Exhibit 10.1


 


LOAN AGREEMENT


 


This LOAN AGREEMENT (“Agreement”)
is made and entered into effective as of December 31, 2008, by and between
BEHRINGER HARVARD 1875 LAWRENCE, LLC, a
Delaware limited liability company, (the “Borrower”) and MUTUAL OF OMAHA BANK, a federally chartered savings bank (“Lender”).


 


ARTICLE I


 


DEFINITION OF TERMS


 


1.1           Definitions.  As used in this Agreement, the following
terms shall have the respective meanings indicated below:


 


Advance:  A disbursement by Lender, whether by journal
entry, deposit to Borrower’s account, check to third party or otherwise of any
of the proceeds of the Loan.


 


Agreement:  This Loan Agreement, as the same may from
time to time be amended or supplemented.


 


Allocations:  The items set forth in the Budget for which
Advances of Loan proceeds will be made, other than the initial Advance at
closing.


 


Approved Lease Form:  That form of lease agreement that Borrower
shall utilize in leasing all or any part of the Mortgaged Property on Leases in
excess of fifteen thousand (15,000) square feet of space, with Lender’s prior
written consent thereto.


 


Approved Leases:  Bona fide new lease or renewal lease
arrangements with third party tenants conforming in all respects with the
requirements of the Loan Documents and, if required under the terms of the Loan
Documents, with Lender’s express prior written approval thereto.


 


Architectural Barrier Laws:  Any and all architectural barrier laws,
including, without limitation, the Americans with Disabilities Act of 1990,
P.L. 101-336 as amended, or any successor thereto.


 


Assignment:  That certain Assignment of Rents and Leases
of even date herewith executed by Borrower to Lender.


 


Budget:  The Budget set forth on Exhibit B
attached hereto and incorporated herein by reference, for Advances other than
the initial Advance at closing.


 


Calendar Period:  As defined in Section 3.1 hereof.


 


Capital Expenditures:  An Improvement listed as a capital
expenditure as set forth in the Budget or as otherwise approved by Lender, such
approval not to be unreasonably withheld.


 


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Code:  The Uniform Commercial Code, as amended from
time to time, in effect in the state in which the Mortgaged Property is
located.


 


Commitment Fee:  The sum of $176,250.00 to be paid by Borrower
to Lender pursuant to this Agreement.


 


Compliance Certificate:  A certificate to be furnished to Lender, in
the form reasonably acceptable to Lender in all respects, certified by the
appropriate officer of Borrower pursuant to the applicable provisions of this
Agreement, certifying that as of the date thereof, among other things, (i) the
Debt Coverage Ratio for the applicable Calendar Period immediately preceding
the date of the certificate, and (ii) no Event of Default shall have occurred
and be continuing, or if any Event of Default shall have occurred and be
continuing, specifying in detail the nature and period of existence thereof and
any action taken or proposed to be taken by Borrower with respect thereto.


 


Contested Item:  Any imposition, assessment, or mechanic’s or
materialman’s lien asserted against all or any portion of the Mortgaged
Property if, and so long as (i) Borrower has notified Lender of same
within twenty (20) business days of obtaining knowledge thereof, (ii) Borrower
shall diligently and in good faith contest the same by appropriate legal
proceedings which shall operate to prevent the enforcement of collection of the
same and the sale of the Mortgaged Property or any part thereof, to satisfy the
same, (iii) Borrower shall have furnished to Lender a cash deposit, or an
indemnity bond reasonably satisfactory to Lender with a surety reasonably
satisfactory to Lender, in the amount of such imposition or lien claim, plus a
reasonable additional sum to pay all costs, interest and penalties that may be
imposed or incurred in connection therewith, to ensure payment of the matters
under contest and to prevent any sale or forfeiture of the Mortgaged Property
or any part thereof, (iv) Borrower shall promptly upon final determination
thereof pay the amount of any such imposition or lien claim so determined,
together with all costs, interest and penalties which may be payable in
connection therewith, (v) the failure to pay such imposition or lien claim
does not constitute a default under any other lien instrument, mortgage or
security interest covering or affecting any part of the Mortgaged Property, and
(vi) notwithstanding the foregoing, Borrower shall promptly upon request
of Lender pay any such imposition or lien claim notwithstanding such contest,
if in the reasonable opinion of Lender the Mortgaged Property shall be in
jeopardy or in danger of being forfeited or foreclosed.  Lender may pay over any such cash deposit or
part thereof to the claimant entitled thereto at any time when, in the
reasonable judgment of Lender, the entitlement of such claimant is established,
or Lender shall make such cash deposit available to pay such amount as Borrower
is determined to be liable for, or required to pay, and, absent an Event of Default,
shall release any excess to Borrower.


 


Contracts:  All of the right, title, and interest of
Borrower in, to, and under any and all (i)  contracts for the sale of
all or any portion of the Mortgaged Property, whether such Contracts are now or
at any time hereafter existing, together with all payments, earnings, income,
and profits arising from sale of all or any portion of the Mortgaged Property
or from the Contracts and all other sums due or to become due under and
pursuant thereto; (ii) contracts, licenses, permits, and rights relating
to utility services whether executed, granted, or issued by a private person or
entity or a governmental or quasi-governmental agency, which are directly or
indirectly related to, or connected with, the Mortgaged Property; and (iii) all
other contracts 


 


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which
in any way relate to the design, use, enjoyment, occupancy, operation, repair,
maintenance, or ownership of the Mortgaged Property (save and except any and
all leases, subleases or other agreements pursuant to which Borrower is granted
a possessory interest in the Land), including but not limited to engineer
contracts, architect contracts, maintenance agreements, construction contracts
and service contracts.


 


Cure Period:  As defined in Section 7.1(b) hereof.


 


Debt Coverage Ratio:  The definition and formula for this term is
provided in Section 3.1 hereof.


 


Debt Service Requirements:  As defined in Section 3.1 hereof.


 


Debtor Relief Laws:  Title 11 of the United States Code, as now or
hereafter in effect, or any other applicable law, domestic or foreign, as now
or hereafter in effect, relating to bankruptcy, insolvency, liquidation,
receivership, reorganization, arrangement or composition, extension or
adjustment of debts, or similar laws affecting the rights of creditors.


 


Default Rate:  The rate of interest specified in the Note to
be paid by the maker of the Note from and after the occurrence of a default in
payment under the provisions of the Note and Loan Documents, not in excess of
the Maximum Lawful Rate.


 


Disposition:  Any sale, lease (except as expressly
permitted pursuant to the Loan Documents), exchange, assignment, conveyance,
transfer, trade, or other disposition of all or any portion of the Mortgaged
Property (or any interest therein) or all or any part, directly or indirectly,
of the beneficial ownership interest in Borrower (if Borrower is a corporation,
limited liability company, partnership, general partnership, limited
partnership, joint venture, trust, or other type of business association or
legal entity).


 


Environmental
Indemnification Agreement:  That
certain Environmental Indemnity Agreement of even date herewith executed for
the benefit of Lender.


 


Equity Contribution:  Borrower’s equity contribution to the
Mortgaged Property from the Borrower’s equity funds in an amount equal to
$17,657,250.00.  All of Borrower’s
required equity shall be invested at or prior to Loan closing.


 


ERISA:  The Employee Retirement Income Security Act
of 1974, as amended and any successor statute thereof.


 


Event of Default:  Any happening or occurrence described in Section 7.1
of this Agreement.


 


Financing Statement:  The financing statement or financing
statements (on Standard Form UCC-1 or otherwise) delivered by Borrower in
connection with the Loan Documents.


 


Fixtures:  All materials, supplies, equipment, systems,
apparatus, and other items now owned or hereafter acquired by Borrower and now
or hereafter attached to, installed in, or used in connection with (temporarily
or permanently) any of the Improvements or the Land, together 


 


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with
all accessions, appurtenances, replacements, betterments, and substitutions for
any of the foregoing and the proceeds thereof.


 


Force Majeure:  Any act of God, war, civil disturbance, acts
or regulations of Governmental Authorities affecting the sale or transportation
of material, supplies or labor, and strikes, lockouts and other labor disputes.


 


Governmental Authority:  Any and all applicable courts, boards,
agencies, commissions, offices, or authorities of any nature whatsoever for any
governmental unit (federal, state, county, district, municipal, city or
otherwise), whether now or hereafter in existence.


 


Governmental Requirements:  All statutes, laws, ordinances, rules,
regulations, orders, writs, injunctions or decrees of any Governmental
Authority applicable to Borrower, Guarantor or the Mortgaged Property.


 


Guarantor:  BEHRINGER HARVARD
OPPORTUNITY REIT II, INC., a Maryland corporation.


 


Guaranty:  Those instruments of guaranty now or
hereafter in effect from Guarantor to Lender guaranteeing the performance of,
or continued compliance with, the covenants contained in the Loan Documents, or
both.


 


Impositions:  (i) All real estate and personal
property taxes, charges, assessments, standby fees, excises, and levies and any
interest, costs, or penalties with respect thereto, general and special,
ordinary and extraordinary, foreseen and unforeseen, of any kind and nature
whatsoever which at any time prior to or after the execution hereof may be
assessed, levied, or imposed upon the Mortgaged Property or the ownership, use,
occupancy, or enjoyment thereof, or any portion thereof, or the sidewalks,
streets, or alleyways adjacent thereto; (ii) any charges, fees, license
payments, or other sums payable for or under any easement, license, or
agreement maintained for the benefit of the Mortgaged Property; (iii) water,
gas, sewer, electricity, and other utility charges and fees relating to the Mortgaged
Property; and (iv) assessments and charges arising under any subdivision,
condominium, planned unit development, or other declarations, restrictions,
regimes, or agreements affecting the Mortgaged Property.


 


Impositions Reserve:  As defined in Section 6.5 hereof.


 


Improvements:  Any and all additions, alterations, or
repairs, now or at any time hereafter situated, placed, or constructed upon the
Land, or certain site improvements to the Land, and the approximately 186,000
square foot office building located on the Land.


 


Indebtedness:  (i) The principal of, interest on, or
other sums evidenced by the Note or the Loan Documents; (ii) any other
amounts, payments, or premiums payable under the Loan Documents; (iii) such
additional sums, with interest thereon, as may hereafter be borrowed from
Lender, its successors or assigns, by the then record owner of the Mortgaged
Property, when evidenced by a promissory note which, by its terms, is secured
hereby (it being contemplated by Borrower and Lender that such future
indebtedness may be incurred); and (iv) any and all renewals,
modifications, amendments, restatements, rearrangements, consolidations,
substitutions, replacements, enlargements, and extensions of any of the
foregoing, it being 


 


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contemplated
by Borrower and Lender that Borrower may hereafter become indebted to Lender in
further sum or sums.


 


Insured Casualty:  As defined in Section 6.3 hereof.


 


Land:  The real property or interest therein
described in Exhibit A attached hereto and incorporated herein by
this reference, together with all right, title, interest, and privileges of
Borrower in and to (i) all streets, ways, roads, alleys, easements,
rights-of-way, licenses, rights of ingress and egress, vehicle parking rights
and public places, existing or proposed, abutting, adjacent, used in connection
with or pertaining to such real property or the Improvements thereon; (ii) any
strips or gores of real property between such real property and abutting or
adjacent properties; (iii) all water and water rights, timber, crops,
pertaining to such real property; and (iv) all appurtenances and all
reversions and remainders in or to such real property.


 


Leases:  Any and all leases, master leases, subleases,
licenses, concessions, or other agreements (written or oral, now or hereafter
in effect) which grant to third parties a possessory interest in and to, or the
right to use, all or any part of the Mortgaged Property, together with all
security and other deposits or payments made in connection therewith.


 


Lease Schedule:  That certain Lease Schedule showing tenants
and rent payable, including escalations, term, and other material provisions
attached hereto as Exhibit C and as modified from time to time upon
written approval from Lender.


 


Leasing Commissions:  The reasonable and customary commissions paid
to a real estate broker licensed in the state where the Mortgaged Property is
located in connection with an Approved Lease, pursuant to commission agreements
containing such terms and provisions including, without limitation, the timing
of the payment of the commission, as are then prevailing between third party,
unaffiliated owners and brokers for comparable leases of space at properties
similar to the Mortgaged Property in the market area in which the Mortgaged
Property is located.


 


Legal Requirements:  Any and all present and future judicial
decisions, statutes, rulings, rules, regulations, permits, certificates, or
ordinances of any Governmental Authority in any way applicable to Borrower, any
Guarantor or the Mortgaged Property.


 


Lien Instrument:  The Mortgage (or Deed of Trust) of even date
herewith pursuant to which Borrower mortgages the Mortgaged Property to secure
the Loan.


 


Loan:  The loan evidenced by the Note and governed
by this Agreement.


 


Loan Amount: The lesser of
(i) $23,500,000.00, or (ii) 60% of the fair market value of the
Mortgaged Property, as indicated by the appraisal described in Section 3.1
hereof.


 


Loan Documents:  The Note, the Lien Instrument, this
Agreement, the Security Agreement, the Financing Statement, the Guaranty, the
Assignment, the Environmental Indemnification Agreement and any and all other
documents now or hereafter executed by Borrower, Guarantor, or any other person
or party in connection with the Loan, the indebtedness evidenced by the Note,
or the covenants contained in this Agreement.


 


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Loan-to-Value Ratio: The quotient
of (a) the Outstanding Principal Balance, divided by (b) the “as
stabilized” fair market value of the Mortgaged Property as indicated by an
appraisal prepared by an appraiser acceptable to Lender and presented and based
upon such standards as may be required by Lender.


 


Material Adverse Effect:  Any material and adverse effect on (i) the
operations, results of operations, capitalization or liquidity of Borrower or
Guarantor, (ii) the value of the Mortgaged Property, or (iii) the
validity, enforceability or binding effect of any of the Loan Documents.


 


Maturity Date:  Means the Original Maturity Date, subject,
however, to any extension,  right of
acceleration as herein provided, and as provided elsewhere in the Loan
Documents.


 


Maximum Lawful Rate:  The rate utilized by Lender pursuant to
either (i) the usury ceiling from time to time in effect as provided in
Texas law, or (ii) United States federal law for the purpose of
determining the maximum lawful rate allowed by applicable laws, not to exceed
eighteen percent (18%) per annum.


 


Mortgaged Property:  The Land, Fixtures, Improvements, Personalty,
Contracts, Leases, Rents and Reserves, and any interest of Borrower now owned
or hereafter acquired in and to the Land, Fixtures, Personalty, Contracts,
Leases, Rents, and Reserves, together with any and all other security and
collateral of any nature whatsoever, now or hereafter given by Borrower for the
repayment of the Indebtedness or the performance and discharge of the
Obligations.  As used in this Agreement,
the term “Mortgaged Property” shall be expressly defined as meaning all
or, where the context permits or requires any portion of the above or, any
interest therein.


 


Note:  That certain Promissory Note dated as of even
date herewith in the principal sum of the Loan Amount (together with all
renewals and extensions thereof) executed and delivered by Borrower payable to
the order of Lender, evidencing the Loan.


 


Obligations:  Any and all of the covenants, conditions,
warranties, representations, and other obligations made or undertaken by
Borrower to Lender under the Loan Documents.


 


Original Maturity Date:  That day that is four (4) years from the
date hereof.


 


Outstanding Principal
Balance: The amount of principal then advanced and outstanding and payable
from Borrower to Lender in accordance with the Note.


 


Patriot Act:  The USA Patriot Act Title III of Pub.
L.107-56 (signed into law October 26, 2001).


 


Permitted Disposition:  (i) The sale, transfer or exchange of
any portion of the Land for which Lender executes and delivers a release of
lien, (ii) the leasing of any portion of the Land and Improvements
pursuant to a Lease permitted under the Loan Documents, and (iii) a
transfer of a beneficial interest in Borrower or Borrower’s member or members,
by any person or entity holding such an interest to any other affiliated person
or entity holding such an interest or in the case of Borrower’s member or
members, to any unaffiliated person or entity, so long as Borrower remains
under the control of Guarantor, and Guarantor retains ownership, directly or
indirectly, of at least eighty percent (80%) of the membership interests in
Borrower.


 


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Permitted Exceptions:  The exceptions to title reflected in the
Title Insurance issued by the Title Company to Lender.


 


Personalty:  All of the right, title, and interest of
Borrower in and to, (i) all building and construction materials and
equipment; (ii) furniture, furnishings, equipment, machinery, goods
(including, but not limited to, crops, farm products, timber and timber to be
cut); (iii) general intangibles (including payment intangibles), money,
insurance proceeds, accounts, contract and subcontract rights, trademarks,
trade names, inventory, monetary obligations, chattel paper (including
electronic chattel paper), investment property, instruments, documents, letter
of credit rights, and commercial tort claims; (iv) all refundable,
returnable, or reimbursable fees, deposits or other funds or evidences of
credit or indebtedness deposited by or on behalf of Borrower with any governmental
agencies, boards, corporations, providers of utility services, public or
private, including specifically, but without limitation, all refundable,
returnable, or reimbursable tap fees, utility deposits, commitment fees and
development costs, any awards, remunerations, reimbursements, settlements, or
compensation heretofore made or hereafter to be made by any Governmental
Authority pertaining to the Land, Improvements, Fixtures, Contracts, or
Personalty, including but not limited to those for any vacation of, or change
of grade in, any streets affecting the Land or the Improvements and those for
municipal utility district or other utility costs incurred or deposits made in
connection with the Land; and (v) all other personal property of any kind
or character as defined in and subject to the provisions of the Code (Article 9 -
Secured Transactions); any and all of which are now owned or hereafter acquired
by Borrower, and which are now or hereafter situated in, on, or about the Land
or the Improvements, or used in or necessary to the complete and proper
planning, development, construction, financing, use, occupancy, or operation
thereof, or acquired (whether delivered to the Land or stored elsewhere) for
use in or on the Land or the Improvements, together with all accessions,
replacements, and substitutions thereto or therefor and the proceeds thereof.


 


Regulatory Authority:  As defined in Section 2.5 hereof.


 


Rents:  All of Borrower’s right title and interest in
and to the rents, revenues, income, proceeds, profits, security and other types
of deposits (after Borrower acquires title thereto), and other benefits paid or
payable by parties to the Contracts or Leases, other than Borrower, for using,
leasing, licensing, possessing, operating from, residing in, selling, or
otherwise enjoying all or any portion of the Mortgaged Property.


 


Repairs:  All capital improvements, repairs and
replacements performed at the Mortgaged Property, including, but not limited
to, the performance of work to the roofs, chimneys, gutters, downspouts,
paving, curbs, ramps, driveways, balconies, porches, patios, exterior walls,
exterior doors and doorways, windows, carpets, appliances, fixtures, elevators
and mechanical and HVAC equipment.


 


Reserves:  As defined in Section 2.6 and Section 6.6
hereof.


 


Restoration Casualty:  As defined in Section 6.3 hereof.


 


Security Agreement:  The Security Agreement shall mean all
security agreements, whether contained in the Lien Instrument, this Agreement,
a separate security agreement or 


 


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otherwise
creating a security interest in all personal property and fixtures of Borrower
(including replacements, substitutions and after-acquired property) now or
hereafter located in or upon the Land or Improvements, or used or intended to
be used in the operation thereof, to secure the Loan.


 


Special Account:  An account established by Borrower with
Lender (in which Borrower shall at all times maintain a minimum balance of
$1,000.00) into which all Advances made directly to Borrower will be deposited.


 


Subordinate Mortgage:  Any mortgage, lien instrument, pledge, lien
(statutory, constitutional, or contractual), security interest, encumbrance or
charge, or conditional sale or other title retention agreement, covering all or
any portion of the Mortgaged Property executed and delivered by Borrower, the
lien of which is subordinate and inferior to the lien of the Lien Instrument.


 


Tenant
Improvements: 
The construction or modification of improvements on or installation of
fixtures or equipment in the Mortgaged Property, not to exceed Twenty and
No/100 Dollars ($20.00) per square foot unless otherwise agreed to by Lender,
not to be unreasonably withheld, as required to be performed by Borrower
pursuant to the terms of any lease which is either (i) an Approved Lease,
or (ii) approved in writing by Lender.


 


Tenant
Improvements and Leasing Commissions Advance:  An Advance related to Tenant Improvements or
Leasing Commissions, which is to be made at the time Borrower satisfies the
conditions set forth in Sections 3.1 and 3.2.


 


Title Company:  The Title Company (and its issuing agent, if
applicable) issuing the Title Insurance, which shall be acceptable to Lender in
its sole and absolute discretion.


 


Title Insurance:  One or more title insurance commitments,
binders or policies, as Lender may require, issued by the Title Company, on a
coinsurance or reinsurance basis (with direct access endorsement or rights) if
and as required by Lender, equal to the Loan Amount insuring that the Lien
Instrument constitutes a valid first and prior lien covering the Land and
Improvements subject only to those exceptions which Lender may approve.


 


ARTICLE II



THE LOAN


 


2.1           Agreement to Lend.  Lender hereby agrees to lend up to but not in
excess of the Loan Amount to Borrower, and Borrower hereby agrees to borrow
such sum from Lender, all upon and subject to the terms and provisions of this
Agreement, such sum to be evidenced by the Note.  No principal amount repaid by Borrower may be
reborrowed by Borrower.  Borrower’s
liability for repayment of the interest on account of the Loan shall be limited
to and calculated with respect to Loan proceeds actually disbursed to Borrower
pursuant to the terms of this Agreement and the Note and only from the date or
dates of such disbursements.  Lender may,
in Lender’s discretion, disburse Loan proceeds by journal entry to pay interest
and financing costs and disburse Loan proceeds directly to third parties to pay
costs or expenses required to be paid by Borrower pursuant to this
Agreement.  Loan proceeds disbursed by
Lender by journal entry to 


 


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pay interest or financing
costs, and Loan proceeds disbursed directly by Lender to pay costs or expenses
required to be paid by Borrower pursuant to this Agreement, shall constitute
Advances to Borrower.


 


2.2           Advances.  Other than the initial Advance for
acquisition costs, the purposes for which Loan proceeds are allocated and the
respective amounts of such Allocations are set forth in the Budget.


 


2.3           Allocations.  Except as may otherwise be provided in the
Loan Documents, the Allocations shall be disbursed only for the purposes set
forth in the Budget.  Except as Lender
may otherwise consent (not to be unreasonably withheld), Lender shall not be
obligated to make an Advance for an Allocation set forth in the Budget to the
extent that the amount of the Advance for such Allocation would, when added to
all prior Advances for such Allocation, exceed the total of such Allocation as
set forth in the Budget.


 


2.4           Limitation on Advances.  To the extent that Loan proceeds disbursed by
Lender pursuant to the Allocations are insufficient to pay all costs required
for the Mortgaged Property, Borrower shall pay such excess costs with funds
derived from sources other than the Loan. 
Under no circumstances shall Lender be required to disburse any proceeds
of the Loan in excess of the Loan Amount.


 


2.5           Loan Limitation.  In the event
that, as a result of the occurrence of a Material Adverse Effect, any appraisal
is required or desired by Lender, or any other governmental entity or
quasi-governmental entity which has the authority and power to regulate the
business and other activities of Lender (“Regulatory Authority”),
Borrower shall, within sixty (60) days following a request therefor by
Lender, furnish to Lender (at Borrower’s sole cost and expense) an appraisal in
form, substance and by an appraising firm reasonably acceptable to Lender and,
if applicable, the Regulatory Authority requiring such appraisal pursuant to
this Section; provided that Borrower shall not be required to furnish more than
one (1) such test appraisal in any calendar year.  In the event Borrower should fail to timely
provide an acceptable appraisal of the Mortgaged Property at Borrower’s cost
and expense, Lender shall further be entitled, at any time, to obtain an
appraisal on its own, at Borrower’s expense, and any such appraisal obtained by
Lender may be utilized by Lender (even in lieu of other available appraisals) to
undertake the loan-to-value calculations described herein.


 


2.6           Budgeted Reserves.  The Budget
shall reflect that, of the Loan Amount, funds may be advanced hereunder for (i) Capital
Expenditures, and for (ii) Tenant Improvement and Leasing Commissions (the
“Tenant Improvement/Leasing Commission Costs”). 
The Capital Expenditures and Tenant Improvement/Leasing Commission
Costs, and the cost items in the Budget that are not advanced, may hereinafter
be referred to collectively as the “Reserves”. 
The amount in each of the Reserve accounts and the disbursal of funds
from each of the Reserve accounts is subject to the approval of the Lender as
set forth herein.


 


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ARTICLE III


 


ADVANCES


 


3.1                                 Conditions to Advance. 
The obligation of Lender to make the initial Advance hereunder, is
subject to the prior or simultaneous occurrence of each of the following
conditions:


 


(a)                                  Lender shall have received from Borrower
all of the Loan Documents duly executed by Borrower and by Guarantor, as
applicable;


 


(b)                                 Lender shall have received certified
copies of resolutions of Borrower, if Borrower is a corporation, or a certified
copy of a consent of partners or members, if Borrower is a partnership or
limited liability company, authorizing execution, delivery and performance of
all of the Loan Documents and authorizing the borrowing hereunder, along with
such certificates of existence, certificates of good standing and other certificates
or documents as Lender may reasonably require to evidence Borrower’s authority;


 


(c)                                  Lender shall have received (i) true
copies of all organizational documents of Borrower, including all amendments or
supplements thereto, (ii) if Borrower is a legal entity other than a
corporation, true copies of all organizational documents of any constituent
party, and (iii) such certificates or other documents as Lender may
reasonably require to evidence Borrower’s authority;


 


(d)                                 Lender shall have received evidence that
the Mortgaged Property is not located within any designated flood plain or
special flood hazard area; or evidence that Borrower has applied for and
received flood insurance covering the Mortgaged Property in the amount of the
Loan or the maximum coverage available to Lender;


 


(e)                                  Lender shall have received evidence of
compliance with all Governmental Requirements with requirements relative
thereto;


 


(f)                                    Lender shall have received a full-size,
single sheet copy of all recorded subdivision or plat maps of the Land approved
by all Governmental Authorities, an as-built survey in compliance with Lender’s
requirements, and legible copies of all instruments representing exceptions to
the state of title to the Mortgaged Property;


 


(g)                                 Lender shall have received the Title
Insurance in the amount equal to the Loan Amount;


 


(h)                                 Borrower shall have provided the Equity
Contribution;


 


(i)                                     Lender shall have received payment of the
Commitment Fee;


 


(j)                                     Lender shall have received from Borrower
such other instruments, evidence and certificates as Lender may reasonably
require, including the items indicated below: 
(1) evidence that all the streets furnishing access to the
Mortgaged Property have been dedicated to public use and installed and accepted
by applicable Governmental


 


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Authorities;
(2) evidence satisfactory to Lender showing the availability of all
necessary utilities at the boundary lines of the Land, including sanitary and
storm sewer facilities, potable water, telephone, electricity, gas, and
municipal services; (3) an opinion of counsel for Borrower, which opinion
shall be reasonably satisfactory to Lender; (4) a current financial
statement of Borrower certified by a duly authorized representative of Borrower;
(5) financial statements of each Guarantor; (6) an environmental site
assessment report with respect to the Mortgaged Property prepared by a firm of
engineers approved by Lender, which report shall be satisfactory in form and
substance to Lender, certifying that there is no evidence that any Hazardous
Substance (as defined in the Environmental Indemnification Agreement) have been
generated, treated, stored or disposed of on any of the Mortgaged Property and
none exists on, under or at the Mortgaged Property and a report of the
condition of the Property and Improvements, acceptable to Lender (“Property
Condition Report”); (7) an appraisal of the Mortgaged Property,
ordered and received by Lender, at Borrower’s expense, prepared by an appraiser
acceptable to Lender and presented and based upon such standards as may be
required by Lender; and (8) the insurance required under Section 5.6
hereof;


 


(k)                                  Borrower will furnish Lender, in
accordance with the terms and conditions of this Agreement and at Borrower’s expense,
a survey prepared by a registered engineer or surveyor acceptable to Lender,
showing that the locations of the Improvements, and certifying that same are
entirely within the property lines of the Land, do not encroach upon any
easement, setback or building line or restrictions, are placed in accordance
with the Plans, all Governmental Requirements and all restrictive covenants
affecting the Land and Improvements, and showing no state of facts
objectionable to Lender. All surveys shall be in form and substance and from a
registered public surveyor acceptable to Lender.


 


(l)                                     If requested, Lender shall have received
a Compliance Certificate or other written evidence being provided by Borrower
and reasonably satisfactory to Lender indicating the Debt Coverage Ratio with
respect to the Mortgaged Property for a designated three (3) calendar
month Calendar Period.


 


The following terms define the Debt Coverage Ratio are as follows:


 


(1)                                  Calculation.  The Debt Coverage Ratio calculation shall be
undertaken for the three (3) month period (such periods being herein
referred to as a “Calendar Period”). 
The term “Debt Coverage Ratio” means Net Operating Income
(hereinafter defined) for a Calendar Period divided by Debt Service
Requirements (hereinafter defined) with respect to such same Calendar
Period.  Borrower shall provide written
evidence and documents to Lender indicating the calculations and backup
information for the Debt Coverage Ratio for the Calendar Period.  Lender shall be entitled to request and require
such backup documentation as may be required by Lender in order to satisfy
itself as to the correct calculation of the Debt Coverage Ratio for the
Calendar Period.


 


(2)                                  Debt
Service Requirements. The term “Debt Service Requirements” shall
mean all principal and interest payments which would be owing during such
Calendar Period based upon a hypothetical payment schedule calculated using (i) the
Outstanding


 


11

















 


Principal
Balance, (ii) an interest rate equal to the actual interest rate
borne on the Indebtedness during the Calendar Period, and (iii) a
level-payment amortization schedule of twenty-five (25) years.


 


(3)                                  Net
Operating Income.  The term “Net
Operating Income” shall mean, for each applicable Calendar Period, the
difference of (i) Gross Income less (ii) Operating Expenses,
determined on a generally accepted accounting principles basis of accounting
except as otherwise provided herein.  As
used herein, the following terms shall have the respective meanings set forth
below.


 


(4)                                  Gross
Income.  The term “Gross Income”
for each Calendar Period shall mean rentals, revenues and other cash forms of
consideration, received by, or paid to or for the account of or for the benefit
of, Borrower resulting from or attributable to the operation, leasing and
occupancy of the Mortgaged Property, determined on a cash basis (except as
specified herein), including, but not limited to, the following: (i) rents
by any lessees or tenants of the Mortgaged Property (net of any concessions); (ii) rents
and receipts received by or for the benefit of Borrower with respect to the
full or partial reimbursement of Operating Expenses from any lessee or tenant
of the Mortgaged Property; (iii) proceeds received by or for the benefit
of Borrower in connection with any rental loss or business interruption
insurance with respect to the Mortgaged Property;  and (iv) any other fees or rents
collected by, for or on behalf of Borrower with respect to the leasing and
operation of the Mortgaged Property; and (vi) interest, if any, earned by
Borrower on security and other type deposits of and advance rentals paid by,
any lessees or tenants of the Mortgaged Property.


 


Notwithstanding
anything included within the above definition of Gross Income, there shall be
excluded from Gross Income the following: 
(i) any security or other deposits of lessees and tenants, unless
and until the same actually are either applied to actual rentals owed; (ii) any
security and other type deposits and advance rentals, relating to the Mortgaged
Property which have been forfeited (and not applied to actual rentals owed) or
other non-recurring income; (iii) the proceeds of any financing or
refinancing with respect to all or any part of the Mortgaged Property; (iv) the
proceeds of any sale or other capital transaction (excluding leases for
occupancy purposes only) of all or any portion of the Mortgaged Property; (v) any
insurance or condemnation proceeds paid with respect to the Mortgaged Property,
except for rental loss or business interruption insurance; (vi) any
insurance and condemnation proceeds applied in reduction of the principal of
the Note in accordance with the terms of the Lien Instrument or the other Loan
Documents; provided, however, nothing set forth herein shall in any manner
imply Lender’s consent to a sale, refinancing or other capital transaction; and
(vii) any Gross Income related to a tenant who is not paying Rents as of
the date of a Debt Coverage Ratio calculation, unless a replacement tenant is
in place and paying Rents.


 


(5)                                  Operating
Expenses.  The term “Operating
Expenses” shall mean those amounts actually incurred and paid with respect
to the ownership, operation, management, leasing and occupancy of the Mortgaged
Property, determined using generally accepted accounting principles, except as
otherwise specified herein, including, but not limited to, any and all of the
following (but without duplication of any item):


 


12

















 


(i)                                     real property taxes calculated on an
accrual basis (and not on the cash basis) of accounting for the Calendar
Period; such accrual accounting for ad valorem taxes shall be based upon taxes
actually assessed for the current calendar year, or if such assessment for the
current calendar year has not been made, then until such assessment has been
made (and with any retroactive adjustments for prior calendar months as may
ultimately be needed when the actual assessments has been made) ad valorem
taxes for the Calendar Period shall be estimated based on the last such
assessment for the Mortgaged Property; (ii) foreign, U.S., state and local
sales, use or other taxes, except for taxes measured by net income; (iii) special
assessments or similar charges against the Mortgaged Property not paid by
lessees or tenants; (iv) costs of utilities, air conditioning and heating
for the Mortgaged Property to the extent not directly paid by lessees or
tenants; (v) maintenance and repair costs for the Mortgaged Property; (vi) 
management fees at the lesser of (a) three percent (3.00%) of the Gross
Income for each applicable calendar month, and (b) actual management fees
paid for such period; (vii) all salaries, wages and other benefits to “on-site”
employees of Borrower or, to the extent paid separately by Borrower (in
addition to management fees), Borrower’s property manager (excluding all
salaries, wages and other benefits of officers and supervisory personnel, and
other general overhead expenses of Borrower and Borrower’s property manager)
employed in connection with the leasing, maintenance and management of the
Mortgaged Property; (viii) insurance premiums calculated on an accrual
basis (and not on the cash basis) of accounting for the Calendar Period; such
accrual accounting for insurance premiums shall be based upon the insurance
premiums for the Mortgaged Property which was last billed to Borrower, adjusted
to an annualized premium if necessary; (ix) to the extent payable by
Borrower, outside accounting and audit fees and costs and administrative
expenses in connection with the direct operation and management of the
Mortgaged Property; and (x) any payments, and any related interest
thereon, to lessees or tenants of the Mortgaged Property with respect to
security deposits or other deposits required to be paid to tenants but only to
the extent any such security deposits and related interest thereon have been
previously included in Gross Income.


 


Notwithstanding anything to the contrary as being
included in the definition of Operating Expenses, there shall be excluded from
Operating Expenses the following:  (i) depreciation
and any other non-cash deduction allowed to Borrower for income tax purposes; (ii) those
costs relating to capital expenditures, Leasing Commissions and Tenant
Improvements Costs; (iii) any and all principal, interest or other costs
paid under or with respect to the Note or Loan.


 


3.2                                 Capital Expenditure, Tenant Improvement
and Leasing Commissions Advances.  The
obligation of Lender to make each Capital Expenditure, Tenant Improvement and
Leasing Commission Advance, as listed on Exhibit B attached hereto,
or as otherwise approved by Lender in accordance with this Agreement, shall be
subject to the simultaneous occurrence or satisfaction of each of the following
conditions:


 


13

















 


(a)                                  Satisfaction, as of the date of the
initial Advance hereunder, of each of the conditions contained in Section 3.1
hereof;


 


(b)                                 With respect to an Advance to pay for
Capital Expenditures or Tenant Improvements, Borrower shall provide evidence
reasonably satisfactory to Lender (including, if requested by Lender, access to
the Mortgaged Property for the purpose of inspecting the work done, at Borrower’s
reasonable expense) that the Capital Expenditures or Tenant Improvements, or
such portion thereof, for which the Advance is being requested have been
completed in accordance with Section 3.2 (i), (j) and (k) hereof;


 


(c)                                  With respect to an Advance to pay for
Capital Expenditures or Tenant Improvements, Borrower shall submit to Lender
copies of invoices for which the Advance is being requested, and if required by
Lender, shall also submit waivers of lien for amounts previously received;


 


(d)                                 With respect to an Advance to pay for
Capital Expenditures or Tenant Improvements, Borrower shall execute and deliver
to Lender a certificate (in form and substance reasonably satisfactory to
Lender) that the Capital Expenditures or Tenant Improvements covered by the
applicable Advance comply with, and have fully satisfied, the terms and provisions
of Section 3.2 hereof;


 


(e)                                  With respect to a final Advance to pay
for Tenant Improvements and is relative to an Approved Lease, Borrower shall
provide Lender with a copy of any and all applicable permanent certificates of
occupancy and other governmental permits, if any be required, issued by
applicable governmental authorities, which certificates and permits allow the
tenant to open for business as contemplated under such lease;


 


(f)                                    With respect to a final Advance to pay
for Tenant Improvements and is relative to an Approved Lease, Borrower shall
provide Lender with (1) an original estoppel certificate executed by the
tenant under the Approved Lease for which such request relates, stating that
such tenant has accepted the Tenant Improvements, and that, to such tenant’s
knowledge, there are no defaults under such lease (nor does there exist any
event or conditions, which with the passage of time or the giving of notice, or
both, could result in such a default) and for tenant’s obligation for payment
of rent by the tenant under the terms and conditions of the Approved Lease, and
(2) if required by Lender, an original subordination, non-disturbance and
attornment agreement in form reasonably acceptable to Lender executed by the
tenant under the Approved Lease in favor of Lender;


 


(g)                                 With respect to an Advance to pay any
portion of the Leasing Commissions, Borrower shall provide evidence as
reasonably requested by Lender that such Leasing Commissions are then due and
payable or have been properly paid, and such additional documents, certificates
and affidavits as Lender may reasonably request;


 


(h)                                 Notwithstanding any provision to the
contrary, Loan proceeds disbursed with respect to any Approved Lease (i) for
Tenant Improvements shall be an amount not


 


14

















 


to
exceed, under any circumstances, the reasonable costs and expenses actually
incurred by Borrower; and (ii) for Leasing Commissions shall be an amount
not to exceed, under any circumstances, the commission actually incurred by
Borrower which is reasonable and customary for a licensed real estate broker in
the market area in which the Mortgaged Property is located;


 


(i)                                     With respect to an Advance to pay for
Tenant Improvements, Borrower shall construct and complete all Tenant
Improvements in accordance with the Approved Leases to which they relate.  Borrower or tenant shall pay for and obtain
or cause to be paid for and obtained all permits, licenses and approvals required
by all applicable laws with regard to the Tenant Improvements, whether
necessary for commencement, completion, use or otherwise;


 


(j)                                     With respect to an Advance to pay for
Capital Expenditures or Tenant Improvements, Borrower shall perform or cause to
be performed all work in connection with the Improvements or Tenant
Improvements in a good and workmanlike manner, in compliance with all
applicable laws (including, without limitation, any and all applicable life
safety laws, environmental laws and laws for the handicapped and/or disabled) and,
with respect only to those leases requiring Lender approval, with the plans
approved (in writing) by Lender covering Tenant Improvements exceeding an
aggregate amount greater than Two Hundred Fifty Thousand and No/100 Dollars
($250,000.00), which performance by Borrower shall be without regard to the
sufficiency of the amount of the proceeds of the Loan available and allocated
for Tenant Improvement and Leasing Commissions;


 


(k)                                  With respect to an Advance for Capital
Expenditures or Tenant Improvements, Borrower covenants and agrees that
Improvements or Tenant Improvements shall be constructed, installed or
completed, as applicable, free and clear of any and all liens (including
mechanic’s, materialman’s or other liens), claims and encumbrances whatsoever,
except for a Contested Item; and


 


(l)                                     Borrower shall provide such additional
documents, certificates and affidavits as Lender may reasonably require.


 


3.3                                 Advance Not A Waiver. 
No Advance of the proceeds of the Loan shall constitute a waiver of any
of the conditions of Lender’s obligation to make further Advances, nor, in the
event Borrower is unable to satisfy any such condition, shall any such Advance
have the effect of precluding Lender from thereafter declaring such inability
to be an Event of Default.


 


3.4                                 Advance Not An Approval. 
The making of any Advance or part thereof shall not be deemed an
approval or acceptance by Lender of the work theretofore done.  Lender shall have no obligation to make any
Advance or part thereof after the happening and during the continuance of any
Event of Default, but shall have the right and option so to do; provided that
if Lender elects to make any such Advance, no such Advance shall be deemed to
be either a waiver of the right to demand payment of the Loan, or any part
thereof, or an obligation to make any other Advance.


 


15

















 


3.5                                 Time and Place of Advances. 
All Advances are to be made at the office of Lender, or at such other
place as Lender may designate; and Lender shall require ten (10) days
prior notice in writing before the making of any such Advance.  Unless specifically approved by Lender,
Lender shall not be obligated to undertake any Advance hereunder more than
twice in any 30-day period.  Except as
set forth in this Agreement, all Advances are to be made by direct deposit into
the Special Account.  In the event
Borrower shall in any manner be deprived of Borrower’s interests in and to the
Land, Lender may, at Lender’s option but without any obligation to do so,
continue to make Advances under this Agreement, and subject to all its terms
and conditions, to such person or persons as may succeed to Borrower’s title
and interest and all sums so disbursed shall be deemed Advances under this
Agreement and secured by the Lien Instrument and all other liens or security
interests securing the Loan.


 


3.6                                 No Third Party Beneficiaries. 
The benefits of this Agreement shall not inure to any third party, nor
shall this Agreement be construed to make or render Lender liable to any
materialmen, subcontractors, contractors, laborers or others for goods and
materials supplied or work and labor furnished in connection with the
construction of the Improvements or for debts or claims accruing to any such
persons or entities against Borrower. 
Lender shall not be liable for the manner in which any Advances under
this Agreement may be applied by Borrower and any of Borrower’s other
contractors or subcontractors. 
Notwithstanding anything contained in the Loan Documents, or any conduct
or course of conduct by the parties hereto, before or after signing the Loan
Documents, this Agreement shall not be construed as creating any rights, claims
or causes of action against Lender, or any of its officers, directors, agents
or employees, in favor of any contractor, subcontractor, supplier of labor or
materials, or any of their respective creditors, or any other person or entity
other than Borrower.  Without limiting
the generality of the foregoing, Advances made to any contractor, subcontractor
or supplier of labor or materials, pursuant to any requests for Advances,
whether or not such request is required to be approved by Borrower, shall not
be deemed a recognition by Lender of a third-party Borrower status of any such
person or entity.


 


3.7                                 Extension Option. 
Borrower shall have the option to request one (1) extension of
twelve (12) months from the Original Maturity Date, upon sixty (60) days prior
written notice to Lender, before the Original Maturity Date, subject to the
following conditions: (i) there shall be no Event of Default and no event,
but for the passage of time or notice given by the Lender, would constitute an
Event of Default; (ii) the Debt Coverage Ratio set forth in Section 3.1(l) shall
have been calculated and reflect a Debt Service Requirement at a ratio of 1.25
to 1.00 and at an interest rate of the greater of seven percent (7%) per annum
or the then current 10-year Treasury Note Rate plus two and one-half percent
(2.50%), based on a twenty-five (25) year amortization; (iii) the then
current Loan to Value Ratio shall be less than sixty percent (60%); and (iv) Borrower
pays to Lender an extension fee equal to one-quarter of one percent (0.25%) of
the amount of the Loan.  Borrower shall
also be responsible for all costs, fees and expenses incurred in the execution
and delivery of the extension agreements, including, but not limited to,
attorney’s fees and title insurance premiums.


 


16

















 


ARTICLE IV


 


WARRANTIES AND REPRESENTATIONS


 


Borrower hereby
unconditionally warrants and represents to Lender, as of the date hereof and at
all times during the term of the Agreement, as follows:


 


4.1                                 Organization and Power. 
If Borrower is a corporation, general partnership, limited partnership,
joint venture, trust, limited liability company or other type of business
association, as the case may be, Borrower, if any, (i) is either a
corporation duly incorporated with a legal status separate from its affiliates,
or a partnership or trust, joint venture or other type of business association
duly organized, validly existing, and in good standing under the laws of the
state of its formation or existence, and has complied with all conditions
prerequisite to its doing business in the state in which the Mortgaged Property
is located, and (ii) has all requisite power and all governmental
certificates of authority, licenses, permits, qualifications, and documentation
to own, lease, and operate its properties and to carry on its business as now
being, and as proposed to be, conducted.


 


4.2                                 Validity of Loan Documents. 
The execution, delivery, and performance by Borrower of the Loan
Documents, (i) if Borrower, or any signatory who signs on its behalf, is a
corporation, general partnership, limited partnership, joint venture, trust, or
other type of business association, as the case may be, are within Borrower’s
powers and have been duly authorized by Borrower’s board of directors,
shareholders, partners, venturers, trustees, or other necessary parties, and
all other requisite action for such authorization has been taken, (ii) have
received any and all requisite prior governmental approvals in order to be
legally binding and enforceable in accordance with the terms thereof, and (iii) will
not violate, be in conflict with or constitute (with due notice or lapse of
time, or both) a default under or violation of any Legal Requirement or result
in the creation or imposition of any lien, charge, or encumbrance of any nature
whatsoever upon any of Borrower’s or Guarantor’s property or assets, except as
contemplated by the provisions of the Loan Documents.  The Loan Documents constitute the legal,
valid, and binding obligations of Borrower, Guarantor, and others obligated
under the terms of the Loan Documents, enforceable in accordance with their
respective terms.


 


4.3                                 Information. 
All information, financial statements, reports, papers, and data given
or to be given to Lender with respect to Borrower or Guarantor or the Mortgaged
Property (to Borrower’s knowledge, if prepared by an unaffiliated third party)
are, or at the time of delivery will be, taken as a whole, accurate, complete,
and correct in all material respects and do not, or will not, omit any fact,
the inclusion of which is necessary to prevent the facts contained therein from
being materially misleading.  Since the
date of the financial statements of Borrower or any Guarantor heretofore
furnished to Lender, no Material Adverse Effect has occurred, and except as
heretofore disclosed in writing to Lender, neither Borrower nor Guarantor has
incurred any material liability, direct or indirect, fixed or contingent.


 


4.4                                 Business Purposes. 
The loan evidenced by the Note is solely for the purpose of carrying on
or acquiring the business of Borrower, and is not for personal, family,
household, or agricultural purposes.


 


17

















 


4.5                                 Mailing Address. 
Borrower’s mailing address, as set forth herein or as changed pursuant
to the provisions hereof, is true and correct.


 


4.6                                 No Reliance on Lender. 
Borrower is experienced in the ownership and operation of properties
similar to the Mortgaged Property, and Borrower and Lender have and are relying
solely upon Borrower’s expertise and business plan in connection with the
construction of the Improvements and ownership and operation of the Mortgaged
Property.  Borrower is not relying on
Lender’s expertise or business acumen in connection with the Mortgaged
Property.


 


4.7                                 No Litigation. 
To the best of Borrower’s knowledge, after due investigation and
inquiry, there are no (i) actions, suits, or proceedings, at law or in
equity, before any Governmental Authority or arbitrator pending or threatened
against or affecting Borrower, Guarantor or involving the Mortgaged Property; (ii) outstanding
or unpaid judgments against Borrower, any Guarantor or the Mortgaged Property;
or (iii) defaults by Borrower with respect to any order, writ, injunction,
decree, or demand of any Governmental Authority or arbitrator.


 


4.8                                 Governmental Requirements. 
To the best of Borrower’s knowledge after investigation and due inquiry,
except as disclosed on the Property Condition Report, no violation of any
Governmental Requirements exists or will exist with respect to the Mortgaged
Property and neither Borrower nor the Guarantor are, nor will they be, in
default with respect to any Governmental Requirements.


 


4.9                                 Utility Services. 
All utility services of sufficient size and capacity necessary for the
Improvements and the use thereof for their intended purposes are available, including
potable water, storm and sanitary sewer, gas, electric and telephone
facilities.


 


4.10                           Access.  All roads
necessary for the full utilization of the Improvements for their intended
purposes that are related to the access of the Land have been completed and
have been dedicated to the public use and accepted by the appropriate
Governmental Authority.


 


4.11                           No Commencement. 
No steps have been taken, nor has any contract or other agreement for
construction thereon been entered into, for furnishing materials for such
construction or for any other purpose, the performance of which by the other
party thereto would give rise to a lien on the Land.


 


4.12                           Financial Statements. 
Each financial statement of Borrower or Guarantor delivered heretofore,
concurrently herewith or hereafter to Lender was and will be prepared in
conformity with generally accepted accounting principles or another basis
approved by Lender in writing, applied on a basis consistent with that of
previous statements and fairly disclose the financial condition of Borrower or
Guarantor, as the case may be, (including all contingent liabilities) as of the
date thereof and for the period covered thereby, and there has been no material
adverse change in either Borrower’s or Guarantor’s financial condition
subsequent to the date of the most recent financial statement of Borrower or
Guarantor delivered to Lender.


 


4.13                           Disclaimer of Future Financing. 
Borrower acknowledges and agrees that Lender has not made any
commitments, either express or implied, to extend the term of the Loan past its
stated maturity date or to provide Borrower with any future financing, except
as set forth herein.


 


18
















 


4.14                           ERISA.  Neither
Borrower, nor any of Borrower’s Constituent Parties are an “employee benefit
plan” as defined in Section 3(3) of ERISA, which is subject to
Title I of ERISA, and the assets of such parties do not constitute “plan
assets” of one or more such plans within the meaning of 29 C.F.R. Section 2510.3-101.


 


4.15                           Indebtedness, Operations and Fundamental
Changes of Borrower.  Borrower: (a) has not incurred any debt,
secured or unsecured, direct or contingent (including guaranteeing any
obligation), other than (i) the Indebtedness, and (ii) trade payables
or accrued expenses incurred in the ordinary course of business of operating
the Mortgaged Property; no debt whatsoever may be secured (senior, subordinate
or pari passu) by the Mortgaged Property except the Indebtedness;  (b) has not made any loans or advances
to any third party (including any member, manager, general partner, principal
or affiliate of Borrower, or any Guarantor); (c) is solvent and is able to
pay its debts from its assets as the same shall become due; (d) has done
all things necessary to preserve its existence and corporate and partnership
formalities; (e) has maintained its assets in such a manner that it is not
costly or difficult to segregate, ascertain or identify its individual assets
from those of any affiliate or any other person; (f) has, and any manager
or general partner of Borrower has, at all times since their respective
formation, observed all legal and customary formalities regarding their
respective formation; and (g) does not hold itself out to be responsible
for the debts and obligations of any other person.


 


ARTICLE V


 


COVENANTS OF BORROWER


 


Borrower hereby
unconditionally covenants and agrees with Lender, until the Loan shall have
been paid in full and the lien of the Lien Instrument shall have been released,
as follows:


 


5.1                                 Payment and Performance. 
Borrower will pay the Indebtedness as and when specified in the Loan
Documents, and will perform and discharge all of the Obligations, in full and
on or before the dates same are to be performed.


 


5.2                                 Existence.  Borrower will
preserve and keep in full force and effect its existence (separate and apart
from its affiliates), rights, franchises, and trade names.


 


5.3                                 Compliance with Legal Requirements. 
Borrower will promptly and faithfully comply with, conform to, and obey,
in all material respects, all Legal Requirements, whether the same shall
necessitate structural changes in, improvements to, or interfere with the use
or enjoyment of, the Mortgaged Property.


 


5.4                                 Payment of Impositions. 
Borrower will duly pay and discharge, or cause to be paid and
discharged, the Impositions not later than the earlier to occur of (i) the
delinquency date thereof, (ii) the day any fine, penalty, interest, or
cost may be added thereto or imposed, or (iii) the day any lien may be
filed for the nonpayment thereof (if such day is used to determine the due date
of the respective item), and Borrower shall deliver to Lender a written receipt
evidencing the payment of the respective Imposition.


 


5.5                                 Repair.  Borrower will
keep the Mortgaged Property in a commercially reasonable order and condition as
on the date of this Agreement and placement in its market, and will make


 


19

















 


all repairs, replacements, renewals, additions,
betterments, improvements, and alterations thereof and thereto, interior and
exterior, structural and nonstructural, ordinary and extraordinary, foreseen
and unforeseen, which are necessary or reasonably appropriate to keep same in
such order and condition.  Borrower will
use commercially reasonable efforts to prevent any act, occurrence or neglect
which might impair the value or usefulness of the Mortgaged Property for its
intended usage as set forth in the Loan Documents.


 


5.6                                 Insurance.  Borrower
shall, at Borrower’s expense, maintain in force and effect on the Mortgaged
Property at all times while this Agreement continues in effect the following
insurance:


 


(a)                                  “All-risk” coverage insurance against
loss or damage to the Mortgaged Property from all-risk perils.  The amount of such insurance shall be not
less than one hundred percent (100%) of the full replacement cost of the
Improvements, furniture, furnishings, fixtures, equipment and other items
(whether personalty or fixtures) included in the Mortgaged Property and owned
by Borrower from time to time, without reduction for depreciation.  The determination of the replacement cost
amount shall be adjusted annually to comply with the requirements of the
insurer issuing such coverage or, at Lender’s election, by reference to such
indexes, appraisals or information as Lender determines in its reasonable
discretion.  Full replacement cost, as
used herein, means, with respect to the Improvements, the cost of replacing the
Improvements without regard to deduction for depreciation, exclusive of the
cost of excavations, foundations and footings below the lowest basement floor,
and means, with respect to such furniture, furnishings, fixtures, equipment and
other items, the cost of replacing the same. 
Each policy or policies shall contain a replacement cost endorsement and
either an agreed amount endorsement (to avoid the operation of any co-insurance
provisions) or a waiver of any co-insurance provisions, all subject to Lender’s
approval.


 


(b)                                 Commercial general liability insurance
for personal injury, bodily injury, death and property damage liability in
amounts not less than $1,000,000.00 per occurrence, $2,000,000.00 in aggregate
(and after the commencement of construction of Improvements, excess umbrella
coverage in amount not less than $5,000,000.00) or such lesser amount as Lender
in Lender’s sole discretion may accept, for bodily injury, personal injury and
property damage.  Lender hereby retains
the right to periodically review the amount of said liability insurance being
maintained by Borrower and to require an increase in the amount of said
liability insurance should Lender deem an increase to be reasonably prudent
under then existing circumstances.


 


(c)                                  Insurance covering the major components
of the central heating, air conditioning and ventilating systems, boilers,
other pressure vessels, high pressure piping and machinery, elevators and
escalators, if any, and other similar equipment installed in the Improvements,
in an amount equal to one hundred percent (100%) of the full replacement cost
of the Improvements which policies shall insure against physical damage to and
loss of occupancy and use of the Improvements arising out of an accident or
breakdown covered thereunder.


 


20

















 


(d)                                 If the Land or any part thereof is
identified by the Secretary of Housing and Urban Development as being situated
in an area now or subsequently designated as having special flood hazards
(including, without limitation, those areas designated as Zone A or
Zone V), flood insurance in an amount equal to one hundred percent (100%)
of the replacement cost of the Improvements or the maximum amount of flood
insurance available, whichever is the lesser.


 


(e)                                  During the period of any construction on
the Land or renovation or alteration of the Improvements, including Tenant
Improvements, a so-called “Builder’s All-Risk Completed Value” or “Course of
Construction” insurance policy in non-reporting form for any Improvements under
construction, renovation or alteration in an amount approved by Lender and
Worker’s Compensation Insurance covering all persons engaged in such
construction, renovation or alteration.


 


(f)                                    During the term of a Lease, rental value
or rental income insurance in amounts sufficient to compensate Borrower for all
Rents and profits during a period of not less than one (1) year in which
the Mortgaged Property may be damaged or destroyed.


 


(g)                                 Law and ordinance coverage in an amount
reasonably satisfactory to Lender if the Mortgaged Property, or any part
thereof, shall constitute a nonconforming use or structure under applicable
zoning ordinances, sub-division and building codes or other laws, ordinances,
orders and requirements.


 


(h)                                 Such other insurance on the Mortgaged
Property or on any replacements or substitutions thereof or additions thereto
as may from time to time be required by Lender against other insurable hazards
or casualties which at the time are commonly insured against in the case of property
similarly situated, due regard being given to the height and type of buildings,
their construction, location, use and occupancy.


 


All such insurance shall (i) be
with insurers authorized to do business in the state within which the Land is
located and who have and maintain a rating of at least A- V or better from the
Best rating service, (ii) contain the complete address of the Land (or a
complete legal description), (iii) be for a term of at least one (1) year,
(iv) contain deductibles no greater than $25,000.00 or as otherwise
reasonably required by Lender, and (v) be subject to the approval of
Lender as to insurance companies, amounts, content, forms of policies, method
by which premiums are paid and expiration dates.


 


Borrower shall as of the
date hereof deliver to Lender evidence that said insurance policies have been
paid current as of the date hereof and certified copies of such insurance
policies and original certificates of insurance signed by an authorized agent
evidencing such insurance satisfactory to Lender.  Borrower shall renew all such insurance and
deliver to Lender certificates evidencing such renewals at least thirty (30)
days before any such insurance shall expire. 
Without limiting the required endorsements to insurance policies, Borrower
further agrees that all such policies shall provide that proceeds thereunder
shall be payable to Lender, its successors and assigns, pursuant and subject to
a mortgagee clause (without contribution) of standard form attached to, or
otherwise made a part of, the applicable policy and that Lender, its


 


21

















 


successors and assigns,
shall be named as an additional insured under all liability insurance
policies.  Borrower further agrees that
all such insurance policies:  (i) shall
provide for at least thirty (30) days’ prior written notice to Lender prior to
any cancellation or termination thereof and prior to any modification thereof
which affects the interest of Lender; (ii) in the case of property
insurance, shall contain an endorsement or agreement by the insurer that any
loss shall be payable to Lender in accordance with the terms of such policy
notwithstanding any act or negligence of Borrower which might otherwise result
in forfeiture of such insurance; and (iii) shall either name Lender as an
additional insured or waive all rights of subrogation against Lender.  The delivery to Lender of the insurance
policies or the certificates of insurance as provided above shall constitute an
assignment of all proceeds payable under such insurance policies by Borrower to
Lender as further security for the indebtedness secured hereby.  In the event of foreclosure of the Lien
Instrument, or other transfer of title to the Mortgaged Property in
extinguishment in whole or in part of the secured indebtedness, all right,
title and interest of Borrower in and to all proceeds payable under such
policies then in force concerning the Mortgaged Property shall thereupon vest
in the purchaser at such foreclosure, or in Lender or other transferee in the
event of such other transfer of title. 
Approval of any insurance by Lender shall not be a representation of the
solvency of any insurer or the sufficiency of any amount of insurance.  In the event Borrower fails to provide,
maintain, keep in force or deliver and furnish to Lender the policies of
insurance required by this Agreement or evidence of their renewal as required
herein and failure to cure such failure within five (5) days after notice
from Lender, Lender may, but shall not be obligated to, procure such insurance
and Borrower shall pay all amounts advanced by Lender, together with interest
thereon at the Default Rate from and after the date advanced by Lender until
actually repaid by Borrower, promptly upon demand by Lender.  Any amounts so advanced by Lender, together
with interest thereon, shall be secured by this Agreement, the Lien Instrument
and by all of the other Loan Documents securing all or any part of the
Indebtedness.  Lender shall not be
responsible for nor incur any liability for the insolvency of the insurer or
other failure of the insurer to perform, even though Lender has caused the
insurance to be placed with the insurer after failure of Borrower to furnish
such insurance.


 


5.7                                 Inspection.  Borrower will
permit Lender, and their agents, representatives, and employees, to inspect the
Mortgaged Property at all reasonable times and at reasonable intervals, with or
without prior notice to Borrower.


 


5.8                                 Payment for Labor and Materials. 
Except for a Contested Item, Borrower will promptly pay all bills for
labor, materials, and specifically fabricated materials incurred in connection
with the Mortgaged Property and never permit to exist in respect of the
Mortgaged Property or any part thereof any lien or security interest, even
though inferior to the liens and security interests hereof, for any such bill,
and in any event never permit to be created or exist in respect of the
Mortgaged Property, or any part thereof, any other or additional lien or
security interest on a parity with, superior, or inferior to any of the liens
or security interests hereof, except for the Permitted Exceptions.


 


5.9                                 Further Assurances and Corrections. 
From time to time, at the request of Lender, Borrower will (i) promptly
correct any defect, error, or omission which may be discovered in the contents
of any of the Loan Documents or in the execution or acknowledgment thereof; (ii) execute,
acknowledge, deliver, record and/or file such further instruments and perform
such


 


22

















 


further acts and provide such further assurances as
may be necessary, desirable, or proper, in Lender’s reasonable judgment, to
carry out more effectively the purposes of the Loan Documents; (iii) execute,
acknowledge, deliver, procure, file, and/or record any document or instrument
(including without limitation, any financing statement) reasonably deemed
advisable by  Lender to protect the liens
and the security interests herein granted against the rights or interests of
third persons; and (iv) pay all costs connected with any of the foregoing.


 


5.10                           Statement of Unpaid Balance. 
At any time and from time to time, Borrower will furnish promptly, upon
the request of Lender, a written statement or affidavit, in form satisfactory
to Lender, confirming the unpaid balance of the Indebtedness and that there are
no offsets or defenses against full payment of the Indebtedness and the terms
hereof, or if there are any such offsets or defenses, specifying them.


 


5.11                           Disclosures. 
If at any time Borrower shall become aware of the existence or
occurrence of any financial or economic conditions or natural disasters which
would reasonably be expected to have a Material Adverse Effect, Borrower shall
promptly notify Lender of the existence or occurrence thereof and of Borrower’s
opinion as to what effects such may have on the Mortgaged Property or
Borrower.  Borrower shall also give
prompt notice to Lender of (i)  any litigation or dispute, threatened or
pending against or affecting Borrower, the Mortgaged Property or any Guarantor
which could have a Material Adverse Effect, (ii) any Event of Default, (iii) any
default by Borrower or any acceleration of any indebtedness owed by Borrower
under any Contract (if such default or acceleration could reasonably be
expected to have a Material Adverse Effect), (iv) any default by Guarantor
or any acceleration of any indebtedness owed by the Guarantor under any
contract to which Guarantor is a party, and (v) any change in the
character of Borrower’s business as it existed on the date hereof that could
result in a Material Adverse Effect.


 


5.12                           Delivery of Contracts. 
Borrower will deliver to Lender a copy of each Contract promptly after
the execution of same by all parties thereto. 
Within thirty (30) days after a request by Lender,  Borrower shall prepare and deliver to Lender
a complete listing of all Contracts, showing date, term, parties, subject
matter, concessions, whether any defaults exist, and other information specified
by  Lender with respect to each of such
Contracts, together with a copy thereof (if so requested by Lender).


 


5.13                           No Changes.  Borrower will
not materially amend, alter or change (by amendment or otherwise) any Approved
Lease, except in the ordinary course of prudent office property management,
unless previously approved in advance in writing by Lender.


 


5.14                           Defects and Variances. 
Borrower will, upon demand of Lender and at Borrower’s sole expense,
correct any structural defect in the Improvements.


 


5.15                           BROKERS.  EXCEPT FOR THOSE CLAIMS THAT ARE CAUSED BY
THE WILLFUL MISCONDUCT OR GROSS NEGLIGENCE OF LENDER, OR BY PERSONS UNDER
CONTRACT WITH LENDER, BORROWER WILL INDEMNIFY LENDER FROM CLAIMS OF BROKERS
ARISING BY REASON OF THE EXECUTION HEREOF OR THE CONSUMMATION OF THE
TRANSACTIONS CONTEMPLATED HEREBY.


 


23

















 


5.16                           Compliance with Governmental Requirements. 
Borrower will comply promptly, in all material respects, with all
Governmental Requirements.


 


5.17                           Compliance with Restrictive Covenants. 
Borrower will comply with all title requirements and restrictive
covenants, if any, affecting the Mortgaged Property.


 


5.18                           Payment of Expenses. 
Borrower will promptly reimburse Lender for all expenses of Lender,
including reasonable attorneys’ fees incurred in connection with the
preparation, execution, delivery, administration and performance of the Loan
Documents.  Borrower shall pay or
reimburse to Lender all costs and expenses relating to the Mortgaged Property,
including (without limitation), title insurance and examination charges, survey
costs, insurance premiums, filing and recording fees, and other expenses
payable to third parties incurred by Lender in connection with the consummation
of the transactions contemplated by this Agreement.


 


5.19                           Notices Received. 
Borrower will promptly deliver to Lender a true and correct copy of all
notices received by Borrower from any person or entity with respect to
Borrower, Guarantor, the Mortgaged Property, or any or all of them, which in
any material way relates to or affects the Loan or the Mortgaged Property,
including without limitation, any Lease.


 


5.20                           Leases.  Borrower will
deliver to Lender, upon request of Lender, executed counterparts of all Leases
and rental agreements affecting the Mortgaged Property.


 


5.21                           Approval to Lease Required. 
Borrower shall utilize the Approved Lease Form in leasing all or
any part of the Mortgaged Property, or any part thereof for a rental space in
excess of fifteen thousand (15,000) square feet.  In the event that Borrower elects to utilize
a form of lease that is different from the Approved Lease Form, Borrower will
obtain the prior written consent of Lender as to such new form of tenant lease
to be utilized in leasing the Mortgaged Property, or any part thereof, prior to
entering into, on such new form, any lease of all or any part of the Mortgaged
Property.


 


5.22                           Statements and Reports. 
Borrower agrees to maintain full and accurate books of account and other
records reflecting the results of the operations of the Mortgaged Property and
shall deliver to Lender, during the term of the Loan and until the Loan has
been fully paid and satisfied, the following statements and reports:


 


(a)                                  Annual financial statements, balance
sheets and income statements of Borrower and each Guarantor, within one hundred
twenty (120) days after the end of each calendar year, prepared in accordance
with generally accepted accounting principles, consistently applied, which are
acceptable to Lender, and certified to by the chief financial officer of
Borrower and each Guarantor, respectively;


 


(b)                                 Monthly operating statements and
rent-roll with respect to the Mortgaged Property, within forty-five (45) days
after the end of each  calendar
month, prepared in such form and detail as Lender may require and in accordance
with generally accepted accounting principles consistently applied, which are
acceptable to Lender, and certified to by the appropriate officer of Borrower;


 


24

















 


(c)                                  Quarterly certificate evidencing among
other things, the Debt Coverage Ratio, within forty-five (45) days after the
end of each calendar quarter Calendar Period basis, prepared in the form and
detail described herein, as Lender may reasonably require, and in accordance
with generally accepted accounting principles, consistently applied, which are
acceptable to Lender, and certified by the chief financial officer of Borrower;


 


(d)                                 Copies of all state (if applicable) and
federal tax returns prepared with respect to Guarantor and Borrower within
thirty (30) days of such returns being filed with the Internal Revenue Service
or applicable state authority;


 


(e)                                  Copies of extension requests or similar
documents with respect to federal or state (if applicable) income tax filings
for Guarantor and Borrower within thirty (30) days of such documents being
filed with the Internal Revenue Service or applicable state authority; and


 


(f)                                    Such reports and statements as Lender may
reasonably require from time to time.


 


5.23                           ERISA.  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 Loan Agreement or any of the other Loan Documents) to be a
non-exempt (under a statutory or administrative class exemption) prohibited
transaction under 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 Agreement, as
requested by Lender in its sole discretion, that:  (a) Borrower is not an “employee benefit
plan” as defined in Section 3(3) of ERISA, which is subject to Title
I of ERISA, or a “governmental plan” within the meaning of Section 3(3) of
ERISA; (b) Borrower is not subject to state statutes regulating
investments and fiduciary obligations with respect to governmental plans; and (c) one
or more of the following circumstances is true: (1) Equity interests in
Borrower are publicly offered securities within the meaning of 29 C.F.R. Section 2510.3-101(b)(2);
(2) Less than twenty-five percent (25%) of each outstanding class of
equity interests in Borrower are held by “benefit plan investors” within the
meaning of 29 C.F.R. Section 2510.3-101(f)(2); or (3) Borrower
qualifies as an “operating company” or a “real estate operating company” within
the meaning of 29 C.F.R. Section 2510.3-101(c) or (e) or an
investment company registered under the Investment Company Act of 1940.


 


5.24                           Indebtedness, Operations and Fundamental
Changes of Borrower.  Borrower: 
(a) will not enter into any contract or agreement with any member,
manager, general partner, principal or affiliate of Borrower or any affiliate
thereof, except upon terms and conditions that are intrinsically fair and
substantially similar to those that would be available on an arm’s length basis
with third parties other than an affiliate; (b) will not incur any debt,
secured or unsecured, direct or contingent (including guaranteeing any
obligation), other than (i) the Indebtedness, and (ii) trade payables
or accrued expenses incurred in the ordinary course of business of operating
the Mortgaged Property; no debt whatsoever may be secured (senior, subordinate
or pari passu) by the Mortgaged Property except the Indebtedness; (c) will
not make any loans or advances to any third party (including any member,
manager, general partner, principal or affiliate of Borrower, or any
Guarantor); (d) will be solvent and pay its debts from its assets as the
same


 


25

















 


shall become due; (e) will do all things
necessary to preserve its existence and corporate and partnership formalities,
and will not, nor will any general partner thereof, amend, modify or otherwise
change its partnership certificate, partnership agreement, certificate,
articles of incorporation or by-laws in a manner which adversely affects
Borrower’s existence as a single-purpose, single-asset “bankruptcy remote”
entity; (f) will conduct and operate its business as presently conducted
and operated and not own or engage in any business other than the Land and
Improvements; (g) will maintain books and records and bank accounts
separate from those of its affiliates, including its general partners,
principals and members; (h) will be, and at all times will hold itself out
to the public as, a legal entity separate and distinct from any other entity
(including any general partner, principal, member or affiliate thereof); (i) unless
it is a disregarded entity, will file its own tax returns and prepare its own
financial statements; (j) will maintain adequate capital for the normal
obligations reasonably foreseeable in a business of its size and character and
in light of its contemplated business operations; (k) will not, nor will
any member, manager, shareholder, partner, principal or affiliate, seek the
dissolution or winding up, in whole or in part, of Borrower; (l) will not
enter into any transaction of merger or consolidation, or acquire by purchase
or otherwise all or substantially all of the business or assets of, or any
stock or beneficial ownership of, any entity; (m) will not commingle the
funds and other assets of Borrower with those of any member, manager, general
partner, principal or affiliate or any other person; (n) will maintain its
assets in such a manner that it is not costly or difficult to segregate,
ascertain or identify its individual assets from those of any affiliate or any
other person; (o) will, and any general partner of Borrower will, continue
to observe, in all respects material to its existence as a separate entity, all
legal formalities; (p) will not hold itself out to be responsible for the
debts and obligations of any other person; and (q) upon the commencement
of a voluntary or involuntary bankruptcy proceeding by or against Borrower,
Borrower shall not seek a supplemental stay or otherwise pursuant to 11 U.S.C.
105 or any other Debtor Relief Law of any jurisdiction whatsoever, now or
hereafter in effect, which may be or become applicable, to stay, interdict,
condition, reduce or inhibit the ability of Lender to enforce any rights of
Lender against any guarantor or indemnitor of the Indebtedness or the
Obligations or any other party liable with respect thereto by virtue of any
indemnity, guaranty or otherwise.


 


5.25                           USA Patriot Act. 
Lender hereby notifies Borrower and Guarantor that pursuant to the
requirements of the Patriot Act, Lender is required to obtain, verify and
record information that identifies Borrower and Guarantor and which information
includes the name and address of Borrower and Guarantor and other information
that will allow Lender to identify Borrower and Guarantor in accordance with
the Patriot Act.  Without the prior
written consent of Lender, neither Borrower nor Guarantor will: (1) be or
become subject at any time to any law, regulation, or list of any government
agency (including, without limitation, the U.S. Office of Foreign Asset Control
list) that prohibits or limits Lender from making any advance or extension of
credit to Borrower or Guarantor or from otherwise conducting business with
Borrower or Guarantor, or (2) fail to provide documentary and other
evidence of Borrower’s or Guarantor’s identity as may be requested by Lender at
any time to enable Lender to verify Borrower’s and Guarantor’s identity or to
comply with any applicable law or regulation, including, without limitation, Section 326
of the USA Patriot Act of 2001, 31 U.S.C. Section 5318.


 


26
















 


ARTICLE VI


 


ASSIGNMENTS, CASUALTY,
CONDEMNATION AND RESERVES


 


6.1                                 Assignment
of Contracts.  As additional security
for the payment of the Loan, Borrower hereby transfers and assigns to Lender
all of Borrower’s rights and interest, but not its obligations, in, under and
to each Contract upon the following terms and conditions:


 


(a)           Borrower represents
and warrants that the copy of each Contract Borrower has furnished or will
furnish to Lender is or will be (as applicable) a true and complete copy
thereof, including all amendments thereto, if any, and that Borrower’s interest
therein is not subject to any encumbrance other than in favor of Lender.


 


(b)           Neither this
assignment nor any action by Lender shall constitute an assumption by Lender of
any obligations under any Contract, and Borrower shall continue to be liable
for all obligations of Borrower thereunder, Borrower hereby agreeing to perform
all of its material obligations under each Contract.  EXCEPT FOR THOSE LOSSES, COSTS,
LIABILITIES OR EXPENSES THAT ARE CAUSED BY THE WILLFUL MISCONDUCT OR GROSS
NEGLIGENCE OF LENDER, BORROWER AGREES TO INDEMNIFY AND HOLD LENDER HARMLESS
AGAINST AND FROM ANY LOSS, COST, LIABILITY OR EXPENSE (INCLUDING BUT NOT
LIMITED TO ATTORNEYS’ FEES) RESULTING FROM ANY FAILURE OF BORROWER TO SO
PERFORM.


 


(c)           During a continuing
Event of Default, Lender shall have the right at any time (but shall have no
obligation) to take in its name or in the name of Borrower such action as
Lender may at any time determine to be necessary or advisable to cure any
default under any Contract or to protect the rights of Borrower or Lender
thereunder. 
EXCEPT FOR THOSE ACTIONS THAT ARE CAUSED BY THE WILLFUL MISCONDUCT OR
GROSS NEGLIGENCE OF LENDER, LENDER SHALL INCUR NO LIABILITY IF ANY ACTION SO
TAKEN BY IT OR IN ITS BEHALF SHALL PROVE TO BE INADEQUATE OR INVALID, AND
BORROWER AGREES TO INDEMNIFY AND HOLD LENDER HARMLESS AGAINST AND FROM ANY
LOSS, COST, LIABILITY OR EXPENSE (INCLUDING BUT NOT LIMITED TO REASONABLE
ATTORNEYS’ FEES) INCURRED IN CONNECTION WITH ANY SUCH ACTION.


 


(d)           Borrower hereby
irrevocably constitutes and appoints Lender as Borrower’s attorney-in-fact, in
Borrower’s or Lender’s name, during a continuing Event of Default, to enforce
all rights of Borrower under each Contract. 
Such appointment is coupled with an interest and is therefore
irrevocable.


 


(e)           In the absence of a
continuing Event of Default, and notice from Lender to Borrower directing
Borrower that Lender is exercising its rights under this Section 6.1
Borrower shall have the right to exercise its rights as owner under each
Contract, provided that, except in the ordinary course of prudent office
property management, Borrower shall not cancel or materially amend in any
material respect any Contract or do


 


27

















 


or suffer to be
done any act which would impair, to any material extent, the security
constituted by this assignment without the prior written consent of Lender.


 


(f)            This assignment
shall inure to the benefit of Lender and its successors and assigns, any
purchaser upon foreclosure of the Lien Instrument, any receiver in possession
of the Mortgaged Property and any corporation affiliated with Lender which
assumes Lender’s rights and obligations under this Agreement.


 


6.2                                 Assignment
of Proceeds.  Borrower hereby further
transfers and assigns to Lender and acknowledges that Lender shall be entitled
to receive (i) any and all sums which may be awarded and become payable to
Borrower for condemnation of all or any portion of the Mortgaged Property, or
(ii) the proceeds of any and all insurance upon the Mortgaged Property
(other than the proceeds of general public liability insurance).


 


(a)           Borrower shall, upon
request of Lender, make, execute, acknowledge and deliver any and all additional
assignments and documents as may be necessary from time to time to enable
Lender to collect and receipt for any of such insurance or condemnation
proceeds.


 


(b)           Lender shall not be,
under any circumstances, liable or responsible for failure to collect, or
exercise diligence in the collection of, any of such sums.


 


(c)           Except as otherwise
provided in Sections 6.3 and 6.4 hereof, any sums so received by Lender
pursuant to this Section 6.2 may otherwise, in Lender’s sole
discretion, be provided back to Borrower for restoration of the Mortgaged
Property, in the amounts, manner, method and pursuant to such requirements in
documents as Lender may require, or shall be applied to the liquidation of the
Indebtedness in accordance with the provisions of the Lien Instrument.


 


6.3                                 Limited
Right to Use Casualty Insurance Proceeds. 
Borrower will give Lender prompt notice of any damage to or destruction
of the Mortgaged Property, and:


 


(a)           In case of loss
covered by policies of insurance, Lender (or, after foreclosure, the purchaser
at the foreclosure sale) is hereby authorized to settle and adjust any claim
under such policies without the consent of Borrower, provided Lender shall
allow Borrower one hundred fifty (150) days from the date of the loss to settle
and adjust with the insurance company or companies on the amount to be paid
upon the loss with Lender’s approval; provided, that Borrower may adjust losses
aggregating not in excess of $250,000.00 if such adjustment is carried out in a
competent and timely manner, and provided that in any case Lender shall and is
hereby authorized to collect and receipt for any such insurance proceeds; and
the expenses incurred by Lender in the adjustment and collection of insurance
proceeds shall be so much additional indebtedness hereby secured and shall be
reimbursed to Lender upon demand.


 


(b)           In the event of any
insured damage to or destruction of the Mortgaged Property or any part thereof
(herein called an “Insured Casualty”) which is a Restoration Casualty
(hereinafter defined), then, the proceeds of insurance shall be applied to the
cost of restoring, repairing, replacing or rebuilding the Mortgaged Property or
part thereof


 


28

















 


subject to such
Restoration Casualty, as provided for below; and Borrower hereby covenants and
agrees to commence and diligently prosecute such restoring, repairing,
replacing or rebuilding; provided, that Borrower shall pay all costs (and if
required by Lender, Borrower shall deposit the total thereof with Lender in
advance to be held in a money market account at Lender and from which Lender
shall approve draw requests) of such restoring, repairing, replacing or
rebuilding in excess of the net proceeds of insurance made available pursuant
to the terms hereof.  As used herein, the
term “Restoration Casualty” shall mean an Insured Casualty which
(i) occurs prior to that date that is six (6) months prior to the
Maturity Date, (ii) occurs when no Event of Default has occurred and is
then continuing, (iii) Lender is not prohibited from permitting
restoration pursuant to a Regulatory Authority, and (iv) in the reasonable
judgment of Lender, (1)  the Mortgaged Property will be forecasted to
maintain a Debt Coverage Ratio greater than or equal to 1.15 to 1.00 during the
period of restoration and (3) the Mortgaged Property can be restored
within twelve (12) months to an economic unit not less valuable than the same
was prior to the Insured Casualty and adequately securing the outstanding
balance of the Loan.


 


(c)           Except as provided
above, the proceeds of insurance consequent upon any Insured Casualty (or
condemnation proceeds as set forth in Section 6.4 below, or other
funds paid within one hundred twenty (120) days from the occurrence of an
Insured Casualty or condemnation) shall be applied to the payment of the
Indebtedness hereby secured without a prepayment penalty or premium.


 


(d)           In the event that
proceeds of insurance, if any, shall be made available to Borrower for the
restoring, repairing, replacing or rebuilding of the Mortgaged Property,
Borrower hereby covenants to restore, repair, replace or rebuild the same to be
of at least equal value and of substantially the same character as prior to
such damage or destruction, or as close thereto as practicable, all to be
effected in accordance with applicable law and plans and specifications
approved in advance by Lender, such approval not to be unreasonably withheld.


 


In the event Borrower is
entitled to reimbursement or funding out of insurance proceeds held by Lender,
such proceeds shall be disbursed from time to time upon Lender being furnished
with (1) evidence satisfactory to it of the estimated cost of completion
of the restoration, repair, replacement and rebuilding, (2) funds, or, at
Lender’s option, assurances satisfactory to Lender that such funds are
available, sufficient in addition to the proceeds of insurance to complete the
proposed restoration, repair, replacement and rebuilding, and (3) such
architect’s certificates, waivers of lien, contractor’s sworn statements, title
insurance endorsements, bonds, plats of survey and such other evidences of
cost, payment and performance as Lender may reasonably require and approve,
such approval not to be unreasonably withheld; and Lender may, in any event, require
that all plans and specifications for such restoration, repair, replacement and
rebuilding be submitted to and approved by Lender prior to commencement of
work, such approval not to be unreasonably withheld.  No payment made prior to the final completion
of the restoration, repair, replacement and rebuilding shall exceed ninety
percent (90%) of the value of the work performed from time to time; funds other
than proceeds of insurance shall be disbursed prior to disbursement of such
proceeds; and at all times, the undisbursed balance of such proceeds remaining
in the hands of Lender, together with funds deposited for that purpose or


 


29

















 


irrevocably committed to
the satisfaction of Lender by or on behalf of Borrower for that purpose, shall
be at least sufficient in the reasonable judgment of Lender to pay for the cost
of completion of the restoration, repair, replacement or rebuilding, free and
clear of all liens or claims for lien. 
Any surplus which may remain out of insurance proceeds held by Lender
after payment of such costs of restoration, repair, replacement or rebuilding
shall be paid to Borrower or as Borrower may direct.


 


6.4                                 Limited
Right to Use Condemnation Proceeds. 
Borrower will give Lender prompt notice of any instituted or threatened
(in writing) condemnation proceeding affecting a part of the Mortgaged Property
and if there shall occur any condemnation of a part of the Mortgaged Property,
and if (i) in the reasonable judgment of Lender the Mortgaged Property can
be restored, within a reasonable time and in any event prior to six
(6) months prior to Maturity Date to an economic unit not less valuable
than the same was prior to such condemnation and adequately securing the
Indebtedness, and (ii) Lender receives assurances satisfactory to Lender
that tenancies or other sources of revenue from the Mortgaged Property will
continue in full force and effect after restoration subject only to rent
abatement during the period when any leased premises are untenantable, then, if
and so long as there is no Event of Default, Lender will make available to
Borrower for such restoration, proceeds of condemnation, if any, collected by
Lender because of the act or occurrence and not restricted by any adverse claim
thereto.  If Lender holds all such funds
in an account for such purposes, they shall be held in a money market account
from which Lender shall approve draw requests.


 


6.5                                 Reserve
for Impositions and Insurance Premiums. 
Upon the occurrence and during the continuance of an Event of Default,
Borrower shall create a fund or reserve (the “Impositions Reserve”) for
the payment of all insurance premiums and Impositions against or affecting the
Mortgaged Property by paying to Lender, on the first day of each calendar month
prior to the maturity of the Note, as may be extended, a sum equal to the
premiums that will next become due and payable on the insurance policies
covering Borrower, the Mortgaged Property or any part thereof or such other
insurance policies required hereby or by the Loan Documents, plus Impositions
next due on the Mortgaged Property or any part thereof as estimated by Lender,
less all sums paid previously to Lender therefor, divided by the number of
months to elapse before one month prior to the date when each of such premiums
and Impositions will become delinquent. 
Such sums deposited and held in an Impositions Reserve account with the
Lender shall accrue interest at Lender’s money market rate for the purposes of
paying such premiums and Impositions. 
Notwithstanding the foregoing, excluded from such payment to Lender
shall be the then-current charges for water, gas, sewer, electricity, and other
utilities.  Any excess reserve shall, at
the discretion of Lender upon notice to Borrower, be credited by Lender on
subsequent reserve payments or subsequent payments to be made on the Note by
the maker thereof, and any deficiency shall be paid by Borrower to Lender on or
before three (3) business days from the date when Lender demands such
payment to be made, but in no event after the date when such premiums and
Impositions shall become delinquent.  In
the event there exists a deficiency in such fund or reserve at any time when
Impositions or insurance premiums are due and payable, Lender may, but shall not
be obligated to, advance the amount of such deficiency on behalf of Borrower
and such amounts so advanced shall become a part of the Indebtedness, shall be
immediately due and payable, and shall bear interest at the Default Rate from
the date of such advance through and including the date of repayment.  Unless otherwise agreed at the time of such
transfer, transfer of legal title to the Mortgaged Property shall automatically
transfer to the


 


30

















 


holder of legal title to the Mortgaged Property the interest of
Borrower in all sums deposited with Lender under the provisions hereof or
otherwise.


 


6.6                                 Security
Interest in Reserves.


 


(a)           As additional
security for the payment and performance by Borrower of all duties,
responsibilities and obligations under the Note and the other Loan Documents,
Borrower hereby unconditionally and irrevocably assigns, conveys, pledges,
mortgages, transfers, delivers, deposits, sets over and confirms unto Lender,
and hereby grants to Lender a security interest in all sums on deposit under
this Agreement, the Lien Instrument and the other Loan Documents (collectively,
the “Reserves”) including, without limitation, (i) the Impositions
Reserve, (ii) the Tenant Improvements/Leasing Commissions amounts;
(iii) the accounts into which the Reserves have been deposited,
(iv) all insurance on said accounts, (v) all accounts, contract
rights and general intangibles or other rights and interests pertaining
thereto, (vi) all sums now or hereafter therein or represented thereby,
(vii) all replacements, substitutions or proceeds thereof, (viii) all
instruments and documents now or hereafter evidencing the Reserves or such
accounts, (ix) all powers, options, rights, privileges and immunities
pertaining to the Reserves (including the right to make withdrawals therefrom),
and (x) all proceeds of the foregoing. 
Borrower hereby authorizes and consents to the account into which the
Reserves have been deposited being held in Lender’s name or the name of any entity
servicing the Note for Lender and hereby acknowledges and agrees that Lender,
or at Lender’s election, such servicing agent, shall have exclusive control
over said account.  Notice of the
assignment and security interest granted to Lender herein may be delivered by
Lender at any time to the financial institution wherein the Reserves have been
established, and Lender, or such servicing entity, shall have possession of all
passbooks or other evidences of such accounts. 
Borrower hereby holds Lender harmless with respect to all risk of loss
regarding amounts on deposit in the Reserves, except to the extent that any
such loss is caused by the gross negligence or intentional misconduct of
Lender.  Borrower hereby knowingly,
voluntarily and intentionally stipulates, acknowledges and agrees that the
advancement of the funds from the Reserves as set forth herein is at Borrower’s
direction and is not the exercise by Lender of any right of set-off or other
remedy upon a default.  If a default
shall occur hereunder or under any other of the Loan Documents which is not
cured within any applicable grace or cure period, then Lender may, without
notice or demand on Borrower, at its option: 
(A) withdraw any or all of the funds (including, without
limitation, interest) then remaining in the Reserves and apply the same, after
deducting all costs and expenses of safekeeping, collection and delivery
(including, but not limited to, attorneys’ fees, costs and expenses) to the
indebtedness evidenced by the Note or any other obligations of Borrower under
the other Loan Documents in such manner as Lender shall deem appropriate in its
sole discretion, and the excess, if any, shall be paid to Borrower, provided
that Lender shall not apply any such sums to the payment of principal unless it
has accelerated the Loan, (B) exercise any and all rights and remedies of
a secured party under the Code, or (C) exercise any other remedies
available at law or in equity.  No such
use or application of the funds contained in the Reserves shall be deemed to
cure any default hereunder or under the other Loan Documents.


 


31

















 


(b)           The Reserves are
solely for the protection of Lender and entail no responsibility on Lender’s
part beyond the payment of the respective costs and expenses in accordance with
the terms thereof and beyond the allowing of due credit for the sums actually
received.  Upon assignment of this Loan
Agreement by Lender, any funds in the Reserves shall be turned over to the
assignee and any responsibility of Lender, as assignor, with respect thereto
shall terminate.  Upon full payment of
the indebtedness secured hereby in accordance with its terms (or if earlier,
the completion of the applicable conditions to release of each Reserve to Lender’s
reasonable satisfaction) or at such earlier time as Lender may elect, the
balance in the Reserves then in Lender’s possession shall be paid over to
Borrower.


 


(c)           Any amounts received
by Lender from Borrower may be invested by Lender (or its servicer) for its
benefit, and Lender shall not be obligated to pay, or credit, any interest
earned thereon to Borrower except as may be otherwise specifically provided in
this Agreement.


 


6.7                                 Account
Relationship.  Borrower agrees, at
all times while the Loan continues in effect, to maintain the Special Account
in a depository relationship with Lender, as Borrower’s bank account and
depository for the Borrower and the Mortgaged Property.


 


ARTICLE VII


 


EVENTS OF DEFAULT


 


7.1                                 Events
of Default.  Each of the following
shall constitute an “Event of Default” hereunder:


 


(a)           If Borrower shall
fail, refuse, or neglect to pay, in full, any installment or portion of the
Indebtedness as and when the same shall become due and payable, whether at the
due date thereof stipulated in the Loan Documents, upon acceleration or
otherwise.


 


(b)           If Borrower shall
fail, refuse or neglect to comply with, perform and discharge fully and timely
any of the Obligations as and when called for; provided, however,
that a failure by Borrower to timely satisfy an Obligation shall not constitute
an “Event of Default” hereunder or under any of the Loan Documents, if
(i) such failure does not constitute an Event of Default pursuant to any
other subsection of this Section 7.1 other than this subsection (b),
and (ii) such failure is fully cured by Borrower on or before the
expiration of the Cure Period (hereinafter defined).  As used in this subsection 7.1(b), the
term “Cure Period” means a thirty (30) day period commencing upon
Lender’s written notice to Borrower of Borrower’s failure to satisfy the
subject Obligation; provided, however, if (1) the subject
failure is, by its nature, not readily susceptible to cure within thirty (30)
days, and (2) Borrower commences such cure process within the initial 30-day
period and diligently pursues same to completion with ninety (90) days of
the initial failure by Borrower to satisfy the subject Obligation, then such
failure shall not constitute an “Event of Default”.


 


32

















 


(c)           If any
representation, warranty, or statement made by Borrower, Guarantor, or any
affiliate of Borrower or Guarantor, under, or pursuant to the Loan Documents or
any affidavit or other instrument executed or delivered with respect to the
Loan Documents or the Indebtedness is determined by Lender to be false or
misleading in any material respect as of the date hereof or thereof, and such
representation, warranty, or statement is not corrected by Borrower, Guarantor
or others within ten (10) days of receipt of notice from Lender of the
discovery of such materially misleading representation, warranty or statement.


 


(d)           If Borrower shall
default or commit an event of default under and pursuant to any other mortgage
or security agreement (which is not a Loan Document) which covers or affects
any part of the Mortgaged Property that is continuing beyond any applicable
notice and grace period;


 


(e)           If Borrower
(i) shall execute an assignment for the benefit of creditors or an
admission in writing by Borrower of Borrower’s inability to pay, or Borrower’s
failure to pay, debts generally as the debts become due; or (ii) shall
allow the levy against the Mortgaged Property or any part thereof, of any
execution, attachment, sequestration or other writ which is not vacated within
sixty (60) days after the levy; or (iii) shall allow the appointment of a
receiver, trustee or custodian of Borrower or of the Mortgaged Property or any
part thereof, which receiver, trustee or custodian is not discharged within
sixty (60) days after the appointment; or (iv) files as a debtor a
petition, case, proceeding or other action pursuant to, or voluntarily seeks of
the benefit or benefits of any Debtor Relief Law, or takes any action in
furtherance thereof; or (v) files either a petition, complaint, answer or
other instrument which seeks to effect a suspension of, or which has the effect
of suspending any of the rights or powers of Lender or the trustee under the
Lien Instrument granted in the Note, herein or in any Loan Document; or (vi) allows
the filing of a petition, case, proceeding or other action against Borrower as
a debtor under any Debtor Relief Law or seeks appointment of a receiver,
trustee, custodian or liquidator of Borrower or of the Mortgaged Property, or
any part thereof, or of any significant portion of Borrower’s other property
and (a) Borrower admits, acquiesces in or fails to contest diligently the
material allegations thereof, or (b) the petition, case, proceeding or
other action results in the entry of an order for relief or order granting the
relief sought against Borrower, or (c) the petition, case, proceeding or
other action is not permanently dismissed or discharged on or before the
earlier of trial thereon or sixty (60) days next following the date of filing.


 


(f)            If Borrower, any
Constituent Party, or any Guarantor, shall die, dissolve, terminate or
liquidate, or become permanently disabled.


 


(g)           If Borrower creates,
places, or permits to be created or placed, or through any act or failure to
act, acquiesces in the placing of, or allows to remain, any Subordinate
Mortgage, regardless of whether such Subordinate Mortgage is expressly
subordinate to the liens or security interests of the Loan Documents, with
respect to the Mortgaged Property, other than the Permitted Exceptions and any
Contested Item.


 


33

















 


(h)           If Borrower makes a
Disposition (other than a Permitted Disposition), without the prior written
consent of Lender.


 


(i)            If Borrower
abandons all or any material portion of the Mortgaged Property.


 


(j)            The occurrence of
any event referred to in Sections 7.1(e) and (f) hereof
with respect to any Guarantor, (as if such Guarantor was the “Borrower” in such
Sections).


 


(k)           An Event of Default
as defined in any of the Loan Documents.


 


(l)            If, except with
respect to any Contested Item, any levy, attachment or garnishment is issued,
or if any lien for the performance of work or the supply of materials is filed,
against any part of the Mortgaged Property and remains unsatisfied or unbonded
following the earlier of (i) thirty (30) days after the date of filing
thereof or (ii) the requesting by Borrower of an Advance.


 


(m)          If Borrower should
fail to timely pay all or any portion of the Commitment Fee at the time such
amounts are owing pursuant to this Agreement.


 


(n)           If Borrower shall
fail to pay when due any principal of or interest on any debt or the maturity
of any such debt shall have been accelerated, or any such debt shall have been
required to be prepaid prior to the stated maturity thereof.


 


(o)           If Borrower refuses
or neglects to provide Lender the Compliance Certificate in accordance with the
terms and conditions of this Agreement.


 


7.2                                 Remedies.  Lender shall have the right, upon the
happening and during the continuance of an Event of Default, in addition to any
rights or remedies available to it under all other Loan Documents, to enter
into possession of the Mortgaged Property. 
All amounts so expended by Lender shall be deemed to have been disbursed
to Borrower as Loan proceeds and secured by the Lien Instrument.  For this purpose, Borrower hereby constitutes
and appoints (which appointment is coupled with an interest and is therefore
irrevocable) Lender as Borrower’s true and lawful attorney-in-fact, with full
power of substitution to manage the Improvements in the name of Borrower, and
hereby empowers Lender, acting as Borrower’s attorney-in-fact, as follows:  to use any funds of Borrower, including any
balance which may be held in escrow, any Borrower’s Deposit and any funds which
may remain unadvanced hereunder; to continue all or any existing Contracts; to
employ such contractors, subcontractors, agents, design professionals and
inspectors as shall be required; to pay, settle or compromise all existing
bills and claims which are or may be liens against the Mortgaged Property, or
may be necessary or desirable for the clearing of title; to execute all the
applications and certificates in the name of Borrower which may be required by
any Contract; and to do any and every act with respect to the Improvements
which Borrower could do in Borrower’s own behalf.  Lender, acting as Borrower’s
attorney-in-fact, shall also have power to prosecute and defend all actions or
proceedings in connection with the Mortgaged Property and to take such action
and require such performance as is deemed necessary.


 


34

















 


ARTICLE VIII


 


LENDER’S DISCLAIMERS -
BORROWER’S INDEMNITIES


 


8.1                                 No
Obligation by Lender to Operate.  Any
term or condition of any of the Loan Documents to the contrary notwithstanding,
Lender shall not have, and by its execution and acceptance of this Agreement
hereby expressly disclaims, any obligation or responsibility for the
management, conduct or operation of the business and affairs of Borrower or
Guarantor.  Any term or condition of the
Loan Documents which permits Lender to disburse funds, whether from the
proceeds of the Loan, Borrower’s Deposit or otherwise, or to take or refrain
from taking any action with respect to Borrower, Guarantor, the Mortgaged
Property or any other collateral for repayment of the Loan, shall be deemed to
be solely to permit Lender to audit and review the management, operation and
conduct of the business and affairs of Borrower and Guarantor, and to maintain
and preserve the security given by Borrower to Lender for the Loan, and may not
be relied upon by any other person. 
Further, Lender shall not have, has not assumed and by its execution and
acceptance of this Agreement hereby expressly disclaims any liability or
responsibility for the payment or performance of any indebtedness or obligation
of Borrower or Guarantor and no term or condition of the Loan Documents, shall
be construed otherwise.  Borrower hereby expressly
acknowledges that no term or condition of the Loan Documents shall be construed
so as to deem the relationship between Borrower, Guarantor and Lender to be
other than that of borrower, guarantor and lender, and Borrower shall at all
times represent that the relationship between Borrower, Guarantor and Lender is
solely that of borrower, guarantor and lender. 
EXCEPT FOR THOSE COSTS, EXPENSES OR
LIABILITIES THAT ARE CAUSED BY THE WILLFUL MISCONDUCT OR GROSS NEGLIGENCE OF
LENDER, BORROWER HEREBY INDEMNIFIES AND AGREES TO HOLD LENDER HARMLESS FROM AND
AGAINST ANY COST, EXPENSE OR LIABILITY INCURRED OR SUFFERED BY LENDER AS A
RESULT OF ANY ASSERTION OR CLAIM OF ANY OBLIGATION OR RESPONSIBILITY OF LENDER
FOR THE MANAGEMENT, OPERATION AND CONDUCT OF THE BUSINESS AND AFFAIRS OF
BORROWER OR GUARANTOR, OR AS A RESULT OF ANY ASSERTION OR CLAIM OF ANY
LIABILITY OR RESPONSIBILITY OF LENDER FOR THE PAYMENT OR PERFORMANCE OF ANY
INDEBTEDNESS OR OBLIGATION OF BORROWER OR GUARANTOR.


 


8.2                                 INDEMNITY BY BORROWER.  EXCEPT FOR THOSE LOSSES, LIABILITIES, CLAIMS,
DAMAGES, COSTS OR EXPENSES, THAT ARE CAUSED BY THE WILLFUL MISCONDUCT OR GROSS
NEGLIGENCE OF LENDER OR ANY OTHER INDEMNIFIED PERSON, BORROWER HEREBY
INDEMNIFIES LENDER AND EACH AFFILIATE THEREOF AND THEIR RESPECTIVE OFFICERS,
DIRECTORS, EMPLOYEES, AND AGENTS FROM, AND HOLDS EACH OF THEM HARMLESS AGAINST,
ANY AND ALL LOSSES, LIABILITIES, CLAIMS, DAMAGES, COSTS, AND EXPENSES TO WHICH
ANY OF THEM MAY BECOME SUBJECT, INSOFAR AS SUCH LOSSES, LIABILITIES,
CLAIMS, DAMAGES, COSTS, AND EXPENSES ARISE FROM OR RELATE TO ANY OF THE LOAN
DOCUMENTS OR ANY OF THE TRANSACTIONS CONTEMPLATED THEREBY OR FROM ANY
INVESTIGATION, LITIGATION, OR OTHER PROCEEDING, INCLUDING, WITHOUT LIMITATION,
ANY THREATENED INVESTIGATION, LITIGATION, OR


 


35

















 


OTHER PROCEEDING RELATING TO ANY OF
THE FOREGOING.  WITHOUT INTENDING TO
LIMIT THE REMEDIES AVAILABLE TO LENDER WITH RESPECT TO THE ENFORCEMENT OF ITS
INDEMNIFICATION RIGHTS AS STATED HEREIN OR AS STATED IN ANY LOAN DOCUMENT, IN
THE EVENT ANY CLAIM OR DEMAND IS MADE OR ANY OTHER FACT COMES TO THE ATTENTION
OF LENDER IN CONNECTION WITH, RELATING OR PERTAINING TO, OR ARISING OUT OF THE
TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT, WHICH LENDER REASONABLY BELIEVES
MIGHT INVOLVE OR LEAD TO SOME LIABILITY OF LENDER, BORROWER SHALL, PROMPTLY
UPON RECEIPT OF WRITTEN NOTIFICATION OF ANY SUCH CLAIM OR DEMAND, ASSUME IN
FULL THE PERSONAL RESPONSIBILITY FOR AND THE DEFENSE OF ANY SUCH CLAIM OR
DEMAND AND PAY IN CONNECTION THEREWITH ANY LOSS, DAMAGE, DEFICIENCY, LIABILITY
OR OBLIGATION, INCLUDING, WITHOUT LIMITATION, LEGAL FEES AND COURT COSTS
INCURRED IN CONNECTION THEREWITH.  IN THE
EVENT OF COURT ACTION IN CONNECTION WITH ANY SUCH CLAIM OR DEMAND, BORROWER
SHALL ASSUME IN FULL THE RESPONSIBILITY FOR THE DEFENSE OF ANY SUCH ACTION AND
SHALL PROMPTLY SATISFY AND DISCHARGE ANY FINAL DECREE OR JUDGMENT (SUBJECT TO
ANY RIGHTS OF APPEAL) RENDERED THEREIN. 
LENDER MAY, IN ITS SOLE DISCRETION, IN GOOD FAITH, MAKE ANY PAYMENTS SUSTAINED
OR INCURRED BY REASON OF ANY OF THE FOREGOING; AND BORROWER SHALL PROMPTLY
REPAY TO LENDER, IN CASH AND NOT WITH PROCEEDS OF THE LOAN, THE AMOUNT OF SUCH
PAYMENT, WITH INTEREST THEREON AT THE DEFAULT RATE APPLICABLE UNDER THE
NOTE.  LENDER SHALL HAVE THE RIGHT TO
JOIN BORROWER AS A PARTY DEFENDANT IN ANY LEGAL ACTION BROUGHT AGAINST LENDER
IN RESPECT OF WHICH LENDER IS ENTITLED TO THE BENEFIT OF THIS SECTION 8.2,
AND BORROWER HEREBY CONSENTS TO THE ENTRY OF AN ORDER MAKING BORROWER A PARTY
DEFENDANT TO ANY SUCH ACTION.


 


8.3                                 No
Agency.  Nothing herein shall be
construed as making or constituting Lender as the agent of Borrower in making
payments pursuant to any Contracts entered into by Borrower.  The purpose of all requirements of Lender
hereunder is solely to allow Lender to check and require documentation
sufficient to protect Lender and the Loan contemplated hereby.


 


ARTICLE IX


 


MISCELLANEOUS


 


9.1                                 Successors
and Assigns.  This Agreement shall be
binding upon, and shall inure to the benefit of, Borrower, Guarantor, and
Lender, and their respective heirs, legal representatives, successors and
assigns; provided, however, that Borrower may not assign any rights or
obligations under this Agreement without the prior written consent of Lender.


 


9.2                                 Headings.  The Article, Section, and Subsection
entitlements hereof are inserted for convenience of reference only and shall in
no way alter, modify, define or be used in construing the text of such
Articles, Sections or Subsections.


 


36
















 


9.3           Survival. 
This Loan Agreement and each and all of the Obligations shall survive
the execution and delivery of the Loan Documents and the consummation of the
Loan and shall continue in full force and effect until the Indebtedness shall
have been paid in full in accordance with the terms of the Loan Documents and
Borrower shall well and truly have performed each and every of the Obligations;
provided, however, that nothing contained in this Section shall limit the
obligations of Borrower or Guarantor as otherwise set forth herein.


 


9.4           APPLICABLE LAW.  THE LOAN DOCUMENTS SHALL BE GOVERNED BY AND
CONSTRUED ACCORDING TO THE LAWS OF THE STATE OF TEXAS FROM TIME TO TIME IN
EFFECT EXCEPT TO THE EXTENT PREEMPTED BY UNITED STATES FEDERAL LAW.


 


9.5           Notices.  All
notices or other communications required or permitted to be given pursuant to
this Agreement shall be in writing and shall be considered as properly given if
(i) mailed by first class United States mail, postage prepaid, registered
or certified with return receipt requested; (ii) by delivering same in
person to the intended addressee; or (iii) by delivery to an independent
third party commercial delivery service for same day or next day delivery and
providing for evidence of receipt at the office of the intended addressee.  Notice so mailed shall be effective three (3) days
after its deposit with the United States Postal Service or any successor
thereto; notice sent by a commercial delivery service shall be effective upon
delivery to such commercial delivery service; notice given by personal delivery
shall be effective only if and when received by the addressee; and notice given
by other means shall be effective only if and when received at the designated
address of the intended addressee.  For
purposes of notice, the addresses of the parties shall be as set forth in this
Agreement; provided, however, that either party shall have the right to change
its address for notice hereunder to any other location within the continental
United States by the giving of thirty (30) days notice to the other party in
the manner set forth herein. For purposes of such notices, the addresses of the
parties shall be as follows:


 


	
  Lender:

  	
  Mutual of Omaha Bank

  
	
   

  	
  4455 LBJ Freeway,
  Suite 907

  
	
   

  	
  Dallas, Texas 75244

  
	
   

  	
  Attention: Chris Martineau

  
	
   

  	
   

  
	
  And to:

  	
  Mutual of Omaha Bank

  
	
   

  	
  3333 Farnam Street

  
	
   

  	
  Omaha, Nebraska 68131

  
	
   

  	
  Attention: Tod R. Ellis

  
	
   

  	
   

  
	
  Borrower:

  	
  Behringer Harvard 1875
  Lawrence, LLC

  
	
   

  	
  15601 Dallas Parkway,
  Suite 600

  
	
   

  	
  Addison, Texas 75001

  
	
   

  	
  Attn: Gerald J.
  Reihsen, III

  



 


9.6           Reliance by Lender. 
Lender is relying and is entitled to rely upon each and all of the
provisions of this Agreement; and accordingly, if any provision or provisions
of this 


 


37

















 


Agreement should be held to be invalid or
ineffective, then all other provisions hereof shall continue in full force and
effect notwithstanding.


 


9.7           Participations. 
Lender shall have the right at any time and from time to time to grant
participations in the Loan and Loan Documents, provided such participants are
acceptable to Lender.  Each participant
shall be entitled to receive all information received by Lender regarding the
creditworthiness of Borrower, any of its principals and the Guarantor,
including (without limitation) information required to be disclosed to a
participant pursuant to Banking Circular 181 (Rev., August 2, 1984),
issued by the Comptroller of the Currency (whether the participant is subject
to the circular or not).  In the event
that Lender shall request any modification to the Loan Documents, Borrower
agrees to make reasonable modifications to the Loan Documents, provided that
Lender advises Borrower in writing that the modifications are necessary to
effectuate an assignment of or participation in the Loan, and provided that
such modifications do not increase Borrower’s obligations to any material
extent or change any of its monetary obligations in respect of the Loan.  Such modifications may include, if required
by Lender, matters relating to approvals to be granted by Lender under the
terms of this Agreement.  In the event
that no Event of Default is then existing and except as otherwise required by
any Regulatory Authority, Lender will use its best efforts to remain as the
lead or agent bank in regard to the Loan and Loan Documents.


 


9.8           Controlling Agreement.  It is expressly stipulated and agreed to be
the intent of Borrower and Lender at all times to comply with applicable state
law or applicable United States federal law (to the extent that it permits Lender
to contract for, charge, take, reserve, or receive a greater amount of interest
than under state law) and that this section shall control every other covenant
and agreement in this Agreement.


 


9.9           Controlling Document.  In the event of a conflict between the terms
and conditions of this Agreement and the terms and conditions of any other Loan
Document, the terms and conditions of this Agreement shall control.


 


9.10         Construction of Agreement.  All pronouns, whether in masculine, feminine
or neuter form, shall be deemed to refer to the object of such pronoun whether
same is masculine, feminine or neuter in gender, as the context may suggest or
require.  All terms used herein, whether
or not defined in Section 1.1 hereof, and whether used in singular
or plural form, shall be deemed to refer to the object of such term, whether
such is singular or plural in nature, as the context may suggest or require.


 


9.11         Counterpart Execution.  To facilitate execution, this Agreement may
be executed in one or more counterparts as may be convenient or required, with
all such counterparts collectively constituting a single instrument.


 


9.12         Relationship of Borrower and Lender.  The relationship between Borrower and Lender
is solely that of debtor and creditor, and Lender has no fiduciary or other
special relationship with Borrower, and no term or condition of any of the Loan
Documents shall be construed so as to deem the relationship between Borrower
and Lender to be other than that of debtor and creditor.


 


38

















 


9.13         NOTICE OF INDEMNIFICATION.  BORROWER ACKNOWLEDGES AND AGREES THAT THIS
AGREEMENT CONTAINS CERTAIN INDEMNIFICATION PROVISIONS.


 


9.14         ENTIRE AGREEMENT.  THIS LOAN AGREEMENT AND THE OTHER LOAN
DOCUMENTS REPRESENT THE FINAL AGREEMENT BETWEEN THE PARTIES AND MAY NOT BE
CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL
AGREEMENTS OF THE PARTIES.  THERE ARE NO
UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES. 
THIS INSTRUMENT MAY BE AMENDED ONLY BY AN INSTRUMENT IN WRITING
EXECUTED BY THE PARTIES HERETO.


 


[THE REMAINDER OF THIS PAGE IS LEFT INTENTIONALLY BLANK; SIGNATURE
PAGES FOLLOW.]


 


39

















 


IN WITNESS WHEREOF, the
parties hereto have executed this Agreement effective as of the day and year
first above written.


 


	
   

  	
  LENDER:

  
	
   

  	
   

  
	
   

  	
  MUTUAL OF OMAHA BANK, a federally chartered 

  
	
   

  	
  savings bank

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Chris Martineau

  
	
   

  	
  Name:

  	
  Chris Martineau

  
	
   

  	
  Title:

  	
  SVP

  
					



 


Signature
Page


 

















 


	
   

  	
  BORROWER:

  
	
   

  	
   

  
	
   

  	
  BEHRINGER HARVARD 1875 LAWRENCE,

  
	
   

  	
  LLC, a Delaware limited
  liability company

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Robert S. Aisner

  
	
   

  	
   

  	
  Robert S. Aisner,
  President and Chief

  
	
   

  	
   

  	
  Executive Officer

  



 


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