Document:

Exhibit

Exhibit 10.26

LOAN AGREEMENT

Dated as of July 5, 2016

Between

HGREIT II COTTONWOOD CENTER LLC, a Delaware limited liability company,
as Borrower

and

PRINCIPAL LIFE INSURANCE COMPANY, an Iowa corporation, 
as Lender 

Premises:    2755, 2795, 2825 and 2855 East Cottonwood Parkway
Cottonwood Heights, Utah 84121

Loan Number:  757840

TABLE OF CONTENTS

	
						
	I.
	DEFINITIONS; PRINCIPLES OF CONSTRUCTION
	 

	 
	 
	 
	 
	 

	 
	Section 1.1
	 
	Definitions
	1
	

	 
	Section 1.2
	 
	Principles of Construction
	13
	

	 
	 
	 
	 
	 

	II.
	GENERAL TERMS
	 

	 
	 
	 
	 
	 

	 
	Section 2.1
	 
	Loan Commitment; Disbursement to Borrower
	13
	

	 
	Section 2.2
	 
	Interest; Loan Payments; Late Payment Charge
	13
	

	 
	Section 2.3
	 
	Prepayments
	15
	

	 
	 
	 
	 
	 

	III.
	REPRESENTATIONS AND WARRANTIES
	 

	 
	 
	 
	 
	 

	 
	Section 3.1
	 
	Borrower Representations
	16
	

	 
	Section 3.2
	 
	Survival
	21
	

	 
	 
	 
	 
	 

	IV.
	BORROWER COVENANTS
	 

	 
	 
	 
	 
	 

	 
	Section 4.1
	 
	Affirmative Covenants
	22
	

	 
	Section 4.2
	 
	Negative Covenants
	26
	

	 
	 
	 
	 
	 

	V.
	INSURANCE; CASUALTY; CONDEMNATION
	 

	 
	 
	 
	 
	 

	 
	Section 5.1
	 
	Insurance
	32
	

	 
	Section 5.2
	 
	Casualty
	36
	

	 
	Section 5.3
	 
	Condemnation
	36
	

	 
	Section 5.4
	 
	Restoration
	37
	

	 
	 
	 
	 
	 

	VI.
	RESERVE FUNDS
	 

	 
	 
	 
	 
	 

	 
	Section 6.1
	 
	Tax and Insurance Escrow Fund
	41
	

	 
	Section 6.2
	 
	Property Reserves Escrow Fund
	42
	

	 
	Section 6.3
	 
	Miscellaneous
	42
	

	 
	 
	 
	 
	 

	VII.
	DEFAULTS
	 

	 
	 
	 
	 
	 

	 
	Section 7.1
	 
	Events of Default
	43
	

	 
	Section 7.2
	 
	Remedies
	47
	

	 
	Section 7.3
	 
	Payment of Costs; Remedies Cumulative; Waivers
	47
	

	 
	 
	 
	 
	 

	VIII.
	Assignment of Leases and Rents
	 

	 
	 
	 
	 
	 

	 
	Section 8.1
	 
	License to Collect Rents
	48
	

	 
	Section 8.2
	 
	Enforcement; Lender Liability
	50
	

	 
	Section 8.3
	 
	Lease(s) Approval
	50
	

	 
	Section 8.4
	 
	Rights of Lender
	52
	

	 
	 
	 
	 
	 

	IX.
	SPECIAL PROVISIONS
	 

	 
	 
	 
	 
	 

	 
	Section 9.1
	 
	Fees and Taxes
	53
	

	 
	 
	 
	 
	 

	X.
	RECOURSE OBLIGATIONS
	 

	 
	 
	 
	 
	 

	 
	Section 10.1
	 
	Non-Recourse
	53
	

-2-

	
						
	 
	Section 10.2
	 
	Release of Liability
	56
	

	 
	 
	 
	 
	 

	XI.
	MISCELLANEOUS
	 

	 
	 
	 
	 
	 

	 
	Section 11.1
	 
	Waiver
	56
	

	 
	Section 11.2
	 
	Estoppel
	56
	

	 
	Section 11.3
	 
	Successors and/or Assigns
	56
	

	 
	Section 11.4
	 
	Inconsistencies
	56
	

	 
	Section 11.5
	 
	Governing Law/Jurisdiction
	57
	

	 
	Section 11.6
	 
	Proceedings
	57
	

	 
	Section 11.7
	 
	Joint and Several
	57
	

	 
	Section 11.8
	 
	Headings, etc.
	57
	

	 
	Section 11.9
	 
	Counterparts
	57
	

	 
	Section 11.10
	 
	Integration
	58
	

	 
	Section 11.11
	 
	Schedules Incorporated
	58
	

	 
	Section 11.12
	 
	No Joint Venture or Partnership
	58
	

	 
	Section 11.13
	 
	Waiver of Counterclaim
	58
	

	 
	Section 11.14
	 
	Capitalized Terms
	58
	

	 
	Section 11.15
	 
	No Liability of Lender
	58
	

	 
	Section 11.16
	 
	No Third Parties Benefited
	58
	

	 
	Section 11.17
	 
	Time is of the Essence
	59
	

	 
	Section 11.18
	 
	Severability of Provisions
	59
	

	 
	Section 11.19
	 
	Preferences
	59
	

	 
	Section 11.20
	 
	Lender's Form W-9
	59
	

	 
	Section 11.21
	 
	Component Notes
	59
	

	 
	Section 11.22
	 
	Replacement Note
	60
	

	 
	Section 11.23
	 
	Confidentiality
	60
	

	 
	Section 11.24
	 
	Partial Release
	60
	

Schedules

Schedule I    Certified Evidence of Insurance
Schedule II    Certified Organizational Chart
Schedule III    Intentionally Deleted
Schedule IV    Property Reserves Escrow Fund 

LOAN AGREEMENT

THIS LOAN AGREEMENT ("Agreement"), made as of the date set forth on the cover page hereof, is by and between PRINCIPAL LIFE INSURANCE COMPANY, an Iowa corporation (together with its successors and/or assigns "Lender"), and HGREIT II COTTONWOOD CENTER LLC, a Delaware limited liability company ("Borrower"). 

RECITALS

A.    Borrower desires to obtain the Loan (as hereinafter defined) from Lender;

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

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

ARTICLE I.  DEFINITIONS; PRINCIPLES OF CONSTRUCTION    

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

"Affiliate(s)" means any Person(s) directly or indirectly Controlling, Controlled by, or under common Control with Borrower.

"Alteration" shall mean any installation, improvement, repair or maintenance to the Improvements (and shall specifically not include any demolition or expansion of the Improvements).

"Approved Accounting Method" means generally accepted accounting principles, a tax basis of accounting or, if acceptable to Lender in its reasonable discretion, other sound methods of accounting, in each case consistently applied.

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

"Business Day(s)" shall mean any day other than a Saturday, Sunday or any other day on which federally insured depository institutions in New York, New York are authorized or obligated by law, governmental decree or executive order to be closed.

"Casualty" shall have the meaning set forth in Section 5.2 of this Agreement.

"Casualty Retainage" shall have the meaning set forth in Section 5.4(b)(v) of this Agreement.

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"Chief Executive Office of Borrower" shall mean 2800 Post Oak Boulevard, Suite 4800, Houston, Texas 77056.

"Closing Date" means July 5, 2016.

"Code" means the Internal Revenue Code of 1986, as amended, and as it may be further amended from time to time, any successor statutes thereto, together with applicable United States Department of Treasury regulations issued pursuant thereto in temporary or final form.

"Collateral" means, collectively, the Premises, the Reserve Funds and all proceeds and products of the foregoing, all whether now owned or hereafter acquired by Borrower, and all other property of Borrower which is or hereafter may become subject to a lien in favor of Lender as security for the repayment of the Loan.

"Component Notes" shall have the meaning set forth in Section 11.21 of this Agreement.

"Condemnation" shall mean a permanent or temporary taking by any Governmental Authority as the result of or in lieu of or in anticipation of (as reasonably determined by Lender and/or as evidenced by affirmative written statements to such effect from the Governmental Authority) the exercise of the right of condemnation or eminent domain, of all or any part of the Premises, or any interest therein or right accruing thereto, including any right of access thereto or any change of grade affecting the Premises or any part thereof.

"Condemnation Proceeds" shall have the meaning set forth in Section 5.4(b) of this Agreement.

"Contest Requirements" means (i) such contest may be made without the payment of the amount contested or the amount contested has been paid pending resolution of such contest; (ii) such contest shall prevent, during the period of such contest, the sale or forfeiture of the Premises or any part thereof, or any interest therein, to satisfy such contested lien, claim, charge or unpaid tax; (iii) Borrower has given written Notice to Lender of its intended action with respect to such contest and provides Lender promptly with copies of all notices, pleadings and other communications sent or received with respect to such contest; (iv) Borrower shall have either: (A) obtained a bond over such lien, claim, charge or unpaid tax from a bonding company reasonably acceptable to Lender, obtained title insurance over, or deposited funds in escrow with a title company or other escrow agent which has the effect of removing such lien or preventing the collection of the lien, claim, charge or unpaid tax so contested, or (B) provided to Lender a cash deposit or letter of credit acceptable to Lender in the amount of the lien, claim, charge or unpaid tax; (v) Borrower shall pay all costs and expenses incidental to such contest; and (vi) in the event of a final, non-appealable ruling or adjudication adverse to Borrower, Borrower shall promptly pay such lien, claim, charge or unpaid tax, shall indemnify and hold Lender and the Premises harmless from any loss or damage arising from such contest and shall take whatever action necessary to prevent sale, forfeiture or any other loss or damage to the Premises or to the Lender.

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"Control" (and terms correlative thereto) when used with respect to any specified Person(s) means the power to direct or cause the direction of the management, policies or activities of such Person(s), directly or indirectly, whether through the ownership of voting securities or other beneficial interests, by contract or otherwise.

"Conveyance Date" means the date Lender acquires title to the Premises after an Event of Default.

"Default Rate" means a rate equal to the lesser of (i) four percent (4%) per annum above the then applicable interest rate payable under the Note or (ii) the maximum rate allowed by applicable law.

"Defaulting Guarantor" is defined in Section 7.1 of this Agreement.

"DSC Ratio" shall mean, with respect to any applicable period of time, the ratio of the annual net operating income from the Lease(s) to the annual regularly scheduled Monthly Payments, as reasonably determined by Lender.  Only net operating income from executed Lease(s) in effect on the Premises which (i) are deemed approved (in accordance with Section 8.3 of this Agreement) or acceptable to Lender, or do not require Lender's approval, (ii) have no uncured defaults, and (iii) have not had an event occur which has not otherwise been remedied or waived in a commercially reasonable manner, and which at the time of Lender's determination, with the passage of time or giving of notice or both, would become a default, shall be used in Lender's determination of the annual net operating income.

"Easements" is defined in Section 4.1.6 of this Agreement.

"Embargoed Person" means (i) any person, entity, country, government or governmental agency or entity thereof that is or becomes subject to trade restrictions , embargo, or economic sanction pursuant to applicable United States law, regulation or Executive Order, including but not limited to, 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; and (ii) any person identified on the Specially Designated Nationals and Blocked Persons List or Consolidated Sanctions List maintained by OFAC (as hereinafter defined) and/or on any other similar list maintained by OFAC.

"Entity(ies)" means a (a) corporation, (b) limited partnership, limited liability partnership or general partnership, (c) limited liability company, or (d) trust.

"Environmental Activity or Condition" has the meaning set forth in the Environmental Indemnity.

"Environmental Indemnity" shall mean that certain Environmental Indemnity Agreement from Borrower and Guarantor to Lender in connection with the Loan dated of even 

-4-

date herewith, as the same may be amended, restated, replaced, supplemented or otherwise modified from time to time.

"ERISA" means the Employee Retirement Income Security Act of 1974, as amended.

"Escrow Interest Calculation" means interest shall be credited on or before the tenth (10th) of each calendar month on the average balance of the cash portion of the applicable escrow for the preceding calendar month or any portion of such preceding calendar month at a rate equal to the thirty-day average of the daily 30-day Commercial Paper Rate as published in The Wall Street Journal or similar financial publication, less 100 basis points; provided, however, that interest shall cease to be credited on any portion of the escrow at such time as it has been disbursed to Borrower or otherwise applied on behalf of Borrower in any manner expressly provided for in this Agreement or in the other Loan Documents.  In no event shall the Escrow Interest Calculation be less than 0.00%.

"Escrow Release" shall have the meaning set forth in Schedule IV, if any, of this Agreement.

"Event of Default" shall have the meaning set forth in Section 7.1 of this Agreement.

"Extraordinary Rental Payments" shall mean (i) any prepaid monthly rental payments under the Lease(s) in excess of one regular monthly payment amount under the applicable Lease(s) (except for customary Security Deposits), (ii) lease termination payments for Lease(s) which equal or exceed the Threshold Amount, (iii) once the lease termination payments, calculated on a cumulative basis over a calendar year, have reached the Threshold Amount, any further lease termination payments for Lease(s) in the same calendar year (including the lease termination payment that caused the Threshold Amount to be reached), and (iv) purchase option exercise payments.

"Force Majeure" shall mean a delay due to acts of God, governmental restrictions, stays, judgments, orders, decrees, enemy actions (including acts of terrorism), civil commotion, fire, casualty, strikes, work stoppages, shortages of labor or materials or other causes beyond the reasonable control of Borrower, provided that adverse economic conditions, inflation, and other conditions of general applicability shall not be deemed a cause beyond the reasonable control of Borrower, and lack of funds in and of itself shall not be deemed a cause beyond the reasonable control of Borrower.

"Governmental Authority" means (i) any national, federal, state, regional or local government, or any other political subdivision of any of the foregoing, in each case with jurisdiction over Borrower and/or the Premises, or (ii) any Person(s) with jurisdiction over Borrower and/or the Premises exercising executive, legislative, judicial, regulatory or administrative functions of or pertaining to government.

"Governmental Incentive Financing" means any financing or similar incentive or development program entered into by Borrower voluntarily (or for which Borrower is permitted 

-5-

to decline to enter into), which results in a lien, encumbrance or special assessment on the Premises in favor of a governmental agency or authority, including, without limitation, a PACE Loan. 

"Guarantor" means, individually and collectively, Hines Global Reit II, Inc., a Maryland corporation, and permitted successors and/or assigns.

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

"Hazardous Substances" shall have the meaning set forth in the Environmental Indemnity.

"Immediate Family Member(s)" shall have the meaning set forth in Section 4.2.3(b)(iv) of this Agreement.

"Improvements" shall have the meaning set forth in the Mortgage.

"Indebtedness" means the Loan Amount outstanding from time to time together with all accrued and unpaid interest thereon, interest accrued at the Default Rate (if any), Late Charges (if any), the Prepayment Premium (if any), and all other obligations and liabilities of Borrower due or to become due to Lender pursuant to the Loan Documents.

"Insurance Proceeds" shall have the meaning set forth in Section 5.4(b) of this Agreement.

"Interest Owner(s)" means any Person(s) owning an interest (directly or indirectly) in Borrower, but specifically excluding any shareholder(s) of Guarantor other than a single shareholder that owns fifty percent (50%) or more interest.

"Interest Period" shall mean, with respect to any Payment Date, the period commencing on (and including) the first calendar day of the preceding calendar month and terminating on (and including) the last calendar day of the preceding calendar month; provided, however, that no Interest Period shall end later than the Maturity Date (other than for purposes of calculating interest at the Default Rate), and the initial Interest Period shall begin on August 1, 2016 and shall end on August 31, 2016.

"Land" shall have the meaning set forth in the Mortgage.

"Late Charge" means the lesser of: three percent (3%) of the amount not paid as required under the Loan Documents or the maximum amount permitted by applicable law.

"Lease(s)" means all leases and all other tenancies, rental arrangements, license agreements, concession agreements, storage agreements, subleases, and guarantees of the 

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performance or obligations of any tenants thereunder affecting the Premises, or any part thereof, now existing or which may be executed at any time in the future prior to the Maturity Date, and all amendments, extensions and renewals of said leases, subleases, and guarantees and any of them.

"Lease Modification" means all lease extensions, renewals, amendments or modifications of Lease(s).

"Legal Requirements" means all applicable requirements of law and ordinance, and all rules and regulations, now or hereafter enacted, by authorities having jurisdiction over the Premises and the use thereof, including but not limited to all covenants, conditions and restrictions of record pertaining to the Premises, the Improvements, and the use thereof.  

"Lessee Documents" shall have the meaning set forth in Section 8.3(f) of this Agreement.

"Loan" shall mean the loan made by Lender to Borrower in the Loan Amount which is evidenced by the Note and secured by the Mortgage and the other Loan Documents.

"Loan Amount" means $78,000,000.00.

"Loan Documents" shall mean this Agreement, the Mortgage, the Guaranty (if any), the Note and any other instrument or agreement executed by Borrower which evidences or secures the Loan (other than the Environmental Indemnity), as the same may be amended, restated, replaced, supplemented or otherwise modified from time to time, but excluding any mortgage loan application, term sheet or loan commitment.

"Management Agreement" shall mean that certain Property Management and Leasing Agreement dated July 5, 2016 between Borrower and Manager and any replacement thereof entered into in accordance with this Agreement.

"Manager" shall mean Hines Interests Limited Partnership or any New Manager pursuant to Section 4.2.1 of this Agreement.

"Material Adverse Effect" means a material adverse effect upon (i) the business or the financial position or results of operation of Borrower or the Premises, (ii) the ability of Borrower or Guarantor (if any) to perform, or of Lender to enforce, any of the Loan Documents or Environmental Indemnity to which Borrower or Guarantor (if any) is a party, (iii) the value or use of the Premises, or (iv) the lien of the Mortgage or Borrower's title to the Premises.

"Maturity Date" means August 1, 2023 or such earlier date as a result of acceleration or otherwise.  

"Monthly Payment" shall mean principal and interest in an amount equal to $328,010.40.

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"Mortgage" shall mean that certain Deed of Trust, Assignment of Leases and Rents, Fixture Filing and Security Agreement from Borrower to Trustee for the benefit of Lender in connection with the Loan dated the date hereof, as the same may be amended, restated, replaced, supplemented or otherwise modified from time to time.

"Net Proceeds" shall have the meaning set forth in Section 5.4(b) of this Agreement.

"Net Proceeds Deficiency" shall have the meaning set forth in Section 5.4(b)(vii) of this Agreement.

"New Manager" shall have the meaning set forth in Section 4.2.1 of this Agreement.

"Note" shall mean that certain Secured Promissory Note, dated the date hereof, in the Loan Amount, made by Borrower in favor of Lender in connection with the Loan, as the same may be amended, restated, replaced, supplemented or otherwise modified from time to time in accordance with the terms and conditions of the Loan Documents.

"Notice" means each notice, consent, request, report or other communication under this Agreement, the Environmental Indemnity or any other Loan Document which any party hereto may desire or be required to give to the other.  A Notice shall be deemed to be an adequate and sufficient Notice if given in writing and service is made by either (i) registered or certified mail, postage prepaid, in which case Notice shall be deemed to have been received three (3) Business Days following deposit to United States mail; or (ii) a nationally recognized overnight air courier, next day delivery, prepaid, in which case such Notice shall be deemed to have been received one (1) Business Day following delivery to such nationally recognized overnight air courier.  All Notices shall be addressed to Borrower at its Chief Executive Office, or to Lender at c/o Principal Real Estate Investors, LLC, 801 Grand Avenue, Des Moines, Iowa 50392-1450, Attn:  Commercial Mortgage Servicing, with reference to the applicable loan number, or to such other place as either party may by written notice to the other hereafter designate as a place for service of Notice.  Borrower shall not be permitted to designate more than two places for service of Notice concurrently.

"OFAC" means the Office of Foreign Assets Control, United States Department of the Treasury.

"Open Period" shall mean the period beginning on the Payment Date in the month which is four months prior to the Maturity Date and ending on the Maturity Date. 

"Operation Expenses" means expenses for the operation, maintenance, taxes, assessments, utility charges and insurance attributable to the Premises including sufficient reserves for the same or replacements or renewals thereof provided that any payments to parties affiliated with Borrower shall be considered an Operation Expense only to the extent that the amount expended for such expense does not exceed the then current market rate for such expense; provided Lender has approved all payments due under the Management Agreement.

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"PACE Loan" shall mean any Property-Assessed Clean Energy loan or any similar financing.

"Payment Date" means the first day of each calendar month during the term of the Loan.  

"Permitted Encumbrances" means (i) all title exceptions set forth in the Title Insurance Policy, (ii) the lien and security interests created by the Loan Documents, (iii) the Lease(s), (iv) Easements, (v) liens, if any, for taxes or charges imposed by any Governmental Authority (other than liens securing any Governmental Incentive Financing), not yet due or delinquent or which are being disputed by Borrower in accordance with this Agreement, (vi) any liens or other charges (other than mechanics' or materialmans' liens) during the period they are being contested in accordance with the Contest Requirements, and (vii) any title matters or exceptions approved in writing by Lender subsequent to the Closing Date.  In no event shall a mechanic's or materialman's lien (or any memorandum thereof) be deemed to be Permitted Encumbrances.

"Permitted Transfer" shall mean those Transfers permitted in Section 4.2.3 of this Agreement or as otherwise expressly permitted in writing by Lender.

"Person(s)" means any natural person, Entity(ies), joint venture, estate, 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.

"Policies" or "Policy" shall have the meaning set forth in Section 5.1(b)(i) of this Agreement.

"Premises" means the Land, the Improvements and the property, rights and interests described in the Mortgage. 

"Prepayment Premium" shall mean the greater of (i) one percent (1%) of the outstanding principal amount of the Loan, or (ii) a premium calculated as provided in subparagraphs (1)-(3) below:

(1)    Determine the "Reinvestment Yield."  The Reinvestment Yield will be equal to the yield on a United States Treasury Issue with similar remaining time to the Maturity Date as reasonably selected by Lender within two weeks prior to the date of prepayment plus fifty (50) basis points and converted to an equivalent monthly compounded nominal yield.  In the event there is no market activity involving the United States Treasury Issue at the time of prepayment, Lender shall choose a comparable Treasury Bond, Note or Bill which Lender reasonably deems to be similar to the United States Treasury Issue's characteristics (i.e., rate, remaining time to maturity, yield).

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(2)    Calculate the "Present Value of the Loan."  The Present Value of the Loan is the present value of the payments remaining to be made hereunder (all installment payments and any remaining payment due on the Maturity Date) discounted at the Reinvestment Yield for the number of months remaining from the date of prepayment to the Maturity Date.  In the event of a partial prepayment as a result of the terms of this Agreement, the Present Value of the Loan shall be calculated in accordance with the preceding sentence multiplied by the fraction which results from dividing the principal amount to be prepaid by the principal balance of the Loan immediately prior to the prepayment.

(3)    Subtract the principal amount to be prepaid from the Present Value of the Loan (or portion thereof as provided above) as of the date of prepayment.  Any resulting positive differential shall be the premium.

"Qualified Institution" shall mean a bank, saving and loan association, investment bank, or commercial credit corporation that is domiciled in the United States, qualifies for federal insurance and is otherwise acceptable to Lender.

"Qualifying Manager" shall mean a successor property manager acceptable to Lender in Lender's reasonable discretion or a reputable management company having at least seven (7) years' experience in the management of commercial properties with similar uses and quality as the Premises and in the jurisdiction in which the Premises is located.

"REA" shall mean any reciprocal easement agreement or declaration of covenants, conditions or restrictions or such other similar agreement or declaration which at any time affects the Premises, as the same may be amended, restated, supplemented or otherwise modified from time to time, if and to the extent any such an agreement(s) or declaration(s) exists.

"Recourse Obligations" shall have the meaning set forth in Article X of this Agreement.

"Regular Interest Rate" shall mean a fixed rate per annum equal to 2.98%.

"Release" shall have the meaning set forth in Section 11.24 of this Agreement.

"Release Parcel" shall have the meaning set forth in Section 11.24 of this Agreement.

"Remaining Premises" shall have the meaning set forth in Section 11.24 of this Agreement.

"Rents" means all rents or other income or payments, regardless of type or source of payment (including but not limited to common area maintenance charges, security deposits (to the extent not applied in accordance with the terms of the applicable Lease(s)), storage fees, lease termination payments, purchase option payments, refunds of any type, prepayment of rents, settlements of litigation or settlements of past due rents and any letter of credit and any proceeds derived from any letter of credit) which may now or hereafter be or become due or owing to Borrower under the Lease(s), or on account of the use and operation of the Premises.

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"Required Entity Status" shall mean the type of entity status the Borrower is required to maintain throughout the term of the Loan, which for this Loan shall be a Single-Purpose Entity.

"Reserve Funds" shall mean the escrows and deposits described in Article VI of this Agreement.

"Restoration" shall have the meaning set forth in Section 5.2 of this Agreement.

"Security Deposits" means all security deposits held or to be held with respect to the Premises, pursuant to the applicable Lease(s).

"Single-Purpose Entity" means a corporation, limited partnership, limited liability company, or business trust which:
		
	(1)
	is and will be organized solely for the purpose of acquiring, developing, owning, holding, selling, leasing, financing, managing and operating the Premises, entering into and performing its obligations under the Loan Documents, refinancing the Premises in connection with a permitted repayment of the Loan, and transacting lawful business that is incidental, necessary and appropriate to accomplish the foregoing;

		
	(2)
	does not and will not engage in any business unrelated to the matters listed in paragraph (1) above;

		
	(3)
	does not and will not own any assets other than (a) the Premises and (b) incidental Personal Property necessary for the ownership, management and operation of the Premises, and now holds and will hold the Premises and such assets in its own name;

		
	(4)
	does and will do all things necessary to observe its organizational formalities and preserve its existence, and does not and will not engage in, seek or consent to nor will it allow any constituent party to engage in, seek or consent to, any dissolution, winding up, liquidation, consolidation or merger, and, except as otherwise expressly permitted by the Loan Documents, does not and will not engage in, seek or consent to any asset sale, transfer of partnership, membership, shareholder, beneficial interests, or any material amendment of its limited partnership agreement, articles of incorporation and bylaws, articles of organization, certificate of formation, operating agreement, trust agreement, trust certificate, or other organizational documents (as applicable) without first obtaining Lender's reasonable approval;

		
	(5)
	has at all times been, is and intends to remain solvent and has paid and intends to pay its debts and liabilities from its own funds and assets as the same shall become due (and with respect to Borrower, to the extent there is sufficient cash flow from the operation of the Premises to do so), and does maintain and intends to maintain adequate capital for the normal obligations reasonably foreseeable in a business of its size and character and in light of its contemplated business operations; provided, however, that the foregoing shall not require its members, partners or shareholders to make additional capital contributions to such entity, 

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and provided further that the fact that the value of the Premises is ever less than the outstanding balance of the Loan shall not violate this Section;
		
	(6)
	does and will maintain its accounts, books, financial statements and records, as well as its organizational documents and other corporate documents, as official records, separate from those of any other Person(s) (including not listing Borrower's assets as assets on the financial statement of any other Person(s); provided, however, that Borrower's assets may be included in a consolidated financial statement of its Affiliates provided that (a) appropriate notation shall be made on such consolidated financial statements to indicate the separateness of Borrower and such Affiliates and to indicate that Borrower's assets and credit are not available to satisfy the debts and other obligations of such Affiliates or any other Person and (b) such assets shall be listed on Borrower's own separate balance sheet).  Borrower will file its own tax returns (to the extent Borrower is required to file any such tax returns) and will not file a consolidated federal income tax return with any other Person(s) unless Borrower is a disregarded Entity for federal income tax purposes;

		
	(7)
	does not commingle and will not commingle its funds or assets with those of any other Person;

		
	(8)
	does and will conduct its business in its own name;

		
	(9)
	does and will pay the salaries of its employees from its own funds;

		
	(10)
	does not have and will not incur any indebtedness other than (A) the Indebtedness, (B) commercially reasonable unsecured trade payables (not to exceed two percent (2%) of the principal amount of the Loan) in the ordinary course of business relating to the ownership, management and operation of the Premises which are not evidenced by a note, which are paid no later than the due date thereof and which amounts are normal and reasonable under the circumstances, and (C) such other liabilities that are expressly permitted pursuant to this Agreement;

		
	(11)
	does not have and will not acquire, assume, guarantee or become obligated for the debts, obligations or securities of any other Person or hold itself out to be responsible for or have its credit available to satisfy the debts or obligations of any other Person, except for the Indebtedness;

		
	(12)
	does and will at all times hold itself out to the public to be, and does identify and will identify itself as, a separate and distinct Entity under its own name and not as a division or part of any other Person(s) and has corrected and will correct any known misunderstanding regarding its status as a separate and distinct Entity;

		
	(13)
	does not have and will not make loans or advances to any Person(s); 

		
	(14)
	does and will maintain an arms-length relationship with its Affiliates; and

		
	(15)
	if Borrower is a single member limited liability company, it must have at least two (2) Special Members, one of which, upon the dissolution of such sole member or the withdrawal or the disassociation of the sole member from Borrower, shall immediately become the sole member of Borrower, and the other of which shall become the sole member of Borrower if the first such Special Member no longer is available to serve as such sole member. 

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"Special Member" means a Person(s) who is not a member of the limited liability company but has agreed to act as a Special Member under the terms of the operating agreement with only the rights and duties expressly set forth therein and only upon the occurrence of certain events that cause the member to cease to be a member of the limited liability company.

"State" means the state where the Premises is located.

"Subordination of Management Fees Agreement" shall mean any Assignment of Management Agreement and Subordination of Management Fees Agreement among Lender, Borrower and any Manager in connection with the Loan, as the same may be amended, restated, replaced, supplemented or otherwise modified from time to time.

"Tax and Insurance Escrow Fund" shall have the meaning set forth in Section 6.1 of this Agreement.

"Threshold Amount" shall mean for Alterations:  $2,000,000.00; for Casualty:  $2,000,000.00; for Condemnation:  $1,000,000.00; and for lease termination payments (as set forth in the definition for Extraordinary Rental Payments):  $250,000.00; provided however, at any time that an Event of Default has occurred and is continuing under the Loan Documents, each Threshold Amount shall be $0.00.

"Title Insurance Policy" means a loan policy of title insurance for the Premises issued to Lender insuring the first priority lien in favor of Lender created by the Mortgage. 

"Transfer" shall have the meaning set forth in Section 4.2.3(a) of this Agreement.

"Trustee" means Fidelity National Title Insurance Company, or such other Trustee as may be appointed by Lender as provided in the Mortgage.

"UCC" means Uniform Commercial Code as in effect in the State.

"U.S. Publicly-Traded Entity" means a Person (other than a natural person) whose securities are listed on a national securities exchange, or quoted on an automated quotation system, in the United States.

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

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ARTICLE II.  GENERAL TERMS

Section 2.1    Loan Commitment; Disbursement to Borrower.

2.1.1    The Loan.  Subject to and upon the terms and conditions set forth herein, Lender has made and Borrower has accepted the Loan on the Closing Date in the Loan Amount.  Borrower has requested and has received a disbursement of the Loan on the Closing Date.  Any portion of the Loan borrowed and repaid hereunder in respect of the Loan may not be reborrowed.  The foregoing will not be deemed to limit or restrict the disbursement to Borrower of any escrows, holdbacks, accounts, reserves or Insurance Proceeds or Awards that are to be disbursed to Borrower under other provisions of this Agreement or the other Loan Documents.  The Loan shall be evidenced by the Note, this Agreement and the other Loan Documents and shall be secured by the Mortgage and the other Loan Documents.

2.1.2    Use of Proceeds.  Borrower shall use the proceeds of the Loan disbursed to it (a) to pay to Lender the amounts due under the Loan Documents, and (b) for Borrower's general business purposes (including acquisition of Borrower's interest in the Premises or repayment of a previous financing arrangement, if applicable).  No part of the proceeds of the Note may be used for the purpose of buying or carrying "margin stock" within the meaning of Regulation U of the Board of Governors of the Federal Reserve System.

Section 2.2    Interest; Loan Payments; Late Payment Charge.

2.2.1    Interest; Payments Generally.  Interest on the outstanding principal balance of the Loan pursuant to the Note shall accrue at the Regular Interest Rate and shall be calculated in accordance with Section 2.2.2.  A payment of interest from the Closing Date to and including July 31, 2016, shall be paid on the Closing Date calculated by multiplying the actual number of days elapsed in the period for which interest is being calculated by a daily rate based on the Regular Interest Rate and a 360-day year.  All amounts due under the Note shall be payable without setoff, counterclaim or any other deduction whatsoever.

2.2.2    Interest Calculation.  Interest on the outstanding principal balance of the Loan shall be calculated by multiplying (a) thirty (30) days by (b) a daily rate by (c) the outstanding principal balance of the Loan based on a 360-day year composed of twelve 30-day months.

2.2.3    Making of Payments.  Each Monthly Payment shall be paid in lawful money of the United States of America by automated clearing house transfer through such bank or financial institution as shall be approved in writing by Lender in Lender's reasonable discretion, shall be made to an account designated by Lender, or shall be made in such other manner as Lender may direct from time to time in the ordinary course of business.  Any other monthly deposits or payments Borrower is required to make to Lender under the terms of the Loan Documents shall be made by the same payment method and on the same date as the Monthly Payment.  Lender has the right, upon five (5) Business Days prior Notice to Borrower, to require a change in the method of payment.  For purposes of making a Monthly Payment 

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hereunder, but not for purposes of calculating interest accrual periods, if the day on which such Monthly Payment is due is not a Business Day, then amounts due on such date shall be due on the immediately succeeding Business Day.  Notwithstanding the foregoing sentence, with regard to the payment due on the Maturity Date or any other payment in full of the Indebtedness, the payment shall be made by Borrower in funds immediately available to Lender by 3:00 p.m., New York City time on the date such payment is due to Lender by deposit to such account as Lender may designate by written Notice to Borrower.

2.2.4    Payments Before Maturity Date.  Borrower shall pay to Lender on the Payment Date occurring on September 1, 2016 and on each Payment Date thereafter up to but not including the Maturity Date, an amount equal to the Monthly Payment, which payments shall be applied first to accrued and unpaid interest for the prior Interest Period and the balance, if any, to the outstanding principal balance of the Loan.

2.2.5    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 (including accrued and unpaid interest to and including the Maturity Date) and all other amounts due hereunder and under the Note, the Mortgage and the other Loan Documents.  

2.2.6    Payments after Default.  Upon the occurrence and during the continuance of an Event of Default, interest on the outstanding principal balance of the Loan and, to the extent permitted by law, overdue interest and other amounts due in respect of the Loan, shall accrue at the Default Rate, calculated from the date on which the Event of Default occurred until the earlier of the date the Event of Default is waived or the date upon which the Indebtedness is paid in full.  Any such amount shall be secured by the Mortgage and the other Loan Documents to the extent permitted by applicable law.  This paragraph and paragraph 2.2.7 shall not be construed as an agreement or privilege to extend the date of the payment of the Indebtedness, nor as a waiver of any other right or remedy accruing to Lender by reason of the occurrence and continuance of any Event of Default; and Lender retains its rights under the Note to accelerate and to continue to demand payment of the Indebtedness upon the occurrence and during the continuance of any Event of Default.

2.2.7    Late Payment Charge.  If any principal, interest or any other sums due under the Loan Documents is not paid by Borrower on or prior to the date on which it is due, excluding the payment of the Loan due at maturity, whether by acceleration or otherwise, Borrower shall pay to Lender within five (5) days after demand the Late Charge 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.  Notwithstanding the foregoing, during the period that interest at the Default Rate is accruing upon amounts due under the Loan Documents, no Late Charges (other than Late Charges already assessed by Lender) shall be incurred by or assessed against Borrower.  

2.2.8    Usury Savings.  Notwithstanding anything herein or in any of the other Loan Documents or the Environmental Indemnity to the contrary, no provision contained herein 

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or therein which purports to obligate Borrower to pay any amount of interest or any fees, costs or expenses which are in excess of the maximum permitted by applicable law, shall be effective to the extent it calls for the payment of any interest or other amount in excess of such maximum.  All agreements between Borrower and Lender, whether now existing or hereafter arising and whether written or oral, are hereby limited so that in no contingency, whether by reason of demand for payment or acceleration of the maturity hereof or otherwise, shall the interest contracted for, charged or received by Lender exceed the maximum amount permissible under applicable law.  If, from any circumstance whatsoever, interest would otherwise be payable to Lender in excess of the maximum lawful amount, the interest payable to Lender shall be reduced to the maximum amount permitted under applicable law; and if from any circumstance Lender shall ever receive anything of value deemed interest by applicable law in excess of the maximum lawful amount, an amount equal to any excessive interest shall, at the option of Lender, be refunded to Borrower or be applied to the reduction of the unpaid balance of the Loan Amount, without a Prepayment Premium and not to the payment of interest or, if such excessive interest exceeds the unpaid balance of the Loan Amount such excess shall be refunded to Borrower.  This paragraph shall control all agreements between Borrower and Lender.

Section 2.3    Prepayments.

2.3.1    Prepayment During the Open Period.  Borrower shall not have the right or privilege to prepay all or any portion of the unpaid principal balance of the Note until the Open Period, except as otherwise specifically set forth in this Agreement, including without limitation, Section 2.3.2.  From and after the commencement of the Open Period, the principal balance of the Note may be prepaid, at par, in whole but not in part, upon: (a) not less than thirty (30) days prior written Notice to Lender specifying the date on which prepayment is to be made, provided Borrower may send subsequent notices changing the date of prepayment to a date no earlier than three (3) days after delivery of such notice and/or retracting such prepayment; (b) payment of all accrued and unpaid interest on the outstanding principal balance of the Note to and including the date on which prepayment is to be made; and (c) payment of all other Indebtedness then due under the Loan Documents.  Lender shall not be obligated to accept any prepayment of the principal balance of the Note unless it is accompanied by all sums due in connection therewith.

2.3.2    Prepayment Prior To Open Period.  In addition to the Loan prepayment rights expressly set forth in this Agreement, including, without limitation Section 2.3.1, Section 5.4(c), and Section 11.24, prior to the Open Period, Borrower may prepay the principal balance of the Note in full (or in part in connection with the release of a Release Parcel if permitted by the terms of this Agreement), in accordance with the requirements of clauses (a) – (c) of Section 2.3.1 hereof; provided further, that such prepayment is accompanied by payment of the Prepayment Premium.  

2.3.3    Release on Payment in Full.  Lender shall, at the expense of Borrower, 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 Premises and remit any remaining Reserve Funds to Borrower.  No voluntary or involuntary prepayment of anything less than the 

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full amount of 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 shall give rise to any obligation on the part of Lender to release the lien of the Mortgage on the Premises, except as provided in Section 11.24.  

ARTICLE III.  REPRESENTATIONS AND WARRANTIES    

Section 3.1    Borrower Representations.  Borrower represents and warrants as of the Closing Date that:

3.1.1    Organization.  Borrower is and, until the Indebtedness is paid in full, will continue to (a) be a duly organized and validly existing Entity in good standing under the laws of the state of its formation, (b) if applicable, be duly qualified to transact business in each jurisdiction in which the nature of its business, the Premises or any of the other Collateral makes such qualification necessary, (c) have the requisite Entity power and authority to carry on its business as now being conducted, (d) have the requisite Entity power to execute, deliver and perform its obligations under the Loan Documents and Environmental Indemnity, and (e) comply with the provisions of all of its organizational documents and the Legal Requirements of the state of its formation.  Schedule II includes a Certified Organizational Chart that sets forth the ownership interest (and relationship) of each Interest Owner in Borrower with a direct or indirect ownership of twenty percent (20%) or more.

3.1.2    Required Entity Status.  Borrower complies with the provisions and requirements of the Required Entity Status.  

3.1.3    Authorization.  The execution, delivery and performance of the Loan Documents and Environmental Indemnity and the borrowing evidenced by the Note (i) are within the applicable powers of the Borrower and any Person(s) executing on behalf of Borrower; (ii) have been authorized by all requisite action; and (iii) will not violate, conflict with, result in a breach of or constitute (with notice or lapse of time or both) a default under any governing instrument of Borrower or any Entity(ies) executing on behalf of Borrower, or any indenture, agreement or other instrument to which Borrower or any Person(s) executing on behalf of Borrower is a party or by which each such party or any of their respective assets or the Premises is or may be bound or affected.

3.1.4    Enforceability.  To the best of Borrower's knowledge, the Loan Documents and Environmental Indemnity constitute the legal, valid and binding obligations of Borrower, enforceable against Borrower in accordance with their respective terms, except as may be limited by (i) bankruptcy, insolvency, reorganization or other similar laws affecting the rights of creditors generally, and (ii) general principles of equity (regardless of whether considered in a proceeding in equity or at law).

3.1.5    Financial Condition.  (i) Borrower is solvent, and will not become insolvent as a result of incurring the Indebtedness, and no bankruptcy, reorganization, insolvency or similar proceeding under any state or federal law with respect to the Borrower, Guarantor or 

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any owner of a direct interest in Borrower has been initiated, (ii) Borrower has not entered into this Loan transaction with the intent to hinder, delay or defraud any creditor, (iii) Borrower has received reasonably equivalent value for the making of the Loan, and (iv) Borrower has no known contingent liabilities which could reasonably be expected to have a Material Adverse Effect.  All financial statements heretofore delivered to Lender by or on behalf of Borrower are true and correct in all material respects, have been prepared in accordance with the Approved Accounting Method consistently applied, fairly present the respective financial conditions of the subjects thereof as of the dates thereof and for the periods covered thereby, and no material adverse change has occurred in the financial conditions presented therein since the respective dates thereof.

3.1.6    Litigation.  To the best of Borrower's knowledge, there are no pending actions, suits or proceedings at law or in equity by or before any Governmental Authority, arbitrator or other authority or, to the knowledge of Borrower, threatened in writing against Borrower or any Interest Owner(s) or the Premises that could reasonably be expected to have a Material Adverse Effect.

3.1.7    Not Foreign Person.  Borrower is not a "foreign person" within the meaning of the Code.

3.1.8    ERISA.  Until the Indebtedness is paid in full:  (i) Borrower is not and will not be an "employee benefit plan" as defined in Section 3(3) of ERISA, which is subject to Title I of ERISA or a "plan" as defined in and subject to Section 4975 of the Code, (ii) the assets of Borrower do not and will not constitute "plan assets" of one or more such plans for purposes of Title I of ERISA or Section 4975 of the Code, (iii) transactions by or with Borrower are not and will not be subject to state statutes applicable to Borrower regulating investments of and fiduciary obligations with respect to employee benefit plans or any governmental plans, (iv) Borrower has made and will continue to make all required contributions to all employee benefit plans, if any, established for or on behalf of Borrower or to which Borrower is required to contribute, (v) Borrower has and will continue to administer each such plan, if any, in accordance with its terms and the applicable provisions of ERISA and any other federal or state law, and (vi) Borrower has not and will not permit any liability under Sections 4201, 4243, 4062 or 4069 of Title IV of ERISA or taxes or penalties relating to any employee benefit plan or multi-employer plan to become delinquent or assessed, respectively, which would have a Material Adverse Effect.

3.1.9    OFAC.  Until the Indebtedness is paid in full:

(A)    Borrower has complied and will continue to comply with all requirements of law relating to money laundering, anti-terrorism, trade embargos and economic sanctions, now or hereafter in effect; 

(B)    None of (i) the Borrower, (ii) any Person having a twenty percent (20%) or greater economic interest in the Borrower, or (iii) any Person otherwise controlling the Borrower, is or will become an Embargoed Person; 

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(C)    Borrower will not use the proceeds of the Loan to finance or otherwise facilitate, directly or indirectly, any transaction or dealing with an Embargoed Person; 

(D)    Borrower's profits are not and will not be predominantly derived from dealings with Embargoed Persons, including but not limited to activities in countries subject to United States embargoes administered by OFAC; and

(E)    Borrower has made and will make appropriate inquiries, including inquiries about Persons having an ownership interest in the Borrower, to ensure the foregoing representations and warranties remain true and correct at all times.

The foregoing representations shall not apply to the extent that any such Person's ownership interest in Borrower is held solely through a U.S. Publicly-Traded Entity and is less than twenty percent (20%).

3.1.10    Investment Company Act.  Borrower is not and, until the Indebtedness is paid in full, Borrower will not be (i) an "investment company" or a company "controlled" by an "investment company," within the meaning of the Investment Company Act of 1940, as amended, or (ii) subject to any other federal or state law or regulation which purports to restrict or regulate its ability to borrow money.

3.1.11    Agreements.  Borrower is not a party to any agreement or instrument or subject to any restriction which could reasonably be expected to have a Material Adverse Effect.  Borrower is not in default (beyond any grace or notice and cure periods) in any respect in the performance, observance or fulfillment of any of the material obligations, covenants or conditions contained in any indenture, agreement or instrument to which it is a party or by which Borrower or the Premises is bound.

3.1.12    No Defaults.  To the best of Borrower's knowledge, no default or Event of Default exists under or with respect to any Loan Document or the Environmental Indemnity.

3.1.13    Title.  Borrower owns good, indefeasible, marketable and insurable fee simple title to the Premises, free and clear of all liens, other than the Permitted Encumbrances.  Borrower has the right to mortgage, grant, bargain, sell, pledge, assign, warrant, transfer and convey good title to the Premises.  There are not now, and there will not be any outstanding options or agreements to purchase or rights of first refusal to purchase affecting the Premises, except those tenant purchase rights, if any, as previously approved by Lender in writing.  

3.1.14    Condemnation.  Borrower has not received written or verbal notice that (i) a Condemnation has been commenced or is contemplated with respect to all or any portion of the Premises, or (ii) a relocation of roadways providing direct access to the Premises has been commenced or is contemplated.

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3.1.15    Liens.  All costs and expenses of any and all labor, materials, supplies and equipment used on or prior to the date hereof in the construction of the Improvements have been paid in full.  Borrower (or a prior owner of the Premises) has paid in full for, and Borrower is the owner of, all furnishings, fixtures and equipment (other than tenants' property), if any, used in connection with the operation of the Premises, free and clear of any and all security interests, liens or encumbrances, except the Permitted Encumbrances, except for immaterial equipment leases.

3.1.16    Separate Assessment.  The Premises is and, until the Indebtedness is paid in full, will be assessed for real estate tax purposes as one or more wholly independent tax lot or lots, separate from any adjoining land or improvements not constituting a part of such lot or lots, and no other land or improvements not constituting part of the Premises is or will be assessed and taxed together with the Premises or any portion thereof.

3.1.17    Enforceability of Lien.  To the best of Borrower's knowledge, upon recordation in the appropriate real property records in the State and the payment of all applicable filing fees related thereto, the Mortgage securing the Loan establishes and creates a valid, effective, and enforceable first mortgage lien on and a security interest in, or claim to the Premises as security for the repayment of the Indebtedness, subject only to the Permitted Encumbrances.  To the best of Borrower's knowledge, all Personal Property and fixtures covered by the Mortgage are (or will be) subject to a UCC financing statement to be filed and/or recorded, as appropriate, for such recordation or filing in all places necessary to perfect a valid first priority lien with respect to the rights and property that are the subject of the Mortgage to the extent governed by the UCC.  

3.1.18    Flood.  To the best of Borrower's knowledge, except as shown on the survey delivered to Lender in connection with the closing of the Loan, no portion of the Improvements is located in an area identified by the Secretary of Housing and Urban Development or the Federal Emergency Management Agency or any successor thereto as an area having special flood hazards, or, if now or hereafter located within any such area, Borrower has either elevated such Improvements to applicable minimum elevation or has obtained and will maintain applicable flood hazard insurance.

3.1.19    Permits, Licenses, Approvals.  To the best of Borrower's knowledge, (i) Borrower has obtained and will maintain all necessary certificates, licenses, permits and other approvals, governmental and otherwise, necessary for the operation of the Premises and the conduct of its business, and (ii) the Land and the Improvements and the intended use thereof by Borrower comply with all applicable Legal Requirements.

3.1.20    Encroachments.  Except as shown on the Survey, none of the Improvements lie or will lie outside of the boundaries of the Land or the applicable building restriction lines to the extent that such could reasonably be expected to have a Material Adverse Effect.  Except as shown on the Survey, no improvements on adjoining properties now or will encroach upon the Land so as to adversely affect the value or marketability of the Premises 

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except those which are insured against by the Title Insurance Policy or otherwise approved by Lender in writing.

3.1.21    Access/Utilities.  All public roads and streets necessary for service of and access to the Premises for the current or contemplated use thereof have been completed and are physically and legally open for use by the public.  All utility services necessary and sufficient for the full use, occupancy, operation and disposition of the Land and the Improvements for their intended purposes are available to the Premises, including water, storm sewer, sanitary sewer, gas, electric, cable and telephone facilities, through public rights-of-way or perpetual private easements.

3.1.22    Physical Condition.  Except as disclosed in the physical condition report delivered to Lender in connection with the closing of the Loan, to the best of Borrower's knowledge, as of the Closing Date, (i) the Premises is free from (a) unrepaired damage caused by a Casualty, and (b) material structural defects and (ii) all building systems contained in the Premises are in good working order in all material respects, subject to ordinary wear and tear.  

3.1.23    No Prior Assignment.  As of the Closing Date, Lender is the assignee of all of Borrower's interest under the Lease(s), and as of the Closing Date, there are no other assignments of any of the lessor's interest in the Lease(s) or any of the Rents due or to become due and payable thereunder.

3.1.24    Security Deposits.  Borrower is in possession of the Security Deposits, if any, all of which are held in compliance with all applicable Legal Requirements.

3.1.25    Lease(s).  Except as otherwise disclosed to Lender in writing, (a) Borrower is the sole owner of the entire lessor's interest in the Lease(s); (b) the Lease(s) are the valid, binding and enforceable obligations of Borrower and the applicable tenant or lessee thereunder; (c) except for first and/or last month's rents and Security Deposits collected in accordance with prevailing renting practices, none of the Rents have been collected for more than one (1) month in advance; (d) the premises demised under the Lease(s) have been completed and the tenants under the Lease(s) have accepted the same and have taken possession of the same on a rent-paying basis except as previously disclosed in writing to Lender; (e) there exists no offset or defense to the payment of any portion of the Rents except as previously disclosed in writing to Lender; (f) no Lease contains an option to purchase, right of first refusal to purchase, right of first offer to purchase, expansion right, or any other similar provision except as previously disclosed in writing to Lender; (g) no Person(s) has any possessory interest in, or right to occupy the Premises, except under and pursuant to the Permitted Encumbrances; (h) all leasing broker fees and commissions payable by Borrower on or prior to the Closing Date with respect to the Lease(s) have been paid in full, in cash or other form of immediately available funds except as previously disclosed in writing to Lender; (i) Borrower has delivered to Lender copies of all Lease(s) of all or any portion of the Premises; (j) to the best of Borrower's knowledge, there are no illegal activities or activities relating to illegal controlled substances at the Premises; and (k) Borrower has not received any notice of termination or intent to vacate from any tenant except as previously disclosed in writing to Lender.  

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3.1.26    Special Assessments.    There are no pending or, to the knowledge of Borrower, proposed special or other assessments for public improvements or otherwise affecting the Premises, nor, to the knowledge of Borrower, are there any contemplated improvements to the Premises that may result in such special or other assessments.

3.1.27    REA.  The REA, if any, is in full force and effect and neither Borrower nor, to the best of Borrower's knowledge, any other party to the REA, is in default thereunder, and to the best of Borrower's knowledge after due inquiry, there are no conditions which, with the passage of time or the giving of notice, or both, would constitute a default thereunder.  Except as set forth in the Title Insurance Policy, the REA has not been modified, amended or supplemented in any respect.

3.1.28    Margin Stock.  Neither the Borrower nor any subsidiary of Borrower is engaged principally, or as one of its important activities, in the business of extending credit for the purpose, whether immediate, incidental or ultimate, of buying or carrying "margin stock" within the meaning of Regulation U of the Board of Governors of the Federal Reserve System.

Section 3.2    Survival.  Borrower agrees that (i) all of the representations and warranties of Borrower set forth in Section 3.1 and elsewhere in this Agreement and in the other Loan Documents shall survive for so long as any Indebtedness remains owing to Lender under this Agreement or any of the other Loan Documents by Borrower; (ii) the representations and warranties set forth in the Environmental Indemnity shall survive as stated therein; and (iii) Borrower will not take any action, or fail to take any action, the effect of which would be to make any of the representations and warranties of Borrower set forth in Section 3.1 no longer true.  The fact tht the value of the Premises is ever less than the outstanding balance of the Loan shall not constitute a breach of Section 3.1.5, nor shall any partner of member (direct or indirect) in Borrower be obligated to contribute capital to Borrower to prevent a breach of Section 3.1.5.  All representations, warranties, covenants and agreements made by Borrower in this Agreement, in the other Loan Documents and the Environmental Indemnity shall be deemed to have been relied upon by Lender notwithstanding any investigation hereafter made by Lender or on its behalf.  Borrower will promptly notify Lender in writing if any of the representations, warranties or covenants in this Agreement, in the other Loan Documents and the Environmental Indemnity are no longer true or have been breached or if Borrower has a reasonable basis to believe that they may no longer be true or have been breached.  In addition, Borrower will, at the request of Lender, provide such information as may be reasonably requested by Lender to determine Borrower's compliance with the terms hereof.

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ARTICLE IV.  BORROWER COVENANTS

Section 4.1    Affirmative Covenants.  From the Closing Date and until (i) the payment and performance in full of all obligations of Borrower under the Loan Documents or (ii) the earlier release of the lien of the Mortgage encumbering the Premises in accordance with the terms of this Agreement and the other Loan Documents, Borrower hereby covenants and agrees with Lender that:

4.1.1    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, charges and expenses to the extent required under the Loan Documents and the Environmental Indemnity, including but not limited to any continuing obligations set forth in Article III of this Agreement that are to be observed, performed and satisfied until the Indebtedness is paid in full.

4.1.2    Liens/Business Operations.  Borrower shall pay before delinquency any indebtedness permitted to be incurred by Borrower pursuant to the Loan Documents and any other claims which could become a lien on the Premises (unless otherwise specifically permitted in this Agreement, the Environmental Indemnity or the other Loan Documents), and upon request of Lender exhibit satisfactory evidence of the discharge thereof.  Borrower shall manage, operate and maintain the Premises and keep the Premises, including but not limited to, the Improvements, in good condition and repair (ordinary wear and tear excepted) and free from mechanics' liens or other liens or claims for liens, provided however, that notwithstanding anything in this Agreement or the other Loan Documents to the contrary, Borrower may in good faith, with reasonable diligence and upon written Notice to Lender within twenty (20) days after Borrower has knowledge of such lien or claim, contest the validity or amount of any such lien or claim and defer payment and discharge thereof during the pendency of such contest in the manner provided by law, provided that the Contest Requirements are satisfied.

4.1.3    Business; Compliance.  Borrower shall comply, and use commercially reasonable efforts to cause each lessee or other user of the Premises to comply, with the Legal Requirements.  Borrower shall not commit, permit or suffer to exist, any act or omission affording the federal government or any state or local government the right of forfeiture as against (a) the Premises or any part thereof or (b) any monies paid in performance of Borrower's obligations under the Loan Documents.  Borrower shall, if other than a natural person, do all things necessary to preserve and keep in full force and effect its existence, franchises, rights and privileges under the laws of the state of its formation and, if other than its state of formation, the State.  Borrower shall notify Lender at least thirty (30) days prior to (i) any relocation of the Chief Executive Office of Borrower or any change in Borrower's state of formation, and/or (ii) if Borrower is a natural person, any relocation of Borrower's principal residence.  In addition, Borrower shall give Lender prior written Notice of its intent to change its name and shall comply with the terms and conditions of Section 4.2.3.  of this Agreement in connection therewith.

4.1.4    Taxes.  Borrower shall pay or cause to be paid before any penalty attaches or interest accrues all general taxes, special taxes, assessments (including assessments for benefits from public works or improvements whenever begun or completed), utility charges, 

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water charges, sewer service charges, common area maintenance charges, if any, vault or space charges and all other like charges against or affecting the Premises or against any Personal Property, or which might become a lien on the Premises (except those taxes and assessments that may be impounded and paid directly to the taxing authority in accordance with Section 6.1 of this Agreement), and shall, within ten (10) Business Days following Lender's written request, furnish to Lender a duplicate receipt or other verification of such payment.  If any such tax, assessment or charge may legally be paid in installments, Borrower may, at its option, pay such tax, assessment or charge in installments.  Notwithstanding the foregoing or anything to the contrary in this Agreement or the other Loan Documents, if Borrower desires to contest any tax, assessment or charge relating to the Premises, Borrower may do so in the manner provided by law; provided, however, that the Contest Requirements are satisfied.  

4.1.5    Alterations.  Unless otherwise specifically set forth herein and except for any Lender approval required in connection with any Property Reserves Escrow Fund, Borrower shall obtain Lender's prior written consent (which consent shall not be unreasonably withheld, conditioned or delayed) to (a) any Alterations to any Improvements on the Premises that could upon completion thereof, reasonably be expected to have a Material Adverse Effect, (b) any demolition, reduction or expansion of the gross leasable area of the Improvements, (c) any Alterations for which the cost will exceed the Threshold Amount, or (d) any other Alterations other than those listed in the following sentence.  Notwithstanding the foregoing, Lender's consent shall not be required in connection with any Alterations which are (i) tenant improvement work performed pursuant to the terms of any Lease executed on or before the Closing Date, (ii) (a) tenant improvement work performed pursuant to the terms and provisions of a Lease entered into by Borrower in accordance with the terms of this Agreement, or (b) tenant improvement work which is commercially reasonable to facilitate re-letting of any portion of the Premises, either of which does not materially adversely affect (x) any structural component of any Improvements, (y) any mechanical, electrical, utility or heating, cooling or ventilation system contained in any Improvements, or (z) the exterior (including the roof) of any building constituting a part of any Improvements, (iii) performed in connection with the restoration of the Premises after the occurrence of a Casualty or Condemnation in accordance with the terms and provisions of this Agreement, or (iv) required under Legal Requirements.  If the total unpaid amounts due and payable with respect to Alterations to the Improvements at the Premises (other than amounts to be paid or reimbursed by tenants under the Lease(s)) shall at any time exceed the Threshold Amount, Borrower shall promptly notify Lender and upon Lender's reasonable request shall 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:  (i) a cash deposit, (ii) a letter of credit acceptable to Lender, (iii) a completion bond from a bonding company reasonably acceptable to Lender, or (iv) a completion and/or payment guaranty from Guarantor, in form and substance reasonably acceptable to Lender; provided no additional security shall be required to the extent of escrows already deposited with Lender for tenant improvements or related deposits.  All Alterations shall be completed on a timely basis subject to Force Majeure, in a good workmanlike manner and in accordance with all Legal Requirements.  So long as no Event of Default then exists under the Loan Documents, Lender shall release said additional security from time to time upon receipt of acceptable written evidence of payment of actual costs for the Alterations together with those items as Lender 

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reasonably deems necessary in its discretion.  Funds held as additional security for Alterations that exceed the Threshold Amount shall be subject to the applicable terms of Article VI of this Agreement.

4.1.6    REA/Easements.  Borrower shall (i) promptly and faithfully observe, perform and comply with all the material terms, covenants and provisions of the REA on its part to be observed, performed and complied with, at the times set forth therein and to do all things necessary to preserve unimpaired its rights thereunder; (ii) not do, permit, suffer or refrain from doing anything under the REA, the result of which could reasonably be expected to have a Material Adverse Effect; (iii) not cancel, surrender, modify, amend or in any way alter or permit the alteration of any of the terms of the REA and not to release any party thereto other than Borrower from any obligation imposed upon it thereby, if such cancellation, surrender, modification, amendment, alteration or release could reasonably be expected to result in a Material Adverse Effect; and (iv) give Lender prompt written Notice of any material default of which Borrower has knowledge by any party to the REA and promptly deliver to Lender copies of each notice of such material default and, after the occurrence and during the continuance of an Event of Default, copies of all notices, communications, plans, specifications and other similar instruments received or delivered by Borrower in connection with the REA.  Notwithstanding anything to the contrary contained in this Section 4.1.6, Borrower shall have the right to make non-material amendments to the REA without the consent of Lender if the same could not reasonably be expected to result in a Material Adverse Effect and Borrower shall have the right to otherwise amend the REA with the prior written consent of Lender, such consent not to be unreasonably withheld, conditioned or delayed.  In addition, Borrower shall have the right to enter into easements or other similar agreements ("Easements") relating to the use or development of the Premises without Lender's prior written consent, if said Easements do not or could not reasonably be expected to (a) have a Material Adverse Effect, (b) adversely affect access to the Premises, or (c) require any lessee's prior consent that has not been obtained by Borrower.  Recorded copies of all amendments to the REA and recorded copies of all Easements entered into by Borrower must be delivered to Lender promptly in accordance with the Notice provisions.

4.1.7    Financial Reporting.  Borrower shall keep adequate books and records of account of the Premises and its own financial affairs, and shall cause Guarantor to keep books and records of account of its own financial affairs, sufficient to permit the preparation of financial statements therefrom in accordance with the Approved Accounting Method, consistently applied and shall furnish to Lender the following, which shall be prepared, dated and certified by Borrower as true, correct and complete in the form reasonably required by Lender, unless otherwise specified below:

(a)    Within 90 days after the end of each fiscal year for Borrower, detailed financial reports covering the full and complete operation of the Premises, prepared in accordance with the Approved Accounting Method, including, without limitation, income and expense statements;

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(b)    Within 15 days after any written request by Lender, the reports described in paragraph (a) above, prepared on a quarterly basis, and said reports may be internally prepared by Borrower; 

(c)    Within 90 days after the end of each fiscal year for Borrower, a detailed rent roll of the leasing status of the Premises as of the end of such year identifying the lessee (and assignee, subtenants and licensees, if any) and location of demised premises; square footage leased; base and additional rental amounts including any increases; rental concessions, allowances, abatements and/or rental deferments (both upcoming and expired); pass-through amounts; purchase options; commencement and expiration dates; early termination dates; renewal options and annual renewal rents; total net rentable area of the Premises; the existence of any affiliation between Borrower and tenant; and a detailed listing of tenant defaults;

(d)    Within 15 days following Lender's written request, (i) a detailed annual budget for the current fiscal year, for Lender's review, but not approval, to include, without limitation, a comparison showing corresponding information for Borrower's preceding fiscal year; (ii) a copy of Borrower's and Guarantor's (if any) most currently completed signed federal income tax return; (iii) detailed annual financial reports for Borrower and any Guarantor for the immediately preceding fiscal year; (iv) if applicable and required to be furnished by the lessee pursuant to the terms of its lease, a listing of sales volumes attained by lessees of the Premises under percentage leases for the immediately preceding year; and (v) an aged accounts receivable report; and

(e)    Such other financial statements, and such other information and reports (including background and credit reports which may be obtained by Lender at Lender's cost) as may, from time to time, reasonably be required by Lender. 

4.1.8    Required Entity Status.  Borrower shall comply with the provisions and requirements of the Required Entity Status.

4.1.9    Title.  Borrower at its sole cost (i) shall warrant and defend the title to the Premises against all claims and demands of all persons whomsoever, subject to the Permitted Encumbrances; (ii) will on demand execute any additional instrument which may be required to give Lender a valid first lien on all of the Premises; and (iii) will do all things necessary to preserve and keep the Premises free and clear of any liens (other than liens being contested in accordance with the Contest Requirements), subject only to the Permitted Encumbrances.

Section 4.2    Negative Covenants.  From the Closing Date until payment and performance in full of all obligations of Borrower under the Loan Documents or the earlier release of the lien of the Mortgage encumbering the Premises 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:

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4.2.1    Property Management.  Unless otherwise specified below, Borrower shall not, without the prior written consent of Lender (which consent shall not be unreasonably withheld, conditioned or delayed), (i) terminate any Management Agreement except in connection with the replacement of the Manager pursuant to the terms of this Section 4.2.1, modify or amend any of the provisions of any Management Agreement if such termination, modification or amendment could reasonably be expected to result in a Material Adverse Effect; (ii) pay management fees in excess of fees which are market fees in the surrounding geographic area for the applicable property type (provided that Lender has approved the fees payable  under the Management Agreement); or (iii) enter into any new management agreement with respect to the Premises except in connection with the replacement of the Manager pursuant to the terms of this Section 4.2.1.  If (a) an Event of Default has occurred and is continuing, (b) Manager shall become bankrupt or insolvent or (c) a default beyond any applicable notice and cure period by Manager occurs under the Management Agreement that gives Borrower the right to terminate the Management Agreement, then Lender, at its option, may require Borrower to engage a replacement management agent and terminate the Manager without fee or obligation to Lender.  Borrower shall promptly provide Lender with written Notice of the occurrence of any such default or bankruptcy/insolvency of Manager of which Borrower has knowledge.  So long as no Event of Default has occurred and is continuing, notwithstanding the foregoing or anything to the contrary in this Agreement, Borrower may, without Lender's prior written consent or approval, retain a Person(s) (the "New Manager") to act as Manager of the Premises or replace an existing Manager provided that (i) the New Manager is a Qualifying Manager who shall manage the Premises pursuant to a commercially reasonable and market comparable Management Agreement, and (ii) the New Manager executes and delivers to Lender an agreement substantially similar to the Subordination of Management Fees Agreement executed in connection with the initial Loan closing or if no such Subordination of Management Fees Agreement was executed in connection with the initial closing of the Loan, then in form and substance reasonably acceptable to Lender; upon satisfaction of these terms and conditions, the New Manager shall be considered to be "Manager" hereunder and all references in this Agreement and the other Loan Documents to "Manager" shall be deemed to refer to said New Manager, the term "Management Agreement" hereunder and all references in this Agreement and the other Loan Documents to "Management Agreement" shall be deemed to refer to the management agreement pursuant to which such New Manager manages the Premises and the term "Subordination of Management Fees Agreement" hereunder and all references in this Agreement and the other Loan Documents to "Subordination of Management Fees Agreement" shall be deemed to refer to the agreement executed and delivered by the New Manager to Lender.

4.2.2    Zoning/Use.  Borrower shall not cause or permit any change in the general use of the Premises without Lender's prior written consent.  Borrower shall not (i) initiate or consent to any zoning reclassification of any portion of the Premises, (ii) seek any variance under any existing zoning ordinance or use, or (iii) permit the use of any portion of the Premises in any manner that could reasonably be expected to result in the current use thereof becoming a non‐conforming use under any applicable zoning ordinance or any other applicable land use law, rule or regulation, without the prior written consent of Lender; provided, however, the prior written consent of Lender shall not be unreasonably withheld, conditioned or delayed in 

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connection with any application of Borrower seeking any zoning reclassification, any variance under any existing zoning ordinance or any special use or permit with regard to the Release Parcel in connection with the completion of the Release of the Release Parcel from the lien of the Mortgage, if permitted hereunder.  Borrower shall not make or permit any use of the Premises that could be reasonably expected, with the passage of time, to result in the creation of any right of use, or any claim of adverse possession or easement on, to or against any part of the Premises in favor of any Person(s) or the public. 

4.2.3    Transfers.  

(a)    Except for the Permitted Transfer(s) described in this Section 4.2.3 or except to the extent permitted elsewhere in the Loan Documents (including (i) Lease(s) permitted by the terms of this Agreement, (ii) transfers of Release Parcels if permitted by the terms of this Agreement, and (iii) Easements permitted by the terms of Section 4.1.6), Borrower or any Person(s) owning an interest in Borrower shall not permit, acquiesce to or allow any of the following to occur:  (A) a sale, conveyance, option to sell, assignment, transfer, encumbrance (other than (i) the Permitted Encumbrances, or (ii) any lien affecting the Premises for which Borrower is contesting and has complied with the Contest Requirements provided the same does not result in a Transfer of title to or interest in the Premises), including any mortgage, hypothecation, lien or conveyance of security title, alienation, pledge, forfeiture or other disposition (whether directly or indirectly, voluntary or involuntary, or by operation of law) of all or any portion of the Premises or an interest in the Premises or direct or indirect ownership interests in the Borrower; (B) the reconstitution or conversion of Borrower and/or any Person(s) owning a direct interest in Borrower from one Entity type to another Entity type, including (i) any change in the state of formation or organization or incorporation of Borrower, (ii) any change in the name of Borrower, (iii) the conversion of any general partnership interest in Borrower to a limited partnership interest if Borrower is a partnership, or any change, removal, or resignation of any general partner of Borrower if Borrower is a partnership, (iv) the admission of an Interest Owner as, or conversion of an existing Interest Owner into, a holder of any "preferred equity" in Borrower (obligating the Borrower to make payments to such Interest Owner without regard to cash flow of the Premises), and (v) a partial or complete liquidation, dissolution or termination of Borrower and/or any general partner of Borrower; (C) the issuance or other creation of ownership interests in the Borrower and/or any Person(s) owning an interest in Borrower (excluding Hines Global REIT II, Inc. and shareholders of Hines Global REIT II, Inc.); (D) a merger, consolidation, reorganization or any other business combination with respect to Borrower and/or any Person(s) owning an interest in Borrower (excluding Hines Global REIT II, Inc. and shareholders of Hines Global REIT II, Inc,); (E) a conversion to or operation of all or any portion of the Premises as a cooperative or condominium form of ownership; (F) if the Borrower is a trust, or if a trust owns a direct ownership interest in Borrower, the revocation, termination or expiration of such trust or the addition, deletion or substitution of a trustee of such trust; or (G) the acknowledgement or consent by Borrower to an encumbrance on, or an assessment against, all or any portion of the Premises to any Governmental Incentive Financing.  For the purposes of this provision, 

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any of the events described above shall be defined as a "Transfer".  If any such Transfer occurs without the prior written consent of Lender (other than Transfers where Lender's consent is not required as set forth below or as otherwise provided elsewhere in this Agreement), it shall be null and void and shall constitute an immediate Event of Default under the Loan Documents, subject to and in accordance with Section 7.1(a)(v) of this Agreement.  Lender may in its commercially reasonable discretion consent to a Transfer (not otherwise expressly permitted by the terms hereof) and any such consent shall not constitute a consent as to any other Transfer.

(b)    Each of the following Transfers shall be considered a "Permitted Transfer(s)":

(i)    Premises Transfer:  So long as no Event of Default exists under the Loan Documents, Lender shall not unreasonably withhold its consent to a Transfer of the Premises (each, a "Premises Transfer") provided Lender receives sixty (60) days advance written request from Borrower and provided the following conditions are complied with in each instance: 

(1)    Prior review and approval of the proposed purchaser or other transferee ("Transferee") and the subject Transfer by Lender, in Lender's commercially reasonable discretion.  Review of the Transferee and the subject Transfer shall encompass various factors, including, but not limited to, the proposed Transferee's creditworthiness, financial strength, and real estate management and leasing expertise, Lender's lending exposure to the proposed Transferee (or any Person(s) owning an interest in said Transferee) as well as the proposed Transfer's effect on the Premises, the Borrower, and other security for the Loan;

(2)    Payment to Lender of an assumption fee equal to (a) one half of one percent (0.50%) of the then outstanding principal balance of the Loan for the first assumption, and (b) one percent of the then outstanding principal balance of the Loan for each assumption thereafter; provided, however, that Lender will require $15,000.00 of such fee to be paid at the beginning of Lender's review process, and such sum shall be nonrefundable and earned upon receipt by Lender whether or not the transaction is ultimately completed or Lender ultimately approves the proposed Transfer; 

(3)    Receipt, at Borrower's expense, of an endorsement to the Title Insurance Policy bringing the effective date of the Title Insurance Policy forward to the date of the consummation of the Transfer and which is otherwise reasonably acceptable to Lender (or if an acceptable endorsement is not available, a new standard mortgage ALTA loan policy acceptable to Lender);

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(4)    Receipt by Lender of copies of all relevant information and documentation relating to or reasonably required by Lender in connection with the proposed Transfer including but not limited to (a) the organizational documents of the Transferee; (b) the deeds or other instruments of transfer for the Premises or interests in Borrower and documents relating to the assignment and assumption of Lease(s); (c) evidence of compliance with the insurance requirements contained in the Loan Documents; (d) compliance with such other closing requirements as are customarily imposed by Lender in connection with such Transfers; and (e) compliance with the representations and warranties herein regarding the Transferee's Required Entity Status;

(5)    Execution, delivery, acknowledgment and recordation, as applicable, of such loan assumption agreements (assuming all of Borrower's obligations under the Loan Documents), loan modification agreements, and new, revised and/or replacement indemnification agreements, property reserve agreements/addendums, security instruments, financing statements, UCCs, new or revised letters of credit and/or guarantees each in form and substance reasonably satisfactory to Lender; provided that all such documents shall be substantially on the same terms and conditions as the existing Loan Documents;

(6)    Payment of Lender's reasonable outside counsel fees and costs, if any, and any other fees and costs incurred by Borrower in connection with such Premises Transfer whether or not the Premises Transfer is consummated; and

(7)    If applicable, receipt by Lender of a waiver from any tenant having a right or option to purchase the Premises or any portion thereof, waiving such right or option in form and substance acceptable to Lender.

Lender agrees to release any Guarantor(s) from any further obligations under the Guaranty and to release Borrower from any further obligations under the Loan Documents (excluding Borrower's and any Guarantor's obligations in the event of fraud or misrepresentation and under the Environmental Indemnity except as provided herein) in connection with a Premises Transfer from and after the date of the Premises Transfer provided:  (a) the Transferee executes an assumption agreement reasonably acceptable to Lender assuming all of Borrower's obligations under (i) the Loan Documents (other than the Environmental Indemnity) arising from and after the Premises Transfer, and (ii) the Environmental Indemnity; (b) any Guarantor(s)'s obligations (other than the Environmental Indemnity) arising from and after the Premises Transfer and under the Environmental Indemnity are assumed by a Person(s) having ownership in 

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Transferee and acceptable to Lender in its reasonable discretion; (c) Borrower and any Guarantor(s) shall be released from their obligations under the Environmental Indemnity only if said obligations are assumed in writing by a Person(s) reasonably acceptable to Lender which obligations shall specifically include all past Environmental Activity or Condition regardless of causation; and (d) all obligations of Borrower under the Loan Documents have been satisfied in full up to and including the date of the Premises Transfer.  

(ii)    Reconstitution of Borrower:  So long as no Event of Default exists under the Loan Documents, the reconstitution or conversion of Borrower from one Entity type to another Entity type shall be permitted without Lender's consent, provided the following conditions are complied with in each instance:  (1) the ownership of Borrower will be substantially the same after the reconstitution or conversion as reasonably determined by Lender; (2) Borrower satisfies conditions (3)-(7) of the Premises Transfer requirements above; and (3) Lender receives a reasonable fee for handling such Transfer not to exceed $7,500.00.
 
(iii)    Borrower Name Change:  So long as no Event of Default exists under the Loan Documents, Borrower shall be permitted without Lender's consent to change its name provided the following conditions are complied with in each instance:  (1) the Entity type has not changed (see Reconstitution of Borrower for change in Entity type requirements); (2) the ownership of Borrower will be exactly the same after the name change as determined by Lender; (3) Borrower satisfies conditions (4), (5) and (7) of the Premises Transfer requirements above; and (4) Lender receives a reasonable fee for handling such Transfer not to exceed $5,000.00.

(iv)    Hines Transfer:  Provided (A) Borrower is controlled by Guarantor or another Hines Affiliate, (B) Guarantor or another Hines Affiliate controls Hines Global REIT II Properties LP ("HGR II OP"), and (C) not less than 51% of the interests in Borrower is owned directly or indirectly by HGR II OP, Guarantor, or another Hines Affiliate, the following transfers are permitted without Lender's consent and without the payment of any fee, charge, or penalty: (a) transfers (including pledges) of direct or indirect interests in Borrower, HGR II OP and Guarantor, (b) the issuance of new shares or other direct or indirect interests in HGR II OP and/or Guarantor, (c) the merger, combination, consolidation or other reorganization of Guarantor and/or HGR II OP, and (d) the pledge of up to a 49% direct or indirect interest in Borrower; provided that for any such transfer of 20% or more of direct/indirect interest in Borrower, (1) Lender receives at least thirty (30) days prior written notice of such transfer ; (2) Lender receives an organizational chart for Borrower which includes ownership breakdowns for all entity levels and is certified by Borrower as true and correct; (3) at Lender's option, Lender receives an acceptable background and credit check, at Borrower's cost, for the transferee if upon consummation of the transfer 

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said transferee's direct/indirect interest in Borrower equals or exceeds 20% and Lender has not already received and approved a background and credit check for said transferee; (4) at Lender's option, Lender receives an acceptable OFAC report at Borrower's cost; and (5) Lender receives a reasonable fee for handling each such transfer, not to exceed $2,500.00.

For purposes of subsection (iv) above, the following terms shall have the following meanings:

"Hines Affiliate" means any entity which is any of (i) a general or limited partnership, in which the only managing general partners are one or more of Gerald D. Hines, Jeffrey C. Hines, HILP; (ii) a limited liability company in which the only managing members are one or more of Gerald D. Hines, Jeffrey C. Hines, HILP; (iii) a corporation a majority of the voting stock of which is owned, directly or indirectly, by any combination of members of the Hines Family, one or more Hines Family Trusts; (iv) HILP; (v) any Hines Fund; or (vi) any other entity other than the entities described in clauses (i) through (iv) of this definition that is Controlled, directly or indirectly, by one or more of Gerald D. Hines, Jeffrey C. Hines, a Hines Family Trust, HILP, or members of the Hines Family.

"HILP" means Hines Interests Limited Partnership, a Delaware limited partnership. 
 
"Hines Family" means any one or more of (i) Jeffrey C. Hines, his spouse and his children and grandchildren (including, without limitation, children and grandchildren by adoption); or (ii) Gerald D. Hines, his spouse and his children and grandchildren (including, without limitation, children and grandchildren by adoption).

"Hines Family Trust" means a trust, the vested beneficiaries of which include members of the Hines Family and in which the only trustees are one or more of Gerald D. Hines, Jeffrey C. Hines, members of the Hines Family, HILP, or one or more current or former employees of HILP.
 
"Hines Fund" means any fund or co-investment vehicle, platform or program (e.g., a series of related coordinated investments through project-specific legal entities) controlled by HILP or another Hines Affiliate, as fund, entity or program managing general partner, managing member or manager, including, without limitation, any real estate investment trust or similar entity.

Notwithstanding anything herein to the contrary, any such Transfer shall be conditioned upon Borrower's ability to, after giving effect to the Transfer in question, (I) remake the representations contained herein relating to OFAC and ERISA matters (and, upon Lender's request, Borrower shall deliver to Lender an Officer's Certificate containing such updated representations effective as of the date of the consummation of the 

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applicable Transfer), and (II) continue to comply with the covenants contained herein relating to OFAC and ERISA matters.

ARTICLE V.  INSURANCE; CASUALTY; CONDEMNATION

Section 5.1    Insurance.

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

(i)    comprehensive all risk property insurance on a special form causes of loss basis (against losses caused by but not limited to, fire, smoke, lightning, windstorm (including named storm), hail, explosion, collapse, sinkhole, malicious mischief, vandalism, sprinkler leakage, and terrorism) covering the Improvements (specifically excluding any buildings pursuant to pad or ground leases which are owned and insured by the lessees thereof) and the Personal Property (as applicable) .  The property insurance policy shall comply with the following: 

(A)    be in an amount not less than one hundred percent (100%) of the "Full Replacement Cost," which for purposes of this Agreement shall mean the agreed upon replacement value (exclusive of costs of excavations, foundations, underground utilities and footings) with a waiver of depreciation (excluding the land value) or such lesser amount specifically approved in writing by Lender; 

(B)    be written on a replacement cost basis with a waiver of depreciation; 

(C)    contain an agreed amount endorsement or waiver of all co-insurance provisions with respect to the Improvements and Personal Property; 

(D)    include a deductible not to exceed $100,000 with the exception of flood, earthquake and windstorm, which may have a deductible not to exceed $100,000 or 5% of the total insurable value; and

(E)    contain an "Ordinance or Law Coverage" endorsement (to include (i) loss to the undamaged portion of the Improvements, (ii) demolition costs, and (iii) increased cost of construction endorsements) if any of the Improvements or the use of the Premises shall at any time constitute non-conforming structures or uses.

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(ii)    commercial general liability insurance against claims for personal injury, bodily injury, death or property damage occurring upon, in or about the Premises with a combined single limit of not less than One Million Dollars ($1,000,000) per occurrence, and Two Million Dollars ($2,000,000) in the annual aggregate (the aggregate limit shall apply per location if multiple properties are insured under the policy).  The commercial general liability policy shall not include a deductible/self-insured retention greater than $100,000.   The commercial general liability policy shall provide coverage for the following hazards:  (A) premises and operations; (B) products and completed operations; (C) independent contractors; and (D) contractual liability for all insured contracts, plus additional excess liability insurance in a minimum amount of $20,000,000 per occurrence on terms consistent with the requirements in the foregoing sentence;

(iii)    rental loss or business interruption insurance, with a waiver of all coinsurance provisions, for the perils specified herein (I) for (A) one hundred percent (100%) of the Rents (including Operation Expenses) for a period of eighteen (18) months or (B) on an actual losses sustained basis for a minimum period of eighteen (18) months (specifically excluding Rents under Lease(s) where the lessee has no rental abatement or termination rights in connection with a Casualty during the term of the Loan for so long as said Lease(s) is in full force and effect); and (II) containing an extended period of indemnity endorsement which provides that after the physical loss to the Improvements has been repaired, the continued loss of income will be insured until such income either returns to the same level it was prior to the loss, or the expiration of six (6) months from the date that the Premises is repaired or replaced and operations are resumed, whichever first occurs and notwithstanding that the policy may expire prior to the end of such period;

(iv)    at all times during which structural construction, repairs or alterations are being made with respect to the Improvements, and only if the Premises 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;

(v)    flood insurance, in an amount reasonably determined by Lender, if any portion of the Improvements is at any time located in a "special flood hazard area" as identified by the Federal Emergency Management Agency, or any successor agency thereto;

(vi)    equipment breakdown/boiler and machinery insurance, if applicable, in amounts as shall be reasonably required by Lender on terms 

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consistent with the commercial property insurance policy required under subsection (i) above;

(vii)    if any Policy described in clauses (i)-(iv) above shall contain an exclusion from coverage under such Policy for loss or damage incurred as a result of an act of terrorism or similar acts of sabotage, Borrower shall maintain insurance against loss or damage incurred as a result of acts of terrorism or similar acts of sabotage provided such insurance (a) is commercially available and (b) can be obtained at a commercially reasonable cost as reasonably determined by Lender; and

(viii)    upon sixty (60) days' written Notice, such other commercially 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 Premises located in or around the region in which the Premises is located.

(b)    (i)    All insurance provided for in Section 5.1(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 form and content, including amounts, deductibles, loss payees and insureds, such approval not to be unreasonably withheld, conditioned or delayed.   The Policies shall name Borrower as a Named Insured.  The Policies shall be issued by financially sound and responsible insurance companies authorized to do business in the State and must be rated A, class size VIII or better in the most current issue of Best's Insurance Reports or A3 from Moody's or A1 from Standard and Poor's.

(ii)    The Policies for the insurance described in Sections 5.1(a)(i), (iii), (iv), (v), (vi), (vii) and (viii) (as applicable) shall have attached thereto standard mortgagee and loss payee/lender's loss payable clauses in favor of and permitting Lender to collect any and all proceeds payable thereunder and shall include a 30-day (except for nonpayment of premium, in which case, a 10-day) notice of cancellation clause in favor of Lender.  The Policies for the insurance described in Sections 5.1(a)(ii), (vii) and (viii) (as applicable) shall name Lender as an additional insured and shall include a 30 day (except for nonpayment of premium, in which case, a 10 day) notice of cancellation clause in favor of Lender.  

(iii)    All certificates of insurance (or copies of Policies if requested by Lender) shall be delivered to Lender with evidence of renewal coverage delivered to Lender on or before the expiration date of any policy.  The certificates of insurance must include all limits, sublimits and deductibles of the applicable Policy.  If requested by Lender, Borrower shall certify to the certificates of insurance upon renewal or replacement of the Policies with a form similar to Schedule I attached herein.  

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(iv)    Borrower shall not carry or permit to be carried separate insurance, concurrent in kind or form and contributing in the event of loss, with any insurance required in the Loan Documents.

(v)    Borrower may carry the insurance coverages required herein under blanket insurance policies provided that: (A) any policy of blanket insurance hereunder shall comply in all respects with the provisions of this Section 5.1; (B) the protection afforded by Borrower under any policy of blanket insurance hereunder shall be no less than which would have been afforded under a separate policy or policies relating to the Premises; and (C) any blanket policy remains subject to review and the reasonable approval by Lender based on the schedule of locations and values, which shall be provided by Borrower upon Lender's request.

(vi)    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, (provided that Borrower shall not have provided such evidence to Lender within five (5) Business Days of Borrower's receipt of written notice from Lender which may be in the form of email, facsimile or mail), upon reasonable prior notice to Borrower, to take such action as Lender reasonably deems necessary to protect its interest in the Premises, including, without limitation, the obtaining of such insurance coverage as Lender in its reasonable discretion deems appropriate.  All costs incurred by Lender in connection with such action or in obtaining such insurance and keeping it in full force and effect which are not promptly paid by Borrower shall be added to the Indebtedness and shall bear interest at the Default Rate from the date of such advance until paid and shall be due and payable on demand.

Section 5.2    Casualty.  If the Premises shall be damaged or destroyed, in whole or in part, by fire or other casualty (a "Casualty"), Borrower shall give prompt Notice of such damage to Lender and shall, taking into account the time necessary to adjust the loss, obtain permits and enter into restoration contracts, promptly commence and diligently prosecute the completion of the repair and restoration of the Premises as nearly as reasonably possible to the condition the Premises was in immediately prior to such Casualty with such alterations as may be reasonably approved by Lender (a "Restoration") and otherwise in accordance with Section 5.4.  Subject to the Net Proceeds being made available by Lender, Borrower shall pay all costs of such Restoration whether or not such costs are covered by insurance.  Borrower (or Lender, if an Event of Default then exists) shall settle and adjust any claim under the Policies required to be maintained by Borrower; provided, however, that any settlement or adjustment where the aggregate amount of Net Proceeds (including any deductible payable by Borrower) exceeds the Threshold Amount shall be subject to the written approval of Lender, not to be unreasonably withheld or delayed and all other settlements or adjustments shall require contemporaneous Notice to Lender.  In all circumstances, the proceeds thereof shall be paid to Lender and Lender 

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is authorized to collect and to give receipts therefor.  Lender may, but shall not be obligated to make proof of loss if Borrower is not diligently pursuing the same.

Section 5.3    Condemnation.  Borrower shall promptly give Lender Notice of the actual or threatened commencement of any proceeding for the Condemnation of the Premises and shall deliver to Lender copies of any and all papers served in connection with such proceedings.  Lender may participate with Borrower in any such proceedings to the extent that the Award therefrom is reasonably anticipated by Lender to exceed the Threshold Amount.  Borrower shall from time to time deliver to Lender all instruments reasonably 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.  In all circumstances, the proceeds thereof shall be paid to Lender and Lender is authorized to collect and to give receipts therefor.  Lender may, but shall not be obligated to make proof of loss if Borrower is not diligently pursuing the same.  Notwithstanding any Condemnation, Borrower shall continue to pay the Indebtedness at the time and in the manner provided for its payment in the Note and in this Agreement and the Indebtedness shall not be reduced until any Award shall have been actually received and applied by Lender, after the deduction of reasonable out-of-pocket expenses of collection, to the reduction or discharge of the Indebtedness.  If a portion of the Premises is taken by a condemning authority, Borrower shall promptly commence and diligently prosecute the Restoration of the Premises (to the extent that such Restoration is necessary) and otherwise comply with the provisions of Section 5.4.  If the Premises 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 Indebtedness.  

Section 5.4    Restoration.  The following provisions shall apply in connection with the Restoration of the Premises:

(a)    If the Net Proceeds shall be equal to or less than the Threshold Amount, and the costs of completing the Restoration shall be equal to or less than the Threshold Amount, the Net Proceeds will be disbursed by Lender to Borrower for the Restoration (or in the case of a Condemnation where Restoration is not necessary, for Borrower's general business purposes) upon receipt, provided that no Event of Default then exists.

(b)    If the Net Proceeds are greater than the Threshold Amount or the costs of completing the Restoration are greater than the Threshold Amount, Lender shall make the Net Proceeds available for the Restoration in accordance with the provisions of this Section 5.4(b).  The term "Net Proceeds" shall mean:  (x) the amount of all insurance proceeds received by Lender pursuant to the Policies described in Section 5.1 as a result of the Casualty, after deduction of its reasonable out-of-pocket costs and expenses (including, but not limited to, reasonable counsel fees), if any, in collecting same ("Insurance Proceeds"), or (y) the amount of the Award, after deduction of its reasonable out-of-pocket costs and expenses (including, but not limited to, reasonable 

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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 is met, in Lender's discretion: 

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

(B)    in the event the Net Proceeds are Condemnation Proceeds, the land constituting the Premises which is taken is located along the perimeter or periphery of the Premises, and no material portion of the Improvements is located on the condemned land or Lender has otherwise determined the Condemnation does not and could not reasonably be expected to have a Material Adverse Effect;

(C)    Lease(s) in effect as of the date of the occurrence of such Casualty or Condemnation or Lease(s) obtained in substitution thereof (which otherwise satisfy the terms of this Agreement), whichever the case may be, shall remain in full force and effect during and after the completion of the Restoration, notwithstanding the occurrence of any such Casualty or Condemnation, whichever the case may be such that upon completion of the Restoration the DSC Ratio shall be at least equal to the lesser of:  the DSC Ratio existing immediately prior to the Casualty or Condemnation or 1.0x;  

(D)    Borrower shall commence the Restoration as soon as reasonably practicable, subject to delays for Force Majeure, but in no event later than the period of time required by any applicable Lease(s), REA, or any applicable zoning law, ordinance, rule or regulation, and shall diligently pursue the same to satisfactory completion;

(E)    Lender shall be reasonably satisfied that any operating deficits, including all scheduled Monthly Payments, which will be incurred with respect to the Premises as a result of the occurrence of any such Casualty or Condemnation, whichever the case may be, will be covered out of (1) the Net Proceeds, (2) the insurance coverage referred to in Section 5.1(a)(iii), if applicable, or (3) other funds of Borrower;

(F)    Lender shall be reasonably satisfied that the Restoration will be completed and the tenants will be in occupancy and open for business on or before the earliest to occur of (1) the Maturity Date, (2) the earliest date required for such completion/occupancy under the terms of any applicable Lease(s) or REA, (3) such time as may be 

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required under applicable zoning law, ordinance, rule or regulation in order to repair and restore the Premises to substantially the condition it was in immediately prior to such Casualty or to as nearly as possible the condition it was in immediately prior to such Condemnation, as applicable or (4) the expiration of the insurance coverage referred to in Section 5.1(a)(iii) unless Borrower shall have provided to Lender additional security acceptable to Lender for rent loss interruption;

(G)    the Premises and the use thereof after the Restoration will be in compliance in all material respects with and permitted under all applicable zoning laws, ordinances, rules and regulations, the Lease(s) and, if applicable, REA(s);

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

(I)    such Casualty or Condemnation, as applicable, does not result in the loss of (i) permanent access to the Premises or the related Improvements unless substitute access reasonably satisfactory to Lender is available to the Premises or (ii) parking on the Premises unless substitute parking reasonably satisfactory to Lender is available to the Premises or such loss of parking does not and could not reasonably be expected to have a Material Adverse Effect; and

(J)    such other conditions to such disbursements, in Lender's reasonable discretion, as would be customarily required by a construction lender doing business in the area where the Premises is located and making loans secured by collateral similar to the Premises, including, without limitation, receipt of lien waivers for work performed.

(ii)    Notwithstanding anything contained herein to the contrary, if the Net Proceeds exceed the Threshold Amount, all Net Proceeds shall be held by Lender and, until disbursed in accordance with the provisions of this Section 5.4(b), shall constitute additional security for the Indebtedness 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 reasonably satisfactory to Lender that (A) all materials installed and work and labor performed then to date (except to the extent that such materials, work and/or labor are to be paid for out of the requested disbursement, in which case Borrower shall submit invoices for such costs and expenses) in connection with the Restoration have been paid for in full, (B) subject to the rights of contest set forth in this Agreement, there exist no notices of pendency, stop orders, mechanic's or materialman's liens or notices of 

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intention to file same, or any other liens or encumbrances of any nature whatsoever on the Premises arising out of the Restoration unless the Contest Requirements have been satisfied, and (C) all terms and conditions of Section 5.4(b)(i) have been satisfied.  Lender shall credit Borrower with interest on the Net Proceeds (and the Net Proceeds Deficiency, if cash and if applicable) pursuant to the Escrow Interest Calculation.

(iii)    Lender must approve the plans and specifications required in connection with the Restoration before such Restoration is commenced if the estimated cost of Restoration exceeds 25% of the Indebtedness or involves any structural changes or modifications, which approval shall not be unreasonably withheld, conditioned or delayed.  

(iv)    Borrower must pay to Lender a non-refundable processing fee for disbursing the Net Proceeds equal to the greater of $5,000.00 or .25% of the amount of such Net Proceeds within sixty (60) days after Net Proceeds are received and before Lender disburses any Net Proceeds.

(v)    In no event shall Lender be obligated to make disbursements of the Net Proceeds (except as provided in Section 5.4(a) above) in excess of actual costs incurred from time to time for work in place as part of the Restoration, as certified by Borrower, minus the Casualty Retainage.  The term "Casualty Retainage" shall mean an amount equal to five percent (5%) (or such other amount reasonably determined by Lender) of the costs actually incurred for work in place as part of the Restoration, as certified by Borrower.  The Casualty Retainage shall not be released until Borrower certifies to Lender that the Restoration has been substantially completed in accordance with the provisions of this Section 5.4(b) and that all approvals necessary for the re-occupancy and use of the Premises have been obtained from all appropriate Governmental Authorities and copies thereof delivered to Lender, and Lender receives evidence reasonably 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 and Lender receives an endorsement to the Title Insurance Policy insuring the continued priority of the lien of the Mortgage which endorsement shall be reasonably acceptable to Lender.

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

(vii)    If at any time the Net Proceeds or the undisbursed balance thereof shall not, in the reasonable opinion of Lender, be sufficient to pay in full the balance of the costs which are reasonably estimated to be incurred in connection with the completion of the Restoration, Borrower shall demonstrate to the reasonable satisfaction of Lender the availability of sufficient funds of Borrower to satisfy such deficiency or, if Borrower is not able to so demonstrate, at Lender's election upon written Notice to Borrower, Borrower shall deposit the 

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deficiency in the form of cash, a letter of credit acceptable to Lender, or such other security acceptable to Lender (the "Net Proceeds Deficiency") with Lender not later than sixty (60) days after the date of said Notice and before any further disbursement of the Net Proceeds shall be made.  Any Net Proceeds Deficiency deposited with Lender shall be held by Lender as additional security for the Loan 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 5.4(b), the Net Proceeds Deficiency shall constitute additional security for the Indebtedness and other obligations of Borrower under the Loan Documents.

(viii)    The excess, if any, of the Net Proceeds and the remaining balance, if any, of the Net Proceeds Deficiency deposited with Lender, after the Restoration has been substantially completed in accordance with the provisions of this Section 5.4(b), and the receipt by Lender of evidence reasonably satisfactory to Lender that all costs incurred in connection with the Restoration have been paid in full and all work performed in connection with the Restoration has been completed, shall be remitted by Lender to Borrower, provided no Event of Default shall have occurred and be continuing under the Loan Documents.

(c)    To the extent any of the conditions for Restoration set forth in Section 5.4(b) above are not satisfied, Lender may elect to either (i) permit the Restoration to occur notwithstanding the fact that certain of such conditions for Restoration have not been satisfied (in which case Lender will make the Net Proceeds available as set forth above); or (ii) retain and apply the Net Proceeds toward the payment of the Indebtedness whether or not then due and payable, without Prepayment Premium or other prepayment penalty or premium so long as no Event of Default then exists, in such order, priority and proportions as Lender in its sole discretion shall deem proper.  If Lender elects item (i) of this paragraph above, after completion of the Restoration, any excess Net Proceeds pursuant to Section 5.4(b)(viii) shall be returned to Borrower.  If the Net Proceeds are equal to or greater than Twenty-five Million and 00/100 Dollars ($25,000,000.00) and Lender elects item (ii) above, Lender, in its sole and absolute discretion, may declare the entire Indebtedness to be immediately due and payable provided, however, that if no Event of Default then exists, no Prepayment Premium shall be due.  Irrespective of whether any Event of Default then exists, if Lender elects option (ii) above and the Loan is in the Open Period, no Prepayment Premium or other prepayment penalty or premium shall be due and payable in connection with any partial or prepayment in full of the Indebtedness.

(d)    Should a Casualty occur after foreclosure or sale proceedings have been instituted, the Insurance Proceeds, if not applied to Restoration, shall be used to pay (i) the Indebtedness then due and owing in the event of a non-judicial sale in such priority as Lender elects, or (ii) the amount due in accordance with any decree of foreclosure or deficiency judgment that may be entered in connection with such proceedings, and the 

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balance, if any, shall be paid to the owner of the equity of redemption if it shall then be entitled to the same, or otherwise as any court having jurisdiction may direct.

ARTICLE VI.  RESERVE FUNDS

Section 6.1    Tax and Insurance Escrow Fund.  Following an Event of Default, Borrower shall deposit with Lender, on each Payment Date, an amount equal to one-twelfth (1/12) of the sums calculated by Lender (plus a reasonable "cushion") for payment of: (i) the estimated annual taxes and assessments assessed or levied against the Premises, and (ii) the estimated annual premiums for property insurance required by the Loan Documents, excluding commercial general liability insurance (collectively, the "Tax and Insurance Escrow Fund").  Lender shall use the Tax and Insurance Escrow Fund to pay the taxes, assessments and insurance premiums, as applicable when the same become due; or, upon Borrower's prior written request (which must be received by Lender at least thirty (30) days prior to the pertinent due date of the taxes, assessments or insurance premiums, as applicable), reimburse Borrower in connection with Borrower's payment of taxes, assessments and insurance premiums, as applicable, upon receipt of written evidence of payment of same which is acceptable to Lender.  Borrower shall timely procure and deliver to Lender, in advance of the due date, such statements, invoices or bills for such foregoing charges.  If the total payments made by Borrower under this Section 6.1 exceed the amount of payments actually made by Lender for taxes, assessments and insurance premiums, such excess shall be credited by Lender on subsequent Tax and Insurance Escrow Fund deposits to be made by Borrower.  If, however, the Tax and Insurance Escrow Fund is insufficient to pay the taxes, assessments and insurance premiums when the same shall be due and payable, Borrower will pay to Lender any amount necessary to make up the deficiency, within three (3) Business Days after Lender has notified Borrower of such deficiency, but in all events prior to the date when payment of such taxes, assessments and insurance premiums shall be delinquent, subject to Borrower's right to contest any such taxes or assessments, provided the Contest Requirements are satisfied.  

Section 6.2    Property Reserves Escrow Fund.  To the extent applicable, Borrower shall deposit with Lender certain funds to be held by Lender as required by and in accordance with the provisions of Section 8.1(b) hereof and Schedule IV attached hereto.

Section 6.3    Miscellaneous.

(a)    Borrower grants to Lender a first-priority perfected security interest in each of the Reserve Funds and any and all monies now or hereafter deposited in each Reserve Fund as additional security for payment of the Indebtedness.  Until disbursed, expended or applied in accordance herewith, the Reserve Funds shall constitute additional security for the Indebtedness.

(b)    In no event shall Lender be obligated to disburse funds from a Reserve Fund if an Event of Default shall exist.  During the continuance 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 

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any amounts or obligations then due under the Loan Documents or Environmental Indemnity in any order in its sole discretion (in the event Lender has accelerated the Loan, any such application of such sums to the payment of the Indebtedness shall require payment of a Prepayment Premium subject to and in accordance with the terms of this Agreement), apply such funds for the purposes for which they were held or hold such funds in a non-interest bearing account as additional security for the Loan; provided, however, that if there is an Event of Default resulting in a public sale of the Premises, or if Lender otherwise acquires the Premises after an Event of Default, Borrower shall be entitled to a credit of the tax portion of the Tax and Insurance Escrow Fund against any delinquent or accrued ad valorem taxes accrued or owing prior to the Conveyance Date with respect to the Premises.

(c)    The Reserve Funds shall not constitute trust funds and may be commingled with other monies held by Lender.  Nothing contained herein shall cause Lender to be deemed a trustee of any Letter of Credit, any renewal thereof or any proceeds therefrom.  

(d)    The Reserve Funds shall be held without any allowance for interest unless otherwise specifically set forth in Schedule IV attached hereto.  If interest is allowed, all earnings of interest on a Reserve Fund shall be added to and become a part of such Reserve Fund and shall be disbursed in the same manner as other monies deposited in such Reserve Fund unless otherwise specified in Schedule IV.

(e)    Upon satisfaction of the Mortgage, any amounts remaining in the Reserve Funds shall be promptly returned to Borrower.  

(f)    Lender shall not be liable for any loss sustained on the investment of any funds constituting the Reserve Funds provided that Lender has deposited the Reserve Funds with a Qualified Institution.
 

ARTICLE VII.  DEFAULTS

Section 7.1    Events of Default.  

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

(i)    failure to pay when due any principal, interest, Prepayment Premium or other Indebtedness, taxes or assessments or insurance premiums required pursuant to the Loan Documents or the Environmental Indemnity, and such failure shall have continued for five (5) days; provided, however that Lender shall give Borrower written Notice specifying such default with respect to the first such default in any calendar year and any subsequent occurrence of such default in any calendar year shall constitute an Event of Default without Notice by Lender to Borrower; or

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Notwithstanding the above, in the event that Borrower fails to pay 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 Loan Documents, then an Event of Default shall immediately occur without Notice by Lender to Borrower.

Further notwithstanding the above, in the event that a failure to pay taxes or assessments or insurance premiums in excess of five (5) days after the due date results in (i) a Material Adverse Effect, (ii) a failure to comply with Section 5.1(a), or (iii) subject to Borrower's right to contest any such tax or assessment, provided the Contest Requirements are satisfied, the filing of a tax lien against the Premises, then an Event of Default shall occur without Notice by Lender to Borrower.

Further notwithstanding the above as it relates solely to taxes, assessments and insurance premiums, to the extent that a Tax and Insurance Escrow Fund has been established in accordance with Article VI of this Agreement and Borrower has fully complied with all terms and conditions of Article VI relating to same, then an Event of Default shall not occur for Lender's failure to apply any of said Tax and Insurance Escrow Fund amounts.

In no event shall Borrower's failure to pay when due any principal, interest, Prepayment Premium or other Indebtedness, taxes or assessments or insurance premiums required pursuant to the Loan Documents or the Environmental Indemnity be subject to Force Majeure.

(ii)    Borrower, Interest Owner or Guarantor admits in writing its inability to pay its debts or voluntarily brings or acquiesces to any of the following:  (A) any action for dissolution, act of dissolution or dissolution or the like of Borrower, Interest Owner(s) or any Guarantor under the Federal Bankruptcy Code as now or hereafter constituted; (B) the filing of a petition or answer proposing the adjudication of Borrower, Interest Owner(s) or any Guarantor as a bankrupt or its reorganization or arrangement, or any composition, readjustment, liquidation, dissolution or similar relief with respect to it pursuant to any present or future federal or state bankruptcy or similar law; (C) the appointment by order of a court of competent jurisdiction of a receiver, trustee or liquidator of the Premises or any part thereof or of Borrower, Interest Owner(s) or any Guarantor or of substantially all of the assets of Borrower, Interest Owner or any Guarantor; or (D) a transfer in fraud of creditors or an assignment for the benefit of creditors, subject to the rights granted Borrower to replace any such Guarantor pursuant to subparagraph (viii) below; or

(iii)    one or more of the items set forth in the foregoing subparagraph (ii) above occur which were not either voluntarily brought or acquiesced in by Borrower, Interest Owner(s) or any Guarantor, and which are not 

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discharged or dismissed within ninety (90) days after the action, filing or appointment, as the case may be; or 

With respect to the matters in subparagraph (ii) above and this subparagraph (iii) for an Interest Owner(s) only, no Event of Default shall occur until a claim or right is asserted against Borrower or the Premises which delays or otherwise adversely affects Lender's rights, remedies, or interests granted under the Loan Documents (whether or not such assertion is successful).

(iv)    with respect to the matters not described in any other subparagraphs of this section, failure to duly observe or perform or the breach of any covenant, condition or agreement of the Borrower or any Guarantor contained in the Loan Documents or in the Environmental Indemnity, and such failure shall have continued for thirty (30) days after Notice specifying such failure is given by Lender to Borrower, subject to the rights granted Borrower to replace any such Guarantor pursuant to subparagraph (viii) below; or  

If any failure to observe or perform under this subparagraph (iv) shall be of such nature that it cannot be cured or remedied within thirty (30) days, Borrower and/or Guarantor shall be entitled to a reasonable concurrent period of time to cure or remedy such failure (not to exceed one hundred twenty (120) days following the giving of Notice), provided Borrower and/or Guarantor commences the cure or remedy thereof within the thirty (30) day period following the giving of Notice and thereafter proceeds with diligence, as determined by Lender, to complete such cure or remedy.

(v)    the failure of Borrower to duly observe or perform or the breach of any of the covenants, conditions and agreements of the Borrower contained in Section 4.2.3 of this Agreement or in Section 3.1 of the Mortgage and to cure such failure within ten (10) days following Borrower's receipt of Notice of such failure; provided, however, that Borrower shall only be granted said ten (10) day cure period if (1) the failure to observe or perform is a curable event, (2) the Transfer does not have a Material Adverse Effect, and (3) the granting of said cure period will not have a Material Adverse Effect as reasonably determined by Lender; or

(vi)    any representation (other than fraud or willful misrepresentation) when made by or on behalf of Borrower, Interest Owner(s) or any Guarantor regarding the Premises, the making or delivery of any of the Loan Documents or the Environmental Indemnity or in any written information provided by or on behalf of Borrower, Interest Owner(s) or any Guarantor in connection with the Loan shall prove to be untrue or inaccurate and in Lender's reasonable determination, such untruth or inaccuracy has a Material Adverse Effect; or  

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(vii)    fraud or willful misrepresentation by or on behalf of Borrower, Interest Owner(s) or any Guarantor regarding the Premises, the making or delivery of any of the Loan Documents or the Environmental Indemnity or in any written information provided by or on behalf of Borrower, Interest Owner(s) or any Guarantor in connection with the Loan; or

(viii)    subject to the provisions of this Agreement, the death or incapacitation of any Guarantor (or any Person(s) who is personally liable for any obligation under the Loan Documents or the Environmental Indemnity) or any other Event of Default occurs with respect to Guarantor under the foregoing clauses (ii), (iii), (iv) and (vii) (such Guarantor, a "Defaulting Guarantor") unless (a) the remaining Guarantor(s), if any, have a net worth or an aggregate net worth, as the case may be, equal to or greater than an amount equal to:  the net worth of said remaining Guarantor(s) as of the Closing Date plus the net worth of the decedent or incapacitated Guarantor or Defaulting Guarantor, as applicable, as of the Closing Date and affirm in writing the continued joint and several liability under the Guaranty within ninety (90) days of the death or incapacitation of, or Event of Default attributable to, such Guarantor, (b) a substitute Guarantor(s) having an interest in Borrower and otherwise reasonably acceptable to Lender having a net worth or an aggregate net worth, as the case may be, equal to or greater than the net worth of the decedent or incapacitated Guarantor or Defaulting Guarantor, as applicable, as of the Closing Date shall become liable by an assumption agreement acceptable to Lender within ninety (90) days of the death or incapacitation of, or Event of Default attributable to, such Guarantor, (c) the remaining Guarantor(s) and a substitute Guarantor(s) having interest in Borrower and otherwise reasonably acceptable to Lender collectively have a net worth or an aggregate net worth, as the case may be, equal to or greater than an amount equal to:  the net worth of said remaining Guarantor(s) as of the Closing Date plus the net worth of the decedent or incapacitated Guarantor, or Defaulting Guarantor, as applicable as of the Closing Date and affirm in writing the joint and several liability under the Guaranty within ninety (90) days of the death or incapacitation of, or Event of Default attributable to, such Guarantor (Lender must receive a background and credit check and an OFAC report, both acceptable to Lender and at Borrower's cost, for any substitute Guarantor(s)); or (d) Borrower provides additional collateral for the Loan to Lender's reasonable satisfaction; or

(ix)    the failure of Borrower to comply with the provisions of the Required Entity Status and to cure such failure to comply within ten (10) days following Borrower's receipt of Notice from Lender of such failure; provided, however, that Borrower shall only be granted said ten (10) day cure period if the failure to maintain the Required Entity Status is a curable event and the granting of said cure period will not have a Material Adverse Effect as reasonably determined by Lender; or

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(x)    the failure of Borrower to duly observe, perform or satisfy the obligations of the Borrower contained in Section 3.1.9 of this Agreement or the failure of Guarantor, if any, to duly observe, perform or satisfy the obligations of Guarantor contained in paragraphs 5(e)-(h) of the Guaranty;

(b)    Upon the occurrence of an Event of Default, in each and every such case, the whole of the principal balance of the Loan shall, at the option of the Lender and without further notice to Borrower, become immediately due and payable together with accrued interest thereon, a Prepayment Premium (unless the Loan term is in the Open Period) and all other Indebtedness, and whether or not Lender has exercised said option, interest shall accrue on the entire principal balance of the Loan and any accrued interest, Prepayment Premium or other Indebtedness then due, at the Default Rate until fully paid or if Lender has not exercised said option, for the duration of any Event of Default.  Borrower agrees that if Lender accelerates the whole or any part of the principal balance of the Loan after the occurrence of an Event of Default but prior to the Open Period, Borrower waives any right to prepay the principal sum hereby secured in whole or in part without premium and agrees to pay, as yield maintenance protection and not as a penalty, the Prepayment Premium.

Section 7.2    Remedies.  To the extent permitted by applicable law, upon the occurrence of an Event of Default which is continuing, Lender shall have the rights and remedies afforded under applicable law and hereunder, in the Mortgage, the Environmental Indemnity and the other Loan Documents, including acceleration.

Section 7.3    Payment of Costs; Remedies Cumulative; Waivers.

(a)    Borrower agrees that all reasonable costs, charges and expenses, including but not limited to, reasonable attorneys' fees and costs, incurred or expended by Trustee or Lender arising out of or in connection with (i) any default, breach or failure by Borrower under the Loan Documents, (ii) servicing of the Loan (other than routine loan servicing performed in the ordinary course of business and for the performance of which Lender is not routinely reimbursed by other borrowers in the ordinary course of Lender's business), including administrative or service fees assessed by Lender pursuant to a Borrower consent request, or (iii) the exercise, enforcement, compromise, defense, litigation, or settlement of any of Lender's rights or remedies under the Loan Documents or relating to the Loan or the Indebtedness, including any action, proceeding or hearing, legal, equitable or quasi-legal, in any way affecting or pertaining to the Loan Documents, the Environmental Indemnity, or the Premises, shall be promptly paid by Borrower upon written Notice from Lender.  All such sums not promptly paid by Borrower shall be added to the Indebtedness secured hereby and shall bear interest at the Default Rate from the date of such advance until paid and shall be due and payable on demand.  

(b)    Borrower hereby agrees that upon the occurrence of an Event of Default and the acceleration of the Indebtedness, to the full extent that such rights can be lawfully waived, Borrower hereby waives and agrees not to insist upon, plead, or in any 

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manner take advantage of, any rights of redemption, valuation, appraisement, notice of acceleration, any stay of execution, extension, exemption, homestead, marshaling or moratorium law or any law providing for the valuation or appraisement of all or any part of the Premises prior to any sale or sales thereof under any provision of the Mortgage or before or after any decree, judgment or order of any court or confirmation thereof, or claim or exercise any right to redeem all or any part of the Premises so sold and hereby expressly waives to the full extent permitted by applicable law on behalf of itself and each and every Person acquiring any right, title or interest in or to all or any part of the Premises, all benefit and advantage of any such laws which would otherwise be available to Borrower or any such Person, and agrees that neither Borrower nor any such Person will invoke or utilize any such law to otherwise hinder, delay or impede the exercise of any remedy granted or delegated to Lender herein but will permit the exercise of such remedy as though any such laws had not been enacted.  Borrower hereby further expressly waives to the full extent permitted by applicable law on behalf of itself and each and every Person acquiring any right, title or interest in or to all or any part of the Premises any and all rights of redemption from any sale or any order or decree of foreclosure obtained pursuant to provisions of the Mortgage.

(c)    All rights and remedies granted to Trustee or Lender in the Loan Documents shall be in addition to and not in limitation of any rights and remedies to which it is entitled in equity, at law or by statute, and the invalidity of any right or remedy herein provided by reason of its conflict with applicable law or statute shall not affect any other valid right or remedy afforded to Trustee or Lender.  No waiver of any default or Event of Default under any of the Loan Documents shall at any time thereafter be held to be a waiver of any rights of the Trustee or Lender hereunder, nor shall any waiver of a prior Event of Default or default operate to waive any subsequent Event of Default or default.  All remedies provided for in the Loan Documents are cumulative and may, at the election of Lender, be exercised alternatively, successively or concurrently.  No act of Trustee or Lender shall be construed as an election to proceed under any one provision herein to the exclusion of any other provision or to proceed against one portion of the Premises to the exclusion of any other portion.

ARTICLE VIII.  ASSIGNMENT OF LEASES AND RENTS

Section 8.1    License to Collect Rents.

(a)    Pursuant to and in accordance with the terms of the Mortgage, Borrower has appointed Lender the true and lawful attorney of Borrower with full power of substitution and with power for it and in its name, place and stead, to demand, collect, and give receipts and releases for any and all assigned Rents effective upon an Event of Default.  The terms of the Utah Uniform Assignment of Rents Act are incorporated herein by reference, with the parties acknowledging that the assignment contained therein is a present and absolute assignment and not a collateral assignment of Borrower's interest in the Rents (as defined herein and within the meaning of the Utah Uniform Assignment of Rents Act, Utah Code Annotated Section 57-26-101, et seq.) described therein.  Prior to 

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the occurrence of an Event of Default, Lender hereby grants to Borrower the revocable license to enforce all provisions contained in the Lease(s) and collect and use all Rents, as the same become due and payable, but in any event for not more than one calendar month in advance, provided, however, Borrower's use of such Rents shall be subject to the Recourse Obligations.  Such license shall not be applicable to any Extraordinary Rental Payments, all of which shall be paid directly to Lender.  Lender shall be entitled to hold Extraordinary Rental Payments it receives in an account as additional security for the Note and the funds shall be governed by the terms set forth below.  Borrower shall render such accounts of collections as Lender may reasonably require.  The license herein granted to Borrower shall be revoked immediately and automatically, without further action or documentation, upon the occurrence of an Event of Default; and upon written notice of an Event of Default at any time hereafter given by Lender to any lessee, all Rents thereafter payable and all agreements and covenants thereafter to be performed by any such lessee shall be paid and performed by such lessee directly to Lender in the same manner as if the above license had not been granted, without prosecution of any legal or equitable remedies under the Mortgage.  Any lessee of the Premises or any part thereof is authorized and directed to pay to Borrower any Rent herein assigned currently for not more than one calendar month in advance, but shall make all Extraordinary Rental Payments to Lender and any payment so made, other than Extraordinary Rental Payments, prior to receipt by such lessee of the aforementioned notice shall constitute a full acquittance to lessee therefore.  In the event Lender has revoked Borrower's license to collect Rents upon the occurrence of an Event of Default and Lender, in Lender's sole discretion, elects to waive said Event of Default, then provided no Event of Default subsequently occurs, any Rents (other than Extraordinary Rental Payments) collected by Lender which are in excess of those applied to pay in full any Monthly Payment(s) and any deposit(s) of Reserve Funds then due from Borrower under the terms of the Loan Documents and/or any requirements resulting as a condition to any waiver by Lender of the Event of Default shall be promptly paid to Borrower.

(b)    The entire amount of an Extraordinary Rental Payment shall be delivered to Lender.  At Lender's option, such Extraordinary Rental Payments shall be held by Lender without allowance for interest (hereinafter referred to as the "Extraordinary Rental Escrow") and disbursed or applied as hereinafter provided.  So long as no Event of Default then exists under the Loan Documents and the Extraordinary Rental Escrow has not otherwise been applied pursuant to the Loan Documents in connection therewith, Lender shall disburse funds from time to time from the Extraordinary Rental Escrow as follows: (i) funds resulting from lease termination payments shall be disbursed for costs and expenses incurred by Borrower for tenant improvements and leasing commissions for Lease(s) approved by Lender, at a combined rate per square foot of net rentable area leased as reasonably determined by Lender; provided, however, such sums shall be disbursed solely for tenant improvements and leasing commissions for the re-leasing of any tenant spaces; (ii) funds resulting from any prepaid rental payments in excess of one regular monthly rental payment under the Lease(s) shall be disbursed to Borrower on the Payment Date in such amounts as become due monthly under the applicable Lease(s); and (iii) in Lender's sole discretion, funds 

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resulting from purchase option exercise payments shall be held as additional security for the Loan or applied to the Indebtedness, together with the payment of a Prepayment Premium, as applicable.  Such disbursements of funds from the Extraordinary Rental Escrow shall be conditioned upon Borrower furnishing to Lender a written request for each such disbursement together with those items as Lender deems reasonably necessary in its discretion.  Funds in the Extraordinary Rental Escrow shall be subject to the applicable terms of Article VI of this Agreement.

Section 8.2    Enforcement; Lender Liability    .  Trustee and Lender shall be under no obligation to enforce any of the rights or claims assigned to it under the Mortgage or to perform or carry out any of the obligations of the lessor under any of the Lease(s) and does not assume any of the liabilities in connection with or arising out of the covenants and agreements of Borrower in the Lease(s); and Borrower covenants and agrees that it will faithfully perform all of the obligations which are the responsibility of Borrower under any and all of the Lease(s).  All Security Deposits collected by Borrower shall be maintained in accordance with all applicable Legal Requirements and, if cash and required under applicable law to be maintained in a separate account, shall be deposited by Borrower in a Qualified Institution.  Except to the extent that the same is caused solely as a result of Lender's gross negligence or willful misconduct, should Trustee or Lender incur any liability, loss or damage under the Lease(s) or under or by reason of the assignment of Lease(s), or in the defense of any claims and demands whatsoever which may be asserted against Trustee or Lender by reason of any alleged obligations or undertakings on its part to perform or discharge any of the terms, covenants or agreements contained in any of the Lease(s), the amount thereof, including costs, expenses and reasonable attorneys' fees and costs, shall be added to the Indebtedness.

Section 8.3    Lease(s) Approval    .

(a)    Other than as provided in Section 8.3(b) below, Borrower covenants not to alter, modify, amend or change the terms of any of the Lease(s) or give any consent or permission or exercise any option required or permitted by the terms thereof or waive any obligation required to be performed by any lessee or cancel, renew (except in accordance with the specific renewal terms of Lease(s) which have been approved in writing by Lender) or terminate any of the Lease(s) or accept a surrender thereof or enter into Lease(s) after the Closing Date without the prior written consent of Lender, not to be unreasonably withheld, conditioned or delayed, and Borrower will not make any further transfer or assignment thereof, or attempt to pledge, assign or encumber any of the Lease(s) or Rents or other amounts payable thereunder.  Borrower further covenants to deliver to Lender, promptly upon receipt thereof, copies of any and all demands, claims and notices of default received by Borrower from any lessee under any of the Lease(s) assigned herein or of any default beyond any applicable notice or cure period thereunder by lessee.  Borrower shall enforce the Lease(s) and all remedies available to Borrower against the lessees thereunder in case of default beyond any applicable notice or cure period under the Lease(s) by lessees.

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(b)    Notwithstanding the foregoing and subject to Lender's lease approval rights outlined in Schedule IV attached hereto, if any, Borrower shall be permitted, in the ordinary course of business, to (i) enter into, extend, renew, amend or modify (but not terminate) any Lease which covers less than twenty percent (20%) of the net rentable area of space at the Premises; and (ii) consent to assignment by lessee or other consents in accordance with and pursuant to the terms of any Lease which covers less than twenty percent (20%) of the net rentable area of space at the Premises; all without Lender's prior written consent, provided that all of the following conditions are satisfied:

(I)    No Event of Default then exists under the Loan Documents;

(II)    The Lease contains no purchase option, right of first refusal to purchase or right of first offer to purchase all or a portion of the Premises;

(III)    A new Lease must contain terms which are commercially reasonable as determined by Borrower or Manager in its prudent business judgment;

(IV)    Lease Modifications (A) are at a market rent; (B) are commercially reasonable as determined by Borrower or Manager in its prudent business judgment; and (C) do not involve the relocation of a tenant to space not located within the Premises;

(V)    The new Lease or Lease Modification, does not or will not cause a default under any Lease(s), REA or any other document or instrument (recorded or otherwise) in any way burdening or affecting the Premises; and

(VI)    The lessee's business does not and will not involve (i) the presence of Hazardous Substances on the Premises, including but not limited to businesses engaged in the processing of dry cleaning on-site, (ii) illegal activities, or (iii) the presence of or activities related to illegal controlled substances.

(c)    Borrower shall furnish to Lender a true and complete copy of each Lease and Lease Modification, hereafter made by Borrower with respect to the Premises within thirty (30) days after delivery of each such Lease or Lease Modification by the parties thereto together with an original tenant estoppel certificate on Lender's form thereof.  The delivery by Borrower of each Lease and Lease Modification that does not require Lender's consent under the terms of this Section 8.3 shall constitute a representation by Borrower that the conditions contained in this Section 8.3 have been complied with.

(d)    With regard to those Lease(s) or Lease Modification(s) for which Lender's consent is required, (A) if:  (i) Borrower provides Lender with a written request 

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for consent to such Lease or Lease Modification and the request is accompanied by:  (I) a copy of the Lease or Lease Modification; and (II) copies of the most recently completed balance sheets and income statements for such lessee on any Lease(s) that covers 20% or more of the total net rentable area, to the extent reasonably available; (ii) the request is delivered to Lender by overnight delivery and otherwise in accordance with the Notice provisions and states the following at the top of the first page in bold lettering "LENDER'S RESPONSE IS REQUIRED WITHIN TEN (10) DAYS OF RECEIPT OF THIS NOTICE PURSUANT TO THE TERMS OF A LOAN AGREEMENT BETWEEN THE UNDERSIGNED AND LENDER"  (Lender and Borrower hereby agree that such ten (10) day period shall commence on the date of Lender's actual receipt of all information reasonably required by Lender in connection with Lender's review of said Lease or Lease Modification); then in the event Lender fails to either approve such request or disapprove such request (such disapproval stating the reasons for such disapproval) for more than ten (10) days after receipt thereof, the action that was the subject of said request shall be deemed approved.  Lender may condition its consent to any Lease or Lease Modification on Lender's receipt of a fully executed Subordination, Non-Disturbance and Attornment Agreement, in form and substance satisfactory to Lender; and (B) if Borrower desires an Escrow Release for said Lease(s) or Lease Modification(s) in accordance with Schedule IV hereof, if applicable, said Escrow Release request must accompany the request for Lender's approval of the Lease(s) or Lease Modification(s).

(e)    Notwithstanding the above, so long as no Event of Default exists under the Loan Documents, Borrower shall have the right to terminate Lease(s) under ten percent (10%) of the net rentable area of the Premises without Lender's prior written consent in the event that the lessee under the Lease is in material default of its Lease and provided the following conditions are met:  (i) after giving effect of the Lease termination, the DSC Ratio is at least 1.00x; and (ii) after giving effect of the Lease termination, the Premises is at least seventy-five percent (75%) occupied with executed Lease(s) approved by Lender or otherwise complying with Section 8.3(b) of this Agreement and in effect on the Premises, with no uncured defaults.

(f)    If requested by Borrower or any tenant of the Premises, Lender will provide lessees non-disturbance agreement(s) in form and substance reasonably acceptable to Lender.  Borrower hereby acknowledges that in the course of obtaining subordination, non-disturbance and attornment agreements, non-disturbance agreements or documents of similar nature (hereinafter "Lessee Documents") either prior to or following the Closing Date from lessees in connection with the Lease(s) of the Premises, Lender may execute agreements which (i) may contain terms, conditions or restrictions on such lessees that are not consistent with the Loan Documents with regard to alterations, modifications, amendments or changes to such Lease(s), or (ii) may contain other provisions different from and in some cases in conflict with the terms of the Loan Documents.  Borrower further acknowledges and agrees that Borrower's performance of its obligations under the Loan Documents are a material inducement to Lender's willingness to enter into such Lessee Documents and Borrower remains obligated to 

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perform in accordance with all of the terms, conditions, restrictions and provisions of the Loan Documents notwithstanding the terms of any Lessee Documents.

Section 8.4    Rights of Lender.  Following the occurrence of an Event of Default that is continuing, Lender may as attorney-in-fact or agent of Borrower or in its own name as Lender and under the powers granted herein extend, modify, or terminate (to the extent permitted by law or the terms of the specific Lease) any then existing Lease(s) or subleases and make new Lease(s), which extensions, modifications or new Lease(s) may provide for terms to expire, or for options to lessees to extend or renew terms to expire, beyond the Maturity Date and the issuance of a deed or deeds to a purchaser or purchasers at a foreclosure sale, it being understood and agreed that any such Lease(s), and the options or other such provisions to be contained therein, shall be binding upon Borrower and all Persons whose interests in the Premises are subject to the lien of the Mortgage and shall be binding also upon the purchaser or purchasers at any foreclosure sale, notwithstanding any redemption from sale, discharge of the Indebtedness secured by the Mortgage, satisfaction of any foreclosure decree, or issuance of any certificate of sale or deed to any purchaser.  

ARTICLE IX.  SPECIAL PROVISIONS

Section 9.1    Fees and Taxes.  If by the laws of the United States of America or of any state or governmental subdivision having jurisdiction over Borrower or of the Premises or of the Loan evidenced by the Loan Documents or any amendments or modifications thereof, any tax or fee is due or becomes due or is imposed upon Lender in respect of the issuance of the Note or the making, recording and registration of the Mortgage or otherwise in connection with the Loan Documents, the Environmental Indemnity or the Loan, except for Lender's income or franchise tax, Borrower covenants and agrees to pay such tax or fee in the manner required by such law, and to hold harmless and indemnify Trustee, Lender, and their successors and assigns, against any liability incurred by reason of the imposition of any such tax or fee. 

ARTICLE X.  RECOURSE OBLIGATIONS

Section 10.1    Non-Recourse.  

(A)        Notwithstanding any provision to the contrary in this Agreement, the other Loan Documents or the Environmental Indemnity and except as otherwise provided for in this Section 10.1, (i) the liability of Borrower under the Loan Documents shall be limited to the interest of Borrower in the Premises and the Rents; and (ii) in the event of any exercise of remedies under the Loan Documents, no judgment for any deficiency upon the Indebtedness evidenced by the Loan Documents shall be sought or obtained by Lender against Borrower.  Nothing herein shall in any manner limit or impair (a) the existence of the Indebtedness, or the lien of the Mortgage or enforcement of the Loan Documents and the Environmental Indemnity pursuant to the terms thereof, or (b) the obligations of any indemnitor or Guarantor, if any.

(B)    Notwithstanding the foregoing limitation, Borrower shall be personally liable to Lender for any actual loss or damage to Lender arising from any of the following:

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(a)    (i) the failure to pay any of the taxes, assessments or similar charges specified in the Loan Documents, or (ii) the failure to maintain insurance in compliance with the provisions of the Loan Documents, or (iii) to the extent same have been disbursed to Borrower in accordance with the Loan Documents, Borrower's failure to apply Insurance Proceeds or Condemnation Proceeds in compliance with the provisions of the Loan Documents; 

Notwithstanding the above, Borrower's personal liability for the specific amounts of any unpaid tax installments, assessments or similar charges or insurance premiums, only, shall be limited to the amount of Rents received by Borrower for the nine (9) months preceding an Event of Default of which Borrower has received written Notice and thereafter; but less any such Rents applied to (A) payment of principal, interest and other charges when due under the Loan Documents, or (B) payment of Operation Expenses provided that Borrower has furnished Lender with evidence reasonably satisfactory to Lender of the Operation Expenses (including market-based management and leasing fees) and payment thereof.

(b)    breach of the representations, warranties and covenants in the Environmental Indemnity;  

(c)    physical waste of the Premises caused by the gross negligence or willful misconduct of Borrower, Guarantor or any of their respective Affiliates or Manager which materially damages or materially reduces the value of the Premises;  

(d)    any Rents which Borrower receives after receipt of written Notice of, and during the continuance of an Event of Default under the Loan Documents which are not applied to (A) payment of principal, interest and other charges when due under the Loan Documents or (B) payment of Operation Expenses (including market-based management and leasing fees);  

(e)    any Security Deposits or other refundable deposits or prepaid Rents (together with any interest required by law) not applied in accordance with the terms of the Lease(s) or not turned over to Lender upon conveyance of the Premises to Lender pursuant to foreclosure or power of sale or by a deed acceptable to Lender; 

(f)    misapplication or misappropriation by or on behalf of Borrower or Guarantor of tax reserve accounts, tenant improvement reserve accounts, Reserve Funds disbursements or other similar sums paid to or held by Borrower or any other Person(s) (other than Lender) in connection with the operation of the Premises; 

(g)    any fraud or willful misrepresentation by or on behalf of Borrower, Interest Owner or any Guarantor regarding the Premises, the making or delivery of any of the Loan Documents or in any materials or information provided by or on behalf of Borrower, Interest Owner or Guarantor, if any, in connection with the Loan; 

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(h)    the loss of Lender's perfection or priority of its security interest in Personal Property covered under any UCC financing statement due to Borrower's failure to notify Lender as provided for in Section 4.1.3 of this Agreement; 

(i)    the filing of a mechanic's lien affecting the Premises other than a mechanic's lien affecting the Premises for which Borrower has complied with the Contest Requirements; and 

(j)    all legal costs and expenses (including reasonable attorneys' fees) reasonably incurred by Lender in connection with litigation or other legal proceeding involving the collection or enforcement of the Loan or preservation of Lender's rights under the Loan Documents, other than those customarily incurred by a lender in realizing upon its lien in an uncontested foreclosure sale after an undisputed default, but only to the extent (a) Lender is the prevailing party in such litigation, legal proceeding and enforcement and, (b) Borrower, Guarantor or any Affiliate of Borrower or Guarantor acts or attempts to prevent, impede or delay such litigation, legal proceeding, and enforcement action and such act or attempted act is held by a court having jurisdiction to be (1) frivolous, or (2) not raised or asserted in good faith.

Notwithstanding anything contained in the language above as it relates solely to taxes, assessments and insurance premiums, to the extent that a Tax and Insurance Escrow Fund has been established in accordance with Article VI of this Agreement and Borrower has fully complied with all terms and conditions of Article VI relating to same, then Borrower shall not be personally liable for Lender's failure to apply any of said Tax and Insurance Escrow Fund amounts.

(C)    Notwithstanding anything to the contrary in the Loan Documents, the limitation on liability contained in Section 10.1(A) SHALL BECOME NULL AND VOID and shall be of no further force and effect and Borrower shall be fully and personally liable for the payment of principal, interest, Prepayment Premium and all other Indebtedness and the liabilities and obligations under the Loan Documents, and Lender shall have full recourse thereon against Borrower (together with the obligations set forth in Section 10.1(B), the "Recourse Obligations"), in the event:

(x)    of a Transfer (other than a Permitted Transfer or otherwise expressly approved by Lender (including a Release)) which results in a Transfer (other than a condemnation or a lien being contested) of all or any portion of the Premises or a change of Control of Borrower; 

(y)    Borrower's procurement of subordinate financing or mezzanine financing except as expressly permitted by the terms of this Agreement; 

(z)    all or any portion of the Premises is operated as or converted to a cooperative or condominium form of ownership; or 

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(aa)    the Premises shall become an asset in a bankruptcy or insolvency proceeding or a petition or answer seeking any reorganization, arrangement, composition, readjustment, liquidation, dissolution or similar relief under the Bankruptcy laws of the United States or under any other applicable federal, state or other statute or law (collectively, a "Proceeding") except to the extent such is an involuntary Proceeding in which Borrower, Guarantor, and/or its Affiliates have not joined, colluded, or acquiesced nor solicited petitioners for the filing of such Proceeding.

Section 10.2    Release of Liability.  Except for Borrower's obligations under the Environmental Indemnity as set forth therein and except for any loss or damage to Lender arising from any fraud or willful misrepresentation by or on behalf of Borrower, Interest Owner or any Guarantor regarding the Premises, the making or delivery of any of the Loan Documents or in any materials or information provided by or on behalf of Borrower, Interest Owner or any Guarantor in connection with the Loan, Borrower shall be completely relieved of all liability under the Loan Documents upon payment in full of the Indebtedness evidenced by the Loan Documents.

ARTICLE XI.  MISCELLANEOUS

Section 11.1    Waiver.  By accepting payment of any sum evidenced or secured by this Agreement, the Mortgage or the other Loan Documents after its due date, Lender does not waive its right either to require prompt payment when due of all other sums or installments so secured or to declare a default for failure to pay such other sums or installments.

Section 11.2    Estoppel.  Within fifteen (15) days after any written request by either party to this Agreement, the requested party shall certify to its knowledge, by a written statement duly acknowledged, the amount of principal, interest and other Indebtedness then owing on the Note, the terms of payment, Maturity Date and the date to which interest has been paid.  Borrower shall further certify whether any defaults, offsets or defenses exist against the Indebtedness secured hereby.  Borrower shall also use commercially reasonable efforts to furnish to Lender, within thirty (30) days of its reasonable request therefore, tenant estoppel letters from such tenants of the Premises as Lender may reasonably require; which Lender shall not request more than  two (2) times over the term of the Loan, unless an Event of Default then exists, and provided that the foregoing covenant shall be expressly subject to the limitations and conditions relating to estoppels that are set forth in the applicable Lease(s).  

Section 11.3    Successors and/or Assigns.  This Agreement and all provisions hereof shall inure to the benefit of the heirs, successors and assigns of Lender and shall bind the heirs and successors and assigns of Borrower. 

Section 11.4    Inconsistencies.  The terms of the Loan Documents and the Environmental Indemnity shall be construed and interpreted without any presumption, inference, or rule requiring construction or interpretation of any provision of the Loan Documents and the Environmental Indemnity against the interest of the party causing the Loan Documents and the 

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Environmental Indemnity or any portion of it to be drafted.  Borrower is entering into the Loan Documents and the Environmental Indemnity freely and voluntarily without any duress, economic or otherwise.

Section 11.5    Governing Law/Jurisdiction.  This Agreement shall be governed by, and construed in accordance with, the laws of the State, without regard to its conflicts of law principles.  Borrower irrevocably (a) agrees that any suit, action or other legal proceeding arising out of or relating to this Agreement, the Note, the Mortgage, the other Loan Documents and the Environmental Indemnity may be brought in a court of record in the State or in the Courts of the United States located in the State, (b) submits to the jurisdiction of each such court in any such suit, action or proceeding, and (c) waives any objection which it may have to the laying of venue of any such suit, action or proceeding in any of such courts and any claim that any such suit, action or proceeding has been brought in an inconvenient forum.  Borrower irrevocably consents to the service of any and all process in any such suit, action or proceeding by service of copies of such process to Borrower at its address provided in the Mortgage.  Nothing in this Section 11.5 will affect the right of Lender to serve legal process in any other manner permitted by law or affect the right of Lender to bring any suit, action or proceeding against Borrower or Borrower's assets in the courts of any other jurisdiction.

Section 11.6    Proceedings.  Unless Lender shall otherwise direct in writing, Borrower shall appear in and defend all actions or proceedings purporting to affect the security hereunder, or any right or power of the Lender.  The Lender shall have the right to appear in such actions or proceedings.  Borrower shall save Lender harmless from all reasonable costs and expenses, including but not limited to, reasonable attorneys' fees and costs, costs of a title search, continuation of abstract and preparation of survey incurred by reason of any action, suit, proceeding, hearing, motion or application before any court or administrative body in and to which Lender may be or become a party by reason hereof.  All money paid or expended by Lender in that regard, together with interest thereon from date of such payment at the applicable interest rate shall be additional Indebtedness secured hereby and shall be due and payable by Borrower upon written Notice from Lender.

Section 11.7    Joint and Several.  If more than one party is obligated for any obligations hereunder, then such obligations and agreements of such parties, as applicable, shall be joint and several.

Section 11.8    Headings, etc.  The headings and captions of various paragraphs of this Agreement are for convenience of reference only and are not to be construed as defining or limiting, in any way, the scope or intent of the provisions hereof.

Section 11.9    Counterparts.  This Agreement may be executed in counterparts, each of which shall be deemed an original; and such counterparts when taken together shall constitute but one agreement.  

Section 11.10    Integration.  This Agreement, taken together with all of the other Loan Documents and all certificates and other documents delivered by Borrower to Lender, embody 

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the entire agreement and supersede all prior agreements, written or oral, relating to the subject matter hereof.  PURSUANT TO UTAH CODE ANNOTATED SECTION 25-5-4, BORROWER IS NOTIFIED THAT THIS AGREEMENT AND THE OTHER THE WRITTEN LOAN DOCUMENTS REPRESENT THE FINAL AGREEMENT BETWEEN THE PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF ANY ALLEGED PRIOR, CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES. THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.
    

Section 11.11    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 11.12    No Joint Venture or Partnership.  Borrower and Lender intend that the relationship created under this Agreement, the other Loan Documents and the Environmental Indemnity be solely that of borrower and lender.  Nothing is intended to create a joint venture, partnership, tenancy-in-common, or joint tenancy relationship between Borrower and Lender nor to grant to Lender any interest in the Premises other than that of lender or secured party and borrower or debtor.

Section 11.13    Waiver of Counterclaim.  Borrower hereby waives, to the extent permitted by applicable law, the right to assert any counterclaim, other than a compulsory counterclaim, in any action or proceeding brought against Borrower by Lender under any of the Loan Documents or the Environmental Indemnity.  Notwithstanding the foregoing, Borrower shall not be prohibited and shall have the right to assert any such claims against the Lender in a separate and independent action or proceeding. 

Section 11.14    Capitalized Terms.  Capitalized terms used herein and not otherwise defined shall have those meanings given to them in the other Loan Documents.

Section 11.15    No Liability of Lender.  Borrower acknowledges and agrees that Lender's acceptance or approval of any action of Borrower or any other matter requiring Lender's approval, satisfaction, acceptance or consent pursuant to this Agreement, the other Loan Documents or the Environmental Indemnity, including any report certificate, financial statement, appraisal or insurance policy, will not be deemed a warranty or representation by Lender of the sufficiency, legality, effectiveness or other import or effect of such matter.

Section 11.16    No Third Parties Benefited.  This Agreement is between and for the sole benefit of Borrower and Lender, and Lender's successors and assigns, and creates no rights whatsoever in favor of any other Person and no other Person will have any rights to rely hereon.

Section 11.17    Time is of the Essence.  Time is of the essence of each of Borrower's obligations under this Agreement.  The waiver by Lender of any default or Event of Default under this Agreement will not be deemed a waiver of any subsequent default or Event of Default.

-58-

Section 11.18    Severability of Provisions.  If a court of competent jurisdiction finds any provision of this Agreement, the other Loan Documents or the Environmental Indemnity to be invalid, illegal or unenforceable as to any Person or circumstance in any state, such finding will not render that provision invalid, illegal or unenforceable as to any other Person or circumstance or in any other state.  Where permitted by Legal Requirements, any provision found invalid, illegal or unenforceable will be deemed modified to the extent necessary to be within the limits of enforceability, legality or validity; however, if such provision cannot be deemed so modified, it will be deemed stricken and all other provisions of this Agreement in all other respects will remain valid, legal and enforceable.

Section 11.19    Preferences.  Lender will have no obligation to marshal any assets for the benefit of Borrower or any other Person or in satisfaction of any or all of the Indebtedness.  Lender will have the continuing and exclusive right to apply or reverse and reapply any and all payments by Borrower to any portion of the Indebtedness.  To the extent Borrower makes a payment to Lender or Lender receives any proceeds from the Collateral, 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 Person under any bankruptcy, insolvency or other law, or for equitable cause, then, to the extent of such payment or proceeds released by Lender, the Indebtedness will be revived and continue in full force and effect, as if such payment or proceeds had not been received by Lender.

Section 11.20    Lender's Form W-9.      Upon Borrower's written request Lender agrees to provide Borrower with an executed Internal Revenue Service Form W-9.

Section 11.21    Component Notes.  At any time, but without increasing the liabilities of Borrower under the Loan Documents, upon written request of Lender, Borrower shall issue one or more separate (or component) notes (the "Component Notes") with revised interest rates and/or amortization schedules (if applicable) to replace the Note, the aggregate weighted average coupon rate of which shall, as of the issuance of the Component Notes, equal the initial interest rate on the Loan (adjusted to account for amortization, if applicable).  Each Component Note may have a different interest rate and/or different amortization, if applicable, but the aggregate of the interest and amortization for the Component Notes shall be the same as the Note.  Borrower shall also be obligated to enter into such amendments to other Loan Documents as are necessary to reference the Component Notes.  Notwithstanding the foregoing, Borrower shall only be required to issue such Component Notes as long as:

(i)    at and at all times after the issuance of such Component Notes, the aggregate weighted average coupon rate of the revised interest rates of the Component Notes equals the aggregate weighted average coupon rate of the Loan as if the Note had never been replaced;

(ii)    there shall be no negative economic effect upon Borrower's debt service payments or change in the aggregate amount or time of payment thereof; and

-59-

(iii)    such replacement of the Note shall be at no cost and expense to Borrower (including that Lender shall reimburse Borrower for its reasonable attorneys' fees in reviewing the Component Notes).

Section 11.22    Replacement Note.  Upon receipt by Borrower of written Notice from Lender of the loss, theft, destruction or mutilation of the Note and provided that Borrower receives from Lender a lost note affidavit and indemnity in form reasonably acceptable to Borrower and Lender, Borrower will execute and deliver to Lender, in lieu thereof, a replacement note in identical form to the Note and dated as of the date of the Note.  Upon delivery to Lender of such replacement note, all references in this Agreement and any other Loan Documents to the Note shall be deemed to be references to such replacement note.

Section 11.23    Confidentiality.      All news releases, publicity or advertising by Borrower or its Affiliates through any media intended to reach the general public which refers to Lender, the Loan Documents or the financing evidenced by the Loan Documents, shall be subject to the prior written approval of Lender.   Lender shall have the right to issue any of the foregoing without Borrower's approval and Borrower authorizes Lender to issue press releases, advertisements and other promotional materials in connection with Lender's own promotional and marketing activities, and such materials, including photographs, may describe the Loan in general terms or in detail and Lender's participation in the Loan.

Section 11.24    Partial Release.  At any time before the Indebtedness is paid in full, Borrower shall have the right to request a Release ("Release") of not more than two of the four buildings comprising the Premises, including related land and parking areas, from the lien secured by the Mortgage and all other Loan Documents (the "Release Parcel"); provided the following terms and conditions are satisfied:

		
	(a)
	the Release is the result of a sale of the Building(s);

(b)    Borrower delivers to Lender, no later than forty-five (45) days prior to the estimated date of the proposed Release, written Notice of Borrower's intent to consummate the Release; along with the identity of the proposed transferee (which must be an Entity other than Borrower);

(c)    Borrower shall prepay a portion of the unpaid principal balance of the Note in an amount equal to one hundred twenty percent (120%) of an amount attributable to the portion of the Loan tied to the Release Parcel as reasonably determined by Lender based on the relative values of the buildings, and shall, in addition, pay to Lender as yield maintenance protection, the Prepayment Premium, if applicable;  

(d)    Borrower timely furnishes to Lender an updated as-built survey of the remaining portion of the Premises as security for the Loan and the Improvements thereon (the "Remaining Premises") that (i) is in form and substance reasonably acceptable to Lender, and (ii) is acceptable to the title insurance company.  The Remaining Premises 

-60-

shall be reasonably acceptable to Lender and shall maintain its original access to public roads it had prior to such Release;

(e)    Borrower timely furnishes to Lender an endorsement updating the Title Insurance Policy or, if an endorsement is not available, a new ALTA standard loan title policy in the full amount of the remaining principal balance of the Loan from an issuer and in form and substance reasonably acceptable to Lender insuring the continued first lien priority of the Mortgage on the Remaining Premises subject only to those exceptions previously approved by Lender;

(f)    Borrower timely furnishes to Lender evidence that the Remaining Premises is one or more complete lots and continues to satisfy all of the applicable building ordinances, zoning laws, parking requirements, building restrictions, set back lines and all other applicable rules and regulations of all governmental bodies having jurisdiction over the Remaining Premises;

(g)    Borrower timely furnishes to Lender evidence that the Release Parcel is separately assessed from the Remaining Premises or that the separate assessment procedures have been initiated (with evidence of same provided to Lender); 

(h)    If applicable, Borrower shall furnish evidence that SanDisk has consented to (i) the Release Parcel being released and (ii) the reciprocal easement agreement referred to in (i) below; 

(i)    The execution and recording of a reciprocal easement agreement reasonably acceptable to Lender that addresses how the Remaining Premises and the Release Parcel share parking and access, if necessary and not addressed by existing documents; 
 
(j)    The Lease(s) shall continue separate and independent from any leases on the Release Parcel, there will be no reduction in the rentals under the Lease(s) on the Remaining Premises, and lessees shall have no defenses to the leases or right of offset against the rentals payable thereunder by reason of any default or act of lessor under the leases relating to the Release Parcel.  The debt yield utilizing the then outstanding balance of the Loan and the annual net operating income from Lease(s) on the Remaining Premises that have remaining terms of at least one (1) year shall be at least 12%;

(k)    Borrower timely furnishes to Lender, at Borrower's expense, a new MAI appraisal of the Remaining Premises (prepared by an appraiser reasonably acceptable to Lender) which shows the loan to value ratio on the Remaining Premises is not more than 55% and is otherwise reasonably acceptable to Lender;

(l)    Lease rollover for the Remaining Premises in any given calendar year of the remainder of the term of the Loan shall not be greater than twenty percent (20%) of the net rentable area, as determined by Lender;

-61-

(m)    The proposed use of the Release Parcel will not violate the provisions of any REA pertaining to the Remaining Premises;

(n)    No default then exists under the Loan Documents; 

(o)    Borrower shall pay to Lender a processing fee of $20,000 for the Release; 
        
(p)    Whether or not the Release actually occurs, Borrower shall pay all costs, fees and expenses associated with the Release, including without limitation, Lender's reasonable attorney's fees and costs; and

(q)    Borrower shall execute an amendment to the Loan Documents evidencing the change in the description of the Premises and the amount of Monthly Payment as a result of the Release and any paydown.

(Signatures on next page)

-62-

IN WITNESS WHEREOF, Borrower and Lender have hereunto caused this Agreement to be executed on the date first above written.

LENDER:

	
	
	PRINCIPAL LIFE INSURANCE COMPANY, an Iowa corporation

By:   PRINCIPAL REAL ESTATE INVESTORS, LLC, a Delaware limited liability company, its authorized signatory

   By   /s/ Robert R. Bailey__________
      Name: Robert R. Bailey
      Title: Senior Financing Consultant

   By   /s/ Julie M. Williams_________
      Name: Julie M. Williams
      Title: Assistant Managing Director
      Commercial Finance Consulting

BORROWER:

	
	
	HGREIT II COTTONWOOD CENTER LLC, a Delaware limited liability company

By   /s/ Janice E. Walker________________
   Name: Janice E. Walker
   Title: Authorized Agent

BB\dm\s:757840\loan documents - initial\la.doc
6/24/16

SCHEDULE I

Certified Evidence of Insurance

By Borrower's execution of this Agreement, Borrower hereby represents and certifies to Lender that the attached commercial property insurance certificate completely and accurately reflects the property insurance in force under the property insurance policy as of the Closing Date.

See attached property insurance certificate.

SCHEDULE II

Certified Organizational Chart

By Borrower's execution of this Agreement, Borrower hereby represents and certifies to Lender that the attached organizational chart completely and accurately depicts the ownership of Borrower as of the Closing Date and that all Person(s) with a direct or indirect ownership of twenty percent (20%) or more as of the Closing Date are reflected on said chart.

See attached organizational chart.

SCHEDULE III

INTENTIONALLY DELETED

SCHEDULE IV

Property Reserves Escrow Fund

1.    Property Reserves.  Borrower has agreed to deposit with Lender funds and letter of credit(s), if any (if more than one, collectively if the context so requires the "Letter of Credit") as detailed below ("Property Reserves Escrow Fund") to be held by Lender: (i) to reimburse Borrower for the costs of (a) certain future tenant improvements which are to be borne by Borrower in accordance with approved Lease(s) of space at the Premises ("Tenant Improvements") and certain future reasonable leasing commissions to be paid to third party brokers by Borrower pursuant to written agreements covering leasing activities at the Premises ("Leasing Commissions") and (b) rent abatement granted to Extra Space Management ("Rent Abatement") as set forth below.  The funds as well as any Letter of Credit and any renewal or replacement thereof and any proceeds therefrom shall be held by Lender as additional security for the Loan and are hereafter referred to as the "Property Reserves".  The term "Escrow Release" as used herein shall refer to a disbursement of funds and/or a reduction of a Letter of Credit, if any, as applicable, from the Property Reserves.

a.    On the Closing Date, Borrower shall deposit with Lender the Rent Abatement in the amount of _________________________________ ($_________) which is the amount for the remaining rent abatement granted to Extra Space Management.  Said amount is equal to the monthly base rent plus reimbursements commencing on September 1, 2016 times the number of months remaining until the month in which full rental payments commence under the Extra Space Management lease.  Lender agrees the Rent Abatement amount may be reduced by Borrower paying all or a portion of such rental abatements to Extra Space Management after the Closing Date.  

b.    In the event Lender has not received evidence acceptable to Lender on or prior to September 30, 2020 (12 months prior to the SanDisk lease expiration date) that SanDisk has agreed (pursuant to a lease, or lease amendment) to renew its lease or enter into a new lease reasonably acceptable to Lender for not less than 76,600 square feet of space at the Premises, then commencing on October 1, 2020, Borrower shall deposit with Lender on each Payment Date an amount to be reasonably determined by Lender at that time equal to the projected net cash flow for the following twelve (12) months (to be no less than $25 and no more than $45 times the number of square feet not renewed by SanDisk, the "Combined Rate") to reimburse Borrower for the cost to complete any Tenant Improvements and Leasing Commissions for the space vacated by SanDisk and the SanDisk renewal space (if applicable) and any other space in the Improvements.  

2.    Borrower shall deliver to Lender not later than 30 days prior to the expiration date of any Letter of Credit and any renewal or replacement Letter of Credit, a renewal or replacement unconditional, irrevocable bank Letter of Credit identical in terms and amount and issued by a rated United States bank acceptable to Lender.  If Borrower shall fail to deliver any 

-2-

renewal or replacement Letter of Credit in accordance with the foregoing requirements, Lender may, in its discretion, draw upon any Letter of Credit then in its possession and hold such proceeds in accordance with the terms hereof.

Lender reserves the right to periodically review the financial condition of the issuing bank for any Letter of Credit and any renewal or replacement Letter of Credit and if Lender determines that the issuing bank no longer satisfies the criteria set forth above, Lender may require a replacement Letter of Credit in form and substance and from a rated United States bank acceptable to Lender.

3.    Standard Disbursement Requirements.  The following shall be defined as "Standard Disbursement Requirements":

(i)    copies of unconditional lien waivers or conditional (if applicable), invoices, cancelled checks, etc. for work completed which is the subject of the Escrow Release request.  If the Escrow Release request is for payment upon submission of invoice(s) and not on a reimbursement basis, Lender shall receive conditional lien waivers, provided, however, that prior to any subsequent Escrow Release, Lender shall receive unconditional lien waivers for all work that was the subject of the prior Escrow Release.  The administration fee shall be reasonably increased if the Escrow Release is for payment upon submission of invoice(s) and not on a reimbursement basis; 

(ii)    a title search in form and substance reasonably acceptable to Lender and if such search discloses conditions unacceptable to Lender or Lender deems it reasonably necessary, then such endorsements or other assurances reasonably satisfactory to Lender from the title insurance company insuring the continued first lien priority of the Mortgage; 

(iii)    to the extent Lender deems reasonably necessary, any or all of the following at Lender's discretion:  (A) all permits, bonds, licenses and approvals, whether necessary for commencement, performance, completion, occupancy, use or otherwise required by any applicable laws for the stage of work so completed; (B) a copy of the construction contract and any change orders and addenda thereto; (C) a statement from an architect, contractor or engineering consultant, in Lender's reasonable discretion, as to the extent and cost of the work so completed; and/or (D) other evidence as reasonably determined by Lender showing that Borrower has completed and performed the portion of the work which is the subject of the Escrow Release request; and

(iv)    Lender having inspected, or having expressly waived in writing such inspection, and approved the completed portion of the work which is the subject of the Escrow Release request.

4.    Tenant Improvements and Leasing Commissions.

-3-

a.    Except as hereinafter provided and so long as no Event of Default has occurred and is continuing under the Loan Documents, Lender shall allow Escrow Release(s) in the amounts hereinafter specified in accordance with the following terms and conditions:

(i)    Escrow Release(s) for Tenant Improvements and Leasing Commissions shall be for an amount equal to the Combined Rate; provided, however, that in the event that the lease term is less than five (5) years, the Combined Rate shall be prorated (example, a three year lease = 3/5 times the Combined Rate);  

(ii)    Borrower shall submit written Escrow Release(s) requests to Lender for Tenant Improvements and Leasing Commissions no more than once per calendar month and each such request shall be for an aggregate amount of not less than $50,000 (excluding the final disbursement); and
 
(iii)    Escrow Release(s) shall be conditioned upon Borrower furnishing to Lender with its written request, at Lender's discretion, the Standard Disbursement Requirements and the following:

(A)    fully executed lease(s) or fully executed amendments extending upcoming term expirations of previously approved existing Lease(s) (which existing Lease(s) must not be in default beyond any applicable notice and cure period at the time of the Escrow Release request), as the case may be, all in form and substance acceptable to Lender (not to be unreasonably withheld, conditioned or delayed) to creditworthy lessees (other than Borrower or any Person(s) affiliated with Borrower) and with minimum lease terms of three (3) years; 

Notwithstanding anything herein to the contrary, in the event a new lease or amendment to an existing Lease requires Borrower's payment of tenant improvement and leasing commissions, Borrower shall advise Lender whether Borrower desires to make a request for an Escrow Release for Tenant Improvements and Leasing Commissions.  Borrower is hereby advised that Lender's approval of any such new lease or amendment may take into consideration the economic feasibility of a release of such funds in relation to the value of the lease, creditworthiness of the lessee and/or acceptability of the lease terms and Lender's approval of such new lease or amendment to an existing Lease may be conditioned on Borrower's agreement to a partial Escrow Release or no Escrow Release for said new lease or Lease amendment.  In the event that a partial Escrow Release or no Escrow Release applies to a particular tenant space, any funds allocated to Tenant Improvements and Leasing Commissions for said tenant space may be available for an Escrow Release for other tenant space (or future 

-4-

rollover of said tenant space) upon Borrower's written request and compliance with the terms and conditions of this Schedule IV.   

(B)    with respect to any Escrow Release request relating to final and completed Tenant Improvements for a lessee's space, lessee's estoppel certificate(s) for the improved space in form and substance reasonably acceptable to Lender indicating, among other things, the lessee's occupancy and unconditional acceptance of the improvements and the commencement of consecutive monthly rental payments, all rental concessions and deferments having expired; 

(C)    with respect to any Escrow Release request relating to final and completed Tenant Improvements for a lessee's space, a final, unconditional certificate of occupancy (or equivalent occupancy approval) for the improved space from the local authority responsible for issuing such certificate (unless not required to be issued by said local authority); and

(D)    with respect to any Escrow Release request relating to payment of Leasing Commissions, Borrower having furnished to Lender an estoppel or letter, in form and substance reasonably acceptable to Lender, from the applicable broker or agent evidencing payment in full of the commission, or, in Lender's discretion, such other documentation acceptable to Lender.

5.    Rent Abatement.  So long as no Event of Default has occurred and is continuing under the Loan documents, Lender will disburse to Borrower (i) on a monthly basis an amount equal to the base rent plus reimbursements for the month prior to the applicable disbursement except that prior to the final disbursement Borrower shall have provided Lender with evidence reasonably satisfactory to Lender that Extra Space Management has commenced paying full rent under its lease, and (ii) on a monthly basis an amount equal to any amounts paid by Borrower to Extra Space Management in satisfaction of such rent abatement during any prior month.  A lease amendment detailing any reduction in rental abatements for Extra Space Management will be provided by Borrower.

6.    Loan to Value Requirement.  Notwithstanding anything herein to the contrary, in no event shall Lender allow an Escrow Release if the outstanding Indebtedness on the Loan equals or exceeds ninety percent (90%) of the appraised value of the Premises as calculated by Lender at the time of the request for the Escrow Release (Lender shall include recently signed Lease(s) in connection with its determination of the appraised value including if a Tenant Improvement and Leasing Commission Escrow Release request, Lender shall consider the consummation of the proposed Lease or Lease amendment in connection with its determination of the appraised value and such valuation will be done on a discounted cash flow basis over a ten (10) year holding period).

-5-

7.    Interest on Property Reserves.  Provided no Event of Default has occurred and is continuing under any of the Loan Documents, Lender shall credit Borrower with interest earnings on the cash portion of the Property Reserves, (excluding however any cash proceeds resulting from Lender having drawn on any Letter of Credit or any renewal or replacement thereof) pursuant to the Escrow Interest Calculation.  Any interest earnings shall be disbursed to Borrower with the final disbursement of the Property Reserves.  

8.    Administration/Inspection Fee.  Lender shall be entitled to charge Borrower a reasonable processing fee for administering and reviewing each Escrow Release.  Lender shall also be entitled to charge Borrower reasonable processing fees both for reviewing any renewal or replacement Letter of Credit which Borrower is required to provide as well as for drawing upon any Letter of Credit held pursuant to the terms hereof.  Borrower shall be responsible for payment of all costs, fees and charges in connection with any reduction, renewal or replacement of the Letter of Credit which are assessed by the issuing bank.  Additionally, Lender shall be entitled to charge Borrower for any reasonable costs incurred by Lender in inspecting the Premises.

9.    Cost Overruns.  In the event that the costs and expenses incurred by Borrower in completing any work which is the subject of this Schedule IV exceed the respective amounts allocated by Lender for such items of expense, Borrower shall be responsible for the payment (from sources other than the Property Reserves) of such excess costs and expenses.

10.    Obligations of Lender.  Nothing contained in this Schedule IV shall be construed to (a) make Lender responsible for performing or completing the work which is the subject of the Property Reserves Escrow Fund, (b) require Lender to expend sums to complete the work which is the subject of the Property Reserves Escrow Fund which are in excess of such amounts then allocated by Lender for such items, or (c) obligate Lender to demand from Borrower additional sums to complete the work which is the subject of the Property Reserves Escrow Fund.Exhibit

Exhibit 10.27

TERM LOAN AGREEMENT
dated as of August 18, 2016
among
HGREIT II GOODYEAR CROSSING LLC  
as Borrower
and
SUNTRUST BANK
as Lender

Active 
36942122.8

TABLE OF CONTENTS

	
					
	 
	 
	 
	Page
	

	ARTICLE I DEFINITIONS; CONSTRUCTION
	1
	

	Section 1.1
	 
	Definitions
	1
	

	Section 1.2
	 
	Accounting Terms and Determination
	18
	

	Section 1.3
	 
	Terms Generally
	18
	

	 
	 
	 
	 

	ARTICLE II AMOUNT AND TERMS OF THE COMMITMENT
	18
	

	Section 2.1
	 
	Commitment
	18
	

	Section 2.2
	 
	Repayment of Loan
	19
	

	Section 2.3
	 
	Prepayments
	19
	

	Section 2.4
	 
	Interest on Loan
	20
	

	Section 2.5
	 
	Fees
	20
	

	Section 2.6
	 
	Computation of Interest and Fees
	20
	

	Section 2.7
	 
	Inability to Determine Interest Rates
	20
	

	Section 2.8
	 
	Illegality
	20
	

	Section 2.9
	 
	Increased Costs
	21
	

	Section 2.10
	 
	Payments Generally
	21
	

	Section 2.11
	 
	Taxes
	22
	

	Section 2.12
	 
	Hedging Transactions
	24
	

	Section 2.13
	 
	Funding Indemnity
	25
	

	Section 2.14
	 
	Mitigation of Obligations
	25
	

	 
	 
	 
	 

	ARTICLE III CONDITIONS PRECEDENT TO LOAN
	25
	

	Section 3.1
	 
	Conditions To Effectiveness
	25
	

	Section 3.2
	 
	Delivery of Documents
	28
	

	 
	 
	 
	 

	ARTICLE IV REPRESENTATIONS AND WARRANTIES
	28
	

	Section 4.1
	 
	Existence; Power
	28
	

	Section 4.2
	 
	Organizational Power; Authorization
	28
	

	Section 4.3
	 
	Governmental Approvals; No Conflicts
	28
	

	Section 4.4
	 
	Financial Statements
	28
	

	Section 4.5
	 
	Litigation
	29
	

	Section 4.6
	 
	Compliance with Laws and Agreements
	29
	

	Section 4.7
	 
	Investment Company Act, Etc
	29
	

	Section 4.8
	 
	Taxes
	29
	

	Section 4.9
	 
	Defaults
	29
	

	Section 4.10
	 
	Margin Regulations
	29
	

	Section 4.11
	 
	ERISA
	29
	

	Section 4.12
	 
	[Intentionally Deleted]
	29
	

	Section 4.13
	 
	Labor Relations
	30
	

	Section 4.14
	 
	No Subsidiaries
	30
	

	Section 4.15
	 
	Insolvency
	30
	

	Section 4.16
	 
	Single Purpose Entity
	30
	

i
36942122.8

	
					
	Section 4.17
	 
	Other Agreements
	30
	

	Section 4.18
	 
	OFAC
	30
	

	Section 4.19
	 
	Patriot Act
	30
	

	Section 4.20
	 
	Brokerage
	30
	

	Section 4.21
	 
	Leases
	31
	

	Section 4.22
	 
	Property Specific Representations
	31
	

	 
	 
	 
	 

	ARTICLE V AFFIRMATIVE COVENANTS
	32
	

	Section 5.1
	 
	Notices of Material Events
	32
	

	Section 5.2
	 
	Existence; Conduct of Business
	32
	

	Section 5.3
	 
	Compliance with Laws, Etc
	32
	

	Section 5.4
	 
	Payment of Obligations
	33
	

	Section 5.5
	 
	Insurance, Casualty and Condemnation
	33
	

	Section 5.6
	 
	Taxes; Charges
	33
	

	Section 5.7
	 
	Taxes on Security
	33
	

	Section 5.8
	 
	Books and Records
	34
	

	Section 5.9
	 
	Visitation and Inspection
	34
	

	Section 5.10
	 
	Maintenance of Property
	34
	

	Section 5.11
	 
	Leasing Requirements
	34
	

	Section 5.12
	 
	Mechanic’s Liens and Stop Notices
	34
	

	Section 5.13
	 
	Appraisal
	35
	

	Section 5.14
	 
	[Intentionally Deleted]
	35
	

	Section 5.15
	 
	Estoppel Certificates
	35
	

	Section 5.16
	 
	Further Assurances
	35
	

	Section 5.17
	 
	Single Purpose Entity
	35
	

	Section 5.18
	 
	Cash Management
	37
	

	Section 5.19
	 
	Re-Tenanting Reserve
	38
	

	Section 5.20
	 
	Approved Re-Leasing Plan
	40
	

	 
	 
	 
	 

	ARTICLE VI FINANCIAL COVENANTS AND REPORTING
	40
	

	Section 6.1
	 
	Financial Statements and Other Information
	40
	

	Section 6.2
	 
	Debt Service Coverage Ratio
	40
	

	 
	 
	 
	 

	ARTICLE VII NEGATIVE COVENANTS
	41
	

	Section 7.1
	 
	Due on Sale and  Encumbrance; Transfers of Interests
	41
	

	Section 7.2
	 
	Limitation on Indebtedness
	42
	

	Section 7.3
	 
	Liens
	42
	

	Section 7.4
	 
	Control; Management
	42
	

	Section 7.5
	 
	Transactions with Affiliates
	42
	

	Section 7.6
	 
	Government Regulation
	43
	

	Section 7.7
	 
	Hedging Transactions
	43
	

	Section 7.8
	 
	Limitations on Distributions
	43
	

	Section 7.9
	 
	Impairment of Security
	43
	

	Section 7.10
	 
	Conditional Sales
	43
	

	 
	 
	 
	 

ii
36942122.8

	
					
	ARTICLE VIII EVENTS OF DEFAULT
	44
	

	Section 8.1
	 
	Events of Default
	44
	

	Section 8.2
	 
	Remedies
	46
	

	 
	 
	 
	 

	ARTICLE IX MISCELLANEOUS
	47
	

	Section 9.1
	 
	Notices
	47
	

	Section 9.2
	 
	Partial Release
	48
	

	Section 9.3
	 
	Waiver; Amendments
	49
	

	Section 9.4
	 
	Expenses; Indemnification
	49
	

	Section 9.5
	 
	Successors and Assigns
	50
	

	Section 9.6
	 
	Register
	51
	

	Section 9.7
	 
	Governing Law; Jurisdiction; Consent to Service of Process
	51
	

	Section 9.8
	 
	Waiver of Jury Trial
	52
	

	Section 9.9
	 
	Right of Setoff
	52
	

	Section 9.10
	 
	Counterparts; Integration
	52
	

	Section 9.11
	 
	Survival
	52
	

	Section 9.12
	 
	Severability
	52
	

	Section 9.13
	 
	Confidentiality
	53
	

	Section 9.14
	 
	Use of Name and Information
	53
	

	Section 9.15
	 
	Interest Rate Limitation
	53
	

	Section 9.16
	 
	Waiver of Effect of Corporate Seal
	53
	

	Section 9.17
	 
	Patriot Act
	53
	

	Section 9.18
	 
	No Advisory or Fiduciary Responsibility
	54
	

	Section 9.19
	 
	Time is of the Essence
	54
	

	Section 9.20
	 
	Third Parties; Benefit
	54
	

Exhibits
		
	Exhibit A
	-    Form of Compliance Certificate

		
	Exhibit 3.1
	-    Certificate of Flood Insurance Compliance

		
	Exhibit 5.5
	-    Insurance Requirements; Casualty and Condemnation

		
	Exhibit 5.11
	-    Leasing and Tenant Matters

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36942122.8

TERM LOAN AGREEMENT
TERM LOAN AGREEMENT (this “Agreement”) is made and entered into as of August 18, 2016, by and between HGREIT II GOODYEAR CROSSING LLC, a Delaware limited liability company  (the “Borrower”), and SUNTRUST BANK, a Georgia banking corporation (the “Lender”).
W I T N E S S E T H:
WHEREAS, Borrower has requested that Lender make a term loan in a principal amount equal to $29,000,000.00 to Borrower (the “Loan”).
WHEREAS, subject to the terms and conditions of this Agreement, Lender is willing to make the Loan to Borrower.
NOW, THEREFORE, in consideration of the premises and the mutual covenants herein contained, Borrower and Lender agree as follows:

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ARTICLE I 
 
DEFINITIONS; CONSTRUCTION

Section 1.1    Definitions.  In addition to the other terms defined herein, the following terms used herein shall have the meanings herein specified (to be equally applicable to both the singular and plural forms of the terms defined):
“Accounts” shall have the meaning set forth in Section 5.18.
“Affiliate” shall mean, as to any Person, any other Person that directly, or indirectly through one or more intermediaries, Controls, is Controlled by, or is under common Control with, such Person. 
“Amazon” shall mean AMAZON.COM.AZDC LLC, a Delaware limited liability company, the tenant under the Amazon Lease. 
“Amazon Lease” shall mean that certain Lease Agreement dated April 11, 2008 by and between AMAZON.COM.AZDC LLC, a Delaware limited liability company (as successor to Amazon.com.azdc, Inc.), as tenant, and Borrower (as successor to Duke Realty Limited Partnership), as landlord, as amended by that certain First Amendment to Lease Agreement dated April 13, 2009, as further amended by that certain Second Amendment to Lease Agreement dated November 24, 2009, as further amended by that certain Third Amendment to Lease Agreement dated as of June 20, 2013.
“Amazon Lease Renewal Trigger” shall mean the earliest of (i)  September 30, 2018, unless the Approved Replacement Lease Start Date has occurred in connection with the renewal of the Amazon Lease, or (ii) the effective date on which the Amazon Lease terminates. Following the occurrence of an Amazon Lease Renewal Trigger, the Amazon Lease Renewal Trigger shall terminate upon a Cash Flow Sweep Cure with respect to such Amazon Lease Renewal Trigger.
“Anti-Corruption Laws” shall mean all laws, rules, and regulations of any jurisdiction applicable to the Loan Parties or any of their Subsidiaries from time to time concerning or relating to bribery or corruption.

“Applicable Interest Rate” shall have the meaning set forth in Section 2.4.
“Applicable Law” shall mean all laws, statutes, codes, ordinances, rules, rulings, orders, judgments, decrees, injunctions, arbitral decisions, regulations, authorizations, determinations, directives and any other requirements and/or provisions (including building codes and zoning regulations and ordinances) of all Governmental Authorities, whether now or hereafter in force, which may be or become applicable to Borrower (or Lender, as applicable), the relationship of lender and borrower, the Property, any of the Loan Documents, or any part of any of them (whether or not the same may be valid), and all requirements, obligations and conditions of all instruments of record applicable to the Property on the date hereof. 
“Applicable Margin” shall mean 2.00% per annum.
“Appraisal” shall have the meaning set forth in Section 3.1(b).

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“Approved Lease” shall mean (i) the Amazon Lease, and (ii) all Leases approved by Lender pursuant to Exhibit 5.11.
 “Approved Re-Leasing Plan” shall mean the leasing plan, including Borrower’s strategy, milestones, lease pricing matrix, benchmarks, programs and team for the leasing of the unleased portions of the Property, as approved by Lender, not to be unreasonably withheld, conditioned, or delayed.
“Approved Replacement Lease” shall mean one or more, or a combination of (i) the Amazon Lease, provided Amazon has given the First Extension Notice (as defined in the Amazon Lease) and has extended the Amazon Lease for the First Extension Term (as defined in the Amazon Lease), or (ii) in the event the Amazon Lease is terminated, or has expired by its terms, or is renewed for less than the entire premises covered by the Amazon Lease, one or more Leases of all of the improvements on the Property approved by Lender pursuant to Exhibit 5.11, which may be a renewal of the Amazon Lease for less than all of the premises covered by the Amazon Lease, provided such Tenant has provided Lender a subordination, non-disturbance and attornment agreement in connection with each such Lease, in a form reasonably acceptable to the Lender (or as required by the Amazon Lease).
“Approved Replacement Lease Re-Tenanting Costs” shall have the meaning set forth in Section 5.19.
“Approved Replacement Lease Start Date” shall mean, provided no Event of Default shall have occurred and is continuing, the date when (i) an Approved Replacement Tenant commences payment in full of rent in accordance with the terms of the applicable Approved Replacement Lease (which shall include up to one month per year of “free rent” or “rental abatement” period under the Approved Replacement Lease), (ii) a certificate executed on behalf of the Borrower by a Responsible Officer, certifying that  all work required to be performed by Borrower under the applicable Approved Replacement Lease to the extent necessary to cause the applicable Approved Replacement Lease to commence has been completed in accordance with the applicable Approved Replacement Lease, has been paid for in full , and (iii) Lender shall have received an estoppel certificate or commencement date letter signed and acknowledged by the applicable Approved Replacement Tenant stating that (A) all work required to be performed by Borrower under the applicable Approved Replacement Lease to the extent necessary to cause the applicable Approved Replacement Lease to commence has been completed in accordance with the applicable Approved Replacement Lease, and has been accepted by such Tenant or (B) all work required to be performed by the applicable Approved Replacement Tenant to the extent necessary to cause the applicable Approved Replacement Lease to commence has been completed, has been paid for in full, and any reimbursement payable to the applicable Approved Replacement Tenant has been paid in full in accordance with the applicable Approved Replacement Lease.  
“Approved Replacement Tenant” shall mean a Tenant under an Approved Replacement Lease, which may include Amazon.
“Assignment of Contracts” shall mean the Assignment of Contracts, Plans and Permits executed by Borrower in favor of Lender, as the same may be modified, amended, amended and restated or supplemented from time to time.
“Assignment of Leases and Rents” shall mean the Assignment of Leases and Rents executed by Borrower in favor of Lender, and pertaining to Leases of space at the Property, as the same may be modified, amended, amended and restated or supplemented from time to time.

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“Bank Product Obligations” shall mean, collectively, all obligations and other liabilities of Borrower to Lender or any Affiliate of Lender in respect of any of the following services provided to Borrower by Lender or any Affiliate of Lender: (a) any treasury or other cash management services, including deposit accounts, automated clearing house (ACH) origination and other funds transfer, depository (including cash vault and check deposit), zero balance accounts and sweeps, return items processing, controlled disbursement accounts, positive pay, lockboxes and lockbox accounts, account reconciliation and information reporting, payables outsourcing, payroll processing, trade finance services, investment accounts and securities accounts, and (b) card services, including credit card (including purchasing card and commercial card), prepaid cards, including payroll, stored value and gift cards, merchant services processing, and debit card services.
“Base Rate” shall mean the highest of (i) the per annum rate which Lender publicly announces from time to time to be its prime lending rate, as in effect from time to time, or (ii) the Federal Funds Rate, as in effect from time to time, plus one-half of one percent (0.50%) per annum (any changes in such rates to be effective as of the date of any change in such rate). Lender’s prime lending rate is a reference rate and does not necessarily represent the lowest or best rate charged to customers.  Lender may make commercial loans or other loans at rates of interest at, above or below Lender’s prime lending rate.  
“Beneficial Owner” shall mean, with respect to any amount paid hereunder or under any other Loan Document, the Person that is the beneficial owner, for U.S. federal income tax purposes, of such payment.
 “Borrower” shall have the meaning in the introductory paragraph hereof. 
“Business Day” shall mean (i) any day other than a Saturday, Sunday or other day on which commercial banks in Atlanta, Georgia are authorized or required by Applicable Law to close and (ii) if such day relates to a determination of the LIBOR Index Rate, any day on which dealings in Dollars are carried on in the London interbank market.
“Capital Lease Obligations” of any Person shall mean all obligations of such Person to pay rent or other amounts under any lease (or other arrangement conveying the right to use) real or personal property, or a combination thereof, which obligations are required to be classified and accounted for as capital leases on a balance sheet of such Person under GAAP, and the amount of such obligations shall be the capitalized amount thereof determined in accordance with GAAP.
“Cash Flow Sweep Cure” shall mean:
(a)    if a DSCR Trigger shall have occurred, a Cash Flow Sweep Cure with respect to such DSCR Trigger shall occur (i) if the Debt Service Coverage Ratio set forth in a subsequent covenant certificate which is delivered as required under this Agreement confirms that the Debt Service Coverage Ratio is equal to or greater than 1.25 to 1.00, and/or (ii) if Borrower prepays a portion of the Loan sufficient to cause the Debt Service Coverage Ratio to be equal to or greater than 1.25 to 1.00.
(b)    if an Event of Default shall have occurred, a Cash Flow Sweep Cure with respect to such Event of Default shall occur if no Event of Default is then continuing.
(c)    if an Amazon Lease Renewal Trigger shall have occurred, a Cash Flow Sweep Cure with respect to such Amazon Lease Renewal Trigger shall occur on the earlier to occur of (i) the Approved Replacement Lease Start Date for Approved Replacement Leases sufficient to cause the Debt Service Coverage Ratio to be greater than 1.25 to 1.00, and (ii) the Approved Replacement Lease Start Date for Approved Replacement Leases covering the entire premises.

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“Cash Flow Sweep Event” shall mean the occurrence and continuance of (i) an Event of Default, (ii) a DSCR Trigger, or (iii) an Amazon Lease Renewal Trigger. 
“Cash Management Agreement” shall mean that certain Cash Management Agreement dated as of the Closing Date, by and among Borrower, Property Manager, Lender and SunTrust Bank, in its capacity as depository bank.
“Change in Law” shall mean (i) the adoption of any Applicable Law after the date of this Agreement, (ii) any change in any Applicable Law, or any change in the interpretation, implementation or application thereof, by any Governmental Authority after the date of this Agreement, or (iii) compliance by Lender (or by Lender’s holding company, if applicable), or by Lender’s parent corporation, if applicable, with any request, guideline or directive (whether or not having the force of law) of any Governmental Authority made or issued after the date of this Agreement; provided that for purposes of this Agreement, (x) the Dodd-Frank Wall Street Reform and Consumer Protection Act and all requests, rules, guidelines or directives in connection therewith and (y) all requests, rules, guidelines or directives promulgated by the Bank for International Settlements, the Basel Committee on Banking Supervision (or any successor or similar authority) or the United States or foreign regulatory authorities, in each case pursuant to Basel III, shall in each case be deemed to be a “Change in Law”, regardless of the date enacted, adopted or issued.
“Change of Control” shall mean (a) the management and operations of the investment advisor to Hines Global REIT II (for so long as it is a real estate investment trust) are no longer controlled by a Hines Affiliate; (b) a Hines Affiliate no longer has the day to day Control of any successor to the Hines Global REIT II  that is not a real estate investment trust; (c) Hines Global REIT II (or its successor) shall no longer Control (directly or indirectly) the Borrower and the Property; or (d) Hines Global REIT II (or its successor) shall no longer own (directly or indirectly) at least fifty percent (50%) of the Equity Interests in the Borrower.
“Charges” shall have the meaning set forth in Section 5.6.
 “Closing Date” shall mean the date on which the conditions precedent set forth in Section 3.1 and Section 3.2 have been satisfied or waived in accordance with Section 9.2.
“Code” shall mean the Internal Revenue Code of 1986, as amended and in effect from time to time.
“Collateral” shall mean the Property, all personalty located at the Property, and all other property of Borrower that purports to be the subject of a Lien to Lender to secure the whole or any part of the Obligations, and shall include, without limitation, all casualty insurance proceeds and condemnation awards with respect to the foregoing.
“Collateral Assignment of Hedge” shall mean a collateral assignment of a Hedging Transaction in form and substance mutually satisfactory to Borrower and Lender.
“Collections Account” shall have the meaning set forth in Section 5.18(a).
“Collections Account Agreement” shall mean that certain Deposit Account Control Agreement (CRE Cash Management) among Borrower, Lender and SunTrust Bank, in its capacity as depository bank, relating to the Collections Account as set forth in Section 5.18(a).
“Commitment” shall mean the obligation of Lender to make the Loan on the Closing Date.

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“Commodity Exchange Act” shall mean the Commodity Exchange Act (7 U.S.C. § 1 et seq.), as amended and in effect from time to time, and any successor statute.
“Compliance Certificate” shall mean a certificate executed on behalf of the Borrower by a Responsible Officer in the form of, and containing the certifications set forth in, the certificate attached hereto as Exhibit A.
“Control” shall mean the power, directly or indirectly, to direct or cause the direction of the management and policies of a Person, whether through the ability to exercise voting power, by contract or otherwise. The terms “Controlling”, “Controlled by”, and “under common Control with” have meanings correlative thereto.
“Debt Service” shall mean, for any period of measurement hereunder, the sum of all principal and interest payments that would be due and payable over such period of calculation with respect to the Loan, assuming amortization of the outstanding principal balance of the Loan plus any amounts remaining that may be advanced under the Loan over a thirty (30) year period (regardless of whether such payment is required during such period under the Loan Documents) with a per annum interest rate equal to the greatest of (i) 200 basis points above the ask yield of the 10 Year United States Treasury note as of the close of business on the Business Day preceding the date of calculation, as announced on Bloomberg.com or another reliable source reasonably selected by Lender, (ii) Six and one-quarter percent (6.25%), or (iii) the actual interest rate on the Loan in effect at the date of such calculation.
“Debt Service Coverage Ratio” shall mean for such period of computation, the Net Operating Income for that period, divided by Debt Service for such period.
“Debtor Relief Laws” shall mean the United States Bankruptcy Code, and all other liquidation, conservatorship, bankruptcy, assignment for the benefit of creditors, moratorium, rearrangement, receivership, insolvency, reorganization, or similar debtor relief laws of the United States or other applicable jurisdictions from time to time in effect.
“Default” shall mean any condition or event that, with the giving of notice or the lapse of time or both, would constitute an Event of Default.
“Default Interest” shall have the meaning set forth in Section 2.4(b).
“Default Rate” shall mean the lesser of (a) the interest rate otherwise applicable to the Loan hereunder plus an additional 4% per annum, or (b) the highest rate of interest that lenders may contract for, charge or receive from borrowers under Applicable Law for the use, forbearance or detention of money.  
“Distribution” shall have the meaning set forth in Section 7.8(a).
“Dollar(s)” and the sign “$” shall mean lawful money of the United States of America.
“DSCR Trigger” shall mean the Debt Service Coverage Ratio shall be less than 1.25 to 1.00 (the “Minimum DSCR Requirement”), as set forth in the covenant certificate delivered by Borrower pursuant to this Agreement, or if no covenant certificate is delivered to Lender as required under this Agreement, on the date on which such covenant certificate was otherwise required to be delivered to Lender under the terms of this Agreement; provided, however, a DSCR Trigger shall not occur if, within fifteen (15) days following Lender’s receipt of the covenant certificate, Borrower shall pay down the outstanding principal balance of the Loan in accordance with Section 2.3 of this Agreement, in an amount such that the Minimum DSCR 

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Requirement would have been satisfied for the applicable period per the reasonable determination of Lender.   Following the occurrence of a DSCR Trigger, the DSCR Trigger shall terminate upon a Cash Flow Sweep Cure with respect to such DSCR Trigger.
 “Environmental Indemnification Agreement” shall mean that certain Environmental Indemnification Agreement dated as of the Closing Date, by Borrower and Guarantor in favor of Lender, as the same may be modified, amended, amended and restated or supplemented from time to time.
“Environmental Laws” shall mean all laws, rules, regulations, codes, ordinances, orders, decrees, judgments, injunctions, notices or binding agreements issued, promulgated or entered into by or with any Governmental Authority and all common laws, relating in any way to human health, the environment, health and safety, preservation of natural resources, the management, Release or threatened Release of any Hazardous Material or to health and safety matters.
“Environmental Liability” shall mean any liability, contingent or otherwise (including any liability for damages, costs of environmental investigation and remediation, costs of administrative oversight, fines, natural resource damages, penalties or indemnities), of Borrower directly or indirectly resulting from or based upon (i) any actual or alleged non-compliance with any Environmental Law, (ii) the generation, use, handling, transportation, storage, treatment or disposal of any Hazardous Materials, (iii) any actual or alleged exposure to any Hazardous Materials, (iv) the Release or threatened Release of any Hazardous Materials or (v) any contract, agreement or other consensual arrangement pursuant to which liability is assumed or imposed with respect to any of the foregoing.
“Equity Interests” means shares of capital stock, partnership interests, membership interests in a limited liability company, beneficial interests in a trust or other equity ownership interests in a Person, and any warrants, options or other rights entitling the holder thereof to purchase or acquire any such equity interest.
 “ERISA” shall mean the Employee Retirement Income Security Act of 1974, as amended from time to time, and any successor statute.
“ERISA Affiliate” shall mean any trade or business (whether or not incorporated), which, together with Borrower, is treated as a single employer under Section 414(b) or (c) of the Code or, solely for the purposes of Section 302 of ERISA and Section  412 of the Code, is treated as a single employer under Section 414 of the Code.
“ERISA Event” shall mean (a) any “reportable event”, as defined in Section 4043 of ERISA or the regulations issued thereunder with respect to a Plan (other than an event for which the 30-day notice period is waived); (b) the existence with respect to any Plan of an “accumulated funding deficiency” (as defined in Section 412 of the Code or Section 302 of ERISA), whether or not waived; (c) the filing pursuant to Section 412(d) of the Code or Section 303(d) of ERISA of an application for a waiver of the minimum funding standard with respect to any Plan; (d) the incurrence by Borrower or any of its ERISA Affiliates of any liability under Title IV of ERISA with respect to the termination of any Plan; (e) the receipt by Borrower or any ERISA Affiliate from the PBGC or a plan administrator appointed by the PBGC of any notice relating to an intention to terminate any Plan or Plans or to appoint a trustee to administer any Plan; (f) the incurrence by Borrower or any of its ERISA Affiliates of any liability with respect to the withdrawal or partial withdrawal from any Plan or Multiemployer Plan; or (g) the receipt by Borrower or any ERISA Affiliate of any notice, or the receipt by any Multiemployer Plan from Borrower or any ERISA Affiliate of any notice, concerning the imposition of Withdrawal Liability or a determination that a Multiemployer Plan is, or is expected to be, insolvent or in reorganization, within the meaning of Title IV of ERISA.

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“Event of Default” shall mean any of the events specified in Section 8.1.
“Excluded Swap Obligation”  shall mean, with respect to any Guarantor, any Swap Obligation if, and to the extent that, all or a portion of the Guarantee of such Guarantor of, or the grant by such Guarantor of a security interest to secure, such Swap Obligation (or any Guarantee thereof) is or becomes illegal under the Commodity Exchange Act or any rule, regulation or order of the Commodity Futures Trading Commission (or the application or official interpretation of any thereof) by virtue of such Guarantor’s failure for any reason to constitute an “eligible contract participant” as defined in the Commodity Exchange Act at the time the Guarantee of such Guarantor becomes effective with respect to such related Swap Obligation.   If a Swap Obligation arises under a master agreement governing more than one swap, such exclusion shall apply only to the portion of such Swap Obligation that is attributable to swaps for which such Guarantee or security interest is or becomes illegal.  
“Excluded Taxes” shall mean any of the following Taxes imposed on or with respect to Lender or required to be withheld or deducted from a payment to Lender, (a) Taxes imposed on or measured by net income (however denominated), franchise Taxes, and branch profits Taxes, in each case, (i) imposed as a result of Lender being organized under the laws of, or having its principal office or its applicable lending office located in, the jurisdiction imposing such Tax (or any political subdivision thereof), or (ii) that are Other Connection Taxes, (b) any U.S. federal withholding Taxes imposed on amounts payable to or for the account of such Lender pursuant to a law in effect on the date on which (i) such Lender becomes a Lender under this Agreement or (ii) such Lender changes its lending office, except in each case to the extent that, pursuant to Section 2.11, amounts with respect to such Taxes were payable either to such Lender’s assignor immediately before such Lender became a party hereto or to such Lender immediately before it changed its lending office, (c) Taxes attributable to such Lender’s failure to comply with Section 2.11(e) (including any Taxes imposed as a result of the expiration, inaccuracy, or deficiency of any form or certification provided thereunder)  and (d) any U.S. federal withholding Taxes imposed under FATCA. 
“FATCA” shall mean (a) Sections 1471 through 1474 of the Code, as of the date of this Agreement (or any amended or successor version that is substantively comparable and not materially more onerous to comply with), any current or future regulations or official interpretations thereof, (b) any treaty, law, regulation or other official guidance enacted in the United States or in any other jurisdiction, or relating to an intergovernmental agreement between the United States and any other jurisdiction with the purpose (in either case) of facilitating the implementation of paragraph (a) above, or (c) any agreement pursuant to the implementation of paragraphs (a) or (b) above with the IRS, the United States government or any governmental or taxation authority in the United States  .
“Federal Funds Rate” shall mean, for any day, the rate per annum (rounded upwards, if necessary, to the next 1/100th of 1%) equal to the weighted average of the rates on overnight Federal funds transactions with member banks of the Federal Reserve System arranged by Federal funds brokers, as published by the Federal Reserve Bank of New York on the next succeeding Business Day or if such rate is not so published for any Business Day, the Federal Funds Rate for such day shall be the average rounded upwards, if necessary, to the next 1/100th of 1% of the quotations for such day on such transactions received by Lender from three Federal funds brokers of recognized standing selected by Lender.
“Flood Insurance Laws” shall mean, collectively, (i) the National Flood Insurance Act of 1968 as now or hereafter in effect or any successor statute thereto, (ii) the Flood Disaster Protection Act of 1973 as now or hereafter in effect or any successor statute thereto,  (iii) the National Flood Insurance Reform Act of 1994 as now or hereafter in effect or any successor statute thereto,  (iv) the  Flood Insurance Reform Act of 2004 as now or hereafter in effect or any successor statute thereto, in each case, together with all statutory 

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and regulatory provisions consolidating, amending, replacing, supplementing, implementing  or interpreting any of the foregoing, as amended or modified from time to time.
“Force Majeure” shall mean events occasioned by strikes, lock-outs, war or civil disturbance, natural disaster or acts of God which cause a delay in Borrower’s performance of an obligation; provided, however, that Borrower must give written notice to Lender within ten (10) days after the occurrence of an event which it believes to constitute an event of Force Majeure.
 “Foreign Lender” shall mean (a) if Borrower is a U.S. Person, a Lender that is not a U.S. Person, and (b) if Borrower is not a U.S. Person, a Lender that is resident or organized under the laws of a jurisdiction other than that in which Borrower is resident for tax purposes.
“GAAP” shall mean generally accepted accounting principles in the United States applied on a consistent basis and subject to the terms of Section 1.2.
“Governmental Authority” shall mean the government of the United States of America, or any other nation or any political subdivision thereof, whether state or local, and any agency, authority, instrumentality, regulatory body, court, central bank or other entity exercising executive, legislative, judicial, taxing, regulatory or administrative powers or functions of or pertaining to government.
“Guarantee” of or by any Person (the “guarantor”) shall mean any obligation, contingent or otherwise, of the guarantor guaranteeing or having the economic effect of guaranteeing any Indebtedness or other obligation of any other Person (the “primary obligor”) in any manner, whether directly or indirectly and including any obligation, direct or indirect, of the guarantor (a) to purchase or pay (or advance or supply funds for the purchase or payment of) such Indebtedness or other obligation or to purchase (or to advance or supply funds for the purchase of) any security for the payment thereof, (b) to purchase or lease property, securities or services for the purpose of assuring the owner of such Indebtedness or other obligation of the payment thereof, (c) to maintain working capital, equity capital or any other financial statement condition or liquidity of the primary obligor so as to enable the primary obligor to pay such Indebtedness or other obligation or (d) as an account party in respect of any letter of credit or letter of guaranty issued in support of such Indebtedness or obligation; provided, that the term “Guarantee” shall not include endorsements for collection or deposits in the ordinary course of business. The amount of any Guarantee shall be deemed to be an amount equal to the stated or determinable amount of the primary obligation in respect of which Guarantee is made or, if not so stated or determinable, the maximum reasonably anticipated liability in respect thereof (assuming such Person is required to perform thereunder) as determined by such Person in good faith. The term “Guarantee” used as a verb has a corresponding meaning.
“Guarantor” shall mean any and all present or future endorsers, guarantors, and sureties of the Obligations or any portion thereof. The initial Guarantor shall mean Hines Global REIT II.

“Guaranty” shall mean that certain Guaranty dated as of the Closing Date, by Guarantor in favor of Lender, as the same may be modified, amended, amended and restated or supplemented from time to time.
“Hazardous Materials” shall mean all hazardous or toxic substances, materials, mixtures, wastes or other pollutants or contaminants, including without limitation explosive or radioactive substances, petroleum or petroleum distillates, asbestos or asbestos containing materials, lead-based substances, polychlorinated biphenyls, radon gas, mold, mycotoxins and other fungi, infectious or medical wastes and all other substances or wastes of any nature, regulated pursuant to or covered by any Environmental Law.

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“Hedging Obligations” of any Person shall mean any and all obligations of such Person, whether absolute or contingent and howsoever and whensoever created, arising, evidenced or acquired under (i) any and all Hedging Transactions, (ii) any and all cancellations, buy backs, reversals, terminations or assignments of any Hedging Transactions and (iii) any and all renewals, extensions and modifications of any Hedging Transactions and any and all substitutions for any Hedging Transactions.
“Hedging Transaction” of any Person shall mean (a) any transaction (including an agreement with respect to any such transaction) now existing or hereafter entered into by such Person that is a rate swap transaction, swap option, basis swap, forward rate transaction, commodity swap, commodity option, equity or equity index swap or option, bond option, interest rate option, foreign exchange transaction, cap transaction, floor transaction, collar transaction,  currency swap transaction, cross-currency rate swap transaction, currency option, spot transaction, credit protection transaction, credit swap, credit default swap, credit default option, total return swap, credit spread transaction, repurchase transaction, reverse repurchase transaction, buy/sell-back transaction, securities lending transaction, or any other similar transaction (including any option with respect to any of these transactions) or any combination thereof, whether or not any such transaction is governed by or subject to any Master Agreement (as defined below) and (b) any and all transactions of any kind, and the related confirmations, which are subject to the terms and conditions of, or governed by, any form of master agreement published by the International Swaps and Derivatives Association, Inc., any International Foreign Exchange Master Agreement, or any similar agreement (any such master agreement, together with any related schedules, a “Master Agreement”), including any such obligations or liabilities under any Master Agreement.
“Hines Affiliate” shall mean any Person which:
(A)    is any of (i) a general or limited partnership in which the only general or managing partners are Gerald D. Hines, Jeffrey C. Hines, Hines Real Estate Holdings Limited Partnership (“HREH”) or any of the entities described in clauses (ii) through (vi) below; (ii) a limited liability company in which the only managing members or managers are one or more of Gerald D. Hines, Jeffrey C. Hines, HREH or any of the entities described in clause (i) above or clauses (iii) through (vi) below; (iii) a corporation the majority of the voting stock of which is owned, directly or indirectly, by members of the Hines Family, one or more Hines Family Trusts or any of the entities described in clauses (i) and (ii) above and clauses (iv) through (vi) below; (iv) HREH; (v) any fund or co-investment vehicle, platform or program (e.g., a series of related coordinated investments through project-specific legal entities) controlled by HREH or any of the entities described in clauses (i) through (iv) above or clauses (vi) below, as fund/entity/program managing general partner, managing member or manager, including a real estate investment trust; or (vi) any other entity (other than the entities described in clauses (i) through (v) of this definition) that is controlled, directly or indirectly, by Gerald D. Hines, Jeffrey C. Hines, HREH, a member of the Hines Family, a Hines Family Trust, or any of the entities described in clauses (i) through (v) above); and
(B)    has non-exclusive rights to use the “Hines” name or brand and to access the “Hines” support network (including, without limitation, expertise relating to the performance of property management and development management services, as applicable) in discharging its obligations.
“Hines Family” shall mean any one or more of (i) Jeffrey C. Hines, his spouse and his children and grandchildren (including, without limitation, children and grandchildren by adoption); (ii) Gerald D. Hines, his spouse and his children and grandchildren (including, without limitation, children and grandchildren by 

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adoption); or (iii) the estate of either of them or the issue (including, without limitation, children and grandchildren by adoption), brothers, sisters and spouses of issue of Gerald D. Hines or Jeffrey C. Hines.
“Hines Family Trust” shall mean a trust, the vested beneficiaries of which include members of the Hines Family and in which the only trustees are Gerald D. Hines, Jeffrey C. Hines, members of the Hines Family, HREH, another Hines Affiliate or one or more current or former employees of a Hines Affiliate.
“Hines Global REIT” shall mean Hines Global REIT, Inc., a Maryland corporation.
“Hines Global REIT II” shall mean Hines Global REIT II, INC., a Maryland corporation.
“Hines REIT” shall mean Hines Real Estate Investment Trust, Inc., a Maryland corporation, its successors and assigns, and any successor to all or a substantial part of the assets of Hines REIT.
“Immaterial Condemnation” shall have the meaning set forth in Exhibit 5.5.
“Indebtedness” of any Person shall mean, without duplication (i) all obligations of such Person for borrowed money, (ii) all obligations of such Person evidenced by bonds, debentures, notes or other similar instruments, (iii) all obligations of such Person in respect of the deferred purchase price of property or services (other than trade payables incurred in the ordinary course of business; (iv) all obligations of such Person under any conditional sale or other title retention agreement(s) relating to property acquired by such Person, (v) all Capital Lease Obligations of such Person, (vi) all obligations, contingent or otherwise, of such Person in respect of letters of credit, acceptances or similar extensions of credit, (vii) all Guarantees of such Person of the type of Indebtedness described in clauses (i) through (vi) above, (viii) all Indebtedness of a third party secured by any Lien on property owned by such Person, whether or not such Indebtedness has been assumed by such Person, (ix) all obligations of such Person, contingent or otherwise, to purchase, redeem, retire or otherwise acquire for value any common stock of such Person, (x) Off-Balance Sheet Liabilities and (xi) all Hedging Obligations. The Indebtedness of any Person shall include the Indebtedness of any partnership or joint venture in which such Person is a general partner or a joint venturer, except to the extent that the terms of such Indebtedness provide that such Person is not liable therefor.
“Indemnified Taxes” shall mean (a) Taxes other than Excluded Taxes, imposed on or with respect to any payment made by or on account of any obligation of any Loan Party under any Loan Document and (b) to the extent not otherwise described in (a), Other Taxes.
“Indemnitee” shall have the meaning set forth in Section 9.3(b).
“Interest Period” shall mean a period of one(1) month, provided that (i) the initial Interest Period may be less than one month, if the initial funding date of the Loan is a day other than the first Business Day of a calendar month and (ii) no Interest Period shall extend beyond the maturity date of the Note.
“Interest Rate Determination Date” shall mean (a) with respect to the first Interest Rate Determination Date, the date on which the Loan is initially funded, and (b) with respect to all subsequent Interest Rate Determination Dates, the first Business Day of each calendar month thereafter.
“IRS” shall mean the United States Internal Revenue Service. 
“Lease” shall mean any lease, sublease or sub-sublease, letting, license, concession or other agreement (whether written or oral and whether now or hereafter in effect) pursuant to which any Person is 

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granted a possessory interest in, or right to use or occupy all or any portion of any space in the Property, and every modification, amendment or other agreement relating to such lease, sublease, sub-sublease, or other agreement entered into in connection with such lease, sublease, sub-sublease, 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.
“Leasing Commissions” shall mean leasing brokerage commissions paid, or payable, by Borrower in connection with an Approved Replacement Lease, which commissions either (i) have been approved by Lender in its reasonable discretion or (ii) do not exceed market rates. 
“Lender” shall have the meaning assigned to such term in the opening paragraph of this Agreement; provided that, unless the context otherwise requires, each reference to the Lender shall be deemed to include any Person to which Lender assigns all or any portion of its rights under this Agreement. 
“LIBOR Index Rate” shall mean, with respect to each Interest Period, (i) the rate per annum effective on any Interest Rate Determination Date equal to the London interbank offered rate for deposits in U.S. Dollars appearing  on Reuters screen page LIBOR 01 (or on any successor or substitute page of such service or any successor to such service, or such other commercially available source providing such quotations as may be designated by Lender from time to time) at approximately 11:00 A.M. (London time) two (2) Business Days prior to the Interest Rate Determination Date, with a maturity comparable to such Interest Period (provided that if such rate is less than zero, such rate shall be deemed to be zero), divided by (ii) a percentage equal to 100% minus the then stated maximum rate of all reserve requirements (including any marginal, emergency, supplemental, special or other reserves and without benefit of credits for proration, exceptions or offsets that may be available from time to time) applicable to any member bank of the Federal Reserve System in respect of Eurocurrency liabilities as defined in Regulation D (or any successor category of liabilities under Regulation D); provided, that if the rate referred to in clause (i) above is not available at any such time for any reason, then the rate referred to in clause (i) shall instead be the interest rate per annum, as determined by Lender, to be the arithmetic average of the rates per annum at which deposits in  U. S. Dollars in an amount equal to the amount of the Loan are offered by major banks in the London interbank market to Lender at approximately 11:00 A.M. (London time), two (2) Business Days prior to the Interest Rate Determination Date (provided that if such rate is less than zero, such rate shall be deemed to be zero). 
“Lien” shall mean any mortgage, pledge, security interest, lien (statutory or otherwise), charge, encumbrance, hypothecation, or other arrangement having the practical effect of the foregoing or any assignment, deposit arrangement, preference, priority or other security agreement or preferential arrangement of any kind or nature whatsoever (including any conditional sale or other title retention agreement and any capital lease having the same economic effect as any of the foregoing).
“Loan” shall have the meaning set forth in the first “Whereas” clause hereto. 
“Loan Charges” shall have the meaning set forth in Section 9.13.
“Loan Closing Statement” shall mean that certain [Closing Statement] dated as of the Closing Date, executed by Borrower and First American Title Insurance Company.
“Loan Documents” shall mean, collectively, this Agreement, the Note, the Security Instrument, the Guaranty, the Environmental Indemnification Agreement, the Assignments of Leases and Rents, the Assignment of Contracts, the Subordination of Management Agreement, any Collateral Assignment of Hedge, the Collections Account Agreement, the Cash Management Agreement, the Loan Closing Statement, 

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and any and all other instruments, agreements, documents and writings executed in connection with any of the foregoing.
“Loan Parties” shall mean Borrower and the Guarantor.
“Master Disbursement Sweep Account” shall have the meaning set forth in Section 5.18.
“Material Adverse Effect” shall mean, with respect to any event, act, condition or occurrence of whatever nature (including any adverse determination in any litigation, arbitration, or governmental investigation or proceeding), whether singularly or in conjunction with any other event or events, act or acts, condition or conditions, occurrence or occurrences whether or not related, a material adverse change in, or a material adverse effect on, (i) the ability of the Borrower or the Guarantor to perform any of their respective obligations under the Loan Documents, (ii) the rights and remedies of Lender under any of the Loan Documents or (iii) the legality, validity or enforceability of any of the Loan Documents.
“Maturity Date” shall mean the earlier of (i) August 18, 2021 or (ii) the date on which the principal amount of the Loan has been declared or automatically has become due and payable (whether by acceleration or otherwise).
“Maximum Rate” shall have the meaning set forth in Section 9.14.
“Mechanic’s Liens” shall have the meaning set forth in Section 5.12.
“Multiemployer Plan” shall have the meaning set forth in Section 4001(a)(3) of ERISA.
 “Net Operating Income” shall mean for any period (i) annualized revenue from existing Tenants pursuant to Approved Leases that are in occupancy of their demised premises and paying rent at the time of calculation or are in a free rent period (excluding (a) non-recurring income, (b) revenue from Leases for which the Tenant is in default under such Lease and the applicable cure or grace period has expired, (c) revenue from Leases with Tenants who are not currently occupying their demised premises or have “gone dark”, and (d) revenue from Leases with a Tenant that is in bankruptcy, unless the Borrower has delivered to Lender a copy of the order in such bankruptcy case whereby the Tenant has assumed the Lease, and the Tenant has paid Borrower all past due rental obligations under the Lease), together with parking revenues, less (ii) the greater of (a) operating expenses based on the most recent twelve (12) month period adjusted to reflect insurance premiums based on insurance coverage required by Lender and projected property taxes for the upcoming tax period or (b) annualized operating expenses of $1,250,000.00.  For covenant purposes, calculation of operating expenses shall include (i) an assumed management fee equal to the greater of (a) two percent (2.0%) of Borrower’s effective gross income, or (b) the actual management fee payable under the approved property management agreement, and (ii) structural reserves at $0.10 per net rentable square feet.  For covenant purposes, the calculation of operating expenses shall exclude depreciation, amortization, income taxes, debt service per year, partnership expenses, Leasing Commissions, Tenant Improvements, and capital expenditures. 
“Note” shall mean the promissory note or promissory notes made by Borrower in favor of Lender in the aggregate principal amount of the Loan, as the same may be amended, restated, replaced, supplemented or otherwise modified from time to time with the written consent of Lender.
“Obligations” shall mean (a) all amounts owing by Borrower to Lender pursuant to or in connection with this Agreement or any other Loan Document, including without limitation, all principal, interest (including any interest accruing after the filing of any petition in bankruptcy or the commencement of any 

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insolvency, reorganization or like proceeding relating to Borrower, whether or not a claim for post-filing or post-petition interest is allowed in such proceeding), all reimbursement obligations, fees, expenses, indemnification and reimbursement payments, costs and expenses (including all fees and expenses of counsel to Lender incurred pursuant to this Agreement or any other Loan Document), whether direct or indirect, absolute or contingent, liquidated or unliquidated, now existing or hereafter arising hereunder or thereunder, (b) all Hedging Obligations owed by Borrower to Lender or any Affiliate of Lender, and (c) all Bank Product Obligations, together with all renewals, extensions, modifications or refinancings of any of the foregoing; provided, however,  that with respect to any Guarantor, the Obligations shall not include any Excluded Swap Obligations.
“OFAC” shall mean the Office of Foreign Assets Control of the United States Department of the Treasury.
“Off-Balance Sheet Liabilities” of any Person shall mean (i) any repurchase obligation or liability of such Person with respect to accounts or notes receivable sold by such Person, (ii) any liability of such Person under any sale and leaseback transactions which do not create a liability on the balance sheet of such Person, (iii) any liability of such Person under any so-called “synthetic” lease transaction or (iv) any obligation arising with respect to any other transaction which is the functional equivalent of or takes the place of borrowing but which does not constitute a liability on the balance sheet of such Person.
“Operating Account” shall have the meaning set forth in Section 5.18(a).
“Other Connection Taxes” shall mean, with respect to any Lender, Taxes imposed as a result of a present or former connection between such Lender and the jurisdiction imposing such Tax (other than connections arising from such Lender having executed, delivered, become a party to, performed its obligations under, received payments under, received or perfected a security interest under, engaged in any other transaction pursuant to or enforced any Loan Document, or sold or assigned an interest in any Loan or Loan Document). 
“Other Taxes” shall mean all present or future stamp, court or documentary, intangible, recording, filing or similar Taxes that arise from any payment made under, from the execution, delivery, performance, enforcement or registration of, from the receipt or perfection of a security interest under, or otherwise with respect to, any Loan Document, except any such Taxes that are Other Connection Taxes imposed with respect to an assignment.
“Patriot Act” shall have the meaning set forth in Section 9.16.
“Payment Date” shall have the meaning set forth in Section 2.4(d).
“Payment Office” shall mean the office of Lender located at 303 Peachtree Street., Atlanta, Georgia 30308, or such other location as to which Lender shall have given written notice to Borrower. 
“PBGC” shall mean the Pension Benefit Guaranty Corporation referred to and defined in ERISA, and any successor entity performing similar functions.
“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 as exceptions in Schedule B, or insured over by, the Title Insurance Policy, (c) Liens, if any, for Taxes imposed by any Governmental Authority not yet due or delinquent or being contested as permitted by and in accordance with the terms of the Loan Documents, (d) Approved Leases, (e) mechanics’ and materialmen’s liens and 

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similar claims being contested in accordance with the terms of the Loan Documents,  and (f) such other title and survey exceptions as Lender has approved or may approve in writing in Lender’s sole discretion, which Permitted Encumbrances in the aggregate do not materially and adversely affect the value or use of the Property or Borrower’s ability to repay the Loan.
“Permitted Indebtedness” shall have the meaning set forth in Section 7.2.
“Permitted Transfer” shall mean, absent an Event of Default:
(a)    any Transfer, directly as a result of the death of a natural person, of stock, membership interests or other ownership interests previously held by the decedent in question to the Person or Persons lawfully entitled thereto;
(b)    a Transfer by an individual of any direct or indirect interest in Borrower in connection with the estate planning of such individual transferor to (1) an immediate family members (i.e., a sibling, parent, spouse, child (or step-child), grandchild or other lineal descendant of the related Person) of such interest holder, (2) a trust established for the benefit of such immediate family member, or (3) partnerships or limited liability companies of which the partners or members, respectively, are comprised entirely of the transferor and immediate family members of the transferor;
(c)    Transfers of direct or indirect ownership interests in the Borrower to a Person that is wholly owned by the transferor; 
(d)    Transfers of direct or indirect ownership interests in the Borrower resulting solely from the sale, transfer or issuance of shares of common stock in a Person that is a publicly traded entity, provided such shares of common stock are listed on the New York Stock Exchange or another nationally recognized stock exchange; and
(e)    (i) Transfers, in one or more series of transactions (including pledges), of indirect interests in Borrower, (ii) the issuance of new shares or other direct or indirect interests in Hines Global REIT Properties LP (“HGR II OP”) and/or Hines Global REIT II, (iii) the merger, consolidation or other reorganization of HGR II OP and/or Hines Global REIT II, so long as HGR II OP and/or Hines Global REIT II is the surviving entity, and (iv) the Transfer of up to 49% of the direct interest in Borrower;
so long as after giving effect to any and all such Transfers, (i) there is not a Change of Control, and (ii) Borrower is able to remake (and shall be deemed to have remade) the representations and warranties set forth in Section 4.18 and Section 4.19 hereof. Borrower shall give Lender written notice promptly following the occurrence of any Transfer, including a Permitted Transfer, involving (a) a Transfer of a direct interest in Borrower, (b) a Transfer, indirectly, of a 20% or greater interest in Borrower, or (c) a Transfer, indirectly, which results in a Person holding, directly or indirectly, more than a 20% interest in Borrower that did not hold a 20% ownership interest in the Borrower immediately prior to such Transfer.   In connection with any Transfer hereunder, Borrower and any transferee shall cooperate and comply (at Borrower’s or such transferee’s expense) with all necessary “know your customer” or other similar checks under all Applicable Laws applicable to Lender, and shall, upon Lender’s written request, furnish to Lender such reasonably available information as Lender may request in order for Lender to conduct due diligence, satisfactory to Lender, regarding the foregoing. 
In the event a Permitted Transfer would result in (i) Guarantor owning, directly or indirectly, less than ten percent (10%) of the membership interest in the Borrower, or (ii) Guarantor no longer Controlling, directly or indirectly, the Borrower and the Property, then as a condition to the Permitted Transfer, Borrower 

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shall cause an Affiliate of the Borrower (the “Supplemental Guarantor”) reasonably acceptable to Lender to execute and deliver to Lender a guaranty and an environmental indemnity agreement, in form and substance substantially identical to the Guaranty and Environmental Indemnification Agreement.  Simultaneously with the delivery of said guaranty and environmental indemnity agreement, Borrower shall deliver, or cause to be delivered, to Lender one or more opinions of counsel in form reasonably satisfactory to Lender (such approval not to be unreasonably withheld, conditioned, or delayed) confirming due organization and authorization of the Supplemental Guarantor, due authorization and execution of said guaranty and environmental indemnity agreement, no violation of organizational documents, written agreements and applicable laws, and the enforceability of said guaranty and an environmental indemnity agreement (subject to customary qualifications, assumptions and exclusions).
“Person” shall mean any individual, partnership, firm, corporation, association, joint venture, limited liability company, trust or other entity, or any Governmental Authority.
“Plan” shall mean any employee pension benefit plan (other than a Multiemployer Plan) subject to the provisions of Title IV of ERISA or Section 412 of the Code or Section 302 of ERISA, and in respect of which Borrower or any ERISA Affiliate is (or, if such plan were terminated, would under Section 4069 of ERISA be deemed to be) an “employer” as defined in Section 3(5) of ERISA.
“Principal” shall have the meaning set forth in Section 5.17.
“Proceeding” shall mean any case, proceeding or other action under any existing or future Debtor Relief Laws.
“Property” shall mean those certain parcels of real property described in the Security Instrument, a portion of which is known by the street address of 16920 West Commerce Drive, Goodyear, Arizona, and all related facilities, amenities, fixtures, and personal property owned by Borrower, and any other buildings or improvements now or hereafter located or erected thereon.
“Property Management Agreement” shall mean the written agreement between Borrower and the Property Manager for the management of the Property, which Property Management Agreement shall be subject to Lender’s prior written approval, which approval shall not be unreasonably withheld. 
“Property Manager” shall mean Hines Interests Limited Partnership, a Delaware limited partnership.
“Re-Tenanting Additional Deposit” shall have the meaning set forth in Section 5.19. 
“Re-Tenanting Funds” shall have the meaning set forth in Section 5.19.
“Re-Tenanting Funds Account” shall have the meaning set forth in Section 5.19.
     “Register” shall have the meaning set forth in Section 9.6.
 “Regulation D” shall mean Regulation D of the Board of Governors of the Federal Reserve System, as the same may be in effect from time to time, and any successor regulations.
“Related Parties” shall mean, with respect to any specified Person, such Person’s Affiliates and the respective directors, officers, employees, agents and advisors of such Person and such Person’s Affiliates.

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“Release” shall mean any release, spill, emission, leaking, dumping, injection, pouring, deposit, disposal, discharge, dispersal, leaching or migration into the environment (including ambient air, surface water, groundwater, land surface or subsurface strata) or within any building, structure, facility or fixture.   
“Responsible Officer” shall mean any of the president, the chief executive officer, the chief operating officer, the chief financial officer, the treasurer or a vice president of Borrower or such other representative of Borrower as may be designated in writing by any one of the foregoing with the consent of Lender; and, with respect to financial covenants only, the chief financial officer or the treasurer of Borrower.
 “Sanctioned Country” shall mean, at any time, a country or territory that is, or whose government is, the subject or target of any Sanctions.
“Sanctioned Person” shall mean, at any time, (a) any Person listed in any Sanctions-related list of designated Persons maintained by OFAC or the U.S. Department of State, (b) any Person operating, organized or resident in a Sanctioned Country or (c) any Person owned or controlled by any such Person or Persons described in the foregoing clauses (a) or (b).
“Sanctions” shall mean economic or financial sanctions or trade embargoes imposed, administered or enforced from time to time by the U.S. government, including those administered by OFAC or the U.S. Department of State.
“Security Instrument” shall mean that certain Deed of Trust, Assignment of Rents and Leases, Security Agreement and Fixture Filing dated of even date herewith, executed by Borrower for the benefit of Lender, covering and creating a first-priority Lien on the Property, as the same may be modified, amended, amended and restated or supplemented from time to time.
“Stop Notice” shall have the meaning set forth in Section 5.12.
“Subordination of Management Agreement” shall mean that certain Assignment and Subordination of Management Agreement, dated as of the Closing Date and executed by Borrower, Property Manager and Lender, as the same may be modified, amended, amended and restated, supplemented or replaced from time to time.
“Subsidiary” shall mean, with respect to any Person (the “parent”), any corporation, partnership, joint venture, limited liability company, association or other entity the accounts of which would be consolidated with those of the parent in the parent’s consolidated financial statements if such financial statements were prepared in accordance with GAAP as of such date, as well as any other corporation, partnership, joint venture, limited liability company, association or other entity (i) of which securities  or other ownership interests representing more than 50% of the equity  or more than 50% of  the ordinary voting power, or in the case of a partnership, more than 50% of the general partnership interests are, as of such date, owned, Controlled or held, or (ii) that is, as of such date, otherwise Controlled, by the parent or one or more subsidiaries of the parent or by the parent and one or more subsidiaries of the parent. Unless otherwise indicated, all references to “Subsidiary” hereunder shall mean a Subsidiary of Borrower.
“Swap Obligation” shall mean, with respect to any Guarantor, any obligation to pay or perform under any agreement, contract or transaction that constitutes a “swap” within the meaning of section 1a(47) of the Commodity Exchange Act.  

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“Tax Distribution” means any distribution required to be made by Borrower to its equity holders for the payment of Taxes related to the allocation of income to such equity holders pursuant to the Limited Liability Company Agreement of Borrower or Applicable Law. 
“Taxes” shall mean any and all present or future taxes, levies, imposts, duties, deductions, withholdings (including backup withholding), assessments, fees, charges imposed by any Governmental Authority, including any interest, additions to tax or penalties applicable thereto.
“Tenant” shall mean any Person occupying all or any portion of any space in the Property pursuant to a Lease.
“Tenant Improvements” shall mean all bona fide costs incurred for construction and related work to the Property required by an Approved Replacement Lease.
“Termination Fee Deposit” shall have the meaning set forth in Section 5.11.
“Title Insurance Policy” shall mean a mortgagee title insurance policy issued in the maximum principal amount of the Loan, in such form as is acceptable to Lender in its sole discretion, covering the fee estate in the Property, with such reinsurance and endorsements as Lender may require, containing no exceptions to title (printed or otherwise) which are unacceptable to Lender, and insuring that the Security Instrument is a first-priority Lien on the Property.
“Transfer” shall have the meaning set forth in Section 7.1.    
“U.S. Borrower” shall mean a Borrower that is a U.S. Person.
“U.S. Person” shall mean any Person that is a “United States person” as defined in Section 7701(a)(30) of the Code.
“U.S. Tax Compliance Certificate” shall mean a certificate reasonably satisfactory to Borrower certifying that a Foreign Lender is not a “bank” within the meaning of Section 881(c)(3)(A) of the Code, a “10 percent shareholder” of Borrower within the meaning of Section 871(h)(3) or Section 881(c)(3)(B) of the Code, or a “controlled foreign corporation” described in Section 881(c)(3)(C) of the Code, and that no payments in connection with any Loan Document are effectively connected with a U.S. trade or business conducted by such Lender.
 “Unimproved Property” shall mean that portion of the Property which is identified in the Security Instrument as Parcel No. 1:  Lot 1B-2 of “A Minor Land Division of Lot 1B, Goodyear Crossing Industrial Park”, according to the plat of record in the Office of the County Recorder of Maricopa County, Arizona, recorded in Book 1038 of Maps, Page 30.
“Withdrawal Liability” shall mean liability to a Multiemployer Plan as a result of a complete or partial withdrawal from such Multiemployer Plan, as such terms are defined in Part I of Subtitle E of Title IV of ERISA.

Section 1.2    Accounting Terms and Determination.  Unless otherwise defined or specified herein, all accounting terms used herein shall be interpreted, all accounting determinations hereunder shall be made, and all financial statements required to be delivered hereunder shall be prepared, in accordance with GAAP as in effect from time to time, applied on a basis consistent (except for such changes approved 

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by the independent public accountants of the Person for whom the financial statements are prepared) with the most recent audited consolidated financial statement of the Person for whom the financial statements are delivered pursuant to Section 4.4; provided, that if Borrower notifies Lender that Borrower wishes to amend any financial covenant hereunder to eliminate the effect of any change in GAAP on the operation of such financial covenant (or if Lender notifies  Borrower that it wishes to amend a financial covenant for such purpose), then the compliance with such covenant shall be determined on the basis of GAAP in effect immediately before the relevant change in GAAP became effective, until either such notice is withdrawn or such covenant is amended in a manner satisfactory to Borrower and Lender.

Section 1.3    Terms Generally.  The definitions of terms herein shall apply equally to the singular and plural forms of the terms defined.  Whenever the context may require, any pronoun shall include the corresponding masculine, feminine and neuter forms.  The words “include”, “includes” and “including” shall be deemed to be followed by the phase “without limitation”.  The word “will” shall be construed to have the same meaning and effect as the word “shall”.  In the computation of periods of time from a specified date to a later specified date, the word “from” means “from and including” and the word “to” means “to but excluding”. Unless the context requires otherwise (i) any definition of or reference to any agreement, instrument or other document herein shall be construed as referring to such agreement, instrument or other document as it was originally executed or as it may from time to time be amended, supplemented or otherwise modified (subject to any restrictions on such amendments, supplements or modifications set forth herein), (ii) any reference herein to any Person shall be construed to include such Person’s successors and permitted assigns, (iii) the words “hereof”, “herein” and “hereunder” and words of similar import shall be construed to refer to this Agreement as a whole and not to any particular provision hereof, (iv) all references to Articles, Sections, Exhibits and Schedules shall be construed to refer to Articles, Sections, Exhibits and Schedules to this Agreement and (v) all references to a specific time shall be construed to refer to the time in the city and state of Lender’s principal office, unless otherwise indicated. 

ARTICLE II 
 
AMOUNT AND TERMS OF THE COMMITMENT

Section 2.1    Commitment.  
(a)    Subject to the terms and conditions set forth herein, Lender agrees to make the Loan to Borrower on the Closing Date.  The Loan shall bear interest at the rate provided in Section 2.4. The execution and delivery of this Agreement by Borrower and the satisfaction of all conditions precedent pursuant to Section 3.1 shall be deemed to constitute Borrower’s request to borrow the Loan on the Closing Date.  Borrower shall receive only one borrowing hereunder in respect of the Loan and any amount borrowed and repaid hereunder in respect of the Loan may not be reborrowed.
(b)    Lender shall maintain in accordance with its usual practice appropriate records evidencing the Indebtedness of Borrower to Lender resulting from the advance of the Loan by Lender, including the amounts of principal and interest payable thereon and paid to Lender from time to time under this Agreement.  The entries made in such record shall be prima facie evidence of the existence and amounts of the obligations of Borrower therein recorded; provided that the failure or delay of Lender in maintaining or making entries into any such record or any error therein shall not in any manner affect the obligation of Borrower to repay the Loan (both principal and unpaid accrued interest) in accordance with the terms of this Agreement.

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(c)    Borrower’s obligation to pay the principal of, and interest on, the Loan shall be evidenced by the Note.  Lender has no intention of making advances under the Loan in excess of the aggregate face amount of the Note. Borrower acknowledges and agrees, however, that, if, for any reason, the outstanding principal balance of the Loan outstanding from time to time exceeds the face amount of the Note, the excess shall bear interest at the Default Rate, shall be payable, with accrued interest, ON DEMAND and shall be secured by all of the collateral described in the Security Instrument and all other Collateral for the Loan.  

Section 2.2    Repayment of Loan.
(a)    The Borrower shall pay interest on the Loan as set forth in Section 2.4.
(b)    To the extent not previously paid, the aggregate unpaid principal balance of the Loan together with interest accrued and unpaid thereon, shall be due and payable in full on the Maturity Date.

Section 2.3    Prepayments.  
(a)    Optional Prepayments.  Borrower shall have the right at any time and from time to time to prepay the Loan, in whole or in part, without premium or penalty, by giving irrevocable written notice (or telephonic notice promptly confirmed in writing) of its intention to prepay to Lender no later than three (3) Business Days prior to the date of such prepayment (which notice may be retracted).  Each such notice shall specify the proposed date of such prepayment and the principal amount of the Loan or portion thereof to be prepaid.  Such amount shall be due and payable on the date designated in such notice, together with accrued interest to such date on the amount so prepaid in accordance with Section 2.4(a); provided that if all or any portion of the Loan is prepaid on a date other than the last day of an Interest Period applicable thereto, Borrower shall also pay all amounts required pursuant to Section 2.13.  Each prepayment of the Loan shall be applied to principal installments in inverse order of maturity. 
(b)    Mandatory Prepayments.  On the earlier of (x) the date Lender elects to require prepayment of all or a portion of the Loan in accordance with Exhibit 5.5, Section 2 or 3 hereof and (y) the next occurring Payment Date following the date on which Borrower actually receives any  insurance proceeds or condemnation awards, if and to the extent Lender is not obligated hereunder to make such proceeds or awards available to Borrower for the restoration of the Property, Borrower shall prepay the outstanding principal balance of the Loan in an amount equal to one hundred percent (100%) of such proceeds or awards.  Such prepayment shall be applied, first, to interest on the outstanding principal balance of the Loan that would have accrued at the Applicable Interest Rate on the amount prepaid through the end of the Interest Period in which such prepayment occurs, notwithstanding that such Interest Period extends beyond the date of prepayment, and then to all other amounts then due to Lender under this Agreement or any of the other Loan Documents and then to the outstanding principal balance of the Loan.

Section 2.4    Interest on Loan.
(a)    Subject to Section 2.7 and Section 2.8 below, Borrower shall pay interest on the Loan at the LIBOR Index Rate in effect for the applicable Interest Period plus the Applicable Margin in effect from time to time (the “Applicable Interest Rate”).

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(b)    While an Event of Default exists or after acceleration, at the option of Lender, Borrower shall pay interest (“Default Interest”) on the Loan at the Default Rate.
(c)    In the event that any payment due under the terms hereunder is not received by Lender within ten (10) days of the date such payment is due (inclusive of the date when due),  Borrower shall pay to Lender a late charge equal to five percent (5%) of such payment provided such late charge shall not apply to the amount of the loan due at maturity whether by acceleration or otherwise.  Such fee shall be payable on the earlier of (i) the date of demand by Lender and (ii) the date that Borrower makes the late payment. 
(d)    Interest on the principal amount of the Loan shall accrue from and including the Closing Date to but excluding the date of any repayment thereof.  Interest shall be payable in arrears on the fifth day of each calendar month (each a “Payment Date”), commencing on October 5, 2016,  and on the Maturity Date.    All Default Interest shall be payable on demand.  
(e)    Lender shall determine the interest rate applicable to the Loan hereunder and shall promptly notify Borrower of such rate in writing (or by telephone, promptly confirmed in writing).  Any such determination shall be conclusive and binding for all purposes, absent manifest error.

Section 2.5    Fees.  Borrower shall pay to Lender for its own account a loan fee equal to .65% of the Loan ($188,500.00), which fee shall be due and payable by the Borrower on the Closing Date.  All fees shall be fully earned on the Closing Date and shall not be subject to refund or rebate under any circumstances.

Section 2.6    Computation of Interest and Fees.  All computations of interest and fees hereunder shall be made on the basis of a year of 360 days for the actual number of days (including the first day but excluding the last day) occurring in the period for which such interest or fees are payable (to the extent computed on the basis of days elapsed). Each determination by Lender of an interest amount or fee hereunder shall be made in good faith and, except for manifest error, shall be final, conclusive and binding for all purposes. 

Section 2.7    Inability to Determine Interest Rates.  If at any time, Lender shall have determined (which determination shall be conclusive and binding upon Borrower) that (i) by reason of circumstances affecting the relevant interbank market, adequate means do not exist for ascertaining the LIBOR Index Rate, or (ii) the LIBOR Index Rate does not adequately and fairly reflect the cost to Lender of making, funding or maintaining the  Loan, Lender shall give written notice (or telephonic notice, promptly confirmed in writing) to Borrower as soon as practicable thereafter. Until Lender notifies Borrower that the circumstances giving rise to such notice no longer exist, the Loan shall be converted to a Loan bearing interest at the Base Rate. 

Section 2.8    Illegality.  If any Change in Law shall make it unlawful or impossible for Lender to make, maintain or fund the Loan at the Applicable Interest Rate, Lender shall promptly give notice thereof to Borrower, whereupon until Lender notifies Borrower that the circumstances giving rise to such suspension no longer exist, the obligation of Lender to fund or maintain the Loan at the Applicable Interest Rate  shall be suspended, and the Loan shall be converted to a Loan bearing interest  at the Base Rate, either (i) on the last day of the then current Interest Period if Lender may lawfully continue to maintain the Loan at the 

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Applicable Interest Rate to such date, or (ii) immediately if Lender shall determine that it may not lawfully continue to maintain the Loan at the Applicable Interest Rate to such date.  

Section 2.9    Increased Costs.
(a)    If any Change in Law shall:
(i)    impose, modify or deem applicable any reserve, special deposit or similar requirement that is not otherwise included in the determination of the LIBOR Index Rate hereunder against assets of, deposits with or for the account of, or credit extended by, Lender (except any such reserve requirement reflected in the LIBOR Index Rate); or 
(ii)    impose on Lender or the eurodollar interbank market any other condition (other than Taxes) affecting this Agreement or the  Loan; 
and the result of the foregoing is to increase the cost to Lender of making, converting into, continuing or maintaining the Loan or to reduce the amount received or receivable by Lender hereunder (whether of principal, interest or any other amount), then Borrower shall promptly pay, upon written notice from and demand by Lender, within five Business Days after the date of such notice and demand, additional amount or amounts sufficient to compensate Lender for such additional costs incurred or reduction suffered. 
(b)    If Lender shall have determined that on or after the date of this Agreement any Change in Law regarding capital or liquidity requirements has or would have the effect of reducing the rate of return on Lender’s capital (or on the capital of Lender’s parent corporation) as a consequence of its obligations hereunder to a level below that which Lender or Lender’s parent corporation could have achieved but for such Change in Law (taking into consideration Lender’s policies or the policies of Lender’s parent corporation with respect to capital adequacy), then, from time to time, within five (5) Business Days after receipt by Borrower of written demand by Lender, Borrower shall pay to Lender such additional amounts as will compensate Lender or Lender’s parent corporation for any such reduction suffered.  
(c)    A certificate of Lender setting forth the amount or amounts necessary to compensate Lender or its parent corporation, as the case may be, as specified in paragraph (a) or (b) of this Section shall be delivered to Borrower and shall be conclusive, absent manifest error.  Borrower shall pay Lender such amount or amounts within 10 days after receipt thereof.
(d)    Failure or delay on the part of Lender to demand compensation pursuant to this Section shall not constitute a waiver of Lender’s right to demand such compensation.

Section 2.10    Payments Generally.
Borrower shall make each payment required to be made by it hereunder (whether of principal, interest, fees, or of amounts payable under Sections 2.9 , 2.11 or 2.13, or otherwise) prior to 12:00 noon, on the date when due, in immediately available funds, without set-off or counterclaim. Any amounts received after such time on any date may, in the discretion of Lender, be deemed to have been received on the next succeeding Business Day for purposes of calculating interest thereon.  All such payments shall be made to Lender at its Payment Office.  If any payment hereunder shall be due on a day that is not a Business Day, the date for payment shall be extended to the next succeeding Business Day, and, in the case of any payment accruing interest, interest thereon shall be made payable for the period of such extension.  All payments hereunder shall be made in Dollars.

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Section 2.11    Taxes.
(a)    Payments Free of Taxes.  Any and all payments by or on account of any obligation of any Loan Party under any Loan Document shall be made without deduction or withholding for any Taxes, except as required by Applicable Law.  If any Applicable Law requires the deduction or withholding of any Tax from any such payment by a Loan Party (or its withholding agent), then the Loan Party (or its withholding agent) shall be entitled to make such deduction or withholding and shall timely pay the full amount deducted or withheld to the relevant Governmental Authority in accordance with Applicable Law and, if such Tax is an Indemnified Tax, then the sum payable by the applicable Loan Party shall be increased as necessary so that after such deduction or withholding has been made (including such deductions and withholdings applicable to additional sums payable under this Section) Lender receives an amount equal to the sum it would have received had no such deduction or withholding been made. 
(b)    Payment of Other Taxes by Borrower.  Without duplication of any payment made pursuant to any other provision of this Agreement, Borrower shall timely pay to the relevant Governmental Authority in accordance with Applicable Law, or at the option of Lender timely reimburse it for the payment of, any Other Taxes.
(c)    Indemnification by Borrower.  Without duplication of any payment made pursuant to any other provision of this Agreement, Borrower shall indemnify Lender, within 10 days after demand therefor, for the full amount of any Indemnified Taxes (including Indemnified Taxes imposed or asserted on or attributable to amounts payable under this Section) payable or paid by Lender or required to be withheld or deducted from a payment to Lender and any reasonable expenses arising therefrom or with respect thereto, whether or not such Indemnified Taxes were correctly or legally imposed or asserted by the relevant Governmental Authority.  A certificate as to the amount of such payment or liability delivered to Borrower by Lender shall be conclusive absent manifest error.
(d)    Evidence of Payments.  As soon as practicable after any payment of Taxes by Borrower or any other Loan Party to a Governmental Authority pursuant to this Section 2.11, Borrower or other Loan Party shall deliver to Lender the original or a certified copy of a receipt issued by such Governmental Authority evidencing such payment, a copy of the return reporting such payment or other evidence of such payment reasonably satisfactory to Lender.
(e)    Status of Lender.  
(i)    If Lender is entitled to an exemption from or reduction of withholding Tax with respect to payments made under any Loan Document, Lender shall deliver to Borrower, at the time or times reasonably requested by Borrower, such properly completed and executed documentation reasonably requested by Borrower as will permit such payments to be made without withholding or at a reduced rate of withholding.  In addition, Lender, if reasonably requested by Borrower, shall deliver such other documentation prescribed by Applicable Law or reasonably requested by Borrower as will enable Borrower to determine whether or not Lender is subject to backup withholding or information reporting requirements.  Notwithstanding anything to the contrary in the preceding two sentences, the completion, execution and submission of such documentation (other than such documentation set forth in Section 2.11(e) (ii)(A), (ii)(B) and (ii)(D) below) shall not be required if in the Lender’s reasonable judgment such completion, execution or submission would subject such Lender to any material unreimbursed cost or expense or would materially prejudice the legal or commercial position of such Lender.

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(ii)    Without limiting the generality of the foregoing, in the event that Borrower is a U.S. Borrower,
(A)    any Lender that is a U.S. Person shall deliver to Borrower on or prior to the date on which such Lender becomes the Lender under this Agreement (and from time to time thereafter upon the reasonable request of Borrower), executed originals of IRS Form W-9 certifying that such Lender is exempt from U.S. federal backup withholding tax;
(B)    any Foreign Lender shall, to the extent it is legally entitled to do so, deliver to Borrower on or prior to the date on which such Foreign Lender becomes the Lender under this Agreement (and from time to time thereafter upon the reasonable request of Borrower), whichever of the following is applicable:
(1)    in the case of a Foreign Lender claiming the benefits of an income tax treaty to which the United States is a party (x) with respect to payments of interest under any Loan Document, executed originals of IRS Form W-8BEN OR W-8BEN-E establishing an exemption from, or reduction of, U.S. federal withholding Tax pursuant to the “interest” article of such tax treaty and (y) with respect to any other applicable payments under any Loan Document, IRS Form W-8BEN OR W-8BEN-E establishing an exemption from, or reduction of, U.S. federal withholding Tax pursuant to the “business profits” or “other income” article of such tax treaty;
(2)    executed originals of IRS Form W-8ECI;
(3)    in the case of a Foreign Lender claiming the benefits of the exemption for portfolio interest under Section 881(c) of the Code, (x) a U.S. Tax Compliance Certificate and (y) executed originals of IRS Form W-8BEN OR W-8BEN-E; or
(4)    to the extent a Foreign Lender is not the Beneficial Owner, executed originals of IRS Form W-8IMY, accompanied by IRS Form W-8ECI, IRS Form W-8BEN OR W-8BEN-E, a U.S. Tax Compliance Certificate, and/or other certification documents from each Beneficial Owner, as applicable; provided that if the Foreign Lender is a partnership and one or more direct or indirect partners of such Foreign Lender are claiming the portfolio interest exemption, such Foreign Lender may provide a U.S. Tax Compliance Certificate on behalf of each such direct and indirect partner;
(C)    any Foreign Lender shall, to the extent it is legally entitled to do so, deliver to Borrower on or prior to the date on which such Foreign Lender becomes a Lender under this Agreement (and from time to time thereafter upon the reasonable request of Borrower), executed originals of any other form prescribed by Applicable Law as a basis for claiming exemption from or a reduction in U.S. federal withholding Tax, duly completed, together with such supplementary documentation as may be prescribed by Applicable Law to permit Borrower to determine the withholding or deduction required to be made; and

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(D)    if a payment made to Lender under any Loan Document would be subject to U.S. federal withholding Tax imposed by FATCA if such Lender were to fail to comply with the applicable reporting requirements of FATCA (including those contained in Section 1471(b) or 1472(b) of the Code, as applicable), such Lender shall deliver to Borrower at the time or times prescribed by law and at such time or times reasonably requested by Borrower such documentation prescribed by Applicable Law (including as prescribed by Section 1471(b)(3)(C)(i) of the Code) and such additional documentation reasonably requested by Borrower as may be necessary for Borrower to comply with their obligations under FATCA and to determine that such Lender has complied with such Lender’s obligations under FATCA or to determine the amount to deduct and withhold from such payment.  Solely for purposes of this clause (D), “FATCA” shall include any amendments made to FATCA after the date of this Agreement.
(iii)    Lender agrees that if any form or certification it previously delivered expires or becomes obsolete or inaccurate in any respect, it shall update such form or certification or promptly notify Borrower in writing of its legal inability to do so.
(f)    Treatment of Certain Refunds.  If any party determines, in its sole discretion exercised in good faith, that it has received a refund of any Taxes as to which it has been indemnified pursuant to this Section 2.11 (including by the payment of additional amounts pursuant to this Section 2.11), it shall pay to the indemnifying party an amount equal to such refund (but only to the extent of indemnity payments made under this Section 2.11 with respect to the Taxes giving rise to such refund), net of all out-of-pocket expenses (including Taxes) of such indemnified party and without interest (other than any interest paid by the relevant Governmental Authority with respect to such refund).  Such indemnifying party, upon the request of such indemnified party, shall repay to such indemnified party the amount paid over pursuant to this paragraph (f) (plus any penalties, interest or other charges imposed by the relevant Governmental Authority) in the event that such indemnified party is required to repay such refund to such Governmental Authority.  Notwithstanding anything to the contrary in this paragraph (f), in no event will the indemnified party be required to pay any amount to an indemnifying party pursuant to this paragraph (f) the payment of which would place the indemnified party in a less favorable net after-Tax position than the indemnified party would have been in if the Tax subject to indemnification and giving rise to such refund had not been deducted, withheld or otherwise imposed and the indemnification payments or additional amounts with respect to such Tax had never been paid.  This paragraph shall not be construed to require any indemnified party to make available its Tax returns (or any other information relating to its Taxes that it deems confidential) to the indemnifying party or any other Person.
(g)    Survival.  Each party’s obligations under this Section 2.11 shall survive the termination of the Commitment and the repayment, satisfaction or discharge of all obligations under any Loan Document.

Section 2.12    Hedging Transactions.  Borrower may enter into a Hedging Transaction in connection with the Loan.  In the event that Lender or an Affiliate of Lender provides a Hedging Transaction to Borrower, (i) the incremental exposure to Lender or such Affiliate shall be secured by the Collateral on a pro rata and pari passu basis with the Loan and (ii) in connection with any prepayment of the Loan, Borrower shall terminate, at Borrower’s cost, the required portion of the Hedging Obligations.  In the event that Borrower enters into any Hedging Transaction, Borrower shall cause a Collateral Assignment of Hedge to be duly executed by the applicable parties thereto within ten (10) days of execution of a Hedging Transaction.  

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Nothing herein constitutes an offer or recommendation to enter into any “swap” or trading strategy involving a “swap” within the meaning of Section 1a(47) of the Commodity Exchange Act.  Any such offer or recommendation, if any, will only occur after Lender has received appropriate documentation from Borrower regarding whether Borrower is qualified to enter into a swap under Applicable Law.

Section 2.13    Funding Indemnity.  In the event of any (a) payment of any principal of any portion of the Loan other than on the last day of the Interest Period applicable thereto (including as a result of an Event of Default) or (b) the failure by Borrower to borrow or prepay any portion of the Loan on the date specified in any applicable notice (regardless of whether such notice is withdrawn or revoked) then, in any such event, Borrower shall compensate Lender, within five (5) Business Days after written demand from Lender, for any loss, cost or expense attributable to such event.  Such loss, cost or expense shall be deemed to include an amount determined by Lender to be the excess, if any, of (A) the amount of interest that would have accrued on the principal amount of such portion of the Loan if such event had not occurred at the LIBOR Index Rate applicable to the Loan for the period from the date of such event to the last day of the then current Interest Period therefor (or in the case of a failure to borrow for the period that would have been the Interest Period for such portion of the Loan) over (B) the amount of interest that would accrue on the principal amount of such portion of the Loan for the same period if the LIBOR Index Rate were set on the date such portion of the Loan was prepaid or the date on which Borrower failed to borrow such portion of the Loan.   A certificate as to any additional amount payable under this Section 2.13 submitted to Borrower by Lender shall be conclusive, absent manifest error.

Section 2.14    Mitigation of Obligations.  If Lender requests compensation under Section 2.9, or if Borrower is required to pay any additional amount to Lender or any Governmental Authority for the account of Lender pursuant to Section 2.11, then Lender shall use reasonable efforts to designate a different lending office for funding or booking its portion of the Loan hereunder or to assign its rights and obligations hereunder to another of its offices, branches or affiliates, if, in the reasonable judgment of Lender, such designation or assignment (i) would eliminate or reduce amounts payable under Section 2.9 or Section 2.11, as the case may be, in the future and (ii) would not subject Lender to any unreimbursed cost or expense and would not otherwise be disadvantageous to Lender.  Borrower hereby agrees to pay all reasonable costs and expenses incurred by Lender in connection with such designation or assignment.

ARTICLE III 
 
CONDITIONS PRECEDENT TO LOAN 

Section 3.1    Conditions To Effectiveness.  The obligation of Lender to make the Loan shall not become effective until the date on which each of the following conditions is satisfied (or waived in accordance with Section 9.2):
(a)    Lender shall have received payment of all fees, expenses and other amounts due and payable on or prior to the Closing Date, including, without limitation, reimbursement or payment of all out-of-pocket expenses of Lender, the Sole Lead Arranger and their Affiliates (including reasonable fees, charges and disbursements of counsel to Lender) required to be reimbursed or paid by Borrower hereunder, under any other Loan Document, the Fee Letter and under any agreement with Lender or the Sole Lead Arranger.

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(b)    Lender (or its counsel) shall have received the following, each to be in form and substance satisfactory to Lender:
(i)    a counterpart of each of the Loan Documents signed by or on behalf of the parties thereto; 
(ii)    a certificate of the manager or managing member or  Secretary or Assistant Secretary, as applicable, of each Loan Party, and the members of Borrower to the extent requested by Lender, attaching and certifying copies of its bylaws, or partnership agreement or limited liability company agreement, and of the resolutions of its boards of directors or other equivalent governing body, or comparable organizational documents and authorizations, authorizing the execution, delivery and performance of the Loan Documents to which it is a party and certifying the name, title and true signature of each officer or manager of such Loan Party executing the Loan Documents to which it is a party; 
(iii)    certified copies of the articles or certificate of incorporation, certificate of organization or limited partnership, or other registered organizational documents of each Loan Party, and the members of Borrower to the extent requested by Lender, together with certificates of good standing or existence, as may be available from the Secretary of State of the jurisdiction of organization of such Loan Party or the applicable member of Borrower and each other jurisdiction where such party is required to be qualified to do business as a foreign corporation;
(iv)    a favorable written opinion of counsel to the Loan Parties, addressed to Lender, and covering such matters relating to the Loan Parties, the Loan Documents and the transactions contemplated therein as Lender shall reasonably request;
(v)    a certificate, dated the Closing Date and signed by a Responsible Officer, certifying that after giving effect to the funding of the Loan, (x) no Default or Event of Default exists, and (y) since the date of the financial statements of Borrower described in Section 4.4, there shall have been no change which has had or could reasonably be expected to have a Material Adverse Effect only at Closing;
(vi)    a duly executed funds disbursement agreement;
(vii)    the Title Insurance Policy;
(viii)    current “as-built” survey of the Property, dated or updated to a date not earlier than thirty (30) days prior to the Closing Date, certified to Lender and the title insurer, prepared by a surveyor licensed in the State of Arizona acceptable to Lender and the issuer of the mortgagee title insurance policy, and conforming to Lender’s current standard survey requirements;
(ix)    appropriate information on the past and present environmental, health and safety conditions at the Property, including without limitation a Phase I environmental site assessment report for the Property that (x) complies with the most recent ASTM 1527 standard, and (y) is prepared by an environmental consultant acceptable to Lender, and any further environmental assessment, testing, analysis, or reporting deemed necessary or desirable by Lender and showing results satisfactory to Lender.  Lender may, based on site conditions, require appropriate documentation from an appropriate Governmental Authority 

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on the current status and future activities and actions concerning environmental conditions at the Property;
(x)    a current engineering report or property condition report with respect to the Property, covering, among other matters, inspection of heating ventilation, air conditioning and any other base building systems, roof and structural details and showing no failure of compliance with building plans and specifications, Applicable Laws (including requirements of the Americans with Disabilities Act, as amended ) and fire safety and health standards;
(xi)    an appraisal of the Property performed by an M.A.I. appraiser acceptable to Lender (an “Appraisal”) which indicates a minimum leased fee value “as is” of $58,000,000.00;
(xii)    an update to existing zoning letter or zoning report, dated not more than (30) days prior to the Closing Date, certified to Lender;
(xiii)    copies of property and liability insurance policies maintained by Borrower, conforming to the requirements of Exhibit 5.5 hereof and otherwise in form and detail acceptable to Lender, in each case naming Lender as loss payee or additional insured, as the case may be, together with a lender’s loss payable endorsement in form and substance satisfactory to Lender;
(xiv)    flood hazard certification with respect to the Property, and, if applicable, evidence of flood insurance coverage conforming to the requirements of Exhibit 5.5 hereof, along with an executed Certificate of Flood Insurance Compliance in the form attached hereto as Exhibit 3.1.
(xv)    a current rent roll of the Property, certified by Borrower, which rent roll shall include the following information:  (a) Tenant names; (b) unit/suite numbers; (c) area of each demised premises and total area of the Property (stated in net rentable square feet); (d) rental rate (including escalations) (stated in gross amount and in amount per net rentable square foot per year); (e) Lease term (commencement, expiration and renewal options); (f) real property tax or common area and maintenance expense pass-throughs; and (g) security deposit;
(xvi)    copy of the most recent tax bill for the Property;
(xvii)    copies of service contracts;
(xviii)    a copy of the Amazon Lease;
(xix)    an estoppel certificate and subordination, non-disturbance and attornment agreement from AMAZON.COM.AZDC LLC, a Delaware limited liability company;
(xx)    copies of existing certificates of occupancy for the Property; and
(xxi)    a copy of the Management Agreement for the Property, certified by Borrower as being true, correct and complete. 

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Section 3.2    Delivery of Documents.  All of the Loan Documents, certificates, legal opinions and other documents and papers referred to in this Article shall be delivered to Lender and shall be in form and substance satisfactory in all respects to Lender.

ARTICLE IV 
 
REPRESENTATIONS AND WARRANTIES
Borrower represents and warrants to Lender as follows:

Section 4.1    Existence; Power.  Borrower (i) is duly organized, validly existing and in good standing as a limited liability company under the laws of the jurisdiction of its organization, (ii) has all requisite power and authority to carry on its business as now conducted, and (iii) is duly qualified to do business, and is in good standing, in each jurisdiction where such qualification is required. 

Section 4.2    Organizational Power; Authorization.  The execution, delivery and performance by each Loan Party of the Loan Documents to which it is a party are within such Loan Party’s organizational powers and have been duly authorized by all necessary organizational, and if required, shareholder or member action. This Agreement has been duly executed and delivered by Borrower, and constitutes, and each other Loan Document to which any Loan Party is a party, when executed and delivered by such Loan Party, will constitute, valid and binding obligations of Borrower or such Loan Party (as the case may be), enforceable against it in accordance with their respective terms, except as may be limited by applicable bankruptcy, insolvency, reorganization, moratorium, or similar laws affecting the enforcement of creditors’ rights generally and by general principles of equity.

Section 4.3    Governmental Approvals; No Conflicts.  The execution, delivery and performance by Borrower of this Agreement, and by each Loan Party of the other Loan Documents to which it is a party (a) do not require any consent or approval of, registration or filing with, or any action by, any Governmental Authority, except those as have been obtained or made and are in full force and effect or where the failure to do so, individually or in the aggregate, could not reasonably be expected to have a Material Adverse Effect, (b) will not violate any Applicable Law or the charter, by-laws or other organizational documents of Borrower or any order of any Governmental Authority, (c) will not violate or result in a default under any indenture, material agreement or other material instrument binding on Borrower or any of its assets or give rise to a right thereunder to require any payment to be made by Borrower and (d) will not result in the creation or imposition of any Lien on any asset of Borrower, except Liens (if any) created under the Loan Documents.

Section 4.4    Financial Statements.  All financial data, including the statements of cash flow and income and operating expense, that have been delivered to Lender in respect of Borrower, Guarantor and the Property:  (i) were true, complete and correct in all material respects when delivered, and remain true and correct in all material respects as of the Closing Date, (ii) accurately represent the financial condition of Guarantor and the Property as of the date of such reports, and (iii) have been prepared in accordance with standard accounting methods acceptable to Lender in its reasonable discretion, consistently applied. Borrower has no 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, except as referred to 

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or reflected in said financial statements covering the relevant period.  Guarantor has no contingent liabilities, liabilities for taxes or unrealized or anticipated losses from any unfavorable commitments that are known to Borrower or Guarantor, except as referred to or reflected in said financial statements covering the relevant period.

Section 4.5    Litigation.  No litigation, investigation or proceeding of or before any arbitrators or Governmental Authorities is pending against or, to the knowledge of Borrower, threatened against or affecting Borrower (i) as to which there is a reasonable possibility of an adverse determination that could reasonably be expected to have, either individually or in the aggregate, a Material Adverse Effect or (ii) which in any manner draws into question the validity or enforceability of this Agreement or any other Loan Document.  Borrower is not contemplating either the filing of a petition by it under any Debtor Relief Law or the liquidation of all or a major portion of its assets or property, and Borrower has no knowledge of any Person contemplating the filing of any such petition against it.

Section 4.6    Compliance with Laws and Agreements.  Borrower and the Property are in compliance with (a) all Applicable Laws, judgments, decrees and orders of any Governmental Authority, including without limitation all Environmental Laws, in all material respects, and (b) all indentures, agreements, Leases, or other instruments binding upon it or them, except, in the case of this clause (b), where non-compliance, either singly or in the aggregate, could not reasonably be expected to result in a Material Adverse Effect.  All approvals under Applicable Laws have been obtained and are valid and in full force and effect.  None of the Property is located in an area identified by the Federal Emergency Management Agency as an area having special flood hazards.

Section 4.7    Investment Company Act, Etc.  Borrower is not (a) an “investment company”, as defined in, or subject to regulation under, the Investment Company Act of 1940, as amended, or (b) otherwise subject to any other regulatory scheme limiting its ability to incur debt.

Section 4.8    Taxes.  Borrower has timely filed or caused to be filed all Federal income tax returns and all other material tax returns that are required to be filed by it, and has paid all taxes shown to be due and payable by it on such returns or on any assessments made against it or its property and all other taxes, fees or other charges imposed on it or any of its property by any Governmental Authority, except where the same are not yet due or are currently being contested in good faith by appropriate proceedings and for which Borrower has set aside on its books adequate reserves in accordance with GAAP.  The charges, accruals and reserves on the books of Borrower in respect of such taxes are adequate, and no tax liabilities that could be materially in excess of the amount so provided are reasonably anticipated.

Section 4.9    Defaults.  No Default or Event of Default has occurred and is continuing.

Section 4.10    Margin Regulations.  None of the proceeds of the Loan will be used, directly or indirectly, for “purchasing” or “carrying” any “margin stock” within the respective meanings of each of such terms under Regulation U or for any purpose that violates the provisions of Regulation T, Regulation U or Regulation X.  Borrower is not engaged principally, or as one of its important activities, in the business of extending credit for the purpose of purchasing or carrying “margin stock”.

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Section 4.11    ERISA.  No ERISA Event has occurred or is reasonably expected to occur that, when taken together with all other such ERISA Events for which liability is reasonably expected to occur, could reasonably be expected to result in a Material Adverse Effect.  The present value of  all accumulated  benefit obligations under each Plan (based on the assumptions used for purposes of Statement of Financial Standards No. 87) did not, as of the date of the most recent financial statements reflecting such amounts, exceed the fair market value of the assets of such Plan, and the present value of all accumulated benefit obligations of all underfunded Plans (based on the assumptions used for purposes of Statement of Financial Standards No. 87) did not, as of the date of the most recent financial statements reflecting such amounts, exceed the fair market value of the assets of all such underfunded Plans.

Section 4.12    [Intentionally Deleted].

Section 4.13    Labor Relations.  There are no strikes, lockouts or other material labor disputes or grievances against Borrower, or, to Borrower’s knowledge, threatened against or affecting Borrower, and no significant unfair labor practice, charges or grievances are pending against Borrower, or to Borrower’s knowledge, threatened against it before any Governmental Authority.  All payments due from Borrower pursuant to the provisions of any collective bargaining agreement have been paid or accrued as a liability on the books of Borrower, except where the failure to do so could not reasonably be expected to have a Material Adverse Effect.

Section 4.14    No Subsidiaries.  Borrower does not have any Subsidiaries.  

Section 4.15    Insolvency.  After giving effect to the execution and delivery of the Loan Documents and the making of the Loan under this Agreement, as of the Closing, Borrower will not be “insolvent”, within the meaning of such term as defined in Section 101 of the United States Code, as amended from time to time, to be unable to pay its debts generally as such debts become due, or have unreasonably small capital to engage in any business or transaction, whether current or contemplated.   

Section 4.16    Single Purpose Entity.  Until the Obligations have been paid in full, Borrower hereby represents, warrants and covenants that Borrower is, shall be and shall continue to be a single purpose entity as described in Section 5.17 hereof.  If Borrower consists of more than one Person, each such Person shall be a single purpose entity.

Section 4.17    Other Agreements.  Borrower is not a party to any agreement or instrument or subject to any court order, injunction, permit or restriction which might reasonably be expected to have a Material Adverse Effect.  Borrower is not in violation of any agreement, which violation would have a Material Adverse Effect.

Section 4.18    OFAC.  The Loan Parties have implemented and maintain in effect policies and procedures designed to ensure compliance by the Loan Parties, their Subsidiaries and Affiliates, and their respective directors, officers, employees and agents, with Anti-Corruption Laws and applicable Sanctions.  The Loan Parties, their Subsidiaries and, to the knowledge of the Borrower, their Affiliates, their respective directors, officers, employees, and agents, are in compliance with Anti-Corruption Laws and applicable 

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Sanctions.  None of (a) the Loan Parties, or (b) to the knowledge of Borrower, any Affiliate of the Loan Parties, or any of their respective directors, officers or employees, or any agent of the Loan Parties or any Subsidiary or Affiliate that will act in any capacity in connection with or benefit from the credit facility established hereby, is a Sanctioned Person.  No Loan, use of proceeds or other transaction contemplated by this Agreement will violate any Anti-Corruption Law or applicable Sanctions.

Section 4.19    Patriot Act.  Neither any Loan Party nor any of its Subsidiaries is an “enemy” or an “ally of the enemy” within the meaning of Section 2 of the Trading with the Enemy Act or any enabling legislation or executive order relating thereto.  Neither any Loan Party nor any of its Subsidiaries is in violation of (a) the Trading with the Enemy Act, (b) any of the foreign assets control regulations of the United States Treasury Department (31 C.F.R., Subtitle B, Chapter V, as amended) or any enabling legislation or executive order relating thereto or (c) the Patriot Act.  None of the Loan Parties (i) is a blocked person described in Section 1 of Executive Order 13224 of the President of the United States or (ii) to the best of Borrower’s knowledge, engages in any dealings or transactions, or is otherwise associated, with any such blocked person.  

Section 4.20    Brokerage.  Borrower has not dealt with any brokers or “finders” in connection with the Loan and no brokerage or “finders” fees or commissions are payable by or to any Person in connection with the Loan, other than Jones Lang LaSalle, who will be paid in full by the Borrower on the Effective Date.

Section 4.21    Leases.  Borrower represents and warrants to Lender with respect to Leases that:  (1) the rent roll delivered to Lender is true, correct and complete, and, to Borrower’s knowledge, the Leases are valid and in full force and effect; (2) the Leases (including any and all amendments thereto) are in writing, and there are no oral agreements with respect thereto; (3) the copies of the Leases delivered to Lender are true, correct and complete; (4) to Borrower’s knowledge, neither the landlord nor any Tenant is in default under any of the Leases; (5) Borrower has no knowledge of any notice of termination or default with respect to any Lease; (6) Borrower has not assigned or pledged any of the Leases, the rents or any interests therein except to Lender; (7) no Tenant or other party has any right or option to purchase all or any portion of the Property except as provided in its Lease; (8) no Tenant has the right to terminate its Lease prior to expiration of the stated term of such Lease except as provided in its Lease; and (9) no Tenant has prepaid more than one (1) month’s rent in advance.

Section 4.22    Property Specific Representations.  
(a)    Title.  Borrower has good, marketable, insurable and indefeasible fee simple title to the Property, subject to no liens or other encumbrances except Permitted Encumbrances, and there are no defaults by Borrower under any of the Permitted Encumbrances, which violation might reasonably be expected to have a Material Adverse Effect.
(b)    Separate Tax Parcel; Special Assessments.  The Property is comprised of one (1) or more parcels, each of which constitutes a separate tax lot and none of which constitutes a portion of any other tax lot.  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.

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(c)    Transfer and Mortgage Taxes.  All transfer taxes, deed stamps, intangible taxes or other amounts in the nature of transfer taxes required to be paid under Applicable Law in connection with the transfer of the Property to Borrower have been paid or are being paid simultaneously herewith.  All mortgage, mortgage recording, stamp, intangible or other similar tax required to be paid under Applicable Law in connection with the execution, delivery, recordation, filing, registration, perfection or enforcement of any of the Loan Documents, including, without limitation, the Security Instrument, have been paid or are being paid simultaneously herewith.
(d)    Purchase Options.  There are no outstanding options to purchase, rights of first refusal to purchase or rights of first offer to purchase affecting any part of the Property except as provided in the Leases.
(e)    Zoning.  Except as may be set forth in any zoning report delivered to Lender in connection with the closing of the Loan, the Property complies with all applicable zoning ordinances, regulations and restrictive covenants affecting the Property,  and no special use permits are required for the current or anticipated use of the Property that have not been obtained.
(f)    Easement Rights.  Borrower has been granted all easements appropriate for the use and operation of the Property.
(g)    Utilities; Access.  All utility and municipal services necessary for the use and occupancy of the Property are available and have sufficient capacity to operate the Property for their intended purposes, including water supply, storm and sanitary sewer facilities, electricity and telephone facilities. All impact, connection or other requisite fees for such services have been paid.  The Property has direct physical access to and from at least one public road.
(h)    Other Liens.  Borrower represents and warrants that except as otherwise provided in the Loan Documents, Borrower has made no contract or arrangement of any kind the performance of which by the other party thereto would give rise to a Lien on the Property.

ARTICLE V 
 
AFFIRMATIVE COVENANTS
Borrower covenants and agrees that so long as any Obligation remains unpaid or outstanding:

Section 5.1    Notices of Material Events.  Borrower will furnish to Lender prompt written notice of the following:
(a)    the occurrence of any Event of Default;
(b)    the filing or commencement of any action, suit or proceeding by or before any arbitrator or Governmental Authority against or, to the knowledge of Borrower, affecting Borrower which, if adversely determined, could reasonably be expected to result in a Material Adverse Effect;
(c)    the occurrence of any event or any other development by which Borrower (i) fails to comply with any Environmental Law or to obtain, maintain or comply with any permit, license or other approval required under any Environmental Law, (ii) becomes subject to any Environmental Liability, (iii) 

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receives written notice of any claim with respect to any Environmental Liability, or (iv) becomes aware of any basis for any Environmental Liability and in each of the preceding clauses, which individually or in the aggregate, could reasonably be expected to result in a Material Adverse Effect; 
(d)    the occurrence of any ERISA Event that could reasonably be expected to result in liability of Borrower; 
(e)    receipt by Borrower of any written notice from Amazon alleging or asserting that Borrower is in default under the Amazon Lease; and
(f)    Copies of correspondence by and between Borrower and Amazon regarding the exercise or non-exercise of the First Extension Option (as defined in the Amazon Lease), including, (i) a copy of Borrower’s notice to Amazon of its determination of Fair Market Rent (as defined in the Amazon Lease), and Amazon’s notice to Borrower of its objections, if any, to such determination, and (ii) the First Extension Notice (as defined in the Amazon Lease). 
Each notice delivered under this Section shall be accompanied by a written statement of a Responsible Officer setting forth the details of the event or development requiring such notice and any action taken or proposed to be taken with respect thereto.

Section 5.2    Existence; Conduct of Business.  Borrower will do or cause to be done all things necessary to preserve, renew and maintain in full force and effect its legal existence and its respective rights, licenses, permits, privileges, franchises, patents, copyrights, trademarks and trade names material to the conduct of its business and will continue to engage in the same business as presently conducted. 

Section 5.3    Compliance with Laws, Etc.  Borrower will comply in all material respects with all laws, rules, regulations and requirements of any Governmental Authority applicable to its business and the Property.  The Borrower will maintain in effect and enforce policies and procedures designed to ensure compliance by the Borrower, its Subsidiaries and their respective directors, officers, employees and agents with Anti-Corruption Laws and applicable Sanctions.

Section 5.4    Payment of Obligations.  Borrower will pay and discharge at or before maturity, all of its obligations and liabilities (including without limitation all tax liabilities and claims that could result in a statutory Lien) before the same shall become delinquent or in default, except where (a) the validity or amount thereof is being contested in good faith by appropriate proceedings, (b) Borrower has set aside on its books adequate reserves with respect thereto in accordance with GAAP and (c) the failure to make payment pending such contest could not reasonably be expected to result in a Material Adverse Effect.

Section 5.5    Insurance, Casualty and Condemnation.  
(a)    Borrower shall maintain insurance in accordance with the requirements of Exhibit 5.5 and shall comply with the terms and conditions of Exhibit 5.5 with respect to casualty and condemnation and the other matters addressed therein.
(b)    Borrower will take all actions required under the Flood Insurance Laws and/or requested by Lender to assist in ensuring that Lender is in compliance with the Flood Insurance Laws 

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applicable to the Collateral, including providing Lender with the address of all improvements and other structures on the Property, and, to the extent required, obtaining flood insurance for such improvements, property, structures and contents (or applicable portion thereof) prior to such assets becoming Collateral (if applicable at such time), and thereafter maintaining such flood insurance in full force and effect for so long as required by the Flood Insurance Laws.

Section 5.6    Taxes; Charges.  Borrower shall pay before any fine, penalty, interest or cost may be added thereto, and shall not enter into any agreement to defer, any and all Taxes imposed on it or the Property that may become a Lien upon the Property or become payable during the term of the Loan (“Charges”), and will promptly furnish Lender with evidence of such payment.  Borrower shall not suffer or permit the joint assessment of the Property with any other real property constituting a separate tax lot or with any other real or personal property.  Provided, however, that Borrower may contest the validity of such Charges so long as (i) Borrower notifies Lender that it intends to contest such claim or demand, (ii) Borrower provides Lender with an indemnity, bond or other security (including any reserve account established by Borrower) reasonably satisfactory to Lender (including an endorsement to the Title Insurance Policy insuring against such Charge) or otherwise in accordance with Applicable Laws against such Charge, including interest and penalties, (iii) Borrower shall promptly upon final determination thereof pay the amount of any such Charge, together with all costs, interest and penalties which may be payable in connection therewith, (iv) such proceeding shall suspend the collection of such contested Charge from the Property, and (v) Borrower is diligently contesting the same by appropriate legal proceedings in good faith and at its own expense and concludes such contest prior to the tenth (10th) day preceding the earlier to occur of (1) the Maturity Date, or (2) the date on which the Property is scheduled to be sold for non-payment.

Section 5.7    Taxes on Security.  Without duplication of any payment made pursuant to any other provision of this Agreement, Borrower shall pay all taxes, charges, filing, registration and recording fees, excises and levies payable with respect to the Note or the Liens created or secured by the Loan Documents, other than income, franchise and doing business taxes imposed on Lender or any other Excluded Taxes.  If there shall be enacted any law (1) deducting the Loan from the value of the Property for the purpose of taxation, (2) affecting any Lien on the Property, or (3) changing existing laws of taxation of mortgages, deeds of trust, security deeds, or debts secured by real property, or changing the manner of collecting any such taxes, Borrower shall promptly pay to Lender, on demand, all taxes, costs and charges for which Lender is or may be liable as a result thereof; however, if such payment would be prohibited by law or would render the Loan usurious, then instead of collecting such payment, Lender may declare all amounts owing under the Loan Documents to be due and payable on a date not less than one hundred twenty (120) days after the delivery of notice thereof to Borrower.

Section 5.8    Books and Records.  Borrower will keep proper books of record and account in which full, true and correct entries shall be made of all dealings and transactions in relation to its business and activities to the extent necessary to prepare the financial statements of Borrower as required by this Agreement.

Section 5.9    Visitation and Inspection.  Subject to the provisions of any Lease, Borrower will permit any representative of Lender to visit and inspect the Property, to examine its books and records and to make copies and take extracts therefrom, and to discuss its affairs, finances and accounts with any of its officers and with its independent certified public accountants, all at such reasonable times and as often as 

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Lender may reasonably request after reasonable prior notice to Borrower; provided, that if an Event of Default shall have occurred and is continuing, no prior notice shall be required.

Section 5.10    Maintenance of Property.  Borrower will observe and comply in all material respects with all Applicable Laws applicable to the ownership, use and operation of the Property.  Borrower shall maintain the Property in good condition as a warehouse/distribution center and promptly repair any damage or casualty thereto.  Subject to the provisions of any Lease, Borrower shall permit Lender and its representatives and employees, upon reasonable prior notice to Borrower, to enter upon and inspect the Property and conduct such environmental and engineering studies as Lender may require; provided, that such inspections and studies do not materially interfere with the use and operation of the Property or the rights of Tenants.  Except during the occurrence and continuance of an Event of Default, invasive testing shall require the reasonable approval of Borrower.

Section 5.11    Leasing Requirements.
(a)    Borrower shall comply with the terms and conditions of Exhibit 5.11 with respect to the matters described therein.
(b)    Borrower shall deposit with Lender on the date of Borrower’s receipt thereof any and all termination fees or other similar funds paid by a Tenant in connection with any Tenant’s election to exercise an early termination option contained in its respective Lease or otherwise at the Property (the “Termination Fee Deposit”).  Any Termination Fee Deposit shall be held in the Re-Tenanting Account, to be disbursed in accordance with this Agreement.

Section 5.12    Mechanic’s Liens and Stop Notices.  Borrower shall pay when due all claims and demands of mechanics, materialmen, laborers and others which, if unpaid, might result in a mechanic’s or materialman’s or similar Lien and/or notice of pendency of action (each, a “Mechanic’s Lien”) being filed or recorded against Property or the assertion of a stop notice or similar claim (“Stop Notice”) against Loan proceeds, and shall defend, indemnify and hold Lender harmless from all Mechanic’s Liens and Stop Notices.  If any Mechanic’s Liens are filed, recorded or otherwise asserted against any portion of the Property, or if any such Stop Notices are asserted against Loan proceeds, Borrower shall, within ten (10) days of written demand, discharge or cause to be discharged such Mechanic’s Lien and/or Stop Notice, and shall promptly obtain the dismissal of any proceedings for the enforcement thereof.  Notwithstanding anything to the contrary contained herein or in any other Loan Documents, Borrower may contest in good faith the validity of any Mechanic’s Lien or Stop Notice so long as (1) Borrower notifies Lender that it intends to contest such Mechanic’s Lien or Stop Notice, (2) Borrower provides Lender with either (i) an endorsement to the Title Insurance Policy (insuring against such Mechanic’s Lien and/or Stop Notice), (ii) a release bond or (iii) other security, in each case in such form and amount as are reasonably satisfactory to Lender, including Lender’s estimate of interest, penalties and attorneys’ fees, (3) such proceeding shall suspend the collection of such contested claim from the Property, (4) Borrower is diligently contesting the same by appropriate legal proceedings in good faith, at its own expense, and on its own behalf and on behalf of Lender and concludes such contest prior to the tenth (10th) day preceding the earlier to occur of the Maturity Date or the date on which the Property is scheduled to be sold for non-payment, and (5) Borrower timely pays any award, judgment or settlement in favor of such Mechanic’s Lien or Stop Notice claimant.

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Section 5.13    Appraisal.  Upon the written request of Lender, Borrower shall assist Lender with obtaining a new or updated Appraisal.  Borrower shall only be obligated to pay the cost of such a new or updated Appraisal once in any twenty-four (24) month period, unless an Event of Default has occurred and is continuing, in which case Borrower shall pay the cost of any and all new and updated Appraisals obtained by Lender.  Lender shall provide a copy of any new or updated Appraisal to Borrower only if Borrower covered the cost of such new or updated appraisal.

Section 5.14    [Intentionally Deleted].

Section 5.15    Estoppel Certificates.  Borrower, within ten (10) days after request, shall furnish to Lender a written statement, duly acknowledged, setting forth the amount due on the Loan, the terms of payment of the Loan, the date to which interest has been paid, whether any offsets or defenses exist against the Loan and, if any are alleged to exist, the nature thereof in detail, and such other matters as Lender reasonably may request.  Notwithstanding the foregoing, in no event shall Lender be permitted to ask Borrower for such written statement more than once per calendar year.

Section 5.16    Further Assurances.  Borrower will, and will cause each other Loan Party to, execute any and all further documents, financing statements, agreements and instruments, and take all such further actions (including the filing and recording of financing statements, fixture filings, Security Instruments and other documents), which may be required under any Applicable Law, or which Lender may reasonably request, to effectuate the transactions contemplated by the Loan Documents or to grant, preserve, protect or perfect the Liens created by the Loan Documents or the validity or priority of any such Lien, all at the expense of Borrower.  Borrower also agrees to provide to Lender, from time to time upon request, evidence reasonably satisfactory to Lender as to the perfection and priority of the Liens created or intended to be created by the Loan Documents.

Section 5.17    Single Purpose Entity.  Borrower covenants and agrees that its organizational documents shall provide that it has not since its date of formation, and shall not: 
(a)    engage in any business or activity other than the acquisition, development, ownership, disposition, operation, leasing, managing and maintenance of the Property, and entering into the Loan Documents, and activities incidental thereto;
(b)    acquire or own any material assets other than (i) the  Property, and (ii) such incidental personal property as may be necessary for the ownership or operation of the Property;
(c)    merge into or consolidate with any Person or, to the fullest extent permitted by Applicable Law, dissolve, terminate or liquidate in whole or in part, transfer or otherwise dispose of all or substantially all of its assets or change its legal structure;
(d)    own any Subsidiary or make any investment in, any Person without the prior written consent of Lender;
(e)    commingle its assets with the assets of any of its members, general partners, Affiliates, principals or of any other Person, participate in a cash management system with any other Person or fail to use its own separate stationery, telephone number, invoices and checks;

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(f)    incur any Indebtedness or Guarantees, other than (1) the Obligations, and (2) Permitted Indebtedness;
(g)    (i) fail to maintain its records (including financial statements), books of account and bank accounts separate and apart from those of the members, general partners, principals and Affiliates of Borrower, the Affiliates of a member, general partner or principal of Borrower, and any other Person, (ii) permit its assets or liabilities to be listed as assets or liabilities on the financial statement of any other Person or (iii) include the assets or liabilities of any other Person on its financial statements;
(h)    enter into any contract or agreement with any member, general partner, principal or Affiliate of Borrower (other than a business management services agreement with an Affiliate of Borrower, provided that (i) such agreement is reasonably acceptable to Lender, (ii) the manager, or equivalent thereof, under such agreement holds itself out as an agent of Borrower and (iii) the agreement meets the standards set forth in this subsection (h) following this parenthetical), except upon terms and conditions that are commercially reasonable, fair and substantially similar to those that would be available on an arms-length basis with third parties other than any member, general partner, principal or Affiliate of Borrower;
(i)    fail to correct any known misunderstandings regarding the separate identity of Borrower, or any member, general partner, principal or Affiliate thereof or any other Person;
(j)    guarantee or become obligated for the debts of any other Person or hold itself out to be responsible for the debts of another Person;
(k)    make any loans or advances to any third party, including any member, general partner, principal or Affiliate of Borrower, or any member, general partner, principal or Affiliate thereof, and shall not acquire obligations or securities of any member, general partner, principal or Affiliate of Borrower, or any member, general partner, or Affiliate thereof;
(l)    fail to file its own tax returns or be included on the tax returns of any other Person except as required by Applicable Law or to the extent it is a “disregarded entity” for tax purposes;
(m)    fail either to hold itself out to the public as a legal entity separate and distinct from any other Person and not as a division or part of any other entity or to conduct its business solely in its own name or a name franchised or licensed to it by an entity other than an Affiliate of Borrower, in order not (i) to mislead others as to the identity with which such other party is transacting business, or (ii) to suggest that Borrower, is responsible for the debts of any third party (including any member, general partner, principal or Affiliate of Borrower, or any member, general partner, principal or Affiliate thereof);
(n)    provided that the Property generates sufficient operating income to cause the same, fail to maintain adequate capital for the normal obligations reasonably foreseeable in a business of its size and character and in light of its contemplated business operations, provided this provision shall not be violated if the value of the Property becomes less than the outstanding balance of the Loan;
(o)    share any common logo with or hold itself out as or be considered as a department or division of (i) any general partner, principal, member or Affiliate of Borrower, (ii) any Affiliate of a general partner, principal or member of Borrower, or (iii) any other Person;
(p)    fail to allocate fairly and reasonably any overhead expenses that are shared with an Affiliate, including paying for office space and services performed by any employee of an Affiliate;

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(q)    pledge its assets for the benefit of any other Person, and with respect to Borrower, other than with respect to the Loan;
(r)    fail to maintain a sufficient number of employees, if any, in light of its contemplated business operations;
(s)    fail to hold its assets in its own name;
(t)    fail to consider the interests of its creditors in connection with all corporate, limited liability company, limited partnership or trust, as applicable, actions to the extent permitted by Applicable Law; and
(u)    have any of its obligations guaranteed by an Affiliate, other than as provided in the Loan Documents.

Section 5.18    Cash Management.
(a)    Borrower shall be required to maintain all accounts of Borrower associated with the Property with Lender.  Without limitation of the foregoing, Borrower shall have established and shall maintain (i) its primary operating account for the Property with Lender, designated as account number 1000164293721 (the “Operating Account”), (ii) a restricted depository account with Lender into which Tenants will be directed by Borrower to pay rents by ACH payment or wire transfer, designated as account number 1000164293747 (the “Collections Account”), and (iii) a restricted collateral account with Lender, designated as account number 1000164293754 (the “Master Disbursement Sweep Account”; and together with the Collections Account, the Operating Account and all other accounts maintained by Borrower in connection with the Loan, the “Accounts”).  The Accounts shall not be co-mingled with each other or any other accounts or investments of Borrower or its owners or Affiliates.  Borrower shall also have entered into the Collections Account Agreement, and Borrower shall cause all income relating to the Property to be transferred to and deposited in the Collections Account subject to the Collections Account Agreement and the Cash Management Agreement.  Borrower shall pay for all expenses of opening and maintaining the Accounts.
(b)    Prior to a Cash Flow Sweep Event, funds will be transferred on a daily basis from the Collections Account to the Operating Account pursuant to the terms of the Cash Management Agreement.  Borrower shall have control over the Operating Account and may use funds in the Operating Account for any purpose, including making distributions to Borrower and its owners, subject to the terms of the Loan Documents.  Upon the occurrence of a Cash Flow Sweep Event, control over funds in the Collections Account shall shift to Lender and funds in the Collections Account shall be directed to the Master Disbursement Sweep Account and applied in accordance with the terms of the Cash Management Agreement.  Upon the occurrence of a Cash Flow Sweep Cure and provided that no other Cash Flow Sweep Event or any Event of Default exists, Lender will return control of the Collections Account to Borrower and any funds remaining in the Master Disbursement Sweep Account shall be transferred to the Collections Account.
(c)    Borrower hereby grants to Lender a first priority security interest in each of the Accounts 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 Accounts, including, without limitation, executing and filing UCC financing statements and continuations thereof.  This Agreement is, among other things, intended by the parties to be a security agreement for purposes of the Uniform Commercial Code.  Borrower and Lender further agree that it is the intent of the parties that this Agreement 

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is an authenticated record evidencing Lender’s “control” of the Accounts (within the meaning of Section 9-104 of the Uniform Commercial Code as in effect in the State of New York).

Section 5.19    Re-Tenanting Reserve.
(a)    Amounts deposited pursuant to this Section 5.19 are referred to herein as the “Re-Tenanting Funds” and the sub-account of the Master Disbursement Sweep Account in which such amounts are held by Lender shall hereinafter be referred to as the “Re-Tenanting Funds Account”.  Upon the occurrence of an Amazon Lease Renewal Trigger, all amounts remaining in the Master Disbursement Sweep Account after the disbursements set forth in Section 6(a) of the Cash Management Agreement, shall be held in the Re-Tenanting Funds Account, for disbursement in accordance with the terms of this Section 5.19.  Provided no Event of Default shall have occurred and is continuing, the Re-Tenanting Funds shall be made available to the Borrower to pay, or reimburse Borrower for payment of, Leasing Commissions and Tenant Improvements, subject to the satisfaction of the conditions set forth in this Section 5.19.
(b)    If the balance of the Re-Tenanting Funds Account on the earlier of (i) the effective date on which the Amazon Lease terminates, or (ii) September 30, 2019, is less than $3,300,000.00, then within ten (10) days after the earlier to occur of such dates, Borrower shall deposit, or cause to be deposited, with Lender additional Re-Tenanting Funds in the amount equal to $3,300,000.00 minus the amount then held in the Re-Tenanting Funds Account (the “Re-Tenanting Additional Deposit”) and minus any amounts previously paid for Leasing Commissions and Tenant Improvements reasonably approved by Lender for any Approved Replacement Leases.  The Re-Tenanting Additional Deposit shall be held in the Re-Tenanting Funds Account.  
(c)    Upon execution of an Approved Replacement Lease, Borrower shall provide evidence reasonably satisfactory to Lender of the amount of the costs the Tenant Improvements and Leasing Commissions to be paid or reimbursed by Borrower with respect to the Approved Replacement Lease (including, executed leasing commission agreements and executed contracts for completion of the Tenant Improvements) (the “Approved Replacement Lease Re-Tenanting Costs”).  If at any time the Approved Replacement Lease Re-Tenanting Costs for Approved Replacement Leases covering the entire premises exceed the balance of the Re-Tenanting Funds Account (“TI/LC Shortfall”), Borrower shall pay the Approved Replacement Lease Re-Tenanting Costs, up to  the amount of the TI/LC Shortfall, prior to the disbursement of Re-Tenanting Funds.  Lender shall have no obligation to disburse the Re-Tenanting Funds for amounts paid by Borrower for Approved Replacement Lease Re-Tenanting Costs to the extent of the TI/LC Shortfall.   Borrower shall provide evidence reasonably satisfactory to Lender that Approved Replacement Lease Re-Tenanting Costs in the amount of the TI/LC Shortfall have been completed and have been paid for in full by the Borrower. 
(d)    Lender shall disburse to Borrower the Re-Tenanting Funds to pay, or reimburse Borrower for payment of, Leasing Commissions and Tenant Improvements in connection with an Approved Replacement Lease upon satisfaction by Borrower of each of the following conditions:  
(i)    Borrower shall submit a request for payment to Lender at least twenty (20) days prior to the date on which Borrower requests such payment be made and specifies the costs of Tenant Improvements (or portion thereof) and Leasing Commissions to be paid or reimbursed with respect to the applicable Approved Replacement Lease;
(ii)    on the date such request is received by Lender and on the date such payment or reimbursement is to be made, no Event of Default shall remain outstanding;

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(iii)    Lender shall have received and, if applicable, approved, a budget for the cost of the Tenant Improvements and a schedule of Leasing Commission payable in connection with the Approved Replacement Lease, provided no approval is required if the Leasing Commission and Tenant Improvements are consistent with then market terms and the requested disbursement will be used to pay all or a portion of such costs and payments;
(iv)    Lender shall have received a certificate executed on behalf of the Borrower by a Responsible Officer (A) stating that all Tenant Improvements (or the portion thereof completed to date) to be funded by the requested disbursement have been completed in a good and workmanlike manner and in accordance with all Applicable Laws, such certificate to be accompanied by a copy of any material license, permit or other approval required by any Governmental Authority in connection with such Tenant Improvements (if available, in the case of partially completed Tenant Improvements), (B) identifying (1) each Person that supplied materials or labor in connection with the Tenant Improvements to be funded by the requested disbursement pursuant to a written or oral agreement with Borrower and (2) each Person that provided brokerage services in connection with the Leasing Commissions to be funded by the requested disbursement, and (C) stating that each such Person has been paid in full to date or will be paid in full to date upon such disbursement, such certificate to be accompanied by lien waivers or other evidence of payment satisfactory to Lender in the case of Tenant Improvements and commission statements evidencing such payment in the case of Leasing Commissions;
(v)    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;
(vi)    in the case of the final disbursement of Re-Tenanting Funds for Tenant Improvements in connection with an Approved Replacement Lease, Lender shall have received an estoppel certificate, commencement date letter or completion certificate signed and acknowledged by the applicable Replacement Tenant stating that (A) all work required to be performed by Borrower have been completed in accordance with the applicable Approved Replacement Lease and has been accepted by the applicable Replacement Tenant or (B) all work required to be performed by such Tenant has been completed and a reimbursement of the amount specified in such estoppel certificate, commencement date letter or completion certificate is due to the applicable Replacement Tenant pursuant to the applicable Approved Replacement Lease;
(vii)    Lender shall have received such other evidence as Lender may reasonably request that (A) the Tenant Improvements (or portion thereof) to be funded by the requested disbursement have been completed and are paid for or will be paid for in full upon such disbursement to Borrower and (B) the Leasing Commissions (or portion thereof) to be funded by the requested disbursement have been paid for or will be paid for in full upon such disbursement to Borrower.  Lender shall not be required to disburse Re-Tenanting Funds more frequently than once each calendar month.
(e)    Provided no Cash Flow Sweep Event shall have occurred and is continuing, any Re-Tenanting Funds remaining after the Approved Replacement Lease Start Date for all Approved Replacement Leases covering the entire premises, shall be disbursed to the Operating Account.  If a Cash Flow Sweep Event shall have occurred and is continuing, any Re-Tenanting Funds remaining after the Approved Replacement Lease Start Date for all Approved Replacement Leases covering the entire premises, 

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shall be held in the Master Disbursement Sweep Account and disbursed in accordance with the Cash Management Agreement.
(f)    All reasonable out-of-pocket costs and expenses incurred by Lender in connection with holding and disbursing the Re-Tenanting Funds shall be paid by Borrower.

Section 5.20    Approved Re-Leasing Plan.  Within twenty four (24) months after the date of the termination of the Amazon Lease, Borrower will deliver to Lender an Approved Re-Leasing Plan, unless prior to such date Borrower shall have delivered to Lender either (a) Approved Replacement Leases sufficient to cause the Debt Service Coverage Ratio to be greater than 1.25 to 1.00, or (b) Approved Replacement Leases covering the entire premises.

ARTICLE VI 
 
FINANCIAL COVENANTS AND REPORTING

Section 6.1    Financial Statements and Other Information.  Borrower will deliver to Lender:
(a)    as soon as available and in any event forty-five (45) days after the end of each fiscal quarter of Borrower, a balance sheet of Borrower, and an operating statement for the Property on a year-to-date basis, all certified by Borrower;
(b)    commencing upon the earlier of (i) a Cash Flow Sweep Event, or (ii) fiscal year 2017, as soon as available and in any event within ninety (90) days after the end of each fiscal year of Borrower, a detailed operating budget for the next fiscal year forecasting revenue, operating costs and capital expenses for the Property, which operating budget shall not be subject to Lender’s approval, except that during a Cash Flow Sweep Event, the budget shall be subject to the reasonable approval of the Lender; 
(c)    within ninety (90) days after the end of each fiscal year of Hines Global REIT II, its audited consolidated balance sheet and related statements of operations, stockholders’ equity and cash flows as of the end of and for such year, setting forth in each case in comparative form the figures for the previous fiscal year, all reported on by Deloitte LLP or other independent public accountants of recognized national standing (without a “going concern” or like qualification, commentary or exception arising out of the scope of the audit, or without any qualification or exception as to the scope of such audit) to the effect that such consolidated financial statements present fairly in all material respects the financial condition and results of operations of Hines Global REIT II and its consolidated subsidiaries, including Borrower, on a consolidated basis in accordance with GAAP consistently applied; and
(d)    such other reports, data, information and certificates as Lender may reasonably request with respect to Borrower and the Property.

Section 6.2    Debt Service Coverage Ratio.  Commencing on December 31, 2016 and thereafter on each June 30th and December 31st during the term of the Loan, the Borrower shall, within forty-five (45) days thereafter, deliver to Lender a Compliance Certificate setting forth the Debt Service Coverage Ratio calculated as of June 30th and December 31st, as applicable.   For purposes of determining Net Operating Income, the “annualized revenue” (i) for the calculation as of each June 30th, shall be the sum of gross revenue 

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from the Property for the six month period ending June 30th, multiplied by two (2), and (i) for the calculation as of each December 31st, shall be the sum of gross revenue from the Property for the twelve month period ending December 31st.  Notwithstanding the foregoing, Borrower shall not be required to deliver a Compliance Certificate pursuant to this Section 6.2 from and after the date the Re-Tenanting Additional Deposit is paid to Lender.

ARTICLE VII 
 
NEGATIVE COVENANTS
Borrower covenants and agrees that so long as any Obligation remains unpaid or outstanding:

Section 7.1    Due on Sale and  Encumbrance; Transfers of Interests.  Without the prior written consent of Lender, which may be withheld in its sole discretion, the Loan shall become due and payable upon the occurrence of any Transfer (as defined below), except for Permitted Encumbrances and Permitted Transfers.  Without limiting the foregoing, other than with respect to a Permitted Transfer, without the prior written consent of Lender:
(a)    neither Borrower nor any other Person having a legal or beneficial ownership or economic interest in Borrower shall:  (i) Transfer, directly or indirectly, any interest in the Property or any part thereof, any Collateral or any other asset of Borrower, or mortgage, pledge or assign any other asset of Borrower, except for Permitted Encumbrances or Distributions permitted under this Agreement; (ii) further encumber, alienate, grant a lien or grant any other interest in the Property or any part thereof, whether voluntarily or involuntarily, except for Permitted Encumbrances; (iii) enter into any easement or other agreement granting rights in, or restricting the use or development of, the Property, except for Permitted Encumbrances; or (iv) permit any partition of the Property; 
(b)    except for a Permitted Transfer, neither Borrower nor any other Person having a beneficial ownership or economic interest in Borrower shall Transfer, directly or indirectly, any ownership or economic interest in Borrower, or encumber, alienate, grant a lien or grant any other interest in any ownership or economic interest in Borrower, whether voluntarily or involuntarily; and
(c)    except for a Permitted Transfer, no new general partner, limited partner, manager or member having the ability to control the affairs of Borrower shall be admitted to or created in Borrower (nor shall any existing general partner, controlling limited partner, manager, managing member or controlling member withdraw from Borrower), and no change in Borrower’s organizational documents relating to control over Borrower and/or the Property shall be effected that would have the effect of changing the control, direct or indirect, of Borrower.
As used in this Section and in the definition of Permitted Transfer, the term “Transfer” shall include the sale, transfer, conveyance, mortgage, pledge or assignment of (i) the Property or any part thereof, or any direct legal or beneficial interest therein; or (ii) any ownership interest in Borrower, or any direct or indirect owner of Borrower, direct or indirect, legal or equitable.  In connection with any Transfer that is permitted hereunder, Borrower and any transferee shall cooperate and comply (at Borrower’s or such transferee’s expense) with all necessary “know your customer” or other similar checks under all Applicable Laws applicable to Lender.  The term “Transfer” shall not include leasing of space within the Property, so long as Borrower complies with the provisions of the Loan Documents relating to such leasing activity. 

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Section 7.2    Limitation on Indebtedness.  Borrower (and each general partner in Borrower, if any) shall not, without the prior consent of Lender, incur any Indebtedness other than (a) the Loan, (b) customary trade debt, account payables, financing for equipment, supplies and personal property, leasing commissions and tenant improvement costs in the ordinary course of its business of owning and operating the Property, provided that such debt (i) is not evidenced by a note, (ii) is paid at least five (5) days prior to delinquency, and (iii) is payable to trade creditors and in amounts as are normal and reasonable under the circumstances, and (c) Hedging Obligations related to the Loan to the extent required or permitted hereunder (“Permitted Indebtedness”).

Section 7.3    Liens.  Borrower will not create, incur, assume or suffer to exist any Lien on any of its assets or property now owned or hereafter acquired, except:
(a)    Liens securing the Obligations; 
(b)    Permitted Encumbrances; 
(c)    purchase money Liens upon or in any fixed or capital assets to secure the purchase price or the cost of construction or improvement of such fixed or capital assets or to secure Indebtedness incurred solely for the purpose of financing the acquisition, construction or improvement of such fixed or capital assets (including Liens securing any Capital Lease Obligations); provided that (i) any such Lien secures Indebtedness permitted by Section 7.2, (ii) any such Lien attaches to such asset concurrently or within 90 days after the acquisition or the completion of the construction or improvements thereof, (iii) any such Lien does not extend to any other asset, and (iv) the Indebtedness secured thereby does not exceed the cost of acquiring, constructing or improving such fixed or capital assets; and
(d)    extensions, renewals, or replacements of any Lien referred to in subsections (b) through (c) of this Section; provided that the principal amount of the Indebtedness secured thereby is not increased and that any such extension, renewal or replacement is limited to the assets originally encumbered thereby.    

Section 7.4    Control; Management.  Borrower shall not, without the prior written consent of Lender (which consent shall not be unreasonably withheld, conditioned or delayed): (i) execute the Property Management Agreement, (ii) upon execution of an approved Property Management Agreement, surrender, terminate or cancel the Property Management Agreement, or otherwise replace Property Manager, or enter into any other management agreement or leasing agreement with respect to the Property; (ii) reduce or consent to the reduction of the term of the Property Management Agreement; (iii) increase or consent to the increase of the amount of any charges under, or Borrower’s obligations under, the Property Management Agreement; or (iv) otherwise modify, change, supplement, alter or amend, or waive or release any of its rights and remedies under, the Property Management Agreement in any material respect.  The Property Manager (and any successor that may be approved by Lender) shall hold and maintain all necessary licenses, certifications and permits required by Applicable Law.  Borrower shall fully perform all of its covenants, agreements and obligations under the Property Management Agreement and shall cause the Property Manager to enter into a Subordination of Management Agreement upon execution of the Property Management Agreement. Without Lender’s prior approval, no management fee payable to a Property Manager which is an Affiliate of Borrower may exceed three percent (3%) of actual operating revenues, plus customary reimbursable expenses.

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Section 7.5    Transactions with Affiliates.  Without the prior written consent of Lender, which consent shall not be unreasonably withheld, Borrower shall not engage in any transaction affecting the Property with an Affiliate of Borrower, except (i) 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 (ii) Tax Distributions.   

Section 7.6    Government Regulation.  Borrower will not (a) be or become subject at any time to any foreign asset control, anti-terrorism, money laundering or other similar law, regulation or list of any Governmental Authority of the United States (including, without limitation, the OFAC list) that prohibits or limits Lender from making any advance or extension of credit to Borrower or from otherwise conducting business with the Loan Parties, or (b) fail to provide documentary and other evidence of the identity of the Loan Parties  as may be requested by Lender at any time to enable Lender to verify the identity of the Loan Parties or to comply with any Applicable Law, including, without limitation, Section 326 of the Patriot Act at 31 U.S.C. Section 5318.  The Borrower will not, directly or indirectly, use the proceeds of the Loan or other extensions of credit hereunder, or lend, contribute or otherwise make available such proceeds to any subsidiary, joint venture partner or other Person (i) to fund any activities or business of or with any Person, or in any country or territory, that, at the time of such funding, is, or whose government is, the subject of Sanctions, or (ii) in any other manner that would result in a violation of Sanctions by any Person (including any Person participating in the Loan or other extensions of credit hereunder, whether as underwriter, advisor, investor, or otherwise).  No part of the proceeds of the Loan or other extensions of credit hereunder will be used, directly or indirectly, in furtherance of an offer, payment, promise to pay, or authorization of the payment or giving of money, or anything else of value, to any Person in violation of applicable Anti-Corruption Laws.

Section 7.7    Hedging Transactions.  Borrower will not enter into any Hedging Transactions, other than (a) Hedging Transactions required or allowed by Section 2.12 and (b) Hedging Transactions entered into in the ordinary course of business to hedge or mitigate risks to which Borrower is exposed in the conduct of its business or the management of its liabilities.  Solely for the avoidance of doubt, Borrower acknowledges that a Hedging Transaction entered into for speculative purposes or of a speculative nature (which shall be deemed to include any Hedging Transaction under which Borrower is or may become obliged to make any payment (i) in connection with the purchase by any third party of any common stock or any Indebtedness or (ii) as a result of changes in the market value of any common stock or any Indebtedness) is not a Hedging Transaction entered into in the ordinary course of business to hedge or mitigate risks.

Section 7.8    Limitations on Distributions.  Following the delivery by Lender to Borrower of notice of the existence of an Event of Default, and during the continuance of such Event of Default, Borrower shall not distribute any money or other property to any partner or other direct or indirect owner of Borrower, whether in the form of earnings, income or other proceeds from the Property, nor shall Borrower repay any principal or interest on any loan or other advance made to Borrower by any partner or other direct or indirect owner of Borrower, nor shall Borrower loan or advance any funds to any such partner or other direct or indirect owner of Borrower (any of the foregoing, a “Distribution”).

Section 7.9    Impairment of Security.  The Borrower shall take no willful or intentional action which shall materially impair in any manner the value of the Property or the validity, priority or enforceability of the Security Instrument.

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Section 7.10    Conditional Sales.  Borrower shall not incorporate in the Property any property acquired under a conditional sales contract, or lease, or as to which the vendor retains title or a security interest, without the prior written consent of Lender.

ARTICLE VIII 
 
EVENTS OF DEFAULT

Section 8.1    Events of Default.  The term “Event of Default”, as used in this Agreement shall mean the occurrence or happening, from time to time, of any one or more of the following:
(a)    Payment at Maturity.  Borrower shall fail to pay all outstanding Obligations on the Maturity Date.  
(b)    Other Payment Defaults.  Borrower shall fail to pay (i) any principal of the Loan when and as the same shall become due and payable, whether at the due date thereof or at a date fixed for prepayment or otherwise, or (ii) any interest on the Loan or any fee or any other amount payable under this Agreement or any other Loan Document (except amounts described under the preceding clause (b)(i) or subsection (a) of this Section), when and as the same shall become due and payable, and as to any such failure described in this clause (b)(ii), such failure shall continue unremedied for a period of three (3) Business Days. 
(c)    Representations and Warranties.  Any representation or warranty made or deemed made by or on behalf of a Loan Party in or in connection with this Agreement or any other Loan Document (including the Schedules attached thereto), or in any amendments or modifications hereof or waivers hereunder, or in any certificate, report, financial statement or other document submitted to Lender by any Loan Party or any representative of any Loan Party pursuant to or in connection with this Agreement or any other Loan Document shall prove to be incorrect in any material respect when made or deemed made or submitted.
(d)    Certain Covenants. Borrower shall fail to observe or perform any covenant or agreement contained in Section 5.1, Section 5.12, Section 5.17, Section 6.1, Section 6.2, Section 7.1, Section 7.2, Section 7.3, Section 7.4, Section 7.10, or a Guarantor shall fail to observe or perform any covenant or agreement contained in Section 5 of the Guaranty.  
(e)    Compliance with Covenants.  Borrower shall fail to observe or perform any covenant or agreement contained in this Agreement or in any of the other Loan Documents (other than those referred to in clauses (a), (b), (c) and (d) above), and the continuance of such failure for thirty (30) days (or such shorter period provided in any other Loan Document) after notice by Lender to Borrower; provided, however, that, subject to any shorter period for curing any failure by Borrower as specified in any of the other Loan Documents, Borrower shall have an additional period of time as is reasonably necessary to cure such failure if:  (1) such failure does not involve the failure to make payments on a monetary obligation; (2) such failure cannot reasonably be cured within thirty (30) days; (3) Borrower is diligently undertaking to cure such default; and (4) Borrower has provided Lender with security reasonably satisfactory to Lender against any interruption of payment or impairment of Collateral as a result of such continuing failure; provided, however that such additional cure period shall not exceed ninety (90) days.

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(f)    Insurance.  Borrower shall fail to maintain insurance as required under Section 5.5 of this Agreement.
(g)    Voluntary Proceeding.  A Loan Party shall (i) commence a voluntary case or other Proceeding or file any petition seeking liquidation, reorganization or other relief under any federal, state or foreign bankruptcy, insolvency or other similar law now or hereafter in effect  or seeking the appointment of a custodian, trustee, receiver, liquidator or other similar official of it or any substantial part of its property, (ii) consent to the institution of, or fail to contest in a timely and appropriate manner, any Proceeding or petition described in clause (i) of this subsection, (iii) apply for or consent to the appointment of a custodian, trustee, receiver, liquidator or other similar official for such Loan Party or for a substantial part of its assets, (iv) file an answer admitting the material allegations of a petition filed against it in any such Proceeding, (v) make a general assignment for the benefit of creditors, or (vi) take any action for the purpose of effecting  any of the foregoing.
(h)    Involuntary Proceeding.  An involuntary Proceeding shall be commenced or an involuntary petition shall be filed seeking (i) liquidation, reorganization or other relief in respect of a Loan Party or its debts, or any substantial part of its assets, under any federal, state or foreign bankruptcy, insolvency or other similar law now or hereafter in effect or (ii) the appointment of a custodian, trustee, receiver, liquidator or other similar official for a Loan Party or for a substantial part of its assets, and in any such case, such  Proceeding or petition shall remain undismissed for a period of ninety (90) days or an order or decree approving or ordering any of the foregoing shall be entered.
(i)    [Intentionally Deleted] 
(j)    ERISA Event.  An ERISA Event shall have occurred that, in the opinion of Lender, when taken together with other ERISA Events that have occurred, could reasonably be expected to result in a Material Adverse Effect. 
(k)    Monetary Judgments.  Any judgment or order for the payment of money in excess of $500,000.00 in the aggregate shall be rendered against a Loan Party, and either (i) enforcement proceedings shall have been commenced by any creditor upon such judgment or order or (ii) there shall be a period of thirty (30) consecutive days during which a stay of enforcement of such judgment or order, by reason of a pending appeal or otherwise, shall not be in effect.
(l)    Non-Monetary Judgments.  Any non-monetary judgment or order shall be rendered against a Loan Party that could reasonably be expected to have a Material Adverse Effect, and there shall be a period of thirty (30) consecutive days during which a stay of enforcement of such judgment or order, by reason of a pending appeal or otherwise, shall not be in effect.
(m)    Levy.  Any execution or attachment shall be levied against any of the Property, and such execution or attachment is not set aside, discharged or stayed within thirty (30) days after the same is levied.
(n)    Other Indebtedness.  Borrower (whether as primary obligor or as guarantor or other surety) shall fail to pay any principal of, or premium or interest on, any indebtedness that is outstanding, when and as the same shall become due and payable (whether at scheduled maturity, required prepayment, acceleration, demand or otherwise), and such failure shall continue after the applicable grace period, if any, specified in the agreement or instrument evidencing or governing such indebtedness; or any other event shall occur or condition shall exist under any agreement or instrument relating to such indebtedness and shall continue after the applicable grace period, if any, specified in such agreement or instrument, if the effect of 

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such event or condition is to accelerate, or permit the acceleration of, the maturity of such indebtedness; or any such indebtedness shall be declared to be due and payable, or required to be prepaid or redeemed (other than by a regularly scheduled required prepayment or redemption), purchased or defeased, or any offer to prepay, redeem, purchase or defease such indebtedness shall be required to be made, in each case prior to the stated maturity thereof; or a default shall occur under any other mortgage, deed to secure debt, deed of trust or security agreement conveying or encumbering the Property, including any Permitted Encumbrances.
(o)    Change of Control.  Any Change of Control shall occur unless expressly and in writing consented to by Lender.
(p)    Transfers.  The Transfer of all or any part or the Property, or any interest therein, or of any direct or indirect interest in Borrower, in any such case in violation of Section 7.1 of this Agreement.
(q)    Validity of Loan Documents.  Any of the Loan Documents ceases to be a legal, valid and binding agreement enforceable against any Loan Party in accordance with the terms of such Loan Document or is in any way terminated (except in accordance with its terms) or becomes or is declared ineffective or inoperative or is in any way challenged or contested by a Loan Party, or any Affiliate of a Loan Party, or ceases to give or provide the respective Liens, security interests, rights, titles, interests, remedies, powers or privileges intended to be created thereby.
(r)    Death or Incompetency of Guarantor.  The death or declaration of incompetency of any Guarantor that is a natural person unless within thirty (30) days after the death or declaration of incompetency of such Guarantor, a substitute guarantor acceptable to Lender shall have executed a supplemental Guaranty, Environmental Indemnification Agreement and other documentation in form and substance acceptable to Lender.

Section 8.2    Remedies.  Upon the occurrence of an Event of Default (other than an event with respect to Borrower described in clause (g) or (h) of Section 8.1), and at any time thereafter during the continuance of such Event of Default, Lender at its election may (but shall not be obligated to) without notice, exercise any and all rights and remedies afforded by this Agreement, the other Loan Documents, Applicable Law, equity or otherwise, including (a) declaring the Obligations immediately due and payable; (b) reducing any claim to judgment; (c) obtaining appointment of a receiver (to which Borrower hereby consents) and/or judicial or nonjudicial foreclosure under the Security Instrument; (d) terminating Lender’s Commitment; (e) in its own name or in the name of Borrower, entering into possession of the Property, leasing and operating the Property, performing all work and constructing improvements; and (f) setting-off and applying, to the extent thereof and to the maximum extent permitted by Applicable Law, any and all deposits, funds, or assets at any time held and any and all other indebtedness at any time owing by Lender to or for the credit or account of Borrower against the Obligations; provided that, if an Event of Default specified in either clause (g) or (h) of Section 8.1 shall occur, the principal of the Loan then outstanding, together with accrued interest thereon, and all fees, and all other Obligations shall automatically become due and payable, without presentment, demand, protest or other notice of any kind, all of which are hereby waived by Borrower.
Borrower hereby appoints Lender as Borrower’s attorney-in-fact, which power of attorney is irrevocable and coupled with an interest, with full power of substitution if Lender so elects, to do any of the following in Borrower’s name upon the occurrence of an Event of Default:  (i) endorse the name of Borrower on any checks or drafts representing proceeds of any insurance policies, or other checks or instruments payable to Borrower with respect to the Property; (ii) prosecute or defend any action or proceeding incident to the Property; (iii) pay, settle, or compromise all bills and claims regarding the Property; 

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(iv) perform the obligations and exercise the rights of Borrower under all Leases, guaranties and other agreements to which it is a party or by which the Property is bound, enter into Leases, guaranties and other agreements regarding the Property and pay all leasing, operating and capital expenses of the Property; and (v) take over and use all or any part of the labor, materials, supplies and equipment contracted for, owned by, or under the control of Borrower, whether or not previously incorporated into the improvements located on the Property.  Lender shall not have any liability to Borrower for the sufficiency or adequacy of any such actions taken by Lender.

ARTICLE IX 
 
MISCELLANEOUS

Section 9.1    Notices.
(a)    Except in the case of notices and other communications expressly permitted to be given by telephone, all notices and other communications to any party herein to be effective shall be in writing and shall be delivered by hand or overnight courier service, mailed by certified or registered mail as follows: 
To Borrower:        HGREIT II Goodyear Crossing LLC 
c/o Hines Advisors Limited Partnership
2800 Post Oak Boulevard, Suite 4800
Houston, Texas  77056
Attn:  Kevin McMeans

with copy to:    HGREIT II Goodyear Crossing LLC 
c/o Hines Advisors Limited Partnership
2800 Post Oak Boulevard, Suite 4800
Houston, Texas 77056
Attn:  Jason P. Maxwell – General Counsel

with copy to:    Baker Botts L.L.P.
2001 Ross Avenue, Suite 600
Dallas, Texas 75201
Attn: Jonathan W. Dunlay
            
To Lender:    SunTrust Bank
CRE Atlanta Middle Office    
Attn:  Middle Office Hub Team Lead
Mail Code:  GA-Atlanta-0081
1155 Peachtree Street, N.E., Suite 300
Atlanta, GA  30309
    
With a copy to 
(for information 
purposes only):        Sutherland Asbill & Brennan LLP
999 Peachtree Street, Suite 2300
Atlanta, GA 30309-3996

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Attn:  William Rothschild 
Any party hereto may change its address or facsimile number for notices and other communications hereunder by notice to the other parties hereto.  All such notices and other communications shall be effective, when transmitted by overnight delivery, one (1) Business Day after the date on which the notice is deposited with a recognized overnight courier service; or if mailed, upon the third (3rd) Business Day after the date deposited into the mails or if hand-delivered, upon delivery; provided, that notices delivered to Lender shall not be effective until actually received by Lender at its address specified in this Section 9.1.
(b)    Any agreement of Lender herein to receive certain notices by telephone or facsimile is solely for the convenience and at the request of Borrower.  Lender shall be entitled to rely on the authority of any Person purporting to be a Person authorized by Borrower to give such notice and Lender shall not have any liability to Borrower or other Person on account of any action taken or not taken by Lender in reliance upon such telephonic or facsimile notice.  The obligation of Borrower to repay the Loan and all other Obligations hereunder shall not be affected in any way or to any extent by any failure of Lender to receive written confirmation of any telephonic or facsimile notice or the receipt by Lender of a confirmation which is at variance with the terms understood by Lender to be contained in any such telephonic or facsimile notice.

Section 9.2    Partial Release.
(a)    In the event Amazon has extended the Amazon Lease for a term of not less than ten (10) years and providing for Rents sufficient to cause the Debt Service Coverage Ratio to be greater than 1.25 to 1.00, or Lender has approved other Leases of the Property (including the Amazon Lease for less than all of the premises) for a term of not less than ten (10) years pursuant to Exhibit 5.11  which provide Rents sufficient to cause the Debt Service Coverage Ratio to be greater than 1.25 to 1.00, Lender will release (the “Partial Release”) the Unimproved Property from the lien of the Security Instrument upon Borrower’s request and satisfaction of all the following conditions:
(i)    Borrower’s request for the Partial Release shall be given to Lender in writing and no later than forty-five (45) days preceding the date such Partial Release is requested;
(ii)    The Unimproved Property and the remaining portion of the Property encumbered by the Security Instrument after the release of the Unimproved Property (the “Remaining Property”) must be split into separate tax parcels;
(iii)    No Event of Default or event which, but for the passage of time, the giving of notice or both would constitute an Event of Default, shall have occurred and be continuing;
(iv)    Neither the release of the Release Parcel from the lien of the Security Instrument nor the foreclosure of the Security Instrument on the Remaining Property would violate (or cause any of the Remaining Property to violate) any applicable zoning, subdivision or other applicable law;
(v)    Borrower shall deliver an endorsement to the Title Insurance Policy at Borrower’s expense insuring the priority of the Security Instrument as a first lien on the Remaining Property;

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(vi)    Borrower shall grant, as an appurtenance to the Remaining Property, any easement rights over the Release Parcel for the benefit of the Remaining Property that Lender may reasonably request and which is consistent with Lender’s then current underwriting standards for the maintenance, operation and improvement of the Remaining Property;
(vii)    Borrower shall have paid or reimbursed Lender for all expenses incurred by Lender in connection with the Partial Release (including without limitation, attorneys’ fees, title insurance costs, appraisal fees, recording costs and trustee’s fees);
(viii)    Borrower shall submit partial release instruments, prepared at Borrower’s expense, in form and substance satisfactory to Lender;
(ix)    Borrower shall have provided evidence and documentation reasonably satisfactory to Lender that (A) that the Release Parcel will be assessed as a separate tax parcel with respect to all Taxes and assessments, (B) that the Remaining Property will comply with all federal, state, and local environmental, land use and zoning laws (including minimum lot size, minimum parking requirements, setback requirements, lot coverage ratios, frontage, subdivision, site plan approval and access to a public right of way), (C) that access to the Remaining Property following the Partial Release to any previously dedicated streets and utilities shall not be impaired, and (D) that all required notices have been given and consents obtained in connection with the proposed Partial Release, including the consent of the Guarantor and all Tenants under Leases; and
(x)    Borrower shall have provided evidence and documentation reasonably satisfactory to Lender that the future development and use of the Release Parcel will not directly compete with the use of the Remaining Property and will not negatively impact the value of the Remaining Property.

Section 9.3    Waiver; Amendments.
(a)    No failure or delay by Lender in exercising any right or power hereunder or under any other Loan Document, and no course of dealing between Borrower and Lender, shall operate as a waiver thereof, nor shall any single or partial exercise of any such right or power, or any abandonment or discontinuance of steps to enforce such right or power, preclude any other or further exercise thereof or the exercise of any other right or power hereunder or thereunder.  The rights and remedies of Lender hereunder and under the other Loan Documents are cumulative and are not exclusive of any rights or remedies provided by Applicable Law.  No waiver of any provision of this Agreement or of any other Loan Document or consent to any departure by Borrower therefrom shall in any event be effective unless the same shall be permitted by subsection (b) of this Section, and then such waiver or consent shall be effective only in the specific instance and for the purpose for which given.  Without limiting the generality of the foregoing, the making of any advance under the Loan shall not be construed as a waiver of any Default or Event of Default, regardless of whether Lender may have had notice or knowledge of such Default or Event of Default at the time.
(b)    No amendment or waiver of any provision of this Agreement or the other Loan Documents, nor consent to any departure by Borrower therefrom, shall in an event be effective unless the same shall be in writing and signed by Borrower and Lender and then such waiver or consent shall be effective only in the specific instance and for the specific purpose for which given.

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Section 9.4    Expenses; Indemnification.
(a)    Borrower shall pay (i) all reasonable, out-of-pocket costs and expenses of Lender and its Affiliates (including, without limitation, the reasonable fees, charges and disbursements of outside counsel and the allocated cost of inside counsel) in connection with the preparation and administration of the Loan Documents and any amendments, modifications or waivers thereof (whether or not the transactions contemplated in this Agreement or any other Loan Document shall be consummated), and (ii) all out-of-pocket costs and expenses (including, without limitation, the reasonable fees, charges and disbursements of outside counsel and the allocated cost of inside counsel) incurred by Lender in connection with the enforcement or protection of its rights in connection with this Agreement, including its rights under this Section 9.4, or in connection with the Loan made hereunder, including all such out-of-pocket expenses incurred during any workout, restructuring or negotiations in respect of the Loan.
(b)    Borrower shall indemnify Lender and each Related Party of Lender  (each such Person being called an “Indemnitee”) against, and hold each Indemnitee harmless from, any and all costs, losses, liabilities, claims, damages and related expenses, including the fees, charges and disbursements of any counsel for any Indemnitee, which may be incurred by or asserted against any Indemnitee arising out of, in connection with or as a result of (i) the execution or delivery of this Agreement, any other Loan Document, or any other agreement or instrument contemplated hereby, the performance by the parties hereto of their respective obligations hereunder or the consummation  of any of the transactions contemplated hereby, (ii) the Loan or any actual or proposed use of the proceeds therefrom, (iii) any non-compliance with any Environmental Laws, (iv) any actual or alleged presence or Release of Hazardous Materials on or from the Property or any liability related in any way to Borrower or the Property, or (v) any actual or prospective claim, litigation, investigation or proceeding relating to any of the foregoing, whether based on contract, tort, or any other theory  and regardless of whether any Indemnitee is a party thereto; provided that such indemnity shall not, as to any Indemnitee, be available to the extent that such costs, losses, claims, damages, liabilities or related expenses are determined by a court of competent jurisdiction by final and non-appealable judgment to have resulted from (x) the gross negligence or willful misconduct of such Indemnitee or (y) a claim brought by Borrower or any other Loan Party against an Indemnitee for breach in bad faith of such Indemnitee’s obligations hereunder or under any other Loan Document.  No Indemnitee shall be liable for any damages arising from the use by others of any information or other materials obtained through Syndtrak, Intralinks or any other Internet or intranet website, except as a result of such Indemnitee’s gross negligence or willful misconduct as determined by a court of competent jurisdiction in a final and non-appealable judgment. This Section 9.4(b) shall not apply with respect to Taxes other than any Taxes that represent costs, losses, liabilities, claims, damages and related expenses arising from any non-Tax claim.
(c)    Without duplication of any payment made to any other provision of this Agreement, Borrower shall pay, and hold Lender harmless from and against, any and all present and future stamp, documentary, and other similar taxes with respect to this Agreement and any other Loan Documents, any Collateral described therein, or any payments due thereunder, and save Lender harmless from and against any and all liabilities with respect to or resulting from any delay or omission to pay such taxes. .
(d)    To the extent permitted by Applicable Law, Borrower shall not assert, and hereby waives, any claim against any Indemnitee, on any theory of liability, for special, indirect, consequential or punitive damages (as opposed to actual or direct damages) arising out of, in connection with or as a result of, this Agreement, any other Loan Document or any agreement or instrument contemplated hereby, the transactions contemplated therein, the Loan or the use of proceeds thereof.

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(e)    All amounts due under this Section 9.4 shall be payable promptly after written demand therefor.

Section 9.5    Successors and Assigns.  The provisions of this Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective successors and assigns permitted hereby, except that, except for Permitted Transfers, Borrower may not assign or otherwise transfer any of its rights or obligations hereunder without the prior written consent of Lender (and any other attempted assignment or transfer by Borrower shall be null and void).  Lender may at any time, without consent of, or notice to Borrower, pledge or assign to any Person, or grant participations in, all or any portion of its rights under this Agreement and, to the extent of any assignment shall be released from its obligations hereunder, provided that the Lender (or its designee) complies with the registration provisions of Section 9.6.  Lender may forward to each purchaser, transferee, assignee or participant all documents and information which Lender now has or may hereafter acquire relating to Borrower, any loan to Borrower, any Guarantor or the Property, whether furnished by Borrower, any Guarantor or otherwise, as Lender determines necessary or desirable.

Section 9.6    Register.  Lender (or a designated assignee) shall, acting solely for this purpose as an agent of the Borrower, maintain at one of its offices in the United States a copy of each assignment or participation granted in Section 9.5 and a register for the recordation of the names and addresses of the Lenders, and the Commitments of, and principal amounts (and stated interest) of the Loan owing to, each Lender pursuant to the terms hereof from time to time and the names and addresses of each participant and the principal amounts (and stated interest) of each participant’s interest in the Loan or other obligations under the Loan Documents  (the “Register”).  The entries in the Register shall be conclusive absent manifest error, and Borrower and Lender shall treat each assignee whose name is recorded in the Register pursuant to the terms hereof as a Lender hereunder for all purposes of this Agreement and Lender shall treat each participant whose name is recorded in the Register pursuant to the terms hereof as the owner of such participation for all purposes of this Agreement.  The Register shall be available for inspection by Borrower and any Lender, at any reasonable time and from time to time upon reasonable prior notice. 

Section 9.7    Governing Law; Jurisdiction; Consent to Service of Process.
(a)    This Agreement and the other Loan Documents and any claims, controversy, dispute or cause of action (whether in contract or tort or otherwise) based upon, arising out of or relating to this Agreement or any other Loan Document (except, as to any other Loan Document, as expressly set forth therein) and the transactions contemplated hereby and thereby shall be construed in accordance with and be governed by the law (without giving effect to the conflict of law principles thereof except for Sections 5-1401 and 5-1402 of the New York General Obligations Law) of the State of New York. 
(b)    Borrower hereby irrevocably and unconditionally submits, for itself and its property, to the exclusive jurisdiction of the United States District Court for the Southern District of New York, and of the Supreme Court of the State of New York sitting in New York county, and of any appellate court from any thereof, in any action or proceeding arising out of or relating to this Agreement or any other Loan Document or the transactions contemplated hereby or thereby, or for recognition or enforcement of any judgment, and each of the parties hereto hereby irrevocably and unconditionally agrees that all claims in respect of any such action or proceeding may be heard and determined in such District Court or New York state court or, to the extent permitted by Applicable Law, such appellate court.  Each of the parties hereto agrees that a final judgment in any such action or proceeding shall be conclusive and may be enforced in other jurisdictions by suit on the judgment or in any other manner provided by Applicable Law.  Nothing in 

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this Agreement or any other Loan Document shall affect any right that Lender may otherwise have to bring any action or proceeding relating to this Agreement or any other Loan Document against Borrower or its properties in the courts of any jurisdiction.
(c)    Borrower irrevocably and unconditionally waives any objection which it may now or hereafter have to the laying of venue of any such suit, action or proceeding described in paragraph (b) of this Section and brought in any court referred to in paragraph (b) of this Section. Each of the parties hereto irrevocably waives, to the fullest extent permitted by Applicable Law, the defense of an inconvenient forum to the maintenance of such action or proceeding in any such court.
(d)    Each party to this Agreement irrevocably consents to the service of process in the manner provided for notices in Section 9.1.  Nothing in this Agreement or in any other Loan Document will affect the right of any party hereto to serve process in any other manner permitted by Applicable Law.

Section 9.8    Waiver of Jury Trial.  EACH PARTY HERETO IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN ANY LEGAL PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY (WHETHER BASED ON CONTRACT, TORT OR ANY OTHER THEORY). EACH PARTY HERETO (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER, AND (B) ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER INTO THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION.

Section 9.9    Right of Setoff.  In addition to any rights now or hereafter granted under Applicable Law and not by way of limitation of any such rights, Lender shall have the right, at any time or from time to time upon the occurrence and during the continuance of an Event of Default, without prior notice to Borrower, any such notice being expressly waived by Borrower to the extent permitted by Applicable Law, to set off and apply against all deposits (general or special, time or demand, provisional or final) of Borrower at any time held or other obligations at any time owing by Lender to or for the credit or the account of Borrower against any and all Obligations held by Lender, irrespective of whether Lender shall have made demand hereunder and although such Obligations may be unmatured.  Lender agrees promptly to notify Borrower after any such set-off and any application made by Lender; provided that the failure to give such notice shall not affect the validity of such set-off and application.    

Section 9.10    Counterparts; Integration.  This Agreement may be executed by one or more of the parties to this Agreement on any number of separate counterparts (including by facsimile transmission or by electronic mail in pdf format), and all of said counterparts taken together shall be deemed to constitute one and the same instrument. This Agreement, the Fee Letter, the other Loan Documents, and any separate letter agreement(s) relating to any fees payable to Lender and its Affiliates constitute the entire agreement among the parties hereto and thereto regarding the subject matters hereof and thereof and supersede all prior agreements and understandings, oral or written, regarding such subject matters.  Delivery of an executed counterpart to this Agreement or any other Loan Document by facsimile transmission or by electronic mail in pdf format shall be as effective as delivery of a manually executed counterpart hereof.

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Section 9.11    Survival.  All covenants, agreements, representations and warranties made by Borrower herein and in the certificates, reports, notices and other instruments delivered in connection with or pursuant to this Agreement shall be considered to have been relied upon by the other parties hereto and shall survive the execution and delivery of this Agreement and the other Loan Documents and the making  of the Loan, regardless of any investigation made by any such other party or on its behalf and notwithstanding that Lender may have had notice or knowledge of any Default or incorrect representation or warranty at the time any credit is extended hereunder, and shall continue in full force and effect as long as the principal of or any accrued interest on the Loan or any fee or any other amount payable under this Agreement is outstanding and unpaid.  The provisions of Sections 2.9, 2.11, and 9.4 shall survive and remain in full force and effect regardless of the consummation of the transactions contemplated hereby, the repayment of the Loan, the termination of this Agreement or any provision hereof.  

Section 9.12    Severability.  Any provision of this Agreement or any other Loan Document held to be illegal, invalid or unenforceable in any jurisdiction, shall, as to such jurisdiction, be ineffective to the extent of such illegality, invalidity or unenforceability without affecting the legality, validity or enforceability of  the remaining provisions hereof or thereof; and the illegality, invalidity or unenforceability of a particular provision in a particular jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction.

Section 9.13    Confidentiality.  Lender agrees to take normal and reasonable precautions to maintain the confidentiality of any information relating to Borrower or its business, to the extent designated in writing as confidential and provided to it by Borrower, other than any such information that is available to Lender on a non-confidential basis prior to disclosure by Borrower, except that such information may be disclosed (i) to any Related Party of Lender including, without limitation, accountants, legal counsel and other advisors, (ii) to the extent required by Applicable Laws or regulations or by any subpoena or similar legal process, (iii) to the extent requested by any regulatory agency or authority purporting to have jurisdiction over it (including any self-regulatory authority such as the National Association of Insurance Commissioners), (iv) to the extent that such information becomes publicly available other than as a result of a breach of this Section, or which becomes available to Lender or any Related Party of Lender on a non-confidential basis from a source other than Borrower, (v) in connection with the exercise of any remedy hereunder or under any other Loan Documents or any suit, action or proceeding relating to this Agreement or any other Loan Documents or the enforcement of rights hereunder or thereunder, (vi) subject to execution by such Person of an agreement containing provisions substantially the same as those of this Section, to (A) any assignee of or Participant in, or any prospective assignee of or Participant in, any of its rights or obligations under this Agreement, or (B) any actual or prospective party (or its Related Parties) to any swap or derivative or other transaction under which payments are to be made by reference to Borrower and its obligations, this Agreement or payments hereunder, (vii) to any rating agency, (viii) to the CUSIP Service Bureau or any similar organization, or (ix) with the consent of Borrower.  Any Person required to maintain the confidentiality of any information as provided for in this Section shall be considered to have complied with its obligation to do so if such Person has exercised the same degree of care to maintain the confidentiality of such information as such Person would accord its own confidential information.  

Section 9.14    Use of Name and Information.  Borrower agrees that Lender shall be permitted to use information related to the Loan, including the syndication and arrangement thereof, in connection with marketing, press releases or other transactional announcements or updates provided to investor or trade 

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publications, including, but not limited to, the placement of “tombstone” advertisements in publications of its choice at its own expense.  

Section 9.15    Interest Rate Limitation.  Notwithstanding anything herein to the contrary, if at any time the interest rate applicable to the Loan, together with all fees, charges and other amounts which may be treated as interest on the Loan under Applicable Law (collectively, the “Loan Charges”), shall exceed the maximum lawful rate of interest (the “Maximum Rate”) which may be contracted for, charged, taken, received or reserved by Lender holding a portion of the Loan in accordance with Applicable Law, the rate of interest payable in respect of the Loan hereunder, together with all Loan Charges payable in respect thereof, shall be limited to the Maximum Rate.

Section 9.16    Waiver of Effect of Corporate Seal.  Borrower represents and warrants that it is not required to affix its corporate seal to this Agreement or any other Loan Document pursuant to any requirement of Applicable Law or regulation, agrees that this Agreement is delivered by Borrower under seal and waives any shortening of the statute of limitations that may result from not affixing the corporate seal to this Agreement or such other Loan Documents.

Section 9.17    Patriot Act.   Lender hereby notifies the Loan Parties that pursuant to the requirements of the USA PATRIOT Act (Title III of Pub. L. 107-56 (signed into law October 26, 2001)) (the “Patriot Act”), it is required to obtain, verify and record information that identifies each Loan Party, which information includes the name and address of such Loan Party and other information that will allow Lender to identify such Loan Party in accordance with the Patriot Act.  Each Loan Party shall provide to the extent commercially reasonable, such information and take such other actions as are reasonably requested by Lender in order to assist Lender in maintaining compliance with the Patriot Act.

Section 9.18    No Advisory or Fiduciary Responsibility.  In connection with all aspects of each transaction contemplated hereby (including in connection with any amendment, waiver or other modification hereof or of any other Loan Document), Borrower and each other Loan Party acknowledges and agrees and acknowledges its Affiliates’ understanding that (i) (A) the services regarding this Agreement provided by Lender are arm’s-length commercial transactions between Borrower, each other Loan Party and their respective Affiliates, on the one hand, and Lender, on the other hand, (B) each of Borrower and the other Loan Parties have consulted their own legal, accounting, regulatory and tax advisors to the extent they have deemed appropriate, and (C) Borrower and each other Loan Party is capable of evaluating and understanding, and understands and accepts, the terms, risks and conditions of the transactions contemplated hereby and by the other Loan Documents; (ii) (A) Lender is and has been acting solely as a principal and, except as expressly agreed in writing by the relevant parties, has not been, is not, and will not be acting as an advisor, agent or fiduciary for Borrower, any other Loan Party or any of their respective Affiliates, or any other Person, and (B) Lender has no obligation to Borrower, any other Loan Party or any of their Affiliates with respect to the transaction contemplated hereby except those obligations expressly set forth herein and in the other Loan Documents; and (iii) Lender and its Affiliates may be engaged in a broad range of transactions that involve interests that differ from those of Borrower, the other Loan Parties and their respective Affiliates, and Lender has no obligation to disclose any of such interests to Borrower, any other Loan Party or any of their respective Affiliates.  To the fullest extent permitted by Applicable Law, each of Borrower and the other Loan Parties hereby waives and releases any claims that it may have against Lender with respect to any breach or alleged breach of agency or fiduciary duty in connection with any aspect of any transaction contemplated hereby.  

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Section 9.19    Time is of the Essence.  Time is of the essence of each and every provision of this Agreement.

Section 9.20    Third Parties; Benefit.  All conditions to the obligation of Lender to make advances hereunder are imposed solely and exclusively for the benefit of Lender and its assigns and no other persons shall have standing to require satisfaction of such conditions in accordance with their terms or be entitled to assume that Lender will refuse to make advances in the absence of strict compliance with any or all thereof and no other person shall, under any circumstances, be deemed to be the beneficiary of such conditions, any or all of which may be freely waived in whole or in part by Lender at any time in the sole and absolute exercise of its discretion.  The terms and provisions of this Agreement are for the benefit of the parties hereto and, except as herein specifically provided, no other person shall have any right or cause of action on account thereof.
 (remainder of page left intentionally blank)

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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed by their respective authorized officers as of the day and year first above written.
	
		
	HGREIT II GOODYEAR CROSSING LLC, a Delaware
limited liability company

	 
	 

	 
	 

	By:
	/s/ Janice E. Walker

	Name:
	Janice E. Walker

	Title:
	Authorized Agent

	 
	 

	[SEAL]

	 
	 

	 
	 

	SUNTRUST BANK

	 
	 

	 
	 

	By:
	/s/ Rob West

	Name:
	Rob West

	Title:
	Senior Vice President

Signature Page to Term Loan Agreement
36942122.8

EXHIBIT A
 [FORM OF]

BORROWER COMPLIANCE CERTIFICATE

[Date]

SunTrust Bank
CRE Atlanta Middle Office 
Mail Code: GA-Atlanta-0081
1155 Peachtree Street, N.E., Suite 300
Atlanta, Georgia 30309 
Attention:  Rob West
		
	E-
	mail address: Rob.A.West@SunTrust.com

For the Period Ending:  ______________

Ladies and Gentlemen:

Reference is hereby made to the Term Loan Agreement dated as of ________, 2016 (as amended, restated, supplemented or otherwise modified from time to time, the “ Loan Agreement”), by and between HGREIT II Goodyear Crossing LLC, a Delaware limited liability company (“Borrower”) and SunTrust Bank, as lender (“Lender”). Capitalized terms used herein without definition shall have the meanings set forth in the Loan Agreement.

The undersigned hereby certifies as of the date hereof that he/she is the _______________ of Borrower, and that, as such, he/she is authorized to execute and deliver this Compliance Certificate  (this “Certificate”) to Lender on the behalf of the Borrower, and that:
1.    The calculations set forth in Annex 1 are computations of the Debt Service Coverage Ratio for purposes of Section 6.2 of the Loan Agreement, and are true and accurate in all respects on and as of the date of this Certificate.  Attached hereto are supporting details of the calculation of the Debt Service Coverage Ratio.

2.    Based upon a review of the activities of Borrower and the calculations attached hereto during the period covered thereby, as of the date hereof, there [exists][does not exist] a Cash Flow Sweep Event pursuant to the terms of the Loan Agreement.

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK – SIGNATURE PAGE FOLLOWS]

Exhibit A
36942122.8

HGREIT II Goodyear Crossing LLC 

By:                        
Name:                        
Title:                        

Exhibit A
36942122.8

ANNEX 1

Calculations of Debt Service Coverage Ratio 

[Attached]

Exhibit A
36942122.8

EXHIBIT 3.1
Certificate of Flood Insurance Compliance
SunTrust Bank
CRE Atlanta Middle Office 
Mail Code: GA-Atlanta-0081
1155 Peachtree Streee, N.E., Suite 300
Atlanta, Georgia 30309 
Attention:  Rob West

Re:  $29,000,000.00 loan (“Loan”) evidenced by Term Loan Agreement dated as of ________ (as amended, modified, supplemented, restated, or renewed, from time to time, the “Agreement”), by and between  HGREIT II GOODYEAR CROSSING LLC, a Delaware limited liability company (the “Borrower”) and SUNTRUST BANK, a Georgia banking corporation, (the “Lender”)
Reference is made to the Agreement and the other documents evidencing and securing the Loan (“Loan Documents”).  Capitalized terms used in this certificate (including schedules and other attachments hereto, this “Certificate”) without definition have the meanings specified in the Loan Documents.
Pursuant to applicable provisions of the Agreement, the undersigned, being an authorized representative of Borrower authorized and empowered to issue this Certificate for and on behalf of Borrower hereby certifies to Lender as follows as of the date hereof:
		
	1.
	Review of Flood Insurance Terms and Conditions.  The undersigned has reviewed the terms of the Agreement, including, but not limited to, the representations and warranties of Borrower and Guarantor(s) set forth in the Agreement and the covenants of Borrower set forth in the Agreement, regarding flood insurance for real and personal property (“Flood Insurance Terms and Conditions”), and has made, or caused to be made under his or her supervision, a review in reasonable detail of the transactions and condition of Borrower and Guarantor(s) through the reporting periods.  

		
	2.
	Compliance with Terms of Agreement.  Borrower is in compliance with all of the Flood Insurance Terms and Conditions.

		
	3.
	Certifications regarding Personal Property.  The real property pledged as collateral for the Loan (“Real Property”) is legally described in the Loan Documents. The undersigned certifies as follows with respect to the personal property pledged as collateral for the Loan (as described in the Loan Documents), including without limitation all personal property, collateral and contents securing the Loan within the meaning of 12 CFR 208.25 (c) (collectively “Personal Property”) [mark appropriate statement and attach backup materials]:

(i)     ____ Borrower does not own any Personal Property in connection with the Loan and the Real Property [acceptable to mark if there is none, or if any present is owned by third parties or leased by Borrower]
(ii)    ____ The aggregate value of Personal Property that Borrower currently owns, or will in the succeeding twelve (12) months from the date hereof own, in connection with the Loan and the Real Property, is equal to or more than $500,000.00 with respect to each building located on the Real Property, and Borrower maintains flood insurance on the Personal Property in connection with the 

Active 267780
Exhibit 
Page 1
36942122.8

Loan and the Real Property in an amount not less than $500,000.00 per building, as evidenced by the attached information on insurance.
(iii)    ____ The aggregate value of Personal Property that Borrower currently owns, or will in the succeeding twelve (12) months from the date hereof own, in connection with the Loan and the Real Property [with respect to the _____ building – Note: specify designated building if more than one building is located on the Real Property],  is $ ________ [insert actual value amount], and Borrower maintains flood insurance on said Personal Property, as evidenced by the attached information on values and insurance, in a per building amount that is not less than the lowest of:
		
	(a)
	$500,000.00; 

		
	(b)
	An amount that, when combined with the amount of flood insurance Borrower maintains on the Real Property, is equal to the outstanding principal balance of the Loan; or

		
	(c)
	The full insurable value of the Personal Property 

 (iv)     ____ The aggregate value of Personal Property that Borrower currently owns, or will in the succeeding twelve (12) months from the date hereof own, in connection with the Loan and the Real Property [with respect to the _____ building – Note: specify designated building if more than one building is located on the Real Property], is $ ___________ [insert actual value amount], and Borrower maintains flood insurance on said Personal Property, as evidenced by the attached information on values and insurance, in a per building amount that is equal to $________________.  [insert amount that exceeds $500,000.00]
		
	4.
	Schedules and Exhibits.  Any schedules and exhibits attached hereto are incorporated herein by this reference.

Borrower covenants and agrees promptly to notify Lender and to deliver to Lender a replacement certificate if any of the information in any certification marked in Section 3 changes such that the certification becomes untrue.

Active 267780
Exhibit 
Page 2
36942122.8

IN WITNESS WHEREOF, this Certificate is executed by the undersigned this ____ day of __________.
Date:    
[insert signature blocks]
[attach applicable schedules and exhibits]

Active 267780
Exhibit 
Page 3
36942122.8

EXHIBIT 5.5
INSURANCE REQUIREMENTS; CASUALTY AND CONDEMNATION
1.    Insurance.  Borrower shall maintain insurance as follows:
(a)    Required Coverages.
(i)    Comprehensive “special causes of loss” or “all risk” property insurance (or its equivalent) covering the Property, including improvements and personal property, against losses caused by but not limited to fire, flood, windstorm (including named windstorm), hail, explosion, collapse, earthquake, sinkhole, malicious mischief, vandalism, sprinkler leakage, terrorism and such other insurable hazards as, under good insurance practices, from time to time, are insured against for other real properties similar to the Property in nature, use, location, height and type of construction.  Such insurance policy shall:
(1)   Insure the Property, including improvements and personal property, in an amount equal to not less than 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); 
(2)    Be written on a replacement cost basis and contain either an agreed amount endorsement with respect to the Property (including improvements and personal property) or a waiver of all co-insurance provisions; 
(3)    Contain “Ordinance or Law Coverage” including loss to the undamaged portion of the building, the expense of demolition (including the demolition of undamaged portions of the Property) and increased cost of construction due to the enforcement of Applicable Laws regulating reconstruction at the time of rebuilding following a loss;
(4)    With the exception of flood, earthquake, and named windstorm as defined below, include a deductible not greater than $100,000;  
(5)    If any portion of the Property is currently or at any time in the future located in a “special flood hazard area” designated by the Federal Emergency Management Agency:  (a) include flood hazard insurance in an amount equal to (I) the maximum amount of such insurance available under the Flood Insurance Laws and (II) such excess limits as Lender may require, with a deductible not greater than the maximum amount available under the Flood Insurance Laws; and (b) include flood hazard insurance with respect to all personal property and contents securing the Loan within the meaning of 12 CFR 208.25, to the extent required by the Flood Insurance Laws;
(6)    If any portion of the Property is located in a Seismic Zone 4 or at the discretion of Lender, Seismic Zone 3, have an earthquake deductible that does not exceed 5% of the insured value;
(7)    If any portion of the Property is located within a Tier One designated county, have a named windstorm deductible that does not exceed 3% of the insured value.

Exhibit 
Page 1
36942122.8

(ii)    Loss of rents insurance or business income insurance, as applicable, on an actual loss sustained basis in an amount not less than the amount of rent receivable or business income (less expenses that do not continue during the period of restoration) earned in a twelve (12) month period and at the discretion of Lender additionally providing a 365-day extended period of indemnity.  Lender shall be named as loss payee as respects to this coverage.
(iii)    At all times during which structural construction, repairs or alterations are being made with respect to the Property, and only if the aforesaid coverages do not otherwise apply, (1) owner’s contingent or protective liability insurance covering claims not covered by or under the terms or provisions of the below mentioned commercial general liability and excess liability insurance policies; and (2) the insurance provided for in subsection (i) above written in a so-called builder’s risk completed value form (I) on a non-reporting basis; (II) against “special causes of loss” or “all risk” coverage (III) including  soft costs; (IV) with an agreed amount endorsement waiving co-insurance provisions; and (V) with permission to occupy the Property.
(iv)    Comprehensive boiler and machinery insurance, if applicable, in amounts as shall be reasonably required by Lender on terms consistent with the commercial property insurance policy required under subsection (i) above.
(v)    If perils of terrorism and acts of terrorism or other similar acts or events are hereafter excluded from Borrower’s comprehensive “special causes of loss” or “all risk” property insurance or loss of rents insurance or business income insurance coverage required under subsections (i) and (ii) above, Borrower shall, if the same is available and the cost of which is commercially reasonable, obtain an endorsement to such policy, or a separate policy from an insurance provider which meets the requirements set forth in Section 1(b) below, or is otherwise satisfactory to Lender, insuring against all such excluded acts or events.  The endorsement or policy shall be in amount, form, and substance reasonably satisfactory to Lender. 
(vi)    Commercial general liability insurance against claims for personal injury, bodily injury (including death) or property damage occurring upon, in or about the Property.  Such policy shall be written on an occurrence form with a per occurrence limit of not less than $1,000,000 and a general aggregate limit of not less than $2,000,000. The general aggregate limit shall apply per location if multiple properties are insured under the program and the policy shall not include a deductible greater than $25,000.  The policy shall provide coverage for the following hazards: (1) premises and operations; (2) products and completed operations; (3) independent contractors; and (4) contractual liability for all oral and written contracts.
(vii)    Workers’ compensation, subject to the statutory limits of the state, and employer’s liability insurance in respect of any work or operations on or about the Property, or in connection with the Property or its operation (if applicable).
(viii)    Commercial automobile liability insurance against claims for personal injury, bodily injury and property damage with a combined single limit of $1,000,000.  Coverage shall apply for owned/leased vehicles (if applicable) and hired and non-owned autos.
(ix)    Excess liability insurance in an amount not less than $5,000,000 per occurrence on terms consistent with the commercial general liability and commercial automobile liability insurance required under subsections (vi) and (viii) above.

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(x)    Environmental liability coverage with a per occurrence limit of not less than $1,000,000.00. 
(xi)     Upon sixty (60) days’ written notice, such other reasonable insurance and in such reasonable amounts as Lender may from time to time reasonably request against such other insurable hazards which at the time are commonly insured against by institutional lenders for properties similar to the Property located in or around the same region as the Property if the cost of such coverage is commercially reasonable.
Borrower acknowledges that whether the cost of any insurance coverage requested or required under the foregoing subsections (v) and (xi) is “commercially reasonable” shall be reasonably determined by Lender from time to time and that such determination shall take into account the cost of such coverage(s) then typically required by institutional mortgage lenders with respect to properties similar to the Property located in the same geographical area as the Property.  In no event shall Lender be liable for any loss, damage or injury resulting from the inadequacy or lack of any insurance coverage.
(b)    Form and Quality.  All insurance required hereunder shall be obtained under valid and enforceable policies (collectively, the “Policies” or in the singular, the “Policy”), and shall be subject to the approval of Lender as to insurance companies, amounts, deductibles, loss payees and insureds.  The Policies shall be issued by financially sound and responsible insurance companies authorized to do business in the state or commonwealth where the Property is located and must have an A.M. Best policy holder rating of “A-” or better (or an equivalent rating approved in writing by Lender).  To the extent such Policies are not available as of the date hereof, Borrower shall deliver to Lender an Acord 28 (property) and Acord 25 (liability) or similar certificates of insurance evidencing the coverages and amounts required hereunder.  Not less than five (5) days prior to the expiration date of any insurance coverage in place with respect to the Property, Borrower shall deliver to Lender an Acord 28 (property) and Acord 25 (liability) or similar certificates of insurance, evidencing renewal of coverage as required herein.  Prior to the expiration date of any insurance coverage in place with respect to the Property, Borrower shall deliver to Lender evidence satisfactory to Lender of payment of the premiums due in connection with the renewal of coverage (the “Insurance Premiums”), and, as soon as available thereafter, copies of all renewal Policies or other evidence of the coverages of such Policies otherwise satisfactory to Lender.  The certificates of insurance must include all limits, sub-limits and deductibles and must list the Certificate Holder as provided by Lender. Lender shall not be deemed by reason of the custody of any insurance policies, certificates or binders or copies thereof to have knowledge of the contents thereof.  Lender reserves the right to request certified copies of the insurance policies required in this Article.
(c)    Endorsement. All insurance policies shall be endorsed in form and substance reasonably acceptable to Lender to name Lender as an additional insured, lender loss payee, or mortgagee hereunder, and its successors and/or assigns, as their interests may appear, with loss payable to Lender, without contribution, under a standard New York (or local equivalent) mortgagee clause.  With respect to all insurance, no Person other than Lender shall be named as mortgagee or loss payee.
(d)    Other Requirements.  All Policies 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;

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(ii)    The Policies shall not be canceled by the insurer without at least thirty (30) days’ prior written notice to Lender, except only ten (10) days’ prior written notice to Lender for non-payment of premium shall be required;
(iii)    The insurance shall not be invalidated should Borrower/Named Insured waive, in writing, prior to loss, any or all rights of recovery against a party for loss occurring to the Property (waiver of subrogation).
(e)    Blanket Insurance. Borrower may affect the insurance coverage herein required under its blanket insurance policies; provided that:
(i)    Any such policy or policies of blanket insurance either shall specify therein, or Borrower shall furnish Lender with written statement from the insurer (or from Borrower’s insurance broker) under such policy or policies specifying: (1) the maximum amount of the total insurance afforded by the blanket policy allocated to the Property, and (2) any sublimits in such blanket policy or policies applicable to the Property, which amounts shall not be less than the amounts required pursuant to this Exhibit 5.5;
(ii)    Any policy of blanket insurance hereunder shall comply in all respects with the other provisions of this Exhibit 5.5; and
(iii)    The protection afforded Borrower under any policy of blanket insurance hereunder shall be no less than that which would have been afforded under a separate policy or policies relating only to the Property.
(f)    Adjustments.  Borrower shall give immediate written notice of any loss in respect of the Property to Lender and to the insurance carrier commensurate with the requirements of the policies so as not to prejudice recovery of any loss.  With respect to any loss exceeding $1,000,000.00, Borrower hereby irrevocably authorizes and empowers Lender, as attorney-in-fact for Borrower, coupled with an interest, to make proof of loss, to adjust and compromise any claim under insurance policies, to appear in and prosecute any action arising from such insurance policies, to collect and receive insurance proceeds, and to deduct therefrom Lender’s expenses incurred in the collection of such proceeds.  Nothing contained in this Section 1(f) however, shall require Lender to incur any expense or take any action hereunder. Any proceeds of insurance policies coming into the possession of Lender shall not be deemed trust funds, and Lender shall be entitled to apply such proceeds as herein provided.
(g)    Additional Information. Borrower shall supply such information as Lender deems necessary to determine the adequacy of the insurance procured by Borrower on the Property.  This information may include but is not limited to (i) a statement of values including replacement costs and estimated annual rents for all properties insured under the insurance policies, (ii) probable maximum loss (PML) studies, (iii) property condition reports and (iv) catastrophic modeling.
(h)    Lender’s Right to Procure Insurance.  Notwithstanding anything to the contrary contained herein, 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 (but not the obligation), with written notice to Borrower, to take such action as Lender deems necessary to protect its interest in the Property, including, without limitation, obtaining such insurance coverage as Lender in its sole discretion deems appropriate.  All premiums and expenses incurred by Lender in connection with such action or in obtaining such insurance and keeping it in effect shall be paid by Borrower to Lender upon demand and, until paid, shall be secured by the Security Instrument and shall accrue Default Interest. 

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2.    Use and Application of Insurance Proceeds.  Lender shall apply insurance proceeds to costs of restoring the Property or the Loan as follows:
(a)    if the loss is less than or equal to $1,000,000.00, Lender shall upon receipt thereof release the insurance proceeds to Borrower for restoration of the Property; provided, that: (i) no Default or Event of Default exists; and (ii) Borrower promptly commences and is diligently pursuing restoration of the Property; 
(b)    if the loss exceeds $1,000,000.00 but is not more than $10,000,000.00, or if Borrower is obligated to repair and restore the Property under the Amazon Lease, Lender shall apply the insurance proceeds to restoration; provided, that at all times during such restoration: (i) no Event of Default or Default exists; (ii) Lender reasonably determines that there are sufficient funds available to restore and repair the Property to a condition reasonably approved by Lender; (iii) Lender reasonably determines that the aggregate of the Net Operating Income of the Property during restoration and the business interruption insurance proceeds to be received during restoration will be sufficient to pay debt service on the Loan; (iv) Lender reasonably determines (based on Approved Leases which will remain in effect after restoration is complete and the like) that after restoration and the extended period of indemnity during which business interruption insurance proceeds continue to be received, the Debt Service Coverage Ratio will be at least equal to the lesser of Minimum DSCR Requirement or the Debt Service Coverage Ratio immediately prior to such casualty; (v) Lender reasonably determines that restoration and repair of the Property to a condition approved reasonably by Lender will be completed within eighteen (18) months after the date of loss or casualty and in any event ninety (90) days prior to the Maturity Date; and (vi) Borrower promptly commences and diligently pursues restoration of the Property;
(c)    if the conditions set forth above are not satisfied, Lender may apply any insurance proceeds it may receive to the payment of the Loan or allow all or a portion of such proceeds to be used for the restoration of the Property, in Lender’s sole discretion; 
(d)    with respect to a loss in excess of $1,000,000.00 for which Lender is required or elects, as applicable, to make insurance proceeds available to Borrower for restoration, insurance proceeds applied to restoration will be disbursed on receipt of satisfactory plans and specifications, contracts and subcontracts, schedules, budgets, lien waivers and architects’ certificates, and otherwise in accordance with prudent commercial construction lending practices for construction loan advances; and 
(e)    the net proceeds of rent loss and/or business interruption insurance shall be paid to Lender upon the occurrence of an Event of Default; otherwise, to Borrower to be used in accordance with the provisions hereof.  
3.    Condemnation Awards.  Borrower shall give prompt notice to Lender of the institution of any proceeding for the condemnation or other taking of the Property or any portion thereof.  Lender may participate in any such proceeding and Borrower will deliver to Lender all instruments necessary or required by Lender to permit such participation.  Without Lender’s prior consent, not to be unreasonably withheld with respect to an Immaterial Condemnation (as defined below), Borrower (1) shall not agree to any compensation or award, and (2) shall not take any action or fail to take any action which would cause the compensation to be determined.  All awards and compensation for the taking or purchase in lieu of condemnation of the Property or any part thereof are hereby assigned to and shall be paid to Lender.  Borrower authorizes Lender to collect and receive such awards and compensation, to give proper receipts and acquittances therefor, and in Lender’s sole discretion, to apply the same toward the payment of the Loan, notwithstanding that the Loan may not then be due and payable, or to the restoration of the Property; provided, however, that if (A) the 

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award is less than or equal to $1,000,000.00 and Borrower requests that such proceeds be used for non-structural site improvements (such as landscape, driveway, walkway and parking area repairs) required to be made as a result of such condemnation, (B) such condemnation does not adversely affect the Property or access thereto, as reasonably determined by Lender, or (C) Borrower is obligated to repair and restore the Property under the Amazon Lease (the foregoing set forth in clauses (A), (B), and/or (C), an “Immaterial Condemnation”), Lender will apply the award to such restoration in accordance with the disbursement procedures applicable to insurance proceeds as set forth therein, provided, that there exists no Default or Event of Default.  Borrower, upon request by Lender, shall execute all instruments requested to confirm the assignment of the awards and compensation to Lender, free and clear of all liens, charges or encumbrances other than Permitted Encumbrances.  It is expressly understood and agreed that any proceeds received by Lender pursuant to this Section 3 shall in no way be construed as being held in trust for the benefit of Borrower.

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EXHIBIT 5.11
LEASING AND TENANT MATTERS
Borrower and Lender agree as follows:  
1.    Leases.  Within ten (10) Business Days after Lender’s request, Borrower shall furnish to Lender a copies of all Leases not previously delivered to Lender, certified by Borrower as being true, correct and complete.  
2.    Covenants of Borrower Regarding Leases and Rents.  Borrower covenants that Borrower (a) will observe and perform all of the obligations imposed upon the landlord in the Leases; (b) will use its commercially reasonable efforts to enforce or secure, or cause to be enforced or secured, the performance of each and every obligation and undertaking of the respective Tenants under the Leases, except for obligations or undertaking waived in the ordinary course of Borrower’s business, and will appear in and defend, at Borrower’s sole cost and expense, any action or proceeding arising under, or in any manner connected with, the Leases; (c) will not collect any of the rents under the Leases more than thirty (30) days in advance of the time when the same become due under the terms of the Leases; (d) will not discount any future accruing rents other than in the ordinary course of business; (e) without the prior written consent of Lender, will not execute any assignment of the Leases or the rents thereunder; and (f) will execute and deliver, at the request of Lender, all such assignments of the Leases and rents thereunder in favor of Lender as Lender may from time to time reasonably require.
3.    Leasing Guidelines.
 (a)    Borrower shall not enter into any Lease without the prior consent of Lender, which consent shall not be unreasonably withheld, conditioned or delayed.
(b)    Borrower shall not, without the prior consent of Lender, which consent shall not be unreasonably withheld, conditioned or delayed, modify, amend, extend, waive or grant consents or approvals under any Lease or any guaranty thereof. 
4.    Tenant Estoppels.  At Lender’s request, but not more often than once in any one (1) year period, Borrower shall request and use commercially reasonable efforts to obtain and furnish to Lender, written estoppels in form and substance reasonably satisfactory to Lender, executed by Tenants under the Leases in the Property and confirming the term, rent and other provisions and matters reasonably requested by Lender from time to time relating to the Leases, including, without limitation, such estoppels as may be required by Lender as a condition precedent to its making the Loan.
5.    Subordination, Non-Disturbance and Attornment Agreements.   At Borrower’s expense, each Tenant under a Lease, including an Approved Replacement Lease, shall enter into a Subordination, Non-Disturbance and Attornment Agreement on Lender’s then standard form.
6.    Delivery of Leasing Information and Documents.  From time to time upon Lender’s request, Borrower shall promptly deliver to Lender (a) a complete rent roll of the Property in such detail as Lender may require, together with such operating statements and leasing schedules and reports as Lender may require, and (b) such other leasing information as Lender may reasonably request.

Exhibit 
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36942122.8

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