Document:

Exhibit
10.1

MERS MIN: 8000101-0000004159-9

 

 

AMENDED
AND RESTATED LOAN AGREEMENT

 

 

Dated as of October 18,
2006

 

 

Between

 

 

BEHRINGER HARVARD 1325 G
STREET, LLC,

as Borrower

 

 

and

 

 

BEAR STEARNS COMMERCIAL
MORTGAGE, INC.,

as Lender

 

 

TABLE OF
CONTENTS

 

	
  

  	
   

  	
   

  	
   

  	
  Page

  
	
   

  	
   

  	
   

  
	
  ARTICLE 1 -

  	
   

  	
  DEFINITIONS; PRINCIPLES OF CONSTRUCTION

  	
   

  	
  1

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Section 1.1

  	
   

  	
  Definitions

  	
   

  	
  1

  
	
  Section 1.2

  	
   

  	
  Principles of Construction

  	
   

  	
  20

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE 2 -

  	
   

  	
  GENERAL TERMS

  	
   

  	
  21

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Section 2.1

  	
   

  	
  Loan Commitment; Disbursement to Borrower

  	
   

  	
  21

  
	
  Section 2.2

  	
   

  	
  Interest Rate

  	
   

  	
  21

  
	
  Section 2.3

  	
   

  	
  Loan Payment

  	
   

  	
  22

  
	
  Section 2.4

  	
   

  	
  Prepayments

  	
   

  	
  23

  
	
  Section 2.5

  	
   

  	
  Defeasance

  	
   

  	
  24

  
	
  Section 2.6

  	
   

  	
  Release of Property

  	
   

  	
  26

  
	
  Section 2.7

  	
   

  	
  Lockbox Account/Cash Management

  	
   

  	
  27

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE 3 -

  	
   

  	
  CONDITIONS PRECEDENT

  	
   

  	
  29

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Section 3.1

  	
   

  	
  Conditions Precedent to Modification

  	
   

  	
  29

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE 4 -

  	
   

  	
  REPRESENTATIONS AND WARRANTIES

  	
   

  	
  33

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Section 4.1

  	
   

  	
  Borrower Representations

  	
   

  	
  33

  
	
  Section 4.2

  	
   

  	
  Survival of Representations

  	
   

  	
  41

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE 5 -

  	
   

  	
  BORROWER COVENANTS

  	
   

  	
  41

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Section 5.1

  	
   

  	
  Affirmative Covenants

  	
   

  	
  41

  
	
  Section 5.2

  	
   

  	
  Negative Covenants

  	
   

  	
  50

  
	
  Section 5.3

  	
   

  	
  Performance by Property Manager

  	
   

  	
  59

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE 6 -

  	
   

  	
  INSURANCE; CASUALTY; CONDEMNATION

  	
   

  	
  60

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Section 6.1

  	
   

  	
  Insurance

  	
   

  	
  60

  
	
  Section 6.2

  	
   

  	
  Casualty

  	
   

  	
  63

  
	
  Section 6.3

  	
   

  	
  Condemnation

  	
   

  	
  63

  
	
  Section 6.4

  	
   

  	
  Restoration

  	
   

  	
  63

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE 7 -

  	
   

  	
  RESERVE FUNDS

  	
   

  	
  68

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Section 7.1

  	
   

  	
  Required Repair Funds

  	
   

  	
  68

  
	
  Section 7.2

  	
   

  	
  Tax and Insurance Escrow Fund

  	
   

  	
  69

  
	
  Section 7.3

  	
   

  	
  Replacements and Replacement Reserve

  	
   

  	
  70

  
	
  Section 7.4

  	
   

  	
  [Intentionally Omitted]

  	
   

  	
  75

  
	
  Section 7.5

  	
   

  	
  Reserve Funds, Generally.

  	
   

  	
  75

  
	
  Section 7.6

  	
   

  	
  Letter of Credit Rights

  	
   

  	
  76

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE 8 -

  	
   

  	
  DEFAULTS

  	
   

  	
  77

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Section 8.1

  	
   

  	
  Event of Default

  	
   

  	
  77

  
	
  Section 8.2

  	
   

  	
  Remedies.

  	
   

  	
  79

  
	
  Section 8.3

  	
   

  	
  Remedies Cumulative; Waivers

  	
   

  	
  80

  
								

 

 i
 

 

 

	
  

  	
   

  	
  Page

  
	
   

  	
   

  	
   

  
	
  ARTICLE 9 -

  	
   

  	
  SPECIAL PROVISIONS

  	
   

  	
  81

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Section 9.1

  	
   

  	
  Sale of Notes and Securitization

  	
   

  	
  81

  
	
  Section 9.2

  	
   

  	
  Securitization

  	
   

  	
  81

  
	
  Section 9.3

  	
   

  	
  Rating Surveillance

  	
   

  	
  82

  
	
  Section 9.4

  	
   

  	
  Exculpation

  	
   

  	
  82

  
	
  Section 9.5

  	
   

  	
  Termination of Property Manager

  	
   

  	
  82

  
	
  Section 9.6

  	
   

  	
  Servicer

  	
   

  	
  83

  
	
  Section 9.7

  	
   

  	
  Resizing

  	
   

  	
  83

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE 10 -

  	
   

  	
  MISCELLANEOUS

  	
   

  	
  84

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Section 10.1

  	
   

  	
  Survival

  	
   

  	
  84

  
	
  Section 10.2

  	
   

  	
  Lender’s Discretion

  	
   

  	
  84

  
	
  Section 10.3

  	
   

  	
  Governing Law

  	
   

  	
  84

  
	
  Section 10.4

  	
   

  	
  Modification, Waiver in Writing

  	
   

  	
  85

  
	
  Section 10.5

  	
   

  	
  Delay Not a Waiver

  	
   

  	
  86

  
	
  Section 10.6

  	
   

  	
  Notices

  	
   

  	
  86

  
	
  Section 10.7

  	
   

  	
  Trial by Jury

  	
   

  	
  87

  
	
  Section 10.8

  	
   

  	
  Headings

  	
   

  	
  87

  
	
  Section 10.9

  	
   

  	
  Severability

  	
   

  	
  87

  
	
  Section 10.10

  	
   

  	
  Preferences

  	
   

  	
  87

  
	
  Section 10.11

  	
   

  	
  Waiver of Notice

  	
   

  	
  87

  
	
  Section 10.12

  	
   

  	
  Remedies of Borrower

  	
   

  	
  87

  
	
  Section 10.13

  	
   

  	
  Expenses; Indemnity

  	
   

  	
  88

  
	
  Section 10.14

  	
   

  	
  Schedules Incorporated

  	
   

  	
  89

  
	
  Section 10.15

  	
   

  	
  Offsets, Counterclaims and Defenses

  	
   

  	
  89

  
	
  Section 10.16

  	
   

  	
  No Joint Venture or Partnership; No Third Party
  Beneficiaries.

  	
   

  	
  89

  
	
  Section 10.17

  	
   

  	
  Publicity

  	
   

  	
  89

  
	
  Section 10.18

  	
   

  	
  Waiver of Marshalling of Assets

  	
   

  	
  90

  
	
  Section 10.19

  	
   

  	
  Waiver of Counterclaim

  	
   

  	
  90

  
	
  Section 10.20

  	
   

  	
  Conflict; Construction of Documents; Reliance

  	
   

  	
  90

  
	
  Section 10.21

  	
   

  	
  Brokers and Financial Advisors

  	
   

  	
  90

  
	
  Section 10.22

  	
   

  	
  Prior Agreements

  	
   

  	
  91

  
	
  Section 10.23

  	
   

  	
  Transfer of Loan

  	
   

  	
  91

  
	
  Section 10.24

  	
   

  	
  Joint and Several Liability

  	
   

  	
  91

  
	
  Section 10.25

  	
   

  	
  MERS

  	
   

  	
  91

  
							

 

 ii
 

 

 

	
  SCHEDULES

  	
   

  	
   

  
	
  Schedule I

  	
  -

  	
  [reserved]

  
	
  Schedule II

  	
  -

  	
  Assignment and Assumption Agreement

  
	
  Schedule III

  	
  -

  	
  Co-Owner Indemnity

  
	
  Schedule IV

  	
  -

  	
  Required Repairs

  
	
  Schedule V

  	
  -

  	
  Tenants-In-Common Agreement

  
	
  Schedule VI

  	
  -

  	
  Affiliate Agreements

  
	
  Schedule VII

  	
  -

  	
  Co-Owner Transferee Criteria

  
	
  Schedule VIII

  	
  -

  	
  Consent and Assumption Agreement

  
	
  Schedule IX

  	
  -

  	
  Co-Owner Transferee Operating Agreement

  
	
  Schedule X

  	
  -

  	
  [reserved]

  
	
  Schedule XI

  	
  -

  	
  Rent Roll

  
	
  Schedule XII

  	
  -

  	
  Exceptions to Representations

  

 

 iii

 

 

AMENDED AND RESTATED LOAN AGREEMENT

THIS AMENDED AND RESTATED LOAN AGREEMENT,
dated as of this 18th  day of October, 2006 (as amended, restated,
replaced, supplemented or otherwise modified from time to time, this “Agreement”), between BEAR STEARNS
COMMERCIAL MORTGAGE, INC., a New York corporation, having an address at 383
Madison Avenue, New York, New York 10179 (“Lender”),
and BEHRINGER HARVARD 1325 G STREET, LLC, a Delaware limited liability company,
having its principal place of business c/o Behringer Harvard Funds, 15601
Dallas Parkway, Suite 600, Addison, Texas 75001 (“Borrower”).

W I T N E S S E T H:

WHEREAS, pursuant to that certain Loan Agreement (the “Original
Loan Agreement”) dated as of November 15, 2005 between Behringer Harvard
Operating Partnership I LP (“Original Lender”), as lender, and Borrower,
as borrower, Original Lender made a mortgage loan to Borrower in the original
principal amount of $125,000,000 (the “Loan”);

WHEREAS, the Loan is secured by, among other things,
(i) that certain Amended and Restated Deed of Trust and Security Agreement,
dated as of the date hereof, from Borrower, as grantor, for the benefit of
MERS, as nominee of Lender, as beneficiary (as the same may be amended,
restated, replaced, supplemented or otherwise modified from time to time, the “Mortgage”)
and (ii) that certain Amended and Restated Assignment of Leases and Rents,
dated as of the date hereof, from Borrower, as assignor, to MERS, as nominee of
Lender, as assignee (as the same may be amended, restated, replaced,
supplemented or otherwise modified from time to time, the “Assignment of
Leases”);

WHEREAS, as of the date hereof Borrower has paid the
Loan down to the current outstanding principal balance of $100,000,000 and
Lender has purchased and assumed from Original Lender all of Original Lender’s
right, title and interest in and to the Loan, the Loan Agreement and all other
documents evidencing, securing, governing or otherwise pertaining to the Loan;

WHEREAS, Borrower and Lender have agreed to modify and
restate the terms, covenants and conditions of the Original Loan Agreement in
accordance with the terms and conditions set forth herein.

NOW, THEREFORE, in consideration of the foregoing, and
for other good and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, Borrower and Lender hereby agree that the Original
Loan Agreement is modified and restated in its entirety to read as follows:

ARTICLE 1 -
DEFINITIONS; PRINCIPLES OF CONSTRUCTION

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

“Accredited Investor”
shall mean an Accredited Investor as defined in the regulations promulgated by
the Securities and Exchange Commission.

 

 

“Additional Insolvency
Opinion” shall mean any subsequent Insolvency Opinion.

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

“Agent”
shall mean Wells Fargo Bank, N.A., a national banking association, or any
successor Eligible Institution acting as Agent under the Cash Management
Agreement.

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

“Annual Budget”
shall mean the operating budget, including all planned capital expenditures,
for the Property prepared by Borrower for the applicable Fiscal Year or other
period.

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

“Approved Investor
Questionnaire” shall mean a questionnaire to be completed by
prospective Co-Owner Transferees, in a form approved by Lender.

“Assignment of Leases”
shall have the meaning set forth in the Recitals to this Agreement.

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

“Assignment and Assumption
Agreement” shall mean an agreement, in the form attached hereto
as Schedule II, or otherwise acceptable to Lender, pursuant to which a
Co-Owner Transferee takes title to an undivided interest in the Property
subject to the Mortgage and the Loan Documents.

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

“Bankruptcy Action”
shall mean with respect to any Person (a) such Person filing a voluntary
petition under the Bankruptcy Code or any other Federal or state bankruptcy or
insolvency law; (b) the filing of an involuntary petition against such Person
under the Bankruptcy Code or any other Federal or state bankruptcy or
insolvency law, in which such Person colludes with, or otherwise assists such
Person, or cause to be solicited petitioning creditors for any involuntary
petition against such Person; (c) such Person filing an answer consenting to or
otherwise acquiescing in or joining in any involuntary petition filed against
it, by any other Person under the Bankruptcy Code or any other Federal or state
bankruptcy or insolvency law; (d) such Person consenting to or acquiescing in
or joining in an application for the appointment of a custodian, receiver,
trustee, or examiner for such person or any portion of 

 2
 

 

 

the Property; (e) such Person making an assignment for
the benefit of creditors, or admitting, in writing or in any legal proceeding,
its insolvency or inability to pay its debts as they become due.

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

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

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

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

“Borrower”
shall mean Behringer Harvard 1325 G Street, LLC, a Delaware limited liability
company, together with its permitted successors and assigns.

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

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

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

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

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

 3
 

 

 

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

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

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

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

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

“Co-Owner Indemnity”
shall mean, individually or collectively, those certain Co-Owner Indemnity
Agreements, each by Borrower or a Co-Owner Transferee, as applicable, and a
principal thereof acceptable to Lender, in favor of Lender, together with any
such agreement hereafter executed by a Co-Owner Transferee, which shall be in
the form set forth on Schedule III.

“Co-Owner Transferee”
shall have the meaning set forth in Section 5.2.13(b).

“Co-Owner Transferee
Criteria” shall mean the criteria set forth on Schedule VII
hereto.

“Co-Owner Transferee
Operating Agreement” shall mean a limited liability company
operating agreement substantially in the form set forth on Schedule IX
hereto.

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

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

“Consent and Assumption
Agreement” shall mean an agreement, in the form attached hereto
as Schedule VIII, or otherwise acceptable to Lender, pursuant to which a
Co-Owner Transferee assumes its pro rata share of the obligations of Borrower
under the Loan Documents.

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

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

 4
 

 

 

Lender in respect of the Loan under the Note, this
Agreement, the Mortgage or any other Loan Document.

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

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

1.     the numerator is the Net Operating Income (excluding interest on
credit accounts) for such period as set forth in the statements required
hereunder, without deduction for (i) actual management fees incurred in
connection with the operation of the Property, (ii) amounts paid to the Reserve
Funds, less (A) management fees equal to the greater of (1) assumed management
fees of three percent (3%) of Gross Income from Operations or (2) the actual
management fees incurred, and (B) assumed annual Replacement Reserve Fund
contributions and reserves for tenant improvements and leasing commissions
equal to $237,786 in the aggregate (adjusted proportionately for any period
other than one year); and

2.     the denominator is the greater of (a) the actual aggregate
amount of principal and interest due and payable on the Note for such applicable
period or (b) assumed debt service payments for such period calculated on the
basis of a debt service constant of 6.25%.

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

“Default Rate”
shall mean, with respect to the Loan, a rate per annum equal to the lesser of
(a) the Maximum Legal Rate, or (b) five percent (5%) above the Interest Rate.

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

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

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

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

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

“Disclosure Document”
shall have the meaning set forth in Section 9.2 hereof.

 5
 

 

 

“Eligible Account”
shall mean a separate and identifiable account from all other funds held by the
holding institution that is either (a) an account or accounts maintained with a
federal or state-chartered depository institution or trust company which
complies with the definition of Eligible Institution or (b) a segregated trust
account or accounts maintained with a federal or state chartered depository
institution or trust company acting in its fiduciary capacity which, in the
case of a state chartered depository institution or trust company, is subject
to regulations substantially similar to 12 C.F.R. §9.10(b), having in either
case a combined capital and surplus of at least $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”
shall mean a depository institution or trust company, the short term unsecured
debt obligations or commercial paper of which are rated at least “A-1+” by
S&P, “P-1” by Moody’s and “F-1+” by Fitch in the case of accounts in which
funds are held for thirty (30) days or less (or, in the case of (a) accounts in
which funds are held for more than thirty (30) days, the long-term unsecured
debt obligations of which are rated at least “A” by Fitch and S&P and “A2”
by Moody’s or (b) any Letter of Credit, the long-term unsecured debt
obligations of which are rated at least “AA” by Fitch and S&P and “Aa2” by
Moody’s).

“Embargoed Person”
shall mean any person, entity or government subject to trade restrictions under
U.S. law, including, but not limited to, The USA PATRIOT Act (including the
anti-terrorism provisions thereof), the International Emergency Economic Powers
Act, 50 U.S.C. §§ 1701, et seq., The Trading with the Enemy Act, 50 U.S.C.
App. 1 et seq., and any Executive Orders or regulations promulgated thereunder
including those related to Specially Designated Nationals and Specially
Designated Global Terrorists, with the result that the investment in Borrower,
Principal or Indemnitor, as applicable (whether directly or indirectly), is
prohibited by law or the Loan made by the Lender is in violation of law.

“Environmental Laws”
shall mean any present and future federal, state and local laws, statutes,
ordinances, rules, regulations and the like, as well as common law, relating to
protection of human health or the environment with respect to exposure to
Hazardous Substances, relating to Hazardous Substances, relating to liability
for or costs of Remediation or prevention of Releases of Hazardous Substances
or relating to liability for or costs of other actual or threatened danger to
human health or the environment with respect to exposure to Hazardous
Substances.

“Environmental Liens”
shall mean all liens and other encumbrances imposed pursuant to any
Environmental Law, whether due to any act or omission of Borrower or any other
person or entity.

“Environmental Report”
shall mean that certain Phase I environmental report (or Phase II environmental
report, if required) in respect of the Property delivered to Lender in
connection herewith.

“ERISA”
shall mean the Employee Retirement Income Security Act of 1974, as amended.

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

 6
 

 

 

“Exchange Act”
shall have the meaning set forth in Section 9.2 hereof.

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

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

“Fitch”
shall mean Fitch, Inc.

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

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

“Gross Income from
Operations” shall mean for any period, all income, computed in
accordance with GAAP or other accounting principles reasonably acceptable to
Lender, derived from the ownership and operation of the Property from whatever
source during such period, including, but not limited to, Rents from tenants in
occupancy, open for business (except that tenants with ratings of BBB or better
from the Rating Agencies need not be in occupancy or open for business) and
paying full contractual rent without right of offset or credit, utility
charges, escalations, forfeited security deposits, interest on credit accounts,
service fees or charges, license fees, parking fees, rent concessions or
credits, business interruption or other loss of income or rental insurance
proceeds or other required pass-throughs and interest on Reserve Funds, if any,
but excluding Rents which in the aggregate exceed 5% of the total Rents that
are from month-to-month tenants or tenants that are included in any Bankruptcy
Action (unless such tenant’s Lease has been affirmed in the related Bankruptcy
Action), sales, use and occupancy or other taxes on receipts required to be
accounted for by Borrower to any Governmental Authority, refunds and
uncollectible accounts, sales of furniture, fixtures and equipment, Insurance
Proceeds (other than business interruption or other loss of income or rental
insurance), Awards, unforfeited security deposits, utility and other similar
deposits and any disbursements to Borrower from the Reserve Funds, if any.  Gross income shall not be diminished as a
result of the Mortgage or the creation of any intervening estate or interest in
the Property or any part thereof.

“Hazardous Substance”
shall mean any and all substances (whether solid, liquid or gas) defined,
listed, or otherwise classified as pollutants, hazardous wastes, hazardous
substances, hazardous materials, extremely hazardous wastes, or words of
similar meaning or regulatory effect under any present or future Environmental
Laws or that may have a negative impact on human health or the environment,
including but not limited to petroleum and petroleum products, asbestos and
asbestos-containing materials, polychlorinated biphenyls, lead, radon,
radioactive materials, flammables and explosives, but excluding substances of
kinds and in amounts ordinarily and customarily used or stored in similar
properties for the purposes of cleaning or other maintenance or operations and
otherwise in compliance with all Environmental Laws.

“Improvements”
shall have the meaning set forth in the granting clause of the Mortgage with
respect to the Property.

 7
 

 

 

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

“Indemnitor”
shall mean Behringer Harvard REIT I, Inc., a Maryland Corporation.

“Indemnity Agreement”
shall mean that certain Indemnity Agreement dated as of the Modification Date
by Borrower and Indemnitor (or a substitute indemnitor approved by Lender in
accordance with the terms hereof) in favor of Lender.

“Independent Manager” shall mean a
manager of a limited liability company who is not at the time of initial
appointment, or at any time while serving as a manager of such an entity, and
has not been at any time during the preceding five (5) years:  (a) a stockholder, director, member, manager
(with the exception of serving as the Independent Manager), officer, employee,
partner, attorney or counsel of the Borrower or any Affiliate of either of
them; (b) a creditor, customer, supplier or other Person who derives any of its
purchases or revenues from its activities with the Borrower or any Affiliate of
either of them; (c) a Person controlling or under common control with any such
stockholder, director, officer, partner, customer, supplier or other Person; or
(d) a member of the immediate family of any such stockholder, director,
officer, employee, partner, customer, supplier or other person.  As used in this definition, the term “control”
means the possession, directly or indirectly, of the power to direct or cause
the direction of management, policies or activities of a Person, whether
through ownership of voting securities, by contract or otherwise.  “Independent Director”
and “Independent Trustee” shall have
correlative meanings.

“Insolvency Opinion” shall have the
meaning set forth in Section 3.1.6 hereof.

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

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

“Interest Rate”
shall mean 5.4830% per annum.

“Investor Questionnaire
Procedures” shall mean, with respect to any proposed Co-Owner
Transferee, the satisfaction of the requirements set forth in the Approved
Investor Questionnaire.

“Lease”
shall mean any lease, sublease or subsublease, letting, license, concession or
other agreement (whether written or oral and whether now or hereafter in
effect) pursuant to which any Person is granted a possessory interest in, or right
to use or occupy all or any portion of any space in the Property of Borrower,
and every modification, amendment or other agreement relating to such lease,
sublease, subsublease, or other agreement entered into in 

 8
 

 

 

connection with such lease, sublease, subsublease, or
other agreement and every guarantee of the performance and observance of the
covenants, conditions and agreements to be performed and observed by the other
party thereto.

“Lease Obligations” shall
have the meaning set forth in Section 7.4.1 hereof.

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

“Lease Obligations Shortfall”
shall have the meaning set forth in Section 7.4.1 hereof.

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

“Lender”
shall mean Bear Stearns Commercial Mortgage, Inc., together with its successors
and assigns.

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

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

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

“Loan” shall
have the meaning set forth in the Recitals to this Agreement..

“Loan Documents”
shall mean, collectively, this Agreement, the Note, the Mortgage, the
Assignment of Leases and Rents, the Co-Owner Indemnity, the Assignment of
Property Management Agreement, the Indemnity Agreement and all other documents
pursuant to which any Person incurs, has incurred or assumes any obligation to
or for the benefit of Lender in connection with the Loan.

 9
 

 

 

“Lockbox Account”
shall have the meaning specified in Section 2.7.1(a) hereof.

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

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

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

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

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

“MERS” shall
mean Mortgage Electronic Registration Systems, Inc., a Delaware corporation.

“Modification Date”
shall mean October 18, 2006.

“Monthly Debt Service
Payment Amount” shall mean an amount equal to interest only on
the outstanding principal balance of the Loan, calculated in accordance with
the terms hereof.

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

“Mortgage”
shall have the meaning set forth in the Recitals to this Agreement.

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

 10
 

 

 

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

“Net Operating Income”
shall mean the amount obtained by subtracting from Gross Income from Operations
(i) Operating Expenses and (ii) a vacancy allowance equal to the greater of (x)
underwritten vacancy of 5%, (y) actual vacancy or (z) market rate vacancy as
reasonably determined by Lender.

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

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

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

“Note” shall
mean that certain Amended and Restated Promissory Note of even date herewith in
the principal amount of One Hundred Million and No/100 Dollars
($100,000,000.00), made by Borrower in favor of Lender, as the same may be
amended, restated, replaced, supplemented or otherwise modified from time to
time.

“Officers’ Certificate”
shall mean a certificate delivered to Lender by Borrower which is signed by an
authorized officer of Property Manager.

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

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

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

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

 11
 

 

 

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

“Person” shall
mean any individual, corporation, partnership, joint venture, limited liability
company, estate, trust, unincorporated association, any federal, state, county
or municipal government or any bureau, department or agency thereof and any
fiduciary acting in such capacity on behalf of any of the foregoing.

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

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

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

“Prepayment Rate”
shall mean the bond equivalent yield (in the secondary market) on the United
States Treasury Security that as of the Prepayment Rate Determination Date has
a remaining term to maturity closest to, but not exceeding, the remaining term
to the Maturity Date, as most recently published in the “Treasury Bonds, Notes
and Bills” section in The Wall Street Journal as of such Prepayment Rate
Determination Date.  If more than one
issue of United States Treasury Securities has the remaining term to the
Maturity Date referred to above, the “Prepayment Rate” shall be the yield on
the United States Treasury Security most recently issued as of such date.  If the publication of the Prepayment Rate in
The Wall Street Journal is discontinued, Lender shall determine the Prepayment
Rate on the basis of “Statistical Release H.15(519), Selected Interest Rates,”
or any successor publication, published by the Board of Governors of the
Federal Reserve System, or on the basis of such other publication or
statistical guide as Lender may reasonably select.

“Prepayment Rate
Determination Date” shall mean the date which is five (5)
Business Days prior to the prepayment date.

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

“Property Management
Agreement” shall mean, with respect to the Property, the
management agreement entered into by and between Borrower and the Property
Manager, pursuant to which the Property Manager is to provide management and
other services with respect to the Property.

 12
 

 

 

“Property Manager”
shall mean HPT Management Services LP, a Texas limited partnership, or any
successor or assign permitted hereunder.

“Provided Information”
shall have the meaning set forth in Section 9.1(a) hereof.

“Qualifying Property
Manager” shall mean either (a) a reputable and experienced
management organization reasonably satisfactory to Lender, which organization
or its principals possess at least ten (10) years experience in managing
properties similar in size, scope and value of the Property and which, on the
date Lender determines whether such management organization is a Qualifying
Property Manager, manages at least 1,000,000 square feet of office space, provided
that Borrower shall have obtained prior written confirmation from the Rating
Agency that management of the Property by such entity will not cause a
downgrading, withdrawal or qualification of the then current rating of the
securities issued pursuant to the Securitization, or (b) the fee owner of the
Property, provided that such owner possesses experience in managing and
operating properties similar in size, scope and value of the Property.  Lender acknowledges that, notwithstanding
anything herein to the contrary, HPT Management Services LP shall be deemed to
be a Qualifying Property Manager.

“Qualifying Sub-Manager”
shall mean a property sub-manager which (a) is a reputable management
company having at least five (5) years’ experience in the management of
commercial properties with similar uses as the Property and in the jurisdiction
in which the Property is located, (b) has, for at least five (5) years
prior to its engagement as property sub-manager, managed at least (5)
properties of the same property type as the Property, (c) at the time of
its engagement as property sub-manager manages at least 1,000,000 square feet
of office space and (d) is not the subject of a bankruptcy or similar
insolvency proceeding.

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

“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.

“Rating Surveillance Charge”
shall have the meaning set forth in Section 9.3 hereof.

“Regulation AB” shall
mean Regulation AB under the Securities Act and the Exchange Act, as such
Regulation may be amended from time to time.

“Related Entities” shall
have the meaning set forth in Section 5.2.13(d)(iv) hereof.

“Related Loan” shall mean
a loan made to an Affiliate of Borrower or secured by a Related Property, that
is included in a Securitization with the Loan.

“Related Property” shall
mean a parcel of real property, together with improvements thereon and personal
property related thereto, that is “related”,
within the meaning of the definition of Significant Obligor, to one or more of
the Properties.

 13
 

 

 

“Release”
with respect to any Hazardous Substance includes but is not limited to any
release, deposit, discharge, emission, leaking, leaching, spilling, seeping,
migrating, injecting, pumping, pouring, emptying, escaping, dumping, disposing
or other movement of Hazardous Substances.

“Relevant Leasing Threshold”
shall mean any Lease for an amount of leaseable square footage equal to or
greater than 20,000 square feet.

“Relevant Restoration Threshold”
shall mean Two Million and No/100 dollars ($2,000,000).

“Remediation”
includes but is not limited to any response, remedial, removal, or corrective
action; any activity to clean up, detoxify, decontaminate, contain or otherwise
remediate any Hazardous Substance; any actions to prevent, cure or mitigate any
Release of any Hazardous Substance; any action to comply with any Environmental
Laws or with any permits issued pursuant thereto; any inspection,
investigation, study, monitoring, assessment, audit, sampling and testing,
laboratory or other analysis, or evaluation relating to any Hazardous
Substances or to anything referred to herein.

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

“Rents”
shall mean, with respect to the Property, all rents, rent equivalents, moneys
payable as damages or in lieu of rent or rent equivalents, royalties
(including, without limitation, all oil and gas or other mineral royalties and
bonuses), income, receivables, receipts, revenues, deposits (including, without
limitation, security, utility and other deposits), accounts, cash, issues,
profits, charges for services rendered, and other consideration of whatever
form or nature received by or paid to or for the account of or benefit of
Borrower or its agents or employees (but excluding amounts paid by Borrower to
its agents or employees) from any and all sources arising from or attributable
to the Property, and proceeds, if any, from business interruption or other loss
of income insurance.

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

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

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

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

“Required Repair Account”
shall have the meaning set forth in Section 7.1.1 hereof.

“Required Repair Fund”
shall have the meaning set forth in Section 7.1.1 hereof.

“Required Repairs”
shall have the meaning set forth in Section 7.1.1 hereof.

 14
 

 

 

“Reserve Funds”
shall mean the Tax and Insurance Escrow Fund, the Replacement Reserve Fund (if
any), the Required Repair Fund (if any), the Lease Obligations Reserve Fund (if
any) and any other escrow fund established by the Loan Documents.

“Resizing Event”
shall have the meaning set forth in Section 9.7.

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

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

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

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

“Securities Act”
shall have the meaning set forth in Section 9.2 hereof.

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

“Securitization Notice”
shall have the meaning set forth in Section 5.2.13(e) hereof.

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

“Servicer” shall have the meaning set forth in Section 9.6 hereof.

“Servicing Agreement”
shall have the meaning set forth in Section 9.6 hereof.

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

“Significant Obligor”
shall have the meaning set forth in Item 1101(k) of Regulation AB under the
Securities Act.

“Special Purpose Entity”
means a corporation, limited partnership, limited liability company, or
Delaware statutory trust which at all times before and after the Modification
Date:

(i)            is organized solely for the purpose
of (A) acquiring, developing, owning, holding, selling, leasing, transferring,
exchanging, managing and operating the Property, entering into this Agreement
with the Lender, any Tenants in Common Agreement and the Property Management
Agreement and related documents, refinancing the Property in connection with a
permitted repayment of the Loan, and transacting lawful business that is
incident, necessary and appropriate to accomplish the foregoing; or (B) acting
as a general partner of the limited partnership that owns the Property, a
member of the limited liability company that owns the Property or the
beneficiary or trustee of a Delaware statutory trust that owns the Property;

(ii)           has not engaged and will not engage
in any business unrelated to (A) the acquisition, development, ownership,
management, operation or sale of the Property, (B) acting as general partner of
the limited partnership that owns the Property, (C) acting as a 

 15
 

 

 

member of the
limited liability company that owns the Property, or (D) acting as the
beneficiary or trustee of a Delaware statutory trust that owns the Property, as
applicable;

(iii)          has not had and will not have any
assets other than those related to the Property or its partnership interest in
the limited partnership, the member interest in the limited liability company
or the beneficial interest in the Delaware statutory trust that owns the
Property or acts as the general partner, managing member or beneficiary or
trustee thereof, as applicable;

(iv)          has not engaged, sought or consented
to and will not engage in, seek or consent to any dissolution, winding up,
liquidation, consolidation, merger, sale of all or substantially all of its assets,
transfer of partnership, membership or beneficial or trustee interests (if such
entity is a general partner in a limited partnership, a member in a limited
liability company or a beneficiary of a Delaware trust), or amendment of its
limited partnership agreement, articles of incorporation, articles of
organization, certificate of formation, limited liability company agreement
and/or operating agreement or trust formation and governance documents (as
applicable) with respect to the matters set forth in this definition (in each
case, except as permitted hereunder or otherwise with Lender’s prior written
consent);

(v)           if such entity is a limited
partnership, from and after the Modification Date shall have as its only
general partners, Special Purpose Entities that are corporations, limited
partnerships or limited liability companies each of which (A) is a corporation
or single-member Delaware limited liability company, (B) has one Independent
Director (or two if requested by Lender in connection with a Securitization),
and (C) holds a direct interest as general partner in the limited partnership
of not less than 0.5% (or 0.1%, if the limited partnership is a Delaware
entity);

(vi)          if such entity is a corporation, from
and after the Modification Date shall have at least one (1) Independent
Director (or two if requested by Lender in connection with a Securitization),
and shall not cause or permit the board of directors of such entity to take any
Material Action either with respect to itself or, if the corporation is a not
Borrower, with respect to Borrower or any action requiring the unanimous
affirmative vote of one hundred percent (100%) of the members of its board of
directors unless each Independent Director shall have participated in such vote
and shall have voted in favor of such action;

(vii)         if such entity is a Delaware statutory
trust, from and after the Modification Date shall have at least one (1)
Independent Trustee (or two if requested by Lender in connection with a
Securitization), and shall not cause or permit the board of trustees of such
entity to take any Material Action either with respect to itself or, if the
Delaware statutory trust is a not Borrower, with respect to Borrower or any
action requiring the unanimous affirmative vote of one hundred percent (100%)
of the members of its board of trustees unless each Independent Trustee shall
have participated in such vote and shall have voted in favor of such action;

 16

 

(viii)        if such entity is a limited liability
company (other than limited liability company meeting all of the requirements
applicable to a single-member limited liability company set forth in this
definition of “Special Purpose Entity”), from and after the Modification Date
such limited liability company shall have as its manager a Special Purpose
Entity that is a corporation, that has at least one (1) Independent Manager (or
two if requested by Lender in connection with a Securitization) and that owns
at least 1.0% (one percent) of the equity of the limited liability company;

(ix)           if such entity is a limited liability
company that does not have as its manager a Special Purpose Entity that is a
corporation (any such limited liability company is referred to herein as a “single-member
limited liability company” regardless of whether it has one or more members),
from and after the Modification Date (a) shall be a Delaware limited liability
company, (b) shall have at least one (1) Independent Manager (or two if requested
by Lender in connection with a Securitization) of such company, (c) shall not
take any Material Action and shall not cause or permit the members or managers
of such entity to take any Material Action unless each Independent Manager then
serving shall have participated and consented in writing to such action, and
(c) shall have either (1) a member which owns no economic interest in the
company, has signed the company’s limited liability company agreement and has
no obligation to make capital contributions to the company, or one (1) natural
person or one entity that is not a member of the company, that has signed its
limited liability company agreement and that, under the terms of such limited
liability company agreement becomes a member of the company immediately prior
to the withdrawal or dissolution of the last remaining member of the company;

(x)            if such entity is (a) a limited
liability company, has an operating agreement, (b) a limited partnership, has a
limited partnership agreement, (c) a corporation, has a certificate of
incorporation or articles, or (d) a Delaware statutory trust, has
organizational documents that, in each case, provide that from and after the
Modification Date such entity will not: (1) dissolve, merge, liquidate,
consolidate; (2) except as permitted herein, sell all or substantially all of
its assets or the assets of the Borrower (as applicable) except as permitted
herein, (3) engage in any other business activity, or amend its organizational
documents with respect to the matters set forth in this definition without the
consent of the Lender; or (4) without the affirmative vote of all directors of
the corporation (that is such entity or the general partner or managing or
co-managing member or manager of such entity) file a bankruptcy or insolvency
petition or otherwise institute insolvency proceedings with respect to itself
or to any other entity in which it has a direct or indirect legal or beneficial
ownership interest;

(xi)           [intentionally omitted];

(xii)          is solvent and pays its debts and
liabilities (including, as applicable, shared personnel and overhead expenses)
from its assets as the same become due, and is maintaining adequate capital for
the normal obligations reasonably foreseeable in a business of its size and
character and in light of its contemplated business operations;

 17
 

 

 

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

(xiv)        has filed and will file its own tax
returns; provided, however, that Borrower’s assets and income may be
included in a consolidated tax return of its parent companies if inclusion on
such consolidated tax return is in compliance with applicable law or, in the
event that Borrower is a disregarded entity for federal tax purposes, then
Borrower’s assets and income may be included on the tax returns filed by its
owner;

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

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

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

(xviii)      has conducted and will conduct its
business in its name or in a name franchised or licensed to it by an entity
other than an Affiliate of Borrower;

(xix)         has maintained and will maintain its
balance sheets, operating statements and other entity documents separate from
any other Person and has not permitted and will not permit its assets to be
listed as assets on the financial statement of any other entity except as
required or permitted by GAAP; provided, however, that any such
consolidated financial statement shall contain a note indicating that it
maintains separate balance sheets and operating statements for the Borrower and
the Property;

(xx)          has a sufficient number of employees
in light of its contemplated business operations, which may be none;

(xxi)         has observed and will observe all
partnership, corporate or limited liability company or Delaware statutory trust
formalities, as applicable;

(xxii)            has and will have no Indebtedness
(including loans (whether or not such loans are evidenced by a written
agreement) between Borrower and any Affiliates of Borrower and relating to the
management of funds in the custodial account maintained by the Property
Manager) other than (i) the Loan as made pursuant to the Original Loan
Agreement, as amended and restated hereby from and after the Modification Date,
(ii) liabilities incurred in the ordinary course of business relating to the
ownership and operation of the Property and the routine administration of
Borrower not to exceed $3,000,000 at any one time in the aggregate with respect
to each entity constituting Borrower (other than management fees and
commissions and liabilities that are reserved for) and, in the case of a
general partner or managing member of a Person, liabilities arising by reason
of its status as a general partner or managing member, which liabilities

 18
 

 

 

are paid not
more than sixty (60) days after the later of the date incurred or invoiced
(unless disputed in good faith with adequate reserves established therefor),
are not evidenced by a note and which amounts are normal and reasonable under
the circumstances, and (iii) such other liabilities that are permitted pursuant
to the Loan Documents;

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

(xxiv)       has not and will not acquire obligations
or securities of its partners, members, beneficiaries or shareholders or any
other Affiliate;

(xxv)            has allocated and will allocate
fairly and reasonably any overhead expenses that are shared with any Affiliate,
including, but not limited to, paying for shared office space and services
performed by any employee of an Affiliate;

(xxvi)           has not maintained or used, and will
not maintain or use, invoices and checks bearing the name of any other Person, provided,
however, that Property Manager, on behalf of such Person, may maintain
and use invoices and checks bearing Property Manager’s name;

(xxvii)          has not pledged and will not pledge
its assets for the benefit of any other Person except as permitted or required
pursuant to this Agreement;

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

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

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

(xxxi)           has not identified and will not
identify its partners, members, beneficiaries or shareholders, or any Affiliate
of any of them, as a division or part of it, and
has not identified itself and shall not identify itself as a division of any
other Person;

(xxxii)          other than the Property Management
Agreement and any Tenants in Common Agreement, has not entered into or been a
party to, and will not enter into or be a party to, any transaction with its
partners, members, beneficiaries, shareholders or

 19
 

 

 

Affiliates
except (A) in the ordinary course of its business and on terms which are
intrinsically fair, commercially
reasonable and are no less favorable to it than would be obtained in a
comparable arm’s-length transaction with an unrelated third party and (B) in
connection with this Agreement;

(xxxiii)         does not and will not have any of its
obligations guaranteed by any Affiliate except as otherwise required in the
Loan Documents; and

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

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

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

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

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

“Tangible Net Worth”
shall mean, with respect
to any Person as of a given date, such Person’s equity calculated in
conformance with GAAP by subtracting total liabilities from total tangible
assets.

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

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

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

“Tenant Direction Letters”
shall mean notices signed by Borrower, which shall be irrevocable by Borrower
and otherwise in form acceptable to Lender in its reasonable discretion,
directing each Tenant to pay Rent and other sums due to Borrower pursuant to
its Lease directly to the Lockbox Bank.

“Tenants-in-Common
Agreement” shall mean an agreement, in the form attached hereto
as Schedule V, or otherwise in form and substance each acceptable to
Lender, by and among each Person comprising Borrower, if applicable.

 20
 

 

 

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

“Transfer”
shall have the meaning set forth in Section 5.2.13(a) hereof.

“Transferee”
shall have the meaning set forth in Section 5.2.13(d)(ii) hereof.

“Transferee’s Principals”
shall have the meaning set forth in Section 5.2.13(d)(ii) hereof.

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

“U.S. Obligations”
shall mean non redeemable securities evidencing an obligation to timely pay
principal and/or interest in a full and timely manner that are (a) direct
obligations of the United States of America for the payment of which its full
faith and credit is pledged, or (b) to the extent acceptable to the Rating
Agencies, other “government securities” within the meaning of Section 2(a)(16)
of the Investment Company Act of 1940, as amended.

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

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

ARTICLE 2 -
GENERAL TERMS

Section 2.1             Loan
Modification; Disbursement to Borrower.

2.1.1        The Loan.  Subject to and upon the terms and conditions
set forth herein, Lender and Borrower hereby agrees modify the terms of the
Loan on the Modification Date.

 21
 

 

 

Nothing
contained in this Agreement or the other Loan Documents shall (a) in any way
waive Lender’s rights, powers or remedies under the Loan Documents, (b) in any
way limit, impair or prejudice Lender from exercising any past, present or
future right, power or remedy from and after the date hereof under the Loan
Documents or (c) constitute or be deemed to be a novation of the Debt or other
obligations under the Loan Documents.

2.1.2        Disbursement to Borrower.  Borrower acknowledges that (a) the proceeds
of the Loan have been fully disbursed to Borrower by Original Lender, (b) the
outstanding principal balance of the Loan as of the Modification Date is
$100,000,000 and (c) there are no defenses, offsets or counterclaims to
the payment of the Loan.  Any amount
borrowed and repaid hereunder in respect of the Loan may not be reborrowed.

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

2.1.4        Use of Proceeds.  Borrower represents that it used the proceeds
of the Loan to acquire the Property and to pay costs and expenses incurred in
connection therewith.

Section 2.2             Interest
Rate.

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

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

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

2.2.4        Usury Savings.  This Agreement, the Note and the other Loan
Documents are subject to the express condition that at no time shall Borrower
be obligated or required to pay interest on the principal balance of the Loan
at a rate which could subject Lender to either civil or criminal liability as a
result of being in excess of the Maximum Legal Rate.  If, by the terms of this Agreement or the
other Loan Documents, Borrower is at any time required or obligated to pay
interest on the principal balance due hereunder at a rate in excess of the
Maximum Legal Rate, the Interest Rate or the Default Rate, as the case may be,
shall be deemed to be immediately reduced to the Maximum Legal Rate and all
previous payments in excess of the Maximum Legal Rate shall be deemed to have
been payments in reduction of principal and not on account of the interest due
hereunder.  All sums paid or agreed to be
paid to Lender for the use, forbearance, or detention of the sums due under the
Loan, shall, to the extent permitted by

 22
 

 

 

applicable law, be amortized, prorated, allocated, and spread
throughout the full stated term of the Loan until payment in full so that the
rate or amount of interest on account of the Loan does not exceed the Maximum
Legal Rate of interest from time to time in effect and applicable to the Loan
for so long as the Loan is outstanding.

Section 2.3             Loan
Payment.

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

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

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

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

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

 23
 

 

 

time shall, for all purposes hereof, be deemed to have been paid on the
next succeeding Business Day.

Section 2.4             Prepayments.

2.4.1        Voluntary Prepayments.  (a) Except as otherwise provided in this
Section 2.4.1 and Section 2.4.2 below, Borrower shall not have the right
to prepay the Loan in whole or in part prior to the Maturity Date.  On and after the Payment Date that is two (2)
months prior to Maturity Date Borrower may, at its option and upon thirty (30)
days prior written notice to Lender, prepay the Debt in whole, but not in part,
without payment of the Yield Maintenance Premium.  If for any reason Borrower prepays the Loan
on a date other than a Payment Date (including pursuant to the preceding
sentence), Borrower shall pay Lender, in addition to the Debt, all interest
which would have accrued on the amount of the Loan through and including the
Payment Date next occurring following the date of such prepayment.

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

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

2.4.4        Prepayment Prior to Defeasance Expiration Date.  If the Permitted Release Date has occurred
but the Defeasance Expiration Date has not occurred, the Debt may be prepaid in
whole (but not in part) prior to the date permitted under Section 2.4.1
hereof upon not less than thirty (30) days prior written notice to Lender
specifying the Payment Date on which prepayment is to be made (a “Prepayment Date”) provided no Event of
Default exists and upon payment of an amount equal to the greater of
(a) the Yield Maintenance Premium and (b) one percent (1%) of the
outstanding principal balance of the Loan as of the Prepayment Date.  Lender shall notify Borrower of the amount
and the basis of determination of the required prepayment consideration.  If any notice of prepayment is given, the
Debt shall be due and payable on the Prepayment Date.  Lender shall not be obligated to accept any
prepayment of the Debt unless it is accompanied by the prepayment consideration
due in connection therewith.  If for any
reason Borrower prepays the Loan on a date other than a Payment Date, Borrower
shall pay Lender, in addition to the Debt, all interest which would have
accrued on the amount of the

 24
 

 

 

Loan through and including the Payment Date next occurring following
the date of such prepayment.

Section 2.5             Defeasance.

2.5.1        Voluntary Defeasance.  (a) Provided no Event of Default shall then
exist, Borrower shall have the right at any time after the Defeasance
Expiration Date and prior to the date voluntarily prepayments are permitted
under Section 2.4.1 hereof to voluntarily defease all, but not part, of
the Loan by and upon satisfaction of the following conditions (such event being
a “Defeasance Event”):

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

(ii)           Borrower shall pay to Lender all
accrued and unpaid interest on the principal balance of the Loan to and
including the Defeasance Date.  If for
any reason the Defeasance Date is not a Payment Date, the Borrower shall also
pay interest that would have accrued on the Note through and including the
Payment Date immediately preceding the next Payment Date, provided, however,
if the Defeasance Deposit shall include short-term interest computed from the
date of such prepayment through to the next succeeding Payment Date, Borrower
shall not be required to pay such short term interest pursuant to this
sentence;

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

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

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

(vi)          Borrower shall deliver an opinion of
counsel for Borrower that is standard in commercial lending transactions and
subject only to customary qualifications, assumptions and exceptions opining,
among other things, that Borrower has legally and validly transferred and
assigned the U.S. Obligations and all obligations, rights and duties under and
to the Note to the Successor Borrower, that Lender has a perfected first
priority security interest in the Defeasance Deposit and the U.S. Obligations
delivered by Borrower and that any REMIC Trust formed pursuant to a
Securitization will not fail to maintain its status as a “real estate mortgage
investment conduit” within the meaning of Section 860D of the Code as a
result of such Defeasance Event;

 25
 

 

 

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

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

(ix)           Borrower shall deliver a certificate
of Borrower’s independent certified public accountant certifying that the U.S.
Obligations purchased with the Defeasance Deposit generate monthly amounts
equal to or greater than the Scheduled Defeasance Payments;

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

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

(b)           In
connection with the Defeasance Event, Borrower shall use the Defeasance Deposit
to purchase U.S. Obligations which provide payments on or prior to, but as
close as possible to, all successive scheduled Payment Dates after the
Defeasance Date upon which interest and principal payments are required under
this Agreement and the Note, and in amounts equal to the scheduled payments due
on such dates under this Agreement and the Note (including, without limitation,
scheduled payments of principal, interest, servicing fees (if any), and any
other amounts due under the Loan Documents on such Payment Dates) and assuming
the Note is prepaid in full on the Anticipated Repayment Date (the “Scheduled Defeasance Payments”).  Borrower, pursuant to the Security Agreement
or other appropriate document, shall authorize and direct that the payments
received from the U.S. Obligations may be made directly to the Lockbox Account (unless
otherwise directed by Lender) and applied to satisfy the Debt Service
obligations of Borrower under this Agreement and the Note.  Any portion of the Defeasance Deposit in
excess of the amount necessary to purchase the U.S. Obligations required by this
Section 2.5 and satisfy Borrower’s other obligations under this Section 2.5
and Section 2.6 shall be remitted to Borrower.

 26
 

 

 

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

2.5.3        Successor Borrower.  In connection with any Defeasance Event,
Borrower may at its option, or if so required by the applicable Rating Agencies
shall, establish or designate a successor entity (the “Successor Borrower”) acceptable to Lender,
which shall be a Special Purpose Entity and Borrower shall transfer and assign
all obligations, rights and duties under and to the Note, together with the
pledged U.S. Obligations to such Successor Borrower.  Such Successor Borrower shall assume the
obligations under the Note and the Security Agreement and Borrower shall be
relieved of its obligations under such documents.  Borrower shall pay One Thousand and 00/100
Dollars ($1,000) to any such Successor Borrower as consideration for assuming
the obligations under the Note and the Security Agreement.  Notwithstanding anything in this Agreement to
the contrary, no other assumption fee shall be payable upon a transfer of the
Note in accordance with this Section 2.5.3, but Borrower shall pay
all costs and expenses incurred by Lender, including Lender’s attorneys’ fees
and expenses and any fees and expenses of any Rating Agencies, incurred in
connection therewith.

Section 2.6             Release of Property.  Except as set forth in this Section 2.6
or Section 6.4(e) or a prepayment of the entire Loan pursuant to Section
2.4.2, no repayment, prepayment or defeasance of all or any portion of the Loan
shall cause, give rise to a right to require, or otherwise result in, the
release of the Lien of the Mortgage on the Property.  If the entire Loan has been prepaid pursuant
to Section 2.4.2, Borrower has elected to prepay the entire amount of the Loan
pursuant to Section 6.4(e) or after the requirements of this Section 2.6 have
been satisfied, the Property shall be released from the lien of the Mortgage.

2.6.1        Release of Property.

(a)           If
Borrower has elected to defease the entire Loan and the requirements of Section 2.5
and this Section 2.6 have been satisfied, all of the Property shall
be released from the Lien of the Mortgage and the U.S. Obligations, pledged
pursuant to the Security Agreement, shall be the sole source of collateral
securing the Note.

(b)           In
connection with the release of the Mortgage, Borrower shall submit to Lender,
not less than thirty (30) days prior to the Defeasance Date (or such later date
as may be agreed to by Lender or Servicer) a release of Lien (and related Loan
Documents) for the Property for execution by Lender.  Such release shall be in a form appropriate
in the jurisdiction in which the Property is located and that would be
satisfactory to a prudent lender and contains standard provisions, if any,
protecting the rights of the releasing lender . 
In addition, Borrower shall provide all other documentation Lender
reasonably requires to be delivered by Borrower in connection with such
release, together with an Officer’s Certificate certifying that such

 27
 

 

 

documentation (i) is in compliance with all Legal Requirements,
and (ii) will effect such releases in accordance with the terms of this
Agreement.

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

Section 2.7             Lockbox Account/Cash Management.

2.7.1        Lockbox Account.  (a) 
During the term of the Loan, Borrower shall establish and maintain an
account (the “Lockbox Account”)
with Lockbox Bank in trust for the benefit of Lender, which Lockbox Account
shall be under the sole dominion and control of Lender.  The Lockbox Account shall be entitled “Behringer
Harvard 1325 G Street, LLC, as Borrower, and Bear Stearns Commercial Mortgage,
Inc., as Lender, pursuant to Amended and Restated Loan Agreement dated as of
October 18, 2006 - Lockbox Account”. 
Borrower hereby grants to Lender a first-priority security interest in
the Lockbox Account and all deposits at any time contained therein and the
proceeds thereof and will take all actions necessary to maintain in favor of
Lender a perfected first priority security interest in the Lockbox Account,
including, without limitation, executing and filing UCC-1 Financing Statements
and continuations thereof.  Lender and
Servicer shall have the sole right to make withdrawals from the Lockbox Account
and all costs and expenses for establishing and maintaining the Lockbox Account
shall be paid by Borrower.  All monies
now or hereafter deposited into the Lockbox Account shall be deemed additional
security for the Debt.

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

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

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

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

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

 28
 

 

 

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

2.7.2        Cash Management Account.  (a) 
During the term of the Loan, Borrower shall establish and maintain a
segregated Eligible Account (the “Cash
Management Account”) to be held by Agent in trust and for the
benefit of Lender, which Cash Management Account shall be under the sole
dominion and control of Lender.  The Cash
Management Account shall be entitled “Behringer Harvard 1325 G Street, LLC, as
Borrower, and Bear Stearns Commercial Mortgage, Inc., as Lender, pursuant to
Amended and Restated Loan Agreement dated as of October 18, 2006 - Cash Management
Account.”  Borrower hereby grants to
Lender a first priority security interest in the Cash Management Account and
all deposits at any time contained therein and the proceeds thereof and will
take all actions necessary to maintain in favor of Lender a perfected first
priority security interest in the Cash Management Account, including, without
limitation, executing and filing UCC-1 Financing Statements and continuations
thereof.  Borrower will not in any way
alter or modify the Cash Management Account and will notify Lender of the
account number thereof.  Lender and
Servicer shall have the sole right to make withdrawals from the Cash Management
Account and all costs and expenses for establishing and maintaining the Cash
Management Account shall be paid by Borrower.

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

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

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

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

 29
 

 

 

ARTICLE 3 -
CONDITIONS PRECEDENT

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

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

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

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

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

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

(c)           Survey.  Lender shall have received a title survey for
the Property, certified to the title company and Lender and their successors
and assigns, in form and content satisfactory to Lender and prepared by a
professional and properly licensed land surveyor satisfactory to Lender in
accordance with the most recent Minimum Standard Detail

 30
 

 

 

Requirements for ALTA/ACSM Land Title Surveys.  The following additional items from the list
of “Optional Survey Responsibilities and Specifications” (Table A) should be
added to each survey: 2, 3, 4, 6, 8, 9, 10, 11 and 13.  The survey shall reflect the same legal
description contained in the Title Insurance Policy relating to the Property
referred to in clause (b) above and shall include, among other things, a legal
description of the real property comprising part of such Property reasonably
satisfactory to Lender.  The surveyor’s
seal shall be affixed to each survey and the surveyor shall provide a
certification for each survey in form and substance acceptable to Lender.

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

(e)           Environmental
Reports.  Lender shall have received
the Environmental Report in respect of the Property, in form and substance
reasonably satisfactory to Lender.

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

(g)           Encumbrances.  Borrower shall have taken or caused to be
taken such actions in such a manner so that Lender (or Lender’s nominee) has a
valid and perfected first Lien on the Property as of the Modification Date with
respect to the Mortgage, subject only to applicable Permitted Encumbrances and
such other Liens as are permitted pursuant to the Loan Documents, and Lender
shall have received satisfactory evidence thereof.

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

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

3.1.6        Opinions
of Borrower’s Counsel. Lender shall have received opinions of Borrower’s
counsel (and if applicable, Borrower’s local counsel) (a) with respect to
non-consolidation issues (an “Insolvency
Opinion”) and (b) with respect to due execution, authority,
enforceability of the Loan Documents and such other matters as Lender may
reasonably require, all such opinions in form, scope and substance reasonably
satisfactory to Lender and Lender’s counsel in their reasonable discretion.

 31
 

 

 

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

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

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

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

3.1.11      Tenant
Estoppels.  Lender shall have
received an executed tenant estoppel letter, which shall be in form and
substance satisfactory to Lender, from (a) each tenant occupying ten
percent (10%) of more of the gross leasable area of the Property, (b) each
tenant leasing an entire building at the Property, (c) each tenant paying
base rent in an amount equal to or exceeding five percent (5%) of the Gross
Income from Operations from the Property occupied by such tenant and
(d) including the area leased by those described in clauses (a), (b)
and (c), lessees of not less than seventy-five percent (75%) of the gross
leasable area of the Property.

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

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

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

3.1.15      Subordination
and Attornment. Lender shall have received appropriate instruments acceptable
to Lender in its commercially reasonable discretion subordinating any

 32
 

 

 

Leases of record prior to such Mortgage and including an agreement by
such Tenants to attorn to Lender in the event of a foreclosure or delivery of a
deed in lieu thereof.

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

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

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

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

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

3.1.21      Co-Tenancy
Forms.  Lender shall have approved
the form of Assignment and Assumption Agreement, Consent and Assumption
Agreement, Tenants-in-Common Agreement and Co-Owner Indemnity to be used by
Borrower upon a transfer pursuant to Section 5.2.13(a) hereof.

3.1.22      Intentionally
Omitted.

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

3.1.24      Intentionally
Omitted.

3.1.25      Lockbox
Establishment.  Borrower shall have
established the Lockbox Account at a Lockbox Bank approved by Lender, and shall
have executed and delivered a lockbox agreement acceptable to Lender in its
reasonable discretion.

3.1.26      Tenant
Direction Letters.  Borrower shall
deliver Tenant Direction Letters for each existing Tenant.

 33
 

 

 

ARTICLE 4 -
REPRESENTATIONS AND WARRANTIES

Section 4.1             Borrower Representations.  Borrower represents and warrants as of the date
hereof and as of the Modification Date (provided if Borrower consists of more
than one Person, any representations and warranties as to a Borrower shall be
deemed made by each Borrower as to its Borrowing entity only) that, except as
set forth on Schedule XII:

4.1.1        Organization.  Borrower has been duly organized and is
validly existing and in good standing with requisite power and authority to own
the Property and to transact the businesses in which it is now engaged.  Borrower is duly qualified to do business and
is in good standing in each jurisdiction where it is required to be so
qualified in connection with the Property, businesses and operations.  Borrower possesses all rights, licenses,
permits and authorizations, governmental or otherwise, necessary to entitle it
to own the Property and to transact the businesses in which it is now engaged,
and the sole business of Borrower is the ownership, management, operation and
sale of the Property (including any undivided interest therein).

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

4.1.3        No
Conflicts.  The execution, delivery
and performance of this Agreement and the other Loan Documents by Borrower will
not conflict with or result in a breach of any of the terms or provisions of,
or constitute a default under, or result in the creation or imposition of any
lien, charge or encumbrance (other than pursuant to the Loan Documents) upon
any of the property or assets of Borrower pursuant to the terms of any
indenture, mortgage, deed of trust, loan agreement, partnership agreement or
other agreement or instrument to which Borrower is a party or by which any of
Borrower’s property or assets is subject, nor to Borrower’s Knowledge will such
action result in any violation of the provisions of any statute or any order,
rule or regulation of any Governmental Authority having jurisdiction over
Borrower or any of Borrower’s properties or assets, and any consent, approval,
authorization, order, registration or qualification of or with any court or any
such regulatory Governmental Authority required for the execution, delivery and
performance by Borrower of this Agreement or any other Loan Documents has been
obtained and is in full force and effect.

4.1.4        Litigation.  To Borrower’s Knowledge, there are no
actions, suits or proceedings at law or in equity by or before any Governmental
Authority or other agency now pending or threatened against or affecting
Borrower or the Property, which actions, suits or proceedings, if determined
against Borrower or the Property, might materially adversely affect the
condition (financial or otherwise) or business of Borrower or the condition or
ownership of the Property.

 34

 

 

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

4.1.6        Title.  Borrower has good and indefeasible fee simple
title to the real property comprising part of the Property and good title to
the balance of the Property, free and clear of all Liens whatsoever except the
Permitted Encumbrances, such other Liens as are permitted pursuant to the Loan
Documents and the Liens created by the Loan Documents.  To Borrower’s Knowledge, there are no claims
for payment for work, labor or materials affecting the Property which are due
and unpaid under the contracts pursuant to which such work or labor was
performed or materials provided which are or may become a lien prior to, or of
equal priority with, the Liens created by the Loan Documents.

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

 35
 

 

 

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

4.1.9        No
Plan Assets.  Borrower is not an “employee
benefit plan,” as defined in Section 3(3) of ERISA, subject to Title I of ERISA,
and none of the assets of Borrower constitutes or will constitute “plan assets”
of one or more such plans within the meaning of 29 C.F.R. Section
2510.3-101.  In addition, (a) Borrower is
not a “governmental plan” within the meaning of Section 3(32) of ERISA and (b)
transactions by or with Borrower are not subject to state statutes regulating
investment of, and fiduciary obligations with respect to, governmental plans
similar to the provisions of Section 406 of ERISA or Section 4975 of the Code
currently in effect, which prohibit or otherwise restrict the transactions
contemplated by this Agreement.

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

4.1.11      Financial
Information.  To Borrower’s
Knowledge, all financial data, including, without limitation, the statements of
cash flow and income and operating expense, that have been delivered to Lender
in respect of the Property (i) are true, complete and correct in all material
respects, (ii) accurately represent the financial condition of the Property as
of the date of such reports, and (iii) to the extent prepared or audited by an
independent certified public accounting firm, have been prepared in accordance
with accounting principles reasonably acceptable to Lender, consistently
applied throughout the periods covered, except as disclosed therein.  Borrower does not have any contingent
liabilities, liabilities for taxes, unusual forward or long-term commitments or
unrealized or anticipated losses from any unfavorable commitments that are
known to Borrower and reasonably likely to have a materially adverse effect on
the Property or the operation thereof as an office building, except as referred
to or reflected in said financial statements. 
Since the date of such financial statements, there has been no materially
adverse change in the financial condition, operations or business of Borrower
from that set forth in said financial statements.

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

4.1.13      Federal
Reserve Regulations.  No part of the
proceeds of the Loan will be used for the purpose of purchasing or acquiring
any “margin stock” within the meaning of

 36
 

 

 

Regulation U of the Board of Governors of the Federal Reserve System or
for any other purpose which would be inconsistent with such Regulation U or any
other Regulations of such Board of Governors, or for any purposes prohibited by
Legal Requirements or by the terms and conditions of this Agreement or the
other Loan Documents.

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

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

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

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

4.1.18      Enforceability.  The Loan Documents are not subject to any
right of rescission, set-off, counterclaim or defense by Borrower, including
the defense of usury, nor would the operation of any of the terms of the Loan
Documents, or the exercise of any right thereunder exercised by Lender in
accordance with applicable law, render the Loan Documents unenforceable, and
Borrower has not asserted any right of rescission, set-off, counterclaim or
defense with respect thereto.

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

4.1.20      Insurance.  Borrower has obtained and has delivered to
Lender (a) certified copies of all insurance policies reflecting the
insurance coverages, amounts and other requirements set forth in this Agreement
or (b) other evidence of such matters acceptable to Lender.  To Borrower’s Knowledge, no claims have been
made under any such policy, and no Person, including Borrower, has done, by act
or omission, anything which would impair the coverage of any such policy.

4.1.21      Use
of Property.  The Property is used
exclusively for office purposes and other appurtenant and related uses.

 37
 

 

 

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

4.1.23      Flood
Zone.  To Borrower’s Knowledge, no
Improvements on the Property are located in an area identified by the Federal
Emergency Management Agency as an area having special flood hazards.

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

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

4.1.26      Leases.
To Borrower’s Knowledge, the Property is not subject to any Leases other than
the Leases described on the Rent Roll attached as Schedule XI hereto and
made a part hereof.  No Person has any
possessory interest in the Property or right to occupy the same except under
and pursuant to the provisions of the Leases. 
The current Leases are in full force and effect and, to Borrower’s
Knowledge, there are no defaults thereunder by either party and there are no
conditions that, with the passage of time or the giving of notice, or both,
would constitute defaults thereunder.  No
Rent (including security deposits) has been paid more than one (1) month in
advance of its due date.  All work to be
performed by Borrower under each Lease has been performed as required and has
been accepted by the applicable tenant, and any payments, free rent, partial
rent, rebate of rent or other payments, credits, allowances or

 38
 

 

 

abatements required to be given by Borrower to any tenant has already
been received by such tenant.  There has
been no prior sale, transfer or assignment, hypothecation or pledge of any
Lease or of the Rents received therein which is outstanding.  To Borrower’s Knowledge, except as set forth
on Schedule XI, no tenant listed on Schedule XI has assigned its Lease
or sublet all or any portion of the premises demised thereby, no such tenant
holds its leased premises under assignment or sublease, nor does anyone except
such tenant and its employees occupy such leased premises.  No tenant under any Lease has a right or
option pursuant to such Lease or otherwise to purchase all or any part of the
leased premises or the building of which the leased premises are a part.  Except as set forth in Schedule XI, no
tenant under any Lease has any right or option for additional space in the
Improvements.  To Borrower’s actual
knowledge based on the Environmental Report delivered to Lender in connection
herewith, no hazardous wastes or toxic substances, as defined by applicable
federal, state or local statutes, rules and regulations, have been disposed,
stored or treated by any tenant under any Lease on or about the leased premises
nor does Borrower have any knowledge of any tenant’s intention to use its
leased premises for any activity which, directly or indirectly, involves the
use, generation, treatment, storage, disposal or transportation of any
petroleum product or any toxic or hazardous chemical, material, substance or
waste, except in either event, in compliance with applicable federal, state or
local statues, rules and regulations.

4.1.27      Survey.  To Borrower’s Knowledge, the Survey for the
Property delivered to Lender in connection with this Agreement does not fail to
reflect any material matter affecting the Property or the title thereto.

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

4.1.29      Filing
and Recording Taxes.  All transfer
taxes, deed stamps, intangible taxes or other amounts in the nature of transfer
taxes required to be paid by any Person under applicable Legal Requirements
currently in effect in connection with the acquisition of the Property by
Borrower have been paid or are simultaneously being paid.  All mortgage, mortgage recording, stamp,
intangible or other similar tax required to be paid by any Person under
applicable Legal Requirements currently in effect in connection with the
execution, delivery, recordation, filing, registration, perfection or
enforcement of any of the Loan Documents, including, without limitation, the
Mortgage, have been paid, and, under current Legal Requirements, the Mortgage
is enforceable in accordance with its terms by Lender (or any subsequent holder
thereof).

4.1.30      Special
Purpose Entity/Separateness.

(a)           Until
the Debt has been paid in full, Borrower hereby represents, warrants and
covenants that the Borrower is, shall be and shall continue to be a Special
Purpose Entity.  If Borrower consists of
more than one Person, each such Person shall be a Special Purpose Entity
(provided any representations and warranties as to a Borrower shall be deemed
made by each Borrower as to its Borrowing entity only).  Lender acknowledges that the single purpose
provisions contained in the organizational documents of Borrower meets the
definition of “Special Purpose Entity” as set forth herein.

 39
 

 

 

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

(c)           Any
and all of the assumptions made in any Insolvency Opinion, including, but not
limited to, any exhibits attached thereto, are true and correct in all
respects, and Borrower has complied and will comply with all of the assumptions
made with respect to it in any Insolvency Opinion.  Each Affiliate of Borrower with respect to
which an assumption is made in any Insolvency Opinion will comply with all of the
assumptions made with respect to it in any such Insolvency Opinion.

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

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

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

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

4.1.35      Principal
Place of Business and Organization.  Borrower shall not change its
principal place of business set forth in the introductory paragraph of this
Agreement without first giving Lender thirty (30) days prior written
notice.  Borrower shall not change the
place of its organization as set forth in the introductory paragraph of this
Agreement without the consent of Lender, which consent shall not be
unreasonably withheld, conditioned or delayed. 
Upon

 40
 

 

 

Lender’s reasonable request, Borrower shall execute and deliver
additional financing statements, security agreements and other instruments
which may be necessary to effectively evidence or perfect Lender’s security
interest in the Property as a result of such change of principal place of
business or place of organization.

4.1.36      Environmental
Representations And Warranties. 
Based upon an environmental assessment of the Property, and except as
otherwise disclosed by the Environmental Report, Borrower represents and
warrants that to Borrower’s Knowledge (a) there are no Hazardous Substances or
underground storage tanks in, on, or under the Property, except those that are
both (i) in compliance with all applicable Environmental Laws and with permits
issued pursuant thereto and (ii) fully disclosed to Lender in writing pursuant
to the Environmental Report; (b) there are no past, present or threatened
Releases of Hazardous Substances in, on, under or from the Property which have
not been fully remediated in accordance with Environmental Law; (c) there is no
identified threat of any Release of Hazardous Substances migrating to the
Property; (d) there is no past or present non-compliance with Environmental
Laws, or with permits issued pursuant thereto, in connection with the Property
which has not been fully remediated in accordance with Environmental Law; (e)
Borrower does not know of, and has not received, any written or oral notice or
other communication from any person or entity (including but not limited to a
governmental entity) relating to Hazardous Substances or Remediation thereof,
of possible liability of any person or entity pursuant to any Environmental
Law, other environmental conditions in connection with the Property, or any
actual or potential administrative or judicial proceedings in connection with
any of the foregoing; and (f) Borrower has truthfully and fully provided to
Lender, in writing, any and all information relating to conditions in, on,
under or from the Property that is known to Borrower and that is contained in
files and records of Borrower, including but not limited to any reports
relating to Hazardous Substances in, on, under or from the Property and/or to
the environmental condition of the Property.

4.1.37      Acquisition
Costs.  Borrower represents and
warrants that all consideration payable to the seller of the Property to
Borrower has been, or shall be in connection with the modification of the loan,
paid in full, and that no further obligation to any such seller, contingent or
otherwise, shall remain outstanding after the date hereof.

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

4.1.39      Cash
Management Account.  Borrower hereby
represents and warrants to Lender that:

(a)           This
Agreement, together with the other Loan Documents, create a valid and
continuing security interest (as defined in the Uniform Commercial Code of the
State of

 41
 

 

 

New York) in the Lockbox Account and Cash Management Account in favor
of Lender, which security interest is prior to all other Liens, other than
Permitted Encumbrances, and is enforceable as such against creditors of and
purchasers from Borrower.  Other than in
connection with the Loan Documents and except for Permitted Encumbrances,
Borrower has not sold, pledged, transferred or otherwise conveyed the Lockbox
Account and Cash Management Account ;

(b)           Each
of the Lockbox Account and Cash Management Account constitute “deposit accounts”
and/or “securities accounts” within the meaning of the Uniform Commercial Code
of the State of New York;

(c)           The
Lockbox Account and Cash Management Account are not in the name of any Person
other than Borrower, as pledgor, or Lender, as pledgee. Borrower has not
consented to the Lockbox Bank and Agent complying with instructions with
respect to the Lockbox Account and Cash Management Account from any Person
other than Lender or another Person designated by Lender.

4.1.40      Previous
Activities.  Borrower hereby
represents and warrants to Lender that Borrower:

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

(b)           has
paid all taxes which it owes and have become due and payable and is not
currently involved in any dispute with any taxing authority;

(c)           is
not now, nor has ever been, party to any lawsuit, arbitration, summons, or
legal proceeding that resulted in a judgment against it that has not been paid
in full;

(d)           has
no judgments or Liens of any nature against it except for tax liens not yet due
and the Permitted Encumbrances;

(e)           has
provided Lender with complete financial statements that reflect a fair and
accurate view of the entity’s financial condition; and

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

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

 42
 

 

 

ARTICLE 5
- BORROWER COVENANTS

Section 5.1             Affirmative Covenants.  From the Modification Date and until payment
and performance in full of all obligations of Borrower under the Loan Documents
or the earlier release of the Lien of the Mortgage encumbering the Property
(and all related obligations) in accordance with the terms of this Agreement
and the other Loan Documents, Borrower hereby covenants and agrees with Lender
that:

5.1.1        Existence; Compliance with Legal Requirements; Insurance.  Borrower shall do or cause to be done all
things necessary to preserve, renew and keep in full force and effect its
existence, rights, licenses, permits and franchises and comply with all Legal
Requirements applicable to it and the Property. Borrower shall not commit, nor
shall Borrower permit or any other Person in occupancy of or involved with the
operation or use of the Property to commit any act or omission affording the
federal government or any state or local government the right of forfeiture as
against the Property or any part thereof or any monies paid in performance of
Borrower’s obligations under any of the Loan Documents.  Borrower hereby covenants and agrees not to
commit, permit or suffer to exist any act or omission affording such right of
forfeiture.  Borrower shall at all times
maintain, preserve and protect all its franchises and trade names and preserve
all the remainder of its property used or useful in the conduct of its business
and shall keep the Property in good working order and repair, and from time to
time make, or cause to be made, all reasonably necessary repairs, renewals,
replacements, betterments and improvements thereto, all as more fully provided
in the Mortgage.  Borrower shall keep the
Property insured at all times by financially sound and reputable insurers, to
such extent and against such risks, and maintain liability and such other
insurance, as is more fully provided in this Agreement. After prior written
notice to Lender, Borrower, at its own expense, may contest by appropriate
legal proceeding promptly initiated and conducted in good faith and with due
diligence, the validity of any Legal Requirement, the applicability of any
Legal Requirement to Borrower or the Property or any alleged violation of any
Legal Requirement, provided that (i) no Event of Default has occurred and
remains uncured; (ii) intentionally omitted; (iii) such proceeding shall be
permitted under and be conducted in accordance with the provisions of any
instrument to which Borrower is subject and shall not constitute a default
thereunder and such proceeding shall be conducted in accordance with all
applicable statutes, laws and ordinances; (iv) the Property or any part thereof
or interest therein will not be immediate in danger of being sold, forfeited,
terminated, cancelled or lost; (v) Borrower shall promptly upon final
determination thereof comply with any such Legal Requirement determined to be
valid or applicable or cure any violation of any Legal Requirement; (vi) such
proceeding shall suspend the enforcement of the contested Legal Requirement
against Borrower or the Property; and (vii) Borrower shall furnish such
security as may be required in the proceeding, or as may be requested by
Lender, to insure compliance with such Legal Requirement, together with all
interest and penalties payable in connection therewith.  Lender may apply any such security, as
necessary to cause compliance with such Legal Requirement at any time when, in
the reasonable judgment of Lender, the validity, applicability or violation of
such Legal Requirement is finally established or the Property (or any part
thereof or interest therein) shall be in danger of being sold, forfeited,
terminated, cancelled or lost.  Provided
no Event of Default then exists, any security deposited with Lender pursuant to
this Section 5.1.1 may be used to satisfy compliance with the related Legal
Requirement with any excess after the satisfaction of same to be returned to
Borrower.

 43
 

 

 

5.1.2        Taxes and Other Charges. Borrower shall pay or cause
to be paid all Taxes and Other Charges now or hereafter levied or assessed or
imposed against the Property or any part thereof as the same become due and
payable.  Borrower will deliver to Lender
receipts for payment or other evidence satisfactory to Lender that the Taxes
and Other Charges have been so paid or are not then delinquent no later than
ten (10) days prior to the date on which the Taxes and/or Other Charges would
otherwise be delinquent if not paid (provided, however, that
Borrower is not required to furnish such receipts for payment of Taxes in the
event that such Taxes have been paid by Lender pursuant to Section 7.2
hereof).  If Borrower pays or causes to
be paid all Taxes and Other Charges and provides a copy of the receipt
evidencing the payment thereof to Lender, then Lender shall reimburse Borrower,
provided that there are then sufficient proceeds in the Tax and Insurance
Escrow Fund and provided that the Taxes are being paid pursuant to Section
7.2.  Upon written request of Borrower,
if Lender has paid such Taxes pursuant to Section 7.2 hereof, Lender shall
provide Borrower with evidence that such Taxes have been paid.  Borrower shall not suffer and shall promptly
cause to be paid and discharged any Lien or charge whatsoever which may be or
become a Lien or charge against the Property, and shall promptly pay for all
utility services provided to the Property. 
After prior written notice to Lender, Borrower, at its own expense, may
contest by appropriate legal proceeding, promptly initiated and conducted in
good faith and with due diligence, the amount or validity or application in
whole or in part of any Taxes or Other Charges, provided that (i) Borrower is
permitted to do so under the provisions of any mortgage or deed of trust
superior in lien to the Mortgage; (ii) such proceeding shall be permitted under
and be conducted in accordance with the provisions of any other instrument to
which Borrower is subject and shall not constitute a default thereunder and
such proceeding shall be conducted in accordance with all applicable statutes,
laws and ordinances; (iii) the Property nor any part thereof or interest
therein will be in immediate danger of being sold, forfeited, terminated,
cancelled or lost; (iv) Borrower shall promptly upon final determination
thereof pay the amount of any such Taxes or Other Charges, together with all
costs, interest and penalties which may be payable in connection therewith; (v)
such proceeding shall suspend the collection of such contested Taxes or Other
Charges from the Property; and (vi) Borrower shall furnish such security as may
be required in the proceeding, or as may be reasonably requested by Lender, to
insure the payment of any such Taxes or Other Charges, together with all
interest and penalties thereon.  Lender
may pay over any such cash deposit or part thereof held by Lender to the
claimant entitled thereto at any time when, in the reasonable judgment of
Lender, the entitlement of such claimant is established.  Provided no Event of Default then exists, any
security deposited with Lender pursuant to this Section 5.1.2 may be used to
satisfy the related Taxes or Other Charges with any excess after the
satisfaction of same to be returned to Borrower.

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

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

 44
 

 

 

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

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

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

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

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

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

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

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

5.1.10      Tenancy
In Common.  In the event that
Borrower is, now or hereafter, comprised of more than one Person, then each
such Person comprising Borrower shall execute and be bound by a
Tenants-in-Common Agreement, which shall be recorded, and shall otherwise
comply with Section 5.2.13(b) hereof. 
Borrower shall give prompt notice to Lender of any default or event of
default under the Tenants-in-Common Agreement of which Borrower obtains
knowledge.

 45
 

 

 

5.1.11      Financial
Reporting.

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

(b)           Borrower
will cause Property Manager to furnish to Lender annually, within one hundred
twenty (120) days following the end of each Fiscal Year of Borrower, certified
(or audited if requested by Lender or required by Law) annual financial
statements prepared in accordance with GAAP (or such other accounting basis
reasonably acceptable to Lender) for the Property for such Fiscal Year,
including statements of profit and loss for the Property.  Such statements shall set forth the financial
condition and the results of operations for the Property for such Fiscal Year,
and shall include, but not be limited to, amounts representing annual Net Cash
Flow, Net Operating Income, Gross Income from Operations and Operating
Expenses.  Such annual financial
statements shall be accompanied by (i) a comparison of the budgeted income and
expenses and the actual income and expenses for the prior Fiscal Year, (ii) a
certificate executed by the Property Manager, stating that each such annual
financial statement presents fairly the results of operations of the Property
and has been prepared in accordance with GAAP (or such other accounting basis
reasonably acceptable to Lender), (iii) a certified rent roll containing
current rent, lease expiration dates and the square footage occupied by each
tenant; (v) a schedule reconciling Net Operating Income to Net Cash Flow (the “Net Cash Flow Schedule”), which shall
itemize all material adjustments made to Net Operating Income to arrive at Net
Cash Flow.  Together with the annual
financial statements, Property Manager shall furnish to Lender an Officer’s
Certificate certifying to its knowledge as of the date thereof whether there
exists an event or circumstance which constitutes a Default or Event of Default
under the Loan Documents executed and delivered by, or applicable to, Borrower,
and if such Default or Event of Default exists, the nature thereof, the period
of time it has existed and the action then being taken to remedy the same.

(c)           Borrower
will furnish, or cause to be furnished, to Lender on or before twenty (20) days
after the end of each calendar quarter (and, prior to a Securitization, on or
before twenty (20) days after the end of each calendar month) the following
items, accompanied by a certificate of Property Manager, stating that such
items are true, correct, accurate, and complete and fairly present the results
of the operations of  the Property
(subject to normal year-end adjustments) as applicable: (i) a rent roll for the
subject month; (ii) quarterly and year-to-date operating statements (including
Capital Expenditures) prepared for each calendar quarter, noting Net Operating
Income, Gross Income from Operations, and Operating Expenses (not including any
contributions to the Replacement Reserve Fund), and other information necessary
and sufficient to fairly represent the financial position and results of
operation of the Property

 46
 

 

 

during such calendar month, and containing a
comparison of budgeted income and expenses and the actual income and expenses
together with a detailed explanation of any variances of five percent (5%) or
more between budgeted and actual amounts for such periods, all in form
satisfactory to Lender; (iii) a calculation reflecting the annual Debt Service
Coverage Ratio for the immediately preceding twelve (12) month period as of the
last day of such month; and (iv) a Net Cash Flow Schedule.

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

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

(f)            If,
at the time one or more Disclosure Documents are being prepared for a
Securitization, Lender expects that Borrower alone or Borrower and one or more
Affiliates of Borrower collectively, or the Property alone or the Property and
Related Properties collectively, will be a Significant Obligor, Borrower shall
furnish to Lender upon request (i) the selected financial data or, if
applicable, Net Operating Income, required under Item 1112(b)(1) of Regulation
AB with respect to Borrower, the relevant Affiliates of Borrower and the
Property, if Lender expects that the principal amount of the Loan together with
any Related Loans as of the cut-off date for such Securitization may, or if the
principal amount of the Loan together with any Related Loans as of the cut-off
date for such Securitization and at any time during which the Loan and any
Related Loans are included in a Securitization does, equal or exceed ten
percent (10%) (but less than twenty percent (20%)) of the aggregate principal
amount of all mortgage loans included or expected to be included, as
applicable, in the Securitization or (ii) the financial statements required
under Item 1112(b)(2) of Regulation AB with respect to Borrower, the relevant
Affiliates of Borrower and the Property, if Lender expects that the principal
amount of the Loan together with any Related Loans as of the cut-off date for
such Securitization may, or if the principal amount of the Loan together with
any Related Loans as of the cut-off date for such Securitization and at any time
during which the Loan and any Related Loans are included in a Securitization
does, equal or exceed twenty percent (20%) of the aggregate principal amount of

 47
 

 

 

all mortgage loans included or expected to be included, as applicable,
in the Securitization.  Such financial
data or financial statements shall be furnished to Lender (A) within a
reasonable period of time after notice from Lender in connection with the
preparation of Disclosure Documents for the Securitization, (B) not later than
forty-five (45) days after the end of each fiscal quarter of Borrower and (C)
not later than one hundred twenty (120) days after the end of each Fiscal Year
of Borrower; provided, however, that Borrower shall not be
obligated to furnish financial data or financial statements pursuant to clauses
(B) or (C) of this sentence with respect to any period for which a filing
pursuant to the Exchange Act in connection with or relating to the
Securitization (an “Exchange Act Filing”)
is not required.  If requested by Lender,
Borrower shall furnish to Lender financial data and/or financial statements for
any tenant of the Property if, in connection with a Securitization, Lender
expects there to be, with respect to such tenant or group of Affiliated
tenants, a concentration within all of the mortgage loans included or expected
to be included, as applicable, in the Securitization such that such tenant or
group of affiliated tenants would constitute a Significant Obligor.

(g)           If
requested by Lender, Borrower shall provide Lender, promptly upon request, with
summaries of the financial statements referred to in Section 5.1.11(f)
hereof if, at the time a Disclosure Document is being prepared for a
Securitization, it is expected that the principal amount of the Loan and any
Affiliated Loans at the time of such Securitization may, or if the principal
amount of the Loan and any Affiliated Loans at any time during which the Loan
and any Affiliated Loans are included in a Securitization does, equal or exceed
ten percent (10%) (but is less than twenty percent (20%)) of the aggregate
principal amount of all mortgage loans included or expected to be included, as
applicable, in a Securitization.  Such
summaries shall meet the requirements for “summarized
financial information,” as defined in Section 210.1-02(bb) of
Regulation S-X, or such other requirements as may be determined to be necessary
or appropriate by Lender.

(h)           All
financial data and financial statements provided by Borrower hereunder pursuant
to Section 5.1.11(f) hereof shall be prepared in accordance with GAAP, and
shall meet the requirements of Regulation AB and such other applicable legal
requirements as Lender may specify in its request to Borrower.  All financial data and financial statements
provided by Borrower under Section 5.1.11(f) shall be accompanied by an
Officer’s Certificate, which shall state that such financial statements meet
the requirements set forth in the first sentence of this
Section 5.1.11(h).

(i)            If
requested by Lender, Borrower shall provide Lender, promptly upon request, with
any other or additional financial statements, or financial, statistical or
operating information, in each case relating to Borrower, any Affiliates of
Borrower or the Property, as Lender shall determine to be required pursuant to
Regulation AB or any amendment, modification or replacement thereto or other
legal requirements in connection with any Disclosure Document or any Exchange
Act Filing or as shall otherwise be reasonably requested by Lender.

(j)            Notwithstanding
any other provisions of this Section 5.1.11, Borrower’s obligations with
respect to the delivery of information (i) with respect to periods predating
Borrower’s acquisition of the Property, (ii) relating to tenants of the
Property, or (iii) otherwise relating to Persons or property not owned by
Borrower or within its reasonable control (or in the

 48
 

 

 

control of one or more of its Affiliates) shall be limited to using
commercially reasonable efforts to (A) enforce Borrower’s contractual rights,
if any, to the delivery of such information (e.g. by its seller, pursuant to
the applicable purchase and sale agreement, or by a tenant pursuant to its
Lease) or (B) otherwise obtain such information.  Lender shall notify Borrower in the event the
Loan is intended to be included in a Securitization in which Borrower alone or
Borrower and one or more Affiliates of Borrower collectively, or the Property
alone or the Property and Related Properties collectively, will be a
Significant Obligor and, in such event, Lender shall credit Borrower $20,000.00
for expenses incurred by Borrower in connection with its compliance with
Regulation AB prior to the cut-off date for such Securitization.

(k)           Borrower
shall cause Property Manager to furnish to Lender, within ten (10) Business
Days after request (or as soon thereafter as may be reasonably possible), such
further detailed information with respect to Property Manager or the Property
as may be reasonably requested by Lender, including, but not limited to, a
certificate stating to its knowledge that the representations and warranties of
Borrower set forth in Section 4.1.30(a) are true and correct as of the date of
such certificate.

(l)            Borrower
shall cause Property Manager to furnish to Lender, within ten (10) Business
Days after request (or as soon thereafter as may be reasonably possible), such
further detailed information with respect to the operation of the Property as
may be reasonably requested by Lender.

(m)          Any
reports, statements or other information required to be delivered under this
Agreement shall be delivered (i) in paper form, (ii) on a diskette, and (iii)
if requested by Lender and within the capabilities of Property Manager’s data
systems without change or modification thereto, in electronic form and prepared
using Microsoft Word for Windows or WordPerfect for Windows files (which files
may be prepared using a spreadsheet program and saved as word processing
files).

5.1.12      Business
and Operations.  Borrower will
continue to engage in the businesses presently conducted by it as and to the
extent the same are necessary for the ownership, maintenance, management and
operation of the Property.  Borrower will
qualify to do business and will remain in good standing under the laws of each
jurisdiction as and to the extent the same are required for the ownership,
maintenance, management and operation of the Property.

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

5.1.14      Costs
of Enforcement.  In the event (a)
that the Mortgage encumbering the Property is foreclosed in whole or in part or
that the Mortgage is put into the hands of an attorney

 49
 

 

 

for collection, suit, action or foreclosure, (b) of the foreclosure of
any mortgage prior to or subsequent to the Mortgage encumbering the Property in
which proceeding Lender is made a party, or (c) of the bankruptcy, insolvency,
rehabilitation or other similar proceeding in respect of or an assignment by
Borrower for the benefit of its creditors, then Borrower (or only the
applicable Borrower if as a result of clause (c)), its successors or assigns,
shall be chargeable with and agrees to pay all costs of collection and defense,
including reasonable attorneys’ fees and costs, incurred by Lender or Borrower
in connection therewith and in connection with any appellate proceeding or
post-judgment action involved therein, together with all required service or
use taxes.

5.1.15      Estoppel
Statement.

(a)           After
request by Lender, Borrower shall cause Property Manager to furnish to Lender
within ten (10) days a statement, duly acknowledged and certified, setting
forth (i) the amount of the original principal amount of the Note, (ii) the
unpaid principal amount of the Note, (iii) the applicable interest rate of the
Note, (iv) the date installments of interest and/or principal were last paid,
(v) any known offsets or defenses to the payment of the Debt, if any, and (vi)
that the Note, this Agreement, the Mortgage and the other Loan Documents are
valid, legal and binding obligations and have not been modified or if modified,
giving particulars of such modification.

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

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

5.1.16      Loan
Proceeds.  Borrower has used the
proceeds of the Loan only for the purposes set forth in Section 2.1.4.

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

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

 50

 

 

5.1.19      Intentionally
Omitted.

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

 51
 

 

 

of a termination fee to Borrower, and has in fact terminated its lease
and paid said fee, Borrower may accept said termination.

5.1.21      Alterations.  Subject to the rights of tenants to make
alterations pursuant to the terms of their respective Leases, Borrower shall
obtain Lender’s prior written consent to any alterations to any Improvements,
which consent shall not be unreasonably withheld or delayed except with respect
to alterations that may have a material adverse effect on Borrower’s financial
condition, the value of the Property or the Net Operating Income.  Notwithstanding the foregoing, Lender’s
consent shall not be required in connection with any alterations that will not
have a material adverse effect on Borrower’s financial condition, the value of
the Property or the Net Operating Income, provided that such alterations are
made in connection with (a) tenant improvement work performed pursuant to the
terms of any Lease executed on or before the Modification Date, (b) tenant
improvement work performed pursuant to the terms and provisions of a Lease and
not adversely affecting any structural component of any Improvements, any
utility or HVAC system contained in any Improvements or the exterior of any
building constituting a part of any Improvements, (c) alterations performed in
connection with the restoration of the Property after the occurrence of a
casualty in accordance with the terms and provisions of this Agreement or (d)
any structural alteration which costs less than $1,750,000.00 in the aggregate
for all components thereof which constitute such alteration or any
non-structural alteration which costs less than $2,750,000.00 in the aggregate
for all components thereof which constitute such alteration.  If the total unpaid amounts due and payable
with respect to alterations to the Improvements at the Property (other than
such amounts to be paid or reimbursed by tenants under the Leases) shall at any
time equal or exceed $1,750,000.00 (and such amount is not being paid from any
Reserve Funds) (the “Threshold Amount”),
Borrower, upon Lender’s request, shall promptly deliver to Lender as security
for the payment of such amounts and as additional security for Borrower’s
obligations under the Loan Documents any of the following: (A) cash, (B) U.S.
Obligations, (C) other securities having a rating acceptable to Lender and that
the applicable Rating Agencies have confirmed in writing will not, in and of
itself, result in a downgrade, withdrawal or qualification of the then current
ratings assigned in connection with any Securitization, or (D) a completion
bond or letter of credit issued by a financial institution having a rating by
Standard & Poor’s Ratings Group of not less than A-1+ if the term of such
bond or letter of credit is no longer than three (3) months or, if such term is
in excess of three (3) months, issued by a financial institution having a
rating that is acceptable to Lender and that the applicable Rating Agencies
have confirmed in writing will not, in and of itself, result in a downgrade,
withdrawal or qualification of the then current ratings assigned in connection
with any Securitization.  Such security
shall be in an amount equal to the excess of the total unpaid amounts with
respect to alterations to the Improvements on the Property (other than such
amounts to be paid or reimbursed by tenants under the Leases) over the
Threshold Amount and, if cash, U.S. Obligations or other securities, may be
applied from time to time, at the option of Borrower, to pay for such
alterations.  At the option of Lender,
following the occurrence and during the continuance of an Event of Default,
Lender may terminate any of the alterations and use the deposit to restore the
Property to the extent necessary to prevent any material adverse effect on the
value of the Property.

5.1.22      Tenant
Direction Letters.  Borrower shall
deliver Tenant Direction Letters for each Tenant occupying any portion of the
Property pursuant to a Lease executed after the date hereof, or pursuant to an
assignment of an existing Lease.

 52
 

 

 

5.1.23      Environmental
Covenants.  Borrower covenants and
agrees that:  (a) all uses and operations
on or of the Property, whether by Borrower or any other person or entity, shall
be in compliance with all applicable Environmental Laws and permits issued
pursuant thereto; (b) there shall be no Releases of Hazardous Substances in,
on, under or from the Property; (c) there shall be no Hazardous Substances in,
on, or under the Property, except those that are both (i) in compliance with
all applicable Environmental Laws and with permits issued pursuant thereto and
(ii) fully disclosed to Lender in writing; (d) Borrower shall keep (or shall
cause Tenants to keep) the Property free and clear of all Environmental Liens;
(e) Borrower shall, at its sole cost and expense, fully and expeditiously
cooperate in all activities pursuant to Section 8.3 of the Mortgage, including
but not limited to providing all relevant information and making knowledgeable
persons available for interviews; (f) Borrower shall, at its sole cost and
expense, perform any environmental site assessment or other investigation of
environmental conditions in connection with the Property, pursuant to any
reasonable written request of Lender which requests shall not be more frequent
than once per year unless Lender has a reasonable basis for an additional
request (including but not limited to sampling, testing and analysis of soil,
water, air, building materials, and other materials and substances whether
solid, liquid or gas), and share with Lender the reports and other results
thereof, and Lender and other Indemnified Parties shall be entitled to rely on
such reports and other results thereof; (g) Borrower, at its sole cost and
expense, shall comply (or shall cause Tenants to comply) with all reasonable
written requests of Lender to (i) effectuate Remediation of any condition
(including but not limited to a Release of a Hazardous Substance) in, on, under
or from the Property; (ii) comply with any Environmental Law; (iii) comply with
any directive from any governmental authority; and (iv) take any other
reasonable action necessary or appropriate for protection of human health or
the environment; (h) Borrower shall not do or allow any tenant or other user of
the Property to do any act that materially increases the dangers to human
health or the environment, poses an unreasonable risk of harm to any person or
entity (whether on or off the Property), impairs or may impair the value of the
Property, is contrary to any requirement of any insurer, constitutes a public
or private nuisance, constitutes waste, or violates any covenant, condition,
agreement or easement applicable to the Property; and (i) Borrower shall, upon
obtaining knowledge thereof, immediately notify Lender in writing of (A) any
presence or Releases or threatened Releases of Hazardous Substances in, on,
under, from or migrating towards the Property; (B) any non-compliance with any
Environmental Laws related in any way to the Property; (C) any actual or
potential Environmental Lien; (D) any required or proposed Remediation of
environmental conditions relating to the Property; and (E) any written notice
or other written communication of which any Borrower becomes aware from any
source whatsoever (including but not limited to a governmental entity) relating
in any way to Hazardous Substances or Remediation thereof, possible liability
of any person or entity pursuant to any Environmental Law, other environmental
conditions in connection with the Property, or any actual or potential
administrative or judicial proceedings in connection with anything referred to
in this Section 5.1.23.

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

 53
 

 

 

5.2.1        Operation of Property. Borrower
shall not, without the prior written consent of Lender, terminate the Property
Management Agreement or any sub-management agreement or otherwise replace the
Property Manager or any sub-manager or enter into any other management
agreement or sub-management agreement with respect to the Property.  Lender agrees that its consent will not be
unreasonably withheld, delayed or conditioned provided that the Person chosen
by Borrower as the replacement Property Manager or sub-manager is a Qualifying
Property Manager, and further agrees that any such written request for consent
that includes evidence that the replacement Property Manager or sub-manager is
a Qualifying Property Manager, shall be approved or disapproved within ten (10)
Business Days of Lender’s receipt, provided such written request from Borrower
shall conspicuously state, in large bold type, that “PURSUANT TO
SECTION 5.2.1 OF THE LOAN AGREEMENT, A RESPONSE IS REQUIRED WITHIN TEN (10)
BUSINESS DAYS OF LENDER’S RECEIPT OF THIS WRITTEN NOTICE”.  If Lender fails to disapprove any such matter
within such period, such matter shall be deemed approved.  Notwithstanding anything herein to the
contrary, Lender’s consent shall not be required in connection with the
termination of any sub-management agreement if the replacement sub-manager is a
Qualifying Sub-Manager.  Any replacement
Property Manger or sub-manager shall enter into an assignment of management
agreement or consent in substantially the same form as those entered into by
the initial Property Manager and sub-manager as of the Modification Date.

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

(i)            Permitted
Encumbrances;

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

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

5.2.3        Dissolution. 
Borrower shall not (a) engage in any dissolution, liquidation or
consolidation or merger with or into any other business entity, (b) engage in
any business activity not related to the ownership and operation of the
Property, (c) transfer, lease or sell, in one transaction or any combination of
transactions, the assets or all or substantially all of the properties or
assets of Borrower except to the extent permitted by the Loan Documents, or
(d) modify, amend, waive or terminate its organizational documents or its
qualification and good standing in any jurisdiction in which it is organized or
the Property is located, in each case, without obtaining the prior written
consent of Lender or Lender’s designee.

5.2.4        Change in Business. 
Borrower shall not enter into any line of business other than the
ownership and operation of the Property, or make any material change in the
scope or nature of its business objectives, purposes or operations, or
undertake or participate in activities other than the continuance of its present
business.

5.2.5        Debt Cancellation. 
Borrower shall not cancel or otherwise forgive or release any claim or
debt (other than termination of Leases in accordance herewith) owed to

 54
 

 

 

Borrower by any Person, except for adequate
consideration and in the ordinary course of Borrower’s business.

5.2.6        Affiliate Transactions.  Other than the Property Management Agreement
and the Tenants in Common Agreement, if any, and the Co-Owner Indemnities,
Borrower shall not enter into, or be a party to, any transaction with an
Affiliate of Borrower or any of the partners of Borrower except in the ordinary
course of business and on terms which are fully disclosed to Lender in advance
and are no less favorable to Borrower or such Affiliate than would be obtained
in a comparable arm’s-length transaction with an unrelated third party.  Lender hereby acknowledges disclosure of the
agreements described on Schedule VI between Borrower and an Affiliate of
Borrower.

5.2.7        Zoning. 
Borrower shall not initiate or consent to any zoning reclassification of
any portion of the Property or seek any variance under any existing zoning
ordinance or use or permit the use of any portion of the Property in any manner
that could result in such use becoming a non-conforming use under any zoning
ordinance or any other applicable land use law, rule or regulation, without the
prior consent of Lender.

5.2.8        Assets. 
Borrower shall not purchase or own any real estate other than the
Property owned by the Borrower as of the date hereof as reflected in the Title
Insurance Policy.

5.2.9        Debt.  Borrower
shall not create, incur or assume any Indebtedness other than the Debt except
to the extent expressly permitted hereby.

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

5.2.11      No Action for Partition; Tenants-in Common Agreement.  Neither Borrower nor any Person comprising
Borrower shall initiate any action to partition the Property, or any similar
action, without Lender’s prior written consent and Borrower hereby expressly
waives any and all rights to partition the Property.  Other than to reflect transfers permitted
hereunder, Borrower shall not modify, amend or terminate the Tenants-in-Common
Agreement without Lender’s prior written consent.

5.2.12      ERISA.

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

(b)           Borrower further covenants and agrees to deliver to Lender
such certifications or other evidence from time to time throughout the term of
the Loan, as requested by Lender in its sole discretion, that (A) Borrower is
not and does not maintain an “employee

 55
 

 

 

benefit plan” as defined in Section 3(3) of
ERISA, which is subject to Title I of ERISA, or a “governmental plan” within
the meaning of Section 3(3) of ERISA; (B) Borrower is not subject to state
statutes regulating investments and fiduciary obligations with respect to
governmental plans; and (C) one or more of the following circumstances is true:

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

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

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

5.2.13      Transfers. 
(a)  Unless such action is
permitted by the provisions of this Section 5.2.13, Borrower will not (i) sell,
assign, convey, transfer or otherwise dispose of its interests in the Property
or any part thereof, (ii) permit any owner, directly or indirectly, of an
ownership interest in the Property, to transfer such interest, whether by
transfer of stock or other interest in Borrower or any entity, or otherwise,
(iii) incur Indebtedness, (iv) mortgage, hypothecate or otherwise encumber or
grant a security interest in the Property or any part thereof, (v) sell,
assign, convey, transfer, mortgage, encumber, grant a security interest in, or
otherwise dispose of any direct or indirect ownership interest in Borrower, or
permit any owner of an interest in Borrower to do the same, or (vi) file a
declaration of condominium with respect to the Property (any of the foregoing
transactions, a “Transfer”).
For purposes hereof, a “Transfer” shall not include  (A) any direct or indirect transfer by devise
or descent or by operation of law upon the death of a partner, member or
shareholder of a Borrower, (B) any direct or indirect sale, transfer or
hypothecation of a partnership, membership or shareholder interest in Borrower
or other entity, whichever the case may be, by the current member(s), as
applicable, to any immediate family member of such member (or a trust for the
benefit of any such persons), (C) any transfer to Behringer Harvard Funds or an
Affiliate of Behringer Harvard Funds or (D) any transfer or pledge of an equity
interest in Behringer Harvard Funds or any Affiliate thereof or the issuance of
additional equity interests in Behringer Harvard Funds or any Affiliate
thereof.  In addition, as a
condition to any Transfer pursuant to this Section 5.2.13, Indemnitor
must continue to Control Borrower and own, directly or indirectly, at least a
20% legal and beneficial interest in Borrower. 
If after giving effect to any Transfer or any of the transfers pursuant
to the foregoing clauses (A), (B), (C) or (D), more than forty-nine percent
(49%) in the aggregate of direct or indirect interests in Borrower are owned by
any Person and its Affiliates that owned less than forty-nine percent (49%)
direct or indirect interest in Borrower as of the Modification Date, Borrower
shall, as a condition thereto, deliver to Lender an Additional Insolvency
Opinion acceptable to Lender and the Rating Agencies.

(b)           Notwithstanding anything in this Section 5.2.13 to the
contrary, Borrower shall have the right to transfer title to one or more
undivided interests in the Property to one or more entities as additional
tenants-in-common (each, a “Co-Owner
Transferee”) provided the following conditions shall be
satisfied with respect to each such transfer:

 56
 

 

 

(i)            No
Event of Default or event which, with the giving of notice, passage of time or
both, shall constitute an Event of Default, shall exist or shall otherwise
occur as a result of such transfer unless such transfer would cure such
default;

(ii)           An
Affiliate of Sponsor shall continue to own not less than a 20% undivided
interest in the Property, and the total number of persons who own interests in
the Property shall not exceed the lesser of (x) 35 and (y) the number of
co-owners set forth in Revenue Procedure 2002-22, I.R.B. 2002-14, as such
pronouncement may be modified from time to time (for this purpose, “person” is
defined as in Section 7701(a)(1) of the Code);

(iii)          Borrower
shall have delivered to Lender the following fully-executed documents, each in
a form approved by Lender in writing:

(A)          copies
of all documents evidencing or relating to a transfer of an interest in the
Property to a Co-Owner Transferee, and

(B)           all
other documents, instruments, opinions and/or agreements reasonably required by
Lender, including without limitation, (1) an Assignment and Assumption
Agreement, (2) execution by each Co-Owner Transferee and a principal of each
Co-Owner Transferee of a Co-Owner Indemnity, (3) copies of all organizational
documents, good standing certificates, resolutions and consents of each
Co-Owner Transferee in form and substance acceptable to Lender, (4) a Consent
and Assumption Agreement and (5) an Approved Investor Questionnaire with
respect to such Co-Owner Transferee in the form approved by Lender; provided
that Lender shall not require, pursuant to this clause (B), (x) a Consent and
Assumption Agreement in any form other than, or (except for the documents
described in subclauses (1), (2), and (5) of this clause (B)), any document
imposing obligations upon any Co-Owner Transferee or existing Borrower, or upon
any principal of any of them, in addition to those contained in, the form of
Consent and Assumption Agreement attached hereto as Schedule VIII, or
any change to the opinions of counsel delivered in connection with the
modification of the Loan, or any opinion supplemental to any such opinion,
except, in either such case, as may be necessary to accommodate any material
change in fact or law occurring after the date of this Agreement;

(iv)          The
Property shall continue to be subject to a property management agreement with a
Qualifying Property Manager owned and controlled by the Sponsor or otherwise
acceptable to Lender, pursuant to a management agreement approved by Lender in
its sole discretion;

(v)           There
shall have been no material adverse change in the financial condition in the
Borrower or the Sponsor or in the financial or physical condition of the
Property from the Modification Date;

(vi)          Each
additional Co-Owner Transferee must be organized as a Delaware limited
liability company and a Special Purpose Entity pursuant to a Co-Owner

 57
 

 

 

Transferee Operating Agreement substantially in the form set forth on Schedule
IX or otherwise as approved by Lender;

(vii)         Borrower
shall pay Lender’s reasonable and customary out-of-pocket costs and expenses,
including, without limitation, reasonable attorneys’ fees, incurred by Lender
in connection with the transfer and any fees charged by Rating Agencies, and
Borrower pays Lender, concurrently with the closing of any transfer an
administrative fee (unless such transfer occurs on the Modification Date) of
$1,000 per transfer, provided that for any transfer of more than 49% of the
interests in the Property, Borrower shall (a) obtain a Rating Confirmation and
(b) pay a transfer fee equal to one-quarter of one percent (0.25%) of the then
outstanding principal balance of the Loan as of the date of the closing of the
first transfer and one-half of one percent (0.5%) of the then outstanding
principal balance of the Loan as of the date of the closing for any additional
transfer thereafter;

(viii)        The
Co-Owner Transferee, shall furnish an opinion of counsel satisfactory to Lender
and its counsel as to due formation and organization and the valid existence
and good standing of the Co-Owner Transferee, and that the Assignment and
Assumption Agreement and Consent and Assumption Agreement have each been duly
authorized, executed and delivered, and that the Loan Documents are valid,
binding and enforceable against the Co-Owner Transferee in accordance with
their terms; provided that if the Co-Owner Transferee is a limited liability
company meeting all of the requirements applicable to a single-member limited
liability company set forth in the definition of “Special Purpose Entity,” no
opinions shall be required with respect to any member thereof; provided,
further, that an opinion in substantially the form of the opinion of counsel
addressing such matters that was delivered in connection with the modification
of the Loan, together with such other matters as Lender may reasonably require
in light of material changes in fact or law occurring after the date of this
Agreement or to address requirements of any Rating Agency, shall be deemed to
satisfy this condition;

(ix)           Borrower
must deliver to Lender, without any cost or expense to Lender, such
endorsements to the Title Insurance Policy as Lender may deem necessary at the
time of the transfer, all in form and substance reasonably satisfactory to
Lender, including, without limitation, an endorsement or endorsements to the
Title Insurance Policy extending the effective date of such policy to the date
of execution and delivery (or, if later, of recording) of the Assignment and
Assumption Agreement, with no additional exceptions added to such policy, and
insuring that fee simple title to the Property is vested in the Borrower,
including the Co-Owner Transferee, subject to any Tenants-In-Common Agreement;

(x)            If
the Co-Owner Transferee is acquiring less than a twenty percent (20%) interest
in the Property, Sponsor shall certify that the Co-Owner Transferee and its
Principal satisfy the Investor Questionnaire Procedures, which certification
may be based on the representations and affidavits of the Co-Owner Transferee
and its Principals.  If the Co-Owner
Transferee is acquiring a twenty percent (20%) or greater interest in the
Property or does not satisfy the Investor Questionnaire Procedures, the
Co-Owner Transferee and its Principal must satisfy the Co-Owner Transferee
Criteria and Lender’s

 58
 

 

 

standard, customary and reasonable credit underwriting, in each case,
as determined by Lender;

(xi)           Except
as expressly provided in the Indemnity, no Transfer to a Co-Owner Transferee
pursuant to this Section 5.2.13(b) shall be deemed to release Indemnitor from
any obligations under the Indemnity Agreement;

(xii)          If
after giving effect to any such Transfer, more than twenty percent (20%) in the
aggregate of direct or indirect interests in the Property are owned by any
Co-Owner Transferee and its Affiliates that previously owned less than a twenty
percent (20%) direct or indirect interest in the Property, unless a pairing
with such Co-Owner Transferee was included in a previous Insolvency Opinion
Lender shall have received an Additional Insolvency Opinion acceptable to
Lender and the Rating Agencies with respect to such Co-Owner Transferee and any
Person that directly or indirectly owns forty-nine percent (49%) or more of
such Co-Owner Transferee; provided that an opinion in substantially the form of
the opinion of counsel addressing such matters that was delivered in connection
with the modification of the Loan, together with such other matters as Lender
may reasonably require in light of material changes in fact or law occurring
after the date of this Agreement or to address requirements of any Rating
Agency, shall be deemed to satisfy this condition;

(xiii)         In
connection with any Transfer that results in more than forty-nine percent (49%)
of the interests in the Property being owned by a single Co-Owner Transferee or
its Affiliates other than Behringer Harvard Funds or an Affiliate of Behringer
Harvard Funds, Lender shall have the approval of the Rating Agencies selected
by Lender, which approval, if required by Lender, shall take the form of a
confirmation in writing from such Rating Agencies to the effect that such
Transfer will not result in a requalification, reduction, downgrade or
withdrawal of the ratings in effect immediately prior to such assumption or
transfer for the Securities or any class thereof issued in connection with a
Securitization which are then outstanding; and

(xiv)        No
such Transfer shall occur within thirty (30) days prior to the anticipated date
of a Securitization as set forth in a Securitization Notice or thirty (30) days
after a Securitization; provided, however, that notwithstanding anything else
contained herein, such Transfers shall be permitted for a period of forty-five
(45) days following the Modification Date regardless of the timing of the
Securitization.

(c)           Any Transfer by a Borrower other than Transfers described
in Section 5.2.13(a) and (b) above, and any subsequent Transfer by a Co-Owner
Transferee, in any case resulting in a single Person or group of related
Persons who did not previously own 49% or more of the interests in the Property
owning 49% or more of the interests in the Property, shall be subject to prior
written approval of the Lender on a discretionary basis, payment of a transfer
fee equal to one-quarter of one percent (0.25%) of the then outstanding
principal balance of the Loan as of the date of the closing of the first
transfer and one-half of one percent (0.5%) of the then outstanding principal
balance of the Loan as of the date of the closing for any additional transfer
thereafter and all of Lender’s reasonable expenses incurred in connection with
such Transfer, the approval by any and all Rating Agencies (if required by
Lender after a Securitization) of the

 59
 

 

 

proposed Transferee, the proposed Transferee’s
continued compliance with the covenants set forth in Sections 4.1.9, 4.1.30 and
5.2.12 hereof, and such other conditions as Lender shall determine in its sole
discretion to be in the interest of Lender. 
No such assumption shall be permitted within the first twelve (12)
months from the date hereof.

(d)           Notwithstanding anything in this Section 5.2.13 to the
contrary, and in addition to the other transfers expressly permitted hereunder,
at any time other than within thirty (30) days prior to or after the
anticipated date of a Securitization (as determined by Lender), Lender’s
consent to a transfer of the entire Property or an assignment or other transfer
of one hundred percent (100%) of the membership interests in Borrower shall not
be withheld provided that Lender receives not less than thirty (30) days prior
written notice of such transfer hereunder and no Event of Default then exists
(unless such transfer would cure such Event of Default), and further provided
that, the following additional requirements are satisfied:

(i)            Borrower
shall pay any and all out-of-pocket costs incurred in connection with the
transfer of such interests (including, without limitation, Lender’s counsel
fees and disbursements and all recording fees, title insurance premiums and
mortgage recording taxes) and an assumption fee equal to one-quarter of one
percent (0.25%) of the then outstanding principal balance of the Loan as of the
date of the closing of the first assumption and one-half of one percent (0.5%)
of the then outstanding principal balance of the Loan as of the date of the
closing for any additional assumption thereafter.

(ii)           The
proposed transferee (the “Transferee”)
or Transferee’s Principals (hereinafter defined) must have demonstrated
expertise in owning and operating properties similar in location, size and
operation to the Property, which expertise shall be reasonable determined by
Lender.  The term “Transferee’s
Principals” shall mean collectively, (A) Transferee’s managing members, general
partners or principal shareholders and (B) such other members, partners or
shareholders of Transferee owning a controlling interest in Transferee;

(iii)          Transferee
and Transferee’s Principals shall, as of the date of such transfer, be an
Accredited Investor;

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

(v)           If
required or requested by any of the Rating Agencies, Borrower shall deliver an
Additional Insolvency Opinion reasonably acceptable to Lender and the Rating
Agencies in connection with such Transfer; provided that an opinion in
substantially the form of the opinion of counsel addressing such matters that
was delivered in connection with the modification of the Loan, together with
such other matters as Lender may reasonably require in light of material
changes in fact or law occurring after the date of

 60
 

 

 

this Agreement or to address requirements of any Rating Agency, shall
be deemed to satisfy this condition;

(vi)          There
shall be no material convictions, judgments, litigation or regulatory action
pending or threatened against Transferee, Transferee’s Principals or Related
Entities which is not reasonably acceptable to Lender, and none of Transferee,
Transferee’s Principals or Related Entities shall be on any so-called
prohibited persons lists;

(vii)         The
creditworthiness of Transferee, Transferee’s Principals and Related Entities
shall be reasonably acceptable to Lender, and such entity shall not have
defaulted under its or their obligations with respect to any other indebtedness
in a manner which is not acceptable to Lender;

(viii)        If
the transfer is a transfer of the Property, Transferee shall be a Special
Purpose Entity which at the time of such transfer will be in compliance with
the covenants contained in Section 5.1.1 and the representations contained in
4.1.30 hereof and which shall have assumed (subject to the terms of Section 9.4
hereof) pursuant to executed assumption agreement in form and substance
satisfactory to Lender all of the terms, covenants and conditions set forth in
this Agreement and the other Loan Documents, expressly including the covenants
contained in Section 5.1.1 and the representations contained in 4.1.30 hereof;

(ix)           Transferee
and Transferee’s Principals must be able to satisfy the covenants set forth in
Sections 4.1.9 and 5.2.12 hereof, and Transferee and Transferee’s Principals
shall deliver (A) all organizational documentation reasonably requested by
Lender, which shall be reasonably satisfactory to Lender, and (B) all
certificates, agreements and covenants reasonably required by Lender;

(x)            One
or more of Transferee’s Principals acceptable to Lender shall execute in favor
of Lender a replacement Indemnity Agreement in form and substance satisfactory
to Lender, upon which Indemnitor shall be released from any liability under the
existing Indemnity Agreement first arising after the date of such Transfer; and

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

(e)           Lender hereby agrees that it shall provide to Borrower
notice of the anticipated date of a Securitization, not less than sixty (60)
days prior to such date (a “Securitization
Notice”).

(f)            With respect to any matter related to a Transfer of less
than forty-nine percent (49%) of the interests in the Property pursuant to
Section 5.2.13(b) above, Lender shall approve or disapprove any such matter
within ten (10) Business Days of Lender’s receipt of a

 61
 

 

 

written notice from Borrower requesting
Lender’s approval, provided such notice includes all information necessary to
make such decision, and further provided that such written notice from Borrower
shall conspicuously state, in large bold type, that “PURSUANT TO SECTION 5.2.13(b) OF THE LOAN AGREEMENT, A RESPONSE IS
REQUIRED WITHIN TEN (10) BUSINESS DAYS OF LENDER’S RECEIPT OF THIS WRITTEN
NOTICE”.  If Lender fails to
disapprove any such matter within such period, Borrower shall provide a second
written notice requesting approval, which written notice shall conspicuously
state, in large bold type, that “PURSUANT TO
SECTION 5.2.13(b) OF THE LOAN AGREEMENT, THE MATTER DESCRIBED HEREIN SHALL BE
DEEMED APPROVED IF LENDER DOES NOT RESPOND TO THE CONTRARY WITHIN FIVE (5)
BUSINESS DAYS OF LENDER’S RECEIPT OF THIS WRITTEN NOTICE”.  Thereafter, if Lender does not disapprove
such matter within said five (5) Business Day period such matter shall be
deemed approved.  Such deemed approval,
however, shall not in any way be deemed to otherwise constitute a waiver of the
requirements of Section 5.2.13(b).

(g)           Notwithstanding anything in this Section 5.2.13 to the
contrary, Lender’s consent shall not be required in connection with one or a
series of Transfers of indirect interests in any Co-Owner Transferee that owns
less than twenty percent (20%) of the aggregate interests in the Property; provided,
however, no such Transfer shall result in the change of control in such
Co-Owner Transferee.  As used in this
definition, the term “control” means the possession, directly or indirectly, of
the power to direct or cause the direction of management, policies or
activities of a Person, whether through ownership of voting securities, by
contract or otherwise.

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

Section 5.3             Performance by Property Manager.  To the extent that Borrower consists of more
than one tenants-in-common, Lender acknowledges that Property Manager will
perform certain obligations of Borrower, including delivery to Lender of
required information, statements, certifications required hereunder, and Lender
shall accept such performance by Property Manager on behalf of Borrower.

 62

 

 

ARTICLE 6
- INSURANCE; CASUALTY; CONDEMNATION

Section 6.1             Insurance.

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

(i)            comprehensive all risk insurance on
the Improvements and the Personal Property, including contingent liability from
Operation of Building Laws, Demolition Costs and Increased Cost of Construction
Endorsements, in each case (A) in an amount equal to one hundred percent (100%)
of the “Full Replacement Cost,” which for purposes of this Agreement shall mean
actual replacement value (exclusive of costs of excavations, foundations,
underground utilities and footings) with a waiver of depreciation; (B)
containing an agreed amount endorsement with respect to the Improvements and
Personal Property waiving all co-insurance provisions; (C) providing for no
deductible in excess of Twenty-Five Thousand and No/100 Dollars ($25,000) for
all such insurance coverage; and (D) containing an “Ordinance or Law Coverage”
or “Enforcement” endorsement if any of the Improvements or the use of the
Property shall at any time constitute legal non-conforming structures or
uses.  In addition, Borrower shall
obtain: (y) if any portion of the Improvements is currently or at any time in
the future located in a federally designated “special flood hazard area”, flood
hazard insurance in an amount equal to the lesser of (1) the outstanding
principal balance of the Note or (2) the maximum amount of such insurance
available under the National Flood Insurance Act of 1968, the Flood Disaster
Protection Act of 1973 or the National Flood Insurance Reform Act of 1994, as
each may be amended or such greater amount as Lender shall require; and (z)
earthquake insurance in amounts and in form and substance satisfactory to
Lender in the event the Property is located in an area with a high degree of
seismic activity, provided that the insurance pursuant to clauses (y) and (z)
hereof shall be on terms consistent with the comprehensive all risk insurance
policy required under this subsection (i).

(ii)           commercial general liability
insurance against claims for personal injury, bodily injury, death or property
damage occurring upon, in or about the Property, such insurance (A) to be on
the so-called “occurrence” form with a combined limit, including umbrella
coverage, of not less than Five Million and No/100 Dollars ($5,000,000.00); (B)
to continue at not less than the aforesaid limit until required to be changed
by Lender in writing by reason of changed economic conditions making such
protection inadequate; and (C) to cover at least the following hazards:  (1) premises and operations; (2) products and
completed operations on an “if any” basis; (3) independent contractors; (4)
blanket contractual liability for all legal contracts; and (5) contractual
liability covering the indemnities contained in Article 9 of the Mortgage to
the extent the same is available;

(iii)          business income insurance (A) with
loss payable to Lender; (B) covering all risks required to be covered by the
insurance provided for in subsection (i) above; (C) covering rental losses or
business interruption, as may be applicable, for a period of at least eighteen
(18) months after the date of the casualty; and (D) in an annual amount equal
to (100%) of the rents or estimated gross revenues from the operation of the
Property (as reduced to reflect expenses not incurred during Restoration).  The amount of

 63
 

 

 

such business
income insurance shall be determined prior to the Modification Date and at
least once each year thereafter based on Borrower’s reasonable estimate of the
gross income from the Property for the succeeding eighteen (18) month
period.  All proceeds payable to Lender
pursuant to this subsection shall be held by Lender and shall be applied to the
obligations secured by the Loan Documents from time to time due and payable
hereunder and under the Note; provided, however, that nothing herein contained
shall be deemed to relieve Borrower of its obligations to pay the obligations secured
by the Loan Documents on the respective dates of payment provided for in the
Note and the other Loan Documents except to the extent such amounts are
actually paid out of the proceeds of such business income insurance;

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

(v)           workers’ compensation, subject to the
statutory limits of the State;

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

(vii)         umbrella liability insurance in an
amount not less than Five Million and No/100 Dollars ($5,000,000.00) per
occurrence on terms consistent with the commercial general liability insurance
policy required under subsection (ii) above;

(viii)        if any of the policies of insurance
covering the risks required to be covered under subsections (i) through (vii)
above contains an exclusion from coverage for acts of terrorism, Borrower shall
obtain and maintain a separate policy providing such coverages in the event of
any act of terrorism, 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; and

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

(b)           All
insurance provided for in Section 6.1(a) shall be obtained under valid and
enforceable policies (collectively, the “Policies”
or in the singular, the “Policy”),
and shall be subject to the approval of Lender as to insurance companies,
amounts, deductibles, loss payees and insureds. 
The Policies shall be issued by financially sound and responsible
insurance

 64
 

 

 

companies authorized to do business in the State and having a rating of
“A:X” or better in the current Best’s Insurance Reports and a claims paying
ability rating of “A” or better by at least two (2) of the Rating Agencies
including, (i) S&P, and (ii) Moody’s if Moody’s is rating the
Securities.  Notwithstanding the
foregoing, Borrower shall be permitted to retain its current insurance coverage
with St. Paul’s provided that St. Paul’s S&P rating does not fall below “A-”.  The Policies described in Section 6.1 (other
than those strictly limited to liability protection) shall designate Lender as
loss payee.  Not less than thirty (30)
days prior to the expiration dates of the Policies theretofore furnished to
Lender, certificates of insurance evidencing the Policies accompanied by
evidence satisfactory to Lender of payment of the premiums due thereunder (the “Insurance Premiums”), shall be
delivered by Borrower to Lender.

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

(d)           All
Policies of insurance provided for or contemplated by Section 6.1(a), except
for the Policy referenced in Section 6.1(a)(v), shall name Borrower, or the
Tenant, as the insured and Lender as the additional insured, as its interests
may appear, and in the case of property damage, boiler and machinery, flood and
earthquake insurance, shall contain a so-called New York standard
non-contributing mortgagee clause in favor of Lender providing that the loss thereunder
shall be payable to Lender.

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

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

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

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

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

(f)            If
at any time Lender is not in receipt of written evidence that all insurance
required hereunder is in full force and effect, Lender shall have the right,
after ten (10) Business Days written notice to Borrower, to take such action as
Lender deems necessary to protect its interest in the Property, including,
without limitation, the obtaining of such insurance coverage as Lender in its
reasonable discretion deems appropriate. 
All premiums incurred by Lender in connection with such action or in
obtaining such insurance and keeping it in effect shall be paid

 65
 

 

 

by Borrower to Lender upon demand and, until paid, shall be secured by
the Mortgage and shall bear interest at the Default Rate.  If Borrower fails in so insuring the Property
or in so assigning and delivering the Policies, Lender may, at its option,
obtain such insurance using such carriers and agencies as Lender shall elect
from year to year and pay the premiums therefor, and Borrower will reimburse
Lender for any premium so paid, with interest thereon as stated in the Note from
the time of payment, on demand, and the amount so owning to Lender shall be
secured by the Mortgage.  The insurance
obtained by Lender may, but need not, protect Borrower’s interest and the
coverage that Lender purchases may not pay any claim that Borrower makes or any
claim that is made against Borrower in connection with the Property.

Section 6.2             Casualty.  If the Property shall be damaged or
destroyed, in whole or in part, by fire or other casualty (a “Casualty”), Borrower (a) shall give to
Lender prompt notice of such damage reasonably estimated by Borrower to cost
more than Five Hundred Thousand Dollars ($500,000.00) to repair, and (b) shall
promptly commence and diligently prosecute the completion of the repair and
restoration of the Property as nearly as possible to the condition the Property
was in immediately prior to such fire or other casualty, with such alterations
as may be reasonably approved by Lender, (a “Restoration”)
and otherwise in accordance with Section 6.4. Borrower shall pay, or cause to
be paid, all costs of such Restoration whether or not such costs are covered by
insurance. Lender may, but shall not be obligated to make proof of loss if not
made promptly by Borrower.

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

Section 6.4             Restoration  (a)  If
the Net Proceeds shall be less than the Relevant Restoration Threshold and the
costs of completing the Restoration shall be less than the Relevant

 66
 

 

 

Restoration Threshold, the Net Proceeds will be disbursed by Lender to
Borrower upon receipt, provided that all of the conditions set forth in clauses
(A), (E), (F), (G), (H), (J) and (L) of Section 6.4(b)(i) below are met and
Borrower delivers to Lender a written undertaking to expeditiously commence and
to satisfactorily complete with due diligence the Restoration in accordance
with the terms of this Agreement.

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

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

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

(B)           (1) in the event the Net Proceeds are
Insurance Proceeds, and (x) less than twenty-five percent (25%) of the total
floor area of the Improvements on the Property has been damaged, destroyed or
rendered unusable as a result of such fire or other casualty, or (y) Borrower
is required under a Lease exceeding the Relevant Leasing Threshold to use the
Net Proceeds for the restoration of the Property, or (2) in the event the Net
Proceeds are Condemnation Proceeds, and (x) less than fifteen percent (15%) of
the land constituting the Property is taken, and such land is located along the
perimeter or periphery of the Property, and no portion of the building is
located on such land, or (y) Borrower is required under a Lease exceeding the
Relevant Leasing Threshold to use the Net Proceeds for the restoration of the
Property;

(C)           Leases demising in the aggregate a
percentage amount equal to or greater than the Rentable Space Percentage of the
total rentable space in the Property which has been demised under executed and
delivered Leases in effect as of the date of the occurrence of such fire or
other casualty or taking, whichever the case may be, shall remain in full force
and effect during and after the completion of the Restoration, notwithstanding
the occurrence of any such fire or other casualty or taking, whichever the case
may be, and will make all necessary repairs and restorations thereto at their
sole cost and expense.  The term “Rentable Space Percentage” shall mean
(x) in the event the Net Proceeds are Insurance Proceeds, a percentage amount
equal to fifty percent (50%) and (y) in the event the Net Proceeds are
Condemnation Proceeds, a percentage amount equal to fifty percent (50%);

 67
 

 

 

(D)          Borrower shall commence the
Restoration as soon as reasonably practicable (but in no event later than
ninety (90) days after such damage or destruction or taking or obtaining
building permits, whichever the case may be, occurs) and shall diligently
pursue the same to satisfactory completion;

(E)           Lender shall be satisfied that any
operating deficits, including all scheduled payments of principal and interest
under the Note, which will be incurred with respect to the Property as a result
of the occurrence of any such fire or other casualty or taking, whichever the
case may be, will be covered out of (1) the Net Proceeds, (2) the insurance coverage
referred to in Section 6.1(a)(iii), if applicable, or (3) by other funds of
Borrower;

(F)           Lender shall be satisfied that the
Restoration will be completed on or before the earliest to occur of (1) the
Maturity Date, (2) the earliest date required for such completion under the
terms of any Leases, (3) such time as may be required under applicable zoning
law, ordinance, rule or regulation in order to repair and restore the Property
to the condition it was in immediately prior to such fire or other casualty or
to as nearly as possible the condition it was in immediately prior to such
taking, as applicable or (4) the expiration of the insurance coverage referred
to in Section 6.1(a)(iii);

(G)           the Property and the use thereof
after the Restoration will be in compliance with and permitted under all
applicable zoning laws, ordinances, rules and regulations provided, however,
that compliance with such zoning laws, ordinances, rules and regulations
(including, without limitation, parking requirements) will not require
restoration of the Improvements or the Property to a size, condition, or
configuration materially different than that which existed immediately prior to
such Casualty or taking;

(H)          the Restoration shall be done and
completed by Borrower in an expeditious and diligent fashion and in compliance
with all applicable governmental laws, rules and regulations (including,
without limitation, all applicable environmental laws);

(I)            such fire or other casualty or
taking, as applicable, does not result in the loss of access to the Property or
the related Improvements;

(J)            the Debt Service Coverage Ratio,
after giving effect to the Restoration, shall be equal to or greater than 1.20
to 1.0;

(K)          Borrower shall deliver or cause to be
delivered to Lender a signed detailed budget approved in writing by Borrower’s
architect or engineer stating the entire cost of completing the Restoration,
which budget should be consistent with restoration budgets of similar office
properties then owned and operated by nationally recognized owners and
operators of office properties located in the areas in which the Property is
located; and

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

 68
 

 

 

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

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

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

 69
 

 

 

work and has supplied all materials in accordance with the provisions
of the contractor’s, subcontractor’s or materialman’s contract, the contractor,
subcontractor or materialman delivers the lien waivers and evidence of payment
in full of all sums due to the contractor, subcontractor or materialman as may
be reasonably requested by Lender or by the title company issuing the Title
Insurance Policy, and Lender receives an endorsement to the Title Insurance
Policy insuring the continued priority of the lien of the Mortgage and evidence
of payment of any premium payable for such endorsement.  If required by Lender, the release of any
such portion of the Casualty Retainage shall be approved by the surety company,
if any, which has issued a payment or performance bond with respect to the
contractor, subcontractor or materialman.

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

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

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

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

(d)           In the event of foreclosure of the Mortgage with respect
to the Property, or other transfer of title to the Property in extinguishment
in whole or in part of the Debt all right, title and interest of Borrower in
and to the Policies that are not blanket Policies then in force

 70
 

 

 

concerning the Property and all proceeds
payable thereunder shall thereupon vest in the purchaser at such foreclosure or
Lender or other transferee in the event of such other transfer of title.

(e)           Lender shall with reasonable promptness following any
Casualty or Condemnation notify Borrower whether or not Net Proceeds are
required to be made available to Borrower for restoration pursuant to this
Section 6.4.  All Net Proceeds not
required to be made available for Restoration shall be retained and applied by
Lender in accordance with Section 2.4.2 hereof (a “Net Proceeds Prepayment”).  If such Net Proceeds Prepayment shall be
equal to or greater than Five Million and 00/100 Dollars ($5,000,000.00),
Borrower shall have the right to elect to prepay the remaining outstanding
principal balance of the Note (a “Casualty/Condemnation
Prepayment”) upon satisfaction of the following conditions:  (i) within thirty (30) days following the
date of the Net Proceeds Prepayment, Borrower shall provide Lender with written
notice of Borrower’s intention to pay the Note in full, (ii) Borrower shall
prepay the Note on or before the third (3rd) Payment Date occurring following the
date of the Net Proceeds Prepayment subject to and in accordance with the
provisions of Section 2.4.2, and (iii) no Event of Default shall exist
on the date of such Casualty/Condemnation Prepayment.  Notwithstanding anything in Section 6.2 or
Section 6.3 to the contrary, Borrower shall have no obligation to commence
Restoration of the Property upon delivery of the written notice set forth in
clause (i) of the preceding sentence (unless Borrower subsequently shall fail
to satisfy the requirement of clause (ii) of the preceding sentence).

ARTICLE 7
- RESERVE FUNDS

Section 7.1             Required
Repair Funds.

7.1.1        Deposits.
Borrower shall perform the repairs at the Property, if any, as more
particularly set forth on Schedule IV hereto (such repairs hereinafter
referred to as “Required Repairs”).  Borrower shall complete the Required Repairs
on or before the required deadline for each repair as set forth on Schedule
IV.  It shall be an Event of Default
under this Agreement if (i) Borrower does not complete the Required Repairs at
the Property by the required deadline for each repair as set forth on Schedule
IV, and (ii) Borrower does not satisfy each condition contained in Section
7.1.2 hereof.  Upon the occurrence of
such an Event of Default, Lender, at its option, may withdraw all Required
Repair Funds from the Required Repair Account and Lender may apply such funds
either to completion of the Required Repairs at the Property or toward payment
of the Debt in such order, proportion and priority as Lender may determine in
its sole discretion.  Lender’s right to
withdraw and apply Required Repair Funds shall be in addition to all other
rights and remedies provided to Lender under this Agreement and the other Loan
Documents.  On the Modification Date,
Borrower shall deposit with Lender the sum of $    0    ,
which sum represents 125% of the estimated cost to complete the Required
Repairs.  Amounts so deposited, if any,
shall hereinafter be referred to as Borrower’s “Required Repair Fund” and the account, if any, in which
such amounts are held shall hereinafter be referred to as Borrower’s “Required Repair Account”.

7.1.2        Release
of Required Repair Funds.  Lender
shall disburse to Borrower (or to Property Manager on behalf of Borrower) the
Required Repair Funds from the Required Repair Account from time to time upon
satisfaction by Borrower of each of the following

 71
 

 

 

conditions:  (i) Borrower shall
submit a written request for payment to Lender at least fifteen (15) days prior
to the date on which Borrower requests such payment be made and specifies the
Required Repairs to be paid, (ii) on the date such request is received by
Lender and on the date such payment is to be made, no Default or Event of
Default shall exist and remain uncured, (iii) Lender shall have received a
certificate from Borrower (or the Property Manager on behalf of Borrower) (A)
stating that all Required Repairs at the Property to be funded by the requested
disbursement have been completed in good and workmanlike manner and in
accordance with all applicable federal, state and local laws, rules and
regulations, such certificate to be accompanied by a copy of any license,
permit or other approval by any Governmental Authority required to commence
and/or complete the Required Repairs, (B) identifying each Person that supplied
materials or labor in connection with the Required Repairs performed at the Property
to be funded by the requested disbursement under a contract in excess of
$50,000, and (C) stating that each Person who has supplied materials or labor
in connection with the Required Repairs to be funded by the requested
disbursement has been paid in full or will be paid in full upon such
disbursement, such certificate to be accompanied by lien waivers or other
evidence of payment satisfactory to Lender, (iv) at Lender’s option, a title
search for the Property indicating that the Property is free from all liens,
claims and other encumbrances not previously approved by Lender, and (v) Lender
shall have received such other evidence as Lender shall reasonably request that
the Required Repairs at the Property to be funded by the requested disbursement
have been completed and are paid for or will be paid upon such disbursement to
Borrower.  Lender shall not be required
to make disbursements from the Required Repair Account with respect to the
Property more than once each calendar month and such disbursement shall be made
only upon satisfaction of each condition contained in this Section 7.1.2.  Upon the completion of the Required Repairs
as provided herein, any remaining Required Repair Funds shall be returned to
Borrower provided no Event of Default then exists.

Section 7.2             Tax and
Insurance Escrow Fund.  Borrower
shall pay to Lender on each Payment Date (a) one-twelfth of the Taxes that
Lender estimates will be payable during the next ensuing twelve (12) months in
order to accumulate with Lender sufficient funds to pay all such Taxes at least
thirty (30) days prior to their respective due dates and (b) one-twelfth of the
Insurance Premiums that Lender estimates will be payable for the renewal of the
coverage afforded by the Policies upon the expiration thereof in order to
accumulate with Lender sufficient funds to pay all such Insurance Premiums at
least thirty (30) days prior to the expiration of the Policies, (said amounts
in (a) and (b) above are hereinafter called the “Tax and Insurance Escrow Fund”).  The Tax and Insurance Escrow Fund and the
payments of interest or principal or both, payable pursuant to the Note, shall
be added together and shall be paid as an aggregate sum by Borrower to
Lender.  Lender will apply the Tax and
Insurance Escrow Fund to payments of Taxes and Insurance Premiums required to
be made by Borrower pursuant to this Agreement and under the Mortgage.  In making any payment relating to the Tax and
Insurance Escrow Fund, Lender may do so according to any bill, statement or
estimate procured from the appropriate public office (with respect to Taxes) or
insurer or agent (with respect to Insurance Premiums) or from Borrower without
inquiry into the accuracy of such bill, statement or estimate or into the
validity of any tax, assessment, sale, forfeiture, tax lien or title or claim
thereof, provided, however, Lender shall use reasonable efforts to pay such
real property taxes sufficiently early to obtain the benefit of any available
discounts of which it has knowledge.  If
the amount of the Tax and Insurance Escrow Fund shall exceed the amounts due
for Taxes and Insurance Premiums, Lender shall, in its sole discretion, return
any excess to Borrower or credit 

 72
 

 

 

such excess against future payments to be made to the
Tax and Insurance Escrow Fund.  Any
amount remaining in the Tax and Insurance Escrow Fund after the Debt has been
paid in full shall be returned to Borrower. 
In allocating such excess, Lender may deal with the Person shown on the
records of Lender to be the owner of the Property.  If at any time Lender reasonably determines
that the Tax and Insurance Escrow Fund is not or will not be sufficient to pay
Taxes or Insurance Premiums by the dates set forth above, Lender shall notify
Borrower of such determination and Borrower shall increase its monthly payments
to Lender by the amount that Lender estimates is sufficient to make up the
deficiency at least thirty (30) days prior to delinquency of the Taxes or
Insurance Premiums.  Notwithstanding the foregoing,
Lender shall not require a monthly escrow for Taxes or Insurance Premiums so
long as Borrower provides Lender with evidence of payment for all Taxes and
Insurance Premiums.  In the event
Borrower (i) fails to provide such evidence, (ii) is delinquent in the payment
of any Taxes or Insurance Premiums or (iii) an Event of Default occurs,
however, Borrower will thereafter be required to make deposits with Lender for
Taxes and Insurance Premiums as provided herein.  Pursuant to the Indemnity Agreement,
Indemnitor has guaranteed to Lender the payment of the Taxes and Insurance
Premiums which are not paid by Borrower as required herein.

Section 7.3             Replacements
and Replacement Reserve.

7.3.1        Replacement
Reserve Fund.  On each Payment Date
Borrower shall pay to Lender one twelfth of the amount (the “Replacement Reserve Monthly Deposit”)
reasonably estimated by Lender in its sole discretion to be due for
replacements and repairs required to be made to the Property during the
calendar year (collectively, the “Replacements”),
which Replacement Reserve Monthly Deposit shall be in an amount equal to no
less than $0.20 per year per square foot of gross leasable area.  Amounts so deposited shall hereinafter be
referred to as Borrower’s “Replacement
Reserve Fund” and the account in which such amounts are held
shall hereinafter be referred to as Borrower’s “Replacement Reserve Account”.  Lender may reassess its estimate of the
amount necessary for the Replacement Reserve Fund from time to time based upon
an updated engineering report of the Property, and may increase the monthly
amounts required to be deposited into the Replacement Reserve Fund upon thirty
(30) days notice to Borrower if Lender determines in its reasonable discretion
that an increase is necessary to maintain the proper maintenance and operation
of the Property.  Notwithstanding the
foregoing, Lender shall waive the requirement for monthly deposits to the
Replacement Reserve Fund until such time as either Lender determines that the
Property is not being properly maintained or the Tangible Net Worth of
Indemnitor falls below $250,000,000, in which case (a) Borrower shall
promptly deposit with Lender greater of (i) the amount of previous deposits
that have been waived less amounts actually expended by Borrower for
replacements and repairs during the period that such deposits were waived or
(ii) an amount determined at that time as necessary for the completion of any
deferred maintenance and to complete any ongoing Replacements as and when
necessary to keep the Property in good repair and condition, based on an
engineering report prepared by an engineer acceptable to Lender (the “Replacement Reserve Shortfall”);
provided that in no event shall the Replacement Reserve Shortfall exceed
thirty-six times the Replacement Reserve Monthly Deposit, and (b) Borrower
shall thereafter make the monthly deposits to the Replacement Reserve Fund
until such time as Lender determines in its sole discretion that such monthly
deposits are not necessary for the proper maintenance of the Property.  Pursuant to the Indemnity Agreement,
Indemnitor has guaranteed to Lender the payment of the Replacement Reserve
Shortfall.

 73
 

 

 

7.3.2        Disbursements from Replacement Reserve Account.

(a)           Lender shall make disbursements from the Replacement
Reserve Account to pay Borrower only for the costs of the Replacements.  Lender shall not be obligated to make
disbursements from the Replacement Reserve Account to reimburse Borrower for
the costs of routine maintenance to the Property or for costs which are to be
reimbursed from the Required Repair Fund (if any).

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

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

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

 74
 

 

 

covered by the current reimbursement request
(or, in the event that payment to such contractor, supplier, subcontractor,
mechanic or materialmen is to be made by a joint check, the release of lien
shall be effective through the date covered by the previous release of funds
request).

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

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

7.3.3        Performance of Replacements.

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

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

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

 75
 

 

 

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

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

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

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

 76
 

 

 

inspection as required hereunder, whether such inspection is conducted
by Lender or by an independent qualified professional.

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

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

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

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

7.3.4        Failure
to Make Replacements.

(a)           It
shall be an Event of Default under this Agreement if Borrower fails to comply
with any provision of this Section 7.3 and such failure is not cured within
thirty (30) days after notice from Lender; provided, however, if
such failure is not capable of being cured within said thirty (30) day period,
then provided that Borrower commences action to complete such cure and
thereafter diligently proceeds to complete such cure, such thirty (30) day
period shall be extended for such time as is reasonably necessary for Borrower,
in the exercise of due diligence, to cure such failure, but such additional
period of time shall not exceed ninety (90) days.  Upon the occurrence of such an Event of
Default, Lender may use the Replacement Reserve Fund (or any portion thereof)
for any purpose, including but not limited to completion of the Replacements as
provided in Section 7.3.3, or for any other repair or replacement to the
Property or toward payment of the Debt in such order, proportion and priority
as Lender may determine in its sole discretion. 
Lender’s right to withdraw and apply the Replacement Reserve Funds shall
be in addition to all other rights and remedies provided to Lender under this
Agreement and the other Loan Documents.

 77

 

 

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

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

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

Section 7.4             Lease Obligation Reserve.

7.4.1        Deposits to Lease Obligations Reserve Fund.  Borrower represents that Schedule XII
sets forth all tenant improvement allowances and rent concessions outstanding
as of the Modification Date (collectively, the “Lease Obligations”). 
Borrower covenants to pay all Lease Obligations as and when the same are
due under the related Leases.  In the
event that (a) Borrower fails to pay any such Lease Obligations as and
when the same are due under the related Leases, (b) the Tangible Net Worth
of Indemnitor falls below $250,000,000 or (c) an Event of Default occurs,
Borrower shall promptly deposit with Lender the amount of any Lease Obligations
then outstanding (the “Lease Obligations
Shortfall”).  Any amounts
so deposited shall hereinafter be referred to as the “Lease Obligations Reserve
Fund”.  Pursuant to the Indemnity
Agreement, Indemnitor has guaranteed to Lender the payment of the Lease
Obligations Shortfall.

7.4.2        Withdrawal of Lease Obligations Reserve Funds.  Lender shall make disbursements from the
Lease Obligations Reserve Fund for payment of the Lease Obligations.  Lender shall make disbursements as requested
by Borrower (or by Property Manager on behalf of Borrower) on a monthly basis
in increments of no less than $5,000.00 upon delivery by Borrower of Lender’s
standard form of draw request and evidence that the related Lease Obligations
have been paid or will be paid from the proceeds of such disbursement.  If requested by Lender in connection with any
disbursement of Lease Obligations Reserve Funds, Borrower shall also deliver
copies of paid invoices, lien waivers and evidence that any related tenant
improvements have been completed in accordance with all applicable Legal
Requirements.

Section 7.5             Reserve Funds, Generally.

7.5.1        Borrower hereby grants to Lender a security interest in each
of the Reserve Funds and any and all monies now or hereafter deposited in each
Reserve Fund as

 78
 

 

 

additional security for payment of the
Debt.  Until expended or applied in
accordance herewith, the Reserve Funds shall constitute additional security for
the Debt.

7.5.2        Upon the occurrence of an Event of Default, Lender may, in
addition to any and all other rights and remedies available to Lender, apply
any sums then present in any or all of the Reserve Funds to the payment of the
Debt in any order in its sole discretion.

7.5.3        The Reserve Funds shall not constitute trust funds and may be
commingled with other monies held by Lender.

7.5.4        All of the Reserve Funds other than the Tax and Insurance
Escrow Fund shall be placed in interest bearing accounts and any interest earned
thereon, less a servicing fee of one-quarter of one percent (0.25%) per annum
(but in no event more than the interest earned), shall be added to and become a
part of such Reserve Fund.  Borrower
shall be responsible for payment of any federal, state or local income or other
tax applicable to the interest earned on such Reserve Funds which is credited
or paid to Borrower.

7.5.5        Borrower shall not, without obtaining the prior written
consent of Lender, further pledge, assign or grant any security interest in any
Reserve Fund or the monies deposited therein or permit any lien or encumbrance
to attach thereto, or any levy to be made thereon, or any UCC-1 Financing
Statements, except those naming Lender as the secured party, to be filed with
respect thereto.

7.5.6        Lender shall not be liable for any loss sustained on the
investment of any funds constituting the Reserve Funds unless occasioned by the
gross negligence or willful misconduct of Lender.

7.5.7        Upon payment in full of the Debt and performance of all other
obligations under this Agreement and the other Loan Documents, Lender shall
disburse to Borrower all remaining Reserve Funds.

Section 7.6             Letter of Credit Rights.  Any Letter of Credit delivered to Lender
pursuant to this Agreement shall be held by Lender as additional security for
the Loan.  Lender shall have the right to
draw upon any Letter of Credit immediately and without further notice:

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

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

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

 79
 

 

 

ARTICLE 8
- DEFAULTS

Section 8.1             Event of Default.

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

(i)            if
(a) any portion of the principal or interest on the Debt or monthly escrow
payment is not paid when due, except that not more than two times in any twelve
month period it shall not be an Event of Default if such amount (other than
amounts due on the Maturity Date) is paid within five (5) days of the
applicable due date or (b) if any other portion of the Debt is not paid within
ten (10) days after notice to Borrower from Lender (in each case regardless of
any grace period set forth in the Mortgage);

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

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

(iv)          if
Borrower transfers or encumbers any portion of the Property without Lender’s
prior written consent (to the extent such consent is required) or otherwise
violates the provisions of Section 5.2.13 of this Agreement;

(v)           if
any material representation or warranty made by Borrower herein or in any other
Loan Document, or in any report, certificate, financial statement or other
instrument, agreement or document furnished to Lender shall have been false or
misleading in any material respect as of the date the representation or
warranty was made;

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

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

 80
 

 

 

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

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

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

(xi)           if
a default exists beyond any applicable notice and cure period under any
Tenants-in-Common Agreement to the extent such default can, in Lender’s
reasonable determination, result in a termination of such Tenants-in-Common
Agreement or a lien on any interest in the Property;

(xii)          if
Borrower shall continue to be in Default under any of the other terms,
covenants or conditions of this Agreement not specified in subsections (i) to
(xi) above, for ten (10) days after notice to Borrower from Lender, in the case
of any Default which can be cured by the payment of a sum of money, or for
thirty (30) days after notice from Lender in the case of any other Default; provided,
however, that if such non-monetary Default is susceptible of cure but
cannot reasonably be cured within such 30-day period and provided further that
Borrower shall have commenced to cure such Default within such 30-day period
and thereafter diligently and expeditiously proceeds to cure the same, such
30-day period shall be extended for such time as is reasonably necessary for
Borrower in the exercise of due diligence to cure such Default, such additional
period not to exceed one hundred eighty (180) days;

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

(xiv)        any
Person comprising Borrower or otherwise owning an interest in the Property files
any partition action affecting the Property, which action is not dismissed
within sixty (60) days; or

(xv)         if
any of the assumptions contained in any substantive non-consolidation opinion
delivered in connection herewith, Insolvency Opinion or Additional Insolvency
Opinion are or shall become untrue in any material respect.

Notwithstanding anything
herein to the contrary, in the event that Borrower is comprised of more than
one Person owning the Property as tenants in common and an Event of Default
shall occur pursuant to clauses (iv), (vi), (vii), (xi) or (xiv) above which is
not caused by the action of any Borrower that is an Affiliate of Sponsor and
such Event of Default shall cease to exist as a result of a transfer by the
defaulting Borrower to one or more other Borrowers or an Affiliate of

 81
 

 

 

Behringer Harvard Funds
made in accordance with the provisions of Section 5.2.13 hereof, such transfer
shall be permitted and Lender shall accept a cure of such Event of Default
effective as of the date of such transfer provided that (a) Borrower notifies
Lender of its intention to effect such cure within 15 days after the occurrence
of the related Event of Default, (b) the transfer is completed within 60
days after the occurrence of the related Event of Default, (c) Borrower
continues to make timely payment of all amounts due under the Loan Documents
(provided that notwithstanding such payment, interest shall accrue at the
Default Rate until such Event of Default is cured pursuant to this paragraph)
and (d) during such cure period there is no material impairment to the value,
use or operation of the Property.

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

Section 8.2             Remedies.

(a)           Upon the occurrence of an Event of Default, all or any one
or more of the rights, powers, privileges and other remedies available to
Lender against Borrower under this Agreement or any of the other Loan Documents
executed and delivered by, or applicable to, Borrower or at law or in equity
may be exercised by Lender at any time and from time to time, whether or not
all or any of the Debt shall be declared due and payable, and whether or not
Lender shall have commenced any foreclosure proceeding or other action for the
enforcement of its rights and remedies under any of the Loan Documents with
respect to the Property.  Any such
actions taken by Lender shall be cumulative and concurrent and may be pursued
independently, singly, successively, together or otherwise, at such time and in
such order as Lender may determine in its sole discretion, to the fullest
extent permitted by law, without impairing or otherwise affecting the other
rights and remedies of Lender permitted by law, equity or contract or as set
forth herein or in the other Loan Documents. 
Without limiting the generality of the foregoing, Borrower agrees that
if an Event of Default is continuing (i) Lender is not subject to any “one
action” or “election of remedies” law or rule (to the extent waiveable by
Borrower),  and (ii) all liens and other
rights, remedies or privileges provided to Lender shall remain in full force
and effect until Lender has exhausted all of its remedies against the Property
and the Mortgage has been foreclosed, sold and/or otherwise realized upon in
satisfaction of the Debt or the Debt has been paid in full.

(b)           To the extent permitted by applicable law, Lender shall
have the right from time to time to partially foreclose the Mortgage in any
manner and for any amounts secured

 82
 

 

 

by the Mortgage then due and payable as
determined by Lender in its sole discretion including, without limitation, the
following circumstances: (i) in the event Borrower defaults beyond any
applicable grace period in the payment of one or more scheduled payments of
principal and interest, Lender may foreclose the Mortgage to recover such
delinquent payments, or (ii) in the event Lender elects to accelerate less than
the entire outstanding principal balance of the Loan, Lender may foreclose the
Mortgage to recover so much of the principal balance of the Loan as Lender may
accelerate and such other sums secured by the Mortgage as Lender may
elect.  Notwithstanding one or more
partial foreclosures, the Property shall remain subject to the Mortgage to
secure payment of sums secured by the Mortgage and not previously recovered.

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

(d)           As used in this Section 8.2, a “foreclosure” shall include
any sale by power of sale.

Section 8.3             Remedies Cumulative; Waivers.  The rights, powers and remedies of Lender
under this Agreement shall be cumulative and not exclusive of any other right,
power or remedy which Lender may have against Borrower pursuant to this
Agreement or the other Loan Documents, or existing at law or in equity or
otherwise.  Lender’s rights, powers and
remedies may be pursued singly, concurrently or otherwise, at such time and in
such order as Lender may determine in Lender’s sole discretion.  No delay or omission to exercise any remedy,
right or power accruing upon an Event of Default shall impair any such remedy,
right or power or shall be construed as a waiver thereof, but any such remedy,
right or power may be exercised from time to time and as often as may be deemed
expedient.  A waiver of one Default or
Event of Default with respect to Borrower shall not be construed to be a waiver
of any subsequent Default or Event of Default by Borrower or to impair any
remedy, right or power consequent thereon.

 83
 

 

ARTICLE 9
- SPECIAL PROVISIONS

Section 9.1             Sale of Notes and Securitization.  At the request of the holder of the Note and,
to the extent not already required to be provided by Borrower under this
Agreement, Borrower shall cooperate with Lender to allow Lender to satisfy the
market standards to which the holder of the Note customarily adheres or which
may be reasonably required in the marketplace or by the Rating Agencies in
connection with the sale of the Note or participations therein or the first
successful securitization (such sale and/or securitization, the “Securitization”) of rated single or
multi-class securities (the “Securities”)
secured by or evidencing ownership interests in the Note and the Mortgage.  In this regard Borrower shall:

(a)           (i)            provide
such financial and other information with respect to the Property, Borrower and
the Property Manager, (ii) provide budgets relating to the Property and (iii)
to perform or permit or cause to be performed or permitted such site
inspection, appraisals, market studies, environmental reviews and reports
(Phase I’s and, if appropriate, Phase II’s), engineering reports and other due
diligence investigations of the Property, as may be reasonably requested by the
holder of the Note or the Rating Agencies or as may be necessary or appropriate
in connection with the Securitization (the “Provided Information”), together, if customary, with
appropriate verification and/or consents of the Provided Information through
letters of auditors or opinions of counsel of independent attorneys acceptable
to Lender and the Rating Agencies;

(b)           cause counsel to render opinions, which may be relied upon
by the holder of the Note, the Rating Agencies and their respective counsel,
agents and representatives, as to non-consolidation, fraudulent conveyance, and
true sale and/or lease or any other opinion customary in securitization
transactions, which counsel and opinions shall be reasonably satisfactory to
the holder of the Note and the Rating Agencies;

(c)           make such representations and warranties as of the closing
date of the Securitization with respect to the Property, Borrower, and the Loan
Documents as are consistent with the representations and warranties made in the
Loan Documents; and

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

All material out-of-pocket third party costs and
expenses incurred by Borrower in connection with complying with requests made
under this Section 9.1 shall be paid by Lender. 
Additionally, if Lender requires a second Independent Director in
connection with a Securitization, Lender shall prior to the cut-off date for
such Securitization, reimburse Borrower for the estimated cost of maintaining a
second Independent Director for the remaining term of the Loan.

Section 9.2             Securitization.  Borrower understands that certain of the
Provided Information may be included in disclosure documents in connection with
the Securitization,

 84
 

 

 

including, without limitation, a prospectus,
prospectus supplement or private placement memorandum (each, a “Disclosure Document”) and may also be
included in filings with the Securities and Exchange Commission pursuant to the
Securities Act of 1933, as amended (the “Securities
Act”), or the Securities and Exchange Act of 1934, as amended (the “Exchange Act”), or provided or made
available to investors or prospective investors in the Securities, the Rating
Agencies, and service providers relating to the Securitization.  In the event that the Disclosure Document is
required to be revised prior to the sale of all Securities, Borrower will
cooperate with the holder of the Note in updating the Disclosure Document by
providing all current information necessary to keep the Disclosure Document
accurate and complete in all material respects.

Section 9.3             Rating Surveillance.  Lender, at its option, may retain the Rating
Agencies to provide rating surveillance services on any certificates issued in
a Securitization.  Such rating
surveillance will be at the expense of Lender (the “Rating Surveillance Charge”).

Section 9.4             Exculpation.  Subject to the qualifications below, Lender
shall not enforce the liability and obligation of Borrower to perform and
observe the obligations contained in the Note, this Agreement, the Mortgage or
the other Loan Documents by any action or proceeding wherein a money judgment
shall be sought against Borrower, except that Lender may bring a foreclosure
action, an action for specific performance or any other appropriate action or
proceeding to enable Lender to enforce and realize upon its interest under the
Note, this Agreement, the Mortgage and the other Loan Documents, or in the
Property, the Rents following an Event of Default, or any other collateral
given to Lender pursuant to the Loan Documents; provided, however, that, except
as specifically provided herein, any judgment in any such action or proceeding
shall be enforceable against Borrower only to the extent of Borrower’s interest
in the Property, in the Rents following an Event of Default and in any other
collateral given to Lender, and Lender, by accepting the Note, this Agreement,
the Mortgage and the other Loan Documents, agrees that it shall not sue for,
seek or demand any deficiency judgment against Borrower in any such action or
proceeding under or by reason of or under or in connection with the Note, this
Agreement, the Mortgage or the other Loan Documents.  The provisions of this Section shall not,
however, (a) constitute a waiver, release or impairment of any obligation
evidenced or secured by any of the Loan Documents; (b) impair the right of
Lender to name Borrower as a party defendant in any action or suit for
foreclosure and sale under any of the Mortgage; (c) affect the validity or
enforceability of the Indemnity Agreement, any Co-Owner Indemnity or any other
guaranty made in connection with the Loan or any of the rights and remedies of
Lender thereunder; (d) impair the right of Lender to obtain the appointment of
a receiver; (e) impair the enforcement of any of the Assignment of Leases
following an Event of Default; or (f) constitute a prohibition against Lender
commencing any other appropriate action or proceeding in order for Lender to
exercise its remedies against the Property. 
In addition, the foregoing shall not be deemed a waiver of the right of
Lender to enforce the liability and obligation of a Borrower, Sponsor or any
Principal of a Borrower (or any successor or assign of any of the foregoing),
by money judgment or otherwise, as expressly set forth in any Co-Owner
Indemnity or Indemnity Agreement executed in connection herewith.

Section 9.5             Termination of Property Manager.  If (a) an Event of Default has occurred and
is continuing, (b) the Property Manager shall become insolvent, (c) the
Property Manager is in default under the terms of the Property Management
Agreement beyond any applicable grace

 85
 

 

 

or cure period or (d) Property Manager is not
managing the Property in accordance with the management practices of nationally
recognized management companies managing similar properties in locations
comparable to those of the Property, then, in the case of (a), (b), (c) or (d),
Borrower shall, at the request of Lender, terminate the Property Management
Agreement and replace the Property Manager with a manager reasonably approved
by Lender on terms and conditions reasonably satisfactory to Lender, it being
understood and agreed that the management fee for such replacement manager
shall not exceed then prevailing market rates. 
Property Manager shall have the right to subcontract some or all of its
responsibilities under the Property Management Agreement pursuant to an
agreement on terms and conditions satisfactory to Lender in its reasonable
discretion, it being understood and agreed that the management fee for such
Property Manager shall not exceed then prevailing market rates, as determined
by Lender, and in no event shall each agreement impair Lender’s rights
hereunder or under the other Loan Documents. 
If (i) an Event of Default has occurred and is continuing, (ii) any
sub-manager shall become insolvent, (iii) any sub-manager is in default under
the terms of the related sub-management agreement beyond any applicable grace
or cure period or (iv) any sub-manager is not managing the Property in
accordance with the management practices of nationally recognized management
companies managing similar properties in locations comparable to those of the
Property, then, in the case of (i), (ii), (iii) or (iv), Borrower shall, at the
request of Lender, cause Property Manager to terminate the sub-management
agreement and replace the sub-manager with a manager reasonably approved by
Lender on terms and conditions reasonably satisfactory to Lender, it being
understood and agreed that the management fee for such replacement sub-manager
shall not exceed then prevailing market rates, as determined by Lender.

Section 9.6             Servicer.  At the option of Lender, the Loan may be
serviced by a servicer/trustee (the “Servicer”)
selected by Lender and Lender may delegate all or any portion of its
responsibilities under this Agreement and the other Loan Documents to the
Servicer pursuant to a servicing agreement (the “Servicing Agreement”) between Lender and Servicer.  Lender shall be responsible for any set-up
fees or any other costs relating to or arising under the Servicing Agreement.

Section 9.7             Resizing.  Borrower covenants and agrees that in
connection with any Securitization of the Loan, upon Lender’s request Borrower
shall deliver one or more new component notes to replace the original note or
modify the original note to reflect multiple components of the Loan or create
one or more mezzanine loans (including amending Borrower’s organizational
structure to provide for one or more mezzanine borrowers) (each a “Resizing Event”).  Lender agrees that such new notes or modified
note or mezzanine notes shall after the Resizing Event have the same weighted
average coupon as the original note prior to such Resizing Event, except that
the application of principal to such new notes or modified note or mezzanine
notes following an Event of Default or as a result of a Casualty or
Condemnation may cause the weighted average spread of such new notes or
modified note or mezzanine notes to change. 
Subject to the foregoing, Lender shall have the right to apply
principal, interest rates and amortization of the Loan between such new
components and/or mezzanine loans in a manner specified by Lender in its sole
discretion such that the pricing and marketability of the Securities and the
size of each class of Securities and the rating assigned to each such class by
the Rating Agencies shall provide the most favorable rating levels and achieve
the optimum bond execution for the Loan. 
In connection with any Resizing Event, Borrower covenants and agrees to
modify

 86
 

 

 

the Cash Management Agreement with respect to
the newly created components and/or mezzanine loans.

ARTICLE
10 - MISCELLANEOUS

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

Section 10.2           Lender’s Discretion.  Whenever pursuant to this Agreement, Lender
exercises any right given to it to approve or disapprove, or any arrangement or
term is to be satisfactory to Lender, the decision of Lender to approve or
disapprove or to decide whether arrangements or terms are satisfactory or not
satisfactory shall (except as is otherwise specifically herein provided) be in
the sole discretion of Lender and shall be final and conclusive.

Section 10.3           Governing Law.  (a)  THIS AGREEMENT WAS NEGOTIATED IN THE STATE OF NEW
YORK, THE LOAN WAS MADE BY LENDER AND ACCEPTED BY BORROWER IN THE STATE OF NEW
YORK, AND THE PROCEEDS OF THE LOAN DELIVERED PURSUANT HERETO WERE DISBURSED
FROM THE STATE OF NEW YORK, WHICH STATE THE PARTIES AGREE HAS A SUBSTANTIAL
RELATIONSHIP TO THE PARTIES AND TO THE UNDERLYING TRANSACTION EMBODIED HEREBY,
AND IN ALL RESPECTS, INCLUDING, WITHOUT LIMITING THE GENERALITY OF THE
FOREGOING, MATTERS OF CONSTRUCTION, VALIDITY AND PERFORMANCE, THIS AGREEMENT,
THE NOTE AND THE OTHER LOAN DOCUMENTS AND THE OBLIGATIONS ARISING HEREUNDER AND
THEREUNDER SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF
THE STATE OF NEW YORK APPLICABLE TO CONTRACTS MADE AND PERFORMED IN SUCH STATE
(WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF LAWS) AND ANY APPLICABLE LAW OF
THE UNITED STATES OF AMERICA, EXCEPT THAT AT ALL TIMES THE PROVISIONS FOR THE
CREATION, PERFECTION, AND ENFORCEMENT OF THE LIEN AND SECURITY INTEREST CREATED
PURSUANT HERETO AND PURSUANT TO THE OTHER LOAN DOCUMENTS SHALL BE GOVERNED BY
AND CONSTRUED ACCORDING TO THE LAW OF THE STATE IN WHICH THE PROPERTY IS
LOCATED, IT BEING UNDERSTOOD THAT, TO THE FULLEST EXTENT PERMITTED BY THE LAW OF
SUCH STATE, THE LAW OF THE STATE OF NEW YORK SHALL GOVERN THE CONSTRUCTION,
VALIDITY AND ENFORCEABILITY OF ALL LOAN DOCUMENTS AND ALL OF THE OBLIGATIONS
ARISING HEREUNDER OR THEREUNDER.  TO THE
FULLEST EXTENT PERMITTED BY LAW, BORROWER HEREBY UNCONDITIONALLY AND
IRREVOCABLY WAIVES ANY CLAIM TO ASSERT THAT THE LAW OF ANY

 87
 

 

 

OTHER JURISDICTION GOVERNS THIS AGREEMENT,
THE NOTE AND THE OTHER LOAN DOCUMENTS, AND, EXCEPT AS PROVIDED ABOVE, THIS
AGREEMENT, THE NOTE AND THE OTHER LOAN DOCUMENTS SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK PURSUANT TO
SECTION 5-1401 OF THE NEW YORK GENERAL OBLIGATIONS LAW.

(b)           ANY LEGAL SUIT, ACTION
OR PROCEEDING AGAINST LENDER OR BORROWER ARISING OUT OF OR RELATING TO THIS
AGREEMENT OR THE OTHER LOAN DOCUMENTS MAY AT LENDER’S OPTION BE INSTITUTED IN
ANY FEDERAL OR STATE COURT IN THE CITY OF NEW YORK, COUNTY OF NEW YORK,
PURSUANT TO SECTION 5-1402 OF THE NEW YORK GENERAL OBLIGATIONS LAW AND
BORROWER WAIVES ANY OBJECTIONS WHICH IT MAY NOW OR HEREAFTER HAVE BASED ON
VENUE AND/OR FORUM NON CONVENIENS OF ANY SUCH SUIT, ACTION OR PROCEEDING, AND
BORROWER HEREBY IRREVOCABLY SUBMITS TO THE JURISDICTION OF ANY SUCH COURT IN
ANY SUIT, ACTION OR PROCEEDING.  BORROWER
DOES HEREBY DESIGNATE AND APPOINT:

CT
Corporation System

111 Eighth Avenue

New York, New York 10011

AS ITS AUTHORIZED AGENT TO ACCEPT
AND ACKNOWLEDGE ON ITS BEHALF SERVICE OF ANY AND ALL PROCESS WHICH MAY BE
SERVED IN ANY SUCH SUIT, ACTION OR PROCEEDING IN ANY FEDERAL OR STATE COURT IN
NEW YORK, NEW YORK, AND AGREES THAT SERVICE OF PROCESS UPON SAID AGENT AT SAID
ADDRESS AND WRITTEN NOTICE OF SAID SERVICE MAILED OR DELIVERED TO BORROWER IN
THE MANNER PROVIDED HEREIN SHALL BE DEEMED IN EVERY RESPECT EFFECTIVE SERVICE
OF PROCESS UPON BORROWER IN ANY SUCH SUIT, ACTION OR PROCEEDING IN THE STATE OF
NEW YORK.  BORROWER (I) SHALL GIVE
PROMPT NOTICE TO LENDER OF ANY CHANGED ADDRESS OF ITS AUTHORIZED AGENT
HEREUNDER, (II) MAY AT ANY TIME AND FROM TIME TO TIME DESIGNATE A
SUBSTITUTE AUTHORIZED AGENT WITH AN OFFICE IN NEW YORK, NEW YORK (WHICH
SUBSTITUTE AGENT AND OFFICE SHALL BE DESIGNATED AS THE PERSON AND ADDRESS FOR
SERVICE OF PROCESS), AND (III) SHALL PROMPTLY DESIGNATE SUCH A SUBSTITUTE
IF ITS AUTHORIZED AGENT CEASES TO HAVE AN OFFICE IN NEW YORK, NEW YORK OR IS
DISSOLVED WITHOUT LEAVING A SUCCESSOR.

Section 10.4           Modification, Waiver in Writing.  No modification, amendment, extension,
discharge, termination or waiver of any provision of this Agreement, or of the
Note, or of any other Loan Document, nor consent to any departure by Borrower
therefrom, shall in any event be effective unless the same shall be in a
writing signed by the party against whom enforcement is sought, and then such
waiver or consent shall be effective only in the specific instance, and for the
purpose, for which given.  Except as
otherwise expressly provided herein,

 88
 

 

 

no notice to, or demand on Borrower, shall
entitle Borrower to any other or future notice or demand in the same, similar
or other circumstances.

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

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

If to Lender:                                                       Bear
Stearns Commercial Mortgage, Inc.

383 Madison Avenue

New York, New York 10179

Attention:  J. Christopher Hoeffel

With a copy to:                                     Kelley Drye &
Warren LLP

101 Park Avenue

New York, New York 10178

Attention:  Paul A. Keenan, Esq.

If to Borrower:                                           c/o
Behringer Harvard Funds

15601 Dallas Parkway, Suite 600

Addison, Texas 75001

Attention: Gerald J. Reihsen, III

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

600 West Broadway

Suite 2600

San Diego, CA 92101-3391

Attention: Darryl Steinhause, Esq.

A notice shall be deemed to have been given: in the
case of hand delivery, at the time of delivery; in the case of registered or
certified mail, when delivered or the first attempted delivery

 89
 

 

 

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

Section 10.7           Trial by Jury.  BORROWER AND LENDER HEREBY AGREE NOT TO ELECT
A TRIAL BY JURY OF ANY ISSUE TRIABLE OF RIGHT BY JURY, AND WAIVES ANY RIGHT TO
TRIAL BY JURY FULLY TO THE EXTENT THAT ANY SUCH RIGHT SHALL NOW OR HEREAFTER
EXIST WITH REGARD TO THE LOAN DOCUMENTS, OR ANY CLAIM, COUNTERCLAIM OR OTHER
ACTION ARISING IN CONNECTION THEREWITH. 
THIS WAIVER OF RIGHT TO TRIAL BY JURY IS GIVEN KNOWINGLY AND VOLUNTARILY
BY BORROWER AND LENDER, AND IS INTENDED TO ENCOMPASS INDIVIDUALLY EACH INSTANCE
AND EACH ISSUE AS TO WHICH THE RIGHT TO A TRIAL BY JURY WOULD OTHERWISE
ACCRUE.  LENDER IS HEREBY AUTHORIZED TO
FILE A COPY OF THIS PARAGRAPH IN ANY PROCEEDING AS CONCLUSIVE EVIDENCE OF THIS
WAIVER BY BORROWER AND LENDER.

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

Section 10.9           Severability.  Wherever possible, each provision of this
Agreement shall be interpreted in such manner as to be effective and valid
under applicable law, but if any provision of this Agreement shall be
prohibited by or invalid under applicable law, such provision shall be
ineffective to the extent of such prohibition or invalidity, without invalidating
the remainder of such provision or the remaining provisions of this Agreement.

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

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

Section 10.12         Remedies of Borrower.  In the event that a claim or adjudication is
made that Lender or its agents have acted unreasonably or unreasonably delayed
acting in any case

 90
 

 

 

where by law or under this Agreement or the
other Loan Documents, Lender or such agent, as the case may be, has an
obligation to act reasonably or promptly, Borrower agrees that neither Lender
nor its agents shall be liable for any monetary damages, and Borrower’s sole
remedies shall be limited to commencing an action seeking injunctive relief or
declaratory judgment.  The parties hereto
agree that any action or proceeding to determine whether Lender has acted
reasonably shall be determined by an action seeking declaratory judgment.

Section 10.13         Expenses; Indemnity.

(a)           Borrower covenants and agrees to pay or, if Borrower fails
to pay, to reimburse, Lender upon receipt of written notice from Lender for all
reasonable costs and expenses (including reasonable attorneys’ fees and
disbursements) incurred by Lender in connection with (i) the preparation,
negotiation, execution and delivery of this Agreement and the other Loan
Documents and the consummation of the transactions contemplated hereby and
thereby and all the costs of furnishing all opinions by counsel for Borrower
(including without limitation any opinions requested by Lender as to any legal
matters arising under this Agreement or the other Loan Documents with respect
to the Property); (ii) Borrower’s ongoing performance of and compliance with
Borrower’s respective agreements and covenants contained in this Agreement and
the other Loan Documents on its part to be performed or complied with after the
Modification Date, including, without limitation, confirming compliance with
environmental and insurance requirements; (iii) Lender’s ongoing performance
and compliance with all agreements and conditions contained in this Agreement
and the other Loan Documents on its part to be performed or complied with after
the Modification Date; (iv) except as otherwise provided in this Agreement, the
negotiation, preparation, execution, delivery and administration of any
consents, amendments, waivers or other modifications to this Agreement and the
other Loan Documents and any other documents or matters reasonably requested by
Lender; (v) securing Borrower’s compliance with any requests made pursuant to
the provisions of this Agreement; (vi) the filing and recording fees and
expenses, title insurance and reasonable fees and expenses of counsel for
providing to Lender all required legal opinions, and other similar expenses
incurred in creating and perfecting the Liens in favor of Lender pursuant to
this Agreement and the other Loan Documents; (vii) enforcing or preserving any
rights, in response to third party claims or the prosecuting or defending of
any action or proceeding or other litigation, in each case against, under or
affecting Borrower, this Agreement, the other Loan Documents, the Property, or
any other security given for the Loan; and (viii) enforcing any obligations of
or collecting any payments due from Borrower under this Agreement, the other
Loan Documents or with respect to the Property or in connection with any
refinancing or restructuring of the credit arrangements provided under this
Agreement in the nature of a “work-out” or of any insolvency or bankruptcy
proceedings; provided, however, that Borrower shall not be liable for the
payment of any such costs and expenses to the extent the same arise by reason
of the gross negligence, illegal acts, fraud or willful misconduct of
Lender.  Notwithstanding the foregoing,
all material out-of-pocket third party costs and expenses incurred by Borrower
in connection with complying with requests made under Section 9.1 shall be paid
by Lender.

(b)           Each Borrower shall indemnify, defend and hold harmless
Lender from and against any and all other liabilities, obligations, losses,
damages, penalties, actions, judgments, suits, claims, costs, expenses and
disbursements of any kind or nature whatsoever (including, without limitation,
the reasonable fees and disbursements of counsel for Lender in

 91
 

 

 

connection with any investigative,
administrative or judicial proceeding commenced or threatened, whether or not
Lender shall be designated a party thereto), that may be imposed on, incurred
by, or asserted against Lender in any manner relating to or arising out of (i)
any breach by such Borrower of its obligations under, or any material
misrepresentation by such Borrower contained in, this Agreement or the other
Loan Documents, or (ii) the use or intended use of the proceeds of the Loan
(collectively, the “Indemnified
Liabilities”); provided, however, that such
Borrower shall not have any obligation to Lender hereunder to the extent that
such Indemnified Liabilities arise from the gross negligence, illegal acts,
fraud or willful misconduct of Lender. 
To the extent that the undertaking to indemnify, defend and hold
harmless set forth in the preceding sentence may be unenforceable because it
violates any law or public policy, such Borrower shall pay the maximum portion
that it is permitted to pay and satisfy under applicable law to the payment and
satisfaction of all Indemnified Liabilities incurred by Lender.

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

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

Section 10.16         No Joint Venture or Partnership; No
Third Party Beneficiaries.

(a)           Borrower and Lender intend that the relationships created
hereunder and under the other Loan Documents be solely that of borrower and
lender.  Nothing herein or therein is
intended to create a joint venture, partnership, tenancy-in-common, or joint
tenancy relationship between Borrower and Lender nor to grant Lender any
interest in the Property other than that of mortgagee, beneficiary or lender.

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

 92
 

 

Section 10.17         Publicity.  All news releases, publicity or advertising
by Borrower or their Affiliates through any media intended to reach the general
public which refers to the Loan Documents or the financing evidenced by the
Loan Documents, to Lender, Bear Stearns, or any of their Affiliates shall be
subject to the prior written approval of Lender.  All news releases, publicity or advertising
by Lender through any media intended to reach the general public which refers
solely to the Borrower or to the Loan made by the Lender to the Borrower shall
be subject to the prior written approval of Borrower, provided however, the
foregoing shall not apply to Provided Information included in disclosure
documents in connection with a Securitization.

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

Section 10.19         Waiver of Counterclaim.  Borrower hereby waives the right to assert a
counterclaim, other than a compulsory counterclaim, in any action or proceeding
brought against it by Lender or its agents.

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

Section 10.21         Brokers and Financial Advisors.  Borrower hereby represents that it has dealt
with no financial advisors, brokers, underwriters, placement agents, agents or
finders in connection with the transactions contemplated by this Agreement
other than NorthMarq Capital.  Borrower
hereby agrees to indemnify, defend and hold Lender harmless from and against
any

 93
 

 

 

and all claims, liabilities, costs and
expenses of any kind (including Lender’s reasonable attorneys’ fees and
expenses) in any way relating to or arising from a claim by any Person that
such Person acted on behalf of Borrower or Lender in connection with the
transactions contemplated herein.  The
provisions of this Section 10.21 shall survive the expiration and termination
of this Agreement and the payment of the Debt.

Section 10.22         Prior Agreements.  This Agreement and the other Loan Documents
contain the entire agreement of the parties hereto and thereto in respect of
the transactions contemplated hereby and thereby, and all prior agreements or
understandings among or between such parties, whether oral or written, are
superseded by the terms of this Agreement and the other Loan Documents and
unless specifically set forth in a writing contemporaneous herewith the terms,
conditions and provisions of such prior agreement do not survive execution of
this Agreement.

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

Section 10.24         Joint and Several Liability.  If Borrower consists of more than one person
or party, the obligations and liabilities of each person or party shall be
joint and several except as otherwise expressly provided in the Loan Documents.

Section 10.25         MERS.  MERS serves as mortgagee of record and
secured party solely as nominee, in an administrative capacity, for Lender and
only holds legal title to the interests granted, assigned, and transferred in
the Mortgage and the Assignments of Leases. 
MERS shall at all times comply with the instructions of Lender.  If necessary to comply with law or custom,
MERS (for the benefit of Lender) may be directed by Lender to exercise any or
all of those interests, including without limitation, the right to foreclose
and sell the Property, and take any action required of Lender, including
without limitation, a release, discharge or reconveyance of the Mortgage.  Subject to the foregoing, all references in
the Loan Documents to “Mortgagee”
shall include Lender and its successors and assigns.  The relationship of Borrower and Lender under
the Mortgage and the other Loan Documents is, and shall at all times remain,
solely that of borrower and lender (the role of MERS thereunder being solely
that of nominee as set forth above and not that of a lender); and Lender
neither undertakes nor assumes any responsibility or duty to Borrower or to any
other Person with respect to the Property.

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

 94

 

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

	
   

  	
  BORROWER:

  
	
   

  	
   

  
	
   

  	
  BEHRINGER HARVARD 1325 G STREET,

  LLC, a Delaware limited liability company

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  	
  Gerald J. Reihsen, III

  
	
   

  	
  Title:

  	
  Secretary

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  LENDER:

  
	
   

  	
   

  
	
   

  	
  BEAR STEARNS COMMERCIAL

  MORTGAGE, INC., a New York corporation

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  
	
   

  	
  Title:

  	
  Managing Director

  
						

 

 

 

	
  

  	
  Indemnitor hereby executes this Agreement

  
	
   

  	
  to evidence its agreement to be bound by the

  
	
   

  	
  applicable terms hereof, including Section 9.4:

  
	
   

  	
   

  
	
   

  	
   

  	
  BEHRINGER HARVARD REIT
  I, INC., a Maryland
  corporation

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  	
  Gerald J. Reihsen, III

  
	
   

  	
   

  	
  Title:

  	
  Executive Vice President

  
							

 

 

SCHEDULE
I

[reserved]

 SCH. I-1

 

SCHEDULE
II

ASSIGNMENT AND ASSUMPTION
AGREEMENT

 SCH. II-1

 

SCHEDULE
III

CO-OWNER
INDEMNITY

 SCH. III-1

 

SCHEDULE
IV

REQUIRED REPAIRS

	
  Description
  of Repair

  	
   

  	
  Estimated Cost

  	
   

  	
  125% of Estimated

  Cost

  	
   

  	
  Required Completion

  Date

  
	
  Paving/Asphalt
  Repairs

  	
   

  	
  $

  	
  21,250

  	
   

  	
  $

  	
  26,562.50

  	
   

  	
  Six months from
  Modification Date

  
	
  ADA Compliance

  	
   

  	
  $

  	
  1,000

  	
   

  	
  $

  	
  1,250

  	
   

  	
  Six months from
  Modification Date

  

 

 SCH. IV-1

 

SCHEDULE
V

TENANTS
IN COMMON AGREEMENT

 SCH. V-1

 

SCHEDULE
VI

AFFILIATE AGREEMENTS

[NONE]

 SCH. VI-1

 

SCHEDULE
VII

CO-OWNER
TRANSFEREE CRITERIA

1)              Each
Co-Owner Transferee and/or its principals must be an Accredited Investor;

2)              Each
Co-Owner Transferee, its principals and all other entities which may be owned
or controlled directly or indirectly by Transferee’s principals (“Related
Entities”) must not have been a party to any bankruptcy proceedings, voluntary
or involuntary, made an assignment for the benefit of creditors or taken
advantage of any insolvency act, or any act for the benefit of debtors within
seven (7) years prior to the date of the proposed transfer of the Property;

3)              There
shall be no material litigation or regulatory action pending or threatened, or
judgments or convictions against Co-Owner Transferee, its principals or Related
Entities which is not reasonably acceptable to Lender;

4)              Co-Owner
Transferee, its principals and Related Entities shall not have defaulted under
its or their obligations with respect to any other indebtedness in a manner
which is not reasonably acceptable to Lender; and

5)              If
the Loan is included in a Securitization, Lender shall have obtained a Rating
Confirmation.

 SCH. VII-1

 

SCHEDULE
VIII

CONSENT
AND ASSUMPTION AGREEMENT

 SCH. VIII-1

 

SCHEDULE
IX

CO-OWNER
TRANSFEREE OPERATING AGREEMENT

 SCH. IX-1

 

SCHEDULE
X

[RESERVED]

 SCH. X-1

 

SCHEDULE
XI

RENT ROLL

 SCH. XI-1

 

SCHEDULE
XII

EXCEPTIONS
TO REPRESENTATIONS

Outstanding Tenant
Improvement Allowances:

 

	
  

  	
   

  	
   

  	
   

  	
  AS OF

  
	
  1325 G Street

  	
   

  	
   

  	
   

  	
  10/12/06

  
	
  Behringer Harvard

  Funds

  	
   

  	
   

  	
   

  	
   

  

 

	
   

  	
   

  	
  TI ALLOWANCE

  REMAINING

  	
   

  	
  COMMENT

  	
   

  	
  FREE

  RENT

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  GSA-USAID

  	
   

  	
  $

  	
  15,394.61

  	
   

  	
  Orig Const Allowance was $180,000

  	
   

  	
  N/A

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Merrill Communication

  	
   

  	
  $

  	
  4,851.00

  	
   

  	
  Orig Const Allowance was $25/SF

  	
   

  	
  N/A

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Prudential Relocation

  	
   

  	
  $

  	
  145,150.00

  	
   

  	
  Allowance must be used by 12/31/06; if balance
  remaining after date, to be applied rent charges.

  	
   

  	
  SEE COMMENT

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Thompson (Source Media)

  	
   

  	
  $

  	
  175,993.01

  	
   

  	
  Orig Const Allowance was $268,600; note up to
  $168,600 can be applied toward rent if remaining once work is complete.

  	
   

  	
  SEE COMMENT

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  EED

  	
   

  	
  $

  	
  31,145.00

  	
   

  	
  In addition to TI, LL also has an obligation of
  $9,450 above TI for certain work.

  	
   

  	
  N/A

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  GSA-FBI

  	
   

  	
   

  	
   

  	
  LL to paint common area every 3 years, next date by
  2/16/08.

  	
   

  	
  N/A

  

 

 SCH. XII-1Exhibit
10.2

MERS MIN:
8000101-0000004159-9

AMENDED
AND RESTATED PROMISSORY NOTE

	
  $100,000,000.00

  	
  New York, New York

  
	
   

  	
  October 18, 2006

  

 

THIS AMENDED AND RESTATED
PROMISSORY NOTE (this “Note”) is
between BEHRINGER  HARVARD 1325
G STREET, LLC, a Delaware limited liability company (“Borrower”) and BEAR STEARNS COMMERCIAL
MORTGAGE, INC. (together with its successors and/or assigns, “Lender”).

W I T N E S S E T
H

WHEREAS, Lender is the
lawful owner and holder of that certain Deed of Trust Note in the original
principal amount of $125,000,000.00 dated as of November 15, 2005 from Borrower
to Behringer Harvard Operating Partnership I LP (the “Original
Note”);

WHEREAS, Borrower and
Lender desire to modify and restate the terms, covenants and conditions of the
Original Note in accordance with the terms and conditions set forth herein.

NOW, THEREFORE, in
consideration of the foregoing, and for other good and valuable consideration,
the receipt and sufficiency of which are hereby acknowledged, Borrower and
Lender hereby agree as follows:

A.            Incorporation of Recitals.  The recitals set forth above are hereby
incorporated herein by this reference with the same force and effect as if
fully set forth herein.

B.            Outstanding Indebtedness.  Borrower acknowledges that it is indebted to
Lender in accordance with the Original Note and that the outstanding principal
balance of the Original Note as of the date hereof is $100,000,000.00, and that
there are no defenses, offsets or counterclaims to the payment of same.

C.            Modification.  The Original Note is hereby modified and
restated in its entirety to read as follows:

FOR VALUE RECEIVED,
BEHRINGER  HARVARD 1325
G STREET, LLC, a Delaware limited liability company, as maker,
having its principal place of business at c/o Behringer Harvard Funds, 15601
Dallas Parkway, Suite 600, Addison, Texas 75001 
(“Borrower”), hereby unconditionally
promises to pay to the order of BEAR STEARNS COMMERCIAL
MORTGAGE, INC., a New York corporation, as lender, having an address
at 383 Madison Avenue, New York, New York 10179 (together with its successors
and/or assigns, “Lender”), or at such other place
as the holder hereof may from time to time designate in writing, the principal
sum of One Hundred Million and No/100 Dollars ($100,000,000.00), in lawful
money of the United States of America with interest thereon to be computed from
the date of this Note at the Interest Rate, and to be paid in accordance with
the terms of this Note and that certain Amended and Restated Loan Agreement, dated
the date hereof, between Borrower and

 

 

Lender (as the same may
hereafter be amended, restated, replaced, supplemented, renewed, extended or
otherwise modified from time to time, the “Loan Agreement”).  All capitalized terms not defined herein
shall have the respective meanings set forth in the Loan Agreement.

ARTICLE 1

PAYMENT TERMS

Borrower agrees to pay
the principal sum of this Note and interest on the unpaid principal sum of this
Note from time to time outstanding at the rates and at the times specified in
Article 2 of the Loan Agreement and the outstanding balance of the principal
sum of this Note and all accrued and unpaid interest thereon shall be due and
payable on the Maturity Date.

ARTICLE 2

DEFAULT AND ACCELERATION

Except as otherwise
provided in the Loan Agreement, the Debt shall without notice become
immediately due and payable at the option of Lender if any payment required in
this Note is not paid on or prior to the date when due or if not paid on the
Maturity Date or on the happening of any other Event of Default.

ARTICLE 3

LOAN DOCUMENTS

This Note is secured by
the Mortgage and the other Loan Documents. 
All of the terms, covenants and conditions contained in the Loan
Agreement, the Mortgage and the other Loan Documents are hereby made part of
this Note to the same extent and with the same force as if they were fully set
forth herein.  In the event of a conflict
or inconsistency between the terms of this Note and the Loan Agreement, the
terms and provisions of the Loan Agreement shall govern.

ARTICLE 4

SAVINGS CLAUSE

Notwithstanding anything
to the contrary, (a) all agreements and communications between Borrower
and Lender are hereby and shall automatically be limited so that, after taking
into account all amounts deemed interest, the interest contracted for, charged
or received by Lender shall never exceed the Maximum Legal Rate, (b) in
calculating whether any interest exceeds the Maximum Legal Rate, all such
interest shall be amortized, prorated, allocated and spread over the full amount
and term of all principal indebtedness of Borrower to Lender and (c) if
through any contingency or event Lender receives or is deemed to receive
interest in excess of the Maximum Legal Rate, any such excess shall be deemed
to have been applied toward payment of the principal of any and all then
outstanding indebtedness of Borrower to Lender.

ARTICLE 5

NO ORAL CHANGE

This Note may not be
modified, amended, waived, extended, changed, discharged or terminated orally
or by any act or failure to act on the part of Borrower or Lender, but only by

 2
 

 

 

an agreement in writing
signed by the party against whom enforcement of any modification, amendment,
waiver, extension, change, discharge or termination is sought.

ARTICLE 6

WAIVERS

Borrower and all others
who may become liable for the payment of all or any part of the Debt do hereby
severally waive presentment and demand for payment, notice of dishonor, notice
of intention to accelerate, notice of acceleration, protest and notice of
protest and non-payment and all other notices of any kind, except for such
notices as are expressly provided for in any Loan Document.  No release of any security for the Debt or
extension of time for payment of this Note or any installment hereof, and no
alteration, amendment or waiver of any provision of this Note, the Loan
Agreement or the other Loan Documents made by agreement between Lender or any
other Person shall release, modify, amend, waive, extend, change, discharge,
terminate or affect the liability of Borrower, and any other Person who may
become liable for the payment of all or any part of the Debt, under this Note,
the Loan Agreement or the other Loan Documents, except as may be expressly
provided in such release, alteration, amendment or waiver.  No notice to or demand on Borrower shall be
deemed to be a waiver of the obligation of Borrower or of the right of Lender
to take further action without further notice or demand as provided for in this
Note, the Loan Agreement or the other Loan Documents.  If Borrower is a partnership, the agreements
herein contained shall remain in force and be applicable, notwithstanding any
changes in the individuals or entities comprising the partnership, and the term
“Borrower,” as used herein, shall include any alternate or successor
partnership, but any predecessor partnership and their partners shall not
thereby be released from any liability. 
If Borrower is a corporation, the agreements contained herein shall
remain in full force and be applicable notwithstanding any changes in the
shareholders comprising, or the officers and directors relating to, the
corporation, and the term “Borrower” as used herein, shall include any
alternative or successor corporation, but any predecessor corporation shall not
be relieved of liability hereunder.  If
any Borrower is a limited liability company, the agreements herein contained
shall remain in force and be applicable, notwithstanding any changes in the
members comprising the limited liability company, and the term “Borrower” as
used herein, shall include any alternate or successor limited liability
company, but any predecessor limited liability company shall not thereby be
released from any liability.  (Nothing in
the foregoing sentence shall be construed as a consent to, or a waiver of, any
prohibition or restriction on transfers of interests in such partnership,
corporation or limited liability company which may be set forth in the Loan
Agreement, the Mortgage or any other Loan Document.)

ARTICLE 7

TRANSFER

Upon the transfer of this
Note, Borrower hereby waiving prior notice of any such transfer, Lender may
deliver all the collateral mortgaged, granted, pledged or assigned pursuant to
the Loan Documents, or any part thereof, to the transferee who shall thereupon
become vested with all the rights herein or under applicable law given to
Lender with respect thereto, and Lender shall thereafter forever be relieved
and fully discharged from any liability or responsibility in the matter; but
Lender shall retain all rights hereby given to it with respect to any liabilities
and the collateral not so transferred.

 3
 

 

 

ARTICLE 8

EXCULPATION

The provisions of
Section 9.4 of the Loan Agreement are hereby incorporated by reference
into this Note to the same extent and with the same force as if fully set forth
herein.

ARTICLE 9

GOVERNING LAW

(A)          THIS NOTE WAS NEGOTIATED IN THE STATE OF NEW YORK, AND MADE
BY BORROWER AND ACCEPTED BY LENDER IN THE STATE OF NEW YORK, AND THE PROCEEDS
OF THIS NOTE WERE DISBURSED FROM THE STATE OF NEW YORK, WHICH STATE THE PARTIES
AGREE HAS A SUBSTANTIAL RELATIONSHIP TO THE PARTIES AND TO THE UNDERLYING
TRANSACTION EMBODIED HEREBY, AND IN ALL RESPECTS, INCLUDING, WITHOUT LIMITING
THE GENERALITY OF THE FOREGOING, MATTERS OF CONSTRUCTION, VALIDITY AND
PERFORMANCE, THIS NOTE AND THE OBLIGATIONS ARISING HEREUNDER SHALL BE GOVERNED
BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK
APPLICABLE TO CONTRACTS MADE AND PERFORMED IN SUCH STATE (WITHOUT REGARD TO
PRINCIPLES OF CONFLICT LAWS) AND ANY APPLICABLE LAW OF THE UNITED STATES OF
AMERICA.  TO THE FULLEST EXTENT PERMITTED
BY LAW, BORROWER HEREBY UNCONDITIONALLY AND IRREVOCABLY WAIVES ANY CLAIM TO
ASSERT THAT THE LAW OF ANY OTHER JURISDICTION GOVERNS THIS NOTE AND THIS NOTE
SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF
NEW YORK PURSUANT TO SECTION 5-1401 OF THE NEW YORK GENERAL OBLIGATIONS
LAW.

(B)          ANY LEGAL SUIT, ACTION OR PROCEEDING AGAINST LENDER OR
BORROWER ARISING OUT OF OR RELATING TO THIS NOTE MAY AT LENDER’S OPTION BE
INSTITUTED IN ANY FEDERAL OR STATE COURT IN THE CITY OF NEW YORK, COUNTY OF NEW
YORK, PURSUANT TO SECTION 5-1402 OF THE NEW YORK GENERAL OBLIGATIONS
LAW, AND BORROWER WAIVES ANY OBJECTIONS WHICH IT MAY NOW OR HEREAFTER HAVE
BASED ON VENUE AND/OR FORUM NON CONVENIENS OF ANY SUCH SUIT, ACTION OR
PROCEEDING, AND BORROWER HEREBY IRREVOCABLY SUBMITS TO THE JURISDICTION OF ANY
SUCH COURT IN ANY SUIT, ACTION OR PROCEEDING. 
BORROWER DOES HEREBY DESIGNATE AND APPOINT:

CT
Corporation System

111 Eighth Avenue

New York, New York 10011

AS ITS AUTHORIZED AGENT TO ACCEPT
AND ACKNOWLEDGE ON ITS BEHALF SERVICE OF ANY AND ALL PROCESS WHICH MAY BE
SERVED IN ANY SUCH SUIT, ACTION OR PROCEEDING IN ANY FEDERAL OR STATE COURT IN
NEW

 4
 

 

 

YORK, NEW YORK, AND AGREES THAT
SERVICE OF PROCESS UPON SAID AGENT AT SAID ADDRESS AND WRITTEN NOTICE OF SAID
SERVICE MAILED OR DELIVERED TO BORROWER IN THE MANNER PROVIDED HEREIN SHALL BE
DEEMED IN EVERY RESPECT EFFECTIVE SERVICE OF PROCESS UPON BORROWER IN ANY SUCH
SUIT, ACTION OR PROCEEDING IN THE STATE OF NEW YORK.  BORROWER (I) SHALL GIVE PROMPT NOTICE TO
LENDER OF ANY CHANGED ADDRESS OF ITS AUTHORIZED AGENT HEREUNDER, (II) MAY
AT ANY TIME AND FROM TIME TO TIME DESIGNATE A SUBSTITUTE AUTHORIZED AGENT WITH
AN OFFICE IN NEW YORK, NEW YORK (WHICH SUBSTITUTE AGENT AND OFFICE SHALL BE
DESIGNATED AS THE PERSON AND ADDRESS FOR SERVICE OF PROCESS), AND
(III) SHALL PROMPTLY DESIGNATE SUCH A SUBSTITUTE IF ITS AUTHORIZED AGENT
CEASES TO HAVE AN OFFICE IN NEW YORK, NEW YORK OR IS DISSOLVED WITHOUT LEAVING
A SUCCESSOR.

ARTICLE 10

NOTICES

All notices or other
written communications hereunder shall be delivered in accordance with
Section 10.6 of the Loan Agreement.

ARTICLE 11

JOINT AND SEVERAL

If more than one
Person has executed this Note as “Borrower”, the obligations of all such
Persons hereunder shall be joint and several except as set forth in the Loan
Documents.

[the remainder of this page is intentionally left
blank]

 5

 

 

IN WITNESS WHEREOF,
Borrower has duly executed this Note as of the day and year first above
written.

	
  

  	
   

  	
  BEHRINGER HARVARD 1325 G STREET,

  LLC, a Delaware limited liability company

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  	
  Gerald J. Reihsen, III

  
	
   

  	
   

  	
  Title:

  	
  Secretary

  
						

 

 

SIGNATURE
PAGE TO AMENDED AND RESTATED PROMISSORY NOTE

 

	
  

  	
   

  	
  LENDER:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  BEAR STEARNS COMMERCIAL

  MORTGAGE, INC., a New York corporation

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  	
   

  
	
   

  	
   

  	
  Title:

  	
  Managing Director

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00111-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00111-of-00352.parquet"}]]