Document:

Exhibit 10.2

 

Exhibit “A”

 

[Date]

[Name and title of
officer or key employee]

Re:  2006
Employment Retention Policy

Dear                           :

This letter, if accepted and agreed to by you, will
constitute a legally binding agreement (this “Agreement”)
pursuant to which Lone Star Technologies, Inc. (“Lone
Star”) or the Lone Star operating subsidiary by which you are
employed (Lone Star or such operating subsidiary, the “Employer”)
is offering you the opportunity to participate in the 2006 Employment Retention
Policy attached to this Agreement as Exhibit “A” (the “Policy”)
subject to the terms and conditions of this Agreement.  More specifically, Employer and you do hereby
agree as follows:

1.             Participation in Policy;
Termination of Other Arrangements.  In recognition of your valuable service to
Employer, and in consideration of your continued employment, Employer is
offering you the opportunity to participate in the Policy.  Your severance multiple for purposes of the
Policy will be             .  If you accept and agree to participate in the
Policy, the existing Employment Retention Policy (the “Existing
Policy”) will be terminated upon your execution and delivery of
this Agreement.  Notwithstanding the
foregoing, if a Change-in-Control (as defined in the Policy) occurs on or
before October 24, 2007, if you were a participant in the Existing Policy, you
shall be entitled at your option to receive the benefits under the Existing
Policy or the Policy (whichever you consider at the time of employment termination
to be most favorable) if you are terminated without “Cause” or resign for “Good
Reason” (as such terms are defined in the Policy) within two years after such
Change-in-Control and irrespective of whether you elected to remain in the
Existing Policy or instead to participate in the Policy.

2.             Noncompetition Obligation.  During the Noncompetition Period (as herein
defined) you will not directly or indirectly compete with Lone Star and/or your
Employer (whether as a shareholder, partner, officer, employee, consultant or
otherwise) in any business in which Lone Star and/or your Employer was engaged
during your employment by your Employer. 
For purposes of this Agreement, the Noncompetition Period shall be (i)
the term of your employment by Employer and (ii) if a Change-in-Control (as
defined in the Policy) occurs with respect to your Employer and your employment
is terminated without “Cause” or you resign for “Good Reason” (as such terms
are defined in the Policy) contemporaneously with or within two years after
such Change-in-Control, the additional six-month period following such
termination of your employment.  The
foregoing noncompetition obligation shall not prevent you from owning up to 1%
of the outstanding securities of any publicly traded competing business.  You acknowledge that this noncompetition
obligation is ancillary to an otherwise enforceable agreement and that the
limitations as to time and scope of activity are reasonable and do not impose a
greater restraint than is necessary to protect the goodwill and other business
interests of Lone Star and your Employer. 
If a court of competent jurisdiction should nevertheless find this
noncompetition provision to be invalid or unenforceable as written but may be
rendered valid 

 

and enforceable by limitation
thereof, such provision shall be automatically revised to be valid and enforceable
to the maximum extent permitted by applicable law.

3.             Nonsolicitation Obligation.  During the Nonsolicitation Period (as herein
defined), you agree not to directly or indirectly recruit, hire, solicit to
hire or otherwise induce or encourage any employee of Lone Star or your
Employer to cease working for Lone Star or your Employer or to commence working
for you or any other business with whom you have a relationship (whether as a
shareholder, partner, officer, employee, consultant or otherwise).  For purposes of this Agreement, the “Nonsolicitation Period” means (i)
the term of your employment by Employer and (ii) if a Change-in-Control (as
defined in the Policy) occurs with respect to your Employer and your employment
is terminated without “Cause” or you resign for “Good Reason” (as such terms
are defined in the Policy) contemporaneously with or within two years after
such Change-in-Control, the additional six-month period following such
termination of your employment.  The
foregoing nonsolicitation obligation shall not be deemed violated by reason of
your hiring an employee of Lone Star or your Employer responding to newspaper
advertisements or other general solicitations for prospective employees.

4.             Confidentiality Obligation.  Lone Star and/or your Employer may from time
to time provide you with business, competitive, financial, market, industrial,
customer, prospective customer, supplier, intellectual property or other
information of a proprietary or confidential nature, whether in written, oral,
computer-readable or other form (collectively, the “Confidential
Information”).  Throughout the
term of your employment and continuing at all times thereafter, you agree to
maintain the confidentiality of, and not to disclose to any third party (other
than for legitimate business purposes of Lone Star or your Employer during your
employment), any of the Confidential Information.  Notwithstanding the immediately preceding sentence,
you may disclose any of the Confidential Information that (i) is in the public
domain other than as a result of a violation of this Agreement by you; (ii)
becomes available to you from a third party source with the right to disclose
such information; or (iii) is required to be disclosed by applicable law or
judicial or administrative process.

 2
 

 

If this Agreement correctly sets forth this
understanding between your Employer and you, please so indicate by signing
below in the space provided.  The offer set forth in this Agreement will remain open through the
close of business on [Date] at which time it will expire if not theretofore
accepted by you.

	
   

  	
  Sincerely yours,

  
	
   

  	
   

  
	
   

  	
  [Name
  of Employer]

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  LONE STAR TECHNOLOGIES, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  ACCEPTED
  AND AGREED:

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
				

 

 3Exhibit
10.1

 

LOAN
AGREEMENT

Dated as of
October 26, 2006

by and between

BEHRINGER HARVARD 101 SOUTH TRYON LP

as Borrower

and

CITIGROUP
GLOBAL MARKETS REALTY CORP.

as Lender

 

 

TABLE OF
CONTENTS

	
  

  	
  Page

  
	
  1.                                       DEFINITIONS;
  PRINCIPLES OF CONSTRUCTION

  	
  1

  
	
   

  	
   

  	
   

  
	
  1.1

  	
  Specific Definitions

  	
  1

  
	
  1.2

  	
  Index of Other Definitions

  	
  13

  
	
  1.3

  	
  Principles of Construction

  	
  16

  
	
   

  	
   

  	
   

  
	
  2.                                       GENERAL
  LOAN TERMS

  	
  16

  
	
   

  	
   

  	
   

  
	
  2.1

  	
  The Loan

  	
  16

  
	
  2.2

  	
  Interest; Monthly Payments

  	
  16

  
	
  2.3

  	
  Loan Repayment

  	
  17

  
	
  2.4

  	
  Release of Property

  	
  20

  
	
  2.5

  	
  Payments and Computations

  	
  21

  
	
   

  	
   

  	
   

  
	
  3.                                       CASH
  MANAGEMENT AND RESERVES

  	
  21

  
	
   

  	
   

  	
   

  
	
  3.1

  	
  Cash Management Arrangements

  	
  21

  
	
  3.2

  	
  Required Repairs; Completion of Required Repairs

  	
  22

  
	
  3.3

  	
  Tax and Insurance Subaccount

  	
  22

  
	
  3.4

  	
  Ground Rent Subaccount

  	
  23

  
	
  3.5

  	
  Bank of America Lease Required Improvements
  Subaccount

  	
  23

  
	
  3.6

  	
  Operating Expense Subaccount

  	
  24

  
	
  3.7

  	
  Casualty/Condemnation Subaccount

  	
  24

  
	
  3.8

  	
  Security Deposit Subaccount

  	
  24

  
	
  3.9

  	
  Cash Collateral Subaccount

  	
  25

  
	
  3.10

  	
  Grant of Security Interest; Application of Funds

  	
  25

  
	
  3.11

  	
  Property Cash Flow Allocation

  	
  26

  
	
  3.12

  	
  Initial Deposits into Reserves

  	
  26

  
	
  3.13

  	
  Initial Leasing Reserve

  	
  26

  
	
  3.14

  	
  Bank of America Lease Termination and Space
  Reduction - Letter of Credit

  	
  27

  
	
   

  	
   

  	
   

  
	
  4.                                       REPRESENTATIONS
  AND WARRANTIES

  	
  30

  
	
   

  	
   

  	
   

  
	
  4.1

  	
  Organization; Special Purpose

  	
  30

  
	
  4.2

  	
  Proceedings; Enforceability

  	
  30

  
	
  4.3

  	
  No Conflicts

  	
  31

  
	
  4.4

  	
  Litigation

  	
  31

  
	
  4.5

  	
  Agreements

  	
  31

  
	
  4.6

  	
  Title

  	
  31

  
	
  4.7

  	
  No Bankruptcy Filing

  	
  32

  
	
  4.8

  	
  Full and Accurate Disclosure

  	
  32

  
	
  4.9

  	
  Tax Filings

  	
  33

  
	
  4.10

  	
  No Plan Assets

  	
  33

  
	
  4.11

  	
  Compliance

  	
  33

  
	
  4.12

  	
  Contracts

  	
  34

  

 

 i
 

 

 

	
  4.13

  	
  Federal Reserve Regulations; Investment Company Act

  	
  34

  
	
  4.14

  	
  Easements; Utilities and Public Access

  	
  34

  
	
  4.15

  	
  Physical Condition

  	
  34

  
	
  4.16

  	
  Leases

  	
  34

  
	
  4.17

  	
  Fraudulent Transfer

  	
  35

  
	
  4.18

  	
  Ownership of Borrower

  	
  35

  
	
  4.19

  	
  Purchase Options

  	
  36

  
	
  4.20

  	
  Management Agreement

  	
  36

  
	
  4.21

  	
  Hazardous Substances

  	
  36

  
	
  4.22

  	
  Name; Principal Place of Business

  	
  37

  
	
  4.23

  	
  Other Debt

  	
  37

  
	
  4.24

  	
  Intentionally Omitted

  	
  37

  
	
  4.25

  	
  Intentionally Omitted

  	
  37

  
	
  4.26

  	
  Ground Lease

  	
  37

  
	
   

  	
   

  	
   

  
	
  5.                                       COVENANTS

  	
  37

  
	
   

  	
   

  	
   

  
	
  5.1

  	
  Existence

  	
  37

  
	
  5.2

  	
  Taxes and Other Charges

  	
  37

  
	
  5.3

  	
  Access to Property

  	
  38

  
	
  5.4

  	
  Repairs; Maintenance and Compliance; Alterations

  	
  38

  
	
  5.5

  	
  Performance of Other Agreements

  	
  39

  
	
  5.6

  	
  Cooperate in Legal Proceedings

  	
  39

  
	
  5.7

  	
  Further Assurances

  	
  39

  
	
  5.8

  	
  Environmental Matters

  	
  39

  
	
  5.9

  	
  Title to the Property

  	
  42

  
	
  5.10

  	
  Leases

  	
  42

  
	
  5.11

  	
  Estoppel Statement

  	
  44

  
	
  5.12

  	
  Property Management

  	
  45

  
	
  5.13

  	
  Special Purpose Bankruptcy Remote Entity

  	
  45

  
	
  5.14

  	
  Assumption in Non-Consolidation Opinion

  	
  45

  
	
  5.15

  	
  Change In Business or Operation of Property

  	
  46

  
	
  5.16

  	
  Debt Cancellation

  	
  46

  
	
  5.17

  	
  Affiliate Transactions

  	
  46

  
	
  5.18

  	
  Zoning

  	
  46

  
	
  5.19

  	
  No Joint Assessment

  	
  46

  
	
  5.20

  	
  Principal Place of Business

  	
  46

  
	
  5.21

  	
  Change of Name, Identity or Structure

  	
  46

  
	
  5.22

  	
  Indebtedness

  	
  47

  
	
  5.23

  	
  Licenses

  	
  47

  
	
  5.24

  	
  Compliance with Restrictive Covenants, Etc.

  	
  47

  
	
  5.25

  	
  ERISA

  	
  47

  
	
  5.26

  	
  Transfers

  	
  48

  
	
  5.27

  	
  Liens

  	
  50

  
	
  5.28

  	
  Dissolution

  	
  50

  
	
  5.29

  	
  Expenses

  	
  51

  
	
  5.30

  	
  Indemnity

  	
  51

  

 

 ii
 

 

 

	
  5.31

  	
  Intentionally Omitted

  	
  52

  
	
  5.32

  	
  Intentionally Omitted

  	
  52

  
	
  5.33

  	
  Patriot Act Compliance

  	
  52

  
	
  5.34

  	
  Ground Lease

  	
  53

  
	
  5.35

  	
  Landlord’s Bankruptcy

  	
  55

  
	
  5.36

  	
  Borrower’s (Tenant’s) Bankruptcy

  	
  55

  
	
   

  	
   

  	
   

  
	
  6.                                       NOTICES
  AND REPORTING

  	
  56

  
	
   

  	
   

  	
   

  
	
  6.1

  	
  Notices

  	
  56

  
	
  6.2

  	
  Borrower Notices and Deliveries

  	
  56

  
	
  6.3

  	
  Financial Reporting

  	
  57

  
	
   

  	
   

  	
   

  
	
  7.                                       INSURANCE;
  CASUALTY; AND CONDEMNATION

  	
  59

  
	
   

  	
   

  	
   

  
	
  7.1

  	
  Insurance

  	
  59

  
	
  7.2

  	
  Casualty

  	
  62

  
	
  7.3

  	
  Condemnation

  	
  63

  
	
  7.4

  	
  Application of Proceeds or Award

  	
  64

  
	
   

  	
   

  	
   

  
	
  8.                                       DEFAULTS

  	
  65

  
	
   

  	
   

  	
   

  
	
  8.1

  	
  Events of Default

  	
  65

  
	
  8.2

  	
  Remedies

  	
  67

  
	
   

  	
   

  	
   

  
	
  9.                                       SPECIAL
  PROVISIONS

  	
  69

  
	
   

  	
   

  	
   

  
	
  9.1

  	
  Sale of Note and Secondary Market Transaction

  	
  69

  
	
  9.2

  	
  Costs and Expenses

  	
  72

  
	
  9.3

  	
  Condominium Provisions

  	
  72

  
	
  9.4

  	
  Mezzanine Loan

  	
  76

  
	
  9.5

  	
  Letters of Credit

  	
  78

  
	
   

  	
   

  	
   

  
	
  10.                                 MISCELLANEOUS

  	
  78

  
	
   

  	
   

  	
   

  
	
  10.1

  	
  Exculpation

  	
  78

  
	
  10.2

  	
  Brokers and Financial Advisors

  	
  80

  
	
  10.3

  	
  Retention of Servicer

  	
  80

  
	
  10.4

  	
  Survival

  	
  81

  
	
  10.5

  	
  Lender’s Discretion

  	
  81

  
	
  10.6

  	
  Governing Law

  	
  81

  
	
  10.7

  	
  Modification, Waiver in Writing

  	
  82

  
	
  10.8

  	
  Trial by Jury

  	
  83

  
	
  10.9

  	
  Headings/Exhibits

  	
  83

  
	
  10.10

  	
  Severability

  	
  83

  
	
  10.11

  	
  Preferences

  	
  83

  
	
  10.12

  	
  Waiver of Notice

  	
  83

  
	
  10.13

  	
  Remedies of Borrower

  	
  83

  

 

 iii
 

 

 

	
  10.14

  	
  Prior Agreements

  	
  84

  
	
  10.15

  	
  Offsets, Counterclaims and Defenses

  	
  84

  
	
  10.16

  	
  Publicity

  	
  84

  
	
  10.17

  	
  No Usury

  	
  84

  
	
  10.18

  	
  Conflict; Construction of Documents

  	
  85

  
	
  10.19

  	
  No Third Party Beneficiaries

  	
  85

  
	
  10.20

  	
  Yield Maintenance Premium

  	
  85

  
	
  10.21

  	
  Assignment

  	
  86

  
	
  10.22

  	
  Borrower’s Designee

  	
  86

  
	
  10.23

  	
  Intentionally Omitted

  	
  86

  
	
  10.24

  	
  Set-Off

  	
  86

  
	
  10.25

  	
  Counterparts

  	
  86

  

 

	
  Schedule
  1 - TI and Free Rent

  
	
  Schedule 2 - Required Repairs

  
	
  Schedule 3 - Exceptions to Representations and
  Warranties

  
	
  Schedule 4 - Organization of Borrower

  
	
  Schedule 5 - Definition of Special Purpose
  Bankruptcy Remote Entity

  
	
  Schedule 8 - Rent Roll

  

 

 iv

 

LOAN AGREEMENT

LOAN AGREEMENT
dated as of October 26, 2006 (as the same may be modified, supplemented,
amended or otherwise changed, this “Agreement”)
by and between BEHRINGER HARVARD 101
SOUTH TRYON LP, a
Delaware limited partnership (“Borrower”)
and CITIGROUP GLOBAL MARKETS REALTY CORP.,
a New York corporation (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:

Acceptable
Letter of Credit: 
an irrevocable, unconditional, transferable, clean sight draft letter of
credit (either an evergreen letter of credit or one with a stated expiration
date at least thirty (30) Business Days after the Stated Maturity Date, or
having a stated expiration date not less than one year after its date of
issuance, provided that such initially issued Acceptable Letter of Credit, or
any renewal thereof, is renewed or substituted by an Acceptable Letter of
Credit satisfying all of the conditions of this definition at least thirty (30)
days prior to the date on which the Acceptable Letter of Credit, or any renewal
thereof, is scheduled to expire) in favor of Lender and entitling Lender to
draw thereon in New York, New York, or Chicago, Illinois, issued by a domestic
Approved Bank or the U.S. agency or branch of a foreign Approved Bank, and
otherwise in form and substance reasonably acceptable to Lender.  If at any time the bank issuing any such
Acceptable Letter of Credit shall cease to be an Approved Bank, Lender shall
have the right after twenty (20) Business Days notice thereof to draw down the
same in full and hold the proceeds of such draw in accordance with the
applicable provisions hereof unless the Borrower shall have delivered to Lender
a replacement Acceptable Letter of Credit prior to such draw down.

Acceptable
Mezzanine Lender: 
(i) any Person satisfying the definition of “Qualified Transferee” (or
any successor term) under clause (ii) (or such corresponding subsection of any
successor term) of the definition of “Qualified Transferee” set forth in the
form Intercreditor Agreement attached as Appendix VI to the Standard & Poor’s
U.S. CMBS Legal and Structural Finance Criteria published May 1, 2003, as the
same may have been amended or modified prior to the date of the Mezzanine Loan,
based on the default values for minimum total assets and capital/statutory
surplus or shareholders’ equity included in the definition of “Eligibility
Requirements” in such publication (or any successor term) or (ii) any other
Person that has been approved by Lender acting reasonably, and provided,
however, in the case of each of the foregoing clauses (i) and (ii), that if the
Mezzanine Loan is made after the occurrence of a Secondary Market Transaction,
such Person (1) was identified to the applicable Rating Agencies as the
proposed lender in connection with the request for a Rating Comfort Letter
referred to in Section 9.4(c), or (2) has otherwise been approved in writing by
the applicable Rating Agencies.

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.

 

Approved
Bank:  shall
mean a bank, the long term unsecured debt obligations of which are rated at
least “AA” by S&P and its successors, and the equivalent by Fitch and its
successors and Moody’s and its successors (unless Lender approves in writing a
financial institution other than a bank or a lower rating, in each case in
Lender’s sole and absolute discretion).

Approved
Leasing Expenses: 
actual out-of-pocket expenses incurred by Borrower in leasing space at
the Property pursuant to Leases entered into in accordance with the Loan
Documents, including brokerage commissions (including those paid pursuant to
the Management Agreement) and tenant improvements, which expenses (i) are
(A) specifically approved by Lender in connection with approving the
applicable Lease, (B) 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 (C) otherwise approved by
Lender, which approval shall not be unreasonably withheld or delayed, and
(ii) are substantiated by executed Lease documents and brokerage
agreements.

Approved
Operating Expenses: 
during a Cash Trap Period, operating expenses incurred by Borrower which
(i) are within one hundred five percent (105%) of the total amounts
included in the Approved Operating Budget for the current calendar month (or
for unpaid operating expenses included in the Approved Operating Budget for
prior calendar months); provided that, for purposes hereof, operating expenses
in such Approved Operating Budget shall be deemed to be increased from the
amounts in the applicable Approved Operating Budget to the extent that such
increased amounts are at least equal to an increase in operating revenues from
the amounts in such Approved Operating Budget or directly relate to variances
in occupancy levels or emergencies or unforeseen circumstances, (ii) are
for real estate taxes, insurance premiums, electric, gas, oil, water, sewer or
other utility service to the Property, (iii) are for property management fees
payable to Manager under the Management Agreement, such amounts not to exceed
three percent (3%) of the monthly Rents (excluding however any asset management
fees payable by Borrower to Manager pursuant to the Management Agreement;
provided, however, the foregoing three percent (3%) limitation shall not be
deemed to preclude Borrower from paying any such asset management fees pursuant
to the terms of the Management Agreement from their own funds) or
(iv) have been approved by Lender, acting in a commercially reasonably manner.  Notwithstanding the foregoing, nothing herein
shall be deemed to preclude Borrower from paying any asset management fee (over
and above the amount set forth above) pursuant to the terms of the Management
Agreement from their own funds.

Assumption
Fee:  an amount
equal to (i) with respect to the first assumption, one-quarter of one percent
(0.25%) of the then unpaid Principal and (ii) with respect to any subsequent
assumptions after the first assumption, one-half of one percent (0.5%) of the
then unpaid Principal.

Available
Cash:  as of each
Payment Date during the continuance of Cash Trap Period, the amount of Rents,
if any, remaining in the Deposit Account after the application of all of the
payments required under clauses (i) through (vi) of Section 3.11(a).

 2
 

 

Bank
of America:  Bank
of America, N.A., a national banking association, or any successor tenant under
the Bank of America Lease.

Bank
of America Lease: 
that certain Lease, dated December 21, 2005, effective as of January 1,
2006, by and between Bank of America, N.A., as tenant, and Trizec Holdings,
LLC, a Delaware limited liability company, as landlord.

Bank
of America Lease Letter of Credit Amount:  an amount equal to the product of (A) the
aggregate amount of square footage in excess of 50,000 square feet vacated by
Bank of America; and (B) $7.00, less any Bank of America Lease Termination
Payment deposited with Lender.  In no
event shall such amount be a negative number.

Bank
of America Lease Required Improvements:  the improvements, repairs, replacements and
other alterations required to be made by Borrower or reimbursed by Borrower to
the tenant under the Bank of America Lease pursuant to Sections 10.6(a),
10.6(b)(1) and 10.6(b)(2) of the Bank of America Lease.

Bank
of America Lease Termination Payment:  the amount of any termination fee or penalty
or other fee or penalty of any kind made to Borrower in connection with any
termination of a portion of the Bank of America Lease in connection with a
reduction of the space covered by the Bank of America Lease, whether by right
pursuant to the Bank of America Lease, by agreement with Borrower or otherwise.

Behringer
Harvard REIT: 
Behringer Harvard REIT I, Inc., a Maryland corporation.

Behringer
Harvard Operating Partnership:  Behringer
Harvard Operating Partnership I LP, a Texas limited partnership.

BHR
Partners:  BHR
Partners, LLC, a Delaware limited liability company.

Borrower:  has
the meaning set forth in the preamble to this Agreement.

Borrower’s
Designee:  the
Manager or such other Person as Borrower, with the consent of Lender (not to be
unreasonably withheld), may from time to time designate as “Borrower’s Designee”;
provided that there shall be only one Borrower’s Designee at any time.

Borrower
GP:  Behringer
Harvard 101 South Tryon GP, LLC, a Delaware limited liability company.

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

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

Capital
Expenses:  expenses
that are capital in nature or required under GAAP to be capitalized.

 3
 

 

Cash
Trap Period:  shall
commence, if, (i) an Event of Default has occurred and is continuing, and shall
end if such Event of Default has been cured and no other Event of Default has
occurred and is continuing, (ii) as of any Calculation Date, the Debt Service
Coverage Ratio is less than 1.10:1, and shall end upon Lender’s determination
that the Property has achieved a Debt Service Coverage Ratio of at least 1.10:1
for two consecutive Calculation Dates, or (iii) at any time during the Term,
Borrower fails to deliver to Lender either (A) cash or (B) the Bank of America
Lease Letter of Credit as required under Section 3.14 hereof, and shall end
upon Borrower’s delivery to Lender of either (A) cash or (B) the Bank of
America Lease Letter of Credit in accordance with Section 3.14 hereof.

Citigroup
Group:  the issuer
that is named in the Disclosure Document or registration statement relating to
a Secondary Market Transaction (the “Registration Statement”),
and each of such issuer’s directors, each of its officers who have signed the
Registration Statement and each person or entity who controls such issuer or
the Lender within the meaning of Section 15 of the Securities Act or Section 30
of the Exchange Act.

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.

Common
Elements:  has the
meaning set forth in the Condominium Documents.

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.

Condominium:  any condominium that includes the Property as
a part thereof and that was created pursuant to the Condominium Act.

Condominium
Act:  North
Carolina Condominium Act, Section 47C-1-101 et. seq., as amended.

Condominium
Documents:  (a)
those certain By-Laws of Trade Tryon Plaza Condominium Association, Inc., (b)
those certain Articles of Incorporation of Trade Tryon Plaza Condominium
Association, Inc., (c) that certain Declaration of Condominium for Trade Tryon
Plaza Condominium, dated December 10, 1988, by Granyette, Inc., a North
Carolina corporation, and (d) such other documents, as required by the
Condominium Act, relating to the submission of the Property to the provisions
of said Condominium Act, as each of the foregoing may be amended, restated,
replaced, supplemented or otherwise modified from time to time.

Debt:  the unpaid Principal, all interest accrued
and unpaid thereon, 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 interest payments due under the
Note in such period.

 4
 

 

Debt
Service Coverage Ratio: 
as of any date, the ratio calculated by Lender of (i) the Net
Operating Income for the 12-month period ending with the most recently
completed calendar month to (ii) the debt service with respect to such
period (assuming a constant payment of principal and interest based upon a
30-year amortization schedule).

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

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 (as applicable prior to
the occurrence of an Event of Default), compounded monthly.

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

Defeasance
Maturity Date: 
means the Permitted Prepayment Date.

Deposit
Bank:  JPMorgan
Chase Bank, N.A., a national banking corporation, or such other bank or
depository selected by Lender in its discretion.

Effective
Gross Income:  In-place
Base Rent plus Potential Income from Vacant Space, Reimbursement Income, and
other income from whatever source, less an adjustment for the greater of (i)
market vacancy and (ii) actual physical vacancy (which vacancy shall include
any space then leased to bankrupt tenants which are not in full occupancy of
their respective leased premises or which have rejected their respective leases
or which are not paying rent on a current basis), each as determined by Lender
in its sole discretion exercised in good faith (uniformly and consistently
applied in the same manner as Lender exercises similar discretion in other
loans of this type and nature for comparable properties) in accordance with
Lender’s then current underwriting standards for loans of this type and the
then current underwriting standards of the Rating Agencies.

Eligible
Account:  a
separate and identifiable account from all other funds held by the holding
institution that is either (i) an account or accounts (A) maintained with a
federal or state-chartered depository institution or trust company which
complies with the definition of Eligible Institution or (B) as to which
Lender has received a Rating Comfort Letter from each of the applicable Rating
Agencies with respect to holding funds in such account, or (ii) a segregated
trust account or accounts maintained with the corporate trust department of a
federal depository institution or state chartered depository institution
subject to regulations regarding fiduciary funds on deposit similar to Title 12
of the Code of Federal Regulations §9.10(b), having in either case corporate
trust powers, acting in its fiduciary capacity, and a combined capital and
surplus of at least $50,000,000 and subject to supervision or examination by
federal and state authorities.  An
Eligible Account will not be evidenced by a certificate of deposit, passbook or
other instrument.

Eligible
Institution:  a
depository institution insured by the Federal Deposit Insurance Corporation the
short term unsecured debt obligations or commercial paper of which

 5
 

 

are rated at least A-1 by
S&P, P-1 by Moody’s and F-1+ by Fitch, in the case of accounts in which
funds are held for thirty (30) days or less or, in the case of Letters of
Credit or accounts in which funds are held for more than thirty (30) days, the
long term unsecured debt obligations of which are rated at least “AA” by Fitch
and S&P and “Aa2” by Moody’s.

ERISA:  the Employment 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.

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.

Ground
Rent:  all rent and
any and all other charges due and payable under the Ground Lease.

Guarantor:  Behringer Harvard REIT
or any other entity guaranteeing any payment or performance obligation of
Borrower.

Harvard
Fund I: 
individually or collectively, Behringer Harvard Short-Term Opportunity
Funds I, L.P., a Texas limited partnership and/or Behringer Harvard Mid-Term
Value Enhancement Fund I, L.P. a Texas limited partnership and/or Behringer
Harvard Strategic Opportunity Fund LLP, a Texas limited partnership, and/or any
other fund for which Behringer Harvard Holdings, LLC, or an Affiliate of it
under its Control, serves as general partner, manager or advisor.

Harvard
REIT:  individually
or collectively, the Behringer Harvard Operating Partnership and/or Behringer
Harvard REIT and/or Behringer Harvard Opportunity REIT I, Inc., a Maryland
corporation (“Behringer Harvard Opportunity REIT”),
and/or any other fund for which Behringer Harvard Holdings, LLC, or an Affiliate
of it under its Control, serves as general partner, manager or advisor.

HPT:  HPT Management Services LP, a Texas limited
partnership.

In-place
Base Rent:  fixed
base rent paid by tenants that have occupied the space covered by their
respective leases and have commenced paying rent and the free rent or rent
abatement periods under such leases have expired, and there are no defaults
under such leases (nor does there exist any event or condition, which with the
passage of time or the giving of notice, or both, could result in such a
default).

 6
 

 

 

Interest
Period: 
(i) the period from the date hereof through the first day
thereafter that is the 5th day of a calendar month and (ii) each
period thereafter from the 6th day of each calendar month through the 5th day of the following calendar month; except
that the Interest Period, if any, that would otherwise commence before and end
after the Maturity Date shall end on the Maturity Date.  Notwithstanding the foregoing, if Lender
exercises its right to change the Payment Date to a New Payment Date in
accordance with Section 2.2.4, then from and after such election, each Interest
Period shall be the period from the New Payment Date in each calendar month
through the day in the next succeeding calendar month immediately preceding the
New Payment Date in such calendar month.

Interest
Rate:  a rate of
interest equal to 5.433% per annum (or, when applicable pursuant to this
Agreement or any other Loan Document, the Default Rate).

Key
Principal:  Robert
M. Behringer, an individual.

Leases:  all leases and other agreements or
arrangements heretofore or hereafter entered into providing for the use,
enjoyment or occupancy of, or the conduct of any activity upon or in, the
Property or the Improvements, including any guarantees, extensions, renewals,
modifications or amendments thereof and all additional remainders, reversions
and other rights and estates appurtenant thereunder.

Legal
Requirements: statutes, laws, rules, orders, regulations,
ordinances, judgments, decrees and injunctions of Governmental Authorities
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, 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 part of the Property.

Letter
of Credit: shall mean any Acceptable Letter of
Credit or other letter of credit given to Lender in lieu of any reserve
required hereunder.

Lien:
any mortgage, deed of trust, lien (statutory or otherwise), pledge,
hypothecation, easement, restrictive covenant, preference, assignment (intended
as security), security interest or any other encumbrance, charge or transfer
(intended as security) 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, 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.

Loan
Documents:  this
Agreement and all other documents, agreements and instruments now or hereafter
evidencing or securing the Loan or pursuant to which any Person incurs, has
incurred or assumes any obligation to or for the benefit of Lender, or makes
any certification, representation or warranty to Lender in connection with the
Loan, including the following, each of which is dated as of the date
hereof:  (i) the Promissory Note
made by Borrower to Lender in the aggregate principal amount equal to the Loan
(the “Note”), (ii) the

 7
 

 

Deed of Trust, Assignment
of Leases and Rents, Security Agreement and Fixture Filing made by Borrower to
a trustee, for the benefit of Lender which covers the Property (the “Mortgage” or the “Security Instrument”),
(iii) the Assignment of Leases and Rents from Borrower to Lender (the “Assignment of Leases”),
(iv) the Assignment of Agreements, Licenses, Permits and Contracts from
Borrower to Lender, (v) the Clearing Account Agreement among
Borrower, Lender and the Clearing Bank (the “Clearing
Account Agreements”), (vi) the Deposit Account Agreement
among Borrower, Lender, Servicer and the Deposit Bank (the “Deposit Account Agreement”), (vii)
the Guaranty of Recourse Obligations made by Guarantor for the benefit of
Lender, and (viii) the Consent and Subordination of Manager made by Manager and
consented to by Borrower (the “Consent and Subordination”);
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 (including pursuant to
Section 9.1.7).

Management
Agreement:  the Third Amended and Restated
Property Management and Leasing Agreement, between Behringer Harvard REIT,
Behringer Harvard Operating Partnership and HPT, as partially assigned from
Behringer Harvard Operating Partnership to Borrower by that certain Partial
Assignment and Assumption of Amended and Restated Property Management
Agreement, dated as of even date with this Agreement, 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
5.12.

Manager:  HPT or any successor, assignee or replacement
manager appointed by Borrower in accordance with Section 5.12.

Material
Alteration: any alteration affecting structural elements
of the Property the cost of which exceeds $250,000; provided, however, that in
no event shall (i) any Required Repairs (if any), (ii) 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
(iii) alterations performed as part of a Restoration, constitute a Material
Alteration.

Material
Lease:  all Leases
which individually or in the aggregate with respect to the same tenant and its
Affiliates (i) cover more than 21,000 square feet of the Improvements or
(ii)  have a gross annual rent of more than ten percent (10%) of the total
annual Rents or (iii) demise at least one full floor of the Improvements.

Maturity
Date:  the date on
which the final payment of principal of the Note (or any replacement promissory
note issued in connection with a Defeasance Event, if applicable) becomes due
and payable as therein provided, whether at the Stated Maturity Date, the
Defeasance Maturity Date, by declaration of acceleration, or otherwise.

Minor
Lease: any Lease that is not a Material Lease.

Net
Operating Income: 
for any period, the underwritten net cash flow of the Property
determined by Lender in its sole discretion exercised in good faith (uniformly
and consistently applied in the same manner as Lender exercises similar discretion
in other loans of this type and nature for comparable properties) in accordance
with Lender’s then current

 8
 

 

underwriting standards
for loans of this type and the then current underwriting standards of the
Rating Agencies (including adjustments for a management fee equal to the
greater of the management fees paid under the Management Agreement during such
period or three percent (3%) of gross revenues, market vacancy, bankrupt
tenants which are not in full occupancy of their respective leased premises or
which have rejected their respective leases or which are not paying rent on a
current basis, leasing costs and capital items).

Officer’s
Certificate:  a
certificate delivered to Lender by Borrower, which is signed by the manager or
a senior executive officer of Borrower.

Other
Charges:  all
Ground Rents, maintenance charges, impositions other than Taxes, and any other
charges, including vault charges and license fees for the use of vaults, chutes
and similar areas adjoining the Property, now or hereafter levied or assessed
or imposed against the Property or any part thereof.

Payment
Date:  the 6th day of each calendar month or, upon Lender’s
exercise of its right to change the Payment Date in accordance with Section
2.2.4, the New Payment Date (in either case, if such day is not a Business Day,
the Payment Date shall be the first Business Day thereafter).  The first Payment Date hereunder shall be
December 6, 2006.

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 or
discharged within 30 days after a Borrower first receives notice of such Lien,
(v) such other title and survey exceptions as Lender approves in writing
in Lender’s discretion, and (vi) Liens securing a Mezzanine Loan in accordance
with Section 9.4.

Permitted
Transfers:

(i) a Lease entered
into in accordance with the Loan Documents;

(ii) a Permitted
Encumbrance;

(iii) a Transfer and
Assumption pursuant to Section 5.26.3;

(iv) provided that no
Event of Default shall then exist, a Transfer of a direct or indirect interest
in Borrower to any Person (including the Transfer or issuance of publicly
traded shares or of operating partnership units in the Harvard REIT, Behringer
Harvard Opportunity REIT, Harvard Fund I or the Behringer Harvard Operating
Partnership, which shall be permitted whether or not an Event of Default shall
exist) provided that (A) such Transfer shall not (x) cause the transferee
(other than Key Principal), together with its Affiliates, to acquire Control of
Borrower or to increase its direct or indirect interest in Borrower to an
amount which equals or exceeds forty-nine percent (49%) or (y) result in
Borrower no longer being Controlled by Key Principal, (B) Borrower shall give
Lender notice of such Transfer together with copies of all instruments effecting
such Transfer not less than ten (10) days prior to the date of such Transfer
(other than with respect to Transfers of “unit interests” in Harvard Fund I),
and (C) the legal and financial structure of Borrower and its member(s) or
partners, as applicable, and the special

 9
 

 

purpose nature and
bankruptcy remoteness of Borrower and its member(s) or partners, as applicable,
after such Transfer, shall satisfy Lender’s then current applicable
underwriting criteria and requirements;

(v) provided that no
Event of Default shall then exist, a Transfer of a direct or indirect interest
in a Borrower related to or in connection with the estate planning of such
transferor to (1) the spouse, children or grandchildren of such transferor
(and/or any spouse of a child or grandchild), or any other immediate family
member of such transferor, or (2) a trust established for the benefit of any
such parties, provided that (A) such Transfer shall not cause a change in the
Control of Borrower, (B) such Transfer shall not result in a change of the day
to day management and operations of the Property, (C) Borrower shall give
Lender notice of such Transfer together with copies of all instruments
effecting such Transfer not less than ten (10) days after the date of such
Transfer and (D) the legal and financial structure of Borrower, and its
member(s) or partners, as applicable, and the special purpose nature and
bankruptcy remoteness of Borrower and its member(s) or partners, as applicable,
after such Transfer, shall satisfy Lender’s then current applicable
underwriting criteria and requirements; or

(vi) a Transfer of a
direct or indirect interest in Borrower that occurs by devise or bequest or by
operation of law upon the death of a natural person that was the holder of such
interest to a member of the immediate family of such interest holder or a trust
established for the benefit of such immediate family member, provided that
(A) no such Transfer shall result in a change of the day to day operations
of the Property, (B) Borrower shall give Lender notice of such Transfer
together with copies of all instruments effecting such Transfer not less than
30 days after the date of such Transfer, (C) Borrower shall continue to be
a Special Purpose Bankruptcy Remote Entity, (D) if any such Transfer would
result in a change of Control of Borrower and occurs prior to the occurrence of
a Secondary Market Transaction, such Transfer is approved by Lender in writing
within thirty (30) days after any such Transfer, and (E) if any such
Transfer would result in a change of Control of Borrower and occurs after the
occurrence of a Secondary Market Transaction, Borrower, at Borrower’s sole cost
and expense, shall, within thirty (30) days after any such Transfer,
(a) deliver (or cause to be delivered) (x) a Rating Comfort Letter to
Lender, and (y) a substantive non-consolidation opinion to Lender and the
Rating Agencies with respect to such Borrower and such transferee in form and
substance satisfactory to Lender and the Rating Agencies, (b) obtain the
prior written consent of Lender which shall not be unreasonably withheld, and
(c) reimburse Lender for all reasonable expenses incurred by Lender in
connection with such Transfer.

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.

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

 10
 

 

Potential
Income from Vacant Space:  an
amount equal to the total leaseable square footage at the Property that is
vacant on the date of determination multiplied by the market rent on a square
foot basis as determined by an appraiser.

Property:  the parcel of real property and Improvements
thereon owned or leased by Borrower and encumbered by the Mortgage (including,
without limitation, the condominium units owned by Borrower and the leasehold
estate owned by Borrower in such real property and Improvements); together with
all rights pertaining to such real property and Improvements, and all other
collateral for the Loan as more particularly described in the granting clauses
of the Mortgage and referred to therein as the “Property”.  The Property is commonly known as Bank of
America Plaza, Charlotte, North Carolina.

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

Rating
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”), and Fitch, Inc., a
division of Fitch Ratings Ltd. (“Fitch”), 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.

Rating
Comfort Letter:  a
letter issued by each of the applicable Rating Agencies which confirms that the
taking of the action referenced to therein will not result in any
qualification, withdrawal or downgrading of any existing ratings of Securities
created in a Secondary Market Transaction.

Reimbursement
Income:  income
recovered from tenants as a result of reimbursements for maintenance and
utility charges, escalations, taxes, insurance premiums, service fees or
charges, license fees, and other required pass-throughs.

Release
Date: the earlier to occur of (i) the thirty-sixth
(36th) Payment
Date of the Term and (ii) the date that is two (2) years from the “startup
day” (within the meaning of Section 860G(a)(9) of the Code) of the REMIC
Trust established in connection with a Securitization involving this Loan.

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

 11
 

 

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 (other than fees paid
under the Management Agreements and salaries paid to 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 a
Borrower, Manager or any of their agents or employees and proceeds, if any,
from business interruption or other loss of income insurance.

Scheduled
Defeasance Payments: 
the Monthly Debt Service Payment Amount required under the Note for all
Payment Dates occurring after the Defeasance Date but prior to the Defeasance
Maturity Date and the outstanding Principal balance on the Note as of the Defeasance
Maturity Date and all accrued and unpaid interest as of such date.

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

Servicer:  a servicer selected by Lender to service the
Loan, including any “master servicer” or “special servicer” appointed under the
terms of any pooling and servicing agreement or similar agreement entered into
as a result of a Secondary Market Transaction.

State:
the state in which the Property is located.

Stated
Maturity Date: 
November 6, 2016, as such date may be changed in accordance with Section
2.2.4.

Sub-Manager:  Trammel Crow or any successor, assignee or
replacement sub-manager appointed by Borrower in accordance with Section 5.12.

Sub-Management
Agreement:  the Subcontract for Management
Services, between HPT and Trammel Crow, pursuant to which Trammel Crow is to
sub-manage the Property, as the same may be amended, restated, replaced,
supplemented or otherwise modified from time to time in accordance with Section
5.12.

Taxes:  all real estate and personal property taxes,
assessments, water rates or sewer rents, maintenance charges, impositions,
vault charges and license fees, now or hereafter levied or assessed or imposed
against all or part of the Property.

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
(other than surviving indemnity obligations with respect to matters as to which
no claim for indemnification is then pending).

Title
Insurance Policy: 
the ALTA mortgagee title insurance policy in the form acceptable to
Lender issued with respect to the Property and insuring the Lien of the
Mortgage.

 12
 

 

Trammel
Crow:  Trammel Crow
Services, Inc., a Delaware corporation.

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

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

Underwriter
Group:  each person
who controls any underwriter, syndicate member or placement agent retained by
Lender or its issuer in connection with a Secondary Market Transaction, within
the meaning of Section 15 of the Securities Act and Section 20 of the Exchange
Act.

U.S.
Obligations:  obligations that are “government
securities” within the meaning of Section 2(a)(16) of the Investment Company
Act of 1940, as amended, and, to the extent acceptable to the applicable Rating
Agencies, other non-callable government securities satisfying the REMIC
Provisions (hereinafter defined), in each case to the extent such obligations
are not subject to prepayment, call or early redemption.  As used herein, “REMIC
Provisions” mean provisions of the federal income tax law
relating to real estate mortgage investment conduits, which appear at Sections
860A through 860G of Subchapter M of Chapter 1 of Subtitle A of the Code, and
related provisions, and temporary and final regulations and, to the extent not
inconsistent with such temporary and final regulations, proposed regulations,
and published rulings, notices and announcements promulgated thereunder, as the
foregoing may be in effect from time to time.

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

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

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

“Annual Budget” - 6.3.5

“Applicable Taxes” - 2.2.3

“Approved Annual Budget” - 6.3.5

“Approved Capital Budget” - 6.3.5

“Approved Operating Budget” - 6.3.5

 13
 

 

“Association” – 9.3

“Award” - 7.3.2

“Bank of America Lease Draw
Requirements” – 3.14

“Bank of America Lease Letter of
Credit” – 3.14

“Bank of America Lease Required
Improvements Subaccount” – 3.5

“Bank of America Lease Subaccount”
– 3.14

“Bankruptcy Act” – 5.35

“Bankruptcy Proceeding” - 4.7

“Behringer Harvard Opportunity
REIT” – 1.1 (Definition of Harvard REIT)

“Borrower’s Recourse Liabilities”
- 10.1

“Cash Collateral Subaccount” -
3.9

“Cash Management Accounts” - 3.10

“Casualty” - 7.2.1

“Casualty/Condemnation Prepayment”
- 2.3.2

“Casualty/Condemnation Subaccount”
- 3.7

“Clearing Account” - 3.1

“Clearing Account Agreement” -
1.1 (Definition of Loan Documents)

“Clearing Bank” - 3.1

“Condemnation” - 7.3.1

“Condominium Default” – 9.3

“Consent and Subordination” - 1.1
(Definition of Loan Documents)

“Defeasance Collateral Account” -
2.3.3

“Defeasance Date” - 2.3.3

“Defeasance Event” - 2.3.3

“Deposit Account” - 3.1

“Deposit Account Agreement” - 1.1
(Definition of Loan Documents)

“Disclosure Document” - 9.1.2

“Easements” - 4.14

“Election” – 5.35

“Endorsement” – 5.26.3

“Environmental Laws” - 4.21

“Equipment” - Mortgage

“Event of Default” - 8.1

“Exchange Act” - 9.1.2

“Fitch” - 1.1 (Definition of
Rating Agency)

“Ground Lease” - Mortgage

“Ground Rent Subaccount” – 3.4

“Hazardous Substances” -  4.21

“Improvements” - Mortgage

“Indemnified Liabilities” - 5.30

“Indemnified Party” - 5.30

“Independent Director” - Schedule
5

“Insolvency Action” – 10.1

“Insurance Premiums” - 7.1.2

“Insured Casualty” - 7.2.2

“Intercreditor Agreement” – 9.4

 14
 

 

“Late Payment Charge” - 2.5.3

“Lender’s Consultant” - 5.8.1

“Lender’s Losses” – 10.1

“Licenses” - 4.11

“Loan” - 2.1

“Mezzanine Borrower” – 9.4

“Mezzanine Lender” – 9.4

“Mezzanine Loan” – 9.4

“Monthly Debt Service Payment
Amount” - 2.2.1

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

“Mortgage” - 1.1 (Definition of
Loan Documents)

“New Payment Date” - 2.2.4

“Note” - 1.1 (Definition of Loan
Documents)

“Notice” - 6.1

“OFAC” – 5.33

“Operating Expense Subaccount” -
3.6

“Permitted Indebtedness” - 5.22

“Permitted Investments” - Deposit
Account Agreement

“Permitted Prepayment Date” -
2.3.4

“Policies” - 7.1.2

“Principal” - 2.1

“Proceeds” - 7.2.2

“Proposed Material Lease” -
5.10.2

“Provided Information” - 9.1.1

“Qualified Carrier” - 7.1.1

“Remedial Work” - 5.8.2

“REMIC Provisions” - 1.1
(Definition of U.S. Obligations)

“Rent Roll” - 4.16

“Required Repairs” – 3.2

“Restoration” - 7.4.1

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

“Secondary Market Transaction” -
9.1.1

“Securities” - 9.1.1

“Securities Act” - 9.1.2

“Security Deposit Subaccount” -
3.8

“Significant Casualty” - 7.2.2

“Special Purpose Bankruptcy
Remote Entity” - 5.13

“Springing Recourse Event” - 10.1

“Subaccounts” - 3.1

“Successor Borrower” - 2.3.3

“Tax and Insurance Subaccount” -
3.3

“Tenant Improvement Funds” – 3.13

“Tenant Improvement Reserve
Subaccount” – 3.13

“Third Party Report” – 9.1.3

“TI Leases” – 3.13

“Toxic
Mold” - 4.21

 15

 

“Transfer and Assumption” -
5.26.3

“Transferee
Borrower” - 5.26.3

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,” and (v) accounting terms not
specifically defined herein shall be construed in accordance with GAAP.

2.                                      GENERAL LOAN TERMS

2.1                               The
Loan.  Subject to and upon the
terms and conditions of this Agreement, Lender agrees to make a loan to
Borrower (the “Loan”)
in the maximum principal amount of up to $150,000,000 (the “Principal”).  The Loan shall mature on the Stated Maturity
Date or, if a Defeasance Event has occurred in accordance with Section 2.3.3
hereof, on the Defeasance Maturity Date. 
Borrower acknowledges receipt of the Principal, the proceeds of which
are being and shall be used to (i) acquire 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 unpaid Principal shall accrue at the Interest Rate and be payable as
hereinafter provided.  On the date
hereof, Borrower shall pay interest only on the unpaid Principal from the date
hereof through and including November 5, 2006. 
On December 6, 2006 and each Payment Date thereafter through and
including the Maturity Date, Borrower shall pay interest on the unpaid Principal
accrued at the Interest Rate during the Interest Period immediately preceding
such Payment Date (the “Monthly
Debt Service Payment Amount”). 
The balance of the Principal together with all accrued and unpaid
interest thereon 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, 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 Borrower hereunder
and under the other Loan Documents shall be made free and clear of and without
deduction for any and all present or future taxes, levies, imposts, deductions,
charges or withholdings, and all liabilities with respect thereto, excluding
taxes imposed on Lender’s income, and franchise taxes imposed on Lender by the
law or regulation of any Governmental Authority (all such non-excluded taxes,
levies, imposts, deductions, charges, withholdings and liabilities being
hereinafter referred to in this Section 2.2.3 as “Applicable Taxes”). 
If Borrower shall be required by law to deduct any

 16
 

 

Applicable Taxes from or in respect of any
sum payable hereunder to Lender, the following shall apply:  (i) the sum payable shall be increased
as may be necessary so that after making all required deductions (including
deductions 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
deductions been made, (ii) Borrower shall make such deductions and
(iii) Borrower shall pay the full amount deducted to the relevant taxation
authority or other authority in accordance with applicable law.  Payments pursuant to this Section 2.2.3 shall
be made within ten days after the date Lender makes written demand
therefor.  If the amounts payable
hereunder relate to Applicable Taxes which are not of general application to
lending institutions making secured mortgage loans at such time, Borrower shall
have the option to prepay the Loan in full without any Yield Maintenance
Premium unless Lender, at its option, elects not to require Borrower to pay
such Applicable Taxes pursuant to this Section 2.2.3.  Notwithstanding the foregoing, if the Loan is
transferred to a transferee which is organized under the laws of any
jurisdiction other than the United States of America or any state thereof, the
transferor shall cause such transferee, concurrently with the effectiveness of
such transfer, to furnish to the transferor and Borrower either a United States
Internal Revenue Service Form 4224 or United States Internal Revenue Service
Form 1001 (wherein such transferee claims entitlement to complete exemption
from United States federal withholding tax on all interest payments hereunder);
provided, however, that in the event that the transferor fails to cause the
transferee to furnish either such Form, Borrower shall deduct any Applicable
Taxes to the extent required by law and payments shall be made net of any Applicable
Taxes without regard to the provisions of clause (i) of the second
sentence of this Section 2.2.3.

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

2.3                               Loan
Repayment.

2.3.1                     Repayment.  Borrower shall repay the entire outstanding
principal balance of the Note 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. 
Borrower shall have no right to prepay or defease all or any portion of
the Principal except in accordance with Section 2.2.3, Section 2.3.2,
Section 2.3.3, Section 2.3.4, Section 2.4 and Section 7.4.2 hereof.  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 any other amounts then
due and owing under the Loan Documents. 
If prior to the Stated Maturity Date the Debt is accelerated by reason
of an Event of Default, then Lender shall be entitled to receive, in addition
to the unpaid Principal and accrued interest and other sums due under the Loan
Documents, an amount equal to the Yield Maintenance Premium

 17
 

 

applicable to such Principal so
accelerated.  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
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
Payment is made on any date other than a Payment Date, then such Casualty/Condemnation
Payment 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.  Notwithstanding
anything to the contrary contained herein, each Casualty/Condemnation
Prepayment shall be applied in inverse order of maturity and shall not extend
or postpone the due dates of the monthly installments due under the Note or
this Agreement, or change the amounts of such installments.  In addition, and notwithstanding anything to
the contrary contained herein or in any other Loan Document, provided no Event
of Default is continuing, no Yield Maintenance Premium shall be payable in
connection with any prepayment of the Debt required by Lender under Sections 5
and 6 of the Mortgage.

2.3.3                     Defeasance.

(a)                                  Conditions to Defeasance.  Provided no Event of Default shall be
continuing, Borrower shall have the right on any Payment Date after the Release
Date and prior to the Permitted Prepayment Date to voluntarily defease the
entire amount of the Principal and obtain a release of the Lien of the Mortgage
by providing Lender with the Defeasance Collateral (a “Defeasance Event”), subject to the satisfaction of the
following conditions precedent:

(1)                                  Borrower shall give
Lender not less than thirty (30) days prior written notice specifying a Payment
Date (the “Defeasance
Date”) on which the Defeasance Event is to occur.

(2)                                  Borrower shall pay to
Lender (A) all payments of Principal and interest due on the Loan to and
including the Defeasance Date and (B) all other sums, then due under the Note,
this Agreement and the other Loan Documents;

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

(4)                                  Borrower shall
execute and deliver to Lender a Security Agreement in respect of the Defeasance
Collateral Account and the Defeasance Collateral;

 18
 

 

(5)                                  Borrower shall
deliver to Lender an opinion of counsel for Borrower that is standard in
commercial lending transactions and subject only to customary qualifications,
assumptions and exceptions opining, among other things, that (i) Lender
has a legal and valid perfected first priority security interest in the
Defeasance Collateral Account and the Defeasance Collateral, (ii) if a
securitization has occurred, the REMIC Trust formed pursuant to such securitization
will not fail to maintain its status as a “real estate mortgage investment
conduit” within the meaning of Section 860D of the Code as a result of a
Defeasance Event pursuant to this Section 2.3.3, (iii) the Defeasance
Event will not result in a significant modification and will not be an exchange
of the Note for purposes of Section 1001 of the Code and the Treasury
Regulations thereunder, (iv) delivery of the Defeasance Collateral and the
grant of a security interest therein to Lender will not constitute an avoidable
preference under Section 547 of the Bankruptcy Code or applicable state
law and (v) a non-consolidation opinion with respect to the Successor Borrower;

(6)                                  Borrower shall
deliver to Lender a Rating Comfort Letter as to the Defeasance Event;

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

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

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

(10)                            Borrower shall pay all
costs and expenses of Lender incurred in connection with the Defeasance Event,
including Lender’s reasonable attorneys’ fees and expenses and Rating Agency
fees and expenses.

(b)                                 Defeasance Collateral Account.  On or before the date on which Borrower
delivers the Defeasance Collateral, Borrower shall open at any Eligible
Institution the defeasance collateral account (the “Defeasance Collateral Account”) which shall at all times
be an Eligible Account.  The Defeasance
Collateral Account shall contain only (i) Defeasance Collateral, and (ii) cash
from interest and principal paid on the Defeasance Collateral.  All cash from interest and principal payments
paid on the Defeasance Collateral shall be paid over to Lender on each Payment
Date and applied first to accrued and unpaid interest and then to
Principal.  Any cash from interest and
principal paid on the Defeasance Collateral not needed to pay accrued and
unpaid interest or Principal shall be retained in the Defeasance Collateral
Account as additional collateral for the Loan. 
Borrower shall cause the Eligible Institution at which the Defeasance
Collateral is deposited to enter an agreement with Borrower and Lender,
satisfactory to Lender in its sole discretion, pursuant to which such Eligible
Institution shall agree to hold and distribute the Defeasance Collateral in
accordance with this Agreement.  The
Successor Borrower shall be the owner of the Defeasance Collateral Account and
shall report all

 19
 

 

income accrued on Defeasance Collateral for
federal, state and local income tax purposes in its income tax return.  Borrower shall prepay all cost and expenses
associated with opening and maintaining the Defeasance Collateral Account.  Lender shall not in any way be liable by
reason of any insufficiency in the Defeasance Collateral Account.

(c)                                  Successor Borrower.  In connection with a Defeasance Event under
this Section 2.3.3, Borrower shall, if required by the Rating Agencies or
if Borrower elects to do so, establish or designate a successor entity (the “Successor Borrower”) which
shall be a Special Purpose Bankruptcy Remote Entity and which shall be approved
by the Rating Agencies.  Any such
Successor Borrower may, at Borrower’s option, be an Affiliate of Borrower
unless the Rating Agencies shall require otherwise.  Borrower shall transfer and assign all
obligations, rights and duties under and to the Note, together with the
Defeasance Collateral to such Successor Borrower.  Such Successor Borrower shall assume the
obligations under the Note and the Security Agreement and Borrower shall be
relieved of its obligations under such documents.  Borrower shall pay a minimum of $1,000 to any
such Successor Borrower as consideration for assuming the obligations under the
Note and the Security Agreement. 
Borrower shall pay all costs and expenses incurred by Lender, including
Lender’s attorney’s fees and expenses, incurred in connection therewith.

2.3.4                     Optional
Prepayments.  On and after the
third Payment Date prior to the Stated Maturity Date (the “Permitted Prepayment Date”),
Borrower shall have the right to prepay the Loan in whole (but not in part),
provided that Borrower gives Lender at least fifteen (15) days’ prior written
notice thereof.  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.  Any such prepayment shall be made
without payment of the Yield Maintenance Premium.

2.4                               Release
of Property.

2.4.1                     Release on
Defeasance.  If Borrower has
elected to defease the Note and the requirements of Section 2.3.3 and this
Section 2.4 have been satisfied, the Property shall be released from the
Lien of the Mortgage and the Defeasance Collateral pledged pursuant to the
Security Agreement shall be the sole source of collateral securing the
Note.  In connection with the release of
the Lien, Borrower shall submit to Lender, not less than thirty (30) days prior
to the Defeasance Date (or such shorter time as is acceptable to Lender in its
sole discretion), a release of Lien (and related Loan Documents) for execution
by Lender.  Such release shall be in a
form appropriate in the jurisdiction in which the Property is located and
contain standard provisions protecting the rights of the releasing lender.  In addition, Borrower shall provide all other
documentation Lender reasonably requires to be delivered by Borrower in
connection with such release, together with an Officer’s Certificate certifying
that such documentation (i) is in compliance with all Legal Requirements, and
(ii) will effect such release in accordance with the terms of this
Agreement.  Borrower shall pay all costs,
taxes and expenses associated with the release of the Lien of the Mortgage,
including Lender’s reasonable attorneys’ fees.

2.4.2                     Release on
Payment in Full.  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

 20
 

 

warranty by and without any recourse against
Lender whatsoever), the Lien of the Loan Documents if not theretofore released.

2.5                               Payments
and Computations.

2.5.1                     Making of
Payments.  Each payment by a
Borrower shall be made in funds settled through the New York Clearing House
Interbank Payments System or other funds immediately available to Lender by
11:00 a.m., New York City time, on the date such payment is due, to Lender by
deposit to such account as Lender may designate by written notice to
Borrower.  Whenever any such payment
shall be stated to be due on a day that is not a Business Day, such payment
shall be made on the first Business Day thereafter.  All such payments shall be made irrespective
of, and without any deduction, set-off or counterclaim whatsoever and are
payable without relief from valuation and appraisement laws 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 regularly
scheduled payment of Principal, interest or other monthly payment or reserve or
escrow deposit due under any Loan Document is not paid by Borrower on the date
on which it is due and, subject to the last sentence of this Section 2.5.3,
such failure continues for five (5) days, 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.  With respect to the foregoing
five (5) day grace period, the parties agree that such five (5) day grace
period shall only be applicable no more than twice during the Term, and in all
other instances, the Late Payment Charge shall be payable in accordance with
this Section 2.5.3 with respect to any Principal, interest or other sum due
under any Loan Document which is not paid by Borrower on the date on which the
same is due (other than the balloon payment of Principal due on the Maturity
Date or acceleration of the Loan).

3.                                      CASH
MANAGEMENT AND RESERVES

3.1                               Cash
Management Arrangements. 
Borrower shall cause all Rents to be transmitted directly by tenants of
the Property into a trust account (the “Clearing Account”) maintained by Borrower 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.  Without in any way limiting
the foregoing, all Rents received by Borrower, Manager or Sub-Manager shall be
deposited into the Clearing Account within two Business Days of receipt.  Funds deposited into the Clearing Account
shall be swept by the Clearing Bank 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 collectively

 21
 

 

referred to herein as “Subaccounts”).  The Deposit Account and any Subaccount will
be under the sole control and dominion of Lender, and Borrower shall not have
any right of withdrawal therefrom. 
Borrower shall pay for all expenses of opening and maintaining all of the
above accounts.

3.2                               Required
Repairs; 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”), if any, within one (1) year
of the date hereof or such shorter period of time for such item set forth on
Schedule 2, if any.  All such repairs and
remedial work shall be completed in a good and workmanlike manner in accordance
with all applicable Legal Requirements and free from all Liens not previously
approved by Lender.

3.3                               Tax
and Insurance Subaccount.

3.3.1                     Monthly
Deposits.  Subject to the terms
and provisions of Section 3.3.2 below, Borrower shall pay to Lender on each
Payment Date (i) one-twelfth of the Taxes that Lender estimates will be
payable during the next 12 months in order to accumulate with Lender sufficient
funds to pay all such Taxes at least thirty (30) days prior to the delinquency
date and (ii) one-twelfth of the Insurance Premiums that Lender estimates
will be payable for the renewal of the coverage afforded by the Policies upon
the expiration thereof in order to accumulate with Lender sufficient funds to
pay all such Insurance Premiums at least 30 days prior to the expiration of the
Policies.  Such amounts will be
transferred by Lender to a Subaccount (the “Tax and Insurance Subaccount”).  Provided that no monetary Event of Default or
material non-monetary Event of Default has occurred and is continuing, Lender
will (a) apply funds in the Tax and Insurance Subaccount to payments of
Taxes and Insurance Premiums required to be made by Borrower pursuant to
Sections 5.2 and 7.1, provided that Borrower has promptly supplied Lender with
notices of all Taxes and Insurance Premiums due, or (b) reimburse Borrower
for such amounts upon presentation of evidence of payment; subject, however, to
Borrower’s’ right to contest Taxes in accordance with Section 5.2.  In making any payment relating to Taxes and
Insurance Premiums, Lender may do so according to any bill, statement or
estimate procured from the appropriate public office (with respect to
Taxes) or insurer or agent (with respect to Insurance Premiums), without
inquiry into the accuracy of such bill, statement or estimate or into the
validity of any tax, assessment, sale, forfeiture, tax lien or title or claim
thereof.  If Lender determines in its
reasonable judgment that the funds in the Tax and Insurance Subaccount will be
insufficient to pay (or in excess of) the Taxes or Insurance Premiums next
coming due, Lender may increase (or decrease) the monthly contribution
required to be made by Borrower to the Tax and Insurance Subaccount.

3.3.2                     Waiver of
Monthly Deposits. 
Notwithstanding the foregoing, provided no Event of Default has occurred
and is continuing and Borrower has provided to Lender evidence of payment of
the Taxes and the Insurance Premiums in the manner and within the time periods
set forth herein, Lender shall not require Borrower to make the monthly
deposits required under Section 3.3.1 above. 
Upon notice by Lender following the occurrence of an Event of Default or
Borrower’s failure to provide such evidence of payment, Borrower shall resume
making the monthly deposits required under Section 3.3.1 above with such
payments to begin on the first Payment Date following such notice.

 22
 

 

3.4                               Ground
Rent Subaccount.  Subject to the
last sentence of this Section 3.4, on each Payment Date, Borrower shall pay to
Lender, an amount that is estimated by Lender to be due and payable by Borrower
under the Ground Lease for the Ground Rent, in order to accumulate with Lender
sufficient funds to pay all sums payable under the Ground Lease at least ten
(10) Business Days prior to the next due date for such sums.  Such amounts will be transferred by Lender to
a Subaccount (the “Ground
Rent Subaccount”).  Upon
Borrower’s failure to pay any Ground Rents within the time periods required to
be paid under the Ground Lease and at least five (5) days prior to the
expiration of any cure period available to Borrower or Lender pursuant to the
Ground Lease, Lender may, in its discretion, apply any amounts held in the
Ground Rent Subaccount to the payment of such Ground Rent; provided however,
that the provisions of this Section 3.4 shall not be deemed to create any
obligation on the part of Lender to pay any such Ground Rent from amounts on
deposit in the Ground Rent Subaccount. 
Such deposit may be increased by Lender in the amount Lender deems
necessary, in its reasonable discretion, based on any increases in the Ground
Rent due under the Ground Lease. 
Notwithstanding the foregoing, Borrower shall not be required to make
monthly deposits to the Ground Rent Subaccount so long as Borrower has
deposited and maintains in the Ground Rent Subaccount sufficient amounts for
the payment of at least one (1) month of Ground Rents.

3.5                               Bank
of America Lease Required Improvements Subaccount.  On the date hereof, Borrower shall deposit
with Lender $2,921,160.23 and Lender shall transfer such amounts into a
Subaccount (the “Bank of
America Lease Required Improvements Subaccount”).  Provided that no Event of Default has
occurred and is continuing, Lender shall disburse funds held in the Bank of
America Lease Required Improvements Subaccount to Borrower, within ten (10)
days after the delivery by Borrower to Lender of a request therefor (but not
more often than once per month), in increments of at least $5,000, accompanied
by the following items (which items shall be in form and substance satisfactory
to Lender): (i) an Officer’s Certificate (A) certifying that the Bank of
America Lease Required Improvements 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,
(B) identifying each Person that supplied materials or labor in connection with
such Bank of America Lease Required Improvements or any portion thereof and (C)
stating that each such Person has been or, upon receipt of the requested
disbursement, will be paid in full with respect to the portion of the Bank of
America Lease Required Improvements which is the subject of the requested
disbursement; (ii) copies of appropriate Lien waivers or other evidence of
payment satisfactory to Lender; and (iii) such other evidence as Lender shall
reasonably request that the Bank of America Lease Required Improvements which
is the subject of the requested disbursement have been completed and paid for
(which may, if required by Lender, include a tenant estoppel certificate from
the tenant under the Bank of America Lease confirming the satisfactory
completion of such Bank of America Lease Required Improvements and/or
confirmation of any amounts due to the tenant under the Bank of America Lease
as reimbursement for any Bank of America Lease Required Improvements).  Provided no Default or Event of Default shall
have occurred and is continuing, upon completion of all of the Bank of America
Lease Required Improvements, any balance remaining in the Bank of America Lease
Required Improvements Subaccount shall promptly be released to Borrower.  Any such disbursement of more than $10,000 to
pay (rather than reimburse) any Bank of America Lease Required Improvements
may, at Lender’s option, be made by joint check payable to Borrower

 23
 

 

and the Person that supplied materials or
labor in connection with such Bank of America Lease Required Improvements.

3.6                               Operating
Expense Subaccount.  On each
Payment Date during the continuance of a Cash Trap Period, a portion of Rents
that have been deposited into the Deposit Account during the immediately
preceding Interest Period in an amount equal to the monthly amount set forth in
the Approved Operating Budget for the following month (plus any other amounts
requested by Borrower for such month for payment of items constituting Approved
Operating Expenses, which are not included in the Approved Operating Budget),
shall be transferred into a Subaccount for the purpose of payment of Approved
Operating Expenses for the month in which such Payment Date occurs (the “Operating Expense Subaccount”).  Provided no Event of Default has occurred and
is continuing, Lender shall disburse funds held in the Operating Expense
Subaccount to Borrower (or at Borrower’s direction, to Manager or Sub-Manager),
within five (5) Business Days after delivery by Borrower to Lender of a request
therefor (but not more often than weekly), in increments of at least $1,000,
provided (i) such disbursement is for an Approved Operating Expense; and
(ii) such disbursement is accompanied by (A) an Officer’s Certificate
certifying (1) that such funds will be used to pay Approved Operating
Expenses and a description thereof, (2) that all outstanding trade
payables (other than those not yet due and payable or those to be paid from the
requested disbursement or those constituting Permitted Indebtedness) have
been paid in full, (3) that the same has not been the subject of a
previous disbursement, and (4) that all previous disbursements have been
or will be used to pay the previously identified Approved Operating Expenses,
and (B) reasonably detailed documentation satisfactory to Lender as to the
amount, necessity and purpose therefor. 
Notwithstanding anything to the contrary contained herein, to the extent
that (i) Borrower has requested a disbursement of funds from the Operating
Expense Subaccount in accordance with the foregoing provisions and (ii) at the
time of such request, the funds that have been collected in the Operating
Expense Subaccount are insufficient to cover the same, then Lender shall
nonetheless disburse additional funds that are thereafter deposited into the
Operating Expense Subaccount to Borrower (without any requirement for Borrower
to submit an additional request therefor); provided that sufficient funds have
been collected in the Deposit Account to make the payments required under
clauses (i) - (v) of Section 3.11(a) on the next succeeding Payment Date.

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 to be transferred to a Subaccount (the “Casualty/Condemnation Subaccount”)
in accordance with the provisions of Section 7. 
All amounts in the Casualty/Condemnation Subaccount shall be disbursed
in accordance with the provisions of Section 7.

3.8                               Security
Deposit Subaccount.  Borrower
shall keep all security deposits under Leases in accordance with applicable
Legal Requirements.  After the occurrence
of an Event of Default, 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 in
a Subaccount (the “Security
Deposit Subaccount”) subject to the terms of the Leases.  Security deposits held in the Security Deposit
Subaccount will be released by Lender upon notice from Borrower together with
such evidence as Lender may reasonably request 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 pursuant to the rights of Borrower under the applicable Lease.

 24
 

 

Any letter of credit or other instrument that
Borrower receives in lieu of a cash security deposit under any Lease shall
(i) be maintained in full force and effect in the 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                               Cash
Collateral Subaccount.  If a Cash
Trap Period shall have commenced, then on the immediately succeeding Payment
Date and on each Payment Date thereafter during the continuance of such Cash
Trap Period, all Available Cash shall be paid to Lender, which amounts shall be
transferred by Lender into a Subaccount (the “Cash Collateral Subaccount”) as cash
collateral for the Debt.  Any funds in
the Cash Collateral Account and not previously disbursed or applied shall be
disbursed to Borrower upon the termination of such Cash Trap Period.  Lender shall have the right, but not the
obligation, at any time during the continuance of a monetary Event of Default
or material non-monetary Event of Default, in its sole and absolute discretion
to apply all sums then on deposit in the Cash Collateral Subaccount to the
Debt, in such order and in such manner as Lender shall elect in its sole and
absolute discretion, including (if the Loan has been accelerated) to make a
prepayment of Principal (together with the applicable Yield Maintenance Premium
applicable thereto).  Notwithstanding
anything to the contrary contained above, Lender shall have the right, but not
the obligation, in its sole and absolute discretion from time to time, to
disburse funds deposited into the Cash Collateral Subaccount to Borrower for
application to Approved Leasing Costs or capital expenditures approved by
Lender, subject to such terms and conditions as Lender may require.

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 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, 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 Deposit 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, except those
naming Lender as the secured party, to be filed with respect thereto.  This Agreement is, among other things,
intended by the parties to be a security agreement for purposes of the
UCC.  Upon the occurrence and during 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 discretion without seeking the appointment of a receiver and without
adversely affecting the rights of Lender to foreclose the Lien of the Mortgage
or exercise its other rights under the Loan Documents, provided that Lender
will not apply any such sums to prepayment of Principal unless it has
accelerated the Loan.  Cash Management
Accounts shall not constitute trust funds and may be commingled with other
monies held by Lender.  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

 25
 

 

in full of the Debt, all remaining funds in
the Subaccounts, if any, shall be promptly disbursed to Borrower.

3.11                        Property
Cash Flow Allocation.  (a) All
Rents deposited into the Deposit Account during the immediately preceding
Interest Period shall be applied on each Payment Date as follows in the
following order of priority: (i) First, to make payments into the Tax and
Insurance Subaccount as required under Section 3.3; (ii) Second, to make payments
into the Ground Rent Subaccount as required under Section 3.4;
(iii) Third, to pay the monthly portion of the fees charged by the Deposit
Bank in accordance with the Deposit Account Agreement; (iv) Fourth, to
Lender to pay the Monthly Debt Service Payment Amount due on such Payment Date
(plus, if applicable, interest at the Default Rate and all other amounts, other
than those described under other clauses of this Section 3.11(a), then due to
Lender under the Loan Documents); (v) intentionally omitted; (vi) Fifth,
during the continuance of a Cash Trap Period, to make payments for Approved
Operating Expenses as required under Section 3.6; (vii) Sixth, during the
continuance of a Cash Trap Period, to make payments in an amount equal to all
remaining Available Cash on such Payment Date into the Cash Collateral
Subaccount in accordance with Section 3.9; and (viii) Lastly, except during the
continuance of a Cash Trap Period, payments to Borrower of any remaining
amounts.  Notwithstanding the foregoing,
except during the continuance of a Cash Trap Period, provided that in any given
Interest Period, all amounts referred to in the foregoing clauses (i) - (v)
have been paid (if and as applicable), then at Borrower’s request, the payments
to Borrower under the foregoing clause (viii) shall be made on a weekly basis.

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

(c)                                  Notwithstanding
anything to the contrary contained in this Section 3.11, after the occurrence
of an Event of Default, Lender may apply all Rents deposited into the Deposit
Account and other proceeds of repayment in such order and in such manner as
Lender shall elect, provided that Lender may not apply Rents to the prepayment
of principal unless the Loan has been accelerated.

3.12                        Initial
Deposits into Reserves.  The
initial deposits required to be made on the date hereof into the reserve
accounts established under this Article 3 are funded from the proceeds of the
Loan disbursed at closing.

3.13                        Initial
Leasing Reserve.  On the date
hereof, Borrower shall deposit with Lender $4,398,707.84 (the “Tenant Improvement Funds”)
and Lender shall transfer such amount into a Subaccount (the “Tenant Improvement Reserve
Subaccount”).  The Tenant
Improvement Funds shall be used to reimburse Borrower and/or to pay, in the
allocated amounts and in accordance with the terms and conditions set forth in
this Agreement, for the reasonable costs and expenses incurred by Borrower in
completing the tenant improvements and/or paying the tenants under the
applicable Leases allowances for tenant improvements and/or paying leasing
commissions under the applicable Leases, in each case in the amounts allocated
to, and as described for each

 26
 

 

applicable Lease, on Schedule 1 (the “TI Leases”).  Provided that no Event of Default has
occurred and is continuing, Lender shall disburse Tenant Improvement Funds held
in the Tenant Improvement Reserve Subaccount and applicable to each TI Lease
(as set forth on Schedule 1) to Borrower, within fifteen (15) days after the
delivery by Borrower to Lender of a request therefore (but not more often than
once per month), in increments of at least $5,000 (or the remaining balance of
the amount allocated to the applicable TI Lease, if less), provided: (i)
Borrower shall have provided Lender with either (1) as to leasing commissions
relating to the applicable TI Lease (as set forth on Schedule 1), reasonable
evidence that such commissions have been paid, or are then due and will be paid
with proceeds of the requested disbursement, or (2) as to leasehold improvement
work or allowances therefor, reasonable evidence (which may, if required by
Lender, include a tenant estoppel certificate from the tenant under the
applicable TI Lease) indicating, as applicable, (A) that the tenant
improvements or allowances therefor have been completed in accordance with the
applicable TI Lease, (B) that the tenant under the applicable TI Lease is then
owed and entitled to payment upon the applicable tenant allowance pursuant to
the terms of such TI Lease, or (C) if the time period upon which the applicable
tenant may draw upon the applicable TI Lease has elapsed, that such tenant is
no longer entitled to obtain or require the payment of the applicable tenant
allowance under the terms of the applicable TI Lease; and (ii) the request for
disbursement is accompanied by (A) an Officer’s Certificate certifying that
such funds will be used only to pay (or reimburse Borrower for) the relevant
expenditures set forth above (or, in the event of a disbursement under clause
(i)(C) above, that the condition set forth in such clause (i)(C) has been
satisfied with respect to the applicable TI Lease), and that the same have not been
the subject of a previous disbursement, and (B) reasonably detailed supporting
documentation as to the amount, necessity and purpose therefor.  Any such disbursement of more than $50,000 to
pay (rather than reimburse) tenant improvements under this Section may, at
Lender’s option, be made by joint check payable to Borrower and the payee of
such tenant improvements.

3.14                        Bank of
America Lease Termination and Space Reduction - Letter of Credit.

(a)                                  In
the event that Bank of America gives notice to Borrower of its intention to
terminate a portion of the Bank of America Lease in connection with a reduction
of the space covered by the Bank of America Lease, whether by right pursuant to
the Bank of America Lease, by agreement with Borrower or otherwise, Borrower
shall deliver to Lender, within thirty (30) days of such notice, either (i)
cash in an amount equal to the Bank of America Lease Letter of Credit Amount
(which cash shall be deposited into the Bank of America Lease Subaccount) or
(ii) an Acceptable Letter of Credit in favor of Lender in an amount equal to
the Bank of America Lease Letter of Credit Amount providing that the Lender or
its successors and assigns may draw the full amount thereof at any time upon
demand (and subject to no other drawing requirements or conditions) and
otherwise in form and content satisfactory to Lender (such Letter of Credit and
any replacement or renewals thereof, the “Bank of America Lease Letter of Credit”).  Subject to the provisions of this Section,
Lender shall retain custody of the cash deposited in the Bank of America Lease
Subaccount or the Bank of America Lease Letter of Credit until such time as the
Loan is repaid in full.

(b)                                 Lender
shall have the right to draw upon the Bank of America Lease Letter of Credit in
the full amount thereof upon the occurrence of any of the following: (A) any
Event of Default; (B) Lender receives a notice stating that the Bank of America
Lease Letter of 

 27
 

 

Credit will not be renewed (as provided for
in such Bank of America Lease Letter of Credit) and either (i) a replacement
Acceptable Letter of Credit in an amount equal to the amount of the Bank of
America Lease Letter of Credit or (ii) cash in the amount of the Bank of
America Lease Letter of Credit, is not provided at least ten (10) Business Days
prior to the expiration date of
the Bank of America Lease Letter of Credit; or (C) at any time the bank issuing
the Bank of America Lease Letter of Credit shall cease to be an Approved Bank
and either (i) a replacement Acceptable Letter of Credit in an amount equal to
the amount of the Bank of America Lease Letter of Credit or (ii) cash in the
amount of the Bank of America Lease Letter of Credit, is not provided within
twenty (20) Business Days after notice thereof.

(c)                                  The
proceeds of any draw under the Bank of America Lease Letter of Credit pursuant
to Section 3.14(b)(A) above shall be allocated to the Debt, in such order and
in such manner as Lender shall elect in its sole and absolute discretion,
including (if the Loan has been accelerated) to make a prepayment of Principal
(together with the applicable Yield Maintenance Premium applicable
thereto).  The proceeds of any draw under
the Bank of America Lease Letter of Credit pursuant to Section 3.14(b)(B) or (C)
above shall be deposited by Lender into the Bank of America Lease Subaccount
pursuant to Section 3.14(f) below and shall be governed by the provisions of
this Section 3.14 as well as the other terms and conditions of this Agreement
and the other Loan Documents.

(d)                                 If
Borrower shall have delivered the Bank of America Lease Letter of Credit in
accordance with this Section 3.14 and provided that no Event of Default has
occurred and is continuing, the amount of the required Bank of America Lease
Letter of Credit shall be reduced from time to time, upon Borrower’s written
request to Lender, by an amount equal to not more than the amount that Borrower
would have been entitled to have disbursed to it from the Bank of America Lease
Subaccount under Section 3.14(f) below if cash was held in the Bank of America
Lease Subaccount instead of the Bank of America Lease Letter of Credit, and
provided further, that: (a) such requests may be made not more frequently than
once per month; (b) without limiting any other requirement hereunder, the
amount of any reduction shall be in increments of $100,000 or any whole
multiple thereof; (c) all Bank of America Lease
Draw Requirements shall have been satisfied as if cash was held in the Bank
of America Lease Subaccount instead of the Bank
of America Lease Letter of Credit and Borrower
was requesting a disbursement of funds from the Bank of America Lease Subaccount in an amount equal to the requested
reduction in the amount of the Bank of America Lease Letter of Credit.  If the
amount of the Bank of America Lease Letter of Credit is reduced, Lender will cooperate with
Borrower in amending or replacing the Bank of America Lease Letter of Credit to
reflect such reduced amount.  Borrower shall pay any fees or other amounts
charged by any issuing bank with respect to any such request and shall promptly
pay to Lender all costs and expenses of Lender incurred in connection with any
such request, including Lender’s reasonable attorneys’ fees.

(e)                                  If
Borrower shall have delivered the Bank of America Lease Letter of Credit in
accordance with this Section 3.14 and provided no Event of Default shall have
occurred and be continuing, Lender shall surrender to Borrower such Bank of
America Lease Letter of Credit within fifteen (15) days after the delivery by
Borrower to Lender of a request therefor, provided that: (i) all of the Bank of
America Space is leased to a replacement tenant or tenants reasonably
acceptable to Lender; (ii) the term of such replacement lease or leases are at
least five years each; (iii) the rent due under such leases shall be at least
equal to the then current rent

 28
 

 

payable by Bank of America under the Bank of
America Lease with respect to the space subject thereto (or that would have
been payable with respect to the space subject thereto had the space not been
reduced under the Bank of America Lease); (iv) Borrower shall have provided
Lender (either concurrently with such request or in connection with prior
reductions in the amount of the Bank of America Lease Letter of Credit) with
tenant estoppel certificates from each such tenant under each applicable lease
indicating that all construction to be performed and all improvements to be
installed under the lease has been completed, that such tenant has accepted the
tenant improvements and occupied the space covered by its lease and has
commenced paying rent and the free rent or rent abatement periods under such
lease has expired, and there are no defaults under such lease (nor does there
exist any event or condition, which with the passage of time or the giving of
notice, or both, could result in such a default); (v) Lender shall have (if it
desires) verified (by an inspection conducted at Borrower’s expense)
performance of any construction work associated with any such lease; and (vi)
the request for release is accompanied by an Officer’s Certificate certifying
that all of the costs of tenant improvements and leasing commissions with
respect to the entire Bank of America Space relating to the Bank of America
Lease Letter of Credit and all such replacement leases have been paid in
full.  In addition, promptly after the
Loan is repaid in full, Lender shall surrender to Borrower the Bank of America
Lease Letter of Credit.

(f)                                    The
proceeds of any draw under the Bank of America Lease Letter of Credit pursuant
to Section 3.14(b)(B) or (C) above, any Bank of America Lease Termination
Payment and any cash delivered to Lender in accordance with Section 3.14(a)
hereof, shall be deposited with Lender, upon receipt thereof, and Lender shall
transfer such amount into a Subaccount (“Bank of
America  Lease
Subaccount”).  Provided
that no Event of Default has occurred and is continuing, Lender shall disburse
funds held in the Bank of America Lease 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 increments of at least $5,000,
provided: (i) such disbursement is for an Approved Leasing Expense
incurred hereafter; (ii) Lender shall have (if it desires) verified
(by an inspection conducted at Borrower’s expense) performance of any
construction work associated with such Approved Leasing Expense; (iii) all
space relating to the request is leased to a replacement tenant or tenants
reasonably acceptable to Lender; (iv) the term of such replacement lease or
leases are at least five years each; (v) the rent due under such leases shall
be at least equal to the then current rent payable by Bank of America under the
Bank of America Lease with respect to the space subject thereto (or that would
have been payable with respect to the space subject thereto had the space not
been reduced under the Bank of America Lease); (vi) the request for
disbursement is accompanied by (A) an Officer’s Certificate certifying
(1) that such funds will be used only to pay (or reimburse Borrower for)
Approved Leasing Expenses and a description thereof, (2) that all
outstanding trade payables (other than those not yet due and payable or those
to be paid from the requested disbursement or those constituting Permitted Indebtedness) have
been paid in full, (3) that the same has not been the subject of a
previous disbursement, and (4) that all previous disbursements have been
used only to pay (or reimburse Borrower for) the previously identified
Approved Leasing Expenses, and (B) reasonably detailed supporting
documentation as to the amount, necessity and purpose therefor; (vii) the
Effective Gross Income, determined on a pro forma basis for the following
twelve (12) month period is equal to or greater than the Effective Gross Income
for the previous twelve (12) month period; and (viii) Borrower shall have
provided Lender with tenant estoppel certificates from each such tenant under
each applicable lease

 29
 

 

indicating that all construction to be
performed and all improvements to be installed under the lease has been
completed, that such tenant has accepted the tenant improvements and occupied
the space covered by its lease and has commenced paying rent and the free rent
or rent abatement periods under such lease has expired, and there are no
defaults under such lease (nor does there exist any event or condition, which
with the passage of time or the giving of notice, or both, could result in such
a default) (all requirements under this Section 3.14(f) for disbursement of
funds from the Bank of America Lease Subaccount to Borrower, collectively, the “Bank of America Lease Draw Requirements”).  Any such 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.

(g)                                 Borrower
shall have the one-time right, upon ten (10) days prior written notice to
Lender, and provided that no Event of Default then exists, to either (i) in the
event that the Bank of America Lease Letter of Credit is being held by Lender
pursuant to the terms of this Section 3.14, deliver to Lender cash in the
amount of the Bank of America Lease Letter of Credit and in exchange thereof,
Lender shall deliver to Borrower the Bank of America Lease Letter of Credit; or
(ii) in the event that cash is being held by Lender in the Bank of America
Lease Subaccount pursuant to the terms of this Section 3.14, deliver to Lender
an Acceptable Letter of Credit in the amount of the cash being held by Lender
in the Bank of America Lease Subaccount and in exchange thereof, Lender shall
disburse to Borrower the cash on deposit in the Bank of America Lease
Subaccount; provided, however, Borrower shall not have the right to obtain the
exchange set forth in clause (ii) above in the event that the Bank of America
Lease Letter of Credit has been drawn down pursuant to Section 3.14(b) hereof.

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                               Organization;
Special Purpose.  Borrower 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.  Borrower is duly qualified to
do business and is in good standing in each jurisdiction where it is required
to be so qualified in connection with its properties, business and
operations.  Borrower is a Special
Purpose Bankruptcy Remote Entity.

4.2                               Proceedings;
Enforceability.  Borrower has
taken all necessary action to authorize the execution, delivery and performance
of the Loan Documents.  The Loan
Documents to which Borrower is a party have been duly executed and delivered by
Borrower and constitute legal, valid and binding obligations of Borrower enforceable
against Borrower in accordance with their respective terms, subject to
applicable bankruptcy, insolvency and similar laws affecting rights of
creditors generally, and general principles of equity.  The Loan Documents to which Guarantor and/or
Affiliates are a party have been duly executed and delivered by such Guarantor
and/or Affiliates party thereto, and constitute legal, valid and binding
obligations of such Guarantor and/or Affiliates party thereto, enforceable
against such Guarantor and/or Affiliates party thereto in accordance with their
respective terms, subject to

 30

 

applicable bankruptcy, insolvency and similar
laws affecting rights of creditors generally, and general principles of
equity.  The Loan Documents are not
subject to, and Borrower has not asserted, any right of rescission, set-off,
counterclaim or defense, including the defense of usury.  No exercise of any of the terms of the Loan
Documents, or any right thereunder, will render any Loan Document
unenforceable.

4.3          No Conflicts.  The execution, delivery and performance of
the Loan Documents by Borrower and the transactions contemplated hereby will
not conflict with or result in a breach of any of the terms or provisions of,
or constitute a default under, or result in the creation or imposition of any
Lien (other than pursuant to the Loan Documents) upon any of the property of
Borrower pursuant to the terms of, any agreement or instrument to which
Borrower is a party or by which 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
the Property.  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, or the recordation of the Mortgage. 
Any consent, approval, authorization, order, registration or
qualification of or with any Governmental Authority required for the execution,
delivery and performance by Borrower of the Loan Documents has been obtained
and is in full force and effect.

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

4.5          Agreements.  Borrower is not a party to any agreement or
instrument or subject to any restriction which might adversely affect Borrower
or the Property, or Borrower’s business, properties, operations or condition,
financial or otherwise.  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 Borrower is
a party or by which Borrower or the Property is bound.

4.6          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.  Borrower is lawfully
possessed of the real property subject to each Ground Lease and by virtue of
each Ground Lease and has a good and valid leasehold estate for the full term
of each Ground Lease, free and clear of all liens, encumbrances and charges
whatsoever except for the Permitted Encumbrances.  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. 
The Mortgage when properly recorded in the appropriate records, together
with any UCC Financing Statements required to be filed in connection therewith
and the other Loan Documents, will create (i) a valid, perfected first
priority lien on Borrower’s interest in that portion of the Property, the
Leases (to the extent not subject to the Uniform Commercial Code) and the Rents
constituting interest in real estate or real property interests (including
fixtures) and (ii) to the extent that a security interest therein may be
created under the Uniform Commercial

 31
 

 

Code, a valid security interest in that
portion of the Property, the Leases (to the extent subject to the Uniform
Commercial Code) and Rents and other collateral for the Loan constituting
personal property, which security interest constitutes a perfected first
priority security interest (a) to the extent that a security interest therein
may be perfected by the filing of a UCC Financing Statement and (b) with
respect to the Cash Management Accounts by virtue of Lender’s control of such
Cash Management Accounts, all in accordance with the terms of such Loan
Documents, in each case subject only to any applicable Permitted
Encumbrances.  All 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 will, contemporaneously with such recordation or
filing, be) paid by Borrower.  The
Permitted Encumbrances do not materially adversely affect the value, operation
or use of the Property, or Borrower’s ability to repay the Loan.  No Condemnation or other proceeding has been
commenced or, to Borrower’s best knowledge, is contemplated with respect to all
or part of the Property or for the relocation of roadways providing access to
the Property.  There are no claims for
payment for work, labor or materials affecting the Property which are or may
become a Lien prior to, or of equal priority with, the Liens created by the
Loan Documents.  There are no outstanding
options to purchase or rights of first refusal affecting all or any portion of
the Property.  The survey for the Property
delivered to Lender does not fail to reflect any material matter affecting the
Property or the title thereto.  Except as
shown on the survey, all of the Improvements included in determining the
appraised value of the Property lie wholly within the boundaries and building
restriction lines of the Property, and no improvement on an adjoining property
encroaches upon the Property, and no easement or other encumbrance upon the
Property encroaches upon any of the Improvements, except those insured against
by the Title Insurance Policy.  Each
parcel comprising the Property is a separate tax lot and is not a portion of
any other tax lot that is not a part of the Property.  To the best of Borrower’s knowledge, there
are no pending or proposed special or other assessments for public improvements
or otherwise affecting the Property, or any contemplated improvements to the
Property that may result in such special or other assessments.

4.7          No Bankruptcy Filing.  Borrower
is not 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 its property (a “Bankruptcy Proceeding”), and Borrower has no knowledge
of any Person contemplating the filing of any such petition against
Borrower.  In addition, neither Borrower
nor any principal nor Affiliate of Borrower has been a party to, or the subject
of a Bankruptcy Proceeding for the past ten years.

4.8          Full and Accurate Disclosure.  No statement of fact made by Borrower in any
of the 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 which
adversely affects, or, as far as Borrower can foresee, might adversely affect,
the Property or the business, operations or condition (financial or otherwise)
of Borrower.  All financial data,
including the statements of cash flow and income and operating expense, that
have been delivered to Lender in respect of Borrower and, to Borrower’s
knowledge, the Property (i) are true, complete and correct in all material
respects, (ii) accurately represent the financial condition of Borrower
and the Property as of the date of such reports, and (iii) to the extent
prepared by an independent

 32
 

 

certified public accounting firm, have been
prepared in accordance with GAAP consistently applied throughout the periods
covered, except as disclosed therein. 
Borrower does not have any contingent liabilities, liabilities for
taxes, unusual forward or long-term commitments, 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 or the Property from that set forth in said financial statements.

4.9          Tax Filings.  To the extent required, Borrower has filed
(or has obtained effective extensions for filing) all federal, state and local
tax returns required to be filed and have paid or made adequate provision for
the payment of all federal, state and local taxes, charges and assessments
payable by Borrower.  Borrower believes
that its 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.

4.10        No Plan Assets.  As of the date hereof and throughout the Term
(i) Borrower is not and will not be an “employee benefit plan,” as defined in
Section 3(3) of ERISA, subject to Title I of ERISA, (ii) none of the
assets of Borrower constitutes or will constitute “plan assets” of one or more
such plans within the meaning of 29 C.F.R. Section 2510.3-101, (iii) 
Borrower is not and will not be a “governmental plan” within the meaning of
Section 3(32) of ERISA, and (iv) transactions by or with Borrower are
not and will not be subject to state statutes regulating investment of, and
fiduciary obligations with respect to, governmental plans.  As of the date hereof, neither Borrower, nor
any member of a “controlled group of corporations” (within the meaning of
Section 414 of the Code) maintains, sponsors or contributes 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).

4.11        Compliance.  Each Borrower and, to Borrower’s best
knowledge, the Property and the use thereof comply in all material respects
with all applicable Legal Requirements (including with respect to parking and
applicable zoning and land use laws, regulations and ordinances).  Borrower is not in default or violation of
any order, writ, injunction, decree or demand of any Governmental Authority,
the violation of which might materially adversely affect the condition
(financial or otherwise) or business of Borrower.  The Property is used exclusively as an office
building property and other appurtenant and related uses.  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 the Property. 
Neither the zoning nor any other right to construct, use or operate the
Property is in any way dependent upon or related to any property other than the
Property. All certifications, permits, licenses and approvals, including
certificates of completion and occupancy permits required for the legal use,
occupancy and operation of the Property (collectively, the “Licenses”), have been
obtained and are in full force and effect. 
The use being made of the Property is in conformity with the certificate
of occupancy issued for the Property and all other restrictions, covenants and
conditions affecting the Property.

 33
 

 

4.12        Contracts.  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 (or that of its predecessor in interest) and
provide for the payment of fees in amounts and upon terms comparable to
existing market rates.

4.13        Federal Reserve Regulations;
Investment Company Act.  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 such 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; (ii) a “holding company” or a “subsidiary company” of a “holding
company” or an “affiliate” of either a “holding company” or a “subsidiary
company” within the meaning of the Public Utility Holding Company Act of 1935,
as amended; or (iii) subject to any other federal or state law or
regulation which purports to restrict or regulate its ability to borrow money.

4.14        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 are in full force and effect
without default thereunder.  The 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.  All public utilities necessary or
convenient to the full use and enjoyment of the Property are located in the
public right-of-way abutting the Property, and all such utilities are connected
so as to serve the Property without passing over other property absent a valid
easement.  All roads necessary for the
use of the Property for its current purpose have been completed and dedicated
to public use and accepted by all Governmental Authorities.

4.15        Physical Condition.  To Borrower’s knowledge and except as set
forth in the property condition assessment, prepared by EMG and delivered to
Lender in connection with the Loan, the Property, including all Improvements,
parking facilities, systems, Equipment and landscaping, are in good condition,
order and repair in all material respects; to Borrower’s knowledge there exists
no structural or other material defect or damages to the Property, whether
latent or otherwise.  Borrower has not
received notice from any insurance company or bonding company of any defect or
inadequacy in the Property, or any part thereof, which would adversely affect
its insurability or cause the imposition of extraordinary premiums or charges
thereon or any termination of any policy of insurance or bond.  No portion of the Property is located in an
area as identified by the Federal Emergency Management Agency as an area having
special flood hazards.  The Improvements
have suffered no material casualty or damage which has not been fully repaired
and the cost thereof fully paid.

4.16        Leases.  The rent roll attached hereto as Schedule 8
(the “Rent Roll”)
is true, complete and correct and the Property is not subject to any Leases
other than the Leases described in the Rent Roll.  Except as set forth on the Rent Roll or
tenant estoppel certificates

 34
 

 

delivered to Lender prior to the date hereof:
(i) each Lease is in full force and effect; (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 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 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) to Borrower’s
best knowledge, 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 best 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 3.8;
(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
Borrower and the applicable tenant thereunder; (x) to Borrower’s best
knowledge, no Person has any possessory interest in, or right to occupy, the
Property except under the terms of the Lease; and (xi) each Lease is
subordinate to the Loan Documents, either pursuant to its terms or pursuant to
a subordination and attornment agreement. 
None of the Leases contains any option to purchase or right of first
refusal to purchase the Property or any part thereof.  Neither the Leases nor the Rents have been
assigned or pledged except to Lender, and no other Person has any interest
therein except the tenants thereunder.

4.17        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 probable 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 obligations of Borrower).

4.18        Ownership of Borrower.  The sole limited partner (99.9% limited
partner) of Borrower is Behringer Harvard Operating Partnership.  The sole general partner (0.1% general
partner) of Borrower is Borrower GP.  The
only partners of Behringer Harvard Operating Partnership are Behringer Harvard
REIT (0.1% general partner), BHR Partners (in excess of 90% limited partner)
and certain other individual holders of equity interests (less than 10% limited
partners).  The sole member of BHR Partners
is Behringer Harvard REIT.  The partnership
interests in Borrower, the membership interest in Borrower GP and the general
partnership interest of Behringer Harvard REIT and the limited partnership
interests of BHR Partners in Behringer Harvard Operating Partnership are owned
free and clear of all Liens, warrants, options and rights to purchase.  Borrower has no obligation to any Person to
purchase,

 35
 

 

repurchase or issue any ownership interest in
it.  The organizational chart attached
hereto as Schedule 4 is complete and accurate and illustrates all Persons who
have a direct or indirect ownership interest in Borrower.

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

4.20        Management Agreement.  The Management Agreement is 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.  Pursuant to the
Management Agreement, Borrower has appointed the Manager as its agent for (i)
hiring, terminating (subject to the provisions thereof), overseeing and otherwise
dealing with any sub-property manager for the Property, (ii) otherwise
overseeing the operation and management of the Property, and (iii) making
decisions and otherwise interacting and dealing with Lender with respect to the
Loan, this Agreement, the other Loan Documents and the Property.  Additionally, subject to the provisions of
Section 3.1 and the Clearing Account Agreement and the Deposit Account
Agreement, the Manager has control of all operating and other bank accounts
with respect to the Property.

4.21        Hazardous Substances.  Except as disclosed in the environmental
assessment reports delivered to Lender in connection with the Loan,
(i) 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 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 state super-lien and environmental clean-up statutes, any local
law requiring related permits and licenses 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, toxic mold or fungus
of a type that may pose a risk to human health or the environment or would
negatively impact the value of the Property (“Toxic Mold”) or any other substances or
materials which are included under or regulated by Environmental Laws
(collectively, “Hazardous
Substances”); (iii) to the best of Borrower’s knowledge,
after due inquiry, 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 the best of Borrower’s knowledge, after due inquiry, no Hazardous
Substances are present in, on or under any nearby real property which could
migrate to or otherwise affect the Property; (v) to the best of Borrower’s
knowledge, no Toxic Mold is on or about the Property which requires
remediation; and (vi) no underground storage tanks exist on the Property
and the Property has never been used as a landfill.  To the best of Borrower’s knowledge, 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.

 36
 

 

4.22        Name; Principal Place of Business.  Borrower does not use and will not use any
trade name or has done or will not do business under any name other than its
actual name set forth herein and the trade name of the Property.  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.

4.23        Other Debt.  There is no indebtedness with respect to the
Property or any excess cash flow or any residual interest therein, whether
secured or unsecured, other than Permitted Encumbrances and Permitted
Indebtedness.

4.24        Intentionally Omitted.

4.25        Intentionally Omitted.

4.26        Ground Lease.  Borrower has delivered to Lender a true,
correct and complete copy of each Ground Lease. 
Neither Ground Lease has been amended, modified, supplemented or
assigned.  Borrower is the sole tenant
and holder of a good, valid and marketable leasehold estate under each Ground
Lease and the interest of Borrower, as tenant, under each Ground Lease has not
been assigned.  Each Ground Lease is in
full force and effect.  No default exists
on the part of any party under any Ground Lease, and no event has occurred
which, but for the passage of time, or notice, or both, would constitute a
default under any Ground Lease.  All
rents, additional rents and other sums due and payable under each Ground Lease
has been paid in full.  No party to any
Ground Lease has commenced any action or given or received any notice for the
purpose of terminating any Ground Lease. 
Except for each Ground Lease, there are no agreements between Borrower
and the lessor thereunder, in any way concerning the subject matter of such
Ground Lease, the Property or the occupancy or use of the Property.

5.                                      COVENANTS

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

5.1          Existence.  Borrower 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 (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.

5.2          Taxes and Other Charges.  Borrower shall pay all Taxes and Other
Charges prior to delinquency, and deliver to Lender receipts for payment or
other evidence satisfactory to Lender that the Taxes have been so paid at least
thirty (30) days prior to the delinquency date (provided, however, that
Borrower need not pay such Taxes nor furnish such receipts for payment of Taxes
paid by Lender pursuant to Section 3.3) and that the Other Charges have been so
paid prior to delinquency.  Borrower
shall not suffer and shall promptly cause to be paid and discharged any Lien
against the Property, and shall promptly pay for all utility services provided
to the Property.  After prior notice to
Lender, Borrower, at their 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 Taxes or Other Charges,
provided that

 37
 

 

(i) no Event of Default has occurred and
is continuing, (ii) such proceeding shall suspend the collection of the
Taxes or such Other Charges, (iii) 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,
(iv) no part of or interest in the Property will be in imminent danger of
being sold, forfeited, terminated, canceled or lost, (v) 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 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 Taxes and Other Charges being
contested (less amounts then being retained in the Taxes and Insurance
Subaccount to pay such Taxes so contested), and (vi) Borrower shall
promptly upon final determination thereof pay the amount of such Taxes or Other
Charges, together with all costs, interest and penalties.  Lender may, with the prior approval of
Borrower (not to be unreasonably withheld), 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.

5.3          Access to Property.  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 subject to
the rights of tenants of the Property under their respective Leases.

5.4          Repairs; Maintenance and
Compliance; Alterations.

5.4.1       Repairs; Maintenance and Compliance.  Borrower shall at all times maintain,
preserve and protect all franchises and trade names, and Borrower shall cause
the 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 5.4.2 and normal replacement
of Equipment with Equipment of equivalent value and functionality or removal of
Equipment that is not material to the operation or value of the Property as an
office building).  Borrower shall
promptly comply with all Legal Requirements and immediately cure properly any
violation of a Legal Requirement. 
Borrower shall notify Lender in writing within three Business Days after
Borrower first receives notice of any such non-compliance.  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.

5.4.2       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 the 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.  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.  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

 38
 

 

in accordance with plans and specifications
approved by Lender (which approval shall not be unreasonably withheld or
delayed), (ii) all 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 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 5.4.2.

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

5.6          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.

5.7          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 reasonably require from time to time; and (ii) 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
(b) searches of title to the Property, each such search to be conducted by
search firms reasonably designated by Lender in each of the locations reasonably
designated by Lender.

5.8          Environmental Matters.

5.8.1       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 the Property, (B) the Property is in violation of
any Environmental Laws or (C) any condition on or near the 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.  Nothing herein shall prevent Borrower from
recovering such expenses from any other party that may be liable for such
removal or cure.

 39
 

 

5.8.2       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 the Property, (ii) all claims made or
threatened by any third party (including any Governmental Authority) against
Borrower or the Property or any party occupying the 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 the Property that could cause the 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 the Property, Borrower shall (i) undertake an investigation to
identify the source(s) of such mold or 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 the Property affected by Toxic Mold, including
providing any necessary moisture control systems at the Property), and (iii)
provide evidence reasonably satisfactory to Lender of the foregoing.  Borrower shall permit Lender to join and
participate in, as a party if it so elects, any legal or administrative
proceedings or other actions initiated with respect to the 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 request, at any time
and from time to time, Borrower shall provide an inspection or audit of the
Property prepared by a licensed hydrogeologist, licensed environmental engineer
or qualified environmental consulting firm approved by Lender assessing the
presence or absence of Hazardous Substances on, in or near the Property, 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 30 days after such request, Lender may order same,
and Borrower hereby grants to Lender and its employees and agents access to the
Property and a license to undertake such inspection or audit.

(c)           If any environmental site assessment
report prepared in connection with such inspection or audit recommends that an
operations and maintenance plan be implemented for any Hazardous Substance,
whether such Hazardous Substance existed prior to the ownership of the Property
by Borrower, or presently exists or is reasonably suspected of existing,
Borrower shall cause such operations and maintenance plan to be prepared and
implemented at its expense upon request of Lender, and with respect to any
Toxic Mold, Borrower shall take all action necessary to clean and disinfect any
portions of the Improvements affected by Toxic Mold in or about the
Improvements, including providing any necessary moisture control systems at the
Property.  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 30 days after written demand by
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

 40
 

 

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, are 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 are
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 sold, forfeited or lost if a Borrower
fails to promptly perform the Remedial Work being contested, and if Borrower
fails to prevail in 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 any civil liability for which
Borrower has not 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
reasonably requested by Lender 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, which amount shall periodically
be disbursed to Borrower during the course of such Remedial Work, within ten
(10) days after the delivery by Borrower to Lender of a request therefor (but
not more often than once per month), in increments of at least $5,000,
accompanied by the following items (which items shall be in form and substance
satisfactory to Lender): (i) an Officer’s Certificate (A) certifying that the
Remedial Work 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, (B) identifying each Person
that supplied materials or labor in connection with such Remedial Work or any
portion thereof and (C) stating that each such Person has been or, upon receipt
of the requested disbursement, will be paid in full with respect to the portion
of the Remedial Work which is the subject of the requested disbursement; (ii)
copies of appropriate Lien waivers or other evidence of payment satisfactory to
Lender; (iii) with respect to any disbursement that exceeds $50,000, at Lender’s
option, a title search for the Property indicating that it is free from all
Liens not previously approved by Lender; (iv) a copy of each License required
to be obtained with respect to the portion of the Remedial Work which is the
subject of the requested disbursement; and (v) such other evidence as Lender
shall reasonably request that the Remedial Work which is the subject of the
requested disbursement have been completed and paid for.  Provided no Default or Event of Default shall
have occurred and is continuing, upon completion of the Remedial Work, any
unused portion of any security deposited with Lender

 41
 

 

pursuant to this Section 5.8.2 shall promptly
be released to Borrower.  Any such
disbursement of more than $10,000 to pay (rather than reimburse) any Remedial
Work may, at Lender’s option, be made by joint check payable to Borrower and
the Person that supplied materials or labor in connection with such Remedial
Work.

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

5.9          Title to the Property.  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.

5.10        Leases.

5.10.1     Generally.  Upon request, Borrower shall furnish Lender
with executed copies of all Leases then in effect (other than Leases that have
previously been furnished to Lender). 
All renewals of Leases and all proposed leases shall provide for rental
rates and terms comparable to existing local market rates and shall be arm’s
length transactions with bona fide, independent third-party tenants.

5.10.2     Material Leases.  Borrower shall not enter into a proposed
Material Lease or a proposed renewal, extension (other than a renewal or
extension that is being unilaterally exercised by a tenant pursuant to the
terms of an existing Lease, with respect to which Lender shall not have any
consent rights) or modification of an existing Material Lease without the prior
written consent of Lender, which consent shall not, so long as no Event of
Default is continuing, 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”)
and, if such Proposed Material Lease is based on the standard form of Lease
approved by Lender, blacklined to show changes from the standard form of Lease
approved by Lender and then being used by Borrower.  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 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.
Provided that no Event of Default is continuing, if Borrower provides Lender
with a written request for approval (which written request shall specifically
refer to this Section 5.10.2 and shall explicitly state that failure by Lender
to approve or disapprove within 10 Business Days will constitute a deemed
approval) and Lender fails to reject the request in writing delivered to
Borrower within 10 Business Days after receipt by

 42
 

 

Lender of the request, the Proposed Material
Lease or proposed renewal, extension or modification of an existing Material
Lease shall be deemed approved by Lender, and Borrower shall be entitled to
enter into such Proposed Material Lease or proposed renewal, extension or
modification of an existing Material Lease. 
Notwithstanding anything to the contrary in this Section 5.10,
unless expressly agreed to in writing by Lender, any approval or deemed
approval by Lender of a proposed Lease or proposed renewal, extension or
modification of an existing Lease pursuant to this Section 5.10 shall not
be deemed to constitute (in and of itself) an approval or deemed approval by
Lender of any Approved Leasing Expenses in connection therewith.

5.10.3     Minor Leases.  Notwithstanding the provisions of Section
5.10.2 above, 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 for similarly situated properties, (b) with respect to
any new Lease with a new tenant (other than kiosks and vending machines), shall
have an initial term (together with all renewal options) of not less than three
years or greater than ten years, (c) shall provide for automatic
self-operative subordination to the Mortgage 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 Mortgage to the Lease, and
(d) 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 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 days after the execution of the Lease.  Notwithstanding anything in this Section 5.10
to the contrary, at Borrower’s request and at Borrower’s sole cost and expense,
Lender shall enter into a subordination, non-disturbance and attornment
agreement on Lender’s then current form with any tenant under a Lease of at
least 2,500 rentable square feet.

5.10.4     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 impair the value of the Leases as security for the Debt;  (ii) shall promptly send copies to
Lender 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 Property, 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

 43
 

 

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, may not, so long as no
Event of Default is continuing,  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 or as expressly permitted under the terms of such Lease in
accordance with Section 5.10.3(d)) without the prior consent of Lender,
which consent shall not, so long as no Event of Default is continuing, be
unreasonably withheld or delayed.

5.11        Estoppel Statement.  After request by Lender, Borrower shall
within ten 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, and (v) that the Loan Documents
are valid, legal and binding obligations and have not been modified or if
modified, giving particulars of such modification.

5.12        Property Management.

5.12.1     Management Agreement.  Borrower shall (i) cause the Property to
be managed pursuant to the Management Agreement; (ii) promptly 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 notify Lender of any
default under the Management Agreement of which it is aware; (iv) 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 Management Agreement; and
(v) promptly enforce the performance and observance of all of the
covenants required to be performed and observed by Manager under the Management
Agreement.  Without Lender’s prior
written consent, Borrower shall not (a) surrender, terminate, cancel,
extend or renew the Management Agreement (other than extensions or renewals
pursuant to the express renewal/extension provisions set forth in the
Management Agreement on the same terms and conditions set forth therein (as in
effect on the date hereof, or as hereinafter amended or modified in accordance
with the terms and conditions set forth in this Agreement)) or otherwise
replace the Manager or enter into any other management agreement (except
pursuant to Section 5.12.2); (b) reduce or consent to the reduction of the
term of the Management Agreement; (c) increase or consent to the increase
of the amount of any charges under the 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, the Management Agreement;
(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
Management Agreement (or such successor management agreement); or (f) suffer
or permit the ownership, management or control of the Manager to be transferred
to a Person other than an Affiliate of Behringer Harvard REIT.

 44
 

 

5.12.2     Termination of Manager / Sub-Manager.

(a)           If (i) an Event of Default shall
be continuing, or (ii) Manager is in default under the Management
Agreement, or (iii) upon the gross negligence, malfeasance or willful
misconduct of the Manager, Borrower shall, at the request of Lender, terminate
the Management Agreement and replace Manager with a replacement manager acceptable
to both Lender (in Lender’s discretion) and the applicable Rating Agencies, on
terms and conditions satisfactory to both Lender and 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 both Lender
(in Lender’s discretion) and the applicable Rating Agencies.  Any successor manager shall execute and
deliver to Lender a consent and subordination of manager in form and substance
substantially similar to the Consent and Subordination delivered to Lender on
the date hereof.

(b)           If (i) as of any Calculation
Date, Borrower fails to maintain a Debt Service Coverage Ratio of at least
1.0:1, or (ii) an Event of Default shall be continuing, or
(iii) Sub-Manager is in default under the Sub-Management Agreement, or
(iv) upon the gross negligence, malfeasance or willful misconduct of the
Sub-Manager, Borrower shall, at the request of Lender, terminate the
Sub-Management Agreement and, at Borrower’s option, replace Sub-Manager with a
replacement manager acceptable to both Lender (in Lender’s discretion) and the
applicable Rating Agencies, on terms and conditions satisfactory to both Lender
and the applicable Rating Agencies; provided, however, in the event that
Borrower elects to replace Sub-Manager with a Qualifying Sub-Manager, no
approval of Lender or the applicable Rating Agencies shall be required.  All calculations of the Debt Service Coverage
Ratio for purposes of this Section 5.12.2(b) shall be subject to verification
by Lender.  Borrower’s failure to
terminate the Sub-Management Agreement within thirty (30) days after
Lender’s request of Borrower shall constitute an immediate Event of
Default.  Borrower may from time to time
appoint a successor sub-manager to sub-manage the Property, which successor
sub-manager and Sub-Management Agreement shall be approved in writing by both
Lender (in Lender’s discretion) and the applicable Rating Agencies; provided,
however, in the event that Borrower elects to replace Sub-Manager with a Qualifying
Sub-Manager, no approval of Lender or the applicable Rating Agencies shall be
required for such replacement, however, Lender and the applicable Rating
Agencies’ approval shall be required with respect to any new Sub-Management
Agreement.  Any successor sub-manager
shall execute and deliver to Lender a consent and subordination of manager in
form and substance substantially similar to the Consent and Subordination
delivered to Lender on the date hereof.

5.13        Special Purpose Bankruptcy Remote
Entity. 
Borrower shall at all times be a Special Purpose Bankruptcy Remote
Entity. Borrower shall not directly or indirectly make any change, amendment or
modification to its organizational documents, or otherwise take any action
which could result in Borrower not being a Special Purpose Bankruptcy Remote
Entity.  A “Special Purpose Bankruptcy Remote Entity”
shall have the meaning set forth on Schedule 5 hereto.

5.14        Assumption in Non-Consolidation
Opinion. 
Borrower shall conduct its business so that the assumptions (with
respect to each Person) made in that certain substantive

 45

 

non-consolidation opinion letter dated the
date hereof delivered by Borrower’s counsel in connection with the Loan, shall
be true and correct in all respects.

5.15                        Change
In Business or Operation of Property. 
Borrower shall not purchase or own any real property other than the
Property and shall not enter into any line of business other than the ownership
and operation of the Property, or make any material change in the scope or
nature of its business objectives, purposes or operations, or undertake or participate
in activities other than the continuance of its present business or otherwise
cease to operate the Property as an office building, or terminate such business
for any reason whatsoever (other than temporary cessation in connection with
renovations to the Property).

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

5.17                        Affiliate
Transactions.  Other than the
Management Agreement, Borrower shall not enter into, or be a party to, any
transaction with an Affiliate of Borrower or any of the members of Borrower
except in the ordinary course of business and on terms which are fully
disclosed to Lender in advance and are no less favorable to Borrower or such
Affiliate than would be obtained in a comparable arm’s-length transaction
with an unrelated third party.  With
respect to the foregoing, Lender hereby acknowledges that it has approved the
Management Agreement.

5.18                        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.

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

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

5.21                        Change
of Name, Identity or Structure. 
Borrower shall not change its name, identity (including its trade name
or names) or Borrower’s organizational 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. 
Borrower shall execute and deliver to Lender, prior to or
contemporaneously with the effective date of any such change, any financing
statement or financing statement change 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

 46
 

 

intends to operate the Property, and
representing and warranting that Borrower does business under no other trade
name with respect to the Property.

5.22                        Indebtedness.  Borrower shall not directly or indirectly
create, incur or assume any indebtedness other than the Debt and unsecured
trade payables incurred in the ordinary course of business relating to the
ownership and operation of the Property which do not exceed, at any time, a
maximum amount of three percent (3%) of the original amount of the Principal
and are paid within sixty (60) days of the date incurred or invoiced
(collectively, “Permitted
Indebtedness”); provided,
however, such three percent (3%) limitation shall not apply to (i) any asset
management or property management fee payable pursuant to the terms of the
Management Agreement, or (ii) any amounts that are payable out of any reserves
established under this Agreement. 
Notwithstanding the foregoing, with respect to the 60-day period set
forth above, Borrower may, after prior notice to Lender, at its own expense,
contest by appropriate legal proceeding, promptly initiated and conducted in
good faith and with due diligence, the amount or validity of any such Permitted
Indebtedness (during which time such 60-day period shall be tolled), provided
that if Borrower desires to withhold payment of such Permitted Indebtedness
during the pendency of the contest, (i) no Event of Default has occurred
and is continuing, (ii) no part of or interest in the Property will be in
danger of being sold, forfeited, terminated, canceled or lost,
(iii) Borrower shall have furnished such security as may be required in
the proceeding, or as may be reasonably requested by Lender, to insure the
payment of any such Permitted Indebtedness, together with all interest and
penalties thereon, which security shall not be less than one hundred
twenty-five percent (125%) of the Permitted Indebtedness being contested, and
(iv) Borrower shall promptly upon final determination thereof pay the
amount of such Permitted Indebtedness, together with all costs, interest and
penalties and Borrower shall be permitted to use such security to make such
payment.

5.23                        Licenses.  Borrower shall not Transfer any License
required for the operation of the Property (other than in connection with a
Lender-approved Transfer and Assumption pursuant to Section 5.26.3 or to the
extent required in connection with a Permitted Transfer).

5.24                        Compliance
with Restrictive Covenants, Etc. 
Borrower will not modify, waive in any material respect or release any
Easements, restrictive covenants or other Permitted Encumbrances, or suffer,
consent to or permit the foregoing, without Lender’s prior written consent,
which consent may be granted or denied in Lender’s sole discretion.

5.25                        ERISA.

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

5.25.2              Borrower shall not
maintain, sponsor, contribute to or become obligated to contribute to, or
suffer or permit any ERISA Affiliate of Borrower to, maintain, sponsor,
contribute to or become obligated to contribute to, any Plan or any Welfare
Plan or permit the assets of Borrower to become “plan assets,” whether by
operation of law or under regulations promulgated under ERISA.

 47
 

 

5.25.3              Borrower shall
deliver to Lender such certifications or other evidence from time to time
throughout the Term, as requested by Lender in its sole discretion, that (A)
Borrower is not and does not maintain 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 3(3) of ERISA; (B) Borrower is not subject
to state statutes regulating investments and fiduciary obligations with respect
to governmental plans; and (C) one or more of the following circumstances is
true:

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

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

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

5.26                        Transfers.

5.26.1              Generally.  Borrower shall not directly or indirectly
make, suffer or permit the occurrence of any Transfer other than a Permitted
Transfer.

5.26.2              Intentionally
Omitted.

5.26.3              Transfer and
Assumption.

(a)                                  Subject
to obtaining Lender’s prior written consent, which may be withheld in Lender’s
reasonable and absolute discretion, and subject to the terms and satisfaction
of all of the conditions precedent set forth in this Section 5.26.3, Borrower
shall have the right (which may not be exercised more than twice during the
Term) to Transfer the Property to one or more parties (the “Transferee Borrower”) and
have the Transferee Borrower assume all of Borrower’s obligations under the
Loan Documents, and have replacement guarantors and indemnitors assume all of
the obligations of the indemnitors and guarantors of the Loan Documents
(collectively, a “Transfer
and Assumption”). 
Borrower may make a written application to Lender for Lender’s consent
to the Transfer and Assumption, subject to the conditions set forth in
paragraphs (b) and (c) of this Section 5.26.3.  Together with such written application,
Borrower will pay to Lender the reasonable review fee then required by
Lender.  Borrower also shall pay on
demand all of the reasonable costs and expenses incurred by Lender, including
reasonable attorneys’ fees and expenses, and including the fees and expenses of
Rating Agencies and other outside entities, in connection with considering any
proposed Transfer and Assumption, whether or not the same is permitted or
occurs.

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

(1)                                  No Event of Default
has occurred and is continuing;

 48
 

 

(2)                                  Lender receives at
least thirty (30) days prior written notice of such Transfer;

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

(4)                                  Evidence satisfactory
to Lender has been provided showing that the Transferee Borrower and such of
its Affiliates as shall be designated by Lender comply and will comply with
Section 5.13 hereof, as those provisions may be modified by Lender taking into
account the ownership structure of Transferee Borrower and its Affiliates;

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

(6)                                  If the Loan has not
been the subject of a Secondary Market Transaction, then Lender shall have
determined that no rating for any securities that would be issued in connection
with such securitization will be diminished, qualified, or withheld by reason
of the Transfer and Assumption;

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

(8)                                  Borrower, the
Transferee Borrower, and the replacement guarantors and indemnitors shall have
indicated in writing in form and substance reasonably satisfactory to Lender
their readiness and ability to satisfy the conditions set forth in subsection (c)
below;

(9)                                  The identity,
experience, and financial condition of the Transferee Borrower and the
replacement guarantors and indemnitors shall be satisfactory to Lender; and

(10)                            The proposed property
manager and proposed Management Agreement shall be satisfactory to Lender and
the applicable Rating Agencies.

(11)                            Each Ground Lease shall
remain in full force and effect.

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

(1)                                  Borrower shall
deliver to Lender the applicable Assumption Fee;

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(2)                                  Borrower, Transferee
Borrower and the original and replacement guarantors and indemnitors shall
execute and deliver to Lender any and all documents required by Lender, in form
and substance required by Lender, in Lender’s sole discretion;

(3)                                  Counsel to the
Transferee Borrower and replacement guarantors and indemnitors shall deliver to
Lender opinions in form and substance satisfactory to Lender as to such matters
as Lender shall require, which may include opinions as to substantially the
same matters and were required in connection with the origination of the Loan
(including a new substantive non-consolidation opinion with respect to the
Transferee Borrower);

(4)                                  Borrower shall cause
to be delivered to Lender, an endorsement (relating to the change in the
identity of the vestee and execution and delivery of the Transfer and
Assumption documents) to the Title Insurance Policy in form and substance
acceptable to Lender, in Lender’s reasonable discretion (the “Endorsement”); and

(5)                                  Borrower shall
deliver to Lender a payment in the amount of all remaining unpaid costs
incurred by Lender in connection with the Transfer and Assumption, including
but not limited to, Lender’s reasonable attorneys fees and expenses, all
recording fees, and all fees payable to the title company for the delivery to
Lender of the Endorsement.

(d)                                 Upon
the closing of a Transfer and Assumption, Lender shall release Borrower and
Guarantor from all obligations under the Loan Documents arising prior to and
after the date of the Transfer and Assumption (but only to the extent that such
obligations of Borrower and Guarantor are expressly assumed by the Transferee
Borrower or replacement guarantor, as the case may be, in connection with the
Transfer and Assumption).

5.27                        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, except Liens in favor of Lender and
Permitted Encumbrances, unless such Lien is bonded or discharged within 30 days
after Borrower first receives notice of such Lien (or such longer period as is permitted
under this Agreement in the event and to the extent the Lien is of a nature
which may be contested by Borrower under the provisions of this Agreement and
Borrower is in fact contesting such Lien in accordance with the express
provisions and conditions set forth in this Agreement).  Notwithstanding the foregoing, pledges of any
direct or indirect legal or beneficial ownership interest in Behringer Harvard
Operating Partnership shall not constitute Liens prohibited hereunder.

5.28                        Dissolution.  Borrower shall not (i) engage in any
dissolution, liquidation or consolidation or merger with or into any other
business entity, (ii) engage in any business activity not related to the
ownership and operation of the Property or (iii) 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.

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5.29                        Expenses.  Borrower shall reimburse Lender upon receipt
of notice for all reasonable out-of-pocket costs and expenses (including
reasonable attorneys’ fees and disbursements) incurred by Lender 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 and Lender’s ongoing performance under and
compliance with the Loan Documents, including confirming compliance with environmental
and insurance requirements; (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 Lender; (iv) filing and recording of any Loan Documents;
(v) title insurance, surveys, inspections and appraisals; (vi) the
creation, perfection or protection of Lender’s Liens in the Property and the
Cash Management Accounts (including fees and expenses for title and lien
searches, intangibles taxes, personal property taxes, mortgage recording taxes,
due diligence expenses, travel expenses, accounting firm fees, costs of
appraisals, environmental reports and Lender’s Consultant, surveys and
engineering reports); (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 Rating Agencies in connection with any
modification of the Loan requested by Borrower; and (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.  Any costs and
expenses due and payable by Borrower 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 5.29
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.

5.30                        Indemnity.  Borrower shall defend, indemnify and hold
harmless Lender 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,
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 Loan, 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 Borrower;
(iv) ownership of the Mortgage, 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

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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 government 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 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 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 10 days
after demand and shall bear interest at the Default Rate from the date due
until paid.  The obligations and
liabilities of Borrower under this Section 5.30 shall survive the Term (with
respect to any matter occurring or in existence prior to the end of the Term,
and thereafter with respect to third party claims, suits and actions) 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.

5.31                        Intentionally
Omitted.

5.32                        Intentionally
Omitted.

5.33                        Patriot
Act Compliance.  (a) Borrower will use their good faith
and commercially reasonable efforts to comply with the Patriot Act (as defined
below) and all applicable requirements of governmental authorities having
jurisdiction over Borrower and the Property, including those relating to money
laundering and terrorism.  Lender shall
have the right to audit Borrower’s compliance with the Patriot Act and all
applicable requirements of governmental authorities having jurisdiction over
Borrower and 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 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 Mortgage and the other Loan Documents and
shall be immediately due and payable. 
For purposes hereof, the term “Patriot Act” means the Uniting and
Strengthening America by Providing Appropriate Tools Required to Intercept and
Obstruct Terrorism (USA PATRIOT ACT) Act of 2001, as the same may be amended
from time to time, and corresponding provisions of future laws.

(b)                                 Neither
Borrower nor any member of Borrower nor any partner of any such member nor any
owner of a direct or indirect interest in Borrower (a) is listed on any

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Government Lists (as defined below), (b) is a
person who has been determined by competent authority to be subject to the
prohibitions contained in Presidential Executive Order No. 13224 (Sept. 23,
2001) or any other similar prohibitions contained in the rules and regulations
of OFAC (as defined below) or in any enabling legislation or other Presidential
Executive Orders in respect thereof, (c) has been previously indicted for or
convicted of any felony involving a crime or crimes of moral turpitude or for
any Patriot Act Offense (as defined below), or (d) is currently under
investigation by any governmental authority for alleged criminal activity.  For purposes hereof, the term “Patriot Act Offense” means
any violation of the criminal laws of the United States of America or of any of
the several states, or that would be a criminal violation if committed within
the jurisdiction of the United States of America or any of the several states,
relating to terrorism or the laundering of monetary instruments, including any
offense under (a) the criminal laws against terrorism; (b) the criminal laws
against money laundering, (c) the Bank Secrecy Act, as amended, (d) the Money
Laundering Control Act of 1986, as amended, or the (e) Patriot Act.  “Patriot Act Offense” also includes the
crimes of conspiracy to commit, or aiding and abetting another to commit, a
Patriot Act Offense.  For purposes
hereof, the term “Government
Lists” means (i) the Specially Designated Nationals and Blocked
Persons Lists maintained by Office of Foreign Assets Control (“OFAC”), (ii) any other list
of terrorists, terrorist organizations or narcotics traffickers maintained
pursuant to any of the Rules and Regulations of OFAC that Lender notified
Borrower in writing is now included in “Governmental Lists”, or (iii) any
similar lists maintained by the United States Department of State, the United
States Department of Commerce or any other government authority or pursuant to
any Executive Order of the President of the United States of America that
Lender notified Borrower in writing is now included in “Governmental Lists”.

5.34                        Ground
Lease.  With respect to each
Ground Lease, Borrower agrees as follows:

(a)                                  Borrower
shall perform all obligations of the tenant under each Ground Lease and under
any statute, ordinance, rule or regulation relating to each Ground Lease, and
shall not cause or permit any breach thereof, and shall enforce the obligations
of the landlord under each Ground Lease to the end that Borrower may enjoy all
the rights granted under each Ground Lease. 
If Borrower shall default under any Ground Lease or if Lender shall
receive notice of any default under any Ground Lease, Lender may, at its option
but without any obligation to do so, take any action necessary or desirable to
cure any such default, Lender being authorized to enter upon the Property for
such purposes with or without notice and without becoming a mortgagee in
possession.  Borrower shall, within
thirty (30) days of demand (or upon demand if an Event of Default has
occurred), pay to Lender all costs of Lender incurred in curing any such
default, together with interest on such costs from the date of expenditure
until said sums have been paid, at the Default Rate.

(b)                                 Borrower
shall give prompt notice to Lender of any default by any party under any Ground
Lease (which shall include, but not be limited to, copies of any default
notices sent or received under any Ground Lease or received by Borrower), and
shall give prompt notice (and in any event within five (5) Business Days after
becoming aware of the same) to Lender of (i) any litigation or arbitration with
respect to any Ground Lease, or (ii) any action or proceeding to terminate,
foreclose or otherwise enforce any Ground Lease or to recover possession of the
Property or any portion thereof. 
Borrower shall furnish to Lender all information that it may

 53
 

 

reasonably request concerning the performance
by Borrower of Borrower’s obligations under each Ground Lease.

(c)                                  Borrower
acknowledges and agrees that the provisions hereof shall be deemed to be
obligations of Borrower in addition to Borrower’s obligations as tenant under
each Ground Lease; provided, however, the inclusion herein of any obligations
relating to similar matters as to which Borrower is obligated under each Ground
Lease shall not restrict or limit Borrower’s obligations to perform promptly
all of its obligations as tenant under each Ground Lease.

(d)                                 Borrower
acknowledges and agrees that (i) it has no present intent, without the written
consent of Lender, to effect or consent to any merger of any Ground Lease or of
the leasehold estate or other estate created thereby, with the fee estate in
the property covered by such Ground Lease by reason of the fact that such
Ground Lease or the leasehold estate created thereby, may be held directly or
indirectly by or for the account of any person or entity who or which also
holds the fee estate in such property, and (ii) Borrower will take no action to
effect or consent to such a merger except with Lender’s prior written
consent.  If Borrower acquires any other
estate, title or interest in the property covered by any Ground Lease, the Loan
Documents shall attach to and be a lien upon such other estate so acquired, and
such other estate shall, without further assignment, mortgage or conveyance,
become and remain subject to the lien of and covered by the Mortgage.  Promptly upon becoming aware thereof,
Borrower shall notify Lender of any such acquisition by Borrower and, on
written request by Lender, shall cause to be executed and recorded all such
documents and instruments as may in the reasonable opinion of Lender be
required to carry out the intent and meaning hereof.

(e)                                  Borrower
acknowledges and agrees that no termination or surrender by Borrower under any
Ground Lease shall be valid or effective without Lender’s prior written
consent.  The terms of any Ground Lease
may not be modified, amended, supplemented, waived or released, or terminated,
without the prior written consent of Lender. 
Lender agrees that it shall not unreasonably withhold, condition or
delay its consent to any proposed amendment or modification of any Ground Lease
which is requested by Borrower so long as (i) no Event of Default exists, (ii)
such amendment or modification does not amend or modify the Loan Documents or
limit or otherwise adversely affect Lender’s liens, rights, protection and
claims under the other Loan Documents or the priority, validity or
enforceability thereof, (iii) each Ground Lease continues to cover and relate
to the Property and no other property, and (iv) such amendment or modification
would not, in Lender’s reasonable judgment, have a material adverse effect on
the Collateral.

(f)                                    Borrower
acknowledges and agrees that if any Ground Lease is for any reason whatsoever
terminated prior to the expiration of its term and, if pursuant to any
provision of any Ground Lease or otherwise, Lender or its designee shall
acquire from the landlord under any Ground Lease a new lease or other agreement
for the use of the property covered by such Ground Lease, Borrower shall have
no right, title or interest in or to such new lease or other agreement or the
estate created thereby.

(g)                                 Borrower
shall from time to time upon the written request of Lender cooperate with
Lender and shall use its commercially reasonable efforts to deliver to Lender

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estoppel certificates from the landlord under
each Ground Lease in form and substance acceptable to Lender.

5.35                        Landlord’s
Bankruptcy.

(a)                                  Borrower
acknowledges that pursuant to Section 365 of the Bankruptcy Reform Act of 1978
(as the same may be amended from time to time, “Bankruptcy Act”) it is possible that a trustee in
bankruptcy of the landlord under the applicable Ground Lease, or such landlord
as a debtor-in-possession, could reject such Ground Lease, in which case
Borrower, as tenant, would have the election described in Section 365(h) of the
Bankruptcy Act (which election, as the same may be amended from time to time,
and together with any comparable right under any other state or federal law
relating to bankruptcy, reorganization or other relief for debtors, whether now
or hereafter in effect, is herein called the “Election”) to treat such Ground Lease as terminated by
such rejection or, in the alternative, to remain in possession for the balance
of the term of such Ground Lease, and any renewal or extension thereof that is
enforceable by the tenant under applicable nonbankruptcy law.  Borrower shall not exercise the Election without
the prior written consent of Lender, which consent may be withheld, conditioned
or delayed for any reason in Lender’s sole and absolute discretion.  Borrower acknowledges that since each Ground
Lease is a primary part of the security for the Debt, it is not anticipated
that Lender would consent to termination of any Ground Lease.

(b)                                 In
order to secure the covenant made in this Section and as security for the Debt,
Borrower assigns the Election and all rights related thereto to Lender.  Borrower acknowledges and agrees that the
foregoing assignment of the Election and related rights is one of the rights
which Lender may use in order to protect and preserve the other rights and
interests of Lender under this Agreement and the other Loan Documents.  Borrower agrees that exercise of the Election
in favor of preserving the right to possession under any Ground Lease shall not
be deemed to constitute a taking or sale of the Property by Lender and shall
not entitle Borrower to any credit against the Debt.

(c)                                  Borrower
acknowledges and agrees that in the event the Election is exercised in favor of
Borrower remaining in possession, Borrower’s resulting rights under the
applicable Ground Lease, as adjusted by the effect of Section 365 of the
Bankruptcy Act, shall then be part of the Property and shall be subject to the
Liens created by this Agreement, the Mortgage and the other Loan
Documents.  The Liens in favor of Lender
under this Agreement, the Mortgage and the other Loan Documents shall attach to
all of Borrower’s rights and remedies at any time arising under or pursuant to
Section 365 of the Bankruptcy Code, including, without limitation, all of
Borrower’s rights to remain in possession of the Property.

5.36                        Borrower’s
(Tenant’s) Bankruptcy.

(a)                                  If
there shall be filed by or against Borrower a petition under the Bankruptcy
Act, and Borrower, as the tenant under each Ground Lease, shall determine to
reject any Ground Lease pursuant to Section 365(a) of the Bankruptcy Act, then
Borrower shall give Lender not less than ten (10) days’ prior notice of the date
on which Borrower shall apply to the bankruptcy court for authority to reject
such Ground Lease.  Lender shall have the
right, but not the obligation, to serve upon Borrower within such 10-day period
a notice stating that (i) Lender

 55
 

 

demands that Borrower assume and assign such
Ground Lease to Lender pursuant to Section 365 of the Bankruptcy Act and (ii)
Lender agrees to cure or provide adequate assurance of prompt cure of all
defaults and provide adequate assurance of future performance under such Ground
Lease.  If Lender serves upon Borrower
the notice described in the preceding sentence, Borrower shall not seek to
reject such Ground Lease, shall (if required by applicable law) seek the
approval of the presiding court to such assignment and assumption and shall
comply with the demand provided for in clause (i) of the preceding sentence
within thirty (30) days after the notice shall have been given, subject to (if
required by applicable law) approval of such court and to the performance by
Lender of the agreement provided for in clause (ii) of the preceding sentence.

(b)                                 Effective
upon the entry of an order for relief in respect of Borrower under the
Bankruptcy Act, Borrower hereby assigns and transfers to Lender a non-exclusive
right to apply to the bankruptcy court under Section 365(d)(4) of the
Bankruptcy Act for an order extending the period during which the applicable
Ground Lease may be rejected or assumed.

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
notice to the other party):  If to
Lender: Citigroup Global Markets Realty Corp., 388 Greenwich St., Floor 11, New
York, NY 10013, Attention: Paul Schuler, Telecopier (212) 816-1299, with a copy
to:  Thacher Proffitt & Wood LLP, Two
World Financial Center, New York, New York 10281, Attention: Donald F. Simone,
Telecopier: (212) 912-7751; if to Borrower: 
c/o the Borrower’s Designee, 15601 Dallas Parkway, Suite 600, Addison,
Texas 75001, to the attention of Borrower, Telecopier: (214) 655-1610.  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 on a Business Day; or 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 Borrower which might materially adversely affect Borrower’s condition
(financial or otherwise) or business or the Property; (ii) any
material adverse change in Borrower’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 all instruments,
documents, boundary surveys, footing or foundation surveys, certificates, plans
and specifications, appraisals, title and other insurance reports and
agreements, reasonably requested, from time to time, by Lender within the
possession or reasonable control of Borrower. 
In addition, after request by Lender (but no more frequently than twice
in any year), (x) Borrower shall furnish to Lender within ten days, a
certificate addressed to Lender, its successors and assigns reaffirming (to the
best of their knowledge) all representations and warranties of Borrower set
forth in the Loan Documents as of the date requested by Lender or, to the
extent of

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any changes to any such representations and
warranties, so stating such changes, and (y) Borrower shall use
commercially reasonable efforts to furnish to Lender within 30 days, tenant estoppel
certificates addressed to Lender, its successors and assigns from each tenant
at each Property in form and substance reasonably satisfactory to Lender.

6.3                               Financial
Reporting.

6.3.1                     Bookkeeping.  Borrower shall keep on a calendar year basis,
in accordance with GAAP (or federal income tax basis of accounting,
consistently applied), 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
relating to the Property at the office of Manager 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, within 120 days after each calendar year, a complete copy
of Borrower’s annual financial statements audited (if Lender requires for such
statements for any year by notice delivered no later than October 31 of the
calendar year in question; in the absence of such Lender requirement such
statements need not be audited) by a “big four” accounting firm or another
independent certified public accountant (accompanied by an unqualified opinion
from such accounting firm or other independent certified public
accountant) reasonably acceptable to Lender, each in accordance with GAAP
(or federal income tax basis of accounting, consistently applied) and
containing balance sheets and statements of profit and loss for Borrower and
the Property in such detail as Lender may request.  Each of such financial statements
(x) shall be in form and substance satisfactory to Lender, (y) shall
set forth the financial condition and the income and expenses for the Property
for the immediately preceding calendar year, including statements of annual Net
Operating Income as well as (1) a list of tenants, if any, occupying more
than twenty percent (20%) of the rentable space of the Property, (2) a
breakdown showing (a) the year in which each Lease then in effect expires,
(b) the percentage of rentable space covered by such Lease, (c) the
percentage of base rent with respect to which Leases shall expire in each such
year, expressed both on a per year and a cumulative basis and (z) shall be
accompanied by an Officer’s Certificate certifying (1) 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(or
federal income tax basis of accounting, consistently applied) and
(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.

6.3.3                     Monthly/Quarterly
Reports.  Borrower shall furnish
to Lender within 30 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 (or federal income tax basis of
accounting, consistently applied) to fairly represent the financial position
and results of operation of the

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Property during such calendar month, all in
form satisfactory to Lender; (ii) a balance sheet for such calendar month;
(iii) a comparison of the 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 ten percent (10%) or more 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) intentionally
omitted; (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.  Each such statement shall
be accompanied by an Officer’s Certificate certifying that to the best of such
officer’s knowledge, (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 (or federal
income tax basis of accounting, consistently applied) (subject to normal
year-end adjustments) and (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.

6.3.4                     Other
Reports.  Subject to the
provisions of Section 6.3.2, Borrower shall furnish to Lender, within ten
Business Days after request, such further detailed information with respect to
the operation of the Property and the financial affairs of Borrower or Manager
as may be reasonably requested by Lender or any applicable Rating Agency.

6.3.5                     Annual
Budget.  Borrower shall prepare
and submit (or shall cause Manager to prepare and submit) to Lender within 30
days after a Cash Trap Period commences and by December 15th of
each year thereafter during the Term until such Cash Trap Period has ended, for
approval by Lender, which approval shall not be unreasonably withheld or
delayed, a proposed pro forma budget for the Property for the succeeding
calendar year (the “Annual
Budget”, and each Annual Budget approved by Lender is referred
to herein as the “Approved
Annual Budget”), and, promptly after preparation thereof, any
revisions to such Annual Budget.  The
Annual Budget shall consist of (i) an operating expense budget 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 once such Annual Budget has been
approved by Lender, such operating expense budget shall be referred to herein
as the “Approved Operating Budget”),
and (ii) a Capital Expense budget showing, on a month-by-month basis, in
reasonable detail, each line item of anticipated Capital Expenses (and once
such Annual Budget has been approved by Lender, such Capital Expense budget
shall be referred to herein as the “Approved
Capital Budget”).  Until
such time that any Annual Budget has been approved by Lender, the prior
Approved Annual Budget shall apply for all purposes hereunder (with such
adjustments as reasonably determined by Lender (including increases for any
non-discretionary expenses)).

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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 during the Term all
insurance required to be maintained under each Ground Lease and 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, vandalism, and
malicious mischief, boiler and machinery and, if required by Lender in
accordance with subsections (b) or (i) below, flood and/or earthquake coverage,
and subject to subsection (j) below, coverage for damage or destruction
caused by the acts of “Terrorists” (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 insure costs of 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 and in any
event in such amount as is necessary so that the insurer would not deem
Borrower a co-insurer under such policies, (ii) have deductibles no
greater than the lesser of $25,000 or five percent (5%) of the Net Operating
Income per occurrence, (iii) be paid annually in advance and
(iv) contain an agreed amount replacement cost endorsement with a waiver
of depreciation, and shall cover, without limitation, all tenant improvements
and betterments that Borrower is required to insure on a replacement cost
basis.  Lender shall be named Loss Payee
on a Standard Mortgagee Endorsement.

(b)                                 Flood
insurance if any part of the Improvements or (whether or not constituting
Improvements) the paved parking area or parking garage included in the Property
is now or hereafter 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) one hundred percent (100%) of the full replacement cost
of the Improvements on the Property (without any deduction for depreciation) or
(B) such other amount as is agreed by Lender and (ii) have a maximum
permissible deductible of $3,000.

(c)                                  Public
liability insurance, including (i) “Commercial General Liability Insurance”,
(ii) “Owned”, “Hired” and “Non Owned Auto Liability”; and (iii) umbrella
liability coverage for personal injury, bodily injury, death, accident and
property damage, such insurance providing in combination no less than
containing minimum limits per occurrence of $1,000,000 and $2,000,000 in the
aggregate for any policy year; together with at least $10,000,000 excess and/or
umbrella liability insurance for any and all claims with no deductible.  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.

(d)                                 Rental
loss and/or business interruption insurance (i) with Lender being named as “Lender
Loss Payee”, and (ii) in an amount equal to one hundred percent (100%) of the
projected Rents from the Property for not less than a 24 month period
commencing at the

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time of loss until repairs are completed with
reasonable speed and diligence plus a post-repair completion extended period of
indemnity such that the continued loss of income will be insured until the
Property is restored and such income returns to the same level it was at prior
to the loss, or the expiration of not less than such 24 month period from the
time of loss, whichever first occurs, and notwithstanding that the policy may
expire prior to the end of such period. 
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 mechanical and electrical equipment
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 Leases on a replacement cost basis and in an amount
equal to the greater of (i) $2,000,000 and (ii) one hundred percent (100%) of
the full replacement cost of the Improvements on the Property (without any
deduction for depreciation).

(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” insurance on the
so-called completed value basis in an amount equal to not less than the full
insurable value of the Property, against such risks (including fire and
extended coverage and collapse of the Improvements to agreed limits) as Lender
may request, in form and substance acceptable to Lender.

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

(i)                                     Such
other insurance (including environmental liability insurance, earthquake (but
only if a future seismic study indicates a PML in excess of twenty percent
(20%) insurance, mine subsidence insurance and windstorm insurance) as may from
time to time be reasonably required by Lender 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 (or by a separate
Policy) against loss or damage by terrorist acts in an amount equal to one
hundred percent (100%) of the “Full Replacement Cost” of the 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” 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
the Property; provided that such coverage is available.  Notwithstanding the foregoing, with respect
to any such stand-alone policy covering terrorist acts, Borrower shall not be
required to pay any Insurance Premiums solely with respect to such terrorism
coverage in excess of the Terrorism Premium Cap (hereinafter defined); provided
that if the Insurance Premiums payable with respect to such terrorism coverage
exceeds the Terrorism Premium Cap, Lender may, at its option (1) purchase such
stand-alone terrorism Policy, with Borrower paying such portion of the
Insurance Premiums with respect thereto equal to the Terrorism Premium Cap and
the Lender paying such portion of the Insurance Premiums in

 60

 

excess of the Terrorism Premium Cap or (2)
modify the deductible amounts, policy limits and other required policy terms to
reduce the Insurance Premiums payable with respect to such stand-alone
terrorism Policy to the Terrorism Premium Cap. 
As used herein, (i) “Terrorism
Premium Cap” means an amount equal to one hundred percent (100%)
of the aggregate Insurance Premiums payable with respect to all the insurance
coverage under Section 7.1.1(a) for the last policy year in which coverage for
terrorism was included as part of the “all risk” property policy required by
subsection (a) above, adjusted annually by a percentage equal to the increase
in the Consumer Price Index (hereinafter defined) and (ii) “Consumer Price Index” means
the Consumer Price Index for All Urban Consumers published by the Bureau of
Labor Statistics of the United States Department of Labor, New York
Metropolitan Statistical Area, All Items (1982-84 = 100), or any successor
index thereto, approximately adjusted, and in the event that the Consumer Price
Index is converted to a different standard reference base or otherwise revised,
the determination of adjustments provided for herein shall be made with the use
of such conversion factor, formula or table for converting the Consumer Price
Index as may be published by the Bureau of Labor Statistics or, if said Bureau
shall not publish the same, then with the use of such conversion factor,
formula or table as may be published by Prentice-Hall, Inc., or any other
nationally recognized publisher of similar statistical information; and if the
Consumer Price Index ceases to be published, and there is no successor thereto
(i) such other index as Lender and Borrower shall agree upon in writing or (ii)
if Lender and Borrower cannot agree on a substitute index, such other index, as
reasonably selected by Lender.  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 (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.  All policies of insurance (the “Policies”) required pursuant
to Section 7.1.1 shall (i) be issued by companies approved by Lender
and licensed 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:VIII 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 (in the case of property insurance), loss payee (in the
case of 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 against Lender; (v) be assigned
and the originals thereof delivered to Lender, or in lieu of delivering
originals of the Policies, Borrower may, on an annual basis, deliver Acord evidences
of coverages or the equivalent, as adequate proof of coverage; provided,
however, if at any time, Lender requests carrier certification of Policies,
Borrower shall deliver such certification within ten (10) days of Lender’s
request therefor; (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 30 days’
prior written notice of any modification, reduction or cancellation of any of
the Policies, (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

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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 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) receipts for or other
evidence of the payment of the Insurance Premiums reasonably satisfactory to
Lender.  If Borrower does not furnish
such evidence and receipts at least ten (10) Business 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 30 days after its effective date.  Within 30 days after request by Lender,
Borrower shall obtain such increases in the amounts of coverage required
hereunder as may be reasonably requested by Lender, taking into consideration
changes in the value of money over time, changes in liability laws, changes in
prudent customs and practices, and the like.

7.2                               Casualty.

7.2.1                     Notice;
Restoration.  If the 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 (unless Lender has breached its obligation (if
any) to make such insurance proceeds available pursuant to Section 7.4.1),
shall promptly proceed to restore, repair, replace or rebuild the 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
covered by any of the Policies (an “Insured
Casualty”) occurs where the loss does not exceed $250,000,
provided no 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 competent 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 where the
loss exceeds $250,000 (a “Significant
Casualty”), Borrower may settle and adjust any claim with the
prior consent of Lender (which consent shall not be unreasonably withheld or
delayed) unless either (i) an Event of Default has occurred and is
continuing or (ii) the loss equals or exceeds $1,000,000, in which either
such case Lender may, in its sole discretion, settle and adjust any 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

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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 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 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 one
hundred percent (100%) of the cost of fully restoring the Improvements 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 the
Debt in full.

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 the 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
(unless Lender has breached its obligation (if any) to make such Award available
pursuant to Section 7.4.1), shall promptly proceed to restore, repair, replace
or rebuild the Property in accordance with Legal Requirements to the extent
practicable to be of at least equal value and of substantially the same
character (and to have the same utility) as prior to such Condemnation.

7.3.2                     Collection
of Award.  If a Condemnation
occurs where the award or payment in respect thereof (an “Award”) does not exceed
$250,000 or which results in the taking of five percent (5%) or less of the
Property, provided no Event of Default has occurred and is continuing, Borrower
may make any compromise, adjustment or settlement in connection with such
Condemnation with the prior consent of Lender, not to be unreasonably withheld,
provided such adjustment is carried out in a competent and timely manner, and
Borrower is hereby authorized to collect and receipt for the Award.  In the event of a Condemnation where the
Award is in excess of $250,000 or which results in the taking of more than five
percent (5%) of the Property, Lender is hereby irrevocably appointed as
Borrower’s attorney-in-fact, coupled with an interest, with exclusive power to
collect, receive and retain such Award and to make any compromise, adjustment
or settlement in connection with such Condemnation with the prior consent of
Borrower (unless an Event of Default is continuing, in which case, Borrower’s
prior consent shall not be required), not to be unreasonably withheld (which
shall be deemed consented to if Borrower fails to respond to any request for
consent therefor within 10 days’ of request). 
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

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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 (i) the loss is in an aggregate
amount less than twenty-five percent (25%) of the unpaid Principal,
(ii) in the reasonable judgment of Lender, the Property can be restored
within nine months after all applicable restoration permits have been obtained,
and prior to six months before the Stated Maturity Date and prior to the
expiration of the rental or business interruption insurance with respect
thereto, to the Property’s pre-existing condition and utility as existed
immediately prior to such Insured Casualty or Condemnation and to an economic
unit not less valuable and not less useful than the same was immediately prior
to the 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 has been damaged,
destroyed or rendered unusable as a result of such Insured Casualty or
Condemnation; (iv) Leases demising in the aggregate at least sixty-five percent
(65%) of the total rentable space in the Property and in effect as of the date
of the occurrence of such Insured Casualty or Condemnation remain in full force
and effect during and after the completion of the Restoration (hereinafter
defined); and (v) no Event of Default shall have occurred and be then
continuing, then the Proceeds or the Award, as the case may be (after
reimbursement of any expenses incurred by Lender), shall be applied to pay for
or reimburse Borrower for the cost of restoring, repairing, replacing or
rebuilding the Property (the “Restoration”),
in the manner set forth herein.  Borrower
shall commence and diligently prosecute such Restoration.  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, both (x) 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; and (y) Lender shall have received
evidence reasonably satisfactory to it that during the period of the
Restoration, the Rents will be at least equal to the sum of the operating
expenses and Debt Service, as reasonably determined by Lender.

7.4.2                     Application
to Debt.  Except as provided in
Section 7.4.1, any Proceeds and/or Award may, at the option of Lender in its
discretion, be applied to the payment of (i) accrued but unpaid interest
on the Note, (ii) the unpaid Principal and (iii) other charges due
under the Note and/or any of the other Loan Documents, 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 without any Yield Maintenance Premium, unless an Event of Default has
occurred

 64
 

 

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 anything to the contrary contained herein, if any
Proceeds or Award are not required to be made available for a Restoration and
are retained and applied by Lender toward the payment of the Debt, Borrower may
prepay the entire outstanding Principal without payment of any Yield
Maintenance Premium provided that (x) such prepayment is made within 90
days after Lender applies such Proceeds or Award to the Debt and
(y) together with such prepayment, Borrower pay to Lender all accrued and
unpaid interest and all other sums payable under the Loan Documents.

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 (or such additional funds are irrevocably committed to the
satisfaction of Lender by or on behalf of Borrower for that purpose),
(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 reasonably
require 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 any other amount under
Section 3.11(a)(i) through (vii) is not paid in full on each Payment
Date (provided, however, if

 65
 

 

adequate funds are available in the Deposit
Account for such payments, the failure by the Deposit Bank to allocate such
funds into the appropriate Subaccounts shall not constitute an Event of
Default);

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

(c)                                  the
Policies are not kept in full force and effect, or are not delivered to Lender
pursuant to Section 7.1.2(v) within 10 days after request;

(d)                                 a
Transfer other than a Permitted Transfer occurs;

(e)                                  any
representation or warranty made by Borrower or Guarantor or in any Loan
Document, or in any report, certificate, financial statement or other
instrument, agreement or document furnished by Borrower or 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
or Guarantor shall (i) make an assignment for the benefit of creditors, or (ii)
shall generally not be paying its debts as they become due;

(g)                                 a
receiver, liquidator or trustee shall be appointed for Borrower or Guarantor;
or Borrower or 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 or Guarantor, as the case
may be; or any proceeding for the dissolution or liquidation of Borrower or
Guarantor shall be instituted; provided however, if such appointment,
adjudication, petition or proceeding was involuntary and not consented to by
Borrower or Guarantor, as the case may be, only upon the same not being
discharged, stayed or dismissed within 60 days;

(h)                                 Borrower
breaches any covenant contained in Sections 5.12.1 (a) - (f), 5.13, 5.15,
5.22 (other than failure to pay trade payables within 60 days if due to lack of
available funds), 5.25 or 5.28;

(i)                                     except
as expressly permitted hereunder, the alteration, improvement, demolition or
removal of all or any of portion of the Improvements without the prior written
consent of Lender (if such consent is required pursuant to the terms of this
Agreement);

(j)                                     an
Event of Default as defined or described elsewhere in this Agreement or in any
other Loan Document occurs;

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

(l)                                     any
of the assumptions contained in any substantive non-consolidation opinion,
delivered to Lender by Borrower’s counsel in connection with the Loan or
otherwise

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hereunder, were not true and correct as of
the date of such opinion or thereafter became untrue or incorrect;

(m)                               if
Key Principal fails to Control (as defined in clause (ii) of the defined term “Control”
in Section 1.1) the Manager and the day to day management and operations of the
Property (unless the Manager is replaced with a successor manager in accordance
with and subject to satisfaction of the terms and conditions set forth in Section
5.12.2);

(n)                                 if
Borrower fails to pay any amount payable pursuant to any of the Condominium
Documents when due and payable in accordance with the provisions thereof and
such failure continues for ten (10) days after written notice thereof to Borrower;

(o)                                 if
a Condominium Default occurs;

(p)                                 failure
by Borrower to provide either (i) cash or (ii) the Bank of America Lease Letter
of Credit as required under Section 3.14;

(q)                                 if
(i) any Ground Lease is modified, amended or terminated except in accordance
with this Agreement, or (ii) any material default occurs under any Ground Lease
that remains uncured beyond any applicable notice and cure periods or which
would allow any other party to terminate any Ground Lease;

(r)                                    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 8.1, for ten days after notice to Borrower (and
Guarantor, if applicable) from Lender, in the case of any default which can be
cured by the payment of a sum of money, or for 30 days after notice from Lender
in the case of any other default; provided, however, that if such non-monetary
default is susceptible of cure but cannot reasonably be cured within such
30-day period, and Borrower (or Guarantor, if applicable) shall have commenced
to cure such default within such 30-day period and thereafter diligently and
expeditiously proceeds to cure the same, such 30-day period shall be extended
for an additional period of time as is reasonably necessary for Borrower (or
Guarantor, if applicable) in the exercise of due diligence to cure such
default, such additional period not to exceed 60 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 during the continuance of such Event of Default, 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, 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 and any other amounts owing by Borrower),
without notice or demand; 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 and any other amounts
owing by Borrower) shall immediately and automatically become due and
payable, without notice or demand, and

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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 or in equity may be exercised by
Lender at any time and from time to time, whether or not all or any of the Debt
shall be declared, 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, singly,
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 Mortgage 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 particular Property or
any portion of the Property for the 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.  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 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 reasonably 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.

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
expedient.  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 consequent
thereon.  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 Mortgage to the extent necessary to foreclose on all or any portion of the
Property, the Rents, the Cash Management Accounts or any other collateral.

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8.2.5                     Lender’s
Right to Perform.  If Borrower
fails to perform any covenant or obligation contained herein and such failure
shall continue for a period of five Business Days after Borrower’s receipt of
written notice thereof from Lender, 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
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 upon demand and if
not paid shall be added to the Debt (and to the extent permitted under
applicable laws, secured by the Mortgage and other Loan Documents) and
shall bear interest thereafter at the Default Rate.  Notwithstanding the foregoing, Lender shall
have no obligation to send notice to Borrower of any such failure.  Additionally, during the continuance of an
Event of Default, Lender shall have the right, but not the obligation, to make
any Protective Advance (hereinafter defined) (provided, however, that Lender
will only make such Protective Advance from its own funds if there are
insufficient funds in the Cash Management Accounts), and the same shall be
added to the Debt (and to the extent permitted under applicable laws, secured
by the Mortgage and other Loan Documents) and shall bear interest
thereafter at the Default Rate.  As used
herein, “Protective Advance”
means all sums advanced for the purpose of payment of real estate taxes
(including special payments in lieu of real estate taxes), maintenance costs,
insurance premiums, operating expenses, trade payables or other items with
respect to the Property (including capital items) reasonably necessary to
protect the Property or any other security given for the Loan or to preserve
any of Lender’s rights or remedies under the Loan Documents.

9.                                      SPECIAL
PROVISIONS

9.1                               Sale
of Note and Secondary Market Transaction.

9.1.1                     General;
Borrower Cooperation.  Lender
shall have the right at any time and from time to time (i) to sell or
otherwise transfer the Loan or any portion thereof or the Loan Documents or any
interest therein to one or more investors, (ii) to sell participation
interests in the Loan to one or more investors or (iii) to securitize the
Loan or any portion thereof in a single asset securitization or a pooled loan
securitization of rated single or multi-class securities (the “Securities”) secured by or
evidencing ownership interests in the Note and the Mortgage (each such sale,
assignment, participation and/or securitization is referred to herein as a “Secondary Market Transaction”).  In connection with any Secondary Market
Transaction, Borrower shall use all reasonable efforts and cooperate fully and
in good faith with Lender and otherwise assist Lender in satisfying the market
standards to which Lender customarily adheres or which may be reasonably
required in the marketplace or by the Rating Agencies in connection with any
such Secondary Market Transactions, including: (a) to (i) provide such
financial and other information with respect to the Property, Borrower and
their 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 reasonably
requested from time to time by Lender 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 clauses (i) and (ii)
of this paragraph (a) being called the “Provided Information”), together, if

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customary, with appropriate verification of
and/or consents to the Provided Information through letters of auditors or
opinions of counsel of independent attorneys acceptable to Lender and the
Rating Agencies; (b) at Borrower’s expense, cause counsel to render
opinions as to non-consolidation (which may be an update of an existing
non-consolidation opinion) and any other opinion customary in securitization
transactions with respect to the Property, Borrower and their Affiliates, which
counsel and opinions shall be reasonably satisfactory to Lender 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 reasonably requested by Lender 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 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 nothing contained in this subsection (e) shall result in changes to
Loan terms adverse to Borrower or require Borrower to incur any additional liabilities.  Borrower’s cooperation obligations set forth
herein shall continue until the Loan has been paid in full.

9.1.2                     Use of
Information.  Borrower
understands that all or any portion of the Provided Information and any other
information and/or material delivered by or on behalf of Borrower, Guarantor or
any of their respective Affiliates 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 such other information and/or
materials 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, if requested by Lender,
certify in writing that Borrower has carefully examined those portions of such
Disclosure Document, pertaining to Borrower, 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 the
light of the circumstances under which they were made, not misleading.  Notwithstanding anything to the contrary
contained in this Section 9.1.3, nothing contained herein shall impose
liability upon Borrower for any losses, claims, damages or liability arising
out of or based upon an untrue statement of any material fact contained in any
statement, report or document provided to Lender on behalf of Borrower by a
party who is not an Affiliate of a Borrower (a “Third Party Report”), unless Borrower had actual
knowledge at the time Borrower

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provided such statement, report or document
to Lender that such Third Party Report contains such untrue statement.

9.1.4                     Borrower
Indemnity Regarding Filings.  In
connection with filings under the Exchange Act, Borrower shall
(i) indemnify Lender, the Citigroup Group and the Underwriter Group for
any Indemnified Liabilities to which Lender, the Citigroup Group or the
Underwriter Group may become subject insofar as the Indemnified Liabilities
arise out of or are based upon the omission to state in the Provided
Information a material fact required to be stated in the Provided Information
in order to make the statements in the Provided Information, in light of the
circumstances under which they were made not misleading and (ii) reimburse
Lender, the Citigroup Group or the Underwriter Group for any legal or other
expenses actually incurred by Lender, Citigroup Group or the Underwriter Group
in connection with defending or investigating the Indemnified Liabilities.  Notwithstanding anything to the contrary
contained in this Section 9.1.4, nothing contained herein shall impose
liability upon Borrower for any Indemnified Liabilities arising out of or based
upon an untrue statement of any material fact contained in any Third Party
Report, unless Borrower had actual knowledge at the time Borrower provided such
statement, report or document to Lender that such Third Party Report contains
such untrue statement.

9.1.5                     Indemnification
Procedure.  Promptly after
receipt by an indemnified party under Section 9.1.3 or 9.1.4 of notice of the
commencement of any action for which a claim for indemnification is to be made
against Borrower, such indemnified party shall notify Borrower in writing of
such commencement, but the omission to so notify Borrower will not relieve
Borrower from any liability that they may have to any indemnified party
hereunder except to the extent that failure to notify causes prejudice to
Borrower.  If any action is brought
against any indemnified party, and it notifies Borrower of the commencement
thereof, Borrower will be entitled, jointly with any other indemnifying party,
to participate therein and, to the extent that it (or they) may elect by
written notice delivered to the indemnified party promptly after receiving the
aforesaid notice of commencement, to assume the defense thereof with counsel
satisfactory to such indemnified party in its discretion.  After notice from Borrower to such indemnified
party under this Section 9.1.5, Borrower shall not be responsible for any legal
or other expenses subsequently incurred by such indemnified party in connection
with the defense thereof other than reasonable costs of investigation;
provided, however, if the defendants in any such action include both Borrower
and an indemnified party, and any indemnified party shall have reasonably
concluded that there are any legal defenses available to it and/or other indemnified
parties that are different from or additional to those available to Borrower,
then the indemnified party or parties shall have the right to select separate
counsel to assert such legal defenses and to otherwise participate in the
defense of such action on behalf of such indemnified party or parties.  Borrower shall not be liable for the expenses
of more than one separate counsel unless there are legal defenses available to
it that are different from or additional to those available to another
indemnified party.

9.1.6                     Contribution.  In order to provide for just and equitable
contribution in circumstances in which the indemnity agreement provided for in
Section 9.1.3 or 9.1.4 is for any reason held to be unenforceable by an
indemnified party in respect of any Indemnified Liabilities (or action in
respect thereof) referred to therein which would otherwise be indemnifiable
under Section 9.1.3 or 9.1.4, Borrower shall contribute to the amount paid or
payable by the

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indemnified party as a result of such Indemnified
Liabilities (or action in respect thereof); provided, however, that no Person
guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of
the Securities Act) shall be entitled to contribution from any Person not
guilty of such fraudulent misrepresentation. 
In determining the amount of contribution to which the respective
parties are entitled, the following factors shall be considered:  (i) the Citigroup Group’s and Borrower’s
relative knowledge and access to information concerning the matter with respect
to which the claim was asserted; (ii) the opportunity to correct and
prevent any statement or omission; and (iii) any other equitable
considerations appropriate in the circumstances.  Lender and Borrower hereby agree that it may
not be equitable if the amount of such contribution were determined by pro rata
or per capita allocation.

9.1.7                     Severance
of Loan.  Lender shall have the
right, at any time (whether prior to, in connection with, or after any
Secondary Market Transaction), with respect to all or any portion of the Loan,
to modify, split and/or sever all or any portion of the Loan as hereinafter
provided.  Without limiting the
foregoing, Lender may (i) cause the Note and the Mortgage to be split into a
first and second mortgage loan, (ii) create one or more senior and subordinate
notes (i.e., an A/B or A/B/C structure), (iii) create multiple components of
the Note or Notes (and allocate or reallocate the principal balance of the Loan
among such components) or (iv) otherwise sever the Loan into two or more loans
secured by mortgages and by a pledge of partnership or membership interests
(directly or indirectly) in Borrower (i.e., a senior loan/mezzanine loan
structure), in each such case, in whatever proportion and whatever priority
Lender determines; provided, however, in each such instance the outstanding
principal balance of all the Notes evidencing the Loan (or components of such
Notes) immediately after the effective date of such modification equals the
outstanding principal balance of the Loan immediately prior to such
modification and the weighted average of the interest rates for all such Notes
(or components of such Notes) immediately after the effective date of such
modification equals the interest rate of the original Note immediately prior to
such modification.  If requested by
Lender, Borrower (and Borrower’s constituent members, if applicable, and
Guarantor) shall execute within seven (7) Business Days after such request,
such documentation as Lender may reasonably request to evidence and/or
effectuate any such modification or severance.

9.2                               Costs
and Expenses.  Notwithstanding
anything to the contrary contained in this Article 9, Borrower shall not
be required to incur out-of-pocket expenses in the performance of their obligations
under Sections 9.1.1 (other than with respect to the delivery or update of
non-consolidation opinions), 9.1.2, 9.1.3
and 9.1.7.

9.3                               Condominium
Provisions.

(a)                                  Borrower
shall not (i) modify or amend any material terms and provisions of (A) the Condominium
Documents (except for minor, nonsubstantial changes to cure an ambiguity or
correct a scrivener’s error), or (B) terminate any of the Condominium
Documents, in each case, without the prior written consent of Lender, which
consent shall not be unreasonably withheld, (ii) make any election regarding
material matters without the prior written consent of Lender, which consent
shall not be unreasonably withheld, or (iii) fail to follow the directions of
Lender (A) with respect to a proposed modification or amendment described in
clause (i) above or (B) in connection with an election described in clause (ii)
above.

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(b)                                 Borrower
shall pay when due and payable all assessments, common charges and other
charges payable by Borrower under the Condominium Documents and shall perform
as and when due each of its obligations under the Condominium Documents in
accordance with their respective terms, and shall not cause or suffer to occur
any breach or default by Borrower in any of such obligations. Subject to Section
9.3(a), Borrower shall keep and maintain each of the Condominium Documents in
full force and effect.

(c)                                  Borrower
hereby assigns, conveys and mortgages to Lender, as further and additional
security for the Loan and Borrower’s obligations under this Agreement, all of
the rights and benefits accruing to Borrower under the Condominium Documents
with respect to the Property, including, without limitation, (i) any right of
Borrower to amend, modify or terminate any of the Condominium Documents, (ii)
any right of Borrower to terminate the condominium regime, including, without
limitation, as a result of condemnation or casualty, (iii) any rights and
powers delegated to Borrower by any association established pursuant to the
Condominium Documents (the “Association”),
and (iv) any right of Borrower to determine whether or not the improvements
will be restored or repaired following a fire or other casualty.  If Lender, its nominee, designee, successor,
or assignee acquires title to one or more of the condominium units which
comprise the Property by reason of foreclosure of the Mortgage, deed-in-lieu of
foreclosure or otherwise, Lender, its nominee, designee, successor, assign or
such purchaser, shall (x) succeed to all of the rights of and benefits accruing
to Borrower under the Condominium Documents with respect to the Property, (y)
be entitled to exercise all of the rights and benefits accruing to Borrower
under the Condominium Documents with respect to the Property, and (z) have the
immediate right to remove any and all managers, members, directors, trustees
and/or officers of the Association appointed by Borrower, and thereupon Lender,
its nominee, designee, successor or assignee shall have the right to appoint
managers, members, directors, trustees and/or officers of the Association, in
replacement for those managers, trustees, members, directors and/or officers so
removed. 
At such time as Lender shall request, Borrower agrees to
execute and deliver to Lender such documents as Lender and its counsel may
reasonably require in order to insure that, to the extent possible, the
provisions of this Section will be validly and legally enforceable and
effective against Borrower and all parties claiming by, through, under or
against Borrower. Borrower hereby absolutely and irrevocably appoints Lender as
its true and lawful attorney, coupled with any interest, in its name and stead
to make and execute on behalf of Borrower any documents necessary to validly
and legally carry out the rights granted to Lender under the terms of this
paragraph, Borrower ratifying all that its said attorney shall do by virtue
thereof. In addition, Borrower covenants and agrees to give to Lender prompt
notice of any notice of special assessment relating to any of the condominium
units which comprise the Property received by Borrower. Borrower hereby assigns
to Lender, as further and additional security for the Debt and Borrower’s
obligations hereunder, all of Borrower’s right to make rules and regulations
for the Association and Borrower hereby covenants and agrees not to make or
cause to be made any rules or regulations (except as may be required to ensure
compliance with applicable law), and not to consent or acquiesce to any rules
and regulations (except as may be required to ensure compliance with applicable
law) being made without in all cases first obtaining the prior written consent
of Lender thereto which shall not be unreasonably withheld or delayed.

(d)                                 As
between Borrower and Lender, the provisions of this Agreement with respect to
the application of insurance proceeds and condemnation awards shall apply to
the

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Property as provided herein, notwithstanding
the submission of the Property to the Condominium Law.  Without limiting the generality of the
foregoing, Borrower, for and on behalf of itself and its direct and indirect
successors and assigns as owner(s) of the condominium units which comprise the
Property in the condominium regime, (i) irrevocably waives, to the extent
permitted by law, any applicable law which grants to the trustees or managers
of the Association and/or the owners of the condominium units rights in the
event of a casualty or a condemnation which are inconsistent with the
provisions of this Agreement and (ii) except to the extent otherwise expressly
required under the Condominium Documents with respect to a casualty or
condemnation affecting the Common Elements and subject to the rights of the
owners of the other units in the Condominium with respect to condemnation
proceeds in connection with a condemnation affecting more than one unit in the
Condominium, expressly agrees to the application of the insurance proceeds and
condemnation awards in accordance with the provisions of this Agreement.  To the extent of any conflict between Article
7 and this Section 9.3(d), Section 9.3(d) shall control.

(e)                                  If
any Condominium Default (as hereinafter defined) shall occur and be continuing,
then, in the event that Borrower fails to remedy such Condominium Default
within a period of thirty (30) days following the earlier to occur of (i)
receipt of written notice from Lender of such Condominium Default or (ii) the
date Borrower obtains knowledge of such Condominium Default, and subject to the
terms and conditions of the applicable Condominium Documents, Lender may (but
shall not be obligated to) take any action that Lender deems reasonably
necessary to cure such Condominium Default, including, without limitation, (w)
performance or attempted performance of Borrower’s obligations under the
applicable Condominium Documents, (x) curing or attempting to cure any
Condominium Default, (y) mitigating or attempting to mitigate any damages or
consequences of the same and (z) entry upon the Property for any or all of such
purposes.  Upon Lender’s request,
Borrower shall submit evidence reasonably satisfactory to Lender of payment or
performance of any of its obligations under each of the Condominium Documents.
Lender may pay and expend such sums of money as Lender in its sole discretion
deems necessary for any such purpose, and Borrower shall pay to Lender within
ten (10) Business Days after the written demand of Lender all such sums so paid
or expended by Lender pursuant to this Section, together with interest thereon
from the date of expenditure at the Default Rate.

(f)                                    Subject
to the provisions of Section 9.3(a) and 9.3(c) above, Borrower will do all
things necessary to preserve and to keep unimpaired its material rights, powers
and privileges under the Condominium Documents and to prevent the termination
or expiration of the Condominium Documents, or the withdrawal of the Property
from a condominium form of ownership under applicable law, to the end that
Borrower may enjoy all of the material rights granted to it as a party to the
Condominium Documents.

(g)                                 Borrower
will (i) promptly notify Lender of the receipt by Borrower of any notice from
the Association or the owner of any other unit in the condominium covering the
Property, asserting or claiming a default by Borrower thereunder or lack of
compliance by Borrower with the Condominium Documents, (ii) promptly notify
Lender of the receipt by Borrower of any notice or request from the Association
or owner of any unit of the termination or purported termination of the
Condominium Documents or to withdraw the Property from condominium ownership
pursuant to applicable law or to seek any action for partition, (iii)

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promptly notify Lender of the receipt by
Borrower of any notice or request from the Association or owner of any unit of
the material modification or change or proposed material modification or change
of the Condominium Documents and (iv) promptly cause a copy of each such notice
or request received by Borrower from the Association or any unit owner, or from
a lender or a mortgagee on such other unit, to be delivered to Lender. Borrower
will permit Lender to participate in any such partition or withdrawal
proceeding to the extent permitted by law and the Condominium Documents (but
Lender shall not be obligated so to do). Borrower will promptly deliver to
Lender a copy of each notice, pleading, brief and preliminary, interim and
final determination or decision and other papers received by it in each such
partition or withdrawal proceeding.

(h)                                 Borrower
will, within twenty (20) days after demand from Lender, obtain, if and to the
extent that Borrower is entitled to the same under the Condominium Documents,
and otherwise request from and make good faith efforts to obtain, from the
Association and deliver to Lender a duly signed and acknowledged certificate
(signed also by Borrower) that the Condominium Documents are unmodified and in
full force and effect (or, if the same have been modified in compliance with
this Agreement, that the Condominium Documents are in full force and effect as
modified and that there have been no other modifications), stating the dates to
which the assessments, common charges and other charges payable under the
Condominium Documents have been paid and stating whether to the certifying
party’s and Borrower’s knowledge, Borrower is in compliance with the
Condominium Documents, or, if not, specifying each default or failure of
compliance of which the certifying party has knowledge.  Borrower will, promptly upon receipt thereof,
furnish Lender with a copy of all notices and statements, however
characterized, issued by the Association or relating to the Condominium
Documents, including without limitation, financial statements and projected
budgets.

(i)                                     Borrower
hereby represents and warrants to Lender as follows:

(1)                                  To Borrower’s
knowledge, Borrower has delivered true, complete and correct copies of each of
the Condominium Documents to Lender and the same have not been modified,
amended or assigned, and to Borrower’s knowledge, there are no other material
condominium-related agreements or documents affecting Borrower’s interest in the
Property; and

(2)                                  To Borrower’s
knowledge, each of the Condominium Documents is in full force and effect and,
to Borrower’s knowledge, no Condominium Default exists or has occurred on the
part of Borrower or on the part of any other party to any of the Condominium
Documents.

(j)                                     The
occurrence of one or more of the following events (each such event, a “Condominium Default”) shall
constitute an Event of Default hereunder:

(1)                                  Any breach by
Borrower of Section 9.3(a) above;

(2)                                  If Borrower fails to
comply with any of the applicable terms, covenants and conditions on Borrower’s
part to be complied with pursuant to the Condominium

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Documents and such failure shall continue beyond any applicable cure
period provided for in the Condominium Documents;

(3)                                  If any provision of
the applicable statutes pursuant to which the Condominium was established or
any section, sentence, clause, phrase or word or the application thereof in any
circumstance, is held invalid and such invalidity shall adversely affect the
lien of the Mortgage or the rights of Lender under the Note, this Agreement,
the Mortgage or any of the other Loan Documents;

(4)                                  If the Condominium
shall become subject to any action for partition commenced by any unit owner
and said action has not been dismissed within thirty (30) days after
commencement thereof unless Borrower, at its own expense, promptly and in good
faith with due diligence works to dismiss said action, in which case Borrower
shall have a period not to exceed sixty (60) days to dismiss said action;

(5)                                  If the Association
(or, if such rights and powers have been delegated by the Association, the
party(ies) to which such rights and powers have been delegated by the
Association) fails (A) to maintain the Common Elements, in good condition and
repair, (B) to promptly comply with all laws, orders, and ordinances affecting
the Condominium, including the Common Elements, or the use thereof, (C) to
promptly repair, replace or rebuild any part of the Common Elements, which may
be damaged or destroyed by any casualty or which may be affected by any
condemnation or similar proceeding, or (D) to complete and pay for, within a
reasonable time, any structural improvements or other structure that
constitutes a portion of the Common Elements at any time in the process of
construction or repair (to the extent that the Association is authorized to so
maintain, repair, replace, rebuild and complete the Condominium, including the
Common Elements, by the Condominium Documents), and such failure shall continue
for a period of sixty (60) days after written notice from Borrower thereof is
delivered to the Association specifying such failure and requiring the same to
be remedied;

(6)                                  If Borrower fails to
maintain the Property as a condominium under the provisions of the Condominium
Act, except as otherwise expressly permitted under this Agreement; or

(7)                                  If the Condominium
regime is terminated for any reason without Lender’s prior written consent,
except as otherwise expressly permitted under this Agreement.

9.4                               Mezzanine
Loan.  Lender agrees to permit
owner(s) of direct or indirect equity interests in Borrower (the “Mezzanine
Borrower”, provided however that in no event shall any
entity required hereunder to be a Special Purpose Bankruptcy Remote Entity be a
Mezzanine Borrower) to obtain a mezzanine loan (the “Mezzanine Loan”),
subject to satisfaction of the following conditions (provided that no more than
one Mezzanine Loan shall be permitted during the term of the Loan):

(a)                                  no
Event of Default shall exist;

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(b)                                 the
Mezzanine Loan may be secured by a pledge by Mezzanine Borrower of such
Mezzanine Borrower’s direct or indirect equity interest in Borrower, but not by
the Property or any assets of Borrower or of any other entity required
hereunder to be a Special Purpose Bankruptcy Remote Entity, and neither
Borrower nor any other entity required hereunder to be a Special Purpose
Bankruptcy Remote Entity shall in any way be obligated in connection with the
Mezzanine Loan (except for non-monetary obligations reasonably acceptable to
Lender that are customary in connection with mezzanine loans involving
securitized senior loans);

(c)                                  if
a Secondary Market Transaction has occurred, Borrower shall have obtained (and
delivered to Lender) a Rating Comfort Letter with respect to the proposed
Mezzanine Loan;

(d)                                 the
Mezzanine Loan lender (the “Mezzanine Lender”) shall be an Acceptable
Mezzanine Lender;

(e)                                  the
Mezzanine Lender shall, upon Lender’s request, execute a subordination and
standstill intercreditor agreement (the “Intercreditor Agreement”)
in form approved by Lender, which approval shall not be unreasonably withheld,
conditioned or delayed so long as the Intercreditor Agreement is otherwise in
conformance with Rating Agency approved forms for intercreditor agreements;

(f)                                    the
Net Operating Income of the Property, as reasonably determined by Lender for
the 12 month period then most recently ended, is sufficient to satisfy an
aggregate projected debt service coverage ratio (based on the aggregate of the
debt service on the Loan (assuming a constant payment of principal and interest
based upon a 30-year amortization schedule) and the Mezzanine Loan) of at least
1.20:1.00;

(g)                                 Lender
shall have approved (such approval not to be unreasonably withheld, conditioned
or delayed) the loan documents evidencing and securing the Mezzanine Loan;

(h)                                 the
maturity of the Mezzanine Loan shall be no earlier than the Maturity Date;

(i)                                     the
Property value, as determined by Lender based on a FIRREA appraisal dated not
more than six (6) months prior to the date of the Mezzanine Loan and otherwise
reasonably acceptable to Lender, prepared, at Borrower’s expense, on behalf of
Lender by an appraiser reasonably approved by Lender which is a member of the
Appraisal Institute with substantial experience in appraising properties
similar to the Property is sufficient to satisfy an aggregate loan-to-value
ratio (based on the aggregate balances of the Loan and the Mezzanine Loan) not
in excess of 80%;

(j)                                     Mezzanine
Loan payments shall be made solely from excess Property cash flow distributed
by the Borrower to its owners after payment of all debt service and reserve
payments under the Loan and operating expenses for the Property or from other
funds of Mezzanine Borrower; and

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(k)                                  Borrower
shall enter into such amendments or supplements to the Loan Documents as Lender
may require in order to establish a hard lock box and cash management arrangement
whereby Property cash flow is deposited and applied, through Lender-controlled
accounts, first to debt service and reserves required under the Loan, then to
fund operating expenses, prior to any distributions of excess Property cash
flow to the Borrower’s owners for payments upon the Mezzanine Loan.

Borrower shall pay or
reimburse to Lender all Rating Agency fees and all reasonable costs and
expenses incurred by Lender, including fees and expenses of Lender’s counsel,
in connection with the review and documentation concerning the Mezzanine Loan
regardless of whether such Mezzanine Loan is closed.

9.5                               Letters
of Credit.  Each Letter of Credit
delivered by Borrower under this Agreement shall be additional security for the
payment of the Debt.  In the event Lender
transfers any Letter of Credit to any successor or assignee of Lender, and the
issuer of the Letter of Credit charges a fee in connection with such transfer,
Borrower shall pay or reimburse Lender for such transfer fee.

10.                               MISCELLANEOUS

10.1                        Exculpation.  (a)  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, and Lender shall not sue
for, seek or demand any deficiency judgment against Borrower in any such action
or proceeding under or by reason of or under or in connection with any Loan
Document.  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 Mortgage; (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;
(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 Mortgage 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) (collectively, “Lender’s
Losses”) arising out of or in connection with any of 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 or intentional misrepresentation by Borrower, or Guarantor in
connection with obtaining the Loan; (b) physical

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waste of the Property or any portion thereof
(other than acts committed by a third party non-affiliated property manager),
or after an Event of Default the removal or disposal of any portion of the
Property (other than acts committed by a third party non-affiliated property
manager); (c) 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 (other than acts committed by a third party non-affiliated
property manager) (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); (d) all Rents of the
Property received or collected by or on behalf of 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 (other than acts committed by a third party
non-affiliated property manager) (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); (e) misappropriation (including failure to
turn over to Lender on demand following an Event of Default) of tenant security
deposits and rents collected in advance, or of funds held by Borrower for the
benefit of another party (other than acts committed by a third party
non-affiliated property manager); (f) the failure to pay Taxes, provided that
Borrower shall not be liable (A) to the extent funds to pay such amounts are
available in the Tax and Insurance Subaccount and Lender failed to pay same or
has elected not to pay the same pursuant to Section 3.3 or (B) Rents are
insufficient to yield sufficient funds to pay such amounts; (g) the breach of
any representation, warranty, covenant or indemnification in any Loan Document
concerning Environmental Laws or Hazardous Substances, including Sections 4.21
and 5.8, and clauses (viii) through (xi) of Section 5.30; (h) any
representation or warranty made by Borrower in Section 4.1 shall be false or
misleading in any material respect as of the date made, or the breach of the
covenants set forth in Section 5.13 (other than a breach of any of the
covenants described in clauses (x) and (xxi) (with respect to unsecured trade
payables) set forth in the definition of “Special Purpose Bankruptcy Remote
Entity” on Schedule 5, if the same occurs as a result of the economic
performance of the Property); (i) Borrower or Guarantor or any of their direct
or indirect Affiliates taking any action or making any omission intended or
reasonably likely to hinder, delay, impair or prevent Lender in or from
enforcing any and all of its rights and remedies under or pursuant to the Loan
Documents or at law or in equity (unless the same is brought in good faith and is
determined in favor of Borrower or Guarantor pursuant to a final,
non-appealable judgment of a court of competent jurisdiction); (j) the
termination of the Management Agreement or the removal of the then-current
Manager as property manager thereunder without Lender’s consent; or (k)
Borrower’s action or inaction which results in the termination of the Ground
Lease, Borrower’s failure to exercise all of its options currently set forth in
the Ground Lease to extend the term of the Ground Lease to at least December
31, 2021 or Borrower’s failure to obtain an extension of the Ground Lease to a
term of at least ten (10) years beyond the Stated Maturity Date; unless in any
case, Borrower obtains replacement parking facilities that, (A) if subject to
an agreement, lease or otherwise, grant rights to such replacement parking
facilities for a term of at least ten (10) years beyond the Stated Maturity
Date (the “Replacement Parking
Facilities Agreement”), and (B) are sufficient to enable the
Property to comply with applicable Legal Requirements (including, without
limitation, zoning requirements), each of (A) and (B) as determined by Lender
in its reasonable discretion.  Borrower
and Guarantor shall be released from any further liability pursuant to clause
(k) above

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in the event that the replacement parking
facilities and the Replacement Parking Facilities Agreement are sufficient to
enable the Property to comply with applicable Legal Requirements (including,
without limitation, zoning requirements) and are otherwise satisfactory to
Lender in its reasonable discretion.

(b)                                 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
U.S. 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 the Borrower in an amount equal to the greater of (x) Lender’s
Losses arising out of or in connection with the following matters or (y) an
amount equal to the unpaid balance of the Debt, 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) shall have occurred, (ii) the occurrence of any
condition or event described in either Section 8.1(f)(i) (with respect to
Borrower only) or Section 8.1(g) (with respect to Borrower only) (each, an
“Insolvency Action”)
and, with respect to such Insolvency Action described in Section 8.1(g), either
Borrower, Guarantor or any Person owning an interest (directly or
indirectly) in Borrower or Guarantor consents to, aids, solicits,
supports, or otherwise cooperates or colludes to cause such Insolvency Action
or fails to contest such Insolvency Action, except in the event that any such
party has a fiduciary or legal duty to take such action, (iii) any involuntary
bankruptcy proceeding is brought by Borrower or Guarantor or any of their
respective Affiliates against any of them; (iv) if subsequent to the
commencement of any voluntary bankruptcy proceeding with respect to Borrower,
any involuntary bankruptcy proceeding is brought by Lender against Borrower,
and Borrower or Guarantor files any motion contesting the same; or (v) Borrower,
Guarantor or any of their respective Affiliates brings or joins in any action
or proceeding for the partition of the Property or any portion thereof or
interest therein.

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 Eastdil Secured, L.L.C., whose fee shall be paid by Borrower or an
affiliate of Borrower (to the extent such affiliate is liable for the payment
of the same).  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 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 to act as its agent hereunder with such powers as
are specifically delegated to the Servicer by Lender, whether pursuant to the
terms of this Agreement, any pooling and servicing agreement or similar
agreement entered into as a result of a Secondary Market Transaction, the
Deposit Account Agreement or otherwise, together with such other powers as are
reasonably incidental thereto.  Borrower
shall pay any reasonable fees and expenses of the Servicer in connection with a
release

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of the Property, assumption or modification
of the Loan, enforcement of the Loan Documents or any other action taken by
Servicer hereunder on behalf of Lender, to the extent such actions are
permitted to be taken pursuant to the terms of the Loan Documents, but only to
the extent that Borrower are expressly required to pay such expenses pursuant
to the terms of this Agreement. 
Notwithstanding anything to the contrary contained herein, to the extent
any matter described in this Agreement requires the consent or approval of the
special servicer under the pooling and servicing agreement (or other similar
agreement) entered into in connection with a Securitization, such special
servicer shall be afforded a consent period for such matter equal to the
greater of (i) the period of time given to Lender hereunder within which to
consent or approve such matter, or (ii) 15 Business Days (to the extent such 15
Business Day period is required under the terms of such pooling and servicing
agreement).

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.

10.6                        Governing
Law.

(a)                                  THIS
AGREEMENT WAS NEGOTIATED 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 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 IN WHICH THE
PROPERTY IS LOCATED, IT BEING UNDERSTOOD THAT, TO THE FULLEST EXTENT PERMITTED
BY THE LAW OF SUCH STATE, THE LAW OF THE STATE OF NEW YORK SHALL GOVERN THE
VALIDITY AND THE ENFORCEABILITY OF ALL LOAN DOCUMENTS AND THE DEBT.  TO THE FULLEST EXTENT PERMITTED BY LAW,
BORROWER HEREBY UNCONDITIONALLY AND

 81
 

 

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, 111
Eighth Avenue, New York, New York 10011 AS ITS AUTHORIZED AGENT TO ACCEPT AND
ACKNOWLEDGE ON ITS BEHALF SERVICE OF ANY AND ALL PROCESS WHICH MAY BE SERVED IN
ANY SUCH SUIT, ACTION OR PROCEEDING IN ANY FEDERAL OR STATE COURT IN NEW YORK,
NEW YORK, AND AGREES THAT SERVICE OF PROCESS UPON SAID AGENT AT SAID ADDRESS
AND WRITTEN NOTICE OF SAID SERVICE 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 OFFICE SHALL BE DESIGNATED AS THE
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.

10.7                        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 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

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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.

10.8                        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.

10.9                        Headings/Exhibits.  The Section headings 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 Exhibits attached hereto, are hereby incorporated by reference as a
part of the 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                 Preferences.  Upon the occurrence and continuance of an
Event of Default, Lender shall have the continuing and exclusive right to apply
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.

10.12                 Waiver of
Notice.  Borrower shall not be
entitled to any notices of any nature whatsoever from Lender except with
respect to matters for which this Agreement or 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.

10.13                 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

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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.  Any action or
proceeding to determine whether Lender has acted reasonably shall be determined
by an action seeking declaratory judgment. 
Borrower specifically waives any claim against Lender and its agents,
including Servicer, with respect to actions taken by Lender or its agents on
Borrower’s behalf.

10.14                 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 such parties,
whether oral or written, are superseded by the terms of this Agreement and the
other Loan Documents.

10.15                 Offsets,
Counterclaims and Defenses. 
Borrower hereby waives the right to assert a counterclaim, other than a
compulsory counterclaim, in any action or proceeding brought against Borrower
by Lender or its agents, including Servicer, or otherwise offset any
obligations to make payments required under the Loan Documents.  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 (including with
respect to any future funding obligation, if any, or any default or dispute
relating thereto) against any assignor of such documents, 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 such offset, counterclaim or defense in
any such action or proceeding is hereby expressly waived by Borrower.

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 Citigroup Group, a Loan purchaser, the Servicer or the trustee in a
Secondary Market Transaction, shall be subject to the prior written approval of
Lender; provided however, that Lender’s consent shall not be required by
Borrower, Borrower’s Affiliates, or any broker dealer or investor
representative related to the marketing or sale of any investment fund or
investment trust managed by Borrower’s Affiliates which disclosure is required
under the Securities Act of 1933 or 1934 or to any potential purchaser of an
interest in the Property.  Lender shall
have the right to issue any of the foregoing without Borrower’s approval.

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

 84
 

 

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.  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 and drafting
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.

10.19                 No Third Party
Beneficiaries.  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 prior to the
Stated Maturity 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 2.2.3, Section 2.3.2, Section
2.3.4 and Section 7.4.2 of this Agreement, all prepayments, 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

 85
 

 

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.

10.21                 Assignment.  The Loan, the Note, the Loan Documents and/or
Lender’s rights, title, obligations and interests therein may be assigned by
Lender and any of its successors and assigns to any Person 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 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 its rights, title,
interests or obligations under this Agreement or under any of the Loan
Documents.

10.22                 Borrower’s
Designee.  Borrower hereby
authorizes, designates and directs Borrower’s Designee to give Lender
directions of any kind, to take the actions or make such deliveries specified
herein to be taken or delivered by Borrower’s Designee (including under
Sections 5.11, 6.3 and 9.1, and including with respect to any requisitions from
any reserve accounts under Article 3) and to give and receive notices of any
kind on behalf of Borrower under this Agreement or any of the other Loan
Documents.  Any notice given by Lender to
Borrower’s Designee shall be deemed to have been given to each and every
Borrower.

10.23                 Intentionally
Omitted.

10.24                 Set-Off.  In addition to any rights and remedies of
Lender provided by this 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 any
currency, 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.

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.

 86

 

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

	
  

  	
  BORROWER:

  
	
   

  	
   

  
	
   

  	
  BEHRINGER
  HARVARD 101 SOUTH TRYON

  LP, a Delaware limited partnership

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  LENDER:

  
	
   

  	
   

  
	
   

  	
  CITIGROUP
  GLOBAL MARKETS REALTY

  
	
   

  	
  CORP., a New York corporation

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  

 

 

Schedule
1

Outstanding
Tenant Improvements and Leasing Costs

	
  Suite No.

  	
   

  	
  Name of Tenant

  	
   

  	
  Description of Leasing

  Costs

  	
   

  	
  Outstanding

  Leasing Costs

  	
   

  
	
  3700, 3800, 3900,
  4000

  	
   

  	
  Alston &
  Bird (Office)

  	
   

  	
  Leasing Fee
  External (paid 6/1/08)

  	
   

  	
  $

  	
  483,608.20

  	
   

  
	
  3700, 3800, 3900,
  4000

  	
   

  	
  Alston &
  Bird (Office)

  	
   

  	
  Future Allowance
  (paid after 6/1/08)

  	
   

  	
  $

  	
  324,384.00

  	
   

  
	
  Various

  	
   

  	
  Bank Of America
  Renewal (Office)

  	
   

  	
  Future Allowance
  (paid after 1/08)

  	
   

  	
  $

  	
  467,935.00

  	
   

  
	
  Various

  	
   

  	
  Bank Of America
  Renewal (Office)

  	
   

  	
  Leasing Fee
  External (paid 1/08)

  	
   

  	
  $

  	
  615,895.64

  	
   

  
	
  Various

  	
   

  	
  Bank Of America
  Renewal (Office)

  	
   

  	
  Future Allowance
  (paid after 4/09)

  	
   

  	
  $

  	
  2,406,885.00

  	
   

  
	
  Various

  	
   

  	
  Bank Of America
  Renewal (Office)

  	
   

  	
  Future Allowance
  (paid after 1/08, Restrooms)

  	
   

  	
  $

  	
  100,000.00

  	
   

  

 

 1-1

 

Schedule
2

Required
Repairs

 

Schedule
3

Exceptions
to Representations and Warranties

None.

 3-1

 

Schedule 4

Organization
of Borrower

 4-1

 

Schedule
5

Definition
of Special Purpose Bankruptcy Remote Entity

A “Special Purpose Bankruptcy
Remote Entity” means (x) a limited liability company that
is a Single Member Bankruptcy Remote LLC, or (y) a corporation, limited
partnership or limited liability company which at all times since its formation
and at all times thereafter (i) was and will be organized solely for the
purpose of (A) owning or leasing the Property or (B) acting as a
general partner of the limited partnership that owns or leases the Property or
member of the limited liability company that owns or leases the Property;
(ii) has not engaged and will not engage in any business unrelated to
(A) the ownership or leasing of the Property, (B) acting as general
partner of the limited partnership that owns or leases the Property or
(C) acting as a member of the limited liability company that owns or
leases the Property, as applicable; (iii) has not had and will not have
any assets other than those related to the Property or its partnership or member
interest in the limited partnership or limited liability company that owns or
leases the Property, as applicable; (iv) has not engaged, sought or
consented to and will not engage in, seek or consent to any (A) dissolution,
winding up, liquidation, consolidation, merger, asset sale (except as expressly
permitted by this Agreement), transfer of partnership or membership interests
or the like, or (B) amendment of its limited partnership agreement, articles of
incorporation, articles of organization, certificate of formation or operating
agreement (as applicable); (v) if such entity is a limited partnership,
has and will have, as its only general partners, Special Purpose Bankruptcy
Remote Entities that are corporations or that are Single Member Bankruptcy Remote
LLC’s; (vi) if such entity is a corporation or a Single Member Bankruptcy
Remote LLC, has and will have at least one Independent Director, and has not
caused or allowed and will not cause or allow the board of directors or board
of managers, as applicable, of such entity to take any action requiring the
unanimous affirmative vote of one hundred percent (100%) of the members of its
board of directors or board of managers, as applicable, unless all of the
directors or managers, as applicable, and all Independent Directors shall have
participated in such vote; (vii) if such entity is a limited liability
company, has and will have at least one member that has been and will be a
Special Purpose Bankruptcy Remote Entity that has been and will be a corporation
or a Single Member Bankruptcy Remote LLC and such corporation or such Single
Member Bankruptcy Remote LLC is the managing member of such limited liability
company; (viii) if such entity is a limited liability company with more
than one member, has and will have articles of organization, a certificate of
formation and/or an operating agreement, as applicable, providing that
(A) such entity will dissolve only upon the bankruptcy of the managing
member, (B) the vote of a majority-in-interest of the remaining members is
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 continue the life of the
limited liability company following the bankruptcy of the managing member is
not obtained, the limited liability company may not liquidate 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 partners, directors or members (including all Independent Directors), as
applicable, 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 reorganization petition or otherwise institute
insolvency proceedings or otherwise seek any relief under any laws relating to
the relief from

 5-1
 

 

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 will remain solvent and has maintained and will 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; provided, however,
that the financial statements of such Person may be included in the consolidated
financial statements of another Person in accordance with GAAP, provided that
in each case, such financial statements identify such Person as a separate
member of such consolidated group and include an express statement to the
effect that the assets of such Person are not available to satisfy the claims
of creditors of such other Person, and will file its own tax returns; provided,
however, that if such entity is a so-called “disregarded entity” under
applicable law for tax purposes, and such entity is required or permitted to be
included in a consolidated return of another entity, then such entity may be
included in the consolidated return of such other entity; (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 or under the trade name of the Property,
(xvii) subject to the proviso in clause (xii) above, 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 partnership,
corporate or limited liability company formalities, as applicable;
(xx) subject to sub clause (xxx) below, has maintained and will maintain
an arm’s-length relationship with its Affiliates; (xxi) (a) if such
entity owns the Property, has and will have no indebtedness other than the Loan
and Permitted Indebtedness (subject to the provisions of Section 5.22 of this
Agreement), or (b) if such entity acts as the general partner of a limited
partnership which owns the Property, has and will have no indebtedness (in
addition to such liability as it has by virtue of its status as general
partner) other than unsecured trade payables in the ordinary course of business
relating to acting as general partner of the limited partnership which owns the
Property which (1) do not exceed, at any time, $10,000 and (2) are
paid within thirty (30) days of the date incurred, or (c) 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 which (1) do not exceed,
at any time, $10,000 and (2) are paid within thirty (30) days of the date
incurred; (xxii) except, if applicable, by virtue of its status as a
general partner, has not and will not assume or guarantee or become obligated
for the debts of any other Person or hold out its credit as being available to
satisfy the obligations of any other Person except for the Loan;
(xxiii) has not and will not acquire obligations or securities of its
partners, members or shareholders; (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 identify itself as a separate and distinct entity under its
own name and not as a division or part of any other Person; (xxvii) has maintained
and will maintain its assets

 5-2
 

 

in such a manner that it will not be costly or
difficult to segregate, ascertain or identify its individual assets from those
of any other Person; (xxviii) has not made and will not make loans to any
Person; (xxix) has not identified and will not identify its partners,
members or shareholders, or any Affiliate of any of them, as a division or part
of it; (xxx) except for the Management Agreement, has not entered into or
been a party to, and will not enter into or be a party to, any transaction with
its partners, members, shareholders 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; (xxxi) has and will have no obligation to
indemnify its partners, officers, directors, members or Special Members, as the
case may be, or has such an obligation that is fully subordinated to 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; and
(xxxii) to the fullest extent permitted under applicable law, will
consider the interests of its creditors in connection with all corporate,
partnership or limited liability actions, as applicable.

“Independent Director”
means (x) in the case of a Single Member Bankruptcy Remote LLC:  a natural person selected by Borrower and
reasonably satisfactory to Lender who shall not have been at the time of such
individual’s appointment as an Independent Director of the Single Member
Bankruptcy Remote LLC, does not thereafter become while serving as an
Independent Director (except pursuant to an express provision in the Single
Member Bankruptcy Remote LLC’s limited liability company agreement providing
for the Independent Director to become a Special Member (defined below) upon
the sole member of such Single Member Bankruptcy Remote LLC ceasing to be a
member in such Single Member Bankruptcy Remote LLC) and shall not have been at
any time during the preceding five years (i) a shareholder/partner/member
of, or an officer or employee of, Borrower or any of its shareholders,
subsidiaries or Affiliates, (ii) a director of any shareholder, subsidiary
or Affiliate of Borrower, (iii) a customer of, or supplier to, Borrower or
any of its shareholders, subsidiaries or Affiliates, (iv) a Person who
Controls any such shareholder, supplier or customer, or (v) a member of
the immediate family of any such shareholder/ director/partner/member, officer,
employee, supplier or customer or of any director of Borrower (other than as an
Independent Director); and (y) in the case of a corporation, an individual
selected by Borrower and reasonably satisfactory to Lender who shall not have
been at the time of such individual’s appointment as a director, does not
thereafter become while serving as an Independent Director and shall not have
been at any time during the preceding five years (i) a
shareholder/partner/member of, or an officer, employee, consultant, agent or
advisor of, Borrower or any of its shareholders, subsidiaries, members or
Affiliates, (ii) a director of any shareholder, subsidiary, member, or
Affiliate of Borrower other than Borrower’s general partner or managing member,
(iii) a customer of, or supplier to, Borrower or any of its shareholders,
subsidiaries or Affiliates that derives more than ten percent (10%) of its
purchases or income from its activities with Borrower or any Affiliate of
Borrower, (iv) a Person who Controls any such shareholder, supplier or
customer, or (v) a member of the immediate family (including a grandchild
or sibling) of any such shareholder/director/partner/member, officer, employee,
supplier or customer or of any other director of Borrower’s general partner or
managing member.  A natural person who
otherwise satisfies the foregoing definition of Independent Director except for
being the independent director, manager or special member of a “special purpose
entity” affiliated with the Borrower that does not own a direct or indirect
equity interest in the Borrower shall not be disqualified from serving as an
Independent Director if such individual is at the time of initial appointment,
or at any time while serving as an Independent

 5-3
 

 

Director, an Independent Director of a “special
purpose entity” affiliated with the Borrower (other than any entity that owns a
direct or indirect equity interest in the Borrower).

“Single Member Bankruptcy
Remote LLC” means a limited liability company organized under
the laws of the State of Delaware which at all times since its formation and at
all times thereafter (i) complies with the following clauses of the
definition of Special Purpose Bankruptcy Remote Entity above:  (i), (ii), (iii), (iv), (ix), (x), (xi) and
(xiii) through (xxxii); (ii) has maintained and will maintain its
accounts, books and records separate from any other person; (iii) has and
will have an operating agreement which provides that the business and affairs
of such Single Member Bankruptcy Remote LLC shall be managed by its sole member
(the “Sole Member”), and at all
times there shall be at least one duly appointed Independent Director, and the
Sole Member will not, without the written consent of its Independent Director
(1) take any action affecting its status as a “Special Purpose Bankruptcy
Remote Entity” (as set forth in this Schedule 5) or (2) take any other “Material
Action” (which for purposes hereof means any action to consolidate or merge
such Single Member Bankruptcy Remote LLC with or into any Person, or sell all
or substantially all of the assets of such Single Member Bankruptcy Remote LLC
other than in connection with a permitted defeasance, an assignment and
assumption effected in accordance with Section 5.26.3 of this Agreement or
payment in full of the Loan in accordance with the terms of the Loan Documents,
or to institute proceedings to have such Single Member Bankruptcy Remote LLC be
adjudicated bankrupt or insolvent, or consent to the institution of bankruptcy
or insolvency proceedings against such Single Member Bankruptcy Remote LLC or
file a petition seeking, or consent to, reorganization or relief with respect
to such Single Member Bankruptcy Remote LLC under any applicable federal or
state law relating to bankruptcy, or consent to the appointment of a receiver,
liquidator, assignee, trustee, sequestrator (or other similar official) of such
Single Member Bankruptcy Remote LLC or a substantial part of its property, or
make any assignment for the benefit of creditors of such Single Member
Bankruptcy Remote LLC, or admit in writing such Single Member Bankruptcy Remote
LLC’s inability to pay its debts generally as they become due, or take action
in furtherance of any such action, or, to the fullest extent permitted by
law,  dissolve or liquidate such Single
Member Bankruptcy Remote LLC); (iv)  has and will have an operating
agreement which provides that, as long as any portion of the Debt remains
outstanding, (A) upon the occurrence of any event that causes Sole Member to cease
to be a member of such Single Member Bankruptcy Remote LLC (other than
(x) upon an assignment by Sole Member of all of its limited liability
company interest in such Single Member Bankruptcy Remote LLC and the admission
of the transferee, if permitted pursuant to the organizational documents of
such Single Member Bankruptcy Remote LLC and the Loan Documents, or (y) the
resignation of Sole Member and the admission of an additional member of such
Single Member Bankruptcy Remote LLC, if permitted pursuant to the
organizational documents of such Single Member Bankruptcy Remote LLC and the
Loan Documents), the person acting as an Independent Director of such Single
Member Bankruptcy Remote LLC shall, without any action of any Person and
simultaneously with Sole Member ceasing to be a member of such Single Member
Bankruptcy Remote LLC, automatically be admitted as the sole member of such
Single Member Bankruptcy Remote LLC (the “Special Member”)
and shall preserve and continue the existence of such Single Member Bankruptcy
Remote LLC without dissolution, (B) no Special Member may resign or transfer
its rights as Special Member unless (x) a successor Special Member has
been admitted to such Single Member Bankruptcy Remote LLC as a Special Member,
and (y) such successor Special Member has also accepted its appointment as an
Independent Director and (C) except as expressly permitted pursuant to the
terms of this

 5-4
 

 

Agreement, Sole Member may not resign and no
additional member shall be admitted to such Single Member Bankruptcy Remote
LLC; (v) has and will have an operating agreement which provides that, as
long as any portion of the Debt remains outstanding, (A) such Single Member
Bankruptcy Remote LLC shall be dissolved, and its affairs shall be would up
only upon the first to occur of the following: (x) the termination of the
legal existence of the last remaining member of such Single Member Bankruptcy
Remote LLC or the occurrence of any other event which terminates the continued
membership of the last remaining member of such Single Member Bankruptcy Remote
LLC in such Single Member Bankruptcy Remote LLC unless the business of such
Single Member Bankruptcy Remote LLC is continued in a manner permitted by its
operating agreement or the Delaware Limited Liability Company Act (the “Act”)
or (y) the entry of a decree of judicial dissolution under Section 18-802
of the Act; (B) upon the occurrence of any event that causes the last remaining
member of such Single Member Bankruptcy Remote LLC to cease to be a member of
such Single Member Bankruptcy Remote LLC or that causes Sole Member to cease to
be a member of such Single Member Bankruptcy Remote LLC (other than
(x) upon an assignment by Sole Member of all of its limited liability
company interest in such Single Member Bankruptcy Remote LLC and the admission
of the transferee, if permitted pursuant to the organizational documents of
such Single Member Bankruptcy Remote LLC and the Loan Documents, or (y) the
resignation of Sole Member and the admission of an additional member of such
Single Member Bankruptcy Remote LLC, if permitted pursuant to the
organizational documents of such Single Member Bankruptcy Remote LLC and the
Loan Documents), to the fullest extent permitted by law, the personal
representative of such member shall be authorized to, and shall, within 90 days
after the occurrence of the event that terminated the continued membership of
such member in such Single Member Bankruptcy Remote LLC, agree in writing to
continue the existence of such Single Member Bankruptcy Remote LLC and to the
admission of the personal representative or its nominee or designee, as the
case may be, as a substitute member of such Single Member Bankruptcy Remote
LLC, effective as of the occurrence of the event that terminated the continued
membership of such member in such Single Member Bankruptcy Remote LLC; (C) the
bankruptcy of Sole Member or a Special Member shall not cause such member or
Special Member, respectively, to cease to be a member of such Single Member
Bankruptcy Remote LLC and upon the occurrence of such an event, the business of
such Single Member Bankruptcy Remote LLC shall continue without dissolution;
(D) in the event of dissolution of such Single Member Bankruptcy Remote LLC,
such Single Member Bankruptcy Remote LLC shall conduct only such activities as
are necessary to wind up its affairs (including the sale of the assets of such
Single Member Bankruptcy Remote LLC in an orderly manner), and the assets of
such Single Member Bankruptcy Remote LLC shall be applied in the manner, and in
the order of priority, set forth in Section 18-804 of the Act; and
(E) to the fullest extent permitted by law, each of Sole Member and the Special
Member shall irrevocably waive any right or power that they might have to cause
such Single Member Bankruptcy Remote LLC or any of its assets to be
partitioned, to cause the appointment of a receiver for all or any portion of
the assets of such Single Member Bankruptcy Remote LLC, to compel any sale of
all or any portion of the assets of such Single Member Bankruptcy Remote LLC
pursuant to any applicable law or to file a complaint or to institute any
proceeding at law or in equity to cause the dissolution, liquidation, winding
up or termination of such Single Member Bankruptcy Remote LLC.

 5-5

 

Schedule
8

Rent Roll

(See
Attached)

 8-1

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