Document:

ex105signedloanagreement

                                                       _______________________________________________________________                                                                                                                             LOAN AGREEMENT                                Dated as of December 24, 2019                                         Between                     SRT SF RETAIL I, LLC and SRT LA RETAIL, LLC,                            individually and collectively, as Borrower                                           And                            PFP HOLDING COMPANY VI, LLC,                                         as Lender                                                                                                                                                                                                _________________________________________________________________                      71215191 

 

                            TABLE OF CONTENTS                                                                             Page   1.    DEFINITIONS; PRINCIPLES OF CONSTRUCTION ............................................... 1        1.1   Specific Definitions ................................................................................................ 1        1.2   Index of Other Definitions .................................................................................... 17        1.3   Principles of Construction..................................................................................... 17   2.    GENERAL LOAN TERMS ........................................................................................... 18        2.1   The Loan ............................................................................................................... 18        2.2   Interest; Monthly Payments .................................................................................. 18              2.2.1 Generally ................................................................................................... 18              2.2.2 Default Rate............................................................................................... 18              2.2.3 Taxes ......................................................................................................... 18              2.2.4 Breakage Indemnity .................................................................................. 19              2.2.5 Requirements of Law ................................................................................ 19              2.2.6 Unavailability or Illegality of LIBOR ....................................................... 20        2.3   Loan Repayment ................................................................................................... 21              2.3.1 Repayment ................................................................................................. 21              2.3.2 Mandatory Prepayments ............................................................................ 21              2.3.3 Optional Prepayments ............................................................................... 21        2.4   Release of Property ............................................................................................... 22        2.5   Payments and Computations ................................................................................. 23              2.5.1 Making of Payments.................................................................................. 23              2.5.2 Computations ............................................................................................ 23              2.5.3 Late Payment Charge ................................................................................ 23              2.5.4 Certain Payments....................................................................................... 23        2.6   Interest Rate Protection Agreements .................................................................... 23              2.6.1 Interest Rate Protection Agreement .......................................................... 23              2.6.2 Execution of Documents ........................................................................... 25              2.6.3 No Obligation of Lender ........................................................................... 25              2.6.4 Receipts from Interest Rate Protection Agreements ................................. 25              2.6.5 Downgrade of Counterparty ...................................................................... 25              2.6.6 Non-Availability of LIBOR; Substitute IRPA .......................................... 26        2.7   Fees ....................................................................................................................... 27              2.7.1 Structuring Fee .......................................................................................... 27              2.7.2 Exit Fee ..................................................................................................... 27        2.8   Extension Option .................................................................................................. 27        2.9   Intentionally Omitted ............................................................................................ 28   3.    CASH MANAGEMENT AND RESERVES ................................................................ 28        3.1   Cash Management Arrangements ......................................................................... 28        3.2   Required Repairs ................................................................................................... 29              3.2.1 Completion of Required Repairs ............................................................... 29              3.2.2 Required Repairs Reserves........................................................................ 29        3.3   Real Estate Taxes .................................................................................................. 29                                         i  71215191 

 

      3.4   Insurance Premiums .............................................................................................. 30        3.5   Capital Expense Reserves ..................................................................................... 30        3.6   Rollover/Leasing Reserves ................................................................................... 31        3.7   Casualty/Condemnation Subaccount .................................................................... 32        3.8   Security Deposits .................................................................................................. 32        3.9   Intentionally Omitted ............................................................................................ 33        3.10  Grant of Security Interest; Application of Funds .................................................. 33        3.11  Intentionally Omitted ............................................................................................ 33   4.    REPRESENTATIONS AND WARRANTIES ............................................................. 33        4.1   Title ....................................................................................................................... 33        4.2   Physical Condition ................................................................................................ 34        4.3   Survey/Boundaries ................................................................................................ 34        4.4   Separate Lots ......................................................................................................... 34        4.5   Easements; Utilities and Public Access ................................................................ 34        4.6   Assessments .......................................................................................................... 34        4.7   Purchase Options .................................................................................................. 35        4.8   Condemnation ....................................................................................................... 35        4.9   Compliance ........................................................................................................... 35        4.10  Valid and First Lien .............................................................................................. 35        4.11  Filing, Recording and Other Taxes ....................................................................... 36        4.12  Tax Filings ............................................................................................................ 36        4.13  Proceedings; Enforceability .................................................................................. 36        4.14  No Conflicts .......................................................................................................... 36        4.15  Organization; Special Purpose .............................................................................. 37        4.16  Other Debt ............................................................................................................. 37        4.17  Ownership of Borrower ........................................................................................ 37        4.18  Name; Principal Place of Business ....................................................................... 37        4.19  No Bankruptcy Filing ........................................................................................... 38        4.20  Fraudulent Transfer ............................................................................................... 38        4.21  ERISA; No Plan Assets ........................................................................................ 38        4.22  Litigation ............................................................................................................... 38        4.23  Agreements ........................................................................................................... 39        4.24  Full and Accurate Disclosure ................................................................................ 39        4.25  Leases .................................................................................................................... 39        4.26  Contracts; Major Contracts ................................................................................... 40        4.27  Management Agreement ....................................................................................... 40        4.28  Operations Agreements ......................................................................................... 41        4.29  Hazardous Substances ........................................................................................... 41        4.30  Embargoed Person ................................................................................................ 41        4.31  Anti-Money Laundering ....................................................................................... 42        4.32  Federal Reserve Regulations; Investment Company Act; Bank Holding Company             ............................................................................................................................... 42   5.    COVENANTS ................................................................................................................. 42        5.1   Warranty of Title................................................................................................... 42        5.2   Existence ............................................................................................................... 42    71215191 

 

      5.3   Dissolution ............................................................................................................ 42        5.4   Change of Name, Identity or Structure ................................................................. 43        5.5   Principal Place of Business ................................................................................... 43        5.6   Special Purpose Bankruptcy Remote Entity ......................................................... 43        5.7   Intentionally Omitted ............................................................................................ 43        5.8   Change in Business or Operation of Property ....................................................... 43        5.9   Indebtedness .......................................................................................................... 43        5.10  Liens ...................................................................................................................... 44        5.11  Prohibited Transfers .............................................................................................. 44        5.12  Taxes and Other Charges ...................................................................................... 44        5.13  No Joint Assessment ............................................................................................. 44        5.14  Repairs; Maintenance and Compliance; Alterations ............................................. 45              5.14.1 Repairs; Maintenance and Compliance ..................................................... 45              5.14.2 Alterations ................................................................................................. 45        5.15  Access to Property ................................................................................................ 46        5.16  Environmental Matters.......................................................................................... 46              5.16.1 Hazardous Substances ............................................................................... 46              5.16.2 Environmental Monitoring ........................................................................ 46              5.16.3 O & M Program......................................................................................... 48        5.17  Leases .................................................................................................................... 48              5.17.1 Material Leases ......................................................................................... 48              5.17.2 Minor Leases ............................................................................................. 49              5.17.3 Additional Covenants with Respect to Leases .......................................... 49        5.18  Property Management ........................................................................................... 49              5.18.1 Management Agreement ........................................................................... 49              5.18.2 Termination of Manager............................................................................ 50        5.19  Approval of Major Contracts ................................................................................ 50        5.20  Zoning ................................................................................................................... 51        5.21  Licenses................................................................................................................. 51        5.22  Compliance with Restrictive Covenants, Etc........................................................ 51        5.23  Performance of Other Agreements ....................................................................... 51        5.24  ERISA ................................................................................................................... 51        5.25  Expenses ............................................................................................................... 52        5.26  Indemnity .............................................................................................................. 52        5.27  Cooperate in Legal Proceedings ........................................................................... 54        5.28  Further Assurances................................................................................................ 54        5.29  Patriot Act; Embargoed Person ............................................................................. 54        5.30  Anti-Money Laundering ....................................................................................... 56        5.31  Condominium Regime .......................................................................................... 56   6.    NOTICES AND REPORTING ...................................................................................... 58        6.1   Notices .................................................................................................................. 58        6.2   Borrower Notices and Deliveries .......................................................................... 59        6.3   Financial Reporting ............................................................................................... 59              6.3.1 Bookkeeping.............................................................................................. 59              6.3.2 Annual Reports .......................................................................................... 59              6.3.3 Monthly/Quarterly Reports ....................................................................... 59    71215191 

 

            6.3.4 Other Reports ............................................................................................ 60              6.3.5 Annual Budget........................................................................................... 60              6.3.6 Breach........................................................................................................ 61              6.3.7 Intentionally Omitted ................................................................................ 61        6.4   Estoppel Statements .............................................................................................. 61   7.    INSURANCE; CASUALTY; AND CONDEMNATION ............................................ 62        7.1   Insurance ............................................................................................................... 62              7.1.1 Coverage.................................................................................................... 62              7.1.2 Policies ...................................................................................................... 64              7.1.3 Blanket Coverage ...................................................................................... 65              7.1.4 No Separate Insurance ............................................................................... 65              7.1.5 Transfers .................................................................................................... 65        7.2   Casualty................................................................................................................. 66              7.2.1 Notice; Restoration .................................................................................... 66              7.2.2 Settlement of Proceeds .............................................................................. 66        7.3   Condemnation ....................................................................................................... 67              7.3.1 Notice; Restoration .................................................................................... 67              7.3.2 Collection of Award .................................................................................. 67        7.4   Application of Proceeds or Award ........................................................................ 67              7.4.1 Application to Restoration ........................................................................ 67              7.4.2 Application to Debt ................................................................................... 68              7.4.3 Procedure for Application to Restoration.................................................. 69   8.    DEFAULTS ..................................................................................................................... 69        8.1   Events of Default .................................................................................................. 69        8.2   Remedies ............................................................................................................... 71              8.2.1 Acceleration .............................................................................................. 71              8.2.2 Remedies Cumulative ............................................................................... 71              8.2.3 Severance/Partial Foreclosure ................................................................... 72              8.2.4 Delay ......................................................................................................... 72              8.2.5 Lender’s Right to Perform......................................................................... 72   9.    SPECIAL PROVISIONS ............................................................................................... 73        9.1   Sale of Note; Secondary Market Transaction; Syndication .................................. 73              9.1.1 Cooperation ............................................................................................... 73              9.1.2 Use of Information .................................................................................... 74              9.1.3 Borrower Obligations Regarding Disclosure Documents ......................... 74              9.1.4 Restructuring of Loan................................................................................ 75   10.   MISCELLANEOUS ....................................................................................................... 76        10.1  Exculpation ........................................................................................................... 76        10.2  Brokers and Financial Advisors ............................................................................ 79        10.3  Retention of Servicer ............................................................................................ 79        10.4  Survival ................................................................................................................. 80        10.5  Lender’s Discretion ............................................................................................... 80        10.6  Governing Law ..................................................................................................... 80    71215191 

 

      10.7  Trial by Jury .......................................................................................................... 82        10.8  Modification, Waiver in Writing .......................................................................... 82        10.9  Headings/Schedules .............................................................................................. 82        10.10 Severability ........................................................................................................... 82        10.11 Prior Agreements .................................................................................................. 82        10.12 Preferences ............................................................................................................ 83        10.13 Certain Waivers .................................................................................................... 83        10.14 Remedies of Borrower .......................................................................................... 83        10.15 Offsets, Counterclaims and Defenses ................................................................... 83        10.16 Publicity ................................................................................................................ 84        10.17 No Usury ............................................................................................................... 84        10.18 Conflict; Construction of Documents; Reliance ................................................... 84        10.19 No Joint Venture or Partnership; No Third Party Beneficiaries ........................... 85        10.20 Yield Maintenance Premium ................................................................................ 85        10.21 Assignment ........................................................................................................... 86        10.22 Intentionally Omitted ............................................................................................ 86        10.23 Certain Additional Rights of Lender (VCOC) ...................................................... 86        10.24 Set-Off................................................................................................................... 86        10.25 Counterparts .......................................................................................................... 87        10.26 Borrower ............................................................................................................... 87        10.27 Cross-Default; Cross-Collateralization; Waiver of Marshalling of Assets ........... 87     LIST OF SCHEDULES   Schedule 1  - Index of Other Definitions  Schedule 2  - Required Repairs  Schedule 3  - Exceptions to Representations and Warranties  Schedule 4  - Rent Roll  Schedule 5  - Organization of Borrower  Schedule 6  - Definition of Special Purpose Bankruptcy Remote Entity  Schedule 7  - Calculation of UNCF  Schedule 8  - Officer’s Certificate  Schedule 9  - Form of Notice to Tenants  Schedule 10 - Allocated Loan Amounts                     71215191 

 

                             LOAN AGREEMENT         LOAN AGREEMENT dated as of December 24, 2019 (as the same may be modified,  supplemented, amended or otherwise changed, this “Agreement”) between SRT SF RETAIL I,  LLC, a Delaware limited liability company “SRT SF RETAIL”) and SRT LA RETAIL, LLC,  a Delaware limited liability  company (“SRT  LA RETAIL”) (SRT SF  RETAIL  and SRT  LA  RETAIL  are  individually,  collectively,  jointly  and  severally  and  together  with  each  of  their  permitted successors and assigns, “Borrower”), and PFP HOLDING COMPANY VI, LLC, a  Delaware limited liability company (together with its successors and assigns, “Lender”).   1.    DEFINITIONS; PRINCIPLES OF CONSTRUCTION         1.1   Specific Definitions.  The following terms have the meanings set forth below:               8 Octavia Property:  the commercial condominium units 102, 307 and 308, and  the Improvements therein owned by SRT SF Retail Borrower and encumbered by the SRT SF  Retail Security  Instrument,  together  with  all  rights  pertaining  to  such  real  property  and  Improvements, and  all  other  collateral  for  the  Loan  relating  thereto  as  more  particularly  described  in  the  Granting  Clauses  of  the SRT  SF  Retail Security  Instrument.   The 8  Octavia  Property  is  commonly  known  as,  8  Octavia Street,  Units  102,  307  and  308,  San  Francisco,  California.               388 Fulton Street Property:  the commercial areas 1 and 2 and Improvements  therein  owned  by SRT  SF  Retail  Borrower and  encumbered  by  the SRT  SF  Retail Security  Instrument, together with all rights pertaining to such real property and Improvements, and all  other  collateral  for  the  Loan  relating  thereto  as  more  particularly  described  in  the  Granting  Clauses of the SRT SF Retail Security Instrument.  The 388 Fulton Street Property is commonly  known as 388 Fulton Street, Units R-1 and R-2, San Francisco, California.               400 Grove Property:  the commercial condominium unit C-1 and Improvements  therein  owned  by SRT  SF  Retail  Borrower and  encumbered  by  the SRT  SF  Retail Security  Instrument, together with all rights pertaining to such real property and Improvements, and all  other  collateral  for  the  Loan  relating  thereto  as  more  particularly  described  in  the  Granting  Clauses of the SRT SF Retail Security Instrument.  The 400 Grove Property is commonly known  as 400 Grove Street, #C-1, San Francisco, California.               450  Hayes Property:  the  commercial  condominium  units  C-1  and  C-2 and  Improvements therein owned by SRT SF Retail Borrower and encumbered by the SRT SF Retail  Security Instrument, together with all rights pertaining to such Units and Improvements, and all  other  collateral  for  the  Loan  relating  thereto  as  more  particularly  described  in  the  Granting  Clauses of the SRT SF Retail Security Instrument.  The 450 Hayes Property is commonly known  as, 450 Hayes Street, Units C-1 and C-2, San Francisco, California.               Advisor: SRT Advisor, LLC, a Delaware limited liability company.               Affiliate:   as  to  any  Person,  any  other  Person  that,  directly  or  indirectly,  is  in  Control of, is Controlled by or is under common Control with such Person or is  a director or  officer of such Person or of an Affiliate of such Person.                                         1  71215191 

 

            Allocated Loan Amount:  with respect to each Individual Property, the amount  listed for such Individual Property on Schedule 10 hereto.               Allocated Prepayment Amount:  the greater of (i) one hundred fifteen percent  (115%) of the Allocated Loan Amount of the applicable Individual Property, and (ii) eighty-five  percent  (85%)  of  the  Net  Sale  Proceeds  from  a  Bona  Fide  Third  Party  Sale  of  the  applicable  Individual Property.               Approved Capital Expenses:  Capital Expenses incurred by Borrower, provided  that such Capital Expenses shall either be (i) included in the Approved Capital Budget for the  then current calendar month or (ii) otherwise approved by Lender, which approval shall not be  unreasonably withheld or delayed.               Approved  Leasing  Expenses:   actual  out-of-pocket  expenses  incurred  by  Borrower and payable to third parties that are not Affiliates of Borrower or Guarantor in leasing  space at the Property pursuant to Leases entered into in accordance with the Loan Documents,  including brokerage commissions and tenant improvement costs and allowances, which expenses  are  (i) specifically  approved  by  Lender  in  connection  with  approving  the  applicable  Lease,  or  (ii) incurred in the ordinary course of business and on market terms and conditions in connection  with  Leases  which  do  not  require  Lender’s  approval  under  the  Loan  Documents,  or  (iii) otherwise  approved  by  Lender,  which  approval  shall  not  be  unreasonably  withheld  or  delayed.  Approved Leasing Expenses shall be substantiated by executed Lease documents and  brokerage agreements.               Bankruptcy Code: Title 11 of the United States Code entitled “Bankruptcy”, as  amended from time to time, and any successor statute or statutes and all rules and regulations  from  time  to  time  promulgated  thereunder,  and  any  comparable  foreign  laws  relating  to  bankruptcy, insolvency or creditors’ rights.               Bona Fide Third Party Sale:  the sale of any Individual Property to a third-party  purchaser that is not an Affiliate of Borrower or Guarantor.               Business  Day:   any  day  other  than  a  Saturday,  Sunday  or  any  day  on  which  commercial  banks  in  New  York,  New  York or  San  Francisco,  California are  authorized  or  required to close.               Capital Expenses:  expenses that are capital in nature or required under GAAP to  be capitalized.               Code:  the Internal Revenue Code of 1986, as amended and as it may be further  amended from time to time, any successor statutes thereto, and applicable U.S. Department of  Treasury regulations issued pursuant thereto in temporary or final form.               Commonly  Controlled  Entity:  an  entity,  whether  or  not  incorporated,  that  is  under common control with Borrower within the meaning of Section 4001(a)(14) of ERISA or is  part of  a group that includes  Borrower and that  is  treated  as  a single employer under Section  414(b) or (c) of the Code.                                         2  71215191 

 

            Control:  with respect to any Person, either (i) ownership directly or indirectly of  forty-nine  percent  (49%)  or  more  of  all  equity  interests  in such  Person  or  (ii)  the  possession,  directly  or  indirectly,  of  the  power  to  direct  or  cause  the  direction  of  the  management  and  policies of such Person, through the ownership of voting securities, by contract or otherwise, and  the terms Controlled, Controlling and common Control shall have correlative meanings.               Debt:  the unpaid Principal, all interest accrued and unpaid thereon, all Exit Fees,  any  Yield  Maintenance  Premium  and  all  other  sums  due  to  Lender  in  respect  of  the  Loan  or  under any Loan Document.               Debt Service:  with respect to any particular period, the scheduled principal and  interest payments due under the Note in such period.                Debt Yield:  as of any date, the ratio (expressed as a percentage) calculated by  Lender of (i) the UNCF to (ii) the unpaid Principal as of such date.               Declaration:   individually  and  collectively,  as  the  same  may  be  amended:   (i) Declaration  of  Reciprocal  Easements,  Covenants  and  Restrictions  of  Fulton  Masonic,  executed by Fulton Masonic LLC, a California limited liability company (“Declarant”), dated  August 27, 2002 and recorded on September 3, 2002 in the Office of the Assessor – Recorder of  San Francisco County, California (the “Official Records”) as Instrument No. 2002-H233568, in  Book  I214, Page 694 (the “Master Declaration”) and that certain Declaration of Restrictions  and Easements and Common Area Maintenance Agreement for Commercial Parcel, executed by  American Stores Properties, Inc., a Delaware corporation (“Original Declarant”), recorded on  November  18,  2005  in  the Official  Records as  Instrument  No. 2005-I075898-00  (the  “Initial  Commercial Declaration”), and amended by that certain Amendment No. 1 to Declaration of  Restrictions and Easements and Common Area Maintenance Agreement for Commercial Parcel  executed by Declarant, recorded on April 7, 2006 in the Official Records as Instrument Number  2006-I156703-00 (collectively,  the  “Commercial Declaration”  and  together with  the Master  Declaration,  the  “Fulton Shops Declaration”);  (ii) Declaration  of  Restrictions  and  Condominium Plan for 8 Octavia Boulevard San Francisco, California a Condominium Project  recorded July 25, 2014 in the Official Records as Instrument No. 2014-J914505 (the “8 Octavia  Declaration”); (iii) Declaration of Restrictions and Condominium Plan for 400 Grove Street San  Francisco, California a Condominium Project recorded March 18, 2015 in the Official Records  as  Instrument  No.  2015-K034558 (the  “400  Grove Declaration”);  (iv) Declaration  of  Restrictions  and  Condominium  Plan  for  450  Hayes  Street  San  Francisco,  California  a  Condominium  Project  December  29,  2015 in  the  Official  Records as  Instrument  No.  2015- K182065 (the  “450  Hayes Declaration”);  and  (v) Declaration  of  Covenants,  Conditions,  and  Restrictions  of  388  Fulton  recorded  June  06,  2016 in  the  Official  Records as  Instrument  No.  2016-K270224-00 (the “388 Fulton Declaration”).               Default:   the  occurrence  of  any  breach  of  any  representation,  warranty  or  covenant under any Loan Document which, with the giving of notice or passage of time, or both,  would be an Event of Default.                                          3  71215191 

 

            Default  Rate:   a  rate  per  annum  equal  to  the  lesser  of  (i)  the  maximum  rate  permitted  by  applicable  law  or  (ii)  five  percent  (5%)  above  the  Interest  Rate,  compounded  monthly.               Deposit Bank:  Wells Fargo Bank, National Association, or such other bank or  depository selected by Lender in its discretion.               Early  Sale  Date:   with  respect  any  payment  of  Principal  in  connection  with a  Bona  Fide  Third  Party  Sale, January 9,  2021;  provided  that  if  Lender  elects  to  change  the  Payment  Date,  as  provided  in  the  definition  of  “Payment  Date”,  for  all  purposes  of  this  Agreement, the Early Sale Date shall be and become the same day of the month and the year set  forth above as the day in the month to which Lender elects to change the Payment Date.               Eligible Account: either (i) an account maintained with a depository institution or  trust company, the short term unsecured debt obligations or commercial paper of which are rated  at least A 1 (or equivalent) by each Rating Agency in the case of accounts in which funds are  held for thirty (30) days or less (or, in the case of accounts in which funds are held for more than  thirty  (30)  days,  the  long  term  unsecured  debt  obligations  of  which  are  rated  at  least  A+  (or  equivalent) by each Rating Agency) or (ii) a segregated trust account maintained with the trust  department  of a federal  or state chartered depository institution or trust  company acting in  its  fiduciary  capacity  which  institution  or  trust  company  is  subject  to  regulations  similar  to  12  C.F.R. §9.10(b), having in either case a combined capital and surplus of at least $50,000,000 and  is  subject  to  federal  and  state  authority,  provided,  however,  for  purposes  of  the  Cash  Management Agreement, the definition of Eligible Account shall have the meaning set forth in  the Cash Management Agreement.               Eligible  Institution:  a  depository  institution  or  trust  company  insured  by  the  Federal Deposit Insurance Corporation the short term unsecured debt obligations or commercial  paper of which are rated at least "A-2" by S&P, "P-2" by Moody’s, and "F-2+" by Fitch in the  case of accounts in which funds are held for thirty (30) days or less or, in the case of accounts in  which funds are held for more than thirty (30) days, the long term unsecured debt obligations of  which are rated at least “A” by Fitch and S&P and “A2” by Moody’s, provided, however, that  for purposes of the Deposit Bank, the definition of Eligible Institution shall have the meaning set  forth in the Cash Management Agreement.               Environmental  Report: individually  and/or  collectively,  as  the  context  may  require,  that  certain (i) Phase  I  Environmental  Site  Assessment  (Fulton  Shops),  prepared  by  EMG  Engineering  and  dated  as  of  December  6,  2019,  (ii) Phase  I  Environmental  Site  Assessment  (8  Octavia),  prepared  by  EMG  Engineering  and  dated  as  of  December  6,  2019,  (iii) Phase  I  Environmental  Site  Assessment  (400  Grove),  prepared  by  EMG  Engineering  and  dated  as  of  December  6,  2019,  (iv) Phase  I  Environmental  Site  Assessment  (450  Hayes),  prepared by  EMG Engineering  and dated as of  December 6, 2019, (v) Phase  I  Environmental  Site Assessment (388 Fulton), prepared by EMG Engineering and dated as of December 6, 2019,  (vi) Phase  I  Environmental  Site  Assessment  (Silver  Lake  Collection),  prepared  by  EMG  Engineering  and  dated  as  of  December  6,  2019,  (vii) Phase  I  Environmental  Site  Assessment  (Fulton Shops), prepared by Millennium Consulting Associates and dated as of March 21, 2016,  (viii) Phase I Environmental Site Assessment (8 Octavia – Unit 102), prepared by Millennium                                         4  71215191 

 

Consulting  Associates  and  dated  as  of  May  20,  2016, (ix) Phase  I  Environmental  Site  Assessment (8 Octavia – Unit 307), prepared by Millennium Consulting Associates and dated as  of May 20, 2016, (x) Phase I Environmental Site Assessment (8 Octavia – Unit 308), prepared  by Millennium Consulting Associates and dated as of May 20, 2016, (xi) Phase I Environmental  Site  Assessment  (400  Grove),  prepared by  Millennium  Consulting  Associates  and  dated  as  of  May  20,  2016, (xii) Phase  I  Environmental  Site  Assessment  (450  Hayes – Restaurant  Site),  prepared  by  Millennium  Consulting  Associates  and  dated  as  of  May  20,  2016,  (xiii) Phase  I  Environmental  Site  Assessment  (450  Hayes – Retail  Boutique),  prepared  by  Millennium  Consulting  Associates  and  dated  as  of  May  20,  2016,  (xiv) Phase  I  Environmental  Site  Assessment  (388  Fulton),  prepared  by  Millennium  Consulting  Associates  and  dated  as  of  October  3,  2016 and  (xv) Phase  I  Environmental  Site  Assessment  (Silver  Lake  Commercial  Property) prepared by Millennium Consulting Associates and dated as of November 22, 2016.               ERISA:   the  Employee  Retirement  Income  Security  Act  of  1974,  as  amended  from time to time, and the rules and regulations promulgated thereunder.               ERISA  Affiliate:   all  members  of  a  controlled  group  of  corporations  and  all  trades and business (whether or not incorporated) under common control and all other entities  which,  together  with  Borrower,  are  treated  as a  single  employer  under  any  or  all  of  Section  414(b), (c), (m) or (o) of the Code.               Excluded  Taxes:   any  of  the  following  Taxes  imposed  on  or  with  respect  to  Lender or required to be withheld or deducted from a payment to Lender, (i) Taxes imposed on  or measured by net income (however denominated), franchise Taxes, and branch profits Taxes,  in each case, imposed as a result of (a) 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 (b) a present or former connection between Lender and the  jurisdiction  imposing  such  Tax  (other  than  connections  arising  from  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 the Loan or any Loan Document), (ii) U.S.  federal  withholding  Taxes  imposed  on  amounts  payable  to  or  for  the  account  of  such  Lender  with respect to an applicable interest in the Loan pursuant to a law in effect on the date on which  Lender  acquires  such interest  in  the  Loan,  except  to  the extent that, pursuant  to Section 2.2.4  hereof, amounts with respect to such Taxes were payable to such Lender’s assignor immediately  before such Lender became a party hereto, (iii) Taxes attributable to Lender’s failure to comply  with Section  2.2.4(b) hereof  and  (iv)  any U.S.  federal  withholding  Taxes  imposed  under  FATCA.               Exit Fee:  (i) with respect to any partial repayment or prepayment of Principal, an  amount equal to one quarter of one percent (0.25%) of the amount of Principal being repaid or  prepaid,  and  (ii)  upon  any  acceleration  or  final  repayment  of the  Loan,  an  amount  equal  to  $45,000, minus the total amount of Exit Fees theretofore paid by Borrower under this Agreement  (if any).                 FATCA:  Sections 1471 through 1474 of the Code, as of the date hereof (or any  amended or successor version that is substantively comparable and not materially more onerous                                         5  71215191 

 

to  comply  with),  any  current  or  future  regulations  or  official  interpretations  thereof  and  any  agreements entered into pursuant to Section 1471(b)(1) of the Code.               Fulton  Shops Property:  the condominium  units and  Improvements  therein  owned by SRT SF Retail Borrower and encumbered by the SRT SF Retail Security Instrument,  together  with  all  rights  pertaining  to  such  real  property  and  Improvements,  and  all  other  collateral for the Loan relating thereto as more particularly described in the Granting Clauses of  the SRT  SF  Retail Security  Instrument.   The Fulton  Shops  Property is  commonly  known  as  1720, 1730, 1770, 1780 and 1790 Fulton Street, San Francisco, California.               Fulton  Shops  Property Zoning Report:  that  certain  preliminary zoning  report  issued by Zoning-Info. for the benefit of the Lender dated December 23, 2019.               GAAP:  generally accepted accounting principles in the United States of America  as of the date of the applicable financial report.               Governmental  Authority:   any  court,  board,  agency,  commission,  office  or  authority  of  any  nature  whatsoever  for any  governmental  unit  (federal,  state,  county,  district,  municipal, city or otherwise) now or hereafter in existence.               Guarantor:  Strategic  Realty  Trust,  Inc.  a  Maryland corporation,  or  any  other  Person that now or hereafter guarantees any of Borrower’s obligations  hereunder or any other  Loan Document.               Indemnified Taxes:  (i) Taxes, other than Excluded Taxes, imposed on or with  respect to any payment made by or on account of any obligation of Borrower under any Loan  Document and (ii) to the extent not otherwise described in clause (i), Other Taxes.               Individual  Property:  individually, each of  (i) the 8 Octavia Property; (ii) 388  Fulton  Street  Property; (iii) 400  Grove  Property;  (iv)  450  Hayes  Property;  (v) Fulton  Shops  Property; and (vi) Silver Lake Collection Property.               Interest  Period:   (i)  the  period  from  the  date  hereof  through  the  first  day  thereafter that is the eighth (8th) day of a calendar month, and (ii) each period thereafter from the  ninth (9th) day of each calendar month through the eighth (8th) day of the following calendar  month.  Notwithstanding the foregoing, in the event Lender shall have elected to change the date  on which scheduled payments under the Loan are due, as described in the definition of “Payment  Date”, from and after the effective date of such election, each Interest Period shall commence on  the  day  of  each  month  in  which  occurs  such  changed  Payment  Date  and  end  on  the  day  immediately preceding the following Payment Date, as so changed.               Interest Rate:  the LIBOR Rate or, during the continuance of a Substitute Rate  Period, the Substitute Rate, in each case, subject to Section 2.2.6 hereof (or, in either such case,  when applicable pursuant to this Agreement or any other Loan Document, the Default Rate).               Lease or Leases:  as applicable, all leases and other agreements or arrangements  entered into (whether written or oral and whether now or hereafter in effect) pursuant to which  any Person is granted a possessory interest in, or right to use, enjoy or occupy all or any portion                                         6  71215191 

 

of  any  space  at  the  Property  or  the  Improvements,  including  any  guarantees,  extensions,  renewals, modifications or amendments thereof.               Lease  Termination  Payments:   (i)  all  fees,  penalties,  commissions  or  other  payments made to Borrower in connection with or relating to the rejection, buy-out, termination,  surrender  or  cancellation  of  any  Lease  (including  in  connection  with  any  bankruptcy  proceeding), (ii) any security deposits or proceeds of letters of credit held by Borrower in lieu of  cash  security  deposits,  which  Borrower  is  permitted  to  retain  pursuant  to  the  applicable  provisions of any Lease and (iii) any payments made to Borrower relating to unamortized tenant  improvements and leasing commissions under any Lease.               Legal  Requirements:   statutes,  laws,  rules,  orders,  regulations,  ordinances,  judgments, decrees and injunctions of Governmental Authorities (including those regarding fire,  health,  handicapped  access,  sanitation,  ecological,  historic,  zoning,  environmental  protection,  wetlands and building laws and the Americans with Disabilities Act of 1990, Pub. L. No. 89-670,  104 Stat. 327 (1990), as  amended, and all regulations  promulgated pursuant  thereto) affecting  Borrower, any Loan Document or all or part of the Property or the construction, ownership, use,  alteration or operation thereof, whether now or hereafter enacted and in force, and all permits,  licenses and authorizations and regulations relating thereto.               LIBOR:  with respect to any Interest Period, the rate per annum which is equal to  the rate for deposits in U.S. Dollars (“U.S. Dollars”), for a period equal to one month, which  appears  on  Reuters  Screen  LIBOR01  Page  as  of  11:00  a.m.,  London  time,  on  the  related  Determination Date.  If such interest rate shall cease to be available from Reuters, LIBOR shall  be  determined  from  such  financial  reporting  service  as  Lender  shall  determine  (in  Lender’s  reasonable  discretion)  and  use  with  respect  to  its  other  loan  facilities  on  which  interest  is  determined based on  LIBOR.   If two or more such rates  appear on Reuters Screen  LIBOR01  Page or associated pages, the rate in respect of such Interest Period will be the arithmetic mean  of  such  offered  rates,  absent  manifest  error.   For  purposes  hereof,  (i)  “Determination  Date”  shall mean, with respect to any Interest Period, the date which is two Eurodollar Business Days  prior to the fifteenth (15th) day of the first calendar month occurring during such Interest Period;  and (ii) “Eurodollar Business Day” shall mean a day on which commercial banks are open for  general business (including dealings in U.S. Dollar deposits) in London, England.  In no event  shall LIBOR be less than zero.               LIBOR Rate:  the sum of the Spread plus the greater of (i) LIBOR and (ii) 1.50%  (the “Floor”).               Lien:   any  mortgage,  deed  of  trust,  lien  (statutory or  otherwise),  pledge,  hypothecation,  easement,  restrictive  covenant,  preference,  assignment,  security  interest  or  any  other  encumbrance,  charge  or  transfer  of,  or  any  agreement  to  enter  into  or  create  any  of  the  foregoing, on or affecting all or any part of the Property or any interest therein, or any direct or  indirect  interest  in  Borrower  or  Sole  Member,  including  any  conditional  sale  or  other  title  retention agreement, any financing lease having substantially the same economic effect as any of  the  foregoing,  the  filing  of  any  financing  statement,  and  mechanic’s,  materialmen’s  and  other  similar liens and encumbrances.                                          7  71215191 

 

            Limited  Partnership  Transfer: a  Transfer  of  limited  partnership  interest  in  Strategic Realty Operating Partnership, L.P. (“Operating Partnership”).               Loan  Documents:   this  Agreement  and  all  other  documents,  agreements  and  instruments now or hereafter evidencing, securing or delivered to Lender in connection with the  Loan,  including,  the  following,  each  of  which  is  dated  as  of  the  date  hereof (but  specifically  excluding the Environmental Indemnity Agreement given by Borrower and Guarantor to Lender  and dated  as  of the date hereof):  (i) the Promissory Note made by  Borrower to  Lender (the  “Note”),  (ii)  the  Deed  of  Trust,  Assignment  of  Leases  and Rents, Security  Agreement and  Fixture Filing made by SRT SF RETAIL to a trustee in favor of Lender (the “SRT SF Retail  Security  Instrument”), (iii) the  Deed  of  Trust,  Assignment  of  Leases  and  Rents,  Security  Agreement and Fixture Filing made by SRT LA RETAIL to a trustee in favor of Lender (the  “SRT  LA  Retail  Security  Instrument”,  and  together  with  the  SRT  SF  Retail  Security  Instrument,  individually  and  collectively,  the  “Security  Instrument”), (iv) Assignment  of  Leases and Rents from SRT SF RETAIL to Lender (the “SRT SF Retail Assignment of Leases  and Rents”), (v) Assignment of Leases and Rents from SRT LA RETAIL to Lender (the “SRT  LA Retail Assignment of Lease and Rents”, and together with the SRT SF Retail Assignment  of  Leases  and  Rents, individually  and  collectively, the  “Assignment  of  Leases  and  Rents”),  (vi) Assignment  of  Agreements,  Licenses,  Permits  and  Contracts  from  Borrower  to  Lender,  (vii) the Deposit  Account  Control  Agreement (the  “Clearing  Account  Agreement”)  among  Borrower,  Lender and the Clearing  Bank, (viii) the Cash  Management  Agreement  (the “Cash  Management Agreement”) among Borrower, Lender and the Deposit Bank, (ix) the Guaranty  of  Recourse  Obligations  made  by  Guarantors  (the  “Guaranty”),  (x)  the  Interest  Rate  Cap  Assignment  and  Security  Agreement  from  Borrower  to  Lender  and  (xi)  the  Consent  and  Subordination  of  Manager  from  Manager  to  Lender,  and  (xii)  the  Contribution  Agreement  between both Individual Borrowers with respect to the Loan; as each of the foregoing may be  (and each of the foregoing defined terms shall refer to such documents as they may be) amended,  restated, replaced, supplemented or otherwise modified from time to time.                 Major  Contract:  each  contract  and  agreement  relating  to  the  ownership,  management, development, use, operation, leasing, maintenance, repair or improvement of the  Property, other than the Management Agreement and the Leases, as to which (i) the term thereof  extends beyond one year (unless cancelable on thirty (30) days or less notice without requiring  the  payment  of  termination  fees  or  payments  of  any  kind),  (ii)  relates  solely  or  primarily  to  environmental  remediation  or  other  environmental  matters  or  (iii)  is  with  an  Affiliate  of  Borrower or Guarantor.                Management Agreement:  each management agreement between an Individual  Borrower and Manager, pursuant to which Manager is to manage the Property, as the same may  be  amended,  restated,  replaced,  supplemented  or  otherwise  modified  from  time  to  time  in  accordance with Section 5.18.               Manager:  Glenborough,  LLC, a Delaware limited  liability  company, or  any  successor, assignee or replacement manager appointed by a Borrower in accordance with Section  5.18.                                          8  71215191 

 

            Material  Adverse  Effect:  with  respect  to  any  circumstance,  act,  condition  or  event of whatever nature (including any adverse determination in any litigation, arbitration, or  governmental  investigation  or  proceeding),  whether  singly  or  in  conjunction  with  any  other  event, act, condition or circumstances, whether or not related, which has or results in a material  adverse  change  in,  or  a  materially  adverse  effect  upon (i)  the  use,  value  or  condition  or  ownership  of  the  Property,  (ii)  the assets,  operations  or  condition  (financial  or  otherwise)  of  Borrower or Guarantor, (iii) the enforceability, validity, perfection or priority of the lien of the  Security Instrument or the other Loan Documents, (iv) the ability of Borrower to timely perform  its obligations under this Agreement or the other Loan Documents, or (v) the ability of Guarantor  to perform its obligations under the Guaranty.               Material  Alteration:   any  (i)  individual  alteration  affecting  (A)  structural  elements  of an  Individual Property,  (B)  a  roof  of an  Individual Property  or  (C)  any  building  system  of an  Individual Property,  or  (ii)  non-structural  alteration  the  cost  of  which  exceeds  $250,000; provided, however, that in no event shall any of the following constitute a Material  Alteration: (a) any Required Repairs, (b) any tenant improvement work performed pursuant to  any Lease existing on the date hereof or entered into hereafter in accordance with the provisions  of this Agreement, or (c) alterations performed as part of a Restoration.               Material Lease:  all Leases which (i) individually or in the aggregate with respect  to the same tenant and its Affiliates cover more than 1,750 square feet of the Improvements, (ii)  provide the tenant  thereunder with  an option or other preferential  right  to  purchase all or  any  portion of the Property, or (iii) are entered into with a tenant who is an Affiliate of Borrower.               Maturity Date:  the date on which the final payment of Principal becomes due  and  payable  pursuant  to  the  Note  or  this  Agreement,  whether  at  the  Stated  Maturity  Date,  by  declaration of acceleration, or otherwise.               Minor Lease: any Lease that is not a Material Lease.               Net Sale Proceeds:  gross sales proceeds from the sale of an Individual Property,  less reasonable and customary closing costs payable to unaffiliated third parties as approved by  Lender in its discretion.               Officer’s  Certificate:   a  certificate  delivered  to  Lender  which  is  signed  by  an  authorized  senior  officer  or  authorized  representative  of  the  Person  on  behalf  of  whom  the  certificate is delivered, which officer or representative is most knowledgeable with respect to the  subject matter set forth in the applicable Officer’s Certificate.               Operations Agreements: any covenants, restrictions, easements, declarations or  agreements  of  record  relating  to  the  construction,  operation  or  use  of  the  Property, including  without limitation, the Declaration, together with all amendments, modifications or supplements  thereto.               Other Charges:  all ground rents,  maintenance charges,  impositions  other than  Taxes, any “common expenses” or expenses allocated to and required to be paid by Borrower  under the  Operations  Agreements, and  any  other  charges,  including  vault  charges  and  license                                         9  71215191 

 

fees for the use of vaults, chutes and similar areas adjoining the Property, now or hereafter levied  or assessed or imposed against the Property or any part thereof.               Other  Taxes:   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.               Partial  Release  Payment  Amount:   the  sum  of  (i)  the  Allocated  Prepayment  Amount  with  respect  to  the applicable Individual  Property to  be  released,  (ii)  any  applicable  Yield Maintenance Premium, and (iii) the Exit Fee applicable to such prepayment.               Patriot  Act:   collectively,  all  laws  relating  to  terrorism  or  money  laundering,  including Executive Order No. 13224 on Terrorist Financing (effective September 24, 2001) and  the Uniting and Strengthening America by Providing Appropriate Tools  Required to  Intercept  and Obstruct Terrorism Act of 2001 (Public Law 107 56), as the same was restored and amended  by  Uniting  and Strengthening  America by  Fulfilling Rights  and Ensuring  Effective  Discipline  Over Monitoring Act (USA FREEDOM Act) of 2015 and as the same may be further amended,  extended, replaced or otherwise modified from time to time, and any corresponding provisions of  future laws.               Patriot  Act  Offense:   (i)  any violation  of  the  laws  of  the  United  States  of  America or of any of the several states, or any act or omission that would constitute a violation  of such laws if committed within the jurisdiction of the United States of America or any of the  several states, relating to terrorism or money laundering, including any offense under (a) the laws  against terrorism; (b) the laws against money laundering, (c) the Bank Secrecy Act, as amended,  (d) the Money Laundering Control Act of 1986, as amended, or (e) the Patriot Act, or (ii) the  conspiracy to commit, or aiding and abetting another to commit, any violation of any such laws.               Payment Date:  the ninth (9th) day of each calendar month or, if such day is not a  Business  Day,  the  immediately  preceding  Business  Day;  provided,  however,  that  Lender  may  elect  once  during  the  Term,  in  its  sole  discretion,  to  change  the  date  on  which  scheduled  payments are due under the Loan upon at least thirty (30) days prior written notice thereof to  Borrower setting forth such changed date, in which event, upon the effective date of such notice,  the Payment Date hereunder shall be the date set forth therein.               Permitted Encumbrances:  (i) the Liens created by the Loan Documents, (ii) all  Liens and other matters disclosed in the Title Insurance Policy, (iii) Liens, if any, for Taxes or  Other  Charges  not  yet  due  and  payable  and  not  delinquent,  (iv) any  workers’,  mechanics’  or  other  similar  Liens  on  the  Property  provided  that  any  such  Lien  is  bonded, discharged,  or  Borrower provides Lender with other assurances of payment or satisfaction acceptable to Lender  in its sole and absolute discretion, within thirty (30) days after Borrower first receives notice of  such  Lien, and  (v) such  other  title  and  survey  exceptions  as  Lender  approves  in  writing  in  Lender’s discretion.               Permitted  Investments:   any  one  or  more  of  the  following  obligations  or  securities  payable  on  demand  or  having  a  scheduled  maturity  on  or  before  the  Business  Day                                         10  71215191 

 

preceding the date upon which such funds are required to be drawn, and having at all times the  required  ratings,  if  any,  provided  for  in  this  definition,  unless  each  Rating  Agency  shall  have  confirmed  in  writing  to  Lender  that  a  lower  rating  would  not,  in  and  of  itself,  result  in  a  downgrade, qualification or withdrawal of the then current ratings assigned to any Securities (the  “Certificates”):                     (i)   any Money Market Fund (the “Fund”) so long as the Fund is rated        “AAA M” or “AAA M-G” by each Rating Agency (or, if not rated by any Rating Agency        other than S&P, otherwise acceptable to such Rating Agency or Agencies, as applicable,        as  confirmed  in  writing  that  such  investment  would  not,  in  and  of  itself,  result  in  a        downgrade,  qualification  or  withdrawal  of  the  then  current  ratings  assigned  to  any        Securities); and                     (ii)  such other obligations as are acceptable as Permitted Investments        to each Rating Agency, as confirmed in writing to Lender, that such obligations would        not, in and of itself, result in a downgrade, qualification or withdrawal of the then current        ratings assigned to any Securities;               provided,  however,  that  the  investments   must  (A)  have  a  predetermined  fixed  dollar of principal due at maturity that cannot vary or change, (B) if rated by S&P, must not have  an “r” highlighter affixed to their rating, (C) if such investments have a variable rate of interest,  such interest rate must be tied to a single interest rate index plus a fixed spread (if any) and must  move  proportionately  with  that  index,  and  (D)  such  investments  must  not  be  subject  to  liquidation prior to their maturity; and provided, further, that, with respect to each investment  described above, in the judgment of Lender, such instrument continues to qualify as a “cash flow  investment”  pursuant  to  Code  Section  860G(a)(6)  earning  a  passive  return  in  the  nature  of  interest and that no instrument or security shall be a Permitted Investment if (x) such instrument  or security evidences a right to receive only interest payments or (y) the right to receive principal  and  interest  payments  derived  from  the  underlying  investment provides  a  yield  to  maturity  in  excess of one hundred twenty percent (120%) of the yield to maturity at par of such underlying  investment.               Permitted Transfers:                       (i)   a Lease entered into in accordance with the Loan Documents; or                     (ii)  a Permitted Encumbrance; or                     (iii) a Bona Fide Third Party Sale in connection with a Partial Release        (subject to the terms of and in accordance with Section 2.4(b) hereof); or                     (iv)  any Transfer in respect of, or of a direct or indirect interest in, any        Person  listed  on  a  nationally  or  internationally  recognized  stock  exchange  or  stock        quotation system; or                     (v)   a  Limited  Partnership  Transfer,  provided  each  of  the  following        conditions is satisfied: (A) no change in Control of Borrower or Sole Member shall occur        as a result of the Limited Partnership Transfer and no change in the parties responsible                                         11  71215191 

 

      for management  of  the  Property shall  occur  as  the  result  of  the  Limited  Partnership        Transfer, and  (B)  if  such  Transfer  would  cause  the  transferee  to  increase  its  direct  or        indirect interest in Borrower to an amount which equals or exceeds ten percent (10%),        Lender shall have approved in its reasonable discretion such proposed transferee, which        approval  shall  be  based  upon  Lender’s  satisfactory  determination  as  to  the  reputable        character and  creditworthiness of such proposed transferee, as  evidenced by credit and        background checks performed by Lender and such other financial statements and other        information reasonably requested by Lender; or                     (vi)  any  Transfer  of  real  property  or  interests  in  real  property  (other        than the Property pursuant to a Bona Fide Third Party Sale) acquired by the Operating        Partnership or  any  subsidiary  thereof  other  than  Borrower or Sole  Member,  resulting        from the activities of Guarantor through (i) investments in existing retail properties; (ii)        joint ventures for the purpose of acquiring interests in real property and developing and        improving real property; (iii) originating or acquiring real estate-related loans and debt,        and derivative instruments related to real estate; and (iv) equity investments in real estate        investment trusts and other real estate companies; or                      (vii) provided that  no  Default  or  Event  of  Default  shall  then  exist,  a        Transfer of an interest in Borrower or Sole Member to any Person provided that:                           A.    such  Transfer  shall  not  (x)  cause  the  transferee,  together              with its Affiliates, to acquire Control of Borrower or Sole Member or to acquire              or  increase  its  direct  or  indirect  interest  in  Borrower  or  in  Sole  Member  to  an              amount  which  equals  or  exceeds  forty-nine  percent  (49%)  or  (y)  result  in              Borrower or Sole Member no longer being Controlled by Guarantor;                           B.    if such Transfer would cause the transferee, together with              its Affiliates, to acquire or to increase its direct or indirect interest in Borrower to              an amount which equals or exceeds ten percent (10%), (x) Borrower shall provide              to Lender thirty (30) days prior written notice thereof and (y) such transferee, and              all other Persons that shall then become an owner of ten percent (10%) or more of              an indirect interest in Borrower, shall be a Qualified Transferee;                           C.    after  giving  effect  to  such  Transfer, Guarantor  shall              continue to Control Borrower and Sole Member shall continue to be Controlled              by Guarantor; and                           D.    each of Borrower and Sole Member shall continue to be a              Special Purpose Bankruptcy Remote Entity and Sole Member shall continue to be              the sole managing member of Borrower.               Person:  any individual, corporation, partnership, limited liability company, joint  venture,  estate,  trust,  unincorporated  association,  any  other  person  or  entity,  and  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.               PFP:  PFP Holding Company VI, LLC, a Delaware limited liability company.                                         12  71215191 

 

            Plan:   (i)  an  employee  benefit  or  other  plan  established  or  maintained  by  Borrower  or  any ERISA  Affiliate  or  to  which  Borrower  or  any  ERISA  Affiliate  makes  or  is  obligated to make contributions and (ii) which is subject to Title IV of ERISA or Section 302 of  ERISA or Section 412 of the Code.               Principal: the outstanding principal balance of the Loan at any given time with a  maximum principal amount of $18,000,000.               Property:  individually  or  collectively,  as  the  context  requires,  each  Individual  Property.               Property  Condition  Report:  collectively, that  certain (i) Property  Condition  Assessment (Fulton Shops), prepared by EMG Engineering and dated as of December 16, 2019,  (ii) Property  Condition  Assessment  (8  Octavia),  prepared EMG  Engineering  and  dated  as  of  December  6,  2019,  (iii) Property  Condition  Assessment  (400  Grove),  prepared  by EMG  Engineering  and  dated  as  of  December 6, 2019,  (iv) Property  Condition  Assessment  (450  Hayes),  prepared  by EMG  Engineering  and  dated  as  of  December 6, 2019,  (v) Property  Condition  Assessment  (388  Fulton),  prepared  by EMG  Engineering  and  dated  as  of  December 6, 2019,  and  (vi) Property  Condition  Assessment  (Silver  Lake  Collection),  prepared  by EMG Engineering and dated as of December 6, 2019.               Property Taxes:  all (i) real estate Taxes, assessments, water rates or sewer rents,  maintenance  charges,  impositions, mortgage  recording  taxes,  vault  charges  and  license  fees  (“Real Estate Taxes”), or (ii) personal property Taxes, in each case, now or hereafter levied or  assessed or imposed against all or part of the Property.                   Qualified  Transferee:   a  transferee  which has  been  approved  by  Lender  in  its  reasonable discretion, which approval shall be based upon Lender’s satisfactory determination as  to  the  reputable  character  and  creditworthiness  of  such  proposed  transferee,  as  evidenced  by  credit and background checks performed by Lender and such other financial statements and other  information reasonably requested by Lender, and for whom, prior to the subject Transfer, Lender  shall  have  received:  evidence  that  the  proposed  transferee  (1)  has  never  been  indicted  or  convicted of, or pled guilty or no contest to, a felony, (2) has never been indicted or convicted of,  or pled guilty or no contest to, a Patriot Act Offense and is not an Embargoed Person, (3) has  never  been  the  subject  of  a  voluntary  or  involuntary  (to  the  extent  the  same  has  not  been  discharged) bankruptcy proceeding, and (4) has no material outstanding judgments or litigations  or regulatory actions continuing or threatened against such proposed transferee or its interests.               Rating Agency:  each of Standard & Poor’s Ratings Services, a division of The  McGraw-Hill  Companies,  Inc.  (“S&P”),  Moody’s  Investors  Service,  Inc.  (“Moody’s”),  Fitch,  Inc., DBRS, Inc., Kroll Bond Rating Agency or any other nationally-recognized statistical rating  organization to the extent any of the foregoing have been engaged by Lender or its designee in  connection with or in anticipation of any Secondary Market Transaction.               Regulatory Change: any change effective after the date of this Agreement in any  statute,  treaty,  rule,  regulation,  ordinance,  executive  order  or  administrative  or  judicial  precedents or authorities (including without limitation, Regulation D of the Board of Governors                                         13  71215191 

 

of the Federal Reserve System of the United States (or any successor)) or the adoption or making  after such date of any interpretation, directive or request applying to a class of banks, including  any  Lender,  of  or  under  any  statute,  treaty,  rule,  regulation,  ordinance,  executive  order  or  administrative or judicial precedents or authorities (whether or not having the force of law and  whether or not failure to comply therewith would be unlawful) by any Governmental Authority  or monetary authority charged with the interpretation or administration thereof or compliance by  Lender  with  any  request  or  directive  regarding  capital  adequacy.   Notwithstanding  anything  herein to the contrary, (a) the Dodd-Frank Wall Street Reform and Consumer Protection Act and  all  requests,  rules,  guidelines  or  directives  thereunder  or  issued in  connection  therewith  and  (b) 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 “Regulatory Change”, regardless of the date enacted, adopted or  issued.               Remaining Property: each Individual Property that remains encumbered by the  Lien of the Security Instrument after a Partial Release.               REMIC Trust: a “real estate mortgage investment conduit” within the meaning  of Section 860D of the Code that holds the Note.               Rents:   all  rents,  rent  equivalents,  moneys  payable  as  damages  (including  payments by reason of the rejection of a Lease in a Bankruptcy Proceeding) or in lieu of rent or  rent  equivalents,  royalties  (including  all  oil  and  gas  or  other  mineral  royalties  and  bonuses),  income,  fees,  receivables,  receipts,  revenues,  deposits  (including  security,  utility  and  other  deposits), accounts, cash, issues, profits, charges for services rendered, and other payment and  consideration of whatever form or nature received by or paid to or for the account of or benefit of  Borrower, Manager or any of their agents or employees from any and all sources arising from or  attributable  to  the  Property  and  the  Improvements,  including  all  receivables,  customer  obligations,  installment  payment  obligations  and  other  obligations  now  existing  or  hereafter  arising or created out of the sale, lease, sublease, license, concession or other grant of the right of  the use and occupancy of the Property or rendering of services by Borrower, Manager or any of  their  agents  or  employees  and  proceeds,  if  any,  from  business  interruption  or  other  loss  of  income insurance.               Right of First Refusal: that certain right of first refusal set forth in Section 6.7 of  the Master Declaration.                Rules:  collectively, all by-laws, rules and regulations promulgated or otherwise  existing with respect to each condominium regime that is the subject of the Declaration, as in  effect from time to time.               Servicer:   a servicer selected by Lender to service the Loan.               Silver Lake Collection Property:  the parcels of real property and Improvements  thereon  owned  by SRT  LA  Retail Borrower  and  encumbered  by  the SRT  LA  Retail Security  Instrument; together with all rights pertaining to such real property and Improvements, and all                                         14  71215191 

 

other  collateral  for  the  Loan  relating thereto as  more  particularly  described  in  the  Granting  Clauses  of  the SRT  LA  Retail Security  Instrument.  The  Silver  Lake  Collection  Property  is  commonly known as 3701, 3705, 3707 and 3709 W. Sunset Blvd. and 1601 Griffith Park Blvd.,  Los Angeles, CA 90026.               Sole Member:  SRT Prime LLC, a Delaware limited liability company, the sole  member of SRT SF RETAIL and SRT LA RETAIL.               Spread:  2.80% per annum.               State:   the state in which the Property is located.               Stated Maturity Date:  January 9, 2023, as the same may be extended pursuant  to Section 2.8.               Substitute Index: a published floating rate index selected by Lender  that is then   commonly accepted by market participants as an alternative to LIBOR in transactions similar to   the Loan.                Substitute Index Rate: with respect to each Interest Period, the per annum rate of   interest of the Substitute Index, determined as of the Determination Date immediately preceding   the commencement of such Interest Period; provided that in no event will the Substitute Index   Rate be less than zero.                Substitute  Rate:  with  respect  to  each  Interest  Period,  the  per  annum  rate  of   interest equal to the greater of (i) the sum of the Substitute Index Rate plus the Substitute Spread,   and (ii) the sum of the Floor plus the Spread.               Substitute Rate Period:  the period commencing on the expiration of the Interest  Period in effect at the time of the delivery of a LIBOR Unavailability Notice pursuant to Section  2.2.6 hereof and ending on the earlier to occur of the Maturity Date or such date upon which the  conditions which gave rise to the delivery of such LIBOR Unavailability Notice shall no longer  exist.               Substitute Spread: the difference (expressed as the number of basis points and  determined at the time of such conversion) between (a) the LIBOR Rate, determined as of the  Determination  Date  for  which  LIBOR  was  last  applicable  to  the  Loan,  and  (b)  the  Substitute  Index Rate as of such Interest Determination Date; provided, however, that if such difference is a  negative number, then the Substitute Spread shall be zero.               Survey: individually  and  collectively, a  survey  of each  Individual Property  prepared  by  a  surveyor  licensed  in  the  State  and  satisfactory  to  Lender  and  the  company  or  companies  issuing  the  Title  Insurance  Policy,  and  containing  a  certification  of  such  surveyor  satisfactory to Lender.               Taxes:   all  present  or  future  taxes,  levies,  imposts,  duties,  deductions,  withholdings (including backup withholding), assessments, fees or other charges imposed by any  Governmental Authority, including any interest, additions to tax or penalties applicable thereto.                                         15  71215191 

 

            Term:  the entire term of this Agreement, which shall expire upon repayment in  full of the Debt and full performance of each and every obligation to be performed by Borrower  pursuant to the Loan Documents.               Title  Insurance  Policy:  collectively, the  ALTA  mortgagee  title  insurance  policies in the form  acceptable to Lender issued with respect to the Property and insuring the  Lien of each Security Instrument.               Toxic Mold:  any toxic mold or fungus at the Property which is of a type (i) that  might pose a significant risk to human health or the environment or (ii) that would negatively  impact the value of the Property.               Transfer:  (i) any  direct  or  indirect  sale,  conveyance,  transfer,  encumbrance,  pledge, lease, or assignment, or the entry into any agreement to sell, convey, transfer, encumber,  pledge, lease or assign (other than an agreement for which Borrower has provided at least thirty  (30) days’ prior written notice to Lender, to sell the Property that will result in payment in full of  the  Debt  in  accordance  with  this  Agreement),  whether  voluntary  or  involuntary  by  law  or  otherwise, whether or not for consideration or of record, of, on, in or affecting (a) all or part of  the Property (including any legal or beneficial direct or indirect interest therein) or (b) any direct  or indirect interest in Borrower (including any profit interest), at any tier of ownership, which  shall also include the division of any assets and liabilities of a limited liability company amongst  one  or  more  new  or  existing  entities,  or  (ii) any  change  of  Control  of  Borrower. For  the  avoidance of doubt, a change in the Advisor is not a change in Control of Borrower so long as (a)  there is no other change in Control of Borrower, (b) Guarantor continues to Control Borrower,  and (c) Lender reasonably approves the replacement advisor based on references, record searches  and other criteria deemed reasonably necessary by Lender.                 UCC:  the Uniform Commercial Code as in effect in the State, the state in which  any of the Cash Management Accounts are located, or any other State applicable to any collateral  for the Loan, as the case may be.               UNCF  (Underwritten  Net  Cash  Flow):   the  recurring  net  cash  flow  of  the  Property determined by Lender in accordance with the provisions contained in Schedule 7.               Welfare Plan:  an employee welfare benefit plan, as defined in Section 3(1) of  ERISA.               Yield Maintenance Date:  with respect to any payment or repayment of Principal  (other than a payment in connection with a Bona Fide Third Party Sale), July 9, 2021; provided  that  if  Lender  elects  to  change  the  Payment  Date,  as  provided  in  the  definition  of  “Payment  Date”, for all purposes of this Agreement, the Yield Maintenance Date shall be and become the  same day of the month and the year set forth above as the day in the month to which Lender  elects to change the Payment Date.                 Yield Maintenance Premium:                       (i) with respect to any prepayment of Principal in connection with a Bona        Fide Third Party Sale on or before the Early Sale Date, the aggregate amount of interest                                         16  71215191 

 

      that  would  have  been  due  to  Lender  with  respect  to  the  amount  of  Principal  being        prepaid,  for the period from and after the date of the prepayment  to  and including the        Early Sale Date, assuming the Loan had not been prepaid, and an Interest Rate equal to        the Early  Sale Interest  Rate (hereinafter  defined), it  being  expressly  understood  and        agreed that the payment of the Yield Maintenance Premium shall be in addition to the        payment of any Exit Fee applicable to any such prepayment of Principal.  As used herein,        the “Early Sale Interest Rate” means a per annum interest rate equal to the sum of (A)        the Spread plus  (B) the  greater of (1) 1.50% per annum  and (2) the  LIBOR/swap rate        with  a  maturity  date  closest  to  the  Yield  Maintenance Date  shown  in  the Wall  Street        Journal on the date the prepayment is made (the foregoing to be determined conclusively        by  Lender,  absent  manifest  error).   Notwithstanding  the  foregoing,  if  a  LIBOR        Unavailability  Notice has  been delivered to Borrower, the “Early  Sale Interest Rate”        will be a per annum interest rate equal to the Interest Rate determined as of the applicable        date of prepayment; or                      (ii) with respect to a Bona Fide Third Party Sale after the Early Sale Date,        $0.00; or                     (iii) with  respect  to  any other payment  or  prepayment  of  Principal  (or        acceleration of the Loan) on or before the Yield Maintenance Date, the aggregate amount        of interest that would have been due to Lender with respect to the amount of Principal        being prepaid or repaid, for the period from and after the date of the prepayment to and        including the Yield Maintenance Date, assuming the Loan had not been prepaid, and an        Interest Rate equal to the Assumed Interest Rate (hereinafter defined), it being expressly        understood and agreed that the payment of the Yield Maintenance Premium shall be in        addition  to  the  payment  of  any  Exit  Fee  applicable  to  any  payment  or  prepayment  of        Principal (or acceleration of the Loan).  As used herein, the “Assumed Interest Rate”        means a per annum interest rate equal to the sum of (A) the Spread plus (B) the greater of        (1) 1.50% per annum and (2) the LIBOR/swap rate with a maturity date closest to the        Yield Maintenance Date shown in the Wall Street Journal on the date the prepayment is        made  (the  foregoing  to  be  determined  conclusively  by  Lender,  absent  manifest  error).         Notwithstanding the foregoing, if a LIBOR Unavailability Notice has been delivered to        Borrower, the “Assumed Interest Rate” will be a per annum interest rate equal to the        Interest Rate determined as of the applicable date of prepayment.         1.2   Index of Other Definitions.  An index of other terms which are defined in this  Agreement or in other Loan Documents is set forth on Schedule 1.         1.3   Principles  of  Construction.   Unless  otherwise  specified,  (i)  all references  to  sections  and  schedules  are  to  those  in  this  Agreement,  (ii)  the  words  “hereof,”  “herein”  and  “hereunder”  and  words  of  similar  import  refer  to  this  Agreement  as  a  whole  and  not  to  any  particular provision, (iii) all definitions are equally applicable to the singular and plural forms of  the terms defined, (iv) the word “including” means “including but not limited to,” (v) accounting  terms not specifically defined herein shall be construed in accordance with GAAP, and (vi) the  words the “Property or any portion thereof” and words of similar import refer to, as applicable,  any portion of the Property taken as a whole (including any Individual Property) and any portion  of any Individual Property.                                         17  71215191 

 

2.    GENERAL LOAN TERMS         2.1   The Loan.  Lender is making a loan (the “Loan”) to Borrower on the date hereof,  in the original principal amount of $18,000,000, which shall mature on the Stated Maturity Date.   Borrower acknowledges receipt of the Loan, the proceeds of which are being and shall be used to  (i)  repay  and discharge  existing  loans  relating  to  the  Property,  (ii)  fund  certain  of  the  Subaccounts, and (iii) pay transaction costs.  Any excess proceeds may be used for any lawful  purpose.  No amount repaid in respect of the Loan may be reborrowed.             2.2   Interest; Monthly Payments.               2.2.1 Generally.   From  and  after  the  date  hereof,  interest  on  the  outstanding  Principal shall accrue at the Interest Rate and be payable as hereinafter provided.  On the date  hereof, Borrower shall pay interest on the Principal from the date hereof through and including  January 8, 2020.  On February 9, 2020 (which shall be the first Payment Date hereunder) and  each  Payment  Date  thereafter  through  and  including  the  Maturity  Date,  Borrower  shall  pay  interest  on the outstanding Principal  accrued  and accruing through the last  day of the  Interest  Period.  All accrued and unpaid interest and principal shall be due and payable on the Maturity  Date.  If the Loan is repaid on any date other than on a Payment Date (whether prior to or after  the  Stated Maturity  Date),  Borrower  shall  also  pay  interest  that  would  have  accrued  on  such  repaid Principal to but not including the next Payment Date.               2.2.2 Default  Rate.   After  the  occurrence  and  during  the  continuance  of  an  Event of Default, the entire unpaid Debt shall bear interest at the Default Rate, calculated from  the date such payment was due or such underlying Default shall have occurred without regard to  any grace or cure periods contained herein, and shall be payable upon demand from time to time,  to the extent permitted by applicable law.               2.2.3 Taxes.   Any  and  all  payments  by  or  on  account  of  any  obligation  of  Borrower hereunder and under the other Loan Documents shall be made free and clear of, and  without  deduction  or  withholding  for,  any  Taxes,  except  as  required  by  applicable  law.   If  Borrower shall be required by applicable law (as determined in good faith discretion by Lender)  to deduct or withhold any Taxes from or in respect of any sum payable hereunder to Lender, the  following shall apply:  (i) if such Tax is an Indemnified Tax, the sum payable shall be increased  as may be necessary so that after such deduction or withholding has been made (including such  deductions  and  withholdings  applicable  to  additional  sums  payable  under  this Section  2.2.3),  Lender receives an amount equal to the sum it would have received had no such deduction or  withholding  been  made;  (ii)  Borrower  shall  make  such  deduction  or  withholding;  and  (iii) Borrower  shall  timely  pay  the  full  amount  deducted  or  withheld  to  the  relevant  Governmental  Authority  in  accordance  with  applicable  law.   Borrower  shall  pay  to  Lender,  within  ten  (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  2.2.3)  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.  As  soon  as                                         18  71215191 

 

practicable after any payment of Taxes by Borrower to a Governmental Authority pursuant to  this Section 2.2.3, Borrower 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.                 2.2.4 Breakage Indemnity.  Borrower shall indemnify Lender against any loss  or expense which Lender may actually sustain or incur in liquidating or redeploying funds as a  consequence of (i) any payment or prepayment of the Loan or any portion thereof made on a date  other than a Payment Date, (ii) any default in payment or prepayment of the Principal or any part  thereof  or  interest  accrued  thereon,  as  and  when  due  and  payable  (at  the  date  thereof  or  otherwise, and  whether  by  acceleration or otherwise), and  (iii) the conversion (for any reason  whatsoever, whether voluntary or involuntary) of the Interest Rate from the LIBOR Rate to the  Substitute Rate with respect to any portion of the outstanding Principal then bearing interest at  the LIBOR Rate on a date other than a Payment Date, including, without limitation, such loss or  expenses arising from interest or fees payable by Lender to lenders of funds obtained by it in  order to maintain the LIBOR Rate hereunder (the amounts referred to in clauses (i), (ii) and (iii)  are herein referred to collectively as the “Breakage Costs”).  Lender shall deliver to Borrower a  statement for any such sums which it is entitled to receive pursuant to this Section 2.2.4, which  statement shall be binding and conclusive absent manifest error.  Borrower’s obligations under  this Section  2.2.4 are  in  addition  to  Borrower’s  obligations  to  pay  any  Yield  Maintenance  Premium applicable to a payment or prepayment of Principal.               2.2.5 Requirements of Law.               (a)   If any Regulatory Change or change in the interpretation or application of  any requirement of law, or compliance by Lender with any request or directive (whether or not  having the force of law) hereafter issued from any central bank or other Governmental Authority:                     (i)   shall subject Lender to any tax of any kind whatsoever with respect  to  this  Agreement,  the  Note  or  the  Loan  (excluding  net  income  taxes)  or  change  the  basis  of  taxation of payments to Lender in respect thereof;                     (ii)  shall  impose,  modify  or  hold  applicable  any  reserve,  special  deposit,  compulsory  advance  or  similar  requirement  against  assets  held  by,  deposits  or  other  liabilities  in  or  for  the  account  of,  advances  or  other  extensions  of  credit  by,  or  any  other  acquisition  of  funds  by,  any  office  of  Lender  which  is  not  otherwise  included  in  the  determination of the LIBOR hereunder;                     (iii) shall impose on Lender any other condition;   and  the  result  of  any  of  the  foregoing  is  to  increase  the  cost  to  Lender,  by  an  amount  which  Lender  deems  to  be  material,  of  making  or  maintaining  the  Loan  or  to  reduce  any  amount  receivable  hereunder  in  respect  thereof,  then,  in  any  such  case,  Borrower  shall,  from  time  to  time, upon receipt of prior written notice of not less than ten (10) Business Days of such fact and  a  reasonably  detailed  description  of  the  circumstances,  promptly  pay  Lender  such  additional  amount  or  amounts  as  will  compensate  Lender  for  such  increased  cost  or  reduced  amount  receivable (provided such additional amounts are then being charged by Lender to its borrowers                                         19  71215191 

 

under similar loans generally and are not prohibited by such Regulatory Change to be charged  back to Borrower).               (b)   If  Lender  shall  have  determined  that  any  Regulatory  Change  regarding  capital adequacy or in the interpretation or application thereof or compliance by Lender or any  corporation controlling Lender with any request or directive regarding capital adequacy (whether  or not having the force of law) from any Governmental Authority made subsequent to the date  hereof  shall  have  the  effect  of  reducing  the  rate  of  return  on  Lender’s  or  such  corporation’s  capital  as  a  consequence  of  its  obligations  hereunder  by  an  amount  deemed  by  Lender  to  be  material (taking into consideration Lender’s or such corporation’s policies with respect to capital  adequacy), then from time to time, Borrower shall promptly, upon notice from Lender, pay to  Lender  such  additional  amount  or  amounts  as will  compensate  Lender  for  such  reduction  (provided  such  additional  amounts  are  then  being  charged  by  Lender  to  its  borrowers  under  similar loans generally and are not prohibited by such Regulatory Change to be charged back to  Borrower).   If Lender becomes entitled to claim any additional amounts pursuant to this Section 2.2.5, it shall  promptly  notify  Borrower  of  the  event  by  reason  of  which  it  has  become  so  entitled.   A  certificate as to any additional amounts payable pursuant to this subsection submitted by Lender  to Borrower shall be conclusive in the absence of manifest error or the provision of immediate  proof by Borrower to the contrary. In such event, Borrower shall have the right to prepay the  Loan  in  full  within ninety  (90)  days  after  Lender’s notification  without  payment  of  the  Yield  Maintenance Premium (but with payment of the Exit Fee) so long as Borrower pays to Lender  any amounts payable pursuant to this Section 2.2.5 that are payable or that have accrued prior to  Borrower’s repayment of the Loan, together with all other amounts due and payable under the  Loan Documents.               2.2.6 Unavailability or Illegality of LIBOR.  If at any time Lender determines  (which determination shall be conclusive and binding upon Borrower absent manifest error) that  a LIBOR Unavailability Condition exists (or is expected to exist within the then ensuing sixty  (60)  days),  Lender  may  promptly  give  notice  of  such  fact  to  Borrower  (a  “LIBOR  Unavailability Notice”), and upon and from the expiration of the then-current Interest Period,  the Interest Rate shall be converted to the Substitute Rate until the Maturity Date or such earlier  date that the conditions referred to in this Section 2.2.6 no longer exist (Lender agreeing to give  prompt  notice  to  Borrower  if  such  conditions  no longer  exist).   As  used  herein,  “LIBOR  Unavailability Condition” means (a) Dollar deposits in an amount approximately equal to the  then  outstanding  principal  amount  of  the  Loan  are  not  generally  available  at  such  time  in  the  London  interbank  Eurodollar  market  for  deposits  in  Eurodollars,  (b)  reasonable  means  do  not  exist for ascertaining LIBOR, (c) the LIBOR Rate would be in excess of the maximum interest  rate that Borrower may by law pay, (d) it has become illegal for Lender to maintain the Loan on  the  basis  of  the  LIBOR  Rate or  (e) Lender  determines  in  good  faith  that  one  or  more  replacements  to  LIBOR  as  an  index  for  determining  the  interest  rate  payable  for  floating  rate  commercial  real  estate  loans  has  been  broadly  adopted  by  the  commercial  real  estate  finance  industry  and  Lender  elects  to  convert  the  Loan  to  such  replacement  index.   If  Lender  shall  determine (which determination shall be conclusive and binding upon Borrower absent manifest  error)  that  a  LIBOR  Unavailability  Condition  shall  no  longer  exist,  Lender  shall  give  written  notice of such determination to Borrower at least one (1) day prior to the last day of the related                                         20  71215191 

 

Interest Period.  If such notice is given, the Interest Rate shall be converted to the LIBOR Rate  on the last day of the then current Interest Period.  Borrower shall promptly pay to Lender, upon  demand,  any  additional  amounts  necessary  to  compensate  Lender  for  any  costs  incurred  by  Lender in making any conversion in accordance with this Agreement, including any interest or  fees  payable  by  Lender  to  lenders  of  funds  obtained  by  it  in  order  to  make  or  maintain  the  LIBOR Rate.  Lender’s notice of such costs, as certified to Borrower, shall be conclusive absent  manifest error.  Borrower agrees to pay any Breakage Costs in connection with the conversion  (for any reason whatsoever, whether voluntary or involuntary) of the Interest Rate. In the event  of  a  LIBOR  Unavailability  Notice, Borrower  shall  have  the  right  to  prepay  the  Loan  in  full  within ninety  (90) days  after  Lender’s  notification with payment  of  the  Yield  Maintenance  Premium and the Exit Fee, so long as Borrower pays to Lender any amounts payable pursuant to  this  Section  2.2.6 that  are  payable  or  that  have  accrued  prior  to  Borrower’s  repayment  of  the  Loan, together with all other amounts due and payable under the Loan Documents.         2.3   Loan Repayment.               2.3.1 Repayment.   Borrower  shall  repay the Principal in  full  on the Maturity  Date,  together  with  interest  thereon  to  (but  excluding)  the  date  of  repayment  and  any  other  amounts due and owing under the Loan Documents.  Except during the continuance of an Event  of  Default,  all  proceeds  of  any  repayment,  including  any  prepayments  of  the  Loan,  shall  be  applied  by  Lender  as  follows  in  the  following  order  of  priority:  First,  accrued  and  unpaid  interest  at  the  Interest  Rate; Second,  to  Principal;  and Third,  to  the  Exit  Fee  and  any  other  amounts  then  due  and  owing  under  the  Loan  Documents,  including  the  Yield  Maintenance  Premium (if such repayment or prepayment occurs prior to the Yield Maintenance Date).  During  the  continuance  of  an  Event  of  Default,  all  proceeds  of  repayment,  including  any  payment  or  recovery on the Property (whether through foreclosure, deed-in-lieu of foreclosure, or otherwise)  shall, unless otherwise provided in the Loan Documents, be applied in such order and in such  manner as Lender shall elect in Lender’s sole and absolute discretion.               2.3.2 Mandatory Prepayments.  The Loan is subject to mandatory prepayment  in  certain  instances  of  Insured  Casualty  or  Condemnation  (each  a  “Casualty/Condemnation  Prepayment”),  in  the  manner  and  to  the  extent  set  forth  in Section  7.4.2.   Each  Casualty/Condemnation  Prepayment,  after  deducting  Lender’s  costs  and  expenses  (including  reasonable attorneys’ fees and expenses) in connection with the settlement or collection of the  Proceeds or Award, shall be applied in the same manner as repayments under Section 2.3.1, and  if such Casualty/Condemnation Prepayment is made on any date other than a Payment Date, then  such Casualty/Condemnation Prepayment shall include interest that would have accrued on the  Principal prepaid to but not including the next Payment Date.  Provided that no Event of Default  is  continuing,  any  such  mandatory  prepayment  under  this Section  2.3.2 shall  be  without  the  payment of the Yield Maintenance Premium, but subject to payment of the Exit Fee.               2.3.3 Optional  Prepayments.   Borrower  shall  have  the  right  to  prepay  all  or  any portion of the Principal on any Payment Date provided that Borrower gives Lender at least  thirty  (30)  days  prior  written  notice  thereof,  which  notice  is  accompanied  by  a  copy  of  the  contract  of  sale  for  the  Property  (if  such  prepayment  will  be  in  connection  with  a  sale  of  the  Property),  and  such  prepayment  is  accompanied  by  (a)  the  Yield  Maintenance  Premium  applicable thereto (if such prepayment occurs prior to the Yield Maintenance Date) and (b) the                                         21  71215191 

 

Exit Fee applicable thereto.  Borrower may modify, revoke or cancel any such prepayment notice  so  long as  (i)  Borrower  provides written notice to  Lender of such modification, revocation or  cancellation on or before the date that is two (2) Business Days prior to the prepayment date set  forth  in  such  prepayment  notice  and  (ii)  Borrower  pays  all  out-of-pocket  costs  and  expenses  actually incurred by Lender as a result of the original notice of prepayments and as a result of  such revocation, cancellation or modification, including any amounts pursuant to Section 2.2.4  hereof.  If any such prepayment is not made on a Payment Date, Borrower shall also pay interest  that would have accrued on such prepaid Principal to but not including the next Payment Date.         2.4   Release  of  Property.  (a) Lender  shall,  upon  the  written  request  and  at  the  expense of  Borrower, upon payment in  full  of the Debt in  accordance herewith,  release or, if  requested by Borrower, assign to Borrower’s designee (without any representation or warranty  by and without any recourse against Lender whatsoever) the Lien of the Loan Documents if not  theretofore  released.   In  connection  with  the  release  of  the  Lien,  Borrower  shall  submit  to  Lender, not less than thirty (30) days prior to the date of repayment (or such shorter time as is  acceptable  to  Lender  in  its  sole  discretion),  a  release  of  Lien,  in  a  form  appropriate  in  the  jurisdiction  in  which  the  Property is  located  (and  related  Loan  Documents)  for  execution  by  Lender.  Borrower shall pay all costs, taxes and expenses associated with the release of the Lien  of the Security Instrument, including Lender’s reasonable attorneys’ fees.               (b)   Additionally,  Lender will  release  of  record  (any  such  release  a  “Partial  Release”) an Individual Property from the Lien of the applicable Security Instrument and other  Loan Documents in connection with a Bona Fide Third Party Sale of such Individual Property  from  the  obligations  of  such  Borrower  under  this  Agreement  and  the  other  Loan  Documents  from  and  after  the  date  of  the  closing  of  such  Bona  Fide  Third  Party  Sale,  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 thirty (30) days preceding the date such Partial Release is anticipated  to occur;                     (ii)  Immediately  after  the  Partial  Release,  the  Debt  Yield   of  the  Remaining Property shall be not less than 8.50%;                      (iii) Borrower  shall  have  paid  to  Lender  the  Partial  Release  Payment  Amount;                     (iv)  No Default or Event of Default shall then be ongoing;                     (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 in accordance with all the provisions of the Title Insurance Policy (and  updating the Title Insurance Policy with no additional title matters other than those recorded in  connection with the Partial Release);                     (vi)  Borrower  shall  have  paid  or  reimbursed  Lender  for  all  actual  expenses  incurred  by  Lender  in  connection  with  the  Partial  Release  (including  title  insurance  costs, recording costs, trustee’s fees and reasonable attorneys’ fees);                                         22  71215191 

 

                  (vii) Borrower  shall  submit  partial  release  instruments,  prepared  at  Borrower’s expense, in form and substance satisfactory to Lender and the execution and delivery  of such partial release instruments shall not affect any of Borrower’s obligations under any of the  Loan  Documents  (other  than  as  to  the  Individual  Property  and  obligations  being  released  thereby);                     (viii) Upon  Lender’s  request,  Borrower  shall  have  provided  evidence  and  documentation  satisfactory  to  Lender,  including  (A)  a  copy  of  the  purchase  and  sale  agreement and settlement statement evidencing such sale, and (B) that all required notices have  been given and consents obtained in connection with the proposed Partial Release, including the  consent of Guarantor.         2.5   Payments and Computations.               2.5.1 Making of  Payments.   Each  payment  by  Borrower  shall  be  made  to  Lender not later than 11:00 a.m., New York City time, on the date when due and shall be made  in  lawful  money  of  the  United  States  of  America  in  immediately  available  funds  at  Lender’s  office or at such other place as Lender shall from time to time designate, and any funds received  by Lender after such time shall, for all purposes hereof, be deemed to have been paid on the next  succeeding  Business  Day.   All  such  payments  shall  be  made  irrespective  of, and  without  any  deduction,  set-off  or  counterclaim  whatsoever,  and  with  all  costs  and  charges  incurred  in  the  collection or enforcement thereof, including attorneys’ fees and court costs.               2.5.2 Computations.   Interest  payable  under  the  Loan  Documents  shall  be  computed on the basis of the actual number of days elapsed over a 360-day year.               2.5.3 Late Payment Charge.  If any Principal, interest or other sum due under  any Loan Document is not paid by Borrower on the date on which it is due, Borrower shall pay  to Lender upon demand an amount equal to the lesser of five percent (5%) of such unpaid sum or  the maximum amount permitted by applicable law (the “Late Payment Charge”), in order to  defray the expense incurred by Lender in handling and processing such delinquent payment and  to compensate Lender for the loss of the use of such delinquent payment.  Such amount shall be  secured by the Loan Documents.               2.5.4 Certain Payments.  Notwithstanding anything to the contrary contained  in this Agreement, in connection with and for the purposes of any payment or prepayment of all  or any portion of the Loan on any date after the Payment Date and prior to the Determination  Date with respect to the next succeeding Interest Period, LIBOR shall be determined as of the  Eurodollar Business  Day immediately preceding the date of such payment  or prepayment  and  Lender  shall  thereafter,  reasonably  promptly  after  the  occurrence  of  such  next  succeeding  Determination Date, make any necessary adjustment in the amount actually required to be paid  or prepaid based upon LIBOR as determined on such next succeeding Determination Date.         2.6   Interest Rate Protection Agreements.               2.6.1 Interest  Rate  Protection Agreement.   As  of  the  date  hereof,  Borrower  has entered into, made all payments required under, and satisfied all conditions precedent to the  effectiveness of, an interest rate protection agreement that satisfies all of the following conditions                                         23  71215191 

 

(such  interest  rate  protection  agreement  together  with  (i)  any  extension  thereof,  (ii)  any  other  interest rate protection agreement entered into pursuant to this Agreement or (iii) any Substitute  IRPA  entered  into  pursuant  to Section  2.6.6,  being  referred  to  herein  as  the  “Interest  Rate  Protection Agreement”):               (a)   the Interest Rate Protection Agreement (i) is with a bank or other financial  institution which has (A) a long-term unsecured debt or counterparty rating of “A-” or higher by  S&P; or (B) a long-term unsecured debt or counterparty rating of not less than “A3” by Moody’s  (an  “Acceptable  Counterparty”);  (ii)  has  a  term  ending  no  earlier  than  the  Stated  Maturity  Date; (iii) is  an interest  rate  cap having  (A) in  a notional  amount not  less  than the maximum  Principal  and  (B)  that  shall  have  the  effect  of  capping  LIBOR  at no  greater  than 3.50%  per  annum;  and  (iv)  provides  that  the  only  obligation  of  Borrower  thereunder  is  the  making  of  a  single payment upon the execution and delivery thereof.  Notwithstanding the foregoing, SMBC  Capital Markets, Inc. (with an Acceptable SMBC Credit Support Party (hereinafter defined) as  its  credit support party)  will be an Acceptable Counterparty so  long as  the rating of its  credit  support party (provided such credit support party shall be an Acceptable SMBC Credit Support  Party) is not downgraded, withdrawn or qualified by S&P or Moody’s from the long and short  term ratings issued by such rating agencies below the lesser of the above rating (as applicable) or  its ratings as of the date hereof.  As used herein, an “Acceptable SMBC Credit Support Party”  shall mean (a) Sumitomo Mitsui Banking Corporation or a replacement guarantor that meets the  foregoing  rating  requirements  and  provides  a  guaranty  on  substantially  the  same  form  as  the  guaranty provided by Sumitomo Mitsui Banking Corporation on the date hereof and (b) provided  any  such  credit  support  party  guaranty  guaranties  all  current  and  future  obligations  under  the  Interest Rate Cap Agreement or replacement Interest Rate Cap Agreement, as applicable.               (b)   Borrower’s interest in such Interest Rate Protection Agreement has been  assigned to Lender pursuant to documentation satisfactory to Lender in form and substance, and  the  counterparty  to  such  Interest  Rate  Protection  Agreement  has  executed  and  delivered  to  Lender an acknowledgment of such assignment, which acknowledgment shall be satisfactory to  Lender in form and substance.               (c)   Borrower shall, within ten (10) days of the date hereof, obtain and deliver  to Lender an opinion of counsel from counsel for the counterparty (which counsel may be in- house counsel for the counterparty) (upon which Lender and its successors and assigns and the  Rating Agencies may rely) which shall provide, in relevant part, that:                     (i)   the  counterparty  is  duly  organized,  validly  existing,  and  in  good  standing  under  the  laws  of  its  jurisdiction  of  incorporation  or  organization  and  has  the  organizational power and authority to execute and deliver, and to perform its obligations under,  the Interest Rate Protection Agreement;                     (ii)  the  execution  and  delivery  of  the  Interest  Rate  Protection  Agreement by the counterparty, and any other agreement which the counterparty has executed  and delivered pursuant thereto, and the performance of its obligations thereunder have been and  remain  duly  authorized  by  all  necessary  action  and  do  not  contravene  any  provision  of  its  certificate  of  incorporation  or  by-laws  (or  equivalent  organizational  documents)  or  any  law,  regulation or contractual restriction binding on or affecting it or its property;                                         24  71215191 

 

                  (iii) all  consents,  authorizations  and  approvals  required  for  the  execution and delivery by the counterparty of the Interest Rate Protection Agreement, and any  other  agreement  which  the  counterparty  has  executed  and  delivered  pursuant  thereto,  and  the  performance of its obligations thereunder have been obtained and remain in full force and effect,  all conditions thereof have been duly complied with, and no other action by, and no notice to or  filing  with  any  governmental  authority  or  regulatory  body  is  required  for  such  execution,  delivery or performance; and                     (iv)  the  Interest  Rate Protection  Agreement, and  any other agreement  which the counterparty has executed and delivered pursuant thereto, has been duly executed and  delivered  by  the  counterparty  and  constitutes  the  legal,  valid  and  binding  obligation  of  the  counterparty,  enforceable  against  the  counterparty  in  accordance  with  its  terms,  subject  to  applicable  bankruptcy,  insolvency  and  similar  laws  affecting  creditors’  rights  generally,  and  subject, as to enforceability, to general principles of equity (regardless of whether enforcement is  sought in a proceeding in equity or at law).               2.6.2 Execution of Documents.  Borrower shall promptly execute and deliver  to the counterparty of the Interest Rate Protection Agreement such confirmations and agreements  as  may  be  requested  by  such  counterparty  in  connection  with  such  Interest  Rate  Protection  Agreement.               2.6.3 No  Obligation  of  Lender.   Borrower  agrees  that  Lender  shall  not  have  any  obligation,  duty  or  responsibility  to  Borrower  or  any  other  Person  by  reason  of,  or  in  connection  with,  any  Interest  Rate  Protection  Agreement  (including  any  duty  to  provide  or  arrange  any  Interest  Rate  Protection  Agreement,  to  consent  to  any  mortgage  or  pledge  of  the  Property or any portion thereof as security for Borrower’s performance of its obligations under  any  Interest  Rate  Protection  Agreement,  or  to  provide  any  credit  or  financial  support  for  the  obligations  of  Borrower  or  any  other  Person  thereunder  or  with  respect  thereto).   No  Interest  Rate  Protection  Agreement  shall  alter,  impair,  restrict,  limit  or  modify  in  any  respect  the  obligation  of  Borrower  to  pay  interest  on  the  Loan  as  and  when  the  same  becomes  due  and  payable in accordance with the provisions of the Loan Documents.               2.6.4 Receipts  from  Interest  Rate  Protection  Agreements.   Borrower  shall  cause  all  payments  made  by  the  counterparty  to  the  Interest  Rate  Protection  Agreement  to  be  deposited  into  the  Clearing  Account,  to  be  applied  in  accordance  with Section  3.1 of  this  Agreement.                 2.6.5 Downgrade  of  Counterparty.   In  the  event  of  any  downgrade,  withdrawal or qualification of the rating of the issuer of the Interest Rate Protection Agreement  such  that  it  ceases  to  qualify  as  an  “Acceptable  Counterparty”,  Borrower  shall  replace  the  Interest Rate Protection Agreement with a replacement Interest Rate Protection Agreement from  an  Acceptable  Counterparty  (with  terms  identical  to  the  Interest  Rate  Protection  Agreement  being  replaced,  or  otherwise  approved  by  Lender  in  its  reasonable  discretion  and  the  Rating  Agencies) not later than thirty (30) days following receipt of notice from Lender or Servicer of  such downgrade, withdrawal or qualification.                                            25  71215191 

 

            2.6.6 Non-Availability of LIBOR; Substitute IRPA.               (a)   Notwithstanding anything to the contrary contained above in this Section  2.6,  in Section  2.8(e) hereof  or  elsewhere  in  this  Agreement,  if,  at  any  time,  Lender  gives  Borrower a LIBOR Unavailability Notice, then:                     (i)   within  thirty  (30)  days  after  the  giving  of  such  LIBOR  Unavailability  Notice,  Borrower  shall  enter  into,  make  all  payments  under,  and  satisfy  all  conditions precedent to the effectiveness of, a Substitute IRPA (and in connection therewith, but  not prior to Borrower taking all the actions described in this clause (i), Borrower shall have the  right to terminate any then existing Interest Rate Protection Agreement); and                     (ii)  following the giving of such LIBOR Unavailability Notice, in lieu  of  satisfying  the  condition  described  in Section  2.8(e) hereof  with  respect  to  any  Extension  Period not then yet commenced, Borrower shall instead enter into, make all payments under, and  satisfy all conditions precedent to the effectiveness of a Substitute IRPA on or prior to the first  day of such Extension Period.               (b)   As  used  herein,  “Substitute  IRPA”  means  an  interest  rate  protection  agreement that satisfies all of the following requirements:                     (i)   it  has  a  term  expiring  no  earlier  than,  in  the  case  of Section  2.6.6(a)(i) hereof, the then Stated Maturity Date, and in the case of Section 2.6.6(a)(ii) hereof,  the last day of the requested Extension Period;                     (ii)  it has a notional amount equal to the then outstanding Principal;                     (iii) it provides that the only obligation of Borrower thereunder is the  making  of  a  single  payment  to  the  counterparty  thereunder  upon  the  execution  and  delivery  thereof;                     (iv)  it provides to Lender and Borrower (as determined by Lender in its  sole but good faith discretion), for the term of the Substitute IRPA, a hedge against rising interest  rates that is no less beneficial to Borrower and Lender (as determined by Lender in its sole but  good faith discretion) than (A) in the case of Section 2.6.6(a)(i) hereof, that which was provided  by the Interest Rate Protection Agreement being replaced by the Substitute IRPA and (B) in the  case of Section 2.6.6(a)(ii) hereof, that which was intended to be provided by the Interest Rate  Protection Agreement that, but for the operation of this Section 2.6.6, would have been required  to  have  been  delivered  by  Borrower  pursuant  to Section  2.8(e) hereof  as  a  condition  to  the  requested Extension Period; and                     (v)   without intending to  limit any  of the provisions  of the preceding  clauses (i) through (iv), it satisfies all of the requirements of Sections 2.6.1(a) (other than clause  (iii)(B) thereof), (b) and (c).                                          26  71215191 

 

      2.7   Fees.               2.7.1 Structuring  Fee.   On  the  date  hereof,  Borrower  shall  pay  to  Lender  a  structuring fee of $180,000.               2.7.2 Exit Fee.  Upon any repayment or prepayment of Principal or acceleration  of the Loan, Borrower shall pay to Lender on the date of such repayment or prepayment the Exit  Fee applicable thereto.  All Exit Fees hereunder shall be deemed to be earned by Lender upon the  funding of the Loan.         2.8   Extension  Option.   Borrower  shall  have  the  right,  at  its  option,  to  extend  the  Term until (i) January 9, 2024 (the “First Extended Maturity Date”) and (ii) January 9, 2025  (the “Second Extended Maturity Date”) (and  the period of time during  each such extension  period being referred to herein as an “Extension Period”) by giving notice of such extension to  Lender at least thirty (30) days but no more than ninety (90) days prior to the then scheduled  Stated Maturity Date.  Upon receipt of such request to extend the Term until the First Extended  Maturity Date or the Second Extended Maturity Date, as the case may be, Lender will promptly  confirm  to  Borrower  in  writing  whether  or  not  the  Stated  Maturity Date  will  be  so  extended,  which extension will be granted upon the satisfaction of the following conditions:               (a)   no Default or Event of Default shall be continuing at the time such request  is made or on the then scheduled Stated Maturity Date;               (b)   Borrower  delivers  to  Lender  an  Officer’s  Certificate  confirming  the  accuracy  of  the  information  contained  in clause  (a) above,  and  certifying  that  each  of  the  representations and warranties of Borrower contained in the Loan Documents is true, complete  and correct in all material respects as of the date of such Officer’s Certificate to the extent such  representations and warranties are not matters which by their nature can no longer be true and  correct as a result of the passage of time;               (c)   Borrower pays  to  Lender concurrently  with  the  request  to so  extend the  Term (x) with respect to the extension until the First Extended Maturity Date, an extension fee in  an amount equal to 0.25% of the then-outstanding Principal and (y) with respect to the extension  until the Second Extended Maturity Date, an extension fee in an amount equal to 0.50% of the  then-outstanding Principal;               (d)   on the (i) originally  scheduled  Stated  Maturity  Date, in  the  case  of  the  extension to the First Extended Maturity Date, and (ii) First Extended Maturity Date, in the case  of  the  extension  to  the  Second  Extended  Maturity  Date, the  Debt  Yield  is  at  least 8.50%,  calculated  as  of  the  last  day  of  the  calendar  month  immediately  preceding the (y) originally  scheduled Stated Maturity Date, in the case of the extension to the First Extended Maturity Date,  and (z) First  Extended  Maturity  Date,  in  the  case  of  the  extension  to  the  Second  Extended  Maturity Date; and               (e)   on  or  prior  to  the  then  scheduled  Stated  Maturity  Date,  Borrower  either  (i) extends  the  term  of  the  Interest  Rate  Protection  Agreement  to  a  date  not  earlier  than  the  expiration  of  the  requested  Extension  Period  or  (ii)  enters  into  a  new  interest  rate  protection  agreement  that has  a notional  amount not  less than the then outstanding  Principal, which will                                          27  71215191 

 

have the effect of capping LIBOR at no greater than 3.50%  per annum through the expiration of  the requested Extension Period, and which extension or new agreement is on the same terms and  conditions set forth in Section 2.6.1 of this Agreement.               If  Borrower  is  unable  to  satisfy  all  of  the  foregoing  conditions  within  the  applicable time frames for each, Lender shall have no obligation to extend the Stated Maturity  Date hereunder.           2.9   Intentionally Omitted.   3.    CASH MANAGEMENT AND RESERVES         3.1   Cash Management Arrangements.  Borrower shall at all times cause all Rents  to be transmitted directly by non-residential tenants of the Property into an Eligible Account (the  “Clearing  Account”)  established  and  maintained  by  Borrower  and  approved  by  Lender  in  its  reasonable  discretion,  at  a  local  bank  selected  by  Borrower,  which  shall  at  all  times  be  an  Eligible  Institution  (the  “Clearing  Bank”)  as  more  fully  described  in  the  Clearing  Account  Agreement.  In the event of any resignation of the Clearing Bank, Borrower and Lender shall use  reasonable  efforts  to  designate  such  a  successor  bank  promptly  after  receipt  of  notice  of  resignation by the Clearing Bank and shall take all reasonable actions necessary to cause such  designated  successor  promptly  to  assume  the  obligations  of  the  Clearing  Bank.   Concurrently  with the execution and delivery hereof, Borrower shall deliver a notice in the form of Schedule 9  to each existing non-residential tenant at the Property directing them to remit their rent checks  directly to the Clearing Bank, and shall also deliver such a notice to  each future tenant at the  Property. Without in any way limiting the foregoing, if Borrower or Manager receive any Rents,  then (i) such amounts shall be deemed to be collateral for the Loan and shall be held in trust for  the benefit, and as the property, of Lender, (ii) such amounts shall not be commingled with any  other funds or property  of Borrower or Manager, and (iii) Borrower or  Manager shall  deposit  such  amounts  into  the  Clearing  Account  within  one  (1)  Business  Day  of  receipt.   Funds  deposited into the Clearing Account shall be swept by the Clearing Bank on a daily basis into  Borrower’s operating  account,  unless  an  Event  of  Default  is  continuing,  in  which  event  such  funds shall be swept on a daily basis into an Eligible Account at the Deposit Bank controlled by  Lender (the “Deposit Account”) and applied and disbursed in accordance with this Agreement.   Funds  in  the  Deposit  Account  shall  be  invested  at  Lender’s  discretion  only  in  Permitted  Investments.  Lender will also establish subaccounts of the Deposit Account which shall at all  times be Eligible Accounts (and may be ledger or book entry accounts and not actual accounts)  (such subaccounts are referred to  herein  as  “Subaccounts”).  At all times,  Lender may, in  its  discretion,  elect  to  maintain  the  deposits  and  reserves  required  under  this  Agreement  in  an  Eligible Account at a bank or other depository selected by Lender other than the Deposit Bank in  which  case,  all  references  to  the  Deposit  Account  and  any  Subaccounts  hereunder  shall  be  deemed to include such Eligible Account and the subaccounts of any such Eligible Account and  all  funds in  such  Eligible  Account  shall  be  invested  at  Lender’s  discretion  only  in  Permitted  Investments.  The Clearing Account, Deposit Account and any Subaccount will be under the sole  dominion  and  control  of  Lender,  and  Borrower  shall  have  no  right  of  withdrawal therefrom.   Borrower shall pay for all expenses of opening and maintaining all of the above accounts.                                          28  71215191 

 

      3.2   Required Repairs.               3.2.1 Completion of Required Repairs.  Borrower shall perform and complete  each item of the repairs and environmental remedial work at the Property described on Schedule  2 (the “Required Repairs”) within twelve (12) months of the date hereof or such shorter period  of time for such item set forth on Schedule 2.               3.2.2 Required Repairs Reserves.  On the date hereof, Borrower shall deposit  with Lender the aggregate amount set forth on Schedule 2 and Lender shall cause such amount to  be transferred to a Subaccount (the “Required Repairs Subaccount”).  Provided no Default or  Event  of  Default  is  continuing,  Lender  shall  disburse  funds  held  in  the  Required  Repairs  Subaccount to Borrower, within fifteen (15) days after the delivery by Borrower to Lender of a  request therefor (but not more often than once per month), in amounts of at least $5,000 (or such  lesser amount equal  to  the remaining balance of the Required Repairs Subaccount),  and, with  respect to any particular disbursement for any portion of the Required Repairs, in an amount not  to exceed the amount set forth on Schedule 2 with respect to such particular portion or item of  the  Required  Repairs,  provided  that  the  request  for  disbursement  is  accompanied  by  the  following  items  (which  items  shall  be  in  form  and  substance  satisfactory  to  Lender):   (i)  an  Officer’s Certificate in the form of Schedule 8 attached hereto; (ii) copies of appropriate Lien  waivers or other evidence of payment satisfactory to Lender in connection with any construction  work  associated  with  such  Required  Repairs;  (iii)  at  Lender’s  option,  a  title  search  for  the  applicable Individual Property indicating that it is free from all Liens not previously approved by  Lender;  (iv)  if  applicable,  a  copy  of  each  License  required  to  be  obtained  with  respect  to  the  portion  of  the  Required  Repairs  which  is  the  subject  of  the  requested  disbursement; (v)  such  other  evidence  as  Lender  shall  request  in  its  reasonable  discretion  that  the  Required  Repairs  which  are  the  subject  of  the  requested  disbursement  have  been  completed  and  paid  for; and  (vi) evidence  satisfactory  to  Lender  that  sufficient  funds  remain  in  the  Required  Repairs  Subaccount to complete the Required Repairs.  Lender shall have (if it desires) verified (by an  inspection  conducted  at  Borrower’s  expense)  performance  of  the  work  associated  with  such  Required  Repairs.   Any  disbursement of  more  than  $10,000  to  pay  (rather  than  reimburse)  Required Repairs may, at Lender’s option, be made by joint check payable to Borrower and the  payee of such Required Repairs.  Provided no Default or Event of Default is continuing, upon  Borrower’s completion of all Required Repairs in accordance with this Section 3.2, Lender shall  release any funds remaining in the Required Repairs Subaccount, if any, to Borrower.         3.3   Real Estate Taxes.                 (a)   Borrower shall pay to Lender (i) $153,000 on the date hereof on account  of Real Estate Taxes and (ii) on each Payment Date, one-twelfth (1/12) of the Real Estate Taxes  that Lender estimates will be payable during the next twelve (12) months in order to accumulate  with Lender sufficient funds to pay all such Real Estate Taxes at least thirty (30) days prior to  their  respective  due  dates.   Such  amounts  will  be  transferred  by  Lender  to  a  Subaccount  (the  “Property Tax Subaccount”).  If Lender determines in its reasonable judgment that the funds in  the Property Tax Subaccount will be insufficient to pay (or in excess of) the Real Estate Taxes  next coming due, Lender may, upon thirty (30) days’ notice to Borrower, increase (or decrease)  the monthly contribution required to be made by Borrower to the Property Tax Subaccount.                                         29  71215191 

 

            (b)   Provided that no Default or Event of Default is continuing, Lender will (a)  apply  funds in  the Property  Tax Subaccount  to  payments  of Real  Estate Taxes  required to  be  made  by  Borrower  pursuant  to Section  5.12,  provided  that  Borrower  has  promptly  supplied  Lender with notices of all Real Estate Taxes coming due, or (b) if Borrower has not promptly  supplied  Lender  with  notices  of  Real  Estate  Taxes  coming  due,  reimburse  Borrower  for  such  amounts,  within  fifteen  (15)  days  after  presentation  of  evidence  of  payment.   In  making  any  payment  relating  to  Real  Estate  Taxes,  Lender  may  do  so  according  to  any  bill,  statement  or  estimate procured from the appropriate public office, without inquiry into the accuracy of such  bill, statement or estimate or into the validity of any tax, assessment, sale, forfeiture, tax lien or  title or claim thereof.  Borrower shall have the right to pay any such Real Estate Taxes under  protest, and Lender shall reasonably cooperate with Borrower and at Borrower’s request, make  such payments under protest.           3.4   Insurance Premiums.                 (a)   Borrower shall pay to Lender (i) $10,000.00 on the date hereof on account  of  Insurance  Premiums,  and  (ii)  on  each  Payment  Date  one-twelfth  (1/12)  of  the  Insurance  Premiums that Lender estimates will be payable for the renewal of the coverage afforded by the  Policies upon the expiration thereof in order to accumulate with Lender sufficient funds to pay  all such Insurance Premiums at least thirty (30) days prior to the expiration of the Policies.  Such  amounts  will  be  transferred  by  Lender  to  a  Subaccount  (the  “Insurance  Subaccount”).   If  Lender determines in its reasonable judgment that the funds in the Insurance Subaccount will be  insufficient to pay (or in excess of) the Insurance Premiums next coming due, Lender may, upon  thirty (30) days’ notice to Borrower, increase (or decrease) the monthly contribution required to  be made by Borrower to the Insurance Subaccount.               (b)   Provided that no Default or Event of Default is continuing, Lender will (a)  apply  funds  in  the  Insurance  Subaccount  to  payments  of  Insurance  Premiums  required  to  be  made  by  Borrower  pursuant  to Section  7.1,  provided  that  Borrower  has  promptly  supplied  Lender with notices of all Insurance Premiums coming due, or (b) if Borrower has not promptly  supplied Lender with notices of Insurance Premiums coming due, reimburse Borrower for such  amounts,  within  fifteen  (15)  days  after  presentation  of  evidence  of  payment.   In  making  any  payment relating to Insurance Premiums, Lender may do so according to any bill, statement or  estimate  procured  from  the  insurer  or  agent,  without  inquiry  into  the  accuracy  of  such  bill,  statement or estimate.         3.5   Capital Expense Reserves.                 (a)   Borrower shall pay to Lender $732.00 on each Payment Date for payments  to or reimbursement of Borrower for Approved Capital Expenses in accordance with this Section  3.5,  and  Lender  will  transfer  such  amounts  into  a  Subaccount  (the  “Cap/Ex  Reserve  Subaccount”).   Additionally,  upon  thirty  (30)  days’  prior  notice  to  Borrower,  Lender  may  reassess the amount of the monthly payment required under this Section 3.5 from time to time in  its reasonable discretion (based upon its then current underwriting standards).                 (b)   Provided that no Default or Event of Default is continuing, Lender shall  disburse  funds held  in  the  Cap/Ex  Reserve  Subaccount  to  Borrower,  within  fifteen  (15)  days                                         30  71215191 

 

after the delivery by Borrower to Lender of a request therefor (but not more often than once per  month), in amounts of at least $5,000 provided that the request for disbursement is accompanied  by  the  following  items  (which  items  shall  be  in  form  and  substance  satisfactory  to  Lender):   (i) an Officer’s Certificate in the form of Schedule 8 attached hereto; (ii) copies of Lien waivers  or other evidence of payment satisfactory to Lender (together with backup thereto, if requested  by Lender in its reasonable discretion), unless the requested disbursement shall be used to pay  for  such  Approved  Capital  Expense  directly  (and  not  reimburse  Borrower  for  the  Approved  Capital Expense previously paid for by Borrower), in which case Borrower shall be required to  deliver such items with respect to the Approved Capital Expense which was the subject of the  previous disbursement and conditional lien waivers with respect to the requested items to be paid  for  from  the  requested  disbursement;  (iii)  at  Lender’s  option,  a  title  search  for  the applicable  Individual Property indicating that it is free from all Liens not previously approved by Lender;  (iv) if applicable, a copy of each License required to be obtained with respect to the work that is  the subject of the Approved Capital Expenses which is the subject of the requested disbursement;  and (v) such other evidence as Lender shall request in its reasonable discretion that the Approved  Capital Expenses which are the subject of the requested disbursement have been completed and  paid  for.   Lender shall  have  (if it desires) verified (by  an inspection conducted at Borrower’s  expense)  performance  of  the  work  associated  with  any  Approved  Capital  Expense.   Any  disbursement of more than $10,000 to pay (rather than reimburse) Approved Capital Expenses  may,  at  Lender’s  option,  be  made  by  joint  check  payable  to  Borrower  and  the  payee  of  such  Approved Capital Expenses.         3.6   Rollover/Leasing Reserves.                 (a)   Borrower shall pay to  Lender $500,000.00 (“Upfront Rollover Reserve  Deposit”)  on  the  date  hereof for  payments  to  or  reimbursement  of  Borrower  for  Approved  Leasing Expenses in  accordance with  this Section 3.6, and  Lender will transfer such  amounts  into  a  Subaccount  (the  “Rollover  Reserve  Subaccount”).   Additionally, commencing  on  the  earlier  to  occur  of  (i)  the  first  Payment  Date  of  the  first  Extension Period,  and  (ii)  the  first  Payment Date following the date on which less than $150,000 of the Upfront Rollover Reserve  Deposit  remains  on  deposit  in  the  Rollover  Reserve  Subaccount,  and  continuing on  each  Payment Date thereafter, Borrower shall pay to Lender $4,455.00 for deposit into the Rollover  Reserve Subaccount.  Borrower shall also pay to Lender for transfer into the Rollover Reserve  Subaccount all Lease Termination Payments received by Borrower.  If Lender determines in its  reasonable judgment that the funds in the Rollover Reserve Subaccount will be insufficient to  pay (or in excess of) the amounts due or to become due for Approved Leasing Expenses, Lender  may, upon thirty (30) days’ notice to Borrower, increase (or decrease) the monthly contribution  required to be made by Borrower to the Rollover Reserve Subaccount.                   (b)   Provided that no Default or Event of Default is continuing, Lender shall  disburse funds held in the Rollover Reserve Subaccount to  Borrower, within fifteen (15) days  after the delivery by Borrower to Lender of a request therefor (but not more often than once per  month), in amounts of at least $5,000, provided the request for disbursement is accompanied by  the following items (which items shall be in form and substance satisfactory to Lender):  (i) an  Officer’s  Certificate in  the form  of Schedule 8 attached hereto;  (ii) copies  of  Lien waivers or  other evidence of payment satisfactory to Lender (together with backup thereto, if requested by  Lender in its reasonable discretion), unless the requested disbursement shall be used to pay for                                         31  71215191 

 

such  Approved  Leasing  Expenses  directly  (and  not  reimburse  Borrower  for  the  Approved  Leasing Expenses previously paid for by Borrower), in which case Borrower shall be required to  deliver such items with respect to the Approved Leasing Expense which was the subject of the  previous disbursement and conditional lien waivers with respect to the requested items to be paid  for  from  the  requested  disbursement;  (iii)  at  Lender’s  option,  a  title  search  for  the applicable  Individual Property indicating that it is free from all Liens not previously approved by Lender;  (iv) if applicable, a copy of each License required to be obtained with respect to the work that is  the  subject  of  the  Approved  Leasing  Expenses  which  is  the  subject  of  the  requested  disbursement, and  (v) such other evidence  as  Lender shall  request  in its  reasonable discretion  that the Approved Leasing Expenses which are the subject of the requested disbursement have  been  completed  and  paid  for.   Lender  shall  have  (if  it  desires)  verified  (by  an  inspection  conducted  at  Borrower’s  expense)  performance  of  the  work  associated with  any  Approved  Leasing  Expense.   Any  disbursement  of  more  than  $10,000  to  pay  (rather  than  reimburse)  Approved  Leasing  Expenses  may,  at  Lender’s  option,  be  made  by  joint  check  payable  to  Borrower and the payee of such Approved Leasing Expenses.               (c)   Any Lease Termination Payments and any other funds deposited into the  Rollover Reserve Subaccount from the Security Deposit Subaccount in accordance with Section  3.8 below  shall  be  applied,  at  Lender’s  election,  towards  either  (a)  subject  to  the  rights  of  Borrower  under  the  applicable  Lease,  rent  arrearages  under  such  Lease  (or  to  cure  any  other  tenant  default  under  such  Lease),  (b)  debt  service  shortfalls  that  may  arise  as  a  result  of  a  termination of such Lease (and Borrower hereby authorizes Lender to disburse to itself any such  amounts  without  any  request  therefor  by  Borrower)  or  (c)  funding  any  Approved  Leasing  Expenses which are anticipated to occur in connection with the re-tenanting of the space under  the Lease that was the subject of such termination (in accordance with the terms and conditions  of Section 3.6(b) above.          3.7   Casualty/Condemnation Subaccount.  Borrower shall pay, or cause to be paid,  to Lender all Proceeds or Awards due to any Casualty or Condemnation, and Lender will transfer  such amounts to a Subaccount (the “Casualty/Condemnation Subaccount”) in accordance with  the provisions of Article 7 hereof.  All amounts in the Casualty/Condemnation Subaccount shall  be disbursed in accordance with the provisions of Article 7 hereof.         3.8   Security  Deposits.   Borrower  shall  keep  and  hold  all  security  deposits  under  Leases in accordance with the applicable Lease and applicable Legal Requirements in Borrower’  operating  account.   After  the  occurrence  of  an  Event  of  Default and  during  the  continuance  thereof, Borrower shall, upon Lender’s request, if permitted by applicable Legal Requirements,  turn  over  to  Lender  the  security  deposits  (and  any  interest  theretofore  earned  thereon)  under  Leases, to be held by Lender or Servicer in a Subaccount (the “Security Deposit Subaccount”)  subject to the terms of the Leases and applicable Legal Requirements. Any funds in the Security  Deposit  Subaccount  which  Borrower  is  permitted  to  retain  (i.e.,  a  forfeited  security  deposit)  pursuant to the applicable provisions of any Lease shall be transferred into the Rollover Reserve  subaccount, to be applied and disbursed in accordance with the provisions of Section 3.6 hereof.   Security  deposits  held  in  the  Security  Deposit  Subaccount  will  either  be  released  by  Lender  within fifteen (15) days after the delivery by Borrower to Lender of a request therefor together  with such evidence as Lender may request in its reasonable discretion that such security deposit  is required to be returned to a tenant pursuant to the terms of a Lease, or may be applied as Rent                                         32  71215191 

 

pursuant  to  the  rights  of  Borrower  under  the  applicable  Lease.   Any  letter  of  credit  or  other  instrument that Borrower receives in lieu of a cash security deposit under any Lease entered into  after  the  date  hereof  shall  (i)  be  maintained in  full  force  and  effect  in  its  full  amount  unless  replaced by a cash deposit as hereinabove described and (ii) if permitted pursuant to any Legal  Requirements, name Lender as payee or mortgagee thereunder (or at Lender’s option, be fully  assignable to Lender).          3.9   Intentionally Omitted.         3.10  Grant of Security Interest; Application of Funds.  As security for payment of  the Debt and the performance by Borrower of all other terms, conditions and provisions of the  Loan  Documents,  Borrower  hereby  pledges  and  assigns to  Lender,  and  grants  to  Lender  a  security interest in, all of Borrower’s right, title and interest in and to all Rents and in and to all  payments to or monies held in the Clearing Account, the Deposit Account and all Subaccounts  created  pursuant  to  this Agreement  (collectively,  the  “Cash  Management  Accounts”).   Borrower hereby grants to Lender a continuing security interest in, and agrees to hold in trust for  the benefit of Lender, all Rents in its possession prior to the (i) payment of such Rents to Lender  or (ii) deposit of such Rents into the Clearing Account.  Borrower shall not, without obtaining  the prior written consent of Lender, further pledge, assign or grant any security interest in any  Cash Management Account, or permit any Lien to attach thereto, or any levy to be made thereon,  or any UCC Financing Statements to be filed with respect thereto, except those naming Lender  as  the secured party.  This  Agreement is,  among other things,  intended  by the parties to  be a  security agreement for purposes of the UCC.  Upon the occurrence and during the continuance of  an Event of Default, Lender may apply any sums in any Cash Management Account in any order  and in any manner as Lender shall elect in Lender’s sole and absolute discretion without seeking  the appointment of a receiver and without adversely affecting the rights of Lender to foreclose  the Lien of the Security Instrument or exercise its other rights under the Loan Documents.  Cash  Management  Accounts  shall  not  constitute  trust  funds  and  may  be  commingled  with  other  monies held by Lender.  Provided no Event of Default is continuing, all interest which accrues  on the funds in any Cash Management Account (other than the Tax and Insurance Subaccount)  shall accrue for the benefit of Borrower and shall be taxable to Borrower and shall be added to  and disbursed in the same manner and under the same conditions as the principal sum on which  said  interest  accrued.   Upon  repayment  in  full  of  the  Debt,  all  remaining  funds  in  the  Subaccounts, if any, shall be promptly disbursed to Borrower.          3.11  Intentionally Omitted.   4.    REPRESENTATIONS AND WARRANTIES   Borrower represents and warrants to Lender as of the date hereof that, except to the extent (if  any) disclosed on Schedule 3 with reference to a specific Section of this Article 4:         4.1   Title.   Borrower  has  good,  marketable  and  indefeasible  title  in  fee  to  the  real  property  and  good  title  to  the  balance  of  the  Property,  free  and  clear  of  all  Liens  except  the  Permitted Encumbrances.                                             33  71215191 

 

      4.2   Physical  Condition.   Except  as  may  be  expressly  set  forth  in  the  Property  Condition  Report,  the  Property,  including  all  buildings,  improvements,  parking  facilities,  sidewalks,  storm  drainage  systems,  roofs,  plumbing  systems,  HVAC  systems,  fire  protection  systems,  electrical  systems,  equipment,  elevators,  exterior  sidings  and  doors,  landscaping,  irrigation systems and all structural components, are in good condition, order and repair in all  material  respects,  and  there  exists  no  structural  or  other  material  defects  or  damages  to any  Individual Property,  whether  latent  or  otherwise.   Borrower  has  not  received  notice  from  any  insurance company or bonding company of any defects or inadequacies in the Property, or any  part thereof, which would adversely affect the insurability of the same or cause the imposition of  extraordinary premiums or charges thereon or any termination or threatened termination of any  policy  of  insurance  or  bond.   No  portion  of any  Individual Property  is  located  in  an  area  identified  by  the  Federal  Emergency  Management  Agency  as  an  area  having  special  flood  hazards, or, if so located, the flood insurance required pursuant to Section 7.1.1 hereof is in full  force and effect with respect to that portion of the Property.  The Improvements have suffered no  material casualty or damage which has not been fully repaired and the cost thereof fully paid.         4.3   Survey/Boundaries.  To  Borrower’s  knowledge,  the  Survey  does  not  fail  to  reflect any material matter affecting the Property or the title thereto.  To Borrower’s knowledge,  all  of  the  Improvements  which  were  included  in  determining  the  appraised  value  of each  Individual Property  lie  wholly  within  the  boundaries  and  building  restriction  lines  of such  Individual Property, and no improvements on adjoining properties encroach upon an Individual  Property,  and  no  easements  or  other  encumbrances  affecting an  Individual Property  encroach  upon  any  of  the  Improvements,  so  as  to  affect  the  value  or  marketability  of any  Individual  Property,  except  those  which  are  set  forth  on  the  Survey  and  insured  against  by  the  Title  Insurance Policy.           4.4   Separate Lots.  Each parcel comprising any Individual Property is a separate tax  lot and is not a portion of any other tax lot that is not a part of such Individual Property.          4.5   Easements;  Utilities  and  Public  Access.   All  easements,  cross  easements,  licenses,  air  rights  and  rights-of-way  or  other  similar  property  interests  (collectively,  “Easements”), if any, necessary for the full utilization of the Improvements for their intended  purposes  have  been  obtained,  are  described  in  the  Title  Insurance  Policy  and to  Borrower’s  knowledge, are in full force and effect without default thereunder.  Each Individual Property has  rights of access to public ways  and is served by water, sewer, sanitary sewer and storm drain  facilities  adequate  to  service  it  for  its  intended  uses.  To  Borrower’s  knowledge,  all  public  utilities necessary or convenient to the full use and enjoyment of each Individual Property are  located  in  the  public  right-of-way  abutting such  Individual Property,  and  all  such  utilities  are  connected so as to serve each Individual Property without passing over other property absent a  valid  easement.   All  roads  necessary  for  the  use  of each  Individual Property  for  its  current  purpose  have  been  completed  and to Borrower’s  knowledge, dedicated  to  public  use  and  accepted by all Governmental Authorities.         4.6   Assessments.  There are no pending or, to Borrower’s knowledge, there are no  proposed  special  or  other  assessments  for  public  improvements  or  otherwise  affecting the  Property,  nor,  to  Borrower’s  knowledge, are  there  any  contemplated  improvements  to  the  Property that may result in such special or other assessments.                                         34  71215191 

 

      4.7   Purchase Options.  Neither the Property nor any  part thereof is  subject  to  any  purchase options, rights of first refusal, rights of first offer or other similar rights in favor of third  parties, other than the Right of First Refusal and a right to force a sale following a casualty or  condemnation pursuant  to  Section 6.3 in  the  Fulton  Shops  Declaration,  Section 11.2 in  the  8  Octavia Declaration, Section 11.2 in the 400 Grove Declaration, Section 11.2 in the 450 Hayes  Declaration, and Section 11.2.2 in the 388 Fulton Declaration.         4.8   Condemnation.  No Condemnation or other proceeding has been commenced or,  to Borrower’s knowledge, is contemplated with respect to all or any portion of the Property or  for the relocation of roadways providing access to the Property.           4.9   Compliance.  Borrower and, to Borrower’s knowledge, each Individual Property  (including  the  Improvements)  and  the  use  thereof  comply  in  all  material  respects  with  all  applicable  Legal  Requirements  (including  with  respect  to  parking,  building  and  applicable  zoning  and  land  use  laws,  codes,  regulations  and  ordinances)  and  all  covenants,  agreements,  restrictions  and  encumbrances  contained  in  any  instrument,  either  of  record  or  known  to  Borrower, at any time in force affecting all or any portion of the Property.  Borrower has not  received any written notice of any default or violation by Borrower of any order, writ, injunction,  decree or demand of any Governmental Authority, the violation of which might have a Material  Adverse Effect, and Borrower is otherwise not aware of any such default or violation.  Borrower  has  not  committed  any  act  which  may  give  any  Governmental  Authority  the  right  to  cause  Borrower  to  forfeit  the  Property  or  any  part  thereof  or  any  monies  paid  in  performance  of  Borrower’s  obligations  under  any  of  the  Loan  Documents.  Each  Individual Property  is  used  exclusively  for retail use  and  other  appurtenant  and  related  uses.   All  certifications,  permits,  licenses and approvals, including certificates of completion and occupancy permits required of  Borrower  for  the  legal  use,  occupancy  and  operation  of  the  Property for  its  current  use  (collectively, the “Licenses”), have been obtained and are in full force and effect.  The use being  made of each Individual Property is in conformity with the certificate of occupancy issued for  the Property and all other restrictions, covenants and conditions affecting the Property.  In the  event that all or any part of the Improvements are destroyed or damaged, said Improvements can  be  legally  reconstructed  to  their  condition  prior  to  such  damage  or  destruction,  and  thereafter  exist for the same use without violating any zoning or other ordinances applicable thereto and  without the necessity of obtaining any variances or special permits.  No legal proceedings are  pending  or,  to  the  knowledge  of  Borrower,  threatened  with  respect  to  the zoning  of any  Individual Property.   Neither  the  zoning  nor  any  other  right  to  construct,  use  or  operate any  Individual Property  is  in  any  way  dependent  upon  or  related  to  any  property  other  than such  Individual Property.          4.10  Valid  and  First  Lien.  The Security  Instrument when  properly  recorded  in  the  appropriate  records,  together  with  any  UCC  Financing  Statements  required  to  be  filed  in  connection  therewith,  will  create  (i)  a  valid  and  perfected  first  priority  lien  on  Borrower’s  interest in the Property and (ii) valid and perfected first priority security interests in and to, and  perfected collateral assignments of, all personalty (including the Leases), all in accordance with  the terms thereof, in each case subject only to any applicable Permitted Encumbrances.  There  are  no  mechanics’,  materialman’s  or  other  similar  Liens  or  claims  which  have  been  filed  for  work, labor or materials affecting the Property which are or may become a Lien prior to, or of  equal  or  coordinate  priority  with,  the  Liens  created  by  the Loan  Documents.   The  Permitted                                         35  71215191 

 

Encumbrances, individually or in the aggregate, do not have a Material Adverse Effect or  impair  Borrower’s ability to repay the Loan.            4.11  Filing, Recording and Other Taxes.  All transfer Taxes, deed stamps, intangible  Taxes or other amounts in the nature of transfer Taxes required to be paid by any Person under  applicable Legal Requirements 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  Taxes  required  to  be  paid  by  any  Person  under  applicable  Legal  Requirements  in  connection  with  the  execution,  delivery,  recordation,  filing,  registration,  perfection  or  enforcement  of  any  of  the  Loan  Documents  have  been  paid  or  are  being  paid  simultaneously herewith.  All Taxes and governmental assessments due and owing in respect of  the  Property  have  been  paid,  or  an  escrow  of  funds  in  an  amount  sufficient  to  cover  such  payments has been established hereunder or are insured against by the Title Insurance Policy.          4.12  Tax Filings.  To the extent required, Borrower has filed (or has obtained effective  extensions for filing) all federal, state, commonwealth, district and local Tax returns required to  be  filed  and  has  paid  or  made  adequate  provision  for  the  payment  of  all  federal,  state,  commonwealth,  district  and  local  Taxes,  charges  and  assessments  payable  by  Borrower.   Borrower’s  Tax  returns  (if  any)  properly reflect  the  income  and  Taxes  of  Borrower  for  the  periods covered thereby, subject only to reasonable adjustments required by the Internal Revenue  Service or other applicable Tax authority upon audit.         4.13  Proceedings;  Enforceability.  Each Borrower  has  the  power  and  authority  to  execute, deliver and perform its obligations under the Loan Documents to which it is a party and  all the transactions contemplated thereby.  The Loan Documents to which Borrower is a party  have been duly authorized, executed and delivered by Borrower and constitute legal, valid and  binding  obligations  of  Borrower,  enforceable  against  Borrower  in  accordance  with  their  respective  terms,  except  as  such  enforcement  may  be  limited  by  bankruptcy,  insolvency,  reorganization, moratorium or other similar laws affecting the enforcement of creditors’ rights  generally,  and  by  general  principles  of  equity  (regardless  of  whether  such  enforceability  is  considered in a proceeding in equity or at law).  The Loan Documents are not subject to any right  of rescission, set-off, counterclaim or defense by Borrower or Guarantor including the defense of  usury, nor would the operation of any of the terms of the Loan Documents, or the exercise of any  right thereunder, render the Loan Documents unenforceable, and none of Borrower or Guarantor  have asserted any right of rescission, set-off, counterclaim or defense with respect thereto.         4.14  No Conflicts.  The execution, delivery and performance of the Loan Documents  by Borrower and the transactions  contemplated hereby will  not  conflict  with  any provision of  any law or regulation to which Borrower is subject, or conflict with, or result in a breach of any  of the terms or provisions of, or constitute a default under, or result in the creation or imposition  of any Lien (other than pursuant to the Loan Documents) upon any of the property of Borrower  pursuant  to  the  terms  of,  any  agreement  or  instrument  or  organizational  document  to  which  Borrower is a party or by which it or its property is subject, nor will such action result in any  violation of the provisions of any statute or any order, rule or regulation of any Governmental  Authority having jurisdiction over Borrower or any of its properties.  Borrower’s rights under the  Licenses and the Management Agreement will not be adversely affected by the execution and  delivery  of  the  Loan  Documents,  Borrower’s  performance  thereunder,  the  recordation  of  the                                         36  71215191 

 

Security  Instrument,  or  the  exercise  of  any  remedies  by  Lender.   Any  consent,  approval,  authorization, order, registration or qualification of or with any Governmental Authority or any  other  Person  required  for  the  execution,  delivery  and  performance  by  Borrower  of,  or  compliance  by  Borrower  with,  the  Loan  Documents  or  the  consummation  of  the  transactions  contemplated hereby, has been obtained and is in full force and effect.         4.15  Organization; Special Purpose.                 (a)   Each  of  Borrower  and  Sole  Member  has  been  duly  organized  and  is  validly existing and in good standing under the laws of the state of its formation, with requisite  power  and  authority,  and  all  rights,  licenses,  permits  and  authorizations,  governmental  or  otherwise,  necessary  to  own  its  properties  and  to  transact  the  business  in  which  it  is  now  engaged.  Each of Borrower and Sole Member is duly qualified to do business and is in good  standing  in  each  jurisdiction  where  it  is  required  to  be  so  qualified  in  connection  with  its  properties, business and operations.               (b)   Except as set forth on Schedule 3 attached hereto, each of Borrower and  Sole Member has  at all times since its formation been, and as of the date hereof is, a Special  Purpose Bankruptcy Remote Entity.         4.16  Other  Debt.   There  is  no  indebtedness  with  respect  to  the  Property  or  any  indebtedness  secured  by  excess  cash  flow  or  any  residual  interest  therein,  whether  secured  or  unsecured, other than Permitted Encumbrances and Permitted Indebtedness.         4.17  Ownership of Borrower.  SRT SF RETAIL’s exact legal name is: SRT SF Retail  I, LLC.  SRT SF RETAIL is of the following organizational type: limited liability company, and  the jurisdiction in which SRT SF RETAIL is organized is: Delaware.  SRT SF RETAIL’s U.S.  federal  tax  I.D.  number  is 80-0277264 and SRT  SF  RETAIL’s Delaware  Organizational  I.D.  number is 6016778.  SRT LA RETAIL’s exact legal name is: SRT LA Retail, LLC.  SRT LA  RETAIL is of the following organizational type: limited liability company, and the jurisdiction in  which SRT LA RETAIL is organized is: Delaware.  SRT LA RETAIL’s U.S. federal tax I.D.  number  is 80-0277264 and  SRT  LA  RETAIL’s  Delaware  Organizational  I.D.  number  is  6242065.  The sole managing member of each of SRT SF RETAIL and SRT LA RETAIL is Sole  Member.  Strategic  Realty  Operating  Partnership,  L.P. is  the sole  member  of SRT  Secured  Holdings, LLC, which is the sole member of Sole Member.  The membership interests in SRT  SF  RETAIL,  SRT  LA  RETAIL and  Sole  Member  are  owned  free  and  clear  of  all  Liens,  warrants, options and rights to purchase.  Neither SRT SF RETAIL nor SRT LA RETAIL has  any obligation to any Person to purchase, repurchase or issue any ownership interest in it.  The  organizational  chart  attached  hereto  as Schedule  5 is  complete  and  accurate  and  illustrates  all  Persons  who  have  a  direct  or  indirect  ownership  interest  in SRT  SF  RETAIL and  SRT  LA  RETAIL.         4.18  Name; Principal Place of Business.  Borrower does not use and will not use any  trade name and has not done and will not do business under any name other than its actual name  set forth herein.  The principal place of business of Borrower is its primary address for notices as  set forth in Section 6.1, and Borrower has no other place of business, other than the Property.                                          37  71215191 

 

      4.19  No  Bankruptcy  Filing.   Neither  Borrower,  Guarantor,  Sole  Member  nor  any  Person that directly or indirectly Controls Borrower or Sole Member is contemplating either the  filing of a petition by it under any state or federal bankruptcy or insolvency law or the liquidation  of all or a major portion of Borrower’s assets or properties (a “Bankruptcy Proceeding”), and  Borrower has no knowledge of any Person contemplating the filing of any such petition against it  or such constituent Persons.  In addition, neither Borrower nor Sole Member, Guarantor, nor any  principal  nor  Affiliate  of  Borrower,  Sole  Member, or Guarantor  has  been  a  party  to,  or the  subject of a Bankruptcy Proceeding for the past ten (10) years.         4.20  Fraudulent  Transfer.   Borrower  has  not  entered  into  the  Loan  or  any  Loan  Document  with  the  actual  intent  to  hinder,  delay,  or  defraud  any  creditor,  and  Borrower  has  received reasonably equivalent value in exchange for its obligations under the Loan Documents.   Giving effect to the transactions contemplated by the Loan Documents, the fair saleable value of  Borrower’s  assets  exceeds  and  will,  immediately  following  the  execution  and  delivery of  the  Loan  Documents,  exceed  Borrower’s  total  liabilities,  including  subordinated,  unliquidated,  disputed or contingent liabilities, including the maximum amount of its contingent liabilities or  its debts as such debts become absolute and matured.  Borrower’s assets do not and, immediately  following the execution and delivery of the Loan Documents will not, constitute unreasonably  small capital to carry out its business as conducted or as proposed to be conducted.  Borrower  does  not  intend  to,  and  does  not believe  that  it  will,  incur  debts  and  liabilities  (including  contingent liabilities and other commitments) beyond its ability to pay such debts as they mature  (taking into account the timing and amounts to be payable on or in respect of the obligations of  Borrower).           4.21  ERISA;  No  Plan Assets.  As  of  the  date  hereof  and  throughout  the  Term  (i)  neither Borrower, Guarantor nor any of the Commonly Controlled Entities sponsor, are obligated  to  contribute  to,  or  are  themselves  an  “employee  benefit  plan,”  as  defined  in  Section  3(3)  of  ERISA or a “plan” as defined in Section 4975 of the Code, (ii) none of the assets of Borrower or  Guarantor  constitutes  or  will  constitute  “plan  assets”  of  one  or  more  such  plans  within  the  meaning of 29 C.F.R. Section 2510.3-101, as modified in operation by Section 3(42) of ERISA,  (iii) neither Borrower nor Guarantor is or will be a “governmental plan” within the meaning of  Section 3(32) of ERISA, and (iv) transactions by or with Borrower or Guarantor are not and will  not be subject to state statutes regulating investment of, and fiduciary obligations with respect to,  governmental plans.  As of the date hereof, neither Borrower, Guarantor nor any ERISA Affiliate  maintains,  sponsors  or  contributes  to  or  has  any  obligation  with  respect  to a  “defined  benefit  plan”  (within  the  meaning  of  Section  3(35)  of  ERISA)  or  a  “multiemployer  pension  plan”  (within  the  meaning  of  Section  3(37)(A)  of  ERISA).   Neither  Borrower  nor  Guarantor  has  engaged in any transaction in connection with which it could be subject to either a material civil  penalty assessed pursuant to the provisions of Section 502 of ERISA or a material Tax imposed  under the provisions of Section 4975 of the Code.          4.22  Litigation.  There are no actions, suits or other proceedings at law or in equity by  or  before  any  Governmental  Authority  now  pending  or to  Borrower’s  knowledge, threatened  against or affecting Borrower, Sole Member, Guarantor, the Manager or the Property, which, if  adversely determined, might have a Material Adverse Effect.                                          38  71215191 

 

      4.23  Agreements.  Borrower is not a party to any agreement or instrument or subject  to any restriction which might have a Material Adverse Effect.  Borrower is not in default with  respect  to  any  order  or  decree  of  any  court  or  any  order,  regulation  or  demand  of  any  Governmental  Authority,  which  default  might  have  consequences  that  would  have  a  Material  Adverse  Effect.   Borrower  is  not  in  default  in  any  material  respect  in  the  performance,  observance  or  fulfillment  of  any  of  the  obligations,  covenants  or  conditions  contained  in  any  Permitted Encumbrance or any other agreement or instrument to which it is a party or by which  it or the Property is bound, and to Borrower’s knowledge, there are no defaults under any such  agreement by any other party thereto.         4.24  Full and Accurate Disclosure.  No statement of fact made by Borrower in any  Loan Documents contains any untrue statement of a material fact or omits to state any material  fact necessary to make statements contained therein not misleading.  There is no material fact  presently known to Borrower that has not been disclosed to Lender or, as far as Borrower can  foresee, might have a Material Adverse Effect.  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) are true, complete and correct in all material respects,  (ii) accurately represent the financial condition of Borrower, Guarantor and the Property as of the  date  of  such  reports,  and  (iii)  to  the  extent  prepared  by  an  independent  certified  public  accounting firm, have been prepared in accordance with GAAP consistently applied throughout  the periods covered, except as disclosed therein. Borrower has no contingent liabilities, liabilities  for Taxes, unusual forward or long-term commitments, unrealized or anticipated losses from any  unfavorable  commitments  or  any  liabilities  or  obligations  not  expressly  permitted  by  this  Agreement.  Since the date of such financial statements, there has been no materially adverse  change in the financial condition, operations or business of Borrower, Guarantor or the Property  from that set forth in said financial statements.         4.25  Leases.  The rent roll for each Individual Property attached hereto as Schedule 4  (the  “Rent  Roll”)  is  true,  complete  and  correct  and no  Individual Property  is  subject  to  any  Leases other than the Leases described in the Rent Roll.  Except as set forth on the Rent Roll or  in a tenant estoppel certificate delivered to Lender in connection with the closing of the Loan:  (i)  each Lease is in full force and effect and all conditions precedent to each tenant’s obligations  under  the  related  Lease  have  been  satisfied;  (ii)  the  tenants  under  the  Leases  have  accepted  possession of and are in occupancy of all of their respective demised premises, have commenced  the  payment  of  rent  under  the  Leases,  and to  the  best  of  Borrower’s  knowledge, there  are  no  offsets, claims or defenses to the enforcement thereof; (iii) all rents due and payable under the  Leases have been paid and no portion thereof has been paid for any period more than thirty (30)  days in advance; (iv) the rent payable under each Lease is the amount of fixed rent set forth in  the  Rent  Roll,  and  there  is  no  claim  or  basis  for  a  claim  by  the  tenant  thereunder  for  an  adjustment to the rent; (v) no tenant has made any claim against the landlord under any Lease  which remains outstanding, there are no defaults on the part of the landlord under any Lease, and  no  event  has  occurred  which,  with  the  giving  of  notice  or  passage  of  time,  or  both,  would  constitute such a default; (vi) to Borrower’s knowledge, there is no present material default by  the tenant under any Lease; (vii) all security deposits under Leases are as set forth on the Rent  Roll  and  are  held  consistent  with Section  3.7;  (viii)  Borrower  is  the  sole  owner  of  the  entire  lessor’s interest in each Lease; (ix) each Lease is the valid, binding and enforceable obligation of  the  Borrower and,  to  the  Borrower’s  knowledge, the  applicable  tenant  thereunder,  subject  to                                         39  71215191 

 

applicable bankruptcy, insolvency  and similar laws affecting  rights  of creditors  generally,  and  general principles of equity; (x) no Person has any possessory interest in, or right to occupy, the  Property except under the terms of the Leases; (xi) each Lease is, or as of the Loan Closing will  be, subordinate  to  the  Loan  Documents,  either  pursuant  to  its  terms  or  pursuant  to  a  subordination and attornment agreement; (xii) all work to be performed by the landlord under  each  Lease  has been  performed  as  required  and  has  been  accepted  by  the  tenant  under  such  Lease;  (xiii)  any  payments,  free  rent,  partial  rent,  rebate  of  rent  or  other  payments,  credits,  allowances or abatements required to be given by the landlord to any tenant under any Lease has  already been received by such tenant; (xiv) no tenant under any Lease (or any sublease) is an  Affiliate of Borrower; (xv) all tenants under the Leases are open for business and paying full,  unabated rent; (xvi) there are no brokerage fees or commissions due and payable in connection  with  the  leasing  of  space  at  the  Property;  and  (xvii) to  the  Borrower’s  knowledge, no  tenant  under  any  Lease  has  assigned  its  Lease  or  sublet  all  or  any  portion  of  the  premises  demised  thereby, no such tenant holds its leased premises under assignment or sublease, nor does anyone  except such tenant and its employees occupy such leased premises.  The copies of the Leases  delivered to Lender are true and complete, and there are no oral agreements with respect thereto.   None  of  the  Leases  contains  any  option  to  purchase  or  right  of  first  refusal  to  purchase  the  Property  or  any  part  thereof.  As  of  the  Loan  Closing,  neither  the  Leases  nor  the  Rents are  assigned  or  pledged  except  to  Lender.   To  Borrower’s  knowledge,  no  tenant has  made  an  assignment  for  the  benefit  of  creditors,  or  is  subject  to  any  federal  or  state  bankruptcy  or  reorganization  arrangement  pursuant  to  federal  bankruptcy  law  or  any  similar  federal  or  state  law, or any proceeding for the dissolution or liquidation of such tenant.         4.26  Contracts; Major Contracts.                 (a)   There  are  no  service,  maintenance  or  repair  contracts  affecting  the  Property that are not terminable on one month’s notice or less without cause and without penalty  or  premium.   All  service,  maintenance or  repair  contracts  affecting  the  Property  have  been  entered  into  at  arms-length  in  the  ordinary  course  of  Borrower’s  business.   Each  of  such  agreements  is  in  full  force  and  effect,  there  are  no  monetary  or  other  material  defaults  by  Borrower thereunder and, to the knowledge of Borrower, there are no monetary or other material  defaults thereunder by any other party thereto.  No agreement or instrument to which Borrower is  a party or is subject, or to which the Property is subject, provides any Person with the right to  obtain, a Lien on the Property superior to the Lien of the Security Instrument.               (b)   Borrower  has  delivered  true,  correct  and  complete  copies  of  the  Major  Contracts  (including  all  amendments  and  supplements  thereto)  to  Lender.   Borrower  has  not  entered into, and is not bound by, any Major Contract which continues in existence, except those  previously  disclosed  in  writing  to  Lender.   None  of  Borrower,  Manager  or  any  other  Person  acting  on  Borrower’s  behalf  has  given  or  received  any  notice  of  default  under  any  Major  Contract  that  remains  uncured  or  in  dispute.   Except  for  Manager  under  the  Management  Agreement, no Major Contract has as a party an Affiliate of Borrower.         4.27  Management Agreement.   The  Management  Agreements  are in  full  force  and  effect.  There is no default, breach or violation existing thereunder, and no event has occurred  (other than payments due but not yet delinquent) that, with the passage of time or the giving of  notice, or both, would constitute a default, breach or violation thereunder, by either party thereto.                                         40  71215191 

 

      4.28  Operations Agreements.  Each Operations Agreement is in full force and effect  and  neither  Borrower  nor,  to  Borrower’s  knowledge,  any  other  party  to  any  Operations  Agreement,  is  in  default  thereunder (provided,  however,  with respect  to  the  Declaration,  the  “other  party”  thereto  applies  solely  to  the  condominium  associations  governing  each  such  Individual  Property other than with  respect  to  the Fulton Shops Declaration,  in  which case, it  also means the Market Owner (as defined therein)), and to Borrower’s knowledge, there are no  conditions which, with the passage of time or the giving of notice, or both, would constitute a  default thereunder.           4.29  Hazardous Substances.  (i) Except as set forth in the Environmental Report, the  Property  is  not  in  violation  of  any  Legal  Requirement  pertaining  to  or  imposing  liability  or  standards of conduct concerning environmental regulation, contamination or clean-up, including  the California Environmental Quality Act, the applicable provisions of the California Health and  Safety  Code,  California  Labor  Code,  the  California  Water  Code,  the Comprehensive  Environmental  Response,  Compensation  and  Liability  Act,  the  Resource Conservation  and  Recovery  Act,  the  Emergency  Planning  and  Community  Right-to-Know Act  of  1986,  the  Hazardous Substances Transportation Act, the Solid Waste Disposal Act, the Clean Water Act,  the  Clean  Air  Act,  the  Toxic  Substance  Control  Act,  the  Safe  Drinking  Water  Act,  the  Occupational Safety and Health Act, any Legal Requirements relating to Toxic Mold, any state  super-lien  and  environmental  clean-up  statutes,  any  local  law  requiring  related  permits  and  licenses,  any  common  law  relating  to  Toxic  Mold  or  other  Hazardous  Substances,  and  all  amendments to and regulations in respect of the foregoing laws (collectively, “Environmental  Laws”);  (ii)  the  Property  is  not  subject  to  any  private  or  governmental  Lien  or  judicial  or  administrative  notice  or  action  or  inquiry,  investigation  or  claim  relating  to  hazardous,  toxic  and/or dangerous substances, including, Toxic Mold, or any other substances or materials which  are  included  under  or  regulated  by  Environmental  Laws  (collectively,  “Hazardous  Substances”); (iii) to Borrower’s knowledge, except as set forth in the Environmental Report, no  Hazardous Substances are or have been (including the period prior to Borrower’s acquisition of  the  Property),  discharged,  generated,  treated,  disposed  of  or  stored  on,  incorporated  in,  or  removed  or  transported  from  the  Property  other  than  in  compliance  with  all  Environmental  Laws;  (iv)  to  Borrower’s  knowledge, except  as  set  forth  in  the  Environmental  Report, no  Hazardous Substances are present in, on or under any nearby real property which could migrate  to or otherwise affect the Property; (v) no underground storage tanks exist on the Property and  the  Property  has  never  been  used  as  a  landfill;  and  (vi)  there  have  been  no  environmental  investigations, studies, audits, reviews or other analyses conducted by or on behalf of Borrower  which have not been provided to Lender.         4.30  Embargoed  Person.   None  of  the  funds  or  assets  of  any  Guarantor  or  of  Borrower constitute property of, or are beneficially owned directly or, to Borrower’s knowledge,  indirectly, by any Embargoed Person (as hereinafter defined), (b) no Embargoed Person has any  direct  interest,  and  to  Borrower’s  knowledge,  as  of  the  date  hereof,  based  upon  reasonable  inquiry by Borrower, indirect interest, of any nature whatsoever in Borrower or any Guarantor,  as  applicable, with  the result that the investment  in Borrower or any  Guarantor,  as  applicable  (whether  directly  or  indirectly),  is  prohibited  by  any  Legal  Requirement  or  the  Loan  is  in  violation  of  any  Legal  Requirement  and  (c)  neither  Borrower  nor  any  constituent  member  of  Borrower  has  been  previously  indicted  for  or  convicted  of  any  Patriot  Act  Offense,  or  is                                         41  71215191 

 

currently under investigation by any Governmental Authority with respect to any alleged Patriot  Act Offense.         4.31  Anti-Money Laundering.  None of the funds of Borrower, Sole Member or any  Guarantor, as applicable, that are used to consummate this transaction or to operate the Property  are derived from or are the proceeds of any unlawful activity, with the result that the investment  in  Borrower, Sole Member or any Guarantor, as applicable (whether directly or indirectly), is  prohibited  by  law  or  the  Loan  is  in  violation  of  law  or  may  cause  any  of  the  Property  to  be  subject to forfeiture or seizure.  Borrower has ascertained the identity of all persons and entities  who  have  provided  funds  to  capitalize  Borrower  and  has  conducted  verification  procedures  which are sufficient to establish the identity and source of such funds.         4.32  Federal  Reserve  Regulations;  Investment  Company  Act;  Bank  Holding  Company.  No part of the proceeds of the Loan will be used for the purpose of purchasing or  acquiring any “margin stock” within the meaning of Regulation U of the Board of Governors of  the Federal Reserve System or for any other purpose that would be inconsistent with Regulation  U or any other regulation of such Board of Governors, or for any purpose prohibited by Legal  Requirements  or  any  Loan  Document.   Borrower  is  not  (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.  Borrower  is  not  a  “bank  holding company” or a direct or indirect subsidiary of a “bank holding company” as defined in  the Bank Holding Company Act of 1956, as amended, and Regulation Y thereunder of the Board  of Governors of the Federal Reserve System.    All of the representations and warranties in this Article 4 and elsewhere in the Loan Documents  (i) shall survive for so long as any portion of the Debt remains owing to Lender and (ii) shall be  deemed  to  have  been  relied  upon  by  Lender  notwithstanding  any  investigation  heretofore  or  hereafter  made  by  Lender  or  on  its  behalf,  provided,  however,  that  the  representations,  warranties and covenants set forth in Section 4.29 shall survive in perpetuity.   5.    COVENANTS   Until the end of the Term, Borrower hereby covenants and agrees with Lender that:         5.1   Warranty of Title.  Borrower will warrant and defend the title to the Property,  and the validity and priority of all Liens granted or otherwise given to Lender under the Loan  Documents, subject only to Permitted Encumbrances, against the claims of all Persons.           5.2   Existence.  Each of Borrower and Sole Member shall (i) do or cause to be done  all things necessary to preserve, renew and keep in full force and effect its existence, rights, and  franchises;  (ii)  continue  to  engage  in  the  business  presently  conducted  by  it;  (iii)  obtain  and  maintain  all  Licenses  and  all  applicable  governmental  authorizations;  and  (iv)  qualify  to  do  business and remain in good standing under the laws of each jurisdiction, in each case as and to  the extent required for the ownership, maintenance, management and operation of the Property.         5.3   Dissolution.   Borrower  shall  not  (i)  engage  in  any  dissolution,  liquidation  or  consolidation,  division or  merger  with  or  into  any one  or  more other  business  entities or  (ii)                                         42  71215191 

 

cause, permit or suffer Sole Member to dissolve, divide, wind up or liquidate or take any action,  or omit to take any action, as a result of which Sole Member would be dissolved, divided, wound  up or liquidated in whole or in part.         5.4   Change of Name, Identity or Structure.  Borrower shall not change its name,  identity  (including  its  trade  name  or  names)  or  Borrower’s  corporate,  partnership  or  other  structure without notifying Lender of such change in writing at least thirty (30) days prior to the  effective date of such change and, in the case of a change in Borrower’s structure, without first  obtaining the prior written consent of Lender, which consent may be conditioned upon receipt of  opinions of counsel reasonably requested by Lender.  Borrower hereby authorizes Lender to file,  prior  to  or  contemporaneously  with  the  effective  date  of  any  such  change,  any  financing  statement  or  financing  statement  amendment  required  by  Lender  to  establish  or  maintain  the  validity, perfection and priority of the security interest granted herein.  At the request of Lender,  Borrower shall execute a certificate in form satisfactory to Lender listing the trade names under  which Borrower intends to operate the Property, and representing and warranting that Borrower  does business under no other trade name with respect to the Property.  Borrower shall at all times  maintain, preserve and protect all franchises and trade names.         5.5   Principal  Place  of  Business.   Borrower  shall  not  change  its  principal  place  of  business or chief executive office without first giving Lender thirty (30) days’ prior notice.         5.6   Special  Purpose  Bankruptcy  Remote  Entity.   Each  of  Borrower  and  Sole  Member shall at all times be a Special Purpose Bankruptcy Remote Entity.  Neither Borrower  nor Sole Member shall directly or indirectly make any change, amendment or modification to its   organizational documents, or otherwise take any action which could result in Borrower or Sole  Member not  being  a  Special  Purpose  Bankruptcy  Remote  Entity.   A  “Special  Purpose  Bankruptcy Remote Entity” shall have the meaning set forth on Schedule 6 hereto.         5.7   Intentionally Omitted.         5.8   Change in Business or Operation of Property.  Borrower shall not (i) transfer,  lease or sell, in one transaction or any combination of transactions, all or substantially all of the  property or assets of Borrower except to the extent expressly permitted by the Loan Documents  or (ii) make any material change in the scope or nature of its business objectives, purposes or  operations,  or  undertake  or  participate  in  activities  other  than  the  continuance  of  its  present  business or otherwise cease to operate any Individual Property as a retail property or terminate  such  business  for  any  reason  whatsoever  (other  than  temporary  cessation  in  connection  with  renovations to the Property).           5.9   Indebtedness.  Borrower shall not directly or indirectly create, incur or assume  any  indebtedness  other  than  (i)  the  Debt  and  (ii)  unsecured  trade  payables  incurred  in  the  ordinary course of business relating to the ownership and operation of an Individual Property,  which in the case of such unsecured trade payables (A) are not evidenced by a note, (B) do not  exceed, at any time, a maximum aggregate amount of two percent (2%) of the Allocated Loan  Amount  with  respect  to  the applicable  Individual  Property and  (C) are paid  within thirty (30)  days of the date incurred (collectively, “Permitted Indebtedness”).                                          43  71215191 

 

      5.10  Liens.  Without Lender’s prior written consent, Borrower shall not create, incur,  assume, permit or suffer to exist any Lien on all or any portion of the Property or any direct or  indirect legal or beneficial ownership interest in Borrower or Sole Member, except Liens in favor  of  Lender  and Permitted Encumbrances,  unless such  Lien is  bonded, discharged, or otherwise  satisfied in Lender’s sole discretion, within thirty (30) days after Borrower first receives notice  of such Lien.            5.11  Prohibited Transfers.  Borrower shall not directly or indirectly make, suffer or  permit the occurrence of any Transfer other than a Permitted Transfer.  Borrower shall provide  Lender with copies of all organizational documents (if any) relating to any Permitted Transfer.   Borrower  shall  pay  on  demand  all  of  the  reasonable  costs  and  expenses  incurred  by  Lender,  including reasonable attorneys’ fees and expenses in connection with considering any proposed  Transfer, whether or not the same is permitted or occurs.         5.12  Taxes  and  Other  Charges.   Borrower  shall  pay  all  Property  Taxes  and  Other  Charges  as  the  same  become  due  and  payable,  and  deliver  to  Lender  receipts  for  payment  or  other evidence satisfactory to Lender that the Property Taxes and the Other Charges have been  so  paid  no  later  than  thirty  (30)  days  before  they  would  be  delinquent  if  not  paid  (provided,  however,  that  Borrower  need  not  pay  any  Real  Estate  Taxes  nor  furnish  such  receipts  for  payment of Real Estate Taxes paid by Lender pursuant to Section 3.3 hereof).  Borrower shall  promptly  pay  for  all  utility  services  provided  to  the  Property.   After  prior  notice  to  Lender,  Borrower, at its own expense, may contest by appropriate legal proceeding, promptly initiated  and conducted in good faith and with due diligence, the amount or validity or application of any  Property Taxes or Other Charges, provided that (i) no Default or Event of Default has occurred  and is continuing, (ii) such proceeding shall be permitted under and be conducted in accordance  with  all  applicable  statutes,  laws  and  ordinances,  (iii)  such  proceeding  shall  suspend  the  collection of the Property Taxes or such Other Charges, (iv) such proceeding shall be permitted  under  and  be  conducted  in  accordance  with  the  provisions  of  any  other  instrument  to  which  Borrower is subject and shall not constitute a default thereunder, (v) no part of or interest in the  Property will be in danger of being sold, forfeited, terminated, canceled or lost, (vi) Borrower  shall have furnished such security as may be required in the proceeding, or as may be requested  by Lender, to insure the payment of any such Property Taxes or Other Charges, together with all  interest  and  penalties  thereon,  which  shall  not  be  less  than  one  hundred  twenty-five  percent  (125%) of the Property Taxes and Other Charges being contested, (vii) Borrower shall promptly  upon  final  determination  thereof  pay  the  amount  of  such  Property  Taxes  or  Other  Charges,  together with all costs, interest and penalties, (viii) such contest shall not affect the ownership,  use or occupancy of the Property, and (ix) Borrower shall, upon request by Lender, give Lender  prompt  notice  of  the  status  of  such  proceedings  and/or  confirmation  of  the  continuing  satisfaction of the conditions set forth in clauses (i) through (viii) of this Section 5.12.  Lender  may pay over any such security or part thereof held by Lender to the claimant entitled thereto at  any time when, in the judgment of Lender, the entitlement of such claimant is established or the  Property  (or  any  part  thereof  or  interest  therein)  shall  be  in  danger  of  being  sold,  forfeited,  terminated, cancelled or lost or there shall be any danger of the Lien of the Security Instrument  being primed by any related Lien.         5.13  No  Joint Assessment.   Borrower  shall  not  suffer,  permit  or  initiate  the  joint  assessment  of any  Individual Property  (i)  with  any  other  real  property  constituting  a  tax  lot                                         44  71215191 

 

separate  from such  Individual Property,  or  (ii)  with  any  portion  of such  Individual Property  which may be deemed to constitute personal property, or any other procedure whereby the lien of  any  taxes  which  may  be  levied  against  such  personal  property  shall  be  assessed  or  levied  or  charged to such Individual Property.         5.14  Repairs; Maintenance and Compliance; Alterations.               5.14.1 Repairs;  Maintenance  and  Compliance.   Borrower  shall  cause each  Individual Property  to  be  maintained  in  a  good  and  safe  condition  and  repair  and  shall  not  remove, demolish or alter the Improvements or Equipment (except for alterations performed in  accordance  with Section  5.14.2 and  normal  replacement  of  Equipment  with  Equipment of  equivalent value and functionality).  Borrower shall promptly repair, replace or rebuild any part  of the Property that becomes damaged, worn or dilapidated and shall complete and pay for any  Improvements  at  any  time  in  the  process  of  construction  or  repair.   Borrower  shall  promptly  comply with all Legal Requirements and immediately cure any violation of a Legal Requirement.   Borrower shall notify Lender in writing within one Business Day after Borrower first receives  notice of any such non-compliance.                 5.14.2 Alterations.   Borrower  may,  without  Lender’s  consent,  perform  alterations to the Improvements and Equipment which (i) do not constitute a Material Alteration,  (ii) do not adversely affect Borrower’s financial condition or the value or net operating income  of an Individual Property and (iii) are in the ordinary course of Borrower’s business.  Borrower  shall not perform any Material Alteration without Lender’s prior written consent, which consent  shall not be unreasonably withheld or delayed.  In connection with any Material Alteration, (i) at  Lender’s  election,  if  the  aggregate  cost  for  the  Material  Alteration  is  expected  to  exceed  $250,000,  (x) Lender  shall  have  received  and  approved  (which  approval  shall  not  be  unreasonably withheld, conditioned or delayed), any general contractor’s agreement, architect’s  agreement, or engineer’s agreement and the plans and specifications for such work prepared by a  licensed architect or licensed engineer, in such instances where it is customary to have such plans  and specifications prepared by a licensed architect (e.g., work of a structural nature) or licensed  engineer, and (y) Lender shall have approved (which approval, including as to any reasonable list  of  proposed  general  contractors, architects or  engineers submitted by  Borrower,  shall  not  be  unreasonably withheld, conditioned or delayed) the general contractor and architect retained for  such work; (ii) if, in connection with any work the cost of which equals or exceeds $250,000,  Lender has retained a construction consultant (at Borrower’s sole cost and expense) to monitor  the work in question, Lender shall have received a report from such construction consultant that  all of the work completed has been done substantially in compliance with the approved plans and  specifications and applicable Legal Requirements; and (iii) Lender may, as a condition to giving  its consent to a Material Alteration, require that Borrower deliver to Lender security for payment  of the cost of such Material Alteration in an amount equal to one hundred twenty-five percent  (125%)  of  the  cost  of  the  Material  Alteration  as  estimated  by  Lender,  which  amount  shall  periodically  be  disbursed  to  Borrower  during  the  course  of  such  Material  Alteration  in  accordance  with  the  procedures  and  requirements  set  forth  in Section 3.5(b) relating  to  disbursement  of  funds  for  Approved  Capital  Expenses.   Upon  substantial  completion  of  the  Material Alteration, Borrower shall provide evidence satisfactory to Lender that (i) the Material  Alteration was constructed in accordance with applicable Legal Requirements and substantially  in  accordance  with  the  plans  and  specifications  approved  by  Lender,  if  applicable;  (ii)  all                                         45  71215191 

 

contractors,  subcontractors,  materialmen  and  professionals  who  provided  work,  materials  or  services  in  connection  with  the  Material  Alteration  have  been  paid  in  full  and  have  delivered  unconditional releases of lien; and (iii) all material Licenses necessary for the use, operation and  occupancy of the portion of the Property that is the subject of the Material Alteration (other than  those  which  depend  on  the  performance  of  tenant  improvement  work)  have  been  issued.   Borrower  shall  reimburse  Lender  upon  demand  for  all  out-of-pocket  costs  and  expenses  (including  the  reasonable  fees  of  any  architect,  engineer  or other  professional  engaged  by  Lender)  incurred  by  Lender  in  reviewing  plans  and  specifications  or  in  making  any  determinations necessary to implement the provisions of this Section 5.14.2.         5.15  Access to Property.  Subject to the rights of tenants under the Leases and subject  to  the  Operations  Agreements, Borrower  shall  permit  agents,  representatives,  consultants  and  employees  of  Lender  to  inspect  the  Property  or  any  part  thereof  at  reasonable  hours  upon  reasonable advance notice.         5.16  Environmental Matters.               5.16.1 Hazardous Substances.  So long as Borrower owns or is in possession of  the  Property,  Borrower  shall  (i)  keep  the  Property  free  from  Hazardous  Substances  and  in  compliance with all Environmental Laws, (ii) promptly notify Lender if Borrower shall become  aware  that  (A)  any  Hazardous  Substance  is  on  or  near any  Individual Property,  (B) any  Individual Property is in violation of any Environmental Laws or (C) any condition on or near  any Individual Property shall pose a threat to the health, safety or welfare of humans and (iii)  remove such Hazardous Substances and/or cure such violations and/or remove such threats, as  applicable, as required by law (or as shall be required by Lender in the case of removal which is  not  required  by  law,  but  in  response  to  the  opinion of  a  licensed  hydrogeologist,  licensed  environmental  engineer  or  other  qualified  environmental  consulting  firm  engaged  by  Lender  (“Lender’s Consultant”)), promptly after Borrower becomes aware of same, at Borrower’s sole  expense.  Any removal, remediation and/or cure of any violation relating to Toxic Mold shall  include, without limitation, all acts required to clean and disinfect any portions of any Individual  Property  affected  by  Toxic  Mold  and  to  eliminate  the  source(s)  of  Toxic  Mold  in  or  on any  Individual Property,  including,  providing  any  necessary  moisture  control  systems  at any  Individual Property.  Nothing herein shall prevent Borrower from recovering such expenses from  any other party that may be liable for such removal, remediation or cure.               5.16.2 Environmental Monitoring.               (a)   Borrower shall give prompt written notice to Lender of (i) any proceeding  or inquiry by any party (including any Governmental Authority) with respect to the presence of  any Hazardous Substance on, under, from or about any Individual Property, (ii) all claims made  or  threatened  by  any  third  party  (including  any  Governmental  Authority)  against  Borrower  or  any Individual Property or any party occupying any Individual Property relating to any loss or  injury resulting from any Hazardous Substance, and (iii) Borrower’s discovery of any occurrence  or  condition  on  any  real  property  adjoining  or  in  the  vicinity  of any  Individual  Property that  could cause any Individual Property to be subject to any investigation or cleanup pursuant to any  Environmental Law.  Upon becoming aware of the presence of mold or fungus at any Individual  Property, Borrower shall (i) undertake an investigation to identify the source(s) of such mold or                                         46  71215191 

 

fungus  and  shall  develop  and  implement  an  appropriate  remediation  plan  to  eliminate  the  presence of any Toxic Mold, (ii) perform or cause to be performed all acts reasonably necessary  for  the  remediation  of  any  Toxic  Mold  (including  taking  any  action  necessary  to  clean  and  disinfect any portions of any Individual Property affected by Toxic Mold, including providing  any necessary moisture control systems at any Individual Property), and (iii) provide evidence  satisfactory  to  Lender  (in  Lender’s  reasonable  discretion)  of  the  foregoing.   Borrower  shall  permit Lender to join and participate in, as a party if Lender so elects, any legal or administrative  proceedings or other actions initiated with respect to any Individual Property in connection with  any  Environmental  Law  or  Hazardous  Substance,  and  Borrower  shall  pay  all  reasonable  attorneys’ fees and disbursements incurred by Lender in connection therewith.               (b)   Upon  Lender’s reasonable request,  at  any  time  and  from  time  to  time,  Borrower shall provide an inspection or audit of any Individual Property prepared by Lender’s  Consultant, and if Lender in its good faith judgment determines that reasonable cause exists for  the performance of such environmental inspection or audit, then the cost and expense of such  audit  or  inspection  shall  be  paid  by  Borrower.   Such  inspections  and  audit  may  include  soil  borings and ground water monitoring.  If Borrower fails to provide any such inspection or audit  within thirty (30) days after such request, Lender may order same, and, subject to the rights of  tenants under Leases and subject to the Declaration, Borrower hereby grants to Lender and its  employees  and  agents  access  to any  Individual  Property and  a  license  to  undertake  such  inspection or audit.               (c)   If  any  investigation,  site  monitoring,  containment,  cleanup,  removal,  restoration or other work of any kind is reasonably necessary under an applicable Environmental  Law (“Remedial Work”), Borrower shall commence all such Remedial Work within thirty (30)  days after becoming aware of the same (including by way of notice from Lender) and thereafter  diligently prosecute to completion all such Remedial Work within such period of time as may be  required under applicable law).  All Remedial Work shall be performed by licensed contractors  approved in advance by Lender and under the supervision of a consulting engineer approved by  Lender.   All  costs  of  such  Remedial  Work  shall  be  paid  by  Borrower,  including  Lender’s  reasonable  attorneys’  fees  and  disbursements  incurred  in  connection  with  the  monitoring  or  review of such Remedial Work.  If Borrower does not timely commence and diligently prosecute  to  completion  the  Remedial  Work,  Lender  may  (but  shall  not  be  obligated  to)  cause  such  Remedial  Work  to  be  performed  at  Borrower’s  expense.   Notwithstanding  the  foregoing,  Borrower shall not  be required to  commence such Remedial  Work within the above specified  time period:  (x) if prevented from doing so by any Governmental Authority, (y) if commencing  such Remedial Work within such time period would result in Borrower or such Remedial Work  violating any Environmental Law, or (z) if Borrower, at its expense and after prior written notice  to Lender, is contesting by appropriate legal, administrative or other proceedings, conducted in  good faith and with due diligence, the need to perform Remedial Work.  Borrower shall have the  right  to  contest  the  need  to  perform  such  Remedial  Work,  provided  that,  (1)  Borrower  is  permitted by the applicable Environmental  Laws to  delay performance of the Remedial  Work  pending such proceedings, (2) neither the Property nor any part thereof or interest therein will be  in  danger  of  being  sold,  forfeited  or  lost  if  Borrower  fails  to  promptly  perform  the  Remedial  Work  being  contested,  and  if  Borrower  fails  to  prevail  in  such  contest,  Borrower  would  thereafter have the opportunity to perform such Remedial Work, (3) Lender would not, by virtue  of such permitted contest, be exposed to any risk of civil liability for which Borrower has not                                         47  71215191 

 

furnished additional security as provided in clause (4) below, or to any risk of criminal liability,  and neither the Property nor any interest therein would be subject to the imposition of any Lien  for which Borrower has not furnished additional security as provided in clause (4) below, as a  result of the failure to perform such Remedial Work and (4) Borrower shall have furnished to  Lender  additional  security  in  respect  of  the  Remedial  Work  being  contested  and  the  loss  or  damage that may result from Borrower’s failure to prevail in such contest in such amount as may  be requested by Lender in its reasonable discretion but in no event less than one hundred twenty- five  percent  (125%)  of  the  cost  of  such  Remedial  Work  as  estimated  by  Lender  or  Lender’s  Consultant and any loss or damage that may result from Borrower’s failure to prevail in such   contest.               (d)   Borrower  shall  not  install  or  permit  to  be  installed  on any  Individual  Property any underground storage tank.               5.16.3 O  &  M  Program.   In  the  event  any  environmental  report  delivered  to  Lender  in  connection  with  the  Loan  (including  in  connection  with  any  inspection  or  audit  provided pursuant to Section 5.16.2) recommends the development of or continued compliance  with an operation and maintenance program for any Individual Property (including with respect  to  the  presence  of  asbestos  and/or  lead-based  paint)  (“O  &  M  Program”),  Borrower  shall  develop (or continue to comply with, as the case may be) such O & M Program and shall, during  the Term, comply in all material respects with the terms and conditions of the O & M Program.           5.17  Leases.               5.17.1 Material Leases.  Borrower shall not enter into a proposed Material Lease  or a proposed renewal, extension or modification of an existing Material Lease without the prior  written consent of Lender, which consent shall not be unreasonably withheld or delayed.  Prior to  seeking Lender’s consent to any Material Lease, Borrower shall deliver to Lender a copy of such  proposed lease (a “Proposed Material Lease”) blacklined to show changes from the standard  form  of  Lease  approved  by  Lender  and  then  being  used  by  Borrower,  together  with  any  information requested by Lender in its reasonable discretion relating to the proposed tenant and  lease  guarantor  (if  applicable),  including  any  credit  and  background  checks  performed  by  Borrower relating to such tenant and lease guarantor.  Lender shall approve or disapprove each  Proposed Material Lease or proposed renewal, extension or modification of an existing Material  Lease for which Lender’s approval is  required under this Agreement within ten (10) Business  Days  of  the  submission  by  Borrower  to  Lender  of  a  written  request  for  such  approval,  accompanied by a final copy of the Proposed Material Lease or proposed renewal, extension or  modification  of  an  existing  Material  Lease.   If  requested  by  Borrower,  Lender  will  grant  conditional  approvals  of  Proposed  Material  Leases  or  proposed  renewals,  extensions  or  modifications of existing Material Leases at any stage of the leasing process, from initial “term  sheet” through negotiated lease drafts, provided that Lender shall retain the right to disapprove  any such Proposed Material Lease or proposed renewal, extension or modification of an existing  Material  Lease,  if  subsequent  to  any  preliminary  approval,  material  changes  are  made  to  the  terms  previously  approved  by  Lender,  or  additional  material  terms  are  added  that  had  not  previously been considered and approved by Lender in connection with such Proposed Material  Lease or proposed renewal, extension or modification of an existing Material Lease.                                           48  71215191 

 

            5.17.2 Minor Leases.  Provided that no Event of Default is continuing, renewals,  amendments and modifications of existing Leases and proposed leases, shall not be subject to the  prior approval of Lender provided (i) the proposed lease would be a Minor Lease or the existing  Lease as amended or modified or the renewal  Lease is a Minor  Lease, (ii) the proposed lease  shall  be written substantially in  accordance with  the standard form  of  Lease which shall  have  been approved by Lender, (iii) the Lease as amended or modified or the renewal Lease or series  of  leases  or  proposed  lease  or  series  of  leases:   (a)  shall  provide  for  net  effective  rental  rates  comparable to existing local market rates, (b) shall be an arm’s length transaction with a bona  fide,  independent  third-party  tenant,  (c)  shall  provide  that  any  free  rent or  other  rental  concessions  will  be  applied  at  the  commencement  of  the  term  thereof,  (d)  shall  have  a  term  (together with all renewal options) of not less than three (3) years or greater than ten (10) years,  (e)  shall  provide  for  automatic  self-operative  subordination  to  the Security  Instrument and,  at  Lender’s option, (x) attornment to Lender and (y) the unilateral right by Lender, at the option of  Lender, to subordinate the Lien of the Security Instrument to the Lease, and (f) shall not contain  any option to purchase, any right of first refusal to purchase, any right to terminate (except in the  event  of  the  destruction  or  condemnation  of  substantially  all  of  the applicable  Individual  Property),  any  requirement  for  a  non-disturbance  or  recognition  agreement,  or  any  other  provision which might adversely affect the rights of Lender under the Loan Documents in any  material respect.  Borrower shall deliver to Lender copies of all Leases which are entered into  pursuant to the preceding sentence together with Borrower’s certification that it has satisfied all  of the conditions of the preceding sentence within ten (10) days after the execution of the Lease.                 5.17.3 Additional  Covenants  with Respect to  Leases.   Borrower  (i)  shall  observe and perform the material obligations imposed upon the lessor under the Leases and shall  not do or permit anything to be done that would impair the value of the Leases as security for the  Debt; (ii) shall promptly send to Lender copies of all notices of default that Borrower shall send  or  receive  under  any  Lease;  (iii)  shall  enforce,  in  accordance  with  commercially  reasonable  practices for properties similar to the Individual Property in question, the terms, covenants and  conditions in the Leases to be observed or performed by the lessees, short of termination thereof;  (iv)  shall  not  collect  any  of  the  Rents  more  than  one  month  in  advance  (other  than  security  deposits);  (v)  shall  not  execute  any  other  assignment  of  lessor’s  interest  in  the  Leases  or  the  Rents (except as contemplated by the Loan Documents); (vi) shall not  modify any Lease in  a  manner  inconsistent  with  the  Loan  Documents;  (vii)  shall  not  convey  or  transfer  or  suffer  or  permit a conveyance or transfer of the Property so as to effect a merger of the estates and rights  of,  or  a  termination  or  diminution  of  the  obligations  of,  lessees  under  Leases;  (viii)  shall  not  consent  to  any  assignment  of  or  subletting  under  any  Material  Lease  unless  required  in  accordance  with  its terms  without  the  prior  consent  of  Lender,  which,  with  respect  to  a  subletting, shall not be unreasonably withheld or delayed; and (ix) shall not cancel or terminate  any  Lease  or  accept  a  surrender  thereof  (except  in  the  exercise  of  Borrower’s  commercially  reasonable judgment in connection with a tenant default under a Minor Lease) without the prior  consent of Lender, which consent shall not be unreasonably withheld or delayed.  Upon request,  Borrower shall furnish Lender with executed copies of all Leases then in effect.          5.18  Property Management.               5.18.1 Management  Agreement.   Borrower  shall  (i)  cause each  Individual  Property  to  be  managed  pursuant  to  the applicable Management  Agreement;  (ii)  promptly                                         49  71215191 

 

perform and observe all of the covenants required to be performed and observed by it under the  Management Agreement and do all things necessary to preserve and to keep unimpaired its rights  thereunder;  (iii)  promptly  enforce  the  performance  and  observance  of  all  of  the  covenants  required  to  be  performed  and  observed  by  Manager  under  the applicable Management  Agreement;  (iv) promptly  notify  Lender  of  any  default  under  the applicable Management  Agreement  of  which  it  is  aware;  and  (v)  promptly  deliver  to  Lender  a  copy  of  each  financial  statement, business plan, capital expenditure plan, and property improvement plan and any other  notice, report and estimate received by Borrower under the applicable Management Agreement.   Without  Lender’s  prior  written consent,  Borrower  shall  not  (a) surrender,  terminate,  cancel,  extend or renew any Management Agreement or otherwise replace the Manager or enter into any  other management agreement (except pursuant to Section 5.18.2); (b) reduce or consent to the  reduction of the term of any Management Agreement; (c) increase or consent to the increase of  the amount of any  charges  under any Management  Agreement;  (d) otherwise modify, change,  supplement,  alter  or  amend  in  any  material  respect,  or  waive  or  release  any  of  its  rights  and  remedies  under, any Management  Agreement;  or  (e)  suffer  or  permit  the  occurrence  and  continuance of a default beyond any applicable cure period under the Management Agreement  (or any successor management agreement) if such default permits the Manager to terminate the  applicable Management Agreement (or such successor management agreement).               5.18.2 Termination  of  Manager.   If  (i) intentionally  omitted, (ii)  an  Event  of  Default shall be continuing, (iii) Manager is in default under the Management Agreement beyond  applicable  notice  and cure  periods,  (iv)  Manager  shall  become  a  debtor  in  any  bankruptcy  or  insolvency proceeding or (v) upon the gross negligence, malfeasance or willful misconduct of  Manager,  Borrower  shall,  within  thirty  (30)  days  following  request  by  Lender,  terminate  the  Management Agreement and replace Manager with a replacement manager acceptable to Lender  in Lender’s reasonable discretion and, if the Loan is included in a Securitization, the applicable  Rating Agencies, on terms and conditions satisfactory to Lender and, if the Loan is included in a  Securitization,  the  applicable  Rating  Agencies.   Borrower’s  failure  to  appoint  an  acceptable  manager within thirty (30) days after Lender’s request of Borrower to terminate the Management  Agreement shall  constitute an immediate Event of Default.  Borrower  may  from  time to time  appoint a successor manager to manage the Property, which successor manager and Management  Agreement shall be approved in writing by Lender in Lender’s reasonable discretion and, if the  Loan  is  included  in a  Securitization,  the  applicable  Rating  Agencies.   If  at  any  time  Lender  consents  to  the  appointment  of  a  new  manager,  such  new  manager  and  Borrower  shall,  as  a  condition of Lender’s consent, execute a consent and subordination of management agreement  substantially in  the form of the Consent  and Subordination  of Manager of even date herewith  executed and delivered by Manager to Lender.           5.19  Approval  of  Major  Contracts.   Borrower  shall  not,  without  Lender’s  prior  consent: (a) enter into, surrender or terminate any  Major Contract  to  which it is  a party or to  which Borrower or the Property is subject (unless the other party thereto is in material default  and  the  termination  of  such  agreement  would  be  commercially  reasonable),  (b)  increase  or  consent to the increase of the amount of any charges under any Major Contract to which it is a  party or to which Borrower or the Property is subject, except as provided therein or on an arm’s- length basis and commercially reasonable terms; or (c) otherwise modify, change, supplement,  alter or amend, or waive or release any of its rights and remedies under any Major Contract to                                         50  71215191 

 

which it is a party or to which Borrower or the Property is subject in any material respect, except  on an arm’s-length basis and commercially reasonable terms.         5.20  Zoning.  Borrower shall not initiate or consent to any zoning reclassification of  any portion of the Property or seek any variance under any existing zoning ordinance or use or  permit  the  use  of  any  portion  of  the  Property  in  any  manner  that  could result  in  such  use  becoming a non conforming use under any zoning ordinance or any other applicable land use  law, rule or regulation, without the prior consent of Lender.         5.21  Licenses.  Borrower shall not Transfer any License required for the operation of  the Property.         5.22  Compliance  with  Restrictive  Covenants,  Etc.   Borrower  shall  at  all  times  comply in all material respects with all Operations Agreements.  Borrower will not enter into,  modify, waive in any material respect or release any Easements, Operations Agreements or other  Permitted Encumbrances, or suffer, consent to or permit the foregoing, without Lender’s prior  written consent.         5.23  Performance of Other Agreements.  Borrower shall observe and perform each  and  every  term  to  be  observed  or  performed  by  it  pursuant  to  the  terms  of  any  agreement  or  instrument affecting or pertaining to the Property.         5.24  ERISA.               (a)   Neither  Borrower  nor  Guarantor  shall  engage  in  any  transaction  which  would cause any obligation, or action taken or to be taken, hereunder (or the exercise by Lender  or any assignee of any of its rights under the Note, this Agreement or the other Loan Documents)  to be a non-exempt (under a statutory or administrative class exemption) prohibited transaction  under ERISA or Section 4975 of the Code.               (b)   Borrower’s and Guarantor’s covenant in clause (a) above is based on the  assumption  that  no  portion  of   the  assets  used  by  Lender  in  connection  with  the  transactions  contemplated  under  this  Agreement  and  the  other  Loan  Documents  constitutes  assets  of  a  “benefit plan investor” as defined in Section 3(42) of ERISA and with respect to which Borrower  or Guarantor is a party in interest (as defined in Section 3(14) of ERISA) or a disqualified person  (as  defined  in  Section  4975  of  the  Code)  unless  the  conditions  of  an  available  prohibited  transaction exemption are satisfied.               (c)   Neither Borrower nor Guarantor shall maintain, sponsor, contribute to or  become obligated to contribute to, or suffer or permit any ERISA Affiliate to, maintain, sponsor,  contribute to or become obligated to contribute to, any Plan or any Welfare Plan or permit the  assets  of  Borrower  or  Guarantor  to  become  “plan  assets,”  within  the  meaning  of  29  C.F.R.  2510.3-101, as modified in application by Section 3(42) of ERISA.               (d)   Borrower  shall  deliver to  Lender  such  certifications  or  other  evidence  from time to time throughout the Term, as requested by Lender, that:  (i) neither Borrower nor  Guarantor  is  or  maintains  an  “employee  benefit  plan”  as  defined  in  Section  3(3)  of  ERISA,  which is subject to Title I of ERISA, or a “governmental plan” within the meaning of Section                                         51  71215191 

 

3(32)  of  ERISA;  (ii)  neither  Borrower  nor  Guarantor  is  subject  to  state  statutes  regulating  investments  and fiduciary  obligations  with  respect  to  governmental plans;  and (iii) neither the  assets  of  Borrower  nor  Guarantor  constitute  “plan  assets”  within  the  meaning  of  29  C.F.R.  Section 2510.3-101, as modified in application by Section 3(42) of ERISA of any “benefit plan  investor” as defined in Section 3(42) of ERISA.         5.25  Expenses.   Borrower  shall  pay  or,  if  Borrower  fails  to  pay,  reimburse  Lender  upon  receipt  of  notice  from  Lender  for  all  out-of-pocket  costs  and  expenses  (including  reasonable attorneys’ fees and disbursements) incurred by Lender or Servicer in connection with  the Loan,  including  (i)  the  preparation,  negotiation,  execution  and  delivery  of  the  Loan  Documents and the consummation of the transactions contemplated thereby and all the costs of  furnishing all opinions by counsel for Borrower; (ii) Borrower’s ongoing performance under and  compliance with the Loan Documents, including (x) confirming compliance with environmental  and  insurance  requirements,  (y) intentionally  omitted, and  (z)  processing  of  any  request  for  extension of the Term in accordance with Section 2.8 hereof; (iii) the negotiation, preparation,  execution,  delivery  and  administration  of  any  consents,  amendments,  waivers  or  other  modifications of or under any Loan Document and any other documents or matters requested by  Borrower  or  required  of  Borrower  under  the  terms  of  any  Loan  Document;  (iv)  filing  and  recording  of  any  Loan  Documents;  (v)  title  insurance,  surveys,  inspections,  appraisals,  environmental  reports,  Lender’s  Consultant  costs,  engineering  reports,  intangibles  Taxes,  personal property Taxes, due diligence expenses, travel expenses, accounting firm fees; (vi) the  creation, perfection or protection of Lender’s Liens in the Property and the Cash Management  Accounts (including fees and expenses for title and lien searches and mortgage recording taxes);  (vii) enforcing or preserving any rights in response to third party claims or the prosecuting or  defending of any action or proceeding or other litigation, in each case against, under or affecting  Borrower, the Loan Documents, the Property, or any other security given for the Loan; (viii) fees  charged by Servicer or, if a Securitization has occurred, the Rating Agencies in connection with  the Loan or any modification thereof requested by Borrower; (ix) enforcing any obligations of or  collecting any payments due from Borrower under any Loan Document or with respect to the  Property or in  connection with any refinancing or restructuring of the Loan in the nature of a  “work-out”, or any insolvency or bankruptcy proceedings and (x) the fees and expenses of any  special  servicer  retained  in  respect  of  the  Loan.   Any  costs  and  expenses  due  and  payable  to  Lender hereunder which are not  paid  by  Borrower within ten days  after  demand may  be paid  from any amounts in the Deposit Account, with notice thereof to Borrower.  The obligations and  liabilities of Borrower under this Section 5.25 shall survive the Term and the exercise by Lender  of  any  of  its  rights  or  remedies  under  the  Loan  Documents,  including  the  acquisition  of  the  Property by foreclosure or a conveyance in lieu of foreclosure.         5.26  Indemnity.     (a)   Borrower  shall  defend,  indemnify  and  hold  harmless  Lender  (and  for  purposes  of  this  Section 5.26, Lender shall include PFP, its Affiliates, successors and assigns, and their respective  officers  and  directors)  and  each of  its  Affiliates  and  their  respective  successors  and  assigns,  including  the  directors,  officers,  partners,  members,  shareholders,  participants,  employees,  professionals and agents of any of the foregoing (including any Servicer) and each other Person,  if any,  who  Controls  Lender,  its  Affiliates  or  any  of  the  foregoing  (each,  an  “Indemnified  Party”), from and against any and all liabilities, obligations, losses, damages, penalties, actions,                                         52  71215191 

 

judgments,  suits,  claims,  costs,  expenses  and  disbursements  of  any kind  or  nature  whatsoever  (including  the  reasonable  fees  and  disbursements  of  counsel  for  an  Indemnified  Party  in  connection  with  any  investigative,  administrative  or  judicial  proceeding  commenced  or  threatened, whether or not Lender shall be designated a party thereto, court costs and costs of  appeal  at  all  appellate  levels,  investigation  and  laboratory  fees,  consultant  fees  and  litigation  expenses),  that  may  be  imposed  on,  incurred  by,  or  asserted  against  any  Indemnified  Party  (collectively, the “Indemnified Liabilities”) in any manner, relating to or arising out of or by  reason of the Property (or any part thereof), the Loan, the Loan Documents or any of the rights  and  remedies  granted  to  Lender  under  the  Loan  Documents,  including:   (i)  any  breach  by  Borrower of its obligations under, or any misrepresentation by Borrower contained in, any Loan  Document;  (ii)  the  use  or  intended  use  of  the  proceeds  of  the  Loan;  (iii)  any  information  provided  by  or  on  behalf  of  Borrower,  or  contained  in  any  documentation  approved  by  Borrower;  (iv)  ownership  of  the Security  Instrument,  the  Property  or  any  interest  therein,  or  receipt  of  any  Rents;  (v)  any  accident,  injury  to  or  death  of  persons  or  loss  of  or  damage  to  property occurring in,  on or about  the Property  or on the adjoining sidewalks,  curbs,  adjacent  property or adjacent parking areas, streets or ways; (vi) any use, nonuse or condition in, on or  about the Property or on adjoining sidewalks, curbs, adjacent property or adjacent parking areas,  streets or ways; (vii) performance of any labor or services or the furnishing of any materials or  other property in respect of the Property; (viii) the presence, disposal, escape, seepage, leakage,  spillage, discharge, emission, release, or threatened release of any Hazardous Substance on, from  or affecting the Property; (ix) any personal injury (including wrongful death) or property damage  (real or personal) arising out of or related to such Hazardous Substance; (x) any lawsuit brought  or threatened, settlement reached, or governmental order relating to such Hazardous Substance;  (xi) any violation of the Environmental Laws which is based upon or in any way related to such  Hazardous Substance, including the costs and expenses of any Remedial Work; (xii) any failure  of Borrower or the Property to comply with any Legal Requirement; (xiii) any claim by brokers,  finders or similar persons claiming to be entitled to a commission in connection with any Lease  or other transaction involving the Property or any part thereof, or any liability asserted against  Lender with respect thereto; and (xiv) the claims of any lessee of any portion of the Property or  any Person acting through or under any lessee or otherwise arising under or as a consequence of  any Lease; provided, however, that Borrower shall not have any obligation to any Indemnified  Party  hereunder  to  the  extent  that  it  is  finally  judicially  determined  that  such  Indemnified  Liabilities arise from the gross negligence, illegal acts, fraud, bad faith or willful misconduct of  such  Indemnified  Party.   Any  amounts  payable  to  any  Indemnified  Party  by  reason  of  the  application of this paragraph shall be payable within ten (10) days after demand and shall bear  interest at the Default Rate from the date loss or damage is sustained by any Indemnified Party  until paid.  The obligations and liabilities of Borrower under this Section 5.26 shall survive the  Term,  the  exercise  by  Lender  of  any  of  its  rights  or  remedies  under  the  Loan  Documents,  including the acquisition of any portion of the Property by foreclosure or a conveyance in lieu of  foreclosure and the termination of the Loan Documents.   (b)   Unless  an  Event  of  Default  shall  have  occurred  and  be  continuing,  Borrower  shall  be  entitled to assume the defense of any action for which indemnification is sought hereunder with  counsel of its choice at its expense (in which case Borrower shall not thereafter be responsible  for the fees and expenses of any separate counsel retained by an Indemnified Party except as set  forth below); provided, however, that such counsel shall be subject to the reasonable approval of  each such Indemnified Party. Notwithstanding Borrower’s election to assume the defense of such                                         53  71215191 

 

action, each Indemnified Party shall have the right to employ separate counsel and to participate  in the defense of such action, and Borrower shall bear the reasonable fees, costs and expenses of  such separate counsel, if (i) the use of counsel chosen by Borrower to represent such Indemnified  Party would present such counsel with a conflict of interest; (ii) the actual or potential defendants  in, or targets of, any such action include both Borrower and such Indemnified Party and such  Indemnified Party  shall have reasonably concluded that there may be legal defenses available to  it that are different from or additional to those available to Borrower (in which case Borrower  shall not have the right to assume the defense or such action on behalf of such Indemnified Party  ); (iii) Borrower shall not  have employed counsel  reasonably satisfactory  to  such Indemnified  Party  to represent it within a reasonable time after notice of the institution of such action; or (iv)  Borrower  shall  authorize  in  writing  such Indemnified  Party to  employ  separate  counsel  at  Borrower’s expense. Borrower will not be liable under this Agreement for any amount paid by  an Indemnified  Party to  settle  any  claims  or  actions  if  the settlement  is  entered  into  without  Borrower’s  consent,  which  consent  may  not  be  withheld  or delayed  unless  such  settlement  is  unreasonable  in  light  of  such  claims or  actions  against,  and defenses  available  to,  such  Indemnified Party. Notwithstanding the foregoing, in the event an Indemnified Party releases the  Borrower from its indemnification obligations hereunder, such Indemnified Party  may assume  the defense of any such action with respect to itself.          5.27  Cooperate in Legal  Proceedings.  Borrower shall cooperate  fully  with  Lender  with respect to, and permit Lender, at its option, to participate in, any proceedings before any  Governmental  Authority  which  may  in  any way  affect  the  rights  of  Lender  under  any  Loan  Document.         5.28  Further  Assurances.   Borrower  shall,  at  Borrower’s  sole  cost and  expense,  (i) execute  and  deliver  to  Lender  such  documents,  instruments,  certificates,  assignments  and  other writings, and do such other acts necessary or desirable, to evidence, preserve and/or protect  the collateral at any time securing or intended to secure the Debt and/or for the better and more  effective carrying out of the intents and purposes of the Loan Documents, as Lender may require  in its reasonable discretion from time to time; (ii) provide all such information as Lender may  require in its reasonable discretion to ensure Borrower’s ongoing compliance with Sections 5.11,  5.29 and 5.30,  including  ensuring  compliance  with  all  “know  your  customer”  procedures  as  Lender may from time-to-time institute with respect to loans that are of a similar size and nature  as the Loan; and (iii) upon Lender’s request therefor given from time to time after the occurrence  of any Default or Event of Default pay for (a) reports of UCC, federal tax lien, state tax lien,  judgment  and  pending  litigation  searches  with  respect  to  Borrower  and  Sole  Member  and  (b)  searches of title to the Property, each such search to be conducted by search firms designated by  Lender in each of the locations designated by Lender.         5.29  Patriot  Act;  Embargoed  Person.   (a)   Borrower  will  use  its  good  faith  and  commercially reasonable efforts to comply with the Patriot Act and all applicable requirements  of Governmental Authorities having jurisdiction  over  Borrower  and/or the Property, including  those relating to money laundering and terrorism.  Lender shall have the right, from time-to-time,  to  audit  Borrower’s  compliance  with  the  Patriot  Act  and  all  applicable  requirements  of  Governmental Authorities having jurisdiction over Borrower and/or the Property, including those  relating to money laundering and terrorism.  In the event that Borrower fails to comply with the  Patriot  Act  or  any  such  requirements  of  Governmental  Authorities,  then  Lender  may,  at  its                                         54  71215191 

 

option,  cause  Borrower  to  comply  therewith  and  any  and  all  reasonable  costs  and  expenses  incurred by Lender in connection therewith shall be secured by the Security Instrument and the  other Loan Documents and shall be immediately due and payable.                 (b)   At  all  times  throughout  the  Term,  including  after  giving  effect  to  any  Transfers permitted pursuant to the Loan Documents, (i) none of the funds or assets of Borrower,  Sole Member or Guarantor, whether or not used to repay the Loan, shall constitute property of,  or  shall  be  beneficially  owned  directly  or,  to  Borrower’s  best  knowledge,  indirectly,  by  any  person, entity or government subject to sanctions or trade restrictions under United States law  (“Embargoed  Person”  or  “Embargoed  Persons”)  that  are  identified  on  (A)  the  “List  of  Specially  Designated  Nationals  and  Blocked  Persons”  maintained  by  the  Office  of  Foreign  Assets  Control  (“OFAC”),  U.S.  Department  of  the  Treasury’s  FINCEN  list,  and/or  to  Borrower’s best knowledge, as of the date thereof, based upon reasonable inquiry by Borrower,  on any other similar list maintained by OFAC or FINCEN pursuant to any authorizing statute  including, 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 Order or regulation  promulgated  thereunder,  with  the  result  that  the  investment  in  Borrower,  Sole  Member  or  Guarantor, as applicable (whether directly or indirectly), is prohibited by law, or the Loan made  by  Lender would be in  violation of law, or (B)  Executive Order 13224  (September 23, 2001)  issued  by  the  President  of  the  United  States  (“Executive  Order  Blocking  Property  and  Prohibiting  Transactions  with  Persons  Who  Commit,  Threaten  to  Commit,  or  Support  Terrorism”), any related enabling legislation or any other similar Executive Orders, and (ii) no  Embargoed  Person  shall  have  any  direct  interest  or,  to  Borrower’s  best  knowledge,  indirect  interest, of any nature whatsoever in Borrower, Sole Member or Guarantor, as applicable, with  the result that the investment in Borrower, Sole Member or Guarantor, as applicable (whether  directly or indirectly), is prohibited by law or the Loan is in violation of law.               (c)   At  all  times  throughout  the  Term,  none  of  any  of  the Borrower,  Sole  Member or Guarantor, nor any Person controlling, controlled by or under common control with  any of Borrower, Sole Member or Guarantor, nor any Person having a beneficial interest in, or  for  whom  any  of  the  Borrower,  Sole  Member  or  Guarantor is  acting  as  agent  or  nominee  in  connection with the investment, is (a) a Person named on an OFAC or FINCEN list; (b) a Person  resident  in,  or  organized  or  chartered  under  the  laws  of  a  jurisdiction  identified  as  non- cooperative by the Financial Action Task Force (“FATF”); or (c) a Person whose funds originate  from or will be routed through an account maintained at a foreign shell bank or “offshore bank”.               (d)   None  of  the  Borrower,  Sole  Member  or  Guarantor,  nor  any  Person  controlling,  controlled  by  or  under common  control  with  Borrower  or  Guarantor  is  a  “senior  political  figure” or an “immediate family” member or “close associate” (as  all such terms  are  defined below) of a senior foreign political figure within the meaning of the USA PATRIOT Act  (i.e.,  the  Uniting  and  Strengthening  America  by  Providing  Appropriate  Tools  Required  to  Intercept  and  Obstruct  Terrorism  Act  of  2001,  H.R.  3162,  Public  Law  107-56,  as  may  be  amended).  For the purposes of this subsection (d), (i) “senior foreign political figure” means a  senior  official  in  the  executive,  legislative,  administrative,  military  or  judicial  branches  of  a  foreign government (whether elected or not), a senior official of a major foreign political party or  a senior executive of a foreign government-owned corporation, and such term also includes any  corporation,  business  or  other  entity  that  has  been  formed  by,  or  for  the  benefit  of,  a  senior                                         55  71215191 

 

political figure, (ii) “immediate family” of a senior foreign political figure includes the figure’s  parents,  siblings, spouse,  children  and  in-laws,  and  (iii)  “close  associate”  of  a  senior  foreign  political figure means a person who is widely and publicly known to maintain an unusually close  relationship with the senior foreign political figure, and includes a person who is in a position to  conduct  substantial  domestic  and  international  financial  transactions  on  behalf  of  the  senior  foreign political figure.               (e)   Guarantor is a publicly traded company.  Accordingly, for the purpose of  all statements and representations in this Section 5.29 and Section 5.30 below, as to the owners  of Guarantor or the holders of beneficial interests in Guarantor, are made solely to Borrower’s  knowledge  based  on  the  results  of  the  compliance  review  outsourced  to Phoenix  American  Financial  Services,  Inc., using  Guarantor’s  shareholder  list,  in  accordance  with  Guarantor’s  ordinary course of business.         5.30  Anti-Money  Laundering.   At  all  times  throughout  the  Term,  including  after  giving effect to any Transfers permitted pursuant to the Loan Documents, none of the funds of  Borrower, Sole Member or to Borrower’s knowledge, Guarantor, as applicable, that are used to  consummate this transaction or to repay the Loan shall be derived from or are the proceeds of  any  unlawful  activity,  with  the  result  that  the  investment  in  Borrower,  Sole  Member  or  any  Guarantor, as applicable (whether directly or indirectly), is prohibited by law or the Loan is in  violation of law or may cause any of the Property to be subject to forfeiture or seizure.  Borrower  has  ascertained  the  identity  of  all  persons  and  entities  who  have  provided  funds  to  capitalize  Borrower and has conducted verification procedures which are sufficient to establish the identity  and source of such funds.         5.31  Condominium Regime.                 (a)   Borrower  shall  comply  with all  terms  conditions  and  covenants in  the  Declaration and the Rules.               (b)   Borrower  shall  not,  without  Lender’s  prior  written  consent,  modify,  amend, supplement or in any other manner change the terms, conditions and covenants of the  Declaration or the Rules which affect, alter or impair the lien of the Security Instrument or the  security therefor or which materially increase the obligations or diminishes the rights of Lender,  nor waive or consent to the waiver of any enforcement of the provisions thereof with respect to  another unit owner.               (c)   Borrower shall promptly deliver to Lender a true and full copy of each and  every notice of default or notice requiring the performance of any act by Borrower received by  Borrower with respect to any obligation of Borrower under the provisions of the Declaration or  the Rules.               (d)   Borrower  shall  not,  except  with  the  prior  written  consent  of  Lender  (i)  institute any  action or proceeding for partition of the Property;  (ii) vote  for or consent  to  any  modification  of,  amendment  to  or  relaxation  in  the  enforcement  of  any  provision  of  the  Declaration or the Rules which affects, alters or impairs the lien of the Security Instrument or the  security  therefor,  or  which  materially  increases  the  obligations  or  diminishes  the  rights  of                                         56  71215191 

 

Lender;  (iii) in  the event  of damage to or destruction of the Property, vote in  opposition to  a  motion to repair, restore, or rebuild.               (e)   In each and every case in which, under the provisions of the Declaration or  the Rules, the consent or the vote of the owners of Units (as defined in the 8 Octavia Declaration,  400  Grove  Declaration,  450  Hayes  Declaration  and  388  Fulton  Declaration) or Parcels (as  defined  in  the Fulton  Shops Declaration)  is  required,  Borrower  shall  not  vote  or  give  such  consent so as to impair the lien of the Security Instrument or the security therefor without, in  each and every case, the prior written consent of Lender.               (f)   Borrower  shall  promptly  pay,  as  the  same  become  due  and  payable,  all  common charges or other payments for maintenance and reserve funds and all assessments  as  required by the Declaration or the Rules or any resolutions adopted pursuant thereto, and shall  promptly  upon  demand  exhibit  to  Lender  receipts  for  all  such  payments.   In  the  event  that  Borrower fails to make such payments as the same become due and payable, Lender may from  time to time at its option, but without any obligation to do so and without notice to or demand  upon Borrower, make such payments, and the same shall be added to the Debt and shall bear  interest until repaid at the Default Rate; provided, however, that the failure of Borrower to make  any such payment to the maintenance fund or to exhibit such receipts shall, at the election of  Lender constitute an Event of Default hereunder.               (g)   In the event of the failure of Borrower to perform any of its obligations  relating  to  the  Property  under  the  Declaration  or  Rules within  the  period  provided  in  the  Declaration or the Rules, or absent such cure period, within a period of ten (10) days after notice  from the Lender, or in the case of any such default which cannot with due diligence be cured or  remedied within such period, if Borrower fails to proceed promptly after such notice to cure or  remedy the same with due diligence, then in any such case, Lender may from time to time at its  option,  but  without  any  obligation  so  to  do,  cure  or  remedy  any  such  default  of  Borrower  (Borrower hereby authorizing Lender to enter upon the Property as may be necessary for such  purposes),  and  all  sums  expended  by  Lender  for  such  purposes,  including  reasonable  counsel  fees, shall be added to the Debt and shall become due and payable and shall bear interest until  repaid at the Default Rate; provided, however, that the failure of Borrower to keep or perform the  obligations set forth in any such notice, or, in the case in which such obligations cannot be kept  or performed within the applicable cure period, and provided that Borrower has commenced to  cure  such  default  and  is  diligently  pursuing  same  to  completion,  such  additional  time  as  is  needed to so complete, shall, at the election of Lender, constitute an Event of Default.               (h)   Upon the occurrence and continuation of an Event of Default hereunder,  Lender  may  by  notice  to  Borrower  require  the  resignation  of  Borrower’s  designees  and  the  appointment in lieu thereof of Lender’s designees as members of the Association (as defined in  the  8  Octavia  Declaration,  400  Grove Declaration,  450  Hayes  Declaration  and  388  Fulton  Declaration) or Committee (as defined in the Fulton Shops Declaration) that may be appurtenant  to the Property.                                          57  71215191 

 

6.    NOTICES AND REPORTING         6.1   Notices.   All  notices,  consents,  approvals  and  requests  required  or  permitted  hereunder or under any other Loan Document (a “Notice”) shall be given in writing and shall be  effective for all purposes if either hand delivered with receipt acknowledged, or by a nationally  recognized  overnight  delivery  service  (such  as  Federal  Express),  or  by  certified  or  registered  United States mail, return receipt requested, postage prepaid, or by facsimile and confirmed by  facsimile answer back, in each case addressed as follows (or to such other address or Person as a  party shall designate from time to time by written notice to the other party):           If to Lender:                      PFP Holding Company VI, LLC                    c/o Prime Finance Partners                    233 North Michigan, Suite 1915                    Chicago, IL 60601                    Attention:  Steve Gerstung                    Facsimile No. (312) 276-9649               with a copy to:                      POLSINELLI                    900 West 48th Place, Suite 900                    Kansas City, MO 64112                    Attention:  Dan Flanigan                    Facsimile No. (816) 753-1536         If to Borrower:                      Strategic Realty Trust, Inc.                    c/o SRT Advisor                    400 Concar Drive, Third Floor                    San Mateo, CA 94402                    Attention: G. Lee Burns, Jr.                    Facsimile No.: (650) 343-9690               with a copy to:                      Strategic Realty Trust, Inc.                    c/o SRT Advisor                    400 Concar Drive, Third Floor                    San Mateo, CA 94402                    Attention: M. Bradley Kettmann                    Facsimile No.: (650) 343-9690   A  notice  shall  be  deemed  to  have  been  given:   in  the case  of  hand  delivery,  at  the  time  of  delivery; in the case of registered or certified mail, when delivered or the first attempted delivery                                         58  71215191 

 

on  a  Business  Day;  in  the  case  of  overnight  delivery,  upon  the  first  attempted  delivery  on  a  Business Day; or in the case of facsimile, upon the confirmation of such facsimile transmission.         6.2   Borrower Notices and Deliveries.  Borrower shall (a) give prompt written notice  to Lender of:  (i) any litigation, governmental proceedings or claims or investigations pending or  threatened against any Borrower or Sole Member which might materially adversely affect any  Borrower’s  or  Sole  Member’s  condition  (financial  or  otherwise)  or  business  or an  Individual  Property; (ii) any material adverse change in Borrower’s or Sole Member’s condition, financial  or otherwise, or of the  occurrence of any Default or Event  of Default of which Borrower has  knowledge; and (b) furnish and provide to Lender:  (i) any Securities and Exchange Commission  or other public filings, if any, of any Borrower, Sole Member, Manager, or any Affiliate of any  of  the  foregoing  within three (3)  Business  Days  of  such  filing  and  (ii)  all  instruments,  documents,  boundary  surveys,  footing  or  foundation  surveys,  certificates,  plans  and  specifications, appraisals, title and other insurance reports and agreements, requested, from time  to time, by Lender in its reasonable discretion.           6.3   Financial Reporting.               6.3.1 Bookkeeping.   Borrower  shall  keep  on  a  calendar  year  basis,  in  accordance with  GAAP, proper  and accurate books,  records and accounts  reflecting  all of the  financial affairs of Borrower and all items of income and expense and any services, Equipment  or furnishings provided in connection with the operation of the Property, whether such income or  expense is realized by Borrower, Manager or any Affiliate of Borrower.  Lender shall have the  right from time to time during normal business hours upon reasonable notice to examine such  books, records and accounts at the office of Borrower or other Person maintaining them, and to  make such copies or extracts thereof as Lender shall desire.  After an Event of Default, Borrower  shall pay any costs incurred by Lender to examine such books, records and accounts, as Lender  shall determine to be necessary or appropriate in the protection of Lender’s interest.               6.3.2 Annual  Reports.   Borrower shall furnish  to  Lender annually, (i) within  forty-five  (45)  days  after  each  calendar  year,  unaudited  financial  statements  of  Borrower,  prepared by an authorized representative of Borrower in accordance with GAAP and containing  balance sheets and statements of profit and loss for Borrower and each Individual Property in  such  detail  as  Lender  may  request.   Each  such  statement  (x)  shall  be  in  form  and  substance  satisfactory to Lender, (y) shall set forth the financial condition and the income and expenses for  each  Individual Property (on  a  combined  basis) for  the  immediately  preceding  calendar  year,  including  statements  of  annual  net  operating  income  and  (z)  shall  be  accompanied  by  an  Officer’s  Certificate  certifying  that  such  statement  is  true,  correct,  complete  and  accurate  and  presents fairly the financial condition of the Property and has been prepared in accordance with  GAAP; and (ii) copies of the financial reports required of Guarantor under the Guaranty.               6.3.3 Monthly/Quarterly  Reports.   Borrower  shall  furnish  to  Lender  within  twenty (20) days after the end of each calendar month or calendar quarter (as indicated below)  the  following  items:   (i)  monthly  and  year-to-date  operating  statements,  noting  net  operating  income  and  other  information  necessary  and  sufficient  under  GAAP  to  fairly  represent  the  financial position and results of operation of the Property during such calendar month, all in form  satisfactory  to  Lender;  (ii)  a  balance  sheet  for  such  calendar  month; (iii)  a  comparison  of  the                                         59  71215191 

 

budgeted income and expenses and the actual income and expenses for each month and year-to- date for the Property, together with a detailed explanation of any variances of at least (A) ten  thousand dollars ($10,000), or (B) ten percent (10%), whichever is lower, between budgeted and  actual amounts for such period and year-to-date; (iv) a statement of the actual Capital Expenses  made by Borrower during each calendar quarter as of the last day of such calendar quarter; (v) a  statement that Borrower has not incurred any indebtedness other than Permitted Indebtedness;  (vi) an aged receivables report and (vii) rent rolls identifying the leased premises, names of all  tenants,  units  leased,  monthly  rental  and  all  other  charges  payable  under  each  Lease,  date  to  which  paid,  term  of  Lease,  date  of  occupancy,  date  of  expiration,  material  special  provisions,  concessions  or  inducements  granted  to  tenants,  and  a  year-by-year  schedule  showing  by  percentage the rentable area of the Improvements and the total base rent attributable to Leases  expiring each year) and a delinquency report for the Property and (viii) a leasing activity report  for the calendar month.  Each such statement shall be accompanied by an Officer’s Certificate  certifying  (1)  that such  items  are  true,  correct,  accurate,  and  complete  and  fairly  present  the  financial condition and results of the operations of Borrower and the Property in accordance with  GAAP (subject to normal year-end adjustments), (2) whether there exists a Default or Event of  Default, and if so, the nature thereof, the period of time it has existed and the action then being  taken to remedy it and (3) that as of the date of such Officer’s Certificate, no litigation exists  involving Borrower or the Property in which the amount involved is $250,000 (in the aggregate)  or more or in which all or substantially all of the potential liability is not covered by insurance,  or,  if  so,  specifying  such  litigation  and  the  actions  being  taking  in  relation  thereto.   Such  financial statements shall contain such other information as shall be requested by Lender in its  reasonable discretion for purposes of calculations to be made by Lender pursuant to the terms  hereof.               6.3.4 Other  Reports.   Borrower  shall  furnish  to  Lender,  within  ten  (10)  Business Days after request, such further detailed information with respect to the operation of the  Property and the financial affairs of Borrower, Sole Member or Manager as may be requested by  Lender in its reasonable discretion or any applicable Rating Agency.               6.3.5 Annual Budget.                 (a)   Borrower shall prepare and submit (or shall cause Manager to prepare and  submit) to Lender, for approval by Lender (which approval shall not be unreasonably withheld),  by  November  15th  of  each  year  during  the  Term  (i)  a  proposed pro  forma  operating  expense  budget for each Individual Property for the succeeding calendar year showing, on a month-by- month basis, in reasonable detail, each line item of Borrower’s anticipated operating income and  operating  expenses  (on  a  cash  and  accrual  basis),  including  amounts  required  to  establish,  maintain  and/or  increase  any  monthly  payments  required  hereunder  and  (ii)  promptly  after  preparation  thereof,  any  revisions  to  such  annual  operating  budget.   Each  annual  operating  budget submitted by Borrower and approved by Lender is referred to herein as the “Approved  Operating Budget”.  Until such time that any annual operating budget has been approved by  Lender, the prior Approved Operating Budget shall apply for all purposes hereunder (with such  adjustments  as  determined  by  Lender  in  its  reasonable  discretion  (including  increases  for  any  non-discretionary expenses)).                                          60  71215191 

 

            (b)   Borrower shall prepare and submit (or shall cause Manager to prepare and  submit) to Lender, for approval by Lender (which approval shall not be unreasonably withheld),  by  November  15th  of  each  year  during  the  Term,  (i)  a  proposed  pro  forma  capital  expense  budget for each Individual Property for the succeeding calendar year showing, on a month-by- month  basis,  in  reasonable  detail,  each line  item  of  anticipated  Capital  Expenses  and  (ii) promptly after preparation thereof, any revisions to such annual capital budget.  Each annual  capital  budget submitted  by  Borrower  and  approved  by  Lender  is  referred  to  herein  as  the  “Approved Capital Budget”.                 6.3.6 Breach.   If  Borrower  fails  to  provide  to  Lender  any  of  the  financial  statements,  certificates,  reports  or  information  (the  “Required  Records”)  required  by  this  Article 6 within fifteen (15) days after the date upon which such Required Record is due, and  such  failure  shall  continue  for  a  period  of  fifteen  (15)  days  following  Borrower’s  receipt  of  notice  of  such  failure,  Borrower  shall  pay  to  Lender  an  amount  equal  to  $1,500.00 for  each  Required Record that is not delivered within such additional (15) day period.  In addition, fifteen  (15) days after Borrower’s failure to deliver any Required Records, Lender shall have the option,  upon fifteen (15) days’ notice to Borrower to gain access to Borrower’s books and records and  prepare  or  have  prepared  at  Borrower’s  expense,  any  Required  Records  not  delivered  by  Borrower.                6.3.7 Intentionally Omitted.           6.4   Estoppel Statements.                 (a)   After  request  by  Lender,  Borrower  shall  within  ten (10) days  furnish  Lender with a statement addressed to Lender, its successors and assigns, duly acknowledged and  certified, setting forth (i) the unpaid Principal, (ii) the Interest Rate, (iii) the date installments of  interest and/or Principal were last paid, (iv) any offsets or defenses to the payment of the Debt,  (v)  whether there exists a Default or Event of Default, and (vi) that the Loan Documents are  valid, legal and binding obligations and have not been modified or if modified, giving particulars  of such modification.                (b)   After request by Lender (but no more frequently than twice in any year),  Borrower shall furnish to Lender (x) within ten (10) Business Days,  a certificate addressed to  Lender, its successors and assigns reaffirming (to the extent still applicable) all representations  and warranties of Borrower set forth in the Loan Documents as of the date requested by Lender  or,  to  the  extent  of  any  changes  to  any  such  representations  and  warranties,  so  stating  such  changes, and (y) shall use commercially reasonable efforts to deliver to Lender within thirty (30)  days,  tenant  estoppel  certificates  addressed  to  Lender,  its  successors  and  assigns  from  each  tenant at the Property in form and substance satisfactory to Lender in its reasonable discretion.                (c)   Borrower shall deliver to Lender, upon request, estoppel certificates from  each party under any Operations Agreement, in form and substance satisfactory to Lender in its  reasonable discretion.                                           61  71215191 

 

7.    INSURANCE; CASUALTY; AND CONDEMNATION         7.1   Insurance.               7.1.1 Coverage.  Borrower, at its sole cost, for the mutual benefit of Borrower  and Lender, shall obtain and maintain, or cause to be maintained, during the Term the following  policies of insurance:               (a)   Property insurance insuring against loss or damage customarily included  under  so  called  “all  risk”  or  “special  form”  policies  including  fire,  lightning,  flood  (if  applicable), earthquake (if applicable), windstorm/hail, vandalism, and malicious mischief, boiler  and machinery and, if available, coverage for damage or destruction caused by “War” and the  acts  of  “Terrorists”  both  foreign  and  domestic  (or  such  policies  shall  have  no  exclusion  from  coverage  with  respect  thereto)  and  such  other  insurable  hazards  as,  under  good  insurance  practices, from time to time are insured against for other property and buildings similar to the  premises in nature, use, location, height, and type of construction.  Such insurance policy shall  also provide coverage for Ordinance or Law, coverage for loss to the undamaged portion of the  Improvements,  demolition  and  increased  cost  of  construction  (which  insurance  for  demolition  and increased cost of construction may contain a sub-limit satisfactory to Lender).  Each such  insurance  policy  shall  (i)  be  in  an  amount  equal  to  one  hundred  percent  (100%)  of the  then  replacement  cost  of  the  Improvements  without  deduction  for  physical  depreciation,  (ii)  have  deductibles  no  greater  than  $10,000  per  occurrence,  (iii)  be  paid  annually  in  advance, (iv)  be  written on a replacement cost basis and (v) contain either no coinsurance or, if coinsurance, an  agreed  amount  endorsement,  and  shall  cover,  without  limitation,  all  tenant  improvements  and  betterments that Borrower is required to insure on a replacement cost basis.                (b)   Flood insurance if any part of the improvements located on an Individual  Property  are  located  in  an  area  now  or  hereafter  designated  by  the  Federal  Emergency  Management Agency as a Zone “A” & “V” Special Hazard Area, or such other Special Hazard  Area if Lender so requires in its sole discretion.  Such policy shall (i) be in an amount equal to  (A) 100% of the full replacement cost of the Improvements on the applicable Individual Property  (without any deduction for depreciation) or (B) such other amount as agreed to by Lender and  (ii)  have  a  maximum  permissible  deductible  of  $5,000  per  building  for  residential  properties,  $10,000 per building for commercial properties.               (c)   Public  liability  insurance,  to  be  written  on  an  occurrence  basis  with  no  deductible or self-insured retention on the general liability, including (i) “Commercial General  Liability Insurance” including foreign and domestic terrorism, (ii) “Owned”, “Hired” and “Non  Owned Auto Liability”; and (iii) umbrella liability coverage for personal injury, bodily injury,  death,  accident  and  property  damage,  such  insurance  providing  general  liability  and  excess  liability/umbrella in  combination  no less than $21,000,000 per occurrence and $22,000,000 in  the  annual  aggregate  on  per  location  basis.  If  the  aggregate  limit  applying  to  the Property is  reduced by the payment of a claim or establishment of a reserve equal to or greater than fifty  percent  (50%)  of  the  annual  aggregate,  Borrower  shall  immediately  arrange  to  have  the  aggregate limit restored by endorsement to the existing policy or the purchase of an additional  insurance  policy  unless,  in  Lender's  reasonable  judgment,  Borrower  maintains  sufficient  concurrent excess liability insurance to satisfy the liability requirements of this Loan Document                                         62  71215191 

 

without  the  reinstatement  of  the  aggregate  limit.   This  insurance  shall  be  primary  and  non- contributory and the additional insureds required will be added to both the CGL and Umbrella  policies.   The  policies  described  in  this  subsection  shall  also  include  coverage  for  elevators,  escalators,  independent  contractors,  “Contractual  Liability”  (covering,  to  the  maximum  extent  permitted by law, Borrower’s obligation to indemnify Lender as required under this Agreement  and the other Loan Documents), “Products” and “Completed Operations Liability” coverage, if  appropriate.  Liquor Liability, Automobile Liability and Garage Keepers Liability, or any other  liability coverage deemed appropriate given the Property type and exposure, may be required at  the discretion of the Lender.               (d)   Rental  loss  and/or  business  interruption  insurance  including  terrorism  (i) with  Lender being named as “Lender Loss Payee”, (ii) in an amount equal to 100% of the  projected  Rents from  the  applicable  Individual  Property for  a  period  of  at  least  eighteen  (18)  months.  The period of indemnification shall include the initial period of restoration, the period  of time required to rebuild the applicable Individual Property following a casualty for not less  than twelve (12) months, and an extended period of indemnity endorsement which provides that  after the physical loss to the applicable Individual Property has been repaired, the continued loss  of income will be insured until such income either returns to the same level it was at prior to the  loss, or until the limit for such coverage as required above is exhausted, whichever first occurs,  but not less than a six (6) month and notwithstanding that the policy may expire prior to the end  of such period.  In no event shall the period of indemnification, including the extended period of  indemnity, be less than eighteen (18) months.  The amount of such insurance shall be increased  from time to time during the Term as and when the estimated or actual Rents increase.               (e)   Comprehensive  boiler  and  machinery  insurance  covering  all  centralized  equipment, mechanical and electrical equipment  or other pressure-fired vessels in operation at  the  property  against  physical  damage,  rent  loss  and  improvements  loss  and  covering,  without  limitation, all tenant improvements and betterments that Borrower is required to insure pursuant  to the lease on a replacement cost basis or such other amounts approved by Lender.               (f)   Worker’s  compensation  and  disability  insurance  with  respect  to  any  employees of Borrower, as required by any Legal Requirement.               (g)   During any period of repair or restoration, builder’s “all-risk” or “Special  Form” insurance on the so called completed value basis/non-reporting form in an amount equal  to not less than the full insurable value of the applicable Individual Property, against such risks  (including  fire and  extended  coverage  and  collapse  of  the  Improvements  to  agreed  limits)  as  Lender may request, in form, substance and with deductibles acceptable to Lender and consistent  with Section 7.1.1(a) above.               (h)   Coverage  to  compensate  for  ordinance  of  law,  coverage  for  loss  to  the  undamaged  portion  of  the  Improvements,  the  cost  of  demolition  and  the  increased  cost  of  construction in an amount satisfactory to Lender.               (i)   Such other insurance, higher limits, replacements or substitutions thereof  (including  environmental  liability  insurance,  sinkhole,  mine  subsidence,  and  earthquake                                          63  71215191 

 

insurance) as may from time to time be required by Lender in its reasonable discretion in order to  protect its interests.               (j)   Notwithstanding  anything  in  subsection  (a)  above  to  the  contrary,  Borrower shall be required to obtain and maintain coverage in its property insurance Policy, its  loss of rents/business interruption coverage, and its public liability insurance Policies (or by a  separate Policy) against loss or damage by terrorist acts, both foreign and domestic, in an amount  equal to 100% of the “Full Replacement Cost” of each Individual Property; provided that such  coverage  is  available.   In  the  event  that  such  coverage  with  respect  to  terrorist  acts  is  not  included as  part of the  “all risk” or “special form” property policy  required by subsection (a)  above, Borrower shall, nevertheless be required to obtain coverage for terrorism (as stand alone  coverage)  in  an  amount  equal  to  100%  of  the  “Full  Replacement  Cost”  of each  Individual  Property  plus  the  rental  loss  and/or  business  interruption  coverage  under clause  (d) above;  provided that such coverage is available.  Borrower shall obtain the coverage required under this  subsection (j) from a carrier which otherwise satisfies the rating criteria specified in Section 7.1.2  below  (a  “Qualified  Carrier”)  or  in  the  event  that  such  coverage  is  not  available  from  a  Qualified  Carrier,  Borrower  shall  obtain  such  coverage  from  the  highest  rated  insurance  company providing such coverage.               7.1.2 Policies.  Unless otherwise approved by Lender in writing in advance of  placement,  all  policies  of  insurance  (the  “Policies”)  required  pursuant  to Section  7.1.1 above  shall (i) be issued by companies approved by Lender and authorized to do business in the State,  with  a claims paying  ability rating of “A” or better by S&P (and the equivalent  by any other  Rating Agency), and a rating of A:X or better in the current Best’s Insurance Reports; (ii) name  Lender  and  its  successors  and/or  assigns  as  their  interest  may  appear  as  the  mortgagee  and  lender’s  loss  payable  (in  the  case  of  property  insurance  and  in  the  case  of  business  personal  property/business interruption/loss of rents coverage) and an additional insured (in the case of  liability insurance); (iii) contain (in the case of property insurance) a Non-Contributory Standard  Mortgagee  Clause  and  a  Lender’s  Loss  Payable  Endorsement,  or  their  equivalents,  naming  Lender as the person to which all payments made by such insurance company shall be paid; (iv)  contain a waiver of subrogation on both the Property and Public Liability Policies in favor of  Lender; (v) be assigned and the carrier-certified copies thereof delivered to Lender; (vi) contain  such  provisions  as  Lender  deems  reasonably  necessary  or  desirable  to  protect  its  interest,  including (A) endorsements providing that neither Borrower, Lender nor any other party shall be  a  co-insurer  under  the  Policies,  (B)  that  Lender  shall  receive  at  least  thirty  (30)  days’  prior  written  notice  of  cancellation  (10  days’  notice  for nonpayment  of  premium)  of  any  of  the  property Policies.  Such notice shall also be provided for, liability policies when available from  the  carrier  (provided,  however,  that  if  such  notice  provisions  are  not  available  in  any  of  the  liability  Policies,  Borrower  shall  provide  the  required  notice  to  Lender)  (C)  an  agreement  whereby the insurer waives any right to claim any premiums and commissions against Lender,  provided that the policy need not waive the requirement that the premium be paid in order for a  claim to be paid to the insured and (D) providing that Lender is permitted to make payments to  effect  the  continuation  of  such  policy  upon  notice  of  cancellation  due  to  non-payment  of  premiums; (vii) in the event any insurance policy (except for general public and other liability  and workers compensation insurance) shall contain breach of warranty provisions, such policy  shall  provide  that  with  respect  to  the  interest  of  Lender,  such  insurance  policy  shall  not  be  invalidated by and shall insure Lender regardless of (A) any act, failure to act or negligence of or                                         64  71215191 

 

violation  of  warranties,  declarations  or  conditions  contained  in  such  policy  by  any  named  insured, (B) the occupancy or use of the premises for purposes more hazardous than permitted by  the terms thereof, or (C) any foreclosure or other action or proceeding taken by Lender pursuant  to  any  provision  of  the  Loan  Documents;  and  (viii)  be  satisfactory  in  form  and  substance  to  Lender and approved by Lender as to amounts, form, risk coverage, deductibles, loss payees and  insureds.  Borrower shall pay the premiums for such Policies (the “Insurance Premiums”) as  the same become due and payable and furnish to Lender evidence of the renewal of each of the  Policies together with (unless such Insurance Premiums have been paid by Lender pursuant to  Section  3.3 hereof)  receipts  for  or  other  evidence  of  the  payment  of  the  Insurance  Premiums  satisfactory to Lender in its reasonable discretion.  If Borrower does not furnish such evidence  and receipts at least thirty (30) days prior to the expiration of any expiring Policy, then Lender  may,  but  shall  not  be  obligated  to,  procure  such  insurance  and  pay  the  Insurance  Premiums  therefor, and Borrower shall reimburse Lender for the cost of such Insurance Premiums promptly  on  demand,  with  interest  accruing  at  the  Default  Rate.   Borrower  shall  deliver  to  Lender  a  certified copy of each Policy within thirty (30) days after its effective date.  Within thirty (30)  days after request by Lender, Borrower shall obtain such increases in the amounts of coverage  required  hereunder  as  may  be  requested  by  Lender  in  its  reasonable  discretion,  taking  into  consideration  changes  in  the  value  of  money  over  time,  changes  in  liability  laws,  changes  in  prudent customs and practices, and the like.               7.1.3 Blanket Coverage.  Borrower may provide any required insurance under  a  blanket  policy  or  policies  covering  the  Property  and  Improvements  and  other  property  and  assets not part of the Property, provided that Lender is provided a full schedule of locations and  values for all properties on such blanket policy and such blanket policy: (a) otherwise complies  with  the  requirements  set  forth  in Sections  7.1.1 and 7.1.2;  (b)  except  in  the  case  of  Public  Liability Insurance, specifies how much coverage and which sub limits apply exclusively to the  Improvements  and  that  any  allocated  coverage  shall  equal  or  exceed  the  coverage  amounts  specified in the above Section 7.1.1; (c) must properly identify and fully protect each Individual  Property as if a separate policy were issued for 100% of the replacement cost, with sub limits as  permitted herein, at the time of loss.               7.1.4 No  Separate  Insurance.    Borrower  shall  not  carry  separate  insurance,  concurrent  in  kind  or  form  or  contributing  in  the  event  of  loss,  with  any  of  the  Policies.   Borrower may, however, carry insurance for the Improvements, in addition to the Policies, but  only if such additional insurance: (a) does not violate or entitle the carrier to assert any defense  or disclaim any primary coverage under any of the Policies; (b) mutually benefits Borrower and  Lender,  as  their  interests  may  appear;  and  (c)  otherwise  complies  with  the  terms  of  this  Agreement.               7.1.5 Transfers.  In the event of foreclosure of the Security Instrument or other  transfer of title to the Property and Improvements in extinguishment in whole or in part of the  Debt,  and regardless  of  whether  Lender shall  have sought  a deficiency judgment  with  respect  thereto, all right, title and interest of Borrower in and to the Policies that are not blanket policies  then in  force  concerning  the  Property  and  Improvements  and  all  proceeds  payable  thereunder  shall thereupon vest in the purchaser at such foreclosure or Lender or its designee in the event of  such other transfer of title.                                         65  71215191 

 

            7.1.6 Compliance  at  Closing. As  of  the date  of this Agreement,  Borrower’s  insurance program has been approved by Lender.         7.2   Casualty.               7.2.1 Notice; Restoration.  If an Individual Property is damaged or destroyed,  in whole or in part, by fire or other casualty (a “Casualty”), Borrower shall give prompt notice  thereof  to  Lender.   Following  the  occurrence  of  a  Casualty,  Borrower,  regardless  of  whether  insurance proceeds are available, shall promptly proceed to restore, repair, replace or rebuild the  applicable  Individual Property  in  accordance  with  Legal  Requirements  to  be  of  at  least  equal  value and of substantially the same character as prior to such damage or destruction.               7.2.2 Settlement of Proceeds.  If a Casualty at the Property covered by any of  the Policies (an “Insured Casualty”) occurs where the loss does not exceed $500,000.00, in the  aggregate,  across  all  Property, provided  no  Default  or  Event  of  Default  has  occurred  and  is  continuing,  Borrower  may  settle  and  adjust  any  claim  without  the  prior  consent  of  Lender;  provided such adjustment is carried out in a commercially reasonable and timely manner, and  Borrower is hereby authorized to collect and receipt for the insurance proceeds (the “Proceeds”).   In the event of an Insured Casualty at the Property where the loss equals or exceeds $500,000.00,  in  the  aggregate across  all  Property (a  “Significant  Casualty”),  Lender  may,  in  its  sole  discretion, settle and adjust any claim (provided that so long as no Default or Event of Default is  continuing,  Lender  shall  consult  with  Borrower  on  a  non-binding  basis  prior  to  making  its  determination to  settle or adjust a  claim) without  the consent  of Borrower and agree with  the  insurer(s) on the amount to be paid on the loss, and the Proceeds shall be due and payable solely  to  Lender  and  held  by  Lender  in  the  Casualty/Condemnation  Subaccount  and  disbursed  in  accordance  herewith.   If  Borrower  or  any  party  other  than  Lender  is  a  payee  on  any  check  representing  Proceeds  with  respect  to  a  Significant  Casualty,  Borrower  shall immediately  endorse, and cause all such third parties to endorse, such check payable to the order of Lender.   Borrower hereby irrevocably appoints Lender as its attorney-in-fact, coupled with an interest, to  endorse such check payable to the order of Lender.  The actual, out-of-pocket expenses incurred  by Lender in the settlement, adjustment and collection of the Proceeds shall become part of the  Debt and shall be reimbursed by Borrower to Lender upon demand.  Notwithstanding anything  to the contrary contained herein, if in connection with a Casualty at an Individual Property any  insurance carrier makes a payment under a property insurance Policy that Borrower proposes be  treated  as  business  or  rental  interruption  insurance,  then,  notwithstanding  any  designation  (or  lack  of  designation)  by  the  insurance  carrier  as  to  the  purpose  of  such  payment,  as  between  Lender  and  Borrower,  such  payment  shall  not  be  treated  as  business  or  rental  interruption  insurance proceeds unless Borrower has demonstrated to Lender's satisfaction that the remaining  net Proceeds that will be received from the property insurance carriers are sufficient to pay 100%  of  the  cost  of  fully  restoring  the  Improvements at  such  Individual  Property or,  if  such  net  Proceeds  are  to  be  applied  to  repay  the  Debt  in  accordance  with  the  terms  hereof,  that  such  remaining  net  Proceeds  will  be  sufficient  to  pay that  portion  of  the  Debt  associated  with  the  Allocated Loan Amount for such Individual Property in full.                                          66  71215191 

 

      7.3   Condemnation.               7.3.1 Notice; Restoration.  Borrower shall promptly give Lender notice of the  actual  or  threatened  commencement  of  any  condemnation  or  eminent  domain  proceeding  affecting an Individual Property (a “Condemnation”) and shall deliver to Lender copies of any  and  all  papers  served  in  connection  with  such  Condemnation.   Following  the  occurrence  of  a  Condemnation, Borrower, regardless of whether an Award is available, shall promptly proceed  to restore, repair, replace or rebuild the applicable Individual Property in accordance with Legal  Requirements to the extent practicable to be of at least equal value and of substantially the same  character and utility as prior to such Condemnation. Borrower shall have the right to contest the  amount  of  the  Award  and  Lender  shall  reasonably  cooperate  in  such  contest,  at  no  cost  to  Lender.                 7.3.2 Collection  of  Award.   Lender  is  hereby  irrevocably  appointed  as  Borrower’s  attorney-in-fact,  coupled  with  an  interest,  with  exclusive  power  to  collect,  receive  and retain any award or payment in respect of a Condemnation (an “Award”) and to make any  compromise, adjustment or settlement in connection with such Condemnation.  Notwithstanding  any Condemnation  (or any transfer made in  lieu of or in  anticipation of such Condemnation),  Borrower shall continue to pay the Debt at the time and in the manner provided for in the Loan  Documents,  and  the  Debt  shall  not  be  reduced  unless  and  until  any  Award  shall  have  been  actually received and applied by Lender to expenses of collecting the Award and to discharge of  the  Debt.   Lender  shall  not  be  limited  to  the  interest  paid  on  the  Award  by  the  condemning  authority but shall be entitled to receive out of the Award interest at the rate or rates provided in  the Note.  If the Property is sold, through foreclosure or otherwise, prior to the receipt by Lender  of such Award, Lender shall have the right, whether or not a deficiency judgment on the Note  shall be recoverable or shall have been sought, recovered or denied, to receive all or a portion of  the  Award  sufficient  to  pay  the  Debt.   Borrower shall  cause  any  Award  that  is  payable  to  Borrower  to  be  paid  directly  to  Lender.   Lender  shall  hold  such  Award  in  the  Casualty/Condemnation  Subaccount  and  disburse  such  Award  in  accordance  with  the  terms  hereof.         7.4   Application of Proceeds or Award.               7.4.1 Application  to  Restoration.   If  an  Insured  Casualty  or  Condemnation  occurs where, with respect to the applicable Individual Property (i) the loss is in an aggregate  amount less than fifteen percent (15%) of the unpaid Allocated Loan Amount for the applicable  Individual Property; (ii) in the reasonable judgment of Lender, the applicable Individual Property  can be restored within six (6) months, and prior to six (6) months before the Stated Maturity Date  and prior to the expiration of the rental or business interruption insurance with respect thereto, to  the extent practicable, to at least the equivalent value and of substantially the same character and  utility as  existed immediately prior to such Insured Casualty or Condemnation, and after such  restoration will adequately secure the Debt; (iii) less than (x) thirty percent (30%), in the case of  an Insured Casualty or (y) fifteen percent (15%), in the case of a Condemnation, of the rentable  area of the Improvements of the applicable Individual Property has been damaged, destroyed or  rendered unusable as a result of such Insured Casualty or Condemnation; (iv) Leases demising in  the  aggregate  at  least  seventy  percent  (70%)  of  the  total  rentable  space  in  the applicable  Individual Property and in effect as of the date of the occurrence of such Insured Casualty or                                         67  71215191 

 

Condemnation remain in full force and effect during and after the completion of the Restoration  (hereinafter  defined);  (v)  no  Default  or  Event  of  Default  shall  have  occurred  and  be  then  continuing; and (vi) Lender shall have received evidence satisfactory to Lender in its reasonable  discretion  that  during  the  period  of  the  Restoration,  the  Rents  (together  with  any  other  funds  contributed by Borrower) will be at least equal to the sum of the operating expenses and Debt  Service  and  other  reserve  payments  required  hereunder,  as  determined  by  Lender  in  its  reasonable discretion, then the Proceeds or the Award, as the case may be (after reimbursement  of  any  expenses  incurred  by  Lender)  shall  be  applied  to  reimburse  Borrower  for  the  cost  of  restoring,  repairing,  replacing  or  rebuilding  the applicable  Individual Property  (the  “Restoration”), in the manner set forth herein.  Notwithstanding the foregoing, in no event shall  Lender  be  obligated  to  apply  the  Proceeds  or  Award  to reimburse  Borrower  for  the  cost  of  Restoration  unless,  in  addition  to  satisfaction  of  the  foregoing  conditions,  Borrower  shall  pay  (and  if  required  by  Lender,  Borrower  shall  deposit  with  Lender  in  advance)  all  costs  of  such  Restoration in excess of the net amount of the Proceeds or the Award made available pursuant to  the terms hereof.               7.4.2 Application to Debt.  Except as provided in Section 7.4.1, any Proceeds  and/or Award may, at the option of Lender in its discretion, be applied to the payment of the  Debt, or applied to reimburse Borrower for the cost of any Restoration, in the manner set forth in  Section  7.4.3.   Any  such  prepayment  of  the  Loan  shall  be  subject  to  the  Exit  Fee,  but  shall  otherwise be without any Yield Maintenance Premium, unless an Event of Default has occurred  and is continuing at the time the Proceeds are received from the insurance company or the Award  is received from the condemning authority, as the case may be, in which event Borrower shall  pay to Lender an additional amount equal to the Yield Maintenance Premium, if any, that may be  required with respect to the amount of the Proceeds or Award applied to the unpaid Principal.   Notwithstanding the foregoing provisions of this Section 7.4, if the Loan is included in a REMIC  Trust and, immediately following a release of any portion of the Lien of the Security Instrument  following a Casualty or Condemnation (but taking into account any proposed Restoration of the  remaining  Property), the ratio of the unpaid  principal balance of the  Loan to  the value of the  remaining  Property  is  greater  than  one  hundred  twenty-five  percent  (125%)  (such  value  to  be  determined, in Lender’s sole discretion, by any commercially reasonable method permitted to a  REMIC Trust; and which shall exclude the value of personal property or going concern value, if  any), the principal balance of the Loan must be paid down by an amount equal to the least of the  following amounts:  (i) the net Award (after payment of Lender’s costs and expenses and any  other fees  and expenses that have been approved by  Lender); (ii) the fair market  value of the  released property at the time of the release; or (iii) an amount such that the loan-to-value ratio of  the Loan (as so determined by Lender) does not increase after the release, unless Lender receives  an opinion of counsel that if such amount is not paid, the applicable Securitization will not fail to  maintain its status as a REMIC Trust as a result of the related release of such portion of the Lien  of the Security Instrument.  If and to the extent the preceding sentence applies, only such amount  of the net Award, if any, in excess of the amount required to pay down the principal balance of  the  Loan  may  be  released  for  purposes  of  Restoration  or  released  to  Borrower  as  otherwise  expressly provided in this Section 7.4.                                          68  71215191 

 

            7.4.3 Procedure  for Application  to  Restoration.   If  Borrower  is  entitled  to  reimbursement out of the Proceeds or an Award held by Lender, such Proceeds or Award shall  be disbursed from time to time from the Casualty/Condemnation Subaccount upon Lender being  furnished  with  (i)  evidence  satisfactory  to  Lender  of  the  estimated  cost  of  completion  of  the  Restoration, (ii) a fixed price or guaranteed maximum cost construction contract for Restoration  satisfactory to Lender, (iii) prior to the commencement of Restoration, all immediately available  funds in addition to the Proceeds or Award that in Lender’s judgment are required to complete  the  proposed  Restoration,  (iv)  such  architect’s  certificates,  waivers  of  lien,  contractor’s  sworn  statements, title insurance endorsements, bonds, plats of survey, permits, approvals, licenses and  such other documents and items as Lender may require in its reasonable discretion and approve  in Lender’s discretion, and (v) all plans and specifications for such Restoration, such plans and  specifications to be approved by Lender prior to commencement of any work.  Lender may, at  Borrower’s expense, retain  a consultant to  review and approve all requests for disbursements,  which approval shall also be a condition precedent to any disbursement.  No payment made prior  to the final completion of the Restoration shall exceed ninety percent (90%) of the value of the  work performed from time to time; funds other than the Proceeds or Award shall be disbursed  prior to disbursement of such Proceeds or Award; and at all times, the undisbursed balance of  such Proceeds or Award remaining in the hands of Lender, together with funds deposited for that  purpose or irrevocably committed to the satisfaction of Lender by or on behalf of Borrower for  that purpose, shall be at least sufficient in the reasonable judgment of Lender to pay for the cost  of completion of the Restoration, free  and clear  of all  Liens or claims for  Lien.  Provided no  Default or Event  of Default then exists,  any surplus  that remains  out  of the Proceeds  held  by  Lender after payment of such costs of Restoration shall be paid to Borrower.  Any surplus that  remains out of the Award received by Lender after payment of such costs of Restoration shall, in  the discretion of Lender, be retained by Lender and applied to payment of the Debt or returned to  Borrower.   8.    DEFAULTS         8.1   Events of Default.  An “Event of Default” shall exist with respect to the Loan if  any of the following shall occur:               (a)   any portion of the Debt is not paid when due or Borrower shall fail to pay  when due any payment required under Sections 3.3, 3.4, 3.5, 3.6, or 3.7 hereof;                (b)   any of the Property Taxes are not paid when due (unless, with respect to  Real  Estate  Taxes,  Lender  is  paying  Real  Estate  Taxes  pursuant  to Section  3.3 hereof  and  sufficient  funds  are  in  the  Property  Tax  Subaccount  to  make  such  payment),  subject  to  Borrower’s right to contest Property Taxes in accordance with Section 5.12 hereof;               (c)   the Policies are not  kept  in  full  force and  effect, or are not  delivered to  Lender upon request;               (d)   a Transfer other than a Permitted Transfer occurs;               (e)   any  certification,  representation  or  warranty  made  by  Borrower  or  any  Guarantor herein or in any other Loan Document, or in any report, certificate, financial statement                                         69  71215191 

 

or  other  instrument,  agreement  or  document  furnished  by  Borrower  or  any  Guarantor  in  connection with any Loan Document, shall be false or misleading in any material respect as of  the date the representation or warranty was made;               (f)   Borrower, Sole Member or any  Guarantor shall  make an assignment for  the benefit of creditors, or shall generally not be paying its debts as they become due;               (g)   a  receiver,  liquidator  or  trustee  shall  be  appointed  for  Borrower, Sole  Member or any Guarantor; or Borrower, Sole Member or any Guarantor shall be adjudicated a  bankrupt or insolvent; or any petition for bankruptcy, reorganization or arrangement pursuant to  federal bankruptcy law, or any similar federal or state law, shall be filed by or against, consented  to, or acquiesced in by, Borrower, Sole Member or any Guarantor, as the case may be; or any  proceeding for the dissolution or liquidation of Borrower, Sole Member or any Guarantor shall  be instituted; provided, however, if such appointment, adjudication, petition or proceeding was  involuntary and not consented to by Borrower, Sole Member or any Guarantor, as the case may  be, only upon the same not being discharged, stayed or dismissed within 60 days;               (h)   Borrower breaches any covenant contained in Sections 5.3, 5.6, 5.8, 5.9,  5.18.1 (a) - (e), 5.18.2 or 5.24;                 (i)   except  as  expressly  permitted  hereunder,  the  alteration,  improvement,  demolition  or  removal  of  all  or  any  portion  of  the  Improvements  without  the  prior  written  consent of Lender;               (j)   a default (beyond applicable notice and cure periods) under any agreement  creating a Lien or encumbrance on the Property (including any reciprocal easement agreement or  other  covenants,  restrictions,  easements,  declarations  or  agreements  of  record  relating  to  the  construction, operation or use of the Property);               (k)   the  forfeiture  of  the  Property,  or  any  portion  thereof,  because  of  the  conduct  or  purported  conduct  of  criminal  activity  by  Borrower  or  Guarantor  or  any  of  their  respective agents or representatives in connection therewith;               (l)   there  shall  have  been  rendered  against  Borrower  a  final  judgment(s)  for  the payment of money in excess of $250,000 in the aggregate, and such judgment(s) shall have  continued unsatisfied for a period of thirty (30) days after the entry of such judgment(s);               (m)   an  Event  of  Default (beyond  all  applicable  notice  and  cure  periods) as  defined or described elsewhere in this Agreement or in any other Loan Document occurs;               (n)   a default occurs under any term, covenant or provision set forth herein or  in  any other  Loan Document beyond  any applicable notice and  cure period  (if any) set  forth  herein or therein;               (o)   intentionally omitted; and               (p)   a default shall  be continuing under  any of the other terms,  covenants  or  conditions of this Agreement or any other Loan Document not otherwise specified in this Section                                         70  71215191 

 

8.1, for ten (10) days after notice to Borrower (and Guarantors, if applicable) from Lender, in the  case of any default which can be cured by the payment of a sum of money, or for thirty (30) days  after notice from Lender in the case of any other default; provided, however, that if such non- monetary default is susceptible of cure but cannot reasonably be cured within such thirty (30)  day  period,  and  Borrower  (or  Guarantors,  if  applicable)  shall  have  commenced  to  cure  such  default within such thirty (30) day period and thereafter diligently and expeditiously proceeds to  cure the same, such thirty (30) day period shall be extended for an additional period of time as is  reasonably necessary for Borrower (or Guarantors, if applicable) in the exercise of due diligence  to cure such default, such additional period not to exceed ninety (90) days.         8.2   Remedies.               8.2.1 Acceleration.   Upon  the  occurrence and  during  the  continuance of  an  Event of Default (other than an Event of Default described in paragraph (f) or (g) of Section 8.1)  and  at  any  time  and  from  time  to  time  thereafter,  in  addition  to  any  other  rights  or  remedies  available  to  it  pursuant  to  the  Loan  Documents  or  at law  or  in  equity,  Lender  may  take  such  action,  without  notice  or  demand  (and  Borrower  hereby  expressly  waives  any  such  notice  or  demand), that Lender deems advisable to protect and enforce its rights against Borrower and in  and to the Property; including declaring the Debt to be immediately due and payable (including  unpaid interest, Default Rate interest, Late Payment Charges, Yield Maintenance Premium, Exit  Fees and any other amounts owing by Borrower); and upon any Event of Default described in  paragraph (f)  or  (g)  of Section  8.1,  the  Debt  (including  unpaid  interest,  Default  Rate  interest,  Late Payment Charges, Yield Maintenance Premium, Exit Fees and any other amounts owing by  Borrower)  shall  immediately  and  automatically  become  due  and  payable,  without notice  or  demand, and Borrower hereby expressly waives any such notice or demand, anything contained  in any Loan Document to the contrary notwithstanding.               8.2.2 Remedies Cumulative.  Upon the occurrence and during the continuance  of  an  Event  of  Default,  all  or any  one  or  more  of  the  rights,  powers,  privileges  and  other  remedies available to Lender against Borrower under the Loan Documents or at law, equity or  contract may be exercised by Lender at any time and from time to time, whether or not all or any  of the Debt shall be declared, or be automatically, due and payable, and whether or not Lender  shall  have  commenced  any  foreclosure  proceeding  or  other  action  for  the  enforcement  of  its  rights and remedies under any of the Loan Documents.  Any such actions taken by Lender shall  be  cumulative  and  concurrent  and  may  be  pursued  independently,  singularly,  successively,  together or otherwise, at such time and in such order as Lender may determine in its discretion,  to the fullest extent permitted by law, without impairing or otherwise affecting the other rights  and  remedies  of  Lender  permitted  by  law,  equity  or  contract  or  as  set  forth  in  the  Loan  Documents.  Without limiting the generality of the foregoing, Borrower agrees that if an Event  of Default is continuing, (i) to the extent permitted by applicable law, Lender is not subject to  any  “one  action”  or  “election  of  remedies”  law  or  rule,  and  (ii)  all  Liens  and  other  rights,  remedies or privileges provided to Lender shall remain in full force and effect until Lender has  exhausted all of its remedies against the Property, the Security Instrument has been foreclosed,  the Property has been sold and/or otherwise realized upon in satisfaction of the Debt or the Debt  has been paid in full.  To the extent permitted by applicable law, nothing contained in any Loan  Document shall be construed as requiring Lender to resort to any portion of the Property for the                                         71  71215191 

 

satisfaction of any of the Debt in preference or priority to any other portion, and Lender may  seek satisfaction out of the entire Property or any part thereof, in its discretion.               8.2.3 Severance/Partial Foreclosure.                 (a)   During the continuance of an Event of Default, Lender shall have the right  from time to time to sever the Note and the other Loan Documents into one or more separate  notes,  mortgages  and  other  security  documents  (and,  in  connection  therewith,  to  bifurcate or  otherwise modify the nature of the collateral that secures such notes) in such denominations and  priorities  of  payment  and  liens  as  Lender  shall  determine  in  its  discretion  for  purposes  of  evidencing and enforcing its rights and remedies.  Borrower shall execute and deliver to Lender  from time to time, promptly after the request of Lender, a severance agreement and such other  documents  as  Lender shall request  in  order to  effect  the severance described in  the preceding  sentence,  all  in  form  and  substance satisfactory  to  Lender.   Borrower  hereby  absolutely  and  irrevocably appoints Lender as its true and lawful attorney, coupled with an interest, in its name  and stead to  make  and execute all documents  necessary or desirable to  effect  such severance,  Borrower ratifying all that such attorney shall do by virtue thereof.               (b)   During the continuance of an Event of Default, Lender shall have the right  from  time  to  time  to  partially  foreclose  the Security  Instrument in  any  manner  and  for  any  amounts  secured  by  the Security  Instrument then  due  and  payable  as  determined  by  Lender,  including the following circumstances: (i) in the event Borrower defaults beyond any applicable  grace period in the payment of one or more scheduled payments of Principal and interest, Lender  may foreclose the Security Instrument to recover such delinquent payments; or (ii) in the event  Lender elects to accelerate less than the entire outstanding principal balance of the Loan, Lender  may foreclose the Security Instrument to recover so much of the principal balance of the Loan as  Lender may accelerate and such other sums secured by the Security Instrument as Lender may  elect.  Notwithstanding one or more partial foreclosures, the Property shall remain subject to the  Security Instrument to secure payment of the sums secured by the Security Instrument and not  previously recovered.               8.2.4 Delay.   No  delay  or  omission  to  exercise  any  remedy,  right  or  power  accruing upon an Event of Default, or the granting of any indulgence or compromise by Lender  shall impair any such remedy, right or power hereunder or be construed as a waiver thereof, but  any such remedy, right or power may be exercised from time to time and as often as may be  deemed necessary or advisable by Lender.  A waiver of one Default or Event of Default shall not  be  construed  to  be  a  waiver  of  any  subsequent  Default  or  Event  of  Default or  to  impair  any  remedy, right or power arising from or related thereto.  Notwithstanding any other provision of  this Agreement, Lender reserves the right to seek a deficiency judgment or preserve a deficiency  claim  in  connection with  the foreclosure of the Security  Instrument to  the extent necessary to  foreclose on all or any portion of the Property, the Rents, the Cash Management Accounts or any  other collateral.               8.2.5 Lender’s Right to Perform.  If Borrower fails to perform any covenant or  obligation contained herein and such failure shall become an Event of Default, without in any  way  limiting  Lender’s  right  to  exercise  any  of  its  rights,  powers  or  remedies  as  provided  hereunder, or under any of the other Loan Documents, Lender may, but shall have no obligation                                         72  71215191 

 

to,  perform,  or  cause  performance  of,  such  covenant  or  obligation,  and  all  costs,  expenses,  liabilities, penalties and fines of Lender incurred or paid in connection therewith shall be payable  by Borrower to Lender with five (5) days after demand and if not paid shall be added to the Debt  (and to the extent permitted under applicable laws, secured by the Security Instrument and other  Loan  Documents)  and  shall  bear  interest  thereafter  at  the  Default  Rate.   Notwithstanding  the  foregoing, except as may be otherwise required by the Loan Documents, Lender shall have no  obligation to send notice to Borrower of any such failure nor of its subsequent exercise of its  rights, powers or remedies provided in this Section.   9.    SPECIAL PROVISIONS         9.1   Sale of Note; Secondary Market Transaction; Syndication.                 9.1.1 Cooperation.  (a)  Borrower shall, at the request of Lender, in connection  with one or more sales or assignments of the Note or participations therein (including, without  limitation, any Syndication (as hereinafter defined)) or securitizations of rated single or multi- class securities (the “Securities”) secured by or evidencing ownership interests in the Note and  the Security  Instrument,  including  in  connection  with  collateralized  debt  obligations  or  collateralized loan obligations (a “Securitization”, and each such sale, assignment, Syndication,  participation and/or Securitization, a “Secondary Market Transaction”):  (a) (i)  provide such  financial  and  other  information  with  respect  to  the  Property,  Borrower  and  its  Affiliates,  Manager and any tenants of the Property, (ii) provide business plans and budgets relating to the  Property and (iii) perform or permit or cause to be performed or permitted such site inspection,  appraisals, surveys, market studies, environmental reviews and reports, engineering reports and  other  due  diligence  investigations  of  the  Property,  as  may  be  requested  from  time  to  time  by  Lender in its reasonable discretion or the Rating Agencies or as may be necessary or appropriate  in  connection  with  a Secondary  Market  Transaction  or  Exchange  Act  requirements  (the  items  provided to Lender pursuant to this paragraph (a) being called the “Provided Information”), (b)  cause  counsel  to  render  opinions  as  to  non-consolidation  and  any  other  opinion  customary  in  securitization  transactions  with  respect  to  the  Property,  Borrower  and  its  Affiliates,  which  counsel and opinions shall be satisfactory to Lender in its reasonable discretion and the Rating  Agencies; (c) make such representations and warranties as of the closing date of any Secondary  Market  Transaction  with  respect  to  the  Property,  Borrower  and  the  Loan  Documents  as  are  customarily provided in such transactions and as may be requested by Lender in its reasonable  discretion or the Rating Agencies and consistent with the facts covered by such representations  and  warranties  as  they  exist  on  the  date  thereof,  including  the  representations  and  warranties  made in the Loan Documents; (d) provide current certificates of good standing and qualification  with respect to Borrower and Sole Member from appropriate Governmental Authorities; and (e)  execute such amendments to the Loan Documents and Borrower’s organizational documents, as  may be requested by Lender or the Rating Agencies or otherwise to effect a Secondary Market  Transaction, provided that no such amendment shall result in a material economic change in the  transaction, decrease Borrower’s rights or increase Borrower’s liabilities under this Agreement  or any other Loan Documents.               (b)   Borrower acknowledges that Lender may syndicate a portion of the Loan  to one or more lenders (the “Syndication”) and in connection therewith, Borrower will take all  reasonable  actions  as  Lender  may  request  in  its  reasonable  discretion  to  assist  Lender  in  its                                         73  71215191 

 

Syndication  effort.   Without limiting  the  generality  of  the  foregoing  and  of Section  9.1.1(a),  Borrower shall, at the request of Lender (i) facilitate the review of the Loan and the Property by  any prospective lender; (ii) assist Lender and otherwise cooperate with Lender in the preparation  of information offering materials (which assistance may include reviewing and commenting on  drafts  of  such  information  materials  and  drafting  portions  thereof);  (iii)  deliver  updated  information on Borrower and the Property; (iv) make representatives of Borrower available at  reasonable  times  and  upon  reasonable  notice  to  meet  with  prospective  lenders  at  tours  of  the  Property  and  bank  meetings;  (v)  facilitate  direct  contact  between  the  senior  management  and  advisors of Borrower and any prospective lender; and (vi) provide Lender with all information  reasonably deemed necessary by it to complete the Syndication successfully.  Borrower agrees to  take such further action, in connection with documents and amendments to the Loan Documents,  as may reasonably be required to effect such Syndication.               (c)   Notwithstanding anything to the contrary contained in this Section 9.1.1,  Borrower and Guarantor shall not be required to incur any material out-of-pocket expenses in the  performance of their obligations under this Section 9.1.1, other than the costs and expenses of  Borrower’s  attorneys  and  other  professional  consultants,  if  any,  which  shall  be  borne  by  Borrower.               9.1.2 Use of Information.  Borrower understands that all or any portion of the  Provided  Information  and  the  Required  Records  may  be  included  in  disclosure  documents  in  connection with a Secondary Market Transaction, including a prospectus or private placement  memorandum  (each,  a  “Disclosure  Document”)  and  may  also  be  included  in  filings  with  the  Securities and Exchange Commission pursuant to the Securities Act of 1933, as amended (the  “Securities  Act”),  or  the  Securities  and  Exchange  Act  of  1934,  as  amended  (the  “Exchange  Act”), or provided or made available to investors or prospective investors in the Securities, the  Rating  Agencies,  and  service  providers  or  other  parties  relating  to  the  Secondary  Market  Transaction.   If  the  Disclosure  Document  is  required  to  be  revised,  Borrower  shall  cooperate  with Lender in updating the Provided Information or Required Records for inclusion or summary  in the Disclosure Document or for other use reasonably required in connection with a Secondary  Market Transaction by providing all current information pertaining to Borrower, Manager and  the Property necessary to keep the Disclosure Document accurate and complete in all material  respects with respect to such matters.               9.1.3 Borrower Obligations Regarding Disclosure Documents.  In connection  with a Disclosure Document, Borrower shall:  (a) if requested by Lender, certify in writing that  Borrower  has  carefully  examined  those  portions  of  such  Disclosure  Document,  pertaining  to  Borrower, the Property, Manager and the Loan, and that such portions do not contain any untrue  statement  of  a  material  fact  or  omit  to  state  a  material  fact  necessary  in  order  to  make  the  statements made, in light of the circumstances under which they were made, not misleading; and  (b)  indemnify  (in  a  separate  instrument  of  indemnity,  if  so  requested  by  Lender)  (i)  any  underwriter, syndicate member or placement agent (collectively, the “Underwriters”) retained  by Lender or its issuing company affiliate (the “Issuer”) in connection with a Secondary Market  Transaction,  (ii)  Lender  and  (iii)  the  Issuer  that  is  named  in  the  Disclosure  Document  or  registration  statement relating  to  a  Secondary  Market  Transaction  (the  “Registration  Statement”),  and  each  of  the  Issuer’s  directors,  each  of  its  officers  who  have  signed  the  Registration Statement and each person or entity who controls the Issuer or the Lender within the                                         74  71215191 

 

meaning  of  Section  15  of  the  Securities  Act  or  Section  30  of  the  Exchange  Act  (collectively  within (iii), the “Lender Group”), and each of its directors and each person who controls each  of the Underwriters, within the meaning of Section 15 of the Securities Act and Section 20 of the  Exchange  Act  (collectively,  the  “Underwriter  Group”)  for  any  losses,  claims,  damages  or  liabilities (the “Liabilities”) to which Lender, the Lender Group or the Underwriter Group may  become  subject  (including  reimbursing  all  of  them for  any  legal  or  other  expenses  actually  incurred in connection with investigating or defending the Liabilities) insofar as the Liabilities  arise out of or are based upon any untrue statement of any material fact contained in any of the  Provided  Information  or  in  any  of  the  applicable  portions  of  such  sections  of  the  Disclosure  Document  applicable  to  Borrower,  Manager,  the  Property  or  the  Loan,  or  arise  out  of  or  are  based upon the omission to state therein a material fact required to be stated in the applicable  portions of such sections or necessary in order to make the statements in the applicable portions  of  such  sections  in  light  of  the  circumstances  under  which  they  were  made,  not  misleading,  provided, however, that Borrower shall not be required to indemnify Lender, the Lender Group  or the Underwriter Group for any  Liabilities relating to  untrue statements  or omissions  which  Borrower  identified  to  Lender  in  writing  at  the  time  of  Borrower’s  examination  of  such  Disclosure  Document or  from  the  gross  negligence,  illegal  acts,  fraud,  bad  faith  or  willful  misconduct of Lender.               9.1.4 Restructuring  of  Loan.   Lender,  without  in  any  way  limiting  Lender’s  other  rights  hereunder,  shall  have  the  right  at  any  time,  in  its  sole  and  absolute  discretion,  to  require  Borrower to  restructure  the  Loan  into  multiple  notes  (which  may  include  component  notes  and/or  senior  and  junior  notes)  and/or  to  create  participation  interests  in  the  Loan,  and  which  restructuring  may  include  reallocation  of  principal  amounts  of  the  Loan  (including,  by  way of example, the increase or decrease in the principal amount of the senior note and mortgage  securing same, and the corresponding decrease or increase in the principal amounts of the junior  note(s) and the security instrument securing same) or the restructuring of a portion of the Loan  into  a  mezzanine  loan  to  the  owners  of  the  direct  equity  interests  in  Borrower,  secured  by  a  pledge  of  such  direct  equity  interests,  the  establishment  of  different  interest  rates  and  debt  service  payments  for  the  Loan  and  the  mezzanine  loan  and  the  payment  of  the  Loan  and  the  mezzanine  loan  in  such  order  of  priority  as  may  be  designated  by  Lender;  provided,  that  (a) (i) the total amounts of the Loan and the mezzanine loan shall equal the amount of the Loan  immediately prior to the restructuring, (ii) except in the case of an Event of Default under the  Loan  and/or  the  mezzanine  loan,  the  weighted  average  interest  rate  of  the  Loan  and  the  mezzanine loan, if any, shall, in the aggregate, equal the interest rate which was applicable to the  Loan immediately prior to the restructuring,  (iii) except in the case of an Event of Default under  the Loan and/or the mezzanine loan, the debt service payments on the Loan and the mezzanine  loan shall equal the debt service payment which was due under the Loan immediately prior to the  restructuring, (iv) in connection herewith, Lender acknowledges that Borrower may rely on, and  directly deal with, Lender and/or Servicer with respect to any matters related to the Loan and not  third party participants or other parties involved with the Loan, and (v) the foregoing shall not  decrease Borrower’s rights or shall not increase Borrower’s obligations relative to those set forth  in  this  Agreement  or  any  of  the  other  Loan  Documents. Borrower  shall cooperate  with  all  reasonable requests of Lender in order to restructure the Loan and create the mezzanine loan and  shall  (A)  execute  and  deliver  such  documents  including,  without  limitation  in  the  case  of  the  mezzanine loan, a mezzanine note, a mezzanine loan agreement, a pledge and security agreement  and a mezzanine deposit account agreement, (B) cause Borrower’s counsel to deliver such legal                                         75  71215191 

 

opinions and (C) create such bankruptcy remote borrower under the mezzanine loan as, in the  case of each of (A), (B) and (C) above, shall be required by Lender in its reasonable discretion  and  required  by  any  Rating  Agency  in  connection  therewith,  all  in  form  and  substance  satisfactory to Lender in its reasonable discretion and satisfactory to any such Rating Agency,  including, without limitation, the severance of this Agreement, the Security Instrument and other  Loan  Documents  if  requested.   In  the  event  Borrower  fails  to  execute  and  deliver  such  documents to Lender within ten (10) Business Days following such request by Lender, Borrower  hereby absolutely and irrevocably appoints Lender as its true and lawful attorney, coupled with  an interest, in its name and stead to make and execute all documents necessary or desirable to  effect  such  transactions,  Borrower  ratifying all  that  such  attorney  shall  do  by  virtue  thereof.   Notwithstanding  anything  to  the  contrary  contained  in  this Section  9.1.4,  Borrower  and  Guarantor shall not be required to incur any material out-of-pocket expenses in the performance  of  their  obligations under  this Section  9.1.4,  other  than  the  costs  and  expenses  of  Borrower’s  attorneys and other professional consultants, if any, which shall be borne by Borrower.   10.   MISCELLANEOUS         10.1  Exculpation.  Subject  to  the qualifications  below,  Lender shall not  enforce the  liability and obligation of Borrower to perform and observe the obligations contained in the Loan  Documents  by  any  action  or  proceeding  wherein  a  money  judgment  shall  be  sought  against  Borrower, except that Lender may bring a foreclosure action, an action for specific performance  or any other appropriate action or proceeding to enable Lender to enforce and realize upon its  interest  and  rights  under  the  Loan  Documents,  or  in  the  Property,  the  Rents  or  any  other  collateral given to Lender pursuant to the Loan Documents; provided, however, that, except as  specifically provided herein, any judgment in any such action or proceeding shall be enforceable  against Borrower only to the extent of Borrower’s interest in the Property, in the Rents and in  any  other  collateral  given  to  Lender.   The  provisions  of  this Section  shall  not,  however,  (i) constitute a waiver, release or impairment of any obligation evidenced or secured by any Loan  Document; (ii) impair the right of Lender to name Borrower as a party defendant in any action or  suit  for  foreclosure  and  sale  under  the Security  Instrument;  (iii)  affect  the  validity  or  enforceability of any of the Loan Documents or any guaranty made in connection with the Loan  or any of the rights and remedies of Lender thereunder; (iv) impair the right of Lender to obtain  the  appointment  of  a  receiver;  (v)  impair  the  enforcement  of  the  Assignment  of  Leases  and  Rents; (vi) constitute a prohibition against Lender to commence any other appropriate action or  proceeding in order for Lender to fully realize the security granted by the Security Instrument or  to exercise its remedies against the Property; or (vii) constitute a waiver of the right of Lender to  enforce the liability and obligation of Borrower, by money judgment or otherwise, to the extent  of  any  loss,  damage,  cost,  expense,  liability,  claim  or  other  obligation  incurred  by  Lender  (including attorneys’ fees and costs reasonably incurred) arising out of or in connection with the  following  (all  such  liability  and  obligation  of  Borrower  for  any  or  all  of  the  following  being  referred to herein as “Borrower’s Recourse Liabilities”):                 (a)   fraud,  willful  misconduct, intentional misrepresentation  or  failure  to  disclose a material  fact  by or on behalf of  Borrower, Guarantor, any  Affiliate of Borrower or  Guarantor, or any of their respective agents or representatives in connection with the Loan;                                          76  71215191 

 

            (b)   the forfeiture by Borrower of the Property, or any portion thereof, because  of the conduct or purported conduct of criminal activity by Borrower or Guarantor or any of their  respective agents or representatives in  connection therewith, including by reason of any claim  under the Racketeer Influenced and Corrupt Organizations Act (RICO);               (c)   intentional  or  grossly  negligent physical  waste  of  the  Property  or  any  portion  thereof  (including  the  abandonment  of  the  Property),  or  after  an  Event  of  Default  the  removal or disposal of any portion of the Property;               (d)   misappropriation  or  conversion  by  or  on  behalf  of  Borrower  (including  failure to turn over to Lender on demand following an Event of Default), of any gross revenues,  including  (i)  Rents  and  Lease  Termination  Payments  (ii)  any  Proceeds  paid  by  reason  of  any  Insured Casualty or any Award received in connection with a Condemnation or other sums or  payments attributable to the Property not applied in accordance with the provisions of the Loan  Documents  (except  to  the  extent  that  Borrower  did  not  have  the  legal  right,  because  of  a  bankruptcy, receivership or similar judicial proceeding, to direct disbursement of such sums or  payments); (iii) all Rents of the Property received or collected by or on behalf of the Borrower  after  an  Event  of  Default  and  not  applied  to  payment  of  Principal  and  interest  due  under  the  Note, and to the payment of actual and reasonable operating expenses of the Property, as they  become due or payable (except to the extent that such application of such funds is prevented by  bankruptcy, receivership, or similar judicial proceeding in which Borrower is legally prevented  from  directing the  disbursement  of  such  sums);  (iv)  any  other  funds  due  under  the  Loan  Documents, including, in connection with any of the foregoing, by reason of failure to comply  with Section  3.1 hereof  or  breach  of  the  Clearing  Account  Agreement;  and  (v)  any  security  deposits, advance deposits or any other deposits collected with respect to the Property which are  not  delivered  to  Lender  upon  Lender’s  acquisition  of  the  Property  by  foreclosure  or  a  conveyance in lieu of foreclosure, or otherwise in accordance with the provisions of the Loan  Documents;               (e)   the failure to pay Property Taxes, provided Borrower shall not be liable to  the extent funds to pay such amounts are available in the Property Tax Subaccount and Lender  failed to pay same in accordance with and subject to the terms and conditions set forth in Section  3.3 hereof;                (f)   the  failure  to  obtain  and  maintain  the  Policies  in  accordance  with  this  Agreement, provided Borrower shall not be liable to the extent such failure is a result of non- payment of Insurance Premiums, and funds to pay such Insurance Premiums are available in the  Insurance Subaccount and Lender failed to pay same in accordance with and subject to the terms  and conditions set forth in Section 3.4 hereof;               (g)   failure  to  pay  charges  for  labor  or  materials  or  other  charges  that  can  create Liens on any portion of the Property;               (h)   the breach of any representation, warranty, covenant or indemnification in  any  Loan  Document  concerning  Environmental  Laws  or  Hazardous  Substances,  including  Section  4.29 hereof  and Section  5.16 hereof,  and clauses  (viii)  through (xi) of Section  5.26  hereof;                                         77  71215191 

 

            (i)   any  cost  or  expense  incurred  by  Lender  in  connection  with  the  enforcement of its rights and remedies hereunder or any other Loan Document;                (j)   if  Guarantor,  Borrower  or  any  Affiliate  of  any  of  the  foregoing,  in  connection with any enforcement action or exercise or assertion of any right or remedy by or on  behalf of Lender under or in connection with the Note, the Security Instrument or any other Loan  Document, (i) in bad faith interferes with, hinders or delays the exercise of Lender’s remedies,  (ii) in bad faith raises a defense to the exercise of Lender’s remedies, (iii) contests the validity or  enforceability  of  the  Loan  Documents  or  (iv)  in  bad  faith  asserts  a  claim  against  Lender,  provided that in the case of clause (i), (ii) and (iv) only, Lender shall not be entitled to recover in  the  event  that  Borrower  obtains  a  judgment  or  final  non-appealable  ruling  in  a  court  of  competent  jurisdiction  to  the  effect  that  its  defense,  contest  or  claim  was undertaken  in  good  faith, and was not based on a frivolous or meritless position.               (k)   if (i) the unit owners, association, board, manager or any other governing  body  of  the  Property  or  any  other  person  elect,  vote  or  otherwise  authorize  the  sale  of  any  Individual Property by a decision not to rebuild, restore, or replace, the termination of the legal  status of the condominium or the project, the partition of the condominium or the Property, or the  withdrawal of the condominium from the Davis-Stirling Common Interest Development Act or  any other applicable Legal Requirements, in each case, to the extent that, the insurance, sales or  other  proceeds,  as  applicable,  delivered  to  Lender  as  the  mortgagee  of  Borrower’s  unit  are  insufficient to repay the Allocated Prepayment Amount for such Property in full, or (ii) the Right  of First Refusal is triggered in favor of another Parcel Owner (as defined in the Fulton Shops  Declaration) in accordance with Section 6.7 of the Master Declaration and the insurance, sales or  other  proceeds,  as  applicable,  delivered  to  Lender  as  the  mortgagee  of  Borrower’s  unit  are  insufficient to repay the Allocated Prepayment Amount for such Property in full;                (l)   any  modification  of  any  Declaration  which  (i)  materially  affects  the  permitted  use  or  market  value  of  the  condominium  or  any  part  of  the  Property  (including,  without  limitation,  a  material  increase  in  assessments  imposed  pursuant  to  the  applicable  Declaration that  has  a  Material  Adverse  Effect)  or  impairs  the  right  of  Borrower,  as  a  commercial  unit  owner,  to  operate  the Property  as  it  is  currently  operated  or  as  is  currently  permitted under the Declaration, (ii)  which causes the lien of the Security Instrument against the  Property  to  be  subordinate  to  the  lien  of  the  applicable  condominium  association  against  the  Property, (iii) prohibits any commercial unit owners of the condominium from freely transferring  their respective units  (including the granting of a mortgage thereof), (iv) impairs the rights  of  Lender to enforce its lien on the Property (whether through power of sale, foreclosure, or deed in  lieu thereof) or to otherwise take title to the Property upon such enforcement, or (v) reduces any  of the rights of mortgagees under any Declaration;                (m)   a  breach  of  any  of  the  representations  set  forth  in  the  “Recycled  SPE  Certificate” delivered to Lender in connection with the Loan or a breach of the representation set  forth in Section 4.15(b) hereof or a breach of the covenants set forth in Section 5.6 hereof if such  breach does not result in the substantive consolidation of any Borrower or Sole Member with any  other Person in a bankruptcy or similar proceeding;                                           78  71215191 

 

            (n)   failure of Borrower to have delivered estoppel certificates dated as of the  date of this Agreement, executed by the applicable association, declarant and/or committee for  each Declaration; or               (o)   the potential building code violation at or near the Fulton Shops Property  identified in the Fulton Shops Property Zoning Report.   Notwithstanding anything to the contrary in this Agreement or any of the Loan Documents, (A)  Lender  shall  not  be  deemed  to  have  waived  any  right  which  Lender  may  have  under  Section  506(a), 506(b), 1111(b) or any other provisions of the Bankruptcy Code to file a claim for the  full amount of the Debt or to require that all collateral shall continue to secure all of the Debt in  accordance  with  the  Loan  Documents,  and  (B)  Lender’s  agreement  not  to  pursue  personal  liability of Borrower as set forth above SHALL BECOME NULL AND VOID and shall be of no  further force and effect, and the Debt shall be fully recourse to Borrower in the event that one or  more of the following occurs (each, a “Springing Recourse Event”):                      (i)   an Event of Default described in Section 8.1(d) hereof shall have  occurred;                     (ii)  a  breach  of  any  of  the  representations  set  forth  in the  “Recycled  SPE  Certificate”  delivered  to  Lender  in  connection  with  the  Loan  or  a  breach  of  the  representation set forth in Section 4.15(b) hereof or a breach of the covenants set forth in Section  5.6 hereof if  such  breach results in  the  substantive  consolidation  of  any  Borrower  or  Sole  Member with any other Person in a bankruptcy or similar proceeding; and/or                     (iii) the  occurrence  of  any  condition  or  event  described  in  either  Section  8.1(f) hereof  (with  respect  to  Borrower)  or Section  8.1(g) hereof  (with respect  to  Borrower) and, with respect to such condition or event described in Section 8.1(g) hereof, either  Borrower, Sole Member, Guarantor or any Person owning an interest (directly or indirectly) in  Borrower,  Sole  Member  or  Guarantor  consents  to,  aids, solicits,  supports,  or  otherwise  cooperates  or  colludes  to  cause  such  condition  or  event  or  fails  to  contest  such  condition  or  event.         10.2  Brokers and Financial Advisors.  Borrower hereby represents that it has dealt  with  no  financial  advisors,  brokers,  underwriters,  placement  agents,  agents  or  finders  in  connection with the Loan other than George Smith Partners (“Broker”) whose fees shall be paid  by  Borrower  pursuant  to  a  separate  agreement.   Borrower  shall  indemnify  and  hold  Lender  harmless from and against any and all claims, liabilities, costs and expenses (including attorneys’  fees, whether incurred in connection with enforcing this indemnity or defending claims of third  parties)  of  any  kind  in  any  way  relating  to  or  arising  from  a  claim  by  any  Person  (including  Broker)  that  such  Person  acted  on  behalf  of  Borrower  in  connection  with  the  transactions  contemplated  herein.   The  provisions  of  this Section  10.2 shall  survive  the  expiration  and  termination of this Agreement and the repayment of the Debt.         10.3  Retention of Servicer.  Lender reserves the right to retain the Servicer and any  special servicer to act as its agent(s) hereunder with such powers as are specifically delegated to  the  Servicer  and  any  special  servicer  by  Lender,  whether  pursuant  to  the  terms  of this                                         79  71215191 

 

Agreement, any pooling and servicing agreement or similar agreement entered into as a result of  a Secondary Market Transaction or otherwise, together with such other powers as are reasonably  incidental thereto.  Borrower shall pay any reasonable fees and expenses of the Servicer and any  special servicer in connection with a release of the Property, assumption or modification of the  Loan, enforcement of the Loan Documents or any other action taken by Servicer and any special  servicer hereunder on behalf of Lender (which shall not include ongoing regular servicing fees  relating to the day-to-day servicing of the Loan, for which Borrower shall not be charged).         10.4  Survival.   This  Agreement  and  all  covenants,  agreements,  representations  and  warranties made herein and in the certificates delivered pursuant hereto shall survive the making  by Lender of the Loan and the execution and delivery to Lender of the Note, and shall continue  in full force and effect so long as any of the Debt is unpaid or such longer period if expressly set  forth in this Agreement.  All Borrower’s covenants and agreements in this Agreement shall inure  to the benefit of the respective legal representatives, successors and assigns of Lender.         10.5  Lender’s Discretion.  Whenever pursuant to this Agreement or any other Loan  Document,  Lender  exercises  any  right  given  to  it  to  approve  or  disapprove,  or  consent  or  withhold  consent,  or  any  arrangement  or  term  is  to  be  satisfactory  to  Lender  or  is  to  be  in  Lender’s  discretion,  the  decision  of  Lender  to  approve  or  disapprove,  to  consent  or  withhold  consent,  or  to  decide  whether  arrangements  or  terms  are  satisfactory  or  not  satisfactory,  or  acceptable  or  unacceptable  or  in  Lender’s  discretion  shall  (except  as  is  otherwise  specifically  herein  provided)  be  in the  sole  discretion  of  Lender  and  shall  be  final  and  conclusive.   Additionally, whenever in  this  Agreement or any other  Loan Document, Lender agrees  to  not  unreasonably  withhold,  condition  or  delay  its  consent,  such  agreement  to  not  unreasonably  withhold, condition or delay its consent shall only apply if no Event of Default is continuing, and  if an Event of Default is continuing, Lender shall have the right to withhold, condition or delay  its consent in its sole and absolute discretion.         10.6  Governing Law.               (a)   THIS  AGREEMENT  WAS  NEGOTIATED  IN  THE  STATE  OF  NEW  YORK, AND MADE BY LENDER AND ACCEPTED BY BORROWER IN THE STATE OF  NEW YORK, AND THE PROCEEDS OF THE NOTE DELIVERED PURSUANT HERETO  WERE DISBURSED FROM THE STATE OF NEW YORK, WHICH STATE THE PARTIES  AGREE  HAS  A  SUBSTANTIAL  RELATIONSHIP  TO  THE  PARTIES  AND  TO  THE  UNDERLYING  TRANSACTION  EMBODIED  HEREBY,  AND  IN  ALL  RESPECTS,  INCLUDING  MATTERS  OF  CONSTRUCTION,  VALIDITY  AND  PERFORMANCE,  THIS  AGREEMENT  AND  THE  OBLIGATIONS  ARISING  HEREUNDER  SHALL  BE  GOVERNED  BY,  AND   CONSTRUED  IN  ACCORDANCE  WITH,  THE  LAWS  OF  THE  STATE  OF  NEW  YORK  APPLICABLE  TO  CONTRACTS  MADE  AND  PERFORMED  IN  SUCH  STATE  (WITHOUT  REGARD  TO  PRINCIPLES  OF  CONFLICT  OF  LAWS)  AND  ANY APPLICABLE LAW OF THE UNITED STATES OF AMERICA, EXCEPT THAT AT  ALL  TIMES  THE  PROVISIONS  FOR  THE  CREATION,  PERFECTION,  AND  ENFORCEMENT OF THE  LIENS  CREATED PURSUANT TO THE LOAN DOCUMENTS  SHALL  BE GOVERNED BY, AND CONSTRUED ACCORDING TO, THE  LAW  OF  THE  STATE,  COMMONWEALTH  OR  DISTRICT,  AS  APPLICABLE,  IN  WHICH  THE  PROPERTY IS LOCATED, IT BEING UNDERSTOOD THAT, TO THE FULLEST EXTENT                                         80  71215191 

 

PERMITTED  BY  THE  LAW  OF  SUCH  STATE,  COMMONWEALTH  OR  DISTRICT,  AS  APPLICABLE,  THE  LAW  OF  THE  STATE  OF  NEW  YORK  SHALL  GOVERN  THE  CONSTRUCTION,  VALIDITY  AND  ENFORCEABILITY  OF  ALL  LOAN  DOCUMENTS  AND  THE  DEBT.  TO  THE  FULLEST  EXTENT  PERMITTED  BY  LAW,  BORROWER  HEREBY  UNCONDITIONALLY  AND  IRREVOCABLY  WAIVES  ANY  CLAIM  TO  ASSERT  THAT  THE  LAW  OF  ANY  OTHER  JURISDICTION  GOVERNS  THIS  AGREEMENT AND THE NOTE, AND THIS AGREEMENT AND THE NOTE SHALL BE  GOVERNED  BY  AND  CONSTRUED  IN  ACCORDANCE  WITH  THE  LAWS  OF  THE  STATE  OF  NEW  YORK  PURSUANT  TO  §5-1401  OF  THE  NEW  YORK  GENERAL  OBLIGATIONS LAW.               (b)   ANY LEGAL SUIT, ACTION OR PROCEEDING AGAINST LENDER  OR BORROWER ARISING OUT OF OR RELATING TO THIS AGREEMENT SHALL BE  INSTITUTED  IN  ANY FEDERAL  OR  STATE  COURT  IN  NEW  YORK  COUNTY,  NEW  YORK   AND  BORROWER  WAIVES  ANY  OBJECTION  WHICH  IT  MAY  NOW  OR  HEREAFTER  HAVE  TO  THE  LAYING  OF  VENUE  OF  ANY  SUCH  SUIT,  ACTION  OR  PROCEEDING,  AND  BORROWER  HEREBY  IRREVOCABLY  SUBMITS  TO  THE  JURISDICTION  OF  ANY  SUCH   COURT  IN  ANY  SUIT,  ACTION  OR  PROCEEDING.   BORROWER  DOES  HEREBY  DESIGNATE  AND  APPOINT           CT  CORPORATION  SYSTEM  AT   28 LIBERTY  STREET,  NEW  YORK,      NEW  YORK  10005,    AS  ITS  AUTHORIZED AGENT TO ACCEPT AND ACKNOWLEDGE ON ITS BEHALF SERVICE  OF ANY AND ALL PROCESS WHICH MAY BE SERVED IN ANY SUCH SUIT, ACTION  OR PROCEEDING IN ANY FEDERAL OR STATE COURT IN NEW YORK, NEW YORK,  AND  BORROWER  AGREES  THAT  SERVICE  OF  PROCESS  UPON      SAID  AGENT  AT  SAID ADDRESS AND WRITTEN NOTICE OF SAID SERVICE OF BORROWER MAILED  OR  DELIVERED  TO  BORROWER  IN  THE  MANNER  PROVIDED  HEREIN  SHALL  BE  DEEMED IN EVERY RESPECT EFFECTIVE SERVICE OF PROCESS UPON BORROWER  (UNLESS LOCAL LAW REQUIRES ANOTHER METHOD OF SERVICE), IN ANY SUCH  SUIT,  ACTION  OR  PROCEEDING  IN  THE  STATE  OF  NEW  YORK.   BORROWER  (i)  SHALL  GIVE  PROMPT  NOTICE  TO  LENDER  OF  ANY  CHANGED  ADDRESS  OF  ITS  AUTHORIZED  AGENT  HEREUNDER,  (ii)  MAY  AT  ANY  TIME  AND  FROM  TIME  TO  TIME DESIGNATE A SUBSTITUTE AUTHORIZED AGENT WITH AN OFFICE IN NEW  YORK,  NEW  YORK  (WHICH  SUBSTITUTE  AGENT  AND  OFFICE  SHALL  BE  DESIGNATED AS THE PERSON AND ADDRESS FOR SERVICE OF PROCESS), AND (iii)  SHALL PROMPTLY DESIGNATE SUCH A SUBSTITUTE IF ITS AUTHORIZED AGENT  CEASES  TO  HAVE  AN  OFFICE   IN  NEW  YORK,  NEW  YORK  OR  IS  DISSOLVED  WITHOUT  LEAVING  A  SUCCESSOR.   NOTWITHSTANDING  THE  FOREGOING,  LENDER  SHALL  HAVE  THE  RIGHT  TO  INSTITUTE  ANY  LEGAL  SUIT,  ACTION  OR  PROCEEDING FOR THE ENFORCEMENT OR FORECLOSURE OF ANY LIEN ON ANY  COLLATERAL  FOR  THE  LOAN  IN  ANY  FEDERAL  OR  STATE  COURT  IN  ANY  JURISDICTION(S)  THAT  LENDER  MAY  ELECT  IN  ITS  SOLE  AND  ABSOLUTE  DISCRETION, AND BORROWER WAIVES ANY OBJECTION WHICH IT MAY NOW OR  HEREAFTER  HAVE  TO  THE  LAYING  OF  VENUE  OF  ANY  SUCH  SUIT,  ACTION  OR  PROCEEDING,  AND  BORROWER       HEREBY  IRREVOCABLY  SUBMITS  TO  THE  JURISDICTION OF ANY SUCH COURT IN ANY SUIT, ACTION OR PROCEEDING.                                          81  71215191 

 

      10.7  Trial  by  Jury.   BORROWER  AND  LENDER  HEREBY  AGREE  NOT  TO  ELECT A TRIAL BY JURY OF ANY ISSUE TRIABLE OF RIGHT BY JURY, AND WAIVE  ANY RIGHT TO TRIAL BY JURY FULLY TO THE EXTENT THAT ANY SUCH RIGHT  SHALL NOW OR HEREAFTER EXIST WITH REGARD TO THE LOAN DOCUMENTS, OR  ANY  CLAIM,  COUNTERCLAIM  OR  OTHER  ACTION  ARISING  IN  CONNECTION  THEREWITH.  THIS WAIVER OF RIGHT TO TRIAL BY JURY IS GIVEN KNOWINGLY  AND  VOLUNTARILY  BY     BORROWER  AND  LENDER,  AND  IS  INTENDED  TO  ENCOMPASS  INDIVIDUALLY  EACH  INSTANCE  AND  EACH  ISSUE  AS  TO  WHICH  THE RIGHT TO A TRIAL BY JURY WOULD OTHERWISE ACCRUE.  EITHER PARTY IS  HEREBY  AUTHORIZED  TO  FILE  A  COPY  OF  THIS  PARAGRAPH  IN  ANY  PROCEEDING AS CONCLUSIVE EVIDENCE OF THIS WAIVER BY THE OTHER.         10.8  Modification,  Waiver  in  Writing.   No  modification,  amendment,  extension,  discharge,  termination  or  waiver  of  any  provision  of  this  Agreement  or  of  any  other  Loan  Document, nor consent to any departure by Borrower therefrom, shall in any event be effective  unless the same shall be in a writing signed by the party or parties against whom enforcement is  sought, and then such waiver or consent shall be effective only in the specific instance, and for  the purpose, for which given.  Except  as  otherwise expressly provided herein,  no notice to  or  demand on Borrower shall entitle Borrower to any other or future notice or demand in the same,  similar  or  other  circumstances.   Neither  any  failure  nor  any  delay  on  the  part  of  Lender in  insisting upon strict performance of any term, condition, covenant or agreement, or exercising  any  right,  power,  remedy  or  privilege  hereunder,  or  under  any  other  Loan  Document,  shall  operate as or constitute a waiver thereof, nor shall a single or partial exercise thereof preclude  any  other  future  exercise,  or  the  exercise  of  any  other  right,  power,  remedy  or  privilege.   In  particular, and not by way of limitation, by accepting payment after the due date of any amount  payable under any Loan Document, Lender shall not be deemed to have waived any right either  to require prompt payment when due of all other amounts due under the Loan Documents, or to  declare  an  Event  of  Default  for  failure  to  effect  prompt  payment  of  any  such  other  amount.   Lender shall have the right to waive or reduce any time periods that Lender is entitled to under  the Loan Documents in its sole and absolute discretion.         10.9  Headings/Schedules.   The  Article  and/or  Section  headings  and  the  Table  of  Contents in this Agreement are included herein for convenience of reference only and shall not  constitute a part of this Agreement for any other purpose.  The Schedules attached hereto, are  hereby incorporated  by reference as a part of this Agreement with the same force and effect as if  set forth in the body hereof.         10.10 Severability.   Wherever  possible,  each  provision  of  this  Agreement  shall  be  interpreted in such manner as to be effective and valid under applicable law, but if any provision  of this Agreement shall be prohibited by or invalid under applicable law, such provision shall be  ineffective to the extent of such prohibition or invalidity, without invalidating the remainder of  such provision or the remaining provisions of this Agreement.         10.11 Prior Agreements.  This Agreement and the other Loan Documents contain the  entire  agreement  of  the  parties  hereto  and  thereto  in  respect  of  the  transactions  contemplated  hereby and thereby, and all prior agreements, understandings and negotiations among or between                                         82  71215191 

 

such parties, whether oral or written, are superseded by the terms of this Agreement and the other  Loan Documents.         10.12 Preferences.   Upon  the  occurrence  and  continuance  of  an  Event  of  Default,  Lender shall have the continuing and exclusive right to apply or reverse and reapply any and all  payments by Borrower to any portion of the Debt.  To the extent Borrower makes a payment to  Lender, or Lender receives proceeds of any collateral, which is in whole or in part subsequently  invalidated,  declared  to  be  fraudulent  or  preferential,  set  aside  or  required  to  be  repaid  to  a  trustee, receiver or any other party under any bankruptcy law, state or federal law, common law  or equitable cause, then, to the extent of such payment or proceeds  received, the Debt or part  thereof intended to be satisfied shall be revived and continue in full force and effect, as if such  payment  or  proceeds  had  not  been  received  by  Lender.   This  provision  shall  survive  the  expiration or termination of this Agreement and the repayment of the Debt.         10.13 Certain  Waivers.   Borrower  shall  not  be  entitled  to  any  notices  of  any  nature  whatsoever from Lender except with respect to matters for which this Agreement or any other  Loan Document specifically and expressly requires the giving of notice by Lender to Borrower  and  except  with  respect  to  matters  for  which  Borrower  is  not,  pursuant  to  applicable  Legal  Requirements, permitted to waive the giving of notice.  Borrower hereby expressly waives the  right to receive any notice from Lender with respect to any matter for which no Loan Document  specifically and expressly requires the giving of notice by Lender to Borrower.  Without limiting  any of the other provisions contained herein, Borrower hereby unconditionally and irrevocably  waives, to the maximum extent permitted by applicable law, any rights it may have to claim or  recover  against  Lender  in  any  legal  action  or  proceeding  any  special,  exemplary,  punitive  or  consequential damages.         10.14 Remedies of Borrower.  If a claim or adjudication is made that Lender or any of  its agents, including Servicer, has acted unreasonably or unreasonably delayed acting in any case  where by law or under any Loan Document, Lender or any such agent, as the case may be, has an  obligation  to  act  reasonably  or  promptly,  Borrower  agrees  that  neither  Lender  nor  its  agents,  including Servicer, shall be liable for any monetary damages, and Borrower’s sole remedy shall  be  to  commence  an  action  seeking  injunctive  relief  or  declaratory  judgment.   Borrower  specifically waives any claim against Lender and its agents, including Servicer, with respect to  actions taken by Lender or its agents on Borrower’s behalf.         10.15 Offsets,  Counterclaims  and  Defenses.   Borrower  hereby  waives  the  right  to  assert a counterclaim, other than a compulsory counterclaim, in any action or proceeding brought  against it by Lender or its agents, including Servicer, or otherwise offset any obligations to make  payments required under the Loan Documents provided that the foregoing shall not be construed  to prohibit Borrower from maintaining an independent action.  Any assignee of Lender’s interest  in and to the Loan Documents shall take the same free and clear of all offsets, counterclaims or  defenses  which  Borrower  may  otherwise  have  against  any  assignor  of  such  documents (but  without  prejudice  to  any  rights  Borrower  may  have  under  applicable  law  and  the  Loan  Documents against (x) such assignor and (y) such assignee of Lender with respect to acts, events  or  omissions  first  occurring  or  arising  after  the  date  of  such  assignment), and  no  such  offset,  counterclaim or defense shall be interposed or asserted by Borrower in any action or proceeding  brought by any such assignee upon such documents, and any such right to interpose or assert any                                         83  71215191 

 

such offset, counterclaim or defense in any such action or proceeding is hereby expressly waived  by  Borrower (provided  that  the  foregoing  shall  not  be  construed  to  prohibit  Borrower  from  maintaining an independent action against such assignor).           10.16 Publicity.   All  news  releases,  publicity  or  advertising  by  Borrower  or  its  Affiliates  through  any  media  intended  to  reach  the  general  public,  which  refers  to  the  Loan  Documents,  the  Loan,  Lender  or  any  member  of  the  Lender  Group,  a  Loan  purchaser,  the  Servicer or the trustee in a Secondary Market Transaction, 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. Notwithstanding the foregoing or any other provision of the Loan Documents, nothing  herein shall limit or prohibit Guarantor’s, Borrower’s or any other of its or their Affiliates’, right  or  duty  to  make  filings  with  the  SEC  (including,  without  limitation,  registration  statements,  proxy statements, reports on Form 10-K, 10-Q and 8-K (or their equivalents)), make filings with  any national securities exchange, or make distributions of information and reports to its or their  shareholders,  limited  partners  or  members,  generally,  as  the  case  may  be,  but  only  disclosing  information required to be disclosed because the Guarantor is a public company and Lender shall  have no right of consent or approval over any such filing or distribution.         10.17 No Usury.  Borrower and Lender intend at all times to comply with applicable  state law or applicable United States federal law (to the extent that it permits Lender to contract  for, charge, take, reserve or receive a greater amount of interest than under state law) and that  this Section 10.17 shall control every other agreement in the Loan Documents.  If the applicable  law (state or federal) is ever judicially interpreted so as to render usurious any amount called for  under  the  Note  or  any  other  Loan  Document,  or  contracted  for,  charged,  taken,  reserved  or  received with respect to the Debt, or if Lender’s exercise of the option to accelerate the maturity  of  the  Loan  or  any  prepayment  by  Borrower  results  in  Borrower  having  paid  any  interest  in  excess of that permitted by applicable law, then it is Borrower’s and Lender’s express intent that  all excess amounts theretofore collected by Lender shall be credited against the unpaid Principal  and  all  other  Debt  (or,  if  the  Debt  has  been  or  would  thereby  be  paid  in  full,  refunded  to  Borrower), and the provisions of the Loan Documents immediately be deemed reformed and the  amounts thereafter collectible thereunder reduced, without the necessity of the execution of any  new  document,  so  as  to  comply  with  applicable  law,  but  so  as  to  permit  the  recovery  of  the  fullest amount otherwise called for thereunder.  All sums paid or agreed to be paid to Lender for  the use, forbearance or detention of the Loan shall, to the extent permitted by applicable law, be  amortized,  prorated,  allocated,  and  spread  throughout  the  full  stated  term  of  the  Loan  until  payment in full so that the rate or amount of interest on account of the Debt does not exceed the  maximum lawful rate from time to time in effect and applicable to the Debt for so long as the  Debt is outstanding.  Notwithstanding anything to the contrary contained in any Loan Document,  it is not the intention of Lender to accelerate the maturity of any interest that has not accrued at  the time of such acceleration or to collect unearned interest at the time of such acceleration.         10.18 Conflict; Construction  of Documents; Reliance.   In the event  of any  conflict  between the provisions of this Agreement and any of the other Loan Documents, the provisions  of  this  Agreement  shall  control.   The  parties  hereto  acknowledge  that  each  is  represented  by  separate counsel in connection with the negotiation, drafting, execution and delivery of the Loan  Documents and that the Loan Documents shall not be subject to the principle of construing their  meaning against the party that drafted them.  Borrower acknowledges that, with respect to the                                         84  71215191 

 

Loan,  Borrower shall  rely  solely on its  own judgment  and advisors in  entering into the  Loan,  without relying in any manner on any statements, representations or recommendations of Lender  or any parent,  subsidiary  or affiliate of  Lender.   Lender shall  not  be subject  to  any limitation  whatsoever  in  the  exercise  of  any  rights  or  remedies  available  to  it  under  any  of  the  Loan  Documents  or  any  other  agreements  or  instruments  which  govern  the  Loan  by  virtue  of  the  ownership by it or any parent, subsidiary or affiliate of Lender of any equity interest any of them  may acquire in Borrower, and Borrower hereby irrevocably waives the right to raise any defense  or take any action on the basis of the foregoing with respect to Lender’s exercise of any such  rights or remedies.  Borrower acknowledges that Lender engages in the business of real estate  financings and other real estate transactions and investments which may be viewed as adverse to  or competitive with the business of Borrower or its Affiliates.         10.19 No Joint Venture or Partnership; No Third Party Beneficiaries.                 (a)   Borrower and Lender intend that the relationships created under the Loan  Documents be solely that of borrower and lender.  Nothing herein or therein is intended to create  a joint venture, partnership, tenancy-in-common or joint tenancy relationship between Borrower  and  Lender  nor  to  grant  Lender  any  interest  in  the  Property  other  than  that  of  mortgagee,  beneficiary or lender.               (b)   The Loan Documents are solely for the benefit  of Lender and Borrower  and nothing contained in any Loan Document shall be deemed to confer upon anyone other than  the Lender and Borrower any right to insist upon or to enforce the performance or observance of  any of the obligations contained therein.         10.20 Yield  Maintenance  Premium.   Borrower  acknowledges  that  (a)  Lender  is  making  the  Loan in  consideration  of  the  receipt  by  Lender  of  all  interest  and  other  benefits  intended to be conferred by the Loan Documents and (b) if payments of Principal are made to  Lender on or prior to the Yield Maintenance Date, for any reason whatsoever, whether voluntary,  as a result of Lender’s acceleration of the Loan after an Event of Default, by operation of law or  otherwise, Lender will not receive all such interest and other benefits and may, in addition, incur  costs.  For these reasons, and to induce Lender to make the Loan, Borrower agrees that, except as  expressly provided in Section 7, all prepayments made on or before the Yield Maintenance Date,  if  any,  whether  voluntary  or  involuntary,  will  be  accompanied  by  the  Yield  Maintenance  Premium.   Such  Yield  Maintenance  Premium  shall  be  required  whether  payment  is  made  by  Borrower, by a Person on behalf of Borrower, or by the purchaser at any foreclosure sale, and  may be included in any bid by Lender at such sale.  Borrower further acknowledges that (A) it is  a knowledgeable real estate developer and/or investor; (B) it fully understands the effect of the  provisions of this Section 10.20, as well as the other provisions of the Loan Documents; (C) the  making  of  the  Loan  by  Lender  at  the  Interest  Rate  and  other  terms  set  forth  in  the  Loan  Documents  are sufficient  consideration for Borrower’s obligation to  pay a  Yield  Maintenance  Premium (if required); and (D) Lender would not make the Loan on the terms set forth herein  without the inclusion of such provisions.  Borrower also acknowledges that the provisions of this  Agreement  limiting  the  right  of  prepayment  and  providing  for  the  payment  of  the  Yield  Maintenance  Premium  and  other  charges  specified  herein  were  independently  negotiated  and  bargained for, and constitute a specific material part of the consideration given by Borrower to  Lender for the making of the Loan except as expressly permitted hereunder.                                         85  71215191 

 

      10.21 Assignment.  The Loan, the Note, the Loan Documents and/or Lender’s rights,  title,  obligations  and  interests  therein  may  be  assigned,  pledged,  delegated,  participated  or  otherwise  transferred  by  Lender  and  any  of  its  successors  and  assigns  to  any  Person  without  Borrower’s or Guarantor’s consent at any time in its discretion, in whole or in part, whether by  operation of law (pursuant to a merger or other successor in interest) or otherwise.  Upon such  assignment, all references to Lender in this Loan Agreement and in any Loan Document shall be  deemed  to  refer  to  such  assignee  or  successor  in  interest  and  such  assignee  or  successor  in  interest shall thereafter stand in the place of Lender.  Borrower may not assign and/or delegate,  as applicable, its rights, title, interests or obligations under this Loan Agreement or under any of  the Loan Documents.          10.22 Intentionally Omitted.         10.23 Certain Additional  Rights  of  Lender (VCOC).   Notwithstanding  anything  to  the contrary which may be contained in this Agreement, at all times throughout the Term, upon  the  request  of  Lender  or  any  of  Lender’s  successors,  assigns  or  participants  in  the  Loan,  the  management of  Borrower shall  consult  with  Lender or any of  Lender’s  successors,  assigns  or  participants  on  significant  business  issues  relating  to  the  operation  of  the  Property  and  make  itself available quarterly either personally or by telephone at mutually agreeable times for such  consultation;  provided,  however,  that  such  consultation  need  not  result  in  any  change  in  Borrower’s course of action.  The aforementioned consultation rights are intended to satisfy the  requirement  of  management  rights for  purposes  of  the  Department  of  Labor  “plan  assets”  regulation 29 C.F.R. Section 2510.3 101.   The  rights  described  in  this Section  10.23 may  be  exercised  by  any  Person  which  owns  (i) directly or indirectly, substantially all of the interests in Lender, (ii) a participation interest in  the Loan or (iii) directly or indirectly, substantially all of the interests in the holder of any such  participation interest (it being intended that any such Person described in clauses (i), (ii) and (iii)  of this sentence is intended to be a third party beneficiary of the rights granted under this Section  10.23,  with  the  direct  right  to  enforce  such  rights  against  Borrower,  notwithstanding  the  provisions of Section 10.19 to the contrary).         10.24 Set-Off.  In addition to any rights and remedies of Lender provided by this  Loan Agreement and by law, Lender shall have the right, without prior notice to Borrower,  any such notice being expressly waived by Borrower to the extent permitted by applicable  law, upon any amount becoming due and payable by Borrower hereunder (whether at the  stated maturity, by acceleration or otherwise) to set-off and appropriate and apply against  such amount any and all deposits (general or special, time or demand, provisional or final),  in any currency, and any other credits, indebtedness or claims, in each case whether direct  or indirect, absolute or contingent, matured or unmatured, at any time held or owing by  Lender or any Affiliate thereof to or for the credit or the account of Borrower.  Lender  agrees promptly to notify Borrower after any such set-off and application made by Lender;  provided that the failure to give such notice shall not affect the validity of such set-off and  application.                                          86  71215191 

 

      10.25 Counterparts.  This Agreement may be executed in any number of counterparts,  each of which when so executed and delivered shall be an original, but all of which shall together  constitute one and the same instrument.         10.26 Borrower.  The parties hereto acknowledge that the defined term “Borrower” has  been  defined  to  collectively  include  each  individual  Borrower.   It  is  the  intent  of  the  parties  hereto  in  making  any  determination  under  this  Agreement  and  each  other  Loan  Documents,  including, without limitation, in determining whether (a) a breach of a representation, warranty  or a covenant has occurred, (b) there has occurred a Default or Event of Default, or (c) an event  has occurred which would create recourse obligations under Section 10.1 of this Agreement, that  any such breach, occurrence or event with respect to any individual Borrower shall be deemed to  be such a breach, occurrence or event with respect to each of the individual Borrowers and that  each of the individual Borrowers need not have been involved with such breach, occurrence or  event in order for the same to be deemed such a breach, occurrence or event with respect to each  individual Borrower.         10.27 Cross-Default;  Cross-Collateralization;  Waiver  of  Marshalling  of  Assets.   Borrower  acknowledges  that  Lender  has  made  the  Loan  to  Borrower  upon  the  security  of  its  collective  interest  in  the  Property  and  in  reliance  upon  the  aggregate  of  the  Property  taken  together being of greater value as collateral security than the sum of each Individual Property  taken  separately.   To  the  fullest  extent  permitted  by  law,  each  Borrower,  for  itself  and  its  successors and assigns, waives all rights to a marshalling of the assets of such Borrower, such  Borrower’s members or partners, as applicable, and others with interests in such Borrower, and  of the Property, and shall not assert any right under any laws pertaining to the marshalling of  assets, the sale in inverse order of alienation, homestead exemption, the administration of estates  of  decedents,  or  any  other  matters  whatsoever  to  defeat,  reduce  or  affect  the  right  of  Lender  under the Loan Documents to a sale of the Property for the collection of the Debt without any  prior or different resort for collection or of the right of Lender to the payment of the Debt out of  the net proceeds of the Property in preference to every other claimant whatsoever.  In addition,  each Borrower, for itself and its successors and assigns, waives in the event of foreclosure of any  Individual  Property,  any  equitable  right  otherwise  available  to  such  Borrower  which  would  require the separate sale of the Property or require Lender to exhaust its remedies against any  Individual  Property  or  any  combination  of  the  Property  before  proceeding  against  any  other  Individual Property or combination of Property; and further in the event of such foreclosure each  Borrower  does  hereby  expressly  consent  to  and  authorizes,  at  the  option  of  Lender,  the  foreclosure and sale either separately or together of any combination of the Property.         10.28 Confidentiality.  So  long  as  the  Loan  is  outstanding, Lender  (and  each  of  Lender’s  successors,  participants and  assigns)  agrees  to  maintain  the  confidentiality  of  the  Information (as defined below), except that Information may be disclosed (a) to its Affiliates, to  its  and  its  Affiliates’ partners, directors,  officers, existing  and potential  financing sources,  employees and agents, including accountants, legal counsel, consultants,  and other advisors (it  being  understood  that  the  Persons  to  whom  such  disclosure  is  made  will  be  informed  of  the  confidential nature of such Information and instructed to keep such Information confidential), (b)  to the extent requested by any regulatory authority, (c) to the extent required by applicable laws  or  regulations  or  by  any  subpoena  or  similar  legal  process,  (d)  to  any  other  party  to  this  Agreement, (e) in connection with the exercise of any remedies hereunder or any suit, action or                                         87  71215191 

 

proceeding relating to this Agreement or the enforcement of rights hereunder, (f) subject to an  agreement  containing  provisions  substantially  the  same  as  those  of  this  Section,  to  any  participant in, or any prospective assignee which is not a Competitor of Borrower, (g) with the  consent  of  the  Borrower  or  (h)  to  the  extent  such  Information  (i)  becomes  publicly  available  other  than  as  a  result  of  a  breach  of  this  Section  or  (ii)  becomes  available  to  Lender  on  a  nonconfidential  basis  from  a  source  other  than  Borrower.  For the  purposes  of  this  Section,  “Information”  means  all  information  received  from  Borrower  or  Guarantor,  or  its  Affiliates  relating to such Person or its business, other than any such information that is available to Lender  on  a  nonconfidential  basis  prior to  disclosure  by  such  Person;  provided  that,  in  the  case  of  information  received  from  such  Person  after  the  date  hereof,  such  information  is  clearly  identified  at  the  time  of  delivery  as  confidential.  Any  Person  required  to maintain  the  confidentiality of Information as provided 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  to  its  own  confidential  information.         [Remainder of Page Intentionally Left Blank; Signature Pages Follow]                                           88  71215191 

 

             IN WITNESS WIIEREOF, the parties   hereto have caused this Loan Agreement to be duly executed by their duly authorized representatives, all as of the day and year first above written.                                         BORROWER:                                         SRT SF RETAIL   \LLq                                        a Delaware limited liability company                                         By:                /(-                                        Name: l. et lharnS                                        Title:      t          oto                                         SRT LA RETAIL,   LLC,                                        a Delaware limited liability company                                         By:                                        Name:   C,ke Surnt                                        Title: h*hotntd fiOnalaru                                                            J    J                    ISIGNATURES CONTINUE      ON FOLLOWING     PAGE]                              ISIGNATURE PAGE TO LOAN AGREEMENT] 71215191

 

                                       LENDER:                                         PFP HOLDING COMPAIIY       VI, LLC,                                        a Delaware limited liability company                                         By: Prime Finance Partners VI, Inc.,                                             a Maryland                                             its Managing                                              B                                                N          W. Brayshaw                              [STGNATURE PAGE rO LOAN ACnEEunNr] 71215191

 

                                  Schedule 1                              Index of Other Definitions   “Acceptable Counterparty” - 2.6.1  “Acceptable SMBC Credit Support Party” – 2.6.1  “Applicable Taxes” - 2.2.3  “Approved Capital Budget” - 6.3.5  “Approved Operating Budget” - 6.3.5  “Assignment of Leases and Rents”- 1.1 (Definition of Loan Documents)  “Assumed Interest Rate” – 1.1 (Definition of Yield Maintenance Premium)  “Award” - 7.3.2  “Bankruptcy Proceeding” - 4.19  “Borrower’s Recourse Liabilities” - 10.1  “Breakage Costs” – 2.2.4  “Broker” - 10.2  “Cap/Ex Reserve Subaccount” - 3.5  “Cash Management Accounts” - 3.10  “Cash Management Agreement” – 1.1 (Definition of Loan Documents)  “Casualty” - 7.2.1  “Casualty/Condemnation Prepayment” - 2.3.2  “Casualty/Condemnation Subaccount” - 3.7  “Cause” - Schedule 6  “Certificates” – 1.1 (Definition of Permitted Investments)  “Clearing Account” - 3.1  “Clearing Account Agreement”- 1.1 (Definition of Loan Documents)  “Clearing Bank” - 3.1  “Condemnation” - 7.3.1  “Delaware Act” – Schedule 6  “Deposit Account” - 3.1  “Determination Date” - 1.1 (Definition of LIBOR)  “Disclosure Document” - 9.1.2  “Early Sale Interest Rate” – 1.1 (Definition of Yield Maintenance Premium)  “Easements” - 4.5  “Embargoed Person” – 5.29  “Environmental Laws” - 4.29  “Equipment” - Security Instrument  “Eurodollar Business Day” – 1.1 (Definition of LIBOR)  “Event of Default” - 8.1  “Exchange Act” - 9.1.2  “Extension Period” – 2.8  “FATF” – 5.29  “First Extended Maturity Date” - 2.8  “Floor” – 1.1 (Definition of LIBOR Rate)  “Fund” – 1.1 (Definition of Permitted Investments)  “Guaranty”- 1.1 (Definition of Loan Documents)  “Hazardous Substances” - 4.29                                    Schedule 1-1  71215191 

 

“Improvements” - Security Instrument  “Indemnified Liabilities” - 5.26  “Indemnified Party” - 5.26  “Insurance Premiums” - 7.1.2  “Insurance Subaccount” - 3.4  “Insured Casualty” - 7.2.2  “Interest Rate Protection Agreement” - 2.6.1  “Issuer” - 9.1.3  “Late Payment Charge” - 2.5.3  “Lender Group” - 9.1.3  “Lender’s Consultant” - 5.16.1  “Liabilities” - 9.1.3  “LIBOR Unavailability Condition” - 2.2.6  “LIBOR Unavailability Notice” - 2.2.6  “Licenses” - 4.9  “Loan” - 2.1  “Moody’s” – 1.1 (Definition of Rating Agency)  “Note”- 1.1 (Definition of Loan Documents)  “Notice” - 6.1  “O & M Program” - 5.16.3  “OFAC” - 5.29  “Partial Release” – 2.4(b)  “Permitted Indebtedness” - 5.9  “Policies” - 7.1.2  “Proceeds” - 7.2.2  “Property Tax Subaccount” - 3.3  “Proposed Material Lease” - 5.17.1  “Provided Information” - 9.1.1  “Qualified Carrier” – 7.1.1  “Real Estate Taxes” 1.1 (Definition of Property Taxes)  “Registration Statement” - 9.1.3  “Remedial Work” - 5.16.2  “Rent Roll” - 4.25  “Required Records” - 6.3.6  “Required Repairs” - 3.2.1  “Required Repairs Subaccount” - 3.2.2  “Restoration” - 7.4.1  “Rollover Reserve Subaccount” - 3.6  “S&P” – 1.1 (Definition of Rating Agency)  “Second Extended Maturity Date” - 2.8  “Secondary Market Transaction” - 9.1.1  “Securities” - 9.1.1  “Securities Act” - 9.1.2  “Securitization” – 9.1.1  “Security Deposit Subaccount” - 3.8  “Security Instrument”- 1.1 (Definition of Loan Documents)                                    Schedule 1-2  71215191 

 

“Significant Casualty” - 7.2.2  “Single Member Bankruptcy Remote LLC” - Schedule 6  “Special Member” – Schedule 6  “Special Purpose Bankruptcy Remote Entity” - 5.6  “Springing Recourse Event” – 10.1  “SRT LA Retail Assignment of Leases and Rents” – 1.1 (Definition of Loan Documents)  “SRT LA Retail Security Instrument” – 1.1 (Definition of Loan Documents)  “SRT SF Retail Assignment of Leases and Rents” – 1.1 (Definition of Loan Documents)  “SRT SF Retail Security Instrument” – 1.1 (Definition of Loan Documents)  “Subaccounts” - 3.1  “Substitute IRPA” - 2.6.6  “Syndication” - 9.1.1  “Underwriter Group” - 9.1.3  “Underwriters” - 9.1.3  “U.S. Dollars” – 1.1 (Definition of LIBOR)                                                Schedule 1-3  71215191 

 

                                                         Schedule      2                                                      Required      Repairs                                                                          acc€sg                                         12 montbs 4.l Americarc  Wi*l Disabiliti€E Act          $250                                                             Schedule     2-1  7tzts1,9l

 

                                      Schedule 3  Section 4.15 ft)  Borrower did not have a Special Member until shortly prior to the closing of the Loan.                                                                                     by Borrower,s organizational documents did not include the special member provisions required  schedule 6 of ihis Agreement until shortly prior to the closing of the Loan.  Borrower's organizational documents did not include the special pu{pose' single-member,                                                                       shortly prior to the bankruptcy remote provisions required by Schedule 6 of this Agreement until  closing of the Loan.                                                                               Property; SRT  SF Retail previously owned and operated each of the following: (i) the 8 octavia                -Street                                                         (v) Fulton (ii) 388 Fulton    Property; (iii) 40d Grove Property; (iv) 450 Hayes Property; and  Shops Property.  SRT LA Retail previously owned and operated the Silver Lake Collection Property.  prior to the closing of the Loan, Borrower did not maintain a separate bank account. Borrowet's                                                                               trust bank accounts were hetd by the Operating Partnership due to the real estate investment  structure.                                                                            to file tax Because the Borrower is a "disregarded entity" for tax purposes and is not required                                                                               level. All returns under applicable law, Boriower will not file separate tax returns at the federal                                                                         consolidated at of the Guarantor's (which is the real estate investment trust) federal returns are                                                                            satisfy the the Operating partnership level as part of a tax return configured and compiled to                                                                         the Borrower will federal level regulations on real esiate investment trusts. Individual returns for  be filed at the state level.  prior to the date of this Loan, Borrower was a borrower under a loan from Keybank National  Association (,,Keybank') and in connection with the loan, pledged its assets to Keybank.                                                                        been fully  As of the date hereof, Keybank's interest in the Borrower and the Property has                                                                               without  released and Borrower tras not pledged any of its assets to any other entity, including   limitation, Keybank.                                          Schedule 3-1  7t2t5tgl

 

                                     Sche4gle 4                                        Rent Roll                                      (See Attached)                                         Schedule 4'1 'nzt5t9t

 

                                                                                                                                                                                                                                                                                                                                                 1U2Ol1g      10.45    AM                                                                                                                                                                               Rent       Roll                                                                                                                                                    All Sde@d      Pop*jes      Frcfr De.     1-Z/4i12119    ny P'or-n/                                                                                                      ld*                              leType                     Bntd                   AE                l€Fofi                l€aTo             TGtr          xonthly                                 Anrqal              Aml               AnMl              A.nu.l                                                                                                                                                                                                                                                                   R6t                kfr                                      Rat                                 l.lfrc                                                                                                                                                                                                                                                                                    Pg                                  :.: F     AE          PrA@              9era@  offih-        388   Fulbn.San      Fancis Cuffil@                                                                                                                                                                                                                                                                                                                                    63.86             23-44               0.m p388tult                                                            R-1          Rotn                                              R&il   InliR                                              1208.00         12173116            lu31126          121.00              6,428.57              5.32             n,Az.U                                                                                                                                                                                                                                                   121.00             10,714.69              5.63            t2a576.A               67.60             23.O2               0.00 D388tult                                                            R-2          lohnny bughn6                                     R&il   Inlire                                             1,902.m         1A2U$               ta3u26 T6t&l'ffi                                                                                                                                                                                 t11O.m                                                                 a7,143.26                 s.s1         2o5.7t9.L2               tr-15              23.17              o.oo                                                                  Toel un'6                                           T&IAE                Pe@nbgp              hntfily Rent            hn@l      Rdt O@rp'f,{                                                            2.00                                                 3.110.00                100.00               17,143.26           20s,719-12 Vent                                                                0.00                                                     0.00                   0.00                    0.00                 0.00  Tdt                                                                2.OO                                              3.110.OO                                    17.14?.8             2Os;7t9.r2   D/filoqff    - aoo  Gove,san       FaMis  CuffiLcg                                                                                                                                                                                                                                                                                                                                     61-9              21.41              0.00  p4009@                                                               C1         Little Gsn   R$uart                               Rftil  InliE                                              2,000.00        12l17lE              2tu37           182.00             10,50.00                5.12           123.000.{n  TEIOl.ld                                                                                                                                                                                 2,OOO.OO                                                                10.50.oo                 5.a2          123,0OO.OO               6150              2AAa               o,oo                                                                  Tobl Untu                                            ToblA@               lrecnbgE             t'tonthly Refr         Ann@l     Rent  O@ip_st                                                              1.00                                                2,000.00                100.00               10,250.00            f3,m0.00 Ved                                                                  0.00                                                     0.00                  0.m                     0.00                  0.00  Tel                                                                1.OO                                              aooo.oo                                      10,25O.0O           123,OOO.OO   p450h.r       - 45O  Crlldl€a6  p450haye                                                            c-!          Urban Remedy                                      billdire                                                   834.00          uglL7              4281n            121.00              7,&{5.00              9,r7             91,7,10.00           110.00             37.76               0.00  d50hee                                                              c-2          Debl@                                             ffiilInlire                                              2,890.m          LUU16               |U30l3L          180.00             21,241.5O              7-35                                   84.20              278                0.00  TGIOl.d                                                                                                                                                                                  3,724.Ut                                                                24,846.50                 7.76         346,538.m                 93.04             2lt.7t             o.m                                                                  Tobt    UniE                                         T6lA@                P€|enbgE             Hoilfily    Rffi        hnulkt  O@fte'd                                                             2.00                                                 3,724.00                1@.00               28/886.50            345,538.00  Vent                                                                0-00                                                     0.00                  0.00                    0.00                  0.00  TGI                                                                 2-OO                                              3,721OO                                     28.846.5O           :!t5,6:ta,oo   pSodi       - t Oabvi.,San       Faftis  CuGtrt     l€is  p86vi                                                                307         Gallery Wendi    Norb                             R6ilInlire                                                  730.00         fl2ft4              sl3u23          61.00               3,759.50               5.15            45,114.00              51.80             15.92              0.00  pSodvi                                                               308         Eoba   Gut6                                       R&il   Inline                                               9&).00        sl27t6               sl3!26          121.00              3,920.00               4.00            47,0,O.OO              4a-m              14.86              0.00                                                                                                                                                                                                                                                                                                                                                                           0.00  p8ffivi                                                              102         VAffT                                                                                                       1,930.00                                              0.m                     0.00              0.m                   0.00              0.00              0.00  TGlColid                                                                                                                                                                                  3,4.@                                                                    7,579.5O                2.11           92"1*,00                8.32                7-26              o-m                                                                   Tobl UniB                                            Tafrl  AE           Pe@69c                Xonthly    M           Ann€l     Reft  O@pied                                                               2.00                                                1,7r0.00                 ,15.98               7,679-50             92.154.00                                                                       1.00                                                1830.00                   53.02                    0.00                  0.00  T6l                                                                 3.m                                               3,6rto.OO                                     7F7950              92,154.m    F/fuftoN   - tu]bn    M"S.n          F6tu  CuGntL.g  ptufto6                                                              7720        JPf4o@n     thase    #142839                       R&il Inlim                                               1,89t.00         8t20t1s             el19l2n          60.00               8,428.30              4.45            101,139.60              53.,t0             4.G               0.00  ptultD€                                                              lno          Gr€t   O;ps                                       R#il   InliE                                               589.00          8/U1s              7l3Ll20          60.00               3,057.29              5.19             36,687.48              62.4              20.94              0-00                                                                           lno      Eve  Mils  &SF                                    Reil   Inlim                                                                                                   60.00               6,577.*               5.16             78,930.96              61_91             m.97               0.00  TGlOrot                                                                                                                                                                                   3'75a.oo                                                                14,063.17                 4.a1         2L6,7*-O4                 57-C              12.74              o.m                                                                                                                                                                                    Page    1  of2

 

                                                                                                                                                                                                                                                                                                                                                 121mfi910:454n                                                                                                                                                                               Rent       Roll                                                                                                                                                     AlSdGt        Pope'tb      F on   oae 12101/2019        8y  FDFry                                                                   Toid Urft                                           Totalh               l|genlage            llodftly Rdt            Am€lRdt O@tpied                                                             {.m                                                  3,756.88                l(b.m                18p63.17            216,758.04 Veat                                                                0-00                                                      0.00                  0-m                     0.00                 o.00  TGI                                                                a.oo                                              3,75aJrat                                    14063.17            2'.6,7*M   dH-         Sib6    fde,l6  OrGtltg                                                                                                                                                                                                                                                                                                              91.5,18.{I)            &-47              2r-94              o.tp  Flvsl                                                               1501        CorrG     Orl!reCfte                              Rrbil   Infft                                             1.514.m          9luL4              143'/24          124,m               7Fa9.0O                5-o,l                                                                                                                                                                                                                                                                                              6.32           r4s37.4                 8.82              21.93              0-m  FilEl                                                              3m1           Eeiidor                                          Lrbil   IrSre                                             2,434-00         45114               914t24          127.8              tsp7a.t2                                                                                                                                                                                                                                                                                              5.41           4?5,0€-96               64.90             1.94               0.(n  pdhrsl                                                              371)5        Oo6-ltrie     - saqd     - lc*de  8tad           RaI Il$re                                                 6F4-m            414ls                               tl&lx,             3S,'$20,'                                                                                                                                                                                                                                  '!,EV?s                                                                                                                                                                                                                                                                            o.tx)             0.(x)                 0.m               0.@               0.00              0-&  pel€l                                                               SIGN         OUTFROi'T     trEdE  *il1274                      Roof                                                          o.m         9ILn4               E37la           2,O.m                                                                                                                                                                                                                                                                                                                    0.m               o.{t              0.00              0.00                                                                     PAXX          VTCATT                                                                                                          0.m                                                                      0.d,              0tx!                                                                                                                                                                                                                                                                                                                                    66.79            1g                  o,25  TGI    Crnqt                                                                                                                                                                            to,tltt1.6                                                               8,@As                    s.s,          toti129.4o                                                                   Totat   lrnft'                                       total AE             PcrcdbgF             lforthlt   RFt         Atrlml    lldtt  Odaaed                                                              4.m                                                $r97tn                    lm.m                5E  427.45           m\t,g-{/J  V€ft                                                                L(n                                                      0i00                  0rn                     0.00                  0-m  Tobl                                                                5.OO                                            to.ltcr-6                                     *42'A'              vot,tz,,o                                                                                                                                                                                                                                                                                                                                     a.o6              L9.82              o.10  Gaid     TobI                                                                                                                                                                           26729fi                                                                 tl6,4EA                    s.25 L68!r,39.56                                                                                                                                                                                     Page2ort2

 

                                     Schedule 5                                Organization of Borrower                                      See Attached.                                        Schedule 5-1 7 t2t519r

 

                                  sBT PRIME              I.'OAN      FNJTITY ORS CHART                                                        December              2019                                                                 Page L of 2                                                                ovER 3,000                                                                   PUBLIc                                                                                              As is customary  for a corPoration,                                                                                             Strategic Realty Trust, lnc. has a                                                                 Each has under                 ard of directors and corporate                                                                  10%  interest              officers. (See SEC filings.)  SRT Advisor, LLC                  External advisor         Strategic     Realty                                             lndividual                                     No        Delaware   LLC                   ownership                                        interest,               Trust,    lnc.                                               lnvestors       (See page  2)                                                            Maryland   corparatign                                                            General  Partner 1% interest                                                                      and                                                        Limited Partne r 98% +/ - interest                         (Non-Voting                                                                          < 2% LP interest                     Special LP Un                                                                         (Common   LP Units)                                                                  Strategic                                                                   Realty                                                                Operatlng                                                            Partnership,       L.P.                                                          ' .    DeliwaretP,                                                                  100%  interest                                                                SRT Secured                                                              Holdings, LLC                                                                 Delaware   LLC                                                                   100/o interest                                                               SRT Prime LLC                                                       700%                       too%                              SRT SF Retail l, LLC                                    Delaware   LLC                                   (Owns  SF Assets)                                        (Owns   Silverlake)

 

     sRT PRIME LQAN       ENTITY OB9 C!'l.A,Br                   December     2019                        Page 2 of 2                             Sole Owner                           & Manager                         Glenborough                        lnvestors, LLC                        , Detaware LLC    Glenborough             Limited Partner                          99% interest   Service, Inc.  Delawgre corpgration' ,             6eneral Partner             1% interest                               700%                      Glenborough  Realty                         Group, LLC                          Delaware LLC                              t0olo                        Glenborough, LLC                          Delaware LLC                               700%

 

                                      Schedule 6                  Definition of special Purpose Bankruptcy Remote Entity  (D    A,,Special purpose Bankruptcy   Remote  Entity" means (x) a limited liability company                                                                              which at all tt ut i, a Single Member Bankruptcy Remote LLC or (y) a limited liability company  times since its formation and at all times thereafter:                      (i)    was and will be organized solely for the purpose of (A) owning the        property or (B) acting as a member of the limited liability company that owns the        Property;                      (ii)   has not engaged and will not engage in any business unrelated to        (A) the o*nrrrhip of the lroperty, (B) acting as a member of the limited liability        company that owns the Property, as applicable;                      (iii)  has not had and will not have any assets other than those related to        the property oi itr member interest in the limited liability company that owns the        Property, as aPPlicable;                      (iv)   has not engaged, sought or consented to and will not engage in,        seek or consent to any dissolution, winding up, liquidation, consolidation, merger,        division, asset sale (except as expressly permitted by this Agreement), transfer of        membership interests or the like, or amendment of its articles of organization, certificate        of formation or operating agreement (as applicable);                       (v)   intentionally omitted;                       (vi)  intentionallY omitted;                       (vii) if such entity is a limited liability company that owns the Property,        has and will have at least one member that has been and will be a Special Purpose        BankruPtcY Remote;                       (viii) if such entity is a limited liability company, has and will have        articles of organization, a certificate of formation andlor an operating agreement as                                                                                      the        applicable, pr6viding that (A) such entity will dissolve only upon the bankruptcy of                                                                                        is        managing member,   tgl thi vote of a majority-in-interest of the remaining members         sufficient to continue the life of the limited liability company in the event of such        bankruptcy of the managing member and (C) if the vote of a majority-in-interest of the        remaining members  to coniinue the tife of the limited liability company following the        bankruptcy of the managing member is not obtained, the limited liability company- may        not liquiOate the property without the consent of the applicable Rating Agencies for as        long as the Loan is outstanding;                       (ix)   has not, and without the unanimous consent of all of its members        will not, with respect to itself or to any other entity in which it has a direct or indirect         legal or beneficiai ownership interest (A) file a bankruptcy, insolvency or reorganization                                         Schedule 6-1   7 lzts19t

 

     petition or otherwise institute insolvency proceedings or otherwise seek any relief under       any laws relating to the relief from debts or the protection of debtors generally, (B) seek       or consent to the appointment of a receiver, liquidator, assignee, trustee, sequestrator,       custodian or any similar official for such entity or for all or any portion of such entity's       properties, (C) make any assignment for the benefit of such entity's creditors or (D) take       any action that might cause such entity to become insolvent;                     (x)    has remained and intends to remain solvent and has maintained and       intends to maintain adequate capital in light of its contemplated business operations;                    (xi)   has not failed and will not fail to correct      any known       misunderstanding regarding the separate identity of such entity;                     (xii)  has maintained and will maintain its accounts, books and records       separate from any other Person and will file its own tax returns;                     (xiii) has maintained and will maintain its books, records, resolutions       and agreements as official records;                     (xiv)  has not commingled  and will not commingle its funds or assets       with those of any other Person;                     (xv)   has held and will hold its assets in its own name;                     (xvi)  has conducted and will conduct its business in its name,                    (xvii) has maintained   and will maintain   its financial statements,       accounting records and other entity documents separate from any other Person;                     (xviii) has paid and will pay its own liabilities, including the salaries of its       own employees, out of its own funds and assets;                      (xix) has observed and will observe   all limited liability company       formalities, as applicable ;                      (xx) has maintained and will maintain an arm's-length relationship with       its Affiliates;                      (xxi) (a) if such entity owns the Property, has not and will not have any       indebtedness other than Permitted Indebtedness, or (b) if such entity acts as a managing       member of a limited liability company which owns the Property, has and will have no       indebtedness other than unsecured trade payables in the ordinary course of business       relating to acting as a member of the limited liability company which owns the Property       whichlt; do noi exceed, atany time, $10,000 and (2) are paid within thirty (30) days of       the date incurred;                                        Schedule 6-2  7 12t5191

 

                   (xxii) has not and will not assume or guarantee or become obligated for      the debts of any oiher person or hold out its credit as being available to satisfy the      obligations of any other Person except for the Loan;                     (xxiii) has not and will not acquire obligations or securities of its      members;                     (xxiv) has allocated and will allocate fairly and reasonably shared       expenses, including shared office space, and uses separate stationery, invoices and       checks;                     (xxv) except in connection with the Loan, has not pledged and will not       pledge its assets for the benefit of any other Person;                     (xxvi) has held itself out and identified itself and will hold itself out and                                                                                     or       identify itself as a separate and distinct entity under its own name and not as a division        part ofany other Person;                     (xxvii) has maintained and will maintain its assets in such a manner that it       will not be cosily or difficult to segregate, ascertain or identify its individual assets from       those of anY other Person;                     (xxviii) has not made and will not make loans to any Person;                     (xxix) has not identified and will not identify its members' or any       Affiliate of any of them, as a division or part of it;                     (xxx) has not entered into or been a party to, and will not enter into or be        aparty to, any iransaction with its members or Affiliates except in the ordinary course of       its businesr uttd on terms which are intrinsically fair and are no less favorable to it than                                                                                  party;       would be obtained in a comparable arm's-length transaction with an unrelated third                       (xxxi) has and will have no obligation to indemnify its officers, directors,       members  or Special'Members, as the case may be, or has such an obligation that is fully       subordinated fo the Debt and will not constitute a claim against it if cash flow in excess       of the amount required to pay the Debt is insufficient to pay such obligation;                      (xxxii) has and will have an express acknowledgment in its organizational       documents  thai Lender is an intended third-party beneficiary of the "special purpose"       provisions of such organizational documents; and                      (xxxiii) will consider the interests of its creditors in connection with all       corporate, partnership or limited liabitity company actions, as applicable. (II)  ,,Single Member Bankruptcy Remote       LLC" means    a limited liability company organized rnid.t the laws of the Stati of Delaware which at all times since its formation and at all times thereafter:                                        Schedule 6-3 7lzt5t9l

 

                   (i)    was and will be organized solely for the pu{pose of owning the       Property;                     (i)    has not engaged and will not engage in any business unrelated to       the ownership of the PropertY;                     (ii)   has not had and will not have any assets other than those related to       the Property;                     (iii)  has not engaged, sought or consented to and will not engage in,       seek or consent to any dissolution, winding up, liquidation, consolidation, mergel,       division, asset sale (except as expressly permitted by this Agreement), transfer of       membership interests or the like, or amendment of its limited liability company       agreement or certificate of formation, and Borrower has not been the product of, the       sibject of or otherwise involved in, in each case, any limited liability company division       (whether pursuant to a plan of division or otherwise);                      (iv)  has not, and without the unanimous consent of all of directors will       not, with respect to itself or to any other entity in which it has a direct or indirect legal or       beneficial ownership interest (A) file a bankruptcy, insolvency or reotganization petition       or otherwise institute insolvency proceedings or otherwise seek any relief under any laws       relating to the relief from debts or the protection of debtors generally, (B) seek or consent       to the ippointment of a receiver, liquidator, assignee, ffustee, sequestrator, custodian or                                                                                     (C)       any sim^ilar official for such entity or for all or any portion of such entity's properties,        11uk" any assignment for the benefit of such entity's creditors or (D) take any action that       might cause such entity to become insolvent;                      (v)   has remained and intends to remain solvent and has maintained and       intends to maintain adequate capital in light of its contemplated business operations;                     (vi)  has not failed and wilt not fail to correct any known       misunderstanding regarding the separate identity of such entity;                      (vii) has maintained and  will maintain its books, records, resolutions       and agreements as official records;                      (viii) has not commingled and will not commingle its funds or assets       with those of any other Person, except as is required or is otherwise expressly permitted       under the Loan Documents;                      (ix)   has held and will hold its assets in its own name;                      (x)    has conducted and will conduct its business in its name,                     (xi)   has maintained  and will maintain   its financial statements,        accounting records and other entity documents separate from any other Person, except to        the extent that Borrower is treated as a "disregarded entity" for tax purposes and is not        required to file tax retums under applicable law;                                        Schedule 6-4 71215191

 

                   (xii)  has paid and will pay its own liabilities, including the salaries of its       own employees, out of its own funds and assets;                     (xiii) has observed and will observe   all limited liability company       formalities;                     (xiv) has maintained and will maintain an arm's-length relationship with       its Affiliates;                     (xv)   has not and will not have any indebtedness other than Permitted       Indebtedness;                     (xvi) has  not and wilt not assums or guarantee or become obligated for       the debts of any other Person or hold out its credit as being available to satisfy the       obligations of any other Person except for the Loan;                     (xvii) has not and will not acquire obligations or securities of its       members;                     (xviii) has allocated and will allocate fairly and reasonably shared       expenses, including-shared office space, and uses separate stationery, invoices and       checks;                     (xix) except in connection with the Loan, has not pledged and will not       pledge its assets for the benefit of any other Person;                     (xx)   has held itself out and identified itself and will hold itself out and       identify itself as a separate and distinct entity under its own name and not as a division or       part ofany other Person;                      (xxi) has maintained and will maintain its assets in such a manner that it       will not be costly or difficult to segregate, ascertain or identify its individual assets from       those ofany other Person;                      (xxii) has not made and will not make loans to any Person;                      (xxiii) has not identified and will not identify its members or any Affiliate       of any of them, as a division or part of it;                      (xxiv) has not entered into or been a party to, and will not enter into or be        aparty to, any transaction with its members or Affiliates except in the ordinary course of       its business and on terms which are intrinsically fair and are no less favorable to it than       would be obtained in a comparable arm's-length transaction with an unrelated third party;                      (xxv) has and will have no obligation to indemnify its officers, directors,       members or, from and after the funding of the Loan, Special Member, as the case may be,       or has such an obligation that is fully subordinated to the Debt and will not constitute a                                        Schedule 6-5 7 t21st9l

 

     claim  against it if cash flow in excess of the amount required to pay the Debt is      insuffrcient to pay such obligation;                     (xxvi) from and after the funding of the Loan, will have an express       acknowledgment in its organizational documents that Lender is an intended third-party      beneficiary of the "special purpose" provisions of such organizational documents;                     (xxvii) will consider the interests of its creditors in connection with all       limited liability company actions;                     (xxviii) has maintained and will maintain its accounts, books and records       separate from any other Person;                    (xxix) from and after the funding of the Loan, has and will have an       operating ugr..-.rri which provides that the business and affairs of Borrower shall be       .nunug.J by or under the direction of Sole Member or a board of one or more directors       designated by Sole Member;                     (xxx) from and after the funding  of the Loan, has and will have an       operating agreement which provides that, as long as any porlion of the Debt remains       outstanding, 1n; upon the occurrence of any event that causes Sole Member to cease to       be a member of Borrower (other than (x) upon an assignment by Sole Member of all of       its limited liability company interest in Bonower and the admission of the transferee, if       permitted pursuant to the organizational documents   of Borrower and the Loan       bocuments, or (y) the resignation of Sole Member and the admission of an additional       member  of Borrower, if permitted pursuant to the organizational documents of Borrower       and the Loan Docorrr.ntt;, a Person  shall, without any action of any Person and       simultaneously with Sole Member ceasing to be a member of Borrower, automatically be       admitted as the sole member of Borrower (the "special Member")  and shall preserve       and continue the existence of Borrower without dissolution or division, (B) no Special       Member  may  resign or transfer its rights as Special Member unless a successor Special       Member  haj been admitted to Borrower as a Special Member, and (C) to the greatest       extent permitted by law, except for duties to Borrower (including duties to the members       of Bonower  solely to the extJnt of their respective economic interest in Borrower and to       Borrower's creditors), such Independent Director shall not owe any fiduciary duties to,       and shall not consider, in acting or otherwise voting on any matter for which their       approval is required, the interests of (i) the members of Borrower, (ii) other Affiliates of       Borro*.r, or (iii) any group of Affiliates of which Borrower is a part); provided,       however,the foregoing shall not eliminate the implied contractual covenant of good faith       and fair dealing anO 1n) except as expressly permitted pursuant to the terms of this       Agreement, Sole Member  may not resign and no additional member shall be admitted to       Borrower; and                      (xxxi) from and after the funding of the Loan, has and will have an       operating agreement which provides that, as long as any portion of the Debt remains       outstanding, (A) Bonower shall be dissolved, and its affairs shall be wound up only upon       the first to occur of the following: (x) the termination of the legal existence of the last                                       Schedule 6-6 7 l2t519l

 

      remaining member of Borrower  or the occunence of any other event which terminates       the continued membership of the last remaining member of Boruower in Borrower unless       the business of Borrower is continued in a manner permitted by its operating agreement       or the Delaware Limited Liability Company Act (as the same may be amended, modified       or replaced, the "Delaware Act") or (y) the entry of a decree ofjudicial dissolution under       Section 18-802 of the Delaware Act; (B) upon the occuffence of any event that causes the       last remaining member of Borrower to cease to be a member of Borrower or that causes       Sole Member to cease to be a member of Borrower (other than (x) upon an assignment by       Sole Member   of all of its limited liability company interest in Borrower and the       admission of the transferee, if permitted pursuant to the organizational documents of       Bogower  and the Loan Documents,   or (y) the resignation of Sole Member and the       admission of an additional  member of Borrower, if     permitted pursuant to the       organizational documents of Borrower and the Loan Documents), to the fullest extent       p.i-itt.A by law, the personal representative of such member shall be authorized to, and       rhull, wittrin 90 days after the occutrence of the event that terminated the continued       membership of such member in Borrower,  agree in writing to continue the existence of       Borrower and to the admission of the personal representative or its nominee or designee,       as the case may be, as a substitute member of Borrower, effective as of the occurrence of       the event that ierminated the continued membership of such member in Borrower; (C) the       bankruptcy of Sole Member or a Special Member shall not cause such member or Special       Member, iespectively, to cease to be a member of Borrower and upon the occurrence of       such an .u.nt, the business of Borrower shall continue without dissolution; (D) in the       event of dissolution of Borrower, Borrower shall conduct only such activities as are       necessary to wind up its affairs (including the sale of the assets of Borrower in an orderly       manner), and the asiets of Borrower shall be applied in the manner, and in the order of       priority, set forth in Section 18-804 of the Delaware Act; (E) to the fullest extent       pet-iiteO by law, each of Sole Member and the Special Members shall irrevocably waive       any right oi po*.t that they might have to cause Borrower or any of its assets to be       partitioned, to cause the appointment of a receiver for all or any portion of the assets of       Borrower, to compel any sale of all or any portion of the assets of Borrower pursuant to       any applicable law or to file a complaint or to institute any proceeding at law or in equity       to cause the dissolution, division, liquidation, winding up or termination of Borrower and       (F) Borrower shall be prohibited from effectuating a division (whether pursuant to       Section l8-2I7 of the Delaware Act or otherwise).  (IID  Intentionally Omitted.  (IV)  IntentionallyOmitted.  (V)   Intentionally Omitted.  (VD IntentionallyOmitted                                        Schedule 6-7  7 1215191

 

                                       Sche4ule 7                                    Calculation of UNCF'         Underwritten Net Cash Flow (LINCF) shall be equal to the Property's operating income minus operating expenses and adjusted as follows:         (i)    Operating income will be adjusted (A) to include only fixed rents based on leases in place'for tenants who are in occupancy and paying rent; (B) to include percentage rent but oniy to the extent it is determined by Lender to be stabilized and recurring; (C) to exclude rents from  temporary or month to month tenants,  provided, however, that such income will be included only tl the extent it is determined by Lender to be stabilized and recurring, but only in an amount not to exceed a maximum of 50% of such rent collected in such trailing 12 month period; (D) to exclude rents from tenants expiring in the next 90 days (from the date of ietermination), unless such tenant has renewed or it is determined by Lender in its discretion that such tenant is likely to renew; (E) to exclude rents from tenants operating under bankruptcy protection; (F) to exclude rents from any tenant which is not in occupancy and operating its tusiness; (G) to exclude rents from any tenant which is an affiliate of Borrower; (H) to exclude rents from any tenant which is more than one month delinquent in payment of rent; (I) to include CAM   and otirer reimbursements not in excess of corresponding expense items; (J) to include other income on a case-by-case basis but only to the extent it is determined by Lender to be both stabilized and recurring and (K) a vacancy and credit loss allowance equal to the greater of: (1) actual in-place vacancy andlor credit loss and (2) 5% of all revenues.         (ii)   Operating expenses will be adjusted to reflect (A) the greater of the following, each extluding any non--recrrrring items and capital expenses: (1) the actual expenses for such trailing 1Z month period (except real estate taxes and insurance which will be included at their stabiliied, recurring levels) or-(2) the budgeted expenses (as set forth in Borrower's Approved Operating Budget)-for the next 12 month period; (B) a reserve for rollover expenses equal to at lelst $2.00 p.t rquur. foot; (C) a reserve for capital expenses equal to at least $0.20 per square foot of reniable ipu.. per annum (or such higher amount as is recommended in a third-party engineering report); (Dj u management fee equal to the greater of the management fee or 4o/o of edctive  gios income; and (E) other adjustments as determined by Lender in its sole discretion consistenf with its due diligence findings and prevailing market conditions.                                         Schedule 7-1  7r215t9r

 

                                  Schedule 8                             Form of Officer’s Certificate                                  __________, 20__   PFP Holding Company VI, LLC  c/o Prime Finance Partners  233 North Michigan, Suite 1915  Chicago, IL 60601  Attention:  Steve Gerstung  Facsimile No. (312) 276-9649   Ladies and Gentlemen:   We  refer  to  the  Loan  Agreement  dated  as  of December 24,  2019 (as  amended  or  otherwise  modified  from  time  to  time,  the  “Loan  Agreement”),  by  and  among  the  undersigned  (“Borrower”) and PFP Holding Company VI, LLC (“Lender”).   Capitalized terms used herein without definition shall have the meanings ascribed to them in the  Loan Agreement.   In  connection  with  Section  [3.2.2]  [3.5(b)]  [3.6(b)]  of  the  Loan  Agreement,  Borrower  hereby  requests  a  disbursement  of  funds  from  the  [Required  Repairs]  [Cap/Ex  Reserve]  [Rollover  Reserve] Subaccount.   In  connection  with  this  requested  disbursement,  the  undersigned  _________________ of Borrower hereby certifies to Lender (A) that such funds will be used to  pay  or  reimburse  Borrower  for  [the  Required  Repairs]  [the  Approved  Capital  Expenses]  [Approved Leasing Expenses] described on Exhibit A attached hereto, (B) that all outstanding  trade payables (other than those to be paid from the requested disbursement or those constituting  Permitted Indebtedness) have been paid in full, (C) that the same has not been the subject of a  previous disbursement, (D) that all previous disbursements have been used to pay the previously  identified [Required Repairs] [Approved Capital Expenses] [Approved Leasing Expenses], (E)  that [the Required Repairs] [the Approved Capital Expenses] [Approved Leasing Expenses] or  any portion thereof which are the subject of the requested disbursement have been completed in  a good and workmanlike manner and in accordance with all applicable Legal Requirements, (F)  that all work performed on the Property has been in compliance with the terms and conditions of  the Declaration, (G) attached hereto as Exhibit B is a list identifying each Person that supplied  materials  or  labor  in  connection  with  such  [Required  Repairs]  [Approved  Capital  Expenses]  [Approved Leasing Expenses] or any portion thereof and (H) each Person identified on Exhibit B  attached hereto has been or, upon receipt of the requested disbursement, will be paid in full with  respect to the portion of the [Required Repairs] [Approved Capital Expenses] [Approved Leasing  Expenses] which is the subject of the requested disbursement.      Sincerely,                                      Schedule 8-1  71215191 

 

                                  Schedule 9                              Form of Notice to Tenants                        [BORROWER’S NAME AND ADDRESS]                                           ___________, 20__   Certified Mail  Return Receipt Requested   [Name and Address of Tenant]               Re:   Lease of Space at [Property], [Street Address], [City], [State], [Zip] (the                    “Building”)   Ladies and Gentlemen:               The undersigned is the owner of the Building and the landlord under your lease of  space in the Building (your “Lease”).               By this letter, you are hereby directed (1) to make all checks, in payment of rent  and  other  sums  due  to  the  Landlord  under  your  Lease,  payable  to  the  order  of  “___________________  for  the benefit  of  PFP  Holding  Company  VI,  LLC,  as  mortgagee,  Account No. [__________]”, and (2) to deliver such checks or otherwise make such payments to  the following address:                          [Name and Address of Clearing Bank]                                    Or by wire to:                          [Wire Instructions for Clearing Bank]               The  foregoing  direction  is  irrevocable,  except  with  the  written  consent  of  our  mortgagee, PFP Holding Company VI, LLC (or its successors or assigns), notwithstanding any  future  contrary  request  or  direction  from  the  undersigned  or  any  other  person  (other  than  our  mortgagee  (or  its  successors  or  assigns)).   Thank  you  for  your  cooperation.   Pursuant  to  the  Lease, our mortgagee’s address for notices is c/o Prime Finance Partners, 233 North Michigan  Avenue, Suite 1915, Chicago, Illinois 60601.                                       Very truly yours,                                       [BORROWER], a ______________                                       By:   ____________________________________                                            Name:                                              Title:                                   Schedule 9-1  71215191 

 

                                 Schedule 10                               Allocated Loan Amounts                                                                                                                          Schedule 10-1  71215191ex106primeloanpromissory

                                 PROMISSORY      NOTE $18,000,000                                                           December  24'2Q19               For value received, SRT  SF RETAIL     I, LLC, a Delaware limited liability company   ("San Francisco Borrower"),  having an address at clo SRT Advisor, 400 Concar Drivi, Third Floor, San Mateo, CA 944Q2, and SRT LA RETAIL, LLC,      a Delaware limited liability company ('ol.,os Angeles Borrower"), having an address at clo SRT Advisor, 400  Concar Drive, Third Floor, San Mateo, CA 944Q2, (eacho individually, collectively, jointly and  severally and together with each of their permitted successors and assigns, "Maker'o), promises to pay to the order of PFP HOLDING COMPANY          VI, LLC, a Delaware   limited liability  company, at its principal place of business c/o Prime Finance Partners, 233 North Michigan                                                                                o'Payee"), Avenue,  Suite 1915, Chioago, Illinois 60601 (together with its successors and assigns   or at such place as the holder hereof may from time to time designate in writing, the principal  sum of Eighteen Million and No/100  Dollars ($18,000,000), in lawful money of the United  States of America, with interest on the unpaid principal balance from time to time outstanding to be computed in the manner, at the times and, subject to the provisions of Section 2.2.2 of the Loan  Agreement (as hereinafter defined), at the Interest Rate provided in that certain Loan Agreement  (as amended, modified, restated, consolidated, replaced or supplemented from time to time, the 'ol,oan Agreement")  dated as of the date hereof between Maker  and Payee.  Capitalized terms used but not defined herein shall have the respective meanings given such terms in the Loan Agreement.         1.     Pavment Terrqs.  Maker shall pay the Debt Service to Payee in the manner and at the times specified in eti:cle Z of the Loan Agreement, which payments shall be applied in the  order of priority set forth in said Article 2. Maker shall also pay to Payee interest at the Default  Rate, Late Payment Charges, the Yield Maintenance Premium, if any, the Exit Fee and all other  amounts due and payable as and when provided for in the Loan Agreement. The balance of the  Principal, together with all accrued and unpaid interest thereon, and all other amounts payable to  Payee hereunder, under the Loan Agreement and under the other Loan Documents shall be due  and payable on the Maturity Date.         2,     Loan  Docgments.  This Note is evidence of that certain loan made by Payee to  Maker contemporaneously herewith and is executed pursuant to the terms and conditions of the  Loan Agreement. This Note is secured by and entitled to the benefits of, among other things, the  Security Instrument and the other Loan Documents. Reference is made to the Loan Documents  for a description of the nature and extent of the security afforded thereby, the rights of the holder  hereof in respect of such security, the terms and conditions upon which this Note is secured and  the rights and duties of the holder of this Note. All of the agreements, conditions, covenants,  provisions and stipulations contained in the Loan Agreement and the other Loan Documents are  by this reference hereby made part of this Note to the same extent and with the same force and  effect as if they were fully set forth in this Note, and Maker covenants and agrees to keep and  perform the same, or cause the same to be kept and performed, in accordance with their terms.         3.     Loan Accglerationl Prenavmept.   Upon the occurrence of an Event of Default  (other than an Event of Default described in paragraph (f) or (g) of Section 8.1 of the Loan  Agreement), in addition to any other rights or remedies available to the Payee pursuant to    7t227763

 

theloan Documents or at law or in equity, Payee may declare the Debt to become immediately due ancl payable; and upon any Event of Default described in paragraph (f) or (g) of Section 8.1 of the Loan Agreement, the Debt shall, without notice or demand, become immediately due and payable, and Maker  hereby expressly waives any such notice or demand, anything contained ireiein or in any other Loan Document to the contrary notwithstanding. This Note may not be prepaid except as otherwise expressly provided in, and subject to the terms and conditions, of the Loan Agreement.         4,     B.evival. To the extent that Maker makes  a payment or Payee receives any payment  or proceeds for Maker's benefit, which are subsequently invalidated, declared to be fraudulent oi preferential, set aside or required to be repaid to a trustee, debtor in possession, receiver, custodian or any other party under the Bankruptcy Code or any other bankruptcy law,  common   law or equitable cause, then, to such extent, the obligations of Maker hereunder  intended to be satisfied shall be revived and continue as if such payment or proceeds had not  been received by Payee.        5.     Aqendments.    This Note may not be modified, amended,   waived, extended,  changed, discharged or terminated orally or by any act or failure to act on the part of Maker or  Payee, but only by an agreement in writing signed by the party against whom enforcement of any  modification, amendment, waiver, extension, change, discharge or termination is sought.  Whenever  used, the singular number shall include the plural, the plural the singular, and the  words "Payee" and "Maker" shall include their respective successors, assigns, heirs, executots  and administrators. If Maker consists of more than one person or party, the obligations and  liabilities ofeach such person or party shall bejoint and several.         6.     Waiver.  Maker  and all others who may become liable for the payment of all or  any part of the Debt do hereby severally waive presentment and demand for payment, notice of  dishonor, protest, notice of protest, notice of nonpayment, notice of intent to accelerate the  maturity hereof and of acceleration. No release of any security for the Debt or any Person liable  for payment of the Debt, no extensien of time for payment of this Note or any installment hereof,  and no alteration, amendment or waiver of any provision of the Loan Documents  made by  agreement between Payee and any other person or party shall release, modify, amend, waive,  extend, change, discharge, terminate or affect the liability of Maker, and any other Person or  party who may become  liable under the Loan Documents, for the payment of all or any part of  the Debt.         7,     Exculnation. It is expressly agreed that recourse against Maker for failure to  perform and observe its obligations contained in this Note shall be limited as and to the extent  provided in Section 10.1 of the Loan Agreement.          8.    Notices, All notices or other communications required or permitted to be given  pursuant hereto shall be given in the manner specified in the Loan Agreement directed to the  parties at their respective addresses as provided therein.         9.    Governipg Law.      THIS NOTE SHALL          BE GOVERNED BY AND  CONSTRUED     IN ACCORDANCE       WITH THE    LAWS    OF THE STATE OF NEW YORK  (wrTHouT REGARD        TO PRINCTPLES      OF CONFLTCTS     OF LAWS     EXCEPT   THAT                                              )  71227763

 

IT IS THE INTENT OF MAKER THAT    THE PROVISIONS   OF SECTION  5.1401 OF THE GENERAL OBLIGATIONS LAW OF' THE STATE OF' NEW YORK SHALL APPLY TO THIS NOTE)  AND THE APPLICABLE    LAWS OF TI{E UNITED  STATES OF'AMERICA,  WHICH LAWS OF THE UNITED STATES     OF AMERICA   SHALL, TO THE EXTENT   THE SAME PREEMPT      SUCH STATE LAWS' GOVERN      AND  BE CONTROLLING.   7t227'.163

 

      10.  California Waivers. TO THE EXTENT APPLICABLE, MAKER     HEREBY EXPRESSLY (D WAIVES    AI\TY RIGHT IT MAY HAVE   UNDER CALIFORNIA     CIYIL coDE  $ 2954.10, OR ANy SUCCESSOR     STATUTE,  TO pREpAy THIS NOTE IN WHOLE OR IN PART, WITHOUT PENALTY, UPON            ACCELERATION OF THE MATURITY   DATE, EXCEPT   AS OTHERWISE    SPECIFICALLY   SET FORTH  IN THE LOAN AGREEMENT     AND (II) AGREES THAT  IF A PREPAYMENT    OF'ANY  OR ALL OF THIS NOTE IS MADE, FOLLOWING            ANY ACCELERATION        OF THE MATURITY DATE       BY PAYEE     ON ACCOUNT OF ANY TRANSFER             OR DISPOSITION PROHIBITED     OR RESTRICTED BY THE     LOAN AGREEMENT      OR BY THE SECURITY     INSTRUMENT,   MAKER SHALL BE OBLIGATED TO PAY, CONCURRENTLY     THEREWITH,    THE   YIELD MAINTENANCE      PREMIUM,   THE EXIT FEE AND OTHER   AMOUNTS    PAYABLE UNDER THE    LOAN   AGREEMENT,   IF ANY, EXCEPT AS OTHERWISE SPECIFICALLY           SET FORTH IN THE LOAN AGREEMENT. BY INITIALING       THIS PROVISION IN THE SPACE PROVIDED BELOW MAKER     HEREBY   DECLARES    THAT PAYEE'S   AGREEMENT     TO MAKE THE LOAI\  EVIDENCED   BY THIS NOTE  AT THE INTEREST    RATE  AND FOR THE TERM SET FORTH IN THE LOAN         AGREEMENT     CONSTITUTES ADEQUATE CONSIDERATION, GIVEN INDIVIDUAL       WEIGHT   BY THE UNDERSIGNED,     FOR THIS WAIVER AND AGREEMENT.                                                              SF RETAIL I, LLC                                                          SRT LA RETAIL,  LLC            [Remainder of Page Intentionally Left Blank; Signature Page to FollowJ                                        2 71227763

 

       IN WITNESS   WHEREOF,    Maker has executed this Note as of the date first written above.                                            SRT SF RETAIL I, LLC                                           a Delaware limited liability company                                             By:                                                          rnS                                           Title:           d     n                                             SRT  LA RETAIL,   LLC                                           a Delaware limited liability company                                                    p/-        >                                           By:                                           Name:   C.Lee 6urnS                                           Title:       I                            [SrcNerunn PAcE To PRoMIssoRy Noro] 71227763

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