Document:

Exhibit
10.1

 

LOAN AGREEMENT

Fixed Rate

Dated as of  August 17, 2006

between

BEHRINGER HARVARD
FERNCROFT, LLC

as Borrower,

and

BARCLAYS CAPITAL
REAL ESTATE INC.,

as Lender

 

TABLE OF CONTENTS

	
  

  	
   

  	
   

  	
   

  	
  Page

  
	
  ARTICLE 1

  	
   

  	
  DEFINED TERMS AND CONSTRUCTION GUIDELINES

  	
   

  	
  1

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Section 1.01

  	
   

  	
  Defined Terms

  	
   

  	
  1

  
	
  Section 1.02

  	
   

  	
  General Construction

  	
   

  	
  15

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE 2

  	
   

  	
  MAXIMUM LOAN AMOUNT; PAYMENT TERMS; ADVANCES;
  DEFEASANCE

  	
   

  	
  15

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Section 2.01

  	
   

  	
  Commitment to Lend

  	
   

  	
  15

  
	
  Section 2.02

  	
   

  	
  Calculation of Interest

  	
   

  	
  15

  
	
  Section 2.03

  	
   

  	
  Payment of Principal and Interest

  	
   

  	
  16

  
	
  Section 2.04

  	
   

  	
  Payments Generally

  	
   

  	
  17

  
	
  Section 2.05

  	
   

  	
  Prepayment Rights

  	
   

  	
  18

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE 3

  	
   

  	
  CASH MANAGEMENT

  	
   

  	
  22

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Section 3.01

  	
   

  	
  Lockbox

  	
   

  	
  22

  
	
  Section 3.02

  	
   

  	
  Transfers to Cash Management Account; Trigger Event

  	
   

  	
  22

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE 4

  	
   

  	
  ESCROW AND RESERVE REQUIREMENT

  	
   

  	
  23

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Section 4.01

  	
   

  	
  Creation and Maintenance of Escrows and Reserves

  	
   

  	
  23

  
	
  Section 4.02

  	
   

  	
  Tax Escrow

  	
   

  	
  24

  
	
  Section 4.03

  	
   

  	
  Insurance Premium Escrow

  	
   

  	
  25

  
	
  Section 4.04

  	
   

  	
  Immediate Repair Escrow Account

  	
   

  	
  26

  
	
  Section 4.05

  	
   

  	
  Replacement Reserve Account

  	
   

  	
  27

  
	
  Section 4.06

  	
   

  	
  TI/LC Reserve Account

  	
   

  	
  27

  
	
  Section 4.07

  	
   

  	
  TI/LC Designated Reserve Account

  	
   

  	
  28

  
	
  Section 4.08

  	
   

  	
  Earnout Reserve Account

  	
   

  	
  29

  
	
  Section 4.09

  	
   

  	
  Vacant Space Reserve Account

  	
   

  	
  30

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE 5

  	
   

  	
  COMPLETION OF REPAIRS RELATED TO RESERVE ACCOUNTS;
  CONDITIONS TO RELEASE OF FUNDS

  	
   

  	
  31

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Section 5.01

  	
   

  	
  Conditions Precedent to Disbursements from Certain
  Reserve Accounts

  	
   

  	
  31

  
	
  Section 5.02

  	
   

  	
  Waiver of Conditions to Disbursement

  	
   

  	
  33

  
	
  Section 5.03

  	
   

  	
  Direct Payments to Suppliers and Contractors

  	
   

  	
  33

  
	
  Section 5.04

  	
   

  	
  Performance of Reserve Items

  	
   

  	
  34

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE 6

  	
   

  	
  LOAN SECURITY AND RELATED OBLIGATIONS

  	
   

  	
  35

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Section 6.01

  	
   

  	
  Security Instrument and Assignment of Rents and
  Leases

  	
   

  	
  35

  
	
  Section 6.02

  	
   

  	
  Assignment of Property Management Contract

  	
   

  	
  35

  
	
  Section 6.03

  	
   

  	
  Assignment of Operating Agreements

  	
   

  	
  35

  

 

 i
 

 

	
  Section 6.04

  	
   

  	
  Pledge as Property; Grant of Security Interest

  	
   

  	
  35

  
	
  Section 6.05

  	
   

  	
  Environmental Indemnity Agreement

  	
   

  	
  35

  
	
  Section 6.06

  	
   

  	
  Guaranty of Borrower Sponsors

  	
   

  	
  35

  
	
  Section 6.07

  	
   

  	
  Letter of Credit

  	
   

  	
  35

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE 7

  	
   

  	
  SINGLE PURPOSE ENTITY REQUIREMENTS

  	
   

  	
  36

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Section 7.01

  	
   

  	
  Commitment to be a Single Purpose Entity

  	
   

  	
  36

  
	
  Section 7.02

  	
   

  	
  Definition of Single Purpose Entity

  	
   

  	
  37

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE 8

  	
   

  	
  REPRESENTATIONS AND WARRANTIES

  	
   

  	
  40

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Section 8.01

  	
   

  	
  Organization; Legal Status

  	
   

  	
  40

  
	
  Section 8.02

  	
   

  	
  Power; Authorization; Enforceable Obligations

  	
   

  	
  40

  
	
  Section 8.03

  	
   

  	
  No Legal Conflicts

  	
   

  	
  41

  
	
  Section 8.04

  	
   

  	
  No Litigation

  	
   

  	
  41

  
	
  Section 8.05

  	
   

  	
  Business Purpose of Loan

  	
   

  	
  41

  
	
  Section 8.06

  	
   

  	
  Warranty of Title

  	
   

  	
  41

  
	
  Section 8.07

  	
   

  	
  Condition of the Property

  	
   

  	
  42

  
	
  Section 8.08

  	
   

  	
  No Condemnation

  	
   

  	
  42

  
	
  Section 8.09

  	
   

  	
  Requirements of Law

  	
   

  	
  42

  
	
  Section 8.10

  	
   

  	
  Operating Permits

  	
   

  	
  42

  
	
  Section 8.11

  	
   

  	
  Separate Tax Lot

  	
   

  	
  42

  
	
  Section 8.12

  	
   

  	
  Flood Zone

  	
   

  	
  42

  
	
  Section 8.13

  	
   

  	
  Adequate Utilities

  	
   

  	
  42

  
	
  Section 8.14

  	
   

  	
  Public Access

  	
   

  	
  42

  
	
  Section 8.15

  	
   

  	
  Boundaries

  	
   

  	
  43

  
	
  Section 8.16

  	
   

  	
  Mechanic Liens

  	
   

  	
  43

  
	
  Section 8.17

  	
   

  	
  Assessments

  	
   

  	
  43

  
	
  Section 8.18

  	
   

  	
  Insurance

  	
   

  	
  43

  
	
  Section 8.19

  	
   

  	
  Leases

  	
   

  	
  43

  
	
  Section 8.20

  	
   

  	
  Management Agreement

  	
   

  	
  44

  
	
  Section 8.21

  	
   

  	
  Financial Condition

  	
   

  	
  44

  
	
  Section 8.22

  	
   

  	
  Taxes

  	
   

  	
  44

  
	
  Section 8.23

  	
   

  	
  No Foreign Person

  	
   

  	
  44

  
	
  Section 8.24

  	
   

  	
  Federal Regulations

  	
   

  	
  44

  
	
  Section 8.25

  	
   

  	
  Investment Company Act; Other Regulations

  	
   

  	
  44

  
	
  Section 8.26

  	
   

  	
  ERISA

  	
   

  	
  44

  
	
  Section 8.27

  	
   

  	
  No Illegal Activity as Source of Funds

  	
   

  	
  44

  
	
  Section 8.28

  	
   

  	
  Compliance with Anti-Terrorism, Embargo, Sanctions
  and Anti-Money Laundering Laws

  	
   

  	
  45

  
	
  Section 8.29

  	
   

  	
  Brokers and Financial Advisors

  	
   

  	
  45

  
	
  Section 8.30

  	
   

  	
  Complete Disclosure; No Change in Facts or
  Circumstances

  	
   

  	
  45

  
	
  Section 8.31

  	
   

  	
  Survival

  	
   

  	
  45

  

 

 ii
 

 

	
  ARTICLE 9

  	
   

  	
  BORROWER COVENANTS

  	
   

  	
  45

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Section 9.01

  	
   

  	
  Payment of Debt and Performance of Obligations

  	
   

  	
  45

  
	
  Section 9.02

  	
   

  	
  Payment of Taxes and Other Lienable Charges

  	
   

  	
  45

  
	
  Section 9.03

  	
   

  	
  Insurance

  	
   

  	
  46

  
	
  Section 9.04

  	
   

  	
  Obligations upon Condemnation or Casualty

  	
   

  	
  50

  
	
  Section 9.05

  	
   

  	
  Inspections and Right of Entry

  	
   

  	
  55

  
	
  Section 9.06

  	
   

  	
  Leases and Rents

  	
   

  	
  55

  
	
  Section 9.07

  	
   

  	
  Use of Property

  	
   

  	
  56

  
	
  Section 9.08

  	
   

  	
  Maintenance of Property

  	
   

  	
  56

  
	
  Section 9.09

  	
   

  	
  Waste

  	
   

  	
  57

  
	
  Section 9.10

  	
   

  	
  Compliance with Laws

  	
   

  	
  57

  
	
  Section 9.11

  	
   

  	
  Financial Reports, Books and Records

  	
   

  	
  57

  
	
  Section 9.12

  	
   

  	
  Performance of Other Agreements

  	
   

  	
  59

  
	
  Section 9.13

  	
   

  	
  Existence; Change of Name; Location as a Registered
  Organization

  	
   

  	
  59

  
	
  Section 9.14

  	
   

  	
  Property Management

  	
   

  	
  60

  
	
  Section 9.15

  	
   

  	
  ERISA

  	
   

  	
  60

  
	
  Section 9.16

  	
   

  	
  Compliance with Anti-Terrorism, Embargo, Sanctions
  and Anti-Money Laundering Laws

  	
   

  	
  61

  
	
  Section 9.17

  	
   

  	
  Deposit of Additional Collateral

  	
   

  	
  61

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE 10

  	
   

  	
  NO TRANSFERS OR ENCUMBRANCES; DUE ON SALE

  	
   

  	
  61

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Section 10.01

  	
   

  	
  Prohibition Against Transfers

  	
   

  	
  61

  
	
  Section 10.02

  	
   

  	
  Lender Approval

  	
   

  	
  61

  
	
  Section 10.03

  	
   

  	
  Intentionally Deleted

  	
   

  	
  62

  
	
  Section 10.04

  	
   

  	
  Other Releases of the Mortgaged Property

  	
   

  	
  62

  
	
  Section 10.05

  	
   

  	
  Anti-Terrorism Compliance; Substantive Consolidation
  Opinion

  	
   

  	
  62

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE 11

  	
   

  	
  EVENTS OF DEFAULT; REMEDIES

  	
   

  	
  63

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Section 11.01

  	
   

  	
  Events of Default

  	
   

  	
  63

  
	
  Section 11.02

  	
   

  	
  Remedies

  	
   

  	
  65

  
	
  Section 11.03

  	
   

  	
  Cumulative Remedies; No Waiver; Other Security

  	
   

  	
  67

  
	
  Section 11.04

  	
   

  	
  Enforcement Costs

  	
   

  	
  67

  
	
  Section 11.05

  	
   

  	
  Application of Proceeds

  	
   

  	
  67

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE 12

  	
   

  	
  NONRECOURSE – LIMITATIONS ON PERSONAL LIABILITY

  	
   

  	
  68

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Section 12.01

  	
   

  	
  Nonrecourse Obligation

  	
   

  	
  68

  
	
  Section 12.02

  	
   

  	
  Personal Liability for Certain Losses

  	
   

  	
  68

  
	
  Section 12.03

  	
   

  	
  Full Personal Liability

  	
   

  	
  69

  
	
  Section 12.04

  	
   

  	
  No Impairment

  	
   

  	
  69

  
	
  Section 12.05

  	
   

  	
  No Waiver of Certain Rights

  	
   

  	
  69

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE 13

  	
   

  	
  INDEMNIFICATION

  	
   

  	
  69

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Section 13.01

  	
   

  	
  Indemnification Against Claims

  	
   

  	
  69

  
	
  Section 13.02

  	
   

  	
  Duty to Defend

  	
   

  	
  70

  

 

 iii
 

 

	
  ARTICLE 14

  	
   

  	
  SUBROGATION; NO USURY VIOLATIONS

  	
   

  	
  70

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Section 14.01

  	
   

  	
  Subrogation

  	
   

  	
  70

  
	
  Section 14.02

  	
   

  	
  No Usury

  	
   

  	
  70

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE 15

  	
   

  	
  SALE OR SECURITIZATION OF LOAN

  	
   

  	
  71

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Section 15.01

  	
   

  	
  Splitting the Note

  	
   

  	
  71

  
	
  Section 15.02

  	
   

  	
  Lender’s Rights to Sell or Securitize

  	
   

  	
  72

  
	
  Section 15.03

  	
   

  	
  Dissemination of Information

  	
   

  	
  72

  
	
  Section 15.04

  	
   

  	
  Securitization Indemnification

  	
   

  	
  72

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE 16

  	
   

  	
  BORROWER FURTHER ACTS AND ASSURANCES PAYMENT OF
  SECURITY RECORDING CHARGES

  	
   

  	
  73

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Section 16.01

  	
   

  	
  Further Acts

  	
   

  	
  73

  
	
  Section 16.02

  	
   

  	
  Replacement Documents

  	
   

  	
  73

  
	
  Section 16.03

  	
   

  	
  Borrower Estoppel Certificates

  	
   

  	
  74

  
	
  Section 16.04

  	
   

  	
  Recording Costs

  	
   

  	
  75

  
	
  Section 16.05

  	
   

  	
  Publicity

  	
   

  	
  75

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE 17

  	
   

  	
  LENDER CONSENT

  	
   

  	
  75

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Section 17.01

  	
   

  	
  No Joint Venture; No Third Party Beneficiaries

  	
   

  	
  75

  
	
  Section 17.02

  	
   

  	
  Lender Approval

  	
   

  	
  75

  
	
  Section 17.03

  	
   

  	
  Performance at Borrower’s Expense

  	
   

  	
  75

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE 18

  	
   

  	
  MISCELLANEOUS PROVISIONS

  	
   

  	
  76

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Section 18.01

  	
   

  	
  Notices

  	
   

  	
  76

  
	
  Section 18.02

  	
   

  	
  Entire Agreement; Modifications; Time of Essence

  	
   

  	
  77

  
	
  Section 18.03

  	
   

  	
  Binding Effect; Joint and Several Obligations

  	
   

  	
  77

  
	
  Section 18.04

  	
   

  	
  Duplicate Originals; Counterparts

  	
   

  	
  77

  
	
  Section 18.05

  	
   

  	
  Unenforceable Provisions

  	
   

  	
  77

  
	
  Section 18.06

  	
   

  	
  Governing Law

  	
   

  	
  77

  
	
  Section 18.07

  	
   

  	
  Consent to Jurisdiction

  	
   

  	
  77

  
	
  Section 18.08

  	
   

  	
  WAIVER OF TRIAL BY JURY

  	
   

  	
  78

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Exhibit A

  	
   

  	
  Intentionally Deleted

  	
   

  	
   

  
	
  Exhibit B

  	
   

  	
  Disbursement Request Form

  	
   

  	
   

  
	
  Exhibit C

  	
   

  	
  Immediate Repairs

  	
   

  	
   

  
	
  Exhibit D

  	
   

  	
  Organizational Chart

  	
   

  	
   

  
	
  Exhibit E

  	
   

  	
  Rent Roll

  	
   

  	
   

  
	
  Exhibit F

  	
   

  	
  Replacements

  	
   

  	
   

  

 

 iv

LOAN
AGREEMENT

Fixed
Rate

THIS LOAN AGREEMENT is made as of the 17th day of
August, 2006 by BEHRINGER HARVARD FERNCROFT, LLC, a Delaware limited liability
company (“Borrower”), as
borrower, and BARCLAYS CAPITAL REAL ESTATE INC., a Delaware corporation (together
with its successors and assigns, “Lender”),
as lender.

Background

Borrower desires to obtain a commercial mortgage loan
from Lender in the original principal amount of $18,000,000.00 in lawful money
of the United States of America.  Lender
is willing to make such loan to Borrower on the terms and conditions set forth
in this Loan Agreement.

Agreement

NOW, THEREFORE, in consideration of such loan and for
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, and intending to be legally bound hereby, Borrower and
Lender agree as follows:

ARTICLE 1

DEFINED TERMS AND CONSTRUCTION GUIDELINES

Section 1.01           Defined
Terms.  The following terms have the
meanings set forth below:

“Additional
Collateral” means a cash deposit from Borrower to Lender that
(i) shall be held by Lender in an account that should not be deemed a trust
fund, as additional security for the Loan, (ii) is the least amount necessary
to cause, when added to the amount that is the denominator of the Loan to Value
Ratio calculation, the Loan to Value Ratio to equal no more than 75%, and (iii)
shall be deposited with Lender within ten days of Lender’s request following
Lender’s determination that Guarantor has failed to satisfy the Net Worth Test
or the Liquidity Test.

“Affiliate”
of any Person means (a) any other Person which (i) directly or
indirectly, owns more than forty percent (40%) of the beneficial or equity
interests in such Person or (ii) directly or indirectly, is in Control of,
is Controlled by or is under common Control with, such Person; (b) any
other Person who is a director or officer of (i) such Person,
(ii) any subsidiary of such Person, or (iii) any Person described in
clause (a) above; or (c) any corporation, limited liability company or
partnership which has as a director any Person described in clause
(b) above.

“Anti-Terrorism
Laws” shall mean, collectively, (a) the Uniting and
Strengthening America by Providing Appropriate Tools Required to Intercept and
Obstruct Terrorism Act of 2001 (Public Law 107 56) (The USA PATRIOT Act),
(b) Executive Order No. 13224 on Terrorist Financing, effective September
24, 2001, and relating to Blocking Property and

 

Prohibiting Transactions With Persons Who Commit,
Threaten to Commit, or Support Terrorism, (c) the International Emergency
Economic Power Act, 50 U.S.C. §1701 et  seq. and (d) all
other Legal Requirements relating to money laundering or terrorism.

“Applicable
Interest Rate” has the meaning set forth in Section 2.02(b)
hereof.

“Approved Budget”
has the meaning set forth in Section 9.11(a)(v) hereof.

“Assignment of
Leases and Rents” means the Assignment of Leases and Rents dated
on or about the date hereof from Borrower, as assignor, to Lender, as assignee,
assigning to Lender all of Borrower’s right, title and interest in and to the
Leases and the Rents with respect to the Property.

“Assignment of
Property Management Contract” means an Assignment of Property
Management Contract and Subordination of Management Fees dated on or about the
date hereof from Borrower, as assignor, to Lender, as assignee, and
acknowledged by Property Manager, or, as applicable, any other Assignment of
Property Management Contract executed pursuant to Section 9.14 hereof.

“Bankruptcy Code”
means the Bankruptcy Reform Act of 1978 codified as 11 U.S.C. §101 et
seq., and the regulations issued thereunder, both as hereafter modified
from time to time.

“Borrower”
has the meaning in the introductory paragraph of this Loan Agreement.

“Business Day”
or “business day” means any
day other than a Saturday, a Sunday, or days when Federal Banks located in the
State of New York are closed for a legal holiday or by government directive.

“Cash Flow
Available for Debt Service” means, for a specified period,
(a) Operating Income less (b) Operating Expenses.

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

“Cash Management Agreement”
means the Cash Management Agreement dated on or about the date hereof between
Borrower, Property Manager and Lender.

“Casualty”
means the occurrence of damage or destruction to the Property, or any part
thereof, by fire, flood, vandalism, windstorm, hurricane, earthquake, acts of
terrorism or any other casualty.

“Closing Date”
means August 21, 2006.

“Condemnation”
means the taking by any Governmental Authority of the Property or any part
thereof through eminent domain or otherwise (including, without limitation, any
transfer made in lieu of or in anticipation of the exercise of such taking).

 2
 

 

“Control”
means the possession, directly or indirectly, of the power to direct or cause
the direction of the management and policies of a Person whether through
ownership of voting securities, beneficial interests, by contract or
otherwise.  The definition is to be
construed to apply equally to variations of the word “Control” including “Controlled,”
“Controlling” or “Controlled by.”

“Debt”
means the aggregate of all principal and interest payments that accrue or are
due and payable in accordance with the Loan Agreement, together with any other
amounts due under the Loan Documents. 
The terms “Debt” and “Loan” have the same meaning whenever used in the
Loan Documents.

“Debt Service
Coverage Ratio” means, as to a specific period, the ratio of
(a) the Cash Flow Available for Debt Service, to (b) the principal
and interest that would be due and payable based upon the Applicable Interest
Rate (for purposes of the calculation, assuming that the Interest Only Period
shall have expired).

“Default Rate”
has the meaning set forth in Section 2.04(e) hereof.

“Defeasance”
has the meaning set forth in Section 2.05(b)(i) hereof.

“Defeasance
Collateral” has the meaning set forth in
Section 2.05(b)(iii) hereof.

“Defeasance
Pledge Agreement” has the meaning set forth in Section
2.05(b)(ii) hereof.

“Disbursement
Request” means a written request from Borrower delivered to
Lender, substantially in the form attached hereto as Exhibit B,
signed by a Responsible Officer of Borrower and requesting Lender to disburse
funds from a Reserve Account.  Each
Disbursement Request shall describe in reasonable detail the use of the funds
requested by the Disbursement Request and shall have attached to it, as
applicable:  (a) the original
invoices, or copies of the original invoices, for all items or materials
purchased or services performed which are to be funded by the Disbursement
Request, and (b) copies of all permits, licenses and approvals, if any, by
any Governmental Authority confirming completion of the Reserve Items.  If an original invoice(or copy of an
original) is not available, Borrower shall be required to evidence, to Lender’s
satisfaction, the amounts expended for which reimbursement is requested.

“Disclosure
Documents” has the meaning set forth in Section 15.03
hereof.

“Earnout Criteria”
means, collectively, each of the following: 
(a) the Property has sufficient
income to maintain a Debt Service Coverage Ratio (based on the Loan amount that
Lender determines, in accordance with Section 4.08, can be supported by the
cash flow of the Property) of at least 1.15:1.00; (b)  no Event of
Default shall have occurred and be continuing and no event shall have occurred
and be continuing that with notice or time (or both) would be deemed an Event
of Default; (c) the Property
maintains a Loan to Value Ratio of no more than 75%; (d) no Cash Flow Sweep (as
defined in the Cash Management Agreement) shall have occurred and be
continuing; and (e) Borrower has delivered to Lender (unless previously
delivered to Lender in connection with a disbursement under Section 4.08 hereof)
(i) an executed lease from each tenant demising all or a portion of the Vacant
Space, and (ii) an executed estoppel certificate from each such tenant  indicating that such tenant (A) has commenced

 3
 

 

payment of rent, (B) is in
possession of the premises demised under its lease, (C) is operating its
business in accordance with the terms of its lease, and (D) has no claim or
offset against Borrower.

“Earnout Period”  means the time period between the Closing
Date and September 1, 2009.

“Earnout Reserve
Account” means an account held by Lender, or Lender’s designee,
in which the Earnout Reserve Deposit will be held, which shall not constitute a
trust fund.

“Earnout Reserve
Deposit” has the meaning set forth in Section 4.08 hereof.

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

“Eligible
Institution” means (a) KeyBank, N.A. or (b) a federal
or state chartered depository institution or trust company insured by the
Federal Deposit Insurance Corporation the short term unsecured debt obligations
or commercial paper of which are rated at least A-1 by S&P, P-1 by Moody’s
Investors Service, Inc. and F-1+ by Fitch, Inc. in the case of accounts in
which funds are held for thirty (30) days or less or, in the case of accounts
in which funds are held for more than thirty (30) days, the long term unsecured
debt obligations of which are rated at least “AA” by Fitch, Inc. and S&P
and “Aa2” by Moody’s Investors Service, Inc.

“Environmental Indemnity”
means the Environmental Indemnity Agreement dated on or about the date hereof
from Borrower and the other Environmental Indemnitors named therein to Lender.

“Equity Interests”
means (a) partnership interests (whether general or limited) in an entity
which is a partnership; (b) membership interests in an entity which is a
limited liability company; or (c) the shares or stock interests in an
entity which is a corporation.

“ERISA”
means the Employee Retirement Income Security Act of 1974, and the regulations
issued thereunder, all as amended or restated from time to time.

“Event of Default”
means any of the events specified in Section 11.01 hereof.

“FRB Release”
has the meaning set forth in Section 2.05(c) hereof.

“Full
Disbursement Event”  has
the meaning set forth in the Cash Management Agreement.

 4
 

 

“GAAP”
means generally accepted accounting principles in the United States of America
as in effect from time to time.

“Governmental
Authority” means any nation or government, any state or other
political subdivision thereof, and any Person exercising executive,
legislative, judicial, regulatory or administrative functions of or pertaining
to such government.

“Guarantor”
means Behringer Harvard Opportunity Reit I, Inc., and any other entity or
individual liable under the Guaranty and Environmental Indemnity, or any
replacement thereof.

“Guaranty” means the Guaranty(
Exceptions to Nonrecourse Liability) dated
on or about the date hereof from Guarantor to Lender.

“Immediate
Repairs” means the repairs or improvements to the Property
identified on Exhibit C hereto.

“Immediate Repair
Deposit” has the meaning set forth in Section 4.04(b)
hereof, subject to adjustment as set forth in Section 4.04(d) hereof.

“Immediate Repair
Escrow Account” means an account held by Lender, or Lender’s
designee, in which the Immediate Repair Deposit will be held, which shall not
constitute a trust fund.

“Improvements”
has the meaning set forth in the Security Instrument.

“Indemnified
Claim” means the basis for the Indemnified Party’s claim for
indemnification under Article 13 hereof.

“Indemnified
Parties” means Lender, together with its successors and assigns,
which shall include, without limitation, any owner or prior owner or holder of
the Note, any servicer of the Loan, any investor, or holder of a full or
partial interest in the Loan, any receiver or other fiduciary appointed in a
foreclosure or other proceeding under any Requirements of Law regarding
creditors’ rights, any officers, directors, shareholders, partners, members,
employees, agents, servants, representatives, contractors, subcontractors,
Affiliates of any and all of the foregoing, in all cases whether during the
term of the Loan or as part of, or following, a foreclosure of the Security
Instrument.

“Insurance
Premiums” means the premiums for the insurance Borrower is
required to provide pursuant to Section 9.03 hereof.

“Insurance
Premium Escrow Account” means an account held by Lender, or
Lender’s designee, in which Borrower’s initial deposit for Insurance Premiums
paid on the Closing Date and the Monthly Insurance Deposits will be held.

“Interest Only Payment” shall mean the
monthly payment of interest, at the Applicable Interest Rate, accrued on the
outstanding principal balance of the Loan, due and payable on each Payment Due
Date during the Interest Only Period hereunder.

 5
 

 

“Interest Only
Period” means that period commencing on the Payment Due Date
of  October 1, 2006 through and including
the Payment Due Date of  September 1,
2011.

“Issuer Group”
has the meaning set forth in Section 15.04 hereof.

“Issuer Person”
has the meaning set forth in Section 15.04 hereof.

“Land”
has the meaning set forth in the Security Instrument.

“Lease”
has the meaning set forth in the Security Instrument.

“Lease Guaranty”
has the meaning set forth in the Security Instrument.

“Leasing
Commissions” means leasing commissions incurred by Borrower in
connection with the leasing of  the Property or any portion thereof (including any so-called “override”
leasing commissions which may be due to any leasing or rental agent engaged by
Borrower for the Property if an agent other than such agent also is entitled to
a leasing commission, and leasing commissions earned under the Property
Management Contract, but excluding commissions due any principal, member,
general partner or shareholder of Borrower or any Affiliate of Borrower, unless
such commissions are provided for in the Property Management Contract or are
equal to or less than similar commissions that would be required to be paid to
independent third parties for such services).

“Lender”
has the meaning in the introductory paragraph of this Loan Agreement.

“Letter of Credit”
has the meaning set forth in Section 6.07 hereof.

“Lien”
means any mortgage, pledge, hypothecation, assignment, deposit arrangement,
encumbrance, lien (statutory or otherwise), or other security agreement of any
kind or nature whatsoever (including, without limitation, any conditional sale
or other title retention agreement, the filing of any financing statement under
the UCC or comparable law of any jurisdiction in respect of any of the
foregoing and a mechanics’ or materialman’s lien).

“Liquidity”
means cash and unencumbered, marketable securities.

“Liquidity Test”
means that Guarantor’s Liquidity, as calculated by Lender in accordance with
Lender’s underwriting standards on the basis of information provided by
Guarantor shall be at least $2,000,000.00.

“Loan”
means the aggregate of all principal and interest payments that accrue or are
due and payable in accordance with the Loan Agreement, together with any other
amounts due under the Loan Documents. 
The terms “Loan” and “Debt” have the same meaning whenever used in the
Loan Documents.

“Loan Agreement”
means this Loan Agreement.

“Loan Documents”
means, collectively, this Loan Agreement, the Note, the Security Instrument,
the Assignment of Leases and Rents, the Assignment of Property Management

 6
 

 

Contract, the Environmental Indemnity, the Guaranty,
the Lockbox Agreement, the Cash Management Agreement and any and all other
documents and agreements executed in connection with the Loan, as each such
agreement may be modified, supplemented, consolidated, extended or reinstated
from time to time.

“Loan to Value
Ratio” means with respect to a specified time, the ratio
obtained by dividing (a) the then-outstanding principal balance of the
Loan, by (b) either, as selected in Lender’s discretion, the “as-is”
or “as-stabilized” value of the Property as set forth in the appraisal obtained
by Lender in connection with its underwriting of the Loan or any update thereto
requested by Lender at Borrower’s cost, whichever is most recent.

“Lockbox Account”
means the Account and Lockbox as such terms are defined in the Lockbox
Agreement.

“Lockbox
Agreement” means the Blocked and Control Agreement dated on or
about the date hereof between Borrower, JP Morgan Chase Bank, N.A. and Lender.

“Lockbox
Suspension” has the meaning set forth in the Cash Management
Agreement.

“Losses”
means any and all claims, suits, liabilities (including, without limitation,
strict liabilities and liabilities under federal and state securities laws),
actions, proceedings, obligations, debts, damages, losses, costs, expenses,
fines, penalties, charges, fees, judgments, awards, and amounts paid in
settlement of whatever kind or nature (including without limitation reasonable
legal fees and other costs of defense).

“Major Lease”
means any Lease (i) that consists of 25,000 rentable square feet or more
including any expansion options or (ii) which has a term of more than six (6)
years, exclusive of any extension or options to renew.  Lender may, in Lender’s sole discretion,
aggregate any and all Leases to Affiliates to determine whether such Leases
should be treated as a Major Lease.

“Material Adverse
Effect” means, with respect to any circumstance, act, condition
or event of whatever nature (including any adverse determination in any
litigation, arbitration, or governmental investigation or proceeding), whether
singly or in conjunction with any other event, act, condition or circumstances,
whether or not related, which in Lender’s reasonable judgment, has or results
in a material adverse change in, or a materially adverse effect upon
(a) the business, operations or financial condition of Borrower or
Guarantor; (b) the ability of Borrower or Guarantor to perform its
obligations under any Loan Document to which it is a party; (c) the use,
value or condition of the Property; (d) compliance of the Property with
any Requirements of Law; (e) the validity, priority or enforceability of any
Loan Document or the liens, rights (including, without limitation, recourse
against the Property) or remedies of Lender hereunder or thereunder; or (f) the
occupancy rate of the Property.

“Maturity Date”
has the meaning set forth in Section 2.03(c) hereof.

“Maximum Loan
Amount” means the maximum principal amount of $18,000,000.00 in
lawful money of the United States of America, to be advanced to Borrower
pursuant to this Loan Agreement. 
Reference in the Loan Agreement to “Maximum Loan Amount” mean the

 7
 

 

maximum principal amount, irrespective of actual
principal amount outstanding or actually advanced to Borrower during the term
of the Loan.

“Monthly
Insurance Deposit” means, with respect to the specified period,
an amount equal to one-twelfth (1/12) of the Insurance Premiums that Lender
estimates will be payable during the next ensuing twelve (12) months, subject
to adjustment as set forth in Section 4.03(d) hereof.

“Monthly
Replacement Reserve Deposit” has the meaning set forth in
Section 4.05(b) hereof, subject to adjustment as set forth in Section 4.05(d)
hereof.

“Monthly Tax
Deposit” means, with respect to the specified period, an amount
equal to one-twelfth (1/12) of the Taxes that Lender estimates will be payable
during the next ensuing twelve (12) months, subject to adjustment as set forth
in Section 4.02(d) hereof.

“Monthly TI/LC
Deposit” has the meaning set forth in Section 4.06(b) hereof,
subject to adjustment as set forth in Section 4.06(d) hereof.

“Net Worth” means, as of a given date, a
Person’s equity calculated in conformance with GAAP by subtracting total
liabilities from total tangible assets.

“Net Worth Test”
means that the Net Worth of Guarantor, 
as calculated by Lender in accordance with Lender’s underwriting
standards on the basis of information provided by Guarantor shall be at least
$20,000,000.

“Note”
means the Promissory Note dated on or about the date hereof from Borrower to
the order of Lender in the original principal amount equal to the Maximum Loan
Amount.

“Obligations”
means the Loan, and all other obligations and liabilities of the Borrower to
Lender, whether direct or indirect, absolute or contingent, due or to become
due, or now existing or hereafter incurred, which may arise under, out of, or
in connection with the Loan or the Loan Documents, whether on account of
principal, interest, fees, indemnities, costs, expenses (including, without
limitation, all reasonable fees and disbursements of legal counsel) or
otherwise.

“OFAC List”
means the list of specially designated nationals and blocked persons subject to
financial sanctions that is maintained by the U.S. Treasury Department, Office
of Foreign Assets Control and any other similar list maintained by the U.S.
Treasury Department, Office of Foreign Assets Control pursuant to any Requirements
of Law, including, without limitation, trade embargo, economic sanctions, or
other prohibitions imposed by Executive Order of the President of the United
States.  The OFAC List is accessible
through the internet website www.treas.gov/ofac/t11sdn.pdf.

“Open Date”
has the meaning set forth in Section 2.05(a) hereof.

“Operating
Account” means that certain account in the name of Borrower at
JP Morgan Chase Bank, N.A., account number 707690350, and ABA No. 1110-0061-4.

 8
 

 

“Operating
Agreements” has the meaning set forth in the Security
Instrument.

“Operating
Expenses” means all cash expenses actually incurred by or
charged to Borrower (appropriately pro-rated for any expenses that, although
actually incurred in a particular period, also relate to other periods), with
respect to the ownership, operation, leasing and management of the Property in
the ordinary course of business, determined in accordance with GAAP and
adjusted by Lender in accordance with Lender’s customary underwriting
procedures and policies then in effect which Operating Expenses are also
adjusted by underwritten reserves for Replacements, Tenant Improvements and
Leasing Commissions and any other underwritten reserves as determined by Lender
whether or not required to be reserved. 
Operating Expenses shall specifically exclude (1) costs of Tenant
Improvements and Leasing Commissions, (2) capital expenditures, (3)
depreciation, (4) payments made in connection with the payment of the
outstanding principal balance of the Loan, (5) costs of Restoration following a
Casualty or Condemnation, (6) funds disbursed from any Reserve Account, and (7)
any other non-cash items.

“Operating Income”
means all gross cash income, revenues and consideration received or paid to or
for the account or benefit of Borrower resulting from or attributable to the
operation or leasing of the Property determined in accordance with GAAP
adjusted by Lender in accordance with Lender’s customary underwriting
procedures and policies then in effect, but excluding any income or revenues from
a sale, refinancing, Casualty or Condemnation, payment of rents more than one
(1) month in advance, lease termination payments, payments from any other
events not related to the ordinary course of operations of the Property, and in
connection with a calculation relating to satisfaction of the Earnout Criteria
or the requirements for a Full Disbursement Event, rents received from any
tenant subject to a lease with a term that is within 12 months of termination
or expiration as of the determination.

“Organizational
Chart” means the chart attached hereto as Exhibit D
which shows all persons or entities having an ownership interest in Borrower.

“Other Charges”
means all ground rents, maintenance charges, impositions (other than Taxes) and
similar charges (including, without limitation, vault charges and license fees
for the use of vaults, chutes and similar areas adjoining the Property), now or
hereafter assessed or imposed against the Property, or any part thereof,
together with any penalties thereon.

“Payment Due Date”
has the meaning set forth in Section 2.03(b) hereof.  It is the date that a regularly scheduled Interest Only Payment, during the Interest
Only Period, and payment of principal and interest, after the expiration of the Interest Only Period, is due.

“Permitted
Encumbrances” means only those exceptions shown in the Title
Insurance Policy and each other Lien which has been approved in writing by
Lender.

“Permitted
Transfer” means each of the following:

(a)                                  Transfers
of Equity Interests which, in the aggregate over the term of the Loan
(i) do not exceed forty-nine percent (49%) of the total interests in
Borrower or in Guarantor, as applicable; (ii) do not result in any Person
holding an Equity Interest in Borrower, which exceeds forty-nine percent (49%)
of the total Equity

 9
 

 

Interests in Borrower;
and (iii) do not result in a change of Control of Borrower or Guarantor.

(b)                                 Transfers
with respect to any Person whose stocks or certificates are traded on a
nationally recognized stock exchange or that is a reporting company under the
Securities Exchange Act of 1934, as amended.

(c)                                  Transfers
which have been approved by Lender in accordance with Section 10.02 hereof.

(d)                                 Permitted
Encumbrances.

(e)                                  All
Transfers of worn out or obsolete furnishings, fixtures or equipment that are
promptly replaced with property of equivalent value and functionality if such
property is used in, and material to, the operation of the Property.

(f)                                    All
Major Leases which have been approved by Lender in accordance with this Loan Agreement.

(g)                                 All
Leases which are not Major Leases and which have been approved by the Lender
pursuant to Section 9.06 hereof or that do not require Lender’s approval
pursuant to Section 9.06 hereof.

(h)                                 Transfers of
Equity Interests in a Borrower by or on behalf of the member of such Borrower
who is deceased or declared judicially incompetent, to such member’s heirs,
legatees, devisees, executors, administrators, estate or personal
representatives.

(i)                                     Transfers of
Equity Interests in a Borrower by the member of such Borrower for bona fide
estate planning purposes to (i) such member’s spouse, children (and spouses of
children), siblings, parents, or grandchildren, or (ii) trusts established for
the benefit of such member or such member’s spouse, children (and spouses of
children), siblings, parents or grandchildren.

“Person”
means an individual, partnership, limited partnership, corporation, limited
liability company, business trust, joint stock company, trust, unincorporated
association, joint venture, governmental authority or other entity of whatever
nature.

“Personal
Property” has the meaning set forth in the Security Instrument.

“Prohibited
Prepayment” has the meaning set forth in Section 2.05(c) hereof.

“Prohibited
Prepayment Fee” has the meaning set forth in Section 2.05(c)
hereof.

“Property”
has the
meaning set forth in the Security Instrument.

“Property Manager”
means HPT Management Services L.P., a Texas limited partnership.

 10

 

“Property
Management Contract” means the Amended and Restated Property
Management and Leasing Agreement dated March 9, 2006, between Borrower and
Property Manager which provides for the management of the Property for Borrower
by Property Manager, as assigned to Borrower pursuant to that certain Partial
Assignment and Assumption of Amended and Restated Property Management and
Leasing Agreement executed in connection with the closing of the Loan.

“PV”
has the meaning set forth in Section 2.05(c)(ii) hereof.

“Qualified Loan Amount”
has the meaning set forth in Section 4.08 hereof.

“Rating Agencies”
means Fitch, Inc., Moody’s Investors Service, Inc. and S&P, or any
successor entity of the foregoing, or any other nationally recognized
statistical rating organization to the extent that any of the foregoing have
been or will be engaged by Lender or its designees in connection with or in
anticipation of Securitization or any other sale or grant of participation
interest in the Loan (or any part thereof).

“Rating Confirmation”
means a written confirmation from each of the Rating Agencies (unless otherwise
agreed by Lender) that an action shall not result in a downgrade, withdrawal or
qualification of any securities issued in connection with a Securitization.

“Release”
has the meaning set forth in Section 2.05(b)(i) hereof.

“Release Date”
has the meaning set forth in Section 2.05(b)(ii) hereof.

“REMIC Trust”
means a “real estate mortgage investment conduit” within the meaning of Section
860D of the Code that holds an interest in the Loan.

“Rent Roll”
means a statement from Borrower substantially in the form attached hereto as Exhibit E
detailing the names of all tenants of the Property, the portion of Property
occupied by each tenant, the base rent and any other charges payable under each
Lease, the term of each Lease, the beginning date and expiration date of each
Lease, whether any tenant is in default under its Lease (and detailing the
nature of such default), and any other information as is reasonably required by
Lender, all certified by a Responsible Officer to be true, correct and
complete.

“Rents”
has the meaning set forth in the Security Instrument.

“Replacement
Reserve Account” means an account held by Lender, or Lender’s
designee, in which the Monthly Replacement Reserve Deposits will be held, which
shall not constitute a trust fund.

“Replacements”
means the scheduled repairs and replacements to the Property identified on Exhibit F
hereto.

“Reporting
Default” means, without reference to any cure period under
Article 11, each instance that any of the following occur:  (a) failure to deliver any of the
reports, information, statements or other materials required under Section 9.11
hereof within thirty (30) calendar days

 11
 

 

after written notice from Lender, or (b) failure
to permit Lender or its representatives to inspect or copy books and records
relating to the Property within five (5) Business Days of Lender’s written
request.

“Requirements of
Law” means (a) the organizational documents of an entity,
and (b) any law, regulation, ordinance, code, decree, treaty, ruling or
determination of an arbitrator, court or other Governmental Authority, or any
Executive Order issued by the President of the United States, in each case
applicable to or binding upon such Person or to which such Person, any of its
property or the conduct of its business is subject including, without
limitation, laws, ordinances and regulations pertaining to the zoning,
occupancy and subdivision of real property.

“Reserve Accounts”
means, individually and collectively, as the context requires, the Tax Escrow
Account, the Insurance Premiums Escrow Account, the Immediate Repair Escrow
Account, the Replacement Reserve Account, the TI/LC Reserve Account, the TI/LC
Designated Reserve Account, the Earnout Reserve Account and the Vacant Space
Reserve Account.

“Reserve Item”
means, individually and collectively, as the context requires, the Immediate
Repairs, the Replacements, the Tenant Improvements and the Leasing Commissions.

“Responsible
Officers” means, as to any Person, an individual who is a
manager, managing member, a general partner, the chief executive officer, the
president or any vice president of such Person or, with respect to financial
matters, the chief financial officer or treasurer of such Person or any other
officer authorized by such Person to deliver documents with respect to
financial matters pursuant to this Loan Agreement.

“Restoration”
means the repairs, replacements, improvements, or rebuilding of or to the
Property following a Casualty or Condemnation.

“Restoration
Deficiency Deposit” has the meaning set forth in Section 9.04(d)
hereof.  All amounts deposited by
Borrower with Lender as the Restoration Deficiency Deposit shall become a part
of the Restoration Proceeds and disbursed by Lender for Restoration on the same
conditions applicable to disbursement of Restoration Proceeds and, until so
disbursed, are pledged to Lender as security for the Loan and Obligations.

“Restoration
Holdback” has the meaning set forth in Section 9.04(e) hereof.

“Restoration
Proceeds” has the meaning set forth in Section 9.04(b) hereof.

“SAS Premises”
has the meaning set forth in the Cash Management Agreement.

“S&P”
means Standard & Poor’s Ratings Services, a division of The McGraw-Hill
Companies, Inc., and any successor thereto.

“Scheduled Debt
Payments” has the meaning set forth on Section 2.05(b)(iii)
hereof.

“Securities Act”
means the Securities Act of 1933 and any successor statute thereto and the
related regulations issued thereunder, all as amended from time to time.

 12
 

 

“Securities Liabilities” has the meaning
provided in Section 15.04 hereof.

“Securities
Exchange Act” means the Securities Exchange Act of 1934, and any
successor statute thereto and the related regulations issued thereunder, all as
amended from time to time.

“Securitization”
or “Securitize” means the
sale of the Loan, by itself or as part of a pool with other loans, in a
transaction whereby mortgage pass-through certificates or other securities
evidencing a beneficial interest, backed by the Loan or such pool of loans,
will be sold as a rated or unrated public offering or private placement.

“Security
Instrument” means the Mortgage,
Assignment of Rents and Leases, Security Agreement and Fixture Filing encumbering
the Property and executed by Borrower to Lender or to a trustee for the benefit
of Lender, as the case may be, to secure Borrower’s payment of the Loan and
performance of the Obligations.

“Single Purpose
Entity” has the meaning set forth in Section 7.02 hereof.

“SPE Equity Owner”
has the meaning set forth in Section 7.02(b) hereof.

“Standard Lease
Form” means, as applicable, the standard form of lease agreement
used by Borrower for the rental of commercial units at the Property, in each case in
the form certified to Lender as of the Closing Date or subsequently approved by
Lender in writing.

“Successor
Borrower” has the meaning set forth on Section 2.05(b) hereof.

“Tax Code”
means the Internal Revenue Code of 1986 and the related Treasury Department
regulations issued thereunder, including temporary regulations, all as amended
from time to time.

“Tax Escrow
Account” means an account held by Lender, or Lender’s designee,
in which Borrower’s initial deposit for Taxes made on the Closing Date and the
Monthly Tax Deposits will be held, which shall not constitute a trust fund.

“Taxes”
means all real estate taxes, government assessments or impositions, lienable
water charges, lienable sewer rents, assessments due under owner association
documents, ground rents, vault charges and license fees for the use of vaults
chutes and all other charges (other than the Other Charges), now or hereafter
levied or assessed against the Land and Improvements.

“Tenant
Improvements” means improvements made to the Property to prepare
the same for tenant occupancy in connection with each Lease and made by
Borrower in conformity with the terms of the related Lease and this Loan
Agreement.

“TI/LC Designated
Reserve Account” has the meaning set forth in the Cash
Management Agreement.

“TI/LC Reserve
Account” means an account held by Lender, or Lender’s designee,
in which the Monthly TI/LC Deposits will be held, which shall not constitute a
trust fund.

 13
 

 

“TI/LC Threshold”
has the meaning set forth in Section 4.06(b) hereof.

“Title Insurance
Policy” means the mortgagee title insurance policy obtained by
Lender in connection with the Loan, and, until the issuance of such policy, the
commitment for title insurance as marked-up as of the Closing Date, in either
case in form and substance (with such endorsements and affirmative coverages)
as is satisfactory to Lender, insuring that the Security Instrument constitutes
a perfected first Lien against the Property in the Maximum Loan Amount, subject
only to Permitted Encumbrances.

“Transfer”
means any action other than a Permitted Transfer by which either (a) the
legal or beneficial ownership of the Equity Interests in Borrower or in the
Guarantor or (b) the legal or equitable title to the Property, or
any part thereof, or (c) the cash flow from the Property or any portion
thereof (excluding transfers of cash flow from), is sold, assigned,
transferred, hypothecated, pledged or otherwise encumbered or disposed of, in
each case (a), (b), or (c)  whether undertaken, directly or
indirectly, or occurring by operation of law or otherwise, including, without
limitation, each of the following actions:

(i)                                     the
sale, conveyance, assignment, grant of an option with respect to, mortgage,
deed in trust, pledge, grant of a security interest in, or any other transfer,
as security or otherwise, of the Property or with respect to the Leases or
Rents (or any thereof);

(ii)                                  the
grant of an easement across the Property (other than minor easements not having
a Material Adverse Effect) or any other agreement granting rights in or
restricting the use or development of the Property (including, without
limitation, air rights);

(iii)                               an
installment sale wherein Borrower agrees to sell the Property for a price to be
paid in installments; or

(iv)                              an
agreement by Borrower leasing, for other than actual occupancy by a space tenant
thereunder, all or a substantial part of the Property.

“Transferee”
has the meaning provided in Section 6.07 hereof.

“Trigger Event”
has the meaning provided in the Cash Management Agreement.

“UCC”
means the Uniform Commercial Code in effect in the State where the Property is
located or such other State which governs the perfection of a security interest
in the applicable collateral, as from time to time amended or restated.  For purposes of the application of the UCC to
the Lockbox Account, the Cash Management Account and the Reserve Accounts, the
parties agree that such accounts shall be deemed located in the State where the
Property is located.

“Underwriter Group” has the meaning
provided in Section 15.04 hereof.

“U.S. Obligations”
means obligations or securities not subject to prepayment, call or early
redemption, each of which qualifies as a “Government security” as defined in

 14
 

 

Section 2(a)(16) of the Investment Company Act of
1940, as amended (15 U.S.C. §80a-1 et  seq.), together with all
revenues and proceeds of such obligations or securities.

“Vacant Space”
means a portion of the Property that is unoccupied and not subject to a Lease
as of the Closing Date.

“Vacant Space
Disbursement Conditions” has the meaning provided in Section
4.09 hereof.

“Vacant Space
Reserve Account” means an account held by Lender, or Lender’s
designee, in which the Vacant Space Reserve Deposit will be held, which shall
not constitute a trust fund.

“Vacant Space
Reserve Deposit” has the meaning provided in Section 4.09 hereof.

“Verizon Premises”
has the meaning set forth in the Cash Management Agreement.

Section 1.02           General
Construction.  Defined terms used in
this Loan Agreement may be used interchangeably in singular or plural form, and
pronouns are to be construed to cover all genders.  All references to this Loan Agreement or any
agreement or instrument referred to in this Loan Agreement shall mean such
agreement or instrument as originally executed and as hereafter amended, supplemented,
extended, consolidated or restated from time to time.  The words “herein,” “hereof” and “hereunder”
and other words of similar import refer to this Loan Agreement as a whole and
not to any particular subdivision; and the words “Article” and “section” refer
to the entire article or section, as applicable and not to any particular
subsection or other subdivision. 
Reference to days for performance means calendar days unless business
days are expressly indicated.

ARTICLE 2

MAXIMUM LOAN AMOUNT; PAYMENT TERMS; ADVANCES; DEFEASANCE

Section 2.01           Commitment
to Lend.

(a)           Maximum Loan Amount Approved.  Subject to the terms and conditions set forth
herein, and in reliance on Borrower’s representations, warranties and covenants
set forth herein, Lender agrees to loan the Maximum Loan Amount to Borrower.  The Loan shall be evidenced by this Loan
Agreement and by the Note made by Borrower to the order of Lender and shall
bear interest and be paid upon the terms and conditions provided herein.

(b)           Advance of Maximum Loan Amount.  On the Closing Date, Lender shall advance the
entire Maximum Loan Amount to Borrower.

Section 2.02           Calculation
of Interest.

(a)           Calculation Basis.  Interest due on the Loan shall be paid in
arrears, calculated based on a 360-day year and paid for the actual number of
days elapsed for any whole or partial month in which interest is being
calculated.

 15
 

 

(b)           Applicable Interest Rate.  Interest shall accrue on outstanding
principal at the rate 6.33% per annum (“Applicable Interest Rate”).

(c)           Adjustment for Impositions on Loan
Payment.  All payments made by
Borrower hereunder shall be made free and clear of, and without reduction for,
or on account of, any income, stamp or other taxes, levies, imposts, duties,
charges, fees, deductions or withholdings hereafter imposed, levied, collected,
withheld or assessed by any government or taxing authority (other than taxes on
the overall net income or overall gross receipts of Lender imposed as a result
of a present or former connection between Lender and the jurisdiction of the
government or taxing authority imposing such that this exclusion shall not
apply to a connection arising solely from Lender’s having executed, delivered,
performed its obligations under, received a payment under, or enforced this
Loan Agreement or any other Loan Document). 
If any such amounts are required to be withheld from amounts payable to
Lender, the amounts payable to Lender under the Loan Documents shall be
increased to the extent necessary to yield to Lender, after payment of such
amounts, interest or any such other amounts payable at the rates or in the
amounts specified herein.  If any such
amounts are payable by Borrower, Borrower shall pay all such amounts by their
due date and promptly send Lender a certified copy of an original official
receipt showing payment thereof.  If
Borrower fails to pay such amounts when due or to deliver the required receipt
to Lender, Borrower shall indemnify Lender for any incremental taxes, interest
or penalties that may become payable by Lender as a result of any such failure.

(d)           Intentionally Deleted.

(e)           Acceleration.  Notwithstanding anything to the contrary
contained herein, if Borrower is prohibited by law from paying any amount due
to Lender under Section 2.02(c) or (d), Lender may elect to declare the
unpaid principal balance of the Loan, together with all unpaid interest accrued
thereon and any other amounts due hereunder, due and payable within one hundred
twenty (120) days of Lender’s written notice to Borrower.  No Prohibited Prepayment Fee shall be due in
such event.  Lender’s delay or failure in
accelerating the Loan upon the discovery or occurrence of an event under
Section 2.02(c) shall not be deemed a waiver or estoppel against the
exercise of such right.

Section 2.03           Payment
of Principal and Interest.

(a)           Payment at Closing.  If the Loan is funded on a date other than
the first (1st) day of a calendar month, Borrower shall pay to Lender at the
time of funding an interest payment calculated by multiplying (i) the
number of days from and including the date of funding to (but excluding) the
first (1st) day of the next calendar month by (ii) a daily rate based on
the interest rate and calculated for a 360-day year.

(b)           Payment Dates.  Commencing on the first (1st) day of October,
2006 and continuing on the first (1st) day of each and every successive month
thereafter (each a “Payment Due Date”)
during the Interest Only Period, Borrower
shall pay an Interest Only Payment together with any amounts then due pursuant
to Section 2.02 of this Loan Agreement, and commencing on October 1, 2011, and
continuing on each Payment Due Date thereafter,  through and including the Payment Due Date
immediately prior to the Maturity Date, Borrower shall pay

 16
 

 

consecutive monthly payments of principal and interest
of $111,767.34 and any amounts due pursuant to Section 2.02 of this Loan
Agreement.  Lender shall have the right
at the time of Securitization, upon not less than ten (10) days prior written
notice to Borrower, to change the Payment Due Date to a different calendar day
and, if requested by Lender, Borrower shall promptly execute an amendment to
this Agreement to evidence such change.

(c)           Maturity Date.  On the first (1st) day of  September, 
2013 (“Maturity Date”),
Borrower shall pay the entire outstanding principal balance of the Loan, together
with all accrued but unpaid interest thereon and all other amounts due under
this Loan Agreement, the Note or any other Loan Document.

Section 2.04           Payments
Generally.

(a)           Delivery of Payments.  All payments due to Lender under this Loan
Agreement and the other Loan Documents are to be paid to Lender at Lender’s
office located at 200 Cedar Knolls Road, Whippany, New Jersey 07981-1806,
Attn:  Jonathan Cohen/CMBS Payments, or
at such other place as Lender may designate to Borrower in writing from time to
time.  All amounts due under this Loan
Agreement and the other Loan Documents shall be paid in immediately available
funds without setoff, counterclaim or any other deduction whatsoever.

(b)           Credit for Payment Receipt.  No payment due under this Loan Agreement or
any of the other Loan Documents shall be deemed paid to Lender until received
by Lender at its designated office on a business day prior to 2:00 p.m. Eastern
time.  Any payment received after the
time established by the preceding sentence shall be deemed to have been paid on
the immediately following business day. 
Where a Payment Due Date falls on a date other than a business day, the
Payment Due Date shall be deemed the first business day immediately thereafter.

(c)           Invalidated Payments.  If any payment received by Lender is deemed
by a court of competent jurisdiction to be a voidable preference or fraudulent
conveyance under any bankruptcy, insolvency or other debtor relief law, and is
required to be returned by Lender, then the obligation to make such payment
shall be reinstated, notwithstanding that the Note may have been marked
satisfied and returned to Borrower or otherwise canceled, and such payment
shall be immediately due and payable upon demand.

(d)           Late Charges.  Borrower shall pay to Lender, immediately and
without demand, a late fee equal to five percent (5%) of the delinquent payment
if any payment due on a Payment Due Date is not received by Lender in full on
or before (i) the sixth (6th) calendar day of the month in which such Payment
Due Date occurs (or, if such sixth (6th) calendar day is not a Business Day,
the Business Day immediately preceding such sixth (6th) calendar day), or (ii)
if the Payment Due Date is changed in accordance with Section 2.02(b) above,
the calendar day of the month determined by Lender in its sole discretion.  The late fee set forth in the immediately
preceding sentence shall  not apply to
the final payment due on the Maturity Date.

(e)           Default Interest Rate.  Upon the occurrence of an Event of Default
(including the failure of Borrower to pay the Loan in full on or before the
Maturity Date), the interest rate payable on the Loan shall immediately
increase to the Applicable Interest Rate plus

 17
 

 

five hundred (500) basis points (“Default Rate”) and continue to accrue
at the Default Rate until full payment is received or such Event of Default is
cured, as applicable.  Interest at the
Default Rate also shall accrue on any judgment obtained by Lender in connection
with collection of the Loan or enforcement of any obligations due under the
other Loan Documents until such judgment amount is paid in full.

(f)            Application of Payments.  Payments of principal and interest due from
Borrower shall be applied first to the payment of late fees, then to Lender
advances made to protect the Property or to perform obligations which Borrower
failed to perform, then to the payment of accrued but unpaid interest, and then
to reduction of the outstanding principal. 
Following an Event of Default, Lender may apply all payments to amounts
then due in any manner and in any order determined by Lender, in its sole
discretion.  No principal amount repaid
may be reborrowed.

Section 2.05           Prepayment
Rights.

(a)           Prepayment.  Borrower acknowledges that Lender is making
the Loan to it at the interest rate and upon the other terms herein set forth
in reliance upon Borrower’s promise to pay the Loan over the full stated term
of this Loan Agreement and that Lender may suffer loss or other detriment if
Borrower were to prepay all or any portion of the Note prior to its stated
Maturity Date.  Except as provided in
this Section 2.05, Borrower agrees that Borrower has no right to prepay all or
any part of the Loan prior to the Maturity Date.  On and after the first day of the twelfth
(12th) month preceding the Maturity Date (the “Open Date”), Borrower may prepay the Loan in whole, but
not in part, provided Borrower pays with such prepayment (a) all accrued
interest and all other outstanding amounts then due and unpaid under this Loan
Agreement and under the other Loan Documents, and (b) if the prepayment is
not made on a Payment Due Date, Borrower pays with such prepayment the full
interest amount that would have accrued for the period from the date of
prepayment through the earlier of the next Payment Due Date or the Maturity
Date, as applicable.  Lender is not
obligated to accept any prepayment unless accompanied by amounts required
hereunder.  Notwithstanding any contrary
provision of this Loan Agreement, Lender may at any time apply proceeds from a
casualty or condemnation to principal, without penalty or premium, as provided
in this Loan Agreement.

(b)           Voluntary Defeasance of the Loan.

(i)            Defeasance to Release Property
from Security Instrument.  Subject to
Borrower’s compliance with all terms and conditions of this Section 2.05(b),
Borrower may defease the Loan in whole, but
not in part, in the manner hereinafter set forth (“Defeasance”) on any Business Day after
the Lock-out Period Expiration Date (defined below) and obtain a release (“Release”) of the Property from the lien of the Security
Instrument.  Once a Defeasance has been
completed, the Loan will be secured by the Defeasance Collateral (defined
below), and thereafter the Loan cannot be the subject of any further Defeasance
nor prepaid in whole or in part, notwithstanding any provision of this Section
2.05 to the contrary.  “Lock-out Period Expiration Date” means
the earlier to occur of (i) the third (3rd) anniversary of the Closing
Date, or (ii) the second (2nd) anniversary of the “startup day” (within
the meaning of Section 860G(a)(9) of the Tax

 18
 

 

Code) of the REMIC Trust
established in connection with the last Securitization involving any portion of
the Loan.

(ii)           Conditions to Defeasance.  Borrower may cause a Release upon the
satisfaction of the following conditions (all as reasonably approved by
Lender):

(A)          no Event of Default shall exist under
any of the Loan Documents;

(B)           not less than
forty-five (45) (but not more than ninety (90) days prior written notice shall
be given to Lender specifying a date (such date being on a Payment Due Date) on
which the Defeasance Collateral (as hereinafter defined) is to be delivered
(the “Release Date”);

(C)           all accrued and
unpaid interest and all other sums due under the Note, this Loan Agreement and
under the other Loan Documents up to the Release Date including, without
limitation, all fees, costs and expenses incurred by Lender and its agents in
connection with such release (including, without limitation, reasonable legal
fees and expenses for the review and preparation of the Defeasance Pledge
Agreement (as defined below) and of the other materials described in Section
2.05(b)(ii)(D) below and any related documentation, and any servicing fees,
Rating Agency fees or other costs related to such release), shall be paid in
full on or prior to the Release Date;

(D)          Borrower shall
deliver to Lender on or prior to the Release Date:

1.             The Defeasance
Collateral which meets all requirements of subsection 2.05(b)(iii) below
and is owned by Borrower, free and clear of all liens and claims of
third-parties.

2.             A written
certification of an independent certified public accounting firm (reasonably
acceptable to Lender), confirming that the Defeasance Collateral will generate
amounts sufficient to make all Scheduled Debt Payments as they fall due under
the Note, including full payment due on the Note on the Maturity Date.

3.             A pledge and
security agreement in form and substance reasonably acceptable to Lender (“Defeasance Pledge Agreement”) and
financing statements which pledge and create a first priority security interest
in the Defeasance Collateral in favor of Lender.

4.             Confirmation in
writing from Lender’s custodian that it has received all of the Defeasance
Collateral for the account and benefit of Lender.

 19
 

 

5.             A written
certification from Borrower which confirms that, following Defeasance, Borrower
continues to satisfy the “single purpose entity” requirements of this Loan
Agreement.

6.             Such legal opinions
given by Borrower and/or any Successor Borrower reasonably acceptable to Lender
or other counsel reasonably acceptable to Lender as Lender may require to
confirm (i) that the Defeasance Collateral and the proceeds thereof have
been validly pledged to Lender, that the Defeasance Pledge Agreement and other
Loan Documents after the Defeasance are enforceable against Borrower in
accordance with the respective terms and Lender has a perfected first priority
security interest in the Defeasance Collateral, (ii) in the event of a
bankruptcy proceeding or similar occurrence with respect to Borrower, none of
the Defeasance Collateral nor any proceeds thereof will be property of Borrower’s
estate under Section 541 of the Bankruptcy Code or any similar statute and the
grant of security interest therein to Lender shall not constitute an avoidable
preference under Section 547 of the Bankruptcy Code or applicable state law,
(iii) the release of the lien of the Security Instrument and the pledge of
Defeasance Collateral will not directly or indirectly result in or cause any
REMIC that then holds the Note to fail to maintain its status as a REMIC and
(iv) the defeasance will not cause any REMIC to be an investment company
under the Investment Company Act of 1940.

7.             Forms of all
documents necessary to release the Property from the liens created by the
Security Instrument and related UCC financing statements (collectively, “Release Instruments”), each in
appropriate form required by the state in which the Property is located.

8.             Such other
certificates, confirmations, documents or instruments as Lender reasonably
deems necessary in connection with the Defeasance, including, without
limitation, a Rating Confirmation.

(iii)          Purchase and Ownership of the
Defeasance Collateral.  The “Defeasance Collateral” must consist
only of U.S. Obligations that provide for (A) redemption payments to occur
prior, but as close as possible, to all successive Payment Due Dates occurring
after the Release Date and (B) deliver redemption proceeds at least equal
to the amount of principal and interest due on the Note on such Payment Due
Date including full payment of all obligations under the Note on the Maturity
Date or Open Date (“Scheduled Debt
Payments”).  The
Defeasance Collateral shall be arranged such that redemption payments received
from the Defeasance Collateral are paid directly to Lender to be applied on
account of the Scheduled Debt Payments. 
Unless otherwise agreed in writing by Lender, the pledge of the
Defeasance Collateral shall be effectuated through the book-entry facilities of
a qualified securities intermediary designated by Lender (which may be Lender
itself or an Affiliate of Lender if such party qualifies as a securities
intermediary) in conformity with all applicable laws.

 20
 

 

(iv)          Successor Borrower Option.  Borrower, at Borrower’s expense, has the
right to designate an accommodation borrower (“Successor Borrower”) which satisfies Lender’s then current
requirements for a “single purpose entity” to assume at the time of Defeasance
ownership of the Defeasance Collateral and liability for all of Borrower’s
obligations under this Loan Agreement, the Defeasance Pledge Agreement and the
other Loan Documents (to the extent that liability thereunder survives
repayment of the Loan and release of the Property.  Such transfer and assumption shall be
evidenced by a duly executed, written agreement reasonably satisfactory to
Lender, whereupon Borrower and Guarantor (subject to satisfaction of all
requirements of this Section 2.05(b)(ii)) shall be relieved from liability
in connection with the Loan (except for those obligations which, by the express
terms of the Loan Documents, survive payment of the Loan which shall be assumed
by Successor Borrower).  Notwithstanding
any contrary provision in this Loan Agreement, no assumption fee is required
upon a transfer of the Loan in accordance with this Section.  If a Successor Borrower assumes Borrower’s
obligations, Lender may require as a condition to Defeasance, such additional
legal opinions as Lender reasonably deems necessary to confirm the valid
creation and authority of the Successor Borrower (including a nonconsolidation
opinion), the assignment and assumption of the Loan and Defeasance Collateral
between Borrower and Successor Borrower, and the enforceability of the
assignment documents and of the Loan Documents as the obligation of Successor
Borrower, to be issued by counsel to Borrower and/or any Successor Borrower
reasonably acceptable to Lender or other counsel reasonably acceptable to
Lender.

(v)           Intentionally Deleted.

(vi)          Defeasance Costs and Expenses.  Borrower shall pay all reasonable costs and
expenses incurred by Lender in connection with Defeasance, which payment is
required prior to Lender’s issuance of the Release and whether or not
Defeasance is completed.  Such expenses
include, without limitation, the cost incurred by Lender to obtain Rating
Confirmation contemplated by Section 2.05(b)(ii)(D)(8), the reasonable fees and
disbursements of Lender’s legal counsel and a processing fee to cover Lender’s
administrative costs to process Borrower’s Defeasance request.  Lender reserves the right to require that
Borrower post a deposit to cover costs which Lender reasonably anticipates will
be incurred.

(c)           Prohibited Prepayment Prior to
Open Date.  Except as otherwise set
forth in Section 2.05(d), if payment of all or any part of the principal
balance of the Loan is tendered by Borrower, a purchaser at foreclosure, a
Guarantor, or any other Person prior to the Open Date, whether by reason of
acceleration of the Loan or otherwise (a “Prohibited
Prepayment”), such tender shall be deemed an attempt to
circumvent the prohibition against prepayment set forth in Section
2.05(a) and, at Lender’s option, shall be an Event of Default.  If a Prohibited Prepayment occurs and is
accepted voluntarily or otherwise by Lender, then, in addition to all other
rights and remedies available to Lender upon an Event of Default, a Prohibited
Prepayment Fee (as defined below) shall be due to compensate Lender for damages
suffered as a result of the Prohibited Prepayment, such amount shall be due in
addition to the outstanding principal balance, all accrued and unpaid interest
and other outstanding amounts due under the Loan Documents.  The “Prohibited
Prepayment Fee” shall be a prepayment premium equal to the
greater of:

 21

 

(i)            one percent (1%) of the outstanding
principal balance of Note, or

(ii)           the excess, if any, of (A) the
present value (“PV”) of all scheduled interest and principal payments due on
each Payment Due Date in respect of the Loan for the period from the date of
such accepted Prohibited Payment to the Maturity Date, including the principal
amount of the Loan scheduled to be due on the Maturity Date, discounted at an
interest rate per annum equal to the Index (defined below), based on a 360-day
year of twelve 30-day months, over (B) the principal amount of the Loan
outstanding immediately before such accepted Prohibited Prepayment [i.e., (PV
of all future payments) - (principal balance at time of acceleration)].  The foregoing amount shall be calculated by
Lender and shall be conclusive and binding on Borrower (absent manifest error).

For purposes hereof, “Index” means the average yield for “treasury constant
maturities” published by the Federal Reserve Board in Federal Reserve
Statistical Release H.15 (519) (“FRB
Release”), for the second full week preceding the date of
acceleration of the Maturity Date for instruments having a maturity coterminous
with the remaining term of the Loan.  If
the FRB Release is no longer published, Lender shall select a comparable publication
to determine the Index.  If there is no
Index for instruments having a maturity coterminous with the remaining term of
the Loan, then the weighted average yield to maturity of the Indices with
maturities next longer and shorter than such remaining average life to maturity
shall be used, calculated by averaging (and rounding upward to the nearest
whole multiple of 1/100 of 1% per annum, if the average is not such a multiple)
the yields of the relevant Indices (rounded, if necessary, to the nearest 1/100
of 1% with any figure of 1/200 of 1% or above rounded upward).

(d)           Prepayment as a Result of a
Casualty or Condemnation. 
Prepayments arising from Lender’s application of insurance proceeds upon
the occurrence of a Casualty or the application of a condemnation award upon
the occurrence of a Condemnation may be made prior to the Open Date without
being deemed a Prohibited Prepayment and, whenever made, without payment of the
Prohibited Prepayment Fee.

(e)           Notice Irrevocable.  Notwithstanding any provision of this Loan
Agreement to the contrary, Borrower’s notice of Defeasance in accordance with
subsection 2.05(b) above shall be irrevocable, and the principal balance
to be prepaid shall be absolutely and unconditionally due and payable on the
date specified in such notice.

ARTICLE 3

CASH MANAGEMENT

Section 3.01           Lockbox.  Borrower shall direct all tenants to make
payments of rents due Borrower under the Leases to the Lockbox Account pursuant
to the Lockbox Agreement.

Section 3.02           Transfers to Cash Management
Account; Trigger Event.   Until the
occurrence of a Trigger Event, amounts on deposit in the Lockbox Account shall
be transferred each Business Day to the Operating Account.  Upon the occurrence of a Trigger Event, and
until the occurrence of a Lockbox Suspension, amounts on deposit in the Lockbox
Account shall be

 22
 

 

transferred each Business
Day to the Cash Management Account to be applied in accordance with the terms
and provisions of the Cash Management Agreement.

ARTICLE 4

ESCROW AND RESERVE REQUIREMENTS

Section 4.01           Creation
and Maintenance of Escrows and Reserves.

(a)           Control of Reserve Accounts.  On the Closing Date, each of the Reserve
Accounts shall be established by Lender. 
Each Reserve Account required under this Loan Agreement shall be a
custodial account established by Lender, and, at Lender’s option, funds
deposited into a Reserve Account may be commingled with other money held by
Lender or may be an Eligible Account.  Each
Reserve Account shall be under the sole dominion and control of Lender, and
Borrower shall not have any right to withdraw funds from a Reserve
Account.  Unless otherwise expressly
provided in this Loan Agreement, Borrower shall not be entitled to any earnings
or interest on funds deposited in the Insurance Premium Escrow Account. 
The Reserve Accounts, other than the Insurance Premium
Escrow Account, shall be interest-bearing accounts, provided, however,
that interest paid or payable with respect to said accounts may not be based on
the highest rate of interest payable by Lender on deposits and shall not be
calculated based on any particular external interest rate or interest rate
index, nor shall any such interest reflect the interest rate utilized by Lender
to calculate interest payable on deposits held with respect to any particular
loan or borrower or class of loans or borrowers, and Lender shall have no
liability with respect to the amount of interest paid and/or loss of principal,
and the parties agree that with respect to each Reserve Account other than the
Insurance Premium Escrow Account, Earnout Reserve Account, and the Vacant Space
Reserve Account, Lender shall be entitled to retain an administrative fee equal
to the lesser of (i) one percent (1%) per annum on the amounts on deposit in
the Tax Escrow Account, Immediate Repair Escrow Account, Replacement Reserve
Account, TI/LC Reserve Account and TI/LC Designated Reserve Account, or (ii)
the amount of interest earned per annum on the amounts on deposit in the Tax
Escrow Account, Immediate Repair Escrow Account, Replacement Reserve Account,
TI/LC Reserve Account, and TI/LC Designated Reserve Account.  Upon the occurrence of an Event of Default, Lender may, in addition to any and
all other rights and remedies available to Lender, apply any sums then present
in any or all of the Reserve Accounts to the payment of the Debt in any order
as determined by Lender in its sole discretion, provided that Lender shall not
apply Reserve Accounts to the prepayment of the principal amount of the Loan
until acceleration of the Loan.

(b)           Funds Dedicated to Particular
Purpose.  Funds held in a Reserve
Account are not to be used to fund Reserve Items contemplated by a different
Reserve Account, and Borrower may not use and Lender shall have no obligation
to apply funds from one Reserve Account to pay for Reserve Items contemplated
by another Reserve Account.  For example,
(i) funds held in the Immediate Repair Escrow Account shall not be used to
pay for Replacements, Tenant Improvements or Leasing Commissions;
(ii) funds held in the Replacement Reserve Account shall not be used to
pay for Immediate Repairs, Tenant Improvements or Leasing Commissions; and
(iii) funds held in the TI/LC Reserve Account shall not be used to pay for
Immediate Repairs or Replacements.

 23
 

 

(c)           Release
of Reserves Upon Payment of Debt. 
Upon payment in full of the Loan, Lender shall disburse to Borrower all
unapplied funds held by Lender in the Reserve Accounts pursuant to this Loan
Agreement.

(d)           Release
of Individual Reserve Account after Full Performance of Reserve Items.  Lender shall disburse to Borrower all
unapplied funds remaining in the Immediate Repair Escrow Account upon receipt
of evidence satisfactory to Lender that (i) Borrower has completed, in the
manner required by this Loan Agreement, all Reserve Items to be funded by such
Reserve Account, and (ii) no Liens exist against the Property with respect
to such Reserve Items.  Lender shall not
be obligated to make any such disbursement when an Event of Default exists, and
Lender may deduct from any such disbursement all outstanding amounts then due
and unpaid to Lender under the Loan Documents.

(e)           No
Obligation of Lender.  Nothing in
this Loan Agreement shall:  (i) make
Lender responsible for making or completing any Reserve Item; (ii) require
Lender to advance, disburse or expend funds in addition to funds then on
deposit in the related Reserve Account to make or complete any Reserve Item; or
(iii) obligate Lender to demand from Borrower additional sums to make or
complete any Reserve Item.

(f)            No
Waiver of Default.  No disbursements
made from a Reserve Account at the time when a Borrower default or Event of
Default has occurred and is then continuing shall be deemed a waiver or cure by
Lender of that default or Event of Default, nor shall Lender’s rights and remedies
be prejudiced in any manner thereby.

(g)           Insufficient
Amounts in a Reserve Account. 
Notwithstanding that Lender has the right to require Borrower to pay any
deficiency in a Reserve Account if Lender determines that amounts in a Reserve
Account are insufficient, the insufficiency of funds in a Reserve Account, or
Lender’s application of funds in a Reserve Account following an Event of
Default other than for funding of the Reserve Items, shall not relieve Borrower
from its obligation to perform in full each of its:  (i) obligations and covenants under this
Loan Agreement; (ii) agreements or covenants with tenants under the
Leases; and (iii) agreements with leasing agents.

Section 4.02           Tax
Escrow.

(a)           Deposits
to the Tax Escrow Account.  On the
Closing Date, Borrower has deposited such amount as is noted on the closing
statement relating to the closing of the Loan for Taxes to the Tax Escrow
Account (which is the amount determined by Lender that is necessary to pay when
due Borrower’s obligation for Taxes upon the due dates established by the
appropriate tax or assessing authorities during the next ensuing twelve (12)
months, taking into consideration the Monthly Tax Deposits to be collected from
the first Payment Due Date to the due date for payment of Taxes).  Thereafter, beginning on the first Payment
Due Date and on each Payment Due Date thereafter, Borrower shall deliver to
Lender the Monthly Tax Deposit.

(b)           Disbursement
from Tax Escrow Account.  Provided
amounts in the Tax Escrow Account are sufficient to pay the Taxes then due and
no Event of Default exists, Lender shall pay the Taxes as they become due on
their respective due dates on behalf of Borrower by

 24
 

 

applying the funds held in the Tax Escrow Account to the payments of
Taxes then due.  In making any payment of
Taxes, Lender may do so according to any bill, statement or estimate obtained
from the appropriate public office with respect to Taxes without inquiry into
the accuracy of such bill, statement or estimate or into the validity of any
tax, assessment, sale, forfeiture, tax lien or title or claim thereof.

(c)           Surplus
or Deficiency in Tax Escrow Account. 
If amounts on deposit in the Tax Escrow Account collected for an annual
tax period exceed the Taxes actually paid during such tax period, Lender shall,
in its discretion, return the excess to Borrower or credit the excess against
the payments Borrower is to make to the Tax Escrow Account for the next tax
period.  If amounts on deposit in the Tax
Escrow Account collected for an annual tax period are insufficient to pay the
Taxes actually due during such tax period, Lender shall notify Borrower of the
deficiency and, within ten (10) days thereafter, Borrower shall deliver to
Lender such deficiency amount.  If,
however, Borrower receives notice of any such deficiency on a date that is
within ten (10) days prior to the date that Taxes are due, Borrower will
deposit the deficiency amount within one (1) business day after its receipt of
such deficiency notice.

(d)           Changes
in Amount of Taxes Due; Changes in the Monthly Tax Deposit.  Borrower shall notify Lender immediately of
any changes to the amounts, schedules and instructions for payment of any Taxes
of which it has or obtains knowledge and authorizes Lender or its agent to
obtain the bills for Taxes directly from the appropriate taxing authority.  If the amount due for Taxes shall increase
and Lender reasonably determines that amounts on deposit in the Tax Escrow
Account will not be sufficient to pay Taxes due for an annual tax period,
Lender shall notify Borrower of such determination and of the increase needed
to the Monthly Tax Deposit.  Commencing
with the Payment Due Date specified in such notice from Lender, Borrower shall
make deposits at the increased amount of the Monthly Tax Deposit.

Section 4.03           Insurance
Premium Escrow.

(a)           Deposits
to Insurance Premium Escrow Account. 
On the Closing Date, Borrower has deposited from the proceeds of the
Loan such amount as is noted on the closing statement relating to the closing
of the Loan to the Insurance Premium Escrow Account (which is the amount
determined by Lender that is necessary to pay when due Borrower’s obligation
for Insurance Premiums during the next ensuing twelve (12) months, taking into
consideration the Monthly Insurance Deposits to be collected from the first
Payment Due Date to the due date for payment of such Insurance Premiums).  Thereafter, beginning on the first Payment
Due Date and on each Payment Due Date thereafter, Borrower shall deliver to Lender
the Monthly Insurance Deposit. Notwithstanding the foregoing, Lender hereby
agrees to waive the foregoing requirement of an Insurance Premium Escrow
Account so long as each of the following conditions is satisfied at all times,
as determined by Lender in its reasonable discretion:  (i) the Property remains covered under a
blanket insurance policy that satisfies all insurance requirements hereunder,
and all such insurance remains in full force and effect without any reduction
in coverage and no notice of termination or cancellation has been issued; (ii)
Borrower submits to Lender a certificate of insurance for such blanket
insurance policy prior to each expiration thereof; (iii) Borrower submits to
Lender paid insurance premium receipts or other documentation evidencing timely
payment of all Insurance Premiums prior to the due dates thereof; and (iv) no
Event of Default shall have occurred and be continuing.  In
the event that

 25
 

 

any of the foregoing
conditions is not satisfied at any time, Lender may immediately reinstate the
requirement of monthly deposits to the Insurance Premium Escrow Account.

(b)         Disbursement from Insurance Premium
Escrow Account.  Provided amounts in
the Insurance Premium Escrow Account are sufficient to pay the Insurance
Premiums then due and no Event of Default exists, Lender shall pay the
Insurance Premiums as they become due on their respective due dates on behalf
of Borrower by applying funds held in the Insurance Premium Escrow Account to
the payments of Insurance Premiums then due. 
In making any payment relating to Insurance Premiums, Lender may do so
according to any bill, statement or estimate procured from the insurer without
inquiry into the accuracy of such bill, statement or estimate.

(c)          Surplus or Deficiency in Insurance
Premium Escrow Account.  If amounts on
deposit in the Insurance Premium Escrow Account collected for an annual period
exceed the Insurance Premiums actually paid during such period, Lender shall,
in its discretion, return such excess to Borrower or credit such excess against
the payments Borrower is to make to the Insurance Premium Escrow Account for
the next annual period.  If amounts on
deposit in the Insurance Premium Escrow Account collected for an annual premium
period are insufficient to pay the Insurance Premiums actually due during such
annual period Lender shall notify Borrower of the deficiency and, within ten
(10) days thereafter, Borrower shall deliver to Lender such deficiency
amount.  If, however, Borrower receives
notice of any such deficiency on a date that is within ten (10) days prior to
the date that Insurance Premiums are due, Borrower will deposit the deficiency
amount within one (1) business day after its receipt of such deficiency notice.

(d)         Changes in Insurance Premium
Amounts; Change in Monthly Deposit Amount. 
Borrower shall notify Lender immediately of any changes to the amounts,
schedules and instructions for payment of any Insurance Premiums of which it
has or obtains knowledge and authorizes Lender or its agent to obtain the bills
for the Insurance Premiums directly from the insurance provider or its
agent.  If the amount due for Insurance
Premiums shall increase and Lender reasonably determines that amounts on
deposit in the Insurance Premium Escrow Account will not be sufficient to pay
the Insurance Premiums, Lender shall notify Borrower of such determination and
of the increase needed to the Monthly Insurance Deposit.  Commencing with the Payment Due Date
specified in such notice from Lender, Borrower shall make deposits at the
increased amount of the Monthly Insurance Deposit.

Section 4.04           Immediate
Repair Escrow Account.

(a)           Immediate
Repair Escrow Generally.  Amounts in
the Immediate Repair Escrow Account are to be used for the purpose of funding
the Immediate Repairs, which Borrower covenants and agrees to perform in
accordance with the terms of this Loan Agreement on or before the dates
specified on Exhibit C but not later than 12 months from the date
hereof.

(b)           Deposit
to the Immediate Repair Escrow Account. 
On the Closing Date, Borrower shall deposit proceeds from the Loan in an
amount equal to $9,375.00 with Lender as the reserve for completion of the
Immediate Repairs (“Immediate Repair Deposit”).

 26
 

 

(c)           Disbursements
from the Immediate Repair Escrow Account. 
Lender shall make disbursements from the Immediate Repair Escrow Account
upon Borrower’s performance, to Lender’s satisfaction, of all conditions to
disbursement set forth in Article 5 of this Loan Agreement.

(d)           Reassessment
of Required Deposit.  If at any time
Lender reasonably determines that the Immediate Repair Deposit will not be
sufficient to pay the cost of the Immediate Repairs, Lender may notify Borrower
of such determination and of the amount estimated by Lender to make-up such
deficiency as reasonably determined by Lender based upon changes in
circumstances.  Within ten (10) days
after such notice from Lender, Borrower shall deliver the deficiency amount to
Lender, and Lender shall deposit in the Immediate Repair Escrow Account and
hold and administer same in accordance with this Loan Agreement.

Section 4.05           Replacement
Reserve Account.

(a)           Replacement
Reserve Generally.  Amounts in the
Replacement Reserve Account are to be used for the purpose of funding the
Replacements, which Borrower covenants and agrees to perform in accordance with
the terms of this Loan Agreement.

(b)           Deposits
to the Replacement Reserve Account.  On the Closing
Date, Borrower shall deposit proceeds from the Loan in an amount equal
to $0.00
with Lender as an initial deposit to the Replacement Reserve Account. Beginning on the first
Payment Due Date and on each Payment Due Date thereafter, Borrower shall pay
$3,772.30 (“Monthly Replacement Reserve Deposit”)
to Lender as a deposit to the Replacement Reserve Account.

(c)           Disbursements
from the Replacement Reserve Account. 
Lender shall make disbursements from the Replacement Reserve Account
upon Borrower’s performance, to Lender’s satisfaction, of all conditions to
disbursement set forth in Article 5 hereof.

(d)           Reassessment
of Required Monthly Deposits.  Lender
may, from time to time based on Lender’s inspections of the Property, but no
more often than once in any twelve-month period, reassess its estimate of the
Monthly Replacement Reserve Deposit and may increase such amount on not less
than thirty (30) days written notice to Borrower if Lender determines that an
increase is necessary (i) to fund replacements not listed as part of the
Replacements (and not intended to be covered by the Immediate Repair Escrow
Account or TI/LC Reserve Account) which are necessary to keep the Property in
good order, repair and marketable condition, or (ii) to fund the
replacement of any major building systems or components (e.g., roof, HVAC
system) not listed as part of the Replacements (and not intended to be covered
by the Immediate Repair Escrow Account or TI/LC Reserve Account) which will
reach the end of its useful life within two (2) years of the date of Lender’s
inspection.

Section 4.06           TI/LC Reserve Account.

(a)           TI/LC Reserve Generally.  Amounts in the TI/LC Reserve Account are to
be used for the purpose of funding the costs of Tenant Improvements and Leasing
Commissions that are paid or payable by Borrower during the term of the Loan.

 27
 

 

(b)           Deposits to the TI/LC Reserve Account.  On the Closing Date, Borrower shall deposit
$0.00 with Lender as an initial deposit to the TI/LC Reserve Account.  Beginning on the first Payment Due Date and
on each Payment Due Date thereafter, Borrower shall pay $24,708.58 (“Monthly TI/LC
Deposit”) to Lender as an
additional deposit to the TI/LC Reserve Account.  In addition, any sums that are received by
Lender as “Assigned Property” under the Assignment of Leases and Rents shall be
deposited into the TI/LC Reserve Account.

(c)           Disbursements from the TI/LC Reserve Account.  Lender shall make disbursement from the TI/LC
Reserve Account as follows:

(i)           Lender shall make
disbursements from the TI/LC Reserve Account to reimburse Borrower for Tenant
Improvements required under any new Lease or any modification, renewal or
extension of an existing Lease paid or payable by Borrower, in accordance with
the disbursement procedures (including evidence of lien-free performance) set
forth in Article 5 hereof, provided that:  (A) the Tenant Improvements are required
under any new Lease or any modification, renewal or extension of any existing
Lease, provided that any such new Lease or modification, renewal or extension
of an existing Lease is entered into in accordance with the terms and
provisions of Section 9.06; (B) the cost of such Tenant Improvements is
market, reasonable and customary, (C) the Tenant Improvements are fully
performed in accordance with the standards set forth in Article 5 hereof and
have been accepted without condition by the related tenant; (D) unless
otherwise agreed to by Lender, the related tenant is occupying the space
benefited by the Tenant Improvements and has commenced paying rent; and (E) if
required by Lender, the related tenant shall have executed and delivered a
subordination, non-disturbance agreement and an estoppel certificate or both
all on such forms as is reasonably acceptable to Lender.

(ii)          Lender
shall make disbursements from the TI/LC Reserve Account to reimburse Borrower
for Leasing Commissions paid or payable by Borrower in accordance with the
disbursement procedures set forth in Article 5 hereof provided that:  (A) such leasing commissions and “override”
leasing commissions are market, reasonable and customary for properties similar
to the Property and the portion of the Property leased for which a commission
is due, or are in accordance with the Property Management Contract (B) the
amount of such leasing commissions and “override” leasing commissions are
determined pursuant to arms length transactions between Borrower and each such
leasing agent to which a commission is due; (C) the Lease has been
approved by Lender in accordance with this Loan Agreement or, if Lender’s
approval is not required, conforms with all requirements set forth in Section
9.06 of this Loan Agreement and (D) unless otherwise agreed by Lender, the tenant under the Lease
for which such Leasing Commission is claimed has taken occupancy of the leased
space and commenced paying rent.

Section 4.07           TI/LC Designated Reserve Account.

(a)           TI/LC Designated Reserve Generally.  Amounts in the TI/LC Designated Reserve
Account are to be used for the purpose of funding the costs of Tenant
Improvements and Leasing Commissions that are paid or payable by Borrower
during the term of the Loan.

 28
 

 

(b)           Deposits to the TI/LC Designated Reserve Account.  In accordance with the Cash Management
Agreement, following a Trigger Event and until the occurrence of a Lockbox
Suspension, all excess cashflow from the Property shall be deposited on a
monthly basis into the TI/LC Designated Reserve Account.

(c)           Disbursements from the TI/LC
Designated Reserve Account.  The
deposits held in the TI/LC Designated Reserve Account shall be (i) subject to
the provisions regarding periodic disbursements set forth in Sections 4.06(c),
5.01, 5.02, 5.03 and 5.04 of this Loan Agreement, and (ii) fully disbursed to
Borrower upon the occurrence of the Full Disbursement Event as set forth in the
Cash Management Agreement.

Section
4.08           Earnout Reserve Account.

(a)           Earnout Reserve.  Borrower acknowledges that, based on
Lender’s determination of the Property’s economic performance, Borrower
qualifies for a loan in the amount of $17,000,000.00 on the Closing Date (the “Qualified Loan Amount”).  Lender has funded the Maximum Loan Amount to
Borrower based on Borrower’s delivery to Lender on the Closing Date of $1,000,000.00 
as a deposit to the Earnout Reserve Account (“Earnout Reserve Deposit”).

(b)           Disbursement
of Earnout Reserve Deposit.    If on
or before the expiration of the Earnout Period Borrower delivers to Lender
evidence indicating satisfaction in Lender’s discretion of the Earnout Criteria
that supports the entire Maximum Loan Amount, Lender shall disburse to Borrower
the full amount of the Earnout Reserve Deposit. 
In addition, during the Earnout Period, no more frequently than quarterly,
Borrower may request partial disbursements of the Earnout Reserve Deposit upon
delivery to Lender of evidence indicating in Lender’s discretion that the
Earnout Criteria are satisfied, and that the cash flow from the Property is
sufficient to support a Loan amount in excess of the Qualified Loan
Amount.   The amount of each partial
disbursement shall be the difference between the largest Loan amount that
Lender determines in its discretion can satisfy the Earnout Criteria at the
time of calculation, and the Qualified Loan Amount.  For purposes of example only, if Lender
calculates the Debt Service Coverage Ratio and Loan to Value Ratio and
determines that the Loan amount that supports such calculations is
$17,200,000.00, and all other Earnout Criteria are satisfied,  then the partial disbursement to Borrower
from the Earnout Reserve Account shall be $200,000.00.

(c)           Failure to Achieve
Earnout Criteria Prior to Expiration of Earnout Period.  If Lender determines in its discretion that
the Earnout Criteria have not been satisfied to support the Maximum Loan Amount
prior to the expiration of the Earnout Period, (i) Lender shall have no
obligation to extend the Earnout Period or pay Borrower the undisbursed portion
of the Earnout Reserve Deposit, (ii)  Lender
shall, at Borrower’s request, either (A) maintain the Earnout Reserve Account
as an additional cash collateral account with respect to the Loan for the term
of the Loan, or (B) apply the Earnout Reserve Deposit toward reducing the
outstanding principal balance of the Note (in which event Lender shall reset
the schedule of payments of principal and interest due under the Loan to
account for the then outstanding principal balance and remaining term of the
Loan).  If Lender applies the  Earnout Reserve Deposit against the
outstanding principal balance of the Note, any such prepayment of principal
shall be deemed a

 29
 

 

Prohibited
Prepayment and shall be subject to the Prohibited Prepayment Fee hereunder,
which shall be payable by Borrower from funds other than the Earnout Reserve
Deposit.

(d)           Event of Default;
No Waiver.  Lender shall have no
obligation to disburse any portion of the Earnout Reserve Deposit at any time
during which an Event of Default exists or if any event or condition has
occurred and is continuing that would be an Event of Default if notice had been
given or applicable grace/cure periods had expired (or both).  No disbursement of any portion of the Earnout
Reserve Deposit made by Lender at the time when a default or Event of Default
has occurred and is then continuing shall be deemed a waiver or cure by Lender
of that default or Event of Default, nor shall Lender’s rights and remedies be
prejudiced in any manner thereby.  Lender
shall have no obligation to disburse any portion of the Earnout Reserve Deposit
after the Earnout Period.

(e)           Escrow Account
Requirements.  The Earnout Reserve
Account shall be a custodial account established by Lender, and, at Lender’s
option, may be commingled with other money held by Lender.  The Earnout Reserve Account shall be under
the sole dominion and control of Lender, and Borrower shall not have any right
to withdraw funds therefrom.

(f)            Letter of Credit.  In lieu of cash being deposited with Lender
as the Earnout Reserve Deposit pursuant to Section 4.08(a) hereof, Borrower may
elect (at any time during the term of the Loan) to replace the amount of the
Earnout Reserve Deposit with a Letter of Credit (as defined in Section 6.07
hereof) in the amount of the Earnout Reserve Deposit, less any amounts
disbursed pursuant to Section 4.08(b), and upon the delivery by Borrower of the
Letter of Credit in the amount of the Earnout Reserve Deposit, Lender shall
release to Borrower the cash then held in the Earnout Reserve Deposit.  In addition to the draw rights described in
Section 6.07, Lender may draw on the Letter of Credit and apply proceeds in
accordance with Section 4.08(c) above. 
Lender shall deliver the Letter of Credit to Borrower upon achievement
of the Earnout Criteria prior to the expiration of the Earnout Period in
accordance with Section 4.08(b).  If a
Letter of Credit is delivered to Lender, in lieu of receipt of partial
disbursements of the Earnout Reserve Deposit described in Section 4.08(b)
above, Borrower may instead (no more frequently than on a quarterly basis in
accordance with the procedures set forth in Section 4.08(b) above), replace the
Letter of Credit with a Letter of Credit in an amount less than $1,000,000.00,
based upon Lender’s calculation of the difference between the Qualified Loan
Amount and the largest Loan amount that Lender determines in its discretion can
satisfy the Earnout Criteria at the time of calculation.  For purposes of example only, if Lender
calculates the Debt Service Coverage Ratio and Loan to Value Ratio and
determines that the Loan amount that supports such calculations is
$17,200,000.00, and all other Earnout Criteria is satisfied,  then the Borrower may replace the Letter of
Credit with a Letter of Credit in the amount of $800,000, rather than
$1,000,000.00.

Section 4.09           Vacant
Space Reserve Account.

(a)           Deposits
to the Vacant Space Reserve Account.  On
the Closing Date, Borrower shall deposit $266,500.00 with Lender as a deposit
to the Vacant Space Reserve Account (“Vacant Space Reserve
Deposit”).

 30
 

 

(b)           Partial
Disbursements of Vacant Space Reserve Deposit. 
At Borrower’s election, Lender shall make partial disbursements of the
Vacant Space Reserve Deposit to Borrower, not to exceed the amount of
$22,208.33 in any calendar month.  Such
partial disbursements shall be made within ten (10) Business Days after written
request from Borrower, but shall not be made more than one (1) time in any
calendar month.  Prior to the first (1st)
day of September of each calendar year, Borrower or Guarantor shall make
additional deposits to the Vacant Space Reserve Account (which shall become
part of the “Vacant Space Reserve Deposit”)
in amounts sufficient to restore the balance of the Vacant Space Reserve
Account to $266,500.00, or such lesser amount as may be determined in
accordance with Section 4.09 (c) (“Vacant Space Reserve Account
Threshold”).

(c)           Full
Disbursement of Vacant Space Reserve Deposit. 
Lender shall disburse all funds held in the Vacant Space Reserve Account
directly to Borrower, within ten (10) Business Days after written request from
Borrower, so long as each of the following conditions and performance criteria
have been satisfied to Lender’s reasonable discretion (collectively, the “Vacant Space Disbursement Conditions”):  (i) Borrower has delivered to Lender written
evidence, reasonably satisfactory to Lender, that Borrower has leased at least
13,000 square feet of the Vacant Space to one or more tenants for a term, at a
rental rate and upon other terms that are reasonably acceptable to Lender; (ii)
each tenant of the Vacant Space is in occupancy, open for business and paying
full rent under its respective Lease; (iii) Borrower has delivered to Lender
estoppel certificates executed by each tenant confirming the items described in
(i) and (ii) above and such other items reasonably requested by Lender; and
(iv) no Event of Default shall have occurred and be continuing hereunder.  In the event that the Vacant Space
Disbursement Conditions are satisfied with respect to less than 13,000 square
feet of the Vacant Space, then the Vacant Space Reserve Account Threshold shall
be reduced by $20.50 per square foot of the Vacant Space for which the Vacant
Space Disbursement Conditions have been satisfied.

(d)           Event of Default;
No Waiver.  Lender shall have no
obligation to disburse any portion of the funds held in the Vacant Space
Reserve Account at any time during which an Event of Default exists or if any
event or condition has occurred and is continuing that would be an Event of
Default if notice had been given or applicable grace/cure periods had expired
(or both).  No disbursement of any
portion of the Vacant Space Reserve Deposit made by Lender at the time when a
default or Event of Default has occurred and is then continuing shall be deemed
a waiver or cure by Lender of that default or Event of default, nor shall Lender’s
rights and remedies be prejudiced in any manner thereby.

ARTICLE 5

COMPLETION
OF REPAIRS RELATED TO RESERVE ACCOUNTS;

CONDITIONS TO RELEASE OF FUNDS

Section 5.01           Conditions
Precedent to Disbursements from Certain Reserve Accounts.  The following provisions apply to each
request for disbursement from the Immediate Repair Escrow Account, the
Replacement Reserve Account, the Designated TI/LC Reserve Account, and the
TI/LC Reserve Account:

 31

 

(a)                                  Disbursement
only for Completed Repairs. 
Disbursements shall be limited to Reserve Items that are fully completed
and paid for in full by Borrower, except to the extent permitted under
Section 5.01(b) of this Loan Agreement, and, in the case of Leasing
Commissions, fully and unconditionally earned and paid in full by
Borrower.  At no time shall Lender be
obligated to pay amounts to Borrower in excess of the current balance in the
applicable Reserve Account at the time of disbursement.

(b)                                 Partial
Completion.  Lender shall disburse
funds for Reserve Items prior to completion thereof following Borrower’s
written request where (i) the contractor performing such work requires
periodic payments pursuant to the terms of its written contract with Borrower
and Lender has given its prior written approval to such contract, and
(ii) the cost of the portion of the Reserve Item to be completed under
such contract exceeds $10,000.

(c)                                  Disbursement
Request; Maximum Frequency and Amount. 
Borrower shall submit to Lender a Disbursement Request together with
such additional information as Lender may reasonably request in connection with
the Disbursement Request at least ten (10) business days prior to the date on
which Borrower requests Lender to make a disbursement from a Reserve
Account.  Unless otherwise agreed to by
Lender, Borrower may not submit, and Lender shall not be required to make, more
than one (1) disbursement from each Reserve Account during any calendar month.  No Disbursement Request shall be made for
less than $5,000.00 or the total cost of the Reserve Items, if less.

(d)                                 No
Existing Event of Default.  Lender
may refuse to make any disbursement if an Event of Default exists as of the
date on which Borrower submits the Disbursement Request or on the date the
disbursement is actually to be made.

(e)                                  Responsible
Officer Certificate.  Lender must
receive a certificate, signed by a Responsible Officer of Borrower (and, at
Lender’s option, also signed by Borrower’s project architect or engineer, which
may be an employee of an Affiliate of Borower, if the cost of a single Reserve
Item or the aggregate amount of the Disbursement Request exceeds $50,000),
which certifies that:

(i)                                     All
information stated in the Disbursement Request is true and correct in all
material respects, each attachment to the Disbursement Request is correct and
complete, and if the attachment is a copy of the original, that it is a true
and an accurate reproduction of the original;

(ii)                                  Each
of the Reserve Items to be funded in connection with the Disbursement Request
was performed in a good and workmanlike manner and in accordance with all
Requirements of Law and has been paid in full by Borrower;

(iii)                               The
Leasing Commission has been fully and unconditionally earned and paid in full
by Borrower, if the Reserve Item to be funded is a Leasing Commission;

(iv)                              Subject
to Section 5.03, each party that supplied materials, labor or services has been
paid in full (for the portion for which disbursement is sought in the case of
disbursements authorized in accordance with Section 5.01(b) hereof); and

 32
 

 

(v)                                 In
the case of disbursements authorized in accordance with Section 5.01(b)
hereof, the materials for which the request are made are either (A) on-site at
the Property and properly secured or have been installed in the Property or (B)
materials that Lender determines are not a significant portion of the cost of
the work upon which disbursement is requested.

(f)                                    Inspection
to Confirm Completion.  Prior to
making any disbursement which exceeds $50,000 in the aggregate or for a single Reserve Item,
Lender may require an inspection of the Property (of which Borrower shall be
responsible for the costs of any such inspection, so long as such fee does not
exceed $1,000), performed at Borrower’s expense, to verify completion thereof.

(g)                                 Absence
of Liens.  Lender may require that
Borrower provide Lender with any or all of the following:  (i) a written lien waiver acceptable to
Lender from each party to be paid who
is to receive payment of $50,000 or more in connection with the
Disbursement Request; (ii) a search of title to the Property effective to
the date of the disbursement which shows no Liens other than the Permitted
Encumbrances; or (iii) an endorsement to the Title Insurance Policy which
updates the effective date of such policy to the date of the disbursement and
shows no Liens other than the Permitted Encumbrances.

(h)                                 Payment
of Lender’s Expenses.  Borrower shall
pay all reasonable expenses incurred by Lender in processing Borrower’s
Disbursement Request including, without limitation, any inspection costs
(whether performed by Lender or an independent inspector selected by Lender)
incurred in accordance with Section 5.01(f) and reasonable legal fees and
expenses.

(i)                                     Other
Items Lender Deems Necessary.  Lender
shall have received such other evidence as Lender reasonably requests in
connection with its confirmation that each Reserve Item to be paid in
connection with the Disbursement Request has been completed or performed in
accordance with the terms of this Loan Agreement.

Section 5.02                                Waiver
of Conditions to Disbursement.  No
waiver given by Lender of any condition precedent to disbursement from a
Reserve Account shall preclude Lender from requiring that such condition be
satisfied prior to making any other disbursement from a Reserve Account.

Section 5.03                                Direct
Payments to Suppliers and Contractors. 
Lender, at its option, may make disbursements directly to the supplier
or contractor to be paid in connection with the Disbursement Request.  Borrower’s execution of this Loan Agreement
constitutes an irrevocable direction and authorization for Lender to make
requested payments directly to the supplier or contractor, notwithstanding any
contrary instructions from Borrower or notice from Borrower of a dispute with
such supplier or contractor.  Each
disbursement so made by Lender shall satisfy Lender’s obligation under this
Loan Agreement.  If requested by Borrower any disbursement to
any one supplier or contractor which is in excess of $50,000 may be paid
directly by Lender to such supplier or contractor.

 33
 

 

Section 5.04                                Performance
of Reserve Items.

(a)                                  Performance
of Reserve Items.  Borrower agrees to
commence each Reserve Item by its required commencement date stated on the
applicable Exhibit to this Loan Agreement identifying such Reserve Item and to
pursue completion diligently of each Reserve Item on or before its completion
date stated on such Exhibit and, in the absence of a commencement date or
completion date being specified, when necessary in order to keep the Property
in good order and repair, in a good and marketable condition and as necessary
to keep any portion thereof from deteriorating, or in the case of Tenant
Improvements, when required under the Leases. 
Borrower shall complete each Reserve Item in a good and workmanlike
manner, using only new materials of the same or better quality than that being
replaced.  All Reserve Items shall be
performed in accordance with, and upon completion shall comply with, all Requirements
of Law (including without limitation obtaining and maintaining in effect all
necessary permits and governmental approvals) and all applicable insurance
requirements.

(b)                                 Contracts.  Lender shall have the right, at its option,
to approve all contracts or work orders with materialmen, mechanics, suppliers,
subcontractors, contractors or other parties providing labor or materials in
connection with the Reserve Items that provide for total payments of $50,000 or
more to the party providing such labor or materials.

(c)                                  Entry
onto Property.  In order to perform
inspections or, following an Event of Default, to complete Reserve Items which
Borrower has failed to perform, Borrower hereby grants Lender and its agents
the right, from time to time, to enter onto the Property.

(d)                                 Lender
Remedy for Failure to Perform.  In
addition to Lender’s remedies following an Event of Default, Borrower
acknowledges that Lender shall have the right (but not the obligation) to
complete or perform the Reserve Items for which amounts have been reserved
under this Loan Agreement (or pay the Leasing Commissions as applicable) and
for such purpose, Borrower hereby appoints Lender its attorney-in-fact with
full power of substitution (and which shall be deemed to be coupled with an
interest and irrevocable until the Loan is paid in full and the Security
Instrument is discharged of record, with Borrower hereby ratifying all that its
said attorney shall do by virtue thereof): 
(i) to complete or undertake such work in the name of Borrower;
(ii) to proceed under existing contracts or to terminate existing
contracts (even where a termination penalty may be incurred) and employ such
contractors, subcontractors, watchman, agents, architects and inspectors as
Lender’ determines necessary or desirable for completion of such work; (iii) to
make any additions, changes and corrections to the scope of the work as Lender
deems necessary or desirable for timely completion; (iv) to pay, settle or
compromise all existing bills and claims which are or may become Liens against
the Property or as may be necessary or desirable for completion of such work;
(v) to execute all applications and certificates in the name of Borrower
which may be required to obtain permits and approvals for such work or
completion of such work; (vi) to prosecute and defend all actions or
proceedings in connection with the repair or improvements to the Property; and
(vii) to do any and every act which Borrower might do in its own behalf to
fulfill the terms of Borrower’s obligations under this Loan Agreement.  Amounts expended by Lender which exceed
amounts held in the Reserve Accounts shall be added to the Maximum Loan Amount,
shall be immediately due and payable, and shall bear interest at the Default
Rate from the date of disbursement until paid in full.

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ARTICLE
6

LOAN SECURITY AND RELATED OBLIGATIONS

Section 6.01                                Security
Instrument and Assignment of Rents and Leases.  Payment of the Loan and performance of the
Obligations shall be secured, inter alia, by the Security Instrument and the
Assignment of Leases and Rents.  Borrower
shall execute at closing the Security Instrument and the Assignment of Leases
and Rents and abide by its obligations thereunder.

Section 6.02                                Assignment
of Property Management Contract. 
Borrower and the Property Manager shall execute at closing the
Assignment of the Property Management Contract and Subordination of Management
Fees and to abide by their respective obligations thereunder.

Section 6.03                                Assignment
of Operating Agreements.  As security
for payment of the Loan and performance by Borrower of all Obligations,
Borrower hereby transfers, sets over and assigns to Lender all of Borrower’s
right, title and interest in and to the Operating Agreements to Lender for
security purposes.

Section 6.04                                Pledge
as Property; Grant of Security Interest. 
As security for payment of the Loan and performance by Borrower of all
Obligations, Borrower hereby pledges, assigns, sets over and transfers to
Lender, and grants to Lender a continuing security interest in and to:  (a) each of the Reserve Accounts, the Lockbox
Account and the Cash Management Account, (b) all funds and monies from
time to time deposited or held in each of the Reserve Accounts, the Lockbox
Account and the Cash Management Account, and (c) all interest accrued, if
any, with respect to the Reserve Accounts, the Lockbox Account and the Cash
Management Account; provided that Lender shall make disbursements from
each of the Reserve Accounts when, as and to the extent required by this Loan
Agreement and shall cause amounts on deposit in the Lockbox Account and the
Cash Management Account to be applied in accordance with the terms and
provisions of the Lockbox Agreement and the Cash Management Agreement.  The parties agree that each of the Reserve
Accounts, the Lockbox Account and the Cash Management Account is a “deposit
account” within the meaning of Article 9 of the UCC and that this Loan
Agreement also constitutes a “security agreement” within the meaning of Article
9 of the UCC.  Borrower shall not,
without Lender’s prior written consent, further pledge, assign, transfer or
grant any security interest in any of the Reserve Accounts, the Lockbox Account
or the Cash Management Account nor permit any Lien to attach thereto, except as
may be created in favor of Lender in connection with the Loan.

Section 6.05                                Environmental
Indemnity Agreement.  Borrower and
each Guarantor will be required to execute at closing the Environmental
Indemnity and to abide by their obligations thereunder.

Section 6.06                                Guaranty
of Borrower Sponsors.  Each Guarantor
will be required to execute at closing the Guaranty (Exceptions to Nonrecourse Liability)
and to abide by its obligations thereunder.

Section 6.07                                Letter
of Credit.  Pursuant to, and in accordance
with, Section 4.08 herein, Borrower may elect to deliver to Lender an
irrevocable letter of credit (payable on sight draft) in an amount equal to One
Million Dollars ($1,000,000.00) or the amount then remaining as the

 35
 

 

Earnout Reserve Deposit (“Letter of Credit”), naming Lender as
the sole beneficiary thereof.  If
Borrower elects to deposit such Letter of Credit, the Letter of Credit
shall:  (a) be perpetual or for a term of
one year with automatic renewals unless Lender receives written notice of
non-renewal from the issuing financial institution at least sixty (60) days prior
to the expiration of the then current Letter of Credit; (b) be issued by a
domestic financial institution that is not an Affiliate of Borrower and that
has a long-term senior debt rating by S&P of not less than “AA” or such
other credit rating as is acceptable to Lender; (c) permit full or partial
draws without condition or charge to the beneficiary of the Letter of Credit;
(d) be freely transferable by the beneficiary of the Letter of Credit (and each
successor as beneficiary) without restriction or charge to Lender and
(e) otherwise be acceptable to Lender in all respects.  Borrower shall cause the Letter of Credit to
remain valid and effective at all times while the Loan is outstanding, but
subject to release as provided in Section 4.08(b) herein. In addition to the
rights of Lender to draw on the Letter of Credit as set forth in Section
4.08(c), Lender shall have the right to draw in full or in part upon the Letter
of Credit, without notice to Borrower: 
(i) upon the occurrence of an Event of Default; (ii) if Lender has not
received, at least thirty (30) days prior to the date on which the then
outstanding Letter of Credit is scheduled to expire, a renewal or replacement
Letter of Credit that satisfies all requirements of this Section 6.07; (iii)
upon a transfer of the Loan by Lender (within the meaning of Article 15 hereof)
to another party (“Transferee”),
Lender or its Transferee has not received, for any reason, either an
endorsement to any Letter of Credit by the issuing financial institution evidencing
Transferee as the new beneficiary thereunder or a substitute Letter of Credit
naming Transferee as beneficiary thereunder; (iv) if Borrower fails to
cooperate in any manner deemed appropriate or advisable by Lender in order for
Lender to obtain an endorsement or substitute Letter of Credit; (v) if Borrower
fails to pay any transfer fee due in connection with transferring the Letter of
Credit to the Transferee; or (vi) if Lender has not received within ten (10)
business days of the earlier of (A) Lender’s notice to Borrower that the
financial institution issuing the Letter of Credit ceases to meet the rating
requirement set forth in this Section 6.07, or (B) Borrower’s receipt of actual
knowledge that the financial institution issuing the Letter of Credit ceases to
meet the rating requirement set forth in this Section 6.07, a replacement
Letter of Credit that satisfies all requirements of this Section 6.07.   If Lender draws upon the Letter of Credit,
the proceeds thereof shall be deposited into the Earnout Reserve Account, and
thereafter be subject to all provisions applicable to such Account. Lender
shall be entitled to charge Borrower a reasonable processing fee for
administering and reviewing any renewal, replacement or release of the Letter
of Credit, which Borrower is required to provide pursuant to this Loan
Agreement.

ARTICLE 7

SINGLE PURPOSE ENTITY REQUIREMENTS

Section 7.01                                Commitment
to be a Single Purpose Entity. 
Borrower represents, warrants and covenants to Lender as follows:

(a)                                  Borrower
is a Single Purpose Entity and will continue to be a Single Purpose Entity at
all times until the Loan has been paid in full.

(b)                                 Intentionally
Deleted.

 36
 

 

(c)                                  The
Organizational Chart attached to this Loan Agreement is true, complete and
correct.

(d)                                 All of the
factual assumptions made in the nonconsolidation legal opinion delivered by
Borrower’s counsel to Lender, of even date herewith, are true and correct in
all respects.

(e)                                  The
“single purpose entity” provisions included in the organizational documents of
Borrower shall not, without Lender’s prior written consent, be amended,
rescinded or otherwise revoked until the Loan has been paid in full, except
with respect to any amendments or modifications made solely to reflect
Transfers that are effected in accordance with the terms of this Agreement.

(f)                                    Intentionally
Deleted.

Section 7.02                                Definition
of Single Purpose Entity.

(a)                                  Borrower
Criteria.  With respect to Borrower,
a “Single Purpose Entity” means a
corporation, limited partnership or limited liability company which, at all
times since its formation and thereafter:

(i)                                     has
not engaged, and shall not engage, in any business or activity other than with
respect to Borrower, the acquisition, ownership, operation, and disposition of
the Property, and activities incidental thereto;

(ii)                                  has
not owned and shall not, acquire or own, any assets other than with respect to
Borrower, the Property and such incidental assets or Personal Property as may
be necessary for the operation of the Property;

(iii)                               if
such entity is (A) a limited liability company (other than a single member
limited liability company which satisfies the requirements of clause
(iv) below), has had and shall have at least one member that satisfies the
requirements of Section 7.02(b) below, and (B) a limited
partnership, all of its general partners have satisfied and shall satisfy the
requirements of Section 7.02(b) below;

(iv)                              if
such entity is a single member limited liability company, such entity shall be
formed and organized under Delaware law and otherwise comply with all other
Rating Agency criteria for single member limited liability companies
(including, without limitation, the inclusion of a “springing member” and
delivery of Delaware single member liability company opinions reasonably
acceptable in all respects to Lender and to the Rating Agencies);

(v)                                 Intentionally
Deleted;

(vi)                              has
and shall preserve its existence as an entity duly organized, validly existing
and in good standing (if applicable) under the laws of the jurisdiction of its
formation or organization;

 37
 

 

(vii)                           has
not and shall not merge or consolidate with any other Person;

(viii)                        has
not taken, and shall not take, any action to dissolve (unless with Lender’s
consent and immediately reconstituted), wind-up, terminate or liquidate in
whole or in part; to sell, transfer or otherwise dispose of all or
substantially all of its assets; to change its legal structure, transfer, or
permit the direct or indirect transfer of, any partnership, membership or other
Equity Interests, as applicable, other than Permitted Transfers; or seek to
accomplish any of the foregoing;

(ix)                                shall
not, without the written consent of the sole member:  (A) file or consent to the filing of any
petition, either voluntary or involuntary, to take advantage of any applicable
insolvency, bankruptcy, liquidation or reorganization statute; (B) seek or
consent to the appointment of a receiver, liquidator or any similar official;
or (C) make an assignment for the benefit of creditors;

(x)                                   shall
not amend or restate its organizational documents if such change would
adversely impact the requirements set forth in this Section 7.02;

(xi)                                shall
not own any subsidiary or make any investment in, any other Person;

(xii)                             shall
not commingle its assets with the assets of any other Person;

(xiii)                          shall
not incur any debt, secured or unsecured, direct or contingent (including,
without limitation, guaranteeing any obligation), other than (A) the Loan, (B)
amounts payable from the Reserve Accounts and unpaid management fees, (c)
customary unsecured trade payables incurred in the ordinary course of owning
and operating the Property provided the same are not evidenced by a promissory
note, do not exceed, in the aggregate, at any time a maximum amount of two
percent (2%) of the outstanding principal amount of the Loan and are paid
within sixty (60) days of the date incurred or invoiced (unless disputed in
good faith with adequate reserves established therefor), and (C) such other
liabilities that are permitted pursuant to the Loan Documents;

(xiv)                         shall
maintain its records, books of account, bank accounts, financial statements,
accounting records and other entity documents separate and apart from those of
any other Person, except to the extent that it is a disregarded entity of such
Person for federal income tax purposes;

(xv)                            other
than the Property Management Contract, shall only enter into any contract or
agreement with any general partner, member, shareholder, principal or Affiliate
of Borrower or Guarantor, or any general partner, member, principal or
Affiliate thereof, upon terms and conditions that are intrinsically fair and
substantially similar to those that would be available on an arms-length basis
with third parties;

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

 38
 

 

(xvii)                      shall
not assume or guaranty the debts of any other Person, hold itself out to be
responsible for the debts of another Person, or otherwise pledge its assets for
the benefit of any other Person or hold out its credit as being available to
satisfy the obligations of any other Person, except as permitted pursuant to
the Loan Documents;

(xviii)                   shall
not make any loans or advances to any other Person;

(xix)                           shall
file its own tax returns as required under federal and state law if such
Borrower is not a disregarded entity for federal income tax purposes;

(xx)                              shall
hold itself out to the public as a legal entity separate and distinct from any
other Person and conduct its business solely in its own name shall correct any
known misunderstanding regarding its separate identity, shall conduct business
in its own name, and shall not identify itself or any of its Affiliates as a
division or part of the other, except for services rendered by Property Manager
under the Property Management Contract, so long as Property Manager holds
itself out as an agent of the Borrower;

(xxi)                           shall
maintain adequate capital for the normal obligations reasonably foreseeable in
a business of its size and character and in light of its contemplated business
operations;

(xxii)                        shall
allocate shared expenses (including, without limitation, shared office space)
and to use separate stationery, invoices and checks; provided, however, that
Property Manager, on behalf of Borrower, may maintain and use invoices and checks
bearing Property Manager’s name;

(xxiii)                     shall
pay (or cause the Property Manager to pay on behalf of Borrower from Borrower’s
funds) its own liabilities (including, without limitation, salaries of its own
employees) from its own funds and shall maintain a sufficient number of
employees (if any) in light of its contemplated business operations;

(xxiv)                    shall
not acquire obligations or securities of its partners, members or shareholders,
as applicable, or any other Affiliate;

(xxv)                       shall
conduct its business so that the assumptions made with respect thereto in the
non-consolidation opinion delivered to Lender in connection with the Loan or in
any update thereof or additional non-consolidation opinion delivered in
connection with the Loan subsequent to the closing of the Loan shall be true
and correct in all respects;

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

(xxvii)                 shall
not permit its assets to be listed as assets on the financial statement of any
other Person; provided, however, that its assets may be included
in a consolidated financial statement of its Affiliates, provided that
(A) appropriate notation shall be made on such consolidated financial
statements to indicate the separateness of it

 39
 

 

and such Affiliates and to indicate that its assets and credit are not
available to satisfy the debts and other obligations of such Affiliates or any
other Person and (B) such assets shall be listed on its own separate
balance sheet.

(b)                                 Approved
Organizational Documents.  Lender
acknowledges that the forms of organizational documents of Sponsor Borrower
approved by Lender in connection with the funding of the Loan satisfy the
requirements of this Article 7.

(c)                                  SPE
Equity Owner Criteria.  If Borrower
ceases to be a single member Delaware limited liability company and maintains
more than one member, one of the member’s of Borrower shall be an “SPE Equity Owner,” which shall be a
member of Borrower that is a corporation which, at all times since its
formation and thereafter complies in its own right with each of the
requirements contained in Section 7.02(a)(iv) - (xxvii), except that:

(i)                                     with
respect to Section 7.02(a)(i) the SPE Equity Owner shall not engage in any
business or activity other than being the sole managing member or general
partner, as the case may be, of the Borrower and owning its Equity Interest in
Borrower;

(ii)                                  with
respect to Section 7.02(a)(ii), the SPE Equity Owner has not and shall not
acquire or own any assets other than its Equity Interest in Borrower; and

(iii)                               with
respect to Section 7.02(a)(xiii) the SPE Equity Owner has not and shall not
incur any debt, secured or unsecured, direct or contingent (including, without
limitation, guaranteeing any obligation), other than certain administrative
expenses and liabilities solely in connection with the operations of the
Property as the member or general partner of Borrower, which in no event shall
remain payable for a period in excess of 60 days.

ARTICLE 8

REPRESENTATIONS AND WARRANTIES

Borrower represents and
warrants to Lender that, as of the Closing Date:

Section 8.01                                Organization;
Legal Status.  Borrower is duly
organized, validly existing and in good standing under the laws of its state of
formation; and (a) is duly qualified to transact business and is in good
standing in the state where the Property is located; and (b) has all
necessary approvals, governmental and otherwise, and full power and authority
to own, operate and lease the Property and otherwise carry on its business as
now conducted and proposed to be conducted. 
Borrower’s correct legal name is set forth on the first page of this
Loan Agreement.  Borrower is a “registered
organization” within the meaning of the UCC and Borrower’s organization
identification number issued by its state of organization is correctly stated
on the signature page to this Loan Agreement.

Section 8.02                                Power;
Authorization; Enforceable Obligations. 
Borrower has full power, authority and legal right to execute, deliver
and perform its obligations under the Loan Documents.  Borrower has taken all necessary action to
authorize the borrowing of the Loan on the terms and conditions of this Loan
Agreement and the other Loan Documents, and Borrower has taken all necessary
action to authorize the execution, delivery and performance of its

 40
 

 

obligations under the
Loan Documents.  The officer or
representative of Borrower signing the Loan Documents has been duly authorized
and empowered to do so.  The Loan
Documents constitute legal, valid and binding obligations of Borrower,
enforceable against Borrower in accordance with their terms, except to the
extent enforceability may be limited under applicable bankruptcy and insolvency
laws and similar laws affecting creditors’ rights generally and to general
principles of equity.

Section 8.03                                No
Legal Conflicts.  The borrowing of
the Loan and Borrower’s execution, delivery and performance of its obligations
under the Loan Documents will not: 
(a) violate, conflict with, result in a default (following notice
and/or expiration of the related grace/cure period without cure or both, as
applicable) under any agreement or other instrument to which Borrower is a
party or by which the Property may be bound or affected, or any Requirements of
Law (including, without limitation, usury laws); (b) result in the
creation or imposition of any Lien whatsoever upon any of its assets, except
the Liens created by the Loan Documents; nor (c) require any authorization
or consent from, or any filing with, any Governmental Authority (except for the
recordation of the Security Instrument in the appropriate land records in the
state where the Property is located and UCC filings relating to the security
interest created hereby and by the Security Instrument which are necessary to
perfect Lender’s security interest in the Property).

Section 8.04                                No
Litigation.  No action, suit or
proceeding, or investigation, judicial, administrative or otherwise (including,
without limitation, any reorganization, bankruptcy, insolvency or similar
proceeding) currently is pending or, to the best of Borrower’s knowledge,
threatened or contemplated against or affecting Borrower, any Guarantor or the
Property that has not been disclosed by Borrower in writing to Lender and
which, if adversely determined, could reasonably be expected to have a Material
Adverse Effect.

Section 8.05                                Business
Purpose of Loan.  Borrower will use
the proceeds of the Loan solely for the purpose of carrying on a business or
commercial enterprise and not for personal, family or household purposes.

Section 8.06                                Warranty
of Title.  Such Borrower has good,
marketable and insurable fee simple title
of record to the Property, free and clear of all Liens whatsoever except for
the Permitted Encumbrances.  The Security
Instrument and Assignment of Leases and Rents, when properly recorded in the
appropriate recording office, together with the UCC financing statements
required to be filed in connection therewith, will create (a) a valid,
first priority, perfected lien on that portion of the Property constituting
interests in real property, subject only to Permitted Encumbrances; and
(b) to the extent that perfection may be effected by filing of financing
statements under the Uniform Commercial Code, perfected security interests in
and to, and perfected assignments as collateral of, all Personal Property
(including, without limitation, the Leases to the extent that a security
interests in the Leases is subject to Article 9 of the UCC), all in accordance
with the terms thereof, in each case subject only to any Permitted
Encumbrances.  None of the Permitted
Encumbrances, individually or in the aggregate: 
(a) materially interfere with the benefits of the security intended
to be provided by the Security Instrument, (b) materially and adversely
affect the value of the Property, or (c) materially and adversely impair
the use and operations of the Property. 
Such Borrower owns or has rights in all collateral given as security for
the Loan, free and clear of any and all Liens except for the Liens

 41
 

 

created in favor of
Lender in connection with the Loan.  Such
Borrower shall forever warrant, defend and preserve the title and the validity
and priority of the Liens created in favor of Lender in connection with the
Loan and shall forever warrant and defend the same to Lender against the claims
of all persons whomsoever, subject to the Permitted Encumbrances.

Section 8.07                                Condition
of the Property.  To the best of such
Borrower’s knowledge, the Improvements are structurally sound, in good repair
(other than those Immediate Repairs set forth herein) and free of defects in
materials and workmanship and have been constructed and installed in
substantial compliance with the plans and specifications relating thereto.  All major building systems located within the
Improvements (including, without limitation, the heating and air conditioning
systems, the electrical systems, plumbing systems, and all liquid and solid
waste disposal, septic and sewer systems) are in good working order and
condition and in compliance with all Requirements of Law.  The Property is free from damage caused by
fire or other casualty.

Section 8.08                                No
Condemnation.  No Condemnation
proceeding has been commenced or, to the best of Borrower’s knowledge, is
contemplated with respect to all or any portion of the Property or for the
relocation of roadways providing access to the Property.

Section 8.09                                Requirements
of Law.  The Property and its present
and contemplated use and occupancy are in compliance, in all material respects,
with all Requirements of Law.

Section 8.10                                Operating
Permits.  To the best of Borrower’s
knowledge, all material licenses, permits, registrations, certificates and
other approvals, governmental and otherwise (including, without limitation,
zoning, building code, land use and environmental), necessary for the use,
occupancy and operation of the Property and the conduct of its business
thereat, have been obtained and are in full force and effect as of the date hereof.  To the best of such Borrower’s knowledge, no
event or condition currently exists which could result in the revocation,
suspension, or forfeiture thereof.

Section 8.11                                Separate
Tax Lot.  The Property is assessed
for real estate tax purposes as one or more wholly independent tax lot or lots,
separate from any adjoining land or improvements not constituting a part of the
Property.

Section 8.12                                Flood
Zone.  Except as otherwise disclosed
on the survey of the Property provided to Lender in connection with the Loan,
no portion of the Improvements is located in an area identified by the Federal
Emergency Management Agency or any successor thereto, as an area having special
flood hazards.

Section 8.13                                Adequate
Utilities.  To the best of such
Borrower’s knowledge, the Property is adequately served by all utilities
required for the current or contemplated use thereof.  All water and sewer systems are provided to
the Property by public utilities, and the Property has accepted or is equipped
to accept such utility services.

Section 8.14                                Public
Access.  To the best of such Borrower’s
knowledge, all public roads and streets necessary for access to the Property
for the current or contemplated use thereof have been completed, are
serviceable and all-weather, and are physically and legally open for use by the
public.

 42

 

Section 8.15                                Boundaries.  To the best of such Borrower’s knowledge and
except as may be disclosed in the survey issued by Harry R. Feldman, Inc.,
dated June 1, 2001, last revised July 26, 2006, designated as Job No. 10148,
and delivered to Lender in connection with this Loan, (i) all of the
Improvements lie wholly within the boundaries and building restriction lines of
the Property, and no easements or other encumbrances affecting the Property
(including, without limitation, the Permitted Encumbrances) encroach upon any
of the Improvements.  No improvements on
adjacent properties encroach upon the Property.

Section 8.16                                Mechanic
Liens.  No mechanics’, materialmen’s
or similar liens or claims have been filed or threatened in writing to be filed
for work, labor or materials affecting the Property which are or may be Liens
prior, equal or subordinate to the Security Instrument.

Section 8.17                                Assessments.  No unpaid assessments for public improvements
or assessments otherwise affecting the Property currently exist or, to the best
of Borrower’s knowledge, are pending, nor are improvements contemplated to the
Property that may result in any such assessments.

Section 8.18                                Insurance.  All insurance policies (or copies thereof)
required pursuant to Section 9.03 of this Loan Agreement have been obtained and
delivered to Lender, with all Insurance Premiums prepaid thereunder, reflecting
the insurance coverages, amounts and other requirements set forth in this Loan
Agreement.  To the best of Borrower’s
knowledge, no claims have been made under any of such insurance policies, and
no party, including Borrower, has done, by act or omission, anything which
would impair the coverage of any of such insurance policies.

Section 8.19                                Leases.  With respect to the Leases:  (a) the Rent Roll dated as of the
Closing Date is true, complete and correct in all material respects and the
Property is not subject to Leases other than the Leases identified on such Rent
Roll; (b) Borrower has delivered to Lender complete and accurate copies of all Leases and
no verbal or written agreements exist which terminate, modify or supplement the
Leases, except as otherwise disclosed to Lender in writing and acknowledged by
Lender; (c) each
Lease is in full force and effect and there are no defaults thereunder by
either party; (d) each Lease, by its terms, is subordinate to the lien of
the Security Instrument or the subject of a separate subordination agreement
subordinating the Lease to the lien of the Security Instrument; (e) Borrower is
the sole owner of the entire lessor’s interest in the Leases and has not
assigned, pledged or otherwise transferred the Rents reserved in the Leases
(except to Lender); (f) all of the Leases are bona fide, arms-length agreements
with tenants unrelated to Borrower; (g) none of the Rents have been collected
for more than one (1) month in advance (and for such purpose, a security
deposit shall not be deemed rent collected in advance); (h) all security
deposits reflected on the Rent Roll have been collected and are being held by Borrower
in the full amount reported on the Rent Roll; (i) all work to be performed
by Borrower under each Lease has been performed as required and has been
accepted unconditionally by the applicable tenant; (j) no offsets or defenses
exist in favor of any tenant to the payment of any portion of the Rents and
Borrower has no monetary obligation to any tenant under any Lease; (k) all
payments due from tenants under the Leases are current; (l) no tenant under any
Lease is in default thereunder, or is a debtor in any bankruptcy,
reorganization, insolvency or similar proceeding, or has demonstrated a history
of payment problems which suggest financial difficulty; (m) no Lease contains
an option to purchase, right of first refusal to

 43
 

 

purchase, or any other
similar provision; and (n) no brokerage commissions, finders fees or similar
payment obligations are due and unpaid by Borrower or any Affiliate of Borrower
regarding any Lease which have not been disclosed in writing to Lender and for
which adequate amounts have not been set aside in the TI/LC Reserve Account.

Section 8.20                                Management
Agreement.  No change in the Property
Manager or Property Management Contract has occurred since the date of the most
recent information submitted to Lender with respect thereto, other than has
been disclosed in writing to Lender.

Section 8.21                                Financial
Condition.  Borrower currently is
solvent and has received reasonably equivalent value for its granting of the
Liens in favor of Lender in connection with the Loan.  No change has occurred in the financial
condition of Borrower, Guarantor, or any of their respective constituent equity
owners, general partners or managing members, which would have a Material
Adverse Effect since the date of the most recent financial statements submitted
to Lender with respect to each such party, other than has been disclosed in
writing to Lender.

Section 8.22                                Taxes.  Borrower has filed all federal, state,
county, municipal, and city income tax returns required to have been filed by
them and have paid all taxes and related liabilities which have become due
pursuant to such returns or pursuant to any assessments received by them.  Borrower does not know of any basis for any
additional assessment in respect of any such taxes and related liabilities for
prior years.

Section 8.23                                No
Foreign Person.  Borrower is not a “foreign
person” within the meaning of §1445(f)(3) of the Tax Code.

Section 8.24                                Federal
Regulations.  Borrower is not engaged
nor will it engage, principally, or as one of its important activities, in the
business of extending credit for the purpose of “purchasing” or “carrying” any “margin
stock” within the respective meanings of each of the quoted terms under
Regulation U.

Section 8.25                                Investment
Company Act; Other Regulations. 
Borrower is not an “investment company” or a company “controlled” by an “investment
company” within the meaning of the Investment Company Act of 1940 and the
regulations issued thereunder, each as amended. 
Borrower is not subject to regulations under any federal or state
statute or regulation which limits its ability to incur indebtedness.

Section 8.26                                ERISA.  (a) Borrower is not and will not be an “employee
benefit plan,” as defined in §3(3) of ERISA, subject to Title I of ERISA,
(b) none of the assets of Borrower constitute or will constitute “plan
assets” of one or more such plans within the meaning of 29 C.F.R.
§2510.3-101, (c) Borrower is not and will not be a “governmental plan”
within the meaning of §3(3) of ERISA, and (d) transactions by or with
Borrower are not and will not be subject to state statutes regulating
investment of, and fiduciary obligations with respect to, governmental plans.

Section 8.27                                No
Illegal Activity as Source of Funds. 
No portion of the Property has been or will be purchased, improved,
equipped or furnished with proceeds of any illegal activity.

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Section 8.28                                Compliance
with Anti-Terrorism, Embargo, Sanctions and Anti-Money Laundering Laws.  Borrower, each Guarantor, the Property
Manager, and to the best of Borrower’s knowledge, after having made reasonable
inquiry (a) each Person owning an interest of 20% or more in Borrower, a Guarantor, or the Property Manager
(if the Property Manager is an Affiliate of Borrower) and (b) each tenant
at the Property:  (i) is not
currently identified on OFAC List, and (ii) is not a Person with whom a
citizen of the United States is prohibited to engage in transactions by any
trade embargo, economic sanction, or other prohibition of United States law,
regulation, or Executive Order of the President of the United States,
including, without limitation, any Anti-Terrorism Laws.  Borrower agrees to confirm this
representation and warranty in writing on an annual basis if requested by
Lender to do so.

Section 8.29                                Brokers
and Financial Advisors.  Borrower has
not dealt with any financial advisor, broker, underwriter, placement agent or
finder in connection with the transaction contemplated by this Loan Agreement
who may be owed a commission or other compensation which Borrower will not have
paid in full as of the Closing Date.

Section 8.30                                Complete
Disclosure; No Change in Facts or Circumstances.  To the best of Borrower’s knowledge, Borrower
has disclosed to Lender all material facts and has not failed to disclose any
material fact that could cause any representation or warranty made herein to be
materially inaccurate, incomplete or misleading.  To the best of Borrower’s knowledge, all
information provided in or supplied with the application for Loan, or in
satisfaction of the terms thereof, remains true, complete and correct in all
material respects, and no adverse change in any condition or fact has occurred
that would make any of such information materially inaccurate, incomplete or
misleading.

Section 8.31                                Survival.  The representations and warranties contained
in this Article 8 survive for so long as the Loan remains payable and any
Obligation remains to be performed.

ARTICLE 9

BORROWER COVENANTS

Section 9.01                                Payment
of Debt and Performance of Obligations. 
Borrower shall fully and punctually pay the Loan and perform the
Obligations when and as required by the Loan Documents.  Borrower may not prepay the Loan except in
strict accordance with this Loan Agreement.

Section 9.02                                Payment
of Taxes and Other Lienable Charges.

(a)                                  Payment
Obligation.  Borrower shall promptly
and fully pay by their due date all Taxes and Other Charges now or hereafter
assessed or charged against the Property as they become due and payable.  Borrower shall promptly cause to be paid and
discharged any Lien which may be or become a Lien against the Property
(including, without limitation, mechanic’s or materialman’s liens).  Except to the extent sums sufficient to pay
Taxes or Other Charges have been deposited with Lender in accordance with this
Loan Agreement, Borrower shall furnish to Lender, upon request, evidence
satisfactory to Lender that all Taxes and Other Charges have been paid and are
not delinquent.

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(b)                                 Right
to Contest.  After prior written
notice to Lender, Borrower, at its own expense, may contest by appropriate
legal proceeding, promptly initiated and conducted in good faith with due
diligence, the amount or validity or application in whole or in part of any of
the Taxes or Other Charges, provided that:  (i) no Event of Default exists;
(ii) such proceeding suspends the collection of such Taxes or Other
Charges and the Property will not be in danger of being sold for such unpaid
Taxes or Other Charges, or Borrower has paid all of such Taxes or Other Charges
under protest; (iii) such proceeding is permitted under and is conducted
in accordance with the provisions of any other instrument to which Borrower or
the Property is subject and does not constitute a default thereunder;
(iv) if Borrower has not paid the disputed amounts in full under protest,
Borrower shall deposit with Lender cash (or other security as may be approved,
in writing, by Lender) in an amount Lender deems sufficient to insure the
payment of any such Taxes or Other Charges together with interest and penalties
thereon, if any, provided that after a Securitization, one hundred
twenty-five percent (125%) of the contested amount (plus anticipated penalty
and interest) shall be deposited with Lender; (v) Borrower furnishes to
Lender all other items reasonably requested by Lender; and (vi) upon a final
determination thereof, Borrower promptly pays the amount of any such Taxes or
Other Charges, together with all costs, interest and penalties which may be
payable in connection therewith, and Borrower shall be permitted to use the
amount so deposited with lender to make such payment, and to the extent any of
such funds remain with Lender following such payment, if no Event of Default
shall have occurred, Lender shall disburse all remaining funds to
Borrower.  Lender may pay over any
security held by Lender pursuant to this Section to the claimant entitled
thereto at any time when, in Lender’s judgment, the entitlement of such
claimant is established, and, to the extent the security posted by Borrower
with Lender is insufficient to pay the full amount due (including, without
limitation, any penalties or interest thereon), Borrower shall be liable for
the deficiency.  If Lender pays the
deficiency (which Lender shall not be obligated to do), the amount paid by
Lender shall be added to principal, shall bear interest at the Default Rate until
paid in full and payment of such amounts shall be secured by the Security
Instrument and other collateral given to secure the Loan.

Section 9.03                                Insurance.

(a)                                  Insurance
Required During the Loan Term. 
Borrower, at Borrower’s expense, shall obtain and maintain during the
term of the Loan such insurance coverage (including, without limitation, type,
minimum coverage amount, maximum deductible and acceptable exclusions) for
Borrower and the Property, as set forth in Sections 9.03(a)(i) through (a)(ix) below,
and with respect to any additional insurance coverage, in accordance with
Section 9.03(a)(ix) for insurable hazards or casualties commonly insured
against in the case of property similarly situated as the Property, as Lender
deems reasonably necessary considering, among other things, the location and
occupancy of the Property and all uses of the Property.  Lender reserves the right to periodically
review the insurance coverage Lender has required (types, minimum coverage
amounts and maximum deductibles) and to increase or otherwise change the
required coverage should Lender deem an increase or change to be reasonably
necessary under then existing circumstances. 
Without limiting Lender’s rights hereunder in any respect, it shall be
deemed reasonable for Lender to require no less coverage than the coverage in
place on the Closing Date.  Subject to
the foregoing, Lender shall require the following insurance coverage to be
effective during the term of the Loan, coverage amounts and deductibles to be
acceptable to Lender:

 46
 

 

(i)                                     Property
Insurance.  Casualty insurance must
be maintained for the Improvements and all Personal Property insuring against
any peril now or hereafter included within the classification “all risks of
physical loss” and in an amount at all times sufficient to prevent Borrower or
Lender from becoming a co-insurer within the terms of the applicable policies
but in any event at all times equal to the full replacement cost (as reasonably
determined and adjusted from time to time by Lender) of the Improvements and
Personal Property (without taking into account any depreciation and exclusive
of excavations, footings and foundations, landscaping and paving), without any
exclusions for windstorms.  In all cases
where (A) the outstanding principal balance on the Note exceeds $5
million, or (B) any part of the Improvements constitutes a legal
non-conforming use under the Requirements of Law, such insurance must include “Ordinance
of Law Coverage,” with “Time Element,” “Loss to the Undamaged Portion of the
Building,” “Demolition Cost” and “Increased Cost of Construction” endorsements,
in the amount of coverage requested by Lender. 
The policy must name Lender as an insured mortgagee under a standard
mortgagee clause.  The deductible shall
not exceed $25,000.00.

(ii)                                  Insurance
against Acts of Terrorism.  The
insurance coverage provided under Section 9.03(a) in effect as of the
Closing Date and during the Loan term must also insure against loss or damage
resulting from acts of terrorism or comparable coverage acceptable to Lender in
its discretion with a deductible that does not exceed $25,000, provided such
coverage is commercially available for properties similar to the Property and
located in or around the region in which the Property is located.

(iii)                               Boiler
and Machinery Insurance.  Broad form
boiler and machinery insurance (without exclusion for explosion) and systems
breakdown coverage must be maintained, covering all steam boilers, pipes,
turbines, engines or other pressure vessels, electrical machinery, HVAC
equipment, refrigeration equipment and other similar mechanical equipment
located in, on or about the Property in such amount per accident equal to the
full replacement cost thereof (as reasonably determined and adjusted from time
to time by Lender) and also providing coverage against loss of occupancy or use
arising from any breakdown thereof.  The
policy must name Lender as an insured under a standard joint loss clause and
provide that all proceeds are to be paid to Lender.

(iv)                              Flood
Insurance.  Flood insurance must be
maintained if any portion of the Improvements is located in an area identified
by the Federal Emergency Management Agency or any successor thereto as a
100-year flood zone or special hazard area. 
The required coverage amount shall be equal to the full replacement cost
of the Improvements and Personal Property (without taking into account any
depreciation and exclusive of excavations, footings and foundations,
landscaping and paving).  Such coverage
may need to be purchased through excess carriers if the required coverage
exceeds the maximum insurance available for the Property under the then-current
guidelines published by the Federal Emergency Management Agency or any
successor thereto.  The policy must name
Lender as an insured mortgagee under a standard mortgagee clause.

 47
 

 

(v)                                 Business
Interruption.  Business interruption
insurance must be maintained in an amount sufficient to provide the lost rental
income for the Property for a period of not less than 1 year from the date of
Casualty, with a 6 month extended period of indemnity.  For purposes of this coverage, “rental income”
means the sum of (A) the total, then ascertainable Rents payable under the
Leases and (B) the total ascertainable amount of all other payments to be
received by Borrower from third parties which are the legal obligation of the
tenants, reduced to the extent such amounts would not be received because of
operating expenses not incurred during the period that any portion of the
Property cannot be occupied as a result of the Casualty.  The policy must name Lender as a loss payee
and provide that all proceeds are to be paid to Lender.

(vi)                              Liability
Insurance.  Commercial general
liability insurance coverage must be maintained, covering bodily injury or
death and property damage, including all legal liability to the extent
insurable and all court costs, legal fees and expenses, arising out of, or
connected with, the possession, use, leasing, operation, maintenance or
condition of the Property in such amounts generally required by institutional
lenders for properties comparable to the Property but in no event for a
combined single limit of less than $2 million and $1 million per
occurrence.  The required coverage must
provide for claims to be made on an occurrence basis.  The policy must name Lender as an additional
insured.  The insurance coverage required
under this subsection (vi) may be satisfied by a layering of Commercial General
Liability, Umbrella and Excess Liability Policies, but in no event will the
Commercial General Liability policy be written for an amount less than
$1,000,000 per occurrences and $2,000,000 aggregate for bodily injury and
property damage liability.  Lender may
require umbrella coverage which will be evaluated on a case by case basis but
in no event shall the amount of umbrella coverage be less than $5,000,000.00.

(vii)                           Workers’
Compensation Insurance.  Workers’
compensation insurance must be maintained with respect to all employees
employed at the Property, in compliance with the laws of the state in which the
Property is located.

(viii)                        Earthquake
Insurance.  If the Property is
located in an area in which the probable maximum loss of the Property is 20% or
greater, as determined by Lender in its reasonable discretion, earthquake
insurance must be maintained in form, amount and with deductibles satisfactory
to Lender.

(ix)                                Other
Coverage.  Without limiting Lender’s
rights under this Section 9.03(a), Lender may also require Borrower to maintain
builder’s risk insurance during any period of construction, renovation or
alteration of the Improvements, motor vehicles liability insurance in
connection with all owned or non-owned motor vehicles used in connection with
the management or maintenance of the Property, “dram shop,” or similar coverage
if alcoholic beverages are sold at the Property, fidelity bond coverage for
employees handling Rents and other income from the Property, environmental
insurance and other insurance with respect to the Property or on any
replacements or substitutions thereof or additions thereto against other
insurable hazards or casualties which at the time are commonly insured against
in the case of property similarly situated,

 48
 

 

due regard being given to the height and type of buildings, their
construction, location, use and occupancy.

(b)                                 Qualified
Insurers; Lender’s Consent.  All
insurance must be issued under valid and enforceable policies of insurance
acceptable to Lender and issued by one or more domestic primary insurers
authorized to issue insurance in the state in which the Property is
located.  Each insurer must have a
minimum claims paying ability rating of “A” or better from S&P or an A.M.
Best rating of A-IX or better.  Lender’s
approval of insurance coverage at any time is not a representation or warranty
concerning the sufficiency of any coverage or the solvency of any insurer, and
Lender shall not be responsible for, nor incur any liability for, the
insolvency of the insurer or other failure of the insurer to perform.

(c)                                  Policy
Requirements.  All policies must be
for a term of not less than a year and name Lender as a beneficiary of such
coverage as provided in this Section 9.03 or otherwise identified by
Lender.  Each policy must also contain:  (i) an endorsement or provision that
permits recovery by Lender notwithstanding the negligent or willful acts or
omission of Borrower; (ii) a waiver of subrogation endorsement as to
Lender to the extent available at commercially reasonable rates; (iii) a
provision that prohibits cancellation or termination before the expiration
date, denial of coverage upon renewal, or material modification without at
least thirty (30) days prior written notice to Lender in each instance; and
(iv) effective waivers by the insurer of all claims for Insurance Premiums
against Lender.  If the required
insurance coverage is to be provided under a blanket policy covering the
Property and other properties and assets not part of the Property, such blanket
policy must specify the portion of the total coverage that is allocated to the
Property and any sublimit in such blanket policy which is applicable to the
Property and shall otherwise comply in all respects with the requirements of
this Section 9.03.

(d)                                 Evidence
of Insurance.

Borrower must deliver to
Lender on or before the Closing Date either (i) the original of each
insurance policy required hereunder, (ii) a copy of each original policy
certified by the insurance agent to be a true, correct and complete copy of the
original; (iii) the insurance binder (Acord Form 25 provided by the
insurance carrier) (as well as proof of payment of the first years premium);
(iv) a certificate of insurance (Acord Form 27 or Acord Form 28
provided by the insurance agent or, where such Acord forms are not available, a
certificate of insurance that confirms the same rights as are confirmed by form
Acord Form 27 or Acord Form 28), (v) an original letter from the
insurance carrier on the primary layer, signed by an officer of such carrier,
attaching the form of insurance policy pursuant to which coverage will be
provided (and, if applicable, an original letter from each insurance carrier on
the excess layers, signed by an officer of each such carrier, agreeing that it
is bound to the form of insurance policy delivered by the primary carrier
(i.e., agreeing to “follow form” to the primary carrier); and (A) each
such letter must set forth the date by which the policy will be delivered to
the Lender, which must not be more than sixty (60) days following closing and
(B) include as attachments all mortgagee/loss payee/additional insured
endorsements.  Evidence of the required
coverage for the first year of the Loan (as well as proof of payment of the
first year’s premium) must be delivered to Lender on or before the Closing Date
and thereafter not less than thirty (30) days prior to the expiration date of
each policy.

 49
 

 

(e)                                  Lender’s
Right to Obtain Insurance for Borrower. 
If Borrower fails to deliver to Lender the evidence of insurance
coverage required by this Loan Agreement and does not cure such deficiency
within ten (10) days after Lender’s notice of nondelivery, an Event of Default
shall be deemed to have occurred (without further cure period or notice) and
Lender may procure such insurance at Borrower’s expense, without prejudice to
Lender’s rights upon an Event of Default.  All amounts advanced by Lender to procure the
required insurance shall be added to principal, secured by the Security
Instrument and bear interest at the Default Rate.  Lender shall not be responsible for, nor
incur any liability for the insolvency of the insurer or other failure of the
insurer to perform, even though Lender has caused the insurance to be placed
with the insurer after Borrower’s failure to furnish such insurance.

(f)                                    Additional
Insurance.  Borrower shall not obtain
insurance for the Property in addition to that required by Lender without
Lender’s prior written consent, which consent will not be unreasonably withheld
provided that (i) Lender is named insured on such insurance,
(ii) Lender receives evidence of such insurance as required by subsection
(d) above, and (iii) such insurance complies with all of the
applicable requirements set forth in this Loan Agreement.

Section 9.04                                Obligations
upon Condemnation or Casualty.  If
the Property, or any portion thereof, shall be damaged or destroyed by a
Casualty or become subject to any Condemnation, the following shall apply:

(a)                                  Generally.  Borrower shall promptly notify Lender, in
writing, of any actual or threatened Condemnation or of any Casualty that
damages or renders unusable the Property or any part thereof and, except as
otherwise provided below, shall promptly and diligently pursue Borrower’s claim
for a Condemnation award or insurance proceeds, as applicable.  Borrower shall not make any agreement in lieu
of Condemnation or accept any Condemnation award without Lender’s prior written
consent, unless such claim is in an amount of $100,000 or less.  Borrower shall not accept any settlement of
insurance proceeds with respect to a Casualty without Lender’s prior written
consent, unless such proceeds are in an amount of $100,000 or less.  If requested by Lender, Borrower agrees to
provide copies to Lender of all notices or filings made or received by Borrower
in connection with the Casualty or Condemnation or with respect to collection
of the insurance proceeds or Condemnation award, as applicable.  Notwithstanding that a Casualty or
Condemnation has occurred, or that rights to a Condemnation award or insurance
proceeds are pending, Borrower shall continue to pay the Loan at the time and
in the manner provided in this Loan Agreement.

(b)                                 Lender
Right to Pursue Claim.  Borrower
hereby grants Lender the authority, at Lender’s option, either:  (i) to settle and adjust any claim
arising with respect to the Casualty or Condemnation without Borrower’s consent,
or (ii) to allow Borrower to settle and adjust such claim; provided that,
in either case, the insurance proceeds or Condemnation award, as applicable, is
paid directly to Lender.  Borrower hereby
appoints Lender its attorney-in-fact with full power of substitution (and which
shall be deemed to be coupled with an interest and irrevocable until the Loan
is paid and the Security Instrument is discharged of record, with Borrower
hereby ratifying all that its said attorney shall do by virtue thereof) to endorse
any agreements, instruments or drafts received in connection with a Casualty or
Condemnation.  If any portion of the
insurance proceeds or Condemnation award, as applicable, should be paid

 50
 

 

directly to Borrower, Borrower shall be
deemed to hold such amounts in trust for Lender and shall promptly remit such
amounts to Lender.  If the Property is
sold, through foreclosure or otherwise, prior to the receipt of the
Condemnation award, Lender shall have the right, whether or not a deficiency
judgment on the Note shall have been sought, recovered or denied, to receive
the proceeds of such sale in an amount sufficient to pay the Loan in full.  All expenses incurred by Lender in the
settlement and collection of amounts paid with respect to a Casualty or Condemnation
(including, without limitation, reasonable legal fees and expenses) shall be
deducted and reimbursed to Lender from the insurance proceeds or Condemnation
award, as applicable, prior to any other application thereof.  The insurance proceeds or Condemnation award
paid or payable on account of a Casualty or Condemnation, as applicable
(including all business interruption insurance proceeds paid as a result of
such Casualty or Condemnation), less expenses to be reimbursed to Lender
hereunder, is referred to herein as the “Restoration Proceeds.”

(c)                                  Application
of Restoration Proceeds; Restoration Obligations.  Except as specifically hereafter provided in
subsection (d) below, Lender may, in its sole discretion, either
(i) apply the Restoration Proceeds to payment of the Loan, whether or not
then due and payable, or (ii) hold and release the Restoration Proceeds to
Borrower (A) for the costs of Restoration undertaken by Borrower in
accordance with this Loan Agreement and (B) to cover any shortfall in Operating
Income as a result of such Casualty or Condemnation that is necessary to pay in
full the debt service payments due from Borrower on each Payment Due Date and
other Operating Expenses falling due during the period until Restoration is
completed; provided, however, that Lender shall have no
obligation to release Restoration Proceeds to fund amounts contemplated by
clause (B) unless (1) Lender is satisfied that Restoration Proceeds are
sufficient to pay in full the estimated cost to complete Restoration and (2)
all Operating Expenses to be funded with Restoration Proceeds are approved by
Lender.  If Lender applies Restoration
Proceeds to payment of the Loan and the Loan is still outstanding, (i) interest
will continue to accrue and be due on the unpaid principal at the Applicable
Interest Rate, (ii) the principal and interest payments shall be recast by
Lender to reflect the reduced balance of the principal indebtedness of the
Loan, and (iii) no Prohibited Prepayment Fee shall be due in connection with such
application.  If Lender makes the
Restoration Proceeds available to Borrower for Restoration, Borrower shall
diligently pursue Restoration so as to restore the Property to at least equal
value and substantially the same character as existed immediately prior to such
Casualty or Condemnation.  All plans and
specifications for the Restoration and all contractors, subcontractors and
materialmen to be engaged in the Restoration, as well as the contracts under
which they have been engaged, shall be subject to Lender’s prior review and
approval, which approval shall not be unreasonably withheld so long as the
plans and specifications are not materially different from the original
structure, except as necessary to comply with then-current Requirements of Law.  Lender may engage, at Borrower’s expense, an
independent engineer or inspector to assist Lender in its review of the
approvals requested of Lender in connection with the Restoration and to
periodically inspect the Restoration in progress and upon substantial
completion.

(d)                                 Condition
to Release of Restoration Proceeds for Restoration.  Lender agrees to make the Restoration
Proceeds available to Borrower for Restoration as long as:

 51

 

(i)                                     The
Restoration Proceeds recovered are less than the outstanding principal balance
of the Loan.

(ii)                                  No
Event of Default exists.

(iii)                               Borrower
demonstrates to Lender’s satisfaction that the Restoration Proceeds are
sufficient to pay in full the estimated cost to complete Restoration and any
shortfalls in Operating Income as a result of such Casualty or Condemnation
that are anticipated until Restoration is substantially completed, or, if the
Restoration Proceeds are determined by Lender to be insufficient to pay such
costs in full, Borrower deposits with Lender, in cash or by a cash equivalent
acceptable to Lender, the additional amount estimated by Lender to be necessary
to pay the full cost of Restoration (“Restoration Deficiency
Deposit”).

(iv)                              The
Casualty or Condemnation has not occurred in the eighteen (18) months prior to
the Maturity Date.

(v)                                 Restoration
can be completed not later than the earlier of (A) twelve (12) months from
the date the Casualty or Condemnation occurred, (B) the earliest date by
which completion is required under any Major Lease, (C) the earliest date
by which completion is required under the Requirements of Law to preserve the
right to rebuild the Improvements as they existed prior to the Casualty or
Condemnation or (D) the expiration of Borrower’s business interruption
insurance.

(vi)                              If
a Condemnation has occurred, less than 10% of the Land is taken and the land
taken is along the perimeter or periphery of the Land, and no portion of the
Improvements are taken.

(vii)                           If
a Casualty has occurred, less than 25% of the total floor area of the
Improvements is damaged or rendered unusable by the Casualty and Borrower
demonstrates to Lender’s satisfaction that a reasonable means of access exists
to the Property and within the Improvements unaffected by the Casualty.

(viii)                        Borrower
demonstrates to Lender’s satisfaction that the tenants under Major Leases will
continue occupancy of the Property without rent abatement following Restoration
and that, upon completion of Restoration, the net cash flow of the Property
will be restored to a level sufficient to cover all Operating Expenses of the
Property, including, without limitation, supporting a Debt Service Coverage
Ratio at least equal to, or greater than, the greater of (A) the Debt Service
Coverage Ratio existing as of the Closing Date, or (B) the Debt Service
Coverage Ratio which existed as of the date immediately preceding such Casualty
or Condemnation.

(ix)                                The
Property and its use after completion of Restoration will be in compliance
with, and permitted under, all Requirements of Law.

(e)                                  Disbursement
Procedure; Holdback.  If the
Restoration Proceeds will be made available by Lender to Borrower for
Restoration and the estimated cost of Restoration approved by Lender (together
with all other amounts then held by Borrower pursuant to this

 52
 

 

subsection (e)) is less
than $250,000, Lender shall disburse the entire amount of the Restoration
Proceeds to Borrower, and Borrower hereby covenants and agrees to use the
Restoration Proceeds solely for Restoration performed in accordance with this
Loan Agreement.  If, however, the
estimated cost of Restoration approved by Lender (together with all other
amounts then held by Borrower pursuant to this subsection (e)) is more than
$250,000, Lender shall retain the Restoration Proceeds in an interest bearing
Reserve Account, provided, however, that interest paid or payable
with respect to such Reserve Account held by or on behalf of Lender may not be
based on the highest rate of interest payable by Lender on deposits and shall
not be calculated based on any particular external interest rate or interest
rate index, nor shall any such interest reflect the interest rate utilized by
Lender to calculate interest payable on deposits held with respect to any particular
loan or borrower or class of loans or borrowers, and Lender shall have no
liability with respect to the amount of interest paid and/or loss of principal,
and the parties agree that Lender shall be entitled to retain an administrative
fee equal to one percent (1%) per annum on the amounts on deposit in such
interest-bearing Reserve Account.  If the
Restoration Proceeds are retained by Lender and deposited into such Account, periodic
disbursements from such Reserve Account shall be made to Borrower as follows:

(i)                                     Disbursements
for Restoration.

(A)                              Lender
will disburse Restoration Proceeds for the costs of Restoration to, or as
directed by, Borrower from time to time during the course of the Restoration,
upon receipt of evidence reasonably satisfactory to Lender that (1) all
materials installed and work and labor performed in connection with the
Restoration have been paid in full (except to the extent that they are to be
paid out of the requested disbursement), and (2) there exist no notices of
pendency, stop orders, mechanic’s or materialman’s liens or notices of
intention to file same, or any other Liens of any nature whatsoever on the
Property arising out of the Restoration which have not either been fully bonded
and discharged of record or, in the alternative, fully insured to Lender’s
reasonable satisfaction by the title company insuring the Lien of the Security
Instrument.

(B)                                Lender
may limit disbursements to not more than one (1) per month.

(C)                                Lender
may hold-back from each requested disbursement an amount equal to the greater
of (1) ten percent (10%) of the requested disbursement or (2) the amount which
Borrower is permitted to withhold under its contract with the contractor or
supplier to be paid with the proceeds of such disbursement (either a “Restoration Holdback”).  Amounts held as the Restoration Holdback
shall be disbursed once:  (1) Lender
receives satisfactory evidence that Restoration has been fully completed in
accordance with all Requirements of Law; (2) Lender receives satisfactory evidence
that all Restoration costs have been paid in full or will be fully paid from
the remaining Restoration Proceeds and the Restoration Holdback; and (3) Lender
receives, at Lender’s option, a search of title to the Property, effective as
of the date on which the Restoration Holdback is to be disbursed, showing no
Liens other than the Permitted Encumbrances or an endorsement to its Title
Insurance Policy which

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updates the effective date of such policy to the date on which the
Restoration Holdback is to be disbursed and which shows no Liens since the date
of recordation of the Security Instrument (other than the Permitted
Encumbrances).

(D)                               Notwithstanding
subsection (C) above, Lender may release from the Restoration Holdback
payments to a contractor or supplier if: 
(1) Lender receives satisfactory evidence that such contractor has
satisfactorily completed its contract with Borrower; (2) such contractor or
supplier delivers to Lender an acceptable written waiver of its mechanic’s
lien, in recordable form; and (3) Borrower provides written consent from the
surety company, if any, which has issued a payment or performance bond with
respect to such contractor or supplier.

(ii)                                  Disbursements
for Shortfalls in Operating Income. 
Provided that Lender determines that the Restoration Proceeds are
sufficient to pay in full the estimated cost to complete Restoration, Lender
will disburse Restoration Proceeds not reserved for Restoration to pay the
shortfall in Operating Income necessary to pay (A) first, the debt service
payments due from Borrower on each Payment Due Date falling due from the date
of the Casualty or Condemnation through the date on which Restoration is
substantially completed and (B) then, any Operating Expenses approved by
Lender.  Lender may require satisfactory
evidence that Operating Expenses to be paid have been incurred and may issue
payments directly to the Person entitled to the payment claimed as an Operating
Expense.

(iii)                               Restoration
Proceeds Deemed Insufficient.  If, in
Lender’s judgment, at any time during Restoration, the undisbursed portion of
the Restoration Proceeds, together with the remaining portion of Restoration
Proceeds released to Borrower pursuant to this Section 9.04(e),  shall not be sufficient to pay the costs
remaining for Restoration to be completed or to pay any shortfall in Operating
Income needed to pay in full Borrower’s debt service payments on the Loan and
Operating Expenses anticipated to be incurred during the period of Restoration,
no further disbursement of the Restoration Proceeds will be made until such
funds, in cash or by a cash equivalent acceptable to Lender (also called a “Restoration Deficiency Deposit”),
are deposited (i) by Borrower, within ten (10) days after Lender’s notice of
such deficiency, or (ii) in Lender’s reasonable discretion, following Borrower’s
written request, by withdrawing certain funds then held by Lender in the TI/LC
Reserve Account or the Replacement Reserve Account and applying such funds to
the Restoration Deficiency Deposit. 
Amounts held by Lender as the Restoration Deficiency Deposit shall be
disbursed in accordance with this Section 9.04.

(iv)                              Consequence
of Event of Default.  Lender shall
not be obligated to disburse Restoration Proceeds or amounts from the
Restoration Holdback when an Event of Default exists, and upon the occurrence
of an Event of Default and acceleration of the Loan, any undisbursed portion of
the Restoration Proceeds (including the Restoration Deficiency Deposit and the
Restoration Holdback) may, at Lender’s option, be applied against the Loan, in
such order and manner as Lender determines.

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(v)                                 Surplus
Restoration Proceeds After Restoration Completion.  Any Restoration Proceeds remaining after full
payment of Restoration costs and unpaid expenses due to Lender for which Lender
is permitted reimbursement under this Section 9.04 shall be released to
Borrower provided no Event of Default exists, and Borrower delivers evidence
satisfactory to Lender that (i) Restoration has been fully completed in
accordance with all Requirements of Law and (ii) the Property is free and
clear of all Liens which may be asserted with respect to the Restoration.

Section 9.05                                Inspections
and Right of Entry.  Lender and its
agents may enter the Property upon prior notice to Borrower (notice to be given
unless an Event of Default or an emergency exists, as determined by Lender in
good faith) to inspect the Property and Borrower’s books and records relating
to the Property.  In making such entry
and inspection, Lender agrees to use reasonable efforts to minimize disturbance
to Borrower and tenants of the Property. 
Lender and its agents shall have access, at all reasonable times, to the
Property, including, without limitation, all contracts, plans and specifications,
permits, licenses and approvals required or obtained in connection with the
Property.

Section 9.06                                Leases
and Rents.

(a)                                  Right
to Enter into New Leases.  Borrower
may enter into new Leases for space at the Property and renew or extend
existing Leases without Lender’s prior written consent provided that each such
Lease:  (i) is not a Major Lease, is
documented using, and does not materially deviate from, the Standard Lease Form
(except as set forth in the immediately succeeding paragraph);
(ii) provides for rental rates and terms consistent with sound and
customary leasing and management practices for similar properties in the
geographic area in which the Property is located (unless in the case of a
renewal or extension, the rent payable during such renewal term, or a formula
or other method to compute such rent, has been specified in the original
Lease); (iii) is an arms-length transaction with a tenant that is not an
Affiliate of Borrower; (iv) will not have a Material Adverse Effect on the
value of the Property taken as a whole; and (v) is subordinate to the
Security Instrument (other than with respect to residential leases).  All proposed Leases that do not satisfy the
requirements set forth in this Section require Lender’s prior written approval
at Borrower’s expense (including reasonable legal fees and expenses).  Borrower shall promptly deliver to Lender a
copy of each Lease (other than a residential lease) entered into after the
Closing Date.  Lender’s acceptance of
Borrower’s copy of any Lease shall not be deemed a waiver of the requirements
of this Section if the Lease is not in compliance herewith.

Notwithstanding
this Section 9.06(a)(i) to the contrary, Borrower may use a negotiated modified
standard form lease that differs from the Standard Form Lease without Lender’s
prior written approval so long as (i) such lease is from a regional or national
tenant operating multiple high quality retail stores, (ii) the modifications to
such lease are commercially reasonable (based upon an analysis of the rental
terms of properties of similar size and type in the same geographic area as the
Property) and have no material adverse effect upon Lender, and (iii) Borrower
delivers a copy of such lease to Lender within thirty days upon its receipt
thereof.

(b)                                 Leasing
Decisions.  Provided no Event of
Default exists, so long as the Lease is not a Major Lease (or as a result of
any of the following actions to be taken would

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become a Major Lease) and except as otherwise
provided in this Subsection, Borrower may, without Lender’s prior written consent:  (i) amend or supplement any Lease or
waive any term thereof (including, without limitation, shortening the lease
term, reducing rents, granting rent abatements, or accepting a surrender of all
or any portion of the leased space); (ii) cancel or terminate any Lease;
(iii) consent to a tenant’s assignment of its Lease or subleasing of
space; or (iv) amend, supplement, waive or terminate any Lease Guaranty;
provided that none of the foregoing actions (taking into account the planned
alternative use of the affected space in the case of termination, rent
reduction, surrender of space or shortening of term) will have a Material
Adverse Effect on the value of the Property taken as a whole and such Lease, as
amended, supplemented or waived, is otherwise in compliance with the
requirements of Section 9.06(a) hereof. 
Termination of a Lease (other than a Major Lease) with a tenant who is
in default beyond applicable notice and grace/cure periods shall not be
considered action which has a Material Adverse Effect on the value of the
Property taken as a whole.  Any action
with respect to any Lease that does not satisfy the requirements set forth in
this Section requires Lender’s prior written approval at Borrower’s expense
(including reasonable legal fees). 
Borrower shall promptly deliver to Lender a copy of all instruments
documenting the action taken, together with written certification from a
Responsible Officer that (x) the copies delivered are true, complete and
correct copies of the materials represented thereby and (y) Borrower has
satisfied all conditions of this Section. 
Lender’s acceptance of Borrower’s certification or a copy of such Lease
materials shall not be deemed a waiver of the requirements of this Section if
the action taken is not in compliance herewith.

(c)                                  Observance
of Lessor Obligations.  Borrower
(i) shall observe and perform all obligations imposed upon the lessor
under the Leases and shall not do or permit to be done anything to impair the
value of any of the Leases as security for the Loan; (ii) upon Lender’s
request, shall promptly send copies to Lender of all notices of default which
Borrower shall send or receive (or may have sent or received) under any
non-residential Lease; (iii) shall enforce in a commercially reasonable
manner all of the material terms, covenants and conditions contained in the
Leases to be observed or performed by the tenant; (iv) shall not collect
any Rents more than one (1) month in advance (and for this purpose a security
deposit shall not be deemed rent collected in advance); and (v) shall not
execute any assignment or pledge of the lessor’s interest in any of the Leases
or the Rents (other than in connection with the Loan).

Section 9.07                                Use
of Property.  Borrower shall not
allow changes in the use of the Property without Lender’s prior written
consent.  Borrower shall not initiate,
join in, or consent to any change in any private restrictive covenant or zoning
or land use ordinance limiting or defining the uses which may be made of the
Property.  If use of all or any portion
of the Property is or shall become a nonconforming use, Borrower will not cause
or permit the nonconforming use to be discontinued or the nonconforming portion
of the Property to be abandoned without Lender’s prior written consent.

Section 9.08                                Maintenance
of Property.  Borrower shall maintain
the Property in a good and safe condition and repair.  No portion of the Property shall be removed,
demolished or materially altered (except for normal repair or replacement)
without Lender’s prior written consent. 
Borrower shall promptly repair or replace any portion of the Property
which may become damaged, worn or dilapidated.

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Section 9.09                                Waste.  Borrower shall not commit or suffer any waste
of the Property or do or permit to be done thereon anything that may in any way
impair the value of the Property or invalidate the insurance coverage required
hereunder to be maintained by Borrower. 
Borrower will not, without Lender’s prior written consent, permit any
drilling or exploration for or extraction, removal, or production of any
minerals from the surface or the subsurface of the Property, regardless of the
depth thereof or the method of mining or extraction thereof.

Section 9.10                                Compliance
with Laws.

(a)                                  Obligation
to Perform.  Borrower shall promptly
and fully comply with all Requirements of Law now or hereafter affecting the
Property.  Borrower shall notify Lender
promptly of Borrower’s knowledge or receipt of any notice related to a
violation of any Requirements of Law or of the commencement of any proceedings
or investigations which relate to compliance with Requirements of Law.  At Lender’s request, Borrower shall provide
Lender with copies of all notices, reports or other documents relating to any
litigation or governmental investigation relating to Borrower or the Property.

(b)                                 Right
to Contest.  After prior written
notice to Lender, Borrower, at its own expense, may contest by appropriate
legal proceedings, promptly initiated and conducted in good faith and with due
diligence, the Requirements of Law affecting the Property or alleged violation
thereof, provided that: 
(i) no Event of Default exists; (ii) such proceedings shall be
permitted under and be conducted in accordance with the Requirements of Law;
(iii) the Property will not be in danger of being sold, forfeited,
terminated, cancelled or lost; (iv) non-compliance with such Requirement
of Law shall not impose any civil, criminal or environmental liability on
Lender or Borrower; (v) Borrower deposits with Lender cash (or other
security acceptable to Lender) in such amount as Lender deems sufficient to
cover loss or damage that may result from Borrower’s failure to prevail in such
contest, provided that after a Securitization, one hundred twenty-five
percent (125%) of the amount estimated by Lender is deposited; (vi) Borrower
furnishes to Lender all other items reasonably requested by Lender; and (vii)
upon a final determination thereof, Borrower promptly complies with the
obligations determined to be applicable, and Borrower shall be permitted to use
the amount so deposited with Lender to make such payment, and to the extent any
of such funds remain with Lender following such payment, if no Event of Default
shall have occurred, Lender shall disburse all remaining funds to Borrower.

Section 9.11                                Financial
Reports, Books and Records.

(a)                                  Delivery
of Financial Statements.  Borrower
shall, or shall cause Property manager, to keep adequate books and records of
account with respect to its financial condition and the operation of the
Property, in accordance with cash basis or GAAP, consistently applied (or such
other method which is reasonably acceptable to Lender), and shall furnish, or
cause to be furnished, the following to Lender, each prepared in such detail as
reasonably required by Lender and certified by a Responsible Officer or
Property Manager to be true, complete and correct:

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(i)                                     as
soon as available, but in any event within forty-five (45) days after the end
of each fiscal quarter, a quarterly
Rent Roll providing the required information as of the end of such fiscal quarter;

(ii)                                  as
soon as available, but in any event within forty-five (45) days after the end
of each fiscal
quarter, a quarterly operating statement for the Property detailing the
operating income received, operating expenses incurred, the cost of all
Immediate Repairs, Replacements and Tenant Improvements and Leasing Commission
performed or paid during such quarter, and the Debt Service Coverage Ratio as
of the end of such fiscal quarter;

(iii)                               as
soon as available, but in any event within ninety (90) days after the close of
Borrower’s fiscal year, (A) an annual Rent Roll, presented on an annual
basis consistent with the quarterly Rent Rolls described above; (B) an annual
operating statement for the Property presented on an annual basis consistent
with the quarterly
operating statements described above; (C) an annual balance sheet and
profit and loss statement for Borrower; and (D) a statement of change of
financial position of Borrower, setting forth in comparative form the figures
for the previous fiscal year;

(iv)                              as
soon as available, but in any event at least thirty (30) days prior to the
start of each calendar year, an annual operating budget for the Property
presented on a monthly basis consistent with the information required in the quarterly operating
statement described above which budget shall be delivered to Lender, but shall
not be subject to Lender’s prior approval, unless a Trigger Event shall have
occurred (the “Approved Budget”);

(v)                                 upon Lender’s
request, monthly Rent Roll and operating statements for the Property; and

(vi)                              such
other financial information or property management information (including,
without limitation, copies of Borrower’s state and federal tax returns,
information on tenants under Leases to the extent such information is available
to Borrower, and an accounting of security deposits) as may reasonably be
required by Lender from time to time.

(b)                                 Lender
Audit Rights.  Lender and its agents
have the right, upon prior written notice to Borrower (notice to be given
unless an Event of Default exists), to examine the records, books and other
papers which reflect upon Borrower’s financial condition or pertain to the
income, expense and management of the Property and to make copies and abstracts
from such materials.  Lender also shall
have the right, from time to time (but, in the absence of an Event of Default
existing, not more than annually) and upon prior notice to Borrower (notice to
be given unless an Event of Default exists), to have an independent audit conducted
of any of Borrower’s financial information. 
Lender shall pay the cost of such audit unless Lender performed the
audit following the occurrence of an Event of Default, in which case (and in
addition to Lender’s other remedies) Borrower shall pay the cost incurred by
Lender with respect to such audit upon Lender’s demand.  Upon Borrower’s failure to pay such amounts,
and in addition to Lender’s remedies for Borrower’s failure to perform, the
unpaid amounts shall be

 58
 

 

added to principal, shall bear interest at
the Default Rate until paid in full, and payment of such amounts shall be
secured by the Security Instrument and other collateral given to secure the
Loan.

(c)                                  Financial
Reports from Guarantors and SPE Equity Owner.  Borrower shall cause each Guarantor and, at
Lender’s request, the SPE Equity Owner, to provide to Lender (i) within
ninety (90) days after the close of such party’s fiscal year, such party’s
balance sheet and profit and loss statement (or if such party is an individual,
within ninety (90) days after the close of each calendar year, such party’s
personal financial statements) in form reasonably satisfactory to Lender and
certified by such party to be accurate and complete; and (ii) such
additional financial information (including, without limitation, copies of
state and federal tax returns) as Lender may reasonably require from time to
time and in such detail as reasonably required by Lender.

(d)                                 Reporting
Default.  If a Reporting Default occurs
on more than three (3) separate occasions while the Loan is outstanding, it
shall be an immediate Event of Default.

Section 9.12                                Performance
of Other Agreements.  Borrower shall
observe and perform in a timely manner each and every obligation to be observed
or performed by Borrower pursuant to the terms of any agreement or recorded
instrument affecting or pertaining to the Property or used in connection with
the operation of the Property (including, without limitation, the Operating
Agreements.  Without limiting the
foregoing, Borrower shall (a) give prompt notice to Lender of any notice
received by Borrower with respect to any of the Operating Agreements which
alleges a default or nonperformance by Borrower thereunder, together with a
complete copy of any such notice; (b) enforce, short of termination,
performance of the Operating Agreements to be performed or observed, and
(c) not terminate or amend, or waive compliance with, any of the Operating
Agreements without Lender’s prior written consent, except as may be
(i) permitted pursuant to the respective terms thereof or (ii) absent
the existence of an Event of Default, done in the ordinary course of
business.  If the absence of an Operating
Agreement that has terminated will have a Material Adverse Effect on the value
of the Property, Borrower agrees to enter into a new Operating Agreement in
replacement of the terminated Operating Agreement, containing terms and
conditions no less favorable to Borrower than the terminated Operating
Agreement.  Borrower shall notify Lender
if Borrower does not replace the terminated Operating Agreement.

Section 9.13                                Existence;
Change of Name; Location as a Registered Organization.  Borrower shall continuously maintain
(a) its existence and shall not dissolve or permit its dissolution unless
approved by Lender and immediately reconstituted, and (b) its rights and
franchises to do business in the state where the Property is located.  Borrower shall not change Borrower’s name,
legal entity, or its location as a registered organization within the meaning
of the UCC, without notifying Lender of such change in writing at least thirty
(30) days prior to its effective date. 
The notification requirements set forth in this Section are in addition
to, and not in limitation of, the requirements of Article 7.  Borrower shall pay all costs and expenses
incurred by Lender (including, without limitation, reasonable legal fees) in
connection with any change described herein.

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Section 9.14                                Property
Management.

(a)                                  Borrower
shall cause the Property Manager to manage (or cause to be managed) the
Property in a commercially reasonable manner. 
Borrower shall not remove or replace the Property Manager (which, with
respect to a Property Manager which is an Affiliate of Borrower, shall be
deemed to occur upon a change of Control of the Property Manager) or modify or
waive any material terms of the Property Management Contract without Lender’s
prior written consent and, if requested by Lender, a Rating Confirmation.  Upon replacement of the Property Manager or
sub-property manager, Borrower shall, and shall cause the new manager of the
Property to (or new sub-property manager of the Property, as applicable),
execute an Assignment of Property Management Contract in form and substance
similar to the Assignment of Property Management Contract executed by the
Property Manager, provided however, a replacement sub-property manager will not
be required to execute an Assignment of Property management Contract so long as
the sub-property management agreement provides that (i) Borrower is not liable
for the payment of the management fees under the sub-property management
agreement, and such payment is payable solely from the Property manager, and
(ii) sub-property manager waives any right to place a lien on the Property
following a default under the sub-property management agreement.  Borrower shall comply with all obligations of
Borrower under the Assignment of Property Management Contract.  The property management fee and all other fees
payable under the Property Management Contract shall not exceed those set forth
in the Property Management Contract.

(b)                                 Termination
of Property Manager.  (i) If
Lender, in its reasonable discretion, determines that the Property is not being
properly managed in accordance with management practices customarily employed
for properties similar to the Property, Lender may deliver written notice to
Borrower and Property Manager, which notice shall specify in reasonable detail
the grounds for Lender’s determination. 
If Lender reasonably determines that the conditions specified in Lender’s
notice are not remedied to Lender’s reasonable satisfaction by Borrower or
Property Manager within thirty (30) days from receipt of such notice or if
Borrower or Property Manager have failed to diligently undertake correcting
such conditions within such thirty (30) day period, Lender may direct Borrower,
at Borrower’s option, to either (A) terminate the Property Management Contract
and replace Property Manager with a management company acceptable to Lender or
(B) cause the Property Manager to terminate the sub-property management
agreement and to replace such sub-property manager with a management company
acceptable to Lender.

(ii)                                  If
(A) a default has occurred under the Property Management Contract and has
continued beyond any applicable notice and/or grace period, (B) Property
Manager becomes insolvent, or (C) an Event of Default has occurred,
Borrower shall, at the request of Lender, terminate the Property Management
Contact and require Property Manager to transfer its responsibilities for the
management of the Property to a management company selected by Borrower and
reasonably acceptable to Lender.

Section 9.15                                ERISA.  Borrower shall not engage in any transaction
which would cause any obligation or action taken or to be taken hereunder by
Borrower (or the exercise by Lender of any of its rights under any of the Loan
Documents) to be a non-exempt (under a statutory or administrative class
exemption) prohibited transaction under ERISA. 
Borrower agrees to deliver

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to Lender such
certifications or other evidence throughout the term of the Loan as requested
by Lender in its sole discretion to confirm compliance with Borrower’s
obligations under this Section 9.15 or to confirm that Borrower’s
representations and warranties regarding ERISA remain true.

Section 9.16                                Compliance
with Anti-Terrorism, Embargo, Sanctions and Anti-Money Laundering Laws.  Borrower shall comply with all Requirements
of Law relating to money laundering, anti-terrorism, trade embargos and
economic sanctions, now or hereafter in effect, including, without limitation,
Anti-Terrorism Laws.  Without limiting
the foregoing, Borrower shall not take any action, or permit any action to be
taken, that would cause Borrower’s representations and warranties in Section
8.28 of this Loan Agreement to become untrue or inaccurate at any time during
the term of the Loan.  Borrower shall
notify Lender promptly of Borrower’s actual knowledge that the representations
and warranties in Section 8.28 of this Loan Agreement may no longer be accurate
or that any other violation of the foregoing Requirements of Law has occurred
or is being investigated by Governmental Authorities.  In connection with such an event, Borrower
shall comply with all Requirements of Law and directives of Governmental
Authorities and, at Lender’s request, provide to Lender copies of all notices,
reports and other communications exchanged with, or received from, Governmental
Authorities relating to such event. 
Borrower shall also reimburse Lender for any expense incurred by Lender
in evaluating the effect of such an event on the Loan and Lender’s interest in
the collateral for the Loan, in obtaining any necessary license from
Governmental Authorities as may be necessary for Lender to enforce its rights
under the Loan Documents, and in complying with all Requirements of Law
applicable to Lender as the result of the existence of such an event and for
any penalties or fines imposed upon Lender as a result thereof.

Section 9.17                                Deposit
of Additional Collateral.  Within ten
days of Lender’s request following Lender’s determination that (i) Guarantor
has failed to satisfy the Net Worth Test or the Liquidity Test and (ii) the
Loan to Value Ratio exceeds 75%, Borrower shall deposit the Additional
Collateral with Lender.

ARTICLE 10

NO TRANSFERS OR ENCUMBRANCES; DUE ON SALE

Section 10.01                          Prohibition
Against Transfers.  Borrower shall
not permit any Transfer to be undertaken or cause any Transfer to occur, other
than a Permitted Transfer.  Any Transfer
made in violation of this Loan Agreement shall be void.

Section 10.02                          Lender
Approval.  Lender’s decision to
approve any Transfer proposed by Borrower shall be made in Lender’s sole
discretion and Lender shall not be obligated to approve any Transfer.  Notwithstanding the foregoing, Lender will not
unreasonably withhold its consent four times during the term of the Loan to a
Transfer or sale (but not a pledge, mortgage, assignment, encumbrance or other
transfer as security for an obligation) of the Property and Borrower’s
obligations under the Loan Documents, provided Borrower satisfies all of the
conditions set forth in this Section 10.02.  Borrower agrees to supply all information
Lender may request to evaluate a Transfer, including, without limitation,
information regarding the proposed transferee’s ownership structure, financial
condition and management experience for comparable properties.  Borrower acknowledges that Lender may impose
conditions to its approval of a

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Transfer, including, without limitation,
(i) no Event of Default, or an event which with the giving of notice or
lapse of time or both could become an Event of Default, has occurred and is
continuing, (ii) approval of the proposed transferee’s ownership
structure, financial condition and management experience for comparable
properties, (iii) payment of an assumption fee equal to one half of one
percent (.5%) of the outstanding principal balance of the Loan for the first
such Transfer, and one percent (1%) of the outstanding principal balance of the
Loan for each such Transfer thereafter, (iv) adding guarantors or changing
the scope of the Guaranty, (v) assumption in writing (acceptable to Lender
in its sole discretion) by the transferee and a guarantor (which guarantor must
be acceptable to Lender in its sole discretion ) of all obligations of the
transferor and the Guarantor under the Loan Documents and execution and
delivery of such other documentation as may be required by Lender and the
Rating Agencies, (vi) delivery of a new substantive consolidation opinion, a
tax opinion and other applicable opinions as required by Lender and the Rating
Agencies, (vii) adjusting amounts required for the Reserve Accounts, and (viii)
obtaining Rating Confirmations if a Securitization has occurred.  Borrower agrees to pay all of Lender’s
expenses incurred in connection with reviewing and documenting a Transfer
(including, without limitation, the costs of obtaining Rating Confirmations if
required), which amounts must be paid by Borrower whether or not the proposed
Transfer is approved.  Upon Borrower’s
failure to pay such amounts, and in addition to Lender’s remedies for Borrower’s
failure to perform, the unpaid amounts shall be added to principal, shall bear
interest at the Default Rate until paid in full, and payment of such amounts
shall be secured by the Security Instrument and other collateral given to
secure the Loan.    Upon the occurrence
of an assumption of the Loan by an acceptable transferee satisfying all the
terms set forth in this subsection, Borrower and Guarantor will be released as
of the date of the recordation of the assumption agreement (which shall be
executed by Lender, Borrower, Guarantor and such transferee and its replacement
guarantor) with respect to obligations under the Loan Documents arising on or
after the date of such assumption.

Section 10.03                          Intentionally Deleted.

Section 10.04                          Other
Releases of the Mortgaged Property. 
Lender may release other portions of the Property for such consideration
and upon such conditions as Lender may require without, as to the remainder of
the Property, in any way impairing or affecting the Lien or priority of the
Security Instrument or improving the position of any subordinate lienholder
with respect thereto, except to the extent that the obligations hereunder shall
have been reduced by the actual monetary consideration, if any, received by
Lender for such release, and Lender may accept by assignment, pledge or
otherwise any other property in place thereof as Lender may require without
being accountable for so doing to any other lienholder.  Notwithstanding anything to the contrary
herein, Borrower shall have no right to request and Lender shall have no
obligation to grant its consent to any release pursuant this Section 10.04.

Section 10.05                          Anti-Terrorism
Compliance; Substantive Consolidation Opinion.  Notwithstanding anything to the contrary
contained in this Section 10, (a) no transfer (whether or not such
transfer shall constitute a Transfer) shall be made to any Person on the OFAC
list or shall result in any failure of Borrower to comply with Anti-Terrorism
Laws and (b) in the event any transfer (whether or not such transfer shall
constitute a Transfer) results in any Person owning in excess of forty-nine
percent (49%) of the ownership interest in Borrower or any SPE Equity Owner
(other than a Person who already owned more than 49% of such interests),

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Borrower shall, prior to
such transfer, deliver a new substantive non-consolidation opinion letter with
respect to the new equity owners which is acceptable in all respects to Lender
and to the Rating Agencies if a Securitization has occurred.

ARTICLE 11

EVENTS OF DEFAULT; REMEDIES

Section 11.01         Events of Default.  The occurrence of any one or more of the
following events shall, at Lender’s option, constitute an “Event of Default”
hereunder:

(a)           If any Interest Only Payment or payment of
principal and interest is not paid in full (i) on or before the earlier to
occur of (y) the fifth (5th) calendar day after the Payment Due Date on which
such payment is due and (z) the sixth (6th) calendar day of the month in which
such Payment Due Date occurs, or (ii) if the Payment Due Date is changed in
accordance with Section 2.02 (b) above, on the calendar day of the month
determined by Lender in its sole discretion.

(b)           If any monthly payment required to be
made to a Reserve Account is not paid in full (i) on or before the earlier to
occur of (y) the fifth (5th) calendar day after the Payment Due Date on which
such payment is due and (z) the sixth (6th) calendar day of the month in which
such Payment Due Date occurs, or (ii) if the Payment Due Date is changed in
accordance with Section 2.02 (b) above, on the calendar day of the month
determined by Lender in its sole discretion.

(c)           If unpaid principal, accrued but
unpaid interest and all other amounts outstanding under the Loan Documents are
not paid in full on or before the Maturity Date;

(d)           If an “Event of Default” as that term
is defined under any other Loan Document has occurred;

(e)           If any representation or warranty
made by Borrower, SPE Equity Owner or any Guarantor herein, in the Guaranty, in
the Environmental Indemnity or in any other Loan Document, or in any
certificate, report, financial statement or other instrument or document
furnished to Lender in connection herewith or hereafter, or in connection with
any request for consent by Lender made during the term of the Loan shall have
been false or misleading in any material respect as of the date made;

(f)            If Borrower, SPE Equity Owner or any
Guarantor shall (i) make an assignment for the benefit of creditors;
(ii) generally not be paying its debts as they become due; or
(iii) admit in writing its inability to pay its debts as they become due;

(g)           If (i) Borrower, SPE Equity
Owner or any Guarantor shall commence any case, proceeding or other action
under any existing or future law of any jurisdiction, domestic or foreign,
relating to bankruptcy, insolvency, reorganization, conservatorship or relief
of debtors (A) seeking to have an order for relief entered with respect to
it, or seeking to adjudicate it a bankrupt or insolvent, or seeking
reorganization, arrangement, adjustment, winding-up, liquidation, dissolution,
composition or other relief with respect to it or its debts, or
(B) seeking appointment of a receiver, trustee, custodian, conservator or
other similar official for it or for all

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or any substantial part of its assets; or
(ii) there shall be commenced against Borrower, SPE Equity Owner or any
Guarantor any case, proceeding or other action of a nature referred to in
clause (i) above by any party other than Lender which (A) results in the
entry of an order for relief or any such adjudication or appointment, or
(B) remains undismissed, undischarged or unbonded for a period of ninety
(90) days; or (iii) there shall be commenced against Borrower, SPE Equity
Owner or any Guarantor any case, proceeding or other action seeking issuance of
a warrant of attachment, execution, distraint or similar process against all or
any substantial part of its assets which results in the entry of any order for
any such relief which shall not have been vacated, discharged, or stayed or
bonded pending appeal within ninety (90) days from the entry thereof; or
(iv) Borrower, SPE Equity Owner or any Guarantor shall take any action in
furtherance of, or indicating its consent to, approval of, or acquiescence in,
any of the acts set forth in clause (i), (ii), or (iii) above;

(h)           Any judgment for monetary damages is
entered against Borrower, SPE Equity Owner or any Guarantor which, in Lender’s
reasonable sole judgment, has a Material Adverse Effect or is not covered to
Lender’s satisfaction by collectible insurance proceeds;

(i)            If Borrower or SPE Equity Owner
violates or fails to comply with any provision of Article 7 of this Loan
Agreement (captioned:  Single Purpose
Entity Requirements);

(j)            If Borrower violates or fails to
comply with any of the provisions of Section 9.03 (captioned:  Insurance), Section 9.06 (captioned:  Leases and Rents), Section 9.13
(captioned:  Existence, Change of Name or
Location as a Registered Organization), or Section 9.14 (captioned:  Property Management);

(k)           If a Transfer, other than a Permitted
Transfer, occurs without Lender’s prior written consent or in violation of the
terms of Lender’s consent;

(l)            If Borrower abandons or ceases work
on any Immediate Repair, Replacement or Tenant Improvement for a period of more
than twenty (20) days, unless such cessation results from causes beyond the
reasonable control of Borrower and Borrower is diligently pursuing
reinstitution of such work;

(m)          If a Lien other than a Permitted
Encumbrance is filed against the Property, unless such Lien is promptly
contested in good faith by Borrower as permitted in accordance with Section
9.02(b);

(n)           If any of the assumptions contained
in the non-consolidation opinion delivered to Lender in connection with the
Loan, or in any update thereof or additional non-consolidation opinion
delivered subsequent to the closing of the Loan, is or shall become untrue in
any material respect;

(q)           If Borrower fails to pay the
Prohibited Prepayment Fee when required;

(r)            Except for the specific defaults set
forth in this Section 11.01, if any other default occurs hereunder or under any
other Loan Document which is not cured (i) in the case of any default
which can be cured by the payment of a sum of money, within five (5) days after
written notice from Lender to Borrower, or (ii) in the case of any other
default, within thirty (30)

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days after written notice from Lender to
Borrower; provided that if a default under clause (ii) cannot
reasonably be cured within such thirty (30) day period and Borrower has responsibly
commenced to cure such default promptly upon notice thereof from Lender and
thereafter diligently proceeds to cure same, such thirty (30) day period shall
be extended for so long as it shall require Borrower, in the exercise of due
diligence, to cure such default, but in no event shall the entire cure period
be more than sixty (60) days; or

(s)           If 
(i) Guarantor fails to satisfy the Net Worth Test or Liquidity Test,
(ii) the Loan to Value Ratio is greater than 75%, and (iii) Borrower shall have
failed to deposit the Additional Collateral with Lender within ten calendar
days of Lender’s request.

Section 11.02         Remedies.  If an Event of Default occurs, Lender may, at
its option, and without prior notice or demand, do and hereby is authorized and
empowered by Borrower so to do, any or all of the following:

(a)           Acceleration.  Lender may declare the entire unpaid
principal balance of the Loan to be immediately due and payable.  If such acceleration takes place prior to the
Open Date, an amount equal to the Prohibited Prepayment Fee shall be added to
balance of the Debt.

(b)           Recovery of Unpaid Sums.  Lender may, from time to time, take legal
action to recover any sums as the same become due, without regard to whether or
not the Loan shall be accelerated and without prejudice to Lender’s right
thereafter to accelerate the Loan or exercise any other remedy, if such sums
remain uncollected.

(c)           Foreclosure.  Lender may institute proceedings, judicial or
otherwise, for the complete or partial foreclosure of the Security Instrument
or the complete or partial sale of the Property under power of sale or under
any applicable provision of law.  In
connection with any such proceeding, Lender may sell the Property as an
entirety or in parcels or units and at such times and place (at one or more
sales) and upon such terms as it may deem expedient unless prohibited by law
from so acting.

(d)           Receiver.  Lender may apply for the appointment of a
receiver, trustee, liquidator or conservator of the Property, without regard for
the adequacy of the security for the Debt or a showing of insolvency, fraud or
mismanagement on the part of Borrower. 
Any receiver or other party so appointed has all powers permitted by law
which may be necessary or usual in such cases for the protection, possession,
control, management and operation of the Property.  Borrower hereby consents, to the extent
permitted under applicable law, to the appointment of a receiver or trustee of
the Property upon Lender’s request if an Event of Default has occurred.  At Lender’s option, such receiver or trustee
shall serve without any requirement of posting a bond.

(e)           Recovery of Possession.  Lender may enter into or upon the Property,
either personally or by its agents, and dispossess and exclude Borrower and its
agents and servants therefrom (without liability for trespass, damages or
otherwise), and take possession of all books, records and accounts relating to
the Property, and Borrower agrees to surrender possession of the Property and
all other Property, including without limitation, all documents, books, records
and accounts relating to the Property, to Lender upon demand.  As a 

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mortgagee-in-possession of the Property,
Lender shall have all rights and remedies permitted by law or in equity to a
mortgagee-in-possession, including, without limitation, the right to charge
Borrower the fair and reasonable rental value for Borrower’s use and occupation
of any part of the Property that may be occupied or used by Borrower and the
right to exercise all rights and powers of Borrower with respect to the
Property, whether in the name of Borrower or otherwise (including, without
limitation, the right to make, cancel, enforce or modify Leases, obtain and
evict tenants, and demand, sue for, collect and receive all Rents of the
Property).

(f)            UCC Remedies.  Lender may exercise with respect to the
Property, each right, power or remedy granted to a secured party under the UCC,
including, without limitation, (i) the right to take possession of the
Property and to take such other measures as Lender deems necessary for the
care, protection and preservation of the Property, and (ii) the right to
require that Borrower, at its expense, assemble the Property and make it
available to Lender at a convenient place acceptable to Lender.  Any notice of sale, disposition or other
intended action by Lender with respect to the Property sent to Borrower in
accordance with the provisions hereof at least ten (10) days prior to such
action, shall constitute reasonable notice to Borrower.  Lender shall not have any obligation to
clean-up or otherwise prepare the Property for sale.

(g)           Apply Funds in Reserve Accounts.  Lender may apply any funds then deposited in
any or all of the Reserve Accounts and or otherwise held in escrow or reserve
by Lender under the Loan Documents (including without limitation Restoration
Proceeds) as a credit on the Loan, in such priority and proportion as Lender
deems appropriate; provided that Lender shall not apply Reserve Accounts to the
prepayment of principal unless it has accelerated the Loan.

(h)           Insurance Policies.  Lender may surrender any or all insurance
policies maintained as required by this Loan Agreement, collect the unearned
Insurance Premiums and apply such sums as a credit on the Loan, in such
priority and proportion as Lender deems appropriate.  Borrower hereby appoints Lender its
attorney-in-fact with full power of substitution (and which shall be deemed to
be coupled with an interest and irrevocable until the Loan is paid and the
Security Instrument is discharged of record, with Borrower hereby ratifying all
that its said attorney shall do by virtue thereof) to surrender such insurance
policies and collect such Insurance Premiums.

(i)            Intentionally Deleted.

(j)            Protection of Lender’s Security
and Right to Cure.  Lender may,
without releasing Borrower from any obligation hereunder or waiving the Event
of Default, perform the obligation which Borrower failed to perform in such
manner and to such extent as Lender deems necessary to protect and preserve the
Property and Lender’s interest therein, including without limitation
(i) appearing in, defending or bringing any action or proceeding with
respect to the Property, in Borrower’s name or otherwise; (ii) making
repairs to the Property or completing improvements or repairs in progress;
(iii) hiring and paying legal counsel, accountants, inspectors or
consultants; and (iv) paying amounts which Borrower failed to pay.  Amounts disbursed by Lender shall be added to
the Loan, shall be immediately due and payable, and shall bear interest at the
Default Rate from the date of disbursement until paid in full.

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(k)           Violation of Laws.  If the Property is not in compliance with all
Requirements of Laws, Lender may impose additional requirements upon Borrower
in connection with such Event of Default including, without limitation,
monetary reserves or financial equivalents.

Section 11.03         Cumulative Remedies; No Waiver;
Other Security.  Lender’s remedies
under this Loan Agreement are cumulative (whether set forth in this Article 11
or in any other section of this Loan Agreement) with those in the other Loan
Documents and otherwise permitted by law or in equity and may be exercised
independently, concurrently or successively in Lender’s sole discretion and as
often as occasion therefor shall arise. 
Lender’s delay or failure to accelerate the Loan or exercise any other
remedy upon the occurrence of an Event of Default shall not be deemed a waiver
of such right as remedy.  No partial
exercise by Lender of any right or remedy will preclude further exercise
thereof.  Notice or demand given to
Borrower in any instance will not entitle Borrower to notice or demand in
similar or other circumstances (except where notice is expressly required by
this Loan Agreement or the other Loan Documents to be given) nor constitute
Lender’s waiver of its right to take any future action in any circumstance
without notice or demand.  Lender may
release security for the Loan, may release any party liable therefor, may grant
extensions, renewals or forbearances with respect thereto, may accept a partial
or past due payment or grant other indulgences, or may apply any other security
held by it to payment of the Loan, in each case without prejudice to its rights
under the Loan Documents and without such action being deemed an accord and
satisfaction or a reinstatement of the Loan. 
Lender will not be deemed as a consequence of its delay or failure to
act, or any forbearance granted, to have waived or be estopped from exercising
any of its rights or remedies.

Section 11.04         Enforcement Costs.  Borrower shall pay, on written demand by
Lender all costs incurred by Lender in (a) collecting any amount payable
under the Loan Documents, or (b) enforcing its rights under the Loan
Documents, in each case whether or not legal proceedings are commenced or
whether legal action is pursued to final judgment.  Such fees and expenses include, without
limitation, reasonable fees for attorneys, paralegals, law clerks and other
hired professionals, a reasonable assessment of the cost of services performed
by Lender’s default management staff, court fees, costs incurred in connection
with pre-trial, trial and appellate level proceedings, including discovery, and
costs incurred in post-judgment collection efforts or in any bankruptcy
proceeding.  Amounts incurred by Lender
shall be added to principal, shall be immediately due and payable, shall bear
interest at the Default Rate from the date of disbursement until paid in full,
if not paid in full within five (5) days after Lender’s written demand for
payment, and such amounts shall be secured by the Security Instrument and other
collateral given to secure the Loan.

Section 11.05         Application of Proceeds.  The proceeds from disposition of the Property
shall be applied by Lender as a credit to the Loan and to recovery or
reimbursement of the costs of enforcement (contemplated by Section 11.04 above)
in such priority and proportion as Lender determines appropriate.

Section 11.06         Intentionally Deleted.

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ARTICLE 12

NONRECOURSE – LIMITATIONS ON PERSONAL LIABILITY

Section 12.01         Nonrecourse Obligation.  Except as otherwise provided in this Article
12 or
expressly stated in any of the other Loan Documents, Lender shall enforce the
liability of Borrower to perform and observe the obligations contained in this
Loan Agreement and in each other Loan Document only against the Property and
other collateral given by Borrower as security for payment of the Loan and
performance of Borrower’s obligations under the Loan Documents and not against
Borrower or any of Borrower’s principals, directors, officers, manager, members
or employees.  Notwithstanding the
foregoing, this Article 12 is not applicable to the Environmental Indemnity or
to any Guaranty executed in connection herewith.

Section 12.02         Personal Liability for Certain
Losses.  Section 12.01 above SHALL
NOT APPLY and Borrower shall be PERSONALLY LIABLE for all losses, claims,
expenses or other liabilities incurred by Lender arising out of, or
attributable to, any of the following:

(a)           Fraud or intentional
misrepresentation or intentional failure to disclose a material fact by
Borrower, Guarantor, or any Affiliate of Borrower in connection with
(i) the application for the Loan or the execution and delivery of the Loan
Documents or making of the Loan, (ii) any financial statement or any other
material certificate, report or document required to be furnished by Borrower
to Lender herewith or hereafter, or (iii) any request for Lender’s consent
made during the term of the Loan;

(b)           Misapplication or misappropriation of
(i) insurance proceeds or condemnation awards payable to Lender in
accordance with the Loan Agreement; (ii) Rent and other income derived
from the Property received by Borrower during the existence of an Event of
Default, (iii) Rent paid in advance by tenants under the Leases; and
(iv) tenant security deposits or other refundable deposits held by or on
behalf of Borrower in connection with Leases or any other contract;

(c)           Fees or commissions paid by Borrower,
after the occurrence and during the continuance of an Event of Default, to any
Guarantor, any Affiliate, or any principal of Borrower, any Guarantor or
Affiliate, in violation of the Loan Documents;

(d)           Damage to or loss of all or any part
of the Property as a result of intentional physical waste by Borrower;

(e)           Criminal acts of Borrower, any
principal of Borrower, or any Affiliate resulting in the seizure, forfeiture or
loss of all or any part of the Property;

(f)            Removal of all or any portion of the
Personal Property in violation of the Loan Agreement;

(g)           Breach or default under the ERISA
obligations set forth in Sections 8.26 and 9.15 hereof (including, without
limitation, legal fees and costs incurred in the investigations, defense and
settlement of Losses incurred in correcting any prohibited transaction or in
the sale of a prohibited loan, and in obtaining any individual prohibited
transaction exemption under ERISA that may be required, in Lender’s sole
discretion).

(h)           Violation of any provision of Article
10 hereof; and

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(i)            Failure of Borrower or the SPE
Equity Owner  to comply with any
provision of Article 7 hereof other than, to the extent due to the economic
performance of the Property, any of Sections 7.02(a)(iv), 7.02(a)(xiii), 7.02(a)(xxi),
and 7.02(a)(xxiii).

Section 12.03         Full Personal Liability.  Section 12.01 above shall BECOME NULL AND
VOID and the Loan FULLY RECOURSE to Borrower if:  (a) the Property or any part thereof
becomes an asset in a voluntary bankruptcy or other insolvency proceeding;
(b) Borrower or SPE Equity Owner commences a bankruptcy or other
insolvency proceeding; (c) an involuntary bankruptcy or other insolvency
proceeding is commenced against Borrower or any SPE Equity Owner (by a party
other than Lender) but only if Borrower or such SPE Equity Owner has consented
to such proceeding or (d) if Borrower, any SPE Equity Owner, Guarantor or any
Affiliate or agent of (x) Borrower, (y) any SPE Equity Owner or (z) any
Guarantor has acted in concert with, colluded or conspired with any party to
cause the filing of any involuntary bankruptcy or other insolvency proceeding.

Section 12.04         No Impairment.  Nothing contained in this Article 12 shall
impair, release or otherwise adversely affect: 
(a) any lien, assignment or security interest created by the Loan
Documents; (b) any indemnity, personal guaranty, master lease or similar
instrument now or hereafter made in connection with the Loan (including,
without limitation, the Environmental Indemnity and Guaranty); (c) Lender’s
right to have a receiver or trustee appointed for the Property; (d) Lender’s
right to name Borrower as a defendant in any foreclosure action or judicial
sale under the Security Instrument or other Loan Documents or in any action for
specific performance or otherwise to enable Lender to enforce obligations under
the Loan Documents or to realize upon Lender’s interest in any collateral given
to Lender as security for the Loan; or (e) Lender’s right to a judgment on the
Note against Borrower if necessary to (i) enforce any guaranty or
indemnity provided in connection with the Note or (ii) to obtain any
insurance proceeds or condemnation awards to which Lender would otherwise be
entitled under this Loan Agreement; provided, however, that any
judgment obtained against Borrower shall, except to the extent otherwise
expressly provided in this Article 12, be enforceable against Borrower only to
the extent of Borrower’s interest in the Property and other collateral securing
payment of the Loan and performance of Borrower’s obligations under the Loan
Documents.

Section 12.05         No Waiver of Certain Rights.  Nothing contained in this Article 12 shall be
deemed a waiver of any right which Lender may have under the Bankruptcy Code or
applicable law to protect and pursue its rights under the Loan Documents
including, without limitation, its rights under Sections 506(a) or any
other provision of the Bankruptcy Code to file a claim for the full amount of
the Loan or to require that the collateral continues to secure all of the
indebtedness owing to Lender under Loan Documents.

ARTICLE 13

INDEMNIFICATION

Section 13.01         Indemnification Against Claims.  Borrower shall indemnify, defend, release and
hold harmless Lender and each of the other Indemnified Parties from and against
any and all Losses directly or indirectly arising out of, or in any way
relating to, or as a result of (a) accident, injury to or death of
Persons, or loss of, or damage to, property occurring in, on or with respect to
the Property or on the adjoining sidewalks, curbs, adjacent property or
adjacent

 69
 

 

parking areas, streets or
ways or otherwise arising with respect to the use of the Property;
(b) failure of the Property to be in compliance with any Requirements of
Law; (c) any breach by Borrower of its obligations under, or any material
misrepresentation by Borrower contained in, this Loan Agreement or the other
Loan Documents; (d) the use or intended use of the proceeds of the Loan;
(e) any and all claims and demands whatsoever which may be asserted against
Lender by reason of any alleged obligations or undertakings on its part to
perform or discharge the lessor’s agreements contained in any Lease; or (f) any
claim, litigation, investigation or proceeding commenced or threatened relating
to any of the foregoing, whether or not Indemnified Party is a party thereto; provided,
however, any such release and indemnity shall not apply to any
Indemnified Party to the extent any such Losses arise from Indemnified Party’s
gross negligence or willful misconduct (collectively, “Indemnified Claims”).

Section 13.02         Duty to Defend.  If an Indemnified Party claims
indemnification under this Loan Agreement, the Indemnified Party shall promptly
notify Borrower of the Indemnified Claim. 
After notice by any Indemnified Party, Borrower shall defend such
Indemnified Party against such Indemnified Claim (if requested by any
Indemnified Party, in the name of the Indemnified Party) by attorneys and other
professionals reasonably approved, in writing, by the Indemnified Party.  Notwithstanding the foregoing, any
Indemnified Party may, in its sole discretion and at the expense of Borrower,
engage its own attorneys and other professionals to defend or assist it if such
Indemnified Party determines that the defense as conducted by Borrower is not
proceeding or being conducted in a satisfactory manner or that a conflict of
interest exists between any of the parties represented by Borrower’s counsel in
such action or proceeding.  Within five
(5) business days of Indemnified Party’s demand, Borrower shall pay or, in the
sole discretion of the Indemnified Party, reimburse, the Indemnified Party for
the payment of Indemnified Party’s costs and expenses (including, without
limitation, reasonable attorney fees, engineer fees, environmental consultant
fees, laboratory fees and other professionals in connection therewith) in
connection with the Indemnified Claim. 
Payment not made timely shall bear interest at the Default Rate until
paid in full and payment of such amounts shall be secured by the Security
Instrument and other collateral given to secure the Loan.

ARTICLE 14

SUBROGATION; NO USURY VIOLATIONS

Section 14.01         Subrogation.  If the Loan is used to pay, satisfy,
discharge, extend or renew any indebtedness secured by a pre-existing mortgage,
deed of trust or other Lien encumbering the Property, then to the extent of
funds so used, Lender shall automatically, and without further action on its
part, be subrogated to all rights, including lien priority, held by the holder
of the indebtedness secured by such prior Lien, whether or not the prior Lien is
released, and such former rights are not waived but rather are continued in
full force and effect in favor of Lender and are merged with the Liens created
in favor of Lender as security for payment of the Loan and performance of the
Obligations.

Section 14.02         No Usury.  At no time is Borrower required to pay
interest on the Loan or on any other payment due hereunder or under any of the
other Loan Documents (or to make any other payment deemed by law or by a court
of competent jurisdiction to be interest) at a rate which would subject Lender
either to civil or criminal liability as a result of being in excess of the
maximum interest rate which Borrower is permitted by applicable law to
pay.  If interest (or

 70
 

 

such other amount deemed
to be interest) paid or payable by Borrower is deemed to exceed such maximum
rate, then the amount to be paid immediately shall be reduced to such maximum
rate and thereafter computed at such maximum rate.  All previous payments in excess of such
maximum rate shall be deemed to have been payments of principal (in inverse
order of maturity) and not on account of interest due hereunder.  For purposes of determining whether any
applicable usury law has been violated, all payments deemed by law or a court
of competent jurisdiction to be interest shall, to the extent permitted by
applicable law, be deemed to be amortized, prorated, allocated and spread over
the full term of the Loan in such manner so that interest is computed at a rate
throughout the full term of the Loan which does not exceed the maximum lawful
rate of interest.

ARTICLE 15

SALE OR SECURITIZATION OF LOAN

Section 15.01         Splitting the Note.  Lender has the right from time to time, at
Lender’s cost and expense, to sever the Note into one or more separate
promissory notes in such denominations as Lender determines in its sole
discretion (including the creation of a mezzanine loan secured by a collateral
assignment of the equity interest in Borrower and SPE Equity Owner) which
promissory notes may be included in separate sales or securitizations
undertaken by Lender.  In conjunction
with any such action, but subject to the following provisions of this Section
15.01, Lender may redefine the interest rate and amortization schedule; provided,
however:  (a) if Lender
redefines the interest rate, the initial weighted average of the interest rates
contained in the severed promissory notes taken in the aggregate shall equal
the Applicable Interest Rate, and (b) if Lender redefines the amortization
schedule, the amortization of the severed promissory notes taken in the
aggregate shall require no more amortization to be paid under the Loan than as
required under this Loan Agreement and the Note at the time such action was
taken by Lender.  Subject to the
foregoing, each severed promissory note, and the Loan evidenced thereby, shall
be upon all of the terms and provisions contained in this Loan Agreement and
the Loan Documents which continue in full force and effect, except that Lender
may allocate specific collateral given for the Loan as security for performance
of specific promissory notes, in each case with or without cross default
provisions.  Borrower agrees to cooperate
with all reasonable requests of Lender to accomplish the foregoing, including,
without limitation, execution and prompt delivery to Lender of a severance
agreement and such other documents as Lender shall reasonably require, provided,
however, that no changes to the terms of the Loan shall increase
Borrower’s obligations under the Loan Documents or have a significant adverse
effect on the economics of the transaction to Borrower.  Borrower hereby appoints Lender its
attorney-in-fact with full power of substitution (and which shall be deemed to
be coupled with an interest and irrevocable until the Loan is paid and the Security
Instrument is discharged of record, with Borrower hereby ratifying all that its
said attorney shall lawfully do by virtue thereof) to make and execute all
documents necessary or desirable to effect the aforesaid severance; provided,
however, Lender shall not make or execute any such documents under such
power until five (5) days after written notice has been given to Borrower by
Lender of Lender’s intent to exercise its rights under such power.  Borrower’s failure to deliver any of the
documents requested by Lender hereunder for a period of ten (10) business days
after such notice by Lender shall, at Lender’s option, constitute an Event of
Default hereunder.

 71

 

Section 15.02         Lender’s
Rights to Sell or Securitize. 
Borrower acknowledges that Lender, and each successor to Lender’s
interest, may (without prior notice to Borrower or Borrower’s prior consent),
sell or grant participations in the Loan (or any part thereof), sell or
subcontract the servicing rights related to the Loan, Securitize the Loan or
include the Loan as part of a Securitization and, in connection therewith,
assign Lender’s rights hereunder to a securitization trustee.  Borrower agrees to cooperate with all
reasonable requests of Lender in connection with any of the foregoing
including, without limitation, executing any financing statements or other
documents deemed necessary by Lender or its transferee to create, perfect or
preserve the rights and interest to be acquired by such transferee, provide any
updated financial information with appropriate verification through auditors
letters, revised organizational documents and counsel opinions satisfactory to
the Rating Agencies, executed amendments to the Loan Documents, and review
information contained in a preliminary or final private placement memorandum,
prospectus, prospectus supplements or other disclosure document, providing a
mortgagor estoppel certificate and such other information about Borrower, SPE
Equity Owner, any Guarantor or the Property as Lender may reasonably require
for Lender’s offering materials.  Any
costs and expenses incurred by Borrower in connection with this Section 15.02
shall be borne by Lender.

Section 15.03         Dissemination
of Information.  Borrower
acknowledges that Lender may provide to third parties with an existing or
prospective interest in the servicing, enforcement, evaluation, performance,
ownership, purchase, participation or Securitization of the Loan, including, without
limitation, any Rating Agency and any entity maintaining databases on the
underwriting and performance of commercial mortgage loans, any and all
information which Lender now has or may hereafter acquire relating to the Loan,
the Property, Borrower, SPE Equity Owner or any Guarantor, as Lender determines
necessary or desirable and that such information may be included in disclosure
documents in connection with a Securitization or syndication of participation
interests, including, without limitation, a prospectus, prospectus supplement,
offering memorandum, private placement memorandum or similar document (each, a “Disclosure Document”) and also may be
included in filing with the Securities and Exchange Commission pursuant to the
Securities Act on the Securities Exchange Act. 
To the fullest extent permitted under applicable law, Borrower
irrevocably waives all rights, if any, to prohibit such disclosure, including,
without limitation, any right of privacy.

Section 15.04         Securitization
Indemnification.  Borrower agrees to provide in connection with each
Disclosure Document provided to Borrower for review, an indemnification
certificate:  (a) certifying that
such Disclosure Document has carefully been examined, including, without
limitation, the sections entitled “Special Considerations,” and/or “Risk
Factors,” and “Certain Legal Aspects of the Mortgage Loan,” or similar
sections, and all sections relating to Borrower, SPE Equity Owner, Guarantors,
Property Manager, their respective Affiliates, the Loan, the Loan Documents and
the Property, and any risks or special considerations relating thereto, and
that, to the best of Borrower’s knowledge, such sections (and any other
sections reasonably requested) do not contain any untrue statement of a
material fact or omit to state a material fact necessary in order to make the
statements made, in the light of the circumstances under which they were made,
not misleading; (b) indemnifying Lender (and for purposes of this Section
15.04, Lender shall include its officers and directors) and the entity that
(i) has filed the registration statement, if any, relating to the
Securitization and/or (ii) which is acting as issuer, depositor, sponsor
and/or a similar capacity with respect to the Securitization (any Person

 72
 

 

described in (i) or (ii), an “Issuer Person”),
and each director and officer of any Issuer Person, and each Person or entity
who controls any Issuer Person within the meaning of Section 15 of the
Securities Act or Section 20 of the Securities Exchange Act (collectively, “Issuer Group”),
and each Person which is acting as an underwriter, manager, placement agent,
initial purchaser or similar capacity with respect to the Securitization, each
of its directors and officers and each Person who controls any such Person within
the meaning of Section 15 of the Securities Act or Section 20 of the Securities
Exchange Act which is acting as an underwriter, manager, placement agent,
initial purchaser or similar capacity with respect to the Securitization, each
of its directors and officers and each Person who controls any such Person
within the meaning of Section 15 of the Securities Act and Section 20 of the
Securities Exchange Act (collectively, “Underwriter Group”) for any Losses to
which Lender, the Issuer Group or the Underwriter Group may become subject
insofar as the Losses arise out of or are based upon any breach of the
foregoing certification set forth in clause (a) (collectively, “Securities Liabilities”);
and (c) agreeing to reimburse Lender, the Issuer Group and the Underwriter
Group for any legal or other expenses reasonably incurred by Lender, the Issuer
Group and the Underwriter Group in investigating or defending the Securities
Liabilities; provided, however, that Borrower will be liable
under clauses (b) or (c) above only to the extent that such
Securities Liabilities arise out of, or are based upon, any such untrue
statement or omission made therein in reliance upon, and in conformity with,
information furnished to Lender or any member of the Issuer Group or Underwriter
Group by or on behalf of Borrower or a Guarantor in connection with the
preparation of the Disclosure Documents or in connection with the underwriting
of the Loan, including, without limitation, financial statements of Borrower,
SPE Equity Owner or any Guarantor, and operating statements, rent rolls,
environmental site assessment reports and property condition reports with
respect to the Property, known by Borrower to be untrue or to be a material
omission at the time of its certification delivered pursuant to clause
(a).  This indemnity is in addition to
any liability which Borrower may otherwise have and shall be effective whether
or not an indemnification certificate described in (a) above is provided and
shall be applicable based on information previously provided by or on behalf of
Borrower or a Guarantor if the indemnification certificate is not provided.

ARTICLE 16

BORROW FURTHER ACTS AND ASSURANCES

PAYMENT OF SECURITY RECORDING CHARGES

Section 16.01         Further
Acts.  Borrower, at Borrower’s expense,
agrees to take such further actions and execute such further documents as
Lender reasonably may request to carry out the intent of the Loan Documents or
to establish and protect the rights and remedies created or intended to be
created in favor of Lender under the Loan Documents or to protect the value of
the Property and Lender’s security interest or liens therein.  Borrower agrees to pay all filing,
registration or recording fees or taxes, and all expenses incident to the
preparation, execution, acknowledgement, or filing/recording of the Security
Instrument, the Assignment of Leases and Rents, financing statements or any
such instrument of further assurance, except where prohibited by law so to do.

Section 16.02         Replacement
Documents.  Upon receipt of an
affidavit from an officer of Lender as to the loss, theft, destruction or
mutilation of the Note or any other Loan Document which is not of public
record, and, in the case of any such mutilation, upon surrender and

 73
 

 

cancellation of such document, Borrower will issue a
replacement original in lieu thereof in the same original principal amount and
otherwise on the same terms and conditions as the original, provided however,
in the event Borrower becomes legally obligated to pay a third party under the
Note or Loan Documents by final judgment, then, to the extent Borrower does not
receive credit from such third party for any payments made to Lender under such
duplicate Note or Loan Document, Lender shall indemnify and hold Borrower
harmless in an amount not to exceed the sum of such payments made to Lender
under such duplicate Note or Loan Documents; provided further, that in
connection with any litigation, arbitration or other proceeding pertaining to
any such claim of such third party, Borrower shall use commercially reasonable
efforts to defend against such claim and not confess any judgment pertaining
thereto without Lender’s prior written consent, and, at Lender’s option, permit
Lender to assume and control such defense with counsel acceptable to Lender,
the costs of which shall be borne by Lender.

Section 16.03         Borrower
Estoppel Certificates.

(a)           Borrower Information.  Borrower, within ten (10) days of Lender’s
written request, shall furnish to Lender or Lender’s designee a statement, duly
acknowledged and certified by a Responsible Officer, setting forth:  (i) the Maximum Loan Amount and the
amount of principal advanced as of the certificate date; (ii) the unpaid
principal amount of the Loan; (iii) the calculation of the rate of
interest accruing on the Loan, including the then Applicable Interest Rate;
(iv) the Payment Due Date and the Maturity Date; (v) the date
installments of interest and/or principal were last paid; (vi) that, except as
provided in such statement, no defaults or events exists which would be an
Event of Default with the giving of any applicable notice or the expiration of
any applicable grace or cure period or both; (vii) that the Loan Documents are
valid, legal and binding obligations and have not been modified or, if
modified, giving the particulars of such modification; (viii) whether any
offsets or defenses exist against Borrower’s obligation to pay the Loan and
perform the Obligations and, if any are alleged to exist, a detailed
description thereof; (ix) that all Leases are in full force and effect, and for
Leases other than residential Leases, have not been modified or if modified,
setting forth all modifications; (x) a current Rent Roll for the Property, (xi)
the date to which Rents under the Leases have been paid; (xii) whether or not,
to the best knowledge of Borrower, any of the tenants under the Leases are in
default under the Leases, and, if any of the tenants are in default, setting
forth the specific nature of all such defaults; and (xiii) such other matters
reasonably requested by Lender and reasonably related to the Leases or the
Property.

(b)           Tenant Estoppels.  Borrower shall use commercially reasonably
efforts to obtain and deliver to Lender, promptly upon Lender’s written request
(but in any event no later than fifteen (15) business days following Lender’s
request), duly executed estoppel certificates from tenants identified by Lender
attesting to such facts regarding a tenant’s non-residential Lease as Lender
may require, including, without limitation: 
(i) that the Lease is in full force and effect with no defaults
thereunder on the part of any party, and no event exists that would be an event
of default thereunder with giving of any applicable notice or the expiration of
any applicable grace or cure period or both; (ii) that none of the Rents
have been paid more than one month in advance, except as a security deposit;
and (iii) that the tenant claims no defense or offset against the full and
timely performance of its obligations under the Lease, or setting out any such
claims in reasonable detail.

 74
 

 

(c)           Lender Statement of Loan
Information.  After written request
by Borrower not more than twice annually, Lender shall furnish Borrower a
statement setting forth:  (i) the
original Maximum Loan Amount and the amount of principal advanced by Lender as
of the certificate date; (ii) the unpaid principal amount of the Loan;
(iii) the rate of interest accruing on the Loan, including the then
Applicable Interest Rate; and (iv) the balance of amounts held in the
Reserve Accounts, if any.

Section 16.04         Recording
Costs.  Subject to Sections 15.01 and
15.02 above, Borrower will pay all transfer taxes, filing, registration,
recording or similar fees, and all expenses incident to the preparation,
execution, acknowledgment, recording, filing and/or release or discharge of the
Note, the Security Instrument and each of the other Loan Documents, and all
modifications, extensions, consolidations, or restatements of the same, except
where prohibited by law so to do.

Section 16.05         Publicity.  Borrower acknowledges and agrees that Lender
may release publicity articles concerning the financing or servicing of the
Loan.

ARTICLE 17

LENDER CONSENT

Section 17.01         No
Joint Venture; No Third Party Beneficiaries.  Borrower and Lender intend that the relationships
created hereunder and under each of the other Loan Documents are solely those
of borrower and lender.  Nothing herein
or in any of the other Loan Documents is intended to create, nor shall it be
construed as creating anything but a debtor-creditor relationship between
Borrower and Lender nor shall they be deemed to confer on anyone other than
Lender, and its successors and assigns, any right to insist upon or to enforce
the performance or observance of any of the obligations contained herein or
therein.

Section 17.02         Lender
Approval.  Wherever pursuant to a
Loan Document (a) Lender exercises any right to approve or disapprove or
to grant or withhold consent; (b) any arrangement or term is to be
satisfactory to Lender; (c) a waiver is requested from Lender, or
(d) any other decision is to be made by Lender, all shall be made in
Lender’s sole discretion, unless expressly provided otherwise in such Loan
Document.  By approving or granting
consent, accepting performance from Borrower, or releasing funds from a Reserve
Account, Lender shall not be deemed to have warranted or affirmed the
sufficiency, completeness, legality or effectiveness of the subject matter or
of Borrower’s compliance with Requirements of Laws.  Notwithstanding any provision under the Loan
Documents which provide Lender the opportunity to approve or disapprove any
action or decision by Borrower, Lender is not undertaking the performance of
any obligation of Borrower under any of the Loan Documents or any of the other
documents and agreements in connection with this transaction (including,
without limitation, the Leases).

Section 17.03         Performance
at Borrower’s Expense.  Borrower
acknowledges and agrees that in connection with each request by Borrower
to:  (a) modify or waive any
provision of the Loan Documents; (b) release or substitute Property;
(c) obtain Lender’s approval or consent whenever required by the Loan
Documents including, without limitation, review of a Transfer request, matters
affecting a Major Lease, improvements or alterations to the Property, and
easements or other additions to Permitted Encumbrances; or (d) provide a
subordination, non-disturbance and attornment agreement, and the Loan Documents
do not elsewhere expressly

 75
 

 

provide fo an applicable fee (or provide that none will
be charged), Lender reserves the right to collect a review or processing fee
from Borrower based on a reasonable estimate of the administrative costs which
Lender will incur to connection therewith. 
Borrower agrees to pay such fee along with all reasonable legal fees and
expenses incurred by Lender and the fees required for a Rating Confirmation or
approval from the trustee if the Loan has been Securitized, as applicable,
irrespective of whether the matter is approved, denied or withdrawn.  Any amounts payable by Borrower hereunder,
shall be deemed a part of the Loan, shall be secured by this Loan Agreement and
shall bear interest at the Default Rate if not fully paid within ten (10) days
of written demand for payment.

ARTICLE 18

MISCELLANEOUS PROVISIONS

Section 18.01         Notices.  All notices and other communications under
this Loan Agreement are to be in writing and addressed to each party as set
forth below.  Default or demand notices
shall be deemed to have been duly given upon the earlier of:  (a) actual receipt; (b) one (1)
business day after having been timely deposited for overnight delivery, fee
prepaid, with a reputable overnight courier service, having a reliable tracking
system; or (c) three (3) business days after having been deposited in any
post office or mail depository regularly maintained by the U.S. Postal Service
and sent by certified mail, postage prepaid, return receipt requested, and in
the case of clause (b) and (c) irrespective of whether delivery is
accepted.  A new address for notice may
be established by written notice to the other; provided, however,
that no change of address will be effective until written notice thereof
actually is received by the party to whom such address change is sent.  Notice to outside counsel or parties other
than the named Borrower and Lender, now or hereafter designated by a party as
entitled to notice, are for convenience only and are not required for notice to
a party to be effective in accordance with this section.  Notice addresses are as follows:

Address for Lender:

Barclays Capital Real
Estate Inc.

200 Park Avenue

New York, NY 10166

Attn.:  Lori Rung

Fax:  (212)
412-1664

Polsinelli Shalton Welte
Suelthaus PC

700 West 47th Street, Suite 1000

Kansas City, MO
64112-1802

Attn:  Daniel Flanigan

Fax:  (816)
753-1536

Address for Borrower:

Behringer Harvard
Ferncroft, LLC

1501 Dallas Parkway,
Suite 600

Addison, TX  75001

 76
 

 

Attn:  Andrew Bruce

Fax: 
214-655-1610

Luce Forward Hamilton
Scripps, LLP

600 W. Broadway, Suite
2600

San Diego, CA  92101

Attn:  Darryl Steinhouse, Esq.

Fax:  (619) 232-8311

Section 18.02         Entire
Agreement; Modifications; Time of Essence. 
This Loan Agreement, together with the other Loan Documents, contain the
entire agreement between Borrower and Lender relating to the Loan and supersede
and replace all prior discussions, representations, communications and
agreements (oral or written).  If any
documents relating to the Loan are in conflict, the Note shall control over
this Loan Agreement, and this Loan Agreement shall control over all of the
other documents.  No Loan Document shall
be modified, supplemented or terminated, nor any provision thereof waived,
except by a written instrument signed by the party against whom enforcement
thereof is sought, and then only to the extent expressly set forth in such
writing.  Time is of the essence with
respect to all of Borrower’s obligations under the Loan Documents.

Section 18.03         Binding
Effect; Joint and Several Obligations. 
This Loan Agreement and each of the other Loan Documents shall be
binding upon and inure to the benefit of Borrower and Lender and their
respective successors and assigns, whether by voluntary action of the parties
or by operation of law.  (The foregoing
does not modify any conditions regulating Transfers.)  If Borrower consists of more than one party,
each shall be jointly and severally liable to perform the obligations of
Borrower under the Loan Documents.

Section 18.04         Duplicate
Originals; Counterparts.  This Loan
Agreement and each of the other Loan Documents may be executed in any number of
duplicate originals, and each duplicate original shall be deemed to be an
original.  This Loan Agreement and each
of the other Loan Documents (and each duplicate original) also may be executed
in any number of counterparts, each of which shall be deemed an original and
all of which together constitute a fully executed agreement even though all
signatures do not appear on the same document.

Section 18.05         Unenforceable
Provisions.  Any provision of this
Loan Agreement or any other Loan Documents which is determined by a court of
competent jurisdiction or government body to be invalid, unenforceable or
illegal shall be ineffective only to the extent of such holding and shall not
affect the validity, enforceability or legality of any other provision, nor
shall such determination apply in any circumstance or to any party not
controlled by such determination.

Section 18.06         Governing
Law.  This Loan Agreement and each of
the other Loan Documents shall be interpreted and enforced according to the
laws of the state where the Property is located (without giving effect to rules
regarding conflict of laws).

Section 18.07         Consent
to Jurisdiction.  Borrower hereby
consents and submits to the exclusive jurisdiction and venue of any state or
federal court sitting in the county and State where the Land encumbered hereby
is located with respect to any legal action or proceeding

 77
 

 

arising with respect to the Loan Documents and waives
all objections which it may have to such jurisdiction and venue.  Nothing herein shall, however, preclude or
prevent Lender from bringing actions against Borrower in any other jurisdiction
as may be necessary to enforce or realize upon the security for the Loan
provided in any of the Loan Documents.

Section 18.08         WAIVER
OF TRIAL BY JURY.  BORROWER AND
LENDER EACH WAIVE THEIR RESPECTIVE RIGHT, TO THE FULLEST EXTENT PERMITTED BY
LAW, AND AGREE NOT TO ELECT A TRIAL BY JURY WITH RESPECT TO ANY ISSUE ARISING
OUT OF THIS LOAN AGREEMENT, ANY OTHER LOAN DOCUMENT, OR THE RELATIONSHIP
BETWEEN THE PARTIES AS BORROWER AND LENDER.

[Remainder of page is blank; signatures appear on next
page.]

 78

 

IN WITNESS WHEREOF, this Loan Agreement has been
executed as an instrument under seal by Borrower the day and year first above
written.

	
  BORROWER:

  
	
   

  
	
  BEHRINGER HARVARD FERNCROFT, LLC,

  
	
  a Delaware limited liability company

  
	
   

  
	
   

  
	
  By:

  	
   

  	
   

  
	
   

  	
   Gerald J. Reihsen, III, Secretary

  
	
   

  
	
   

  
	
  Borrower’s State Identification Number:

  
	
   

  
	
  4180319

  
	
   

  
	
  Borrower’s Tax Identification Number:

  
	
   

  
	
  20-5095289

  

 

 

IN WITNESS WHEREOF, Lender hereby signs, seals and
delivers this Loan Agreement.

	
  LENDER:

  
	
   

  
	
  BARCLAYS CAPITAL
  REAL ESTATE INC.

  
	
   

  
	
   

  
	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  
	
   

  	
  Title:

  

 

 

Exhibit
A

Intentionally
Deleted

 A-1

 

Exhibit
B

Disbursement
Request Form

                        ,
        

Barclays Capital Real Estate Inc.

200 Park Avenue

New York, New York  10166

Attention:  CMBS Servicing

Re:                               REQUEST FOR ADVANCE FROM [IMMEDIATE REPAIR ESCROW
ACCOUNT/REPLACEMENT RESERVE ACCOUNT/TI/LC RESERVE ACCOUNT]

Ladies and Gentlemen:

This Disbursement Request in the amount of $                
(the “Requested Advance”)
is made pursuant to Section 5.01 of the Loan Agreement between dated as of                       ,
200   (the “Agreement”)
between the undersigned, as borrower (“Borrower”),
and you, as lender (together with its successors and assigns, “Lender”).  All capitalized terms used and not defined
herein shall have the respective meanings given such terms in the Agreement.

Borrower hereby represents and warrants to Lender
that, as of the date hereof:

1.             The
following is a brief description of the [Immediate Repairs/Replacements/Tenant
Improvements/Leasing Commissions] for which Borrower is requesting the
Requested Advance:

	
  

  	
  Property Name(s):

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Description of Work/Commissions:

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  

 

 B-1
 

 

2.             A brief description of the quantity and price of the
items purchased or labor utilized:

	
  Item or Labor Description:

  	
   

  	
  Quantity:

  	
   

  	
  Price:

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  

 

3.             No
Event of Default has occurred and is continuing.

4.             All
of the work that is the subject of the Requested Advance has been performed in
accordance with all Requirements of Law.

5.             Attached
hereto are copies of invoices for all items or materials purchased and all
contracted labor or services provided, together with evidence that such items
have been paid in full, unless otherwise permitted in accordance with Article 5
of the Agreement.

6.             Attached
hereto are releases or waivers of mechanic’s and materialmen’s liens from all
persons furnishing work or materials with respect to any Reserve Item being
funded hereunder which exceeds $10,000.00.

7.             If
the invoices for any one Reserve Item does not exceed $10,000.00 and Lender
disburses the requested amount directly to Borrower, Borrower covenants and
agrees to promptly pay such invoices.

8.             This
Disbursement Request does x
/ does not o (check one) request a disbursement from the
Replacement Reserve Account to pay or reimburse Borrower for labor or materials
for replacements not described on Exhibit F to the Agreement.  If “does” was checked, please describe the
type of capital improvement:

 

.

[Attached hereto
is a title search or endorsement to the Title Insurance Policy.]

 B-2
 

 

The following are the wire instructions for the
Requested Disbursement:

 

	
  

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  
	
   

  	
  Very truly yours,

  
	
   

  	
   

  
	
   

  	
  [BORROWER]

  
				

 

 B-3

Exhibit
C

Immediate
Repairs

TABLE 1 -
IMMEDIATE REPAIRS & SHORT TERM REPAIRS

Ferncroft Corporate
Center

35 Village Road

Middleton, Massachusetts

EBI Project #
11063614

	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  ESTIMATED

  	
   

  	
  Short

  	
   

  	
  ESTIMATED

  	
   

  	
   

  	
   

  
	
  SECTION

  	
   

  	
  SECTION

  	
   

  	
  RECOMMENDED

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  UNIT

  	
   

  	
  IMMEDIATE

  	
   

  	
  Term

  	
   

  	
  SHORT
  TERM

  	
   

  	
  COMMENTS
  OR ADDITIONAL

  	
   

  
	
  NUMBER

  	
   

  	
  NAME

  	
   

  	
  WORK

  	
   

  	
  QUANTITY

  	
   

  	
  UNIT
  COST

  	
   

  	
  DESCRIPTION

  	
   

  	
  REPAIR
  COST

  	
   

  	
  Repair?

  	
   

  	
  REPAIR
  COST

  	
   

  	
  DESCRIPITON

  	
   

  
	
  SITE CONDITIONS

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  2.1

  	
   

  	
  Topo.

  	
   

  	
  None

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  2.2

  	
   

  	
  Pvm’t/Pkg

  	
   

  	
  None

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  2.3

  	
   

  	
  Amenities

  	
   

  	
  Repair exterior stairs

  	
   

  	
  1

  	
   

  	
  $

  	
  2,500.00

  	
   

  	
  each

  	
   

  	
  $

  	
  2,500

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  The two treads at the bottom of the rear concrete
  stairwell have begun to spall and deteriorate. The stairs serve as a second
  means of egress.

  	
   

  
	
  2.3

  	
   

  	
  Amenities

  	
   

  	
  Repair retaining walls

  	
   

  	
  1

  	
   

  	
  $

  	
  5,000.00

  	
   

  	
  lump sum

  	
   

  	
  $

  	
  5,000

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  2.4

  	
   

  	
  Utilities

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  BUILDING CONDITIONS

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  3.1

  	
   

  	
  Substruct

  	
   

  	
  None

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  3.2

  	
   

  	
  Superstruct

  	
   

  	
  None

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  3.3

  	
   

  	
  Facades

  	
   

  	
  None

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  3.4

  	
   

  	
  Root

  	
   

  	
  None

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  3.5

  	
   

  	
  Bsmt/Attic

  	
   

  	
  None

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  3.6

  	
   

  	
  ADA

  	
   

  	
  None

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  INTERIOR FINISHES & COMPONENTS

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  3.7

  	
   

  	
  Interior F & C

  	
   

  	
  None

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  BUILDING SYSTEMS

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  4.1

  	
   

  	
  Plumbing

  	
   

  	
  None

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  4.2

  	
   

  	
  HVAC

  	
   

  	
  None

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  4.3

  	
   

  	
  Electric

  	
   

  	
  None

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  4.4

  	
   

  	
  F/L Safety

  	
   

  	
  None

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  4.5

  	
   

  	
  Elevators

  	
   

  	
  None

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  MATERIAL CODE VIOLATIONS

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  5.0

  	
   

  	
  Codes

  	
   

  	
  None

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  TOTAL

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  $

  	
  7,500

  	
   

  	
   

  	
   

  	
  $

  	
  0

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  1.25 MULTIPLIER

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  $

  	
  9,375

  	
   

  	
   

  	
   

  	
  $

  	
  0

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  TOTAL DEFERRED MAINTENANCE

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  $

  	
  9,375

  	
   

  	
   

  	
   

  

 

PROPERTY AND LOAN INFORMATION

 

	
  

  	
   

  	
  Building Area

  	
   

  	
  226,338

  	
   

  	
  Property Age 

  	
   

  	
  16 yrs

  	
   

  	
  No. of Floors

  	
   

  	
  8

  	
   

  	
  Survey Date

  	
   

  	
  7/11/06

  	
   

  
	
   

  	
   

  	
  Tenants or Units

  	
   

  	
  2

  	
   

  	
  Property Type

  	
   

  	
  Office

  	
   

  	
  No. of Buildings

  	
   

  	
  1

  	
   

  	
  Report Date

  	
   

  	
  7/13/06

  	
   

  

 

	
  EBI Consulting

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  Exhibit
  1

  

 C-1
 

 

Exhibit
D

Organizational
Chart

 

(1)          Robert M. Behringer is
Manager, and Owner of approximately 54% of Behringer Harvard Holdings,
LLC.  No other member of Behringer
Harvard Holdings, LLC currently owns more than 20%.  Robert Behringer holds 100% of the voting
interests in Behringer Harvard Holdings, LLC.

(2)          Behringer Harvard
Holdings, LLC owns less than 1% of Behringer Harvard Opportunity REIT I, Inc.

 D-1
 

Exhibit
E

Rent
Roll

	
  Database:

  Bldg Status:

  	
   

  	
  BEHRINGER

  Active only

  	
   

  	
   

  	
   

  	
  Rent
  Roll

  Fermcroft Corporate Center

  7/31/2006

  	
   

  	
   

  	
   

  	
  Page:

  Date:

  Time:

  	
   

  	
  1

  8/10/2006

  02:02 PM

  

 

	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  Monthly

  	
   

  	
   

  	
   

  	
  Monthly

  	
   

  	
  Future
  Rent Increase

  	
   

  
	
  Bldg Id-Suit Id

  	
   

  	
  Occupant
  Name

  	
   

  	
  Rent
  Start

  	
   

  	
  Expiration

  	
   

  	
  GLA

  Sqft

  	
   

  	
  Monthly

  Base Rent

  	
   

  	
  Annual

  Rate PSF

  	
   

  	
  Cost

  Recovery

  	
   

  	
  Expense

  Stop

  	
   

  	
  Other

  Income

  	
   

  	
  Cat

  	
   

  	
  Date

  	
   

  	
  Monthly

  Amount

  	
   

  	
  PSF

  	
   

  
	
  Vacant Suites

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  50020    -100

  	
   

  	
  Vacant

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  9,170

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  50020    -600

  	
   

  	
  Vacant

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  32,631

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Occupied Suites

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  50020    -200

  	
   

  	
  VERIZON INFORMATION SERVICES

  	
   

  	
  11/15/2004

  	
   

  	
  11/14/2009

  	
   

  	
  128,700

  	
   

  	
  107,250.00

  	
   

  	
  10.00

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  BRN

  	
   

  	
  8/1/2006

  	
   

  	
  107,250.00

  	
   

  	
  10.00

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  CAM

  	
   

  	
  8/1/2006

  	
   

  	
  66,095.00

  	
   

  	
  6.16

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  CAT

  	
   

  	
  8/1/2006

  	
   

  	
  10,198.00

  	
   

  	
  0.95

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  UTL

  	
   

  	
  8/1/2006

  	
   

  	
  16,645.00

  	
   

  	
  1.55

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  50020    -800

  	
   

  	
  SAS INSTITUTE, INC.

  	
   

  	
  8/15/2005

  	
   

  	
  8/31/2010

  	
   

  	
  55,837

  	
   

  	
  89,571,85

  	
   

  	
  19.25

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  BRN

  	
   

  	
  8/1/2006

  	
   

  	
  89,571.85

  	
   

  	
  19.25

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  BRN

  	
   

  	
  9/1/2006

  	
   

  	
  94,224.94

  	
   

  	
  20.25

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  BRN

  	
   

  	
  9/1/2007

  	
   

  	
  97,714.75

  	
   

  	
  21.00

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  BRN

  	
   

  	
  9/1/2006

  	
   

  	
  102,367.83

  	
   

  	
  22.00

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  BRN

  	
   

  	
  9/1/2009

  	
   

  	
  108,184.19

  	
   

  	
  23.25

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  CAM

  	
   

  	
  8/1/2006

  	
   

  	
  4,580.00

  	
   

  	
  0.98

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  UTL

  	
   

  	
  8/1/2006

  	
   

  	
  5,816.35

  	
   

  	
  1.25

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  50020    -ROOF

  	
   

  	
  VERIZON WIRELESS

  	
   

  	
  9/6/1990

  	
   

  	
  12/31/2009

  	
   

  	
  0

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Totals:

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Occupied Sqft:

  	
   

  	
  81.53

  	
  %

  	
  2 Units

  	
   

  	
  184,537

  	
   

  	
  196,821.85

  	
   

  	
   

  	
   

  	
  0.00

  	
   

  	
   

  	
   

  	
  0.00

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Leased/Unoccupied Sqft:

  	
   

  	
   

  	
   

  	
  0 Units

  	
   

  	
  0

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Vacant Sqft:

  	
   

  	
  18.47

  	
  %

  	
  2 Untis

  	
   

  	
  41,801

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Total Sqft:

  	
   

  	
   

  	
   

  	
  4 Units

  	
   

  	
  226,338

  	
   

  	
  196,821.85

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Total Ferncroft
  Corporate Center:

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Occupied Sqft:

  	
   

  	
  81.53

  	
  %

  	
  2 Units

  	
   

  	
  184,537

  	
   

  	
  196,821.85

  	
   

  	
   

  	
   

  	
  0.00

  	
   

  	
   

  	
   

  	
  0.00

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Leased/Unoccupied Sqft:

  	
   

  	
   

  	
   

  	
  0 Units

  	
   

  	
  0

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Vacant Sqft:

  	
   

  	
  18.47

  	
  %

  	
  2 Untis

  	
   

  	
  41,801

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Total Sqft:

  	
   

  	
   

  	
   

  	
  4 Units

  	
   

  	
  226,338

  	
   

  	
  196,821.85

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Grand Total:

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Occupied Sqft:

  	
   

  	
  81.53

  	
  %

  	
  2 Units

  	
   

  	
  184,537

  	
   

  	
  196,821.85

  	
   

  	
   

  	
   

  	
  0.00

  	
   

  	
   

  	
   

  	
  0.00

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Leased/Unoccupied Sqft:

  	
   

  	
   

  	
   

  	
  0 Units

  	
   

  	
  0

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Vacant Sqft:

  	
   

  	
  18.47

  	
  %

  	
  2 Untis

  	
   

  	
  41,801

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Total Sqft:

  	
   

  	
   

  	
   

  	
  4 Units

  	
   

  	
  226,338

  	
   

  	
  196,821.85

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  

 

	
   

  	
  To the best of Buyer’s
  knowledge, based on information provided be seller, we certify this document
  is true and correct.

  
	
   

  	
   

  
	
   

  	
  /s/ Jeffrey Carter

  	
   

  
	
   

  	
  Jeffrey Carter, Due Diligence Manager

  
	
   

  	
   

  
	
   

  	
  8/16/06

  
	
   

  	
  Date

  

 E-1
 

Exhibit F

Replacements

TABLE 2 - REPLACEMENT RESERVES

 

Femcroft Corporate Center

35 Village Road

Middleton, Massachusetts

EBI Project #         11063614

 

	
  SECTION

  NUMBER

  	
   

  	
  SECTION

  NAME

  	
   

  	
  RECOMMENDED

  WORK

  	
   

  	
  AVERAGE

  EFFECTIVE

  USEFUL

  LIFE

  	
   

  	
  EFFECTIVE

  AGE

  	
   

  	
  REMAINING

  USEFUL

  LIFE

  	
   

  	
  TOTAL

  QUANTITY

  OVER

  TERM

  	
   

  	
  APPROXIMATE

  QUANTITY

  PER YEAR

  	
   

  	
  UNIT COST

  	
   

  	
  UNIT

  DESCRIPTION

  	
   

  	
  ESTIMATAED

  COST PER

  YEAR

  	
   

  
	
  SITE CONDITIONS

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  2.1

  	
   

  	
  Topo

  	
   

  	
  None

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  2.2

  	
   

  	
  Pvm”t/Pkg

  	
   

  	
  Patching crack sealing, sealing and striping

  	
   

  	
  5

  	
   

  	
  2

  	
   

  	
  3

  	
   

  	
  329,238

  	
   

  	
  164,619

  	
   

  	
  $

  	
  0.10

  	
   

  	
  per square foot

  	
   

  	
  $

  	
  16,462

  	
   

  
	
  2.2

  	
   

  	
  Pvm”t/Pkg

  	
   

  	
  Parking garage weather sealant

  	
   

  	
  10

  	
   

  	
  2

  	
   

  	
  8

  	
   

  	
  194,250

  	
   

  	
  194,250

  	
   

  	
  $

  	
  0.35

  	
   

  	
  per square foot

  	
   

  	
  $

  	
  67,988

  	
   

  
	
  2.3

  	
   

  	
  Amenities

  	
   

  	
  None

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  2.4

  	
   

  	
  Utilities

  	
   

  	
  None

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  BUILDING CONDITIONS

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  3.1

  	
   

  	
  Substr.

  	
   

  	
  None

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  3.2

  	
   

  	
  Superstr.

  	
   

  	
  None

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  3.3

  	
   

  	
  Facades

  	
   

  	
  Sealant renewal at windows and doors

  	
   

  	
  12

  	
   

  	
  8

  	
   

  	
  4

  	
   

  	
  13,456

  	
   

  	
  13,456

  	
   

  	
  $

  	
  4.50

  	
   

  	
  per square foot

  	
   

  	
  $

  	
  60,552

  	
   

  
	
  3.4

  	
   

  	
  Roof

  	
   

  	
  None

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  3.5

  	
   

  	
  Bsmt/Attic

  	
   

  	
  None

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  3.6

  	
   

  	
  ADA

  	
   

  	
  Add accessible parking

  	
   

  	
  5

  	
   

  	
  4

  	
   

  	
  1

  	
   

  	
  1

  	
   

  	
  1

  	
   

  	
  $

  	
  500.00

  	
   

  	
  lump sum

  	
   

  	
  $

  	
  500

  	
   

  
	
  INTERIOR FINISHES & COMPONENTS

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  3.7

  	
   

  	
  Interior F & C

  	
   

  	
  Common area refurbishment - psf

  	
   

  	
  8

  	
   

  	
  1

  	
   

  	
  7

  	
   

  	
  27,161

  	
   

  	
  27,161

  	
   

  	
  $

  	
  5.00

  	
   

  	
  per square foot

  	
   

  	
  $

  	
  135,803

  	
   

  
	
  BUILDING SYSTEMS

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  4.1

  	
   

  	
  Plumbing

  	
   

  	
  Large gas fired water heater replacement

  	
   

  	
  18

  	
   

  	
  14

  	
   

  	
  4

  	
   

  	
  1

  	
   

  	
  1

  	
   

  	
  $

  	
  2,500.00

  	
   

  	
  each, # per year

  	
   

  	
  $

  	
  2,500

  	
   

  
	
  4.2

  	
   

  	
  HVAC

  	
   

  	
  None

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  4.3

  	
   

  	
  Electric

  	
   

  	
  None

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  4.4

  	
   

  	
  F/L Safety

  	
   

  	
  Replace fire alarm control panel

  	
   

  	
  20

  	
   

  	
  14

  	
   

  	
  6

  	
   

  	
  1

  	
   

  	
  1

  	
   

  	
  $

  	
  15,000.00

  	
   

  	
  each

  	
   

  	
  $

  	
  15,000

  	
   

  
	
  4.5

  	
   

  	
  Elevators

  	
   

  	
  None

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  4.5

  	
   

  	
  Elevators

  	
   

  	
  None

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ANNUAL
  RECOMMENDATIONS, UNINFLATED

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  INFLATION FACTOR,
  IN PERCENTAGE 1,025

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ANNUAL
  RECOMMENDATIONS, INFLATED @ 2.50% AFTER YEAR ONE

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  NET PRESENT VALUE
  OF RECOMMENDED TOTAL ANNUAL RESERVES

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  PRESENT VALUE OF
  RECOMMENDED TOTAL ANNUAL RESERVES PER SF PER YEAR

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  INFLATED
  VALUE OF RECOMMENDED TOTAL ANNUAL RESERVES PER SF PER YEAR

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  

 

	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  Annual Costs

  	
   

  	
  RECOMMENDED

  	
   

  
	
  SECTION

  	
   

  	
  SECTION

  	
   

  	
  RECOMMENDED

  	
   

  	
  2007

  	
   

  	
  2008

  	
   

  	
  2009

  	
   

  	
  2010

  	
   

  	
  2011

  	
   

  	
  2012

  	
   

  	
  2013

  	
   

  	
  2014

  	
   

  	
  2015

  	
   

  	
  TOTAL OVER

  	
   

  
	
  NUMBER

  	
   

  	
  NAME

  	
   

  	
  WORK

  	
   

  	
  YEAR 1

  	
   

  	
  YEAR 2

  	
   

  	
  YEAR 3

  	
   

  	
  YEAR 4

  	
   

  	
  YEAR 5

  	
   

  	
  YEAR 6

  	
   

  	
  YEAR 7

  	
   

  	
  YEAR 8

  	
   

  	
  YEAR 9

  	
   

  	
  THE TERM

  	
   

  
	
  SITE CONDITIONS

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  2.1

  	
   

  	
  Topo

  	
   

  	
  None

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  2.2

  	
   

  	
  Pvm”t/Pkg

  	
   

  	
  Patching crack sealing, sealing and striping

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  16,462

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  16,462

  	
   

  	
   

  	
   

  	
  $

  	
  32,924

  	
   

  
	
  2.2

  	
   

  	
  Pvm”t/Pkg

  	
   

  	
  Parking garage weather sealant

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  67,988

  	
   

  	
   

  	
   

  	
  $

  	
  67,988

  	
   

  
	
  2.3

  	
   

  	
  Amenities

  	
   

  	
  None

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  2.4

  	
   

  	
  Utilities

  	
   

  	
  None

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  BUILDING CONDITIONS

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  3.1

  	
   

  	
  Substr.

  	
   

  	
  None

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  3.2

  	
   

  	
  Superstr.

  	
   

  	
  None

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  3.3

  	
   

  	
  Facades

  	
   

  	
  Sealant renewal at windows and doors

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  60,552

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  $

  	
  60,552

  	
   

  
	
  3.4

  	
   

  	
  Roof

  	
   

  	
  None

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  3.5

  	
   

  	
  Bsmt/Attic

  	
   

  	
  None

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  3.6

  	
   

  	
  ADA

  	
   

  	
  Add accessible parking

  	
   

  	
  500

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  $

  	
  500

  	
   

  
	
  INTERIOR FINISHES & COMPONENTS

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  3.7

  	
   

  	
  Interior F & C

  	
   

  	
  Common area refurbishment - psf

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  135,803

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  $

  	
  135,803

  	
   

  
	
  BUILDING SYSTEMS

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  4.1

  	
   

  	
  Plumbing

  	
   

  	
  Large gas fired water heater replacement

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  2,500

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  $

  	
  2,500

  	
   

  
	
  4.2

  	
   

  	
  HVAC

  	
   

  	
  None

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  4.3

  	
   

  	
  Electric

  	
   

  	
  None

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  4.4

  	
   

  	
  F/L Safety

  	
   

  	
  Replace fire alarm control panel

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  15,000

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  $

  	
  15,000

  	
   

  
	
  4.5

  	
   

  	
  Elevators

  	
   

  	
  None

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  4.5

  	
   

  	
  Elevators

  	
   

  	
  None

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ANNUAL
  RECOMMENDATIONS, UNINFLATED

  	
   

  	
  500

  	
   

  	
   

  	
   

  	
  16,462

  	
   

  	
  63,052

  	
   

  	
   

  	
   

  	
  15,000

  	
   

  	
  135,803

  	
   

  	
  84,449

  	
   

  	
   

  	
   

  	
  $

  	
  315,266

  	
   

  
	
  INFLATION FACTOR,
  IN PERCENTAGE 1,025

  	
   

  	
  100.00

  	
  %

  	
  102.50

  	
  %

  	
  105.06

  	
  %

  	
  107.69

  	
  %

  	
  110.38

  	
  %

  	
  113.14

  	
  %

  	
  115.97

  	
  %

  	
  118.87

  	
  %

  	
  121.84

  	
  %

  	
   

  	
   

  
	
  ANNUAL
  RECOMMENDATIONS, INFLATED @ 2.50% AFTER YEAR ONE

  	
   

  	
  500

  	
   

  	
   

  	
   

  	
  17,295

  	
   

  	
  67,900

  	
   

  	
   

  	
   

  	
  16.971

  	
   

  	
  157,490

  	
   

  	
  100,384

  	
   

  	
   

  	
   

  	
  $

  	
  360,540

  	
   

  
	
  NET PRESENT VALUE
  OF RECOMMENDED TOTAL ANNUAL RESERVES

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  $

  	
  315,266

  	
   

  
	
  PRESENT VALUE OF
  RECOMMENDED TOTAL ANNUAL RESERVES PER SF PER YEAR

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  $

  	
  0.15

  	
   

  
	
  INFLATED
  VALUE OF RECOMMENDED TOTAL ANNUAL RESERVES PER SF PER YEAR

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  $

  	
  0.18

  	
   

  

 

Notes:

1.

2.

 

PROPERTY AND LOAN INFORMATION

 

	
  

  	
   

  	
  Building Area

  	
   

  	
  226,338 SF

  	
   

  	
  Property Age 

  	
   

  	
  16 yrs

  	
   

  	
  No. of Floors

  	
   

  	
  8

  	
   

  	
  Loan Term

  	
  7 yrs

  	
   

  	
  Site Survey Date

  	
   

  	
  7/11/06

  	
   

  
	
   

  	
   

  	
  Tenants or Units

  	
   

  	
  2

  	
   

  	
  Property Type

  	
   

  	
  Office

  	
   

  	
  No. of Buildings

  	
   

  	
  1

  	
   

  	
  Analysis term

  	
  9 yrs

  	
   

  	
  Report Date

  	
   

  	
  7/13/06

  	
   

  

 

 

 F-1Exhibit 10.2

PROMISSORY
NOTE

	
  $18,000,000.00

  	
  August 17, 2006

  

 

FOR
VALUE RECEIVED, and upon the terms and conditions set forth herein, BEHRINGER
HARVARD FERNCROFT, LLC, a Delaware limited liability company (“Borrower”), promises to pay to the
order of BARCLAYS CAPITAL REAL ESTATE INC., a Delaware corporation (together
with its successors and assigns, “Lender”),
at Lender’s office located at 200 Cedar Knolls Road, Whippany, New Jersey
07981-1806, Attn:  Jonathan Cohen/CMBS
Payments, or at such other place as Lender may designate to Borrower in writing
from time to time, the principal amount of EIGHTEEN MILLION DOLLARS
($18,000,000.00), together with interest thereon, in the amounts, at the times
and otherwise in accordance with the terms set forth in that certain Loan
Agreement of even date herewith (“Loan
Agreement”) between Borrower and Lender, which terms are
incorporated herein by this reference.

ARTICLE
1

TERMS OF NOTE

Section
1.01           Loan Agreement.  This Note is the promissory note referred to
in the Loan Agreement, and evidences the Loan made by Lender to Borrower
pursuant to the Loan Agreement.  All
capitalized terms used herein and not defined herein have the meaning provided
in the Loan Agreement.  All of the terms,
conditions and provisions of the Loan Agreement applicable to this Note and the
debt evidenced hereby are incorporated herein by this reference.

Section
1.02           Intentionally Deleted.

Section
1.03           Exculpation.  NOTWITHSTANDING ANY PROVISION HEREOF TO THE
CONTRARY, BORROWER’S PERSONAL LIABILITY FOR PAYMENT OF THIS NOTE AND
PERFORMANCE OF THE OBLIGATIONS UNDER THIS NOTE IS LIMITED IN THE SAME MANNER
AND TO THE SAME EXTENT AS EXPRESSLY PROVIDED IN THE LOAN AGREEMENT.

Section
1.04           Borrower’s Waivers.  Borrower, for itself and all others who may
become liable for payment of all or any portion of this Note, hereby waives
presentment for payment, demand, protest, and notice of dishonor, protest,
nonpayment, demand, intent to accelerate, and acceleration. Borrower, for
itself and all others who may become liable for payment of all or any portion
of this Note, hereby further waives and renounces, to the fullest extent
permitted by law, all rights to the benefits of any moratorium, reinstatement,
marshalling, forbearance, valuation, stay, extension, redemption, appraisement,
exemption and homestead now or hereafter provided, both as to party and
property (real and personal), against the enforcement and collection of the
obligations evidenced by this Note or any of the other Loan Documents.

Section
1.05           Unconditional Payment.  Any payment received by Lender hereunder that
is required to be refunded or recovered from Lender as a voidable preference or
a fraudulent transfer or is otherwise set-aside pursuant to the Bankruptcy Code
or any insolvency or other debtor relief law shall not be considered as a
payment made on the Loan or under this Note.

 

Borrower’s liability under this Note to make such
payment shall be reinstated, notwithstanding that this Note may have been
marked satisfied and returned to Borrower or otherwise canceled, and such
payment shall be immediately due and payable upon demand.

ARTICLE
2

DEFAULT AND REMEDIES

Section
2.01           Event of Default.  A default (“Event of Default”) shall occur under this Note if an “Event
of Default” as that term is defined under the Loan Agreement or any other Loan
Document has occurred and remains uncured.

Section
2.02           Cumulative and
Independent Remedies.  Following an
Event of Default (which has not been waived in writing by Lender), Lender, without
notice or consent from Borrower, shall be entitled to exercise all rights and
remedies as have been provided to Lender hereunder, under the Loan Agreement
and other Loan Documents, by law or in equity. 
Such rights and remedies are cumulative and may be exercised
independently, concurrently or successively in Lender’s sole discretion and as
often as occasion therefor shall arise. No partial exercise by Lender of any
right or remedy will preclude further exercise thereof.  Notice or demand given to Borrower in any
instance will not entitle Borrower to notice or demand in similar or other
circumstances or constitute Lender’s waiver of its right to take any future
action in any circumstance without notice or demand (except where expressly
required by this Note to be given). Lender may release security for the Loan,
may release any party liable for the Loan, may grant extensions, renewals or
forbearances with respect thereto, and may apply any security held by it to
payment of the Loan, in each case without prejudice to its rights under this
Note.  Lender will not be deemed as a
consequence of its delay or failure to act, or any forbearances granted, to
have waived or be estopped from exercising any of its rights or remedies.

ARTICLE
3

MISCELLANEOUS PROVISIONS

Section
3.01           Incorporation from Loan
Agreement.  All provisions of
Articles 17 and 18, inclusive, of the Loan Agreement are incorporated into
this Note by this reference, as if fully reproduced herein.

Section
3.02           Joint and Several.  If Borrower consists of more than one Person,
each such Person shall, subject to Article 12 of the Loan Agreement, be jointly
and severally liable hereunder.

Section
3.03           Governing Law.  This Note and each of the other Loan
Documents shall be interpreted and enforced according to the laws of the state
where the Property is located (without giving effect to rules regarding
conflict of laws).

Section
3.04           Consent to Jurisdiction.  Borrower hereby consents and submits to the
exclusive jurisdiction and venue of any state or federal court sitting in the
county and state where the Property encumbered hereby is located with respect
to any legal action or proceeding arising with respect to this Note and waives
all objections which it may have to such jurisdiction and

 2
 

 

venue.  Nothing
herein shall, however, preclude or prevent Lender from bringing actions against
Borrower in any other jurisdiction as may be necessary to enforce or realize
upon the security for the Loan provided in any of the Loan Documents.

Section
3.05           WAIVER OF JURY TRIAL.  BORROWER (AND LENDER, BY ITS FUNDING OF THE
LOAN) HEREBY WAIVES ITS RIGHT, TO THE FULL EXTENT PERMITTED BY LAW, AND AGREES
NOT TO ELECT, A TRIAL BY JURY WITH RESPECT TO ANY ISSUE ARISING OUT OF THIS
NOTE OR THE RELATIONSHIP BETWEEN THE PARTIES AS BORROWER AND LENDER.  BORROWER HEREBY WAIVES ANY
RIGHT IT MAY HAVE TO CLAIM OR RECOVER IN ANY TRIAL ACTION OR PROCEEDING
REFERRED TO IN THE PRECEDING SENTENCE, ANY SPECIAL, EXEMPLARY, PUNITIVE OR
CONSEQUENTIAL DAMAGES OR DAMAGES PURSUANT TO M.G.L. C.93A ET SEQ. OTHER THAN
ACTUAL DAMAGES.

[Remainder of page
intentionally left blank]

 

 3

IN WITNESS WHEREOF, this Note has been executed as an
instrument under seal by Borrower the day and year first above written.

	
  

  	
  BORROWER:

  
	
   

  	
   

  
	
   

  	
  BEHRINGER HARVARD FERNCROFT, LLC,

  
	
   

  	
  a Delaware limited liability company

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
   Gerald J. Reihsen, III, Secretary

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