**Exhibit 10.9A**

 

 

**LOAN AGREEMENT**

 

Dated as of September 19, 2003

 

Between

 

**AMERIVEST CENTERRA INC**.

**AMERIVEST PARKWAY INC**.

**AMERIVEST BLACK CANYON INC**.,

collectively, as Borrower

 

and

 

**GREENWICH CAPITAL FINANCIAL PRODUCTS INC.,**

as Lender

 

 
|   | Property  Locations: | Centerra  Office Building, Denver, CO |
|--------|----------------------|---------------------------------------|
|   |                 | Parkway  Centre II, Plano, TX         |
|   |                 | Southwest  Gas Building, Phoenix, AZ  |

 

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**TABLE OF CONTENTS**

 
| 1.     | DEFINITIONS; PRINCIPLES  OF CONSTRUCTION |                                              |
|--------|------------------------------------------|---------------------------------------------------|
|   |                                     |                                              |
|   | 1.1                                      | Specific  Definitions                             |   |
|   | 1.2                                      | Index of Other Definitions                        |   |
|   | 1.3                                      | Principles of  Construction                       |   |
|   |                                     |                                              |
| 2.     | GENERAL LOAN TERMS                       |                                              |
|   |                                     |                                              |
|   | 2.1                                      | The Loan                                          |   |
|   | 2.2                                      | Interest; Monthly Payments                        |   |
|   |                                     | 2.2.1                                             | Generally |   |
|   |                                     | 2.2.2                                             | Default Rate |   |
|   |                                     | 2.2.3                                             | Taxes |   |
|   |                                     | 2.2.4                                             | New Payment Date |   |
|   | 2.3                                      | Loan Repayment                                    |   |
|   |                                     | 2.3.1                                             | Repayment |   |
|   |                                     | 2.3.2                                             | Mandatory Prepayments |   |
|   |                                     | 2.3.3                                             | Defeasance |   |
|   |                                     | 2.3.4                                             | Optional Prepayments |   |
|   | 2.4                                      | Release of Property                               |   |
|   |                                     | 2.4.1                                             | Release on Defeasance |   |
|   |                                     | 2.4.2                                             | Sale of a Property |   |
|   |                                     | 2.4.3                                             | Release on  Payment in Full |   |
|   | 2.5                                      | Payments and  Computations                        |   |
|   |                                     | 2.5.1                                             | Making of Payments |   |
|   |                                     | 2.5.2                                             | Computations |   |
|   |                                     | 2.5.3                                             | Late Payment Charge |   |
|   | 2.6                                      | Fees                                              |   |
|   |                                     | 2.6.1                                             | Origination Fees |   |
|   |                                     |                                              |   |   |
| 3.     | CASH MANAGEMENT  AND RESERVES            |                                              |
|   |                                     |                                              |   |   |
|   | 3.1                                      | Cash Management Arrangements                      |   |
|   | 3.2                                      | Required Repairs                                  |   |
|   |                                     | 3.2.1                                             | Completion  of Required Repairs |   |
|   |                                     | 3.2.2                                             | Required  Repairs Reserves |   |
|   | 3.3                                      | Taxes and  Insurance                              |   |
|   | 3.4                                      | Capital Expense  Reserves                         |   |
|   | 3.5                                      | Rollover Reserves                                 |   |
|   | 3.6                                      | Operating Expense  Subaccount                     |   |
|   | 3.7                                      | Casualty/Condemnation  Subaccount                 |   |
|   | 3.8                                      | Security Deposits                                 |   |
|   | 3.9                                      | Cash Collateral  Subaccount.                      |   |
|   | 3.10                                     | Grant of  Security Interest; Application of Funds |   |
|   | 3.11                                     | Property Cash Flow Allocation                     |   |

 

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| 4.     | REPRESENTATIONS  AND WARRANTIES |                                                 |
|--------|---------------------------------|------------------------------------------------------|
|   |                            |                                                 |   |   |
|   | 4.1                             | Organization; Special  Purpose                       |   |
|   | 4.2                             | Proceedings;  Enforceability                         |   |
|   | 4.3                             | No Conflicts                                         |   |
|   | 4.4                             | Litigation                                           |   |
|   | 4.5                             | Agreements                                           |   |
|   | 4.6                             | Title                                                |   |
|   | 4.7                             | No Bankruptcy Filing                                 |   |
|   | 4.8                             | Full and Accurate Disclosure                         |   |
|   | 4.9                             | Tax Filings                                          |   |
|   | 4.10                            | No Plan Assets                                       |   |
|   | 4.11                            | Compliance                                           |   |
|   | 4.12                            | Contracts                                            |   |
|   | 4.13                            | Federal Reserve Regulations;  Investment Company Act |   |
|   | 4.14                            | Easements; Utilities and  Public Access              |   |
|   | 4.15                            | Physical Condition                                   |   |
|   | 4.16                            | Leases                                               |   |
|   | 4.17                            | Fraudulent Transfer                                  |   |
|   | 4.18                            | Ownership of Borrower                                |   |
|   | 4.19                            | Purchase Options                                     |   |
|   | 4.20                            | Management Agreement                                 |   |
|   | 4.21                            | Hazardous Substances                                 |   |
|   | 4.22                            | Name; Principal Place of Business                    |   |
|   | 4.23                            | Other Debt                                           |   |
|   |                            |                                                 |
| 5.     | COVENANTS                       |                                                 |
|   |                            |                                                 |
|   | 5.1                             | Existence                                            |   |
|   | 5.2                             | Taxes and Other Charges                              |   |
|   | 5.3                             | Access to Property                                   |   |
|   | 5.4                             | Repairs;  Maintenance and Compliance; Alterations    |   |
|   |                            | 5.4.1                                                | Repairs; Maintenance and  Compliance |   |
|   |                            | 5.4.2                                                | Alterations |   |
|   | 5.5                             | Performance of Other  Agreements                     |   |
|   | 5.6                             | Cooperate in Legal  Proceedings                      |   |
|   | 5.7                             | Further Assurances                                   |   |
|   | 5.8                             | Environmental  Matters                               |   |
|   |                            | 5.8.1                                                | Hazardous Substances |   |
|   |                            | 5.8.2                                                | Environmental  Monitoring |   |
|   | 5.9                             | Title  to the Property                               |   |
|   | 5.10                            | Leases                                               |   |
|   |                            | 5.10.1                                               | Generally |   |
|   |                            | 5.10.2                                               | Material Leases |   |

 

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|   |                                   | 5.10.3                                       | Minor Leases                                 |   |
|--------|----------------------------------------|----------------------------------------------|----------------------------------------------|--------|
|   |                                   | 5.10.4                                       | Additional Covenants with  respect to Leases |   |
|   | 5.11                                   | Estoppel Statement                           |                                         |
|   | 5.12                                   | Property  Management                         |                                         |
|   |                                   | 5.12.1                                       | Management  Agreement                        |   |
|   |                                   | 5.12.2                                       | Termination of Manager                       |   |
|   | 5.13                                   | Special Purpose Bankruptcy  Remote Entity    |                                         |
|   | 5.14                                   | Assumption in  Non-Consolidation Opinion     |                                         |
|   | 5.15                                   | Change in Business or  Operation of Property |                                         |
|   | 5.16                                   | Debt Cancellation                            |                                         |
|   | 5.17                                   | Affiliate Transactions                       |                                         |
|   | 5.18                                   | Zoning                                       |                                         |
|   | 5.19                                   | No Joint Assessment                          |                                         |
|   | 5.20                                   | Principal Place of Business                  |                                         |
|   | 5.21                                   | Change of Name,  Identity or Structure       |                                         |
|   | 5.22                                   | Indebtedness                                 |                                         |
|   | 5.23                                   | Licenses                                     |                                         |
|   | 5.24                                   | Compliance with  Restrictive Covenants, Etc  |                                         |
|   | 5.25                                   | ERISA                                        |                                         |
|   | 5.26                                   | Prohibited Transfers                         |                                         |
|   |                                   | 5.26.1                                       | Generally                                    |   |
|   |                                   | 5.26.2                                       | Transfer and Assumption                      |   |
|   | 5.27                                   | Liens                                        |                                         |
|   | 5.28                                   | Dissolution                                  |                                         |
|   | 5.29                                   | Expenses                                     |                                         |
|   | 5.30                                   | Indemnity                                    |                                         |
|   |                                   |                                         |                                         |
| 6.     | NOTICES AND REPORTING                  |                                         |
|   |                                   |                                         |                                         |   |
|   | 6.1                                    | Notices                                      |                                         |
|   | 6.2                                    | Borrower Notices and  Deliveries             |                                         |
|   | 6.3                                    | Financial Reporting                          |                                         |
|   |                                   | 6.3.1                                        | Bookkeeping                                  |   |
|   |                                   | 6.3.2                                        | Annual Reports                               |   |
|   |                                   | 6.3.3                                        | Monthly/Quarterly Reports                    |   |
|   |                                   | 6.3.4                                        | Other Reports                                |   |
|   |                                   | 6.3.5                                        | Annual Budget                                |   |
|   |                                   | 6.3.6                                        | Breach                                       |   |
|   |                                   |                                         |
| 7.     | INSURANCE; CASUALTY; AND  CONDEMNATION |                                         |
|   |                                   |                                         |                                         |   |
|   | 7.1                                    | Insurance                                    |                                         |
|   |                                   | 7.1.1                                        | Coverage                                     |   |
|   |                                   | 7.1.2                                        | Policies                                     |   |

 

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|   | 7.2                 | Casualty                                       |                                                 |
|--------|---------------------|------------------------------------------------|------------------------------------------------------|
|   |                | 7.2.1                                          | Notice; Restoration                                  |   |
|   |                | 7.2.2                                          | Settlement of Proceeds                               |   |
|   | 7.3                 | Condemnation                                   |                                                 |
|   |                | 7.3.1                                          | Notice; Restoration                                  |   |
|   |                | 7.3.2                                          | Collection of Award                                  |   |
|   | 7.4                 | Application of Proceeds  or Award              |                                                 |
|   |                | 7.4.1                                          | Application to  Restoration                          |   |
|   |                | 7.4.2                                          | Application  to Debt                                 |   |
|   |                | 7.4.3                                          | Procedure for Application  to Restoration            |   |
|   |                |                                           |                                                 |   |
| 8.     | DEFAULTS            |                                           |
|   |                |                                           |                                                 |   |
|   | 8.1                 | Events of  Default                             |                                                 |
|   | 8.2                 | Remedies                                       |                                                 |
|   |                | 8.2.1                                          | Acceleration                                         |   |
|   |                | 8.2.2                                          | Remedies  Cumulative                                 |   |
|   |                | 8.2.3                                          | Severance                                            |   |
|   |                | 8.2.4                                          | Delay                                                |   |
|   |                | 8.2.5                                          | Lender’s Right to  Perform                      |   |
|   |                |                                           |                                                 |   |
| 9.     | SPECIAL  PROVISIONS |                                           |
|   |                |                                           |                                                 |   |
|   | 9.1                 | Sale of Note and  Secondary Market Transaction |                                                 |
|   |                | 9.1.1                                          | General; Borrower Cooperation                        |   |
|   |                | 9.1.2                                          | Use of Information                                   |   |
|   |                | 9.1.3                                          | Borrower  Obligations Regarding Disclosure Documents |   |
|   |                | 9.1.4                                          | Borrower  Indemnity Regarding Filings                |   |
|   |                | 9.1.5                                          | Indemnification  Procedure                           |   |
|   |                | 9.1.6                                          | Contribution                                         |   |
|   |                | 9.1.7                                          | Rating Surveillance                                  |   |
|   |                | 9.1.8                                          | Severance of Loan                                    |   |
|   |                |                                           |                                                 |   |
| 10.    | MISCELLANEOUS       |                                           |
|   |                |                                           |                                                 |   |
|   | 10.1                | Exculpation                                    |                                                 |
|   | 10.2                | Brokers and Financial  Advisors                |                                                 |
|   | 10.3                | Retention of Servicer                          |                                                 |
|   | 10.4                | Survival                                       |                                                 |
|   | 10.5                | Lender’s Discretion                       |                                                 |
|   | 10.6                | Governing Law                                  |                                                 |
|   | 10.7                | Modification, Waiver  in Writing               |                                                 |
|   | 10.8                | Trial by Jury                                  |                                                 |
|   | 10.9                | Headings/Exhibits                              |                                                 |
|   | 10.10               | Severability                                   |                                                 |

 

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|   | 10.11 | Preferences                          |   |
|--------|-------|--------------------------------------|--------|
|   | 10.12 | Waiver of Notice                     |   |
|   | 10.13 | Remedies of Borrower                 |   |
|   | 10.14 | Prior  Agreements                    |   |
|   | 10.15 | Offsets, Counterclaims and  Defenses |   |
|   | 10.16 | Publicity                            |   |
|   | 10.17 | No Usury                             |   |
|   | 10.18 | Conflict; Construction of  Documents |   |
|   | 10.19 | No Third Party Beneficiaries         |   |
|   | 10.20 | Yield Maintenance Premium            |   |
|   | 10.21 | Assignment                           |   |
|   | 10.22 | Set-Off                              |   |
|   | 10.23 | Counterparts                         |   |

 

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**LOAN AGREEMENT**

 

**LOAN AGREEMENT** dated as of September 19, 2003 (as the same may be modified,supplemented, amended or otherwise changed, this “***Agreement***”) between **AMERIVEST CENTERRA INC.**, a Coloradocorporation, **AMERIVEST PARKWAY INC**.,a Texas corporation, and **AMERIVEST BLACKCANYON INC**., an Arizona corporation (together with their permittedsuccessors and assigns, “***Borrower***”),and **GREENWICH CAPITAL FINANCIAL PRODUCTS INC.**,a Delaware corporation (together with its successors and assigns, “***Lender***”).

 

**1.****                                     ****DEFINITIONS****; PRINCIPLES OF CONSTRUCTION**

 

**1.1****                              ****Specific Definitions**.  The following terms have themeanings set forth below:

 

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

 

***Allocated Loan Amount***: shall mean the amount set forth opposite the particular Project on Schedule 6attached hereto.

 

***Approved Capital Expenses***: Capital Expenses incurred by Borrower, which Capital Expenses shalleither be (i) included in the Approved Capital Budget for the current calendarmonth or (ii) approved by Lender, in its reasonable discretion.

 

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

 

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

 

***Available Cash***:  asof each Payment Date during the continuance of Cash Management Period, theamount of Rents, if any, remaining in the Deposit Account after the applicationof all of the payments required under clauses (i) through (vii) ofSection 3.11(a).

 

1

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***Black Canyon Mortgage***: shall mean that certain Deed of Trust entered into as of the date hereofand given by AmeriVest Black Canyon Inc. to Lender and encumbering the Projectlocated in Phoenix, Arizona.

 

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

 

***Calculation Date***:****thelast day of each calendar quarter during the Term.

 

***Capital Expenses***: expenses that are capital in nature or required under GAAP to becapitalized.

 

***Cash Management Period***: shall commence upon Lender giving notice to the Clearing Bank of theoccurrence of any of the following: (i) the Stated Maturity Date, or (ii) aDefault or an Event of Default; and shall end upon Lender giving notice to theClearing Bank that the sweeping of funds into the Deposit Account may cease, whichnotice Lender shall only be required to give if (1) the Loan and all otherobligations under the Loan Documents have been repaid in full or (2) the StatedMaturity Date has not occurred and with respect for the matters described inclause (ii) above, such Event of Default has been cured and no other Event ofDefault has occurred and is continuing.

 

***Centerra Mortgage***: shall mean that certain Deed of Trust entered into as of the date hereofand given by AmeriVest Centerra Inc. to Lender and encumbering the Projectlocated in Denver, Colorado.

 

***Code***:  theInternal Revenue Code of 1986, as amended and as it may be further amended fromtime to time, any successor statutes thereto, and applicable U.S. Department ofTreasury regulations issued pursuant thereto in temporary or final form.

 

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

 

***Debt***:  theunpaid Principal, all interest accrued and unpaid thereon, any YieldMaintenance Premium and all other sums due to Lender in respect of the Loan orunder any Loan Document.

 

***Debt Service***: with respect to any particular period, the greater of (i) scheduledPrincipal and interest payments due under the Note in such period or (ii) theproduct of (A) the outstanding principal as of the end of such periodmultiplied by (B) 10.09%.

 

***Debt Service Coverage Ratio***:  asof any date, the ratio calculated by Lender of (i) the Net Operating Income forthe 12 month period ending with the most recently completed calendar month to(ii) the Debt Service with respect to such period.

 

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

 

2

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***Default Rate***:  arate per annum equal to the lesser of (i) the maximum rate permitted byapplicable law, or (ii) 5% above the Interest Rate, compounded monthly.

 

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

 

***Defeasance Percentage***:  thepercentage derived by dividing, (i) in the case of an initial PartialDefeasance, the original principal amount of the Defeased Note by the originalprincipal amount of the Note or (ii) in the case of a subsequent Defeasance,the amount of the subsequent Defeased Note by the original principal amount ofits corresponding Undefeased Note.

 

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

 

***Eligible Institution***:  adepository institution insured by the Federal Deposit Insurance Corporation theshort term unsecured debt obligations or commercial paper of which are rated atleast A-1 by S&P, P-1 by Moody’s and F-1+ by Fitch. in the case of accountsin which funds are held for thirty (30) days or less or, in the case of Lettersof Credit or accounts in which funds are held for more than thirty (30) days,the long term unsecured debt obligations of which are rated at least “AA” byFitch and S&P and “Aa2” by Moody’s.

 

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

 

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

 

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

 

***GCM***: Greenwich Capital Financial Products Inc.

 

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

 

***Guarantor***: AmeriVest Properties Inc., a Maryland corporation.

 

***Interest Period***:  (i)the period from the date hereof through the first day thereafter that is thelast day of a calendar month and (ii) each period thereafter from the 1st dayof each calendar month through the last day of each such calendar month; exceptthat the Interest Period, if any, that would otherwise commence before and endafter the Maturity Date shall end on the Maturity Date.

 

3

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***Interest Rate***:  arate of interest equal to five and thirteen one-hundredths percent (5.13%) perannum, which includes a servicing fee of three (3) basis points per annum (or,when applicable pursuant to this Note or any other Loan Document, the DefaultRate).

 

***Key Principal(s)***: AmeriVest Properties Inc.

 

***Leases***:  allleases and other agreements or arrangements heretofore or hereafter enteredinto affecting the use, enjoyment or occupancy of, or the conduct of anyactivity upon or in, the Property or the Improvements, including anyguarantees, extensions, renewals, modifications or amendments thereof and alladditional remainders, reversions and other rights and estates appurtenantthereunder.

 

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

 

***Lien***:  anymortgage, deed of trust, lien (statutory or otherwise), pledge, hypothecation,easement, restrictive covenant, preference, assignment, security interest orany other encumbrance, charge or transfer of, or any agreement to enter into orcreate any of the foregoing, on or affecting all or any part of the Property orany interest therein, or any direct or indirect interest in Borrower, includingany conditional sale or other title retention agreement, any financing leasehaving substantially the same economic effect as any of the foregoing, thefiling of any financing statement, and mechanic’s, materialmen’s and othersimilar liens and encumbrances.

 

***Loan Documents***: this Agreement and all other documents, agreements and instruments nowor hereafter evidencing, securing or delivered to Lender in connection with theLoan, including the following, each of which is dated as of the datehereof:  (i) the Note made by Borrowerto Lender in the aggregate principal amount equal to the Loan (the “***Note***”), (ii) thethree (3) Deeds of Trust, Assignment of Leases and Rents and Security Agreementmade by Borrower in favor of Lender which covers the Properties (collectively,the “***Mortgage***”),(iii) the three (3) Assignments of Leases and Rents from Borrower to Lender,(iv) Assignment of Agreements, Licenses, Permits and Contracts from Borrower toLender, (v) the Clearing Account Agreement (the “***Clearing Account Agreement***”) amongBorrower, Lender, Manager and Clearing Bank, (vi) the Deposit Account Agreement(the “***Deposit AccountAgreement***”) among Borrower, Lender, Manager and the Deposit Bankand (vii) the Guaranty of Recourse Obligations made by Guarantor; as each ofthe foregoing may be (and each of the foregoing defined terms shall refer tosuch documents as they may be) amended, restated, replaced, supplemented orotherwise modified from time to time.

 

***Loan to Value Ratio***:*** ****s*hall mean the ratio, as determined byLender, of the principal balance of the Note and all other indebtedness securedby liens or encumbrances 

 

4

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againstthe Property to the fair market value of the Property, as such fair marketvalue is determined based upon an M.A.I. appraisal satisfactory to Lender.

 

***Management Agreement***:  themanagement agreement between Borrower and Manager, pursuant to which Manager isto manage the Property, as same may be amended, restated, replaced,supplemented or otherwise modified from time to time in accordance withSection 5.12.

 

***Manager***: AmeriVest Properties Inc., a Maryland corporation, or any successor,assignee or replacement manager appointed by Borrower in accordance withSection 5.12.

 

***Material Alteration***:  anyalteration affecting structural elements of the Property the cost of whichexceeds $250,000; provided, however, that in no event shall (i) any RequiredRepairs, (ii) any tenant improvement work performed pursuant to any Leaseexisting on the date hereof or entered into hereafter in accordance with theprovisions of this Agreement, or (iii) alterations performed as part of aRestoration, constitute a Material Alteration.

 

***Material Lease***:  allLeases which individually or in the aggregate with respect to the same tenantand its Affiliates (i) cover more than 7,500 square feet of the Improvements or(ii)  have a gross annual rent of morethan 5% of the total annual Rents or (iii) demise at least one full floor ofthe Improvements.

 

***Maturity Date***:  thedate on which the final payment of principal of the Note (or the Defeased Note,if applicable) becomes due and payable as therein provided, whether at theStated Maturity Date, by declaration of acceleration, or otherwise.

 

***Minor Lease***:  anyLease that is not a Material Lease.

 

***Note:*** shall mean that certain Promissory Notedated as of the date hereof in the principal amount of $39,000,000 given byBorrower to Lender.

 

***Net Operating Income***:  forany period, the underwritten net cash flow of the Property determined by Lenderin its sole and absolute discretion in accordance with Lender’s then currentunderwriting standards for loans of this type and the then current underwritingstandards of the Rating Agencies (including adjustments for market vacancy,bankrupt tenants, leasing costs and capital items).

 

***Officer’s Certificate***:  acertificate delivered to Lender by Borrower which is signed by a seniorexecutive officer of Borrower.

 

***Other Charges***:  allground rents, maintenance charges, impositions other than Taxes, and any othercharges, including vault charges and license fees for the use of vaults, chutesand similar areas adjoining the Property, now or hereafter levied or assessedor imposed against the Property or any part thereof.

 

***Parkway Mortgage***: shall mean that certain Deed of Trust entered into as of the date hereofand given by AmeriVest Parkway Inc. to Lender and encumbering the Projectlocated in Plano, Texas.

 

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***Partial Release***: shall have the meaning accorded to such term in Section 2.4.2.

 

***Partial Release Amount***: shall mean (i) an amount equal to 125% of the Allocated Loan Amountallocated to the released Project, and (ii) the (A) Prepayment Considerationapplicable thereto or (B) Yield Maintenance Premium, as applicable.

 

***Payment Date***:  the1st day of each calendar month or, upon Lender’s exercise of its right tochange the Payment Date in accordance with Section 2.2.4, the NewPayment Date (in either case, if such day is not a Business Day, the PaymentDate shall be the first Business Day thereafter).  The first Payment Date hereunder shall be November 1, 2003.

 

***Permitted Encumbrances***:  (i)the Liens created by the Loan Documents, (ii) all Liens and other mattersdisclosed in the Title Insurance Policy, (iii) Liens, if any, for Taxes orOther Charges not yet due and payable and not delinquent, (iv) any workers’,mechanics’ or other similar Liens on the Property provided that any such Lienis bonded or discharged within 45 days after Borrower first receives notice ofsuch Lien and (v) such other title and survey exceptions as Lender approves inwriting in Lender’s discretion.

 

***Permitted Transfers***:  (i)a Lease entered into in accordance with the Loan Documents, (ii) a PermittedEncumbrance, (iii) a Transfer and Assumption or (iv) provided that no Defaultor Event of Default shall then exist, a Transfer of an interest in Borrowerprovided that (A) such Transfer shall not (x) cause the transferee (other thanKey Principal), together with its Affiliates, to acquire Control of Borrower orto increase its direct or indirect interest in Borrower to an amount whichequals or exceeds 49% or (y) result in Borrower no longer being Controlled byKey Principal(s), (B) after giving effect to such Transfer, Key Principal(s) shallcontinue to own at least 51% of all equity interests (direct or indirect) inBorrower, (C) Borrower shall give Lender notice of such Transfer together withcopies of all instruments effecting such Transfer not less than 10 days priorto the date of such Transfer, and (D) the legal and financial structure ofBorrower and its members and the single purpose nature and bankruptcyremoteness of Borrower and its members after such Transfer, shall satisfyLender’s then current applicable underwriting criteria and requirements or (v)provided that no Default or Event of Default shall then exist, a Transfer of aninterest in Borrower which shall cause the transferee to increase its direct orindirect interest in Borrower to an amount which equals or exceeds 49% or whichresults in a change of Control of Borrower, provided that (A) such Transfer isfirst approved by Lender in its sole and absolute discretion, and (B) if suchTransfer occurs after a Secondary Market Transaction, Borrower, at its solecost and expense, shall have (1) delivered (or caused to be delivered) toLender, a Rating Comfort Letter, (2) delivered (or caused to be delivered) toLender and the applicable Rating Agencies, a substantive non consolidationopinion with respect to Borrower in form and substance satisfactory to Lenderand the applicable Rating Agencies and (3) reimbursed Lender for all reasonableexpenses incurred by it in connection with such Transfer.

 

***Person***:  anyindividual, corporation, partnership, limited liability company, joint venture,estate, trust, unincorporated association, any other person or entity, and anyfederal, state, county or municipal government or any bureau, department oragency thereof and any fiduciary acting in such capacity on behalf of any ofthe” foregoing.

 

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***Plan***:  (i)an employee benefit or other plan established or maintained by Borrower or anyERISA Affiliate or to which Borrower or any ERISA Affiliate makes or isobligated to make contributions and (ii) which is covered by Title IV of ERISAor Section 302 of ERISA or Section 412 of the Code.

 

***Prepayment Consideration***shall be the amount equal to the greater of(i) one percent (1%) of the aggregate Loan balance at the time of prepayment,or (ii) (A) the amount of the monthly interest which would otherwise be payableon the principal balance being prepaid from the date of the first day of thecalendar month immediately following the date of prepayment (unless prepaymentis tendered on the first day of any calendar month during the term of the Note,in which case from the date of prepayment) to and including the Maturity Date;over (B) the amount of the monthly interest the Lender would earn if theprincipal balance being prepaid were reinvested for the period from the firstday of the calendar month immediately following the date of prepayment (unlessprepayment is tendered on the first day of any calendar month during the termof this Note, in which case from the date of prepayment) to and including the MaturityDate at the Treasury Rate (as hereinafter defined), such difference to bediscounted to present value at the Treasury Rate.  The “Treasury Rate” shall be the annualized yield onsecurities issued by the United States Treasury having a maturity correspondingto the remaining term to the originally scheduled Maturity Date of this Note,as quoted in Federal Reserve Statistical Release [H. 15(519)] under theheading “U.S. Government Securities - Treasury Constant Maturities” for theTreasury Rate Determination Date (as defined below), converted to a monthlyequivalent yield.  If yields for suchsecurities of such maturity are not shown in such publication, then theTreasury Rate shall be determined by Lender by linear interpolation between theyields of securities of the next longer and next shorter maturities.  If said Federal Reserve Statistical Releaseor any other information necessary for determination of the Treasury Rate inaccordance with the foregoing is no longer published or is otherwise unavailable,then the Treasury Rate shall be reasonably determined by Lender based oncomparable data.  The term “TreasuryRate Determination Date” shall mean the date which is five (5) banking daysprior to the scheduled prepayment date.

 

***Project:*** shall mean each of the office buildings located at the followingaddresses:  (i) the Centerra OfficeBuilding, Denver, Colorado; (ii) Parkway Centre II, Plano, Texas; and (iii) theSouthwest Gas Building, Phoenix, Arizona (each a “***Project***” and collectively, the “***Projects***”)

 

***Project Owner***: shall mean any of:  AmeriVestCenterra Inc., a Colorado corporation, AmeriVest Parkway Inc., a Texascorporation and AmeriVest Black Canyon Inc., an Arizona corporation.

 

***Property or Properties***:  theparcels of real property and Improvements thereon owned by Borrower andencumbered by the Mortgages; together with all rights pertaining to such realproperty and Improvements, and all other collateral for the Loan as moreparticularly described in the Granting Clauses of the Mortgages and referred totherein as the Mortgaged Property or Trust Property, as applicable.  The Properties are known as the CenterraOffice Building located in Denver, Colorado, Parkway Center II located inPlano, Texas and the Southwest Gas Building located in Phoenix, Arizona.

 

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***Rating Agency***: each of Standard & Poor’s Ratings Services, a division of TheMcGraw-Hill Companies Inc. (“***S&P***”), Moody’s Investors Service Inc. (“***Moody’s***”), and FitchIBCA Duff & Phelps or any other nationally-recognized statistical ratingorganization to the extent any of the foregoing have been engaged by Lender orits designee in connection with or in anticipation of any Secondary MarketTransaction.

 

***Rating Comfort Letter***:  aletter issued by each of the applicable Rating Agencies which confirms that thetaking of the action referenced to therein will not result in anyqualification, withdrawal or downgrading of any existing ratings of Securitiescreated in a Secondary Market Transaction.

 

***Release Date***:  theearlier to occur of (i) the forty second (42nd) Payment Date of the Term and(ii) the date that is two (2) years from the “startup day” (within the meaningof Section 860G(a)(9) of the Code) of the REMIC Trust established inconnection with a Securitization involving this Loan.

 

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

 

***Rents***:  allrents, rent equivalents, moneys payable as damages (including payments byreason of the rejection of a Lease in a Bankruptcy Proceeding) or in lieu ofrent or rent equivalents, royalties (including all oil and gas or other mineralroyalties and bonuses), income, fees, receivables, receipts, revenues, deposits(including security, utility and other deposits), accounts, cash, issues,profits, charges for services rendered, and other payment and consideration ofwhatever form or nature received by or paid to or for the account of or benefitof Borrower, Manager or any of their agents or employees from any and allsources arising from or attributable to the Property and the Improvements,including all receivables, customer obligations, installment paymentobligations and other obligations now existing or hereafter arising or createdout of the sale, lease, sublease, license, concession or other grant of theright of the use and occupancy of the Property or rendering of services byBorrower, Manager or any of their agents or employees and proceeds, if any,from business interruption or other loss of income insurance.

 

***Scheduled Defeasance Payments***:  (i)in the case of a Full Defeasance, the Monthly Debt Service Payment Amountrequired under the Note (or, to the extent that there has been a previousPartial Defeasance, the Undefeased Note, as the case may be), for all PaymentDates occurring after the Defeasance Date (including the outstanding Principalbalance on the Note (or, Undefeased Note, as the case may be) as of the StatedMaturity Date) and (ii) in the case of a Partial Defeasance, the Monthly DebtService Payment Amount multiplied by the Defeasance Percentage for all PaymentDates occurring after the Defeasance Date (including the outstanding PrincipalBalance on the Note (or the Undefeased Note, as the case may be) as of the StatedMaturity Date).

 

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

 

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***Servicer***:  aservicer selected by Lender to service the Loan.

 

***State***:  thestate in which the Property is located.

 

***Stated Maturity Date***: October 1, 2008, as such date may be changed in accordance with Section 2.2.4.

 

***Taxes***:  allreal estate and personal property taxes, assessments, water rates or sewerrents, maintenance charges, impositions, vault charges and license fees, now orhereafter levied or assessed or imposed against all or part of the Property.

 

***Term***:  theentire term of this Agreement, which shall expire upon repayment in full of theDebt and full performance of each and every obligation to be performed byBorrower pursuant to the Loan Documents.

 

***Title Insurance Policy***:  theTLTA mortgagee title insurance policy as to the Project known as Parkway CenterII in Plano, Texas, and the ALTA mortgagee title insurance policy as to theProjects known as the Centerra Office Building in Denver, Colorado and theSouthwest Gas Building in Phoenix, Arizona, each in the form acceptable toLender issued with respect to the Property and insuring the Lien of theMortgage.

 

***Transfer***:  anysale, conveyance, transfer, lease or assignment, or the entry into anyagreement to sell, convey, transfer, lease or assign, whether by law orotherwise, of, on, in or affecting (i) all or part of the Property (includingany legal or beneficial direct or indirect interest therein), or (ii) anydirect or indirect interest in Borrower (including any profit interest).

 

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

 

***U.S. Obligations***: direct full faith and credit obligations of the United States of Americathat are not subject to prepayment, call or early redemption.

 

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

 

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

 

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

 

“ApprovedAnnual Budget “ - 6.3.5

 

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“AnnualBudget “ - 6.3.5

“ApprovedCapital Budget” - 6.3.5

“ApprovedOperating Budget” - 6.3.5

“ApplicableTaxes” - 2.2.3

“Award”- 7.3.2

“BankruptcyProceeding” - 4.7

“Borrower’sRecourse Liabilities” - 10.1

“CapitalReserve Subaccount” - 3.4

“CashCollateral Subaccount” - 3.9]

“CashManagement Accounts” - 3.10

“Casualty”- 7.2.1

“Casualty/CondemnationPrepayment” - 2.3.2

“Casualty/CondemnationSubaccount” - 3.7

“ClearingAccount” - 3.1

“ClearingAccount Agreement” - 1.1 (Definition of Loan Documents)

“ClearingBank” - 3.1

“Condemnation”- 7.3.1

“DefeasanceCollateral Account” - 2.3.3

“DefeasanceEvent” - 2.3.3

“DefeasanceDate” - 2.3.3

“DefeasedNote” - 2.3.3

“DepositAccount” - 3.1

“DepositAccount Agreement” - 1.1 (Definition of Loan Documents)

“DisclosureDocument” - 9.1.2

“Easements”- 4.14

“EligibleAccount” - Deposit Account Agreement

“Endorsement”- 5.26

“EnvironmentalLaws” - 4.21

“Equipment”- Mortgage

“Eventof Default” - 8.1

“ExchangeAct” - 9.1.2

“GCMGroup” - 9.1.3

“HazardousSubstances” -  4.21

“Improvements”- Mortgage

“IndemnifiedLiabilities” - 5.30

“IndemnifiedParty” - 5.30

“IndependentDirector” - Schedule 5

“InsurancePremiums” - 7.1.2

“InsuredCasualty” - 7.2.2

“Issuer”- 9.1.3

“LatePayment Charge” - 2.5.3

“Lender’sConsultant” - 5.7.1

“Liabilities”- 9.1.3

“Licenses”- 4.11

“Loan”- 2.1

“MonthlyDebt Service Payment Amount” - 2.2.1

 

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

“Mortgage”- 1.1 (Definition of Loan Documents)

“NewPayment Date” - 2.2.4

“Note”- 1.1 (Definition of Loan Documents)

“Notice”- 6.1

“OperatingExpense Subaccount” - 3.6

“PartialDefeasance” - 2.3.3

“PermittedIndebtedness” - 5.22

“PermittedInvestments” - Deposit Account Agreement

“PermittedPrepayment Date” - 2.3.4

“Policies”- 7.1.2

“Principal”- 2.1

“Proceeds”- 7.2.2

“ProposedMaterial Lease” - 5.10.2

“ProvidedInformation” - 9.1.1

“QualifiedCarrier” - 7.1.1

“RegistrationStatement” - 9.1.3

“RemedialWork” - 5.7.2

“RentRoll” - 4.16

“RequiredRecords” - 6.3.6

“RequiredRepairs” - 3.2.1

“RequiredRepairs Subaccount” - 3.2.2

“Restoration”- 7.4.1

“RolloverReserve Subaccount” - 3.5

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

“SecondaryMarket Transaction” - 9.1.1

“Securities”- 9.1.1

“SecuritiesAct” - 9.1.2

“SecurityDeposit Account” - 3.8

“SecurityDeposit Subaccount” - 3.8

“SignificantCasualty” - 7.2.2

“SpecialPurpose Bankruptcy Remote Entity” - 5.13

“SpringingRecourse Event” - 10.1

“Subaccounts”- 3.1

“SuccessorBorrower” - 2.3.3

“Taxand Insurance Subaccount” - 3.3

“ToxicMold” - 4.21

“Transferand Assumption” - 5.26

“TransfereeBorrower” - 5.26

“UndefeasedNote” - 2.3.3

“UnderwriterGroup” - 9.1.3

“Underwriters”- 9.1.3

 

**1.3****                              ****Principles****of Construction**. Unless otherwise specified, (i) all references to sections and schedulesare to those in this Agreement, (ii) the words “hereof,” “herein” and“hereunder” and words of similar import refer to this Agreement as a whole andnot to any

 

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particularprovision, (iii) all definitions are equally applicable to the singular andplural forms of the terms defined, (iv) the word “including” means “includingbut not limited to,” and (v) accounting terms not specifically defined hereinshall be construed in accordance with GAAP.

 

**2.****                                     ****GENERAL****LOAN TERMS**

 

**2.1****                              ****TheLoan**. Lender is making a loan (the “***Loan***”) to Borrower on the date hereof, in theoriginal principal amount (the “***Principal***”) of $39,000,000.00, which shall mature on theStated Maturity Date.  Borroweracknowledges receipt of the Loan, the proceeds of which are being and shall beused to (i) repay and discharge existing loans relating to the Property, (ii)fund certain of the Subaccounts, and (iii) pay transaction costs.  Any excess proceeds may be used for anylawful purpose. No amount repaid in respect of the Loan may be reborrowed.

 

**2.2****                              ****Interest****; Monthly Payments**.

 

**2.2.1****                    ****Generally**.  From and after the date hereof, interest onthe unpaid Principal shall accrue at the Interest Rate and be payable ashereinafter provided.  On the datehereof, Borrower shall pay interest on the unpaid Principal from the datehereof through and including September 30, 2003.  On November 1, 2003 and each Payment Date thereafter throughand including October 1, 2008, the Principal and interest thereon at theInterest Rate shall be payable in equal monthly installments of $230,953.76(the “***Monthly DebtService Payment Amount***”); which is based on the Interest Rateand a 300-month amortization schedule. The Monthly Debt Service Payment Amount due on any Payment Date shallfirst be applied to the payment of interest accrued during the precedingInterest Period and the remainder of such Monthly Debt Service Payment Amountshall be applied to the reduction of the unpaid Principal.  All accrued and unpaid interest shall be dueand payable on the Maturity Date.  Ifthe Loan is repaid on any date other than on a Payment Date (whether prior toor after the Stated Maturity Date), Borrower shall also pay interest that wouldhave accrued on such repaid Principal to but not including the next PaymentDate.

 

**2.2.2****                    ****DefaultRat****e**.  After the occurrence and during thecontinuance of an Event of Default, the entire unpaid Debt shall bear interestat the Default Rate, and shall be payable upon demand from time to time, to theextent permitted by applicable law.

 

**2.2.3****                    ****Taxes**.  Any and all payments by Borrower hereunderand under the other Loan Documents shall be made free and clear of and withoutdeduction for any and all present or future taxes, levies, imposts, deductions,charges or withholdings, and all liabilities with respect thereto, excludingtaxes imposed on Lender’s income, and franchise taxes imposed on Lender by thelaw or regulation of any Governmental Authority (all such non-excluded taxes,levies, imposts, deductions, charges, withholdings and liabilities beinghereinafter referred to in this Section 2.2.3 as “***Applicable Taxes***”).  If Borrower shall be required by law to deductany Applicable Taxes from or in respect of any sum payable hereunder to Lender,the following shall apply:  (i) the sumpayable shall be increased as may be necessary so that after making allrequired deductions (including deductions applicable to additional sums payableunder this Section 2.2.3), Lender receives an amount equal to thesum it would have received had no such deductions been made, (ii) Borrowershall make such deductions and (iii) Borrower shall pay the full amountdeducted to the relevant taxation authority or other authority in accordancewith

 

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applicablelaw.  Payments pursuant to this Section 2.2.3shall be made within ten days after the date Lender makes written demandtherefor.

 

**2.2.4****                    ****NewPayment****Date**.  Lender shall have the right, to be exercisednot more than once during the term of the Loan, to change the Payment Date to adate other than the first day of each month (a “***New Payment Date***”), on 30 days’ writtennotice to Borrower; provided, however, that any such change in the PaymentDate: (i) shall not modify the amount of regularly scheduled monthly principaland interest payments, except that the first payment of principal and interestpayable on the New Payment Date shall be accompanied by interest at theinterest rate herein provided for the period from the Payment Date in the monthin which the New Payment Date first occurs to the New Payment Date, and (ii)shall extend the Stated Maturity Date to the New Payment Date occurring in themonth set forth in the definition of Stated Maturity Date.

 

**2.3****                              ****Loan****Repayment**.

 

**2.3.1****                    ****Repayment**.  Borrower shall repay the entire outstandingprincipal balance of the Note in full on the Maturity Date, together withinterest thereon to (but excluding) the date of repayment and any other amountsdue and owing under the Loan Documents. Borrower shall have no right to prepay or defease all or any portion ofthe Principal except in accordance with Section 2.3.2, Section 2.3.3,and Section 2.4.  Exceptduring the continuance of an Event of Default, all proceeds of any repayment,including any prepayments of the Loan, shall be applied by Lender as follows inthe following order of priority:  First,accrued and unpaid interest at the Interest Rate; Second, to Principal; andThird, to and any other amounts then due and owing under the LoanDocuments.  If prior to the StatedMaturity Date the Debt is accelerated by reason of an Event of Default, thenLender shall be entitled to receive, in addition to the unpaid Principal andaccrued interest and other sums due under the Loan Documents, an amount equalto the Yield Maintenance Premium applicable to such Principal soaccelerated.  During the continuance ofan Event of Default, all proceeds of repayment, including any payment orrecovery on the Property (whether through foreclosure, deed-in-lieu offoreclosure, or otherwise) shall, unless otherwise provided in the LoanDocuments, be applied in such order and in such manner as Lender shall elect inLender’s discretion.

 

**2.3.2****                    ****Mandatory****Prepayments**.  TheLoan is subject to mandatory prepayment in certain instances of InsuredCasualty or Condemnation (each a “***Casualty/Condemnation Prepayment***”), in themanner and to the extent set forth in Section 7.4.2.  Each Casualty/Condemnation Prepayment, afterdeducting Lender’s costs and expenses (including reasonable attorneys’ fees andexpenses) in connection with the settlement or collection of the Proceeds orAward, shall be applied in the same manner as repayments under Section 2.3.1,and if such Casualty/Condemnation Payment is made on any date other than aPayment Date, then such Casualty/Condemnation Payment shall include interestthat would have accrued on the Principal prepaid to but not including the nextPayment Date.  Provided that no Event ofDefault is continuing, any such mandatory prepayment under this Section 2.3.2shall be without the payment of the Yield Maintenance Premium.  Notwithstanding anything to the contrarycontained herein, each Casualty/Condemnation Prepayment shall be applied ininverse order of maturity and shall not extend or postpone the due dates of themonthly installments due under the Note or this Agreement, or change theamounts of such installments.

 

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**2.3.3****                    ****Defeasanc****e**

 

(a)                                **Conditions to Defeasance**. Provided no Event of Default shall be continuing, Borrower shall havethe right on any Payment Date after the Release Date and prior to the PermittedPrepayment Date to voluntarily defease the entire amount of the Principal (a “***Full Defeasance”***) ora portion of the Principal evidenced by the Note (a “***Partial Defeasance***”)(any such Full Defeasance or Partial Defeasance, a “***Defeasance***”)******by providing Lenderwith the Defeasance Collateral (a “***Defeasance Event***”), subject to thesatisfaction of the following conditions precedent:

 

(i)                                  Borrower shall give Lender not less thantwenty (20) days prior written notice specifying a Payment Date (the “***Defeasance Date***”) onwhich the Defeasance Event is to occur.

 

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

 

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

 

(iv)                           Borrower shall execute and deliver to Lendera Security Agreement in respect of the Defeasance Collateral Account and theDefeasance Collateral;

 

(v)                              Borrower shall deliver to Lender an opinionof counsel for Borrower that is standard in commercial lending transactions andsubject only to customary qualifications, assumptions and exceptions opining,among other things, that (i) Lender has a legal and valid perfected firstpriority security interest in the Defeasance Collateral Account and theDefeasance Collateral, (ii) if a securitization has occurred, the REMIC Trustformed pursuant to such securitization will not fail to maintain its status asa “real estate mortgage investment conduit” within the meaning ofSection 860D of the Code as a result of a Defeasance Event pursuant tothis Section 2.3.3, (iii) the Defeasance Event will not result in adeemed exchange for purposes of the Code and will not adversely affect thestatus of the Note as indebtedness for federal income tax purposes, (iv)delivery of the Defeasance Collateral and the grant of a security interesttherein to Lender shall not constitute an avoidable preference underSection 547 of the Bankruptcy Code or applicable state law and (v) anon-consolidation opinion with respect to the Successor Borrower;

 

(vi)                           In the case of a Partial Defeasance, theexecution and delivery by Borrowers of all necessary documents to amend andrestate the Note and issue two substitute notes: one having a principal balanceequal to the defeased portion of the original Note (the “***Defeased Note***”) andthe other having a principal balance equal to the undefeased portion of theoriginal Note (the “***UndefeasedNote***”).  The DefeasedNote and Undefeased Note shall have terms identical to the terms of the Note,except for the principal balance and a pro rata allocation of the Monthly DebtService Payment Amount.  After a PartialDefeasance, all references hereunder and in the other Loan Documents to “***Note***” shall be deemedto mean the

 

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UndefeasedNote, unless expressly provided to the contrary.  A Defeased Note cannot be the subject of any further Defeasance;

 

(vii)                        Borrower shall deliver to Lender a RatingComfort Letter as to the Defeasance Event;

 

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

 

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

 

(x)                                Borrower shall deliver such othercertificates, opinions, documents and instruments as Lender may reasonablyrequest; and

 

(xi)                             Borrower shall pay all costs and expenses ofLender incurred in connection with the Defeasance Event, including Lender’sreasonable attorneys’ fees and expenses and Rating Agency fees and expenses.

 

(b)                               **Defeasance CollateralAccount**.  On or before the date on which Borrowerdelivers the Defeasance Collateral, Borrower shall open at any Eligible Institutionthe defeasance collateral account (the “***Defeasance Collateral Account***”) which shallat all times be an Eligible Account. The Defeasance Collateral Account shall contain only (i) DefeasanceCollateral, and (ii) cash from interest and principal paid on the DefeasanceCollateral.  All cash from interest andprincipal payments paid on the Defeasance Collateral shall be paid over toLender on each Payment Date and applied first to accrued and unpaid interest andthen to Principal.  Any cash from interestand principal paid on the Defeasance Collateral not needed to pay accrued andunpaid interest or Principal shall be retained in the Defeasance CollateralAccount as additional collateral for the Loan. Borrower shall cause the Eligible Institution at which the DefeasanceCollateral is deposited to enter an agreement with Borrower and Lender,satisfactory to Lender in its sole discretion, pursuant to which such EligibleInstitution shall agree to hold and distribute the Defeasance Collateral inaccordance with this Agreement.  TheSuccessor Borrower shall be the owner of the Defeasance Collateral Account andshall report all income accrued on Defeasance Collateral for federal, state andlocal income tax purposes in its income tax return.  Borrower shall prepay all cost and expenses associated withopening and maintaining the Defeasance Collateral Account.  Lender shall not in any way be liable byreason of any insufficiency in the Defeasance Collateral Account.

 

(c)                                **Successor Borrower**.  Inconnection with a Defeasance Event under this Section 2.3.3,Borrower shall, if required by the Rating Agencies or if Borrower elects to doso, establish or designate a successor entity (the “***Successor Borrower***”)which shall be a Single Purpose Bankruptcy Remote Entity and which shall beapproved by the Rating Agencies.  Anysuch Successor Borrower may, at Borrower’s option, be an Affiliate of Borrowerunless the Rating Agencies shall require otherwise.  Borrower shall transfer and assign all obligations, rights andduties under and to the Defeased Note, together with the Defeasance Collateralto such 

 

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SuccessorBorrower.  Such Successor Borrower shallassume the obligations under the Note and the Security Agreement and Borrowershall be relieved of its obligations under such documents.  Borrower shall pay a minimum of $1,000 toany such Successor Borrower as consideration for assuming the obligations underthe Note and the Security Agreement. Borrower shall pay all costs and expenses incurred by Lender, includingLender’s attorney’s fees and expenses, incurred in connection therewith.

 

**2.3.4****                    ****Optional****Prepayments**. From and after the third Payment Date prior to the Stated Maturity Date(the “***PermittedPrepayment Date***”), Borrower shall have the right to prepay allor any portion of the Principal, provided that Borrower gives Lender at least15 days’ prior written notice thereof. If any such prepayment is not made on a Payment Date, Borrower shallalso pay interest that would have accrued on such prepaid Principal to, but notincluding, the next Payment Date.  Anysuch prepayment shall be made without payment of the Yield Maintenance Premium.

 

**2.4****                              ****Release****of Property**.

 

**2.4.1****                    ****Releaseon****Defeasance**.  If Borrower has elected to defease the Noteand the requirements of Section 2.3.3 and this Section 2.4have been satisfied, the Properties shall be released from the Lien of theMortgage and the Defeasance Collateral pledged pursuant to the SecurityAgreement shall be the sole source of collateral securing the Notes.  In connection with the release of the Lien,Borrower shall submit to Lender, not less than twenty (20) days prior to theDefeasance Date (or such shorter time as is acceptable to Lender in its solediscretion), a release of Lien (and related Loan Documents) for execution byLender.  Such release shall be in a formappropriate in the jurisdiction in which the Properties are located and containstandard provisions protecting the rights of the releasing lender.  In addition, Borrower shall provide allother documentation Lender reasonably requires to be delivered by Borrower inconnection with such release, together with an Officer’s Certificate certifyingthat such documentation (i) is in compliance with all Legal Requirements, and(ii) will effect such release in accordance with the terms of thisAgreement.  Borrower shall pay allcosts, taxes and expenses associated with the release of the Lien of theMortgage, including Lender’s reasonable attorneys’ fees.

 

**2.4.2****                    ****Saleof****a Property****.**      Borrower shall be permitted at any timeafter the Release Date, to release any one (1) of the Projects (a “**Partial Release**”) from the Lien of therespective Mortgage thereon upon a bona fide third-party sale of such property,and Lender shall take such actions as are necessary to effectuate, pursuant tothis Section 2.4.2, the release of the Lien of the respectiveMortgage thereon (and related Loan Documents), upon satisfaction of each of thefollowing conditions to the reasonable satisfaction of the Lender:

 

(i)                              Lendershall have received from the Borrower at least sixty (60) days prior writtennotice (a “Partial Release Notice”) of the date proposed for suchPartial Release (the “Release Date”) together with a copy of theapplicable contract of sale (or an executed term sheet which states all of thematerial terms of the sale (provided a fully executed contract substantively inthe form of the term sheet, is delivered to Lender prior to the closing of suchsale and Partial Release)) and all related documents,

 

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which Release Date shall be a Payment Dateor, if not a Payment Date, Borrower shall pay interest on the Partial ReleaseAmount through the next Payment Date on the Release Date;

 

(ii)                           Lendershall have the right, exercisable within thirty (30) days after the date of itsreceipt of the Partial Release Notice, to require that Borrower defease theNote secured by the Lien of the Mortgage encumbering the proposed ReleaseProject in accordance with the terms and conditions of Section 2.3.3,in lieu of having a Partial Release effectuated under this Section 2.4.2if Lender has not exercised such option in writing within such 30-day period,it shall be assumed that the Borrower shall proceed with a Partial Releasepursuant to the terms of this Section 2.4.2;

 

(iii)                        Borrowershall remit to the Lender on the Release Date an amount equal to, asapplicable, (i) the Partial Release Amount for the applicable Project (whichamount shall be determined by Lender and disclosed to Borrower within thirty(30) days after the date of Lender’s receipt of the Partial Release Notice), or(ii) the Yield Maintenance Premium for the partial defeasance, as applicable,and any amounts due under Section 2.3;

 

(iv)                       the sale ofsuch Project is pursuant to an arms’ length agreement to a third party notAffiliated with the Borrower or Guarantor;

 

(v)                          no saleof any Project shall be permitted on or before the Release Date;

 

(vi)                       Borrowershall pay to the Lender all sums then due and payable under the Note, thisAgreement, the Mortgage and the other Loan Documents;

 

(vii)                    concurrentlywith such sale, the Borrower owning the Project being released shall dissolveand liquidate;

 

(viii)                 after givingeffect to such Partial Release, each remaining Borrower shall remain a SpecialPurpose Bankruptcy Remote Entity;

 

(ix)                         Lendershall execute on the date of such Partial Release, a release of Lien andBorrower shall execute any related Loan Documents in connection with suchPartial Release, each of which shall be prepared by Lender and in a formappropriate in the jurisdiction in which the applicable Project is located, asapplicable;

 

(x)                            Aftergiving effect to such Partial Release (i.e., after deducting net operatingincome and debt service attributable to the Project proposed to be released),the Borrower shall have delivered an M.A.I. appraisal of the remaining Projectsencumbered by the Liens of the Mortgages, the results of which shall, asdetermined by Lender, evidence a Loan to Value Ratio

 

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that is no greater than the Loan to Value Ratio existing immediatelyprior to the Partial Release;

 

(xi)                         Aftergiving effect to such Partial Release (i.e., after deducting netoperating income and debt service attributable to the Project proposed to bereleased), the remaining Projects encumbered by the Lien of the Mortgages(excluding the Released Project) shall be no less than the greater of (i) theDebt Service Coverage Ratio for the Loan for all three (3) Projects for the12-month period immediately preceding the Partial Release Date and (ii) theDebt Service Coverage Ratio on the date hereof, which is 1.25:1.00;

 

(xii)                      the Lendershall have received from the Borrower with respect to the matters referred toin clauses (vii) and (viii), (x) statements of the Net Operating Income andDebt Service (both on a consolidated basis and separately for the applicableProject to be released for the applicable measuring period) and (y) based on theforegoing statements of Net Operating Income and Debt Service, calculations ofthe Debt Service Coverage Ratio for the twelve (12) month period preceding thedate of Partial Release Notice with and without giving effect to the proposedPartial Release, accompanied by an officer’s certificate that such statements,calculations and information are true, correct and complete in all materialrespects;

 

(xiii)                   Borrower, attheir sole cost and expense, shall have delivered to the Lender (A) one or moreendorsements to the lender’s policies of title insurance delivered to Lender onthe date hereof in connection with the Mortgages insuring that, after givingeffect to such Partial Release, (x) the Liens created by the remainingMortgages and insured thereby are first priority Liens on the remainingProjects, subject only to the Permitted Encumbrances applicable to suchProjects, and (y) that such policies are each in full force and effect andunaffected by such Partial Release, and (B) a copy of the final closing settlementstatement for such sale;

 

(xiv)                  If the Loan, byitself or together with other loans, has been the subject of a Secondary MarketTransaction, then Lender shall have received a Rating Comfort Letter from theapplicable Rating Agencies stating that the Partial Release does not result ina downgrade of the Loan or the securities of which it is a part;

 

(xv)                     Borrowershall pay all of the reasonable costs and expenses incurred by Lender inconnection with the sale and Partial Release of the Project and the release ofsuch Project from the lien of the applicable Loan Documents;

 

(xvi)                  no Event ofDefault exists and is continuing at the time of the Partial Release Notice oron the Release Date; and

 

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(xvii)               Borrower andGuarantor shall execute and deliver such documents as Lender may reasonablyrequested to confirm the continued validity of the Loan Documents and the Liensthereof, and shall have delivered to the Lender an officer’s certificateconfirming that, to Borrower’s knowledge, the remaining Borrowers and Guarantorare not in default under, and have, as of the date of such Partial Release, nooffsets, counterclaims or defenses to the indebtedness due under the LoanDocuments, and to Borrower’s knowledge, the matters referred to in clause (xvi)above are true and correct, and certifying that all conditions precedent forsuch Partial Release contained in this Agreement have been satisfied.

##### *** ***

**2.4.3****                    ****Release on Payment****in Full**.  Lender shall, upon the writtenrequest and at the expense of Borrower, upon payment in full of the Debt inaccordance herewith, release the Lien of the Loan Documents.

 

**2.5****                              ****Paymentsand****Computations**.

 

**2.5.1****                    ****Makingof****Payments**.  Each payment by Borrower shall be made infunds settled through the New York Clearing House Interbank Payments System orother funds immediately available to Lender by 12:00 p.m., New York City time,on the date such payment is due, to Lender by deposit to such account as Lendermay designate by written notice to Borrower. Whenever any such payment shall be stated to be due on a day that is nota Business Day, such payment shall be made on the first Business Daythereafter.  All such payments shall bemade irrespective of, and without any deduction, set-off or counterclaimwhatsoever and are payable without relief from valuation and appraisement lawsand with all costs and charges incurred in the collection or enforcementthereof, including attorneys’ fees and court costs.

 

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

 

**2.5.3****                    ****LatePayment****Charge**.  If any Principal, interest or other sum dueunder any Loan Document is not paid by Borrower on the date on which it is due,Borrower shall pay to Lender upon demand an amount equal to the lesser of 5% ofsuch unpaid sum or the maximum amount permitted by applicable law (the “***Late Payment Charge***”),in order to defray the expense incurred by Lender in handling and processingsuch delinquent payment and to compensate Lender for the loss of the use ofsuch delinquent payment.  Such amountshall be secured by the Loan Documents.

 

**2.6****                              ****Fees**.

 

**2.6.1****                    ****Origination****Fees**.  Onthe date hereof, Borrower shall pay to Lender an origination fee of $-0-.

 

**3.****                                     ****CASH MANAGEMENT****AND RESERVES**

 

**3.1****                              ****Cash****Management Arrangements**. Borrower shall cause all Rents to be transmitted directly bynon-residential tenants of the Property into a trust account (the “***Clearing***

 

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***Account***”) maintained by Borrower at a local bankselected by Borrower, which shall at all times be an Eligible Institution (the“***Clearing Bank***”)as more fully described in the Clearing Account Agreement.  Without in any way limiting the foregoing,all Rents received by Borrower or Manager shall be deposited into the ClearingAccount within one Business Day of receipt thereof.  Funds deposited into the Clearing Account shall be swept by theClearing Bank on a daily basis into Borrower’s operating account at theClearing Bank, unless a Cash Management Period is continuing, in which eventsuch funds shall be swept on a daily basis into an Eligible Account at theDeposit Bank controlled by Lender (the “***Deposit Account***”) and applied and disbursedin accordance with this Agreement. Funds in the Deposit Account shall be invested at Lender’s discretiononly in Permitted Investments.  Lenderwill also establish subaccounts of the Deposit Account which shall at all timesbe Eligible Accounts (and may be ledger or book entry accounts and not actualaccounts) (such subaccounts are referred to herein as “***Subaccounts***”).  The Deposit Account and any Subaccount willbe under the sole control and dominion of Lender, and Borrower shall have noright of withdrawal therefrom.  Borrowershall pay for all expenses of opening and maintaining all of the aboveaccounts.

 

**3.2****                              ****Required****Repairs**.

 

**3.2.1****                    ****Completion of Required****Repairs**. Borrower shall perform each item of the repairs and environmentalremedial work at the Property described on Schedule 1 (the “***Required Repairs***”),and shall complete such Required Repairs in the following time frames: (i) allitems referenced on Schedule 1 as Code Issues and Deferred Maintenanceshall be completed by Borrower within three (3) months after the date hereof,and (ii) all items referenced on Schedule 1 as ADA issues shall becompleted by Borrower within six (6) months after the date hereof.

 

**3.2.2****                    ****Required Repairs****Reserves**.  On the date hereof, Borrowershall deposit with Lender the aggregate amount of $249,625.00 as being theamount required to complete the Required Repairs and Lender shall cause suchamount to be transferred to a Subaccount which shall bear interest, whichinterest earned shall become a part of such subaccount (the “***Required Repairs Subaccount***”).  Provided no Default or Event of Defaultshall have occurred and is continuing, Lender shall disburse funds held in theRequired Repairs Subaccount to Borrower, within 15 days after the delivery byBorrower to Lender of a request therefor (but not more often than once permonth), in increments of at least $5,000, accompanied by the following items(which items shall be in form and substance reasonably satisfactory to Lender):(i) an Officer’s Certificate (A) certifying that the Required Repairs or anyportion thereof which are the subject of the requested disbursement have beensubstantially completed in a good and workmanlike manner and in materialaccordance with all applicable Legal Requirements, (B) identifying each Personthat supplied materials or labor in connection with such Required Repairs orany portion thereof and (C) stating that each such Person has been or, uponreceipt of the requested disbursement, will be paid in full with respect to theportion of the Required Repairs which is the subject of the requesteddisbursement; (ii) copies of appropriate Lien waivers or other evidence ofpayment satisfactory to Lender; (iii) at Lender’s option, a title search forthe Property indicating that it is free from all Liens not previously approvedby Lender; (iv) a copy of each License required to be obtained with respect tothe portion of the Required Repairs which is the subject of the requesteddisbursement; and (v) such other evidence as Lender shall reasonably requestthat the Required Repairs which are the subject of the 

 

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requesteddisbursement have been completed and paid for. Provided no Default or Event of Default shall have occurred and iscontinuing, upon Borrower’s completion of all Required Repairs in accordancewith this Section 3.2, Lender shall release any funds remaining inthe Required Repairs Subaccount, if any, to Borrower.

 

**3.3****                              ****Taxes and Insurance**. Borrower shall pay to Lender on each Payment Date (i) one-twelfth of theTaxes that Lender estimates will be payable during the next 12 months in orderto accumulate with Lender sufficient funds to pay all such Taxes at least 30days prior to their respective due dates and (ii) one-twelfth of the InsurancePremiums that Lender estimates will be payable for the renewal of the coverageafforded by the Policies upon the expiration thereof in order to accumulatewith Lender sufficient funds to pay all such Insurance Premiums at least 30days prior to the expiration of the Policies. Such amounts will be transferred by Lender to a Subaccount (the “***Tax and Insurance Subaccount***”).  Provided that no Default or Event of Defaulthas occurred and is continuing, Lender will (a) apply funds in the Tax andInsurance Subaccount to payments of Taxes and Insurance Premiums required to bemade by Borrower pursuant to Sections 5.2 and 7.1, provided thatBorrower has promptly supplied Lender with notices of all Taxes and InsurancePremiums due, or (b) reimburse Borrower for such amounts upon presentation ofevidence of payment; subject, however, to Borrower’s right to contest Taxes inaccordance with Section 5.2. In making any payment relating to Taxes and Insurance Premiums, Lendermay do so according to any bill, statement or estimate procured from theappropriate public office (with respect to Taxes) or insurer or agent (withrespect to Insurance Premiums), without inquiry into the accuracy of such bill,statement or estimate or into the validity of any tax, assessment, sale,forfeiture, tax lien or title or claim thereof.  If Lender determines in its reasonable judgment that the funds inthe Tax and Insurance Subaccount will be insufficient to pay (or in excess of)the Taxes or Insurance Premiums next coming due, Lender may increase (ordecrease) the monthly contribution required to be made by Borrower to the Taxand Insurance Subaccount.

 

**3.4****                              ****Capital Expense****Reserves**.  Borrower shall pay on thedate hereof and on each Payment Date to Lender an amount initially equal to $8,100.42per month.  Lender will transfer suchamounts into a Subaccount, which shall bear interest, which interest earnedshall become a part of such subaccount (the “***Capital Reserve Subaccount***”).  Additionally, upon thirty (30) days’ priornotice to Borrower, Lender may reassess the amount of the monthly paymentrequired under this Section 3.4 from time to time in its reasonablediscretion (based upon its then current underwriting standards).  Provided that no Default or Event of Defaulthas occurred and is continuing, Lender shall disburse funds held in the CapitalReserve Subaccount to Borrower, within 15 days after the delivery by Borrowerto Lender of a request therefor (but not more often than once per month), inincrements of at least $5,000 provided that (i) such disbursement is for anApproved Capital Expense; (ii) Lender shall have (if it desires) verified (byan inspection conducted at Borrower’s reasonable expense) performance of thework associated with such Approved Capital Expense; and (iii) the request fordisbursement is accompanied by (A) an Officer’s Certificate certifying (1) thatsuch funds will be used to pay or reimburse Borrower for Approved CapitalExpenses and a description thereof, (2) that all outstanding trade payables(other than those to be paid from the requested disbursement or thoseconstituting Permitted Indebtedness) have been paid in full, (3) that the samehas not been the subject of a previous disbursement, and (4) that all previousdisbursements have been used to pay the previously identified Approved CapitalExpenses, and (B) lien waivers or other evidence of payment

 

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satisfactoryto Lender, (C) at Lender’s option, a title search for the Property indicatingthat the Property is free from all Liens, claims and other encumbrances notpreviously approved by Lender and (D) such other evidence as Lender shallreasonably request that the Approved Capital Expenditures at the Property to befunded by the requested disbursement have been completed and are paid for orwill be paid upon such disbursement to Borrowers.  Any such disbursement of more than $10,000 to pay (rather thanreimburse) Approved Capital Expenses may, at Lender’s option, be made by jointcheck payable to Borrower and the payee on such Approved Capital Expenses.

 

**3.5****                              ****Rollover****Reserves**. Borrower shall pay to Lender $55,101.92 on each Payment Date. Lenderwill maintain all amounts so deposited by Borrower hereunder in a Subaccount,which shall bear interest, which interest earned shall become a part of suchsubaccount (the “***RolloverReserve Subaccount***”). Borrower shall also pay to Lender for transfer into the Rollover ReserveSubaccount all payments received from tenants in connection with the earlytermination or cancellation of any Leases, including fees, penalties andcommissions.   If Lender determines inits reasonable judgment that the funds in the Rollover Reserve Subaccount willbe insufficient to pay (or in excess of) the amounts due or to become due forApproved Leasing Expenses, Lender may increase (or decrease) the monthlycontribution required to be made by Borrower to the Rollover ReserveSubaccount.  Provided that no Default orEvent of Default has occurred and is continuing, Lender shall disburse fundsheld in the Rollover Reserve Subaccount to Borrower, within 15 days after thedelivery by Borrower to Lender of a request therefor (but not more often thanonce per month), in increments of at least $5,000, provided (i) suchdisbursement is for an Approved Leasing Expense; (ii) Lender shall have (if itdesires) verified (by an inspection conducted at Borrower’s reasonable expense)performance of any construction work associated with such Approved LeasingExpense; and (iii) the request for disbursement is accompanied by (A) anOfficer’s Certificate certifying (1) that such funds will be used only to pay(or reimburse Borrower for) Approved Leasing Expenses and a descriptionthereof, (2) that all outstanding trade payables (other than those to be paidfrom the requested disbursement or those constituting Permitted Indebtedness)have been paid in full, (3) that the same has not been the subject of aprevious disbursement, and (4) that all previous disbursements have been usedonly to pay (or reimburse Borrower for) the previously identified ApprovedLeasing Expenses, and (B) reasonably detailed supporting documentation as tothe amount, necessity and purpose therefor. Any such disbursement of more than $10,000 to pay (rather thanreimburse) Approved Leasing Expenses may, at Lender’s option, be made by jointcheck payable to Borrower and the payee of such Approved Leasing Expenses.

 

**3.6****                              ****Operating****Expense Subaccount**. During a Cash Management Period, Borrower shall pay to Lender on orbefore each Payment Date the monthly amount set forth in the Approved OperatingBudget for the following month as being necessary for payment of ApprovedOperating Expenses at the Property for such month, which amounts shall betransferred into a Subaccount for the payment of Approved Operating Expenses(the “***Operating ExpenseSubaccount***”).  Providedno Default or Event of Default has occurred and is continuing, Lender shalldisburse funds held in the Operating Expense Subaccount to Borrower, within 15days after delivery by Borrower to Lender of a request therefor (but not moreoften than once per month), in increments of at least $1,000, provided (i) suchdisbursement is for an Approved Operating Expense; and (ii) such disbursementis accompanied by (A) an Officer’s Certificate certifying (1) that such fundswill be used to pay Approved Operating Expenses and a

 

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descriptionthereof, (2) that all outstanding trade payables (other than those to be paidfrom the requested disbursement or those constituting Permitted Indebtedness)have been paid in full, (3) that the same has not been the subject of aprevious disbursement, and (4) that all previous disbursements have been orwill be used to pay the previously identified Approved Operating Expenses, and(B) reasonably detailed documentation satisfactory to Lender as to the amount,necessity and purpose therefor.

 

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

 

**3.8****                              ****Security****Deposits**. Each Project Owner shall keep all of its respective security depositsunder Leases at its respective Project held in a separately designated accountunder such Project Owner’s control at the Clearing Bank (and in the case of aletter of credit, assigned with full power of attorney and executed sightdrafts to Lender) so that the security deposits shall not be commingled withany other funds of the respective Project Owner (each such account, the “***Security Deposit Account***”).  During a Cash Management Period, eachProject Owner shall, upon Lender’s request, if permitted by applicable LegalRequirements, turn over to Lender the security deposits (and any interesttheretofore earned thereon) under Leases, to be held by Lender in a Subaccount(the “***Security DepositSubaccount***”) subject to the terms of the Leases.  Security deposits held in the SecurityDeposit Subaccount will be released by Lender upon notice from the applicableProject Owner together with such evidence as Lender may reasonably request thatsuch security deposit is required to be returned to a tenant pursuant to theterms of a Lease or may be applied as Rent pursuant to the rights of suchProject Owner under the applicable Lease. Any letter of credit or other instrument that a Project Owner receivesin lieu of a cash security deposit under any Lease entered into after the datehereof shall (i) be maintained in full force and effect in the full amountunless replaced by a cash deposit as hereinabove described, and (ii) ifpermitted pursuant to any Legal Requirements, name Lender as payee or mortgageethereunder (or at Lender’s option, be fully assignable to Lender).

 

**3.9****                              ****Cash Collateral****Subaccount**.

 

(a)                                  If a Cash Management Period shall havecommenced, then on the immediately succeeding Payment Date and on each PaymentDate thereafter during the continuance of such Cash Management Period, allAvailable Cash shall be paid to Lender, which amounts shall be transferred byLender into a Subaccount (the “***Cash Collateral Subaccount***”) as cash collateral for theDebt.  Any funds in the Cash CollateralAccount and not previously disbursed or applied shall be disbursed to Borrowerupon the termination of such Cash Management Period or as expressly permittedin this Section 3.9 with regards to leasing commissions and tenantimprovement costs.  Lender shall havethe right, but not the obligation, at any time (i) during the continuance of anEvent of Default or (ii) subsequent to the second Calculation Date followingthe commencement of a Cash Management Period (whether or not an Event ofDefault is then continuing), in its sole and absolute discretion to apply allsums then on deposit in the Cash Collateral Subaccount to the Debt, in suchorder and in such manner as Lender shall elect in its sole and absolutediscretion, including to make a prepayment of Principal

 

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(togetherwhich the applicable Yield Maintenance Premium or Prepayment Premium applicablethereto).

 

(b)                                 Notwithstanding the terms of Section 3.9(a),if the event in clause (ii) of the definition of “Cash Management Period” isthe event which caused the commencement of the subject Cash Management Period,then, and only then, will the Borrower be permitted to obtain disbursements (inincrements of at least $5,000) for the payment of Approved Leasing Expenseswithin 15 days of its request therefore (but disbursement shall not be mademore often than once per month) from the funds remaining in the Cash CollateralAccount after the application by Lender of funds therein in accordance with Section 3.11below, upon the satisfaction of the following conditions to the satisfaction ofLender: (i) no Default or Event of Default has occurred and is continuing, (ii)such disbursement is for an Approved Leasing Expense; (iii) Lender shall have(if it desires) verified (by an inspection conducted at Borrower’s expense)performance of any construction work associated with such Approved LeasingExpense; and (iv) the request for disbursement is accompanied by: (A) anOfficer’s Certificate certifying (1) that such funds will be used only to pay(or reimburse Borrower for) Approved Leasing Expenses and a descriptionthereof, (2) that all outstanding trade payables (other than those to be paidfrom the requested disbursement or those constituting Permitted Indebtedness)have been paid in full, (3)  that thesame has not been the subject of a previous disbursement, and (4) that allprevious disbursements have been used only to pay (or reimburse Borrower for)the previously identified Approved Leasing Expenses, (B) reasonably detailedsupporting documentation as to the amount, necessity and purpose therefor, and(C) copies of executed interim or final lien waivers if the disbursement is inconnection with tenant improvement expenses. Any such disbursement to pay (rather than reimburse) Approved LeasingExpenses shall be made by joint check payable to Borrower and the payee of suchApproved Leasing Expenses.

 

**3.10****                       ****Grant of Security****Interest; Application of Funds**.  Assecurity for payment of the Debt and the performance by Borrower of all otherterms, conditions and provisions of the Loan Documents, Borrower hereby pledgesand assigns to Lender, and grants to Lender a security interest in, allBorrower’s right, title and interest in and to all Rents and in and to allpayments to or monies held in the Clearing Account, the Deposit Account, allSubaccounts created pursuant to this Agreement (collectively, the “***Cash Management Accounts***”).  Borrower hereby grants to Lender acontinuing security interest in, and agrees to hold in trust for the benefit ofLender, all Rents in its possession prior to the (i) payment of such Rents toLender or (ii) deposit of such Rents into the Deposit Account.  Borrower shall not, without obtaining theprior written consent of Lender, further pledge, assign or grant any securityinterest in any Cash Management Account, or permit any Lien to attach thereto,or any levy to be made thereon, or any UCC Financing Statements, except thosenaming Lender as the secured party, to be filed with respect thereto.  This Agreement is, among other things,intended by the parties to be a security agreement for purposes of the UCC.  Upon the occurrence and during thecontinuance of an Event of Default, Lender may apply any sums in any CashManagement Account in any order and in any manner as Lender shall elect inLender’s discretion without seeking the appointment of a receiver and withoutadversely affecting the rights of Lender to foreclose the Lien of the Mortgageor exercise its other rights under the Loan Documents.  Cash Management Accounts shall notconstitute trust funds and may be commingled with other monies held by Lender.  All interest which accrues on the funds inany Cash Management Account (other than the Tax and

 

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InsuranceSubaccount) shall accrue for the benefit of Borrower and shall be taxable toBorrower and shall be added to and disbursed in the same manner and under thesame conditions as the principal sum on which said interest accrued.  Upon repayment in full of the Debt, allremaining funds in the Subaccounts, if any, shall be promptly disbursed toBorrower.

 

**3.11****                       ****Property****Cash Flow Allocation**.

 

(a)                                  During any Cash Management Period, all Rentsdeposited into the Deposit Account during the immediately preceding InterestPeriod shall be applied on each Payment Date as follows in the following orderof priority: (i) First, to make payments into the Tax and Insurance Subaccountas required under Section 3.3; (ii) Second, to pay the monthlyportion of the fees charged by the Deposit Bank in accordance with the DepositAccount Agreement; (iii) Third, to Lender to pay the Monthly Debt ServicePayment Amount due on such Payment Date (plus, if applicable, interest at theDefault Rate and all other amounts, other than those described under otherclauses of this Section 3.11(a), then due to Lender under the LoanDocuments); (iv) Fourth, to make payments into the Capital Reserve Subaccount asrequired under Section 3.4; (v) Fifth, to make payments into theRollover Reserve Subaccount as required under Section 3.5; (vi)Sixth, during the continuance of a Cash Management Period, to make payments forApproved Operating Expenses as required under Section 3.6; (vii)Seventh, after the consummation of a Secondary Market Transaction, to pay thepro rata portion of the expenses described in Section 9.1.7; and (viii)Lastly, payments to Borrowers of any remaining amounts.

 

(b)                                 The failure of Borrower to make all of thepayments required under clauses (i) through (vii) of Section 3.11(a)in full on each Payment Date shall constitute an Event of Default under thisAgreement; provided, however, if adequate funds are available in the DepositAccount for such payments, the failure by the Deposit Bank to allocate suchfunds into the appropriate Subaccounts shall not constitute an Event ofDefault.

 

(c)                                  Notwithstanding anything to the contrarycontained in this Section 3.11, after the occurrence of a Defaultor an Event of Default, Lender may apply all Rents deposited into the DepositAccount and other proceeds of repayment in such order and in such manner asLender shall elect.

 

**4.****                                     ****REPRESENTATIONS****AND WARRANTIES**

 

Borrowerrepresents and warrants to Lender as of the date hereof that, except to theextent (if any) disclosed on Schedule 2 with reference to a specificSection of this Article 4:

 

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

 

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

 

**4.3****                              ****NoConflicts**.  Theexecution, delivery and performance of the Loan Documents by Borrower and thetransactions contemplated hereby will not conflict with or result in a materialbreach of any of the terms or provisions of, or constitute a default under, orresult in the creation or imposition of any Lien (other than pursuant to theLoan Documents) upon any of the property of Borrower pursuant to the terms of,any agreement or instrument to which Borrower is a party or by which itsproperty is subject, nor will such action result in any violation of theprovisions of any statute or any order, rule or regulation of any GovernmentalAuthority having jurisdiction over Borrower or any of its properties.  Borrower’s rights under the Licenses and theManagement Agreement will not be adversely affected by the execution anddelivery of the Loan Documents, Borrower’s performance thereunder, therecordation of the Mortgage, or the exercise of any remedies by Lender.  Any consent, approval, authorization, order,registration or qualification of or with any Governmental Authority requiredfor the execution, delivery and performance by Borrower of the Loan Documentshas been obtained and is in full force and effect.

 

**4.4****                              ****Litigation**.  There are no actions, suits or otherproceedings at law or in equity by or before any Governmental Authority now, orto Borrower’s knowledge, pending or threatened against or affecting Borrower,the Manager or the Property, which, if adversely determined, might materiallyadversely affect the condition (financial or otherwise) or business ofBorrower, Manager or the condition or ownership of the Property.

 

**4.5****                              ****Agreements**.  Borrower is not a party to any agreement orinstrument or subject to any restriction which might adversely affect Borroweror the Property, or Borrower’s business, properties, operations or condition,financial or otherwise.  Borrower is notin default in any material respect in the performance, observance or fulfillmentof any of the obligations, covenants or conditions contained in any PermittedEncumbrance or any other agreement or instrument to which it is a party or bywhich it or the Property is bound.

 

**4.6****                              ****Title**.  Borrower has good and indefeasible title infee to the real property located in Texas and good, marketable and indefeasibletitle in fee to the real property located in Colorado and Arizona, and goodtitle to the balance of the Property, free and clear of all Liens except thePermitted Encumbrances.  All transfertaxes, deed stamps, intangible taxes or other amounts in the nature of transfertaxes required to be paid by any Person under applicable Legal Requirements inconnection with the transfer of the Property to Borrower have been paid.  The Mortgage when properly recorded in theappropriate records, together with any UCC Financing Statements required to befiled in connection therewith, will create (i) a valid, perfected firstpriority lien on the Borrower’s interest in the Property and (ii) valid andperfected first priority

 

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securityinterests in and to, and perfected collateral assignments of, all personalty(including the Leases), all in accordance with the terms thereof, in each casesubject only to any applicable Permitted Encumbrances.  All mortgage, recording, stamp, intangibleor other similar taxes required to be paid by any Person under applicable LegalRequirements in connection with the execution, delivery, recordation, filing,registration, perfection or enforcement of any of the Loan Documents have beenpaid.  The Permitted Encumbrances do notmaterially adversely affect the value, operation or use of the Property, orBorrower’s ability to repay the Loan. No Condemnation or other proceeding has been commenced or, to Borrower’sknowledge, is contemplated with respect to all or part of the Property or forthe relocation of roadways providing access to the Property.  There are no claims for payment for work,labor or materials affecting the Property which are or may become a Lien priorto, or of equal priority with, the Liens created by the Loan Documents.  There are no outstanding options to purchaseor rights of first refusal affecting all or any portion of the Property.  To Borrower’s knowledge, the survey for theProperty delivered to Lender does not fail to reflect any material matteraffecting the Property or the title thereto. All of the Improvements included in determining the appraised value ofthe Property lie wholly within the boundaries and building restriction lines ofthe Property, and no improvement on an adjoining property encroaches upon theProperty, and no easement or other encumbrance upon the Property encroachesupon any of the Improvements, except those insured against by the TitleInsurance Policy.  Each parcelcomprising the Property is a separate tax lot and is not a portion of any othertax lot that is not a part of the Property. There are no pending or proposed special or other assessments for publicimprovements or otherwise affecting the Property, or any contemplatedimprovements to the Property that may result in such special or otherassessments.

 

**4.7****                              ****NoBankruptc****y Filing**.  Borrower is not contemplating either thefiling of a petition by it under any state or federal bankruptcy or insolvencylaw or the liquidation of all or a major portion of its property (a “***Bankruptcy Proceeding***”),and Borrower has no knowledge of any Person contemplating the filing of anysuch petition against it.  In addition,Borrower nor any principal nor Affiliate of either has been a party to, or thesubject of a Bankruptcy Proceeding for the past ten years.

 

**4.8****                              ****Fulland****Accurate Disclosure**.  No statement of fact made by Borrower in anyLoan Documents contains any untrue statement of a material fact or omits tostate any material fact necessary to make statements contained therein notmisleading.  There is no material factpresently known to Borrower that has not been disclosed to Lender which adverselyaffects, or, as far as Borrower can foresee, might adversely affect, theProperty or the business, operations or condition (financial or otherwise) ofBorrower.  All financial data, includingthe statements of cash flow and income and operating expense, that have beendelivered to Lender in respect of Borrower and the Property (i) are true,complete and correct in all material respects, (ii) accurately represent thefinancial condition of Borrower and the Property as of the date of suchreports, and (iii) to the extent prepared by an independent certified publicaccounting firm, have been prepared in accordance with GAAP consistentlyapplied throughout the periods covered, except as disclosed therein.  Borrower has no contingent liabilities,liabilities for taxes, unusual forward or long-term commitments, unrealized oranticipated losses from any unfavorable commitments or any liabilities orobligations not expressly permitted by this Agreement.  Since the date of such financial statements,there has been no materially adverse change in the financial

 

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condition,operations or business of Borrower or the Property from that set forth in saidfinancial statements.

 

**4.9****                              ****TaxFilings**.  Tothe extent required, Borrower has filed (or has obtained effective extensionsfor filing) all federal, state and local tax returns required to be filed andhave paid or made adequate provision for the payment of all federal, state andlocal taxes, charges and assessments payable by Borrower.  Borrower believes that its tax returns (ifany) properly reflect the income and taxes of Borrower for the periods coveredthereby, subject only to reasonable adjustments required by the InternalRevenue Service or other applicable tax authority upon audit.

 

**4.10****                       ****NoPlan****Assets**.  As of the date hereof and throughout theTerm (i) Borrower is not and will not be an “employee benefit plan,” as definedin Section 3(3) of ERISA, subject to Title I of ERISA, (ii) none of theassets of Borrower constitutes or will constitute “plan assets” of one or moresuch plans within the meaning of 29 C.F.R. Section 2510.3-101, (iii)Borrower is not and will not be a “governmental plan” within the meaning ofSection 3(32) of ERISA, and (iv) transactions by or with Borrower are notand will not be subject to state statutes regulating investment of, andfiduciary obligations with respect to, governmental plans.

 

**4.11****                       ****Compliance**.  Borrower and the Property and the usethereof comply in all material respects with all applicable Legal Requirements(including with respect to parking and applicable zoning and land use laws,regulations and ordinances).  Borroweris not in default or violation of any order, writ, injunction, decree or demandof any Governmental Authority, the violation of which might materiallyadversely affect the condition (financial or otherwise) or business ofBorrower.  The Property is usedexclusively for an office building and other appurtenant and related retailuses.  In the event that all or any partof the Improvements are destroyed or damaged, said Improvements can be legallyreconstructed to their condition prior to such damage or destruction, andthereafter exist for the same use without violating any zoning or otherordinances applicable thereto and without the necessity of obtaining anyvariances or special permits.  No legalproceedings are pending or, to the knowledge of Borrower, threatened withrespect to the zoning of the Property. Neither the zoning nor any other right to construct, use or operate theProperty is in any way dependent upon or related to any property other than theProperty. All certifications, permits, licenses and approvals, includingcertificates of completion and occupancy permits required for the legal use,occupancy and operation of the Property (collectively, the “***Licenses***”), have beenobtained and are in full force and effect. The use being made of the Property is in conformity with the certificateof occupancy issued for the Property and all other restrictions, covenants andconditions affecting the Property.

 

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

 

**4.13****                       ****Federal****Reserve Regulations;Investment Company Act**.  No part of the proceeds of the Loan will beused for the purpose of purchasing or acquiring any “margin stock” within themeaning of Regulation U of the Board of Governors of the Federal Reserve Systemor

 

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forany other purpose that would be inconsistent with such Regulation U or anyother regulation of such Board of Governors, or for any purpose prohibited byLegal Requirements or any Loan Document. Borrower is not (i) an “investment company” or a company “controlled” byan “investment company,” within the meaning of the Investment Company Act of1940, as amended; (ii) a “holding company” or a “subsidiary company” of a“holding company” or an “affiliate” of either a “holding company” or a“subsidiary company” within the meaning of the Public Utility Holding CompanyAct of 1935, as amended; or (iii) subject to any other federal or state law orregulation which purports to restrict or regulate its ability to borrow money.

 

**4.14****                       ****Easements****; Utilities and PublicAccess**.  All easements, cross easements, licenses,air rights and rights-of-way or other similar property interests (collectively,“***Easements***”),if any, necessary for the full utilization of the Improvements for theirintended purposes have been obtained, are described in the Title InsurancePolicy and are in full force and effect without default thereunder.  The Property has rights of access to publicways and is served by water, sewer, sanitary sewer and storm drain facilitiesadequate to service it for its intended uses. All public utilities necessary or convenient to the full use andenjoyment of the Property are located in the public right-of-way abutting theProperty, and all such utilities are connected so as to serve the Propertywithout passing over other property absent a valid easement.  All roads necessary for the use of theProperty for its current purpose have been completed and dedicated to publicuse and accepted by all Governmental Authorities.

 

**4.15****                       ****Physical****Condition**.  TheProperty, including all Improvements, parking facilities, systems, Equipmentand landscaping, are in good condition, order and repair in all materialrespects; there exists no structural or other material defect or damages to theProperty, whether latent or otherwise. Borrower has not received notice from any insurance company or bondingcompany of any defect or inadequacy in the Property, or any part thereof, whichwould adversely affect its insurability or cause the imposition ofextraordinary premiums or charges thereon or any termination of any policy ofinsurance or bond.  No portion of theProperty is located in an area as identified by the Federal EmergencyManagement Agency as an area having special flood hazards.  The Improvements have suffered no material casualtyor damage which has not been fully repaired and the cost thereof fully paid.

 

**4.16****                       ****Leases**.  The rent roll attached hereto asSchedule 3 (the “***RentRoll***”) is true, complete and correct in all material respects,and the Property is not subject to any Leases other than the Leases describedin the Rent Roll.  Except as set forthon the Rent Roll: (i) each Lease is in full force and effect; (ii) the tenantsunder the Leases have accepted possession of and are in occupancy of all oftheir respective demised premises, have commenced the payment of rent under theLeases, and there are no offsets, claims or defenses to the enforcementthereof; (iii) all rents due and payable under the Leases have been paid and noportion thereof has been paid for any period more than 30 days in advance; (iv)the rent payable under each Lease is the amount of fixed rent set forth in theRent Roll, and there is no claim or basis for a claim by the tenant thereunderfor an adjustment to the rent; (v) no tenant has made any claim against thelandlord under any Lease which remains outstanding, there are no defaults onthe part of the landlord under any Lease, and no event has occurred which, withthe giving of notice or passage of time, or both, would constitute such adefault; (vi) to Borrower’s best knowledge, there is no present materialdefault by the tenant under any Lease; (vii) all security deposits under Leasesare as set forth on the Rent Roll and are held consistent with Section 3.8;(viii) Borrower is the sole owner

 

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ofthe entire lessor’s interest in each Lease; (ix) each Lease is the valid,binding and enforceable obligation of the Borrower and the applicable tenantthereunder; (x) no Person has any possessory interest in, or right to occupy,the Property except under the terms of the Lease; and (xi) each Lease issubordinate to the Loan Documents, either pursuant to its terms or pursuant toa subordination and attornment agreement. None of the Leases contains any option to purchase or right of firstrefusal to purchase the Property or any part thereof.  Neither the Leases nor the Rents have been assigned or pledgedexcept to Lender, and no other Person has any interest therein except thetenants thereunder.

 

**4.17****                       ****Fraudulen****t Transfer**. Borrower has not entered into the Loan or any Loan Document with theactual intent to hinder, delay, or defraud any creditor, and Borrower hasreceived reasonably equivalent value in exchange for its obligations under theLoan Documents.  Giving effect to thetransactions contemplated by the Loan Documents, the fair saleable value ofBorrower’s assets exceeds and will, immediately following the execution anddelivery of the Loan Documents, exceed Borrower’s total liabilities, includingsubordinated, unliquidated, disputed or contingent liabilities, including themaximum amount of its contingent liabilities or its debts as such debts becomeabsolute and matured.  Borrower’s assetsdo not and, immediately following the execution and delivery of the LoanDocuments will not, constitute unreasonably small capital to carry out itsbusiness as conducted or as proposed to be conducted.  Borrower does not intend to, and does not believe that it will,incur debts and liabilities (including contingent liabilities and othercommitments) beyond its ability to pay such debts as they mature (taking intoaccount the timing and amounts to be payable on or in respect of obligations ofBorrower).

 

**4.18****                       ****Ownership****of Borrower**.  TheBoard of Directors in each Borrower are listed on Schedule 4 attachedhereto, and the sole interest holders in each Borrower are listed onSchedule 4 attached hereto, and such interest holders are the owners ofall of the issued and outstanding capital stock of Borrower, all of which capitalstock has been validly issued and fully paid and is nonassessable.  The stock of each Borrower is owned free andclear of all Liens, warrants, options and rights to purchase.  Borrower has no obligation to any Person topurchase, repurchase or issue any stock in it. The organizational chart attached hereto as Schedule 4 is completeand accurate and illustrates all Persons who have a direct or indirectownership interest in each Borrower.

 

**4.19****                       ****Purchase****Options**. Neither the Property nor any part thereof is subject to any purchaseoptions or other similar rights in favor of third parties.

 

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

 

**4.21****                       ****Hazardous****Substances**.  ToBorrower’s knowledge (i) the Property is not in violation of any LegalRequirement pertaining to or imposing liability or standards of conductconcerning environmental regulation, contamination or clean-up, including theComprehensive Environmental Response, Compensation and Liability Act, theResource Conservation and Recovery Act, the Emergency Planning and CommunityRight-to-Know Act of 1986, the

 

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HazardousSubstances Transportation Act, the Solid Waste Disposal Act, the Clean WaterAct, the Clean Air Act, the Toxic Substance Control Act, the Safe DrinkingWater Act, the Occupational Safety and Health Act, any state super-lien andenvironmental clean-up statutes (including with respect to Toxic Mold), anylocal law requiring related permits and licenses and all amendments to andregulations in respect of the foregoing laws (collectively, “***Environmental Laws***”);(ii) the Property is not subject to any private or governmental Lien orjudicial or administrative notice or action or inquiry, investigation or claimrelating to hazardous, toxic and/or dangerous substances, toxic mold or fungusof a type that may pose a risk to human health or the environment or wouldnegatively impact the value of the Property (“***Toxic Mold***”) or any other substances ormaterials which are included under or regulated by Environmental Laws(collectively, “***HazardousSubstances***”); (iii) to Borrower’s knowledge, no HazardousSubstances are or have been (including the period prior to Borrower’sacquisition of the Property), discharged, generated, treated, disposed of orstored on, incorporated in, or removed or transported from the Property otherthan in compliance with all Environmental Laws; (iv) to Borrower’s knowledge,no Hazardous Substances are present in, on or under any nearby real propertywhich could migrate to or otherwise affect the Property; (v) to Borrower’sknowledge, no Toxic Mold is on or about the Property which requiresremediation; (vi) no underground storage tanks exist on the Property and theProperty has never been used as a landfill; and (vii) there have been noenvironmental investigations, studies, audits, reviews or other analysesconducted by or on behalf of Borrower which have not been provided to Lender.

 

**4.22****                       ****Name****; Principal Place ofBusiness**.  Borrower does not use and will not use anytrade name and has not done and will not do business under any name other thanits actual name set forth herein.  Theprincipal place of business of Borrower is its primary address for notices as setforth in Section 6.1, and Borrower has no other place of business.

 

**4.23****                       ****OtherDebt**. There is no indebtedness with respect to the Property or any excess cashflow or any residual interest therein, whether secured or unsecured, other thanPermitted Encumbrances and Permitted Indebtedness.

 

Allof the representations and warranties in this Article 4 and elsewhere inthe Loan Documents (i) shall survive for so long as any portion of the Debtremains owing to Lender and (ii) shall be deemed to have been relied upon byLender notwithstanding any investigation heretofore or hereafter made by Lenderor on its behalf, provided, however, that the representations, warranties andcovenants set forth in Section 4.21 shall survive in perpetuity.

 

**5.****                                     ****COVENANTS**

 

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

 

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

 

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**5.2****                              ****Taxesand****Other Charges**.  Borrower shall pay all Taxes and OtherCharges as the same become due and payable, and deliver to Lender receipts forpayment or other evidence satisfactory to Lender that the Taxes and OtherCharges have been so paid no later than 30 days before they would be delinquentif not paid (provided, however, that Borrower need not pay such Taxes norfurnish such receipts for payment of Taxes paid by Lender pursuant to Section 3.3).  Borrower shall not suffer and shall promptlycause to be paid and discharged any Lien against the Property, and shallpromptly pay for all utility services provided to the Property.  After prior notice to Lender, Borrower, atits own expense, may contest by appropriate legal proceeding, promptlyinitiated and conducted in good faith and with due diligence, the amount orvalidity or application of any Taxes or Other Charges, provided that (i) noDefault or Event of Default has occurred and is continuing, (ii) suchproceeding shall suspend the collection of the Taxes or such Other Charges,(iii) such proceeding shall be permitted under and be conducted in accordancewith the provisions of any other instrument to which Borrower is subject andshall not constitute a default thereunder, (iv) no part of or interest in theProperty will be in danger of being sold, forfeited, terminated, canceled orlost, (v) Borrower shall have furnished such security as may be required in theproceeding, or as may be requested by Lender, to insure the payment of any suchTaxes or Other Charges, together with all interest and penalties thereon, whichshall not be less than 125% of the Taxes and Other Charges being contested, and(vi) Borrower shall promptly upon final determination thereof pay the amount ofsuch Taxes or Other Charges, together with all costs, interest andpenalties.  Lender may pay over any suchsecurity or part thereof held by Lender to the claimant entitled thereto at anytime when, in the judgment of Lender, the entitlement of such claimant isestablished.

 

**5.3****                              ****Accessto****Property**.  Borrower shall permit agents,representatives, consultants and employees of Lender to inspect the Property orany part thereof at reasonable hours upon reasonable advance notice.

 

**5.4****                              ****Repairs; Maintenance****and Compliance; Alterations**.

 

**5.4.1****                    ****Repairs****; Maintenance and Compliance**. Borrower shall at all times maintain, preserve and protect allfranchises and trade names, and Borrower shall cause the Property to bemaintained in a good and safe condition and repair and shall not remove,demolish or alter the Improvements or Equipment (except for alterationsperformed in accordance with Section 5.4.2 and normal replacementof Equipment with Equipment of equivalent value and functionality).  Borrower shall promptly comply with allLegal Requirements and immediately cure properly any violation of a LegalRequirement.  Borrower shall notifyLender in writing within one Business Day after Borrower first receives noticeof any such non-compliance.  Borrowershall promptly repair, replace or rebuild any part of the Property that becomesdamaged, worn or dilapidated and shall complete and pay for any Improvements atany time in the process of construction or repair.

 

**5.4.2****                    ****Alterations**.  Borrower may, without Lender’s consent,perform alterations to the Improvements and Equipment which (i) do notconstitute a Material Alteration, (ii) do not adversely affect Borrower’sfinancial condition or the value or Net Operating Income of the Property and(iii) are in the ordinary course of Borrower’s business.  Borrower shall not perform any MaterialAlteration without Lender’s prior written consent, which consent shall not beunreasonably withheld or delayed; provided, however, that Lender may, in itssole and

 

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absolutediscretion, withhold consent to any alteration the cost of which is reasonablyestimated to exceed $1,000,000 or which is likely to result in a decrease ofNet Operating Income by 2.5% or more for a period of 30 days or longer.  Lender may, as a condition to giving itsconsent to a Material Alteration, require that Borrower deliver to Lender securityfor payment of the cost of such Material Alteration in an amount equal to 125%of the cost of the Material Alteration as estimated by Lender.  Upon substantial completion of the MaterialAlteration, Borrower shall provide evidence satisfactory to Lender that (i) theMaterial Alteration was constructed in accordance with applicable LegalRequirements and substantially in accordance with plans and specificationsapproved by Lender (which approval shall not be unreasonably withheld ordelayed), (ii) all contractors, subcontractors, materialmen and professionalswho provided work, materials or services in connection with the MaterialAlteration have been paid in full and have delivered unconditional releases oflien and (iii) all material Licenses necessary for the use, operation andoccupancy of the Material Alteration (other than those which depend on theperformance of tenant improvement work) have been issued.  Borrower shall reimburse Lender upon demandfor all out-of-pocket costs and expenses (including the reasonable fees of anyarchitect, engineer or other professional engaged by Lender) incurred by Lenderin reviewing plans and specifications or in making any determinations necessaryto implement the provisions of this Section 5.4.2.

 

**5.5****                              ****Performance****of Other Agreements**. Borrower shall observe and perform each and every term to be observed orperformed by it pursuant to the terms of any agreement or instrument affectingor pertaining to the Property, including the Loan Documents.

 

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

 

**5.7****                              ****Further****Assurances**. Borrower shall, at Borrower’s sole cost and expense, (i) execute anddeliver to Lender such documents, instruments, certificates, assignments andother writings, and do such other acts reasonably necessary or desirable, toevidence, preserve and/or protect the collateral at any time securing orintended to secure the Debt and/or for the better and more effective carryingout of the intents and purposes of the Loan Documents, as Lender may reasonablyrequire from time to time; and (ii) upon Lender’s request therefor given fromtime to time after the occurrence of any Default or Event of Default pay for(a) reports of UCC, federal tax lien, state tax lien, judgment and pendinglitigation searches with respect to each Borrower and (b) searches of title tothe Property, each such search to be conducted by search firms reasonablydesignated by Lender in each of the locations reasonably designated by Lender.

 

**5.8****                              ****Environmental****Matters**.

 

**5.8.1****                    ****Hazardou****s Substances**.  Solong as Borrower owns or is in possession of the Property, Borrower shall (i)keep the Property free from Hazardous Substances and in compliance with allEnvironmental Laws, (ii) promptly notify Lender if Borrower shall become awarethat (A) any Hazardous Substance is on or near the Property, (B) the Propertyis in violation of any Environmental Laws or (C) any condition on or near theProperty shall pose a threat to the health, safety or welfare of humans and(iii) remove such Hazardous Substances

 

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and/orcure such violations and/or remove such threats, as applicable, as required bylaw (or as shall be required by Lender in the case of removal which is notrequired by law, but in response to the opinion of a licensed hydrogeologist,licensed environmental engineer or other qualified environmental consultingfirm engaged by Lender (“***Lender’sConsultant***”)), promptly after Borrower becomes aware of same, atBorrower’s sole expense.  Nothing hereinshall prevent Borrower from recovering such expenses from any other party thatmay be liable for such removal or cure.

 

**5.8.2****                    ****Environmental Monitoring**.

 

(a)                         Borrower shall give prompt written notice toLender of (i) any proceeding or inquiry by any party (including anyGovernmental Authority) with respect to the presence of any Hazardous Substanceon, under, from or about the Property, (ii) all claims made or threatened byany third party (including any Governmental Authority) against Borrower or theProperty or any party occupying the Property relating to any loss or injury resultingfrom any Hazardous Substance, and (iii) Borrower’s discovery of any occurrenceor condition on any real property adjoining or in the vicinity of the Propertythat could cause the Property to be subject to any investigation or cleanuppursuant to any Environmental Law.  Uponbecoming aware of the presence of mold or fungus at the Property, Borrowershall (i) undertake an investigation to identify the source(s) of such mold orfungus and shall develop and implement an appropriate remediation plan to eliminatethe presence of any Toxic Mold, (ii) perform or cause to be performed all actsreasonably necessary for the remediation of any Toxic Mold (including takingany action necessary to clean and disinfect any portions of the Propertyaffected by Toxic Mold, including providing any necessary moisture controlsystems at the Property), and (iii) provide evidence reasonably satisfactory toLender of the foregoing.  Borrower shallpermit Lender to join and participate in, as a party if it so elects, any legalor administrative proceedings or other actions initiated with respect to theProperty in connection with any Environmental Law or Hazardous Substance, andBorrower shall pay all reasonable attorneys’ fees and disbursements incurred byLender in connection therewith.

 

(b)                        Upon Lender’s request, at any time and fromtime to time, Borrower shall provide an inspection or audit of the Propertyprepared by a licensed hydrogeologist, licensed environmental engineer orqualified environmental consulting firm reasonably approved by Lender assessingthe presence or absence of Hazardous Substances on, in or near the Property,and if Lender in its good faith judgment determines that reasonable causeexists for the performance of such environmental inspection or audit, then thecost and expense of such audit or inspection shall be paid by Borrower. Suchinspections and audit may include soil bearings and ground watermonitoring.  If Borrower fails toprovide any such inspection or audit within 30 days after such request, Lendermay order same, and Borrower hereby grants to Lender and its employees andagents access to the Property and a license to undertake such inspection oraudit.

 

(c)                         If any environmental site assessment reportprepared in connection with such inspection or audit recommends that anoperations and maintenance plan be implemented for any Hazardous Substance,whether such Hazardous Substance existed prior to the ownership of the Propertyby Borrower, or presently exists or is reasonably suspected of existing,Borrower shall cause such operations and maintenance plan to be prepared and

 

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implementedat its expense upon request of Lender, and with respect to any Toxic Mold,Borrower shall take all action necessary to clean and disinfect any portions ofthe Improvements affected by Toxic Mold in or about the Improvements, includingproviding any necessary moisture control systems at the Property.  If any investigation, site monitoring,containment, cleanup, removal, restoration or other work of any kind isreasonably necessary under an applicable Environmental Law (“***Remedial Work***”),Borrower shall commence all such Remedial Work within 30 days after writtendemand by Lender and thereafter diligently prosecute to completion all suchRemedial Work within such period of time as may be required under applicablelaw.  All Remedial Work shall beperformed by licensed contractors approved in advance by Lender and under thesupervision of a consulting engineer approved by Lender.  All costs of such Remedial Work shall bepaid by Borrower, including Lender’s reasonable attorneys’ fees anddisbursements incurred in connection with the monitoring or review of suchRemedial Work.  If Borrower does nottimely commence and diligently prosecute to completion the Remedial Work,Lender may (but shall not be obligated to) cause such Remedial Work to beperformed at Borrower’s expense. Notwithstanding the foregoing, Borrower shall not be required tocommence such Remedial Work within the above specified time period: (x) ifprevented from doing so by any Governmental Authority, (y) if commencing suchRemedial Work within such time period would result in Borrower or such RemedialWork violating any Environmental Law, or (z) if Borrower, at its expense andafter prior written notice to Lender, is contesting by appropriate legal,administrative or other proceedings, conducted in good faith and with duediligence, the need to perform Remedial Work. Borrower shall have the right to contest the need to perform suchRemedial Work, provided that, (1) Borrower is permitted by the applicableEnvironmental Laws to delay performance of the Remedial Work pending suchproceedings, (2) neither the Property nor any part thereof or interest therein willbe sold, forfeited or lost if Borrower fails to promptly perform the RemedialWork being contested, and if Borrower fails to prevail in contest, Borrowerwould thereafter have the opportunity to perform such Remedial Work, (3) Lenderwould not, by virtue of such permitted contest, be exposed to any risk of anycivil liability for which Borrower has not furnished additional security asprovided in clause (4) below, or to any risk of criminal liability, and neitherthe Property nor any interest therein would be subject to the imposition of anyLien for which Borrower has not furnished additional security as provided inclause (4) below, as a result of the failure to perform such Remedial Work and(4) Borrower shall have furnished to Lender additional security in respect ofthe Remedial Work being contested and the loss or damage that may result fromBorrower’s failure to prevail in such contest in such amount as may bereasonably requested by Lender but in no event less than one hundredtwenty-five percent (125%) of the cost of such Remedial Work as estimated byLender or Lender’s Consultant and any loss or damage that may result fromBorrower’s failure to prevail in such contest.

 

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

 

**5.9****                              ****Title to the Property**.  Borrower will warrant anddefend the title to the Property, and the validity and priority of all Liensgranted or otherwise given to Lender under the Loan Documents, subject only toPermitted Encumbrances, against the claims of all Persons.

 

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**5.10****                       ****Leas****es**.

 

**5.10.1****             ****Genera****lly**. Upon request, Borrower shall furnish Lender with executed copies of allLeases then in effect.  All renewals ofLeases and all proposed leases shall provide for rental rates and termscomparable to existing local market rates and shall be arm’s lengthtransactions with bona fide, independent third-party tenants.

 

**5.10.2****             ****Material****Leases**. Borrower shall not enter into a proposed Material Lease or a proposedrenewal, extension or modification of an existing Material Lease without theprior written consent of Lender, which consent shall not, so long as no Eventof Default is continuing, be unreasonably withheld or delayed.  Prior to seeking Lender’s consent to anyMaterial Lease, Borrower shall deliver to Lender a copy of such proposed lease(a “***Proposed MaterialLease***”) blacklined to show changes from the standard form ofLease approved by Lender and then being used by Borrower.  Lender shall approve or disapprove eachProposed Material Lease or proposed renewal, extension or modification of anexisting Material Lease for which Lender’s approval is required under thisAgreement within 10 Business Days of the submission by Borrower to Lender of awritten request for such approval, accompanied by a final copy of the ProposedMaterial Lease or proposed renewal, extension or modification of an existingMaterial Lease.  If requested byBorrower, Lender will grant conditional approvals of Proposed Material Leasesor proposed renewals, extensions or modifications of existing Material Leasesat any stage of the leasing process, from initial “term sheet” throughnegotiated lease drafts, provided that Lender shall retain the right todisapprove any such Proposed Material Lease or proposed renewal, extension ormodification of an existing Material Lease, if subsequent to any preliminaryapproval material changes are made to the terms previously approved by Lender,or additional material terms are added that had not previously been consideredand approved by Lender in connection with such Proposed Material Lease orproposed renewal, extension or modification of an existing Material Lease.

 

**5.10.3****             ****Minor****Leases**. Notwithstanding the provisions of Section 5.10.2 above,provided that no Event of Default is continuing, renewals, amendments andmodifications of existing Leases and proposed leases, shall not be subject tothe prior approval of Lender provided (i) the proposed lease would be a MinorLease or the existing Lease as amended or modified or the renewal Lease is aMinor Lease, (ii) the proposed lease shall be written substantially inaccordance with the standard form of Lease which shall have been approved byLender, subject to any commercially reasonable changes made in the course ofnegotiation with the applicable tenant, (iii) the Lease as amended or modifiedor the renewal Lease or series of leases or proposed lease or series of leases:(a) shall provide for net effective rental rates comparable to existing localmarket rates, (b) shall have an initial term (together with all renewaloptions) of not less than three years or greater than ten years, (c) shallprovide for automatic self-operative subordination to the Mortgage and, atLender’s option, (x) attornment to Lender and (y) the unilateral right byLender, at the option of Lender, to subordinate the Lien of the Mortgage to theLease, and (d) shall not contain any option to purchase, any right of firstrefusal to purchase, any right to terminate (except in the event of thedestruction or condemnation of substantially all of the Property), anyrequirement for a non-disturbance or recognition agreement, or any otherprovision which might adversely affect the rights of Lender under the LoanDocuments in any material respect. Borrower shall deliver to Lender copies of all Leases which are enteredinto pursuant to the preceding sentence together with Borrower’s certificationthat it has satisfied all of the conditions of the preceding sentence within tendays after the execution of the Lease.

 

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**5.10.4****             ****Additional****Covenants with respect toLeases**.  Borrower (i) shall observe and perform thematerial obligations imposed upon the lessor under the Leases and shall not door permit anything to impair the value of the Leases as security for theDebt;  (ii) shall promptly send copiesto Lender of all notices of default that Borrower shall send or receive underany Lease; (iii) shall enforce, in accordance with commercially reasonablepractices for properties similar to the Property, the terms, covenants andconditions in the Leases to be observed or performed by the lessees, short oftermination thereof; (iv)  shall not collectany of the Rents more than one month in advance (other than security deposits);(v) shall not execute any other assignment of lessor’s interest in the Leasesor the Rents (except as contemplated by the Loan Documents); (vi) shall notmodify any Lease in a manner inconsistent with the Loan Documents; (vii) shallnot convey or transfer or suffer or permit a conveyance or transfer of theProperty so as to effect a merger of the estates and rights of, or atermination or diminution of the obligations of, lessees under Leases; (viii)shall not consent to any assignment of or subletting under any Material Leaseunless required in accordance with its terms without the prior consent ofLender, which, with respect to a subletting, may not, so long as no Event ofDefault is continuing,  be unreasonablywithheld or delayed; and (ix) shall not cancel or terminate any Lease or accepta surrender thereof (except in the exercise of Borrower’s commerciallyreasonable judgment in connection with a tenant default under a Minor Lease)without the prior consent of Lender, which consent shall not, so long as noEvent of Default is continuing, be unreasonably withheld or delayed.

 

**5.11****                       ****Estoppel****Statement**. After request by Lender, Borrower shall within ten (10) days furnishLender with a statement addressed to Lender, its successors and assigns, dulyacknowledged and certified, setting forth (i) the unpaid Principal, (ii) theInterest Rate, (iii) the date installments of interest and/or Principal werelast paid, (iv) any offsets or defenses to the payment of the Debt, and (v)that the Loan Documents are valid, legal and binding obligations and have notbeen modified or if modified, giving particulars of such modification,provided, Lender shall only request such estoppel statements from Borrower asneeded by Lender in connection with its secondary market transactions.

 

**5.12****                       ****Property Management**.

 

**5.12.1****             ****Management Agreement**.  Borrower shall (i) cause theProperty to be managed pursuant to the Management Agreement; (ii) promptlyperform and observe all of the covenants required to be performed and observedby it under the Management Agreement and do all things necessary to preserveand to keep unimpaired its rights thereunder; (iii) promptly notify Lender ofany default under the Management Agreement of which it is aware; (iv) promptlydeliver to Lender a copy of each financial statement, business plan, capitalexpenditure plan, and property improvement plan and any other notice, reportand estimate received by Borrower under the Management Agreement; and (v)promptly enforce the performance and observance of all of the covenantsrequired to be performed and observed by Manager under the ManagementAgreement.  Without Lender’s priorwritten consent, Borrower shall not (a) surrender, terminate, cancel, extend orrenew the Management Agreement or otherwise replace the Manager or enter intoany other management agreement (except pursuant to Section 5.12.2);(b) reduce or consent to the reduction of the term of the Management Agreement;(c) increase or consent to the increase of the amount of any charges under theManagement Agreement; (d) otherwise modify, change, supplement, alter or amendin any material respect, or waive or release any of its rights

 

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andremedies under, the Management Agreement; (e) suffer or permit the occurrenceand continuance of a default beyond any applicable cure period under theManagement Agreement (or any successor management agreement) if such defaultpermits the Manager to terminate the Management Agreement (or such successormanagement agreement); or (f) suffer or permit the ownership, management orcontrol of the Manager to be transferred to a Person other than an Affiliate ofBorrower.

 

**5.12.2****             ****Termination****of Manager**.  If(i) as of any Calculation Date, Borrower fails to maintain a Debt ServiceCoverage Ratio of at least 1.20x or (ii) an Event of Default shall becontinuing, or (iii) Manager is in default under the Management Agreement, or(iv) upon the gross negligence, malfeasance or willful misconduct of theManager, Borrower shall, at the request of Lender, terminate the ManagementAgreement and replace Manager with a replacement manager acceptable to Lenderin Lender’s discretion and the applicable Rating Agencies on terms andconditions satisfactory to Lender and the applicable Rating Agencies.  All calculations of the Debt ServiceCoverage Ratio for purposes of this Section 5.12.2 shall be subjectto verification by Lender.  Borrower’sfailure to appoint an acceptable manager within thirty (30) days after Lender’srequest of Borrower to terminate the Management Agreement shall constitute animmediate Event of Default.  Borrowermay from time to time appoint a successor manager to manage the Properties,which successor manager and Management Agreement shall be approved in writingby Lender in Lender’s discretion and the applicable Rating Agencies.

 

**5.13****                       ****Special****Purpose Bankruptcy Remote Entity**.  Each Borrower shall at alltimes be a Special Purpose Bankruptcy Remote Entity.  No Borrower shall directly or indirectly make any change,amendment or modification to its organizational documents, or otherwise takeany action which could result in Borrower not being a Special PurposeBankruptcy Remote Entity.  A “***Special Purpose Bankruptcy RemoteEntity***” shall have the meaning set forth on Schedule 5hereto.

 

**5.14****                       ****Assumption****in Non-ConsolidationOpinion**.  Each Borrower shall each conduct itsbusiness so that the assumptions (with respect to each Person) made in thatcertain substantive non-consolidation opinion letter dated the date hereofdelivered by Borrower’s counsel in connection with the Loan, shall be true andcorrect in all material respects.

 

**5.15****                       ****Changein****Business or Operation of Property**.  Borrower shall not purchaseor own any real property other than the Property and shall not enter into anyline of business other than the ownership and operation of the Property, ormake any material change in the scope or nature of its business objectives,purposes or operations, or undertake or participate in activities other thanthe continuance of its present business or otherwise cease to operate theProperty as an office building property with associated retail uses, orterminate such business for any reason whatsoever (other than temporarycessation in connection with renovations to the Property).

 

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

 

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**5.17****                       ****Affiliate****Transactions**. Borrower shall not enter into, or be a party to, any transaction with anAffiliate of Borrower except in the ordinary course of business and on termswhich are fully disclosed to Lender in advance and are no less favorable toBorrower or such Affiliate than would be obtained in a comparable arm’s lengthtransaction with an unrelated third party.

 

**5.18****                       ****Zoning**.  Borrower shall not initiate or consent toany zoning reclassification of any portion of the Property or seek any varianceunder any existing zoning ordinance or use or permit the use of any portion ofthe Property in any manner that could result in such use becoming a nonconforming use under any zoning ordinance or any other applicable land use law,rule or regulation, without the prior consent of Lender.

 

**5.19****                       ****NoJoint****Assessment**.  Borrower shall not suffer,permit or initiate the joint assessment of the Property (i) with any other realproperty constituting a tax lot separate from the Property, and (ii) with anyportion of the Property which may be deemed to constitute personal property, orany other procedure whereby the lien of any taxes which may be levied againstsuch personal property shall be assessed or levied or charged to the Property.

 

**5.20****                       ****Principal****Place of Business**. Borrower shall not change its principal place of business or chiefexecutive office without first giving Lender 30 days’ prior notice.

 

**5.21****                       ****Change of Name****, Identity or Structure**. Borrower shall not change its name, identity (including its trade nameor names) or Borrower’s corporate, partnership or other structure withoutnotifying Lender of such change in writing at least thirty (30) days prior tothe effective date of such change and, in the case of a change in Borrower’sstructure, without first obtaining the prior written consent of Lender.  Borrower shall execute and deliver to Lender,prior to or contemporaneously with the effective date of any such change, anyfinancing statement or financing statement change required by Lender toestablish or maintain the validity, perfection and priority of the securityinterest granted herein.  At the requestof Lender, Borrower shall execute a certificate in form reasonably satisfactoryto Lender listing the trade names under which Borrower intends to operate theProperty, and representing and warranting that Borrower does business under noother trade name with respect to the Property.

 

**5.22****                       ****Indebte****dness**. Borrower shall not directly or indirectly create, incur or assume anyindebtedness other than the Debt and unsecured trade payables incurred in theordinary course of business relating to the ownership and operation of theProperty which do not exceed, at any time, a maximum amount of 1% of theoriginal amount of the Principal and are paid within thirty (30) days of thedate incurred (collectively, “***Permitted Indebtedness***”).

 

**5.23****                       ****License****s**. Borrower shall not Transfer any License required for the operation ofthe Property.

 

**5.24****                       ****Compliance with****Restrictive Covenants, Etc**. Borrower will not modify, waive in any material respect or release anyEasements, restrictive covenants or other Permitted Encumbrances, or suffer,consent to or permit the foregoing, without Lender’s prior written consent,which consent shall not be unreasonably withheld by Lender.

 

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**5.25****                       ****ERISA**.

 

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

 

(b)                        Borrower shall not maintain, sponsor,contribute to or become obligated to contribute to, or suffer or permit anyERISA Affiliate of Borrower to, maintain, sponsor, contribute to or becomeobligated to contribute to, any Plan or any Welfare Plan or permit the assetsof Borrower to become “plan assets,” whether by operation of law or underregulations promulgated under ERISA.

 

(c)                         Borrower shall deliver to Lender suchcertifications or other evidence from time to time throughout the Term, asrequested by Lender in its sole discretion, that (A) Borrower is not and doesnot maintain an “employee benefit plan” as defined in Section 3(3) ofERISA, which is subject to Title I of ERISA, or a “governmental plan” withinthe meaning of Section 3(3) of ERISA; (B) Borrower is not subject to statestatutes regulating investments and fiduciary obligations with respect togovernmental plans; and (C) one or more of the following circumstances is true:

 

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

 

(ii)               Less than twenty-five percent (25%) of eachoutstanding class of equity interests in Borrower are held by “benefit planinvestors” within the meaning of 29 C.F.R. §2510.3-101(f)(2); or

 

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

 

**5.26****                       ****Prohibited****Transfers**.

 

**5.26.1****             ****Generall****y**. Borrower shall not directly or indirectly make, suffer or permit theoccurrence of any Transfer other than a Permitted Transfer.

 

**5.26.2****             ****Transfer****and Assumption**.

 

(a)                         Notwithstanding the foregoing, Borrower shallhave a one-time right to Transfer the Property to another party (the “***Transferee Borrower***”)and have the Transferee Borrower assume all of Borrower’s obligations under theLoan Documents, and have replacement guarantors and indemnitors assume all ofthe obligations of the indemnitors and guarantors of the Loan Documents(collectively, a “***Transferand Assumption***”). Borrower may make a written application toLender for Lender’s consent to the Transfer and Assumption, subject to theconditions set forth in paragraphs (b) and (c) of thisSection 5.26.2.  Together with suchwritten application, Borrower will pay to Lender the reasonable review fee thenrequired by Lender.  Borrower also shallpay on demand all of the reasonable costs and expenses incurred by Lender,including reasonable attorneys’ fees and expenses, and including the fees andexpenses of Rating Agencies and other outside entities, in connection withconsidering any proposed Transfer and Assumption, whether or not the same ispermitted or occurs.

 

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

 

(i)                  No Default or Event of Default has occurredand is continuing;

 

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

 

(iii)            Evidence satisfactory to Lender has beenprovided showing that the Transferee Borrower and such of its Affiliates asshall be reasonably designated by Lender comply and will comply withSection 5.13 hereof, as those provisions may be modified by Lender takinginto account the ownership structure of Transferee Borrower and its Affiliates;

 

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

 

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

 

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

 

(vii)        Borrower, the Transferee Borrower, and the replacement guarantors andindemnitors shall have indicated in writing in form and substance reasonablysatisfactory to Lender their readiness and ability to satisfy the conditionsset forth in subsection (c) below; and

 

(viii)     The identity, experience, and financial condition of the TransfereeBorrower and the replacement guarantors and indemnitors shall be reasonablysatisfactory to Lender.

 

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

 

(i)                  Borrower shall deliver to Lender anassumption fee in the amount of 1.00% of the then unpaid Principal;

 

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(ii)               Borrower, Transferee Borrower and theoriginal and replacement guarantors and indemnitors shall execute and deliverto Lender any and all documents required by Lender, in form and substancerequired by Lender, in Lender’s sole discretion;

 

(iii)            Counsel to the Transferee Borrower andreplacement guarantors and indemnitors shall deliver to Lender opinions in formand substance reasonably satisfactory to Lender as to such matters as Lendershall require, which may include opinions as to substantially the same mattersand were required in connection with the origination of the Loan;

 

(iv)           Borrower shall cause to be delivered to Lender, an endorsement(relating to the change in the identity of the vestee and execution anddelivery of the Transfer and Assumption documents) to the Title InsurancePolicies in form and substance reasonably acceptable to Lender, in Lender’sreasonable discretion (the “***Endorsement***”); and

 

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

 

**5.27****                       ****Liens**.  Without Lender’s prior written consent,Borrower shall not create, incur, assume, permit or suffer to exist any Lien onall or any portion of the Property or any direct or indirect legal orbeneficial ownership interest in Borrower, except Liens in favor of Lender andPermitted Encumbrances, unless such Lien is bonded or discharged within 30 daysafter Borrower first receives notice of such Lien.

 

**5.28****                       ****Dissolution**.  Borrower shall not (i) engage in anydissolution, liquidation or consolidation or merger with or into any otherbusiness entity, (ii) engage in any business activity not related to theownership and operation of the Property or (iii) transfer, lease or sell, inone transaction or any combination of transactions, all or substantially all ofthe property or assets of Borrower except to the extent expressly permitted bythe Loan Documents.

 

**5.29****                       ****Expenses**.  Borrower shall reimburse Lender upon receiptof notice for all reasonable out-of-pocket costs and expenses (includingreasonable attorneys’ fees and disbursements) incurred by Lender in connectionwith the Loan, including (i) the preparation, negotiation, execution anddelivery of the Loan Documents and the consummation of the transactionscontemplated thereby and all the costs of furnishing all opinions by counselfor Borrower; (ii) Borrower’s and Lender’s ongoing performance under andcompliance with the Loan Documents, including confirming compliance withenvironmental and insurance requirements; (iii) the negotiation, preparation,execution, delivery and administration of any consents, amendments, waivers orother modifications of or under any Loan Document and any other documents ormatters requested by Lender; (iv) filing and recording of any Loan Documents;(v) title insurance, surveys, inspections and appraisals; (vi) the creation,perfection or protection of Lender’s Liens in the Property and the CashManagement Accounts (including fees and expenses for title and lien searches,intangibles taxes, personal property taxes, 

 

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Mortgage,recording taxes, due diligence expenses, travel expenses, accounting firm fees,costs of appraisals, environmental reports and Lender’s Consultant, surveys andengineering reports); (vii) enforcing or preserving any rights in response tothird party claims or the prosecuting or defending of any action or proceedingor other litigation, in each case against, under or affecting Borrower, theLoan Documents, the Property, or any other security given for the Loan; (viii)fees charged by Rating Agencies in connection with the Loan or any modificationthereof and (ix) enforcing any obligations of or collecting any payments duefrom Borrower under any Loan Document or with respect to the Property or inconnection with any refinancing or restructuring of the Loan in the nature of a“work-out”, or any insolvency or bankruptcy proceedings.  Any costs and expenses due and payable toLender hereunder which are not paid by Borrower within ten days after demandmay be paid from any amounts in the Deposit Account, with notice thereof toBorrower.  The obligations andliabilities of Borrower under this Section 5.29 shall survive the Term andthe exercise by Lender of any of its rights or remedies under the LoanDocuments, including the acquisition of the Property by foreclosure or aconveyance in lieu of foreclosure.

 

**5.30****                       ****Indemnity**.  Borrower shall defend, indemnify and holdharmless Lender and each of its Affiliates and their respective successors andassigns, including the directors, officers, partners, members, shareholders,participants, employees, professionals and agents of any of the foregoing(including any Servicer) and each other Person, if any, who Controls Lender,its Affiliates or any of the foregoing (each, an “***Indemnified Party***”), from and againstany and all liabilities, obligations, losses, damages, penalties, actions,judgments, suits, claims, costs, expenses and disbursements of any kind ornature whatsoever (including the reasonable fees and disbursements of counselfor an Indemnified Party in connection with any investigative, administrativeor judicial proceeding commenced or threatened, whether or not Lender shall bedesignated a party thereto, court costs and costs of appeal at all appellatelevels, investigation and laboratory fees, consultant fees and litigationexpenses), that may be imposed on, incurred by, or asserted against anyIndemnified Party (collectively, the “***Indemnified Liabilities***”) in any manner,relating to or arising out of or by reason of the Loan, including: (i) anybreach by Borrower of its obligations under, or any material misrepresentationby Borrower contained in, any Loan Document; (ii) the use or intended use ofthe proceeds of the Loan; (iii) any information provided by or on behalf ofBorrower, or contained in any documentation approved by Borrower; (iv)ownership of the Mortgage, the Property or any interest therein, or receipt ofany Rents; (v) any accident, injury to or death of persons or loss of or damageto property occurring in, on or about the Property or on the adjoiningsidewalks, curbs, adjacent property or adjacent parking areas, streets or ways;(vi) any use, nonuse or condition in, on or about the Property or on adjoiningsidewalks, curbs, adjacent property or adjacent parking areas, streets or ways;(vii) performance of any labor or services or the furnishing of any materialsor other property in respect of the Property; (viii) the presence, disposal,escape, seepage, leakage, spillage, discharge, emission, release, or threatenedrelease of any Hazardous Substance on, from or affecting the Property; (ix) anypersonal injury (including wrongful death) or property damage (real orpersonal) arising out of or related to such Hazardous Substance; (x) anylawsuit brought or threatened, settlement reached, or government order relatingto such Hazardous Substance; (xi) any violation of the Environmental Laws whichis based upon or in any way related to such Hazardous Substance, including thecosts and expenses of any Remedial Work; (xii) any failure of the Property tocomply with any Legal Requirement; (xiii) any claim by brokers, finders orsimilar persons claiming to be entitled to a commission in connection with anyLease or other

 

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transactioninvolving the Property or any part thereof, or any liability asserted againstLender with respect thereto; and (xiv) the claims of any lessee of any portionof the Property or any Person acting through or under any lessee or otherwisearising under or as a consequence of any Lease; provided, however, thatBorrower shall not have any obligation to any Indemnified Party hereunder tothe extent that it is finally judicially determined that such IndemnifiedLiabilities arise from the gross negligence, illegal acts, fraud or willfulmisconduct of such Indemnified Party. Any amounts payable to any Indemnified Party by reason of theapplication of this paragraph shall be payable on demand and shall bearinterest at the Default Rate from the date loss or damage is sustained by anyIndemnified Party until paid.  Theobligations and liabilities of Borrower under this Section 5.30 shallsurvive the Term and the exercise by Lender of any of its rights or remediesunder the Loan Documents, including the acquisition of the Property byforeclosure or a conveyance in lieu of foreclosure.

 

**6.****                                     ****NOTICESAND****REPORTING**

 

**6.1****                              ****Notices**.  All notices, consents, approvals andrequests required or permitted hereunder or under any other Loan Document (a “***Notice***”) shall begiven in writing and shall be effective for all purposes if either handdelivered with receipt acknowledged, or by a nationally recognized overnightdelivery service (such as Federal Express), or by certified or registeredUnited States mail, return receipt requested, postage prepaid, or by facsimileand confirmed by facsimile answer back, in each case addressed as follows (orto such other address or Person as a party shall designate from time to time bynotice to the other party):  If toLender: Greenwich Capital Financial Products Inc., 600 Steamboat Road,Greenwich, Connecticut 06830, Attention: Mortgage Loan Department, Telecopier(203) 618-2052, with a copy to: Brownstein Hyatt & Farber, P.C., 410 17thStreet, 22nd Floor, Denver, Colorado 80202, Attn:  Ana L. Tenzer, Esq., Telecopier: (303)223-1111; if to Borrower: c/o AmeriVest Properties Inc., 1780 South BellaireStreet, Suite 100, Denver, CO 80222, Attention: John Greenman, Telecopier:(303) 296-7353, with a copy to: Jenkens & Gilchrist, 1445 Ross Avenue, Suite3200, Dallas, TX 75202-2799, Attention: Stephen Voelker, Esq., Telecopier:(214) 855-4300.  A notice shall bedeemed to have been given:  in the caseof hand delivery, at the time of delivery; in the case of registered orcertified mail, when delivered or the first attempted delivery on a BusinessDay; in the case of overnight delivery, upon the first attempted delivery on aBusiness Day; or in the case of facsimile, upon the confirmation of suchfacsimile transmission.

 

**6.2****                              ****Borrower****Notices and Deliveries**.  Borrowershall (a) give prompt written notice to Lender of: (i) any litigation,governmental proceedings or claims or investigations pending or threatenedagainst Borrower which might materially adversely affect Borrower’s condition(financial or otherwise) or business or the Property; (ii) any material adversechange in Borrower’s condition, financial or otherwise, or of the occurrence ofany Default or Event of Default of which Borrower has knowledge; and (b)furnish and provide to Lender: (i) any Securities and Exchange Commission orother public filings, if any, of Borrower, Manager, or any Affiliate of any ofthe foregoing within two (2) Business Days of such filing and (ii) allinstruments, documents, boundary surveys, footing or foundation surveys, certificates,plans and specifications, appraisals, title and other insurance reports andagreements, reasonably requested, from time to time, by Lender.  In addition, after request by Lender, asreasonably needed by Lender in connection with its secondary markettransactions, Borrower shall furnish to Lender (x) within ten days, acertificate addressed to Lender, its successors and assigns reaffirming all

 

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representationsand warranties of Borrower set forth in the Loan Documents as of the daterequested by Lender or, to the extent of any changes to any suchrepresentations and warranties, so stating such changes, and (y) within 30days, tenant estoppel certificates addressed to Lender, its successors and assignsfrom each tenant at the Property in form and substance reasonably satisfactoryto Lender, provided, Lender shall only request such estoppel statements fromBorrower as needed by Lender in connection with its secondary markettransactions.

 

**6.3****                              ****Financial****Reporting**.

 

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

 

**6.3.2****                    ****Annual Reports**. Borrower shall furnish to Lender annually, within 120 days after each calendaryear, a complete copy of Borrower’s annual financial statements audited by a“big four” accounting firm or another independent certified public accountant(accompanied by an unqualified opinion from such accounting firm or otherindependent certified public accountant) reasonably acceptable to Lender, eachin accordance with GAAP and containing balance sheets and statements of profitand loss for Borrower and the Property in such detail as Lender mayrequest.  Each such statement (x) shallbe in form and substance reasonably satisfactory to Lender, (y) shall set forththe financial condition and the income and expenses for the Property for theimmediately preceding calendar year, including statements of annual NetOperating Income as well as (1) a list of tenants, if any, occupying more thantwenty percent of the rentable space of the Property, (2) a breakdown showing(a) the year in which each Lease then in effect expires, (b) the percentage ofrentable space covered by such Lease, (c) the percentage of base rent withrespect to which Leases shall expire in each such year, expressed both on a peryear and a cumulative basis and (z) shall be accompanied by an Officer’sCertificate certifying (1) that such statement is true, correct, complete andaccurate in all material respects and presents fairly the financial conditionof the Property and has been prepared in accordance with GAAP and (2) whetherthere exists a Default or Event of Default, and if so, the nature thereof, theperiod of time it has existed and the action then being taken to remedy it.

 

**6.3.3****                    ****Monthly****/Quarterly Reports**. Borrower shall furnish to Lender within 20 days after the end of eachcalendar month or 45 days after the end of each calendar quarter (as indicatedbelow) the following items: (i) monthly and year-to-date operating statements,noting Net Operating Income and other information necessary and sufficientunder GAAP to fairly represent the financial position and results of operationof the Property during such calendar month, all in form satisfactory to Lender;(ii) a balance sheet for such calendar month; (iii) a comparison of thebudgeted income and expenses and the actual income and expenses for each monthand year-to-date for the Property, together with a detailed explanation

 

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ofany variances of 10% or more between budgeted and actual amounts for suchperiod and year-to-date; (iv) a statement of the actual Capital Expenses madeby Borrower during each calendar quarter as of the last day of such calendarquarter; (v) a statement that Borrower has not incurred any indebtedness otherthan indebtedness permitted hereunder; (vi) an aged receivables report and(vii) rent rolls identifying the leased premises, names of all tenants, unitsleased, monthly rental and all other charges payable under each Lease, date towhich paid, term of Lease, date of occupancy, date of expiration, materialspecial provisions, concessions or inducements granted to tenants, and ayear-by-year schedule showing by percentage the rentable area of theImprovements and the total base rent attributable to Leases expiring each year)and a delinquency report for the Property. Each such statement shall be accompanied by an Officer’s Certificatecertifying (1) that such items are true, correct, accurate in all materialrespects, and complete and fairly present the financial condition and resultsof the operations of Borrower and the Property in accordance with GAAP (subjectto normal year-end adjustments) and (2) whether there exists a Default or Eventof Default, and if so, the nature thereof, the period of time it has existedand the action then being taken to remedy it.

 

**6.3.4****                    ****Other****Reports**. Borrower shall furnish to Lender, within ten Business Days after request,such further detailed information with respect to the operation of the Propertyand the financial affairs of Borrower, or Manager as may be reasonably requested by Lender or any applicableRating Agency.

 

**6.3.5****                    ****Annual****Budget**.  Borrower shall prepare and submit (or shallcause Manager to prepare and submit) to Lender within 30 days after a CashManagement Period and by November 30th of each year thereafter during theTerm until such Cash Management Period has ended, for approval by Lender, whichapproval shall not be unreasonably withheld or delayed, a proposed pro formabudget for the Property for the succeeding calendar year (the “***Annual Budget***”, andeach Annual Budget approved by Lender is referred to herein as the “***Approved Annual Budget***”)),and, promptly after preparation thereof, any revisions to such AnnualBudget.  The Annual Budget shall consistof (i) an operating expense budget showing, on a month-by-month basis, inreasonable detail, each line item of the Borrower’s anticipated operating incomeand operating expenses (on a cash and accrual basis), including amountsrequired to establish, maintain and/or increase any monthly payments requiredhereunder (and once such Annual Budget has been approved by Lender, suchoperating expense budget shall be referred to herein as the “***Approved Operating Budget***”),and (ii) a Capital Expense budget showing, on a month-by-month basis, inreasonable detail, each line item of anticipated Capital Expenses (and oncesuch Annual Budget has been approved by Lender, such Capital Expense budgetshall be referred to herein as the “***Approved Capital Budget***”).  Until such time that any Annual Budget hasbeen approved by Lender, the prior Approved Annual Budget shall apply for allpurposes hereunder (with such adjustments as reasonably determined by Lender(including increases for any non-discretionary expenses)).

 

**6.3.6****                    ****Breach**.  If Borrower fails to provide to Lender orits designee any of the financial statements, certificates, reports orinformation (the “***RequiredRecords***”) required by this Section 6.3.6 within 30 daysafter the date upon which such Required Record is due, Borrower shall pay toLender, at Lender’s option and in its discretion, an amount equal to $5,000 foreach Required Record that is not delivered; provided Lender has given Borrowerat least 15 days prior notice of such failure. In addition, 30 days after Borrower’s failure to deliver any

 

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RequiredRecords, Lender shall have the option, upon 15 days notice to Borrower to gainaccess to Borrower’s books and records and prepare or have prepared atBorrower’s expense, any Required Records not delivered by Borrower.

 

**7.****                                     ****INSURANCE****; CASUALTY; AND CONDEMNATION**

 

**7.1****                              ****Insuran****ce**.

 

**7.1.1****                    ****Coverage**.  Borrower, at its sole cost, for the mutualbenefit of Borrower and Lender, shall obtain and maintain during the Term thefollowing policies of insurance:

 

(a)                         Property insurance insuring against loss ordamage customarily included under so called “all risk” or “special form”policies including fire, lightning, flood, earthquake, vandalism, and maliciousmischief, boiler and machinery and, if available and subject tosubsection (j) below, coverage for damage or destruction caused acts of“Terrorists” (or such policies shall have no exclusion from coverage withrespect thereto) and such other insurable hazards as, under good insurancepractices, from time to time are insured against for other property andbuildings similar to the premises in nature, use, location, height, and type ofconstruction.  Such insurance policyshall also insure costs of demolition and increased cost of construction (whichinsurance for demolition and increased cost of construction may contain asub-limit satisfactory to Lender).  Eachsuch insurance policy shall (i) be in an amount equal to the greatest of (A)100% of the then replacement cost of the Improvements without deduction forphysical depreciation, (B) the unpaid Principal, and (C) such amount as isnecessary so that the insurer would not deem Borrower a co-insurer under suchpolicies, (ii) have deductibles no greater than the lesser of $10,000 or 5% ofNet Operating Income per occurrence, (iii) be paid quarterly in advance and(iv) contain an agreed amount replacement cost endorsement with a waiver ofdepreciation, and shall cover, without limitation, all tenant improvements andbetterments that Borrower is required to insure on a replacement costbasis.  If the insurance required underthis subparagraph is not obtained by blanket insurance policies, the insurancepolicy shall be endorsed to also provide guaranteed building replacement costto the Improvements and such tenant improvements in an amount to be subject tothe consent of Lender, which consent shall not be unreasonably withheld.  Lender shall be named Loss Payee on aStandard Mortgagee Endorsement.

 

(b)                        Flood insurance if any part of the Propertyis located in an area now or hereafter designated by the Federal EmergencyManagement Agency as a Zone “A” & “V” Special Hazard Area, or such otherSpecial Hazard Area if Lender so requires in its sole discretion.  Such policy shall (i) be in an amount equalto the greater of (A) 100% of the full replacement cost of the Improvements onthe Property (without any deduction for depreciation) (B) the maximum limit ofcoverage available and (ii) have a maximum permissible deductible of $3,000.

 

(c)                         Public liability insurance, including (i)“Commercial General Liability Insurance”, (ii) “Owned”, “Hired” and “Non OwnedAuto Liability”; and (iii) umbrella liability coverage for personal injury,bodily injury, death, accident and property damage, such insurance providing incombination no less than containing minimum limits per occurrence of

 

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$1,000,000and $2,000,000 in the aggregate for any policy year; together with at least$26,000,000 excess and/or umbrella liability insurance for any and all claimswith no deductible.  The policiesdescribed in this subsection shall also include coverage for elevators,escalators, independent contractors, “Contractual Liability” (covering, to themaximum extent permitted by law, Borrower’s obligation to indemnify Lender asrequired under this Agreement and the other Loan Documents), “Products” and“Completed Operations Liability” coverage.

 

(d)                        Rental loss and/or business interruptioninsurance (i) with Lender being named as “Lender Loss Payee”, (ii) in an amountequal to one hundred percent (100%) of the projected Rents from the Propertyduring the period of restoration; and (iii) containing an extended period ofindemnity endorsement which provides that after the physical loss to theProperty has been repaired, the continued loss of income will be insured untilsuch income either returns to the same level it was at prior to the loss, orthe expiration of eighteen (18) months from the date that the Property isrepaired or replaced and operations are resumed, whichever first occurs, andnotwithstanding that the policy may expire prior to the end of such period.  The amount of such insurance shall beincreased from time to time during the Term as and when the estimated or actualRents increase.

 

(e)                         Comprehensive boiler and machinery insurancecovering all mechanical and electrical equipment against physical damage, rentloss and improvements loss and covering, without limitation, all tenantimprovements and betterments that Borrower is required to insure pursuant tothe lease on a replacement cost basis and in an amount equal to the greater of(i) $2,000,000 and (ii) 100% of the full replacement cost of the Improvementson such Property (without any deduction for depreciation).

 

(f)                           Worker’s compensation and disabilityinsurance with respect to any employees of Borrower, as required by any LegalRequirement.

 

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

 

(h)                        Coverage to compensate for the cost ofdemolition and the increased cost of construction in an amount satisfactory toLender.

 

(i)                            Such other insurance (including environmentalliability insurance, earthquake insurance, mine subsidence insurance andwindstorm insurance) as may from time to time be reasonably required by Lenderin order to protect its interests.

 

(j)                            Notwithstanding anything insubsection (a) above to the contrary, Borrower shall be required to obtainand maintain coverage in its property insurance Policy (or by a separatePolicy) against loss or damage by terrorist acts provided that such coverage isavailable.  Borrower shall obtain suchcoverage from a carrier which otherwise satisfies the rating criteria specifiedin Section 7.1.2 (a “***QualifiedCarrier***”) or in the event that such coverage is not availablefrom a Qualified Carrier, Borrower shall obtain such coverage from the highestrated insurance company providing such coverage.  If such coverage with respect to

 

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terroristacts is available as aforesaid, Borrower shall obtain and maintain suchcoverage in an amount equal to 100% of the “***Full Replacement Cost***” of the Property.

 

**7.1.2****                    ****Policies**.  All policies of insurance (the “***Policies***”) requiredpursuant to Section 7.1.1 shall (i) be issued by companies approved byLender and licensed to do business in the State, with a claims paying abilityrating of “AA” or better by S&P (and the equivalent by any other RatingAgency) and a rating of A:X or better in the current Best’s Insurance Reports;(ii) name Lender and its successors and/or assigns as their interest may appearas the mortgagee (in the case of property insurance) or an additional insured(in the case of liability insurance); (iii) contain (in the case of propertyinsurance) a Non-Contributory Standard Mortgagee Clause and a Lender’s LossPayable Endorsement, or their equivalents, naming Lender as the person to whichall payments made by such insurance company shall be paid; (iv) contain awaiver of subrogation against Lender; (v) be assigned and the originals thereofdelivered to Lender; (vi) contain such provisions as Lender deems reasonablynecessary or desirable to protect its interest, including (A) endorsementsproviding that neither Borrower, Lender nor any other party shall be aco-insurer under the Policies, (B) that Lender shall receive at least 30 days’prior written notice of any modification, reduction or cancellation of any ofthe Policies, (C) an agreement whereby the insurer waives any right to claimany premiums and commissions against Lender, provided that the policy need notwaive the requirement that the premium be paid in order for a claim to be paidto the insured and (D) providing that Lender is permitted to make payments toeffect the continuation of such policy upon notice of cancellation due tonon-payment of premiums; (vii) in the event any insurance policy (except forgeneral public and other liability and workers compensation insurance) shallcontain breach of warranty provisions, such policy shall provide that withrespect to the interest of Lender, such insurance policy shall not beinvalidated by and shall insure Lender regardless of (A) any act, failure toact or negligence of or violation of warranties, declarations or conditionscontained in such policy by any named insured, (B) the occupancy or use of thepremises for purposes more hazardous than permitted by the terms thereof, or(C) any foreclosure or other action or proceeding taken by Lender pursuant toany provision of the Loan Documents; and (viii) be satisfactory in form andsubstance to Lender and approved by Lender as to amounts, form, risk coverage,deductibles, loss payees and insureds. Borrower shall pay the premiums for such Policies (the “***Insurance Premiums***”)as the same become due and payable and furnish to Lender evidence of therenewal of each of the Policies together with (unless such Insurance Premiumshave been paid by Lender pursuant to Section 3.3) receipts for or otherevidence of the payment of the Insurance Premiums reasonably satisfactory toLender.  If Borrower does not furnishsuch evidence and receipts at least 30 days prior to the expiration of anyexpiring Policy, then Lender may, but shall not be obligated to, procure suchinsurance and pay the Insurance Premiums therefor, and Borrower shall reimburseLender for the cost of such Insurance Premiums promptly on demand, withinterest accruing at the Default Rate. Borrower shall deliver to Lender a certified copy of each Policy within30 days after its effective date. Within 30 days after request by Lender, Borrower shall obtain suchincreases in the amounts of coverage required hereunder as may be reasonably requestedby Lender, taking into consideration changes in the value of money over time,changes in liability laws, changes in prudent customs and practices, and thelike.

 

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**7.2****                              ****Casual****ty**.

 

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

 

**7.2.2****                    ****Settlement****of Proceeds**.  Ifa Casualty covered by any of the Policies (an “***Insured Casualty***”) occurs where the lossdoes not exceed $250,000, provided no Default or Event of Default has occurredand is continuing, Borrower may settle and adjust any claim without the priorconsent of Lender; provided such adjustment is carried out in a competent andtimely manner, and Borrower is hereby authorized to collect and receipt for theinsurance proceeds (the “***Proceeds***”).  In the event of an Insured Casualty wherethe loss equals or exceeds $250,000 (a “***Significant Casualty***”), Lender may, in itssole discretion, settle and adjust any claim without the consent of Borrowerand agree with the insurer(s) on the amount to be paid on the loss, and theProceeds shall be due and payable solely to Lender and held by Lender in theCasualty/Condemnation Subaccount and disbursed in accordance herewith.  If Borrower or any party other than Lenderis a payee on any check representing Proceeds with respect to a SignificantCasualty, Borrower shall immediately endorse, and cause all such third partiesto endorse, such check payable to the order of Lender.  Borrower hereby irrevocably appoints Lenderas its attorney-in-fact, coupled with an interest, to endorse such checkpayable to the order of Lender.  Thereasonable expenses incurred by Lender in the settlement, adjustment andcollection of the Proceeds shall become part of the Debt and shall bereimbursed by Borrower to Lender upon demand. Notwithstanding anything to the contrary contained herein, if inconnection with a Casualty any insurance carrier makes a payment under aproperty insurance Policy that Borrower proposes be treated as business orrental interruption insurance, then, notwithstanding any designation (or lackof designation) by the insurance carrier as to the purpose of such payment, asbetween Lender and Borrower, such payment shall not be treated as business orrental interruption insurance proceeds unless Borrower has demonstrated toLender’s satisfaction that the remaining net Proceeds that will be receivedfrom the property insurance carriers are sufficient to pay 100% of the cost offully restoring the Improvements or, if such net Proceeds are to be applied torepay the Debt in accordance with the terms hereof, that such remaining netProceeds will be sufficient to pay the Debt in full.

 

**7.3****                              ****Condemnatio****n**.

 

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

 

**7.3.2****                    ****Collection****of Award**. Lender is hereby irrevocably appointed as Borrower’s attorney-in-fact,coupled with an interest, with exclusive power to collect, receive

 

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andretain any award or payment in respect of a Condemnation (an “***Award***”) and to makeany compromise, adjustment or settlement in connection with suchCondemnation.  Notwithstanding anyCondemnation (or any transfer made in lieu of or in anticipation of suchCondemnation), Borrower shall continue to pay the Debt at the time and in themanner provided for in the Loan Documents, and the Debt shall not be reducedunless and until any Award shall have been actually received and applied byLender to the reasonable expenses of collecting the Award and to discharge ofthe Debt. Lender shall not be limited to the interest paid on the Award by thecondemning authority but shall be entitled to receive out of the Award interestat the rate or rates provided in the Note. If the Property is sold, through foreclosure or otherwise, prior to thereceipt by Lender of such Award, Lender shall have the right, whether or not adeficiency judgment on the Note shall be recoverable or shall have been sought,recovered or denied, to receive all or a portion of the Award sufficient to paythe Debt.  Borrower shall cause anyAward that is payable to Borrower to be paid directly to Lender.  Lender shall hold such Award in theCasualty/Condemnation Subaccount and disburse such Award in accordance with theterms hereof.

 

**7.4****                              ****Application****of Proceeds or Award**.

 

**7.4.1****                    ****Application to****Restoration**.  If an Insured Casualty orCondemnation occurs where (i) the loss is in an aggregate amount less than the15% of the unpaid Principal, (ii) in the reasonable judgment of Lender, theProperty can be restored within six months, and prior to six months before theStated Maturity Date and prior to the expiration of the rental or businessinterruption insurance with respect thereto, to the Property’s pre-existingcondition and utility as existed immediately prior to such Insured Casualty orCondemnation and to an economic unit not less valuable and not less useful thanthe same was immediately prior to the Insured Casualty or Condemnation, andafter such restoration will adequately secure the Debt and (iii) no Default orEvent of Default shall have occurred and be then continuing, then the Proceedsor the Award, as the case may be (after reimbursement of any expenses incurredby Lender), shall be applied to reimburse Borrower for the cost of restoring,repairing, replacing or rebuilding the Property (the “***Restoration***”), in themanner set forth herein.  Borrower shallcommence and diligently prosecute such Restoration.  Notwithstanding the foregoing, in no event shall Lender beobligated to apply the Proceeds or Award to reimburse Borrower for the cost ofRestoration unless, in addition to satisfaction of the foregoing conditions,both (x) Borrower shall pay (and if required by Lender, Borrower shall depositwith Lender in advance) all costs of such Restoration in excess of the netamount of the Proceeds or the Award made available pursuant to the termshereof; and (y) Lender shall have received evidence reasonably satisfactory toit that during the period of the Restoration, the Rents will be at least equalto the sum of the operating expenses, if any, and Debt Service, as reasonablydetermined by Lender.

 

**7.4.2****                    ****Application to Debt**. Except as provided in Section 7.4.1, any Proceeds and/or Award may,at the option of Lender in its discretion, be applied to the payment of (i)accrued but unpaid interest on the Note, (ii) the unpaid Principal and (iii)other charges due under the Note and/or any of the other Loan Documents, orapplied to reimburse Borrower for the cost of any Restoration, in the manner setforth in Section 7.4.3.  Any suchprepayment of the Loan shall be without any Yield Maintenance Premium, unlessan Event of Default has occurred and is continuing at the time the Proceeds arereceived from the insurance company or the Award is received from thecondemning authority, as the case may be, in which event Borrower shall

 

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payto Lender an additional amount equal to the Yield Maintenance Premium, if any,that may be required with respect to the amount of the Proceeds or Awardapplied to the unpaid Principal.

 

**7.4.3****                    ****Procedure****for Application toRestoration**.  If Borrower is entitled to reimbursement outof the Proceeds or an Award held by Lender, such Proceeds or Award shall bedisbursed from time to time from the Casualty/Condemnation Subaccount uponLender being furnished with (i) evidence satisfactory to Lender of theestimated cost of completion of the Restoration, (ii) a fixed price orguaranteed maximum cost construction contract for Restoration satisfactory toLender, (iii) prior to the commencement of Restoration, all immediatelyavailable funds in addition to the Proceeds or Award that in Lender’s judgmentare required to complete the proposed Restoration, (iv) such architect’scertificates, waivers of lien, contractor’s sworn statements, title insuranceendorsements, bonds, plats of survey, permits, approvals, licenses and suchother documents and items as Lender may reasonably require and approve inLender’s discretion, and (iv) all plans and specifications for suchRestoration, such plans and specifications to be approved by Lender prior tocommencement of any work.  Lender may,at Borrower’s expense, retain a consultant to review and approve all requestsfor disbursements, which approval shall also be a condition precedent to anydisbursement.  No payment made prior tothe final completion of the Restoration shall exceed 90% of the value of thework performed from time to time; funds other than the Proceeds or Award shallbe disbursed prior to disbursement of such Proceeds or Award; and at all times,the undisbursed balance of such Proceeds or Award remaining in the hands ofLender, together with funds deposited for that purpose or irrevocably committedto 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 forthe cost of completion of the Restoration, free and clear of all Liens orclaims for Lien.  Provided no Default orEvent of Default then exists, any surplus that remains out of the Proceeds heldby Lender after payment of such costs of Restoration shall be paid toBorrower.  Any surplus that remains outof the Award received by Lender after payment of such costs of Restorationshall, in the discretion of Lender, be retained by Lender and applied topayment of the Debt or returned to Borrower.

 

**8.****                                     ****DEFAULTS**

 

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

 

(a)                         any portion of the Debt is not paid when dueor any other amount under Section 3.11(a)(i) through (vii) and (ix) is notpaid in full on each Payment Date (provided, however, if adequate funds areavailable in the Deposit Account for such payments, the failure by the DepositBank to allocate such funds into the appropriate Subaccounts shall notconstitute an Event of Default);

 

(b)                        any of the Taxes are not paid when due(unless Lender is paying such Taxes pursuant to Section 3.3), subject toBorrower’s right to contest Taxes in accordance with Section 5.2;

 

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

 

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(d)                        a Transfer other than a Permitted Transferoccurs;

 

(e)                         any representation or warranty made byBorrower or Guarantor or in any Loan Document, or in any report, certificate,financial statement or other instrument, agreement or document furnished byBorrower or Guarantor in connection with any Loan Document, shall be false ormisleading in any material respect as of the date the representation orwarranty was made;

 

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

 

(g)                        a receiver, liquidator or trustee shall beappointed for Borrower,  or Guarantor;or Borrower,  or Guarantor shall beadjudicated a bankrupt or insolvent; or any petition for bankruptcy,reorganization or arrangement pursuant to federal bankruptcy law, or anysimilar federal or state law, shall be filed by or against, consented to, oracquiesced in by, Borrower,  orGuarantor, as the case may be; or any proceeding for the dissolution orliquidation of Borrower,  or Guarantorshall be instituted; provided, however, if such appointment, adjudication,petition or proceeding was involuntary and not consented to by Borrower,  or Guarantor, as the case may be, only uponthe same not being discharged, stayed or dismissed within 60 days;

 

(h)                        Borrower breaches any covenant contained inSections 5.12.1 (a) - (f), 5.13, 5.15, 5.22, 5.25 or 5.28;

 

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

 

(j)                            an Event of Default as defined or describedelsewhere in this Agreement or in any other Loan Document occurs including,without limitation, in the Parkway Mortgage, the Centerra Mortgage or the BlackCanyon Mortgage; or any other event shall occur or condition shall exist, ifthe effect of such event or condition is to accelerate or to permit Lender toaccelerate the maturity of any portion of the Debt;

 

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

 

(l)                            any of the assumptions contained in anysubstantive non-consolidation opinion, delivered to Lender by Borrower’scounsel in connection with the Loan or otherwise hereunder, were not true andcorrect as of the date of such opinion or thereafter became untrue orincorrect;

 

(m)                      a default shall be continuing under any ofthe other terms, covenants or conditions of this Agreement or any other LoanDocument not otherwise specified in this Section 8.1, for ten days afternotice to Borrower (and Guarantor, if applicable) from Lender, in the case ofany default which can be cured by the payment of a sum of money, or for 30 daysafter notice from Lender in the case of any other default; provided, however,that if such

 

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non-monetarydefault is susceptible of cure but cannot reasonably be cured within such30-day period, and Borrower (or Guarantor, if applicable) shall have commencedto cure such default within such 30-day period and thereafter diligently andexpeditiously proceeds to cure the same, such 30-day period shall be extendedfor an additional period of time as is reasonably necessary for Borrower (orGuarantor, if applicable) in the exercise of due diligence to cure suchdefault, such additional period not to exceed 60 days.

 

**8.2****                              ****Remedies**.

 

**8.2.1****                    ****Acceleration**. Upon the occurrence of an Event of Default (other than an Event ofDefault described in paragraph (f) or (g) of Section 8.1) and at any timeand from time to time thereafter, in addition to any other rights or remediesavailable to it pursuant to the Loan Documents or at law or in equity, Lendermay take such action, without notice or demand, that Lender deems advisable toprotect and enforce its rights against Borrower and in and to the Property;including declaring the Debt to be immediately due and payable (includingunpaid interest), Default Rate interest, Late Payment Charges, YieldMaintenance Premium and any other amounts owing by Borrower), without notice ordemand; and upon any Event of Default described in paragraph (f) or (g) ofSection 8.1, the Debt (including unpaid interest, Default Rate interest,Late Payment Charges, Yield Maintenance Premium and any other amounts owing byBorrower) shall immediately and automatically become due and payable, withoutnotice or demand, and Borrower hereby expressly waives any such notice ordemand, anything contained in any Loan Document to the contrarynotwithstanding.

 

**8.2.2****                    ****Remedies Cumulative**.  Upon the occurrence of an Event of Default,all or any one or more of the rights, powers, privileges and other remediesavailable to Lender against Borrower under the Loan Documents or at law or inequity may be exercised by Lender at any time and from time to time, whether ornot all or any of the Debt shall be declared, or be automatically, due andpayable, and whether or not Lender shall have commenced any foreclosureproceeding or other action for the enforcement of its rights and remedies underany of the Loan Documents.  Any suchactions taken by Lender shall be cumulative and concurrent and may be pursuedindependently, singly, successively, together or otherwise, at such time and insuch order as Lender may determine in its discretion, to the fullest extentpermitted by law, without impairing or otherwise affecting the other rights andremedies of Lender permitted by law, equity or contract or as set forth in theLoan Documents.  Without limiting thegenerality of the foregoing, Borrower agrees that if an Event of Default iscontinuing, (i) to the extent permitted by applicable law, Lender is not subjectto any “one action” or “election of remedies” law or rule, and (ii) all Liensand other rights, remedies or privileges provided to Lender shall remain infull force and effect until Lender has exhausted all of its remedies againstthe Property, the Mortgage has been foreclosed, the Property has been soldand/or otherwise realized upon in satisfaction of the Debt or the Debt has beenpaid in full.  To the extent permittedby applicable law, nothing contained in any Loan Document shall be construed asrequiring Lender to resort to any portion of the Property for the satisfactionof any of the Debt in preference or priority to any other portion, and Lendermay seek satisfaction out of the entire Property or any part thereof, in itsdiscretion.

 

**8.2.3****                    ****Severance**.  Lender shall have the right from time totime to sever the Note and the other Loan Documents into one or more separatenotes, mortgages and other

 

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securitydocuments in such denominations and priorities of payment and liens as Lendershall determine in its discretion for purposes of evidencing and enforcing itsrights and remedies.  Borrower shallexecute and deliver to Lender from time to time, promptly after the request ofLender, a severance agreement and such other documents as Lender shall requestin order to effect the severance described in the preceding sentence, all inform and substance reasonably satisfactory to Lender.  Borrower hereby absolutely and irrevocably appoints Lender as itstrue and lawful attorney, coupled with an interest, in its name and stead tomake and execute all documents necessary or desirable to effect such severance,Borrower ratifying all that such attorney shall do by virtue thereof.

 

**8.2.4****                    ****Delay**.  No delay or omission to exercise any remedy,right or power accruing upon an Event of Default, or the granting of anyindulgence or compromise by Lender shall impair any such remedy, right or powerhereunder or be construed as a waiver thereof, but any such remedy, right orpower may be exercised from time to time and as often as may be deemedexpedient.  A waiver of one Default orEvent of Default shall not be construed to be a waiver of any subsequentDefault or Event of Default or to impair any remedy, right or power consequentthereon.  Notwithstanding any otherprovision of this Agreement, Lender reserves the right to seek a deficiencyjudgment or preserve a deficiency claim in connection with the foreclosure ofthe Mortgage to the extent necessary to foreclose on all or any portion of theProperty, the Rents, the Cash Management Accounts or any other collateral.

 

**8.2.5****                    ****Lender’s Right****to Perform**.  If Borrower fails to performany covenant or obligation contained herein and such failure shall continue fora period of ten (10) Business Days after Borrower’s receipt of written noticethereof from Lender, without in any way limiting Lender’s right to exercise anyof its rights, powers or remedies as provided hereunder, or under any of theother Loan Documents, Lender may, but shall have no obligation to, perform, orcause performance of, such covenant or obligation, and all costs, expenses,liabilities, penalties and fines of Lender incurred or paid in connectiontherewith shall be payable by Borrower to Lender upon demand and if not paidshall be added to the Debt ( and to the extent permitted under applicable laws,secured by the Mortgage and other Loan Documents) and shall bear interestthereafter at the Default Rate. Notwithstanding the foregoing, Lender shall have no obligation to sendnotice to Borrower of any such failure.

 

**9.****                                     ****SPECIAL PROVISIONS**

 

**9.1****                              ****Saleof Note****and Secondary Market Transaction**.

 

**9.1.1****                    ****Gener****al; Borrower Cooperation**. Lender shall have the right at any time and from time to time (i) tosell or otherwise transfer the Loan or any portion thereof or the LoanDocuments or any interest therein to one or more investors, (ii) to sellparticipation interests in the Loan to one or more investors or (iii) tosecuritize the Loan or any portion thereof in a single asset securitization ora pooled loan securitization of rated single or multi-class securities (the “***Securities***”) securedby or evidencing ownership interests in the Note and the Mortgage (each suchsale, assignment, participation and/or securitization is referred to herein asa “***Secondary Market Transaction***”).  In connection with any Secondary MarketTransaction, Borrower shall, at Borrower’s reasonable expense not to exceed$15,000 (for purposes of this Section 9 only, the “***Expenses Cap***”), useall reasonable efforts and cooperate fully and in good

 

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faithwith Lender and otherwise assist Lender in satisfying the market standards towhich Lender customarily adheres or which may be reasonably required in themarketplace or by the Rating Agencies in connection with any such SecondaryMarket Transactions, including: (a) to (i) to provide such financial and otherinformation with respect to the Property, Borrower and its Affiliates, Managerand any tenants of the Property not otherwise delivered under the terms hereof,(ii)  provide business plans and budgetsrelating to the Property and (iii) perform or permit or cause to be performed or permitted such siteinspection, appraisals, surveys, market studies, environmental reviews andreports, engineering reports and other due diligence investigations of theProperty, as may be reasonably requested from time to time by Lender or theRating Agencies or as may be necessary or appropriate in connection with aSecondary Market Transaction or Exchange Act requirements (the items providedto Lender pursuant to this paragraph (a) being called the “***Provided Information***”),together, if customary, with appropriate verification of and/or consents to theProvided Information through letters of auditors or opinions of counsel ofindependent attorneys acceptable to Lender and the Rating Agencies; (b) atBorrower’s expense subject to the Expense Cap, cause counsel to render opinionsas to non-consolidation and any other opinion customary in securitizationtransactions with respect to the Property, Borrower and its Affiliates, whichcounsel and opinions shall be reasonably satisfactory to Lender and the RatingAgencies; (c) make such representations and warranties as of the closing dateof any Secondary Market Transaction with respect to the Property, Borrower andthe Loan Documents as are customarily provided in such transactions and as maybe reasonably requested by Lender or the Rating Agencies and consistent withthe facts covered by such representations and warranties as they exist on thedate thereof, including the representations and warranties made in the LoanDocuments; (d) provide current certificates of good standing and qualificationwith respect to Borrower from appropriate Governmental Authorities; and (e)execute such amendments to the Loan Documents and Borrower’s organizationaldocuments, as may be requested by Lender or the Rating Agencies or otherwise toeffect a Secondary Market Transaction, provided that nothing contained in thissubsection (e) shall result in a material economic change in thetransaction.  Borrower shall pay allreasonable third party costs and expenses incurred by Lender in connection witha Secondary Market Transaction. Borrower’s cooperation obligations set forth herein shall continue untilthe Loan has been paid in full.

 

**9.1.2****                    ****Useof****Information**.  Borrower understands that all or any portionof the Provided Information and the Required Records may be included indisclosure documents in connection with a Secondary Market Transaction, includinga prospectus or private placement memorandum (each, a “***Disclosure Document***”)and may also be included in filings with the Securities and Exchange Commissionpursuant to the Securities Act of 1933, as amended (the “***Securities Act***”), orthe Securities and Exchange Act of 1934, as amended (the “***Exchange Act***”), orprovided or made available to investors or prospective investors in theSecurities, the Rating Agencies, and service providers or other partiesrelating to the Secondary Market Transaction. If the Disclosure Document is required to be revised, Borrower shallcooperate with Lender in updating the Provided Information or Required Recordsfor inclusion or summary in the Disclosure Document or for other use reasonablyrequired in connection with a Secondary Market Transaction by providing allcurrent information pertaining to Borrower, Manager and the Property necessaryto keep the Disclosure Document accurate and complete in all material respectswith respect to such matters.

 

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**9.1.3****                    ****Borrower Obligations****Regarding DisclosureDocuments**.  In connection with a Disclosure Document,Borrower shall: (a) if requested by Lender, certify in writing that Borrowerhas carefully examined those portions of such Disclosure Document, pertainingto Borrower, the Property, Manager and the Loan, and that such portions do notcontain any untrue statement of a material fact or omit to state a materialfact necessary in order to make the statements made, in the light of thecircumstances under which they were made, not misleading; and (b) indemnify (ina separate instrument of indemnity, if so requested by Lender) (i) anyunderwriter, syndicate member or placement agent (collectively, the “***Underwriters***”)retained by Lender or its issuing company affiliate (the “***Issuer***”) inconnection with a Secondary Market Transaction, (ii) Lender and (iii) theIssuer that is named in the Disclosure Document or registration statementrelating to a Secondary Market Transaction (the “***Registration Statement***”), and each ofthe Issuer’s directors, each of its officers who have signed the RegistrationStatement and each person or entity who controls the Issuer or the Lenderwithin the meaning of Section 15 of the Securities Act or Section 30of the Exchange Act (collectively within (iii), the “***GCM Group***”), and eachof its directors and each person who controls each of the Underwriters, withinthe meaning of Section 15 of the Securities Act and Section 20 of theExchange Act (collectively, the “***Underwriter Group***”) for any losses, claims,damages or liabilities (the “***Liabilities***”) to which Lender, the GCM Group or theUnderwriter Group may become subject (including reimbursing all of them for anylegal or other expenses actually incurred in connection with investigating ordefending the Liabilities) insofar as the Liabilities arise out of or are basedupon any untrue statement or alleged untrue statement of any material factcontained in any of the Provided Information or in any of the applicable portionsof such sections of the Disclosure Document applicable to Borrower, Manager,the Property or the Loan, or arise out of or are based upon the omission oralleged omission to state therein a material fact required to be stated in theapplicable portions of such sections or necessary in order to make thestatements in the applicable portions of such sections in light of thecircumstances under which they were made, not misleading; provided, however,that Borrower shall not be required to indemnify Lender for any Liabilitiesrelating to untrue statements or omissions which Borrower identified to Lenderin writing at the time of Borrower’s examination of such Disclosure Document.

 

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

 

**9.1.5****                    ****Indemnification****Procedure**.  Promptly after receipt by anindemnified party under Section 9.1.3 or 9.1.4 of notice of thecommencement of any action for which a claim for indemnification is to be madeagainst Borrower, such indemnified party shall notify Borrower in writing ofsuch commencement, but the omission to so notify Borrower will not relieveBorrower from any liability that it may have to any indemnified party hereunder

 

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exceptto the extent that failure to notify causes prejudice to Borrower.  If any action is brought against anyindemnified party, and it notifies Borrower of the commencement thereof,Borrower will be entitled, jointly with any other indemnifying party, toparticipate therein and, to the extent that it (or they) may elect by writtennotice delivered to the indemnified party promptly after receiving theaforesaid notice of commencement, to assume the defense thereof with counselsatisfactory to such indemnified party in its discretion.  After notice from Borrower to suchindemnified party under this Section 9.1.5, Borrower shall not beresponsible for any legal or other expenses subsequently incurred by suchindemnified party in connection with the defense thereof other than reasonablecosts of investigation; provided, however, if the defendants in any such actioninclude both Borrower and an indemnified party, and any indemnified party shallhave reasonably concluded that there are any legal defenses available to itand/or other indemnified parties that are different from or additional to thoseavailable to Borrower, then the indemnified party or parties shall have theright to select separate counsel to assert such legal defenses and to otherwiseparticipate in the defense of such action on behalf of such indemnified partyor parties.  Borrower shall not beliable for the expenses of more than one separate counsel unless there arelegal defenses available to it that are different from or additional to thoseavailable to another indemnified party.

 

**9.1.6****                    ****Contribution**.  Inorder to provide for just and equitable contribution in circumstances in whichthe indemnity agreement provided for in Section 9.1.3 or 9.1.4 is for anyreason held to be unenforceable by an indemnified party in respect of anyLiabilities (or action in respect thereof) referred to therein which wouldotherwise be indemnifiable under Section 9.1.3 or 9.1.4, Borrower shallcontribute to the amount paid or payable by the indemnified party as a resultof such Liabilities (or action in respect thereof); provided, however, that noPerson guilty of fraudulent misrepresentation (within the meaning ofSection 11(f) of the Securities Act) shall be entitled to contributionfrom any Person not guilty of such fraudulent misrepresentation.   In determining the amount of contributionto which the respective parties are entitled, the following factors shall beconsidered:  (i) the GCM Group’s andBorrower’s relative knowledge and access to information concerning the matterwith respect to which the claim was asserted; (ii) the opportunity to correctand prevent any statement or omission; and (iii) any other equitableconsiderations appropriate in the circumstances.  Lender and Borrower hereby agree that it may not be equitable ifthe amount of such contribution were determined by pro rata or per capitaallocation.

 

**9.1.7****                    ****Rating****Surveillance**. Lender will retain the Rating Agencies to provide rating surveillanceservices on Securities.  The pro rataexpenses of such surveillance will be paid for by Borrower based on theapplicable percentage of such expenses determined by dividing the thenoutstanding Principal by the then aggregate outstanding amount of the poolcreated in the Secondary Market Transaction which includes the Loan.

 

**9.1.8****                    ****Severanceof****Loan**.  Lender shall have the right, at any time(whether prior to, in connection with, or after any Secondary MarketTransaction), with respect to all or any portion of the Loan, to modify, splitand/or sever all or any portion of the Loan as hereinafter provided.  Without limiting the foregoing, Lender may(i) cause the Note and the Mortgage to be split into a first and secondmortgage loan, (ii) create one more senior and subordinate notes (i.e., an A/Bor A/B/C structure), (iii) create multiple components of the Note or Notes (andallocate or reallocate the principal balance of the Loan among such components)or (iv) otherwise sever

 

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theLoan into two or more loans secured by mortgages and by a pledge of partnershipor membership interests (directly or indirectly) in Borrower (i.e., a seniorloan/mezzanine loan structure), in each such case, in whatever proportion andwhatever priority Lender determines; provided, however, in each such instancethe outstanding principal balance of all the Notes evidencing the Loan (orcomponents of such Notes) immediately after the effective date of suchmodification equals the outstanding principal balance of the Loan immediatelyprior to such modification and the weighted average of the interest rates forall such Notes (or components of such Notes) immediately after the effectivedate of such modification equals the interest rate of the original Noteimmediately prior to such modification. If requested by Lender, Borrower (and Borrower’s constituent members, ifapplicable, and Guarantor) shall execute within two (2) Business Days aftersuch request, such documentation as Lender may reasonably request to evidenceand/or effectuate any such modification or severance.

 

**10.****                              ****MISCELLANEOUS**

 

**10.1****                       ****Exculpation**.  Subject to the qualifications below, Lendershall not enforce the liability and obligation of Borrower to perform andobserve the obligations contained in the Loan Documents by any action orproceeding wherein a money judgment shall be sought against Borrower, exceptthat Lender may bring a foreclosure action, an action for specific performanceor any other appropriate action or proceeding to enable Lender to enforce andrealize upon its interest and rights under the Loan Documents, or in theProperty, the Rents or any other collateral given to Lender pursuant to theLoan Documents; provided, however, that, except as specifically providedherein, any judgment in any such action or proceeding shall be enforceableagainst Borrower only to the extent of Borrower’s interest in the Property, inthe Rents and in any other collateral given to Lender, and Lender shall not suefor, seek or demand any deficiency judgment against Borrower in any such actionor proceeding under or by reason of or under or in connection with any LoanDocument.  The provisions of thisSection shall not, however, (i) constitute a waiver, release or impairmentof any obligation evidenced or secured by any Loan Document; (ii) impair theright of Lender to name Borrower as a party defendant in any action or suit forforeclosure and sale under the Mortgage to the extent required by applicablelaw or regulation; (iii) affect the validity or enforceability of any of theLoan Documents or any guaranty made in connection with the Loan or any of therights and remedies of Lender thereunder; (iv) impair the right of Lender toobtain the appointment of a receiver; (v) impair the enforcement of theAssignment of Leases; (vi) constitute a prohibition against Lender to commence anyother appropriate action or proceeding in order for Lender to fully realize thesecurity granted by the Mortgage or to exercise its remedies against theProperty; or (vii) constitute a waiver of the right of Lender to enforce theliability and obligation of Borrower, by money judgment or otherwise, to theextent of any loss, damage, cost, expense, liability, claim or other obligationincurred by Lender (including attorneys’ fees and costs reasonably incurred)arising out of or in connection with the following (all such liability andobligation of Borrower for any or all of the following being referred to hereinas “***Borrower’s RecourseLiabilities***”): (a) fraud or intentional misrepresentation byBorrower,  or Guarantor in connectionwith obtaining the Loan; (b) waste of the Property or any portion thereof byBorrower; (c) any Proceeds paid by reason of any Insured Casualty or any Awardreceived in connection with a Condemnation or other sums or paymentsattributable to the Property not applied in accordance with the provisions ofthe Loan Documents (except to the extent that Borrower did not have the legalright, because of a bankruptcy, receivership or similar judicial proceeding, todirect disbursement of such sums

 

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orpayments); (d) all Rents of the Property received or collected by or on behalfof the Borrower after an Event of Default and not applied to payment ofPrincipal and interest due under the Note (including any received or collectedby or on behalf of Borrower after an Event of Default, except to the extentthat Borrower did not have the legal right, because of a bankruptcy,receivership or similar judicial proceeding to direct the disbursement of suchsums), and to the payment of actual and reasonable operating expenses of theProperty, as they become due or payable; (e) misappropriation of tenantsecurity deposits and rents collected in advance, or of funds held by Borrowerfor the benefit of another party; (f) if Lender has waived the monthlycollection for real and personal property taxes and insurance premiums, thenthe failure by Borrower to pay Taxes, (g) the breach of any representation,warranty, covenant or indemnification in any Loan Document concerningEnvironmental Laws or Hazardous Substances, including Sections 4.21 and 5.8,and clauses (viii) through (xi) of Section 5.30; (h) Borrower’s failure topay transfer fees and charges due Lender under the Loan Documents in connectionwith any subordinate financing or any transfer of all or any part of thePremises, or any interest therein, from Borrower to Borrower’s transferee, ortransfer of beneficial interest in Borrower (if Borrower is not a naturalperson or persons but is a corporation, partnership, trust or other legalentity), (i) in the event Lender has waived the requirement for third partyproperty management, then any management fee taken by Borrower or any principalof Borrower after an event of default, or (j) with respect to any SubstantialLease (as defined below), in the event Lender (through foreclosure, deed inlieu of foreclosure or otherwise) acquires the Property or any estate therein,or portion thereof, and Lender thereafter becomes (A) liable to the tenantunder such Substantial Lease for any act or omission of Borrower or any priorlandlord, (B) subject to any offsets or defenses which such tenant might haveagainst Borrower or any prior landlord, (C) liable beyond Lender’s equity inthe Property, or (D) bound by any option or other right of such tenant topurchase or sell all or any portion of the Property; provided, however, thatBorrower shall not have any personal liability under this *clause (j)* with respect to any SubstantialLease to the extent that the tenant thereunder waived its rights with respectto the foregoing matters listed in clauses (A) through (D) above, either in itsSubstantial Lease or in a subordination, non-disturbance and attornmentagreement executed by tenant and Borrower with respect to such SubstantialLease at any time prior to the date any such rights are exercised by suchtenant.  For purposes of this Section,each of the following Leases (as the same may be amended or assigned after thedate hereof) shall be deemed to be a “**SubstantialLease**”: that certain Lease dated March 14, 2002 betweenSyChip Incorporated, as tenant, and AmeriVest Parkway Inc., as landlord.

 

Notwithstandinganything to the contrary in this Agreement or any of the Loan Documents, (A)Lender shall not be deemed to have waived any right which Lender may have underSection 506(a), 506(b), 1111(b) or any other provisions of the U.S.Bankruptcy Code to file a claim for the full amount of the Debt or to requirethat all collateral shall continue to secure all of the Debt in accordance withthe Loan Documents, and (B) Lender’s agreement not to pursue personal liabilityof Borrower as set forth above SHALL BECOME NULL AND VOID and shall be of nofurther force and effect, and the Debt shall be fully recourse to Borrower inthe event that one or more of the following occurs (each, a “***Springing Recourse Event***”):(i) an Event of Default described in Section 8.1(d) shall have occurred or(ii) a breach of the covenants set forth in Section 5.13, or (iii) theoccurrence of any condition or event described in either Section 8.1(f) orSection 8.1(g) and, with respect to such condition or event described inSection 8.1(g), either Borrower, Guarantor or any Person owning aninterest (directly or indirectly) in Borrower, or

 

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Guarantorconsents to, aids, solicits, supports, or otherwise cooperates or colludes tocause such condition or event or fails to contest such condition or event.

 

**10.2****                       ****Brokersand****Financial Advisors**.  Borrower hereby represents that it has dealtwith no financial advisors, brokers, underwriters, placement agents, agents orfinders in connection with the Loan other than Northmarq Capital Inc..  Borrower shall indemnify and hold Lenderharmless from and against any and all claims, liabilities, costs and expenses(including attorneys’ fees, whether incurred in connection with enforcing thisindemnity or defending claims of third parties) of any kind in any way relatingto or arising from a claim by any Person that such Person acted on behalf ofBorrower in connection with the transactions contemplated herein.  The provisions of this Section 10.2shall survive the expiration and termination of this Agreement and therepayment of the Debt.

 

**10.3****                       ****Retention****of Servicer**. Lender reserves the right to retain the Servicer to act as its agenthereunder with such powers as are specifically delegated to the Servicer byLender, whether pursuant to the terms of this Agreement, any pooling andservicing agreement or similar agreement entered into as a result of aSecondary Market Transaction, the Deposit Account Agreement or otherwise,together with such other powers as are reasonably incidental thereto.  Borrower shall pay any reasonable fees andexpenses of the Servicer in connection with a release of the Property,assumption or modification of the Loan, enforcement of the Loan Documents orany other action taken by Servicer hereunder on behalf of Lender.

 

**10.4****                       ****Survival**.  This Agreement and all covenants,agreements, representations and warranties made herein and in the certificatesdelivered pursuant hereto shall survive the making by Lender of the Loan andthe execution and delivery to Lender of the Note, and shall continue in fullforce and effect so long as any of the Debt is unpaid or such longer period ifexpressly set forth in this Agreement. All Borrower’s covenants and agreements in this Agreement shall inure tothe benefit of the respective legal representatives, successors and assigns ofLender.

 

**10.5****                       ****Lender****’s Discretion**. Whenever pursuant to this Agreement or any other Loan Document, Lenderexercises any right given to it to approve or disapprove, or consent orwithhold consent, or any arrangement or term is to be satisfactory to Lender oris to be in Lender’s discretion, the decision of Lender to approve ordisapprove, to consent or withhold consent, or to decide whether arrangementsor terms are satisfactory or not satisfactory, or acceptable or unacceptable orin Lender’s discretion shall (except as is otherwise specifically hereinprovided) be in the sole discretion of Lender and shall be final andconclusive.

 

**10.6****                       ****Governing****Law**.

 

(a)                         THE PROCEEDS OF THE NOTE DELIVERED PURSUANTHERETO WERE DISBURSED FROM THE STATE OF NEW YORK, WHICH STATE THE PARTIES AGREEHAS A SUBSTANTIAL RELATIONSHIP TO THE PARTIES AND TO THE UNDERLYING TRANSACTIONEMBODIED HEREBY, AND IN ALL RESPECTS, INCLUDING MATTERS OF CONSTRUCTION,VALIDITY AND PERFORMANCE, THIS AGREEMENT AND THE OBLIGATIONS ARISING HEREUNDERSHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATEOF NEW YORK APPLICABLE TO CONTRACTS MADE AND PERFORMED IN

 

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SUCHSTATE AND ANY APPLICABLE LAW OF THE UNITED STATES OF AMERICA, EXCEPT THAT ATALL TIMES THE PROVISIONS FOR THE CREATION, PERFECTION, AND ENFORCEMENT OF THELIENS CREATED PURSUANT TO THE LOAN DOCUMENTS SHALL BE GOVERNED BY AND CONSTRUEDACCORDING TO THE LAW OF THE STATE IN WHICH THE PROPERTY IS LOCATED, IT BEINGUNDERSTOOD THAT, TO THE FULLEST EXTENT PERMITTED BY THE LAW OF SUCH STATE, THELAW OF THE STATE OF NEW YORK SHALL GOVERN THE VALIDITY AND THE ENFORCEABILITYOF ALL LOAN DOCUMENTS AND THE DEBT, EXCEPT AS EXPRESSLY PROVIDED HEREIN WITHRESPECT TO THE PROVISIONS FOR THE CREATION, PERFECTION, AND ENFORCEMENT OF THELIENS CREATED PURSUANT TO THE LOAN DOCUMENTS. TO THE FULLEST EXTENT PERMITTED BY LAW, BORROWER HEREBY UNCONDITIONALLYAND IRREVOCABLY WAIVES ANY CLAIM TO ASSERT THAT THE LAW OF ANY OTHERJURISDICTION GOVERNS THIS AGREEMENT AND THE NOTE, AND THIS AGREEMENT AND THENOTE SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THESTATE OF NEW YORK PURSUANT TO § 5-1401 OF THE NEW YORK GENERAL OBLIGATIONSLAW.

 

(b)                        ANY LEGAL SUIT, ACTION OR PROCEEDING AGAINSTLENDER OR BORROWER ARISING OUT OF OR RELATING TO THIS AGREEMENT SHALL BEINSTITUTED IN ANY FEDERAL OR STATE COURT IN NEW YORK COUNTY, NEW YORK ANDBORROWER WAIVES ANY OBJECTION WHICH IT MAY NOW OR HEREAFTER HAVE TO THE LAYINGOF VENUE OF ANY SUCH SUIT, ACTION OR PROCEEDING, AND BORROWER HEREBYIRREVOCABLY SUBMITS TO THE JURISDICTION OF ANY SUCH COURT IN ANY SUIT, ACTIONOR PROCEEDING.  BORROWER DOES HEREBYDESIGNATE AND APPOINT CSC CORPORATION AT 1177 AVENUE OF THE AMERICAS, 17THFLOOR, NEW YORK, NEW YORK 10036-2721, AS ITS AUTHORIZED AGENT TO ACCEPT ANDACKNOWLEDGE ON ITS BEHALF SERVICE OF ANY AND ALL PROCESS WHICH MAY BE SERVED INANY SUCH SUIT, ACTION OR PROCEEDING IN ANY FEDERAL OR STATE COURT IN NEW YORK,NEW YORK, AND AGREES THAT SERVICE OF PROCESS UPON SAID AGENT AT SAID ADDRESSAND WRITTEN NOTICE OF SAID SERVICE OF BORROWER MAILED OR DELIVERED TO BORROWERIN THE MANNER PROVIDED HEREIN SHALL BE DEEMED IN EVERY RESPECT EFFECTIVESERVICE OF PROCESS UPON BORROWER (UNLESS LOCAL LAW REQUIRES ANOTHER METHOD OFSERVICE), IN ANY SUCH SUIT, ACTION OR PROCEEDING IN THE STATE OF NEW YORK.  BORROWER (i) SHALL GIVE PROMPT NOTICE TOLENDER OF ANY CHANGED ADDRESS OF ITS AUTHORIZED AGENT HEREUNDER, (ii) MAY ATANY TIME AND FROM TIME TO TIME DESIGNATE A SUBSTITUTE AUTHORIZED AGENT WITH ANOFFICE IN NEW YORK, NEW YORK (WHICH OFFICE SHALL BE DESIGNATED AS THE ADDRESSFOR SERVICE OF PROCESS), AND (iii) SHALL PROMPTLY DESIGNATE SUCH A SUBSTITUTEIF ITS AUTHORIZED AGENT CEASES TO HAVE AN OFFICE IN NEW YORK, NEW YORK OR ISDISSOLVED WITHOUT LEAVING A SUCCESSOR.

 

**10.7****                       ****Modification****, Waiver in Writing**.  Nomodification, amendment, extension, discharge, termination or waiver of anyprovision of this Agreement or of any other Loan Document, nor consent to anydeparture by Borrower therefrom, shall in any event be effective

 

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unlessthe same shall be in a writing signed by the party against whom enforcement issought, and then such waiver or consent shall be effective only in the specificinstance, and for the purpose, for which given.  Except as otherwise expressly provided herein, no notice to ordemand on Borrower shall entitle Borrower to any other or future notice ordemand in the same, similar or other circumstances.  Neither any failure nor any delay on the part of Lender ininsisting upon strict performance of any term, condition, covenant oragreement, or exercising any right, power, remedy or privilege hereunder, orunder any other Loan Document, shall operate as or constitute a waiver thereof,nor shall a single or partial exercise thereof preclude any other futureexercise, or the exercise of any other right, power, remedy or privilege.  In particular, and not by way of limitation,by accepting payment after the due date of any amount payable under any LoanDocument, Lender shall not be deemed to have waived any right either to requireprompt payment when due of all other amounts due under the Loan Documents, orto declare an Event of Default for failure to effect prompt payment of any suchother amount.

 

**10.8****                       ****Trial****by Jury**. BORROWER AND LENDER HEREBY AGREE NOT TO ELECT A TRIAL BY JURY OF ANYISSUE TRIABLE OF RIGHT BY JURY, AND WAIVE ANY RIGHT TO TRIAL BY JURY FULLY TOTHE EXTENT THAT ANY SUCH RIGHT SHALL NOW OR HEREAFTER EXIST WITH REGARD TO THELOAN DOCUMENTS, OR ANY CLAIM, COUNTERCLAIM OR OTHER ACTION ARISING INCONNECTION THEREWITH.  THIS WAIVER OFRIGHT TO TRIAL BY JURY IS GIVEN KNOWINGLY AND VOLUNTARILY BY BORROWER ANDLENDER, AND IS INTENDED TO ENCOMPASS INDIVIDUALLY EACH INSTANCE AND EACH ISSUEAS TO WHICH THE RIGHT TO A TRIAL BY JURY WOULD OTHERWISE ACCRUE.  EITHER PARTY IS HEREBY AUTHORIZED TO FILE ACOPY OF THIS PARAGRAPH IN ANY PROCEEDING AS CONCLUSIVE EVIDENCE OF THIS WAIVERBY THE OTHER.

 

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

 

**10.10****                ****Severability**. Wherever possible, each provision of this Agreement shall be interpretedin such manner as to be effective and valid under applicable law, but if anyprovision of this Agreement shall be prohibited by or invalid under applicablelaw, such provision shall be ineffective to the extent of such prohibition orinvalidity, without invalidating the remainder of such provision or theremaining provisions of this Agreement.

 

**10.11****                ****Preferences**.  Upon the occurrence and continuance of anEvent of Default, Lender shall have the continuing and exclusive right to applyor reverse and reapply any and all payments by Borrower to any portion of theDebt.  To the extent Borrower makes apayment to Lender, or Lender receives proceeds of any collateral, which is in wholeor part subsequently invalidated, declared to be fraudulent or preferential,set aside or required to be repaid to a trustee, receiver or any other partyunder any bankruptcy law, state or federal law, common law or equitable cause,then, to the extent of such payment or proceeds received, the Debt or partthereof intended to be satisfied shall be revived and continue in full forceand effect, as if such payment or proceeds had not been received byLender.  This provision shall survivethe expiration or termination of this Agreement and the repayment of the Debt.

 

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**10.12****                ****Waiver****of Notice**. Borrower shall not be entitled to any notices of any nature whatsoeverfrom Lender except with respect to matters for which this Agreement or anyother Loan Document specifically and expressly requires the giving of notice byLender to Borrower and except with respect to matters for which Borrower isnot, pursuant to applicable Legal Requirements, permitted to waive the givingof notice.  Borrower hereby expresslywaives the right to receive any notice from Lender with respect to any matterfor which no Loan Document specifically and expressly requires the giving ofnotice by Lender to Borrower.

 

**10.13****                ****Remediesof****Borrower**.  If a claim or adjudication is made thatLender or any of its agents, including Servicer, has acted unreasonably orunreasonably delayed acting in any case where by law or under any LoanDocument, Lender or any such agent, as the case may be, has an obligation toact reasonably or promptly, Borrower agrees that neither Lender nor its agents,including Servicer, shall be liable for any monetary damages, and Borrower’ssole remedy shall be to commence an action seeking injunctive relief ordeclaratory judgment.  Any action orproceeding to determine whether Lender has acted reasonably shall be determinedby an action seeking declaratory judgment. Borrower specifically waives any claim against Lender and its agents,including Servicer, with respect to actions taken by Lender or its agents onBorrower’s behalf.

 

**10.14****                ****Prior Agreements**. This Agreement and the other Loan Documents contain the entire agreementof the parties hereto and thereto in respect of the transactions contemplatedhereby and thereby, and all prior agreements, understandings and negotiationsamong or between such parties, whether oral or written, are superseded by theterms of this Agreement and the other Loan Documents.

 

**10.15****                ****Offsets****, Counterclaims and Defenses**. Borrower hereby waives the right to assert a counterclaim, other than acompulsory counterclaim, in any action or proceeding brought against it byLender or its agents, including Servicer, or otherwise offset any obligationsto make payments required under the Loan Documents.  Any assignee of Lender’s interest in and to the Loan Documentsshall take the same free and clear of all offsets, counterclaims or defenseswhich Borrower may otherwise have against any assignor of such documents, andno such offset, counterclaim or defense shall be interposed or asserted byBorrower in any action or proceeding brought by any such assignee upon suchdocuments, and any such right to interpose or assert any such offset,counterclaim or defense in any such action or proceeding is hereby expresslywaived by Borrower.

 

**10.16****                ****Publicity**.  All news releases, publicity or advertisingby Borrower or its Affiliates through any media intended to reach the generalpublic, which refers to the Loan Documents, the Loan, Lender or any member ofthe GCM Group, a Loan purchaser, the Servicer or the trustee in a SecondaryMarket Transaction, shall be subject to the prior written approval ofLender.  Lender shall have the right toissue any of the foregoing without Borrower’s approval in connection with asecondary market transaction.

 

**10.17****                ****NoUsury**. Borrower and Lender intend at all times to comply with applicable statelaw or applicable United States federal law (to the extent that it permitsLender to contract for, charge, take, reserve or receive a greater amount ofinterest than under state law) and that this Section 10.17 shall controlevery other agreement in the Loan Documents. If the applicable

 

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law(state or federal) is ever judicially interpreted so as to render usurious anyamount called for under the Note or any other Loan Document, or contracted for,charged, taken, reserved or received with respect to the Debt, or if Lender’sexercise of the option to accelerate the maturity of the Loan or any prepaymentby Borrower results in Borrower having paid any interest in excess of thatpermitted by applicable law, then it is Borrower’s and Lender’s express intentthat all excess amounts theretofore collected by Lender shall be creditedagainst the unpaid Principal and all other Debt (or, if the Debt has been orwould thereby be paid in full, refunded to Borrower), and the provisions of theLoan Documents immediately be deemed reformed and the amounts thereaftercollectible thereunder reduced, without the necessity of the execution of anynew document, so as to comply with applicable law, but so as to permit therecovery of the fullest amount otherwise called for thereunder.  All sums paid or agreed to be paid to Lenderfor the use, forbearance or detention of the Loan shall, to the extentpermitted by applicable law, be amortized, prorated, allocated, and spreadthroughout the full stated term of the Loan until payment in full so that therate or amount of interest on account of the Debt does not exceed the maximumlawful rate from time to time in effect and applicable to the Debt for so longas the Debt is outstanding. Notwithstanding anything to the contrary contained in any Loan Document,it is not the intention of Lender to accelerate the maturity of any interestthat has not accrued at the time of such acceleration or to collect unearnedinterest at the time of such acceleration.

 

**10.18****                ****Conflict****; Construction of Documents**.  Inthe event of any conflict between the provisions of this Agreement and any of theother Loan Documents, the provisions of this Agreement shall control.  The parties hereto acknowledge that each isrepresented by separate counsel in connection with the negotiation and draftingof the Loan Documents and that the Loan Documents shall not be subject to theprinciple of construing their meaning against the party that drafted them.

 

**10.19****                ****NoThird****Party Beneficiaries**.  The Loan Documents are solelyfor the benefit of Lender and Borrower and nothing contained in any LoanDocument shall be deemed to confer upon anyone other than the Lender andBorrower any right to insist upon or to enforce the performance or observanceof any of the obligations contained therein.

 

**10.20****                ****Yield****Maintenance Premium**. Borrower acknowledges that (a) Lender is making the Loan inconsideration of the receipt by Lender of all interest and other benefitsintended to be conferred by the Loan Documents and (b) if payments of Principalare made to Lender prior to the Stated Maturity Date, for any reasonwhatsoever, whether voluntary, as a result of Lender’s acceleration of the Loanafter an Event of Default, by operation of law or otherwise, Lender will notreceive all such interest and other benefits and may, in addition, incurcosts.  For these reasons, and to induceLender to make the Loan, Borrower agrees that, except as expressly provided inSection 7, all prepayments, if any, whether voluntary or involuntary, willbe accompanied by the Yield Maintenance Premium.  Such Yield Maintenance Premium shall be required whether paymentis made by Borrower, by a Person on behalf of Borrower, or by the purchaser atany foreclosure sale, and may be included in any bid by Lender at suchsale.  Borrower further acknowledgesthat (A) it is a knowledgeable real estate developer and/or investor; (B) itfully understands the effect of the provisions of this Section 10.20, aswell as the other provisions of the Loan Documents; (C) the making of the Loanby Lender at the Interest Rate and other terms set forth in the Loan Documentsare sufficient consideration for Borrower’s obligation to pay a YieldMaintenance Premium (if required); and (D) Lender would not make

 

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theLoan on the terms set forth herein without the inclusion of such provisions.  Borrower also acknowledges that theprovisions of this Agreement limiting the right of prepayment and providing forthe payment of the Yield Maintenance Premium and other charges specified hereinwere independently negotiated and bargained for, and constitute a specificmaterial part of the consideration given by Borrower to Lender for the makingof the Loan except as expressly permitted hereunder.

 

**10.21****                ****Assignment**.  The Loan, the Note, the Loan Documentsand/or Lender’s rights, title, obligations and interests therein may beassigned by Lender and any of its successors and assigns to any Person at anytime in its discretion, in whole or in part, whether by operation of law(pursuant to a merger or other successor in interest) or otherwise.  Upon such assignment, all references toLender in this Loan Agreement and in any Loan Document shall be deemed to referto such assignee or successor in interest and such assignee or successor ininterest shall thereafter stand in the place of Lender.  Borrower may not assign its rights, title,interests or obligations under this Loan Agreement or under any of the LoanDocuments.

 

**10.22****                ****Set-Off****.  In addition to anyrights and remedies of Lender provided by this Loan Agreement and by law,Lender shall have the right, without prior notice to Borrower, any such noticebeing expressly waived by Borrower to the extent permitted by applicable law,upon any amount becoming due and payable by Borrower hereunder (whether at thestated maturity, by acceleration or otherwise) to set-off and appropriate andapply against such amount any and all deposits (general or special, time ordemand, provisional or final), in any currency, and any other credits,indebtedness or claims, in any currency, in each case whether direct or indirect,absolute or contingent, matured or unmatured, at any time held or owing byLender or any Affiliate thereof to or for the credit or the account ofBorrower.  Lender agrees promptly tonotify Borrower after any such set-off and application made by Lender; providedthat the failure to give such notice shall not affect the validity of suchset-off and application.**

 

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

 

[Remainder of page intentionally left blank; signature page follows]

 

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INWITNESS WHEREOF, the parties hereto have caused this Loan Agreement to be dulyexecuted by their duly authorized representatives, all as of the day and yearfirst above written.

 
|   | **AMERIVEST CENTERRA INC**., a Colorado corporation                   |
|--------|-----------------------------------------------------------------------|
|   |                                                                  |   |
|   |                                                                  |   |
|   | By:                                                                   | John  B. Greenman |   |
|   |                                                                  | Name: | John  B. Greenman |   |
|   |                                                                  | Title: | Vice  President |   |
|   |                                                                  |   |
|   | **AMERIVEST PARKWAY INC**., a Texas corporation                       |
|   |                                                                  |   |
|   |                                                                  |   |
|   | By:                                                                   | John  B. Greenman |   |
|   |                                                                  | Name: | John  B. Greenman |   |
|   |                                                                  | Title: | Vice  President |   |
|   |                                                                  |   |
|   | **AMERIVEST BLACK CANYON INC**., an Arizona corporation               |
|   |                                                                  |   |
|   |                                                                  |   |
|   | By:                                                                   | John  B. Greenman |   |
|   |                                                                  | Name: | John  B. Greenman |   |
|   |                                                                  | Title: | Vice  President |   |
|   |                                                                  |   |
|   | **GREENWICH CAPITAL FINANCIAL PRODUCTS INC.**, a Delaware corporation |
|   |                                                                  |   |
|   |                                                                  |   |
|   | By:                                                                   | Gary  E. Swon |   |
|   |                                                                  | Name: | Gary  E. Swon |   |
|   |                                                                  | Title: | Managing  Director |   |
|        |                                                                       |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |

 

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