Exhibit
10.1


Loan No. V  59941




 





LOAN AGREEMENT


Dated as of October 30, 2006


Between


BEHRINGER HARVARD THREE PARKWAY, LLC 

as Borrower


and


JPMORGAN
CHASE BANK, N.A.,

as Lender


 




 



















TABLE OF CONTENTS


	
  

  	
   

  	
   

  	
   

  	
  Page

  
	
  I.

  	
  DEFINITIONS; PRINCIPLES OF CONSTRUCTION

  	
   

  	
  1

  
	
   

  	
  Section 1.1

  	
  Definitions

  	
   

  	
  1

  
	
   

  	
  Section 1.2

  	
  Principles of Construction

  	
   

  	
  23

  
	
  II.

  	
  GENERAL TERMS

  	
   

  	
  24

  
	
   

  	
  Section 2.1

  	
  Loan Commitment; Disbursement to Borrower

  	
   

  	
  24

  
	
   

  	
  Section 2.2

  	
  Interest Rate

  	
   

  	
  24

  
	
   

  	
  Section 2.3

  	
  Loan Payment

  	
   

  	
  25

  
	
   

  	
  Section 2.4

  	
  Prepayments

  	
   

  	
  26

  
	
   

  	
  Section 2.5

  	
  Defeasance

  	
   

  	
  26

  
	
   

  	
  Section 2.6

  	
  Release of Property

  	
   

  	
  29

  
	
   

  	
  Section 2.7

  	
  Lockbox Account/Cash Management

  	
   

  	
  29

  
	
   

  	
  Section 3.1

  	
  Conditions Precedent to Closing

  	
   

  	
  31

  
	
  IV.

  	
  REPRESENTATIONS AND WARRANTIES

  	
   

  	
  35

  
	
   

  	
  Section 4.1

  	
  Borrower Representations

  	
   

  	
  35

  
	
   

  	
  Section 4.2

  	
  Survival of Representations

  	
   

  	
  42

  
	
  V.

  	
  BORROWER COVENANTS

  	
   

  	
  42

  
	
   

  	
  Section 5.1

  	
  Affirmative Covenants

  	
   

  	
  42

  
	
   

  	
  Section 5.2

  	
  Negative Covenants

  	
   

  	
  52

  
	
  VI.

  	
  INSURANCE; CASUALTY; CONDEMNATION

  	
   

  	
  60

  
	
   

  	
  Section 6.1

  	
  Insurance

  	
   

  	
  60

  
	
   

  	
  Section 6.2

  	
  Casualty

  	
   

  	
  63

  
	
   

  	
  Section 6.3

  	
  Condemnation

  	
   

  	
  64

  
	
   

  	
  Section 6.4

  	
  Restoration

  	
   

  	
  64

  
	
  VII.

  	
  RESERVE FUNDS

  	
   

  	
  69

  
	
   

  	
  Section 7.1

  	
  Required Repairs

  	
   

  	
  69

  
	
   

  	
  Section 7.2

  	
  Tax and Insurance Escrow Fund

  	
   

  	
  70

  
	
   

  	
  Section 7.3

  	
  Replacements and Replacement Reserve

  	
   

  	
  70

  
	
   

  	
  Section 7.4

  	
  Rollover Reserve

  	
   

  	
  75

  
	
   

  	
  Section 7.5

  	
  excelleRx Lease

  	
   

  	
  76

  



 









 



 


	
  

  	
  Section 7.6

  	
  Lease Obligation Fund

  	
   

  	
  77

  
	
   

  	
  Section 7.7

  	
  Reserve Funds, Generally

  	
   

  	
  77

  
	
   

  	
  Section 7.8

  	
  Letter of Credit Rights

  	
   

  	
  78

  
	
   

  	
  Section 7.9

  	
  Application of Letter of Credit Proceeds

  	
   

  	
  78

  
	
  VIII.

  	
  DEFAULTS

  	
   

  	
  78

  
	
   

  	
  Section 8.1

  	
  Event of Default

  	
   

  	
  78

  
	
   

  	
  Section 8.2

  	
  Remedies

  	
   

  	
  80

  
	
   

  	
  Section 8.3

  	
  Remedies Cumulative; Waivers

  	
   

  	
  81

  
	
  IX.

  	
  SPECIAL PROVISIONS

  	
   

  	
  82

  
	
   

  	
  Section 9.1

  	
  Securitization

  	
   

  	
  82

  
	
   

  	
  Section 9.2

  	
  Intentionally Omitted

  	
   

  	
  83

  
	
   

  	
  Section 9.3

  	
  Exculpation

  	
   

  	
  83

  
	
   

  	
  Section 9.4

  	
  Matters Concerning Property Manager

  	
   

  	
  85

  
	
   

  	
  Section 9.5

  	
  Servicer

  	
   

  	
  85

  
	
  X.

  	
  MISCELLANEOUS

  	
   

  	
  85

  
	
   

  	
  Section 10.1

  	
  Survival

  	
   

  	
  85

  
	
   

  	
  Section 10.2

  	
  Lender’s Discretion

  	
   

  	
  85

  
	
   

  	
  Section 10.3

  	
  Governing Law

  	
   

  	
  86

  
	
   

  	
  Section 10.4

  	
  Modification, Waiver in Writing

  	
   

  	
  86

  
	
   

  	
  Section 10.5

  	
  Delay Not a Waiver

  	
   

  	
  86

  
	
   

  	
  Section 10.6

  	
  Notices

  	
   

  	
  86

  
	
   

  	
  Section 10.7

  	
  Trial by Jury

  	
   

  	
  87

  
	
   

  	
  Section 10.8

  	
  Headings

  	
   

  	
  87

  
	
   

  	
  Section 10.9

  	
  Severability

  	
   

  	
  87

  
	
   

  	
  Section 10.10

  	
  Preferences

  	
   

  	
  88

  
	
   

  	
  Section 10.11

  	
  Waiver of Notice

  	
   

  	
  88

  
	
   

  	
  Section 10.12

  	
  Remedies of Borrower

  	
   

  	
  88

  
	
   

  	
  Section 10.13

  	
  Expenses; Indemnity

  	
   

  	
  88

  
	
   

  	
  Section 10.14

  	
  Schedules Incorporated

  	
   

  	
  89

  
	
   

  	
  Section 10.15

  	
  Offsets, Counterclaims and Defenses

  	
   

  	
  90

  
	
   

  	
  Section 10.16

  	
  No Joint Venture or Partnership; No Third Party
  Beneficiaries

  	
   

  	
  90

  
	
   

  	
  Section 10.17

  	
  Publicity

  	
   

  	
  90

  
	
   

  	
  Section 10.18

  	
  Waiver of Marshalling of Assets

  	
   

  	
  90

  



 



 ii
 






 



 


	
  

  	
  Section 10.19

  	
  Waiver of Counterclaim

  	
   

  	
  90

  
	
   

  	
  Section 10.20

  	
  Conflict; Construction of Documents; Reliance

  	
   

  	
  91

  
	
   

  	
  Section 10.21

  	
  Brokers and Financial Advisors

  	
   

  	
  91

  
	
   

  	
  Section 10.22

  	
  Prior Agreements

  	
   

  	
  91

  
	
   

  	
  Section 10.23

  	
  Transfer of Loan

  	
   

  	
  91

  
	
   

  	
  Section 10.24

  	
  Joint and Several Liability

  	
   

  	
  91

  



 


	
  SCHEDULES

  
	
   

  
	
  Schedule I

  	
  -

  	
  Form Guaranty of Payment

  
	
   

  	
   

  	
   

  
	
  Schedule II

  	
  –

  	
  Rent Roll

  
	
   

  	
   

  	
   

  
	
  Schedule III

  	
  –

  	
  Required Repairs - Deadlines for Completion

  
	
   

  	
   

  	
   

  
	
  Schedule IV

  	
  –

  	
  Organizational Chart of Borrower

  
	
   

  	
   

  	
   

  
	
  Schedule V

  	
  –

  	
  Exceptions to Representations

  
	
   

  	
   

  	
   

  
	
  Schedule VI

  	
  –

  	
  Lease Obligations

  



 



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LOAN AGREEMENT


THIS LOAN AGREEMENT, dated as of
this 30th day of October, 2006 (as amended, restated,
replaced, supplemented or otherwise modified from time to time, this “Agreement”),
between JPMORGAN CHASE BANK, N.A., a banking
association chartered under the laws of the United States of America, having an
address at 270 Park Avenue, New York, New York 10017 (“Lender”) and BEHRINGER HARVARD THREE PARKWAY, LLC, a Delaware limited
liability company, having its principal place of business c/o Behringer Harvard
Funds, 15601 Dallas Parkway, Suite 600, Addison, Texas 75001 (“Borrower”).


W  I  T
N  E  S  S  E  T  H:


 


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


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


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


I.                                         DEFINITIONS;
PRINCIPLES OF CONSTRUCTION


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


“Additional Insolvency Opinion” shall have the meaning set
forth in Section 4.1.30(c)
hereof.


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


“Affiliated Manager” shall mean any Property Manager in which
Borrower, Principal, or Guarantor has, directly or indirectly, any legal, beneficial
or economic interest.


“Agreement” shall mean this Loan Agreement, as the same may
be amended, restated, replaced, supplemented or otherwise modified from time to
time.


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


“Annual Budget” shall mean the operating budget, including
all planned Capital Expenditures, for the Property prepared by Borrower in
accordance with Section 5.1.11.(d)
hereof for the applicable Fiscal Year or other period.










 



“Approved Annual Budget” shall have the meaning set forth in Section 5.1.11(d) hereof.


“Assignment of Leases” shall mean that certain first priority
Assignment of Leases and Rents, dated as of the date hereof, from Borrower, as
assignor, to Lender, as assignee, assigning to Lender all of Borrower’s
interest in and to the Leases and Rents of the Property as security for the
Loan, as the same may be amended, restated, replaced, supplemented or otherwise
modified from time to time.


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


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


“Bankruptcy Action” shall mean with respect to any Person
(a) such Person filing a voluntary petition under the Bankruptcy Code or
any other Federal or state bankruptcy or insolvency law; (b) the filing of
an involuntary petition against such Person under the Bankruptcy Code or any
other Federal or state bankruptcy or insolvency law, in which such Person colludes
with, or otherwise assists such Person, or cause to be solicited petitioning
creditors for any involuntary petition against such Person; (c) such
Person filing an answer consenting to or otherwise acquiescing in or joining in
any involuntary petition filed against it, by any other Person under the
Bankruptcy Code or any other Federal or state bankruptcy or insolvency law;
(d) such Person consenting to or acquiescing in or joining in an
application for the appointment of a custodian, receiver, trustee, or examiner
for such Person or any portion of the Property; (e) such Person making an
assignment for the benefit of creditors, or admitting, in writing or in any
legal proceeding, its insolvency or inability to pay its debts as they become
due.


“Bankruptcy Code” shall mean Title 11 of the United
States Code, 11 U.S.C. §101, et seq.,
as the same may be amended from time to time, and any successor statute or
statutes and all rules and regulations from time to time promulgated
thereunder, and any comparable foreign laws relating to bankruptcy, insolvency
or creditors’ rights or any other Federal or state bankruptcy or insolvency
law.


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


“Behringer
Holdings” shall mean Behringer Harvard Holdings, a Delaware limited
liability company.


“Behringer
Harvard Funds” shall mean, individually or collectively, Behringer
Holdings, Behringer Harvard Short-Term Opportunity Fund I LP, a Texas limited
partnership, Behringer Harvard Mid-Term Value Enhancement Fund I LP, a Texas
limited partnership, Behringer Harvard Operating Partnership I LP, a Texas
limited partnership, Behringer Harvard REIT I, Inc., a Maryland corporation, Behringer Harvard Opportunity REIT I, Inc., a
Maryland 



 2
 






 



corporation,
and/or Behringer Harvard Strategic Opportunity Fund I LP, a Texas limited
partnership.


“Borrower” shall mean Behringer Harvard Three Parkway, LLC, a
Delaware limited liability company, together with its permitted successors and
assigns.


“Borrower’s Knowledge”
shall mean the actual knowledge attributable to those principals, employees and
officers of Borrower who have given substantive attention to the Property, the
Loan Documents and related matters, without any implied duty to conduct any
inquiry or investigation.


“Business Day” shall mean any day other than a Saturday,
Sunday or any other day on which national banks in New York, New York are not
open for business.


“Capital Expenditures” shall mean, for any period, the amount
expended for items capitalized under GAAP or other accounting principles
reasonably acceptable to Lender, consistently applied (including expenditures
for building improvements or major repairs, leasing commissions and tenant
improvements).


“Cash Management Account” shall have the meaning set forth in
Section 2.7.2 hereof.


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


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


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


“Casualty Consultant” shall have the meaning set forth in Section 6.4(b)(iii) hereof.


“Casualty Retainage” shall have the meaning set forth in Section 6.4(b)(iv) hereof.


“Casualty/Condemnation Prepayment” shall have the meaning set
forth in Section 6.4(e) hereof.


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


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



 3
 






 



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


“Condemnation Pr oceeds” shall have the meaning set forth in Section 6.4(b).


“Consumer Price
Index” or “CPI” shall
mean the Consumer Price Index for All Urban Consumers published by the Bureau
of Labor Statistics of the United States Department of Labor, All Items; 1982-84
= 100.  If the Bureau of Labor Statistics
substantially revises the manner in which the CPI is determined, an adjustment
shall be made by Lender in the revised index which would produce results
equivalent, as nearly as possible, to those which would be obtained if the CPI
had not been so revised.


“Control” shall mean the possession, directly or indirectly,
of the power to direct or cause the direction of management, policies or
activities of a Person, whether through ownership of voting securities, by
contract or otherwise.  “Controlled” and “Controlling”
shall have correlative meanings.


“Debt” shall mean the outstanding principal amount set forth
in, and evidenced by, this Agreement and the Note together with all interest
accrued and unpaid thereon and all other sums (including the Defeasance Payment
Amount and any Yield Maintenance Premium) due to Lender in respect of the Loan
under the Note, this Agreement, the Mortgage or any other Loan Document.


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


“Debt Service Coverage Ratio” shall mean a ratio for the
applicable period in which:


(a)                                  the
numerator is the Net Operating Income (excluding interest on credit accounts
and using annualized operating expenses for any recurring expenses not paid
monthly (e.g., Taxes and Insurance Premiums)) for such period as set forth in
the statements required hereunder, without deduction for (i) actual
management fees incurred in connection with the operation of the Property, or
(ii) amounts paid to the Reserve Funds, less (A) management fees
equal to the greater of (1) assumed management fees of three percent (3%)
of Gross Income from Operations or (2) the actual management fees incurred,
(B) assumed Replacement Reserve Fund contributions equal to $0.20 per
square foot of gross leasable area at the Property, and (C) assumed
Rollover Reserve Fund contributions equal to $0.70 per square foot of gross
leasable area at the Property (adjusted proportionately for any period other
than one year); and


(b)                                 the
denominator is the aggregate amount of principal and interest due and payable
on the Loan and any Mezzanine Loan for such
applicable period 



 4
 






 



(assuming a thirty (30)
year amortization schedule, unless otherwise provided herein).


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


“Default Rate” shall mean, with respect to the Loan, a rate
per annum equal to the lesser of (a) the Maximum Legal Rate or
(b) the greater of (i) five percent (5%) above the Interest Rate or (ii)
five percent (5%) above the Prime Rate in effect at the time of the occurrence
of the Event of Default.


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


“Defeasance Deposit” shall mean an amount equal to the
remaining principal amount of the Note, the Defeasance Payment Amount, any
costs and expenses incurred or to be incurred in the purchase of U.S.
Obligations necessary to meet the Scheduled Defeasance Payments and any
revenue, documentary stamp or intangible taxes or any other tax or charge due
in connection with the transfer of the Note or otherwise
required to accomplish the agreements of Sections 2.4
and 2.5 hereof (including, without
limitation, any fees and expenses of accountants, attorneys and the Rating
Agencies incurred in connection therewith).


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


“Defeasance Expiration Date” shall mean the date that is two
(2) years from the “startup day” within the meaning of Section 860G(a)(9) of
the Code for the REMIC Trust.


“Defeasance Payment Amount” shall mean the amount (if any) which,
when added to the remaining principal amount of the Note will
be sufficient to purchase U.S. Obligations providing the required Scheduled
Defeasance Payments.


“Disclosure Document” shall mean a prospectus, prospectus
supplement, private placement memorandum, or similar offering memorandum or
offering circular, or such other information reasonably requested by Lender, in
each case in preliminary or final form, used to offer Securities in connection
with a Securitization.


“Eligible Account” shall mean a separate and identifiable
account from all other funds held by the holding institution that is either
(a) an account or accounts maintained with a federal or state-chartered
depository institution or trust company which complies with the definition of
Eligible Institution or (b) a segregated trust account or accounts
maintained with a federal or state chartered depository institution or trust
company acting in its fiduciary capacity which, in the case of a state
chartered depository institution or trust company, is subject to regulations
substantially similar to 12 C.F.R. §9.10(b), having in either case a combined
capital and surplus of at least Fifty Million and 00/100 Dollars
($50,000,000.00) and subject to supervision or examination by federal and state
authority.  An Eligible Account will not
be evidenced by a certificate of deposit, passbook or other instrument.



 5
 






 



“Eligible Institution” shall mean a depository institution or
trust company, 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 (a) 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 or (b) any Letter of
Credit, the long-term unsecured debt obligations of which are rated at least “A”
by Fitch and S&P and “A2” by Moody’s).


“Embargoed Person” shall have the meaning set forth in Section 5.1.24 hereof.


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


“ERISA” shall mean the Employee Retirement Income Security
Act of 1974, as amended from time to time, and the regulations promulgated and
the rulings issued thereunder.


“Escrow Agreement” shall have the meaning set forth in Section 7.1 hereof.


“Event of Default” shall have the meaning set forth in Section 8.1(a) hereof.


“excelleRx Lease”
shall mean that certain Lease dated as of December 13, 2004 made by and between
AGL Investments No. 2 Limited Partnership L.L.L.P., predecessor in interest to
Borrower, as landlord, and excelleRx, Inc., as tenant, as the same may be
amended, restated, replaced, supplemented or otherwise modified from time to
time.


“Extraordinary Expense” shall have the meaning set forth in Section 5.1.11(e) hereof.


“Fiscal Year” shall mean each twelve (12) month period
commencing on January 1 and ending on December 31 during each year of
the term of the Loan.


“Fitch” shall mean Fitch, Inc.


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


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


“Gross Income from Operations” shall mean for any period, all
income, computed in accordance with GAAP or other accounting principles
reasonably acceptable to Lender, derived from the ownership and operation of
the Property from whatever source during such period, including, but not
limited to, Rents from tenants in occupancy, open for business (except that
tenants with ratings of BBB or better from the Rating Agencies need not be in
occupancy or open for business) and paying full contractual rent without right
of offset or credit, 



 6
 






 



utility charges, escalations, forfeited security
deposits, interest on credit accounts, service fees or charges, license fees,
parking fees, rent concessions or credits, business interruption or other loss
of income or rental insurance proceeds or other required pass-throughs and
interest on Reserve Funds, if any, but excluding Rents which in the aggregate
exceed 5% of the total Rents that are from month-to-month tenants or tenants
that are included in any Bankruptcy Action (unless such tenant’s Lease has been
affirmed in the related Bankruptcy Action), sales, use and occupancy or other taxes
on receipts required to be accounted for by Borrower to any Governmental
Authority, refunds and uncollectible accounts, sales of furniture, fixtures and
equipment, Insurance Proceeds (other than business interruption or other loss
of income or rental insurance), Awards, unforfeited security deposits, utility
and other similar deposits and any disbursements to Borrower from the Reserve
Funds, if any.  Gross income shall not be
diminished as a result of the Mortgage or the creation of any intervening estate
or interest in the Property or any part thereof.


“Guarantor” shall mean Behringer Harvard REIT I, Inc., a
Maryland corporation.


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


“Guaranty of Payment”
shall mean a Guaranty Agreement in the form attached as Schedule I to
this Agreement.


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


“Indebtedness” of a Person, at a particular date, means the
sum (without duplication) at such date of (a) indebtedness or liability for
borrowed money; (b) obligations evidenced by bonds, debentures, notes, or other
similar instruments; (c) obligations for the deferred purchase price of
property or services (including trade obligations); (d) obligations under
letters of credit; (e) obligations under acceptance facilities; (f) all
guaranties, endorsements (other than for collection or deposit in the ordinary
course of business) and other contingent obligations to purchase, to provide
funds for payment, to supply funds, to invest in any Person or entity, or otherwise
to assure a creditor against loss; and (g) obligations secured by any Liens,
whether or not the obligations have been assumed.


“Indemnifying Person” shall mean each of Borrower, Principal
and Guarantor.


“Independent Director”
shall mean a natural person serving as director of a corporation or manager of
a limited liability company who is not at the time of initial appointment, or
at any time while serving in such capacity, and has not been at any time during
the preceding five (5) years:  (a) a
stockholder, director, member, manager (with the exception of serving as the
Independent Director of Borrower or Principal), trustee, officer, employee,
partner, attorney or counsel of the Borrower or Principal or any Affiliate of
either of them; (b) a creditor, customer, supplier or other Person who derives
any of its purchases or revenues (other 



 7
 






 



than fees for services as an Independent Director and
for providing services incidental thereto) from its activities with the
Borrower or Principal or any Affiliate of either of them; (c) a Person or other
entity Controlling or under common Control with any Person excluded from
serving as Independent Director under subparagraph (a) or (b); or (d) a member
of the immediate family of any Person excluded from serving as Independent
Director under subparagraph (a) or (b).


“Insolvency Opinion” shall mean that certain
non-consolidation opinion letter dated the date hereof delivered by Luce,
Forward, Hamilton & Scripps LLP in connection with the Loan.


“Insurance Premiums” shall have the meaning set forth in Section 6.1(b) hereof.


“Insurance Proceeds” shall have the meaning set forth in Section 6.4(b) hereof.


“Interest Rate” shall mean a rate of 5.4750% per annum.


“JPM” shall mean JPMorgan Chase Bank, N.A., a banking
association chartered under the laws of the United States of America, and its
successors in interest.


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


“Lease Obligation Fund” shall have the meaning set forth in Section 7.6 hereof.


“Lease Obligations”
shall have the meaning set forth in Section 7.6
hereof.


“Lease Termination Fee”
shall mean any payment, fee or penalty paid by a Tenant in connection with the
cancellation or termination of such Tenant’s Lease, whether by reason of such
Tenant’s default or pursuant to the terms of such Lease.


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



 8
 






 



“Lender” shall mean JPMorgan Chase Bank, N.A., together with
its successors and assigns.


“Letter of Credit”
shall mean a clean, irrevocable, unconditional, transferable (with all transfer
fees for the account of the applicant thereunder), evergreen letter of credit
acceptable to Lender (a) with respect to which Borrower has no reimbursement
obligations, (b) entitling the Lender to draw thereon in a location approved by
Lender, and (c) issued by an Eligible Institution.


“Licenses” shall have the meaning set forth in Section 4.1.22 hereof.


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


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


“Loan Documents” shall mean, collectively, this Agreement,
the Note, the Mortgage, the Assignment of Leases, the Environmental Indemnity,
the O&M Agreement, the Assignment of Management Agreement, the Guaranty,
the Cash Management Agreement, the Lockbox Agreement and all other documents
pursuant to which any Person incurs, has incurred or assumes any obligation to
or for the benefit of Lender in connection with the Loan.


“Lockbox Account” shall have the meaning set forth in Section 2.7.1 hereof.


“Lockbox Agreement” shall mean that certain Clearing Account
Agreement dated the date hereof among Borrower, Lender and Lockbox Bank, as the
same may be amended, restated, replaced, supplemented or otherwise modified
from time to time, relating to funds deposited in the Lockbox Account.


“Lockbox Bank” shall mean JPMorgan Chase Bank, N.A., or any
successor or permitted assigns thereof.


“Material Action”
means, with respect to any Person, to file any insolvency or reorganization
case or proceeding, to institute proceedings to have such Person be adjudicated
bankrupt or insolvent, to institute proceedings under any applicable insolvency
law, to seek any relief under any law relating to relief from debts or the
protection of debtors, to consent to the filing or institution of bankruptcy or
insolvency proceedings against such Person, to file a petition seeking, or
consent to, reorganization or relief with respect to such Person under any
applicable federal or state law relating to bankruptcy or insolvency, to seek
or consent to the appointment of a receiver, liquidator, assignee, trustee,
sequestrator, custodian, or any similar official of or for such Person or a
substantial part of its property, to make any assignment for the benefit of
creditors of such Person, to admit in writing such Person’s inability to pay
its debts 



 9
 






 



generally as they become due, or to affirmatively take
action in furtherance of any of the foregoing.


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


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


“Member Loans” shall mean loans from direct or indirect
owners of Borrower, provided that:


(a)                                  such
Member Loans shall not have a fixed maturity date that is any earlier than the
Maturity Date and shall not be secured;


(b)                                 Borrower
shall not apply the proceeds of any such Member Loan to any purpose other than
toward the acquisition, operation or improvement of the Property:


(c)                                  the
maximum amount of the Member Loans to Borrower shall not exceed $13,825,000 in
the aggregate;


(d)                                 the
terms and conditions upon which the Member Loans are made to Borrower shall be
commercially reasonable;


(e)                                  the
terms of the Member Loan shall (i) require that, so long as the Loan shall
remain outstanding, the holder thereof will not receive any payments on account
thereof unless (x) all current payments under the Note, this Agreement and the
other Loan Documents have been paid in full, and (y) all Expenses (as defined
in that certain Subordination and Standstill Agreement of even date herewith
between Lender and Behringer Harvard Operating Partnership I LP) then due and
payable have been paid in full; (ii) provide that such Member Loan be
nonrecourse to Borrower except to the extent of cash (“Retained
Cash”) held by Borrower after payment of all amounts described
in subclauses (x) and (y) of the preceding clause (i); and (iii) provide that
such Member Loan shall not constitute a claim against Borrower if Retained Cash
is not sufficient to pay such Member Loan;


(f)                                    the
Person making the Member Loan shall be a direct or indirect owner of Borrower
and shall not pledge, assign, transfer or convey its interest in the Member
Loan, except that in connection with a transfer of all of such Person’s
ownership interest in Borrower in accordance with the terms of this Agreement,
such Member Loan must also be conveyed to the 



 10
 






 



transferee or another
Person owning a direct or indirect interest in Borrower; and


(g)                                 the
holder of the Member Loan shall have entered into a subordination agreement
with Lender satisfactory to Lender prior to advancing any funds for the Member Loan
to Borrower, and the documentation of the Member Loan shall provide, that such
holder of the Member Loan (i) will not accept any payments on account thereof
except as permitted under clause (e) above and (ii) will not take any action to
enforce any of its rights or remedies to collect any portion or all of the
Member Loan while any portion of the Debt is outstanding and will not, in any
bankruptcy proceeding involving Borrower, vote in favor of any plan of
reorganization in favor of which Lender has not voted.


“Monthly Debt Service Payment Amount” shall mean (a) an
amount equal to interest only on the outstanding principal balance of the Loan,
calculated in accordance with the terms hereof, for each Payment Date
commencing on the Payment Date occurring in December, 2006 through and
including the Payment Date occurring in November, 2011 and (b) a constant
monthly payment of $380,076.15 with respect to each Payment Date thereafter.


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


“Mortgage” shall mean that certain first priority Mortgage
(or Deed of Trust or Deed to Secure Debt) and Security Agreement, dated the
date hereof, executed and delivered by Borrower to Lender as security for the
Loan and encumbering the Property, as the same may be amended, restated,
replaced, supplemented or otherwise modified from time to time.


“Net Cash Flow” shall mean, for any period, the amount
obtained by subtracting Operating Expenses and Capital Expenditures for such
period from Gross Income from Operations for such period.


“Net Cash Flow Schedule” shall have the meaning set forth in Section 5.1.11(b) hereof.


“Net Operating Income” shall mean the amount obtained by
subtracting Operating Expenses from Gross Income from Operations.


“Net Proceeds” shall have the meaning set forth in Section 6.4(b) hereof.


“Net Proceeds Deficiency” shall have the meaning set forth in
Section 6.4(b)(vi) hereof.


“Net Proceeds Prepayment” shall have the meaning set forth in
Section 6.4(e) hereof.


“Note” shall mean that certain Promissory Note of even date
herewith, in the principal amount of Sixty-Seven Million One Hundred
Twenty-Five Thousand and No/100 



 11
 






 



Dollars ($67,125,000), made by Borrower in favor of
Lender, as the same may be amended, restated, replaced, supplemented or
otherwise modified from time to time.


“Officer’s Certificate” shall mean a certificate delivered to
Lender by Borrower which is signed by an authorized officer of the general
partner or managing member of Borrower.


“O&M Agreement” shall mean that certain Operations and
Maintenance Agreement, dated as of the Closing Date, executed and delivered by
Borrower in connection with the Loan to and for the benefit of Lender, as the
same may be amended, restated, replaced, supplemented or otherwise modified
from time to time.


“Operating Expenses” shall mean the total of all
expenditures, computed in accordance with GAAP or other accounting principles
reasonably acceptable to Lender, of whatever kind relating to the operation,
maintenance and management of the Property that are incurred on a regular
monthly or other periodic basis, including without limitation, utilities,
ordinary repairs and maintenance, insurance, license fees, property taxes and
assessments, advertising expenses, management fees, payroll and related taxes,
computer processing charges, operational equipment or other lease payments, and
other similar costs, but excluding depreciation, Debt Service, Capital
Expenditures and contributions to the Reserve Funds.


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


“Other Obligations” shall have the meaning as set forth in
the Mortgage.


“Payment Date” shall mean the first (1st) day of each calendar month
during the term of the Loan or, if such day is not a Business Day, the
immediately preceding Business Day.


“Permitted Encumbrances” shall mean, with respect to the
Property, collectively, (a) the Liens and security interests created by
the Loan Documents, (b) all Liens, encumbrances and other matters
disclosed in the Title Insurance Policy, (c) Liens, if any, for Taxes
imposed by any Governmental Authority not yet due or delinquent, and
(d) such other title and survey exceptions as Lender has approved or may
approve in writing in Lender’s reasonable discretion, which Permitted
Encumbrances in the aggregate do not materially adversely affect the value or
use of the Property or Borrower’s ability to repay the Loan.


“Permitted Release Date” shall mean the date that is the
third (3rd)
anniversary of the first Payment Date.


“Permitted Use”
shall mean office and other appurtenant and related uses.


“Person” shall mean any individual, corporation, partnership,
joint venture, limited liability company, estate, trust, unincorporated association,
any federal, state, county or 



 12
 






 



municipal government or any bureau, department or
agency thereof and any fiduciary acting in such capacity on behalf of any of
the foregoing.


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


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


“Plan” shall have the meaning specified in Section 5.2.9(c) hereof.


“Policies” shall have the meaning specified in Section 6.1(b) hereof.


“Policy” shall have the meaning specified in Section 6.1(b) hereof.


“Prepayment Rate” shall mean the yield calculated by the
linear interpolation of the yields, as reported in Federal Reserve Statistical
Release H.15-Selected Interest Rates under the heading “U.S. Government
Securities/Treasury Constant Maturities” for the week ending prior to the date
the payment or such proceeds are received, of U.S. Treasury constant maturities
with maturity dates (one longer and one shorter) most nearly approximating the
Maturity Date.  (In the event Release
H.15 is no longer published, Lender shall select a comparable publication to
determine the Treasury Rate).


“Prime Rate”
shall mean the prime rate reported in the Money Rates section of The Wall
Street Journal.  In the event that The
Wall Street Journal should cease or temporarily interrupt publication, the term
“Prime Rate” shall mean the daily average prime rate published in another
business newspaper, or business section of a newspaper, of national standing
and general circulation chosen by Lender. 
In the event that a prime rate is no longer generally published or is
limited, regulated or administered by a governmental or quasi-governmental
body, then Lender shall select a comparable interest rate index which is
readily available and verifiable to Borrower but is beyond Lender’s control.


“Principal”
shall mean the Special Purpose Entity that is the general partner of Borrower,
if Borrower is a limited partnership, or managing member of Borrower, if
Borrower is a limited liability company.


“Property” shall mean the parcel
of real property, the Improvements thereon and all personal property owned by
Borrower and encumbered by the Mortgage, together with all rights pertaining to
such property and Improvements, as more particularly described in the granting
clauses of the Mortgage and referred to therein as the “Property”.


“Property Management Agreement” shall mean the management
agreement entered into by and between Borrower and Property Manager, pursuant
to which Property 



 13
 






 



Manager is to provide management and other services
with respect to the Property, or, if the context requires, the Replacement
Management Agreement.


“Property Manager” shall mean HPT Management Services LP, a
Texas limited partnership, or, if the context requires, a Qualifying Property Manager
who is managing the Property in accordance with the terms and provisions of
this Agreement pursuant to a Replacement Management Agreement.


“Provided Information” shall mean any and all financial and
other information provided at any time by, or on behalf of, any Indemnifying
Person with respect to any Property, Borrower, Principal, Guarantor and/or
Property Manager.


“Qualifying Property Manager” shall mean either
(a) Property Manager; or (b) a reputable and experienced management
organization reasonably satisfactory to Lender, which organization or its
principals possess at least ten (10) years experience in managing properties
similar in size, scope, use and value as the Property, provided,
that Borrower shall have obtained (i) prior written confirmation from the
applicable Rating Agencies that management of the Property by such Person will
not cause a downgrade, withdrawal or qualification of the then current ratings
of the Securities or any class thereof and (ii) if such Person is an
Affiliate of Borrower, an Additional Insolvency Opinion.  Lender acknowledges that, notwithstanding
anything herein to the contrary, HPT Management Services LP shall be deemed to
be a Qualifying Property Manager.


“Rating Agencies” shall mean each of S&P, Moody’s and
Fitch, or any other nationally recognized statistical rating agency which has
been approved by Lender.


“Related Entities” shall have the meaning set forth in Section 5.2.10(e) hereof.


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


“Relevant
Leasing Threshold” shall mean any Lease for an amount of leaseable
square footage equal to or greater than one (1) full floor.


“Relevant Restoration Threshold”
shall mean Five Hundred Thousand and No/100 dollars ($500,000).


“Rents” shall mean all rents (including percentage rents),
rent equivalents, moneys payable as damages or in lieu of rent or rent
equivalents, royalties (including, without limitation, all oil and gas or other
mineral royalties and bonuses), income, receivables, receipts, revenues,
deposits (including, without limitation, security, utility and other deposits),
accounts, cash, issues, profits, charges for services rendered, all other
amounts payable as rent under any Lease or other agreement relating to the
Property, including, without limitation, charges for electricity, oil, gas,
water, steam, heat, ventilation, air-conditioning and any other energy,
telecommunication, telephone, utility or similar items or time use charges,
HVAC equipment charges, sprinkler charges, escalation charges, license fees,
maintenance fees, charges for Taxes, Operating Expenses or other reimbursables
payable to Borrower (or to the Property Manager for the account of Borrower)
under any Lease, and other consideration of whatever form or nature 



 14
 






 



received by or paid to or for the account of or
benefit of Borrower or its agents or employees (but excluding amounts paid by
Borrower to its agents or employees) from any and all sources arising from or
attributable to the Property, and proceeds, if any, from business interruption
or other loss of income insurance.


“Replacement Management Agreement” shall mean, collectively,
(a) either (i) a management agreement with a Qualifying Property
Manager substantially in the same form and substance as the Property Management
Agreement, or (ii) a management agreement with a Qualifying Property
Manager, which management agreement shall be reasonably acceptable to Lender in
form and substance, provided, with respect to this subclause
(ii), Lender, at its option, may require that Borrower shall have obtained
prior written confirmation from the applicable Rating Agencies that such
management agreement will not cause a downgrade, withdrawal or qualification of
the then current rating of the Securities or any class thereof and (b) an
assignment of management agreement and subordination of management fees
substantially in the form then used by Lender (or of such other form and
substance reasonably acceptable to Lender), executed and delivered to Lender by
Borrower and such Qualifying Property Manager at Borrower’s expense.


“Replacement Reserve Account” shall have the meaning set
forth in Section 7.3.1 hereof.


“Replacement Reserve Fund” shall have the meaning set forth
in Section 7.3.1 hereof.


“Replacement Reserve Monthly Deposit” shall have the meaning
set forth in Section 7.3.1
hereof.


“Replacements” shall have the meaning set forth in Section 7.3.1(a) hereof.


“Required Amount”
shall mean, at any time, an amount equal to the sum of Ninety Thousand and
No/100 Dollars ($90,000.00) multiplied by a fraction, the numerator of which
shall be the CPI level on the then most current anniversary of the Closing Date
and the denominator of which shall be the CPI level on the Closing Date;
provided that in no event shall the Required Amount be less than Ninety
Thousand and No/100 Dollars ($90,000.00). 
The Required Amount, as adjusted by the CPI on each anniversary of the
Closing Date, shall apply only to the next succeeding renewal of any insurance
policy required under Section 6.1.1(a)(ix).


“Required Repairs” shall have the meaning set forth in Section 7.1 hereof.


“Reserve Funds” shall mean, collectively, the Tax and
Insurance Escrow Fund, the Replacement Reserve Fund, the Rollover Reserve Fund,
the Lease Obligation Fund and any other escrow fund established by the Loan
Documents.


“Resizing Event”
shall have the meaning set forth in Section 9.1.2 hereof.


“Restoration” shall mean the repair and restoration of the
Property after a Casualty or Condemnation as nearly as possible to the
condition the Property was in immediately 



 15
 






 



prior to such Casualty or Condemnation, with such
alterations as may be reasonably approved by Lender.


“Restricted Party” shall mean collectively,
(a) Borrower, Principal, any Guarantor, and any Affiliated Manager and
(b) any shareholder, partner, member, non-member manager, any direct or
indirect legal or beneficial owner of, Borrower, Principal, any Guarantor, any
Affiliated Manager or any non-member manager.


“Rollover Reserve Account” shall have the meaning set forth
in Section 7.4.1 hereof.


“Rollover Reserve Fund” shall have the meaning set forth in Section 7.4.1 hereof.


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


“Sale or Pledge” shall mean a voluntary or involuntary sale,
conveyance, assignment, transfer, encumbrance, pledge, grant of option or other
transfer or disposal of a legal or beneficial interest, whether direct or
indirect.


“Scheduled Defeasance Payments” shall have the meaning set
forth in Section 2.5.1(b)
hereof.


“Securities” shall have the meaning set forth in Section 9.1 hereof.


“Securitization” shall have the meaning set forth in Section 9.1 hereof.


“Security Agreement” shall have the meaning set forth in Section 2.5.1(a)(vi) hereof.


“Servicer” shall have the
meaning set forth in Section 9.5
hereof.


“Servicing Agreement” shall have the meaning set forth in Section 9.5 hereof.


“Severed Loan Documents” shall have the meaning set forth in Section 8.2(c) hereof.


“Special Purpose Entity”
shall mean a corporation, limited partnership or limited liability company
that, since the date of its formation and at all times on and after the date
thereof, has complied with and shall at all times comply with the following requirements
unless it has received either prior consent to do otherwise from Lender or a
permitted administrative agent thereof, or, while the Loan is securitized,
confirmation from each of the applicable Rating Agencies requiring such review
that such noncompliance would not result in the requalification, withdrawal, or
downgrade of the ratings of any Securities or any class thereof:


(i)             is and shall be
organized solely for the purpose of (A) in the case of Borrower, acquiring,
developing, owning, holding, selling, leasing, transferring, 



 16
 






 



exchanging, managing and
operating the Property, entering into and performing its obligations under the
Loan Documents with Lender, refinancing the Property in connection with a
permitted repayment of the Loan, and transacting lawful business that is
incident, necessary and appropriate to accomplish the foregoing; or (B) in the
case of a Principal, acting as a general partner of the limited partnership
that owns the Property or as member of the limited liability company that owns
the Property and transacting lawful business that is incident, necessary and
appropriate to accomplish the foregoing;


(ii)                                         has
not engaged and shall not engage in any business unrelated to (A) the
acquisition, development, ownership, management, operation or sale of the
Property, or (B) in the case of a Principal, acting as general partner of the
limited partnership that owns the Property or acting as a member of the limited
liability company that owns the Property, as applicable;


(iii)                                      has
not owned and shall not own any real property other than, in the case of
Borrower, the Property;


(iv)                                     does
not have, shall not have and at no time had any assets other than (A) in the
case of Borrower, the Property and personal property necessary or incidental to
its ownership and operation of the Property or (B) in the case of a Principal,
its partnership interest in the limited partnership or the member interest in
the limited liability company that owns the Property and personal property
necessary or incidental to its ownership of such interests;


(v)                                        has
not engaged in, sought, consented or permitted to and shall not engage in,
seek, consent to or permit (A) any dissolution, winding up, liquidation,
consolidation or merger, (B) any sale or other transfer of all or substantially
all of its assets or any sale of assets outside the ordinary course of its
business, except as permitted by the Loan Documents, or (C) in the case of a
Principal, any transfer of its partnership or membership interests;


(vi)                                     shall
not cause, consent to or permit any amendment of its limited partnership
agreement, articles of incorporation, articles of organization, certificate of
formation, operating agreement or other formation document or organizational
document (as applicable) with respect to the matters set forth in this
definition;


(vii)                                  if
such entity is a limited partnership, has and shall have at least one general
partner and has and shall have, as its only general partners, Special Purpose
Entities each of which (A) is a corporation or single-member Delaware limited
liability company, (B) has one Independent Director (provided, however, if any
Rating Agency requires two (2) Independent Directors, Borrower shall appoint,
or cause the appointment of, a second Independent Director), and (C) holds a
direct interest as general partner in the limited partnership of not less than
0.5% (or 0.1%, if the limited partnership is a Delaware entity);



 17














 


(viii)                               if
such entity is a corporation, has and shall have at least one (1) Independent
Director (provided, however, if any Rating Agency requires two (2) Independent
Directors, Borrower shall appoint, or cause the appointment of, a second
Independent Director), and shall not cause or permit the board of directors of
such entity to take any Material Action either with respect to itself or, if
the corporation is a Principal, with respect to Borrower or any action
requiring the unanimous affirmative vote of one hundred percent (100%) of the
members of its board of directors unless each Independent Director shall have
participated in such vote and shall have voted in favor of such action;


(ix)                                       if
such entity is a limited liability company (other than a limited liability
company meeting all of the requirements applicable to a single-member limited
liability company set forth in this definition of “Special
Purpose Entity”), has and shall have at least one (1) member that is
a Special Purpose Entity, that is a corporation, that has at least one (1)
Independent Director (provided, however, if any Rating Agency requires two (2)
Independent Directors, Borrower shall appoint, or cause the appointment of, a
second Independent Director) and that directly owns at least one-half-of-one
percent (0.5%) of the equity of the limited liability company (or 0.1% if the
limited liability company is a Delaware entity);


(x)                                          if
such entity is a single-member limited liability company, (A) is and shall be a
Delaware limited liability company, (B) has and shall have at least one (1)
Independent Director (provided, however, if any Rating Agency requires two (2)
Independent Directors, Borrower shall appoint, or cause the appointment of, a
second Independent Director) serving as manager of such company, (C) shall not
take any Material Action and shall not cause or permit the members or managers
of such entity to take any Material Action, either with respect to itself or,
if the company is a Principal, with respect to Borrower, in each case unless
the required number of Independent Directors then serving as managers of the
company shall have participated and consented in writing to such action, and
(D) has and shall have either (1) a member which owns no economic interest in
the company, has signed the company’s limited liability company agreement and
has no obligation to make capital contributions to the company, or (2) a
natural person or entity that is not a member of the company, that has signed
its limited liability company agreement and that, under the terms of such
limited liability company agreement becomes a member of the company immediately
prior to the withdrawal or dissolution of the last remaining member of the
company;


(xi)                                       has
not and shall not (and, if such entity is (a) a limited liability company, has
and shall have a limited liability agreement or an operating agreement, as
applicable, (b) a limited partnership, has a limited partnership agreement, or
(c) a corporation, has a certificate of incorporation or articles that, in each
case, provide that such entity shall not) (1) dissolve, merge, liquidate,
consolidate; (2) sell all or substantially all of its assets; (3) to the extent
permitted by applicable law, amend its organizational documents with respect to
the matters set forth in this definition without the consent of Lender; or (4)
without the 



 18
 






 



affirmative vote of each Independent Director of
itself or the consent of a Principal that is a member or general partner in
it:  (A) file or consent to the filing of
any bankruptcy, insolvency or reorganization case or proceeding, institute any
proceedings under any applicable insolvency law or otherwise seek relief under
any laws relating to the relief from debts or the protection of debtors
generally, file a bankruptcy or insolvency petition or otherwise institute
insolvency proceedings; (B) seek or consent to the appointment of a receiver,
liquidator, assignee, trustee, sequestrator, custodian or any similar official
for the entity or a substantial portion of its property; (C) make an assignment
for the benefit of the creditors of the entity; or (D) affirmatively take any
action in furtherance of any of the foregoing;


(xii)                                    has
at all times been and shall at all times remain solvent and has paid and shall
pay its debts and liabilities (including, a fairly-allocated portion of any
personnel and overhead expenses that it shares with any Affiliate) from its
assets as the same shall become due, and has maintained and shall maintain
adequate capital for the normal obligations reasonably foreseeable in a
business of its size and character and in light of its contemplated business
operations;


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


(xiv)                                has
maintained and shall maintain its bank accounts, books of account, books and
records separate from those of any other Person and, to the extent that it is
not a disregarded entity for tax purposes and is required to file tax returns
under applicable law, has filed and shall file its own tax returns, except to
the extent that it is required by law to file consolidated tax returns and, if
it is a corporation, has not filed and shall not file a consolidated federal
income tax return with any other corporation, except to the extent that it is
required by law to file consolidated tax returns;


(xv)                                   has
maintained and shall maintain its own resolutions and agreements;


(xvi)                                has
not commingled and shall not commingle its funds or assets with those of any
other Person and has not participated and shall not participate in any cash
management system with any other Person, except with respect to a custodial
account maintained by the Property Manager on behalf of Affiliates of Borrower
and, with respect to funds in such custodial account, has separately accounted,
and will continue to separately account for, each item of income and expense
applicable to the Property and Borrower;


(xvii)                             has
held and shall hold its assets in its own name;


(xviii)                          [intentionally
omitted];


(xix)                                  (A)
has maintained and shall maintain its financial statements, accounting records
and other entity documents separate from those of any other 



 19
 






 



Person; (B) has shown and shall show, in its financial
statements, its asset and liabilities separate and apart from those of any
other Person; and (C) has not permitted and shall not permit its assets to be
listed as assets on the financial statement of any of its Affiliates except as
required by GAAP; provided, however, that any such consolidated financial
statement contains a note indicating that the Special Purpose Entity’s separate
assets and credit are not available to pay the debts of such Affiliate and that
the Special Purpose Entity’s liabilities do not constitute obligations of the
consolidated entity;


(xx)                                     has
paid and shall pay its own liabilities and expenses, including the salaries of
its own employees, out of its own funds and assets, and has maintained and
shall maintain a sufficient number of employees in light of its contemplated
business operations, which may be none;


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


(xxii)                               [intentionally
omitted]


(xxiii)                            shall
have no Indebtedness other than (i) the Loan, (ii) liabilities incurred in the
ordinary course of business relating to the ownership and operation of the
Property and the routine administration of Borrower, in amounts not to exceed
$1,500,000 (other than management fees and commissions and liabilities that are
reserved for) and, in the case of a general partner or managing member of a
Person, liabilities arising by reason of its status as a general partner or
managing member, which liabilities are paid not
more than sixty (60) days after the later of the date incurred or invoiced
(unless disputed in good faith with adequate reserves established therefor),
are not evidenced by a note, and which amounts are normal and reasonable under
the circumstances, (iii) Member Loans, and (iv) such other liabilities that are
permitted pursuant to the Loan Documents;


(xxiv)                           has not
assumed, guaranteed or become obligated and shall not assume or guarantee or
become obligated for the debts of any other Person, has not held out and shall
not hold out its credit as being available to satisfy the obligations of any
other Person or has not pledged and shall not pledge its assets for the benefit
of any other Person, in each case except as permitted pursuant to this
Agreement;


(xxv)                              has
not acquired and shall not acquire obligations or securities of its partners,
members or shareholders or any other owner or Affiliate;


(xxvi)                           has
allocated and shall allocate fairly and reasonably any overhead expenses that
are shared with any of its Affiliates, constituents, or owners, or any
guarantors of any of their respective obligations, or any Affiliate of any of
the foregoing, including, but not limited to, paying for shared office space
and for services performed by any employee of an Affiliate;



 20
 






 



(xxvii)                        has
maintained and used and shall maintain and use separate stationery, invoices
and checks bearing its name and not bearing the name of any other entity unless
such entity is clearly designated as being the Special Purpose Entity’s agent,
provided, however, that Property Manager, on behalf of such Person, may
maintain and use invoices and checks bearing Property Manager’s name;


(xxviii)                     [intentionally
omitted];


(xxix)                             has
held itself out and identified itself and shall hold itself out and identify
itself as a separate and distinct entity under its own name or in a name franchised
or licensed to it by an entity other than an Affiliate of Borrower and not as a
division or part of any other Person, except for services rendered by Property
Manager under the Property Management Agreement, so long as Property Manager
holds itself out as an agent of Borrower


(xxx)                                has
maintained and shall maintain its assets in such a manner that it shall not be
costly or difficult to segregate, ascertain or identify its individual assets
from those of any other Person;


(xxxi)                             has
not made and shall not make loans to any Person and has not held and shall not
hold evidence of indebtedness issued by any other Person or entity (other than
cash and investment-grade securities issued by an entity that is not an
Affiliate of or subject to common ownership with such entity);


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


(xxxiii)                       other than
capital contributions and distributions permitted under the terms of its
organizational documents, has not entered into or been a party to, and shall
not enter into or be a party to, any transaction with any of its partners,
members, shareholders or Affiliates except in the ordinary course of its
business and on terms which are commercially reasonable terms comparable to
those of an arm’s-length transaction with an unrelated third party;


(xxxiv)                      has not had
and shall not have any obligation to, and has not indemnified and shall not
indemnify its partners, officers, directors or members, as the case may be, in
each case unless such an obligation or indemnification is fully subordinated to
the Debt and shall not constitute a claim against it in the event that its cash
flow is insufficient to pay the Debt;


(xxxv)                         if such
entity is a corporation, to the extent permitted under applicable corporate
law, has considered and shall consider the interests of its creditors in
connection with all corporate actions that could reasonably be expected to
affect such creditors;


(xxxvi)                      has not had
and shall not have any of its obligations guaranteed by any Affiliate except as
otherwise required in the Loan Documents;



 21
 






 



(xxxvii)                   has not formed,
acquired or held and shall not form, acquire or hold any subsidiary, except
that a Principal may acquire and hold its interest in Borrower;


(xxxviii)                has complied and
shall comply with all of the terms and provisions contained in its
organizational documents.


(xxxix)                        has
conducted and shall conduct its business so that each of the assumptions made
about it and each of the facts stated about it in the Insolvency Opinion are
true;


(xl)                                       has
not permitted and shall not permit any Affiliate or constituent party
independent access to its bank accounts;


(xli)                                    is,
has always been and shall continue to be duly formed, validly existing, and in
good standing in the state of its incorporation or formation and in all other
jurisdictions where it is required to be qualified to do business; and


(xlii)                                 has
no material contingent or actual obligations not related to the Property.


“State” shall mean the State or Commonwealth in which the
Property or any part thereof is located.


“Successor Borrower” shall have the meaning set forth in Section 2.5.3 hereof.


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


“Tax and Insurance Escrow Fund” shall have the meaning set
forth in Section 7.2 hereof
regardless of whether the funds held therein are held by Lender for the payment
of Taxes or Insurance Premiums or both.


“Taxes” shall mean all real estate and personal property
taxes, assessments, water rates or sewer rents, now or hereafter levied or
assessed or imposed against the Property or part thereof.


“Threshold Amount” shall have the meaning set forth in Section 5.1.21 hereof.


“Tenant”
shall mean any person or entity with a possessory right to all or any part of
the Property pursuant to a Lease or other written agreement.


“Title Insurance Policy” shall mean an ALTA mortgagee title
insurance policy in the form acceptable to Lender (or, if the Property is in a
State which does not permit the issuance of such ALTA policy, such form as shall
be permitted in such State and acceptable to Lender) issued with respect to the
Property and insuring the lien of the Mortgage.



 22
 






 



“Transfer” shall have the meaning set forth in Section 5.2.10(b) hereof.


“Transferee” shall have the meaning set forth in Section 5.2.10(e)(iii) hereof.


“Transferee’s Principals” shall mean collectively,
(A) Transferee’s managing members, general partners or principal
shareholders and (B) such other members, partners or shareholders which
directly or indirectly shall own a fifty-one percent (51%) or greater economic
and voting interest in Transferee.


“UCC” or “Uniform Commercial Code” shall mean the Uniform Commercial
Code as in effect in the State in which the Property is located.


“U.S. Obligations” shall mean non-redeemable securities
evidencing an obligation to timely pay principal and/or interest in a full and
timely manner that are (a) direct obligations of the United States of
America for the payment of which its full faith and credit is pledged, or
(b) to the extent acceptable to the Rating Agencies, other “government
securities” within the meaning of Section 2(a)(16) of the Investment
Company Act of 1940, as amended; provided that up to twenty-five percent (25%)
of the U.S. obligations may be securities issued by quasi-governmental agencies
rated at least AAA by the Rating Agencies provided that such securities are
acceptable to the Rating Agencies.


“Yield Maintenance Premium” shall mean an amount equal to the
greater of (a) one percent (1%) of the outstanding principal of the Loan to be
prepaid or satisfied and (b) the excess, if any, of (i) the sum of the
present values of all then-scheduled payments of principal and interest under
the Note assuming that all outstanding principal and interest on the Loan is
paid on the Maturity Date (with each such payment and assumed payment
discounted to its present value at the date of prepayment at the rate which,
when compounded monthly, is equivalent to the Prepayment Rate when compounded
semi-annually and deducting from the sum of such present values any short-term
interest paid from the date of prepayment to the next succeeding Payment Date
in the event such payment is not made on a Payment Date), over (ii) the
principal amount being prepaid.


Section 1.2                                   Principles
of Construction. All references to sections and schedules are to
sections and schedules in or to this Agreement unless otherwise specified.  All uses of the word “including” shall mean “including,
without limitation” unless the context shall indicate otherwise.  Unless otherwise specified, the words “hereof,”
“herein” and “hereunder” and words of similar import when used in this
Agreement shall refer to this Agreement as a whole and not to any particular
provision of this Agreement.  Unless
otherwise specified, all meanings attributed to defined terms herein shall be
equally applicable to both the singular and plural forms of the terms so
defined.



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II.                                     GENERAL
TERMS


Section 2.1                                   Loan
Commitment; Disbursement to Borrower.


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


2.1.2                     Single
Disbursement to Borrower. Borrower may request and receive only one (1)
borrowing hereunder in respect of the Loan and any amount borrowed and repaid
hereunder in respect of the Loan may not be reborrowed.


2.1.3                     The Note,
Mortgage and Loan Documents. The Loan shall be evidenced by the Note
and secured by the Mortgage, the Assignment of Leases and the other Loan
Documents.


2.1.4                     Use of
Proceeds. Borrower shall use the proceeds of the Loan to (a) acquire
the Property or repay and discharge any existing loans relating to the
Property, (b) pay all past-due Basic Carrying Costs, if any, with respect
to the Property, (c) make deposits into the Reserve Funds on the Closing
Date in the amounts provided herein, (d) pay costs and expenses incurred
in connection with the closing of the Loan, as approved by Lender,
(e) fund any working capital requirements of the Property and
(f) distribute the balance, if any, to Borrower.


Section 2.2                                   Interest
Rate.


2.2.1                     Interest
Rate. Interest on the outstanding principal balance of the Loan shall
accrue from (and include) the Closing Date to but excluding the Maturity Date
at the Interest Rate (unless the Default Rate shall be in effect).


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


2.2.3                     Default
Rate. In the event that, and for so long as, any Event of Default shall
have occurred and be continuing, the outstanding principal balance of the Loan
and, to the extent permitted by law, all accrued and unpaid interest in respect
of the Loan and any other amounts due pursuant to the Loan Documents, shall
accrue interest at the Default Rate, calculated from the date such payment was
due without regard to any grace or cure periods contained herein.


2.2.4                     Usury
Savings. This Agreement, the Note and the other Loan Documents are
subject to the express condition that at no time shall Borrower be obligated or
required to pay interest on the principal balance of the Loan at a rate which
could subject Lender to either civil or criminal liability as a result of being
in excess of the Maximum Legal Rate.  If,
by the terms of this Agreement or the other Loan Documents, Borrower is at any time
required or obligated to pay interest on the principal balance due hereunder at
a rate in excess of the Maximum Legal Rate, the Interest Rate or the Default
Rate, as the case may be, shall be deemed to be 



 24
 






 



immediately reduced to the Maximum Legal Rate and all previous payments
in excess of the Maximum Legal Rate shall be deemed to have been payments in
reduction of principal and not on account of the interest due hereunder.  All sums paid or agreed to be paid to Lender
for the use, forbearance, or detention of the sums due under the Loan, shall,
to the extent permitted by applicable law, be amortized, prorated, allocated,
and spread throughout the full stated term of the Loan until payment in full so
that the rate or amount of interest on account of the Loan does not exceed the
Maximum Legal Rate of interest from time to time in effect and applicable to
the Loan for so long as the Loan is outstanding.


Section 2.3                                   Loan
Payment.


2.3.1                     Monthly
Debt Service Payments.  Borrower
shall pay to Lender (a) on the Closing Date, an amount equal to interest only
on the outstanding principal balance of the Loan from the Closing Date up to
and including October 31, 2006 and (b) on each Payment Date thereafter up
to and including the Maturity Date, Borrower shall make a payment to Lender of
principal and/or interest, as applicable, in an amount equal to the Monthly
Debt Service Payment Amount, which payments shall be applied first to accrued
and unpaid interest and the balance to principal.


2.3.2                     Payments
Generally.  The first (1st) interest accrual period
hereunder shall commence on and include the Closing Date and shall end on and
include October 31, 2006.  Each interest
accrual period thereafter shall commence on the first (1st) day of each calendar month during the
term of this Agreement and shall end on and include the final calendar date of
such calendar month.  For purposes of
making payments hereunder, but not for purposes of calculating interest accrual
periods, if the day on which such payment is due is not a Business Day, then
amounts due on such date shall be due on the immediately preceding Business Day
and with respect to payments of principal due on the Maturity Date, interest
shall be payable at the Interest Rate or the Default Rate, as the case may be,
through and including the day immediately preceding such Maturity Date.  All amounts due under this Agreement and the
other Loan Documents shall be payable without setoff, counterclaim, defense or
any other deduction whatsoever.


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


2.3.4                     Late
Payment Charge.  If any
principal, interest or any other sums due under the Loan Documents (excluding
principal due on the Maturity Date) are not paid by Borrower on or prior to the
date on which it is due, Borrower shall pay to Lender upon demand an amount
equal to the lesser of five percent (5%) of such unpaid sum or the Maximum
Legal Rate in order to defray the expense incurred by Lender in handling and
processing such delinquent payment and to compensate Lender for the loss of the
use of such delinquent payment.  Any such
amount shall be secured by the Mortgage and the other Loan Documents to the
extent permitted by applicable law.



 25
 






 



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


Section 2.4                                   Prepayments.


2.4.1                     Voluntary
Prepayments.  Except as otherwise
provided in Section 2.4.2,
Borrower shall not have the right to prepay the Loan in whole or in part prior
to the Maturity Date; provided that on the Payment Date three (3) months
prior to the Maturity Date, or on any Payment Date thereafter (or on any date
thereafter provided that interest is paid through the next Payment Date),
Borrower may, at its option and upon thirty (30) days prior written notice
to Lender prepay the Debt in whole without payment of the Yield Maintenance
Premium.  If for any reason Borrower
prepays the Loan on a date other than a Payment Date, Borrower shall pay
Lender, in addition to the Debt, all interest which would have accrued on the
amount of the Loan through and including the Payment Date next occurring
following the date of such prepayment.


2.4.2                     Mandatory
Prepayments.  On the next
occurring Payment Date following the date on which Lender actually receives any
Net Proceeds, if Lender is not obligated or does not elect to make such Net
Proceeds available to Borrower for the Restoration of the Property or otherwise
remit such Net Proceeds to Borrower pursuant to Section 6.4 hereof,
Borrower shall prepay or authorize Lender to apply such Net Proceeds as a
prepayment of all or a portion of the outstanding principal balance of the Loan
together with accrued interest and any other sums due hereunder in an amount
equal to one hundred percent (100%) of such Net Proceeds; provided,
however, if an Event of Default has occurred and is continuing,
Lender may apply such Net Proceeds to the Debt (until paid in full) in any
order or priority in its sole discretion. 
Other than during the continuance of an Event of Default, no Yield
Maintenance Premium shall be due in connection with any prepayment made
pursuant to this Section 2.4.2.


2.4.3                     Prepayments
After Default.  If during the continuance
of an Event of Default, payment of all or any part of the Debt is tendered by
Borrower or otherwise recovered by Lender, such tender or recovery shall be
(a) made on the next occurring Payment Date together with the Monthly Debt
Service Payment and (b) deemed a voluntary prepayment by Borrower in
violation of the prohibition against prepayment set forth in Section 2.4.1 hereof and Borrower
shall pay, in addition to the Debt, an amount equal to the Yield Maintenance
Premium.


Section 2.5                                   Defeasance.


2.5.1                     Voluntary
Defeasance.  (a)  Provided no Event of Default shall then
exist, Borrower shall have the right at any time after the earlier to occur of
the Defeasance Expiration Date and the Permitted Release Date and prior to the
date voluntarily prepayments are permitted under Section 2.4.1
hereof to voluntarily defease the Loan in full by and upon satisfaction of the
following conditions (such event being a “Defeasance Event”):



 26
 






 



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


(ii)                                         [Intentionally
Omitted];


(iii)                                      Borrower
shall pay to Lender all other sums, not including scheduled interest or
principal payments, then due under the Note, this Agreement, the Mortgage and
the other Loan Documents;


(iv)                                     Borrower
shall pay to Lender the required Defeasance Deposit for the Defeasance Event;


(v)                                        [Intentionally
Omitted];


(vi)                                     Borrower
shall execute and deliver a pledge and security agreement, in form and
substance that would be reasonably satisfactory to a prudent lender creating a
first priority lien on the Defeasance Deposit and the U.S. Obligations
purchased with the Defeasance Deposit in accordance with the provisions of this
Section 2.5 (the “Security Agreement”);


(vii)                                  Borrower
shall deliver 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 Borrower has legally and
validly transferred and assigned the U.S. Obligations and all obligations,
rights and duties under and to the Note to the Successor Borrower, that Lender
has a perfected first priority security interest in the Defeasance Deposit and
the U.S. Obligations delivered by Borrower and that any REMIC Trust formed
pursuant to a 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 such Defeasance Event;


(viii)                               If
required pursuant to the applicable pooling and servicing agreement or by the
Rating Agencies, Borrower shall deliver confirmation in writing from each of
the applicable Rating Agencies to the effect that such release will not result
in a downgrade, withdrawal or qualification of the respective ratings in effect
immediately prior to such Defeasance Event for the Securities issued in
connection with the Securitization which are then outstanding.  If required by the applicable Rating
Agencies, Borrower shall also deliver or cause to be delivered an Additional
Insolvency Opinion with respect to the Successor Borrower in form and substance
satisfactory to Lender and the applicable Rating Agencies;


(ix)                                       Borrower
shall deliver an Officer’s Certificate certifying that the requirements set
forth in this Section 2.5.1(a)
have been satisfied;


(x)                                          Borrower
shall deliver a certificate of Borrower’s independent certified public
accountant certifying that the U.S. Obligations purchased with the 



 27
 






 



Defeasance
Deposit generate monthly amounts equal to or greater than the Scheduled
Defeasance Payments;


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


(xii)                                    Borrower
shall pay all costs and expenses of Lender incurred in connection with the
Defeasance Event, including (A) any costs and expenses associated with a
release of the Lien of the Mortgage as provided in Section 2.6
hereof, (B) reasonable attorneys’ fees and expenses incurred in connection
with the Defeasance Event, (C) the costs and expenses of the Rating
Agencies, (D) any revenue, documentary stamp or intangible taxes or any
other tax or charge due in connection with the transfer of the Note, or
otherwise required to accomplish the defeasance and (E) the costs and
expenses of Servicer and any trustee, including reasonable attorneys’ fees.


(b)                                 In connection with the
Defeasance Event, Borrower shall use the Defeasance Deposit to purchase U.S.
Obligations which provide payments on or prior to, but as close as possible to,
all successive scheduled Payment Dates after the Defeasance Date upon which
interest and principal payments are required under this Agreement and the Note,
and in amounts equal to the scheduled payments due on such Payment Dates under
this Agreement and the Note (including, without limitation, scheduled payments
of principal, interest, servicing fees (if any), and any other amounts due
under the Loan Documents on such dates) and assuming the Note is paid in full
on the Maturity Date (the “Scheduled Defeasance Payments”).  Any portion of the Defeasance Deposit in
excess of the amount necessary to purchase the U.S. Obligations required by
this Section 2.5 and satisfy
Borrower’s other obligations under this Section 2.5
and Section 2.6 shall be
remitted to Borrower.


2.5.2                     Collateral.  Each of the U.S. Obligations that are part of
the defeasance collateral shall be duly endorsed by the holder thereof as
directed by Lender or accompanied by a written instrument of transfer in form
and substance that would be satisfactory to a prudent lender (including,
without limitation, such instruments as may be required by the depository
institution holding such securities or by the issuer thereof, as the case may
be, to effectuate book-entry transfers and pledges through the book-entry
facilities of such institution) in order to perfect upon the delivery of the
defeasance collateral a first priority security interest therein in favor of
Lender in conformity with all applicable state and federal laws governing the
granting of such security interests.


2.5.3                     Successor
Borrower.  In connection with any Defeasance
Event, Borrower may at its option, or if so required by the applicable Rating
Agencies shall, establish or designate a successor entity (the “Successor Borrower”)
acceptable to Lender, which shall be a Special Purpose Entity, and Borrower
shall transfer and assign all obligations, rights and duties under and to the
Note together with the pledged U.S. Obligations 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 One Thousand and 00/100
Dollars ($1,000) to any such Successor Borrower as consideration for assuming
the obligations under the Note and the Security Agreement.  



 28
 






 



Notwithstanding anything in this Agreement to the contrary, no other
assumption fee shall be payable upon a transfer of the Note in accordance with
this Section 2.5.3, but Borrower
shall pay all costs and expenses incurred by Lender, including Lender’s
attorneys’ fees and expenses and any fees and expenses of any Rating Agencies,
incurred in connection therewith.


Section 2.6                                   Release
of Property. Except as set forth in this Section 2.6 or a
prepayment of the entire Loan pursuant to Section 2.4.2, no repayment,
prepayment or defeasance of all or any portion of the Loan shall cause, give
rise to a right to require, or otherwise result in, the release of the Lien of
the Mortgage on the Property.  If the
entire Loan has been prepaid pursuant to Section 2.4.2, or after the
requirements of Section 2.6.1 have been satisfied, the Property shall be
released from the lien of the Mortgage.


2.6.1                     Release of
Property.


(a)                                  If Borrower has
elected to defease the entire Loan and the requirements of Section 2.5 and this Section 2.6 have been satisfied, the
Property shall be released from the Lien of the Mortgage.


(b)                                 In connection with the
release of the Mortgage, Borrower shall submit to Lender, not less than
thirty (30) days prior to the Defeasance Date, a release of Lien (and
related Loan Documents) for the Property for execution by Lender.  Such release shall be in a form appropriate
in the jurisdiction in which the Property is located and that would be
satisfactory to a prudent lender and contains standard provisions, if any,
protecting the rights of the releasing lender. 
In addition, Borrower shall provide all other documentation Lender
reasonably requires to be delivered by Borrower in connection with such
release, together with an Officer’s Certificate certifying that such
documentation (i) is in compliance with all Legal Requirements, and
(ii) will effect such releases in accordance with the terms of this
Agreement.


2.6.2                     Release on
Payment in Full.  Lender shall,
upon payment in full of all principal and interest due on the Loan and all
other amounts due and payable under the Loan Documents in accordance with the
terms and provisions of the Note and this Agreement, release the Lien of the
Mortgage on the Property.  Borrower shall
pay to Lender all reasonable administrative and legal costs incurred in
connection with such release.


Section 2.7                                   Lockbox Account/Cash Management. 


2.7.1       Lockbox Account.


(a)                                  During the term of
the Loan, Borrower shall establish and maintain an account (the “Lockbox Account”) with Lockbox Bank in
trust for the benefit of Lender, which Lockbox Account shall be under the sole
dominion and control of Lender.  The
Lockbox Account shall be entitled “Behringer Harvard Three Parkway, LLC, as
Borrower, and JPMorgan Chase Bank, N.A., as Lender, pursuant to Loan Agreement
dated as of October       , 2006 – Lockbox
Account”.  Borrower hereby grants to
Lender a first-priority security interest in the Lockbox Account and all
deposits at any time contained therein and the proceeds thereof and will take
all actions necessary to maintain in favor of Lender a perfected first priority
security interest in the Lockbox Account, including, without limitation, executing
and filing UCC-1 Financing Statements and continuations thereof.  Lender and Servicer shall have the sole right
to make withdrawals from the Lockbox Account and all costs and expenses for
establishing and 



 29
 






 



maintaining the Lockbox Account shall be paid by Borrower.  All monies now or hereafter deposited into
the Lockbox Account shall be deemed additional security for the Debt.


(b)                                 Borrower shall, or
shall cause Property Manager to, deliver irrevocable written instructions to
all tenants under Leases to deliver all Rents payable thereunder directly to
the Lockbox Account.  Borrower shall, and
shall cause Property Manager to, deposit all amounts received by Borrower or
Property Manager constituting Rents into the Lockbox Account within
one (1) Business Day after receipt thereof.


(c)                                  Borrower shall obtain
from Lockbox Bank its agreement to transfer to the Cash Management Account in
immediately available funds by federal wire transfer all amounts on deposit in
the Lockbox Account once every Business Day during the continuance of a Cash
Sweep Period.


(d)                                 Upon the occurrence of
an Event of Default, Lender may, in addition to any and all other rights and
remedies available to Lender, apply any sums then present in the Lockbox
Account to the payment of the Debt in any order in its sole discretion.


(e)                                  The Lockbox Account
shall be an Eligible Account and shall not be commingled with other monies held
by Borrower or Lockbox Bank.


(f)                                    Borrower shall not
further pledge, assign or grant any security interest in the Lockbox Account or
the monies deposited therein or permit any lien or encumbrance to attach
thereto, or any levy to be made thereon, or any UCC-1 Financing Statements,
except those naming Lender as the secured party, to be filed with respect
thereto, and except for the rights of the Lockbox Bank under the Lockbox
Agreement.


(g)                                 Borrower shall
indemnify Lender and hold Lender harmless from and against any and all actions,
suits, claims, demands, liabilities, losses, damages, obligations and costs and
expenses (including litigation costs and reasonable attorneys fees and
expenses) arising from or in any way connected with the Lockbox Account and/or
the Lockbox Agreement (unless arising from the gross negligence or willful
misconduct of Lender) or the performance of the obligations for which the
Lockbox Account was established.


2.7.2                     Cash Management Account.


(a)                                  Pursuant to the Cash
Management Agreement, Lender has established an account (the “Cash Management Account”) with a financial
institution chosen by Lender in its discretion, which Cash Management Account
shall be under the sole dominion and control of Lender.  Borrower hereby grants to Lender a first
priority security interest in the Cash Management Account and all deposits at
any time contained therein and the proceeds thereof and will take all actions
necessary to maintain in favor of Lender a perfected first priority security
interest in the Cash Management Account, including, without limitation,
executing and filing UCC-1 Financing Statements and continuations thereof.  Lender and Servicer shall have the sole right
to make withdrawals from the Cash Management Account and all costs and expenses
for establishing and maintaining the Cash Management Account shall be paid by
Borrower.



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(b)                                 The insufficiency of
funds on deposit in the Cash Management Account shall not relieve Borrower from
the obligation to make any payments, as and when due pursuant to this Agreement
and the other Loan Documents, and such obligations shall be separate and
independent, and not conditioned on any event or circumstance whatsoever.


(c)                                  All funds on deposit
in the Cash Management Account following the occurrence of an Event of Default
may be applied by Lender in such order and priority as Lender shall determine.


(d)                                 Borrower hereby agrees
that Lender may modify the Cash Management Agreement for the purpose of
establishing additional sub-accounts in connection with any payments otherwise
required under this Agreement and the other Loan Documents and Lender shall
provide notice thereof to Borrower.


2.7.3                     Payments Received Under the Cash Management Agreement.  Notwithstanding anything to the contrary
contained in this Agreement or the other Loan Documents, and provided no Event
of Default has occurred and is continuing, Borrower’s obligations with respect
to the payment of the Monthly Debt Service Payment Amount and amounts required
to be deposited into the Reserve Funds, if any, shall be deemed satisfied to
the extent sufficient amounts are deposited in the Cash Management Account to satisfy
such obligations pursuant to the Cash Management Agreement on the dates each
such payment is required, regardless of whether any of such amounts are so
applied by Lender.


III.                                 CONDITIONS
PRECEDENT


Section 3.1                                   Conditions
Precedent to Closing.  The obligation
of Lender to make the Loan hereunder is subject to the fulfillment by Borrower
or waiver by Lender of the following conditions precedent no later than the
Closing Date:


3.1.1                     Representations
and Warranties; Compliance with Conditions. The representations and
warranties of Borrower contained in this Agreement and the other Loan Documents
shall be true and correct in all material respects on and as of the Closing
Date with the same effect as if made on and as of such date, and no Default or
an Event of Default shall have occurred and be continuing; and Borrower shall
be in compliance in all material respects with all terms and conditions set
forth in this Agreement and in each other Loan Document on its part to be
observed or performed.


3.1.2                     Loan Agreement
and Note.  Lender shall have
received a copy of this Agreement and the Note, in each case, duly executed and
delivered on behalf of Borrower.


3.1.3                     Delivery
of Loan Documents; Title Insurance; Reports; Leases, Etc.


(a)                                  Mortgage, Assignment
of Leases. Lender shall have received from Borrower fully executed and
acknowledged counterparts of the Mortgage and the Assignment of Leases and
evidence that counterparts of the Mortgage and Assignment of Leases have been
delivered to the title company for recording, in the reasonable judgment of
Lender, so as to effectively create upon such recording valid and enforceable
first priority Liens upon the Property, in favor of Lender (or such other
trustee as may be required under local law), subject 



 31
 






 



only to the Permitted Encumbrances and such other Liens as are
permitted pursuant to the Loan Documents. 
Lender shall have also received from Borrower fully executed
counterparts of the other Loan Documents.


(b)                                 Title Insurance.
Lender shall have received a binding commitment to issue the Title Insurance
Policy issued by a title company acceptable to Lender and dated as of the
Closing Date. To the extent permitted by applicable Legal Requirements, such
Title Insurance Policy shall (i) provide coverage an amount equal to the
principal amount of the Loan together with, if applicable, a “tie-in” or
similar endorsement, (ii) insure Lender that the Mortgage creates a valid
first priority lien on the Property encumbered thereby, free and clear of all
exceptions from coverage other than Permitted Encumbrances and standard
exceptions and exclusions from coverage (as modified by the terms of any
endorsements), (iii) contain such endorsements and affirmative coverages
as Lender may reasonably request, and (iv) name Lender or Lender’s
nominee, its successors and assigns, as the insured.  Lender also shall have received evidence that
all premiums in respect of such Title Insurance Policy have been paid.


(c)                                  Survey. Lender shall
have received a current title survey for the Property, certified to the title
company and Lender and their successors and assigns, in form and content
satisfactory to Lender and prepared by a professional and properly licensed
land surveyor satisfactory to Lender in accordance with the most recent Minimum
Standard Detail Requirements for ALTA/ACSM Land Title Surveys.  The following additional items from the list
of “Optional Survey Responsibilities and Specifications” (Table A) should be
added to the survey: 2, 3, 4, 6, 8, 9, 10, 11 and 13.  The survey shall reflect the same legal
description contained in the Title Insurance Policy relating to the Property
referred to in clause (b) above and shall include, among other things, a
legal description of the real property comprising part of the Property
reasonably satisfactory to Lender.  The
surveyor’s seal shall be affixed to the survey and the surveyor shall provide a
certification for the survey in form and substance acceptable to Lender.


(d)                                 Insurance. Lender
shall have received valid certificates of insurance for the policies of
insurance required hereunder, satisfactory to Lender in its sole discretion,
and evidence of the payment of all premiums payable for the existing policy
period.


(e)                                  Environmental
Reports. Lender shall have received a Phase I environmental report (and, if
recommended by the Phase I environmental report, a Phase II environmental
report) in respect of the Property, in each case satisfactory in form and
substance reasonably satisfactory to Lender.


(f)                                    Zoning. With
respect to the Property, Lender shall have received, at Lender’s option,
(i) letters or other evidence with respect to the Property from the
appropriate municipal authorities (or other Persons) concerning applicable
zoning and building laws, and (ii) either (A) an ALTA 3.1 zoning
endorsement for the applicable Title Insurance Policy or (B) other
evidence of zoning compliance, in each case in substance reasonably
satisfactory to Lender.


(g)                                 Encumbrances.  Borrower shall have taken or caused to be
taken such actions in such a manner so that Lender has a valid and perfected
first Lien as of the Closing 



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Date with respect to the Mortgage on the Property, subject only to
applicable Permitted Encumbrances and such other Liens as are permitted
pursuant to the Loan Documents, and Lender shall have received satisfactory
evidence thereof.


3.1.4                     Related
Documents.  Each additional
document not specifically referenced herein, but relating to the transactions
contemplated herein, shall have been duly authorized, executed and delivered by
all parties thereto and Lender shall have received and approved certified
copies thereof.


3.1.5                     Delivery
of Organizational Documents.  On
or before the Closing Date, Borrower shall deliver or cause to be delivered to
Lender copies certified by Borrower of all organizational documentation related
to Borrower and/or the formation, structure, existence, good standing and/or
qualification to do business, as Lender may request in its sole discretion,
including, without limitation, good standing certificates, qualifications to do
business in the State, resolutions authorizing the entering into of the Loan
and incumbency certificates as may be requested by Lender.


3.1.6                     Opinions
of Borrower’s Counsel.  Lender
shall have received opinions from Borrower’s counsel with respect to due
execution, authority, enforceability of the Loan Documents and such other
matters as Lender may reasonably require, all such opinions in form, scope and
substance reasonably satisfactory to Lender and Lender’s counsel in their
reasonable discretion.


3.1.7                     Budgets.  Borrower shall have delivered the Annual
Budget for the current Fiscal Year.


3.1.8                     Basic
Carrying Costs.  Borrower shall
have paid or reserved for all Basic Carrying Costs relating to the Property
which are in arrears, including without limitation, (a) accrued but unpaid
Insurance Premiums due pursuant to the Policies, (b) currently due and
payable Taxes (including any in arrears) relating to the Property, and
(c) currently due Other Charges relating to the Property, which amounts
shall be funded with proceeds of the Loan.


3.1.9                     Completion
of Proceedings.  All
organizational proceedings taken or to be taken in connection with the
transactions contemplated by this Agreement and other Loan Documents and all
documents incidental thereto shall be reasonably satisfactory in form and
substance to Lender, and Lender shall have received all such counterpart
originals or certified copies of such documents as Lender may reasonably
request.


3.1.10              Payments.  All payments, deposits or escrows required to
be made or established by Borrower under this Agreement, the Note and the other
Loan Documents on or before the Closing Date shall have been paid.


3.1.11              Tenant Estoppels.  Lender shall have received an executed tenant
estoppel letter, which shall be in form and substance satisfactory to Lender,
from (a) each tenant occupying ten percent (10%) of more of the gross
leasable area of the Property, (b) each tenant leasing an entire building
at the Property, (c) each tenant paying base rent in an amount equal to or
exceeding five percent (5%) of the Gross Income from Operations from the
Property occupied 



 33
 






 



by such tenant and (d) including the area leased by those
described in clauses (a), (b) and (c), lessees of not less than eighty-five
percent (85%) of the gross leasable area of the Property.


3.1.12              Transaction Costs.  Borrower shall have paid or reimbursed Lender
for all title insurance premiums, recording and filing fees or taxes, costs of
environmental reports, Physical Conditions Reports, appraisals and other reports,
the fees and costs of Lender’s counsel and all other third party out-of-pocket
expenses incurred in connection with the origination of the Loan.


3.1.13              Material Adverse
Change.  There shall have been no
material adverse change in the financial condition or business condition of
Borrower, Principal, Guarantor or the Property since the date of the most
recent financial statements delivered to Lender.  The income and expenses of the Property, the
occupancy thereof, and all other features of the transaction shall be as
represented to Lender without material adverse change.  Neither Borrower, Principal, Guarantor nor
any of their respective constituent Persons shall be the subject of any
bankruptcy, reorganization, or insolvency proceeding.


3.1.14              Leases and Rent
Roll.  Lender shall have received
copies of all tenant leases, certified copies of any tenant leases as requested
by Lender and certified copies of all ground leases affecting the Property, if
any.  Lender shall have received a
current certified rent roll of the Property, reasonably satisfactory in form
and substance to Lender.


3.1.15              Subordination and
Attornment.  Lender shall have
received appropriate instruments acceptable to Lender in its commercially
reasonable discretion subordinating any Leases of record prior to the Mortgage
and including an agreement by such Tenants to attorn to Lender in the event of
a foreclosure or delivery of a deed in lieu thereof.


3.1.16              Tax Lot.  Lender shall have received evidence that the
Property constitutes one (1) or more separate tax lots, which evidence shall be
reasonably satisfactory in form and substance to Lender.


3.1.17              Physical
Conditions Report.  Lender shall
have received a Physical Conditions Report with respect to the Property, which
report shall be reasonably satisfactory in form and substance to Lender.


3.1.18              Property
Management Agreement.  Lender
shall have received a certified copy of the Property Management Agreement with
respect to the Property which shall be satisfactory in form and substance to
Lender.


3.1.19              Appraisal.  Lender shall have received an appraisal of
the Property which shall be satisfactory in form and substance to Lender.


3.1.20              Financial
Statements.  Lender shall have
received (a) a balance sheet with respect to the Property for the two (2) most
recent Fiscal Years and statements of income and statements of cash flows with
respect to the Property for the three (3) most recent Fiscal Years, each
in form and substance reasonably satisfactory to Lender or (b) such other
financial statements relating to the operation of the Property, in form and
substance reasonably satisfactory to Lender.


 



 34














 


3.1.21              Further Documents.  Lender or its counsel shall have received
such other documents and further approvals, opinions, documents and information
as Lender or its counsel may have reasonably requested including the Loan
Documents in form and substance reasonably satisfactory to Lender and its
counsel.


IV.                                REPRESENTATIONS
AND WARRANTIES


Section
4.1                                   Borrower
Representations.  Borrower
represents and warrants as of the date hereof and as of the Closing Date that,
except as set forth on Schedule V:


4.1.1                     Organization.  Borrower has been duly organized and is
validly existing and in good standing with requisite power and authority to own
the Property and to transact the businesses in which it is now engaged.  Borrower 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 the Property, businesses and operations.  Borrower possesses all rights, licenses,
permits and authorizations, governmental or otherwise, necessary to entitle it
to own the Property and to transact the businesses in which it is now engaged,
and the sole business of Borrower is the ownership, management, operation and
sale of the Property.


4.1.2                     Proceedings.  Borrower has taken all necessary action to
authorize the execution, delivery and performance of this Agreement and the
other Loan Documents.  This Agreement and
such other Loan Documents have been duly executed and delivered by or on behalf
of Borrower and constitute legal, valid and binding obligations of Borrower
enforceable against Borrower in accordance with their respective terms, subject
only to applicable bankruptcy, insolvency and similar laws affecting rights of
creditors generally, and subject, as to enforceability, to general principles
of equity (regardless of whether enforcement is sought in a proceeding in
equity or at law).


4.1.3                     No
Conflicts.  The execution,
delivery and performance of this Agreement and the other Loan Documents by
Borrower 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, charge or encumbrance (other than pursuant to the Loan
Documents) upon any of the property or assets of Borrower pursuant to the terms
of any indenture, mortgage, deed of trust, loan agreement, partnership
agreement, or other agreement or instrument to which Borrower is a party or by
which any of Borrower’s property or assets is subject, nor to Borrower’s
Knowledge 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 Borrower’s properties or assets, and any
consent, approval, authorization, order, registration or qualification of or
with any court or any such Governmental Authority required for the execution,
delivery and performance by Borrower of this Agreement or any other Loan
Documents has been obtained and is in full force and effect.


4.1.4                     Litigation.  To Borrower’s Knowledge, there are no
actions, suits or proceedings at law or in equity by or before any Governmental
Authority or other agency now pending or threatened against or affecting
Borrower, Guarantor, Principal or the Property, which actions, suits or proceedings,
if determined against Borrower, Guarantor, Principal or the 



 35
 






 



Property, might materially adversely affect
the condition (financial or otherwise) or business of Borrower, Guarantor,
Principal or the condition or ownership of the Property.


4.1.5                     Agreements.  Except such instruments and agreements set
forth as Permitted Encumbrances in the Title Insurance Policy, Borrower is not
a party to any agreement or instrument or subject to any restriction which
might materially and adversely affect Borrower or the Property, or Borrower’s
business, properties or assets, operations or condition, financial or
otherwise.  To Borrower’s knowledge,
Borrower is not in default in any material respect in the performance,
observance or fulfillment of any of the obligations, covenants or conditions
contained in any agreement or instrument to which it is a party or by which
Borrower or the Property is bound. 
Borrower has no material financial obligation under any indenture,
mortgage, deed of trust, loan agreement or other agreement or instrument to
which Borrower is a party or by which Borrower or the Property is otherwise
bound, other than (a) obligations incurred in the ordinary course of the
operation of the Property as permitted pursuant to clause (xxiii) of the definition
of “Special Purpose Entity” set forth in Section 1.1
hereof and (b) obligations under the Loan Documents.


4.1.6                     Title.  Borrower has good and indefeasible fee simple title to the real property comprising part
of the Property and good title to the balance of the Property, free and clear
of all Liens whatsoever except the Permitted Encumbrances, such other Liens as
are permitted pursuant to the Loan Documents and the Liens created by the Loan
Documents.  The Permitted Encumbrances in
the aggregate do not materially and adversely affect the value, operation or
use of the Property (as currently used) or Borrower’s ability to repay the
Loan.  To Borrower’s Knowledge, there are
no claims for payment for work, labor or materials affecting the Property which
are due and unpaid under the contracts pursuant to which work or labor was
performed or materials provided which are or may become a Lien prior to, or of
equal priority with, the Liens created by the Loan Documents.


4.1.7                     Solvency;
No Bankruptcy Filing.  Borrower (a) has
not entered into the transaction or executed the Note, this Agreement or any
other Loan Documents with the actual intent to hinder, delay or defraud any
creditor and (b) received reasonably equivalent value in exchange for its
obligations under such Loan Documents. 
Giving effect to the Loan, the fair saleable value of Borrower’s assets
exceeds and will, immediately following the making of the Loan, exceed Borrower’s
total liabilities, including, without limitation, subordinated, unliquidated,
disputed and contingent liabilities.  The
fair saleable value of Borrower’s assets is and will, immediately following the
making of the Loan, be greater than Borrower’s probable liabilities, including
the maximum amount of its contingent liabilities on its debts as such debts
become absolute and matured.  Borrower’s
assets do not and, immediately following the making of the Loan will not,
constitute unreasonably small capital to carry out its business as conducted or
as proposed to be conducted.  Borrower
does not intend to, and does not believe that it will, incur debt and
liabilities (including contingent liabilities and other commitments) beyond its
ability to pay such debt and liabilities as they mature (taking into account
the timing and amounts of cash to be received by Borrower and the amounts to be
payable on or in respect of obligations of Borrower).  Except as expressly disclosed to Lender in
writing, no petition in bankruptcy has been filed against Borrower, or to
Borrower’s Knowledge, or any constituent Person in the last seven (7)
years, and neither Borrower nor, to Borrower’s Knowledge, any constituent
Person in the last seven (7) years has ever made an assignment for the
benefit of creditors or taken 



 36
 






 



advantage of any insolvency act for the
benefit of debtors.  Neither Borrower nor
any of its constituent Persons are contemplating either the filing of a
petition by it under any state or federal bankruptcy or insolvency laws or the
liquidation of all or a major portion of Borrower’s assets or property, and
Borrower has no knowledge of any Person contemplating the filing of any such
petition against it or such constituent Persons.


4.1.8                     Full and
Accurate Disclosure.  To Borrower’s
Knowledge, no statement of fact made by Borrower in this Agreement or in any of
the other Loan Documents contains any untrue statement of a material fact or
omits to state any material fact necessary to make statements contained herein
or therein not misleading.  There is no
material fact presently known to Borrower which has not been disclosed to
Lender which adversely affects the Property or the business, operations or
condition (financial or otherwise) of Borrower.


4.1.9                     No Plan
Assets.  Borrower does not
sponsor, is not obligated to contribute to, and is not itself an “employee
benefit plan,” as defined in Section 3(3) of ERISA, subject to
Title I of ERISA or Section 4975 of the Code, and 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.  In addition, (a) Borrower is not a “governmental
plan” within the meaning of Section 3(32) of ERISA and
(b) transactions by or with Borrower are not subject to any state or other
statute, regulation or other restriction regulating investments of, or
fiduciary obligations with respect to, governmental plans within the meaning of
Section 3(32) of ERISA which is similar to the provisions of Section 406
of ERISA or Section 4975 of the Code and which prohibit or otherwise
restrict the transactions contemplated by this Agreement, including, but not
limited to the exercise by Lender of any of its rights under the Loan
Documents.


4.1.10              Compliance.  To Borrower’s Knowledge, Borrower and the
Property and the use thereof comply in all material respects with all
applicable Legal Requirements, including, without limitation, building and
zoning ordinances and codes.  To Borrower’s
Knowledge, Borrower is not in default or violation of any order, writ,
injunction, decree or demand of any Governmental Authority.  To Borrower’s Knowledge, there has not been
committed by Borrower or, to Borrower’s Knowledge, any other Person in
occupancy of or involved with the operation or use of the Property any act or
omission affording the federal government or any other Governmental Authority
the right of forfeiture as against the Property or any part thereof or any
monies paid in performance of Borrower’s obligations under any of the Loan
Documents.


4.1.11              Financial
Information.  To Borrower’s
Knowledge, all financial data, including, without limitation, the statements of
cash flow and income and operating expense, that have been delivered to Lender
in respect of the Property (i) are true, complete and correct in all
material respects, (ii) accurately represent the financial condition of
Borrower and the Property, as applicable, as of the date of such reports, and
(iii) to the extent prepared or audited by an independent certified public
accounting firm, have been prepared in accordance with accounting principles
reasonably acceptable to Lender, consistently applied throughout the periods
covered, except as disclosed therein. 
Borrower does not have any contingent liabilities, liabilities for
taxes, unusual forward or long-term commitments or unrealized or anticipated
losses from any unfavorable commitments that are known to Borrower and
reasonably likely to have a materially adverse effect on the Property or the
operation thereof for the Permitted Use, except as referred to or reflected in
said financial statements.  Since the date
of such financial statements, there has 



 37
 






 



been no materially adverse change in the
financial condition, operations or business of Borrower from that set forth in
said financial statements.


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


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


4.1.14              Utilities and
Public Access.  The Property has
rights of access to public ways and is served by water, sewer, sanitary sewer
and storm drain facilities adequate to service the Property for its intended
uses.  To Borrower’s Knowledge, all
public utilities necessary or convenient to the full use and enjoyment of the
Property are located either in the public right-of-way abutting the
Property (which are connected so as to serve the Property without passing over
other property) or in recorded easements serving the Property and such
easements are set forth in and insured by the Title Insurance Policy.  All roads necessary for the use of the
Property for its current purposes have been completed and dedicated to public
use and accepted by all Governmental Authorities.


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


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


4.1.17              Assessments.
 There are no pending, or to Borrower’s
Knowledge, proposed special or other assessments for public improvements or
otherwise affecting the Property, nor are there any contemplated improvements
to the Property that may result in such special or other assessments.


4.1.18              Enforceability.  The Loan Documents are not subject to any
right of rescission, set-off, counterclaim or defense by Borrower or
Guarantor, including the defense of usury, nor would the operation of any of
the terms of the Loan Documents, or the exercise of any right thereunder
exercised by Lender in accordance with applicable law, render the Loan
Documents unenforceable, and neither Borrower nor Guarantor has asserted any
right of rescission, set-off, counterclaim or defense with respect thereto.


4.1.19              No Prior
Assignment.  There is no prior
assignment of the Leases or any portion of the Rents by Borrower or any of its
predecessors in interest, given as collateral security which will be
outstanding upon application of the proceeds of the Loan.



 38
 






 



4.1.20              Insurance.  Borrower has obtained and has delivered to
Lender (a) certified copies of the Policies reflecting the insurance coverages,
amounts and other requirements set forth in this Agreement or (b) other
evidence of such matters acceptable to Lender. 
To Borrower’s Knowledge, no claims have been made or are currently
pending, outstanding or otherwise remain unsatisfied under any such Policy, and
neither Borrower nor any other Person, has done, by act or omission, anything
which would impair the coverage of any such Policy.


4.1.21              Use of Property.  The Property is used exclusively for the
Permitted Use.


4.1.22              Certificate of
Occupancy; Licenses.  To Borrower’s
Knowledge, all certifications, permits, licenses and approvals, including
without limitation, certificates of completion and occupancy permits required
to be obtained by Borrower for the legal use, occupancy and operation of the
Property for the Permitted Use have been obtained and are in full force and
effect, and to Borrower’s Knowledge, all certifications, permits, licenses and
approvals, including without limitation, certificates of completion and
occupancy permits required to be obtained by any Person other than Borrower for
the legal use, occupancy and operation of the Property the Permitted Use, have
been obtained and are in full force and effect (all of the foregoing
certifications, permits, licenses and approvals are collectively referred to as
the “Licenses”).  Borrower shall and shall cause all other
Persons to, keep and maintain all licenses necessary for the operation of the
Property for the Permitted Use. To Borrower’s Knowledge, the use being made of
the Property is in conformity with all certificates of occupancy issued for the
Property.


4.1.23              Flood Zone.  To Borrower’s Knowledge, no Improvements on
the Property are located in an area identified by the Federal Emergency
Management Agency as an area having special flood hazards or, if so located,
the flood insurance required pursuant to Section 6.1(a)(i)
is in full force and effect with respect to the Property.


4.1.24              Physical
Condition.  Except as disclosed
in the Physical Conditions Report delivered to Lender in connection with this
Loan, to Borrower’s Knowledge, the Property, including, without limitation, all
buildings, improvements, parking facilities, sidewalks, storm drainage systems,
roofs, plumbing systems, HVAC systems, fire protection systems, electrical
systems, equipment, elevators, exterior sidings and doors, landscaping,
irrigation systems and all structural components, are in good condition, order
and repair in all material respects; there exists no structural or other
material defects or damages in the Property and Borrower has not received
notice from any insurance company or bonding company of any defects or inadequacies
in the Property, or any part thereof, which would adversely affect the
insurability of the same or cause the imposition of extraordinary premiums or
charges thereon or of any termination or threatened termination of any policy
of insurance or bond.


4.1.25              Boundaries.  To Borrower’s Knowledge, all of the
improvements which were included in determining the appraised value of the
Property lie wholly within the boundaries and building restriction lines of the
Property, and no improvements on adjoining properties encroach upon the
Property, and no easements or other encumbrances upon the Property encroach
upon any of the Improvements, so as to affect the value or marketability of the
Property except those which are insured against by the Title Insurance Policy.



 39
 






 



4.1.26              Leases.  The Property is not subject to any leases
other than the Leases described in the Rent Roll attached as Schedule II
hereto and made a part hereof.  Borrower
is the owner and lessor of landlord’s interest in the Leases.  No Person has any possessory interest in the
Property or right to occupy the same except under and pursuant to the
provisions of the Leases.  The current
Leases are in full force and effect and, to Borrower’s Knowledge, there are no
defaults thereunder by either party and there are no conditions that, with the
passage of time or the giving of notice, or both, would constitute defaults
thereunder.  No Rent (including security
deposits) has been paid more than one (1) month in advance of its due
date.  All work to be performed by
Borrower under each Lease has been performed as required and has been accepted
by the applicable tenant, and any payments, free rent, partial rent, rebate of
rent or other payments, credits, allowances or abatements required to be given
by Borrower to any tenant has already been received by such tenant.  There has been no prior sale, transfer or
assignment, hypothecation or pledge of any Lease or of the Rents received
therein which is outstanding.  To
Borrower’s Knowledge, except as set forth on Schedule II, no tenant
listed on Schedule II has assigned
its Lease or sublet all or any portion of the premises demised thereby, no such
tenant holds its leased premises under assignment or sublease, nor does anyone
except such tenant and its employees occupy such leased premises.  No tenant under any Lease has a right or
option pursuant to such Lease or otherwise to purchase all or any part of the
leased premises or the building of which the leased premises are a part.  Except as set forth in Schedule II, no
tenant under any Lease has any right or option for additional space in the
Improvements.  To Borrower’s actual
knowledge based on the Environmental Report delivered to Lender in connection
herewith, no hazardous wastes or toxic substances, as defined by applicable
federal, state or local statutes, rules and regulations, have been disposed,
stored or treated by any tenant under any Lease on or about the leased premises
nor does Borrower have any knowledge of any tenant’s intention to use its
leased premises for any activity which, directly or indirectly, involves the
use, generation, treatment, storage, disposal or transportation of any
petroleum product or any toxic or hazardous chemical, material, substance or
waste, except in either event, in compliance with applicable federal, state or
local statues, rules and regulations.


4.1.27              Survey.  To Borrower’s Knowledge, no Survey for the
Property delivered to Lender in connection with this Agreement fails to reflect
any material matter affecting the Property or the title thereto.


4.1.28              Inventory.  Borrower is the owner of all of the
Equipment, Fixtures and Personal Property (as such terms are defined in the
Mortgage) located on or at the Property and shall not lease any Equipment,
Fixtures or Personal Property other than as permitted hereunder.  All of the Equipment, Fixtures and Personal
Property are sufficient to operate the Property in the manner required
hereunder and in the manner in which it is currently operated.


4.1.29              Filing and
Recording Taxes.  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
currently in effect in connection with the acquisition of the Property to
Borrower have been paid or are simultaneously being paid.  All mortgage, mortgage recording, stamp,
intangible or other similar tax required to be paid by any Person under
applicable Legal Requirements currently in effect in connection with the
execution, delivery, recordation, filing, registration, perfection or
enforcement of any of the Loan Documents, including, without limitation, the
Mortgage, have been paid, and, under current Legal 



 40
 






 



Requirements, the Mortgage is enforceable in
accordance with its terms by Lender (or any subsequent holder thereof).


4.1.30              Special Purpose
Entity/Separateness.  (a)  Until the Debt has been paid in
full, Borrower hereby represents, warrants and covenants that (i) Borrower
is, shall be and shall continue to be a Special Purpose Entity and (ii) Principal
is, shall be and shall continue to be a Special Purpose Entity (Lender
acknowledges that the single purpose provisions contained in the organizational
documents of Borrower and Principal satisfy the requirements of a Special
Purpose Entity).


(b)                                 The
representations, warranties and covenants set forth in Section 4.1.30(a) shall survive for so
long as any amount remains payable to Lender under this Agreement or any other
Loan Document.


(c)                                  All
of the facts stated and all of the assumptions made in the Insolvency Opinion,
including, but not limited to, in any exhibits attached thereto, are true and
correct in all respects.  Borrower has
complied and will comply with, and Principal has complied and Borrower will
cause Principal to comply with, all of the assumptions made with respect to
Borrower and Principal in the Insolvency Opinion.  Borrower will comply with all of the
assumptions made with respect to Borrower and Principal in any subsequent
non-consolidation opinion required to be delivered in connection with the Loan
Documents (an “Additional
Insolvency Opinion”).  Each
Affiliate of Borrower and Principal with respect to which an assumption shall
be made in any Additional Insolvency Opinion will comply with all of the
assumptions made with respect to it in any Additional Insolvency Opinion.


4.1.31              Property
Management Agreement.  The
Property Management Agreement is in full force and effect and, to Borrower’s
Knowledge, there are no defaults thereunder by any party thereto and no event
has occurred that, with the passage of time and/or the giving of notice would
constitute a default thereunder.


4.1.32              Illegal Activity.  To Borrower’s Knowledge, no portion of the
Property has been or will be purchased with proceeds of any illegal activity.


4.1.33              No Change in
Facts or Circumstances; Disclosure. 
All information submitted by Borrower to Lender and in all financial
statements, rent rolls (including the rent roll attached hereto as Schedule
II), reports, certificates and other documents submitted in connection with
the Loan or in satisfaction of the terms thereof and all statements of fact
made by Borrower in this Agreement or in any other Loan Document, are accurate,
complete and correct in all material respects, provided, however, that if such
information was provided to Borrower by non-affiliated third parties, Borrower
represents that such information is, to Borrower’s Knowledge, accurate,
complete and correct in all material respects. 
To Borrower’s Knowledge, there has been no material adverse change in
any condition, fact, circumstance or event that would make any such information
inaccurate, incomplete or otherwise misleading in any material respect or that
otherwise materially and adversely affects or might materially and adversely
affect the Property or the business operations or the financial condition of
Borrower.  To Borrower’s Knowledge,
Borrower has disclosed to Lender all material facts and has not failed to
disclose 



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any material fact that could cause any
Provided Information or representation or warranty made herein to be materially
misleading.


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


4.1.35              Embargoed Person.  As of the Closing Date, to Borrower’s
Knowledge, (a) none of the funds or other assets of Borrower constitute
property of, or are beneficially owned, directly or indirectly, by any
Embargoed Person; (b) no Embargoed Person has any interest of any nature
whatsoever in Borrower with the result that the investment in Borrower (whether
directly or indirectly), is prohibited by law or the Loan is in violation of
law; and (c) none of the funds of Borrower have been derived from any unlawful
activity with the result that the investment in Borrower (whether directly or
indirectly), is prohibited by law or the Loan is in violation of law.


4.1.36              Principal Place
of Business; State of Organization. 
Borrower’s principal place of business as of the date hereof is the
address set forth in the introductory paragraph of this Agreement.  The Borrower is organized under the laws of
the State of Delaware.


4.1.37              Loan to Value.  The maximum principal amount of the Loan does
not exceed one hundred twenty-five percent (125%) of the fair market value of
the Property as set forth on the appraisal of the Property.


4.1.38              Mortgage Taxes.  As of the date hereof, Borrower represents
that it has paid or has deposited with the title company issuing the Title
Insurance Policy funds sufficient to pay all state, county and municipal
recording and all other taxes imposed upon the execution and recordation of the
Mortgage.


Section
4.2                                   Survival
of Representations.  Borrower
agrees that all of the representations and warranties of Borrower set forth in Section 4.1 and elsewhere in this
Agreement and in the other Loan Documents shall survive for so long as any
amount remains owing to Lender under this Agreement or any of the other Loan
Documents by Borrower.  All
representations, warranties, covenants and agreements made in this Agreement or
in the other Loan Documents by Borrower shall be deemed to have been relied upon
by Lender notwithstanding any investigation heretofore or hereafter made by
Lender or on its behalf.


V.                                    BORROWER
COVENANTS


Section
5.1                                   Affirmative
Covenants.  From the Closing Date
and until payment and performance in full of all obligations of Borrower under
the Loan Documents or the earlier release of the Lien of the Mortgage
encumbering the Property (and all related obligations) 



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in accordance with the terms of this
Agreement and the other Loan Documents, Borrower hereby covenants and agrees
with Lender that:


5.1.1                     Existence;
Compliance with Legal Requirements; Insurance.  Borrower shall do or cause to be done all
things necessary to preserve, renew and keep in full force and effect its
existence, rights, licenses, permits and franchises and comply with all Legal
Requirements applicable to it and the Property. 
Borrower shall not commit, nor shall Borrower permit any other Person in
occupancy of or involved with the operation or use of the Property to commit
any act or omission affording the federal government or any state or local
government the right of forfeiture as against the Property or any part thereof
or any monies paid in performance of Borrower’s obligations under any of the
Loan Documents.  Borrower hereby
covenants and agrees not to commit, permit or suffer to exist any act or
omission affording such right of forfeiture. 
Borrower shall at all times maintain, preserve and protect all its
franchises and trade names and preserve all the remainder of its property used
or useful in the conduct of its business and shall keep the Property in good
working order and repair, and from time to time make, or cause to be made, all
reasonably necessary repairs, renewals, replacements, betterments and
improvements thereto, all as more fully provided in the Mortgage.  Borrower shall keep the Property insured at
all times by financially sound and reputable insurers, to such extent and
against such risks, and maintain liability and such other insurance, as is more
fully provided in this Agreement. 
Borrower shall operate the Property in accordance with the terms and
provisions of the O&M Agreement in all material respects.  After prior written notice to Lender,
Borrower, at its own expense, may contest by appropriate legal proceeding
promptly initiated and conducted in good faith and with due diligence, the
validity of any Legal Requirement, the applicability of any Legal Requirement
to Borrower or the Property or any alleged violation of any Legal Requirement,
provided that (i) no Default or Event of Default has occurred and remains
uncured; (ii) intentionally omitted; (iii) such proceeding shall be
permitted under and be conducted in accordance with the provisions of any
instrument to which Borrower is subject and shall not constitute a default
thereunder and such proceeding shall be conducted in accordance with all
applicable statutes, laws and ordinances; (iv) neither the Property nor
any part thereof or interest therein will be in immediate danger of being sold,
forfeited, terminated, cancelled or lost; (v) Borrower shall promptly upon
final determination thereof comply with any such Legal Requirement determined
to be valid or applicable or cure any violation of any Legal Requirement;
(vi) such proceeding shall suspend the enforcement of the contested Legal
Requirement against Borrower or the Property; and (vii) Borrower shall
furnish such security as may be required in the proceeding, or as may be
requested by Lender, to insure compliance with such Legal Requirement, together
with all interest and penalties payable in connection therewith.  Lender may apply any such security, as
necessary to cause compliance with such Legal Requirement at any time when, in
the reasonable judgment of Lender, the validity, applicability or violation of
such Legal Requirement is finally established or the Property (or any part
thereof or interest therein) shall be in danger of being sold, forfeited,
terminated, cancelled or lost.  Provided
no Event of Default then exists, any security deposited with Lender pursuant to
this Section 5.1.1 may be used to satisfy compliance with the related Legal
Requirement with any excess after the satisfaction of same to be returned to
Borrower.


5.1.2                     Taxes and
Other Charges. Borrower shall pay or cause to be paid all Taxes and
Other Charges now or hereafter levied or assessed or imposed against the
Property or any part thereof as the same become due and payable; provided,
however, Borrower’s obligation 



 43
 






 



to directly pay to the appropriate taxing
authority Taxes shall be suspended if Borrower has deposited amounts for the
payment of such Taxes into the Tax and Insurance Escrow Fund pursuant to of Section 7.2 hereof.  Borrower will deliver to Lender receipts for
payment or other evidence satisfactory to Lender that the Taxes and Other
Charges have been so paid or are not then delinquent no later than ten (10)
days prior to the date on which the Taxes and/or Other Charges would otherwise
be delinquent if not paid (provided, however, that Borrower is not required to
furnish such receipts for payment of Taxes in the event that such Taxes have
been paid by Lender pursuant to Section 7.2
hereof).  If Borrower pays or causes to
be paid all Taxes and Other Charges and provides a copy of the receipt
evidencing the payment thereof to Lender, then Lender shall reimburse Borrower,
provided that there are then sufficient proceeds in the Tax and Insurance
Escrow Fund and provided that the Taxes are being paid pursuant to Section
7.2.  Upon written request of Borrower,
if Lender has paid such Taxes pursuant to Section 7.2 hereof, Lender shall
provide Borrower with evidence that such Taxes have been paid.  Borrower shall not suffer and shall promptly
cause to be paid and discharged any Lien or charge whatsoever which may be or
become a Lien or charge against the Property, and shall promptly pay for all
utility services provided to the Property. 
After prior written notice to Lender, Borrower, at its own expense, may
contest by appropriate legal proceeding, promptly initiated and conducted in
good faith and with due diligence, the amount or validity or application in
whole or in part of any Taxes or Other Charges, provided that
(i)  Borrower is permitted to do so under the provisions of any
mortgage or deed of trust superior in lien to the Mortgage; (ii) such proceeding
shall be permitted under and be conducted in accordance with the provisions of
any other instrument to which Borrower is subject and shall not constitute a
default thereunder and such proceeding shall be conducted in accordance with
all applicable statutes, laws and ordinances; (iii) neither the Property
nor any part thereof or interest therein will be in immediate danger of being
sold, forfeited, terminated, cancelled or lost; (iv) Borrower shall
promptly upon final determination thereof pay the amount of any such Taxes or
Other Charges, together with all costs, interest and penalties which may be
payable in connection therewith; (v) such proceeding shall suspend the
collection of such contested Taxes or Other Charges from the Property; and
(vi) Borrower shall furnish such security as may be required in the
proceeding, or as may be reasonably requested by Lender, to insure the payment
of any such Taxes or Other Charges, together with all interest and penalties
thereon.  Lender may pay over any such
cash deposit or part thereof held by Lender to the claimant entitled thereto at
any time when, in the reasonable judgment of Lender, the entitlement of such
claimant is established or the Property (or part thereof or interest therein)
shall be in imminent danger of being sold, forfeited, terminated, cancelled or
lost or there shall be any danger of the Lien of the Mortgage being primed by
any related Lien other than a Lien in respect of Taxes being contested in
accordance with the provisions of this Section 5.1.2.  Provided no Event of Default then exists, any
security deposited with Lender pursuant to this Section 5.1.2 may be used to
satisfy the related Taxes or Other Charges with any excess after the
satisfaction of same to be returned to Borrower.


5.1.3                     Litigation.  Borrower shall give prompt written notice to
Lender upon obtaining information of any litigation or governmental proceedings
pending or threatened against Borrower and/or Guarantor which might materially
adversely affect Borrower’s or Guarantor’s condition (financial or otherwise)
or business or the Property.



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5.1.4                     Access to
Property.  Borrower shall permit
agents, representatives and employees of Lender to inspect the Property or any
part thereof at reasonable hours upon reasonable advance notice, subject to the
rights of Tenants under their respective Leases.


5.1.5                     Notice of
Default.  Borrower shall promptly
advise Lender of the occurrence of any Default or Event of Default of which
Borrower has knowledge.


5.1.6                     Cooperate
in Legal Proceedings.  Borrower
shall cooperate fully with Lender with respect to any proceedings before any
court, board or other Governmental Authority which may in any way affect the
rights of Lender hereunder or any rights obtained by Lender under any of the
other Loan Documents and, in connection therewith, permit Lender, at its
election, to participate in any such proceedings.


5.1.7                     Perform
Loan Documents.  Borrower shall
observe, perform and satisfy all the terms, provisions, covenants and
conditions of, and shall pay when due all costs, fees and expenses to the
extent required under the Loan Documents executed and delivered by, or
applicable to, Borrower.


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


5.1.9                     Further
Assurances. Borrower shall, at Borrower’s sole cost and expense:


(a)                                  furnish
to Lender all instruments, documents, boundary surveys, footing or foundation
surveys, certificates, plans and specifications, appraisals, title and other
insurance reports and agreements, and each and every other document,
certificate, agreement and instrument required to be furnished by Borrower
pursuant to the terms of the Loan Documents or reasonably requested by Lender
in connection therewith;


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


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


5.1.10              Principal Place
of Business, State of Organization. 
Borrower will not cause or permit any change to be made in its name,
identity (including its trade name or names), place of organization or
formation (as set forth in Section 4.1.36 hereof) or Borrower’s corporate, partnership
or other structure unless Borrower shall have first notified Lender in 



 45
 






 



writing of such change at least thirty (30)
days prior to the effective date of such change, and shall have first taken all
action required by Lender for the purpose of perfecting or protecting the lien
and security interests of Lender pursuant to this Agreement and the other Loan
Documents and, in the case of a change in Borrower’s structure, without first
obtaining the prior consent of Lender. 
Upon Lender’s request, Borrower shall execute and deliver additional
financing statements, security agreements and other instruments which may be
necessary to effectively evidence or perfect Lender’s security interest in the
Property as a result of such change of principal place of business or place of
organization.  Borrower’s principal place
of business and chief executive office, and the place where Borrower keeps its
books and records, including recorded data of any kind or nature, regardless of
the medium or recording, including software, writings, plans, specifications
and schematics, has been for the preceding four months (or, if less, the entire
period of the existence of Borrower) and will continue to be the address of
Borrower set forth at the introductory paragraph of this Agreement (unless
Borrower notifies Lender in writing at least thirty (30) days prior to the
date of such change).  Borrower’s
organizational identification number, if any, assigned by the state of
incorporation or organization is correctly set forth in the introductory
paragraph of this Agreement.  Borrower
shall promptly notify Lender of any change in its organizational identification
number.  If Borrower does not now have an
organizational identification number and later obtains one, Borrower promptly
shall notify Lender of such organizational identification number.


5.1.11              Financial
Reporting.  (a)  Borrower will keep and maintain or will cause
to be kept and maintained on a Fiscal Year basis, in accordance with GAAP (or
such other accounting basis reasonably acceptable to Lender), records and
accounts reflecting all of the financial affairs of Borrower and all items of
income and expense in connection with the operation of the Property.  Lender shall have the right from time to time
at all times during normal business hours upon reasonable notice to examine
such books, records and accounts at the office of Borrower or other Person
maintaining such books, records and accounts and to make such copies or
extracts thereof as Lender shall desire. 
After the occurrence and during the continuance of an Event of Default,
Borrower shall pay any costs and expenses incurred by Lender to examine
Borrower’s accounting records with respect to the Property, as Lender shall
reasonably determine to be necessary or appropriate in the protection of Lender’s
interest.


(b)                                 Borrower
will furnish to Lender annually, within one hundred twenty (120) days
following the end of each Fiscal Year of Borrower, certified annual financial
statements prepared in accordance with GAAP (or such other accounting basis
reasonably acceptable to Lender) covering the Property for such Fiscal Year and
containing statements of profit and loss for Borrower and the Property and a
balance sheet for Borrower.  Such statements
shall set forth the financial condition and the results of operations for the
Property for such Fiscal Year, and shall include, but not be limited to,
amounts representing annual Net Cash Flow, Net Operating Income, Gross Income
from Operations and Operating Expenses. 
Such annual financial statements shall be accompanied by (i) a
comparison of the budgeted income and expenses and the actual income and
expenses for the prior Fiscal Year, (ii) an Officer’s Certificate stating
that each such annual financial statement presents fairly the financial
condition and the results of operations of Borrower and the Property being
reported upon and has been prepared in accordance with GAAP (or such other
accounting basis reasonably acceptable to Lender), (iii) a list of
tenants, if any, occupying more than twenty percent (20%) of the total floor
area of the Improvements, (iv) a breakdown showing the year in which each
Lease then in effect 



 46
 






 



expires and the percentage of total floor
area of the Improvements and the percentage of base rent with respect to which
Leases shall expire in each such year, each such percentage to be expressed on
both a per year and cumulative basis, and (v) a schedule reconciling Net
Operating Income to Net Cash Flow (the “Net Cash Flow Schedule”), which
shall itemize all material adjustments made to Net Operating Income to arrive
at Net Cash Flow.  Together with Borrower’s
annual financial statements, Borrower shall furnish to Lender an Officer’s
Certificate certifying to its knowledge as of the date thereof whether there
exists an event or circumstance which constitutes a Default or Event of Default
under the Loan Documents executed and delivered by, or applicable to, Borrower,
and if such Default or Event of Default exists, the nature thereof, the period
of time it has existed and the action then being taken to remedy the same.


(c)                                  Borrower
will furnish, or cause to be furnished, to Lender on or before twenty (20)
days after the end of each calendar quarter the following items, accompanied by
an Officer’s Certificate stating 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 (subject to normal year-end
adjustments) as applicable:  (i) 
quarterly and year-to-date operating statements (including Capital
Expenditures) prepared for each calendar quarter, noting Net Operating Income,
Gross Income from Operations, and Operating Expenses (not including any
contributions to the Replacement Reserve Fund), and other information necessary
and sufficient to fairly represent the financial position and results of
operation of the Property during such calendar quarter, and containing a
comparison of budgeted income and expenses and the actual income and expenses
together with a detailed explanation of any variances of five percent (5%) or
more between budgeted and actual amounts for such periods, all in form
satisfactory to Lender; (ii) a calculation reflecting the annual Debt
Service Coverage Ratio for the immediately preceding twelve (12) month
period as of the last day of such quarter accompanied by an Officer’s
Certificate with respect thereto; and (iii) a Net Cash Flow Schedule.  Prior to a Securitization, Borrower shall
provide the items required pursuant to this Section 5.1.11(c) on a monthly
basis.


(d)                                 For
the partial year period commencing on the Closing Date, and for each Fiscal
Year thereafter, Borrower shall submit to Lender an Annual Budget not later
than thirty (30) days after the commencement of such period or Fiscal Year in form
reasonably satisfactory to Lender.  The
Annual Budget shall be subject to Lender’s written approval if a Cash Sweep
Period exists (each such Annual Budget, an “Approved Annual Budget”).  In the event that Lender objects to a
proposed Annual Budget submitted by Borrower during a Cash Sweep Period, Lender
shall advise Borrower of such objections within fifteen (15) days after
receipt thereof (and deliver to Borrower a reasonably detailed description of
such objections) and Borrower shall promptly revise such Annual Budget and
resubmit the same to Lender.  Lender
shall advise Borrower of any objections to such revised Annual Budget within
ten (10) days after receipt thereof (and deliver to Borrower a reasonably
detailed description of such objections) and Borrower shall promptly revise the
same in accordance with the process described in this subsection until Lender
approves the Annual Budget.  Until such
time that Lender approves a proposed Annual Budget, the most recently Approved
Annual Budget shall apply; provided that, such Approved Annual Budget shall be
adjusted to reflect actual increases in Taxes, Insurance Premiums and Other
Charges.



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(e)                                  In
the event that a Cash Sweep Period Exists and Borrower must incur an
extraordinary operating expense or capital expense not set forth in the
Approved Annual Budget (each an “Extraordinary Expense”), then Borrower shall promptly
deliver to Lender a reasonably detailed explanation of such proposed
Extraordinary Expense for Lender’s approval.


(f)                                    Any
reports, statements or other information required to be delivered under this
Agreement shall be delivered (i) in paper form, (ii) on a diskette,
and (iii) if requested by Lender and within the capabilities of Borrower’s
data systems without change or modification thereto, in electronic form and
prepared using Microsoft Word for Windows or WordPerfect for Windows files
(which files may be prepared using a spreadsheet program and saved as word
processing files).  Borrower agrees that Lender
may disclose information regarding the Property and Borrower that is provided
to Lender pursuant to this Section 5.1.11(f)
in connection with the Securitization to such parties requesting such
information in connection with such Securitization.


5.1.12              Business and
Operations.  Borrower will
continue to engage in the businesses presently conducted by it as and to the
extent the same are necessary for the ownership, maintenance, management and
operation of the Property.  Borrower will
qualify to do business and will remain in good standing under the laws of the
jurisdiction as and to the extent the same are required for the ownership,
maintenance, management and operation of the Property.  Borrower shall at all times during the term
of the Loan, continue to own all of the Equipment, Fixtures and Personal
Property which are necessary to operate the Property in the manner required
hereunder and in the manner in which it is currently operated.


5.1.13              Title to the
Property.  Borrower will warrant
and defend (a) the title to the Property and every part thereof, subject
only to Liens permitted hereunder (including Permitted Encumbrances) and
(b) the validity and priority of the Lien of the Mortgage and the
Assignment of Leases on the Property, subject only to Liens permitted hereunder
(including Permitted Encumbrances), in each case against the claims of all
Persons whomsoever.  Borrower shall
reimburse Lender for any losses, costs, damages or expenses (including
reasonable attorneys’ fees and court costs) incurred by Lender if an interest
in the Property, other than as permitted hereunder, is claimed by another
Person.


5.1.14              Costs of
Enforcement.  In the event
(a) that the Mortgage encumbering the Property is foreclosed in whole or
in part or that the Mortgage is put into the hands of an attorney for
collection, suit, action or foreclosure, (b) of the foreclosure of any
mortgage prior to or subsequent to the Mortgage encumbering the Property in
which proceeding Lender is made a party, or (c) of the bankruptcy,
insolvency, rehabilitation or other similar proceeding in respect of Borrower
or any of its constituent Persons or an assignment by Borrower or any of its
constituent Persons for the benefit of its creditors, Borrower, its successors
or assigns, shall be chargeable with and agrees to pay all costs of collection
and defense, including reasonable attorneys’ fees and costs, incurred by Lender
or Borrower in connection therewith and in connection with any appellate
proceeding or post-judgment action involved therein, together with all
required service or use taxes.


5.1.15              Estoppel
Statement.  (a)  After request by Lender, Borrower shall
furnish to Lender within ten (10) days a statement, duly acknowledged and
certified, setting forth (i)  the amount of the original principal amount
of the Note, (ii) the unpaid principal amount of the Note, 



 48
 






 



(iii) the Interest Rate of the Note,
(iv) the date installments of interest and/or principal were last paid,
(v) any known offsets or defenses to the payment of the Debt, if any, and
(vi) that the Note, this Agreement, the Mortgage and the other Loan
Documents are valid, legal and binding obligations and have not been modified
or if modified, giving particulars of such modification.


(b)                                 Borrower
shall use commercially reasonable efforts to deliver to Lender upon request,
tenant estoppel certificates from each commercial tenant leasing space at the
Property in form and substance reasonably satisfactory to Lender provided that
Borrower shall not be required to deliver such certificates more frequently
than one (1) time in any calendar year.


(c)                                  Within
thirty (30) days of request by Borrower, Lender shall deliver to Borrower a
statement setting forth the items described at (a)(i), (ii), (iii) and (iv) of
this Section 5.1.15.


5.1.16              Loan Proceeds.  Borrower shall use the proceeds of the Loan
received by it on the Closing Date only for the purposes set forth in Section 2.1.4.


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


5.1.18              Confirmation of
Representations.  Borrower shall
deliver, in connection with any Securitization, (a) one (1) or more
Officer’s Certificates certifying as to the accuracy (or disclosing any inaccuracies,
as applicable) of all representations made by Borrower in the Loan Documents as
of the date of the closing of such Securitization, and (b) certificates of
the relevant Governmental Authorities in all relevant jurisdictions indicating
the good standing and qualification of Borrower, Principal and Guarantor as of
the date of the Securitization.


5.1.19              No Joint
Assessment. Borrower shall not suffer, permit or initiate the joint
assessment of the Property (a) with any other real property constituting a
tax lot separate from the Property, and (b) which constitutes real
property 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 such real property portion of the Property.


5.1.20              Leasing Matters.
Any Leases with respect to the Property written after the Closing Date, for
more than the Relevant Leasing Threshold square footage shall be subject to the
prior written approval of Lender, which approval may be given or withheld in
the sole discretion of Lender.  Lender
shall approve or disapprove any such Lease within ten (10) Business Days of
Lender’s receipt of a final execution draft of such Lease (including all
exhibits, schedules, supplements, addenda or other agreements relating thereto)
and a written notice from Borrower requesting Lender’s approval to such Lease,
and such Lease shall be deemed approved, if Lender does not disapprove such
Lease within said ten (10) Business Day period 



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provided such written notice conspicuously
states, in large bold type, that “PURSUANT TO SECTION 5.1.20 OF THE LOAN
AGREEMENT, THE LEASE SHALL BE DEEMED APPROVED IF LENDER DOES NOT RESPOND TO THE
CONTRARY WITHIN TEN (10) BUSINESS DAYS OF LENDER’S RECEIPT OF SUCH LEASE AND
WRITTEN NOTICE”, provided that in no event shall Lender’s consent be deemed
given with respect to any Lease for 50,000 or more rentable square feet.  Borrower shall furnish Lender with executed
copies of all Leases.  All renewals of
Leases and all proposed Leases shall provide for rental rates comparable to
existing local market rates (unless such rental rates are otherwise set forth
in the Leases executed prior to the Closing Date).  All proposed Leases shall be on commercially
reasonable terms and shall not contain any terms which would materially impair
Lender’s rights under the Loan Documents. 
All Leases executed after the Closing Date shall provide that they are
subordinate to the Mortgage encumbering the Property and that the tenant
thereunder agrees to attorn to Lender or any purchaser at a sale by foreclosure
or power of sale.  Borrower
(i) shall observe and perform the obligations imposed upon the lessor
under the Leases in a commercially reasonable manner; (ii) shall enforce
the terms, covenants and conditions contained in the Leases upon the part of
the tenant thereunder to be observed or performed in a commercially reasonable
manner and in a manner not to impair the value of the Property involved except
that no termination by Borrower or acceptance of surrender by a tenant of any
Lease shall be permitted unless by reason of a tenant default and then only in
a commercially reasonable manner to preserve and protect the Property;
provided, however, that no such termination or surrender of any Lease covering
more than the Relevant Leasing Threshold will be permitted without the written
consent of Lender which consent may be withheld in the reasonable discretion of
Lender; (iii) shall not collect any of the rents more than one (1) month
in advance (other than security deposits); (iv) shall not execute any
other assignment of lessor’s interest in the Leases or the Rents (except as
contemplated by the Loan Documents); (v) shall not alter, modify or change
the terms of the Leases in a manner inconsistent with the provisions of the
Loan Documents without the prior written consent of Lender, which consent may
be withheld in the sole discretion of Lender; and (vi) shall execute and deliver
at the request of Lender all such further assurances, confirmations and
assignments in connection with the Leases as Lender shall from time to time
reasonably require.  Notwithstanding
anything to the contrary contained herein, Borrower shall not enter into a
lease of all or substantially all of the Property without Lender’s prior
written consent.  Notwithstanding the
foregoing, Borrower may, without the prior written consent of Lender, terminate
any Lease which demises less than the Relevant Leasing Threshold under any of
the following circumstances: (i) the tenant under said Lease is in default
beyond any applicable grace and cure period, and Borrower has the right to
terminate such Lease; (ii) such termination is permitted by the terms of the
Lease in question and Borrower has secured an obligation from a third party to
lease the space under the Lease to be terminated at a rental equal to or higher
than the rental due under the Lease to be terminated; and (iii) if the tenant
under the Lease to be terminated, has executed a right under said Lease to
terminate its lease upon payment of a termination fee to Borrower, and has in
fact terminated its lease and paid said fee, Borrower may accept said
termination.


5.1.21              Alterations.
Subject to the rights of tenants to make alterations pursuant to the terms of
their respective leases, Borrower shall obtain Lender’s prior written consent
to any alterations to any Improvements, which consent shall not be unreasonably
withheld or delayed except with respect to alterations that may have a material
adverse effect on Borrower’s financial condition, the value of the Property or
the Net Operating Income. 
Notwithstanding the 



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foregoing, Lender’s consent shall not be
required in connection with any alterations that will not have a material
adverse effect on Borrower’s financial condition, the value of the Property or
the Net Operating Income, provided that such alterations are made in connection
with (a) tenant improvement work performed pursuant to the terms of any
Lease executed on or before the Closing Date, (b) tenant improvement work
performed pursuant to the terms and provisions of a Lease and not adversely
affecting any structural component of any Improvements, any utility or HVAC
system contained in any Improvements or the exterior of any building
constituting a part of any Improvements, (c) alterations performed in
connection with the Restoration of the Property after the occurrence of a
Casualty or Condemnation in accordance with the terms and provisions of this
Agreement or (d) any structural alteration which costs less than $150,000.00 in
the aggregate for all components thereof which constitute such alteration or
any non-structural alteration which costs less than $300,000.00 in the
aggregate for all components thereof which constitute such alteration.  If the total unpaid amounts due and payable
with respect to alterations to the Improvements at the Property (other than
such amounts to be paid or reimbursed by tenants under the Leases) shall at any
time equal or exceed $300,000.00 (and such amount is not being paid from any
Reserve Funds) (the “Threshold Amount”), Borrower, upon Lender’s request, shall
promptly deliver to Lender as security for the payment of such amounts and as
additional security for Borrower’s obligations under the Loan Documents any of
the following:  (A) cash,
(B) U.S. Obligations, (C) other securities having a rating acceptable
to Lender and that the applicable Rating Agencies have confirmed in writing
will not, in and of itself, result in a downgrade, withdrawal or qualification
of the then current ratings assigned to any Securities or any class thereof in
connection with any Securitization or (D) a completion and performance
bond or an irrevocable letter of credit (payable on sight draft only) issued by
a financial institution having a rating by S&P of not less than “A-1+” if
the term of such bond or letter of credit is no longer than three (3)
months or, if such term is in excess of three (3) months, issued by a
financial institution having a rating that is acceptable to Lender and that the
applicable Rating Agencies have confirmed in writing will not, in and of
itself, result in a downgrade, withdrawal or qualification of the then current
ratings assigned to any Securities or class thereof in connection with any
Securitization.  Such security shall be
in an amount equal to the excess of the total unpaid amounts with respect to
alterations to the Improvements on the Property (other than such amounts to be paid
or reimbursed by tenants under the Leases) over the Threshold Amount and, if
cash, U.S. Obligations or other securities, may be applied from time to time,
at the option of Borrower to pay for such alterations.  At the option of Lender, following the occurrence
and during the continuance of an Event of Default, Lender may terminate any of
the alterations and use the deposit to restore the Property to the extent
necessary to prevent any material adverse effect on the value of the Property.


5.1.22              Operation of
Property. (a) Borrower shall cause
the Property to be operated, in all material respects, in accordance with the
Property Management Agreement (or Replacement Management Agreement) as
applicable.  In the event that the
Property Management Agreement expires or is terminated (without limiting any
obligation of Borrower to obtain Lender’s consent to any termination or
modification of the Property Management Agreement in accordance with the terms
and provisions of this Agreement), Borrower shall promptly enter into a
Replacement Management Agreement with Property Manager or another Qualifying
Property Manager, as applicable.



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 (b)                              Borrower shall:  (i) promptly
perform and/or observe, in all material respects, all of the covenants and
agreements required to be performed and observed by it under the Property
Management Agreement and do all
things necessary to preserve and to keep unimpaired its material rights
thereunder; (ii) promptly notify Lender of any material default under the
Property Management Agreement of which it is aware; and (iii) enforce the performance
and observance of all of the covenants and agreements required to be performed
and/or observed by Property Manager under the Property Management Agreement, in
a commercially reasonable manner.


5.1.23              Supplemental
Mortgage Affidavits. As of the date hereof, Borrower represents that it
has paid or has deposited with the title company issuing the Title Insurance
Policy funds sufficient to pay all state, county and municipal recording and
all other taxes imposed upon the execution and recordation of the
Mortgage.  If at any time Lender
determines, based on applicable law, that Lender is not being afforded the
maximum amount of security available from the Property as a direct or indirect
result of applicable taxes not having been paid with respect to the Property,
Borrower agrees that Borrower will execute, acknowledge and deliver to Lender,
within fifteen (15) days of Lender’s request, supplemental affidavits
increasing the amount of the Debt attributable to the Property for which all
applicable taxes have been paid to an amount determined by Lender to be equal
to the lesser of (a) the greater of the fair market value of the Property
(i) as of the date hereof and (ii) as of the date such supplemental
affidavits are to be delivered to Lender, and (b) the amount of the Debt
attributable to the Property, and Borrower shall, on demand, pay any additional
taxes.


Section
5.2                                   Negative
Covenants.  From the Closing Date
until payment and performance in full of all obligations of Borrower under the
Loan Documents or the earlier release of the Lien of the Mortgage encumbering
the Property in accordance with the terms of this Agreement and the other Loan
Documents, Borrower covenants and agrees with Lender that it will not do,
directly or indirectly, any of the following:


5.2.1                     Operation
of Property.  Borrower shall not,
without Lender’s prior written consent (which consent shall not be unreasonably
withheld): (i) surrender, terminate or cancel the Property Management
Agreement; provided, that Borrower may, without Lender’s consent, replace the
Property Manager so long as the replacement manager is a Qualifying Property
Manager pursuant to a Replacement Management Agreement; (ii) reduce or
consent to the reduction of the term of the Property Management Agreement;
(iii) increase or consent to the increase of the amount of any charges
under the Property Management Agreement; or (iv) otherwise modify, change,
supplement, alter or amend, or waive or release any of its rights and remedies
under, the Property Management Agreement in
any material respect.  Lender agrees that
its consent pursuant to this Section 5.2.1(a) will not be
unreasonably withheld, delayed or conditioned provided that in connection with
any replacement of the Property Manager the Person chosen by Borrower as the
replacement Property Manager is a Qualifying Property Manager, and further
agrees that any such written request for consent that includes evidence that
the replacement Property Manager is a Qualifying Property Manager, shall be
approved or disapproved within ten (10) Business Days of Lender’s receipt,
provided such written request from Borrower shall conspicuously state, in large
bold type, that “PURSUANT TO SECTION 5.2.1 OF
THE LOAN AGREEMENT, A RESPONSE IS REQUIRED WITHIN TEN (10) BUSINESS DAYS OF
LENDER’S RECEIPT OF THIS WRITTEN 



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NOTICE”.  If Lender fails to disapprove any such matter
within such period, Borrower shall provide a second written notice requesting
approval, which written notice shall conspicuously state, in large bold type,
that “PURSUANT TO SECTION 5.2.1 OF THE LOAN
AGREEMENT, THE MATTER DESCRIBED HEREIN SHALL BE DEEMED APPROVED IF LENDER DOES
NOT RESPOND TO THE CONTRARY WITHIN FIVE (5) BUSINESS DAYS OF LENDER’S RECEIPT
OF THIS WRITTEN NOTICE”. 
Thereafter, if Lender does not disapprove such matter within said five
(5) Business Day period such matter shall be deemed approved.


5.2.2                     Liens.  Borrower shall not, without the prior written
consent of Lender, create, incur, assume or suffer to exist any Lien on any
portion of the Property or permit any such action to be taken, except:


(i)                              Permitted Encumbrances;


(ii)                           Liens created by or
permitted pursuant to the Loan Documents; and


(iii)                        Liens for Taxes or Other
Charges not yet delinquent (or that Borrower is contesting in accordance with
the terms of Section 5.1.2 hereof).


5.2.3                     Dissolution.  Borrower shall not (a) engage in any
dissolution, liquidation or consolidation or merger with or into any other
business entity, (b) engage in any business activity not related to the
ownership and operation of the Property,
(c) transfer, lease or sell, in one transaction or any combination of
transactions, the assets or all or substantially all of the properties or
assets of Borrower except to the extent permitted by the Loan Documents,
(d) modify, amend, waive or terminate its organizational documents or its
qualification and good standing in any jurisdiction in which it is organized or
the Property is located or (e) cause the Principal to (i) dissolve,
wind up or liquidate or take any action, or omit to take an action, as a result
of which the Principal would be dissolved, wound up or liquidated in whole or
in part, or (ii) amend, modify, waive or terminate the certificate of
formation or operating agreement of the Principal, in each case, without
obtaining the prior written consent of Lender or Lender’s designee.


5.2.4                     Change in
Business.  Borrower 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.  Nothing contained in this Section 5.2.4 is intended to expand
the rights of Borrower contained in Section 5.2.10(d)
hereof.


5.2.5                     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.


5.2.6                     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 



 53
 






 



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.


5.2.7                     Intentionally
Omitted.


5.2.8                     Intentionally
Omitted.


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


(b)                                 During
the term of the Loan or any obligation or right hereunder, Borrower shall not
be a Plan and none of the assets of Borrower shall constitute of a Plan within
the meaning of Section 29C.F.R. §2510.3-101, as modified by Section
3(42) of ERISA.  Borrower further
covenants and agrees to deliver to Lender such certifications or other evidence
from time to time throughout the term of the Loan, as requested by Lender in
its sole discretion, that (i) Borrower is not a Plan, or a “governmental
plan” within the meaning of Section 3(32) of ERISA; (ii) Borrower is
not subject to any state statute regulating investments of, or fiduciary
obligations with respect to, governmental plans; and (iii) one or more of
the following circumstances is true:


(i)                              Equity interests in
Borrower are publicly offered securities, within the meaning of 29 C.F.R.
§2510.3-101(b)(2);


(ii)                           None of the assets of the
Borrower are, with the application of 29 C.F.R. §2510.3-101, as modified
by Section 3(42) of ERISA, regarded as assets of any Plan; or


(iii)                        Borrower qualifies as an “operating
company” or a “real estate operating company” within the meaning of 29 C.F.R.
§2510.3-101(c) or (e).


(c)                                  “Plan”
shall mean an employee benefit plan (as defined in Section 3(3) of ERISA)
subject to Title I of ERISA or a plan or another arrangement (within the
meaning of Section 4975 of the Internal Revenue Code of 1986, as amended, and
the related Treasury Department regulations, including temporary regulations),
subject to Section 4975 of the Code.


5.2.10              Transfers.  (a) Borrower acknowledges that Lender has
examined and relied on the experience of Borrower and its stockholders, general
partners, members, principals and (if Borrower is a trust) beneficial owners in
owning and operating properties such as the Property in agreeing to make the
Loan, and will continue to rely on Borrower’s ownership of the Property as a
means of maintaining the value of the Property as security for repayment of the
Debt and the performance of the Other Obligations.  Borrower acknowledges that Lender has a valid
interest in maintaining the value of the Property so as to ensure that, should
Borrower default in the repayment of the Debt or the performance of the Other
Obligations, Lender can recover the Debt by a sale of the Property.


(b)                                 Without
the prior written consent of Lender, and except to the extent otherwise set
forth in this Section 5.2.10,
Borrower shall not, and shall not permit any Restricted Party do any of the
following (collectively, a “Transfer”): (i) sell, convey, mortgage, grant, 



 54
 






 



bargain, encumber, pledge, assign, grant
options with respect to, or otherwise transfer or dispose of (directly or
indirectly, voluntarily or involuntarily, by operation of law or otherwise, and
whether or not for consideration or of record) the Property or any part thereof
or any legal or beneficial interest therein or (ii) permit a Sale or
Pledge of an interest in any Restricted Party, other than pursuant to Leases of
space in the Improvements to tenants in accordance with the provisions of Section 5.1.20.


(c)                                  A
Transfer shall include, but not be limited to, (i) an installment sales
agreement wherein Borrower agrees to sell the Property or any part thereof for
a price to be paid in installments; (ii) an agreement by Borrower leasing
all or a substantial part of the Property for other than actual occupancy by a
space tenant thereunder or a sale, assignment or other transfer of, or the
grant of a security interest in, Borrower’s right, title and interest in and to
any Leases or any Rents; (iii) if a Restricted Party is a corporation, any
merger, consolidation or Sale or Pledge of such corporation’s stock or the
creation or issuance of new stock; (iv) if a Restricted Party is a limited
or general partnership or joint venture, any merger or consolidation or the
change, removal, resignation or addition of a general partner or the Sale or
Pledge of the partnership interest of any general partner or any profits or
proceeds relating to such partnership interest, or the Sale or Pledge of
limited partnership interests or any profits or proceeds relating to such
limited partnership interest or the creation or issuance of new limited
partnership interests; (v) if a Restricted Party is a limited liability
company, any merger or consolidation or the change, removal, resignation or
addition of a managing member or non-member manager (or if no managing
member, any member) or the Sale or Pledge of the membership interest of a
managing member (or if no managing member, any member) or any profits or
proceeds relating to such membership interest, or the Sale or Pledge of non-managing
membership interests or the creation or issuance of new non-managing
membership interests; (vi) if a Restricted Party is a trust or nominee
trust, any merger, consolidation or the Sale or Pledge of the legal or
beneficial interest in a Restricted Party or the creation or issuance of new
legal or beneficial interests; or (vii) the removal or the resignation of
the managing agent (including, without limitation, an Affiliated Manager) other
than in accordance with Section 5.1.22
hereof.


(d)                                 Notwithstanding
the provisions of this Section 5.2.10,
Lender’s consent shall not be required in connection with (i) one or a series
of Transfers, of up to forty-nine percent (49%) of the stock in a Restricted
Party, the limited partnership interests or non-managing membership interests
(as the case may be) in a Restricted Party (ii) any transfer to Behringer
Harvard Funds or an Affiliate of Behringer Harvard Funds (iii) any transfer
of an equity interest in Behringer Harvard Funds or any Affiliate thereof or
the issuance of additional equity interests in Behringer Holdings or any
Affiliate thereof or (iv) any transfer of a direct or indirect equity interest
in Borrower to a newly formed entity formed to be the Mezzanine Borrower
pursuant to Section 5.2.10(h) below; provided, however, no such Transfer
shall result in the change of Control in Borrower, Guarantor or Property
Manager.  If after giving effect to any
such Transfer, more than forty-nine percent (49%) in the aggregate of direct or
indirect interests in a Restricted Party are owned by any Person and its
Affiliates that owned less than forty-nine percent (49%) direct or indirect
interest in such Restricted Party as of the Closing Date, Borrower shall, no
less than thirty (30) days prior to the effective date of any such Transfer,
deliver to Lender an Additional Insolvency Opinion acceptable to Lender and the
Rating Agencies.  In addition, as a
condition to any Transfer pursuant to this Section 5.2.10(d), at 



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all times, Guarantor must continue to Control
Borrower and own, directly or indirectly, at least a 51% legal and beneficial
interest in Borrower.


(e)                                  No
consent to any assumption of the Loan shall occur on or before the first (1st) anniversary of the first (1st) Payment Date. Thereafter,
Lender’s consent to Transfers of the Property shall not be unreasonably
withheld provided that Lender receives sixty (60) days prior written notice of
such Transfer and no Event of Default has occurred and is continuing, and
further provided that the following additional requirements are satisfied:


(i)                              Borrower shall pay Lender
a transfer fee equal to one-quarter of one percent (0.25%) of the outstanding
principal balance of the Loan at the time of the first such transfer and a
transfer fee equal to one-half of one percent (0.5%) of the outstanding
principal balance of the Loan at the time of each subsequent transfer (provided
that no transfer fee shall be payable in connection with any transfer to
Behringer Harvard Funds or an Affiliate of Behringer Harvard Funds);


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


(iii)                        The proposed transferee (the “Transferee”)
or Transferee’s Principals must have demonstrated expertise in owning and
operating properties similar in location, size, class and operation to the
Property, which expertise shall be reasonably determined by Lender;


(iv)                       Transferee and Transferee’s
Principals shall, as of the date of such transfer, have an aggregate net worth
and liquidity reasonably acceptable to Lender;


(v)                          Transferee, Transferee’s
Principals and all other entities which may be owned or Controlled directly or
indirectly by Transferee’s Principals (“Related Entities”) must not have
been party to any bankruptcy proceedings, voluntary or involuntary, made an
assignment for the benefit of creditors or taken advantage of any insolvency
act, or any act for the benefit of debtors within seven (7) years prior to
the date of the proposed Transfer;


(vi)                       Transferee shall assume all of
the obligations of Borrower under the Loan Documents in a manner satisfactory
to Lender in all respects, including, without limitation, by entering into an
assumption agreement in form and substance satisfactory to Lender;


(vii)                    There shall be no material
litigation or regulatory action pending or threatened against Transferee,
Transferee’s Principals or Related Entities which is not reasonably acceptable
to Lender;



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(viii)                 Transferee, Transferee’s Principals
and Related Entities shall not have defaulted under its or their obligations
with respect to any other Indebtedness in a manner which is not reasonably
acceptable to Lender;


(ix)                         Transferee and Transferee’s
Principals must be able to satisfy all the representations and covenants set
forth in Sections 4.1.30 and 5.2.9 of this Agreement, no Default or
Event of Default shall otherwise occur as a result of such Transfer, and
Transferee and Transferee’s Principals shall deliver (A) all
organizational documentation reasonably requested by Lender, which shall be
reasonably satisfactory to Lender and (B) all certificates, agreements and
covenants reasonably required by Lender;


(x)                            Transferee shall be
approved by the Rating Agencies selected by Lender, which approval, if required
by Lender, shall take the form of a confirmation in writing from such Rating
Agencies to the effect that such Transfer will not result in a requalification,
reduction, downgrade or withdrawal of the ratings in effect immediately prior
to such assumption or transfer for the Securities or any class thereof issued
in connection with a Securitization which are then outstanding;


(xi)                         Borrower or Transferee, at its
sole cost and expense, shall deliver to Lender an Additional Insolvency Opinion
reflecting such Transfer satisfactory in form and substance to Lender;


(xii)                      Prior to any release of
Guarantor, one (1) or more substitute guarantors reasonably acceptable to
Lender shall have assumed all of the liabilities and obligations of Guarantor
under the Guaranty and Environmental Indemnity and any Guaranty of Payment
executed by Guarantor or execute a replacement guaranty, environmental
indemnity and Guaranty of Payment reasonably satisfactory to Lender (provided
that with respect to a Guaranty of Payment any substitute guarantor shall be
subject to the net worth requirement set forth in Section 7.5.3 hereof unless
otherwise agreed to by Lender in its sole discretion);


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


(xiv)                  The Property shall be managed by a
Qualifying Property Manager pursuant to a Replacement Management Agreement.


Immediately upon a Transfer to such Transferee and the satisfaction of
all of the above requirements, the named Borrower and Guarantor herein shall be
released from all liability under 



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this Agreement, the Note, the Mortgage and the other Loan Documents
accruing after such Transfer.  The
foregoing release shall be effective upon the date of such Transfer, but Lender
agrees to provide written evidence thereof reasonably requested by Borrower.


(f)                                    Borrower,
without the consent of Lender, may grant easements, restrictions, covenants,
reservations and rights of way in the ordinary course of business for water and
sewer lines, telephone and telegraph lines, electric lines and other utilities
or for other similar purposes, provided that no transfer, conveyance or
encumbrance shall materially impair the utility and operation of the Property
or materially adversely affect the value of the Property or the Net Operating
Income of the Property.  If Borrower
shall receive any consideration in connection with any of said described
transfers or conveyances, Borrower shall have the right to use any such
proceeds in connection with any alterations performed in connection therewith,
or required thereby.  In connection with
any transfer, conveyance or encumbrance permitted above, the Lender shall
execute and deliver any instrument reasonably necessary or appropriate to
evidence its consent to said action or to subordinate the Lien of the related
Mortgage to such easements, restrictions, covenants, reservations and rights of
way or other similar grants upon receipt by the Lender of: (A) a copy of the
instrument of transfer; and (B) an Officer’s Certificate stating with respect
to any transfer described above, that such transfer does not materially impair
the utility and operation of the Property or materially reduce the value of the
Property or the Net Operating Income of the Property.


(g)                                 Lender
shall not be required to demonstrate any actual impairment of its security or
any increased risk of default hereunder in order to declare the Debt
immediately due and payable upon Borrower’s Transfer without Lender’s
consent.  This provision shall apply to
every Transfer regardless of whether voluntary or not, or whether or not Lender
has consented to any previous Transfer.


(h)                                 Notwithstanding
the provisions of this Section 5.2.10,
Lender’s consent shall not be required in connection with Transfers in the
nature of a pledge by a Mezzanine Borrower (as defined below) of its direct
and/or indirect equity interest in Borrower (but not of any direct interest in
the Property) to a Permitted Mezzanine Lender (defined below) as security for a
loan to such Mezzanine Borrower (a “Mezzanine Loan”) provided that the
following terms and conditions are satisfied:


(i)                              no Event of Default shall
then exist;


(ii)                           Lender shall have received
at least thirty (30) and no more than sixty (60) days’ prior written notice of
the proposed Mezzanine Loan;


(iii)                        the aggregate amount of the
Loan and the Mezzanine Loan (as of the effective date of the Mezzanine Loan)
shall not exceed eighty percent (80%) of the fair market value of the Property
as determined by an independent MAI appraisal dated not more than ninety (90)
days prior to the effective date of the Mezzanine Loan and otherwise acceptable
to Lender;


(iv)                       the aggregate Debt Service
Coverage Ratio of the Loan and such Mezzanine Loan is at least 1.20 to 1.0;



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(v)                          Borrower shall not be
obligated to repay the Mezzanine Loan nor incur any obligation or liability to the
Permitted Mezzanine Lender or any other Person with respect to the Mezzanine
Loan, and the terms and conditions of the Mezzanine Loan, the collateral
pledged as security therefor, and the documents evidencing the Mezzanine Loan,
shall be satisfactory to Lender;


(vi)                       a new Single Purpose Entity
shall have been formed that will directly or indirectly own 100% of the Equity
Interests in Borrower and Principal (the “Mezzanine Borrower”), the
organizational documents of Borrower, such Mezzanine Borrower, and their
respective constituent owners shall be satisfactory to Lender, and Borrower and
such Mezzanine Borrower shall otherwise satisfy all applicable Rating Agency
criteria for single-purpose entities, bankruptcy remoteness, and mezzanine
borrowers;


(vii)                    the Permitted Mezzanine Lender
shall have executed and delivered to Lender an intercreditor agreement
acceptable to Lender in its sole and absolute discretion, provided that Lender’s
approval of such intercreditor agreement shall not be unreasonably withheld,
conditioned or delayed so long as it is otherwise in conformance with Rating
Agency approved forms for intercreditor agreements (except that Lender shall
not be required to use any Rating Agency approved form of intercreditor
agreement if the Permitted Mezzanine Lender is an Affiliate of Borrower);


(viii)                 Borrower, Principal and Guarantor
shall have executed such additional Loan Documents and such amendments to and
reaffirmations of the existing Loan Documents as Lender may require, including
entering into a cash management arrangement with Lender (or modifying any
existing cash management requirement) to provide for, among other things, the
payment of Lender-approved operating expenses and capital expenses prior to the
payment of debt service on the Mezzanine Loan;


(ix)                         the lender under the Mezzanine
Loan shall be either (A) any person or entity satisfying the definition of “Qualified
Transferee” under clause (ii) of the definition of “Qualified Transferee” set
forth in the form Intercreditor Agreement attached as Appendix VI to the
Standard & Poor’s U.S. CMBS Legal and Structural Finance Criteria published
May 1, 2003, based on the default values for minimum total assets and
capital/statutory surplus or shareholders’ equity included in the definition of
“Eligibility Requirements” in such publication or (B) a third-party
institutional lender, individual investor or Affiliate of Borrower that in any
such case is acceptable to Lender (either of the foregoing, a “Permitted
Mezzanine Lender”); and


(x)                            Borrower shall have paid or
reimbursed Lender for all of its costs and expenses (including reasonable
attorneys’ fees and disbursements) incurred in connection with the foregoing.



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VI.                                 INSURANCE; CASUALTY; CONDEMNATION


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


(i)                              comprehensive all risk
insurance (“Special
Form”) including, but not limited to, loss caused by any type of
windstorm or hail on the Improvements and the Personal Property, (A) in an
amount equal to one hundred percent (100%) of the “Full Replacement Cost,” which
for purposes of this Agreement shall mean actual replacement value (exclusive
of costs of excavations, foundations, underground utilities and footings) with
a waiver of depreciation; (B) containing an agreed amount endorsement with
respect to the Improvements and Personal Property waiving all co-insurance
provisions; (C) providing for no deductible in excess of Twenty-Five
Thousand and No/100 Dollars ($25,000) for all such insurance coverage excluding
windstorm and earthquake and (D)  containing an “Ordinance or Law Coverage”
or “Enforcement” endorsement if any of the Improvements or the use of the
Property shall at any time constitute legal non-conforming structures or
uses.  In addition, Borrower shall
obtain:  (y) if any portion of the
Improvements is currently or at any time in the future located in a “special
flood hazard area,” as designated by the Federal Emergency Management Agency or
such other applicable federal agency, flood hazard insurance in an amount equal
to the maximum amount available under the national flood insurance program and
in addition to the maximum available under the national flood program, any
excess limits as determined by Lender in its sole and absolute discretion; and
(z) earthquake insurance in amounts and in form and substance satisfactory
to Lender in the event the Property is located in an area with a high degree of
seismic activity, with a probable maximum loss exceeding twenty percent (20%),
provided that the insurance pursuant to clauses (y) and (z) hereof shall be on
terms consistent with the comprehensive all risk insurance policy required
under this subsection (i).


(ii)                           business income insurance
(A) with loss payable to Lender; (B) covering all risks required to
be covered by the insurance provided for in subsection (i)
above; (C) in an amount equal to one hundred percent (100%) of the
projected gross revenues from the operation of the Property (as reduced to
reflect expenses not incurred during a period of Restoration) for a period of
at least eighteen (18) months after the date of the Casualty; and (D)
containing an extended period of indemnity endorsement which provides that after
the physical loss to the Improvements and Personal Property has been repaired,
the continued loss of income will be insured until such income either returns
to the same level it was at prior to the loss, or the expiration of 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 business income insurance shall be determined prior
to the Closing Date and at least once each year thereafter based on Borrower’s
reasonable estimate of the gross income from the Property for the succeeding
eighteen (18) month period.  All proceeds
payable to Lender pursuant to this 



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


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


(iv)                       comprehensive boiler and
machinery insurance, if applicable, in amounts as shall be reasonably required
by Lender on terms consistent with the commercial property insurance policy
required under subsection (i)
above;


(v)                          commercial general liability
insurance against claims for personal injury, bodily injury, death or property
damage occurring upon, in or about the Property, such insurance (A) to be
on the so-called “occurrence” form with a combined limit of not less than Two
Million and 00/100 Dollars ($2,000,000.00) in the aggregate and One Million and
00/100 Dollars ($1,000,000.00) per occurrence; (B) to continue at not less
than the aforesaid limit until required to be changed by Lender in writing by
reason of changed economic conditions making such protection inadequate and
(C) to cover at least the following hazards:  (1) premises and operations;
(2) products and completed operations on an “if any” basis;
(3) independent contractors; (4) blanket contractual liability for
all written contracts and (5) contractual liability covering the
indemnities contained in Article 9 of the Mortgage to the extent the same is
available;


(vi)                       automobile liability coverage
for all owned and non-owned vehicles, including rented and leased vehicles
containing minimum limits per occurrence of One Million Dollars and 00/100
Dollars ($1,000,000.00);


(vii)                    worker’s compensation and employee’s
liability subject to the worker’s compensation laws of the applicable state;


(viii)                 umbrella and excess liability insurance
in an amount not less than Fifty Million and 00/100 Dollars ($50,000,000.00)
per occurrence on terms consistent with the commercial general liability
insurance policy required under 



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subsection (v)
above, including, but not limited to, supplemental coverage for employer
liability and automobile liability, which umbrella liability coverage shall
apply in excess of the automobile liability coverage in clause (vi) above;


(ix)                         the insurance required under
Section 6.1(a)(i) and (ii) above shall cover perils of terrorism and acts of
terrorism and Borrower shall maintain insurance for loss resulting from perils
and acts of terrorism on terms (including amounts) consistent with those
required under Section 6.1(a)(i) and (ii) above at all times during the term of
the Loan; provided, however, Borrower shall not be required to pay annual
premiums in excess of the Required Amount for the coverage required under this
Section 6.1.1(a)(ix).  If full
coverage for acts of terrorism satisfying such requirements is not available
for an amount equal to or less than the Required Amount (but coverage for acts
of terrorism not fully satisfying such requirements is available), Borrower
shall be required to spend an amount equal to the Required Amount for coverage
for acts of terrorism, and the scope, form, deductible and carrier with respect
to such coverage shall be acceptable to Lender in its sole discretion; and


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


(b)                                 All
insurance provided for in Section 6.1(a)
shall be obtained under valid and enforceable policies (collectively, the “Policies”
or in the singular, the “Policy”), and shall be subject to the approval of Lender as
to insurance companies, amounts, deductibles, loss payees and insureds.  The Policies shall be issued by financially
sound and responsible insurance companies authorized to do business in the
State and having a claims paying ability rating of “A” or better (and the
equivalent thereof) by at least two (2) of the Rating Agencies rating the
Securities (one (1) of which shall be S&P if they are rating the Securities
and one (1) of which will be Moody’s if they are rating the Securities), or if
only one (1) Rating Agency is rating the Securities, then only by such Rating
Agency.  The Policies described in Section 6.1 (other than those strictly
limited to liability protection) shall designate Lender as loss payee.  Not less than thirty (30) days prior to
the expiration dates of the Policies theretofore furnished to Lender, certificates
of insurance evidencing the Policies accompanied by evidence satisfactory to
Lender of payment of the premiums due thereunder (the “Insurance Premiums”), shall be
delivered by Borrower to Lender.


(c)                                  Any
blanket insurance Policy shall specifically allocate to the Property the amount
of coverage from time to time required hereunder and shall otherwise provide
the same protection as would a separate Policy insuring only the Property in
compliance with the provisions of Section 6.1(a).


(d)                                 All
Policies of insurance provided for or contemplated by Section 6.1(a), except for the Policy
referenced in Section 6.1(a)(vii)
of this Agreement, shall name Borrower, or the Tenant, as the insured and
Lender as the additional insured, as its interests may appear, 



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and in the case of property damage, boiler
and machinery, flood and earthquake insurance, shall contain a so-called New
York standard non-contributing mortgagee clause in favor of Lender providing
that the loss thereunder shall be payable to Lender.


(e)                                  All
Policies of insurance provided for in Section 6.1(a) shall contain clauses or
endorsements to the effect that:


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


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


(iii)                        the issuers thereof shall give
written notice to Lender if the Policy has not been renewed fifteen (15)
days prior to its expiration; and


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


(f)                                    If
at any time Lender is not in receipt of written evidence that all insurance
required hereunder is in full force and effect, Lender shall have the right,
without notice to Borrower, to take such action as Lender deems necessary to
protect its interest in the Property, including, without limitation, the
obtaining of such insurance coverage as Lender in its reasonable discretion
deems appropriate after three (3) Business Days notice to Borrower if prior to
the date upon which any such coverage will lapse or at any time Lender deems
necessary (regardless of prior notice to Borrower) to avoid the lapse of any
such coverage.  All premiums incurred by
Lender in connection with such action or in obtaining such insurance and
keeping it in effect shall be paid by Borrower to Lender upon demand and, until
paid, shall be secured by the Mortgage and shall bear interest at the Default
Rate.  If Borrower fails in so insuring
the Property or in so assigning and delivering the Policy, Lender may, at its
option, obtain such insurance using such carriers and agencies as Lender shall
elect from year to year and pay the premiums therefor, and Borrower will
reimburse Lender for any premium so paid, with interest thereon as stated in
the Note from the time of payment, on demand, and the amount so owing to Lender
shall be secured by the Mortgage.  The insurance
obtained by Lender may, but need not, protect Borrower’s interest and the
coverage that Lender purchases may not pay any claim that Borrower makes or any
claim that is made against Borrower in connection with the Property.


Section
6.2                                   Casualty.  If the Property shall be damaged or
destroyed, in whole or in part, by fire or other casualty (a “Casualty”),
Borrower (a) shall give to Lender prompt notice of such damage reasonably
estimated by Borrower to cost more than Two Hundred Thousand Dollars ($200,000.00)
to repair, and (b) shall promptly commence and diligently prosecute the
completion of the Restoration of the Property pursuant to Section 6.4 hereof as nearly as
possible to the condition the Property was in immediately prior to such
Casualty, with 



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such alterations as may be reasonably
approved by Lender and otherwise in accordance with Section 6.4 hereof.  Borrower shall pay, or cause to be paid, all
costs of such Restoration whether or not such costs are covered by
insurance.  Lender may, but shall not be
obligated to make proof of loss if not made promptly by Borrower.  In addition, Lender may participate in any
settlement discussions with any insurance companies (and shall approve the
final settlement, which approval shall not be unreasonably withheld or delayed)
with respect to any Casualty in which the Net Proceeds or the costs of
completing the Restoration are equal to or greater than Two Hundred Thousand
and 00/100 Dollars ($200,000.00) and Borrower shall deliver to Lender all
instruments required by Lender to permit such participation.


Section
6.3                                   Condemnation.  Borrower shall promptly give Lender notice of
the actual or threatened commencement of any proceeding for the Condemnation of
the Property upon obtaining information of such proceeding and shall deliver to
Lender copies of any and all papers served in connection with such
proceedings.  Lender may participate in
any such proceedings if an Event of Default exists or if the amount of the
Award exceeds three percent 3% of the outstanding principal balance of the
Loan, and Borrower shall from time to time deliver to Lender all instruments
requested by it to permit such participation. 
Borrower shall, at its expense, diligently prosecute any such proceedings,
and shall consult with Lender, its attorneys and experts, and cooperate with
them in the carrying on or defense of any such proceedings.  Notwithstanding any taking by any public or
quasi-public authority through Condemnation or otherwise (including, but not
limited to, any transfer made in lieu of or in anticipation of the exercise of
such taking), Borrower shall continue to pay the Debt at the time and in the
manner provided for its payment in the Note and in this Agreement and the Debt
shall not be reduced until any Award shall have been actually received and
applied by Lender, after the deduction of expenses of collection, to the
reduction or discharge of the Debt. 
Lender shall not be limited to the interest paid on the Award by the
condemning authority but shall be entitled to receive out of the Award interest
at the rate or rates provided herein or in the Note.  If the Property or any portion thereof is
taken by a condemning authority, Borrower shall promptly commence and
diligently prosecute the Restoration of the Property or any portion thereof
pursuant to Section 6.4 hereof
and otherwise comply with the provisions of Section 6.4
hereof.  If the Property is sold, through
foreclosure or otherwise, prior to the receipt by Lender of the Award, Lender
shall have the right, whether or not a deficiency judgment on the Note shall
have been sought, recovered or denied, to receive the Award, or a portion
thereof sufficient to pay the Debt.


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


(a)                                  If
the Net Proceeds shall be less than the Relevant Restoration Threshold and the
costs of completing the Restoration shall be less than the Relevant Restoration
Threshold, the Net Proceeds will be disbursed by Lender to Borrower upon receipt,
provided that all of the conditions set forth in Section 6.4(b)(i)
below are met and Borrower delivers to Lender a written undertaking to
expeditiously commence and to satisfactorily complete with due diligence the
Restoration in accordance with the terms of this Agreement.


(b)                                 If
the Net Proceeds are equal to or greater than the Relevant Restoration
Threshold or the costs of completing the Restoration is equal to or greater
than the Relevant Restoration Threshold, then in either case Lender shall make
the Net Proceeds available for the 



 64
 






 



Restoration in accordance with the provisions
of this Section 6.4(b).  The term “Net Proceeds” for purposes of
this Section 6.4 shall
mean:  (x) the net amount of all
insurance proceeds received by Lender pursuant to Section 6.1
(a)(i), (iv), (ix) and (x) as a result of such damage or
destruction, after deduction of its reasonable costs and expenses (including,
but not limited to, reasonable counsel fees), if any, in collecting same (“Insurance Proceeds”),
or (y) the net amount of the Award, after deduction of its reasonable
costs and expenses (including, but not limited to, reasonable counsel fees), if
any, in collecting same (“Condemnation Proceeds”), whichever the case may be.


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


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


(B)        (1) in the event the Net Proceeds are
Insurance Proceeds, less than twenty-five percent (25%) of the total floor area
of the Improvements on the Property has been damaged, destroyed or rendered
unusable as a result of such Casualty or (2) in the event the Net Proceeds
are Condemnation Proceeds, less than ten percent (10%) of the land constituting
the Property is taken, and such land is located along the perimeter or
periphery of the Property, and no portion of the Improvements is located on
such land;


(C)        Leases demising in the aggregate a percentage
amount equal to or greater than the Rentable Space Percentage of the total
rentable space in the Property which has been demised under executed and
delivered Leases in effect as of the date of the occurrence of such Casualty or
Condemnation, whichever the case may be, shall remain in full force and effect
during and after the completion of the Restoration, notwithstanding the
occurrence of any such Casualty or Condemnation, whichever the case may be, and
Borrower and/or Tenant, as applicable under the respective Lease, will make all
necessary repairs and restorations thereto at their sole cost and expense.  The term “Rentable Space Percentage” shall
mean a percentage amount equal to sixty-five percent (65%);


(D)       Borrower shall commence the Restoration as soon
as reasonably practicable (but in no event later than one hundred twenty (120)
days after such Casualty or Condemnation or obtaining building permits,
whichever the case may be, occurs) and shall diligently pursue the same to
satisfactory completion;


(E)         Lender shall be satisfied that any operating
deficits, including all scheduled payments of principal and interest under the
Note, which will be incurred with respect to the Property as a result of the
occurrence of any such Casualty or Condemnation, whichever the case may be,
will be covered out of (1) the Net Proceeds, (2) the insurance
coverage referred 



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to in Section 6.1(a)(ii)
hereof, if applicable, or (3) by other funds of Borrower;


(F)         Lender shall be satisfied that the Restoration
will be completed on or before the earliest to occur of (1) six (6) months
prior to the Maturity Date, (2) the earliest date required for such
completion under the terms of any Leases, (3) such time as may be required
under all applicable Legal Requirements in order to repair and restore the
Property to the condition it was in immediately prior to such Casualty or to as
nearly as possible the condition it was in immediately prior to such
Condemnation, as applicable, or (4) the expiration of the insurance
coverage referred to in Section 6.1(a)(ii)
hereof;


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


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


(I)            such Casualty or Condemnation, as
applicable, does not result in the loss of access to the Property or the
Improvements;


(J)           the Debt Service Coverage Ratio for the
Property, after giving effect to the Restoration, shall be equal to or greater
than 1.30 to 1.0;


(K)       Borrower shall deliver, or cause to be
delivered, to Lender a signed detailed budget approved in writing by Borrower’s
architect or engineer stating the entire cost of completing the Restoration,
which budget shall be approved by Lender, which approval shall not be
unreasonably withheld; and


(L)         the Net Proceeds together with any cash or
cash equivalent deposited by Borrower with Lender are sufficient in Lender’s
discretion to cover the cost of the Restoration.


(ii)                           The Net Proceeds shall be
held by Lender in an interest-bearing account and, until disbursed in
accordance with the provisions of this Section 6.4(b),
shall constitute additional security for the Debt and Other Obligations under
the Loan Documents.  The Net Proceeds
shall be disbursed by Lender to, or as directed by, Borrower from time to time
during the course of the Restoration, upon receipt of evidence satisfactory to
Lender that (A) all materials installed and work and labor performed
(except to the extent that they are to be paid for out of the requested
disbursement) in connection with the Restoration have been paid for in full or
will be paid in full upon such disbursement, and (B) there exist no
notices of pendency, stop orders, mechanic’s or materialman’s liens or notices
of intention to file same, or any other liens or encumbrances of any nature
whatsoever on the Property which have not either been fully bonded to 



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the satisfaction of Lender and discharged of record or in the
alternative fully insured to the satisfaction of Lender by the title company
issuing the Title Insurance Policy.


(iii)                        All plans and specifications
required in connection with the Restoration, the cost of which exceeds the
Relevant Restoration Threshold, shall be subject to prior review and acceptance
in all respects by Lender and by an independent consulting engineer selected by
Lender (the “Casualty
Consultant”), such review and acceptance not to be unreasonably
withheld or delayed.  Lender shall have
the use of the plans and specifications and all permits, licenses and approvals
required or obtained in connection with the Restoration.  The identity of the contractors,
subcontractors and materialmen engaged in the Restoration, as well as the contracts
under which they have been engaged, shall be subject to prior review and
acceptance by Lender and the Casualty Consultant, such review and acceptance
not to be unreasonably withheld or delayed. 
All costs and expenses incurred by Lender in connection with making the
Net Proceeds available for the Restoration including, without limitation,
reasonable counsel fees and disbursements and the Casualty Consultant’s fees,
shall be paid by Borrower.


(iv)                       In no event shall Lender be
obligated to make disbursements of the Net Proceeds in excess of an amount
equal to the costs actually incurred from time to time for work in place as
part of the Restoration, as certified by the Casualty Consultant, minus
the Casualty Retainage.  The term “Casualty Retainage”
shall mean an amount equal to ten percent (10%) of the costs actually incurred
for work in place as part of the Restoration, as certified by the Casualty
Consultant, until the Restoration has been completed.  The Casualty Retainage shall in no event, and
notwithstanding anything to the contrary set forth above in this Section 6.4(b), be less than the
amount actually held back by Borrower from contractors, subcontractors and
materialmen engaged in the Restoration. 
The Casualty Retainage shall not be released until the Casualty
Consultant certifies to Lender that the Restoration has been completed in
accordance with the provisions of this Section 6.4(b)
and that all approvals necessary for the re-occupancy and use of the Property
have been obtained from all appropriate governmental and quasi-governmental
authorities, and Lender receives evidence satisfactory to Lender that the costs
of the Restoration have been paid in full or will be paid in full out of the
Casualty Retainage; provided, however, that Lender will release the portion of
the Casualty Retainage being held with respect to any contractor, subcontractor
or materialman engaged in the Restoration as of the date upon which the
Casualty Consultant certifies to Lender that the contractor, subcontractor or
materialman has satisfactorily completed all work and has supplied all
materials in accordance with the provisions of the contractor’s, subcontractor’s
or materialman’s contract, the contractor, subcontractor or materialman
delivers the lien waivers and evidence of payment in full of all sums due to the
contractor, subcontractor or materialman as may be reasonably requested by
Lender or by the title company issuing the Title Insurance Policy, and Lender
receives an endorsement to the Title Insurance Policy insuring the 



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continued priority of the lien of the Mortgage and evidence of payment
of any premium payable for such endorsement. 
If required by Lender, the release of any such portion of the Casualty
Retainage shall be approved by the surety company, if any, which has issued a
payment or performance bond with respect to the contractor, subcontractor or
materialman.


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


(vi)                       If at any time the Net Proceeds
or the undisbursed balance thereof shall not, in the reasonable opinion of
Lender in consultation with the Casualty Consultant, be sufficient to pay in
full the balance of the costs which are estimated by the Casualty Consultant to
be incurred in connection with the completion of the Restoration, Borrower
shall deposit the deficiency (the “Net Proceeds Deficiency”) with Lender before any further
disbursement of the Net Proceeds shall be made. 
The Net Proceeds Deficiency deposited with Lender shall be held by
Lender and shall be disbursed for costs actually incurred in connection with
the Restoration on the same conditions applicable to the disbursement of the
Net Proceeds, and until so disbursed pursuant to this Section 6.4(b) shall constitute
additional security for the Debt and Other Obligations under the Loan
Documents.


(vii)                    The excess, if any, of the Net
Proceeds (and the remaining balance, if any, of the Net Proceeds Deficiency)
deposited with Lender after the Casualty Consultant certifies to Lender that
the Restoration has been completed in accordance with the provisions of this Section 6.4(b), and the receipt by
Lender of evidence satisfactory to Lender that all costs incurred in connection
with the Restoration have been paid in full, shall be remitted by Lender to
Borrower, provided no Event of Default shall have occurred and shall be
continuing under the Note, this Agreement or any of the other Loan Documents.


(c)                                  All
Net Proceeds not required (i) to be made available for the Restoration or
(ii) to be returned to Borrower as excess Net Proceeds pursuant to Section 6.4(b)(vii) may be retained
and applied by Lender toward the payment of the Debt whether or not then due
and payable in such order, priority and proportions as Lender in its sole
discretion shall deem proper (provided no Event of Default exists, Borrower
shall not be required to pay any prepayment consideration in connection with
such payment), or, at the discretion of Lender, the same may be paid, either in
whole or in part, to Borrower for such purposes as Lender shall designate, in
its discretion.


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



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(e)                                  Lender
shall with reasonable promptness following any Casualty or Condemnation notify
Borrower whether or not Net Proceeds are required to be made available to
Borrower for restoration pursuant to this Section 6.4.  All Net Proceeds not required to be made
available for Restoration shall be retained and applied by Lender in accordance
with Section 2.4.2 hereof (a “Net
Proceeds Prepayment”).  If
such Net Proceeds Prepayment shall be equal to or greater than Five Million and
00/100 Dollars ($5,000,000.00), Borrower shall have the right to elect to
prepay the outstanding principal balance of the Loan (less the Net Proceeds
Prepayment) for the Property (a “Casualty/Condemnation
Prepayment”) without payment of the Yield Maintenance Premium upon
satisfaction of the following conditions: 
(i) within thirty (30) days following the date of the Net Proceeds
Prepayment, Borrower shall provide Lender with written notice of Borrower’s
intention to pay the Note in full (with a credit for the amount of the Net
Proceeds Prepayment), (ii) Borrower shall prepay the Note in such amount on or
before the third (3rd)
Payment Date occurring following the date of the Net Proceeds Prepayment
(provided that if any such prepayment is made on a date other than a Payment
Date, Borrower shall pay Lender all interest which would have accrued on the
amount being prepaid through the next Payment Date), and (iii) no Event of
Default shall exist on the date of such Casualty/Condemnation Prepayment.  Notwithstanding anything in Section 6.2 or
Section 6.3 to the contrary, Borrower shall have no obligation to commence
Restoration of the Property upon delivery of the written notice set forth in
clause (i) of the preceding sentence (unless Borrower subsequently shall fail
to satisfy the requirement of clause (ii) of the preceding sentence).


VII.                            RESERVE
FUNDS


Section
7.1                                   Required
Repairs.  Borrower shall perform
the repairs at the Property, as more particularly set forth on Schedule III hereto (such repairs
hereinafter referred to as “Required Repairs”). 
Borrower shall complete the Required Repairs on or before the required
deadline for each repair as set forth on Schedule
III.  It shall be an Event of
Default under this Agreement if Borrower does not complete the Required Repairs
at the Property by the required deadline for each repair as set forth on Schedule III; provided, however, that
Lender in its sole and absolute discretion may agree to extend the time to
complete the Required Repairs if Borrower, despite its good faith efforts, has
failed to complete the Required Repairs within such period.  The parties hereby acknowledge and agree that
as of the date hereof, AGL Investments No. 2 Limited Partnership L.L.L.P.,
Borrower, Lender and LandAmerica Partners Title Company have entered into that
certain Escrow Instructions for Order No.: GF#2711000981 (the “Escrow Agreement”) with respect to certain
costs and expenses related to the completion of the Required Repairs.  Borrower (i) shall observe and perform
the obligations imposed upon it under the Escrow Agreement in a commercially
reasonable manner; (ii) shall enforce the terms, covenants and conditions
contained in the Escrow Agreement upon the part of the other parties thereto to
be observed or performed in a commercially reasonable manner, (iii) shall not
amend, modify or terminate the Escrow Agreement without the prior written
consent of Lender and (iv) shall not submit any Disbursement Request (as
defined in the Escrow Agreement) pursuant to Section 3 of the Escrow Agreement
unless such Disbursement Request has been approved by Lender, such approval not
to be unreasonably withheld, conditioned or delayed.  If Borrower submits to Lender for its
approval a Disbursement Request, together with all supporting documentation
reasonably required by Lender, and Lender does not respond to Borrower with its
approval, denial or request for additional information within five (5) Business
Days of Lender’s receipt of said Disbursement Request, such Disbursement
Request shall be deemed approved by 



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Lender provided that the submission to Lender
is marked in bold lettering with the following: 
“LENDER’S RESPONSE IS REQUIRED WITHIN 5 BUSINESS DAYS OF RECEIPT OF THIS
NOTICE PURSUANT TO THE TERMS OF SECTION 7.1 OF A LOAN AGREEMENT BETWEEN THE
UNDERSIGNED AND LENDER”.


Section
7.2                                   Tax
and Insurance Escrow Fund. 
Borrower shall pay to Lender on each Payment Date (a) one-twelfth
(1/12) of the Taxes that Lender estimates will be payable during the next
ensuing 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 (b) one-twelfth (1/12) 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 (said amounts in (a) and (b) above
are hereinafter called the “Tax and Insurance Escrow Fund”).  The Tax and Insurance Escrow Fund and the
Monthly Debt Service Payment Amount, shall be added together and shall be paid
as an aggregate sum by Borrower to Lender. 
Lender will apply the Tax and Insurance Escrow Fund to payments of Taxes
and Insurance Premiums required to be made by Borrower pursuant to this
Agreement and under the Mortgage. 
In making any payment relating to the Tax and Insurance Escrow Fund,
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) or from Borrower 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, provided,
however, Lender shall use reasonable efforts to pay such real property taxes
sufficiently early to obtain the benefit of any available discounts of which it
has knowledge.  If the amount of the Tax
and Insurance Escrow Fund shall exceed the amounts due for Taxes and Insurance
Premiums, Lender shall, in its sole discretion, return any excess to Borrower
or credit such excess against future payments to be made to the Tax and
Insurance Escrow Fund.  Any amount remaining
in the Tax and Insurance Escrow Fund after the Debt has been paid in full shall
be returned to Borrower.  In allocating
such excess, Lender may deal with the Person shown on the records of Lender to
be the owner of the Property.  If at any
time Lender reasonably determines that the Tax and Insurance Escrow Fund is not
or will not be sufficient to pay Taxes and Insurance Premiums by the dates set
forth above, Lender shall notify Borrower of such determination and Borrower
shall increase its monthly payments to Lender by the amount that Lender estimates
is sufficient to make up the deficiency at least thirty (30) days prior to
delinquency of the Taxes or Insurance Premiums. 
Notwithstanding anything to the contrary contained herein, Borrower
shall not be required to make monthly deposits with respect to the Tax and
Insurance Escrow Fund provided that: (i) no Event of Default has occurred, and
(ii) Borrower pays all Taxes prior to delinquency and Insurance Premiums as the
same become due and payable and delivers to Lender evidence of such payment pursuant
to Section 5.1.2 hereof.


Section
7.3                                   Replacements
and Replacement Reserve.


7.3.1                     Replacement
Reserve Fund.  Borrower shall pay
to Lender on each Payment Date the sum of $9,360.50 (the “Replacement Reserve
Monthly Deposit”) for replacements and repairs required to be made
to the Property during the calendar year (collectively, the “Replacements”).  Amounts so deposited shall hereinafter be
referred to as Borrower’s “Replacement Reserve Fund” and the account in which such
amounts are held shall 



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hereinafter be referred to as Borrower’s “Replacement Reserve
Account”.  Lender may reassess
its estimate of the amount necessary for the Replacement Reserve Fund from time
to time, and may increase the monthly amounts required to be deposited into the
Replacement Reserve Fund upon thirty (30) days notice to Borrower if Lender
determines in its commercially reasonable discretion based upon updated
engineering reports or inspections of the Property that an increase is
necessary to maintain the proper maintenance and operation of the
Property.  Any amount held in the
Replacement Reserve Account and allocated for the Property shall be retained by
Lender and credited toward the future Replacement Reserves Monthly Deposits required
by Lender hereunder in the event the Property is released from the Lien of the
Mortgage in accordance with Section 2.5
hereof.  Notwithstanding the foregoing,
Borrower’s obligation to make monthly deposits to the Replacement Reserve Fund
shall be suspended provided that no Event of Default occurs.


7.3.2                     Disbursements
from Replacement Reserve Account. 
(a)  Lender shall make
disbursements from the Replacement Reserve Account to pay Borrower only for the
costs of the Replacements.  Lender shall
not be obligated to make disbursements from the Replacement Reserve Account to
reimburse Borrower for the costs of routine maintenance to the Property,
replacements of inventory or for costs which are to be reimbursed from the
Rollover Reserve Fund.


(b)                                 Lender
shall, upon written request from Borrower and satisfaction of the requirements
set forth in this Section 7.3.2,
disburse to Borrower amounts from the Replacement Reserve Account necessary to
pay for the actual approved costs of Replacements or to reimburse Borrower
therefor, upon completion of such Replacements (or, upon partial completion in
the case of Replacements made pursuant to Section 7.3.2(e))
as determined by Lender.  In no event
shall Lender be obligated to disburse funds from the Replacement Reserve
Account if a Default or an Event of Default exists.


(c)                                  Each
request for disbursement from the Replacement Reserve Account shall be in a
form specified or approved by Lender and shall specify (i) the specific
Replacements for which the disbursement is requested, (ii) the quantity
and price of each item purchased, if the Replacement includes the purchase or
replacement of specific items, (iii) the price of all materials (grouped
by type or category) used in any Replacement other than the purchase or
replacement of specific items, and (iv) the cost of all contracted labor
or other services applicable to each Replacement for which such request for
disbursement is made.  With each request
Borrower shall certify that all Replacements have been made in accordance with
all applicable Legal Requirements of any Governmental Authority having
jurisdiction over the Property and, unless Lender has agreed to issue joint
checks as described below, each request shall include evidence of payment of
all such amounts.  Each request for
disbursement shall include copies of invoices for all items or materials
purchased and all contracted labor or services provided.  Except as provided in Section 7.3.2(e), each request for
disbursement from the Replacement Reserve Account shall be made only after
completion of the Replacement for which disbursement is requested.  Borrower shall provide Lender evidence of
completion of the subject Replacement satisfactory to Lender in its reasonable
judgment.


(d)                                 Borrower
shall pay all invoices in connection with the Replacements with respect to
which a disbursement is requested prior to submitting such request for
disbursement 



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from the Replacement Reserve Account or, at
the request of Borrower, Lender will issue joint checks, payable to Borrower
and the contractor, supplier, materialman, mechanic, subcontractor or other
party to whom payment is due in connection with a Replacement.  In the case of payments made by joint check,
Lender may require a waiver of lien from each Person receiving payment prior to
Lender’s disbursement from the Replacement Reserve Account.  In addition, as a condition to any
disbursement, Lender may require Borrower to obtain lien waivers from each
contractor, supplier, materialman, mechanic or subcontractor who receives payment
in an amount equal to or greater than $100,000 for completion of its work or
delivery of its materials.  Any lien
waiver delivered hereunder shall conform to the requirements of applicable law
and shall cover all work performed and materials supplied (including equipment
and fixtures) for the Property by that contractor, supplier, subcontractor,
mechanic or materialman through the date covered by the current reimbursement
request (or, in the event that payment to such contractor, supplier,
subcontractor, mechanic or materialmen is to be made by a joint check, the
release of lien shall be effective through the date covered by the previous
release of funds request).


(e)                                  If
(i) the cost of a Replacement exceeds $100,000, (ii) the contractor
performing such Replacement requires periodic payments pursuant to terms of a
written contract, and (iii) Lender has approved in writing in advance such
periodic payments, a request for reimbursement from the Replacement Reserve
Account may be made after completion of a portion of the work under such contract,
provided (A) such contract requires payment upon completion of such
portion of the work, (B) the materials for which the request is made are
on site at the Property and are properly secured or have been installed in the
Property, (C) all other conditions in this Agreement for disbursement have
been satisfied, (D) funds remaining in the Replacement Reserve Account
are, in Lender’s judgment, sufficient to complete such Replacement and other
Replacements when required, and (E) if required by Lender, each contractor
or subcontractor receiving payments under such contract shall provide a waiver
of lien with respect to amounts which have been paid to that contractor or
subcontractor.


(f)                                    Borrower
shall not make a request for disbursement from the Replacement Reserve Account
more frequently than once in any calendar month and (except in connection with
the final disbursement) the total cost of all Replacements in any request shall
not be less than $15,000.00.


7.3.3                     Performance
of Replacements.  (a)  Borrower shall make Replacements when
required in order to keep the Property in condition and repair consistent with
other similar properties in the same market segment in the metropolitan area in
which the Property is located, and to keep the Property or any portion thereof
from deteriorating.  Borrower shall
complete all Replacements in a good and workmanlike manner as soon as
practicable following the commencement of making each such Replacement.


(b)                                 Lender
reserves the right, at its option, to approve all contracts or work orders with
materialmen, mechanics, suppliers, subcontractors, contractors or other parties
providing labor or materials under contracts for an amount in excess of
$100,000 in connection with the Replacements performed by Borrower.  Upon Lender’s request, Borrower shall assign
any contract or subcontract to Lender.



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(c)                                  In
the event Lender determines in its reasonable discretion that any Replacement
is not being performed in a workmanlike or timely manner or that any
Replacement has not been completed in a workmanlike or timely manner, and such
failure continues to exist for more than thirty (30) days after notice from
Lender to Borrower, Lender shall have the option, upon ten (10) days notice to
Borrower (except in the case of an emergency), to withhold disbursement for
such unsatisfactory Replacement and to proceed under existing contracts or to
contract with third parties to complete such Replacement and to apply the
Replacement Reserve Fund toward the labor and materials necessary to complete
such Replacement, and to exercise any and all other remedies available to Lender
upon an Event of Default hereunder.


(d)                                 In
order to facilitate Lender’s completion or making of the Replacements pursuant
to Section 7.3.3(c) above,
Borrower grants Lender the right to enter onto the Property and perform any and
all work and labor necessary to complete or make the Replacements and/or employ
watchmen to protect the Property from damage, subject to the rights of
Tenants.  All sums so expended by Lender,
to the extent not from the Replacement Reserve Fund, shall be deemed to have
been advanced under the Loan to Borrower and secured by the Mortgage.  For this purpose Borrower constitutes and
appoints Lender its true and lawful attorney-in-fact with full
power of substitution to complete or undertake the Replacements in the name of
Borrower.  Such power of attorney shall
be deemed to be a power coupled with an interest and cannot be revoked but
shall only be effective following an Event of Default.  Borrower empowers said attorney-in-fact
as follows:  (i) to use any funds in
the Replacement Reserve Account for the purpose of making or completing the
Replacements; (ii) to make such additions, changes and corrections to the
Replacements as shall be necessary or desirable to complete the Replacements;
(iii) to employ such contractors, subcontractors, agents, architects and
inspectors as shall be required for such purposes; (iv) to pay, settle or
compromise all existing bills and claims which are or may become Liens against
the Property, or as may be necessary or desirable for the completion of the
Replacements, or for clearance of title; (v) to execute all applications
and certificates in the name of Borrower which may be required by any of the
contract documents; (vi) to prosecute and defend all actions or
proceedings in connection with the Property or the rehabilitation and repair of
the Property; and (vii) to do any and every act which Borrower might do in
its own behalf to fulfill the terms of this Agreement.


(e)                                  Nothing
in this Section 7.3.3
shall:  (i) make Lender responsible
for making or completing the Replacements; (ii) require Lender to expend
funds in addition to the Replacement Reserve Fund to make or complete any
Replacement; (iii) obligate Lender to proceed with the Replacements; or
(iv) obligate Lender to demand from Borrower additional sums to make or
complete any Replacement.


(f)                                    Borrower
shall permit Lender and Lender’s agents and representatives (including, without
limitation, Lender’s engineer, architect, or inspector) or third parties making
Replacements pursuant to this Section 7.3.3
to enter onto the Property during normal business hours (subject to the rights
of tenants under their Leases) to inspect the progress of any Replacements and
all materials being used in connection therewith, to examine all plans and shop
drawings relating to such Replacements which are or may be kept at the
Property, and to complete any Replacements made pursuant to this Section 7.3.3.  Borrower shall cause all contractors and
subcontractors to cooperate with Lender or Lender’s representatives or such 



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other persons described above in connection
with inspections described in this Section 7.3.3(f)
or the completion of Replacements pursuant to this Section 7.3.3.


(g)                                 Lender
may require an inspection of the Property at Borrower’s expense prior to making
a monthly disbursement in excess of $100,000 from the Replacement Reserve
Account in order to verify completion of the Replacements for which
reimbursement is sought.  Lender may
require that such inspection be conducted by an appropriate independent qualified
professional selected by Lender and/or may require a copy of a certificate of
completion by an independent qualified professional acceptable to Lender prior
to the disbursement of any amounts from the Replacement Reserve Account.  Borrower shall pay the expense of the
inspection as required hereunder, whether such inspection is conducted by
Lender or by an independent qualified professional.


(h)                                 The
Replacements and all materials, equipment, fixtures, or any other item
comprising a part of any Replacement shall be constructed, installed or
completed, as applicable, free and clear of all mechanic’s, materialman’s or
other liens (except for those Liens existing on the date of this Agreement
which have been approved in writing by Lender).


(i)                                     Before
each disbursement in excess of $100,000 from the Replacement Reserve Account,
Lender may require Borrower to provide Lender with a search of title to the
Property effective to the date of the disbursement, which search shows that no
mechanic’s or materialmen’s liens or other liens of any nature have been placed
against the Property since the date of recordation of the related Mortgage and
that title to the Property is free and clear of all Liens (other than the lien
of the related Mortgage and any other Liens previously approved in writing by
Lender, if any).


(j)                                     All
Replacements shall comply with all applicable Legal Requirements of all
Governmental Authorities having jurisdiction over the Property and applicable
insurance requirements including, without limitation, applicable building
codes, special use permits, environmental regulations, and requirements of
insurance underwriters.


(k)                                  In
addition to any insurance required under the Loan Documents, Borrower shall
provide or cause to be provided workmen’s compensation insurance, builder’s
risk, and public liability insurance and other insurance to the extent required
under applicable law in connection with a particular Replacement.  All such policies shall be in form and amount
reasonably satisfactory to Lender.  All
such policies which can be endorsed with standard mortgagee clauses making loss
payable to Lender or its assigns shall be so endorsed.  Certified copies of such policies shall be
delivered to Lender.


7.3.4                     Failure to
Make Replacements.  (a)  It shall be an Event of Default under this
Agreement if Borrower fails to comply with any provision of this Section 7.3 and such failure is not
cured within thirty (30) days after notice from Lender; provided, however,
if such failure is not capable of being cured within said thirty (30) day
period, then provided that Borrower commences action to complete such cure and
thereafter diligently proceeds to complete such cure, such thirty (30) day
period shall be extended for such time as is reasonably necessary for Borrower,
in the exercise of due diligence, to cure such failure, but such additional
period of time shall not exceed ninety (90) days.  Upon the occurrence of such an Event of 



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Default, Lender may use the Replacement
Reserve Fund (or any portion thereof) for any purpose, including but not
limited to completion of the Replacements as provided in Section 7.3.3, or for any other repair
or replacement to the Property or toward payment of the Debt in such order,
proportion and priority as Lender may determine in its sole discretion.  Lender’s right to withdraw and apply the
Replacement Reserve Fund shall be in addition to all other rights and remedies
provided to Lender under this Agreement and the other Loan Documents.


(b)                                 Nothing
in this Agreement shall obligate Lender to apply all or any portion of the
Replacement Reserve Fund on account of an Event of Default to payment of the
Debt or in any specific order or priority.


7.3.5                     Balance in
the Replacement Reserve Account. 
The insufficiency of any balance in the Replacement Reserve Account
shall not relieve Borrower from its obligation to fulfill all preservation and
maintenance covenants in the Loan Documents.


7.3.6                     Indemnification.  Borrower shall indemnify Lender and hold
Lender harmless from and against any and all actions, suits, claims, demands,
liabilities, losses, damages, obligations and costs and expenses (including
litigation costs and reasonable attorneys fees and expenses) arising from or in
any way connected with the performance of the Replacements unless the same are
solely due to gross negligence or willful misconduct of Lender.  Borrower shall assign to Lender all rights
and claims Borrower may have against all persons or entities supplying labor or
materials in connection with the Replacements; provided, however, that Lender
may not pursue any such right or claim unless an Event of Default has occurred
and remains uncured.


Section
7.4                                   Rollover
Reserve.


7.4.1                     Deposits
to Rollover Reserve Fund. 
Borrower shall pay to Lender on each Payment Date the sum of $32,761.83,
which amounts shall be deposited with and held by Lender for tenant improvement
and leasing commission obligations incurred following the date hereof.  Additionally, Borrower shall deposit with
Lender any Lease Termination Fees. 
Amounts so deposited shall hereinafter be referred to as the “Rollover Reserve Fund”.  Notwithstanding the foregoing, Borrower’s
obligation to make monthly deposits to the Rollover Reserve Fund shall be
suspended provided that no Event of Default occurs.


7.4.2                     Withdrawal
of Rollover Reserve Funds. 
Lender shall make disbursements from the Rollover Reserve Fund for
tenant improvement and leasing commission obligations incurred by
Borrower.  All such expenses shall be
approved by Lender in its commercially reasonable discretion, except that
Lender’s approval of such expenses shall not be required (a) if Lender has
separately approved (but was not deemed to have approved) the related Lease in
accordance with the provisions of Section 5.1.20 of this Agreement
or (b) with respect to tenant improvement expenses that are less than $25.00
per square foot.  Lender shall make
disbursements as requested by Borrower on a monthly basis in increments of no
less than $5,000.00 upon delivery by Borrower of Lender’s standard form of draw
request accompanied by copies of paid invoices for the amounts requested and,
if required by Lender, lien waivers and releases from all parties furnishing
materials and/or services in connection with the requested 



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payment. 
Lender may require an inspection of the Property at Borrower’s expense
prior to making a monthly disbursement in order to verify completion of
improvements for which reimbursement is sought. 
Any Lease Termination Fee shall be applied first to tenant improvement
and leasing commission obligations incurred in connection with the reletting of
the space for which such Lease Termination Fee was paid pursuant to a Lease
approved by Lender in accordance with the provisions of this Agreement, and any
remaining portion of such Lease Termination Fee shall be released to Borrower
provided that no Event of Default exists and Lender shall have received a
tenant estoppel certificate in form and substance reasonably satisfactory to
Lender.


Section
7.5                                   excelleRx
Lease.


7.5.1                     Unless
the excelleRx Lease is extended on terms acceptable to Lender prior to March
31, 2014, a Cash Sweep Period shall be implemented pursuant to the Cash
Management Agreement until such time as $980,000 of excess cash has been
collected or another “Cash Sweep Cure” has occurred under the Cash Management
Agreement.  Any cash, Letter of Credit or
Guaranty of Payment, as applicable, deposited with Lender pursuant to this
Section 7.5 shall be released, and any related Cash Sweep Period shall terminate,
at such time as (i) either (a) the excelleRx Lease is extended on market
terms and conditions acceptable to Lender or (b) Borrower enters into a
new lease or leases with a replacement tenant or tenants for the related space
and such replacement tenant is in occupancy and paying rent (as evidenced by an
estoppel certificate in form and substance acceptable to Lender) provided both
the tenant(s) and the lease(s) are pre-approved by Lender in its sole and
absolute discretion based upon Lender’s then current underwriting criteria
(provided that if the Property is leased to more than one tenant, the approval
of the replacement leases shall be governed by the provisions of Section 5.1.20
hereof), (ii) the Property has maintained minimum occupancy of eighty percent
(80%) or greater for at least one calendar quarter and (iii) the Debt
Service Coverage Ratio equals or exceeds 1.20 to 1.0 based on a thirty (30)
year amortization period.  Prior to being
released to Borrower, however, any cash or Letter of Credit deposited pursuant
to this Section 7.5.1 shall be applied first to any tenant improvement and
leasing commission obligations incurred by Borrower in connection with any
reletting of the Property or extension of the excelleRx Lease in the same
manner as Rollover Reserve Funds pursuant to Section 7.4 of this Agreement.


7.5.2                     Notwithstanding
anything herein to the contrary, in no event shall Borrower have the right to
deliver a Guaranty of Payment in lieu of cash or a Letter of Credit pursuant to
this Section 7.5 if (a) the tangible net worth of Guarantor is less than
$300,000,000 or (b) the liquidity of Guarantor is less than the greater of (i)
$10,000,000 or (ii) twenty-five percent (25%) of Guarantor’s contingent
liabilities.  If at any time when a
Guaranty of Payment is outstanding the Guarantor does not satisfy the foregoing
tangible net worth and liquidity requirements, Borrower shall within five (5)
Business Days after notice from Lender deliver cash or a Letter of Credit in
the applicable amount.  For purposes of this Agreement, “tangible net
worth” means, as of a given date, Guarantor’s equity calculated in conformance
with GAAP by subtracting total liabilities from total tangible assets and “liquidity”
means, as of a given date, of Guarantor’s unrestricted cash and amounts
then available under Guarantor’s working capital lines of credit.



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Section
7.6                                   Lease
Obligation Fund.  On the Closing
Date, Borrower shall deposit with Lender the amount of Four Hundred
Ninety-Seven Thousand Nine Hundred Twelve and No/100 Dollars ($497,912.00) as a
reserve for free rent tenant allowances set forth on Schedule VI
hereto (the “Lease Obligations”).  Amounts so deposited shall hereinafter be
referred to as the “Lease Obligation Fund”.  Lender shall disburse to Borrower the Lease
Obligation Funds as set forth on Schedule VI hereto upon delivery by
Borrower of Lender’s standard form of draw request.


Section
7.7                                   Reserve
Funds, Generally. Borrower grants to Lender a first-priority perfected
security interest in each of the Reserve Funds and any and all monies now or hereafter
deposited in each Reserve Fund as additional security for payment of the
Debt.  Until expended or applied in
accordance herewith, the Reserve Funds shall constitute additional security for
the Debt.  Upon the occurrence of an
Event of Default, Lender may, in addition to any and all other rights and
remedies available to Lender, apply any sums then present in any or all of the
Reserve Funds to the payment of the Debt in any order in its sole
discretion.  The Reserve Funds shall not
constitute trust funds and may be commingled with other monies held by
Lender.  Amounts deposited in the
Replacement Reserve Fund and the Rollover Reserve Fund shall bear interest at
the thirty day money market rate published by the bank used by Lender to hold
escrow deposits, and shall be held and released by Lender, and used by
Borrower, in accordance with the terms and conditions of this Agreement.  Lender shall be entitled to a servicing fee
in the amount of .25% per annum multiplied by the average daily balance on deposit
in the Replacement Reserve Fund and the Rollover Reserve Fund (but in no event
shall Lender be entitled to a servicing fee in an amount greater than the
amount of interest earned thereon), and Lender is hereby authorized to deduct
such servicing fee from the Replacement Reserve Fund and the Rollover Reserve
Fund on a monthly basis.  All interest or
other income in connection with the deposit or placement of the Replacement
Reserve Fund and the Rollover Reserve Fund, less the servicing fee, shall be
reported under Borrower’s tax identification number, and shall only be
disbursed as set forth in this Agreement. 
All interest on any Reserve Fund other than the Replacement Reserve Fund
or Rollover Reserve Fund shall not be added to or become a part thereof and
shall be the sole property of and shall be paid to Lender.  Borrower shall be responsible for payment of
any federal, state or local income or other tax applicable to the interest
earned on the Reserve Funds credited or paid to Borrower.  Borrower shall not, without obtaining the
prior written consent of Lender, further pledge, assign or grant any security
interest in any Reserve Fund or the monies deposited therein or permit any lien
or encumbrance to attach thereto, or any levy to be made thereon, or any UCC-1
Financing Statements, except those naming Lender as the secured party, to be
filed with respect thereto.  Lender shall
not be liable for any loss sustained on the investment of any funds
constituting the Reserve Funds.  Borrower
shall indemnify Lender and hold Lender harmless from and against any and all
actions, suits, claims, demands, liabilities, losses, damages, obligations and
costs and expenses (including litigation costs and reasonable attorneys fees
and expenses) arising from or in any way connected with the performance of the
obligations for which the Reserve Funds were established.  Borrower shall assign to Lender all rights
and claims Borrower may have against all persons or entities supplying labor,
materials or other services which are to be paid from or secured by the Reserve
Funds; provided, however, that Lender may not pursue any such right or claim
unless an Event of Default has occurred and remains uncured.



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Section
7.8                                   Letter
of Credit Rights.  Any Letter of
Credit delivered to Lender pursuant to this Agreement shall be held by Lender
as additional security for the Loan. 
Lender shall have the right to draw upon any Letter of Credit
immediately and without further notice:


(a)                                  upon
the occurrence and during the continuance of an Event of Default;


(b)                                 if
Borrower fails to deliver to Lender, no less than thirty (30) days prior to the
expiration of any Letter of Credit (including any renewal or extension
thereof), a renewal or extension of such Letter of Credit or a replacement
Letter of Credit; or


(c)                                  if
the institution issuing the Letter of Credit ceases to be an Eligible
Institution and Borrower fails to deliver to Lender a replacement Letter of
Credit from an Eligible Institution within thirty (30) days of the date that
Borrower is notified or otherwise becomes aware that such institution ceased to
be an Eligible Institution. 


Section
7.9                                   Application
of Letter of Credit Proceeds.  In
the event of a draw upon a Letter of Credit due to the existence of an Event of
Default, Lender may apply such amounts in such order and in such amounts as
Lender shall elect, in its sole and absolute discretion, to payment of the
Debt.  In the event of a draw upon a
Letter of Credit due to the occurrence of an event described in Section 7.8(b)
or (c) above, Lender shall deposit the proceeds of such Letter of Credit
into a reserve account designated by Lender and such proceeds shall be held and
released in the same manner applicable to the release of the Letter of
Credit.  


 


VIII.                        DEFAULTS


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


(i)                              if any portion of the
Debt is not paid prior to the fifth (5th)
calendar day after the same is due or if the entire Debt is not paid on the
Maturity Date, along with applicable prepayment premiums, if any;


(ii)                           if any of the Taxes or Other
Charges are not paid prior to the date when the same become delinquent, except
to the extent that Borrower is contesting same in accordance with the terms of
Section 5.1.2 hereof, or there are sufficient funds in the Tax and Insurance
Escrow Fund to pay such Taxes or Other Charges and Lender fails to or refuses
to release the same from the Tax and Insurance Escrow Fund;


(iii)                        if the Policies are not kept in
full force and effect, or if certified copies of the Policies are not delivered
to Lender within ten (10) days of request;


(iv)                       if Borrower Transfers or
encumbers any portion of the Property without Lender’s prior written consent
(to the extent such consent is required) or otherwise violates the provisions
of this Agreement and Article 6 of the Mortgage;


(v)                          if any material
representation or warranty made by Borrower herein or in any other Loan
Document, or in any report, certificate, financial statement or 



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other instrument, agreement or document furnished to Lender shall have
been false or misleading in any material respect as of the date the
representation or warranty was made;


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


(vii)                    if a receiver, liquidator or
trustee shall be appointed for Borrower, Principal or Guarantor or if Borrower,
Principal or Guarantor shall be adjudicated a bankrupt or insolvent, or if any
petition for bankruptcy, reorganization or arrangement pursuant to federal
bankruptcy law, or any similar federal or state law, shall be filed by or
against, consented to, or acquiesced in by, Borrower, Principal or Guarantor,
or if any proceeding for the dissolution or liquidation of Borrower, Principal
or Guarantor shall be instituted; provided, however, if such appointment,
adjudication, petition or proceeding was involuntary and not consented to by
Borrower, Principal or Guarantor, upon the same not being discharged, stayed or
dismissed within one hundred eighty (180) days;


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


(ix)                         if Borrower breaches any of
its respective negative covenants contained in Section 5.2 or any covenant
contained in Section 4.1.30
hereof;


(x)                            with respect to any term,
covenant or provision set forth herein which specifically contains a notice
requirement or grace period, if Borrower shall be in default under such term,
covenant or condition after the giving of such notice or the expiration of such
grace period;


(xi)                         if any of the assumptions
contained in the Insolvency Opinion delivered to Lender in connection with the
Loan, or in any Additional Insolvency Opinion delivered subsequent to the
closing of the Loan, is or shall become untrue in any material respect;


(xii)                      [intentionally omitted];


(xiii)                   if Borrower shall continue to be in
Default under any of the terms, covenants or conditions of Section 9.1 hereof (unless Borrower is
unable to satisfy such term, covenants or conditions due to circumstances
beyond its control, such as the unavailability of information requested by
Lender), or willfully fails to cooperate with Lender in connection with a
Securitization pursuant to the provisions of Section 9.1
hereof, for five (5) Business Days after notice to Borrower from Lender;


(xiv)                  if Borrower shall continue to be in
Default under any of the other terms, covenants or conditions of this Agreement
not specified in subsections (i)
to (xii) above, for ten (10)
days after notice to Borrower from Lender, in the case 



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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 provided further that 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 such time as is reasonably necessary for Borrower in the
exercise of due diligence to cure such Default, such additional period not to
exceed one hundred eighty (180) days; or


(xv)                     if there shall be default under
any of the other Loan Documents beyond any applicable cure periods contained in
such documents, whether as to Borrower or the Property, or if any other such
event shall occur or condition shall exist, if the effect of such event or
condition is to accelerate the maturity of any portion of the Debt or to permit
Lender to accelerate the maturity of all or any portion of the Debt.


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


Section
8.2                                   Remedies.  (a) 
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 this Agreement or any of the other Loan Documents executed and
delivered by, or applicable to, Borrower or at law or in equity may be
exercised by Lender at any time and from time to time, whether or not all or
any of the Debt shall be declared due and payable, and whether or not Lender
shall have commenced any foreclosure proceeding or other action for the
enforcement of its rights and remedies under any of the Loan Documents with
respect to all or any part of the Property. 
Any such actions taken by Lender shall be cumulative and concurrent and
may be pursued independently, singly, successively, together or otherwise, at
such time and in such order as Lender may determine in its sole discretion, to
the fullest extent permitted by law, without impairing or otherwise affecting
the other rights and remedies of Lender permitted by law, equity or contract or
as set forth herein or in the other Loan Documents.  Without limiting the generality of the foregoing,
Borrower agrees that if an Event of Default is continuing (i) Lender is
not subject to any “one action” or “election of remedies” law or rule (to the
extent waiveable by Borrower), 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 



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the Property and the Mortgage has been
foreclosed, sold and/or otherwise realized upon in satisfaction of the Debt or
the Debt has been paid in full.


(b)                                 With
respect to Borrower and the Property, nothing contained herein or in any other
Loan Document shall be construed as requiring Lender to resort to the Property
for the satisfaction of any of the Debt in any preference or priority to any
other Property, and Lender may seek satisfaction out of the Property, or any
part thereof, in its absolute discretion in respect of the Debt.  In addition, to the extent permitted by
applicable law, Lender shall have the right from time to time to partially
foreclose the Mortgage in any manner and for any amounts secured by the
Mortgage then due and payable as determined by Lender in its sole discretion
including, without limitation, the following circumstances:  (i) in the event Borrower defaults
beyond any applicable grace period in the payment of one or more scheduled
payments of principal and interest, Lender may foreclose the Mortgage to
recover such delinquent payments or (ii) in the event Lender elects to
accelerate less than the entire outstanding principal balance of the Loan,
Lender may foreclose the Mortgage to recover so much of the principal balance
of the Loan as Lender may accelerate and such other sums secured by the
Mortgage as Lender may elect. 
Notwithstanding one or more partial foreclosures, the Property shall
remain subject to the Mortgage to secure payment of sums secured by the
Mortgage and not previously recovered.


(c)                                  During
the continuance of an Event of Default, Lender shall have the right from time
to time to sever the Note and the other Loan Documents into one or more
separate notes, mortgages and other security documents (the “Severed Loan Documents”)
in such denominations as Lender shall determine in its sole discretion for
purposes of evidencing and enforcing its rights and remedies provided
hereunder.  Borrower shall execute and
deliver to Lender from time to time, promptly after the request of Lender, a
severance agreement and such other documents as Lender shall request in order
to effect the severance described in the preceding sentence, all in form and
substance reasonably satisfactory to Lender. 
Borrower hereby absolutely and irrevocably appoints Lender following the
occurrence of an Event of Default as its true and lawful attorney, coupled with
an interest, in its name and stead to make and execute all documents necessary
or desirable to effect the aforesaid severance, Borrower ratifying all that its
said attorney shall do by virtue thereof; provided, however, Lender shall not
make or execute any such documents under such power until three (3) days after
notice has been given to Borrower by Lender of Lender’s intent to exercise its
rights under such power.  Borrower shall
be obligated to pay any costs or expenses incurred in connection with the
preparation, execution, recording or filing of the Severed Loan Documents in
connection with an Event of Default and the Severed Loan Documents shall not
contain any representations, warranties or covenants not contained in the Loan
Documents and any such representations and warranties contained in the Severed
Loan Documents will be given by Borrower only as of the Closing Date.


Section
8.3                                   Remedies
Cumulative; Waivers. The rights, powers and remedies of Lender under
this Agreement shall be cumulative and not exclusive of any other right, power or
remedy which Lender may have against Borrower pursuant to this Agreement or the
other Loan Documents, or existing at law or in equity or otherwise.  Lender’s rights, powers and remedies may be
pursued singly, concurrently or otherwise, at such time and in such order as
Lender may determine in Lender’s sole discretion.  No delay or omission to exercise any remedy,
right or power accruing upon an Event of Default shall impair any such remedy,
right or 



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power or shall be construed as a waiver
thereof, but any such remedy, right or power may be exercised from time to time
and as often as may be deemed expedient. 
A waiver of one Default or Event of Default with respect to Borrower
shall not be construed to be a waiver of any subsequent Default or Event of Default
by Borrower or to impair any remedy, right or power consequent thereon.


IX.                                SPECIAL
PROVISIONS


Section
9.1                                   Securitization.


9.1.1                     Sale of Notes and
Securitization.  Borrower
acknowledges and agrees that Lender may sell all or any portion of the Loan and
the Loan Documents, or issue one or more participations therein, or consummate
one or more private or public securitizations of rated single- or multi-class
securities (the “Securities”)
secured by or evidencing ownership interests in all or any portion of the Loan
and the Loan Documents or a pool of assets that include the Loan and the Loan
Documents (such sales, participations and/or securitizations, collectively, a “Securitization”).  At the request of Lender, and to the extent
not already required to be provided by or on behalf of Borrower under this
Agreement, Borrower shall use reasonable efforts to provide information not in
the possession of Lender or which may be reasonably required by Lender or take
other actions reasonably required by Lender, in each case in order to satisfy
the market standards to which Lender customarily adheres or which may be
reasonably required by prospective investors and/or the Rating Agencies in
connection with any such Securitization including, without limitation, to:


(a)                                  provide
additional and/or updated Provided Information, together with appropriate
verification and/or consents related to the Provided Information through
letters of auditors or opinions of counsel of independent attorneys reasonably
acceptable to Lender, prospective investors and/or the Rating Agencies;


(b)                                 assist
in preparing descriptive materials for presentations to any or all of the
Rating Agencies, and work with, and if requested, supervise, third-party
service providers engaged by Borrower and approved by Lender, Principal and
their respective affiliates to obtain, collect, and deliver information
requested or required by Lender, prospective investors and/or the Rating
Agencies;


(c)                                  deliver
revised organizational documents for Borrower, which counsel opinions and
organizational documents shall be reasonably satisfactory to Lender,
prospective investors and/or the Rating Agencies;


(d)                                 if
required by any prospective investor and/or any Rating Agency, use commercially
reasonable efforts to deliver such additional tenant estoppel letters,
subordination agreements or other agreements from parties to agreements that
affect the Property, which estoppel letters, subordination agreements or other
agreements shall be reasonably satisfactory to Lender, prospective investors
and/or the Rating Agencies;


(e)                                  make
such representations and warranties as of the closing date of the
Securitization with respect to the Property, Borrower, Principal, Guarantor and
the Loan Documents as may be reasonably requested by Lender, prospective
investors and/or the Rating Agencies and consistent with the facts covered by
such representations and warranties as they 



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exist on the date thereof, including the
representations and warranties made in the Loan Documents;


(f)                                    execute
such amendments to the Loan Documents and organizational documents as may be
reasonably requested by the holder of the Note or the Rating Agencies or
otherwise to effect the Securitization; provided, however, that Borrower shall
not be required to modify or amend any Loan Document if such modification or
amendment would (i) change the interest rate, the stated maturity or the
amortization of principal set forth in the Note, or (ii) modify or amend
any other material term of the Loan;


(g)                                 if
requested by Lender, review any information regarding the Property, Borrower,
Principal, Guarantor, Property Manager and the Loan which is contained in a
preliminary or final private placement memorandum, prospectus, prospectus
supplement (including any amendment or supplement to either thereof), or other
disclosure document to be used by Lender or any affiliate thereof; and


(h)                                 supply
to Lender such documentation, financial statements and reports in form and
substance required in order to comply with any applicable securities laws.


9.1.2                     Loan
Components.  Borrower covenants
and agrees that in connection with any Securitization of the Loan, upon Lender’s
request Borrower shall deliver one or more new component notes to replace the
original note or modify the original note to reflect multiple components of the
Loan or create one or more mezzanine loans (including amending Borrower’s
organizational structure to provide for one or more mezzanine borrowers) (each
a “Resizing Event”).  Lender agrees that such new notes or modified
note or mezzanine notes shall have the same weighted average coupon as the
original note prior to such Resizing Event and shall otherwise comply with the
provisions of Section 9.1.1(f).


9.1.3                     Securitization
Costs.  All reasonable third
party costs and expenses incurred by Borrower in connection with Borrower’s
complying with requests made under this Section 9.1 (including, without
limitation, the fees and expenses of the Rating Agencies) shall be paid by
Lender.


Section
9.2                                   Intentionally
Omitted.


Section
9.3                                   Exculpation.  Subject to the qualifications below, Lender
shall not enforce the liability and obligation of Borrower to perform and
observe the obligations contained in the Note, this Agreement, the Mortgage or
the other Loan Documents by any action or proceeding wherein a money judgment
shall be sought against Borrower, except that Lender may bring a foreclosure
action, an action for specific performance or any other appropriate action or
proceeding to enable Lender to enforce and realize upon its interest under the
Note, this Agreement, the Mortgage and the other Loan Documents, or in the
Property, the Rents following an Event of Default, 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 following an Event of Default
and in any other collateral given to Lender, and Lender, by accepting the Note,
this Agreement, the Mortgage and the other Loan 



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Documents, agrees that it shall not sue for,
seek or demand any deficiency judgment against Borrower in any such action or
proceeding under or by reason of or under or in connection with the Note, this
Agreement, the Mortgage or the other Loan Documents.  The provisions of this Section shall not,
however, (a) constitute a waiver, release or impairment of any obligation
evidenced or secured by any of the Loan Documents; (b) impair the right of
Lender to name Borrower as a party defendant in any action or suit for
foreclosure and sale under the Mortgage; (c) affect the validity or
enforceability of or any guaranty made in connection with the Loan or any of
the rights and remedies of Lender thereunder; (d) impair the right of
Lender to obtain the appointment of a receiver; (e) impair the enforcement
of the Assignment of Leases following an Event of Default; (f) constitute
a prohibition against Lender commencing any other appropriate action or
proceeding in order for Lender to exercise its remedies against the
Property.  In addition, the foregoing
shall not be deemed a waiver of the right of Lender to enforce the liability
and obligation of Borrower, by money judgment or otherwise, to the extent of
any loss, damage, cost, expense, liability, claim or other obligation incurred
by Lender (including attorneys’ fees and costs reasonably incurred) arising out
of or in connection with the following:


(i)                              the misapplication or
misappropriation of Rents;


(ii)                           the misapplication or
misappropriation of Insurance Proceeds or Awards;


(iii)                        Borrower’s failure to return or
to reimburse Lender for all Personal Property (other than Personal Property not
material to the operation or value of the Property) taken from the Property by
or on behalf of Borrower and not replaced with Personal Property of the same
utility and of the same or greater value;


(iv)                       any act of actual waste or arson
by Borrower, any principal, affiliate, general partner or member thereof or by
Guarantor;


(v)                          any fees or commissions paid
by Borrower to any principal, affiliate, general partner or member of Borrower
or any Guarantor in violation of the terms of this Guaranty, the other Loan
Documents;


(vi)                       Borrower’s failure to comply
with the provisions of Section 9.4 of the Mortgage; or


(vii)                    any fraud, willful misconduct or
intentional material misrepresentation by Borrower, Principal, Guarantor or any
of their respective Affiliates in connection with the Loan; or


(viii)                 any breach or default of any material
provision of Section 4.1.30 of this Agreement (other than breaches of
the requirements set forth in clauses (xii) or (xxiii) of the definition of
Special Purpose Entity).


Notwithstanding anything to the contrary in this Agreement, the Note or
any of the Loan Documents, (A) Lender shall not be deemed to have waived
any right which Lender may have under Section 506(a), 506(b), 1111(b) or
any other provisions of the Bankruptcy Code 



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to file a claim for the full amount of the Debt
secured by the Mortgage or to require that all collateral shall continue to
secure all of the Debt owing to Lender in accordance with the Loan Documents,
and (B) the Debt shall be fully recourse to Borrower in the event or:
(i) a voluntary breach or default under Section 5.2.10 of this
Agreement, (ii) Borrower or Principal filing a voluntary petition under
the Bankruptcy Code or any other Federal or state bankruptcy or insolvency law;
(iii) Borrower or Principal filing an answer consenting to or otherwise
acquiescing in or joining in any involuntary petition filed against it, by any
other Person under the Bankruptcy Code or any other Federal or state bankruptcy
or insolvency law, or soliciting or causing to be solicited petitioning
creditors for any involuntary petition from any Person; (iv) Borrower or
Principal consenting to or acquiescing in or joining in an application for the
appointment of a custodian, receiver, trustee, or examiner for Borrower,
Principal or any portion of the Property; or (v) Borrower or Principal
making an assignment for the benefit of creditors.


Section
9.4                                   Matters
Concerning Property Manager.  If
(a) an Event of Default has occurred, (b) Property Manager shall
become bankrupt or insolvent or (c) a default occurs under the Property
Management Agreement and continues beyond all applicable notice and cure
periods, Borrower shall, at the request of Lender, terminate the Property
Management Agreement and replace the Property Manager with a Qualifying
Property Manager pursuant to a Replacement Management Agreement, it being
understood and agreed that the management fee for such Qualifying Property
Manager shall not exceed then prevailing market rates.


Section
9.5                                   Servicer.  At the option of Lender, the Loan may be
serviced by a servicer/trustee (any such servicer/trustee, together with its
agents, nominees or designees, are collectively referred to as “Servicer”)
selected by Lender and Lender may delegate all or any portion of its
responsibilities under this Agreement and the other Loan Documents to the
Servicer pursuant to a servicing agreement (the “Servicing Agreement”) between
Lender and Servicer.  Borrower shall be
responsible for any reasonable set-up fees or any other initial costs relating
to or arising under the Servicing Agreement; provided, however, that Borrower
shall not be responsible for payment of the monthly servicing fee due to
Servicer under the Servicing Agreement.


X.                                    MISCELLANEOUS


Section
10.1                            Survival.  This Agreement and all covenants, agreements,
representations and warranties made herein and in the certificates delivered
pursuant hereto shall survive the making by Lender of the Loan and the
execution and delivery to Lender of the Note, and shall continue in full force
and effect so long as all or any of the Debt is outstanding and unpaid unless a
longer period is expressly set forth herein or in the other Loan
Documents.  Whenever in this Agreement
any of the parties hereto is referred to, such reference shall be deemed to
include the legal representatives, successors and assigns of such party.  All covenants, promises and agreements in
this Agreement, by or on behalf of Borrower, shall inure to the benefit of the
legal representatives, successors and assigns of Lender.


Section
10.2                            Lender’s
Discretion.  Whenever pursuant to
this Agreement, Lender exercises any right given to it to approve or
disapprove, or any arrangement or term is to be satisfactory to Lender, the
decision of Lender to approve or disapprove or to decide whether 



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arrangements or terms are satisfactory or not
satisfactory shall (except as is otherwise specifically herein provided) be in
the sole discretion of Lender and shall be final and conclusive.


Section
10.3                            Governing
Law.  This Agreement shall be
governed by and construed in accordance with the laws of the state in which the
Property is located (without regard to any conflict of laws or principles) and
the applicable laws of the United States of America.


Section
10.4                            Modification,
Waiver in Writing.  No
modification, amendment, extension, discharge, termination or waiver of any
provision of this Agreement, or of the Note, 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.


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


Section
10.6                            Notices.  All notices, consents, approvals and requests
required or permitted hereunder or under any other Loan Document shall be given
in writing and shall be effective for all purposes if hand delivered or sent by
(a) certified or registered United States mail, postage prepaid, return
receipt requested or (b) expedited prepaid delivery service, either
commercial or United States Postal Service, with proof of attempted delivery,
and by telecopier (with answer back acknowledged), addressed as follows (or at
such other address and Person as shall be designated from time to time by any
party hereto, as the case may be, in a written notice to the other parties
hereto in the manner provided for in this Section):


If to Lender:                                                                               JPMorgan
Chase Bank, N.A.

c/o ARCap Servicing, Inc.

5221 North O’Connor Blvd., Suite 600

Irving, Texas 75039

Attention:  Wesley Wolf



 86
 






 



With a copy to:                                                             NorthMarq
Capital Inc. 

3500 American Boulevard West, Suite 500

Bloomington, Minnesota 55431

Attention: Karen Pribnow


With a copy to:                                                             Kelley
Drye & Warren LLP

101 Park Avenue

New York, New York 10178

Attention:  Paul A. Keenan, Esq.


If to Borrower:                                                                   c/o
Behringer Harvard Funds

15601 Dallas Parkway, Suite 600

Addison, Texas 75001

Attention: Gerald J. Reihsen, III


With a copy to:                                                             Luce,
Forward, Hamilton & Scripps LLP

600 West Broadway

Suite 2600

San Diego, CA 92101-3391

Attention: Darryl Steinhause, Esq.


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; or in the case of expedited prepaid
delivery and telecopy, upon the first attempted delivery on a Business Day.


Section
10.7                            Trial
by Jury.


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


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


Section
10.9                            Severability.  Wherever possible, each provision of this
Agreement shall be interpreted in such manner as to be effective and valid
under applicable law, but if any provision of this Agreement shall be
prohibited by or invalid under applicable law, 



 87
 






 



such provision shall be ineffective to the
extent of such prohibition or invalidity, without invalidating the remainder of
such provision or the remaining provisions of this Agreement.


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


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


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


Section
10.13                     Expenses;
Indemnity. 
(a)  Borrower covenants and agrees to pay or, if Borrower
fails to pay, to reimburse, Lender upon receipt of written notice from Lender
for all reasonable costs and expenses (including reasonable attorneys’ fees and
disbursements) incurred by Lender in connection with (i) the preparation,
negotiation, execution and delivery of this Agreement and the other Loan
Documents and the consummation of the transactions contemplated hereby and
thereby and all the costs of furnishing all opinions by counsel for Borrower
(including without limitation any opinions requested by Lender as to any legal
matters arising under this Agreement or the other Loan Documents with respect
to the Property); (ii) Borrower’s ongoing performance of and compliance
with Borrower’s respective agreements and covenants contained in this Agreement
and the other Loan Documents on its part to be performed or complied with after
the Closing Date, including, without limitation, confirming compliance with
environmental and insurance requirements; (iii) Lender’s ongoing
performance and compliance with all agreements and conditions contained in this
Agreement and the other Loan Documents on its part to be performed or complied
with after the Closing Date; (iv) except as otherwise provided in this
Agreement, the negotiation, preparation, execution, delivery and 



 88
 






 



administration of any consents, amendments,
waivers or other modifications to this Agreement and the other Loan Documents
and any other documents or matters reasonably requested by Lender;
(v) securing Borrower’s compliance with any requests made pursuant to the
provisions of this Agreement; (vi) the filing and recording fees and
expenses, title insurance and reasonable fees and expenses of counsel for
providing to Lender all required legal opinions, and other similar expenses
incurred in creating and perfecting the Lien in favor of Lender pursuant to
this Agreement and the other Loan Documents; (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, this Agreement, the other Loan Documents, the Property, or
any other security given for the Loan; and (viii) enforcing any
obligations of or collecting any payments due from Borrower under this
Agreement, the other Loan Documents or with respect to the Property (including
any fees incurred by Servicer in connection with the transfer of the Loan to a
special servicer prior to a Default or Event of Default) or in connection with
any refinancing or restructuring of the credit arrangements provided under this
Agreement in the nature of a “work-out” or of any insolvency or
bankruptcy proceedings; provided, however, that Borrower shall not be liable
for the payment of any such costs and expenses to the extent the same arise by
reason of the gross negligence, illegal acts, fraud or willful misconduct of
Lender.


(b)                                 Borrower
shall indemnify, defend and hold harmless Lender from and against any and all
other liabilities, obligations, losses, damages, penalties, actions, judgments,
suits, claims, costs, expenses and disbursements of any kind or nature
whatsoever (including, without limitation, the reasonable fees and
disbursements of counsel for Lender in connection with any investigative,
administrative or judicial proceeding commenced or threatened, whether or not
Lender shall be designated a party thereto), that may be imposed on, incurred
by, or asserted against Lender in any manner relating to or arising out of
(i) any breach by Borrower of its obligations under, or any material
misrepresentation by Borrower contained in, this Agreement or the other Loan
Documents, or (ii) the use or intended use of the proceeds of the Loan
(collectively, the “Indemnified Liabilities”); provided, however, that Borrower
shall not have any obligation to Lender hereunder to the extent that such
Indemnified Liabilities arise from the gross negligence, illegal acts, fraud or
willful misconduct of Lender.  To the
extent that the undertaking to indemnify, defend and hold harmless set forth in
the preceding sentence may be unenforceable because it violates any law or
public policy, Borrower shall pay the maximum portion that it is permitted to
pay and satisfy under applicable law to the payment and satisfaction of all
Indemnified Liabilities incurred by Lender.


(c)                                  Borrower
covenants and agrees to pay for or, if Borrower fails to pay, to reimburse
Lender for, any fees and expenses incurred by any Rating Agency in connection
with any Rating Agency review of the Loan, the Loan Documents or any
transaction contemplated thereby or any consent, approval, waiver or
confirmation obtained from such Rating Agency pursuant to the terms and
conditions of this Agreement or any other Loan Document and Lender shall be
entitled to require payment of such fees and expenses as a condition precedent
to the obtaining of any such consent, approval, waiver or confirmation.


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



 89
 






 



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


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


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


Section
10.17                     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 or the financing evidenced by the
Loan Documents, to Lender, JPM, or any of their Affiliates shall be subject to
the prior written approval of Lender.


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


Section
10.19                     Waiver
of Counterclaim.  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.



 90
 






 



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


Section
10.21                     Brokers
and Financial Advisors.  Borrower
hereby represents that it has dealt with no financial advisors, brokers,
underwriters, placement agents, agents or finders in connection with the
transactions contemplated by this Agreement other than NorthMarq Capital.  Borrower hereby agrees to indemnify, defend
and hold Lender harmless from and against any and all claims, liabilities,
costs and expenses of any kind (including Lender’s reasonable attorneys’ fees
and expenses) in any way relating to or arising from a claim by any Person that
such Person acted on behalf of Borrower in connection with the transactions
contemplated herein.  The provisions of
this Section 10.21 shall survive
the expiration and termination of this Agreement and the payment of the Debt.


Section
10.22                     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 or understandings among or between such parties, whether oral
or written, are superseded by the terms of this Agreement and the other Loan
Documents and unless specifically set forth in a writing contemporaneous
herewith the terms, conditions and provisions of such prior agreement do not
survive execution of this Agreement.


Section
10.23                     Transfer of Loan.  In the event that Lender transfers the Loan,
Borrower shall continue to make payments at the place set forth in the Note
(and its obligation to make such payments shall be deemed satisfied upon the
making of such payments) until such time that Borrower is notified in writing
by Lender that payments are to be made at another place.


Section
10.24                     Joint
and Several Liability.  If
Borrower consists of more than one (1) Person the obligations and
liabilities of each Person shall be joint and several.


(THE
BALANCE OF THIS PAGE HAS BEEN INTENTIONALLY LEFT BLANK.)



 91














 


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.


	
   

  	
  BORROWER:

  
	
   

  	
   

  
	
   

  	
  BEHRINGER HARVARD THREE PARKWAY,

  LLC, a Delaware limited liability company

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Name: Gerald J. Reihsen, III

  
	
   

  	
  Title: Secretary

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  LENDER:

  
	
   

  	
   

  
	
   

  	
  JPMORGAN CHASE BANK, N.A., a banking

  association chartered under the laws of the United

  States of America

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name:

  
	
   

  	
  Title:

  



 















 


SCHEDULE I


Form Guaranty of Payment



 I-1














 


SCHEDULE II


Rent Roll



 II-1














 


SCHEDULE III


(Required
Repairs—Deadlines For Completion)


	
  Required Repair:

  	
   

  	
  Time to complete:

  
	
   

  	
   

  	
   

  
	
  “Water Damage”
  as defined in the Escrow Agreement

  	
   

  	
  180 Days

  



 



 III-1














 


SCHEDULE IV


(Organizational Chart of
Borrower)



 IV-1














 


SCHEDULE V


(Exceptions to
Representations)


[None]



 V-1














 


SCHEDULE VI



(Lease Obligations)


	
  TENANT

  	
  RELEASE DATES

  



 


	
   

  	
   

  	
  12/1/06

  	
   

  	
  1/1/07

  	
   

  	
  2/1/07

  	
   

  	
  3/1/07

  	
   

  
	
  AIG

  	
   

  	
  $

  	
  50,464

  	
   

  	
  $

  	
  50,464

  	
   

  	
  $

  	
  50,464

  	
   

  	
  $

  	
  50,464

  	
   

  
	
  DREXEL

  	
   

  	
  $

  	
  45,600

  	
   

  	
  $

  	
  45,600

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  EXCELLERX

  	
   

  	
  $

  	
  51,214

  	
   

  	
  $

  	
  51,214

  	
   

  	
  $

  	
  51,214

  	
   

  	
  $

  	
  51,214

  	
   

  
	
  TOTAL:

  	
   

  	
  $

  	
  147,278

  	
   

  	
  $

  	
  147,278

  	
   

  	
  $

  	
  101,678

  	
   

  	
  $

  	
  101,678

  	
   

  



 



 VI-1