LOAN AGREEMENT Fixed Rate Dated as of August 17, 2006 between BEHRINGER HARVARD FERNCROFT, LLC as Borrower, and BARCLAYS CAPITAL REAL ESTATE INC., as Lender

Exhibit 10.1

LOAN AGREEMENT

Fixed Rate

Dated as of August 17, 2006

between

BEHRINGER HARVARD FERNCROFT, LLC

as Borrower,

and

BARCLAYS CAPITAL REAL ESTATE INC.,
as Lender

TABLE OF CONTENTS

		Page
ARTICLE 1	DEFINED TERMS AND CONSTRUCTION GUIDELINES	1

Section 1.01	Defined Terms	1
Section 1.02	General Construction	15

ARTICLE 2	MAXIMUM LOAN AMOUNT; PAYMENT TERMS; ADVANCES; DEFEASANCE	15

Section 2.01	Commitment to Lend	15
Section 2.02	Calculation of Interest	15
Section 2.03	Payment of Principal and Interest	16
Section 2.04	Payments Generally	17
Section 2.05	Prepayment Rights	18

ARTICLE 3	CASH MANAGEMENT	22

Section 3.01	Lockbox	22
Section 3.02	Transfers to Cash Management Account; Trigger Event	22

ARTICLE 4	ESCROW AND RESERVE REQUIREMENT	23

Section 4.01	Creation and Maintenance of Escrows and Reserves	23
Section 4.02	Tax Escrow	24
Section 4.03	Insurance Premium Escrow	25
Section 4.04	Immediate Repair Escrow Account	26
Section 4.05	Replacement Reserve Account	27
Section 4.06	TI/LC Reserve Account	27
Section 4.07	TI/LC Designated Reserve Account	28
Section 4.08	Earnout Reserve Account	29
Section 4.09	Vacant Space Reserve Account	30

ARTICLE 5	COMPLETION OF REPAIRS RELATED TO RESERVE ACCOUNTS; CONDITIONS TO RELEASE OF FUNDS	31

Section 5.01	Conditions Precedent to Disbursements from Certain Reserve Accounts	31
Section 5.02	Waiver of Conditions to Disbursement	33
Section 5.03	Direct Payments to Suppliers and Contractors	33
Section 5.04	Performance of Reserve Items	34

ARTICLE 6	LOAN SECURITY AND RELATED OBLIGATIONS	35

Section 6.01	Security Instrument and Assignment of Rents and Leases	35
Section 6.02	Assignment of Property Management Contract	35
Section 6.03	Assignment of Operating Agreements	35

Section 6.04	Pledge as Property; Grant of Security Interest	35
Section 6.05	Environmental Indemnity Agreement	35
Section 6.06	Guaranty of Borrower Sponsors	35
Section 6.07	Letter of Credit	35

ARTICLE 7	SINGLE PURPOSE ENTITY REQUIREMENTS	36

Section 7.01	Commitment to be a Single Purpose Entity	36
Section 7.02	Definition of Single Purpose Entity	37

ARTICLE 8	REPRESENTATIONS AND WARRANTIES	40

Section 8.01	Organization; Legal Status	40
Section 8.02	Power; Authorization; Enforceable Obligations	40
Section 8.03	No Legal Conflicts	41
Section 8.04	No Litigation	41
Section 8.05	Business Purpose of Loan	41
Section 8.06	Warranty of Title	41
Section 8.07	Condition of the Property	42
Section 8.08	No Condemnation	42
Section 8.09	Requirements of Law	42
Section 8.10	Operating Permits	42
Section 8.11	Separate Tax Xxx	00
Xxxxxxx 0.00	Xxxxx Xxxx	42
Section 8.13	Adequate Utilities	42
Section 8.14	Public Access	42
Section 8.15	Boundaries	43
Section 8.16	Mechanic Liens	43
Section 8.17	Assessments	43
Section 8.18	Insurance	43
Section 8.19	Leases	43
Section 8.20	Management Agreement	44
Section 8.21	Financial Condition	44
Section 8.22	Taxes	44
Section 8.23	No Foreign Person	44
Section 8.24	Federal Regulations	44
Section 8.25	Investment Company Act; Other Regulations	44
Section 8.26	ERISA	44
Section 8.27	No Illegal Activity as Source of Funds	44
Section 8.28	Compliance with Anti-Terrorism, Embargo, Sanctions and Anti-Money Laundering Laws	45
Section 8.29	Brokers and Financial Advisors	45
Section 8.30	Complete Disclosure; No Change in Facts or Circumstances	45
Section 8.31	Survival	45

ARTICLE 9	BORROWER COVENANTS	45

Section 9.01	Payment of Debt and Performance of Obligations	45
Section 9.02	Payment of Taxes and Other Lienable Charges	45
Section 9.03	Insurance	46
Section 9.04	Obligations upon Condemnation or Casualty	50
Section 9.05	Inspections and Right of Entry	55
Section 9.06	Leases and Rents	55
Section 9.07	Use of Property	56
Section 9.08	Maintenance of Property	56
Section 9.09	Waste	57
Section 9.10	Compliance with Laws	57
Section 9.11	Financial Reports, Books and Records	57
Section 9.12	Performance of Other Agreements	59
Section 9.13	Existence; Change of Name; Location as a Registered Organization	59
Section 9.14	Property Management	60
Section 9.15	ERISA	60
Section 9.16	Compliance with Anti-Terrorism, Embargo, Sanctions and Anti-Money Laundering Laws	61
Section 9.17	Deposit of Additional Collateral	61

ARTICLE 10	NO TRANSFERS OR ENCUMBRANCES; DUE ON SALE	61

Section 10.01	Prohibition Against Transfers	61
Section 10.02	Lender Approval	61
Section 10.03	Intentionally Deleted	62
Section 10.04	Other Releases of the Mortgaged Property	62
Section 10.05	Anti-Terrorism Compliance; Substantive Consolidation Opinion	62

ARTICLE 11	EVENTS OF DEFAULT; REMEDIES	63

Section 11.01	Events of Default	63
Section 11.02	Remedies	65
Section 11.03	Cumulative Remedies; No Waiver; Other Security	67
Section 11.04	Enforcement Costs	67
Section 11.05	Application of Proceeds	67

ARTICLE 12	NONRECOURSE – LIMITATIONS ON PERSONAL LIABILITY	68

Section 12.01	Nonrecourse Obligation	68
Section 12.02	Personal Liability for Certain Losses	68
Section 12.03	Full Personal Liability	69
Section 12.04	No Impairment	69
Section 12.05	No Waiver of Certain Rights	69

ARTICLE 13	INDEMNIFICATION	69

Section 13.01	Indemnification Against Claims	69
Section 13.02	Duty to Defend	70

iii

ARTICLE 14	SUBROGATION; NO USURY VIOLATIONS	70

Section 14.01	Subrogation	70
Section 14.02	No Usury	70

ARTICLE 15	SALE OR SECURITIZATION OF LOAN	71

Section 15.01	Splitting the Note	71
Section 15.02	Lender’s Rights to Sell or Securitize	72
Section 15.03	Dissemination of Information	72
Section 15.04	Securitization Indemnification	72

ARTICLE 16	BORROWER FURTHER ACTS AND ASSURANCES PAYMENT OF SECURITY RECORDING CHARGES	73

Section 16.01	Further Acts	73
Section 16.02	Replacement Documents	73
Section 16.03	Borrower Estoppel Certificates	74
Section 16.04	Recording Costs	75
Section 16.05	Publicity	75

ARTICLE 17	LENDER CONSENT	75

Section 17.01	No Joint Venture; No Third Party Beneficiaries	75
Section 17.02	Lender Approval	75
Section 17.03	Performance at Borrower’s Expense	75

ARTICLE 18	MISCELLANEOUS PROVISIONS	76

Section 18.01	Notices	76
Section 18.02	Entire Agreement; Modifications; Time of Essence	77
Section 18.03	Binding Effect; Joint and Several Obligations	77
Section 18.04	Duplicate Originals; Counterparts	77
Section 18.05	Unenforceable Provisions	77
Section 18.06	Governing Law	77
Section 18.07	Consent to Jurisdiction	77
Section 18.08	WAIVER OF TRIAL BY JURY	78

Exhibit A	Intentionally Deleted
Exhibit B	Disbursement Request Form
Exhibit C	Immediate Repairs
Exhibit D	Organizational Chart
Exhibit E	Rent Roll
Exhibit F	Replacements

LOAN AGREEMENT

Fixed Rate

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

Background

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

Agreement

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

ARTICLE 1
DEFINED TERMS AND CONSTRUCTION GUIDELINES

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

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

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

“Anti-Terrorism Laws” shall mean, collectively, (a) the Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001 (Public Law 000 00) (Xxx XXX XXXXXXX Xxx), (x) Executive Order No. 13224 on Terrorist Financing, effective September 24, 2001, and relating to Blocking Property and

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

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

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

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

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

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

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

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

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

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

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

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

“Closing Date” means August 21, 2006.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

“Liquidity” means cash and unencumbered, marketable securities.

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

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

“Loan Agreement” means this Loan Agreement.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

“OFAC List” means the list of specially designated nationals and blocked persons subject to financial sanctions that is maintained by the U.S. Treasury Department, Office of Foreign Assets Control and any other similar list maintained by the U.S. Treasury Department, Office of Foreign Assets Control pursuant to any Requirements of Law, including, without limitation, trade embargo, economic sanctions, or other prohibitions imposed by Executive Order of the President of the United States. The OFAC List is accessible through the internet website xxx.xxxxx.xxx/xxxx/x00xxx.xxx.

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

“Operating Account” means that certain account in the name of Borrower at XX Xxxxxx Xxxxx Bank, N.A., account number 707690350, and ABA No. 0000-0000-0.

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

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

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

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

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

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

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

“Permitted Transfer” means each of the following:

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

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

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

(d) Permitted Encumbrances.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

ARTICLE 2
MAXIMUM LOAN AMOUNT; PAYMENT TERMS; ADVANCES; DEFEASANCE

Section 2.01 Commitment to Lend.

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

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

Section 2.02 Calculation of Interest.

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

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

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

(d) Intentionally Deleted.

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

Section 2.03 Payment of Principal and Interest.

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

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

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

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

Section 2.04 Payments Generally.

(a) Delivery of Payments. All payments due to Lender under this Loan Agreement and the other Loan Documents are to be paid to Lender at Lender’s office located at 000 Xxxxx Xxxxxx Xxxx, Xxxxxxxx, Xxx Xxxxxx 00000-0000, Attn: Xxxxxxxx Xxxxx/CMBS Payments, or at such other place as Lender may designate to Borrower in writing from time to time. All amounts due under this Loan Agreement and the other Loan Documents shall be paid in immediately available funds without setoff, counterclaim or any other deduction whatsoever.

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

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

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

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

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

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

Section 2.05 Prepayment Rights.

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

(b) Voluntary Defeasance of the Loan.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

(v) Intentionally Deleted.

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

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

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

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

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

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

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

ARTICLE 3
CASH MANAGEMENT

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

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

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

ARTICLE 4
ESCROW AND RESERVE REQUIREMENTS

Section 4.01 Creation and Maintenance of Escrows and Reserves.

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

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

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

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

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

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

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

Section 4.02 Tax Escrow.

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

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

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

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

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

Section 4.03 Insurance Premium Escrow.

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

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

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

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

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

Section 4.04 Immediate Repair Escrow Account.

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

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

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

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

Section 4.05 Replacement Reserve Account.

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

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

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

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

Section 4.06 TI/LC Reserve Account.

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

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

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

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

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

Section 4.07 TI/LC Designated Reserve Account.

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

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

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

Section 4.08 Earnout Reserve Account.

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

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

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

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

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

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

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

Section 4.09 Vacant Space Reserve Account.

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

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

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

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

ARTICLE 5

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Section 5.04 Performance of Reserve Items.

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

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

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

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

ARTICLE 6
LOAN SECURITY AND RELATED OBLIGATIONS

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

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

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

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

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

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

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

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

ARTICLE 7
SINGLE PURPOSE ENTITY REQUIREMENTS

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

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

(b) Intentionally Deleted.

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

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

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

(f) Intentionally Deleted.

Section 7.02 Definition of Single Purpose Entity.

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

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

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

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

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

(v) Intentionally Deleted;

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

ARTICLE 8
REPRESENTATIONS AND WARRANTIES

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

ARTICLE 9
BORROWER COVENANTS

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

Section 9.02 Payment of Taxes and Other Lienable Charges.

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

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

Section 9.03 Insurance.

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

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

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

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

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

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

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

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

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

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

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

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

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

(d) Evidence of Insurance.

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

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

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

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

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

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

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

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

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

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

(ii) No Event of Default exists.

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

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

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

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

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

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

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

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

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

(i) Disbursements for Restoration.

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

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

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

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

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

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

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

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

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

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

Section 9.06 Leases and Rents.

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

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

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

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

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

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

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

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

Section 9.10 Compliance with Laws.

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

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

Section 9.11 Financial Reports, Books and Records.

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

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

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

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

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

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

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

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

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

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

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

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

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

Section 9.14 Property Management.

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

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

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

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

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

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

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

ARTICLE 10
NO TRANSFERS OR ENCUMBRANCES; DUE ON SALE

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

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

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

Section 10.03 Intentionally Deleted.

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

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

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

ARTICLE 11
EVENTS OF DEFAULT; REMEDIES

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

(i) Intentionally Deleted.

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

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

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

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

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

Section 11.06 Intentionally Deleted.

ARTICLE 12
NONRECOURSE – LIMITATIONS ON PERSONAL LIABILITY

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

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

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

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

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

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

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

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

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

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

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

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

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

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

ARTICLE 13
INDEMNIFICATION

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

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

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

ARTICLE 14
SUBROGATION; NO USURY VIOLATIONS

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

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

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

ARTICLE 15
SALE OR SECURITIZATION OF LOAN

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

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

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

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

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

ARTICLE 16
BORROW FURTHER ACTS AND ASSURANCES
PAYMENT OF SECURITY RECORDING CHARGES

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

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

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

Section 16.03 Borrower Estoppel Certificates.

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

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

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

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

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

ARTICLE 17
LENDER CONSENT

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

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

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

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

ARTICLE 18
MISCELLANEOUS PROVISIONS

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

Address for Lender:

Barclays Capital Real Estate Inc.

000 Xxxx Xxxxxx

Xxx Xxxx, XX 00000

Attn.: Xxxx Xxxx

Fax: (000) 000-0000

Polsinelli Xxxxxxx Xxxxx Suelthaus PC

000 Xxxx 00xx Xxxxxx, Xxxxx 0000

Xxxxxx Xxxx, XX 00000-0000

Attn: Xxxxxx Xxxxxxxx

Fax: (000) 000-0000

Address for Borrower:

Behringer Harvard Ferncroft, LLC

0000 Xxxxxx Xxxxxxx, Xxxxx 000

Xxxxxxx, XX 00000

Attn: Xxxxxx Xxxxx

Fax: 000-000-0000

Xxxx Xxxxxxx Xxxxxxxx Scripps, LLP

000 X. Xxxxxxxx, Xxxxx 0000

Xxx Xxxxx, XX 00000

Attn: Xxxxxx Xxxxxxxxxx, Esq.

Fax: (000) 000-0000

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

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

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

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

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

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

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

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

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

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

BORROWER:

BEHRINGER HARVARD FERNCROFT, LLC,
a Delaware limited liability company


By:
	Xxxxxx X. Xxxxxxx, III, Secretary


Borrower’s State Identification Number:

4180319

Borrower’s Tax Identification Number:

00-0000000

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

LENDER:

BARCLAYS CAPITAL REAL ESTATE INC.


By:
	Name:
	Title:

Exhibit A

Intentionally Deleted

A-1

Exhibit B

Disbursement Request Form

Barclays Capital Real Estate Inc.

000 Xxxx Xxxxxx

Xxx Xxxx, Xxx Xxxx 00000

Attention: CMBS Servicing

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

Ladies and Gentlemen:

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

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

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

	Property Name(s):



	Description of Work/Commissions:

B-1

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

Item or Labor Description:	Quantity:	Price:

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

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

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

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

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

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

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

B-2

The following are the wire instructions for the Requested Disbursement:





		Very truly yours,

		[BORROWER]

B-3

Exhibit C

Immediate Repairs

TABLE 1 - IMMEDIATE REPAIRS & SHORT TERM REPAIRS

Ferncroft Corporate Center

00 Xxxxxxx Xxxx

Xxxxxxxxx, Xxxxxxxxxxxxx

EBI Project # 11063614

ESTIMATED

Short

ESTIMATED

SECTION

RECOMMENDED

UNIT

IMMEDIATE

Term

SHORT TERM

COMMENTS OR ADDITIONAL

NUMBER

NAME

WORK

QUANTITY

UNIT COST

DESCRIPTION

REPAIR COST

Repair?

REPAIR COST

DESCRIPITON

SITE CONDITIONS

2.1

Topo.

None

2.2

Pvm’t/Pkg

None

2.3

Amenities

Repair exterior stairs

2,500.00

each

2,500

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

2.3

Amenities

Repair retaining walls

5,000.00

lump sum

5,000

2.4

Utilities

BUILDING CONDITIONS

3.1

Substruct

None

3.2

Superstruct

None

3.3

Facades

None

3.4

Root

None

3.5

Bsmt/Attic

None

3.6

ADA

None

INTERIOR FINISHES & COMPONENTS

3.7

Interior F & C

None

BUILDING SYSTEMS

4.1

Plumbing

None

4.2

HVAC

None

4.3

Electric

None

4.4

F/L Safety

None

4.5

Elevators

None

MATERIAL CODE VIOLATIONS

5.0

Codes

None

TOTAL

7,500

1.25 MULTIPLIER

9,375

TOTAL DEFERRED MAINTENANCE

9,375

PROPERTY AND LOAN INFORMATION

Building Area

226,338

Property Age

16 yrs

No. of Floors

Survey Date

7/11/06

Tenants or Xxxxx

Xxxxxxxx Xxxx

Xxxxxx

Xx. xx Xxxxxxxxx

Report Date

7/13/06

EBI Consulting

Exhibit 1

C-1

Exhibit D

Organizational Chart

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

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

D-1

Exhibit E

Rent Roll

Database:
Bldg Status:

BEHRINGER
Active only

Rent Roll
Fermcroft Corporate Center
7/31/2006

Page:
Date:
Time:

1
8/10/2006
02:02 PM

								Monthly		Monthly	Future Rent Increase
Bldg Id-Suit Id	Occupant Name	Rent Start		Expiration	GLA Sqft	Monthly Base Rent	Annual Rate PSF	Cost Recovery	Expense Stop	Other Income	Cat	Date	Monthly Xxxxxx	XXX
Xxxxxx Xxxxxx
00000 -000	Xxxxxx				9,170
00000 -000	Xxxxxx				32,631
Occupied Suites
50020 -200	VERIZON INFORMATION SERVICES	11/15/2004		11/14/2009	128,700	107,250.00	10.00				BRN	8/1/2006	107,250.00	10.00
											CAM	8/1/2006	66,095.00	6.16
											CAT	8/1/2006	10,198.00	0.95
											UTL	8/1/2006	16,645.00	1.55

50020 -800	SAS INSTITUTE, INC.	8/15/2005		8/31/2010	55,837	89,571,85	19.25				BRN	8/1/2006	89,571.85	19.25
											BRN	9/1/2006	94,224.94	20.25
											BRN	9/1/2007	97,714.75	21.00
											BRN	9/1/2006	102,367.83	22.00
											BRN	9/1/2009	108,184.19	23.25
											CAM	8/1/2006	4,580.00	0.98
											UTL	8/1/2006	5,816.35	1.25

50020 -ROOF	VERIZON WIRELESS	9/6/1990		12/31/2009	0

Totals:
	Occupied Sqft:	81.53	%	2 Units	184,537	196,821.85		0.00		0.00
	Leased/Unoccupied Sqft:			0 Units	0
	Vacant Sqft:	18.47	%	2 Untis	41,801
	Total Sqft:			4 Units	226,338	196,821.85

Total Ferncroft Corporate Center:
	Occupied Sqft:	81.53	%	2 Units	184,537	196,821.85		0.00		0.00
	Leased/Unoccupied Sqft:			0 Units	0
	Vacant Sqft:	18.47	%	2 Untis	41,801
	Total Sqft:			4 Units	226,338	196,821.85

Grand Total:
	Occupied Sqft:	81.53	%	2 Units	184,537	196,821.85		0.00		0.00
	Leased/Unoccupied Sqft:			0 Units	0
	Vacant Sqft:	18.47	%	2 Untis	41,801
	Total Sqft:			4 Units	226,338	196,821.85

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

	/s/ Xxxxxxx Xxxxxx
	Xxxxxxx Xxxxxx, Due Diligence Manager

	8/16/06
	Date

E-1

Exhibit F

Replacements

TABLE 2 - REPLACEMENT RESERVES

Femcroft Corporate Center

00 Xxxxxxx Xxxx

Xxxxxxxxx, Xxxxxxxxxxxxx

EBI Project # 11063614

SECTION NUMBER	SECTION NAME	RECOMMENDED WORK	AVERAGE EFFECTIVE USEFUL LIFE	EFFECTIVE AGE	REMAINING USEFUL LIFE	TOTAL QUANTITY OVER TERM	APPROXIMATE QUANTITY PER YEAR	UNIT COST		UNIT DESCRIPTION	ESTIMATAED COST PER YEAR
SITE CONDITIONS
2.1	Topo	None
2.2	Pvm”t/Pkg	Patching crack sealing, sealing and striping	5	2	3	329,238	164,619	$	0.10	per square foot	$	16,462
2.2	Pvm”t/Pkg	Parking garage weather sealant	10	2	8	194,250	194,250	$	0.35	per square foot	$	67,988
2.3	Amenities	None
2.4	Utilities	None
BUILDING CONDITIONS
3.1	Substr.	None
3.2	Superstr.	None
3.3	Facades	Sealant renewal at windows and doors	12	8	4	13,456	13,456	$	4.50	per square foot	$	60,552
3.4	Roof	None
3.5	Bsmt/Attic	None
3.6	ADA	Add accessible parking	5	4	1	1	1	$	500.00	lump sum	$	500
INTERIOR FINISHES & COMPONENTS
3.7	Interior F & C	Common area refurbishment - psf	8	1	7	27,161	27,161	$	5.00	per square foot	$	135,803
BUILDING SYSTEMS
4.1	Plumbing	Large gas fired water heater replacement	18	14	4	1	1	$	2,500.00	each, # per year	$	2,500
4.2	HVAC	None
4.3	Electric	None
4.4	F/L Safety	Replace fire alarm control panel	20	14	6	1	1	$	15,000.00	each	$	15,000
4.5	Elevators	None
4.5	Elevators	None
ANNUAL RECOMMENDATIONS, UNINFLATED
INFLATION FACTOR, IN PERCENTAGE 1,025
ANNUAL RECOMMENDATIONS, INFLATED @ 2.50% AFTER YEAR ONE
NET PRESENT VALUE OF RECOMMENDED TOTAL ANNUAL RESERVES
PRESENT VALUE OF RECOMMENDED TOTAL ANNUAL RESERVES PER SF PER YEAR
INFLATED VALUE OF RECOMMENDED TOTAL ANNUAL RESERVES PER SF PER YEAR

			Annual Costs																		RECOMMENDED
SECTION	SECTION	RECOMMENDED	2007		2008		2009		2010		2011		2012		2013		2014		2015		TOTAL OVER
NUMBER	NAME	WORK	YEAR 1		YEAR 2		YEAR 3		YEAR 4		YEAR 5		YEAR 6		YEAR 7		YEAR 8		YEAR 9		THE TERM
SITE CONDITIONS
2.1	Topo	None
2.2	Pvm”t/Pkg	Patching crack sealing, sealing and striping					16,462										16,462				$	32,924
2.2	Pvm”t/Pkg	Parking garage weather sealant															67,988				$	67,988
2.3	Amenities	None
2.4	Utilities	None
BUILDING CONDITIONS
3.1	Substr.	None
3.2	Superstr.	None
3.3	Facades	Sealant renewal at windows and doors							60,552												$	60,552
3.4	Roof	None
3.5	Bsmt/Attic	None
3.6	ADA	Add accessible parking	500																		$	500
INTERIOR FINISHES & COMPONENTS
3.7	Interior F & C	Common area refurbishment - psf													135,803						$	135,803
BUILDING SYSTEMS
4.1	Plumbing	Large gas fired water heater replacement							2,500												$	2,500
4.2	HVAC	None
4.3	Electric	None
4.4	F/L Safety	Replace fire alarm control panel											15,000								$	15,000
4.5	Elevators	None
4.5	Elevators	None
ANNUAL RECOMMENDATIONS, UNINFLATED			500				16,462		63,052				15,000		135,803		84,449				$	315,266
INFLATION FACTOR, IN PERCENTAGE 1,025			100.00	%	102.50	%	105.06	%	107.69	%	110.38	%	113.14	%	115.97	%	118.87	%	121.84	%
ANNUAL RECOMMENDATIONS, INFLATED @ 2.50% AFTER YEAR ONE			500				17,295		67,900				16.971		157,490		100,384				$	360,540
NET PRESENT VALUE OF RECOMMENDED TOTAL ANNUAL RESERVES																					$	315,266
PRESENT VALUE OF RECOMMENDED TOTAL ANNUAL RESERVES PER SF PER YEAR																					$	0.15
INFLATED VALUE OF RECOMMENDED TOTAL ANNUAL RESERVES PER SF PER YEAR																					$	*0.18*

Notes:

PROPERTY AND LOAN INFORMATION

Building Area

226,338 SF

Property Age

16 yrs

No. of Floors

Loan Term

7 yrs

Site Survey Date

7/11/06

Tenants or Xxxxx

Xxxxxxxx Xxxx

Xxxxxx

Xx. xx Xxxxxxxxx

Analysis term

9 yrs

Report Date

7/13/06

F-1

Document Metadata

Table of Contents

LOAN AGREEMENT Fixed Rate Dated as of August 17, 2006 between BEHRINGER HARVARD FERNCROFT, LLC as Borrower, and BARCLAYS CAPITAL REAL ESTATE INC., as Lender

Document Metadata

LOAN AGREEMENT Fixed Rate Dated as of August 17, 2006 between BEHRINGER HARVARD FERNCROFT, LLC as Borrower, and BARCLAYS CAPITAL REAL ESTATE INC., as Lender

ARTICLE 2 MAXIMUM LOAN AMOUNT; PAYMENT TERMS; ADVANCES; DEFEASANCE

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

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

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

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

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

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

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

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

ARTICLE 3 CASH MANAGEMENT

ARTICLE 4 ESCROW AND RESERVE REQUIREMENTS

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

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

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

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

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

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

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

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

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

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

Section 4.08 Earnout Reserve Account.

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

ARTICLE 5

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

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

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

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

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

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

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

ARTICLE 6 LOAN SECURITY AND RELATED OBLIGATIONS

ARTICLE 7 SINGLE PURPOSE ENTITY REQUIREMENTS

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

(b) Intentionally Deleted.

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

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

(f) Intentionally Deleted.

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

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

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

(v) Intentionally Deleted;

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

ARTICLE 8 REPRESENTATIONS AND WARRANTIES

ARTICLE 9 BORROWER COVENANTS

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

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

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

(d) Evidence of Insurance.

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

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

(ii) No Event of Default exists.

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

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

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

(i) Disbursements for Restoration.

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

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

ARTICLE 2
MAXIMUM LOAN AMOUNT; PAYMENT TERMS; ADVANCES; DEFEASANCE

ARTICLE 3
CASH MANAGEMENT

ARTICLE 4
ESCROW AND RESERVE REQUIREMENTS

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

ARTICLE 6
LOAN SECURITY AND RELATED OBLIGATIONS

ARTICLE 7
SINGLE PURPOSE ENTITY REQUIREMENTS

ARTICLE 8
REPRESENTATIONS AND WARRANTIES

ARTICLE 9
BORROWER COVENANTS