Table of Contents

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
______________________________________________________

  FORM 10-Q
______________________________________________________
(Mark One)
x
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 2019
OR
¨
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from              to             
Commission file number 000-54382
______________________________________________________
KBS STRATEGIC OPPORTUNITY REIT, INC.
(Exact Name of Registrant as Specified in Its Charter)
______________________________________________________
Maryland
 
26-3842535
(State or Other Jurisdiction of
Incorporation or Organization)
 
(I.R.S. Employer
Identification No.)
800 Newport Center Drive, Suite 700
Newport Beach, California
 
92660
(Address of Principal Executive Offices)
 
(Zip Code)
(949) 417-6500
(Registrant’s Telephone Number, Including Area Code)
______________________________________________________________________
Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes   x     No   ¨
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).    Yes   x No  ¨
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act. (Check one):
Large Accelerated Filer
 
¨
 
Accelerated Filer
 
¨
Non-Accelerated Filer
 
x  
 
Smaller reporting company
 
¨
 
 
 
 
Emerging growth company
 
¨
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.     ¨
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes   ¨ No   x
Securities registered pursuant to Section 12(b) for the Act:
Title of each class
Trading Symbol(s)
Name of each exchange on which registered
None
N/A
N/A
As of May 10, 2019 , there were 66,572,556 outstanding shares of common stock of KBS Strategic Opportunity REIT, Inc.

Table of Contents

KBS STRATEGIC OPPORTUNITY REIT, INC.
FORM 10-Q
March 31, 2019
INDEX  
PART I.
 
Item 1.
 
 
 
 
 
 
 
 
 
 
 
Item 2.
 
Item 3.
 
Item 4.
PART II.
 
Item 1.
 
Item 1A.
 
Item 2.
 
Item 3.
 
Item 4.
 
Item 5.
 
Item 6.

1
Table of Contents
PART I.
FINANCIAL INFORMATION
Item 1.
Financial Statements


KBS STRATEGIC OPPORTUNITY REIT, INC.
CONSOLIDATED BALANCE SHEETS
(in thousands, except share and per share amounts)
 
 
March 31, 2019
 
December 31, 2018
 
 
(unaudited)
 
 
Assets
 
 
 
 
Real estate held for investment, net
 
$
652,485

 
$
649,868

Real estate held for sale, net
 
—

 
31,252

Real estate equity securities
 
60,973

 
73,876

Real estate debt securities, net
 
—

 
10,859

Total real estate and real estate-related investments, net
 
713,458

 
765,855

Cash and cash equivalents
 
142,782

 
152,385

Restricted cash
 
9,497

 
10,342

Investments in unconsolidated joint ventures
 
47,373

 
44,869

Rents and other receivables, net
 
13,607

 
12,292

Above-market leases, net
 
3,276

 
3,377

Prepaid expenses and other assets
 
14,489

 
13,123

Assets related to real estate held for sale, net
 
—

 
2,746

Total assets
 
$
944,482

 
$
1,004,989

Liabilities and equity
 
 
 
 
Notes and bonds payable, net
 
 
 
 
Notes and bonds payable related to real estate held for investment, net
 
$
589,608

 
$
632,627

Note payable related to real estate held for sale, net
 
—

 
22,845

Total notes and bonds payable, net
 
589,608

 
655,472

Accounts payable and accrued liabilities
 
14,100

 
19,506

Due to affiliate
 
82

 
36

Below-market leases, net
 
4,652

 
5,005

Other liabilities
 
19,176

 
21,006

Redeemable common stock payable
 
7,742

 
10,000

Total liabilities
 
635,360

 
711,025

Commitments and contingencies (Note  1 4 )
 

 

Redeemable common stock
 
—

 
—

Equity
 
 
 
 
KBS Strategic Opportunity REIT, Inc. stockholders’ equity
 
 
 
 
Preferred stock, $.01 par value; 10,000,000 shares authorized, no shares issued and outstanding
 
—

 
—

Common stock, $.01 par value; 1,000,000,000 shares authorized,  66,584,729 and 66,822,861  shares issued and outstanding as of  March 31, 2019  and December 31, 2018 , respectively
 
666

 
668

Additional paid-in capital
 
547,775

 
547,770

Cumulative distributions and net income
 
(240,781
)
 
(256,984
)
Total KBS Strategic Opportunity REIT, Inc. stockholders’ equity
 
307,660

 
291,454

Noncontrolling interests
 
1,462

 
2,510

Total equity
 
309,122

 
293,964

Total liabilities and equity
 
$
944,482

 
$
1,004,989

See accompanying condensed notes to consolidated financial statements.

2
Table of Contents
PART I.
FINANCIAL INFORMATION (CONTINUED)
Item 1.
Financial Statements (continued)

KBS STRATEGIC OPPORTUNITY REIT, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited)
(in thousands, except share and per share amounts)
 
Three Months Ended March 31,
 
2019
 
2018
Revenues:
 
 
 
Rental income
$
18,373

 
$
17,349

Other operating income
1,393

 
735

Interest income from real estate debt securities
369

 
501

Dividend income from real estate equity securities
1,776

 
1,051

Total revenues
21,911

 
19,636

Expenses:
 
 
 
Operating, maintenance, and management
6,271

 
5,487

Real estate taxes and insurance
2,977

 
2,339

Asset management fees to affiliate
1,891

 
1,825

General and administrative expenses
1,533

 
2,052

Foreign currency transaction  loss , net
2,816

 
997

Depreciation and amortization
7,681

 
7,265

Interest expense
7,168

 
6,591

Total expenses
30,337

 
26,556

Other  income (loss):
 
 
 
Income from unconsolidated joint venture
—

 
53

Equity in  income (lo ss)  of unconsolidated joint ventures , net
7,312

 
(2,378
)
Other interest income
690

 
930

Gain (loss)  on real estate equity securities
11,165

 
(16,011
)
Gain  on sale of real estate
7,575

 
624

Loss  on extinguishment of debt
(856
)
 
—

Total other  income (loss) , net
25,886

 
(16,782
)
Net  income (loss)
17,460

 
(23,702
)
Net (income) loss attributable to noncontrolling interests
(679
)
 
21

Net   income ( loss) attributable to common stockholders
$
16,781

 
$
(23,681
)
Net income ( loss) per common share, basic and diluted
$
0.25

 
$
(0.38
)
Weighted-average number of common shares outstanding, basic and diluted
66,812,520

 
62,526,798

See accompanying condensed notes to consolidated financial statements.

3
Table of Contents
PART I.
FINANCIAL INFORMATION (CONTINUED)
Item 1.
Financial Statements (continued)

KBS STRATEGIC OPPORTUNITY REIT, INC.
CONSOLIDATED STATEMENTS OF EQUITY
For the Three Months Ended March 31, 2019 and 2018
(unaudited)
(dollars in thousands)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Common Stock
 
Additional
Paid-in Capital
 
Cumulative Distributions and Net Income
 
Accumulated Other Comprehensive Income
 
Total Stockholders' Equity
 
Noncontrolling Interests
 
Total Equity
 
Shares
 
Amounts
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Balance, December 31, 2018
66,822,861

 
$
668

 
$
547,770

 
$
(256,984
)
 
$
—

 
$
291,454

 
$
2,510

 
$
293,964

Net  income
—

 
—

 
—

 
16,781

 
—

 
16,781

 
679

 
17,460

Issuance of common stock
28,784

 
1

 
285

 
—

 
—

 
286

 
—

 
286

Transfers from  redeemable common stock
—

 
—

 
2,258

 
—

 
—

 
2,258

 
—

 
2,258

Redemptions of common stock
(266,916
)
 
(3
)
 
(2,536
)
 
—

 
—

 
(2,539
)
 
—

 
(2,539
)
Distributions declared
—

 
—

 
—

 
(578
)
 
—

 
(578
)
 
—

 
(578
)
Other offering costs
—

 
—

 
(2
)
 
—

 
—

 
(2
)
 
—

 
(2
)
Noncontrolling interests contributions
—

 
—

 
—

 
—

 
—

 
—

 
12

 
12

Distributions to noncontrolling interests
—

 
—

 
—

 
—

 
—

 
—

 
(1,739
)
 
(1,739
)
Balance , March 31, 2019
66,584,729

 
$
666

 
$
547,775

 
$
(240,781
)
 
$
—

 
$
307,660

 
$
1,462

 
$
309,122

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Common Stock
 
Additional
Paid-in Capital
 
Cumulative Distributions and Net Income
 
Accumulated Other Comprehensive Income
 
Total Stockholders' Equity
 
Noncontrolling Interests
 
Total Equity
 
Shares
 
Amounts
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Balance, December 31, 2017
52,053,817

 
$
521

 
$
388,800

 
$
(155,454
)
 
$
25,146

 
$
259,013

 
$
1,970

 
$
260,983

Cumulative effect adjustments to retained earnings
—

 
—

 
—

 
27,618

 
(25,146
)
 
2,472

 
—

 
2,472

Net loss
—

 
—

 
—

 
(23,681
)
 
—

 
(23,681
)
 
(21
)
 
(23,702
)
Issuance of common stock
41,681

 
1

 
478

 
—

 
—

 
479

 
—

 
479

Stock distribution issued
13,069,487

 
130

 
150,169

 
—

 
—

 
150,299

 
—

 
150,299

Transfers from redeemable common stock
—

 
—

 
4,130

 
—

 
—

 
4,130

 
—

 
4,130

Redemptions of common stock
(419,572
)
 
(5
)
 
(4,605
)
 
—

 
—

 
(4,610
)
 
—

 
(4,610
)
Distributions declared
—

 
—

 
—

 
(1,034
)
 
—

 
(1,034
)
 
—

 
(1,034
)
Noncontrolling interests contributions
—

 
—

 
—

 
—

 
—

 
—

 
8

 
8

Balance , March 31, 2018
64,745,413

 
$
647

 
$
538,972

 
$
(152,551
)
 
$
—

 
$
387,068

 
$
1,957

 
$
389,025


See accompanying condensed notes to consolidated financial statements.

4
Table of Contents
PART I.
FINANCIAL INFORMATION (CONTINUED)
Item 1.
Financial Statements (continued)

KBS STRATEGIC OPPORTUNITY REIT, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited)
(in thousands)
 
 
Three Months Ended March 31,
 
 
2019
 
2018
Cash Flows from Operating Activities:
 
 
 
 
Net income (loss)
 
$
17,460

 
$
(23,702
)
Adjustments to reconcile net  income (loss)  to net cash  used in operating activities:
 
 
 
 
Equity in (income) loss  of unconsolidated joint ventures , net
 
(7,312
)
 
2,378

Depreciation and amortization
 
7,681

 
7,265

(Gain) loss on real estate equity securities
 
(11,165
)
 
16,011

Gain on sale of real estate
 
(7,575
)
 
(624
)
Loss on extinguishment of debt
 
856

 
—

Unrealized  loss (gain) on interest rate caps
 
30

 
(31
)
Deferred rent
 
(1,270
)
 
(745
)
Bad debt  rec overy
 
—

 
(366
)
Amortization of above- and below-market leases, net
 
(252
)
 
(226
)
Amortization of deferred financing costs
 
869

 
789

Accretion  of interest income on real estate debt securities
 
(13
)
 
(107
)
Net amortization of discount and (premium) on bond and notes payable
 
(20
)
 
14

Foreign currency transaction  loss , net
 
2,816

 
997

Changes in assets and liabilities:
 
 
 
 
Rents and other receivables
 
85

 
(1,000
)
Prepaid expenses and other assets
 
(1,925
)
 
(1,900
)
Accounts payable and accrued liabilities
 
(7,292
)
 
(3,802
)
Due to affiliates
 
53

 
21

Other liabilities
 
(599
)
 
15

Net cash  used in  operating activities
 
(7,573
)
 
(5,013
)
Cash Flows from Investing Activities:
 
 
 
 
Acquisitions of real estate
 
—

 
(238,170
)
Improvements to real estate
 
(8,052
)
 
(5,039
)
Proceeds from sales of real estate, net
 
17,894

 
2,542

Distributions of capital from unconsolidated joint venture
 
7,800

 
386

Investment in real estate equity securities
 
(15
)
 
(14,963
)
Proceeds from the sale of real estate equity securities
 
24,076

 
—

Proceeds from principal repayment on real estate debt securities
 
7,750

 
—

Funding of development obligations
 
(21
)
 
(621
)
Net cash  provided by (used in) investing activities
 
49,432

 
(255,865
)
Cash Flows from Financing Activities:
 
 
 
 
Proceeds from notes and bonds payable
 
2,608

 
89,000

Principal payments on notes and bonds payable
 
(54,266
)
 
(857
)
Payments of deferred financing costs
 
(7
)
 
(1,227
)
Payments to redeem common stock
 
(2,539
)
 
(4,610
)
Payment of prepaid other offering costs
 
(2
)
 
(213
)
Distributions paid
 
(292
)
 
(38,170
)
Noncontrolling interests contributions
 
12

 
8

Distributions to noncontrolling interests
 
(1,739
)
 
—

Other financing proceeds, net
 
1,822

 
—

Net cash  (used in) provided by  financing activities
 
(54,403
)
 
43,931

Effect of exchange rate changes on cash, cash equivalents and restricted cash
 
2,096

 
(22
)
Net  decrease  in cash, cash equivalents and restricted cash
 
(10,448
)
 
(216,969
)
Cash, cash equivalents and restricted cash, beginning of period
 
162,727

 
377,182

Cash, cash equivalents and restricted cash, end of period
 
$
152,279

 
$
160,213

See accompanying condensed notes to consolidated financial statements.

5
Table of Contents
PART I.
FINANCIAL INFORMATION (CONTINUED)
Item 1.
Financial Statements (continued)
KBS STRATEGIC OPPORTUNITY REIT, INC.
CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
March 31, 2019
(unaudited)



1.
ORGANIZATION
KBS Strategic Opportunity REIT, Inc. (the “Company”) was formed on October 8, 2008 as a Maryland corporation and elected to be taxed as a real estate investment trust (“REIT”) beginning with the taxable year ended December 31, 2010. The Company conducts its business primarily through KBS Strategic Opportunity (BVI) Holdings, Ltd. (“KBS Strategic Opportunity BVI”), a private company limited by shares according to the British Virgin Islands Business Companies Act, 2004, which was incorporated on December 18, 2015 and is authorized to issue a maximum of 50,000 common shares with no par value. Upon incorporation, KBS Strategic Opportunity BVI issued one certificate containing 10,000 common shares with no par value to KBS Strategic Opportunity Limited Partnership (the “Operating Partnership”), a Delaware limited partnership formed on December 10, 2008. The Company is the sole general partner of, and owns a 0.1% partnership interest in, the Operating Partnership. KBS Strategic Opportunity Holdings LLC (“REIT Holdings”), a Delaware limited liability company formed on December 9, 2008, owns the remaining 99.9%  interest in the Operating Partnership and is its sole limited partner. The Company is the sole member and manager of REIT Holdings.
Subject to certain restrictions and limitations, the business of the Company is externally managed by KBS Capital Advisors LLC (the “Advisor”), an affiliate of the Company, pursuant to an advisory agreement the Company renewed with the Advisor on October 8, 2018 (the “Advisory Agreement”). The Advisor conducts the Company’s operations and manages its portfolio of real estate and other real estate-related investments.
On January 8, 2009, the Company filed a registration statement on Form S-11 with the Securities and Exchange Commission (the “SEC”) to offer a minimum of 250,000 shares and a maximum of 140,000,000 shares of common stock for sale to the public (the “Offering”), of which 100,000,000  shares were registered in a primary offering and 40,000,000  shares were registered to be sold under the Company’s dividend reinvestment plan. The SEC declared the Company’s registration statement effective on November 20, 2009. The Company ceased offering shares of common stock in its primary offering on November 14, 2012 and continues to offer shares under its dividend reinvestment plan.
The Company sold 56,584,976 shares of common stock in its primary offering for gross offering proceeds of $561.7 million . As of March 31, 2019 , the Company had sold 6,772,410  shares of common stock under its dividend reinvestment plan for gross offering proceeds of $75.7 million . Also, as of March 31, 2019 , the Company had redeemed 23,045,646 shares for $277.9 million . As of March 31, 2019 , the Company had issued 25,976,746 shares of common stock in connection with special dividends. Additionally, on December 29, 2011 and October 23, 2012, the Company issued 220,994 shares and 55,249 shares of common stock, respectively, for $2.0 million and $0.5 million , respectively, in private transactions exempt from the registration requirements pursuant to Section 4(2) of the Securities Act of 1933.
On March 2, 2016, KBS Strategic Opportunity BVI filed a final prospectus with the Israel Securities Authority for a proposed offering of up to 1,000,000,000 Israeli new Shekels of Series A debentures (the “Debentures”) at an annual interest rate not to exceed 4.25% . On March 1, 2016, KBS Strategic Opportunity BVI commenced the institutional tender of the Debentures and accepted application for 842.5 million Israeli new Shekels. On March 7, 2016, KBS Strategic Opportunity BVI commenced the public tender of the Debentures and accepted 127.7 million Israeli new Shekels.  In the aggregate, KBS Strategic Opportunity BVI accepted 970.2 million Israeli new Shekels (approximately $249.2 million as of March 8, 2016) in both the institutional and public tenders at an annual interest rate of 4.25% .  KBS Strategic Opportunity BVI issued the Debentures on March 8, 2016.
In connection with the above-referenced offering, on March 8, 2016, the Operating Partnership assigned to KBS Strategic Opportunity BVI all of its interests in the subsidiaries through which the Company indirectly owns all of its real estate and real estate-related investments.  The Operating Partnership owns all of the issued and outstanding equity of KBS Strategic Opportunity BVI.  As a result of these transactions, the Company now holds all of its real estate and real estate-related investments indirectly through KBS Strategic Opportunity BVI.
As of March 31, 2019 , the Company consolidated six office properties, one office portfolio consisting of four office buildings and 14 acres of undeveloped land, one retail property, one apartment property and three investments in undeveloped land with approximately 1,000 developable acres and owned four investments in unconsolidated joint ventures and three investments in real estate equity securities.

6
Table of Contents
PART I.
FINANCIAL INFORMATION (CONTINUED)
Item 1.
Financial Statements (continued)
KBS STRATEGIC OPPORTUNITY REIT, INC.
CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
March 31, 2019
(unaudited)

2.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
There have been no significant changes to the Company’s accounting policies since it filed its audited financial statements in its Annual Report on Form 10-K for the year ended December 31, 2018 , except for the Company’s adoption of the lease accounting standards issued by the Financial Accounting Standards Board (“FASB”) effective on January 1, 2019 . For further information about the Company’s accounting policies, refer to the Company’s consolidated financial statements and notes thereto for the year ended December 31, 2018 included in the Company’s Annual Report on Form 10-K filed with the SEC.
Principles of Consolidation and Basis of Presentation
The accompanying unaudited consolidated financial statements and condensed notes thereto have been prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) for interim financial information as contained within the FASB Accounting Standards Codification (“ASC”) and the rules and regulations of the SEC, including the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, the unaudited consolidated financial statements do not include all of the information and footnotes required by GAAP for audited financial statements. In the opinion of management, the financial statements for the unaudited interim periods presented include all adjustments, which are of a normal and recurring nature, necessary for a fair and consistent presentation of the results for such periods. Operating results for the three months ended March 31, 2019 are not necessarily indicative of the results that may be expected for the year ending December 31, 2019 .
The consolidated financial statements include the accounts of the Company, REIT Holdings, the Operating Partnership, KBS Strategic Opportunity BVI and their direct and indirect wholly owned subsidiaries, and joint ventures in which the Company has a controlling interest. All significant intercompany balances and transactions are eliminated in consolidation.
Use of Estimates
The preparation of the consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and accompanying notes. Actual results could materially differ from those estimates.
Redeemable Common Stock
The Company limits the dollar value of shares that may be redeemed under the share redemption program. During the three months ended March 31, 2019 , the Company had redeemed $2.5 million of common stock under the share redemption program. The Company processed all redemption requests received in good order and eligible for redemption through the March 2019 redemption date, except for 3,294,070 shares totaling $31.0 million due to the limitations under the share redemption program. The Company recorded $7.7 million and $10.0 million of redeemable common stock payable on the Company’s balance sheet as of March 31, 2019 and December 31, 2018 , respectively, related to unfulfilled redemption requests received in good order under the share redemption program. Based on the eleventh amended and restated share redemption program, the Company has $7.5 million available for redemptions in the remainder of 2019 , including shares that are redeemed in connection with a stockholders’ death, “qualifying disability” or “determination of incompetence,” subject to the limitations under the share redemption program.
Reclassifications
Certain amounts in the Company’s prior period consolidated financial statements have been reclassified to conform to the current period presentation.  These reclassifications have not changed the results of operations of prior periods.  Upon adoption of the lease accounting standards of Topic 842 on January 1, 2019 (described below), the Company accounted for tenant reimbursements for property taxes, insurance and common area maintenance as variable lease payments and recorded these amounts as rental income on the statement of operations. For the three months ended March 31, 2018 , the Company reclassified $2.2 million of tenant reimbursement revenue for property taxes, insurance, and common area maintenance to rental income for comparability purposes.

7
Table of Contents
PART I.
FINANCIAL INFORMATION (CONTINUED)
Item 1.
Financial Statements (continued)
KBS STRATEGIC OPPORTUNITY REIT, INC.
CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
March 31, 2019
(unaudited)

Revenue Recognition - Operating Leases
Real Estate
On January 1, 2019 , the Company adopted the lease accounting standards under Topic 842 including the package of practical expedients for all leases that commenced before the effective date of January 1, 2019. Accordingly, the Company     (i) did not reassess whether any expired or existing contracts are or contain leases, (ii) did not reassess the lease classification for any expired or existing lease, and (iii) did not reassess initial direct costs for any existing leases. The Company did not elect the practical expedient related to using hindsight to reevaluate the lease term. In addition, the Company adopted the practical expedient for land easements and did not assess whether existing or expired land easements that were not previously accounted for as leases under the lease accounting standards of Topic 840 are or contain a lease under Topic 842.
In addition, Topic 842 provides an optional transition method to allow entities to apply the new lease accounting standards at the adoption date and recognize a cumulative-effect adjustment to the opening balance of retained earnings. The Company adopted this transition method upon its adoption of the lease accounting standards of Topic 842, which did not result in a cumulative effect adjustment to the opening balance of retained earnings on January 1, 2019 . The Company’s comparative periods presented in the financial statements will continue to be reported under the lease accounting standards of Topic 840.
In accordance with Topic 842, tenant reimbursements for property taxes and insurance are included in the single lease component of the lease contract (the right of the lessee to use the leased space) and therefore are accounted for as variable lease payments and are recorded as rental income on the Company’s statement of operations beginning January 1, 2019 . In addition, the Company adopted the practical expedient available under Topic 842 to not separate nonlease components from the associated lease component and instead to account for those components as a single component if the nonlease components otherwise would be accounted for under the new revenue recognition standard (Topic 606) and if certain conditions are met, specifically related to tenant reimbursements for common area maintenance which would otherwise be accounted for under the revenue recognition standard. The Company believes the two conditions have been met for tenant reimbursements for common area maintenance as (i) the timing and pattern of transfer of the nonlease components and associated lease components are the same and (ii) the lease component would be classified as an operating lease. Accordingly, tenant reimbursements for common area maintenance are also accounted for as variable lease payments and recorded as rental income on the Company’s statement of operations beginning January 1, 2019 .
The Company recognizes minimum rent, including rental abatements, lease incentives and contractual fixed increases attributable to operating leases, on a straight-line basis over the term of the related leases when collectibility is probable and records amounts expected to be received in later years as deferred rent receivable. If the lease provides for tenant improvements, the Company determines whether the tenant improvements, for accounting purposes, are owned by the tenant or the Company. When the Company is the owner of the tenant improvements, the tenant is not considered to have taken physical possession or have control of the physical use of the leased asset until the tenant improvements are substantially completed. When the tenant is the owner of the tenant improvements, any tenant improvement allowance (including amounts that can be taken in the form of cash or a credit against the tenant’s rent) that is funded is treated as a lease incentive and amortized as a reduction of rental revenue over the lease term. Tenant improvement ownership is determined based on various factors including, but not limited to:
•
whether the lease stipulates how a tenant improvement allowance may be spent;
•
whether the lessee or lessor supervises the construction and bears the risk of cost overruns;
•
whether the amount of a tenant improvement allowance is in excess of market rates;
•
whether the tenant or landlord retains legal title to the improvements at the end of the lease term;
•
whether the tenant improvements are unique to the tenant or general purpose in nature; and
•
whether the tenant improvements are expected to have any residual value at the end of the lease.

8
Table of Contents
PART I.
FINANCIAL INFORMATION (CONTINUED)
Item 1.
Financial Statements (continued)
KBS STRATEGIC OPPORTUNITY REIT, INC.
CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
March 31, 2019
(unaudited)

The Company leases apartment units under operating leases with terms generally of one year or less. Generally, credit investigations will be performed for prospective residents and security deposits will be obtained. The Company recognizes rental revenue, net of concessions, on a straight-line basis over the term of the lease, when collectibility is determined to be probable.
In accordance with Topic 842, the Company makes a determination of whether the collectibility of the lease payments in an operating lease is probable. If the Company determines the lease payments are not probable of collection, the Company would fully reserve for any contractual lease payments, deferred rent receivable, and tenant reimbursements and would recognize rental income only if cash is received. Beginning January 1, 2019, these changes to the Company’s collectibility assessment are reflected as an adjustment to rental income. Prior to January 1, 2019, bad debt expense related to uncollectible accounts receivable and deferred rent receivable was included in operating, maintenance, and management expense in the statement of operations.  Any subsequent changes to the collectibility of the allowance for doubtful accounts as of December 31, 2018, which was recorded prior to the adoption of Topic 842, are recorded in operating, maintenance, and management expense in the statement of operations.
Beginning January 1, 2019 , the Company, as a lessor, records costs to negotiate or arrange a lease that would have been incurred regardless of whether the lease was obtained, such as legal costs incurred to negotiate an operating lease, as an expense and classify such costs as operating, maintenance, and management expense on the Company’s consolidated statement of operations, as these costs are no longer capitalizable under the definition of initial direct costs under Topic 842.
Segments
The Company has invested in opportunistic real estate, non-performing loans and other real estate-related assets. In general, the Company intends to hold its investments in opportunistic real estate, non-performing loans and other real estate-related assets for capital appreciation. Traditional performance metrics of opportunistic real estate, non-performing loans and other real estate-related assets may not be meaningful as these investments are generally non-stabilized and do not provide a consistent stream of interest income or rental revenue. These investments exhibit similar long-term financial performance and have similar economic characteristics. These investments typically involve a higher degree of risk and do not provide a constant stream of ongoing cash flows. As a result, the Company’s management views opportunistic real estate, non-performing loans and other real estate-related assets as similar investments. Substantially all of its revenue and net income (loss) is from opportunistic real estate, non-performing loans and other real estate-related assets, and therefore, the Company currently aggregates its operating segments into one reportable business segment.
Per Share Data
Basic net income (loss) per share of common stock is calculated by dividing net income (loss) attributable to common stockholders by the weighted-average number of shares of common stock issued and outstanding during such period. Diluted net income (loss) per share of common stock equals basic net income (loss) per share of common stock as there were no potentially dilutive securities outstanding during the three months ended March 31, 2019 and 2018 .
Distributions declared per share were $0.008600 and $0.015975 during the three months ended March 31, 2019 and 2018 , respectively.
Square Footage, Occupancy and Other Measures
Any references to square footage, occupancy or annualized base rent are unaudited and outside the scope of the Company’s independent registered public accounting firm’s review of the Company’s financial statements in accordance with the standards of the United States Public Company Accounting Oversight Board.

9
Table of Contents
PART I.
FINANCIAL INFORMATION (CONTINUED)
Item 1.
Financial Statements (continued)
KBS STRATEGIC OPPORTUNITY REIT, INC.
CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
March 31, 2019
(unaudited)

Recently Issued Accounting Standards Updates
In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses of Financial Instruments (“ASU No. 2016-13”).  ASU No. 2016-13 affects entities holding financial assets and net investments in leases that are not accounted for at fair value through net income.  The amendments in ASU No. 2016-13 require a financial asset (or a group of financial assets) measured at amortized cost basis to be presented at the net amount expected to be collected.  The allowance for credit losses is a valuation account that is deducted from the amortized cost basis of the financial asset(s) to present the net carrying value at the amount expected to be collected on the financial asset.  ASU No. 2016-13 also amends the impairment model for available-for-sale debt securities.  An entity will recognize an allowance for credit losses on available-for-sale debt securities as a contra-account to the amortized cost basis rather than as a direct reduction of the amortized cost basis of the investment, as is currently required. ASU No. 2016-13 also requires new disclosures.  For financial assets measured at amortized cost, an entity will be required to disclose information about how it developed its allowance for credit losses, including changes in the factors that influenced management’s estimate of expected credit losses and the reasons for those changes.  For financing receivables and net investments in leases measured at amortized cost, an entity will be required to further disaggregate the information it currently discloses about the credit quality of these assets by year of the asset’s origination for as many as five annual periods. For available-for-sale debt securities, an entity will be required to provide a roll-forward of the allowance for credit losses and an aging analysis for securities that are past due.  ASU No. 2016-13 is effective for annual periods beginning after December 15, 2019, including interim periods within those fiscal years.  Early adoption is permitted for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years.  The Company is still evaluating the impact of adopting ASU No. 2016-13 on its financial statements.
In August 2018, the FASB issued ASU No. 2018-13, Fair Value Measurement (Topic 820):   Disclosure Framework -Changes to the Disclosure Requirements for Fair Value Measurement (“ASU No. 2018-13”).  The primary focus of ASU 2018-13 is to improve the effectiveness of the disclosure requirements for fair value measurements. ASU No. 2018-13 removes the requirement to disclose the amount of and reasons for transfers between Level 1 and Level 2 of the fair value hierarchy, the policy for the timing of transfers between levels and the valuation processes for Level 3 fair value measurements. It also adds a requirement to disclose changes in unrealized gains and losses for the period included in other comprehensive income for recurring Level 3 fair value measurements held at the end of the reporting period and to disclose the range and weighted average of significant unobservable inputs used to develop recurring and nonrecurring Level 3 fair value measurements. For certain unobservable inputs, entities may disclose other quantitative information in lieu of the weighted average if the other quantitative information would be a more reasonable and rational method to reflect the distribution of unobservable inputs used to develop the Level 3 fair value measurement.  In addition, public entities are required to provide information about the measurement uncertainty of recurring Level 3 fair value measurements from the use of significant unobservable inputs if those inputs reasonably could have been different at the reporting date. ASU No. 2018-13 is effective for annual periods beginning after December 15, 2019, including interim periods within those fiscal years. Entities are permitted to early adopt either the entire standard or only the provisions that eliminate or modify the requirements. The amendments on changes in unrealized gains and losses, the range and weighted average of significant unobservable inputs used to develop Level 3 fair value measurements, and the narrative description of measurement uncertainty should be applied prospectively for only the most recent interim or annual period presented in the initial fiscal year of adoption. All other amendments should be applied retrospectively to all periods presented upon their effective date. The Company is still evaluating the impact of adopting ASU No. 2018-13 on its financial statements, but does not expect the adoption of ASU No. 2018-13 to have a material impact on its financial statements.

10
Table of Contents
PART I.
FINANCIAL INFORMATION (CONTINUED)
Item 1.
Financial Statements (continued)
KBS STRATEGIC OPPORTUNITY REIT, INC.
CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
March 31, 2019
(unaudited)

3.
REAL ESTATE HELD FOR INVESTMENT
As of March 31, 2019 , the Company owned six office properties, one office portfolio consisting of four office buildings and 14 acres of undeveloped land and one retail property, encompassing, in the aggregate, approximately 3.0 million rentable square feet. As of March 31, 2019 , these properties were 74% occupied. In addition, the Company owned one apartment property, containing 317 units and encompassing approximately 0.3 million rentable square feet, which was 94% occupied. The Company also owned three investments in undeveloped land with approximately 1,000 developable acres. The following table summarizes the Company’s real estate held for investment as of March 31, 2019 and December 31, 2018 , respectively (in thousands):
 
 
March 31, 2019
 
December 31, 2018
Land
 
$
150,315

 
$
148,880

Buildings and improvements
 
524,067

 
515,705

Tenant origination and absorption costs
 
31,005

 
31,584

Total real estate, cost
 
705,387

 
696,169

Accumulated depreciation and amortization
 
(52,902
)
 
(46,301
)
Total real estate, net
 
$
652,485

 
$
649,868

The following table provides summary information regarding the Company’s real estate held for investment as of March 31, 2019 (in thousands):
Property
 
Date Acquired or Foreclosed on
 
City
 
State
 
Property Type
 
Land
 
Building
and Improvements
 
Tenant Origination and Absorption
 
Total Real Estate, at Cost
 
Accumulated Depreciation and Amortization
 
Total Real Estate, Net
 
Ownership %
Richardson Portfolio:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Palisades Central I
 
11/23/2011
 
Richardson
 
TX
 
Office
 
$
1,037

 
$
10,934

 
$
—

 
$
11,971

 
$
(2,982
)
 
$
8,989

 
90.0
%
Palisades Central II
 
11/23/2011
 
Richardson
 
TX
 
Office
 
810

 
18,710

 
—

 
19,520

 
(4,631
)
 
14,889

 
90.0
%
Greenway I
 
11/23/2011
 
Richardson
 
TX
 
Office
 
561

 
2,145

 
—

 
2,706

 
(792
)
 
1,914

 
90.0
%
Greenway III
 
11/23/2011
 
Richardson
 
TX
 
Office
 
702

 
3,688

 
114

 
4,504

 
(1,273
)
 
3,231

 
90.0
%
Undeveloped Land
 
11/23/2011
 
Richardson
 
TX
 
Undeveloped Land
 
3,134

 
—

 
—

 
3,134

 
—

 
3,134

 
90.0
%
Total Richardson Portfolio
 
 
 
 
 
 
 
 
 
6,244

 
35,477

 
114

 
41,835

 
(9,678
)
 
32,157

 
 
Park Highlands (1)
 
12/30/2011
 
North Las Vegas
 
NV
 
Undeveloped Land
 
31,718

 
—

 
—

 
31,718

 
—

 
31,718

 
100.0% (1)

Burbank Collection
 
12/12/2012
 
Burbank
 
CA
 
Retail
 
4,175

 
12,322

 
302

 
16,799

 
(2,663
)
 
14,136

 
90.0
%
Park Centre
 
03/28/2013
 
Austin
 
TX
 
Office
 
3,251

 
30,160

 
—

 
33,411

 
(4,947
)
 
28,464

 
100.0
%
1180 Raymond
 
08/20/2013
 
Newark
 
NJ
 
Apartment
 
8,292

 
38,723

 
—

 
47,015

 
(6,936
)
 
40,079

 
100.0
%
Park Highlands II (1)
 
12/10/2013
 
North Las Vegas
 
NV
 
Undeveloped Land
 
26,154

 
—

 
—

 
26,154

 
—

 
26,154

 
100.0% (1)

Richardson Land II
 
09/04/2014
 
Richardson
 
TX
 
Undeveloped Land
 
3,418

 
—

 
—

 
3,418

 
—

 
3,418

 
90.0
%
Crown Pointe
 
02/14/2017
 
Dunwoody
 
GA
 
Office
 
22,590

 
65,806

 
5,085

 
93,481

 
(8,569
)
 
84,912

 
100.0
%
125 John Carpenter
 
09/15/2017
 
Irving
 
TX
 
Office
 
2,755

 
77,051

 
8,723

 
88,529

 
(6,817
)
 
81,712

 
100.0
%
The Marq (2)
 
03/01/2018
 
Minneapolis
 
MN
 
Office
 
10,387

 
76,599

 
4,271

 
91,257

 
(3,885
)
 
87,372

 
100.0
%
City Tower
 
03/06/2018
 
Orange
 
CA
 
Office
 
13,930

 
132,862

 
7,937

 
154,729

 
(7,257
)
 
147,472

 
100.0
%
Eight & Nine Corporate Centre
 
06/08/2018
 
Franklin
 
TN
 
Office
 
17,401

 
55,067

 
4,573

 
77,041

 
(2,150
)
 
74,891

 
100.0
%
 
 
 
 
 
 
 
 
 
 
$
150,315

 
$
524,067

 
$
31,005

 
$
705,387

 
$
(52,902
)
 
$
652,485

 
 
_____________________
(1) The Company owns 100% of the common members’ equity of Park Highlands and Park Highlands II. On September 7, 2016 and January 8, 2019 , a subsidiary of the Company that owns a portion of Park Highlands and Park Highlands II, sold 820 units of 10% Class A non-voting preferred membership units for $0.8 million and 1,927 units of 10% Class A2 non-voting preferred membership units for $1.9 million , respectively, to accredited investors. The amount of the Class A and A2 non-voting preferred membership units raised, net of offering costs, is included in other liabilities on the accompanying consolidated balance sheets.
(2) This property was formerly known as Marquette Plaza and was re-named The Marq in connection with the Company’s re-branding strategy for this property.

11
Table of Contents
PART I.
FINANCIAL INFORMATION (CONTINUED)
Item 1.
Financial Statements (continued)
KBS STRATEGIC OPPORTUNITY REIT, INC.
CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
March 31, 2019
(unaudited)

Operating Leases
Certain of the Company’s real estate properties are leased to tenants under operating leases for which the terms and expirations vary. As of March 31, 2019 , the leases, excluding options to extend and apartment leases, which have terms that are generally one year or less, had remaining terms of up to 13.2  years with a weighted-average remaining term of 4.9  years. Some of the leases have provisions to extend the lease agreements, options for early termination after paying a specified penalty and other terms and conditions as negotiated. The Company retains substantially all of the risks and benefits of ownership of the real estate assets leased to tenants. Generally, upon the execution of a lease, the Company requires a security deposit from tenants in the form of a cash deposit and/or a letter of credit. The amount required as a security deposit varies depending upon the terms of the respective leases and the creditworthiness of the tenant, but generally are not significant amounts. Therefore, exposure to credit risk exists to the extent that a receivable from a tenant exceeds the amount of its security deposit. Security deposits received in cash and assumed in real estate acquisitions related to tenant leases are included in other liabilities in the accompanying consolidated balance sheets and totaled $3.6 million and $3.7 million as of March 31, 2019 and December 31, 2018 , respectively.
During the three months ended March 31, 2019 and 2018 , the Company recognized deferred rent from tenants of $1.3 million and $0.7 million , respectively, net of lease incentive amortization. As of March 31, 2019 and December 31, 2018 , the cumulative deferred rent receivable balance, including unamortized lease incentive receivables, was $11.1 million and $9.8 million , respectively, and is included in rents and other receivables on the accompanying balance sheets. The cumulative deferred rent balance included $1.3 million of unamortized lease incentives as of March 31, 2019 and December 31, 2018 .
As of March 31, 2019 , the future minimum rental income from the Company’s properties, excluding apartment leases, under non-cancelable operating leases was as follows (in thousands):
April 1, 2019 through December 31, 2019
$
40,401

2020
53,226

2021
48,885

2022
42,233

2023
36,847

Thereafter
114,555

 
$
336,147

As of March 31, 2019 , the Company’s commercial real estate properties were leased to approximately 250 tenants over a diverse range of industries and geographic areas. The Company’s highest tenant industry concentrations (greater than 10% of annualized base rent) were as follows:
Industry
 
Number of Tenants
 
Annualized Base Rent (1)  
(in thousands)
 
Percentage of
Annualized Base Rent
Health Care and Social Services
 
17
 
$
7,397

 
13.2
%
Insurance
 
22
 
6,086

 
10.8
%
 
 
 
 
$
13,483

 
24.0
%
_____________________
(1) Annualized base rent represents annualized contractual base rental income as of March 31, 2019 , adjusted to straight-line any contractual tenant concessions (including free rent), rent increases and rent decreases from the lease’s inception through the balance of the lease term.

12
Table of Contents
PART I.
FINANCIAL INFORMATION (CONTINUED)
Item 1.
Financial Statements (continued)
KBS STRATEGIC OPPORTUNITY REIT, INC.
CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
March 31, 2019
(unaudited)

No other tenant industries accounted for more than 10% of annualized base rent. No material tenant credit issues have been identified at this time. During the three months ended March 31, 2019 , the Company recorded an adjustment to rental income of $0.1 million for lease payments that were deemed not probable of collection. During the three months ended March 31, 2019 and 2018 , the Company recorded bad debt recoveries of $0.2 million and $0.4 million , respectively, which were included in operating, maintenance and management expense in the accompanying consolidated statements of operations.
Geographic Concentration Risk
As of March 31, 2019 , the Company’s real estate investments in California and Texas represented 17.1% and 15.4% , respectively, of the Company’s total assets.  As a result, the geographic concentration of the Company’s portfolio makes it particularly susceptible to adverse economic developments in the California and Texas real estate markets.  Any adverse economic or real estate developments in these markets, such as business layoffs or downsizing, industry slowdowns, relocations of businesses, changing demographics and other factors, or any decrease in demand for office space resulting from the local business climate, could adversely affect the Company’s operating results and its ability to make distributions to stockholders.
Sale of Real Estate
As of December 31, 2018 and March 31, 2019 , the Company had recorded contract liabilities of $3.1 million related to deferred proceeds received from the buyers of the Park Highlands land sales and another developer for the value of land that was contributed to a master association that is consolidated by the Company, which was included in other liabilities on the accompanying consolidated balance sheets.
4.
TENANT ORIGINATION AND ABSORPTION COSTS, ABOVE-MARKET LEASE ASSETS AND BELOW-MARKET LEASE LIABILITIES
As of March 31, 2019 and December 31, 2018 , the Company’s tenant origination and absorption costs, above-market lease assets and below-market lease liabilities (excluding fully amortized assets and liabilities and accumulated amortization) were as follows (in thousands):
 
 
Tenant Origination and
Absorption Costs
 
Above-Market
Lease Assets
 
Below-Market
Lease Liabilities
 
 
March 31, 2019
 
December 31, 2018
 
March 31, 2019
 
December 31, 2018
 
March 31, 2019
 
December 31, 2018
Cost
 
$
31,005

 
$
31,584

 
$
3,714

 
$
3,714

 
$
(6,519
)
 
$
(6,653
)
Accumulated Amortization
 
(8,446
)
 
(7,421
)
 
(438
)
 
(337
)
 
1,867

 
1,648

Net Amount
 
$
22,559

 
$
24,163

 
$
3,276

 
$
3,377

 
$
(4,652
)
 
$
(5,005
)
Increases (decreases) in net income as a result of amortization of the Company’s tenant origination and absorption costs, above-market lease assets and below-market lease liabilities for the three months ended March 31, 2019 and 2018 were as follows (in thousands):
 
 
Tenant Origination and
Absorption Costs
 
Above-Market
Lease Assets
 
Below-Market
Lease Liabilities
 
 
For the Three Months Ended March 31,
 
For the Three Months Ended March 31,
 
For the Three Months Ended March 31,
 
 
2019
 
2018
 
2019
 
2018
 
2019
 
2018
Amortization
 
$
(1,604
)
 
$
(1,537
)
 
$
(101
)
 
$
(44
)
 
$
353

 
$
270


13
Table of Contents
PART I.
FINANCIAL INFORMATION (CONTINUED)
Item 1.
Financial Statements (continued)
KBS STRATEGIC OPPORTUNITY REIT, INC.
CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
March 31, 2019
(unaudited)

Additionally, as of March 31, 2019 and December 31, 2018 , the Company had recorded tax abatement intangible assets, net of amortization, on real estate held for investment, which are included in prepaid expenses and other assets in the accompanying balance sheets, of $1.4 million and $1.6 million , respectively. Also, as of December 31, 2018 , the Company had recorded tax abatement intangible assets, net of amortization, on real estate held for sale, which are included in assets related to real estate held for sale, net in the accompanying balance sheets, of $2.7 million . During each of the three months ended March 31, 2019 and 2018 , the Company recorded amortization expense of $0.2 million related to tax abatement intangible assets.
5.
REAL ESTATE EQUITY SECURITIES
As of March 31, 2019 , the Company owned three investments in real estate equity securities. The following table sets forth the number of shares owned by the Company and the related carrying value of the shares as of March 31, 2019 and December 31, 2018 (dollars in thousands):
 
 
March 31, 2019
 
December 31, 2018
Real Estate Equity Security
 
Number of Shares Owned
 
Total Carrying Value
 
Number of Shares Owned
 
Total Carrying Value
Whitestone REIT
 
95,160

 
$
1,144

 
1,781,894

 
$
21,846

Keppel-KBS US REIT
 
56,979,352

 
39,886

 
56,979,352

 
34,757

Franklin Street Properties Corp.
 
2,773,729

 
19,943

 
2,772,529

 
17,273

 
 
59,848,241

 
$
60,973

 
61,533,775

 
$
73,876

During the three months ended March 31, 2019 , the Company sold 1,686,734 shares of common stock of Whitestone REIT (NYSE Ticker: WSR) for an aggregate sale price of $24.1 million .
The following summarizes the portion of gain and loss for the period related to real estate equity securities held during the three months ended March 31, 2019 and 2018 (in thousands): 
 
 
Three Months Ended March 31,
 
 
2019
 
2018
Net  gain (loss)  recognized during the period on real estate equity securities
 
$
11,165

 
$
(16,011
)
Less net  gain recognized during the period on real estate equity securities sold during the period
 
(3,397
)
 
—

Unrealized  gain (loss)  recognized during the reporting period on real estate equity securities still held at the end of the period
 
$
7,768

 
$
(16,011
)
During the three months ended March 31, 2019 and 2018 , the Company recognized $1.8 million and $1.1 million , respectively, of dividend income from real estate equity securities.

14
Table of Contents
PART I.
FINANCIAL INFORMATION (CONTINUED)
Item 1.
Financial Statements (continued)
KBS STRATEGIC OPPORTUNITY REIT, INC.
CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
March 31, 2019
(unaudited)

6 .
REAL ESTATE DEBT SECURITIES
The information for real estate debt securities as of March 31, 2019 and December 31, 2018 is set forth below (in thousands):
Debt Securities Name
 
Dates Acquired
 
Debt Securities Type
 
Outstanding Principal Balance as of
March 31, 2019
 
Book Value as of
March 31, 2019
 
Book Value as of
December 31, 2018
 
Contractual Interest Rate
 
Annualized Effective
Interest Rate
 
Maturity Date
Battery Point Series B Preferred Units (4)
 
10/28/2016 /
03/30/2017 /
05/12/2017
 
Series B Preferred Units
 
$
—

 
$
—

 
$
10,859

 
(1)  
 
(1)  
 
(1)  
 
 
 
 
 
 
$
—

 
$
—

 
$
10,859

 
 
 
 
 
 
_____________________
(1) On March 20, 2019 , the Company, through an indirect wholly owned subsidiary, entered into a redemption agreement for the Battery Point Series B Preferred Units. The redemption agreement resulted in the redemption of 13,000 Series B Preferred Units with a per-unit price of $1,000 . The Company received $8.6 million , of which $0.9 million relates to accrued interest and an exit fee. In addition, the Company received 210,000 shares of Battery Point Series A-3 Preferred Units with a per-unit price of $25 . The Series A-3 Preferred Units were classified as an equity investment without a readily determinable fair value (see note 12 “Investment in Unconsolidated Joint Ventures” for further information).
The following summarizes the activity related to real estate debt securities for the three months ended March 31, 2019 (in thousands): 
Real estate debt securities - December 31, 2018
 
$
10,859

Principal repayment of Series B Preferred Units
 
(7,750
)
Redemptions of Series B Preferred Units in exchange for Series A-3 Preferred Units
 
(2,992
)
Receipt of deferred interest receivable
 
(130
)
Deferred interest receivable
 
4

Accretion of commitment fee, net of closing costs
 
9

Real estate debt securities - March 31, 2019
 
$
—

For the three months ended March 31, 2019 and 2018 , interest income from real estate debt securities consisted of the following (in thousands):
 
 
Three Months Ended March 31,
 
 
2019
 
2018
Contractual interest income
 
$
356

 
$
394

Interest accretion
 
4

 
96

Accretion of commitment fee, net of closing costs and acquisition fee
 
9

 
11

Interest income from real estate debt securities
 
$
369

 
$
501


15
Table of Contents
PART I.
FINANCIAL INFORMATION (CONTINUED)
Item 1.
Financial Statements (continued)
KBS STRATEGIC OPPORTUNITY REIT, INC.
CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
March 31, 2019
(unaudited)

7 .
REAL ESTATE SALES
During the three months ended March 31, 2019 , the Company disposed of one apartment property. During the year ended December 31, 2018 , the Company disposed of one office building and one office/flex/industrial portfolio consisting of 21 buildings.
On November 12, 2013, the Company, through an indirect wholly owned subsidiary, and EE 424 Bedford OM, LLC entered into an agreement to form a joint venture (the “424 Bedford Joint Venture”), and on January 31, 2014, the 424 Bedford Joint Venture acquired an apartment building containing 66 units in Brooklyn, New York (“424 Bedford”). On January 11, 2019, the 424 Bedford Joint Venture sold 424 Bedford to a purchaser unaffiliated with the Company or the Advisor, for $43.8 million before closing costs and credits. The carrying value of 424 Bedford as of the disposition date was $34.0 million , which was net of $5.3 million of accumulated depreciation and amortization. The Company recognized a gain on sale of $7.6 million related to the disposition of 424 Bedford.
The following summary presents the major components of assets and liabilities related to real estate held for sale as of March 31, 2019 and December 31, 2018 (in thousands):
 
March 31, 2019
 
December 31, 2018
Assets related to real estate held for sale
 
 
 
Real estate, cost
$
—

 
$
34,793

Accumulated depreciation and amortization
—

 
(3,541
)
Real estate, net
—

 
31,252

Other assets
—

 
2,746

Total assets related to real estate held for sale
$
—

 
$
33,998

Liabilities related to real estate held for sale
 
 
 
Notes payable, net
—

 
22,845

Total liabilities related to real estate held for sale
$
—

 
$
22,845

The operations of these properties and gain on sales are included in continuing operations on the accompanying statements of operations. The following table summarizes certain revenue and expenses related to these properties for the three months ended March 31, 2019 and 2018 (in thousands):
 
 
Three Months Ended March 31,
 
 
2019
 
2018
Revenues
 
 
 
 
Rental income
 
$
121

 
$
5,221

Total revenues
 
$
121

 
$
5,221

Expenses
 
 
 
 
Operating, maintenance, and management
 
$
(83
)
 
$
1,118

Real estate taxes and insurance
 
(67
)
 
447

Asset management fees to affiliate
 
76

 
462

Depreciation and amortization
 
15

 
2,623

Interest expense
 
35

 
1,497

Total expenses
 
$
(24
)
 
$
6,147


16
Table of Contents
PART I.
FINANCIAL INFORMATION (CONTINUED)
Item 1.
Financial Statements (continued)
KBS STRATEGIC OPPORTUNITY REIT, INC.
CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
March 31, 2019
(unaudited)

8.
NOTES AND BONDS PAYABLE
As of March 31, 2019 and December 31, 2018 , the Company’s notes and bonds payable, including notes payable related to real estate held for sale, consisted of the following (dollars in thousands):
 
Book Value as of
March 31, 2019
 
Book Value as of
December 31, 2018
 
Contractual Interest Rate as of  March 31, 2019 (1)
 
Effective Interest Rate at
March 31, 2019 (1)
 
Payment Type
 
Maturity Date (2)
Richardson Portfolio Mortgage Loan
$
36,000

 
$
36,000

 
One-Month LIBOR + 2.50%
 
4.99%
 
Interest Only (3)
 
11/01/2021
Park Centre Mortgage Loan
8,035

 
8,404

 
One-Month LIBOR + 2.25%
 
4.74%
 
Principal & Interest
 
07/01/2019
Burbank Collection Mortgage Loan
10,656

 
10,716

 
One-Month LIBOR + 2.35%
 
4.85%
 
Principal & Interest
 
09/30/2019
1180 Raymond Mortgage Loan
30,542

 
30,637

 
One-Month LIBOR + 2.25%
 
4.74%
 
Principal & Interest
 
12/01/2019
1180 Raymond Bond Payable
6,230

 
6,280

 
6.50%
 
6.50%
 
Principal & Interest
 
09/01/2036
424 Bedford Mortgage Loan (4)  
—

 
23,710

 
(4)  
 
(4)  
 
(4)  
 
(4)  
KBS SOR (BVI) Holdings, Ltd. Series A Debentures (5)
213,630

 
259,516

 
4.25%
 
4.25%
 
(5)  
 
03/01/2023
Crown Pointe Mortgage Loan
51,171

 
51,171

 
One-Month LIBOR + 2.60%
 
5.09%
 
Interest Only
 
02/13/2020
125 John Carpenter Mortgage Loan
53,204

 
53,204

 
One-Month LIBOR + 1.75%
 
4.24%
 
Interest Only
 
10/01/2022
City Tower Mortgage Loan
89,000

 
89,000

 
One-Month LIBOR + 1.55%
 
4.04%
 
Interest Only
 
03/05/2021
The Marq Mortgage Loan
53,408

 
50,800

 
One-Month LIBOR + 1.55%
 
4.04%
 
Interest Only
 
06/06/2021
Eight & Nine Corporate Centre Mortgage Loan
43,880

 
43,880

 
One-Month LIBOR + 1.60%
 
4.09%
 
Interest Only
 
06/08/2021
Total Notes and Bonds Payable principal outstanding
595,756

 
663,318

 
 
 
 
 
 
 
 
Net Premium/(Discount) on Notes and Bonds Payable (6)
862

 
198

 
 
 
 
 
 
 
 
Deferred financing costs, net
(7,010
)
 
(8,044
)
 
 
 
 
 
 
 
 
Total Notes and Bonds Payable, net
$
589,608

 
$
655,472

 
 
 
 
 
 
 
 
_____________________
(1) Contractual interest rate represents the interest rate in effect under the loan as of March 31, 2019 . Effective interest rate is calculated as the actual interest rate in effect as of March 31, 2019 (consisting of the contractual interest rate and contractual floor rates), using interest rate indices at March 31, 2019 , where applicable.
(2) Represents the initial maturity date or the maturity date as extended as of March 31, 2019 ; subject to certain conditions, the maturity dates of certain loans may be extended beyond the date shown.
(3) Represents the payment type required under the loan as of March 31, 2019 . Certain future monthly payments due under this loan also include amortizing principal payments. For more information of the Company’s contractual obligations under its notes and bonds payable, see five-year maturity table below.
(4) On January 11, 2019, in connection with the disposition of 424 Bedford, the buyer assumed the mortgage loan secured by 424 Bedford with an outstanding principal balance of $23.7 million at the time of the sale.
(5) See “ – Israeli Bond Financing” below.
(6) Represents the unamortized premium/discount on notes and bonds payable due to the above- and below-market interest rates when the debt was assumed. The discount/premium is amortized over the remaining life of the notes and bonds payable.
During the three months ended March 31, 2019 and 2018 , the Company incurred $7.2 million and $6.6 million , respectively, of interest expense. Included in interest expense for the three months ended March 31, 2019 and 2018 was $0.9 million and $0.8 million , respectively, of amortization of deferred financing costs. Additionally, during the three months ended March 31, 2019 and 2018 , the Company capitalized $0.7 million and $0.6 million , respectively, of interest related to its investments in undeveloped land.

17
Table of Contents
PART I.
FINANCIAL INFORMATION (CONTINUED)
Item 1.
Financial Statements (continued)
KBS STRATEGIC OPPORTUNITY REIT, INC.
CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
March 31, 2019
(unaudited)

As of March 31, 2019 and December 31, 2018 , the Company’s interest payable was $2.3 million and $5.2 million , respectively.
The following is a schedule of maturities, including principal amortization payments, for all notes and bonds payable outstanding as of March 31, 2019 (in thousands):
April 1, 2019 through December 31, 2019
 
$
49,383

2020
 
104,932

2021
 
275,773

2022
 
106,851

2023
 
53,662

Thereafter
 
5,155

 
 
$
595,756

The Company’s notes payable contain financial debt covenants. As of March 31, 2019 , the Company was in compliance with all of these debt covenants.
Israeli Bond Financing
On March 2, 2016, KBS Strategic Opportunity BVI, a wholly owned subsidiary of the Company, filed a final prospectus with the Israel Securities Authority for a proposed offering of up to 1,000,000,000 Israeli new Shekels of the Debentures at an annual interest rate not to exceed 4.25% . On March 1, 2016, KBS Strategic Opportunity BVI commenced the institutional tender of the Debentures and accepted application for 842.5 million Israeli new Shekels. On March 7, 2016, KBS Strategic Opportunity BVI commenced the public tender of the Debentures and accepted 127.7 million Israeli new Shekels.  In the aggregate, KBS Strategic Opportunity BVI accepted 970.2 million Israeli new Shekels (approximately $249.2 million as of March 8, 2016 ) in both the institutional and public tenders at an annual interest rate of 4.25% .  KBS Strategic Opportunity BVI issued the Debentures on March 8, 2016. The terms of the Debentures require five equal annual installment principal payments on March 1st of each year from 2019 to 2023. On March 1, 2019 , the Company paid the first principal installment payment of 194.0 million Israeli new Shekels (approximately $53.6 million as of March 1, 2019 ). As of March 31, 2019 , the Company had one foreign currency collar for an aggregate notional amount of 776.2 million Israeli new Shekels to hedge its exposure to foreign currency exchange rate movements. See note 9 , “Derivative Instruments” for a further discussion on the Company’s foreign currency collar.
The deed of trust that governs the terms of the Debentures contains various financial covenants. As of March 31, 2019 , the Company was in compliance with all of these financial debt covenants.
9 .
DERIVATIVE INSTRUMENTS
The Company enters into derivative instruments for risk management purposes to hedge its exposure to cash flow variability caused by changing interest rates and foreign currency exchange rate movements. The primary goal of the Company’s risk management practices related to interest rate risk is to prevent changes in interest rates from adversely impacting the Company’s ability to achieve its investment return objectives. The Company does not enter into derivatives for speculative purposes.
The Company enters into foreign currency options and foreign currency collars to mitigate its exposure to foreign currency exchange rate movements on its bonds payable outstanding denominated in Israeli new Shekels. A foreign currency collar consists of a purchased call option to buy and a sold put option to sell Israeli new Shekels. A foreign currency collar guarantees that the exchange rate of the currency will not fluctuate beyond the range of the options’ strike prices. A foreign currency option consists of a call option to buy Israeli new Shekels.

18
Table of Contents
PART I.
FINANCIAL INFORMATION (CONTINUED)
Item 1.
Financial Statements (continued)
KBS STRATEGIC OPPORTUNITY REIT, INC.
CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
March 31, 2019
(unaudited)

The following table summarizes the notional amount and other information related to the Company’s foreign currency collar as of March 31, 2019 and December 31, 2018 . The notional amount is an indication of the extent of the Company’s involvement in each instrument at that time, but does not represent exposure to credit, interest rate or market risks (currency in thousands):
 
 
March 31, 2019
 
December 31, 2018
 
Strike Price
 
Trade Date
 
Maturity Date
Derivative Instruments
 
Number of Instruments
 
Notional Amount
 
Number of Instruments
 
Notional Amount
 
 
 
Derivative instruments not designated as hedging instruments
 
 
 
 
 
 
 
 
 
 
Foreign currency collar
 
1
 
776,182
 ILS
 
—
 
—

 
3.49 - 3.62 ILS - USD
 
02/27/2019
 
08/23/2019
Foreign currency collar
 
—
 
—

 
1
 
776,182
 ILS
 
3.54 - 3.66 ILS - USD
 
08/20/2018
 
02/28/2019
The Company enters into interest rate caps to mitigate its exposure to rising interest rates on its variable rate notes payable. The values of interest rate caps are primarily impacted by interest rates, market expectations about interest rates, and the remaining life of the instrument. In general, increases in interest rates, or anticipated increases in interest rates, will increase the value of interest rate caps. As the remaining life of an interest rate cap decreases, the value of the instrument will generally decrease towards zero.
As of March 31, 2019 , the Company had entered into two interest rate caps, which were not designated as a hedging instruments. The following table summarizes the notional amounts and other information related to the Company’s derivative instruments as of March 31, 2019 . The notional amount is an indication of the extent of the Company’s involvement in the instrument at that time, but does not represent exposure to credit, interest rate or market risks (dollars in thousands):
Derivative Instrument
 
Effective Date
 
Maturity Date
 
Notional Value
 
Reference Rate
Interest rate cap
 
02/21/2017
 
02/13/2020
 
$
46,875

 
One-month LIBOR at 3.00%
Interest rate cap
 
04/02/2018
 
03/05/2021
 
$
77,513

 
One-month LIBOR at 3.50%
The following table sets forth the fair value of the Company’s derivative instruments as well as their classification on the consolidated balance sheets as of March 31, 2019 and December 31, 2018 (dollars in thousands):
 
 
 
 
March 31, 2019
 
December 31, 2018
Derivative Instruments
 
Balance Sheet Location
 
Number of Instruments
 
Fair Value
 
Number of Instruments
 
Fair Value
Derivative instruments not designated as hedging instruments
 
 
 
 
 
 
 
 
Interest rate caps
 
Prepaid expenses and other assets
 
2
 
$
4

 
2
 
$
34

Foreign currency collar
 
Other liabilities
 
1
 
$
(1,405
)
 
1
 
$
(4,393
)
The change in fair value of foreign currency options and collars that are not designated as cash flow hedges are recorded as foreign currency transaction gains or losses in the accompanying consolidated statements of operations. During the three months ended March 31, 2019 , the Company recognized a $3.0 million gain related to the foreign currency collars, which is shown net against $5.8 million of foreign currency transaction loss in the accompanying consolidated statements of operations as foreign currency transaction loss , net. During the three months ended March 31, 2018 , the Company recognized a $2.0 million loss related to a foreign currency option, which is shown net against $1.0 million of foreign currency transaction gain in the accompanying consolidated statements of operations as foreign currency transaction loss , net.

19
Table of Contents
PART I.
FINANCIAL INFORMATION (CONTINUED)
Item 1.
Financial Statements (continued)
KBS STRATEGIC OPPORTUNITY REIT, INC.
CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
March 31, 2019
(unaudited)

During the three months ended March 31, 2019 , the Company recorded an unrealized loss of $30,000 on interest rate caps, which was included in interest expense on the accompanying consolidated statements of operations. During the three months ended March 31, 2018 , the Company recorded an unrealized gain of $31,000 on interest rate caps, which was included as an offset to interest expense on the accompanying consolidated statements of operations.
10.
FAIR VALUE DISCLOSURES
Under GAAP, the Company is required to measure certain financial instruments at fair value on a recurring basis. In addition, the Company is required to measure other non-financial and financial assets at fair value on a non-recurring basis (e.g., carrying value of impaired real estate loans receivable and long-lived assets). Fair value is defined as the price that would be received upon the sale of an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The GAAP fair value framework uses a three-tiered approach. Fair value measurements are classified and disclosed in one of the following three categories:
•
Level 1: unadjusted quoted prices in active markets that are accessible at the measurement date for identical assets or liabilities;
•
Level 2: quoted prices for similar instruments in active markets, quoted prices for identical or similar instruments in markets that are not active, and model-derived valuations in which significant inputs and significant value drivers are observable in active markets; and
•
Level 3: prices or valuation techniques where little or no market data is available that requires inputs that are both significant to the fair value measurement and unobservable.
The fair value for certain financial instruments is derived using valuation techniques that involve significant management judgment. The price transparency of financial instruments is a key determinant of the degree of judgment involved in determining the fair value of the Company’s financial instruments. Financial instruments for which actively quoted prices or pricing parameters are available and for which markets contain orderly transactions will generally have a higher degree of price transparency than financial instruments for which markets are inactive or consist of non-orderly trades. The Company evaluates several factors when determining if a market is inactive or when market transactions are not orderly. The following is a summary of the methods and assumptions used by management in estimating the fair value of each class of financial instruments for which it is practicable to estimate the fair value:
Cash and cash equivalents, restricted cash, rent and other receivables and accounts payable and accrued liabilities: These balances approximate their fair values due to the short maturities of these items.
Real estate equity securities : The Company’s real estate equity securities are presented at fair value on the accompanying consolidated balance sheet. The fair values of the real estate equity securities were based on quoted prices in an active market on a major stock exchange. The Company classifies these inputs as Level 1 inputs.
Real estate debt securities : The Company’s real estate debt securities are presented in the accompanying consolidated balance sheets at their amortized cost net of recorded loss reserves (if any) and not at fair value.  The fair value of real estate debt securities was estimated using an internal valuation model that considers the expected cash flows for the debt securities, underlying collateral values (for collateral dependent securities) and estimated yield requirements of institutional investors for real estate debt securities with similar characteristics, including remaining term, type of collateral and other credit enhancements.  The Company classifies these inputs as Level 3 inputs.

20
Table of Contents
PART I.
FINANCIAL INFORMATION (CONTINUED)
Item 1.
Financial Statements (continued)
KBS STRATEGIC OPPORTUNITY REIT, INC.
CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
March 31, 2019
(unaudited)

Notes and bonds payable: The fair values of the Company’s notes and bonds payable are estimated using a discounted cash flow analysis based on management’s estimates of current market interest rates for instruments with similar characteristics, including remaining loan term, loan-to-value ratio, type of collateral and other credit enhancements. Additionally, when determining the fair value of liabilities in circumstances in which a quoted price in an active market for an identical liability is not available, the Company measures fair value using (i) a valuation technique that uses the quoted price of the identical liability when traded as an asset or quoted prices for similar liabilities or similar liabilities when traded as assets or (ii) another valuation technique that is consistent with the principles of fair value measurement, such as the income approach or the market approach. The Company classifies these inputs as Level 3 inputs. The Company’s bonds issued in Israel are publicly traded on the Tel-Aviv Stock Exchange. The Company used the quoted price as of March 31, 2019 for the fair value of its bonds issued in Israel. The Company classifies this input as a Level 1 input.
Derivative instruments : The Company’s derivative instruments are presented at fair value on the accompanying consolidated balance sheets.  The valuation of these instruments is determined using a proprietary model that utilizes observable inputs.  As such, the Company classifies these inputs as Level 2 inputs. The fair value of interest rate caps (floors) are determined using the market standard methodology of discounting the future expected cash payments (receipts) which would occur if variable interest rates rise above (below) the strike rate of the caps (floors). The variable interest rates used in the calculation of projected payments (receipts) on the cap (floor) are based on an expectation of future interest rates derived from observed market interest rate curves and volatilities. The fair value of foreign currency option and collar is based on a Black-Scholes model tailored for currency derivatives.
The following were the face values, carrying amounts and fair values of the Company’s financial instruments as of March 31, 2019 and December 31, 2018 , which carrying amounts do not approximate the fair values (in thousands):
 
 
March 31, 2019
 
December 31, 2018
 
 
Face Value
 
Carrying Amount
 
Fair Value
 
Face Value
 
Carrying Amount
 
Fair Value
Financial assets:
 
 
 
 
 
 
 
 
 
 
 
 
Real estate debt securities (1)
 
$
—

 
$
—

 
$
—

 
$
13,000

 
$
10,859

 
$
10,859

Financial liabilities:
 
 
 
 
 
 
 
 
 
 
 
 
Notes and bond payable
 
$
382,126

 
$
380,029

 
$
385,153

 
$
403,802

 
$
400,470

 
$
407,449

KBS SOR (BVI) Holdings, Ltd. Series A Debentures
 
$
213,630

 
$
209,579

 
$
213,301

 
$
259,516

 
$
255,002

 
$
255,814

_____________________
(1) Carrying amount of real estate debt securities includes other-than-temporary impairment.
Disclosure of the fair value of financial instruments is based on pertinent information available to the Company as of the period end and requires a significant amount of judgment. This has made the estimation of fair values difficult and, therefore, both the actual results and the Company’s estimate of value at a future date could be materially different.
As of March 31, 2019 , the Company measured the following assets at fair value (in thousands):
 
 
 
 
Fair Value Measurements Using
 
 
Total
 
Quoted Prices in Active Markets for Identical Assets
(Level 1)
 
Significant Other Observable Inputs
(Level 2)
 
Significant Unobservable Inputs
(Level 3)
Recurring Basis:
 
 
 
 
 
 
 
 
Real estate equity securities
 
$
60,973

 
$
60,973

 
$
—

 
$
—

Asset derivative - interest rate caps
 
$
4

 
$
—

 
$
4

 
$
—

Liability derivative - foreign currency collar
 
$
(1,405
)
 
$
—

 
$
(1,405
)
 
$
—


21
Table of Contents
PART I.
FINANCIAL INFORMATION (CONTINUED)
Item 1.
Financial Statements (continued)
KBS STRATEGIC OPPORTUNITY REIT, INC.
CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
March 31, 2019
(unaudited)

11 .
RELATED PARTY TRANSACTIONS
The Advisory Agreement entitles the Advisor to specified fees upon the provision of certain services with regard to the investment of funds in real estate and real estate-related investments and the disposition of real estate and real estate-related investments (including the discounted payoff of non-performing loans) among other services, as well as reimbursement of certain costs incurred by the Advisor in providing services to the Company. The Advisory Agreement may also entitle the Advisor to certain back-end cash flow participation fees. The Company also entered into a fee reimbursement agreement (the “AIP Reimbursement Agreement”) with KBS Capital Markets Group LLC, the dealer manager for the Company’s initial public offering (the “Dealer Manager”), pursuant to which the Company agreed to reimburse the Dealer Manager for certain fees and expenses it incurs for administering the Company’s participation in the Depository Trust & Clearing Corporation Alternative Investment Product Platform with respect to certain accounts of the Company’s investors serviced through the platform. The Advisor and Dealer Manager also serve as, or previously served as, the advisor and dealer manager, respectively, for KBS Real Estate Investment Trust, Inc. (“KBS REIT I”), KBS Real Estate Investment Trust II, Inc. (“KBS REIT II”), KBS Real Estate Investment Trust III, Inc. (“KBS REIT III”), KBS Legacy Partners Apartment REIT, Inc. (“KBS Legacy Partners Apartment REIT”), KBS Strategic Opportunity REIT II, Inc. (“KBS Strategic Opportunity REIT II”) and KBS Growth & Income REIT, Inc. (“KBS Growth & Income REIT”).
On January 6, 2014, the Company, together with KBS REIT I, KBS REIT II, KBS REIT III, KBS Legacy Partners Apartment REIT, KBS Strategic Opportunity REIT II, the Dealer Manager, the Advisor and other KBS-affiliated entities, entered into an errors and omissions and directors and officers liability insurance program where the lower tiers of such insurance coverage are shared. The cost of these lower tiers is allocated by the Advisor and its insurance broker among each of the various entities covered by the program, and is billed directly to each entity. In June 2015, KBS Growth & Income REIT was added to the insurance program at terms similar to those described above. KBS REIT I elected to cease participation in the program at the June 2017 renewal and obtained separate insurance coverage. At renewal in June 2018, the Company, KBS Strategic Opportunity REIT II and KBS Legacy Partners Apartment REIT elected to cease participation in the program and obtain separate insurance coverage. The Company, together with KBS Strategic Opportunity REIT II, entered into an errors and omissions and directors and officers liability insurance program where the lower tiers of such insurance coverage are shared. The cost of these lower tiers is allocated by the Advisor and its insurance broker among each REIT covered by the program, and is billed directly to each REIT. The program is effective through June 30, 2019.
During the three months ended March 31, 2019 and 2018 , no other business transactions occurred between the Company and these other KBS-sponsored programs.
Pursuant to the terms of these agreements, summarized below are the related-party costs incurred by the Company for the three months ended March 31, 2019 and 2018 , respectively, and any related amounts payable as of March 31, 2019 and December 31, 2018 (in thousands):
 
Incurred
 
Payable as of
 
Three Months Ended March 31,
 
March 31, 2019
 
December 31, 2018
 
2019
 
2018
 
 
Expensed
 
 
 
 
 
 
 
Asset management fees
$
1,891

 
$
1,825

 
$
—

 
$
—

Reimbursable operating expenses (1)
89

 
83

 
82

 
29

Disposition fees (2)
394

 
—

 
—

 
—

Capitalized
 
 
 
 
 
 
 
Acquisition fees on real estate
—

 
2,360

 
—

 
—

Acquisition fees on real estate equity securities
—

 
148

 
—

 
7

 
$
2,374

 
$
4,416

 
$
82

 
$
36


22
Table of Contents
PART I.
FINANCIAL INFORMATION (CONTINUED)
Item 1.
Financial Statements (continued)
KBS STRATEGIC OPPORTUNITY REIT, INC.
CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
March 31, 2019
(unaudited)

_____________________
(1) The Advisor may seek reimbursement for certain employee costs under the Advisory Agreement. The Company has reimbursed the Advisor for the Company’s allocable portion of the salaries, benefits and overhead of internal audit department personnel providing services to the Company. These amounts totaled $71,000 and $83,000 for the three months ended March 31, 2019 and 2018 , respectively, and were the only employee costs reimbursed under the Advisory Agreement during these periods. The Company will not reimburse for employee costs in connection with services for which the Advisor earns acquisition, origination or disposition fees (other than reimbursement of travel and communication expenses) or for the salaries or benefits the Advisor or its affiliates may pay to the Company’s executive officers. In addition to the amounts above, the Company reimburses the Advisor for certain of the Company’s direct costs incurred from third parties that were initially paid by the Advisor on behalf of the Company.
(2) Disposition fees with respect to real estate sold are included in the gain on sale of real estate in the accompanying consolidated statements of operations.
On November 8, 2017, the Company sold 11 of its properties to various subsidiaries of Keppel-KBS US REIT (the “SREIT”). On November 30, 2018, the Company sold a portfolio of 21 office/flex/industrial buildings to the SREIT. The SREIT is externally managed by a joint venture (the “Manager”) between (i) an entity in which Keith D. Hall, the Company’s Chief Executive Officer and a director, and Peter McMillan III, the Company’s President and Chairman of the board of directors, have an indirect ownership interest and (ii) Keppel Capital Holding Pte. Ltd., which is not affiliated with the Company. The SREIT is expected to pay certain purchase and sale commissions and asset management fees to the Manager in exchange for the provision of certain management services.
On March 20, 2019, Pacific Oak Battery Point Holdings, LLC, a real estate asset management company formed in 2019, and its family of companies (collectively, “Pacific Oak”), acquired all the common equity interests in BPT Holdings, LLC (“Battery Point Holdings”). Battery Point Holdings owns (a) the common stock in Battery Point Trust, Inc. (“Battery Point”), (b) all the service entities that provide advisory, servicing and property management services to Battery Point Holdings generally named “DayMark”, and (c) 40% of additional DayMark entities that purchase, renovate, lease and sell single-family residential homes to Battery Point. As owner of Battery Point Holdings, Pacific Oak will be responsible for funding the ongoing operations of Battery Point Holdings and its subsidiaries. The affiliated DayMark service entities will be paid annual asset management fees equal to 1.5% of the gross asset value of Battery Point, annual property management fees equal to 8% of tenants’ rents received by Battery Point, and acquisition fees of 1% of the gross purchase price of properties acquired. The affiliated DayMark service entities will also receive fees from tenants upon execution of leases and a 1% commission from sellers of properties into the program, if it acts as the broker for the seller.
Pacific Oak is a group of companies founded and owned by Keith D. Hall, the Company’s Chief Executive Officer and a director, and Peter McMillan III, the Company’s President and Chairman of the Board of Directors. As of March 31, 2019 , the Company had 210,000 shares of Battery Point Series A-3 Preferred Units with a per-unit price of $25 .
12 .
INVESTMENT IN UNCONSOLIDATED JOINT VENTURES
As of March 31, 2019 and December 31, 2018 , the Company’s investments in unconsolidated joint ventures were composed of the following (dollars in thousands):
 
 
Number of Properties at March 31, 2019
 
 
 
 
 
Investment Balance at
Joint Venture
 
 
Location
 
Ownership %
 
March 31, 2019
 
December 31, 2018
NIP Joint Venture
 
2
 
Various
 
Less than 5.0%
 
$
1,476

 
$
1,476

110 William Joint Venture
 
1
 
New York, New York
 
60.0%
 
—

 
325

353 Sacramento Joint Venture
 
1
 
San Francisco, California
 
55.0%
 
42,905

 
43,068

Battery Point Series A-3 Preferred Units
 
N/A
 
N/A
 
N/A
 
2,992

 
—

 
 
 
 
 
 
 
 
$
47,373

 
$
44,869


23
Table of Contents
PART I.
FINANCIAL INFORMATION (CONTINUED)
Item 1.
Financial Statements (continued)
KBS STRATEGIC OPPORTUNITY REIT, INC.
CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
March 31, 2019
(unaudited)

Investment in National Industrial Portfolio Joint Venture
On May 18, 2012, the Company, through an indirect wholly owned subsidiary, entered into a joint venture (the “NIP Joint Venture”) with OCM NIP JV Holdings, L.P. and HC KBS NIP JV, LLC (“HC-KBS”). The NIP Joint Venture has invested in a portfolio of industrial properties. The Company made an initial capital contribution of $8.0 million , which represents less than a 5.0% ownership interest in the NIP Joint Venture as of March 31, 2019 .
Prior to January 17, 2018, KBS REIT I, an affiliate of the Advisor, was a member of HC-KBS and had a participation interest in certain future potential profits generated by the NIP Joint Venture.  However, KBS REIT I did not have any equity interest in the NIP Joint Venture. On January 17, 2018, KBS REIT I assigned its participation interest in the NIP Joint Venture to one of the other joint venture partners in the NIP Joint Venture. None of the other joint venture partners are affiliated with the Company or the Advisor.
During the three months ended March 31, 2019 , the Company did no t receive any distributions related to its investment in the NIP Joint Venture. During the three months ended March 31, 2018 , the Company received a distribution of $0.4 million related to its investment in the NIP Joint Venture. The Company recognized $0.1 million of income distributions and $0.3 million of return of capital from the NIP Joint Venture.
Investment in 110 William Joint Venture
On December 23, 2013, the Company, through an indirect wholly owned subsidiary, entered into an agreement with SREF III 110 William JV, LLC (the “110 William JV Partner”) to form a joint venture (the “110 William Joint Venture”). On May 2, 2014, the 110 William Joint Venture acquired an office property containing 928,157 rentable square feet located on approximately 0.8 acres of land in New York, New York (“110 William Street”). Each of the Company and the 110 William JV Partner hold a 60% and 40% ownership interest in the 110 William Joint Venture, respectively.
The Company exercises significant influence over the operations, financial policies and decision making with respect to the 110 William Joint Venture but significant decisions require approval from both members. Accordingly, the Company has accounted for its investment in the 110 William Joint Venture under the equity method of accounting. Income, losses, contributions and distributions are generally allocated based on the members’ respective equity interests.
As of December 31, 2018 , the book value of the Company’s investment in the 110 William Joint Venture was $0.3 million , which includes $1.4 million of unamortized acquisition fees and expenses incurred directly by the Company. During the three months ended March 31, 2018 , the Company recorded $1.5 million equity in loss from the 110 William Joint Venture. During the three months ended March 31, 2018 , the Company did no t receive any distributions related to its investment in the 110 William Joint Venture.
As of March 31, 2019 , the book value of the Company’s investment in the 110 William Joint Venture was $0 . During the three months ended March 31, 2019 , the Company recorded $7.5 million equity in income from the 110 William Joint Venture, which includes a $7.8 million gain related to a distribution received, net of the Company’s share of net losses of $0.3 million . During the three months ended March 31, 2019 , the 110 William Joint Venture made a $7.8 million distribution to the Company and a $5.2 million distribution to the 110 William JV Partner funded with proceeds from the 110 William refinancing (discussed below). The distribution exceeded the book value of the Company’s investment in the 110 William Joint Venture, and the Company recorded the $7.8 million distribution as a gain included in equity in income of unconsolidated joint ventures during the three months ended March 31, 2019 . This gain was recorded because the Company determined that the distribution is not refundable and it does not have an implicit or explicit commitment to fund the 110 William Joint Venture. The Company will suspend the equity method of accounting and will not record the Company's share of losses and will not record the Company's share of any subsequent income for the 110 William Joint Venture until the Company’s share of net income exceeds the gain recorded and the Company’s share of the net losses not recognized during the period the equity method was suspended.

24
Table of Contents
PART I.
FINANCIAL INFORMATION (CONTINUED)
Item 1.
Financial Statements (continued)
KBS STRATEGIC OPPORTUNITY REIT, INC.
CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
March 31, 2019
(unaudited)

Summarized financial information for the 110 William Joint Venture follows (in thousands):
 
 
March 31, 2019
 
December 31, 2018
Assets:
 
 
 
 
       Real estate assets, net of accumulated depreciation and amortization
 
$
239,748

 
$
235,613

       Other assets
 
28,379

 
37,337

       Total assets
 
$
268,127

 
$
272,950

Liabilities and equity:
 
 
 
 
       Notes payable, net
 
$
276,215

 
$
267,311

       Other liabilities
 
9,616

 
7,485

       Partners’  deficit
 
(17,704
)
 
(1,846
)
Total liabilities and equity
 
$
268,127

 
$
272,950

 
 
Three Months Ended March 31,
 
 
2019
 
2018
Revenues
 
$
8,259

 
$
9,809

Expenses:
 
 
 
 
       Operating, maintenance, and management
 
2,171

 
2,466

       Real estate taxes and insurance
 
1,706

 
1,635

       Depreciation and amortization
 
2,665

 
4,219

       Interest expense
 
4,608

 
4,117

Total expenses
 
11,150

 
12,437

Total other income
 
33

 
13

Net loss
 
$
(2,858
)
 
$
(2,615
)
Company’s share of net loss (1)
 
$
(1,715
)
 
$
(1,569
)
_____________________
(1) During the three months ended March 31, 2019 , the Company recorded a $0.3 million of net losses in equity in income of unconsolidated joint ventures and suspended the recording of the Company’s remaining share of net losses.
110 William Street Refinancing
On March 7, 2019, the 110 William Joint Venture closed on refinancing of the 110 William Street existing loans (the “Refinancing”). The 110 William Joint Venture repaid $268.0 million of principal related to the existing 110 William Street loans. The Refinancing is comprised of a mortgage loan with Invesco CMI Investments, L.P., an unaffiliated lender, for borrowings of up to $261.4 million , which is secured by 110 William Street (the “110 William Street Mortgage Loan”) and a mezzanine loan with Invesco CMI Investments, L.P., an unaffiliated lender, for borrowings of up to $87.1 million (the “110 William Street Mezzanine Loan”). The 110 William Street Mortgage Loan is comprised of a senior mortgage loan of $215.5 million (the “Senior Mortgage Loan”) and an amended and restated building loan of $45.9 million (the “Building Loan”) to be use for future tenant improvements, leasing commissions and capital expenditures.
The 110 William Street Mortgage Loan and the 110 William Street Mezzanine Loan mature on April 9, 2021, with three one -year extension options. The 110 William Street Mortgage Loan bears interest at a rate of the greater of (a) 3.5% or (b) 150 basis points over one-month LIBOR. The 110 William Street Mezzanine Loan bears interest at a rate of the greater of (a) 6.9% or (b) 490 basis points over one-month LIBOR. The 110 William Joint Venture entered into an interest rate cap that effectively limits one-month LIBOR at 3.75% on $348.5 million , effective March 7, 2019 through March 15, 2021. The 110 William Street Mortgage Loan and the 110 William Street Mezzanine Loan have monthly payments that are interest-only with the entire unpaid principal balance and all outstanding interest and fees due at maturity. The 110 William Joint Venture has the right to prepay the loans at any time in whole, but not in part, subject to a prepayment fee if prepaid prior to May 9, 2020 and subject to certain other conditions contained in the loan documents. At closing, $210.8 million of the Senior Mortgage Loan and $70.3 million of the 110 William Street Mezzanine Loan was funded with $4.7 million of the Senior Mortgage Loan, $45.9 million of the Building Loan and $16.8 million of the 110 William Street Mezzanine Loan available for future funding, subject to certain terms and conditions contained in the loan documents.

25
Table of Contents
PART I.
FINANCIAL INFORMATION (CONTINUED)
Item 1.
Financial Statements (continued)
KBS STRATEGIC OPPORTUNITY REIT, INC.
CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
March 31, 2019
(unaudited)

Investment in 353 Sacramento Joint Venture
On July 6, 2017, the Company, through an indirect wholly owned subsidiary, entered into an agreement with the Migdal Members to form a joint venture (the “353 Sacramento Joint Venture”). On July 6, 2017, the Company sold a 45% equity interest in an entity that owns an office building containing 284,751 rentable square feet located on approximately 0.35 acres of land in San Francisco, California (“353 Sacramento”) to the Migdal Members. The sale resulted in 353 Sacramento being owned by the 353 Sacramento Joint Venture, in which the Company indirectly owns 55% of the equity interests and the Migdal Members indirectly own 45% in the aggregate of the equity interests.
The Company exercises significant influence over the operations, financial policies and decision making with respect to the 353 Sacramento Joint Venture but significant decisions require approval from both members. Accordingly, the Company has accounted for its investment in the 353 Sacramento Joint Venture under the equity method of accounting. Income, losses, contributions and distributions are generally allocated based on the members’ respective equity interests.
During the three months ended March 31, 2019 and 2018 , the Company did no t receive any distributions related to its investment in the 353 Sacramento Joint Venture.
Summarized financial information for the 353 Sacramento Joint Venture follows (in thousands):
 
 
March 31, 2019
 
December 31, 2018
Assets:
 
 
 
 
       Real estate assets, net of accumulated depreciation and amortization
 
$
180,168

 
$
180,852

       Other assets
 
12,520

 
13,123

       Total assets
 
$
192,688

 
$
193,975

Liabilities and equity:
 
 
 
 
       Notes payable, net
 
$
108,810

 
$
105,593

       Other liabilities
 
6,719

 
10,863

       Partners’ capital
 
77,159

 
77,519

Total liabilities and equity
 
$
192,688

 
$
193,975

 
 
Three Months Ended March 31,
 
 
2019
 
2018
Revenues
 
$
4,157

 
$
2,669

Expenses:
 
 
 
 
       Operating, maintenance, and management
 
831

 
878

       Real estate taxes and insurance
 
700

 
612

       Depreciation and amortization
 
1,567

 
1,450

       Interest expense
 
1,419

 
1,239

Total expenses
 
4,517

 
4,179

Net loss
 
(360
)
 
(1,510
)
Company’s equity in loss  of unconsolidated joint venture
 
$
(163
)
 
$
(798
)

26
Table of Contents
PART I.
FINANCIAL INFORMATION (CONTINUED)
Item 1.
Financial Statements (continued)
KBS STRATEGIC OPPORTUNITY REIT, INC.
CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
March 31, 2019
(unaudited)

Battery Point Series A-3 Preferred Units
Beginning October 28, 2016, the Company invested in Battery Point Series B Preferred Units which were classified as real estate debt securities on the Company’s accompanying balance sheets (see note 6 “Real Estate Debt Securities” for further information).  On March 20, 2019, the Company, through an indirect wholly owned subsidiary, entered into a redemption agreement for the Battery Point Series B Preferred Units. The redemption agreement resulted in the redemption of the Company’s entire investment of 13,000 Series B Preferred Units with a per-unit price of $1,000 with an aggregate outstanding principal balance of $13 million . The Company received a principal paydown of $7.7 million plus accrued interest and an exit fee.  In addition, the Company received 210,000 shares of Battery Point Series A-3 Preferred Units with a per-unit price of $25 with an aggregate face amount of $5.3 million . The Battery Point Series A-3 Preferred Units are entitled to a monthly dividend based on an annual rate of 7.5% . The annual dividend rate increases to 10% for the Battery Point Series A-3 Preferred Units not redeemed by February 28, 2020 and to 11% for the Battery Point Series A-3 Preferred Units not redeemed by February 28, 2021. On each monthly dividend payment date, Battery Point has the obligation to use 20% of the net proceeds of any and all future equity capital raising to redeem the Series A-3 Preferred Units. The Battery Point Series A-3 Preferred Units are redeemable at any time by Battery Point and holders of Series A-3 Preferred Shares may elect to redeem their units beginning on February 28, 2021, subject to Battery Point’s board of directors’ determination that the company has sufficient cash.
The Company does not have a unilateral right to redeem the Battery Point Series A-3 Preferred Units on a stated redemption date, therefore the Company classified the Series A-3 Preferred Units as an equity investment without a readily determinable fair value.  In accordance with FASB ASC 321, Investments - Equity Securities , the Company may elect to measure an equity investment without a readily determinable value that does not qualify for the practical expedient to estimate fair value using the net asset value per share, at its cost minus impairment, if any, plus or minus changes resulting from observable price changes in orderly transactions for the identical or a similar investment of the same issuer.  The Company elected to measure its investment in the Battery Point Series A-3 Preferred Units in accordance with the above accounting guidance and recorded its investment in the Battery Point Series A-3 Preferred Units as of March 31, 2019 , at a carrying value of $3.0 million . 
13.
SUPPLEMENTAL CASH FLOW AND SIGNIFICANT NONCASH TRANSACTION DISCLOSURES
Supplemental cash flow and significant noncash transaction disclosures were as follows (in thousands):
 
 
Three Months Ended March 31,
 
 
2019
 
2018
Supplemental Disclosure of Cash Flow Information:
 
 
 
 
Interest paid, net of capitalized interest of $694 and $650  for the  three  months ended  March 31, 2019  and 2018 , respectively
 
$
9,127

 
$
8,460

Supplemental Disclosure of Significant Noncash Transactions:
 
 
 
 
Accrued improvements to real estate
 
5,108

 
6,019

Mortgage loan assumed by buyer in connection with sale of real estate
 
23,663

 
—

Redeemable common stock payable
 
7,742

 
—

Distributions paid to common stockholders through common stock issuances pursuant to the dividend reinvestment plan
 
286

 
479

Distributions paid to common stockholders through common stock issuances pursuant to the December 2017 special dividend
 
—

 
150,299

Redemption of Series B Preferred Units in exchange for Series A-3 Preferred Units
 
2,992

 
—


27
Table of Contents
PART I.
FINANCIAL INFORMATION (CONTINUED)
Item 1.
Financial Statements (continued)
KBS STRATEGIC OPPORTUNITY REIT, INC.
CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
March 31, 2019
(unaudited)

14.
COMMITMENTS AND CONTINGENCIES
Economic Dependency
The Company is dependent on the Advisor for certain services that are essential to the Company, including the identification, evaluation, negotiation, origination, acquisition and disposition of investments; management of the daily operations of the Company’s investment portfolio; and other general and administrative responsibilities. In the event that the Advisor is unable to provide these services, the Company will be required to obtain such services from other sources.
Environmental
As an owner of real estate, the Company is subject to various environmental laws of federal, state and local governments. Although there can be no assurance, the Company is not aware of any environmental liability that could have a material adverse effect on its financial condition or results of operations as of March 31, 2019 . However, changes in applicable environmental laws and regulations, the uses and conditions of properties in the vicinity of the Company’s properties, the activities of its tenants and other environmental conditions of which the Company is unaware with respect to the properties could result in future environmental liabilities.
Legal Matters
From time to time, the Company is a party to legal proceedings that arise in the ordinary course of its business. Management is not aware of any legal proceedings of which the outcome is probable or reasonably possible to have a material adverse effect on the Company’s results of operations or financial condition, which would require accrual or disclosure of the contingency and the possible range of loss. Additionally, the Company has not recorded any loss contingencies related to legal proceedings in which the potential loss is deemed to be remote.
Participation Fee Liability
Pursuant to the Advisory Agreement currently in effect with the Advisor, the Advisor is due a subordinated participation in the Company’s net cash flows (the “Incentive Fee”) if, after the stockholders have received, together as a collective group, aggregate distributions (including distributions that may constitute a return of capital for federal income tax purposes) sufficient to provide (i) a return of their net invested capital, or the amount calculated by multiplying the total number of shares purchased by stockholders by the issue price, reduced by any amounts to repurchase shares pursuant to the share redemption program, and (ii) a 7.0% per year cumulative, noncompounded return on such net invested capital, the Advisor is entitled to receive 15.0% of the Company’s net cash flows, whether from continuing operations, net sale proceeds or otherwise. Net sales proceeds means the net cash proceeds realized by the Company after deduction of all expenses incurred in connection with a sale, including disposition fees paid to the Advisor. The 7.0% per year cumulative, noncompounded return on net invested capital is calculated on a daily basis. In making this calculation, the net invested capital is reduced to the extent distributions in excess of a cumulative, noncompounded, annual return of 7.0% are paid (from whatever source), except to the extent such distributions would be required to supplement prior distributions paid in order to achieve a cumulative, noncompounded, annual return of 7.0% (invested capital is only reduced as described in this sentence; it is not reduced simply because a distribution constitutes a return of capital for federal income tax purposes). The 7.0% per year cumulative, noncompounded return is not based on the return provided to any individual stockholder. Accordingly, it is not necessary for each of the stockholders to have received any minimum return in order for the Advisor to participate in the Company’s net cash flows. In fact, if the Advisor is entitled to participate in the Company’s net cash flows, the returns of the stockholders will differ, and some may be less than a 7.0% per year cumulative, noncompounded return. This fee is payable only if we are not listed on an exchange.

28
Table of Contents
PART I.
FINANCIAL INFORMATION (CONTINUED)
Item 1.
Financial Statements (continued)
KBS STRATEGIC OPPORTUNITY REIT, INC.
CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
March 31, 2019
(unaudited)

On April 4, 2018, the Company’s stockholders approved the acceleration of the payment of such incentive compensation, subject to certain conditions. Such accelerated payment would require approval by a special committee of the Company’s board of directors in connection with the anticipated conversion of the Company into a net asset value REIT. The Advisor estimated the fair value of this liability to be as much as $43 million as of March 31, 2019 , based on a hypothetical liquidation of the assets and liabilities at their estimated fair values, after considering the impact of any potential closing costs and fees related to the disposition of real estate properties. The fair value of the Incentive Fee liability as of March 31, 2019 is based on the estimated fair values of the Company’s assets and liabilities as of that date and changes to the fair values of assets and liabilities could have a material impact to the Incentive Fee calculation. The Incentive Fee is not currently payable to the Advisor, as it remains subject to further approval by the special committee and the Company’s conversion to a perpetual-life NAV REIT, and there is no guarantee that it will ever be payable.
15 .
SUBSEQUENT EVENTS
The Company evaluates subsequent events up until the date the consolidated financial statements are issued.
Probable Real Estate Acquisition
Georgia 400 Center
On May 1, 2019 , the Company, through an indirect wholly owned subsidiary (the “Buyer”), entered into a purchase and sale agreement to purchase an office property consisting of three buildings containing an aggregate of 416,463 rentable square feet located on an aggregate of 24.4 acres of land in Alpharetta, Georgia (“Georgia 400 Center”). On April 12, 2019 , the Advisor entered into a purchase and sale agreement to purchase Georgia 400 Center and on May 1 , 2019, the Advisor subsequently assigned the purchase and sale agreement, as amended, to the Buyer for $1.0 million , which is the amount of the initial deposit paid by the Advisor. The seller is not affiliated with the Company or the Advisor.
Pursuant to the purchase and sale agreement, the Company would be obligated to purchase the property only after satisfactory completion of agreed upon closing conditions. There can be no assurance that the Company will complete the acquisition. In some circumstances, if the Company fails to complete the acquisition, it may forfeit up to $3.0 million of earnest money. The contractual purchase price of Georgia 400 Center is $91.0 million plus closing costs. Georgia 400 Center was built between 1998 and 2001 and is currently 85% leased to 31 tenants.
Distribution Declared
On May 13, 2019 , the Company’s board of directors authorized a distribution in the amount of $0.00860000 per share of common stock to stockholders of record as of the close of business on June 14, 2019 . The Company expects to pay this distribution on or about June 19, 2019 .

29
Table of Contents
PART I.
FINANCIAL INFORMATION (CONTINUED)
Item 2.
Management's Discussion and Analysis of Financial Condition and Results of Operations

The following discussion and analysis should be read in conjunction with the accompanying financial statements of KBS Strategic Opportunity REIT, Inc. and the notes thereto. As used herein, the terms “we,” “our” and “us” refer to KBS Strategic Opportunity REIT, Inc., a Maryland corporation, and, as required by context, KBS Strategic Opportunity Limited Partnership, a Delaware limited partnership, which we refer to as the “Operating Partnership,” and to their subsidiaries.
Forward-Looking Statements
Certain statements included in this Quarterly Report on Form 10-Q are forward-looking statements. Those statements include statements regarding the intent, belief or current expectations of KBS Strategic Opportunity REIT, Inc. and members of our management team, as well as the assumptions on which such statements are based, and generally are identified by the use of words such as “may,” “will,” “seeks,” “anticipates,” “believes,” “estimates,” “expects,” “plans,” “intends,” “should” or similar expressions. Actual results may differ materially from those contemplated by such forward-looking statements. Further, forward-looking statements speak only as of the date they are made, and we undertake no obligation to update or revise forward-looking statements to reflect changed assumptions, the occurrence of unanticipated events or changes to future operating results over time, unless required by law.
The following are some of the risks and uncertainties, although not all of the risks and uncertainties, that could cause our actual results to differ materially from those presented in our forward-looking statements:
•
We depend on tenants for our revenue and, accordingly, our revenue is dependent upon the success and economic viability of our tenants. Revenues from our property investments could decrease due to a reduction in tenants (caused by factors including, but not limited to, tenant defaults, tenant insolvency, early termination of tenant leases and non-renewal of existing tenant leases) and/or lower rental rates, limiting our ability to pay distributions to our stockholders.
•
Our opportunistic investment strategy involves a higher risk of loss than would a strategy of investing in some other types of real estate and real estate-related investments.
•
We have paid distributions from financings and in the future we may not pay distributions solely from our cash flow from operations or gains from asset sales. To the extent that we pay distributions from sources other than our cash flow from operations or gains from asset sales, we will have less funds available for investment in loans, properties and other assets, the overall return to our stockholders may be reduced and subsequent investors may experience dilution.
•
All of our executive officers and some of our directors and other key real estate and debt finance professionals are also officers, directors, managers, key professionals and/or holders of a direct or indirect controlling interest in our advisor, our dealer manager and other KBS-affiliated entities. As a result, they face conflicts of interest, including significant conflicts created by our advisor’s compensation arrangements with us and other KBS-advised programs and investors and conflicts in allocating time among us and these other programs and investors. These conflicts could result in unanticipated actions. Fees paid to our advisor in connection with transactions involving the origination, acquisition and management of our investments are based on the cost of the investment, not on the quality of the investment or services rendered to us. This arrangement could influence our advisor to recommend riskier transactions to us.
•
We pay substantial fees to and expenses of our advisor and its affiliates. These payments increase the risk that our stockholders will not earn a profit on their investment in us and increase our stockholders’ risk of loss.
•
We cannot predict with any certainty how much, if any, of our dividend reinvestment plan proceeds will be available for general corporate purposes, including, but not limited to, the redemption of shares under our share redemption program, future funding obligations under any real estate loans receivable we acquire, the funding of capital expenditures on our real estate investments or the repayment of debt. If such funds are not available from the dividend reinvestment plan offering, then we may have to use a greater proportion of our cash flow from operations to meet these cash requirements, which would reduce cash available for distributions and could limit our ability to redeem shares under our share redemption program.
•
We have focused, and may continue to focus, our investments in non-performing real estate and real estate-related loans, real estate-related loans secured by non-stabilized assets and real estate-related securities, which involve more risk than investments in performing real estate and real estate-related assets
All forward-looking statements should be read in light of the risks identified in Part I, Item 1A of our Annual Report on Form 10-K for the year ended December 31, 2018 , as filed with the Securities and Exchange Commission (the “SEC”).

30
Table of Contents
PART I.
FINANCIAL INFORMATION (CONTINUED)
Item 2.
Management's Discussion and Analysis of Financial Condition and Results of Operations (continued)

Overview
We were formed on October 8, 2008 as a Maryland corporation, elected to be taxed as a real estate investment trust (“REIT”) beginning with the taxable year ended December 31, 2010 and intend to operate in such manner. KBS Capital Advisors LLC (“KBS Capital Advisors”) is our advisor. As our advisor, KBS Capital Advisors manages our day-to-day operations and our portfolio of investments. KBS Capital Advisors also has the authority to make all of the decisions regarding our investments, subject to the limitations in our charter and the direction and oversight of our board of directors. KBS Capital Advisors also provides asset-management, marketing, investor-relations and other administrative services on our behalf. We have sought to invest in and manage a diverse portfolio of real estate‑related loans, opportunistic real estate, real estate-related debt securities and other real estate-related investments. We conduct our business primarily through our operating partnership, of which we are the sole general partner.
On January 8, 2009, we filed a registration statement on Form S-11 with the SEC to offer a minimum of 250,000 shares and a maximum of 140,000,000 shares of common stock for sale to the public, of which 100,000,000 shares were registered in our primary offering and 40,000,000 shares were registered under our dividend reinvestment plan. We ceased offering shares of common stock in our primary offering on November 14, 2012. We sold 56,584,976  shares of common stock in the primary offering for gross offering proceeds of $561.7 million . We continue to offer shares of common stock under the dividend reinvestment plan. As of March 31, 2019 , we had sold 6,772,410  shares of common stock under the dividend reinvestment plan for gross offering proceeds of $75.7 million . Also as of March 31, 2019 , we had redeemed 23,045,646 of the shares sold in our offering for $277.9 million . As of March 31, 2019 , we had issued 25,976,746 shares of common stock in connection with special dividends. Additionally, on December 29, 2011 and October 23, 2012, we issued 220,994 shares and 55,249 shares of common stock, respectively, for $2.0 million and $0.5 million , respectively, in private transactions exempt from the registration requirements pursuant to Section 4(2) of the Securities Act of 1933, as amended.
On March 2, 2016, KBS Strategic Opportunity (BVI) Holdings, Ltd. (“KBS Strategic Opportunity BVI”), our wholly owned subsidiary, filed a final prospectus with the Israel Securities Authority for a proposed offering of up to 1,000,000,000 Israeli new Shekels of Series A debentures (the “Debentures”) at an annual interest rate not to exceed 4.25%. On March 1, 2016, KBS Strategic Opportunity BVI commenced the institutional tender of the Debentures and accepted application for 842.5 million Israeli new Shekels. On March 7, 2016, KBS Strategic Opportunity BVI commenced the public tender of the Debentures and accepted 127.7 million Israeli new Shekels.  In the aggregate, KBS Strategic Opportunity BVI accepted 970.2 million Israeli new Shekels (approximately $249.2 million as of March 8, 2016 ) in both the institutional and public tenders at an annual interest rate of 4.25%.  KBS Strategic Opportunity BVI issued the Debentures on March 8, 2016. The terms of the Debentures require five equal principal installment payments annually on March 1st of each year from 2019 to 2023.
As of March 31, 2019 , we consolidated six office properties, one office portfolio consisting of four office buildings and 14 acres of undeveloped land, one retail property, one apartment property and three investments in undeveloped land with approximately 1,000 developable acres and owned four investments in unconsolidated joint ventures and three investments in real estate equity securities.
Market Outlook – Real Estate and Real Estate Finance Markets
Volatility in global financial markets and changing political environments can cause fluctuations  in the performance of the U.S. commercial real estate markets.  Possible future declines in rental rates, slower or potentially negative net absorption of leased space and expectations of future rental concessions, including free rent to renew tenants early, to retain tenants who are up for renewal or to attract new tenants, may result in decreases in cash flows from investment properties. To the extent there are increases in the cost of financing due to higher interest rates, this may cause difficulty in refinancing debt obligations at terms as favorable as the terms of existing indebtedness. Further, increases in interest rates would increase the amount of our debt payments on our variable rate debt to the extent the interest rates on such debt are not limited by interest rate caps. Market conditions can change quickly, potentially negatively impacting the value of real estate investments. Management continuously reviews our investment and debt financing strategies to optimize our portfolio and the cost of our debt exposure.

31
Table of Contents
PART I.
FINANCIAL INFORMATION (CONTINUED)
Item 2.
Management's Discussion and Analysis of Financial Condition and Results of Operations (continued)

Liquidity and Capital Resources
Our principal demand for funds during the short and long-term is and will be for the acquisition of real estate and real estate-related investments, payment of operating expenses, capital expenditures and general and administrative expenses, payments under debt obligations, redemptions and purchases of our common stock and payments of distributions to stockholders. To date, we have had six primary sources of capital for meeting our cash requirements:
•
Proceeds from the primary portion of our initial public offering; 
•
Proceeds from our dividend reinvestment plan;
•
Proceeds from our public bond offering in Israel;
•
Debt financing;
•
Proceeds from the sale of real estate and the repayment of real estate-related investments; and
•
Cash flow generated by our real estate and real estate-related investments. 
We sold 56,584,976  shares of common stock in the primary portion of our initial public offering for gross offering proceeds of $561.7 million . We ceased offering shares in the primary portion of our initial public offering on November 14, 2012. We continue to offer shares of common stock under the dividend reinvestment plan. As of March 31, 2019 , we had sold 6,772,410 shares of common stock under the dividend reinvestment plan for gross offering proceeds of $75.7 million . To date, we have invested all of the net proceeds from our initial public offering in real estate and real estate-related investments. We intend to use our cash on hand, proceeds from asset sales, proceeds from debt financing, cash flow generated by our real estate operations and real estate-related investments and proceeds from our dividend reinvestment plan as our primary sources of immediate and long-term liquidity.
Our investments in real estate generate cash flow in the form of rental revenues and tenant reimbursements, which are reduced by operating expenditures and corporate general and administrative expenses.  Cash flow from operations from our real estate investments is primarily dependent upon the occupancy levels of our properties, the net effective rental rates on our leases, the collectibility of rent and operating recoveries from our tenants and how well we manage our expenditures.  As of March 31, 2019 , our office and retail properties were collectively 74% occupied and our apartment property was 94% occupied.
Investments in real estate equity securities generate cash flow in the form of dividend income, which is reduced by asset management fees. As of March 31, 2019 , we had three investments in real estate equity securities outstanding with a total carrying value of $61.0 million .
Under our charter, we are required to limit our total operating expenses to the greater of 2% of our average invested assets or 25% of our net income for the four most recently completed fiscal quarters, as these terms are defined in our charter, unless the conflicts committee of our board of directors has determined that such excess expenses were justified based on unusual and non-recurring factors. Operating expense reimbursements for the four fiscal quarters ended March 31, 2019 did not exceed the charter-imposed limitation.
For the three months ended March 31, 2019 , our cash needs for capital expenditures, redemptions of common stock and debt servicing were met with proceeds from dispositions of real estate and undeveloped land, proceeds from debt financing, proceeds from our dividend reinvestment plan and cash on hand. Operating cash needs during the same period were met through cash flow generated by our real estate and real estate-related investments and cash on hand. As of March 31, 2019 , we had outstanding debt obligations in the aggregate principal amount of $595.8 million , with a weighted-average remaining term of 2.3 years. As of March 31, 2019 , we had a total of $154.0 million of debt obligations scheduled to mature within 12 months of that date. We plan to exercise our extension options available under our loan agreements or pay down or refinance the related notes payable prior to their maturity dates.
We have elected to be taxed as a REIT and intend to operate as a REIT. To maintain our qualification as a REIT, we are required to make aggregate annual distributions to our stockholders of at least 90% of our REIT taxable income (computed without regard to the dividends paid deduction and excluding net capital gain). Our board of directors may authorize distributions in excess of those required for us to maintain REIT status depending on our financial condition and such other factors as our board of directors deems relevant. We have not established a minimum distribution level.

32
Table of Contents
PART I.
FINANCIAL INFORMATION (CONTINUED)
Item 2.
Management's Discussion and Analysis of Financial Condition and Results of Operations (continued)

Cash Flows from Operating Activities
As of March 31, 2019 , we consolidated six office properties, one office portfolio consisting of four office buildings and 14 acres of undeveloped land, one retail property, one apartment property and three investments in undeveloped land with approximately 1,000 developable acres and owned four investments in unconsolidated joint ventures and three investments in real estate equity securities. During the three months ended March 31, 2019 , net cash used in operating activities was $7.6 million . We expect that our cash flows from operating activities will increase in future periods as a result of leasing additional space that is currently unoccupied and anticipated future acquisitions of real estate and real estate-related investments. However, our cash flows from operating activities may decrease to the extent that we dispose of additional assets.
Cash Flows from Investing Activities
Net cash provided by investing activities was $49.4 million for the three months ended March 31, 2019 and primarily consisted of the following:
•
Proceeds from the sale of real estate equity securities of $24.1 million ;
•
Proceeds from the sale of one apartment property of $17.9 million ;
•
Improvements to real estate of $8.1 million ;
•
Distribution of capital from an unconsolidated joint venture of $7.8 million ; and
•
Proceeds from the principal repayment on real estate debt securities of $7.8 million .
Cash Flows from Financing Activities
Net cash used in financing activities was $54.4 million for the three months ended March 31, 2019 and consisted primarily of the following:
•
$51.7 million of net cash provided by debt and other financings as a result of proceeds from notes payable of $2.6 million , partially offset by principal payments on notes and bonds payable of $54.3 million ;
•
$2.5 million of cash used for redemptions of common stock;
•
$1.8 million of net cash provided by the issuance of $1.9 million of preferred membership units of our subsidiary, partially offset by sale commissions and other costs of $0.1 million;
•
$1.7 million of distributions to noncontrolling interests; and
•
$0.3 million of net cash distributions to stockholders, after giving effect to distributions reinvested by stockholders of $0.3 million .
In order to execute our investment strategy, we utilize secured debt and we may, to the extent available, utilize unsecured debt, to finance a portion of our investment portfolio. Management remains vigilant in monitoring the risks inherent with the use of debt in our portfolio and is taking actions to ensure that these risks, including refinancing and interest risks, are properly balanced with the benefit of using leverage. There is no limitation on the amount we may borrow for any single investment. Our charter limits our total liabilities such that our total liabilities may not exceed 75% of the cost of our tangible assets; however, we may exceed that limit if a majority of the conflicts committee approves each borrowing in excess of our charter limitation and we disclose such borrowing to our common stockholders in our next quarterly report with an explanation from the conflicts committee of the justification for the excess borrowing. As of March 31, 2019 , our borrowings and other liabilities were approximately 66% of the cost (before depreciation and other noncash reserves) and 65% of the book value (before depreciation) of our tangible assets.
In March 2016, we, through a wholly-owned subsidiary, issued 970.2 million Israeli new Shekels (approximately $249.2 million as of March 8, 2016 ) in 4.25% bonds to investors in Israel pursuant to a public offering registered in Israel. The bonds have a seven year term, with principal payable in five equal annual installments from 2019 to 2023. On March 1, 2019 , we paid the first principal installment payment of 194.0 million Israeli new Shekels (approximately $53.6 million as of March 1, 2019 ). We have used the proceeds from the issuance of these bonds to make additional investments.

33
Table of Contents
PART I.
FINANCIAL INFORMATION (CONTINUED)
Item 2.
Management's Discussion and Analysis of Financial Condition and Results of Operations (continued)

In addition to making investments in accordance with our investment objectives, we use or have used our capital resources to make certain payments to our advisor and our dealer manager. During our offering stage, these payments included payments to our dealer manager for selling commissions and dealer manager fees related to sales in our primary offering and payments to our dealer manager and our advisor for reimbursement of certain organization and other offering expenses related both to the primary offering and the dividend reinvestment plan. During our acquisition and development stage, we expect to continue to make payments to our advisor in connection with the selection and origination or purchase of investments, the management of our assets and costs incurred by our advisor in providing services to us as well as for any dispositions of assets (including the discounted payoff of non-performing loans).
The advisory agreement has a one-year term but may be renewed for an unlimited number of successive one-year periods upon the mutual consent of our advisor and our conflicts committee.
Among the fees payable to our advisor is an asset management fee. With respect to investments in loans and any investments other than real property, the asset management fee is a monthly fee calculated, each month, as one-twelfth of 0.75% of the lesser of (i) the amount actually paid or allocated to acquire or fund the loan or other investment, inclusive of fees and expenses related thereto and the amount of any debt associated with or used to acquire or fund such investment and (ii) the outstanding principal amount of such loan or other investment, plus the fees and expenses related to the acquisition or funding of such investment, as of the time of calculation. With respect to investments in real property, the asset management fee is a monthly fee equal to one-twelfth of 0.75% of the sum of the amount paid or allocated to acquire the investment, plus the cost of any subsequent development, construction or improvements to the property, and inclusive of fees and expenses related thereto and the amount of any debt associated with or used to acquire such investment. In the case of investments made through joint ventures, the asset management fee will be determined based on our proportionate share of the underlying investment, inclusive of our proportionate share of any fees and expenses related thereto.
Contractual Commitments and Contingencies
The following is a summary of our contractual obligations as of March 31, 2019 (in thousands):
 
 
 
 
Payments Due During the Years Ending December 31,
Contractual Obligations
 
Total
 
Remainder of 2019
 
2020-2021
 
2022-2023
 
Thereafter
Outstanding debt obligations (1)
 
$
595,756

 
$
49,383

 
$
380,705

 
$
160,513

 
$
5,155

Interest payments on outstanding debt obligations (2)
 
57,612

 
19,116

 
30,671

 
5,395

 
2,430

_____________________
(1) Amounts include principal payments only.
(2) Projected interest payments are based on the outstanding principal amounts, maturity dates, foreign currency rates and interest rates in effect at March 31, 2019 . We incurred interest expense of $7.0 million , excluding amortization of deferred financing costs of $0.9 million and including interest capitalized of $0.7 million , for the three months ended March 31, 2019 .

34
Table of Contents
PART I.
FINANCIAL INFORMATION (CONTINUED)
Item 2.
Management's Discussion and Analysis of Financial Condition and Results of Operations (continued)

Participation Fee Liability
Pursuant to the advisory agreement currently in effect with our advisor, our advisor is due a subordinated participation in our net cash flows (the “Incentive Fee”) if, after the stockholders have received, together as a collective group, aggregate distributions (including distributions that may constitute a return of capital for federal income tax purposes) sufficient to provide (i) a return of their net invested capital, or the amount calculated by multiplying the total number of shares purchased by stockholders by the issue price, reduced by any amounts to repurchase shares pursuant to the share redemption program, and (ii) a 7.0% per year cumulative, noncompounded return on such net invested capital, our advisor is entitled to receive 15.0% of our net cash flows, whether from continuing operations, net sale proceeds or otherwise. Net sales proceeds means the net cash proceeds we realized after deduction of all expenses incurred in connection with a sale, including disposition fees paid to our advisor. The 7.0% per year cumulative, noncompounded return on net invested capital is calculated on a daily basis. In making this calculation, the net invested capital is reduced to the extent distributions in excess of a cumulative, noncompounded, annual return of 7.0% are paid (from whatever source), except to the extent such distributions would be required to supplement prior distributions paid in order to achieve a cumulative, noncompounded, annual return of 7.0% (invested capital is only reduced as described in this sentence; it is not reduced simply because a distribution constitutes a return of capital for federal income tax purposes). The 7.0% per year cumulative, noncompounded return is not based on the return provided to any individual stockholder. Accordingly, it is not necessary for each of the stockholders to have received any minimum return in order for our advisor to participate in our net cash flows. In fact, if our advisor is entitled to participate in our net cash flows, the returns of the stockholders will differ, and some may be less than a 7.0% per year cumulative, noncompounded return. This fee is payable only if we are not listed on an exchange.
On April 4, 2018, our stockholders approved the acceleration of the payment of such incentive compensation, subject to certain conditions. Such accelerated payment would require approval by a special committee of our board of directors in connection with our anticipated conversion into a net asset value REIT. Our advisor estimated the fair value of this liability to be as much as $43 million as of March 31, 2019 , based on a hypothetical liquidation of the assets and liabilities at their estimated fair values, after considering the impact of any potential closing costs and fees related to the disposition of real estate properties. The fair value of the Incentive Fee liability as of March 31, 2019 is based on the estimated fair values of our assets and liabilities as of that date and changes to the fair values of assets and liabilities could have a material impact to the Incentive Fee calculation. The Incentive Fee is not currently payable to our advisor, as it remains subject to further approval by the special committee and our conversion to a perpetual-life NAV REIT, and there is no guarantee that it will ever be payable.
Results of Operations
Overview
As of March 31, 2018 , we consolidated six office properties, one office portfolio consisting of four office buildings and 14 acres of undeveloped land, one office/flex/industrial portfolio consisting of 21 buildings, one retail property, two apartment properties and three investments in undeveloped land with approximately 1,100 developable acres and owned three investments in unconsolidated joint ventures, an investment in real estate debt securities and three investments in real estate equity securities. As of March 31, 2019 , we consolidated six office properties, one office portfolio consisting of four office buildings and 14 acres of undeveloped land, one retail property, one apartment property and three investments in undeveloped land with approximately 1,000 developable acres and owned four investments in unconsolidated joint ventures and three investments in real estate equity securities. Our results of operations for the three months ended March 31, 2019 may not be indicative of those in future periods due to acquisition and disposition activities. Additionally, the occupancy in our properties has not been stabilized. As of  March 31, 2019 , our office and retail properties were collectively 74% occupied and our apartment property was 94% occupied. However, due to the amount of near-term lease expirations, we do not put significant emphasis on quarterly changes in occupancy (positive or negative) in the short run. Our underwriting and valuations are generally more sensitive to “terminal values” that may be realized upon the disposition of the assets in the portfolio and less sensitive to ongoing cash flows generated by the portfolio in the years leading up to an eventual sale. There are no guarantees that occupancies of our assets will increase, or that we will recognize a gain on the sale of our assets. In general, we expect that our income and expenses related to our portfolio will increase in future periods as a result of leasing additional space and acquiring additional assets but decrease due to disposition activity.

35
Table of Contents
PART I.
FINANCIAL INFORMATION (CONTINUED)
Item 2.
Management's Discussion and Analysis of Financial Condition and Results of Operations (continued)

Comparison of the three months ended March 31, 2019 versus the three months ended March 31, 2018
The following table provides summary information about our results of operations for the three months ended March 31, 2019 and 2018 (dollar amounts in thousands):
 
 
Three Months Ended March 31,
 
Increase (Decrease)
 
Percentage Change
 
$ Change Due to Acquisitions/ Dispositions (1)
 
$ Change Due to 
Investments Held Throughout
Both Periods (2)
 
 
2019
 
2018
 
 
 
 
Rental income
 
$
18,373

 
$
17,349

 
$
1,024

 
6
 %
 
$
729

 
$
295

Other operating income
 
1,393

 
735

 
658

 
90
 %
 
670

 
(12
)
Interest income from real estate debt securities
 
369

 
501

 
(132
)
 
(26
)%
 
(132
)
 
—

Dividend income from real estate equity securities
 
1,776

 
1,051

 
725

 
69
 %
 
725

 
—

Operating, maintenance, and management costs
 
6,271

 
5,487

 
784

 
14
 %
 
696

 
88

Real estate taxes and insurance
 
2,977

 
2,339

 
638

 
27
 %
 
318

 
320

Asset management fees to affiliate
 
1,891

 
1,825

 
66

 
4
 %
 
48

 
18

General and administrative expenses
 
1,533

 
2,052

 
(519
)
 
(25
)%
 
n/a

 
n/a

Foreign currency transaction  loss , net
 
2,816

 
997

 
1,819

 
182
 %
 
n/a

 
n/a

Depreciation and amortization
 
7,681

 
7,265

 
416

 
6
 %
 
288

 
128

Interest expense
 
7,168

 
6,591

 
577

 
9
 %
 
401

 
176

Income from unconsolidated joint venture
 
—

 
53

 
(53
)
 
(100
)%
 
—

 
(53
)
Equity in  income (lo ss)  of unconsolidated joint ventures , net
 
7,312

 
(2,378
)
 
9,690

 
(407
)%
 
—

 
9,690

Other interest income
 
690

 
930

 
(240
)
 
(26
)%
 
n/a

 
n/a

Gain (loss)  on real estate equity securities
 
11,165

 
(16,011
)
 
27,176

 
(170
)%
 
27,176

 
—

Gain  on sale of real estate
 
7,575

 
624

 
6,951

 
1,114
 %
 
6,951

 
—

Loss  on extinguishment of debt
 
(856
)
 
—

 
(856
)
 
n/a

 
(856
)
 
—

_____________________
(1) Represents the dollar amount increase (decrease) for the three months ended March 31, 2019 compared to the three months ended March 31, 2018 related to real estate and real estate-related investments acquired or disposed on or after January  1,  2018 .
(2) Represents the dollar amount increase (decrease) for the three months ended March 31, 2019 compared to the three months ended March 31, 2018 with respect to real estate and real estate-related investments owned by us during the entirety of both periods presented.
Rental income increased from $17.3 million for the three months ended March 31, 2018 to $18.4 million for the three months ended March 31, 2019 , primarily as a result of properties acquired in 2018 and an overall increase in rental rates, partially offset by properties disposed in 2018 and 2019. The occupancy of our office and retail properties, collectively, held throughout both periods remained consistent at 75% as of March 31, 2018 and March 31, 2019 and the occupancy of our apartment property held throughout both periods decreased from 97% as of March 31, 2018 to 94% as of March 31, 2019 . Annualized base rent per square foot increased from $21.74 as of March 31, 2018 to $22.95 as of March 31, 2019 related to properties (excluding apartments) held throughout both periods. We expect rental income and tenant reimbursements to increase in future periods as a result of future acquisitions of real estate and leasing additional space, but to decrease to the extent we dispose of properties.
Other operating income increased from $0.7 million for the three months ended March 31, 2018 to $1.4 million for the three months ended March 31, 2019 , primarily as a result of properties acquired in 2018, partially offset by properties disposed in 2018 and 2019. We expect other operating income to increase in future periods as a result of future acquisitions of real estate, leasing additional space and increases in parking income as we stabilize properties.
Interest income from real estate debt securities decreased from $0.5 million for the three months ended March 31, 2018 to $0.4 million for the three months ended March 31, 2019 , primarily as a result of a decrease in average principal balance outstanding. We expect interest income from real estate debt securities to decrease as a result of the redemption of real estate debt securities on March 20, 2019.

36
Table of Contents
PART I.
FINANCIAL INFORMATION (CONTINUED)
Item 2.
Management's Discussion and Analysis of Financial Condition and Results of Operations (continued)

Dividend income from real estate equity securities increased from $1.1 million for the three months ended March 31, 2018 to $1.8 million for the three months ended March 31, 2019 , primarily as a result of the timing of the Keppel-KBS US REIT dividends declared and additional real estate equity securities acquired in 2018, partially offset by the sale of real estate equity securities in 2018 and 2019. We expect dividend income from real estate equity securities to vary in future periods as a result of the timing of dividends declared and investment activity.
Property operating costs and real estate taxes and insurance increased from $5.5 million and $2.3 million , respectively, for the three months ended March 31, 2018 to $6.3 million and $3.0 million , respectively, for the three months ended March 31, 2019 , primarily as a result of properties acquired in 2018, partially offset by properties disposed in 2018 and 2019. Real estate taxes and insurance related to properties held through both periods increased during the three months ended March 31, 2019 primarily as a result of a property tax reassessment of 125 John Carpenter. We expect property operating costs and real estate taxes and insurance to increase in future periods as a result of future acquisitions of real estate, increasing occupancy of our real estate assets and inflation, but to decrease to the extent we dispose of properties.
Asset management fees increased from $1.8 million for the three months ended March 31, 2018 to $1.9 million for the three months ended March 31, 2019 , primarily as a result of properties acquired in 2018, partially offset by properties disposed in 2018 and 2019. We expect asset management fees to increase in future periods as a result of future acquisitions of real estate and capital expenditures, but to decrease to the extent we dispose of properties. All asset management fees incurred as of March 31, 2019 have been paid.
General and administrative expenses decreased from $2.1 million for the three months ended March 31, 2018 to $1.5 million for the three months ended March 31, 2019 , primarily due to decreased legal expenses incurred to evaluate certain strategic transactions. We expect general and administrative expenses to fluctuate in future periods based on investment and disposition activity.
We recognized $2.8 million and $1.0 million of foreign currency transaction loss, net, for the three months ended March 31, 2019 and 2018 , respectively, related to the Series A debentures in Israel. These debentures are denominated in Israeli new Shekels and we expect to recognize foreign transaction gains and losses based on changes in foreign currency exchange rates, but expect our exposure to be limited to the extent that we have entered into foreign currency options and foreign currency collars. As of March 31, 2019 , we had entered into one foreign currency collar to hedge against a change in the exchange rate of the Israeli new Shekel versus the U.S. Dollar. The foreign currency collar expires in August 2019 and has an aggregate Israeli new Shekels notional amount of 776.2 million . During the three months ended March 31, 2019 , we recognized a $3.0 million gain related to the foreign currency collars, which is shown net against $5.8 million of foreign currency transaction loss in the accompanying consolidated statements of operations as foreign currency transaction loss , net. During the three months ended March 31, 2018 , we recognized a $2.0 million loss related to the foreign currency option, which is shown net against $1.0 million of foreign currency transaction gain in the accompanying consolidated statements of operations as foreign currency transaction loss , net.
Depreciation and amortization increased from $7.3 million for the three months ended March 31, 2018 to $7.7 million for the three months ended March 31, 2019 , primarily as a result of properties acquired in 2018, partially offset by properties disposed in 2018 and 2019. We expect depreciation and amortization to increase in future periods as a result of future acquisitions of real estate properties, but to decrease as a result of amortization of tenant origination costs related to lease expirations and disposition of properties.
Interest expense increased from $6.6 million for the three months ended March 31, 2018 to $7.2 million for the three months ended March 31, 2019 , primarily as a result of increased borrowings related to properties acquired in 2018 and increased one-month LIBOR rates during the three months ended March 31, 2019 , partially offset by the paydown of debt on properties disposed in 2018 and 2019 and the March 1, 2019 Debentures principal installment payment of 194.0 million Israeli new Shekels (approximately $53.6 million as of March 1, 2019 ). Excluded from interest expense was $0.7 million and $0.6 million of interest capitalized to our investments in undeveloped land during the three months ended March 31, 2019 and 2018 , respectively. Our interest expense in future periods will vary based on interest rate fluctuations, the amount of interest capitalized and our level of future borrowings, which will depend on the availability and cost of debt financing and the opportunity to acquire real estate and real estate-related investments meeting our investment objectives and will decrease to the extent we dispose of properties and paydown debt.
During the three months ended March 31, 2019 , we did not receive any distributions related to our investment in the NIP Joint Venture. During the three months ended March 31, 2018 , we received a distribution of $0.4 million related to our investment in the NIP Joint Venture. We recognized $0.1 million of income distributions and $0.3 million of return of capital from the NIP Joint Venture.

37
Table of Contents
PART I.
FINANCIAL INFORMATION (CONTINUED)
Item 2.
Management's Discussion and Analysis of Financial Condition and Results of Operations (continued)

Equity in loss of unconsolidated joint ventures was $2.4 million for the three months ended March 31, 2018 . Equity in income of unconsolidated joint ventures was $7.3 million for the three months ended March 31, 2019 , primarily as a result of a $7.8 million distribution from the 110 William Joint Venture funded with proceeds from the 110 William refinancing. During the three months ended March 31, 2019 , we recorded $7.5 million equity in income from the 110 William Joint Venture, which includes a $7.8 million gain related to a distribution received, net of our share of net losses of $0.3 million. We will not record any subsequent equity in income for the 110 William Joint Venture until subsequent equity in income equals the gain recorded. 
Other interest income decreased from $0.9 million for the three months ended March 31, 2018 to $0.7 million for the three months ended March 31, 2019 , primarily as a result of decreased dividends from money market mutual funds due to our decreased investment balance in these funds.
Loss on real estate equity securities was $16.0 million for the three months ended March 31, 2018 . Gain on real estate equity securities was $11.2 million for the three months ended March 31, 2019 . We expect gain (loss) on real estate equity securities to fluctuate in future periods as a result of changes in share prices of our investments in real estate equity securities.
During the three months ended March 31, 2018 , we sold 26 acres of undeveloped land that resulted in a gain on sale of $0.6 million, which was net of deferred profit of $0.3 million related to proceeds received from the purchaser for the value of land that was contributed to a master association that we consolidated. During the three months ended March 31, 2019 , we sold one apartment property, which resulted in a gain on sale of $7.6 million .
During the three months ended March 31, 2019 , we recognized loss on extinguishment of debt of $0.9 million related to debt repayments in connection with a real estate disposition.
Funds from Operations, Modified Funds from Operations and Adjusted Modified Funds from Operations
We believe that funds from operations (“FFO”) is a beneficial indicator of the performance of an equity REIT. We compute FFO in accordance with the current National Association of Real Estate Investment Trusts (“NAREIT”) definition. FFO represents net income, excluding gains and losses from sales of real estate assets (which can vary among owners of identical assets in similar conditions based on historical cost accounting and useful-life estimates), impairment losses on real estate assets, depreciation and amortization of real estate assets, and adjustments for unconsolidated partnerships and joint ventures. In addition, we elected the option to exclude mark-to-market changes in value recognized on equity securities in the calculation of FFO. We believe FFO facilitates comparisons of operating performance between periods and among other REITs. However, our computation of FFO may not be comparable to other REITs that do not define FFO in accordance with the NAREIT definition or that interpret the current NAREIT definition differently than we do. Our management believes that historical cost accounting for real estate assets in accordance with U.S. Generally Accepted Accounting Principles (“GAAP”) implicitly assumes that the value of real estate assets diminishes predictably over time. Since real estate values have historically risen or fallen with market conditions, many industry investors and analysts have considered the presentation of operating results for real estate companies that use historical cost accounting to be insufficient by themselves. As a result, we believe that the use of FFO, together with the required GAAP presentations, provides a more complete understanding of our performance relative to our competitors and provides a more informed and appropriate basis on which to make decisions involving operating, financing, and investing activities.
Changes in accounting rules have resulted in a substantial increase in the number of non-operating and non-cash items included in the calculation of FFO. As a result, our management also uses modified funds from operations (“MFFO”) as an indicator of our ongoing performance as well as our dividend sustainability. MFFO excludes from FFO: acquisition fees and expenses (to the extent that such fees and expenses have been recorded as operating expenses); adjustments related to contingent purchase price obligations; amounts relating to straight-line rents and amortization of above- and below-market intangible lease assets and liabilities; accretion of discounts and amortization of premiums on debt investments; amortization of closing costs relating to debt investments; impairments of real estate-related investments; mark-to-market adjustments included in net income; and gains or losses included in net income for the extinguishment or sale of debt or hedges. We compute MFFO in accordance with the definition of MFFO included in the practice guideline issued by the Institute for Portfolio Alternatives (“IPA”) in November 2010 as interpreted by management. Our computation of MFFO may not be comparable to other REITs that do not compute MFFO in accordance with the current IPA definition or that interpret the current IPA definition differently than we do.
In addition, our management uses an adjusted MFFO (“Adjusted MFFO”) as an indicator of our ongoing performance, as well as our dividend sustainability. Adjusted MFFO provides adjustments to reduce MFFO related to operating expenses that are capitalized with respect to certain of our investments in undeveloped land. 

38
Table of Contents
PART I.
FINANCIAL INFORMATION (CONTINUED)
Item 2.
Management's Discussion and Analysis of Financial Condition and Results of Operations (continued)

We believe that MFFO and Adjusted MFFO are helpful as measures of ongoing operating performance because they exclude costs that management considers more reflective of investing activities and other non-operating items included in FFO. Management believes that excluding acquisition costs, prior to our early adoption of ASU No. 2017-01 on January 1, 2017, from MFFO and Adjusted MFFO provides investors with supplemental performance information that is consistent with management’s analysis of the operating performance of the portfolio over time, including periods after our acquisition stage. MFFO and Adjusted MFFO also exclude non-cash items such as straight-line rental revenue.  Additionally, we believe that MFFO and Adjusted MFFO provide investors with supplemental performance information that is consistent with the performance indicators and analysis used by management, in addition to net income and cash flows from operating activities as defined by GAAP, to evaluate the sustainability of our operating performance.  MFFO provides comparability in evaluating the operating performance of our portfolio with other non-traded REITs which typically have limited lives with short and defined acquisition periods and targeted exit strategies.  MFFO, or an equivalent measure, is routinely reported by non-traded REITs, and we believe often used by analysts and investors for comparison purposes.
FFO, MFFO and Adjusted MFFO are non-GAAP financial measures and do not represent net income as defined by GAAP. Net income as defined by GAAP is the most relevant measure in determining our operating performance because FFO, MFFO and Adjusted MFFO include adjustments that investors may deem subjective, such as adding back expenses such as depreciation and amortization and the other items described above. Accordingly, FFO, MFFO and Adjusted MFFO should not be considered as alternatives to net income as an indicator of our current and historical operating performance. In addition, FFO, MFFO and Adjusted MFFO do not represent cash flows from operating activities determined in accordance with GAAP and should not be considered an indication of our liquidity. We believe FFO, MFFO and Adjusted MFFO, in addition to net income and cash flows from operating activities as defined by GAAP, are meaningful supplemental performance measures.
Although MFFO includes other adjustments, the exclusion of straight-line rent, the amortization of above- and below-market leases, the accretion of interest income on real estate debt securities, mark to market foreign currency transaction adjustments and extinguishment of debt are the most significant adjustments for the periods presented.  We have excluded these items based on the following economic considerations:
•
Adjustments for straight-line rent.  These are adjustments to rental revenue as required by GAAP to recognize contractual lease payments on a straight-line basis over the life of the respective lease.  We have excluded these adjustments in our calculation of MFFO to more appropriately reflect the current economic impact of our in-place leases, while also providing investors with a useful supplemental metric that addresses core operating performance by removing rent we expect to receive in a future period or rent that was received in a prior period;
•
Amortization of above- and below-market leases.   Similar to depreciation and amortization of real estate assets and lease related costs that are excluded from FFO, GAAP implicitly assumes that the value of intangible lease assets and liabilities diminishes predictably over time and requires that these charges be recognized currently in revenue.  Since market lease rates in the aggregate have historically risen or fallen with local market conditions, management believes that by excluding these charges, MFFO provides useful supplemental information on the realized economics of the real estate;
•
Accretion of interest income on real estate debt securities.   Discounts and closing costs related to debt investments are accreted/amortized over the term of the loan as an adjustment to interest income.  This application results in income recognition that is different than the underlying contractual terms of the debt investments.  We have excluded the accretion of interest income on real estate debt securities in our calculation of MFFO to more appropriately reflect the economic impact of our debt investments, as discounts will not be economically recognized until the loan is repaid and closing costs are essentially the same as acquisition fees and expenses on real estate.  We believe excluding these items provides investors with a useful supplemental metric that directly addresses core operating performance;
•
Mark-to-market foreign currency transaction adjustments. The U.S. Dollar is our functional currency. Transactions denominated in currency other than our functional currency are recorded upon initial recognition at the exchange rate on the date of the transaction. After initial recognition, monetary assets and liabilities denominated in foreign currency are remeasured at each reporting date into the foreign currency at the exchange rate on that date. In addition, we have entered into foreign currency collars and foreign currency options that results in a foreign currency transaction adjustment. These amounts can increase or reduce net income. We exclude them from MFFO to more appropriately present the ongoing operating performance of our real estate investments on a comparative basis; and


39
Table of Contents
PART I.
FINANCIAL INFORMATION (CONTINUED)
Item 2.
Management's Discussion and Analysis of Financial Condition and Results of Operations (continued)

•
Loss on extinguishment of debt . A loss on extinguishment of debt, which includes prepayment fees related to the extinguishment of debt, represents the difference between the carrying value of any consideration transferred to the lender in return for the extinguishment of a debt and the net carrying value of the debt at the time of settlement. We have excluded the loss from extinguishment of debt in our calculation of MFFO because these losses do not impact the current operating performance of our investments and do not provide an indication of future operating performance.
Adjusted MFFO includes adjustments to reduce MFFO related to real estate taxes, property insurance and financing costs which are capitalized with respect to certain of our investments in undeveloped land.  We have included adjustments for the costs incurred necessary to bring these investments to their intended use, as these costs are recurring operating costs that are capitalized in accordance with GAAP and not reflected in our net income (loss) , FFO and MFFO.   
Our calculation of FFO, which we believe is consistent with the calculation of FFO as defined by NAREIT, is presented in the following table, along with our calculations of MFFO and Adjusted MFFO, for the three months ended March 31, 2019 and 2018 (in thousands). No conclusions or comparisons should be made from the presentation of these periods.
 
 
For the Three Months Ended March 31,
 
 
2019
 
2018
Net   income ( loss) attributable to common stockholders
 
$
16,781

 
$
(23,681
)
Depreciation of real estate assets
 
4,424

 
4,118

Amortization of lease-related costs
 
3,257

 
3,147

Gain on sale of real estate (1)
 
(7,575
)
 
(624
)
(Gain) loss  on real estate equity securities
 
(11,165
)
 
16,011

Adjustments for noncontrolling interests - consolidated entities (2)
 
704

 
(121
)
Adjustments for investments in unconsolidated entities  (3)
 
(6,729
)
 
3,339

FFO attributable to common stockholders
 
(303
)
 
2,189

Straight-line rent and amortization of above- and below-market leases
 
(1,522
)
 
(901
)
Accretion  of interest income on real estate debt securities
 
(13
)
 
(107
)
Amortization of net premium/discount on bond and notes payable
 
(20
)
 
14

Loss  on extinguishment of debt
 
856

 
—

Unrealized  loss (gain) on interest rate caps
 
30

 
(31
)
Mark-to-market foreign currency transaction loss , net
 
2,816

 
997

Adjustments for noncontrolling interests - consolidated entities (2)
 
2

 
3

Adjustments for investments in unconsolidated entities (3)
 
(1,617
)
 
(656
)
MFFO attributable to common stockholders
 
229

 
1,508

Other capitalized operating expenses (4)
 
(764
)
 
(746
)
Adjusted MFFO attributable to common stockholders
 
$
(535
)
 
$
762

_____________________
(1) Reflects an adjustment to eliminate gain on sale of real estate, which includes undepreciated land sales.
(2) Reflects adjustments to eliminate the noncontrolling interest holders’ share of the adjustments to convert our net income (loss) attributable to common stockholders to FFO, MFFO and Adjusted MFFO.
(3) Reflects adjustments to add back our noncontrolling interest share of the adjustments to convert our net income (loss) attributable to common stockholders to FFO, MFFO and Adjusted MFFO for our equity investments in unconsolidated joint ventures.
(4) Reflects real estate taxes, property insurance and financing costs that are capitalized with respect to certain of our investments in undeveloped land.  During the periods in which we are incurring costs necessary to bring these investments to their intended use, certain normal recurring operating costs are capitalized in accordance with GAAP and not reflected in our net income (loss) , FFO and MFFO.
FFO, MFFO and Adjusted MFFO may also be used to fund all or a portion of certain capitalizable items that are excluded from FFO, MFFO and Adjusted MFFO, such as tenant improvements, building improvements and deferred leasing costs. We expect FFO, MFFO and Adjusted MFFO to improve in future periods to the extent that we continue to lease up vacant space and acquire additional assets. We expect FFO, MFFO and Adjusted MFFO to decrease as a result of dispositions.

40
Table of Contents
PART I.
FINANCIAL INFORMATION (CONTINUED)
Item 2.
Management's Discussion and Analysis of Financial Condition and Results of Operations (continued)

Distributions
Distributions declared, distributions paid and cash flows provided by operations were as follows for the first quarter of 2019 (in thousands, except per share amounts):
 
 
Distribution Declared
 
Distributions Declared Per Share
 
Distributions Paid (1)
 
Cash Flows Used In Operations
Period
 
 
 
Cash
 
Reinvested
 
Total
 
First Quarter 2019
 
$
578

 
$
0.009

 
$
292

 
$
286

 
$
578

 
$
(7,573
)
On March 7, 2019 , our board of directors authorized a distribution in the amount of $0.00860000 per share of common stock to stockholders of record as of the close of business on March 14, 2019 . We paid this distribution on March 19, 2019 and this was the only distribution declared during the first quarter of 2019 .
For the three months ended March 31, 2019 , we paid aggregate distributions of $0.6 million , including $0.3 million of distributions paid in cash and $0.3 million of distributions reinvested through our dividend reinvestment plan. Our net income attributable to common stockholders for the three months ended March 31, 2019 was $16.8 million and our cash flows used in operations were $7.6 million . Our cumulative distributions paid and net income attributable to common stockholders from inception through March 31, 2019 were $193.7 million and $203.5 million , respectively. We have funded our cumulative distributions paid, which includes net cash distributions and distributions reinvested by stockholders, with proceeds from debt financing of $18.7 million , proceeds from the dispositions of property of $83.4 million and cash provided by operations of $91.6 million . To the extent that we pay distributions from sources other than our cash flow from operations or gains from asset sales, we will have fewer funds available for investment in real estate-related loans, opportunistic real estate, real estate-related debt securities and other real estate-related investments, the overall return to our stockholders may be reduced and subsequent investors may experience dilution.
Critical Accounting Policies
Our consolidated interim financial statements have been prepared in accordance with GAAP and in conjunction with the rules and regulations of the SEC. The preparation of our financial statements requires significant management judgments and assumptions, require estimates about matters that are inherently uncertain and because they are important for understanding and evaluating our reported financial results. These judgments will affect the reported amounts of assets and liabilities and our disclosure of contingent assets and liabilities at the dates of the financial statements and the reported amounts of revenue and expenses during the reporting periods. With different estimates or assumptions, materially different amounts could be reported in our financial statements. Additionally, other companies may utilize different estimates that may impact the comparability of our results of operations to those of companies in similar businesses. A discussion of the accounting policies that management considers critical in that they involve significant management judgments, assumptions and estimates is included in our Annual Report on Form 10-K for the year ended December 31, 2018 filed with the SEC. There have been no significant changes to our policies during 2019 , except for our adoption of the lease accounting standards issued by the Financial Accounting Standards Board effective on January 1, 2019 .
Revenue Recognition - Operating Leases
Real Estate
On January 1, 2019 , we adopted the lease accounting standards under Topic 842 including the package of practical expedients for all leases that commenced before the effective date of January 1, 2019. Accordingly, we (i) did not reassess whether any expired or existing contracts are or contain leases, (ii) did not reassess the lease classification for any expired or existing lease, and (iii) did not reassess initial direct costs for any existing leases. We did not elect the practical expedient related to using hindsight to reevaluate the lease term. In addition, we adopted the practical expedient for land easements and did not assess whether existing or expired land easements that were not previously accounted for as leases under the lease accounting standards of Topic 840 are or contain a lease under Topic 842.
In addition, Topic 842 provides an optional transition method to allow entities to apply the new lease accounting standards at the adoption date and recognize a cumulative-effect adjustment to the opening balance of retained earnings. We adopted this transition method upon its adoption of the lease accounting standards of Topic 842, which did not result in a cumulative effect adjustment to the opening balance of retained earnings on January 1, 2019 . Our comparative periods presented in the financial statements will continue to be reported under the lease accounting standards of Topic 840.

41
Table of Contents
PART I.
FINANCIAL INFORMATION (CONTINUED)
Item 2.
Management's Discussion and Analysis of Financial Condition and Results of Operations (continued)

In accordance with Topic 842, tenant reimbursements for property taxes and insurance are included in the single lease component of the lease contract (the right of the lessee to use the leased space) and therefore are accounted for as variable lease payments and are recorded as rental income on our statement of operations beginning January 1, 2019 . In addition, we adopted the practical expedient available under Topic 842 to not separate nonlease components from the associated lease component and instead to account for those components as a single component if the nonlease components otherwise would be accounted for under the new revenue recognition standard (Topic 606) and if certain conditions are met, specifically related to tenant reimbursements for common area maintenance which would otherwise be accounted for under the revenue recognition standard. We believe the two conditions have been met for tenant reimbursements for common area maintenance as (i) the timing and pattern of transfer of the nonlease components and associated lease components are the same and (ii) the lease component would be classified as an operating lease. Accordingly, tenant reimbursements for common area maintenance are also accounted for as variable lease payments and recorded as rental income on our statement of operations beginning January 1, 2019 .
We recognize minimum rent, including rental abatements, lease incentives and contractual fixed increases attributable to operating leases, on a straight-line basis over the term of the related leases when collectibility is probable and records amounts expected to be received in later years as deferred rent receivable. If the lease provides for tenant improvements, we determine whether the tenant improvements, for accounting purposes, are owned by the tenant or by us. When we are the owner of the tenant improvements, the tenant is not considered to have taken physical possession or have control of the physical use of the leased asset until the tenant improvements are substantially completed. When the tenant is the owner of the tenant improvements, any tenant improvement allowance (including amounts that can be taken in the form of cash or a credit against the tenant’s rent) that is funded is treated as a lease incentive and amortized as a reduction of rental revenue over the lease term. Tenant improvement ownership is determined based on various factors including, but not limited to:
•
whether the lease stipulates how a tenant improvement allowance may be spent;
•
whether the lessee or lessor supervises the construction and bears the risk of cost overruns;
•
whether the amount of a tenant improvement allowance is in excess of market rates;
•
whether the tenant or landlord retains legal title to the improvements at the end of the lease term;
•
whether the tenant improvements are unique to the tenant or general purpose in nature; and
•
whether the tenant improvements are expected to have any residual value at the end of the lease.
We lease apartment units under operating leases with terms generally of one year or less. Generally, credit investigations will be performed for prospective residents and security deposits will be obtained. We recognize rental revenue, net of concessions, on a straight-line basis over the term of the lease, when collectibility is determined to be probable.
In accordance with Topic 842, we make a determination of whether the collectibility of the lease payments in an operating lease is probable. If we determine the lease payments are not probable of collection, we would fully reserve for any contractual lease payments, deferred rent receivable, and tenant reimbursements and would recognize rental income only if cash is received. Beginning January 1, 2019, these changes to our collectibility assessment are reflected as an adjustment to rental income. Prior to January 1, 2019, bad debt expense related to uncollectible accounts receivable and deferred rent receivable was included in operating, maintenance, and management expense in the statement of operations.  Any subsequent changes to the collectibility of the allowance for doubtful accounts as of December 31, 2018, which was recorded prior to the adoption of Topic 842, are recorded in operating, maintenance, and management expense in the statement of operations.
Beginning January 1, 2019 , we, as a lessor, record costs to negotiate or arrange a lease that would have been incurred regardless of whether the lease was obtained, such as legal costs incurred to negotiate an operating lease as an expense and classify such costs as operating, maintenance, and management expense on the our consolidated statement of operations, as these costs are no longer capitalizable under the definition of initial direct costs under Topic 842.

42
Table of Contents
PART I.
FINANCIAL INFORMATION (CONTINUED)
Item 2.
Management's Discussion and Analysis of Financial Condition and Results of Operations (continued)

Subsequent Events
We evaluate subsequent events up until the date the consolidated financial statements are issued.
Probable Real Estate Acquisition
Georgia 400 Center
On May 1, 2019 , we, through an indirect wholly owned subsidiary (the “Buyer”), entered into a purchase and sale agreement to purchase an office property consisting of three buildings containing an aggregate of 416,463 rentable square feet located on an aggregate of 24.4 acres of land in Alpharetta, Georgia (“Georgia 400 Center”). On April 12, 2019 , our advisor entered into a purchase and sale agreement to purchase Georgia 400 Center and on May 1, 2019, our advisor subsequently assigned the purchase and sale agreement, as amended, to the Buyer for $1.0 million , which is the amount of the initial deposit paid by our advisor. The seller is not affiliated with us or our advisor.
Pursuant to the purchase and sale agreement, we would be obligated to purchase the property only after satisfactory completion of agreed upon closing conditions. There can be no assurance that we will complete the acquisition. In some circumstances, if we fail to complete the acquisition, we may forfeit up to $3.0 million of earnest money. The contractual purchase price of Georgia 400 Center is $91.0 million plus closing costs. Georgia 400 Center was built between 1998 and 2001 and is currently 85% leased to 31 tenants.
Distribution Declared
On May 13, 2019 , our board of directors authorized a distribution in the amount of $0.00860000 per share of common stock to stockholders of record as of the close of business on June 14, 2019 . We expect to pay this distribution on or about June 19, 2019 .

43
Table of Contents
PART I.
FINANCIAL INFORMATION (CONTINUED)
Item 3.
Quantitative and Qualitative Disclosures about Market Risk

We are exposed to the effects of interest rate changes as a result of borrowings used to maintain liquidity, fund distributions and to fund the refinancing of our real estate investment portfolio and operations. We may also be exposed to the effects of changes in interest rates as a result of the acquisition and origination of mortgage, mezzanine, bridge and other loans and the acquisition of real estate securities. We are also exposed to the effects of foreign currency changes in Israel with respect to the 4.25% bonds issued to investors in Israel in March 2016. Our profitability and the value of our investment portfolio may be adversely affected during any period as a result of interest rate changes and foreign currency changes. Our interest rate risk management objectives are to limit the impact of interest rate changes on earnings, prepayment penalties and cash flows and to lower overall borrowing costs. We may manage interest rate risk by maintaining a ratio of fixed rate, long-term debt such that floating rate exposure is kept at an acceptable level. In addition, we may utilize a variety of financial instruments, including interest rate caps, floors, and swap agreements, in order to limit the effects of changes in interest rates on our operations. In order to limit the effects of changes in foreign currency on our operations, we may utilize a variety of foreign currency hedging strategies such as cross currency swaps, forward contracts, puts or calls. When we use these types of derivatives to hedge the risk of interest-earning assets or interest-bearing liabilities, we may be subject to certain risks, including the risk that losses on a hedge position will reduce the funds available for payments to holders of our common stock and the risk that the losses may exceed the amount we invested in the instruments. Additionally, certain of these strategies may cause us to fund a margin account periodically to offset changes in foreign currency rates which may also reduce the funds available for payments to holders of our common stock.
As of March 31, 2019 , we had entered into one foreign currency collar to hedge against a change in the exchange rate of the Israeli new Shekel versus the U.S. Dollar. The foreign currency collar expires in August 2019 and has an aggregate Israeli new Shekels notional amount of 776.2 million . The foreign currency collar consists of a purchased call option to buy Israeli new Shekels at 3.4860 and a sold put option to sell the Israeli new Shekels at 3.6185 . The foreign currency collar is intended to permit us to exchange, on the settlement date of the collar, 776.2 million Israeli new Shekels for an amount ranging from $214.5 million to $222.7 million .
As of March 31, 2019 , we held 20,000 Israeli new Shekels and 21.8 million Israeli new Shekels in cash and restricted cash, respectively. In addition, as of March 31, 2019 , we had bonds outstanding and the related interest payable in the amounts of 776.2 million Israeli new Shekels and 2.7 million Israeli new Shekels, respectively. Foreign currency exchange rate risk is the possibility that our financial results could be better or worse than planned because of changes in foreign currency exchange rates. Based solely on the remeasurement for the three months ended March 31, 2019 , if foreign currency exchange rates were to increase or decrease by 10%, our net income would increase or decrease by approximately $18.9 million and $23.2 million , respectively, for the same period. The foreign currency transaction income or loss as a result of the change in foreign currency exchange rates does not take into account any gains or losses on our foreign currency collar as a result of such change, which would reduce our foreign currency exposure.
We borrow funds at a combination of fixed and variable rates. Interest rate fluctuations will generally not affect our future earnings or cash flows on our fixed rate debt unless such instruments mature or are otherwise terminated. However, interest rate changes will affect the fair value of our fixed rate instruments. As of March 31, 2019 , the fair value of our KBS SOR (BVI) Holdings, Ltd. Series A Debentures was $213.3 million and the outstanding principal balance was $213.6 million . As of March 31, 2019 , excluding the KBS SOR (BVI) Holdings, Ltd. Series A Debentures, the fair value of our fixed rate debt was $7.8 million and the outstanding principal balance of our fixed rate debt was $6.2 million . The fair value estimate of our KBS SOR (BVI) Holdings, Ltd. Series A Debentures was calculated using the quoted bond price as of March 31, 2019 on the Tel Aviv Stock Exchange of 100.20 Israeli new Shekels. The fair value estimate of our fixed rate debt was calculated using a discounted cash flow analysis utilizing rates we would expect to pay for debt of a similar type and remaining maturity if the loans were originated as of March 31, 2019 . As we expect to hold our fixed rate instruments to maturity and the amounts due under such instruments would be limited to the outstanding principal balance and any accrued and unpaid interest, we do not expect that fluctuations in interest rates, and the resulting changes in fair value of our fixed rate instruments, would have a significant impact on our operations.

44
Table of Contents
PART I.
FINANCIAL INFORMATION (CONTINUED)
Item 3.
Quantitative and Qualitative Disclosures about Market Risk (continued)


Conversely, movements in interest rates on variable rate debt would change our future earnings and cash flows, but would not significantly affect the fair value of those instruments. However, changes in required risk premiums would result in changes in the fair value of floating rate instruments. As of March 31, 2019 , we were exposed to market risks related to fluctuations in interest rates on $375.9 million of variable rate debt outstanding. As of March 31, 2019 , we had entered into one interest rate cap with a notional amount of $46.9 million that effectively limits one-month LIBOR at 3.0% effective February 21, 2017 through February 13, 2020 and one interest rate cap with a notional amount of $77.5 million that effectively limits one-month LIBOR at 3.5% effective April 2, 2018 through March 5, 2021 . Based on interest rates as of March 31, 2019 , if interest rates were 100 basis points higher or lower during the 12 months ending March 31, 2020 , interest expense on our variable rate debt would increase by $3.5 million or decrease by $3.8 million , respectively.
The weighted-average interest rates of our fixed rate debt and variable rate debt as of March 31, 2019 were 4.3% and 4.4% , respectively. The interest rate and weighted-average interest rate represent the actual interest rate in effect as of March 31, 2019 (consisting of the contractual interest rate and the effect of contractual floor rates, if applicable), using interest rate indices as of March 31, 2019 where applicable.
We are exposed to financial market risk with respect to our real estate equity securities. Financial market risk is the risk that we will incur economic losses due to adverse changes in our real estate equity security prices. Our exposure to changes in real estate equity security prices is a result of our investment in these types of securities. Market prices are subject to fluctuation and, therefore, the amount realized in the subsequent sale of an investment may significantly differ from the reported market value. Fluctuation in the market prices of a real estate equity security may result from any number of factors, including perceived changes in the underlying fundamental characteristics of the issuer, the relative price of alternative investments, interest rates, default rates and general market conditions. In addition, amounts realized in the sale of a particular security may be affected by the relative quantity of the real estate equity security being sold. We do not currently engage in derivative or other hedging transactions to manage our real estate equity security price risk. As of March 31, 2019 , we owned real estate equity securities with a book value of $61.0 million . Based solely on the prices of real estate equity securities as of March 31, 2019 , if prices were to increase or decrease by 10%, our net income would increase or decrease, respectively, by approximately $6.1 million .
Item 4.
Controls and Procedures
Disclosure Controls and Procedures
As of the end of the period covered by this report, management, including our principal executive officer and principal financial officer, evaluated the effectiveness of the design and operation of our disclosure controls and procedures. Based upon, and as of the date of, the evaluation, our principal executive officer and principal financial officer concluded that the disclosure controls and procedures were effective as of the end of the period covered by this report to ensure that information required to be disclosed in the reports we file and submit under the Securities Exchange Act of 1934, as amended (the “Exchange Act”) is recorded, processed, summarized and reported as and when required. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by us in the reports we file and submit under the Exchange Act is accumulated and communicated to our management, including our principal executive officer and our principal financial officer, as appropriate to allow timely decisions regarding required disclosure.
Internal Control Over Financial Reporting
There have been no changes in our internal control over financial reporting that occurred during our last fiscal quarter that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

45
Table of Contents
PART II.
OTHER INFORMATION


Item 1.
Legal Proceedings
None.
Item 1A.
Risk Factors
Please see the risks discussed in Part I, Item 1A of our Annual Report on Form 10-K for the year ended December 31, 2018 , as filed with the SEC.
Item 2.
Unregistered Sales of Equity Securities and Use of Proceeds
a)
During the period covered by this Form 10-Q, we did not sell any equity securities that were not registered under the Securities Act of 1933, as amended.
b)
Not applicable.
c)
We have adopted a share redemption program that may enable stockholders to sell their shares to us in limited circumstances.
Pursuant to the share redemption program there are several limitations on our ability to redeem shares:
•
Unless the shares are being redeemed in connection with a stockholder’s death, “qualifying disability” or “determination of incompetence” (each as defined under the share redemption program), we may not redeem shares until the stockholder has held the shares for one year.
•
During any calendar year, we may redeem no more than 5% of the weighted-average number of shares outstanding during the prior calendar year.
•
We have no obligation to redeem shares if the redemption would violate the restrictions on distributions under Maryland law, which prohibits distributions that would cause a corporation to fail to meet statutory tests of solvency.
During 2019:
•
We may redeem no more than $2.0 million of shares in connection with a stockholder’s death, “qualifying disability” or “determination of incompetence.”
•
We may redeem no more than $2.0 million of shares per fiscal quarter, excluding shares redeemed in connection with a stockholder’s death, “qualifying disability” or “determination of incompetence.” To the extent any of such capacity is unused in a fiscal quarter, it will be carried over to the next fiscal quarter for redemption of shares excluding shares redeemed in connection with a stockholder’s death, “qualifying disability” or “determination of incompetence.”  In addition, to the extent extra capacity from the bullet above is available with respect to redemptions in the last month of 2019, such capacity will be made available for redemption of shares other than in connection with a stockholder’s death, “qualifying disability” or “determination of incompetence.”
After 2019:
•
During any calendar year, we may redeem only the number of shares that we can purchase with the amount of net proceeds from the sale of shares under the our dividend reinvestment plan during the prior calendar year; provided, however, that this limit may be increased or decreased by us upon ten business days’ notice to our stockholders. To the extent that we redeem less than the number of shares that we can purchase in any calendar year with the amount of net proceeds from the sale of shares under our dividend reinvestment plan during the prior calendar year plus any additional funds approved by us, such excess capacity to redeem shares during any calendar year shall be added to our capacity to otherwise redeem shares during the subsequent calendar year. Furthermore, during any calendar year, once we have received requests for redemptions, whether in connection with a stockholder’s death, “qualifying disability or “determination of incompetence”, or otherwise, that if honored, and when combined with all prior redemptions made during the calendar year, would result in the amount of remaining funds available for the redemption of additional shares in such calendar year being $1.0 million or less, the last $1.0 million of available funds shall be reserved exclusively for shares being redeemed in connection with a stockholder’s death, “qualifying disability or “determination of incompetence.” To the extent that, in the last month of any calendar year, the amount of redemption requests in connection with a stockholder’s death, “qualifying disability or “determination of incompetence” is less than the amount of available funds reserved for such redemptions in accordance with the previous sentence, any excess funds may be used to redeem shares not in connection with a stockholder’s death, “qualifying disability or “determination of incompetence” during such month.

46
Table of Contents
PART II.
OTHER INFORMATION (CONTINUED)
Item 2.
Unregistered Sales of Equity Securities and Use of Proceeds (continued)

•
We may not redeem more than $3.0 million of shares in a given quarter (excluding shares redeemed in connection with a stockholder’s death, “qualifying disability” or “determination of incompetence”). To the extent that, in a given fiscal quarter, we redeem less than the sum of (a) $3.0 million of shares (excluding shares redeemed in connection with a stockholder’s death, “qualifying disability” or “determination of incompetence”) and (b) any excess capacity carried over to such fiscal quarter from a prior fiscal quarter as described below, any remaining excess capacity to redeem shares in such fiscal quarter will be added to our capacity to otherwise redeem shares (excluding shares redeemed in connection with a stockholder’s death, “qualifying disability” or “determination of incompetence”) during succeeding fiscal quarter. We may increase or decrease this limit upon ten business days’ notice to stockholders.
We may amend, suspend or terminate the program upon ten business days’ notice to our stockholders. We may provide notice to our stockholders by including such information in a Current Report on Form 8-K or in our annual or quarterly reports, all publicly filed with the SEC, or by a separate mailing to our stockholders.
During the three months ended March 31, 2019 , we fulfilled redemption requests eligible for redemption under our share redemption program and received in good order and funded redemptions under our share redemption program with the net proceeds from our dividend reinvestment plan and cash on hand. We redeemed shares pursuant to our share redemption program as follows:
Month
 
Total Number
of Shares Redeemed  
 
Average Price Paid
Per Share  (1)
 
Approximate Dollar Value of Shares Available That May Yet Be Redeemed Under the Program
January 2019
 
—

 
$
—

 
(2)  
February 2019
 
13,633

 
$
9.91

 
(2)  
March 2019
 
253,283

 
$
9.49

 
(2)  
Total
 
266,916

 
 
 
 
_____________________
(1) On November 12, 2018 , our board of directors approved an estimated value per share of our common stock of $9.91 . The change in the redemption price became effective for the December 2018 redemption date and is effective until the estimated value per share is updated. We expect to update our estimated value per share no later than December 2019 .
On December 4, 2018 , our board of directors adopted an eleventh amended and restated share redemption program (the “Eleventh SRP”).  The Eleventh SRP changed the funding limits for the share redemption program in calendar year 2019 , after which they will revert back to the prior limits.  Absent these changes, based on the amount of net proceeds raised from the sale of shares under the dividend reinvestment plan during 2018 , we would have had $1.4 million available for redemptions during 2019 , including shares that are redeemed in connection with a stockholders’ death, “qualifying disability” or “determination of incompetence.”  As amended, the following will apply during the calendar year 2019 :
•
We may redeem no more than $2.0 million of shares in connection with a stockholder’s death, “qualifying disability” or “determination of incompetence.”
•
We may redeem no more than $2.0 million of shares per fiscal quarter, excluding shares redeemed in connection with a stockholder’s death, “qualifying disability” or “determination of incompetence.” To the extent any of such capacity is unused in a fiscal quarter, it will be carried over to the next fiscal quarter for redemption of shares excluding shares redeemed in connection with a stockholder’s death, “qualifying disability” or “determination of incompetence.”  In addition, to the extent extra capacity from the bullet above is available with respect to redemptions in the last month of 2019 , such capacity will be made available for redemption of shares other than in connection with a stockholder’s death, “qualifying disability” or “determination of incompetence.”
There were no other changes to the share redemption program. The Eleventh SRP became effective for any redemption request received after December 21, 2018 , which was the last day for a request to be received and processed in 2018 under the Tenth Amended Share Redemption Program.
(2) We limit the dollar value of shares that may be redeemed under the program as described above. During the three months ended March 31, 2019 , we redeemed $2.5 million of common stock under the program, which represented all redemption requests received in good order and eligible for redemption through the March 2019 redemption date, except for the $31.0 million of shares in connection with redemption requests not made upon a stockholder’s death, “qualifying disability” or “determination of incompetence,” which redemption requests will be fulfilled subject to the limitations described above. Based on the Eleventh SRP, we have $7.5 million available for redemptions in the remainder of 2019 , including shares that are redeemed in connection with a stockholders’ death, “qualifying disability” or “determination of incompetence,” subject to the limitations described above.

47
Table of Contents
PART II. OTHER INFORMATION (CONTINUED)

Item 3.
Defaults upon Senior Securities
None.
Item 4.
Mine Safety Disclosures
None.
Item 5.
Other Information
None.

48
Table of Contents
PART II.
OTHER INFORMATION (CONTINUED)
Item 6.
Exhibits

Ex.
 
Description
 
 
 
3.1
 
 
 
 
3.2
 
 
 
 
4.1
 
 
 
 
4.2
 
 
 
 
10.1
 
 
 
 
10.2
 
 
 
 
10.3
 
 
 
 
10.4
 
 
 
 
10.5
 
 
 
 
10.6
 
 
 
 
10.7
 
 
 
 
10.8
 
 
 
 
10.9
 
 
 
 
10.10
 
 
 
 
10.11
 
 
 
 
10.12
 
 
 
 
10.13
 
 
 
 
31.1
 
 
 
 
31.2
 
 
 
 
32.1
 
 
 
 
32.2
 
 
 
 

49
Table of Contents
PART II.
OTHER INFORMATION (CONTINUED)
Item 6.
Exhibits

99.1
 
 
 
 
101.INS
 
XBRL Instance Document
 
 
 
101.SCH
 
XBRL Taxonomy Extension Schema
 
 
 
101.CAL
 
XBRL Taxonomy Extension Calculation Linkbase
 
 
 
101.DEF
 
XBRL Taxonomy Extension Definition Linkbase
 
 
 
101.LAB
 
XBRL Taxonomy Extension Label Linkbase
 
 
 
101.PRE
 
XBRL Taxonomy Extension Presentation Linkbase

50
Table of Contents

SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
 
 
 
 
 
 
 
KBS STRATEGIC OPPORTUNITY REIT, INC.
 
 
 
 
Date:
May 14, 2019
By:
/S/ K EITH  D. H ALL        
 
 
 
Keith D. Hall
 
 
 
Chief Executive Officer and Director
 
 
 
(principal executive officer)
 
 
 
 
Date:
May 14, 2019
By:
/S/ J EFFREY  K. W ALDVOGEL        
 
 
 
Jeffrey K. Waldvogel
 
 
 
Chief Financial Officer, Treasurer and Secretary
 
 
 
(principal financial officer)

51

Exhibit 10.1
TO BE FILED IN THE OFFICE OF THE CLERK OF NEW YORK COUNTY
 
$45,900,000.00 BUILDING LOAN
AMENDED AND RESTATED BUILDING LOAN AGREEMENT

Between
110 WILLIAM PROPERTY INVESTORS III, LLC,

as Borrower,
LENDERS SIGNATORY HERETO
FROM TIME TO TIME,
as Lenders,
and
INVESCO CMI INVESTMENTS, L.P.
as Administrative Agent and Lender


County:
New York
 
Block:
77
 
Lots:
8
 
Premises:
110 William Street
New York, New York
 
UPON RECORDATION RETURN TO:
Greenberg Traurig, P.A.
333 S.E. 2nd Avenue
Miami, Florida 33133
Attention: Richard J. Giusto, Esq. 021497.999802



TABLE OF CONTENTS
 
 
 
Page

 
 
I.
DEFINITIONS; PRINCIPLES OF CONSTRUCTION
2

 
Section 1.1
Definitions
2

 
Section 1.2
Senior Loan Agreement Definitions
14

 
Section 1.3
Principles of Construction
14

 
 
 
 
II.
THE LOAN
14

 
Section 2.1
The Loan
14

 
Section 2.2
The Interest Rate
15

 
Section 2.3
Loan Payments
19

 
Section 2.4
Prepayments
20

 
Section 2.5
Regulatory Change; Taxes
20

 
Section 2.6
Advances
21

 
Section 2.7
Method of Disbursement of Loan Proceeds
30

 
Section 2.8
Mitigation Obligations; Replacement of Lenders
33

 
 
 
 
III.
REPRESENTATIONS AND WARRANTIES
33

 
 
 
 
IV.
BORROWER COVENANTS
33

 
 
 
 
V.
INSURANCE, CASUALTY AND CONDEMNATION
33

 
 
 
 
VI.
RESERVE FUNDS
34

 
 
 
 
VII.
DEFAULTING LENDER
34

 
 
 
 
VIII.
PERMITTED TRANSFERS
34

 
 
 
 
IX.
SECONDARY MARKET TRANSACTION
34

 
 
X.
DEFAULTS
34

 
 
 
 
XI.
MISCELLANEOUS
35

 
 
 
 
XII.
[RESERVED]
35

 
 
 
 
XIII.
ADMINISTRATIVE AGENT AND AGREEMENTS AMONG LENDERS
35

 
 
 
 
XIV.
SENIOR LOAN DOCUMENTS
35

 
 
 
 
Schedule I -
Commitments
 
Schedule II -
Section 22 Affidavit
 
 
 
 
 
 
 
 
 

-ii-


AMENDED AND RESTATED BUILDING LOAN AGREEMENT
THIS AMENDED AND RESTATED BUILDING LOAN AGREEMENT , dated as of March 7, 2019 (as amended, restated, replaced, supplemented or otherwise modified from time to time, this “ Agreement ”), among 110 WILLIAM PROPERTY INVESTORS III, LLC , a Delaware limited liability company, having an address at c/o Savanna, 430 Park Avenue, 12th Floor, New York, New York 10022 (together with its successors and/or assigns, “ Borrower ”) and INVESCO CMI INVESTMENTS, L.P. , a Delaware limited partnership having an address at c/o Invesco Real Estate, 2001 Ross Avenue, Suite 3400, Dallas Texas 75201, as administrative agent for the Lenders (in such capacity, together with its successors in such capacity, the “ Administrative Agent ”) and as a Lender, and each of the lenders that is a signatory hereto on the signature pages hereof and each lender that becomes a “Lender” after the date hereof (individually, a “ Lender ” and, collectively, the “ Lenders ”).
WITNESSETH:
WHEREAS, Morgan Stanley Mortgage Capital Holdings LLC, a New York limited liability company, as administrative agent for Morgan Stanley Bank, N.A., a national banking association and other lenders from time to time (" Existing Lender ") made to Borrower a building loan in the maximum principal amount of $27,338,496.00 (the " Original Building Loan "), pursuant to the terms of that certain Building Loan Agreement, dated as of March 6, 2017 (the " Original Building Loan Agreement "), by and among Borrower and Existing Lender, and which Original Building Loan Agreement has been assigned by Existing Lender and assumed by Lender on the date hereof;
WHEREAS, as of the date hereof, Lender is the holder of the Original Building Loan Note (hereinafter defined), Original Building Loan Mortgage (hereinafter) and Original Building Loan Agreement;
WHEREAS, as of the date hereof, the outstanding principal balance of the Original Building Loan is $24,808,660.24.
WHEREAS, Borrower has requested that Lender lend to Borrower the maximum principal amount of $45,900,000.00 or so much thereof as may be advanced (the " Building Loan ") which shall be evidenced by the Note (hereinafter defined) and advanced pursuant to the terms and conditions of this Agreement;
WHEREAS, in furtherance of the foregoing Borrower has requested that Lender agree to amend, restate, supersede and replace in full the terms and provisions of the Original Building Loan Agreement; and
NOW THEREFORE, in consideration of the premises and the covenants and agreements hereinafter set forth, and in and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree that this Agreement is deemed to amend, modify, restate and replace the Original Building Loan Agreement so that this



Agreement shall hereafter constitute evidence of but one agreement and the terms, covenants, agreements, rights, obligations and conditions contained in this Agreement shall supersede and control the terms, covenants, agreements, rights, obligations and conditions of the Original Building Loan Agreement as follows:
I. DEFINITIONS; PRINCIPLES OF CONSTRUCTION
Section 1.1      Definitions .
For all purposes of this Agreement, except as otherwise expressly provided:
“ Accounting Principles ” shall mean a GAAP or Federal income tax basis or other accounting principles reasonably approved by Administrative Agent.
“ Administrative Agent ” means Invesco CMI Investments, L.P., in its capacity as contractual representative for the Lenders pursuant to Article XIII hereof, and not in its individual capacity as a Lender, and any successor Administrative Agent appointed pursuant to Article XIII .
“ Affiliate ” shall mean, as to any Person, any other Person that is in direct and/or indirect Control of, is directly and/or indirectly Controlled by or is under common direct and/or indirect ownership or Control with such Person.
“ Aggregate Outstanding Principal Balance ” shall mean the sum of (i) the Outstanding Principal Balance of the Loan, (ii) the Senior Loan Outstanding Principal Balance and (iii) the Mezzanine Outstanding Principal Balance.
“ Agreement ” shall have the meaning set forth in the introductory paragraph hereto.
“ ALTA ” shall mean American Land Title Association, or any successor thereto.
“ Applicable Interest Rate ” means, except as provided in subsections (i) and (ii) below, from the date hereof until the Interest Rate Replacement Date, if any, the rate of interest equal to the sum of: (a) the LIBOR Interest Rate, plus (b) the Applicable Spread; provided, however: (i) if Administrative Agent makes a LIBOR Rate Unavailable Determination, in accordance with Section 2.2.3(b) hereof, then the Applicable Interest Rate with respect to the Loan shall convert to the Base Rate in accordance with said section; and (ii) notwithstanding subsection (i) above, if Administrative Agent should, at any time, make a LIBOR Rate Discontinued Determination, in accordance with Section 2.2.3(c) hereof, then from and after the Interest Rate Replacement Date, the Applicable Interest Rate shall be equal to the sum of: (x) the Substitute Rate, plus (y) the Substitute Spread; provided, however, that in no event shall the Applicable Interest Rate ever be less than 2.00%.
“ Applicable Spread ” shall mean 1.50%.
“ Approved Costs ” shall have the meaning set forth in Section 2.6.4 .

-2-


“ Assignment of Leases ” shall mean that certain subordinate Assignment of Leases and Rents, dated as of the date hereof, from Borrower, as assignor, to Administrative Agent, for the benefit of the Lenders, as assignee, as the same may be amended, restated, supplemented or otherwise modified from time to time.
“ Base Rate ” for any Interest Period, shall mean the sum of (a) the Federal Funds Rate, determined as of the Determination Date related to such Interest Period, plus (b) the Base Rate Margin.
“ Base Rate Margin ” shall mean the difference between (a) the Applicable Interest Rate as in effect immediately prior to a LIBOR Rate Unavailable Determination and (b) the Federal Funds Rate in effect as of such LIBOR Rate Unavailable Determination.  Once determined, the Base Rate Margin shall remain constant for so long as the Base Rate shall be in effect.
“ Borrower ” shall have the meaning set forth in the introductory paragraph hereto.
“ Borrower Party ” shall mean each of Borrower, Mezzanine Borrower and Guarantor.
“ Borrower Related Party ” means, collectively and individually, any Borrower Party and any Affiliate of any of the foregoing.
“ Borrower’s Requisition ” shall have the meaning set forth in Section 2.7.1.
“ Breakage Costs ” shall have the meaning set forth in Section 2.2.3(g) .
“ Building Loan Costs ” shall mean Costs of the Improvements with respect to the Property.
“ Build Out Work ” shall mean “Build Out Work” as defined in the Senior Loan Agreement.
“ Capital Expenditures ” shall mean, for any period, amounts expended for replacements and alterations to the Property, excluding any Tenant Improvements, which are required to be capitalized according to Accounting Principles.
“ Capital Expenditures Work ” shall mean any labor performed or materials installed in connection with any Capital Expenditure.
“ Commitment ” shall mean, as to each Lender, such Lender’s obligation to make disbursements pursuant to this Agreement, in an amount up to, but not exceeding the amount set forth for such Lender on Schedule I attached hereto as such Lender’s “Commitment Amount” or as otherwise agreed by the applicable Lenders.
“ Construction Consultant ” shall mean any Person (which may be an Affiliate of Administrative Agent) as Administrative Agent may designate and engage to inspect the Capital Expenditures Work and Tenant Improvement Work, as work progresses, and consult with and to provide advice to and to render reports to Administrative Agent. Notwithstanding anything to the contrary contained herein, provided that no Event of Default is then continuing, the same

-3-


Person shall be the Construction Consultant under both the Loan, the Senior Loan and Mezzanine Loan.
“ Construction Management Agreement ” shall mean (i) the Construction Management Agreement or (ii) any replacement construction management agreement entered into by and between Borrower and a replacement construction manager in accordance with the terms of the Loan Documents, in each case, pursuant to which such construction manager is to provide construction management services with respect to the Property.
“ Construction Manager ” shall mean (i) Savcon, LLC, a Delaware limited liability company and (ii) or any other construction manager engaged by Borrower in accordance with the terms and conditions of the Loan Documents.
“ Contracts ” shall mean all contracts, agreements, warranties, guaranties and representations relating to or governing the use, occupancy, operation, management, name, repair and service of the Property entered into by Borrower, Property Manager or their Affiliates.
“ Control ” shall mean, with respect to any Person, the possession, directly or indirectly, of the power to direct or cause the direction of the management policies or day-to-day activities of a Person, directly or indirectly, through the ownership of voting securities, by contract or otherwise, including, without limitation, having approval or consent rights over the actions or conduct of a Person, and the terms Controlled, Controlling and Common Control shall have correlative meanings.
“ Costs of the Improvements ” shall mean those items defined as a “cost of improvement” under Section 2 of Article 1 of the Lien Law.
“ Debt ” shall mean the then outstanding principal amount of the Loan together with all interest accrued and unpaid thereon and all other sums due to the Lenders in respect of the Loan under the Note, this Agreement and any other Loan Document (including, without limitation, all costs and expenses payable to the Lenders thereunder).
“ Debt Service ” shall mean, with respect to any particular period, the sum of the amount of interest and principal (if any) due pursuant to and in accordance with this Agreement with respect to such particular period.
“ Default Rate ” shall mean, with respect to the Loan, a rate per annum equal to the lesser of (i) the Maximum Legal Rate or (ii) five percent (5%) above the Applicable Interest Rate.
“ Determination Date ” shall mean, with respect to each Interest Period, the date that is two (2) London Business Days prior to the fifteenth (15th) day of the calendar month in which such Interest Period commences; provided, however, that Administrative Agent shall have the right to change the Determination Date to any other day upon written notice to Borrower (in which event such change shall then be deemed effective) and, if requested by Administrative Agent, Borrower shall promptly execute an amendment to this Agreement in form reasonably acceptable to Borrower to evidence such change; provided that the “Determination Date” of the Loan and Mezzanine Loan shall always be the same.

-4-


“ Event of Default ” shall mean an “Event of Default” as defined in the Senior Loan Agreement.
“ Federal Funds Rate ” shall mean, for any period, a fluctuating interest rate per annum equal for each day during such period to the weighted average of the rates on overnight Federal Funds transactions with members of the Federal Reserve System arranged by Federal Funds brokers, as published for such day (or, if such day is not a Business Day, for the next preceding Business Day) by the Federal Reserve Bank of New York, or, if such rate is not so published for any day which is a Business Day, the average of the quotations for such day on such transactions received by Administrative Agent from three Federal Funds brokers of recognized standing selected by Administrative Agent; provided, however, that if the Federal Funds Rate determined as provided above would be less than LIBOR Floor, then the Federal Funds Rate shall be deemed to be LIBOR Floor.
“ First Extension Maturity Date ” shall mean the “First Extension Maturity Date” as defined in the Senior Loan Agreement.
“ Future Advance ” or “ Future Advances ” shall mean, collectively, the Future Advance (Capital Expenditures), Future Advance (TI/LCs) and Future Advance (Interest/Carry Shortfall).
“ Future Advance (Capital Expenditures) ” or “ Future Advances (Capital Expenditures) ” shall mean one or more advances of a portion of the Future Funding Amount in the aggregate of up to Seven Million Three Hundred Fifty Thousand and No/100 Dollars ($7,350,000.00) available to Borrower, pursuant to Section 2.6 hereof, to reimburse Borrower or pay third parties directly for the Lenders’ Percentage of the actual cost incurred by or to be incurred by Borrower with respect to Capital Expenditures Work to be completed in accordance with the terms hereof.
“ Future Advance (Interest/Carry Shortfalls) ” or “ Future Advances (Interest/Carry Shortfall) ” shall mean one or more advances of a portion of the Future Funding Amount in the aggregate of up to Four Million Six Hundred Fifty Thousand and No/100 Dollars ($4,650,000.00) available to Borrower, pursuant to Section 2.6 of the Senior Loan Agreement, to pay for Interest/Carry Shortfall.
“ Future Advance (TI/LCs) ” or “ Future Advances (TI/LCs) ” shall mean, as applicable, one or more advances of a portion of the Future Funding Amount in the aggregate of up to Thirty Eight Million Five Hundred Fifty Thousand and No/100 Dollars ($38,550,000.00) available to Borrower, pursuant to Section 2.6 hereof, to reimburse Borrower or pay third parties directly for Lenders’ Percentage of the actual cost incurred or to be incurred by Borrower with respect to TI/LC Costs, of which $0 has been advanced on the date hereof.
“ Future Funding Amount ” shall mean a portion of the Loan and Senior Loan, as applicable, consisting of Future Advances not to exceed Fifty Million Five Hundred Fifty Thousand and No/100 Dollars ($50,550,000.00), in the aggregate, available to be advanced to Borrower in accordance with the terms and conditions set forth in this Agreement and the Senior Loan Agreement, as applicable, of which $0 has been advanced on the date hereof.
“ Future Funding Reserve Account ” shall mean the “Future Funding Reserve Account”

-5-


as defined in the Senior Loan Agreement.
“ GAAP ” shall mean generally accepted accounting principles set forth in the opinions and pronouncements of the Accounting Principles Board and the American Institute of Certified Public Accountants and statements and pronouncements of the Financial Accounting Standards Board (or agencies with similar functions of comparable stature and authority within the accounting profession), or in such other statements by such entity as may be in general use by significant segments of the U.S. accounting profession.
“ Governmental Approvals ” shall mean all approvals, consents, waivers, orders, acknowledgments, authorizations, inspections, signoffs, permits and licenses required under applicable Legal Requirements to be obtained from any Governmental Authority for the use, occupancy and operation of the Improvements, including, without limitation, all land use, building, subdivision, zoning, environmental and similar ordinances and regulations promulgated by any Governmental Authority.
“ Governmental Authority ” shall mean any court, board, agency, commission, office or authority of any nature whatsoever or any governmental unit (federal, state, county, district, municipal, city, foreign or otherwise) whether now or hereafter in existence.
“ Guarantor ” shall mean KBS Guarantor and Savanna Guarantor, or any successor guarantor(s) thereof in accordance with this Agreement).
“ Improvements ” shall have the meaning set forth in the granting clause of the Mortgage.
“ Initial Maturity Date ” shall mean April 9, 2021.
“ Interest Period ” shall mean (a) for the first interest period hereunder, (i) if the Closing Date occurs on or before the fifteenth (15th) day of a calendar month, the period commencing on the Closing Date and ending on (and including) the fourteenth (14th) day of the calendar month in which the Closing Date occurs, and (ii) if the Closing Date occurs on or after the fifteenth (15th) day of a calendar month, the period commencing on the Closing Date and ending on (and including) the fourteenth (14th) day of the following calendar month and (b) for each interest period thereafter commencing April 15, 2019, the period commencing on the fifteenth (15th) day of each calendar month and ending on (and including) the fourteenth (14th) day of the following calendar month; provided that the “Interest Period” under the Loan and the Mezzanine Loan shall always be the same. Each Interest Period as set forth in clause (b) above shall be a full month and shall not be shortened by reason of any payment of the Loan prior to the expiration of such Interest Period.
“ Interest Rate Replacement Date ” means the date on which Administrative Agent implements a Substitute Rate.
“ KBS Guarantor ” shall mean KBS SOR Properties, LLC, a Delaware limited liability company.
“ Lease ” shall mean any lease, sublease or subsublease, letting, license, concession or other agreement (whether written or oral and whether now or hereafter in effect) pursuant to

-6-


which any Person is granted a possessory interest in, or right to use or occupy all or any portion of any space in the Property, and every modification, amendment or other agreement relating to such lease, sublease, subsublease, or other agreement entered into in connection with such lease, sublease, subsublease, or other agreement and every guarantee of the performance and observance of the covenants, conditions and agreements to be performed and observed by the other party thereto. In no event shall the term “Lease” include any subleases, underleases or similar agreements, except solely to the extent of Borrower’s interest, if any, thereunder.
“ Leasing Commissions ” shall mean the leasing commissions required to be paid by Borrower pursuant to the terms and provisions of the Leasing Agreement for procuring Leases with respect to the Property or any other leasing commission agreement with respect to the Property.
“ Legal Requirements ” shall mean, individually and/or collectively, as the context may require, all federal, state, county, municipal and other governmental statutes, laws, rules, orders, regulations, ordinances, judgments, decrees and injunctions of Governmental Authorities having jurisdiction over the Loan, any Secondary Market Transaction with respect to the Loan, any Borrower Party, the Property or any part thereof or the construction, use, alteration, operation or sale thereof, or any part thereof, whether now or hereafter enacted and in force, including, without limitation, the rules and regulations promulgated pursuant to the Dodd-Frank Wall Street Reform and Consumer Protection Act, zoning and land use laws, the Americans with Disabilities Act of 1990, and all permits, licenses and authorizations and regulations relating thereto, and all covenants, agreements, restrictions and encumbrances contained in any instruments, either of record or known to Borrower, at any time in force affecting the Property or any part thereof, including, without limitation, any which may (i) require repairs, modifications or alterations in or to the Property or any part thereof, or (ii) in any way limit the use and enjoyment thereof..
“ Lender ” shall have the meaning set forth in the introductory paragraph hereto.
“ Lenders’ Percentage ” shall mean 75%.
“ LIBOR ” shall mean, with respect to each Interest Period, the rate (expressed as a percentage per annum and rounded upward, as necessary, to the next nearest 1/1000 of 1%) equal to the rate reported for deposits in U.S. dollars, for a one-month period, that appears on Bloomberg Screen LIBOR01 Page (or the successor thereto) as of 11:00 a.m., London time, on the related Determination Date; provided that, (i) if such rate does not appear on Bloomberg Screen LIBOR01 Page as of 11:00 a.m., London time, on such Determination Date, Administrative Agent shall request the principal London Office of any four major reference banks in the London interbank market selected by Administrative Agent to provide such bank’s offered quotation (expressed as a percentage per annum) to prime banks in the London interbank market for deposits in U.S. dollars for a one month period as of 11:00 a.m., London time, on such Determination Date for the amounts for a comparable loan at the time of such calculation and, if at least two such offered quotations are so provided, LIBOR shall be the arithmetic mean of such quotations, and (ii) if fewer than two such quotations in clause (i) are so provided, Administrative Agent shall request any three major banks in New York City selected by Administrative Agent to provide such bank’s rate (expressed as a percentage per annum) for loans in U.S. dollars to leading European banks for a one-month period as of approximately

-7-


11:00 a.m., New York City time on the applicable Determination Date for the amounts for a comparable loan at the time of such calculation and, if at least two such rates are so provided, LIBOR shall be the arithmetic mean of such rates. Administrative Agent’s computation of LIBOR shall be conclusive and binding on Borrower for all purposes, absent manifest error. Notwithstanding anything to the contrary set forth herein, in no event shall LIBOR ever be less than the LIBOR Floor.
“ LIBOR Floor ” shall mean 2.00%.
“ LIBOR Interest Rate ” shall mean with respect to each Interest Period the quotient of (i) LIBOR applicable to the Interest Period divided by (ii) a percentage equal to 100% minus the Reserve Requirement (if any) applicable to the Interest Period.
“ LIBOR Loan ” shall mean the Loan at any time in which the Applicable Interest Rate is calculated at LIBOR Interest Rate plus the Applicable Spread in accordance with the provisions of Article II hereof.
“ LIBOR Rate Discontinued Determination ” shall have the meaning set forth in Section 2.2.3(c) .
“ LIBOR Rate Unavailable Determination ” shall have the meaning set forth in Section 2.2.3(b) .
“ Lien ” shall mean any mortgage, deed of trust, lien, pledge, hypothecation, assignment, security interest, or any other encumbrance, charge or transfer of, or any agreement to enter into or create any of the foregoing, on or affecting the Property or any portion thereof or any direct or indirect interest in Borrower including, without limitation, any conditional sale or other title retention agreement, any financing lease having substantially the same economic effect as any of the foregoing, the filing of any financing statement, and mechanic’s, materialmen’s and other similar liens and encumbrances.
“ Lien Law ” shall mean the Lien Law of the State of New York.
“ Loan ” shall have the meaning set forth in Section 2.1 .
“ Loan Documents ” shall mean, collectively, this Agreement, the Note, the Mortgage, the Assignment of Leases, the Cash Management Agreement, the Clearing Account Agreement, the Working Capital Account Agreement, the Environmental Indemnity, the Recourse Guaranty, the Completion Guaranty, the Assignment of Management Agreement, the Assignment of Project Management Agreement, the Assignment of Leasing Agreement, the Assignment of Construction Management Agreement, the Assignment of Protection Agreement and any other document pertaining to the Property as well as all other documents now or hereafter executed and/or delivered in connection with the Loan, as the same may be amended, restated, replaced, supplemented or otherwise modified from time to time.
London Business Day ” shall mean any day other than a Saturday, Sunday or any other day on which commercial banks in London, England or New York, New York are not open for business.

-8-


“ Losses ” shall mean actual liabilities, obligations, losses, damages (excluding special, consequential, punitive or indirect damages, unless the same are asserted against Administrative Agent, each Lender or any Indemnified Party by a third party and actually incurred), penalties, actions, judgments, suits, claims, costs, expenses and disbursements of any kind or nature whatsoever (including, without limitation, the reasonable out-of-pocket fees and disbursements of third-party counsel related thereto).
“ Manager ” shall mean Transwestern Commercial Services New York, L.L.C. d/b/a Transwestern, a Delaware limited liability company (“ Initial Manager ”), or any other property manager engaged by Borrower in accordance with the terms and conditions of the Loan Documents.
“ Maturity Date ” shall mean the “Maturity Date” as such term is defined in the Senior Loan Agreement.
“ Maximum Legal Rate ” shall mean the maximum non-usurious interest rate, if any, that at any time or from time to time may be contracted for, taken, reserved, charged or received on the indebtedness evidenced by the Note and as provided for herein or the other Loan Documents, under the laws of such state or states whose laws are held by any court of competent jurisdiction to govern the interest rate provisions of the Loan.
“ Mezzanine Administrative Agent ” shall mean Invesco CMI Investments, L.P., a Delaware limited partnership.
“ Mezzanine Borrower ” shall mean 110 William Mezz III, LLC, a Delaware limited liability company.
“ Mezzanine Lender ” shall mean, individually or collectively, as the context may require, Invesco CMI Investments, L.P., a Delaware limited partnership, and each other lender that becomes party to the Mezzanine Loan Agreement.
“ Mezzanine Lender’s Percentage ” shall mean 25%.
“ Mezzanine Loan ” shall mean that certain mezzanine loan in the maximum principal amount of up to $87,125,000.00 made on the date hereof by Mezzanine Lender to Mezzanine Borrower, and evidenced and secured by the Mezzanine Loan Documents.
“ Mezzanine Loan Agreement ” shall mean the Mezzanine Loan Agreement dated as of the date hereof and made by and between Mezzanine Borrower, Mezzanine Administrative Agent and Mezzanine Lender.
“ Mezzanine Loan Documents ” shall mean the “Mezzanine Loan Documents” as defined in the Senior Loan Agreement.
“ Mezzanine Outstanding Principal Balance ” shall have the meaning of “Outstanding Principal Balance” set forth in the Mezzanine Loan Agreement.
“ Mezzanine Pro Rata Share ” shall mean the quotient of (a) the Mezzanine Outstanding

-9-


Principal Balance and (b) Aggregate Outstanding Principal Balance.
“ Minimum Advance Amount ” shall mean $37,500.00 in the aggregate for a Future Advance under this Agreement and the Senior Loan Agreement.
“ Monthly Debt Service Payment Amount ” shall mean on each Monthly Payment Date through and including the Maturity Date, an amount equal to the interest accruing on the Outstanding Principal Balance at the Applicable Interest Rate (or at the Default Rate, as applicable) for the immediately preceding Interest Period, which interest shall be calculated in accordance with Section 2.2 .
“ Monthly Payment Date ” shall mean the ninth (9 th ) calendar day of each calendar month during the term of the Loan, and if such day is not a Business Day, then the Business Day immediately preceding such day.
“ Mortgage ” shall mean (i) that certain Consolidated, Amended and Restated Building Loan Mortgage, Assignment of Leases and Rents and Security Agreement, dated as of the date hereof, which Consolidated, Amended and Restated Building Loan Mortgage, Assignment of Leases and Rents and Security Agreement, is for a principal amount equal to $215,475,000.00 and (ii) each Serial Mortgage, as each may be amended, restated, replaced, supplemented or otherwise modified from time to time.
“ Note ” shall have the meaning set forth in Section 2.1.3 .
“ Notice ” shall have the meaning set forth in Section 11.6 .
“ Obligations ” shall mean, collectively, Borrower’s obligations for the payment of the Debt and the performance of all obligations of Borrower contained in the Loan Documents.
“ Open Prepayment Date ” shall mean the Monthly Payment Date occurring in May, 2020.
“ Original Building Loan Note ” shall mean the “Note” as defined in the Original Building Loan Agreement.
“ Original Building Loan Mortgage ” shall mean the “Mortgage” as defined in the Original Building Loan Agreement.
“ Outstanding Principal Balance ” means, as of any date, the then outstanding principal balance of the Loan.
“ Patriot Act ” shall have the meaning set forth in Section 3.1.41(a) .
“ Permitted Encumbrances ” shall mean, collectively, (i) the Liens and security interests created by the Loan Documents, the Senior Loan Documents and the Mezzanine Loan Documents, (ii) all Liens, encumbrances and other matters accepted by Administrative Agent, for the benefit of the Lenders, as of closing under the Title Insurance Policy, (iii) Liens, if any, for Taxes imposed by any Governmental Authority not yet due and delinquent, or if due and

-10-


delinquent, are being contested in good faith in accordance with the terms hereof, (iv) any workers’, mechanics’ or other similar Liens on the Property provided that either (x) any such Lien is bonded or discharged or diligently contested in good faith in accordance with the terms hereof or (y) if such Lien is filed in connection with Tenant Improvement Work being performed by a Tenant, Borrower is using commercially reasonable efforts in accordance with the applicable Lease to cause such Tenant to remove such Lien, (v) as to items created or modified after the date hereof, dedications (or modifications of dedications) of portions of the Property or the grant (or modifications of grants) of easements, restrictions, covenants, reservations, rights-of-way and similar encumbrances, entered into in the ordinary course of business for traffic circulation, ingress, egress, parking, access, utilities or for other similar purposes, which are not monetary encumbrances against the Property, do not create material affirmative obligations on behalf of the Property and which do not, individually or in the aggregate, materially and adversely affect the value, use or operation of the Property, (vi)  Approved Equipment Financing (as defined in Section 4.26 hereof), (vii) Leases entered into in accordance with the Loan Documents, (viii) subordination, non-disturbance and attornment agreements executed with respect to Leases, (ix) memoranda of Leases, and (x) such other title and survey exceptions as Administrative Agent has approved or may approve in writing in Administrative Agent’s sole discretion.
“ Permitted Indebtedness ” shall mean “Permitted Indebtedness” as defined in the Senior Loan Agreement.
“ Permitted Transfer ” shall mean a “Permitted Transfer” as defined in the Senior Loan Agreement.
“ Person ” shall mean any individual, corporation, partnership, limited liability company, joint venture, estate, trust, unincorporated association, any other entity, any federal, state, county or municipal government or any bureau, department or agency thereof and any fiduciary acting in such capacity on behalf of any of the foregoing.
“ Property ” shall mean the parcel of real property, the Improvements thereon and all personal property owned by Borrower and encumbered by the Mortgage, together with all appurtenances and other rights pertaining to such property and Improvements, all as more particularly described in the granting clauses of the Mortgage and referred to therein as the “Property”.
“ Pro Rata Share ” shall mean, as to each Lender, the ratio, expressed as a percentage, of (a) the amount of such Lender’s Commitment to (b) the aggregate amount of the Commitments of all Lenders hereunder; provided, however, that if at the time of determination the Commitments have terminated or been reduced to zero, the “Pro Rata Share” of each Lender shall be the Pro Rata Share of such Lender in effect immediately prior to such termination or reduction.
“ Recipient ” meads Administrative Agent or any Lender, as applicable.
“ Regulation D ” shall mean Regulation D of the Board of Governors of the Federal Reserve System from time to time in effect, including any successor or other Regulation or

-11-


official interpretation of said Board of Governors relating to reserve requirements applicable to member banks of the Federal Reserve System.
“ Regulatory Change ” shall mean the occurrence, after the date of this Agreement, of any of the following: (a) the adoption or taking effect of any law, rule, regulation or treaty; (b) any change in any law, rule, regulation or treaty or in the administration, interpretation, implementation or application thereof by any Governmental Authority, including, without limitation, with respect to the Dodd-Frank Wall Street Reform and Consumer Protection Act and all requests, rules, guidelines or directives thereunder or issued in connection therewith; or (c) the making or issuance of any request, rule, guideline or directive (whether or not having the force of law) by any Governmental Authority.
“ Requested Advance Date ” shall have the meaning set forth in Section 2.7.2(a) .
“ Savanna Guarantor ” shall mean, individually and collectively, jointly and severally, Savanna Real Estate Fund III, L.P., a Delaware limited partnership (“ Savanna Fund III ”) and its parallel partnerships.
“ Second Extension Option ” shall mean the “Second Extension Option” as defined in the Senior Loan Agreement.
“ Senior Loan ” shall mean the first priority mortgage loan in the maximum principal amount of up to Two Hundred Fifteen Million Four Hundred Seventy-Five Thousand and No/100 Dollars ($215,475,000.00) made by the Lenders to Borrower pursuant to the Senior Loan Documents, the outstanding principal balance of which, as of the date hereof, is $210,825,000.00.
“ Senior Loan Agreement ” shall mean that certain Senior Loan Agreement dated as of the date hereof, by and among Borrower, Administrative Agent and the Lenders, as the same may be amended, restated, replaced, supplemented or otherwise modified from time to time.
“ Senior Loan Documents ” shall mean the “Loan Documents” as defined in the Senior Loan Agreement.
“ Senior Loan Outstanding Principal Balance ” means, as of any date, the then outstanding principal balance of the Senior Loan.
“ Shortfall ” shall have the meaning set forth in Section 2.6.4 .
“ Spread Maintenance Premium ” shall mean, in connection with a prepayment of all or any portion of the Outstanding Principal Balance of the Loan pursuant to the terms hereof, an amount equal to the present value, discounted at LIBOR on the most recent Determination Date with respect to any period when the Loan is a LIBOR Loan (or, with respect to any period when the Loan is a Substitute Rate Loan, discounted at an interest rate that Administrative Agent believes, in its reasonable judgment, would equal LIBOR on such Determination Date if LIBOR was then available) of all future installments of interest which would have been due hereunder through and including the Open Prepayment Date, on the portion of the Outstanding Principal Balance of the Loan being prepaid as if interest accrued on such portion of the principal balance

-12-


being prepaid at an interest rate per annum equal to the Applicable Spread. The Spread Maintenance Premium shall be reasonably calculated by Administrative Agent and shall be final absent manifest error.
“ State ” shall mean the State or Commonwealth in which the Property or any part thereof is located.
“ Substitute Rate ” shall have the meaning set forth in Section 2.2.3(c) .
“ Substitute Rate Loan ” shall mean the Loan at any time in which the Applicable Interest Rate is calculated at either the (i) Base Rate or (ii) the Substitute Rate plus the Substitute Spread, each in accordance with the provisions of Section 2.2.3 hereof.
“ Substitute Spread ” shall have the meaning set forth in Section 2.2.3(c) .
“ Taxes ” shall mean all present or future taxes, levies, imposts, duties, deductions, withholdings (including backup withholding), assessments, fees or other charges imposed by any Governmental Authority, including any interest, additions to tax or penalties thereto.
“ Tenant ” shall mean any Person leasing, subleasing or otherwise occupying any portion of the Property under a Lease or other occupancy agreement.
“ Tenant Improvement Allowance ” shall mean the amount required to be paid by Borrower to a Tenant under a Lease on account of or in lieu of work performed by such Tenant in the applicable space demised under such Lease.
“ Tenant Improvements ” shall mean the improvements and/or other work affecting any space at the Property, which is required to be constructed and paid for by Borrower pursuant to applicable Leases for such space.
“ Tenant Improvement Work ” shall mean the construction work to be performed by or on behalf of Borrower, as landlord, or a Tenant, as Tenant Improvements under a Lease at the Property entered into pursuant to the terms hereof, including, without limitation, the Build Out Work.
“ Tenant Inducement Costs ” shall mean concessions provided to Tenants in connection with the execution of Leases (including, without limitation, the payment of any lease termination payments).
“ TI/LC Costs ” shall mean the costs of all Tenant Improvement Work or Tenant Improvement Allowances, Tenant Inducement Costs and Leasing Commission costs associated with Leases at the Property entered into pursuant to the terms hereof, in each case, to be paid by Borrower pursuant to the terms of the applicable Lease.
“ Title Company ” shall mean National Land Tenure and Title Associates, each as agent for Stewart Title Insurance Company and First American Title Insurance Company.
“ Title Insurance Policy ” shall mean an ALTA mortgagee title insurance policy in the

-13-


form reasonably acceptable to Administrative Agent issued with respect to the Property and insuring the lien of the Mortgage.
“ Working Capital Account ” shall mean the “Working Capital Account” as defined in the Senior Loan Agreement.
“ Working Capital Account Agreement ” shall mean the “Working Capital Account Agreement” as defined in the Senior Loan Agreement.
“ Unadvanced Amounts ” shall have the meaning set forth in Section 2.7.7 .
Section 1.2      Senior Loan Agreement Definitions .
All capitalized terms used in this Agreement but not defined herein shall have the meanings ascribed to such terms in the Senior Loan Agreement.
Section 1.3      Principles of Construction .
All references to sections and schedules are to sections and schedules in or to this Agreement unless otherwise specified. Any reference in this Agreement or in any other Loan Document to any Loan Document shall be deemed to include references to such documents as the same may hereafter be amended, modified, supplemented, extended, replaced and/or restated from time to time (and, in the case of any note or other instrument, to any instrument issued in substitution therefor). Unless otherwise specified, the words “hereof,” “herein,” and “hereunder” and words of similar import when used in this Agreement shall refer to this Agreement as a whole and not to any particular provision of this Agreement. Unless otherwise specified, all meanings attributed to defined terms herein shall be equally applicable to both the singular and plural forms of the terms so defined.
II.      THE LOAN
Section 2.1      The Loan .
2.1.1      Agreement to Lend and Borrow. Subject to and upon the terms and conditions set forth herein, the Lenders hereby agree to make a loan (the “ Loan ”) to Borrower in the maximum principal amount of FORTY-FIVE MILLION NINE HUNDRED THOUSAND and 00/100 DOLLARS ($45,900,000.00) and, if the terms and conditions of Section 2.6 are satisfied, Future Advances in an aggregate amount not to exceed the Loan.
2.1.2      No Re-Borrowing.
The Future Advances and any amount borrowed and repaid hereunder in respect of the Loan may not be re-borrowed.
2.1.3      The Note. The Loan shall be evidenced by that certain Building Loan Promissory Note of even date herewith, in the maximum principal amount of FORTY-FIVE MILLION NINE HUNDRED THOUSAND and 00/100 DOLLARS ($45,900,000.00) made by Borrower and payable to the Lenders in evidence of the Loan (as the same may hereafter be

-14-


amended, supplemented, restated, increased, extended or consolidated from time to time, the “ Note ”) and shall be repaid in accordance with the terms of this Agreement and the Note.
2.1.4    Use of Proceeds. Borrower shall use proceeds of the Loan to fund Building Loan Costs and for no other purpose whatsoever.
2.1.5    Loan Advances. Subject to compliance by Borrower with the terms and conditions of this Agreement, the Lenders shall make, and Borrower shall accept from the Lenders, Future Advances under this Agreement for the applicable purposes or uses permitted as required hereunder. If Lenders are comprised of more than one Person, then no Lender shall be obligated to advance more than its Pro Rata Share of any Future Advance hereunder. The Lenders shall not be required to make Future Advances for the costs incurred by Borrower with respect to materials stored off the Property. No Future Advances or any portion thereof shall be made directly or indirectly for payments to a Borrower Related Party, except (a) as expressly permitted in the Loan Documents, or (b) as otherwise may be approved in writing by Administrative Agent. The obligations of the Lenders to make Future Advances hereunder are several, and not joint, and under no circumstances shall any Lender be obligated to fund more of its Pro Rata Share of any Future Advance or more than its Commitment.
Section 2.2      The Interest Rate .
2.2.1      Applicable Interest Rate. Subject to the last sentence of this Section 2.2.1 , except as herein provided with respect to interest accruing at the Default Rate, interest on the Note outstanding from time to time shall accrue from the Closing Date up to and including the Maturity Date at the Applicable Interest Rate. In the event that any Event of Default shall have occurred and be continuing, interest on the Obligations shall accrue interest at the Default Rate for the period that such Event of Default is continuing (it being agreed that Administrative Agent and the Lenders have no obligation to accept a cure of an Event of Default).
2.2.2      Interest Calculation. Interest on the Note shall be calculated by multiplying (a) the actual number of days elapsed in the period for which the calculation is being made by (b) a daily rate based on a three hundred sixty (360) day year (that is, the Applicable Interest Rate or the Default Rate, as then applicable to the Note, expressed as an annual rate divided by 360) by (c) the Outstanding Principal Balance.
2.2.3      Determination of Interest Rate.
(a)      Each determination by Administrative Agent of the Applicable Interest Rate shall be conclusive and binding for all purposes, absent manifest error.
(b)      Unless and until a Substitute Rate is implemented in accordance with Section 2.2.3(c) hereof, if, for any reason Administrative Agent determines in its sole but good faith discretion (which determination shall be conclusive and binding absent manifest error) that: (i) United States dollar deposits are not being offered to banks in the London interbank Eurodollar market for a period approximately equal to the applicable Interest Period; (ii) reasonable and adequate means do not exist for ascertaining LIBOR for the applicable Interest Period; or (iii) LIBOR does not adequately and fairly reflect the cost to the Lenders of making or maintaining any LIBOR Loan during an applicable Interest Period (any such

-15-


determination being hereinafter referred to as a “ LIBOR Rate Unavailable Determination ”), then Administrative Agent shall promptly give notice thereof to Borrower. From and after Borrower’s receipt of such notice unless and until a Substitute Rate is implemented in accordance with Section 2.2.3(c) hereof, the Applicable Interest Rate shall be the Base Rate, subject to Section 2.2.3(d) hereof.
(c)      If for any reason Administrative Agent determines in its sole but good faith discretion (which determination shall be conclusive and binding absent manifest error) that: (i) (a) United States dollar deposits are not being offered to banks in the London interbank Eurodollar market for a period approximately equal to the applicable Interest Period or (b) reasonable and adequate means do not exist for ascertaining LIBOR for the applicable Interest Period, and that such circumstances are unlikely to be temporary; (ii) LIBOR is no longer a widely recognizable benchmark rate for newly originated commercial real estate loans in the United States; or (iii) the applicable supervisor or administrator (if any) of LIBOR, or any governmental authority having or purporting to have jurisdiction over Administrative Agent, has made a public statement identifying a specific date after which LIBOR shall no longer be used for determining interest rates for commercial real estate loans in the United States (any such determination being hereinafter referred to as a “ LIBOR Rate Discontinued Determination ”), then Administrative Agent may designate a replacement rate (“ Substitute Rate ”) that Administrative Agent may thereafter elect to implement in lieu of LIBOR in accordance with the terms hereof, and if so implemented, any reference to LIBOR herein shall thereafter be deemed to refer to the Substitute Rate. Such Substitute Rate shall (I) be a market standard reference rate which is then generally being implemented by Administrative Agent and other lenders across commercial real estate loan portfolios as a replacement for LIBOR and (II) be publicly recognized by the International Swaps and Derivatives Association (ISDA) as an alternative to the LIBOR Rate; provided, however, that if the Substitute Rate determined as provided above with respect to any Interest Period shall ever be less than the LIBOR Floor, then the Substitute Rate for such Interest Period shall be deemed to be the LIBOR Floor. If a Substitute Rate is so implemented, Administrative Agent shall designate (which designation shall be conclusive and binding absent manifest error), and implement concurrently with the Substitute Rate, a replacement spread (“ Substitute Spread ”) which shall be equal to the Applicable Spread, adjusted by Administrative Agent, in a manner consistent with Administrative Agent’s treatment of similar mortgage loan facilities, to compensate for any difference between (x) the Substitute Rate and (y) the average of LIBOR for the six (6) months prior to the date of the LIBOR Rate Discontinued Determination, which shall reflect the original intent of the parties with respect to the overall interest rate of the Loan. The Substitute Spread shall replace the Applicable Spread on the Interest Rate Replacement Date and shall thereafter remain constant notwithstanding that the Substitute Rate may fluctuate from time to time. When so implemented, any reference to the Applicable Spread herein shall thereafter be deemed to refer to the Substitute Spread. If a Substitute Rate is implemented in lieu of LIBOR, and a Substitute Spread is implemented in lieu of the Applicable Spread, as set forth above, Borrower agrees to enter into such modifications and/or replacement promissory notes as Administrative Agent deems necessary in order to evidence such replacements provided that any such modifications or replacement promissory notes do not increase the obligations or liabilities of Borrower or decrease any rights of Borrower other than to a de minimis extent. Notwithstanding the foregoing, Administrative Agent agrees that it shall consult with Borrower regarding its selection of a Substitute Rate; provided,

-16-


however, that final determination of the Substitute Rate shall be made by Administrative Agent in its sole but good faith discretion (and Borrower shall have no right to approve the same).
(d)      If, after the date hereof, pursuant to the terms of this Agreement, the Loan has been converted to a Substitute Rate Loan and any Lender shall determine in its sole but reasonable discretion (which determination shall be conclusive and binding upon Borrower absent manifest error) that the event(s) or circumstance(s) which resulted in such conversion shall no longer be applicable, such Lender shall give notice thereof to Borrower, and the Substitute Rate Loan shall automatically convert to a LIBOR Loan on the effective date set forth in such notice. Notwithstanding any provision of this Agreement to the contrary, in no event shall Borrower have the right to elect to convert a LIBOR Loan to a Substitute Rate Loan.
(e)      If any requirement of law or any change therein or in the interpretation or application thereof, shall hereafter make it unlawful for any Lender to make or maintain a LIBOR Loan as contemplated hereunder, (i) the obligation of such Lender hereunder to make a LIBOR Loan shall be cancelled forthwith and (ii) such Lender may give Borrower and Lender a Lender’s Notice, establishing the Applicable Interest Rate at the Substitute Rate plus the Substitute Spread, in which case the Applicable Interest Rate shall be a rate equal to the Substitute Rate in effect from time to time plus the Substitute Spread and such initial Applicable Interest Rate based on the Substitute Rate shall, as closely as reasonably possible, approximate the last Applicable Interest Rate based on LIBOR. In the event the condition necessitating the cancellation of such Lender’s obligation to make a LIBOR Loan hereunder shall cease, such Lender shall promptly notify Borrower and Lender of such cessation and the Loan shall resume its characteristics as a LIBOR Loan in accordance with the terms herein from and after the first day of the Interest Period next following such cessation. Borrower hereby agrees promptly to pay such Lender, upon demand, any additional amounts reasonably necessary to compensate such Lender for any out-of-pocket costs reasonably incurred by such Lender in making any conversion in accordance with this Agreement, including, without limitation, any interest or fees payable by such Lender to lenders of funds obtained by it in order to make or maintain the LIBOR Loan hereunder. Any Lender’s notice of such costs, as certified to Borrower, shall be set forth in reasonable detail and such Lender’s calculation shall be conclusive absent manifest error.
(f)      In the event that, after the date hereof, any change in any requirement of law or in the formal interpretation or application thereof, or compliance by any Lender with any directive (whether or not having the force of law) hereafter issued from any central bank or other Governmental Authority:
(i)      shall hereafter have the effect of reducing the rate of return on any Lender’s capital (other than as a result of an increase in taxes) as a consequence of its obligations hereunder to a level below that which such Lender is reasonably likely to have achieved but for such adoption, change or compliance (taking into consideration such Lender’s policies with respect to capital adequacy) by any amount reasonably deemed by such Lender to be material;
(ii)      shall hereafter impose, modify, increase or hold applicable any material reserve, special deposit, compulsory loan or similar requirement against assets held by, or deposits or other liabilities in or for the account of, advances or loans by, or

-17-


other credit extended by, or any other acquisition of funds by, any office of any Lender which is not otherwise included in the determination of the rate hereunder (other than as a result of an increase in taxes); or
(iii)      shall hereafter impose on any Lender any other condition and the result of any of the foregoing is to increase the cost to such Lender of making, renewing or maintaining loans or extensions of credit or to reduce any amount receivable hereunder;
and the result of any of the foregoing is to increase the cost to Lender of making, renewing or maintaining the Loan or to reduce any amount receivable hereunder, then, in any such case, subject to the notice requirements in the subsequent sentence, provided that such Lender requests the same of similarly situated borrowers, Borrower shall promptly pay such Lender, upon demand, any additional amounts necessary to compensate such Lender for such additional cost or reduced amount receivable which such Lender deems to be material as reasonably determined by such Lender; provided, however, that Borrower shall not be required under this Section 2.2.3 to pay such Lender additional amounts for additional costs or reduced amounts receivable that are attributable to an increase in taxes imposed on such Lender. If any Lender becomes entitled to claim any additional amounts pursuant to this Section 2.2.3, Administrative Agent shall provide Borrower with not less than ten (10) Business Days written notice specifying in reasonable detail the event by reason of which it has become so entitled and the additional amount required to fully compensate such Lender for such additional cost or reduced amount. A certificate as to any additional costs or amounts payable pursuant to the foregoing sentence, executed by an authorized signatory of any Lender and submitted by such Lender to Borrower shall be conclusive in the absence of manifest error. This provision shall survive payment of the Note and the satisfaction of all other obligations of Borrower under this Agreement and the Loan Documents. For the avoidance of doubt, any payments made pursuant to this Section 2.2.3 shall not be deemed a prepayment and no prepayment premium shall be due in connection with such payments.
(g)      Borrower agrees to indemnify each Lender and to hold each Lender harmless from any Losses which such Lender sustains or incurs as a consequence of (i) any default by Borrower in payment of the principal of or interest on a LIBOR Loan, including, without limitation, any such loss or expense arising from interest or fees payable by such Lender to lenders of funds obtained by it in order to maintain a LIBOR Loan hereunder, (ii) any prepayment (whether voluntary or mandatory) of the LIBOR Loan on a day that (A) is not a Monthly Payment Date or (B) is a Monthly Payment Date if Borrower did not give the prior written notice of such prepayment required pursuant to the terms of this Agreement, including, without limitation, such loss or expense arising from interest or fees payable by such Lender to lenders of funds obtained by it in order to maintain the LIBOR Loan hereunder and (iii) the conversion in accordance with the terms hereof of the Applicable Interest Rate to the Substitute Rate plus the Substitute Spread with respect to any portion of the outstanding principal amount of the Loan then bearing interest at a rate other than the Substitute Rate plus the Substitute Spread on a date other than the first day of an Interest Period, including, without limitation, such loss or expenses arising from interest or fees payable by such Lender to lenders of funds obtained by it in order to maintain a LIBOR Loan hereunder (the amounts referred to in clauses (i), (ii) and (iii) are herein referred to collectively as the “ Breakage Costs ”); provided, however,

-18-


Borrower shall not indemnify Administrative Agent or any Lender from any Losses arising from Administrative Agent’s or any Lender’s willful misconduct or gross negligence. Whenever in this Section 2.2.3 the term “interest or fees payable by any Lender to lenders of funds obtained by it” is used and no such funds were actually obtained from such lenders, it shall include interest or fees which would have been payable by such Lender if it had obtained funds from lenders in order to maintain a LIBOR Loan hereunder. Each Lender will provide to Borrower a statement detailing such Breakage Costs and the calculation thereof.
(h)      The provisions of this Section 2.2.3 shall survive payment of the Note in full and the satisfaction of all other obligations of Borrower under this Agreement and the other Loan Documents.
2.2.4      Usury Savings. This Agreement and the other Loan Documents are subject to the express condition that at no time shall Borrower be required to pay interest on the principal balance of the Loan at a rate which could subject any Lender to either civil or criminal liability as a result of being in excess of the Maximum Legal Rate. If by the terms of this Agreement or the other Loan Documents, Borrower is at any time required or obligated to pay interest on the principal balance due hereunder at a rate in excess of the Maximum Legal Rate, the Applicable Interest Rate or the Default Rate, as the case may be, shall be deemed to be immediately reduced to the Maximum Legal Rate and all previous payments in excess of the Maximum Legal Rate shall be deemed to have been payments in reduction of principal and not on account of the interest due hereunder. All sums paid or agreed to be paid to the Lenders for the use, forbearance, or detention of the sums due under the Loan, shall, to the extent permitted by applicable law, be amortized, prorated, allocated, and spread throughout the full stated term of the Loan until payment in full so that the rate or amount of interest on account of the Loan does not exceed the Maximum Legal Rate from time to time in effect and applicable to the Loan for so long as the Loan is outstanding.
Section 2.3      Loan Payments .
2.3.1      Payment Before Maturity Date. Borrower shall make a payment to Administrative Agent, for the benefit of Lenders of interest only on the Closing Date for the initial Interest Period. On the Monthly Payment Date occurring in April 9, 2019 and on each Monthly Payment Date thereafter to and including the Maturity Date, Borrower shall make a payment to Administrative Agent, for the benefit of Lenders equal to the Monthly Debt Service Payment Amount. Borrower shall also pay to Administrative Agent, for the benefit of the Lenders, all amounts required in respect of Reserve Funds as set forth in Article 6 of the Senior Loan Agreement.
2.3.2      Payment on Maturity Date.
(a)      Borrower shall pay to Administrative Agent, for the benefit of the Lenders on the Maturity Date the Outstanding Principal Balance of the Loan, any Spread Maintenance Premium (if the Maturity Date is before the Open Prepayment Date), all accrued and unpaid interest and all other amounts due hereunder and under the Note, the Mortgage and the other Loan Documents.

-19-


(b)      The remaining provisions of Section 2.3.2 of the Senior Loan Agreement are incorporated herein by reference as if fully set forth herein, except that those covenants which specifically reference the Senior Loan Agreement, the Note (as defined in the Senior Loan Agreement), any of the Senior Loan Documents, the Senior Loan or other similar terms shall be modified to the extent appropriate or necessary to reference this Agreement, the Note, the Mortgage, applicable Loan Documents, the Loan or other appropriate Loan related terms, as the case may be.
2.3.3      Late Payment Charge. If any principal, interest or any other sum due under the Loan Documents (other than the payment of principal and any other amounts due on the Maturity Date), is not paid by Borrower on or before the date on which it is due (unless (A) funds for such payment were available in the applicable Subaccounts (as defined in the Cash Management Agreement) and ear-marked for such payment, (B) Administrative Agent’s access to such sums was not restricted or constrained in any manner by Borrower, any Affiliate of Borrower or any applicable Legal Requirement and (C) no Event of Default was continuing), Borrower shall pay to Administrative Agent, for the benefit of Lenders promptly following written demand an amount equal to the lesser of five percent (5%) of such unpaid sum or the Maximum Legal Rate in order to defray the expense incurred by Administrative Agent in handling and processing such delinquent payment and to compensate Administrative Agent for the loss of the use of such delinquent payment. Any such amount shall be secured by the Mortgage and the other Loan Documents and payable to Administrative Agent, for the benefit of Lenders promptly following written demand.
2.3.4      Method and Place of Payment. (a) Except as otherwise specifically provided herein, all payments and prepayments under this Agreement and the Note shall be made to Administrative Agent, for the benefit of Lenders, not later than 3:00 P.M., New York City time, on the date when due and shall be made in lawful money of the United States of America in immediately available funds at Administrative Agent’s office, and any funds received by Administrative Agent, for the benefit of Lenders after such time shall, for all purposes hereof, be deemed to have been paid on the next succeeding Business Day.
(b)    Whenever any payment to be made hereunder or under any other Loan Document shall be stated to be due on a day which is not a Business Day, the due date thereof shall be the next succeeding Business Day. Whenever any obligation of Borrower, Administrative Agent or Lender is required to be performed hereunder or under any other Loan Document a day which is not a Business Day, such action shall be required to be performed by the next succeeding Business Day.
(c)    All payments required to be made by Borrower hereunder or under the Note or the other Loan Documents shall be made irrespective of, and without deduction for, any setoff, claim or counterclaim and shall be made irrespective of any defense thereto (other than payment in full of the applicable payment).
Section 2.4      Prepayments .
The provisions of Section 2.4 of the Senior Loan Agreement are incorporated herein by reference as if fully set forth herein, except that those covenants which specifically reference the

-20-


Senior Loan Agreement, the Note (as defined in the Senior Loan Agreement), any of the Senior Loan Documents, the Senior Loan or other similar terms shall be modified to the extent appropriate or necessary to reference this Agreement, the Note, the Mortgage, applicable Loan Documents, the Loan or other appropriate Loan related terms, as the case may be.
Section 2.5      Regulatory Change; Taxes .
Section 2.5 of the Senior Loan Agreement (including, without limitation, all covenants of Borrower set forth therein) is hereby incorporated by reference as if fully set forth herein as of the date hereof, except that those covenants which specifically reference the Senior Loan Agreement, the Note (as defined in the Senior Loan Agreement), any of the Senior Loan Documents, the Senior Loan or other similar terms shall be modified to the extent appropriate or necessary to reference this Agreement, the Note, the Mortgage, applicable Loan Documents, the Loan or other appropriate Loan related terms, as the case may be.
Section 2.6      Advances .
2.6.1      Working Capital . On the date hereof, Lenders have made their Pro Rata Shares in an amount equal to $6,600,000.00 into an account with the Working Capital Bank (the “ Working Capital Account ”).  Amounts deposited pursuant to this Section 2.6.1 are referred to herein as the “ Working Capital Funds ”. Borrower shall use the Working Capital Funds for Property related costs and expenses and Borrower shall not declare or pay any dividends or otherwise declare or make any distribution to Borrower’s members from such Working Capital Funds. The Working Capital Account will be under the sole control and dominion of Administrative Agent, for the benefit of Lenders, except, so long as no Event of Default is continuing, Borrower shall have the right to make withdrawals from the Working Capital Account. Upon the occurrence and during the continuance of an Event of Default, Borrower shall no longer have any right to withdraw Working Capital Funds from the Working Capital Account, as further set forth in the Working Capital Account Agreement, and Administrative Agent may apply any Working Capital Funds on deposit in the Working Capital Account to the payment of the Debt in such order, proportion and priority as Administrative Agent may determine in its sole and absolute discretion. Borrower shall pay for all expenses of opening and maintaining the Working Capital Account. Any remaining Working Capital Funds after the Debt has been repaid in full shall be disbursed to Borrower.
At or prior to the Closing Date, Borrower shall establish and maintain the Working Capital Account as a segregated Eligible Account pursuant to the terms of the Working Capital Account Agreement with the Working Capital Bank, which such Working Capital Account shall be in trust for the benefit of Lenders and shall be under the sole dominion and control of Borrower prior to an Event of Default and thereafter, Administrative Agent, for the benefit of Lenders. Borrower (i) hereby grants to Administrative Agent, for the benefit of Lenders a first priority security interest in the Working Capital Account and all deposits at any time contained therein and the proceeds thereof, and (ii) will take all actions necessary to maintain in favor of Administrative Agent, for the benefit of Lenders a perfected first priority security interest in the Working Capital Account, including, without limitation, the execution of any account control agreement required by Administrative Agent. Borrower shall not further pledge, assign or grant any security interest in the Working Capital Account or the monies deposited therein or permit

-21-


any lien or encumbrance to attach thereto, or any levy to be made thereon, or any UCC-1 financing statements, except those naming Administrative Agent, for the benefit of Lenders as the secured party, to be filed with respect thereto. Borrower will not in any way alter, modify or close the Working Capital Account and will notify Administrative Agent of the account number thereof. Prior to an Event of Default, Borrower shall have the sole right to make withdrawals from the Working Capital Account and all costs and expenses for establishing and maintaining the Working Capital Account shall be paid by Borrower. After an Event of Default, Administrative Agent, for the benefit of Lenders shall have the sole right to make withdrawals from the Working Capital Account and all costs and expenses for establishing and maintaining the Clearing Account shall be paid by Borrower. All monies now or hereafter deposited into the Working Capital Account shall be deemed additional security for the Debt. Borrower shall indemnify Administrative Agent, each Lender and bank and hold Administrative Agent, each Lender and Working Capital Bank harmless from and against any and all actions, suits, claims, demands, liabilities, losses, damages, obligations and costs and expenses (including litigation costs and reasonable attorneys’ fees and expenses) arising from or in any way connected with the Working Capital Account, such Working Capital Account Agreement or the performance of the obligations for which the Working Capital Account was established (unless arising from the gross negligence or willful misconduct of Administrative Agent, any Lender or Clearing Bank, as applicable).
2.6.2      Conditions of Future Advances (Capital Expenditures), Future Advances (TI/LCs) and Future Advances (Interest/Carry Shortfall). The obligation of Lenders to make their Pro Rata Shares of any Future Advance (Capital Expenditures), Future Advance (TI/LCs) and/or Future Advance (Interest/Carry Shortfall) hereunder shall be subject to the following conditions precedent, all of which conditions precedent must be satisfied, to the extent applicable (and remain satisfied as of the date the Future Advance is actually made by Lenders) prior to Lenders making their Pro Rata Shares of any such Future Advance (Capital Expenditures), Future Advance (TI/LCs) and/or Future Advance (Interest/Carry Shortfall) under this Agreement and, upon satisfaction of the following conditions precedent, Lenders shall be obligated to make their Pro Rata Shares of any applicable Future Advance (Capital Expenditures), Future Advance (TI/LCs) and/or Future Advance (Interest/Carry Shortfall).
(a)      General Conditions :
(i)      Borrower’s Requisition . Borrower has delivered to Administrative Agent Borrower’s Requisition (and all deliverables required to be provided in connection therewith pursuant to this Article 2 ), which shall constitute Borrower’s representation and warranty to Administrative Agent that: (a) all costs for the payment of which Administrative Agent has previously advanced funds have in fact been paid, (b) all the representations and warranties contained in Article III of this Agreement continue to be true and correct in all material respects, except to the extent such representation or warranty was made as of a specified earlier date, in which case such representation shall be true and correct in all material respects as of the date made, subject to changes to such representations and warranties disclosed to Administrative Agent in writing, so long as such update is not the result of any breach of a covenant of Borrower under the Loan Documents, and such changes do not result from any monetary Default, material non-monetary Default which is reasonably

-22-


likely to have a Material Adverse Effect or Event of Default by Borrower, and (c) no monetary Default, material non-monetary Default or Event of Default shall have occurred and be continuing (unless such monetary Default or material non-monetary Default would be cured by funding the applicable Future Advance (Capital Expenditures), Future Advance (TI/LCs) and/or Future Advance (Interest/Carry Shortfall)).
(ii)      No Liens . The Property shall be free from all Liens (other than Permitted Encumbrances).
(iii)      Proceedings . There shall be no governmental actions, proceedings or investigations pending or threatened in writing against or filed by Borrower which is reasonably likely to have a Material Adverse Effect.
(iv)      No Default . On and prior to the date of such Future Advance (Capital Expenditures) or Future Advance (TI/LCs), there shall exist no monetary Default, material non-monetary Default which is reasonably likely to have a Material Adverse Effect or Event of Default (unless such monetary Default or such material non‑monetary Default would be cured by funding the applicable Future Advance (Capital Expenditures), Future Advance (TI/LCs) and/or Future Advance (Interest/Carry Shortfall)).
(v)      Available Commitments . Such Future Advance, together with all other Future Advances previously made hereunder, shall not exceed the aggregate remaining Commitments.
(vi)      Mezzanine Loan . Mezzanine Lender shall have funded Mezzanine Lender’s Percentage of such Future Advance; provided , however , if Mezzanine Lender shall have failed to fund Mezzanine Lender’s Percentage of any Future Advance, and Mezzanine Borrower has satisfied all conditions precedent to such Future Advance under the Mezzanine Loan Agreement, such that Mezzanine Lender has become a “Defaulting Lender” (as defined in the Mezzanine Loan Agreement) (a “ Mezzanine Funding Failure ”), Borrower shall be permitted to “fund” Mezzanine Lender’s Percentage of any such Future Advance (i.e., Borrower shall provide to Administrative Agent evidence acceptable to Administrative Agent that it has sufficient funds on deposit to be allocated to the Approved Costs which were to be paid by Mezzanine Lender’s Percentage of such Future Advance) provided that (x) no Event of Default is continuing, (y) Mezzanine Borrower is actively pursuing its remedies against such Defaulting Lender (as defined in the Mezzanine Loan Agreement) in accordance with the terms of the Mezzanine Loan Agreement, including, without limitation, Section 7.1 thereof and (z) Borrower delivers to Administrative Agent, for the benefit of Lenders, a Letter of Credit in the face amount of the remaining Future Funding Amount (as defined in the Mezzanine Loan Agreement) or deposits with Administrative Agent cash in the amount of the remaining Future Funding Amount (as defined in the Mezzanine Loan Agreement) (any such collateral, the “ Funding Collateral ”). If Borrower elects to deliver to Administrative Agent, for the benefit of Lenders, a Letter of Credit pursuant to this subclause, then the Letter of Credit provisions set forth in Schedule VIII shall be applicable. Following any Mezzanine Funding Failure, if each of clause (x), (y) and (z)

-23-


above has been satisfied by Mezzanine Borrower or Borrower, as applicable, and Borrower has not funded Mezzanine Lender’s Percentage of such Future Advance by the date that is two (2) Business Days after the date Mezzanine Lender was required to fund, then Administrative Agent may draw upon the Funding Collateral in an amount equal to Mezzanine Lender’s Percentage of such Future Advance and shall release the same to Borrower (to be applied by Borrower and/or Mezzanine Borrower in accordance with its Requisition). If Borrower or Mezzanine Lender funds Mezzanine Lender’s Percentage of any Future Advance (to be applied by Borrower and/or Mezzanine Borrower in accordance with its Requisition), so long as no Event of Default is continuing, Administrative Agent will release a corresponding amount of the Funding Collateral to Borrower (to be used by Borrower as determined by Borrower).
(vii)      Payment of Fees . Administrative Agent shall have received payment for any and all reasonable fees payable with respect to the applicable Future Advance, including, but not limited to, solely with respect to the Future Advance (Capital Expenditures) and Future Advance (TI/LCs),the reasonable fees and out-of-pocket expenses of the Construction Consultant (which shall not exceed $2,000 per draw (together with amounts paid for any concurrent draw made under the Mezzanine Loan), if any, relating to the Loan, and all other reasonable, out-of-pocket fees, costs and expenses (including, without limitation, reasonably attorneys’ fees) of Administrative Agent relating to the Loan to the extent then due and payable.
(viii)      Materials . Solely with respect to the Future Advance (Capital Expenditures) and Future Advance (TI/LCs), with respect to any materials stored on the Property, the Lenders shall not be required to make Future Advances for the costs incurred by Borrower in connection therewith, except to the extent (x) Administrative Agent has received evidence that such materials are covered by the insurance policies required by this Agreement and are identified and protected against loss, theft and damage in a manner acceptable to Administrative Agent and the Construction Consultant, (y) Administrative Agent shall have received bills of sale and other documentation evidencing payment in full of such materials, Borrowers’ ownership thereof following payment of such amount, and the release of any right, title or lien in respect thereof by any vendor after payment of such amount. The costs of any such materials stored at the Property, at any one time, for which Borrower shall have received (or is then requesting) a Future Advance (together with any Future Advance (as defined in the Building Loan) or any Future Advance (as defined in the Mezzanine Loan)), shall not exceed $1,000,000 in the aggregate.
(b)      No Damage . The Improvements shall not have been damaged by fire, explosion, accident, flood or other casualty, unless Administrative Agent shall be satisfied, in the reasonable judgment of Administrative Agent, that sufficient insurance proceeds (net of any deductible) together with any Future Advance Proceeds available for such purpose or other funds provided by Borrower will be available to effect the Restoration thereof prior to the Initial Maturity Date based upon Administrative Agent’s reasonable estimate of the time necessary to perform such Restoration.

-24-


(c)      Endorsement to Title Insurance Policy . Solely with respect to the Future Advance (Capital Expenditures) and Future Advance (TI/LCs) (excluding Future Advances (TI/LCs) funded to pay Leasing Commissions, if required by Administrative A g ent, Borrower has delivered to Administrative Agent a “title continuation” reasonably acceptable to Administrative Agent dated as of the date of each Future Advance, which shall show the Mortgage as a first lien on the Property subject only to Permitted Encumbrances and, subject to subsection (l) below, a “pending disbursement” endorsement in a form reasonably acceptable to Administrative Agent, which endorsement shall increase the coverage of the Title Insurance Policy by the amount of the Future Advance through the pending disbursement clause.
(d)      Licenses and Permits : Solely with respect to the Future Advance (Capital Expenditures) and Future Advance (TI/LCs), Borrower shall have delivered to Administrative Agent evidence that (a) any and all building or other permits (if any) required for the continuous construction of the applicable portion of the Capital Expenditures Work or Tenant Improvement Work that is the subject of such Future Advance in accordance with all Legal Requirements have been obtained (and that any and all notices required by any Governmental Authority or by any applicable Legal Requirement to be filed prior to commencement of construction of the improvements contemplated by the Capital Expenditures Work or applicable Lease shall have been filed), and (b) all other material Governmental Approvals, third-party approvals and easements necessary for the construction and completion of the applicable portion of the Capital Expenditures Work or Tenant Improvement Work that is the subject of such Future Advance have been obtained and are in full force and effect.
(e)      Plans : Solely with respect to the Future Advance (Capital Expenditures) and Future Advance (TI/LCs) (excluding Future Advances (TI/LCs) funded to pay Leasing Commissions), Administrative Agent shall have received a complete set of any plans and specifications that were prepared for any (A) Capital Expenditures Work and (B) Tenant Improvement Work in each case having a cost in excess of $1,000,000.00, and Administrative Agent shall have approved the same, such approval not to be unreasonably withheld, delayed or conditioned; provided, however, with respect to Tenant Improvement Work, Administrative Agent’s approval under this clause (e) shall be required only to the extent such Tenant Improvement Work is pursuant to a Major Lease which has not been previously approved by Administrative Agent and such approval is required under this Agreement.
(f)      Contracts : Solely with respect to the Future Advance (Capital Expenditures) and Future Advance (TI/LCs) (excluding Future Advances (TI/LCs) funded to pay Leasing Commissions), Borrower shall have delivered to Administrative Agent the general contract for any (A) Capital Expenditures Work and (B) any Tenant Improvement Work in each case having a cost in excess of $1,000,000.00, together with such other Contracts as may be reasonably requested by Administrative Agent, and Administrative Agent shall have approved the same, such approval not to be unreasonably withheld, delayed or conditioned; provided, however, with respect to Tenant Improvement Work, Administrative Agent’s approval under this clause (f) shall be required only to the extent such Tenant Improvement Work is pursuant to a Major Lease which has not been previously approved by Administrative Agent and such approval is required under this Agreement.

-25-


(g)      Budget : Solely with respect to the Future Advance (Capital Expenditures) and Future Advance (TI/LCs), (excluding Future Advances (TI/LCs) funded to pay Leasing Commissions), Borrower shall have delivered to Administrative Agent a budget for such Capital Expenditures Work and for such Tenant Improvement Work reflecting the anticipated cost for performing such Capital Expenditures Work and Tenant Improvement Work, and Administrative Agent shall have approved the same, such approval not to be unreasonably withheld, delayed or conditioned (each such budget, as approved by Administrative Agent, a “ Project Budget ”); provided that the initial Project Budget for the Capital Expenditures Work attached hereto as Schedule IX is hereby approved by Administrative Agent.
(h)      Inspection : Solely with respect to the Future Advance (Capital Expenditures) and Future Advance (TI/LCs) (excluding Future Advances (TI/LCs) funded to pay Leasing Commissions) which disbursement will exceed $100,000, in connection with any Tenant Improvement Work or Capital Expenditures Work, Administrative Agent, at its option, may require an inspection of the applicable portion of the Property at Borrower’s expense prior to making a Future Advance in order to verify completion of improvements constituting the applicable Capital Expenditures Work, Tenant Improvement Work or other TI/LC Costs, as the case may be.
(i)      Lease Approval; Capital Expenditures : Solely with respect to the Future Advance (Capital Expenditures) and Future Advance (TI/LCs), Administrative Agent shall have approved (i) the Lease that is the subject of a Future Advance (TI/LCs) to the extent that Administrative Agent’s approval is required under the terms of the Loan Documents and (ii) the TI/LC Costs that are the subject of a Future Advance, unless such TI/LC Costs are either (A) specifically set forth in such Lease approved (or deemed approved) by Administrative Agent pursuant to this Agreement or (B) not specifically set forth in a Lease approved (or deemed approved) by Administrative Agent pursuant to this Agreement, but are capped at a specific amount set forth in such approved Lease or are in accordance with the Minimum Leasing Parameters. With respect to advances of the Future Advances (Capital Expenditures), Administrative Agent shall have approved the applicable Capital Expenditures Work or the Capital Expenditures Work shall be included in any Approved Annual Budget. Notwithstanding the foregoing, Administrative Agent shall not be obligated to make or cause to be made any Future Advance of Leasing Commissions until the executed Lease and the agreement pursuant to which any Leasing Commission is due are each delivered to Administrative Agent and such Lease (to the extent that Administrative Agent’s consent is required for such Lease under the terms of the Loan Documents) and such agreement are approved by Administrative Agent (to the extent that Administrative Agent’s approval is required for such agreement under the terms of the Loan Documents).
(j)      Tenant Allowances : Solely with respect to the Future Advance (TI/LCs), in connection with any Tenant Improvement Work performed or to be performed by the tenant under a Lease and Borrower’s obligation thereunder is to pay to such tenant an allowance (all as more specifically provided for in each Lease), Borrower shall (i) provide Administrative Agent with the Lease and identify the section of such Lease detailing the requirements and conditions to Borrower’s obligation to fund under such Lease (together with evidence reasonably satisfactory to Administrative Agent that each of the material conditions has been satisfied), (ii) to the extent Borrower has the right to receive or request the same under such

-26-


Lease, Borrower shall deliver a budget for such Tenant Improvement Work to Administrative Agent prior to making the first request of a Future Advance with respect to the applicable Tenant Improvement Allowance, together with the plans and specifications for such work, (iii) certify in writing that the conditions have been satisfied and that Borrower is obligated to disburse the funds to the Tenant under such Lease, (iv) use commercially reasonable efforts to cause Tenant to perform all Tenant Improvement Work that is the subject of the Tenant Improvement Allowance in accordance with the Lease and (v) deliver to Administrative Agent, concurrently with the request for any Future Advance, all of the materials delivered by the applicable tenant to Borrower in connection with such Future Advance.
(k)      Final Payment : Solely with respect to the Future Advance (Capital Expenditures) and Future Advance (TI/LCs), in connection with a Future Advance for the final amounts to pay for Tenant Improvement Work or Capital Expenditures Work performed or to be performed by or on behalf of Borrower or by the Tenant with respect to any such Lease, Borrower shall provide Administrative Agent with (A) evidence of payment of all costs and expenses of completing the applicable work and a termination of any existing notices of commencement with respect to such work, (B) a copy of any and all applicable permits, if any, required by Legal Requirements, with respect to any such Tenant Improvements, so as to allow the Tenant to occupy the leased premises as contemplated under such Lease, and (C) an original estoppel certificate in form and substance reasonably acceptable to Administrative Agent executed by the applicable tenant under the Lease for which such request relates, stating that such tenant has accepted the subject tenant improvements and that there are no defaults known to the tenant under such Lease.
(l)      Serial Mortgage : As an accommodation to Borrower, Administrative Agent and the Lenders have agreed that Borrower shall be required to utilize so-called “serial mortgages” to secure any and all Future Advances.  Accordingly, the Mortgage executed on the date hereof shall include a mortgage for a principal amount equal to the Initial Advance plus a Future Advance in the total amount of $45,900,000.00. If, at any time, the amount advanced by the Lenders pursuant to this Agreement together with any Future Advance then requested by Borrower shall exceed the aggregate principal amount of the Mortgage, together with each subsequent mortgage recorded pursuant to this Section 2.6.2(a) (each, a “ Serial Mortgage ”), as a condition precedent to the Lenders’ obligation to make any such Future Advance (a) Borrower must execute and deliver to Administrative Agent an additional Serial Mortgage for a principal amount selected by Borrower equal to at least $2,000,000 (or, if less, the then-unfunded aggregate Commitment of the Lenders); (b) in connection with the recordation of any Serial Mortgage, Administrative Agent shall have received a Title Insurance Policy with respect to such Serial Mortgage issued by the Title Company and dated as of the date of the Serial Mortgage, with a pending disbursements endorsement (if any Future Advances to be made following the date of such Serial Mortgage are to be secured by such Serial Mortgage), reinsurance and direct access agreements reasonably acceptable to Administrative Agent, which Title Insurance Policy shall (i) provide coverage in the amount of the Serial Mortgage then being recorded, (ii) insure Administrative Agent that the applicable Serial Mortgage creates a valid Lien on the Property, free and clear of all exceptions from coverage other than Permitted Encumbrances and standard exceptions and exclusions from coverage to the extent set forth in the Title Insurance Policy provided to Administrative Agent in connection with the closing of the Loan, and (iii) name Administrative Agent as the insured; (c) Administrative Agent shall have received

-27-


evidence that all premiums in respect of the Title Policy and all mortgage recording taxes and filing fees in respect of the Serial Mortgage have been paid; (d) Administrative Agent shall have received an opinion of counsel to Borrower with respect to the Serial Mortgage as may be reasonably required by Administrative Agent, in form and substance satisfactory to Administrative Agent (it being acknowledged and agreed that the form delivered on the date hereof in connection with the closing of the Loan is reasonably satisfactory to Administrative Agent) and (e) Borrower shall pay all out-of-pocket costs and reasonable expenses incurred in connection with the execution of the foregoing documents and the preparation, execution and delivery of the documents contemplated in this subsection (l) .
(m)      Disbursement of Future Advances (Interest/Carry Shortfall) – Cash Trap Period: To the extent that a Cash Trap Period is continuing, Future Advances (Interest/Carry Shortfall) may be made to deposit into the Deposit Account to pay to Administrative Agent, for the benefit of Lenders the Monthly Debt Service Payment Amount and the Monthly Debt Service Payment Amount (as defined in the Building Loan Agreement) and other Reserve Funds required by Article 6 , which disbursement of such funds to be made in accordance with Section 6.9.1 . Borrower agrees and acknowledges that the insufficiency of the amount of the Future Advances (Interest/Carry Shortfall) or Borrower’s failure to meet the conditions to Future Advances as set forth in this Section 2.6.2 is not intended to, and shall therefore not, constitute a limitation on the obligation of Borrower to pay Debt Service or Carry Costs.
2.6.3      Construction. Borrower shall (a) construct and complete all Tenant Improvement Work within the time period and as required by, and in accordance with, the Leases, (b) construct all Capital Expenditures Work, (c) pay for or caused to be paid for and obtained all permits, licenses and approvals required by any Governmental Authority with respect to such Tenant Improvement Work and Capital Expenditures Work substantially in accordance with the schedule set forth in any Project Budget submitted to Administrative Agent in connection with any Future Advance, (d) cause all such Tenant Improvement Work and Capital Expenditures Work to be performed in a good and workmanlike manner, in compliance with all Legal Requirements in all material respects (including any and all applicable life safety laws, environmental laws and the ADA); (e) cause all Tenant Improvement Work and Capital Expenditures Work to be performed in a manner consistent with any plans and specifications therefor; (f) cause all Tenant Improvement Work and Capital Expenditures Work to be performed without regard to any deficiency of the amount of the proceeds of the Loan available and allocated for such Tenant Improvement Work and/or Capital Expenditures Work; and (g) cause all such Tenant Improvement Work and Capital Expenditures Work to be constructed, installed and completed as applicable, free and clear of all Liens (except for Permitted Encumbrances).
2.6.4      Funding Amount. The parties hereto acknowledge and agree that each Borrower’s Requisition (to Administrative Agent and Mezzanine Administrative Agent) shall be in the aggregate amount of the costs of Capital Expenditures Work and TI/LC Costs (collectively the “ Approved Costs ”) being paid by Borrower. The parties further acknowledge and agree as follows with respect to such Approved Costs: (i) the portion of Approved Costs each Lender is required to fund as a Future Advance pursuant to this Section 2.6 is such Lender’s Pro Rata Share of the Lender’s Percentage of such Approved Costs, (ii) the portion thereof that each

-28-


Lender is required to fund as a Future Advance (as defined in the Senior Loan Agreement) pursuant to Section 2.6 thereof is such Lender’s Pro Rata Share of the Percentage of the Approved Costs and (iii) the portion thereof that Mezzanine Lender is required to fund as a Future Advance (as defined in the Mezzanine Loan Agreement) pursuant to Section 2.6 thereof is the Mezzanine Lender’s Percentage of the Approved Costs. For avoidance of doubt and by way of example only, in the event of a Borrower’s Requisition in which the Approved Costs are $1,000,000.00 and all conditions in this Agreement, the Senior Loan Agreement and Mezzanine Loan Agreement have been satisfied, then (A) the maximum aggregate amount of the Future Advance to be made by Lenders hereunder (together with “Future Advance”, if any, under the Senior Loan Agreement) shall be $50,550,000.00 and (B) the maximum amount of the Future Advance to be made by the Mezzanine Lender shall be $16,850,000.00. Borrower shall also be obligated to fund any cost overruns or other amount which needs to be expended in order to enable Borrower to satisfy its obligation under Section 2.6.3 hereof to complete construction of Capital Expenditures Work and Tenant Improvement Work. At any time and from time to time during the term of the Loan, with respect to the aggregate Capital Expenditures Work and Tenant Improvement Work, if Administrative Agent determines in its reasonable discretion that the estimated costs and expenses required to complete and pay for such aggregate Capital Expenditures Work and Tenant Improvement Work exceeds the sum of (a) the projected cost reflected on any approved budgets for such work and (b) the remaining unadvanced amounts available to be advanced under the Loan, the Senior Loan and the Mezzanine Loan for the applicable costs, Administrative Agent shall have the right (but not the obligation) to notify Borrower in writing that, the cost of completing such Capital Expenditures Work and Tenant Improvement Work exceeds the approved budgets (the amount of any such deficiency, being herein referred to as the “ Shortfall ”). If Administrative Agent at any time shall deliver any such notice to Borrower, Borrower shall within ten (10) Business Days of delivery thereof, deposit with Administrative Agent, for the benefit of Lenders an amount equal to such Shortfall. For the avoidance of doubt, a Shortfall may exist whether or not Administrative Agent delivers a notice to Borrower; provided, that Borrower’s obligation to make a deposit with Administrative Agent is conditioned on Administrative Agent sending a notice pursuant to the terms of this Section. Administrative Agent shall have no obligation to make further Future Advances until the sums required to be deposited with Administrative Agent have been exhausted and, in any such case, the Loan is back “in balance.” Any such sums not used as provided shall be released to Borrower when and to the extent that Administrative Agent determines that a Shortfall does not exist, provided, however, that should an Event of Default occur, Administrative Agent, in its sole discretion, may apply such amounts either to the remaining costs and expenses to complete the Capital Expenditures Work or Tenant Improvement Work or to the immediate payment of any obligations of Borrower with respect to the Debt.
2.6.5      Quality of Work. No Future Advance or any portion thereof shall be made with respect to defective work or to any Person that has performed work that is defective and that has not been cured, as confirmed by the report of the Construction Consultant, if any, except to the extent that such Future Advance is for the remediation of the defective work. Additionally, Administrative Agent may disburse all or part of any Future Advance before the sum shall become due if Administrative Agent believes it advisable for Administrative Agent to do so, and all such Future Advances or parts thereof shall be deemed to have been made pursuant to this Agreement.

-29-


2.6.6      No Reliance. All conditions and requirements of this Agreement are for the sole benefit of Administrative Agent and Lenders and no other person or party (including, without limitation, the Construction Consultant, if any, any contractor and subcontractors and materialmen) shall have the right to rely on the satisfaction of such conditions and requirements by Borrower. Administrative Agent shall have the right, in its sole and absolute discretion, to waive any such condition or requirement and Borrower shall be authorized to rely on such waiver if and to the extent such waiver is in writing and signed by Administrative Agent.
2.6.7      Miscellaneous. The making of a Future Advance by Lenders shall not constitute Administrative Agent’s approval or acceptance of the construction theretofore completed or materials furnished with respect thereto. Administrative Agent’s inspection and approval of the workmanship and materials used in any Capital Expenditures Work or Tenant Improvement Work, shall impose no liability of any kind on Administrative Agent, the sole obligation of Administrative Agent as the result of such inspection and approval being to make the Future Advances if and to the extent, required by this Agreement.
2.6.8      Trust Funds . All proceeds advanced hereunder shall be subject to the trust fund provisions of Section 13 of the Lien Law. Borrower covenants that (i) it will receive all advanced proceeds and will hold the right to receive such proceeds as trust funds to be first applied to the payment of trust claims as defined in Section 71 of the New York Lien Law, (ii) it will apply all such advanced proceeds to the payment of trust claims (as so defined) only, before using any part of such advanced proceeds for any other purpose, and (iii) it shall request and disburse any and all advances only for Building Loan Costs and for no other purpose or expense whatsoever.
2.6.9      Lien Law Section 22 Compliance . The affidavit attached hereto as Schedule II is made pursuant to and in compliance with Section 22 of the Lien Law.
2.6.10      ALL POTENTIAL LIENORS ARE HEREBY CAUTIONED TO EXERCISE SOUND BUSINESS JUDGMENT IN THE EXTENSION OF CREDIT TO BORROWER. NO POTENTIAL LIENOR SHOULD EXPECT ADMINISTRATIVE AGENT TO MAKE ADVANCES OF THE LOAN IN AMOUNTS AND AT TIMES SUCH THAT IT WILL NOT BE NECESSARY FOR EACH SUCH POTENTIAL LIENOR TO EXERCISE SOUND BUSINESS JUDGMENT IN THE EXTENSION OF CREDIT TO BORROWER. MOREOVER, ALL POTENTIAL LIENORS ARE REMINDED THAT SUBDIVISION (3) OF SECTION 13 OF THE NEW YORK LIEN LAW PROVIDES THAT “NOTHING IN THIS SUBDIVISION SHALL BE CONSIDERED AS IMPOSING UPON ADMINISTRATIVE AGENT ANY OBLIGATION TO SEE TO THE PROPER APPLICATION OF SUCH ADVANCES BY THE BORROWER,” AND ADMINISTRATIVE AGENT DOES NOT IMPOSE SUCH AN OBLIGATION ON ITSELF.
Section 2.7      Method of Disbursement of Loan Proceeds .
2.7.1      Borrower’s Requisition to Be Submitted to Administrative Agent. At such time as Borrower shall desire to obtain a Future Advance (the date of such Future Advance being required to be a Business Day), Borrower shall complete, execute and deliver to Administrative Agent a Borrower’s Requisition in the form attached to the Senior Loan Agreement as Exhibit A (“ Borrower’s Requisition ”), with respect to a Future Advance, shall be accompanied by:

-30-


(a)      with respect to any Future Advance for Tenant Improvement Work or Capital Expenditures Work, duly executed lien waivers, which may be interim lien waivers (for payments to be made from Future Advances for work which is not yet complete) and shall be final lien waivers (for all work which has been completed), as applicable, but in all events such lien waivers may be conditioned upon the payee’s receipt of payment in the applicable amount, from all contractors for all work performed, and all labor or material supplied prior to the date of the Future Advance;
(b)      copies of all invoices, paid receipts, contracts, subcontracts, purchase orders, bills of sale and similar documentation, as applicable, related to each Future Advance so that Administrative Agent can verify all costs set forth in any such Borrower’s Requisition;
(c)      evidence reasonably satisfactory to Administrative Agent that the full amount of the proceeds of the (i) then last preceding Future Advance, (ii) the last preceding Future Advance (as defined in the Senior Loan Agreement) and (iii) the last preceding Future Advance (as defined in Mezzanine Loan Agreement) of the Mezzanine Loan have been paid out in full to the Person with respect to whom such Future Advance was made and otherwise in accordance with this Agreement; and
(d)      such other information, documentation and certification as Administrative Agent shall reasonably request, including, without limitation, any documents required pursuant to Section 2.6 above.
2.7.2      Procedure of Advances.
(a)      Each Borrower’s Requisition shall be submitted to Administrative Agent at least ten (10) Business Days prior to the date of the requested Future Advance (the “ Requested Advance Date ”). Lenders shall make the requested Future Advance on the Requested Advance Date so long as (i) all conditions to such Future Advance are satisfied or waived, (ii) all conditions to a concurrent Future Advance (as defined in the Senior Loan Agreement) are satisfied or waived and (iii) subject to Section 2.6.2(a)(vi) , Mezzanine Lender makes its corresponding Future Advance (as defined in the Mezzanine Loan Agreement) on the Requested Advance Date in an amount equal to Mezzanine Lender’s Percentage of the costs to be paid, in part, with such Future Advance; provided that Borrower may revoke such Borrower’s Requisition at any time prior to the Requested Advance Date upon prior notice to Administrative Agent (subject to payment of any Breakage Costs and any out-of-pocket costs or expenses incurred by Administrative Agent or Lenders in connection with such revocation). Borrower shall be permitted to deliver a single Borrower’s Requisition for the Loan, the Senior Loan and the Mezzanine Loan.
(b)      In no event shall any Lender be required to advance Future Advance funds in an amount less than its Pro Rata Share of the Minimum Advance Amount (except in respect of any final Future Advance).
2.7.3      Funds Advanced. Each Future Advance made directly to Borrower

-31-


shall be made by Administrative Agent by wire transfer (or other transfer) to an account designated by Borrower. All proceeds of all Future Advances shall be used by Borrower only for the purposes for which such Future Advances were made or as otherwise may be permitted or required herein.
2.7.4      Direct Future Advances to Third Parties. At Administrative Agent’s option at any time that a monetary Default, material non-monetary Default which is reasonably likely to have a Material Adverse Effect or Event of Default has occurred and is continuing, Administrative Agent may make any or all Future Advances directly or through the Title Company to (i) any contractor, (ii) the Construction Consultant to pay its reasonable fees (which shall not exceed $2,000 per draw, together with any concurrent draw made under the Mezzanine Loan), if applicable, (iii) Administrative Agent’s counsel to pay the reasonable fees incurred by the same, (iv) to pay (x) any out-of-pocket expenses incurred by Administrative Agent which are reimbursable by Borrower under the Loan Documents (including, without limiting the generality of the foregoing, reasonable attorneys’ fees and expenses and other reasonable fees and expenses incurred by Administrative Agent), provided that Borrower shall theretofore have received written notice from Administrative Agent thereof, or (y) following the occurrence and during the continuance of an Event of Default, any other sums due to Administrative Agent under the Note, this Agreement or any of the other Loan Documents, all to the extent that the same are not paid by the respective due dates thereof, and (v) any other Person to whom Administrative Agent determines payment is due. Any portion of the Loan disbursed by Administrative Agent as set forth above shall be deemed disbursed as of the date on which the Person to whom such payment is made receives the same. The execution of this Agreement by Borrower shall, and hereby does, constitute an irrevocable authorization to disburse such Future Advances constituting part of the Loan directly to any such Person or through the Title Company to such Persons subject to and in accordance with this Section 2.7.4 as amounts become due and payable to them hereunder and any portion of the Loan so disbursed by Administrative Agent shall be deemed disbursed as of the date on which the Person to whom payment is made receives the same. No further authorization from Borrower shall be necessary to warrant such payment directly of such Future Advances to such relevant Person in accordance herewith, and all such Future Advances so made shall satisfy pro tanto the obligations of Administrative Agent hereunder and shall be secured by the Mortgage and the other Loan Documents as fully as if made directly to Borrower.
2.7.5      Frequency of Advances. Administrative Agent shall have no obligation to make Future Advance (Capital Expenditures) or Future Advance (TI/LCs) more often than once in each calendar month. In addition, Administrative Agent may at any time, in Administrative Agent’s sole discretion and without request therefor from Borrower, make Future Advances to pay amounts that are due to Administrative Agent under, and in accordance with, the Loan Documents. In addition, Administrative Agent may at any time, in Administrative Agent’s sole discretion and without request therefore from Borrower, make Future Advance (Interest/Carry Shortfall) to pay amounts that are due to Administrative Agent under, and in accordance with, the Loan Documents; provided that Administrative Agent shall deliver a written notice (or other written evidence customarily used by Administrative Agent to evidence such advance) to Borrower concurrently with or promptly after such Future Advance.
2.7.6      Advances Do Not Constitute a Waiver. No Future Advance shall constitute a waiver of any of the conditions of Administrative Agent’s obligation to make further

-32-


Future Advances, nor, in the event Borrower is unable to satisfy any such condition, shall any Future Advance have the effect of precluding Administrative Agent from thereafter declaring such inability to be an Event of Default hereunder.
2.7.7      Availability of Future Advances. Borrower shall have the right to request (which request shall be irrevocable), upon not less than thirty (30) days’ prior written notice and not more than ninety (90) days’ prior written notice to Administrative Agent, which notice (if any) shall be delivered with Borrower’s notice to extend the First Extension Maturity Date given in accordance with Section 2.3.2(i) of the Senior Loan Agreement, that Borrower’s right to request Future Advances of any unadvanced portion of the Future Funding Amount (the “ Unadvanced Amounts ”) be terminated, in which case, and upon approval from Administrative Agent, the Loan shall be permanently reduced by an amount equal to the all or a portion of the Unadvanced Amounts upon the commencement of the Second Extension Period (if any). Any portion of the Unadvanced Amounts that Borrower does not elect to terminate pursuant to this Section 2.7.7 shall be funded into the Future Funding Reserve Account upon the commencement of the Second Extension Period (if any) to be disbursed in accordance with the terms of Section 6.8 . of the Senior Loan Agreement (as incorporated herein); provided, however, any Unadvanced Amounts funded into the Future Funding Reserve Account shall be disbursed for Building Loan Costs Only.
Section 2.8      Mitigation Obligations; Replacement of Lenders
Section 2.8 of the Senior Loan Agreement (including, without limitation, all covenants of Borrower set forth therein) is hereby incorporated by reference as if fully set forth herein as of the date hereof, except that those covenants which specifically reference the Senior Loan Agreement, the Note (as defined in the Senior Loan Agreement), any of the Senior Loan Documents, the Senior Loan or other similar terms shall be modified to the extent appropriate or necessary to reference this Agreement, the Note, the Mortgage, applicable Loan Documents, the Loan or other appropriate Loan related terms, as the case may be.
III.      REPRESENTATIONS AND WARRANTIES
The representations and warranties set forth in Article III of the Senior Loan Agreement are incorporated herein by reference as if fully set forth herein and remade by Borrower as of the date hereof, except that those covenants which specifically reference the Senior Loan Agreement, the Note (as defined in the Senior Loan Agreement), any of the Senior Loan Documents, the Senior Loan or other similar terms shall be modified to the extent appropriate or necessary to reference this Agreement, the Note, the Mortgage, applicable Loan Documents, the Loan or other appropriate Loan related terms, as the case may be.
IV.      BORROWER COVENANTS
Article IV of the Senior Loan Agreement is hereby incorporated by reference as if fully set forth herein as of the date hereof, except that those covenants which specifically reference the Senior Loan Agreement, the Note (as defined in the Senior Loan Agreement), any of the Senior Loan Documents, the Senior Loan or other similar terms shall be modified to the extent appropriate or necessary to reference this Agreement, the Note, the Mortgage, applicable Loan

-33-


Documents, the Loan or other appropriate Loan related terms, as the case may be.
V.      INSURANCE, CASUALTY AND CONDEMNATION
Article V of the Senior Loan Agreement is hereby incorporated by reference as if fully set forth herein as of the date hereof, except that those covenants which specifically reference the Senior Loan Agreement, the Note (as defined in the Senior Loan Agreement), any of the Senior Loan Documents, the Senior Loan or other similar terms shall be modified to the extent appropriate or necessary to reference this Agreement, the Note, the Mortgage, applicable Loan Documents, the Loan or other appropriate Loan related terms, as the case may be.
VI.      RESERVE FUNDS
Article VI of the Senior Loan Agreement is hereby incorporated by reference as if fully set forth herein as of the date hereof, except that those covenants which specifically reference the Senior Loan Agreement, the Note (as defined in the Senior Loan Agreement), any of the Senior Loan Documents, the Senior Loan or other similar terms shall be modified to the extent appropriate or necessary to reference this Agreement, the Note, the Mortgage, applicable Loan Documents, the Loan or other appropriate Loan related terms, as the case may be; provided that any references to a security interest granted to Administrative Agent or any Lender shall not apply so long as such party has a security interest pursuant to the Senior Loan Agreement.
VII.      DEFAULTING LENDER
Article VII of the Senior Loan Agreement is hereby incorporated by reference as if fully set forth herein as of the date hereof, except that those covenants which specifically reference the Senior Loan Agreement, the Note (as defined in the Senior Loan Agreement), any of the Senior Loan Documents, the Senior Loan or other similar terms shall be modified to the extent appropriate or necessary to reference this Agreement, the Note, the Mortgage, applicable Loan Documents, the Loan or other appropriate Loan related terms, as the case may be.
VIII.      PERMITTED TRANSFERS
Article VIII of the Senior Loan Agreement is hereby incorporated by reference as if fully set forth herein as of the date hereof, except that those covenants which specifically reference the Senior Loan Agreement, the Note (as defined in the Senior Loan Agreement), any of the Senior Loan Documents, the Senior Loan or other similar terms shall be modified to the extent appropriate or necessary to reference this Agreement, the Note, the Mortgage, applicable Loan Documents, the Loan or other appropriate Loan related terms, as the case may be.
IX.      SECONDARY MARKET TRANSACTION
Article IX of the Senior Loan Agreement is hereby incorporated by reference as if fully set forth herein as of the date hereof, except that those covenants which specifically reference the Senior Loan Agreement, the Note (as defined in the Senior Loan Agreement), any of the Senior Loan Documents, the Senior Loan or other similar terms shall be modified to the extent appropriate or necessary to reference this Agreement, the Note, the Mortgage, applicable Loan Documents, the Loan or other appropriate Loan related terms, as the case may be.

-34-


X.      DEFAULTS
Article X of the Senior Loan Agreement is hereby incorporated by reference as if fully set forth herein as of the date hereof, except that those covenants which specifically reference the Senior Loan Agreement, the Note (as defined in the Senior Loan Agreement), any of the Senior Loan Documents, the Senior Loan or other similar terms shall be modified to the extent appropriate or necessary to reference this Agreement, the Note, the Mortgage, applicable Loan Documents, the Loan or other appropriate Loan related terms, as the case may be.
XI.      MISCELLANEOUS
Article XI of the Senior Loan Agreement is hereby incorporated by reference as if fully set forth herein as of the date hereof, except that those covenants which specifically reference the Senior Loan Agreement, the Note (as defined in the Senior Loan Agreement), any of the Senior Loan Documents, the Senior Loan or other similar terms shall be modified to the extent appropriate or necessary to reference this Agreement, the Note, the Mortgage, applicable Loan Documents, the Loan or other appropriate Loan related terms, as the case may be.
XII.      ASSIGNMENT OF BUILDING LOAN AGREEMENT.
Lender shall, as an accommodation to Borrower for the sole purpose of mortgage recording tax savings, upon the written request and at the sole cost and expense of Borrower (for payment of the actual out-of-pocket fees and expenses of Lender’s counsel to prepare necessary assignments), use commercially reasonable efforts to deliver an assignment of this Agreement.
XIII.      ADMINISTRATIVE AGENT AND AGREEMENTS AMONG LENDERS
Article XIII of the Senior Loan Agreement is hereby incorporated by reference as if fully set forth herein as of the date hereof, except that those covenants which specifically reference the Senior Loan Agreement, the Note (as defined in the Senior Loan Agreement), any of the Senior Loan Documents, the Senior Loan or other similar terms shall be modified to the extent appropriate or necessary to reference this Agreement, the Note, the Mortgage, applicable Loan Documents, the Loan or other appropriate Loan related terms, as the case may be.
XIV.      SENIOR LOAN DOCUMENTS
Borrower shall: (a) pay all principal, interest and other sums required to be paid by Borrower under and pursuant to the provisions of the Senior Loan Documents and (b) diligently perform and observe all of the terms, covenants and conditions of the Senior Loan Documents on the part of Borrower to be performed and observed, unless such performance or observance shall be waived in writing by Administrative Agent and/or the Lenders, as applicable. The Loan shall be cross-defaulted and cross-collateralized with the Senior Loan and the other Senior Loan Documents. An Event of Default under this Agreement or any of the other Loan Documents shall constitute an Event of Default under the Senior Loan and an Event of Default under the Senior Loan Agreement or any of the other Senior Loan Documents shall constitute an Event of Default hereunder. Administrative Agent shall have the option to pursue its remedies in any combinations and against any or all of Administrative Agent’s security for the Loan and/or the Senior Loan, whether successively, concurrently or otherwise.

-35-



[NO FURTHER TEXT ON THIS PAGE]




-36-


IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed by their duly authorized representatives, all as of the day and year first above written.
 
ADMINISTRATIVE AGENT:
INVESCO CMI INVESTMENTS, L.P. , a Delaware limited partnership
By: Invesco CMI Investments GP, LLC, a Delaware limited liability company, its general partner

By:     /s/ Beth Zayicek    
Name: Beth Zayicek
Title: Proper Officer


 
LENDER:
INVESCO CMI INVESTMENTS, L.P. , a Delaware limited partnership
By: Invesco CMI Investments GP, LLC, a Delaware limited liability company, its general partner

By:     /s/ Beth Zayicek    
Name: Beth Zayicek
Title: Proper Officer



[Signatures Continue On Following Page]

[Signature Page to Amended and Restated Building Loan Agreement]


 
BORROWER:
 
110 WILLIAM PROPERTY INVESTORS III, LLC ,
A Delaware limited liability company 
 
By:     /s/ Nicholas Bienstock    
Name: Nicholas Bienstock    
Title:     Authorized Signatory    



[Signature Page to Amended and Restated Building Loan Agreement]




STATE OF TEXAS    )
) ss.
COUNTY OF DALLAS    )
On the 6th day of March in the year 2019, before me, the undersigned, a Notary Public in and for said State, personally appeared     Beth Zayicek         , personally known to me or proved to me on the basis of satisfactory evidence to be the individual whose name is subscribed to the within instrument and acknowledged to me that he/she executed the same in his/her capacity, and that by his/her signature on the instrument, the individual, or the person upon behalf of which the individual acted, executed the instrument.
/s/ Omar Felipe    
Notary Public


STATE OF TEXAS    )
) ss.
COUNTY OF DALLAS    )
On the 6th day of March in the year 2019, before me, the undersigned, a Notary Public in and for said State, personally appeared     Beth Zayicek         , personally known to me or proved to me on the basis of satisfactory evidence to be the individual whose name is subscribed to the within instrument and acknowledged to me that he/she executed the same in his/her capacity, and that by his/her signature on the instrument, the individual, or the person upon behalf of which the individual acted, executed the instrument.
/s/ Omar Felipe    
Notary Public




[Acknowledgments Continue On Following Page]

[Acknowledgment Page to Amended and Restated Building Loan Agreement]



ACKNOWLEDGMENT


STATE OF NEW YORK    )
) ss.
COUNTY OF NEW YORK    )
On the 6th day of March in the year 2019, before me, the undersigned, a Notary Public in and for said State, personally appeared     Nicholas Bienstock     , personally known to me or proved to me on the basis of satisfactory evidence to be the individual whose name is subscribed to the within instrument and acknowledged to me that he executed the same in his capacity, and that by his signature on the instrument, the individual, or the person upon behalf of which the individual acted, executed the instrument.


/s/ Amy Miller    
Notary Public



[Acknowledgment Page to Amended and Restated Building Loan Agreement]


SCHEDULE I
COMMITMENTS
INVESCO CMI INVESTMENTS, L.P.    -    100%





SCHEDULE II
SECTION 22 AFFIDAVIT
[Attached]



AFFIDAVIT UNDER SECTION 22
OF THE LIEN LAW OF NEW YORK
The undersigned, being duly sworn, deposes and says that:
1.    He is an authorized signatory of 110 William Property Investors III, LLC, a Delaware limited liability company, having an address c/o Savanna, 430 Park Avenue, 12 th Floor, New York, New York 10022 (“ Borrower ”). The signatory to this affidavit is hereinafter an “ Authorized Signatory ”).
2.    Authorized Signatory gives this affidavit, on behalf of Borrower in his capacity as an authorized signatory of Borrower, in connection with that certain building loan in the aggregate maximum principal amount of $45,900,000.00 (the “ Loan ”) made to Borrower by Invesco CMI Investments, L.P. (“ Lender ”) pursuant to a certain Amended and Restated Building Loan Agreement dated as of March 7, 2019, by and among Borrower, Invesco CMI Investments, L.P., as administrative agent, and Lender (the “ Building Loan Agreement ”).
3.    The maximum principal amount of the Loan is $45,900,000.00.
4.    The amount, if any, to be advanced from the Building Loan to reimburse the Borrower for “costs of the improvements” paid by the Borrower after the commencement of the Capital Expenditure Work or TI/LC Costs, as applicable, but prior to the date hereof is: $2,529,835.76.
5.    The estimated amount to be advanced from the Building Loan for indirect costs of the Improvements which may become due and payable after the date hereof and during the construction of the Capital Expenditure Work or TI/LC Costs (such as OCIP insurance, subguard insurance and the payment and performance bond), as applicable, is $0.00.
6.    The net sum available to Borrower from the Building Loan for the Improvements is $43,370,164.20.
7.    This affidavit is made pursuant to and in compliance with Section 22 of the Lien Law of the State of New York and is a part of the Building Loan Agreement.
8.    Certain of the foregoing amounts are based upon good faith estimates of costs or expenses not yet incurred and certain items listed above may cost more or less than such estimates. Borrower reserves the right to use unexpended amounts from any of said items to defray increases incurred in any other item or items listed above so long as the total amount of Advances expended on said items does not exceed the aggregate amount of said items shown above.
[No Further Text on This Page]




The facts above and any costs itemized on this statement are true, to the knowledge of the undersigned.
 
 
   /s/ Christopher Schlank
    Christopher Schlank     . solely in his capacity as Authorized Signatory of 110 WILLIAM PROPERTY INVESTORS III, LLC , a Delaware limited liability company
 
 


Sworn and subscribed to before me this   5th    day of March, 2019.

   /s/ Amy Miller
Notary Public
 
 


[Signature Page to Affidavit Under Section 22 of the Lien Law of New York]

Exhibit 10.2
 


SENIOR LOAN AGREEMENT
Dated as of March 7, 2019
Between
110 WILLIAM PROPERTY INVESTORS III, LLC.,

as Borrower,
LENDERS SIGNATORY HERETO
FROM TIME TO TIME ,
as Lenders,
and
INVESCO CMI INVESTMENTS, L.P.
as Administrative Agent and Lender


 




TABLE OF CONTENTS
 
 
 
Page

 
 
I.
DEFINITIONS; PRINCIPLES OF CONSTRUCTION
1

 
Section 1.1
Definitions
1

 
Section 1.2
Principles of Construction
39

 
 
 
 
II.
THE LOAN
39

 
Section 2.1
The Loan
39

 
Section 2.2
The Interest Rate
41

 
Section 2.3
Loan Payments
45

 
Section 2.4
Prepayments
49

 
Section 2.5
Regulatory Change; Taxes
50

 
Section 2.6
Working Capital; Advances
54

 
Section 2.7
Method of Disbursement of Loan Proceeds
65

 
Section 2.8
Mitigation Obligations; Replacement of Lenders
67

 
 
 
 
III.
REPRESENTATIONS AND WARRANTIES
68

 
Section 3.1
Borrower Representations
68

 
Section 3.2
Survival of Representations
88

 
Section 3.3
ERISA
89

 
 
 
 
IV.
BORROWER COVENANTS
89

 
Section 4.1
Borrower Affirmative Covenants
89

 
Section 4.2
Borrower Negative Covenants
112

 
Section 4.3
Mezzanine Loan
116

 
 
 
 
V.
INSURANCE, CASUALTY AND CONDEMNATION
117

 
Section 5.1
Insurance
117

 
Section 5.2
Casualty and Condemnation
122

 
Section 5.3
Delivery of Net Proceeds
123

 
 
 
 
VI.
RESERVE FUNDS
128

 
Section 6.1
Cash Management Arrangements
128

 
Section 6.2
Tax Funds
129

 
Section 6.3
Insurance Funds
130

 
Section 6.4
Lease Termination Funds
131

 
Section 6.5
Cash Trap Funds
132

 
Section 6.6
Casualty and Condemnation Account
132

 
Section 6.7
Rebalancing Reserve Account
132

 
Section 6.8
Additional Reserves
133


-i-


 
Section 6.9
Property Cash Flow Allocation
134

 
Section 6.10
Security Interest in Reserve Funds, Working Capital Funds and Interest on Reserve Funds and Working Capital Funds
134

 
Section 6.11
Letters of Credit/Security Deposit
136

 
 
 
 
VII.
DEFAULTING LENDER
136

 
Section 7.1
Defaulting Lender
136

 
 
 
 
VIII.
PERMITTED TRANSFERS
137

 
Section 8.1
Due on Sale
137

 
Section 8.2
Permitted Transfers of Equity Interests
137

 
 
 
 
IX.
SECONDARY MARKET TRANSACTION
138

 
Section 9.1
Sale of Loan
138

 
Section 9.2
[Reserved]
141

 
Section 9.3
Servicing
141

 
Section 9.4
Register
141

 
Section 9.5
Severance Documentation
142

 
Section 9.6
Secondary Market Transaction Expenses
143

 
 
 
 
X.
DEFAULTS
144

 
Section 10.1
Event of Default
144

 
Section 10.2
Remedies
148

 
Section 10.3
Right to Cure Defaults
151

 
Section 10.4
Remedies Cumulative
151

 
 
 
 
XI.
MISCELLANEOUS
152

 
Section 11.1
Successor and Assigns
152

 
Section 11.2
Administrative Agent's Discretion
152

 
Section 11.3
Governing Law
152

 
Section 11.4
Modification, Waiver in Writing
154

 
Section 11.5
Delay Not a Waiver
154

 
Section 11.6
Notices
154

 
Section 11.7
Trial by Jury
156

 
Section 11.8
Headings
156

 
Section 11.9
Severability
157

 
Section 11.10
Preferences
157

 
Section 11.11
Waiver of Notice
157

 
Section 11.12
Claims Against Administrative Agent and Lender; Remedies of Borrower
157

 
Section 11.13
Expenses; General Indemnity; Mortgage Tax Indemnity; ERISA Indemnity
158

 
Section 11.14
Schedules Incorporated
160


-ii-


 
Section 11.15
Offsets, Counterclaims and Defenses
160

 
Section 11.16
No Joint Venture or Partnership; No Third-Party Beneficiaries
160

 
Section 11.17
Publicity
160

 
Section 11.18
Waiver of Marshalling of Assets
161

 
Section 11.19
Waiver of Setoff
161

 
Section 11.20
Conflict; Construction of Documents; Reliance
161

 
Section 11.21
Brokers and Financial Advisors
161

 
Section 11.22
Exculpation
162

 
Section 11.23
Prior Agreements
165

 
Section 11.24
[Reserved]
165

 
Section 11.25
Assignments and Participations
165

 
Section 11.26
Set-Off
166

 
Section 11.27
REOC Status
166

 
Section 11.28
Delegation By Lenders; Lenders' Consultation and Information Right
166

 
Section 11.29
Intercreditor Agreement
168

 
Section 11.30
Acknowledgment and Consent to Bail-In of EEA Financial Institutions
168

 
 
 
 
XII.
[RESERVED]
169

 
 
 
 
XIII.
ADMINISTRATIVE AGENT AND AGREEMENTS AMONG LENDERS
169

 
Section 13.1
Appointment; Nature of Relationship
169

 
Section 13.2
Powers
170

 
Section 13.3
General Immunity
171

 
Section 13.4
No Responsibility for Loan, etc
171

 
Section 13.5
Action on Instructions of Lenders
171

 
Section 13.6
Employment of Agents and Counsel
171

 
Section 13.7
Reliance on Documents; Counsel
172

 
Section 13.8
Administrative Agent's Reimbursement and Indemnification
172

 
Section 13.9
Rights as a Lender
172

 
Section 13.10
Lender Credit Decision
172

 
Section 13.11
Successor Administrative Agent
176

 
Section 13.12
Amendments and Waivers
174

 
Section 13.13
Notice of Defaults
175

 
Section 13.14
Requests for Approval
175

 
Section 13.15
Copies of Documents
176

 
Section 13.16
Defaulting Lenders
176

 
Section 13.17
Pro Rata Treatment
177

 
Section 13.18
Sharing of Payments, Etc.
177

 
Section 13.19
Collateral Matters; Protective Advances
177

 
Section 13.20
Borrower Default
179

 
Section 13.21
Post-Foreclosure Plans
180

 
Section 13.22
Terminology
181

 
 
 
 

-iii-


SCHEDULES
 
 
 
 
Schedule I
 -
Commitments
Schedule II
 -
Rent Roll
Schedule III
 -
Ongoing Work
Schedule IV
 -
Organizational Chart
Schedule V
 -
Minimum Leasing Parameters


-iv-


SENIOR LOAN AGREEMENT
THIS SENIOR LOAN AGREEMENT , dated as of March 7, 2019 (as amended, restated, replaced, supplemented or otherwise modified from time to time, this “ Agreement ”), among 110 WILLIAM PROPERTY INVESTORS III, LLC , a Delaware limited liability company, having an address at c/o Savanna, 430 Park Avenue, 12 th Floor, New York, New York 10022 (together with its successors and/or assigns, “ Borrower ”) and INVESCO CMI INVESTMENTS, L.P. , a Delaware limited partnership having an address at c/o Invesco Real Estate, 2001 Ross Avenue, Suite 3400, Dallas Texas 75201, as administrative agent for the Lenders (in such capacity, together with its successors in such capacity, the “ Administrative Agent ”) and as a Lender, and each of the lenders that is a signatory hereto on the signature pages hereof and each lender that becomes a “Lender” after the date hereof (individually, a “ Lender ” and, collectively, the “ Lenders ”).
All capitalized terms used herein shall have the respective meanings set forth in Article I hereof.
W I T N E S E T H :
WHEREAS, Borrower desires to obtain the Loan from Lenders; and
WHEREAS, Lenders are willing to make the Loan to Borrower, subject to and in accordance with the conditions and terms of this Agreement and the other Loan Documents.
NOW, THEREFORE, in consideration of the covenants set forth in this Agreement, and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto hereby agree, represent and warrant as follows:
I. DEFINITIONS; PRINCIPLES OF CONSTRUCTION
Section 1.1      Definitions .
For all purposes of this Agreement, except as otherwise expressly provided:
“ Acceptable Blanket Policy ” shall have the meaning set forth in Section 5.1.1(c) .
“ Acceptable Replacement Guarantor ” shall have the meaning set forth in Section 10.1 (a)(xxii) .
“ Accounting Principles ” shall mean a GAAP or Federal income tax basis or other accounting principles reasonably approved by Administrative Agent.
“ Accounts ” shall have the meaning set forth in Section 6.1(b) .
“ Act ” shall have the meaning set forth in Section 3.1.24(cc)(v) .
“ ADA ” means the Americans with Disabilities Act, of July 26, 1990, Pub. L. No. 101-336, 104 Stat. 327, 42 U.S.C. § 12101 et. seq., as amended from time to time.



“ Administrative Agent ” means Invesco CMI Investments, L.P., in its capacity as contractual representative for the Lenders pursuant to Article XIII hereof, and not in its individual capacity as a Lender, and any successor Administrative Agent appointed pursuant to Article XIII .
“ Affiliate ” shall mean, as to any Person, any other Person that is in direct and/or indirect Control of, is directly and/or indirectly Controlled by or is under common direct and/or indirect ownership or Control with such Person.
“ Aggregate Outstanding Principal Balance ” shall mean the sum of (i) the Outstanding Principal Balance of the Loan, (ii) the Building Loan Outstanding Principal Balance and (iii) the Mezzanine Outstanding Principal Balance.
“ Agreement ” shall have the meaning set forth in the introductory paragraph hereto.
“ ALTA ” shall mean American Land Title Association, or any successor thereto.
“ Alteration Threshold ” shall mean $2,000,000.00, in the aggregate.
“ Annex ” shall have the meaning set forth in Section 3.1.43(a) .
“ Annual Budget ” shall mean the operating expense and capital budget for the Property setting forth, on a month-by-month basis, in reasonable detail, each line item of Borrower’s good faith estimate of anticipated Gross Revenue, Operating Expenses and Capital Expenditures for the applicable Fiscal Year.
“ Anti-Corruption Laws ” means: (a) the U.S. Foreign Corrupt Practices Act of 1977, as amended; (b) the U.K. Bribery Act 2010, as amended; and (c) any other anti-bribery or anti-corruption laws, regulations or ordinances in any jurisdiction in which Borrower or any Borrower Party is located or doing business.
“ Anti-Money Laundering Laws ” means applicable laws or regulations in any jurisdiction in which Borrower or any Borrower Party is located or doing business that relates to money laundering, any predicate crime to money laundering, or any financial record keeping and reporting requirements related thereto.
“ Applicable Interest Rate ” means, except as provided in subsections (i) and (ii) below, from the date hereof until the Interest Rate Replacement Date, if any, the rate of interest equal to the sum of: (a) the LIBOR Interest Rate, plus (b) the Applicable Spread; provided, however: (i) if Administrative Agent makes a LIBOR Rate Unavailable Determination, in accordance with Section 2.2.3(b) hereof, then the Applicable Interest Rate with respect to the Loan shall convert to the Base Rate in accordance with said section; and (ii) notwithstanding subsection (i) above, if Administrative Agent should, at any time, make a LIBOR Rate Discontinued Determination, in accordance with Section 2.2.3(c) hereof, then from and after the Interest Rate Replacement Date, the Applicable Interest Rate shall be equal to the sum of: (x) the Substitute Rate, plus (y) the Substitute Spread; provided, however, that in no event shall the Applicable Interest Rate ever be less than 2.00%.

-2-


“ Applicable Lending Office ” shall mean the “lending office” of a Lender (or of an Affiliate of such Lender) designated for a Lender on the signature page hereof or such other office of such Lender (or an Affiliate of such Lender) as such Lender may from time to time specify to Borrower in writing as the office by which the Loan is to be made and/or maintained by such Lender.
“ Applicable Similar Law ” shall have the meaning set forth in Section 3.1.8 .
“ Applicable Spread ” shall mean 1.50%.
“ Appraisal ” shall mean an “as-is” appraisal of the Property prepared in accordance with the requirements of FIRREA and USPAP, prepared by an independent third-party appraiser, who is State licensed or State certified if required under the laws of the State where the Property is located, who meets the requirements of FIRREA and USPAP and who is otherwise reasonably satisfactory to Administrative Agent.
“ Appraised Value ” shall mean the “as is” appraised value of the Property, as determined by an Appraisal, and in connection with any calculation of the Loan to Value Ratio pursuant to the terms of this Agreement, that is dated not more than ninety (90) days prior to the date of the calculation thereof.
“ Approved Annual Budget ” shall have the meaning set forth in Section 4.1.6(e) .
“ Approved Costs ” shall have the meaning set forth in Section 2.6.4 .
“ Approved Equipment Financing ” shall have the meaning set forth in Section 4.2.6 .
“ Approved Independent Director Provider ” shall mean (A) each of CT Corporation, Corporation Service Company, National Registered Agents, Inc., Wilmington Trust Company, Stewart Management Company, and Lord Securities Corporation and (B) additional national providers of Independent Directors reasonably approved in writing by Administrative Agent.
“ ACS Extension Term Sheet ” shall mean that certain Term Sheet by and between 110 William Property Investors III, LLC, a Delaware limited liability company, as landlord, and The City of New York, a municipal corporation, acting through the Department of Citywide Administrative Services (DCAS), for use by the Administration for Children Services (ACS), as tenant, dated as of April 13, 2018.
“ Assignment of Construction Management Agreement ” shall mean (i) for so long as the Initial Management Agreement shall remain in effect, the Assignment of Management Agreement as the same may be amended, restated, replaced, supplemented or otherwise modified from time to time and (ii) any other assignment and subordination of construction management agreement entered into in connection with this Agreement, as the same may be amended, restated, replaced, supplemented or otherwise modified from time to time
“ Assignment of Leases ” shall mean that certain Assignment of Leases and Rents, dated as of the date hereof, from Borrower, as assignor, to Administrative Agent, for the benefit of the

-3-


Lenders, as assignee, as the same may be amended, restated, supplemented or otherwise modified from time to time.
“ Assignment of Leasing Agreement ” shall mean (i) for so long as the Initial Management Agreement shall remain in effect, the Assignment of Management Agreement as the same may be amended, restated, replaced, supplemented or otherwise modified from time to time and (ii) any other assignment and subordination of leasing agreement entered into in connection with this Agreement, as the same may be amended, restated, replaced, supplemented or otherwise modified from time to time.
“ Assignment of Management Agreement ” shall mean that certain Conditional Assignment of Management Agreement and Subordination of Management Agreement, dated the date hereof, among Borrower, Manager and Administrative Agent, for the benefit of Lenders, as the same may be amended, restated, replaced, supplemented or otherwise modified from time to time.
“ Assignment of Project Management Agreement ” shall mean that certain Conditional Assignment of Project Management Agreement and Subordination of Project Management Agreement, dated the date hereof, among Borrower, Project Manager and Administrative Agent, for the benefit of Lenders, as the same may be amended, restated, replaced, supplemented or otherwise modified from time to time.
“ Assignment of Protection Agreement ” shall mean that certain Collateral Assignment of Interest Rate Protection Agreement, dated as of the date hereof, between Borrower and Administrative Agent, for the benefit of Lenders and acknowledged by Counterparty, and any other Collateral Assignment of Interest Rate Protection Agreement hereafter delivered in compliance with Section 4.1.11 hereof.
“ Award ” shall mean any compensation paid by any Governmental Authority in connection with a Condemnation in respect of all or any part of the Property.
“ Bankruptcy Code ” shall mean Title 11 of the United States Code, 11 U.S.C. §101 et seq., as the same may be amended from time to time, and any successor statute or statutes and all rules and regulations from time to time promulgated thereunder, and any comparable foreign laws relating to bankruptcy, insolvency or creditors’ rights or any other Federal or state bankruptcy or insolvency law.
“ Bankruptcy Event ” shall mean with respect to any Person: (a) such Person filing a voluntary petition under the Bankruptcy Code or any other federal or state bankruptcy or insolvency law; (b) the filing of an involuntary petition against such Person under the Bankruptcy Code or any other federal or state bankruptcy or insolvency law, or soliciting or causing to be solicited petitioning creditors for any involuntary petition against such Person; (c) such Person filing an answer consenting to or otherwise consenting to or joining in any involuntary petition filed against it, by any other Person under the Bankruptcy Code or any other federal or state bankruptcy or insolvency law, or soliciting or causing to be solicited petitioning creditors for any involuntary petition from any Person; (d) such Person consenting to or acquiescing in or joining in an application for the appointment of a custodian, receiver, trustee, assignee, sequestrator (or similar official), liquidator,

-4-


or examiner for such Person or any portion of the Property; (e) the filing of a petition against a Person seeking reorganization, arrangement, composition, readjustment, liquidation, dissolution or similar relief under the Bankruptcy Code or any other applicable law; (f) under the provisions of any other law for the relief or aid of debtors, an action taken by any court of competent jurisdiction that allows such court to assume custody or Control of a Person or of the whole or any substantial part of its property or assets; or (g) such Person making an assignment for the benefit of creditors, or admitting, in writing or in any legal proceeding, its insolvency or inability to pay its debts as they become due.
“ Base Rate ” for any Interest Period, shall mean the sum of (a) the Federal Funds Rate, determined as of the Determination Date related to such Interest Period, plus (b) the Base Rate Margin.
“ Base Rate Margin ” shall mean the difference between (a) the Applicable Interest Rate as in effect immediately prior to a LIBOR Rate Unavailable Determination and (b) the Federal Funds Rate in effect as of such LIBOR Rate Unavailable Determination.  Once determined, the Base Rate Margin shall remain constant for so long as the Base Rate shall be in effect.
“ Borrower ” shall have the meaning set forth in the introductory paragraph hereto.
“ Borrower Party ” shall mean each of Borrower, Mezzanine Borrower and Guarantor.
“ Borrower Related Party ” means, collectively and individually, any Borrower Party and any Affiliate of any of the foregoing.
“ Borrower Transaction Cost Cap ” shall have the meaning set forth in Section 9.6
“ Borrower’s knowledge ” shall mean the actual knowledge of the parties primarily charged with the operation of the day-to-day activities of Borrower, which, for the avoidance of doubt, shall include, without limitation, Guarantor and Manager.
“ Borrower’s Requisition ” shall have the meaning set forth in Section 2.7.1.
“ Breakage Costs ” shall have the meaning set forth in Section 2.2.3(g) .
“ Build Out Cost Cap ” shall have the meaning set forth in Section 4.1.10 .
“ Build Out Costs ” TI/LC Costs incurred by Borrower in connection with the Build Out Work.
“ Build Out Space ” shall have the meaning set forth in Section 4.1.10 .
“ Build Out Work ” shall have the meaning set forth in Section 4.1.10 .
“ Building Loan ” shall have the meaning set forth in Section 2.6.2(m) .
“ Building Loan Agreement ” shall have the meaning set forth in Section 2.6.2(m)(B) .
“ Building Loan Amount ” shall have the meaning set forth in Section 2.6.2(m)(B) .

-5-


“ Building Loan Documents ” shall mean the “Loan Documents” as defined in the Building Loan Agreement.
“Building Loan Outstanding Principal Balance ” shall mean the “Outstanding Principal Balance” as defined in the Building Loan Agreement.
“ Building Loan Pro Forma Debt Service ” shall mean the “Pro Forma Debt Service” as defined in the Building Loan Agreement.
“ Business Day ” shall mean any day other than a Saturday, a Sunday or a legal holiday on which national banks are not open for general business in the State of New York.
“ Capital Expenditures ” shall mean, for any period, amounts expended for replacements and alterations to the Property, excluding any Tenant Improvements, which are required to be capitalized according to Accounting Principles.
“ Capital Expenditures Work ” shall mean any labor performed or materials installed in connection with any Capital Expenditure.
“ Capped LIBOR Rate ” shall mean three and three quarters percent (3.75%).
“ Carry Costs ” shall mean the sum of the following costs associated with the Property for the applicable period or Fiscal Year: (i) Taxes, (ii) Other Charges, (iii) Insurance Premiums, and (iv) without duplication of the items described in clauses (i) – (iii) , Operating Expenses.
“ Carry Guaranty ” shall mean that certain Carry Guaranty of even date herewith from Savanna Guarantor for the benefit of Administrative Agent, for the benefit of Lenders, as the same may be amended, restated, supplemented or otherwise modified from time to time.
“ Cash Collateral Account ” shall mean the “Cash Collateral Subaccount” (as defined in the Cash Management Agreement).
“ Cash Management Agreement ” shall mean that certain Cash Management Agreement of even date herewith among Administrative Agent, for the benefit of Lenders, Borrower, Manager and Deposit Bank as the same may be amended, restated, supplemented or otherwise modified from time to time.
“ Cash Trap Funds ” shall have the meaning set forth in Section 6.5.1.
“ Cash Trap Period ” shall mean the following:
(i)      from and after the occurrence of any Event of Default, until Administrative Agent accepts in writing (in its sole and absolute discretion) a cure of the applicable Event of Default (provided that no Cash Trap Period remains in effect pursuant any other clause hereof); or
(ii)      the occurrence of a Bankruptcy Event with respect to Borrower or Guarantor; or

-6-


(iii)      (A) during the First Extension Option, the Debt Yield is less than 5.875%, as reasonably determined by Administrative Agent, until such time as the Debt Yield shall be equal to or greater than 6.125% for two (2) consecutive calendar quarters, as reasonably determined by Administrative Agent, (B) during the Second Extension Period, the Debt Yield is less than 6.50%, as reasonably determined by Administrative Agent, until such time as the Debt Yield shall be equal to or greater than 6.75% for two (2) consecutive calendar quarters, as reasonably determined by Administrative Agent, and (C) during the Third Extension Period, the Debt Yield is less than 7.00%, as reasonably determined by Administrative Agent, until such time as the Debt Yield shall be equal to or greater than 7.25% for two (2) consecutive calendar quarters, as reasonably determined by Administrative Agent (the Debt Yield as set forth in (A), (B) and (C), the then-applicable “ Minimum Cash Trap Debt Yield ”) as reasonably determined by Administrative Agent (in each case, provided that no Cash Trap Period remains in effect pursuant to any other clause hereof), provided, that to the extent necessary to satisfy the condition set forth in this clause (iii), Borrower shall have the right to prepay the Loan in an amount equal to the Mortgage Pro Rata Share of the prepaid amount to achieve the then-applicable Minimum Cash Trap Debt Yield (any such amount, the “ Optional Cash Trap Prepayment Amount ”), but subject to the applicable terms and conditions of Section 2.4.1 of this Agreement and provided that the Mezzanine Pro Rata Share of the Optional Cash Trap Prepayment Amount is also simultaneously prepaid by Mezzanine Borrower in accordance with the Mezzanine Loan Agreement and provided that Mezzanine Borrower has also complied with the applicable requirements of Section 2.4.1 of the Mezzanine Loan Agreement; provided , that Administrative Agent acknowledges and agrees that any optional prepayment in connection with this definition shall not result in Borrower being obligated to any prepayment penalty, Spread Maintenance Premium or any similar premium or fee. In lieu of payment of the Mortgage Pro Rata Share of the Optional Cash Trap Prepayment Amount, Borrower may at its option (X) deliver to Administrative Agent, for the benefit of Lenders, a Letter of Credit in the face amount of the Mortgage Pro Rata Share of the Optional Cash Trap Prepayment Amount to be held as collateral for the Loan (provided that Mezzanine Borrower shall have simultaneously delivered to Mezzanine Administrative Agent a letter of credit in the face amount of the Mezzanine Pro Rata Share of the Optional Cash Trap Prepayment Amount (in accordance with the Mezzanine Loan Documents), so that the sum of the face amount of such Letter of Credit delivered to Administrative Agent, for the benefit of Lenders, plus the face amount of such letter of credit delivered to Mezzanine Administrative Agent shall be equal to the aggregate Optional Cash Trap Prepayment Amount, or (Y) deposit cash in the amount of the Mortgage Pro Rata Share of Optional Cash Trap Prepayment Amount into the Cash Collateral Account provided that Mezzanine Borrower shall have simultaneously deposited with Mezzanine Administrative Agent cash in the aggregate amount of the Mezzanine Pro Rata Share of the Optional Cash Trap Prepayment Amount in accordance with the Mezzanine Loan Documents), so that the sum of the amount of cash deposited in the Cash Collateral Account, plus the amount of cash deposited with Mezzanine Administrative Agent shall be equal to the aggregate Optional Cash Trap Prepayment Amount). If Borrower elects to deliver to Administrative Agent, for the benefit of Lenders, a Letter of Credit pursuant to this definition, then the Letter of Credit provisions set forth in Schedule VIII shall be applicable. Any collateral provided to Administrative Agent

-7-


pursuant to clause (X) or (Y) above shall be released to Borrower upon the Property achieving the applicable Minimum Cash Trap Debt Yield for two (2) consecutive calendar quarters.
(iv)      from and after the occurrence of an “Event of Default” as defined in and pursuant to the Mezzanine Loan Documents, until Mezzanine Administrative Agent accepts in writing (in its sole and absolute discretion) the cure of the applicable “Event of Default” (provided that no Cash Trap Period remains in effect pursuant to any other clause hereof).
“ Casualty ” shall mean the occurrence of any casualty, damage or injury, by fire or otherwise, to the Property or any part thereof.
“ Casualty and Condemnation Account ” shall have the meaning set forth in Section 6.6 .
“ Casualty and Condemnation Funds ” shall have the meaning set forth in Section 6.6 .
“ Casualty Consultant ” shall have the meaning set forth in Section 5.3.2(c) . Notwithstanding anything to the contrary contained herein, provided that no Event of Default is then continuing, the same Person shall be the Casualty Consultant under the Loan, the Building Loan and the Mezzanine Loan.
“ Casualty Retainage ” shall have the meaning set forth in Section 5.3.2(d) .
“ Central Bank Pledge ” shall have the meaning set forth in Section 9.1.1 .
“ Clearing Account ” shall have the meaning set forth in Section 6.1(a)(i) .
“ Clearing Account Agreement ” shall mean that certain Deposit Account Control Agreement dated the date hereof by and among Borrower, Administrative Agent, for the benefit of Lenders, and Clearing Bank.
“ Clearing Bank ” shall mean Wells Fargo, National Association or any successor pursuant to the terms and provisions hereof.
“ Closing Date ” shall mean the date hereof.
“ Co-Lender ” shall have the meaning set forth in Section 9.5 .
“ Code ” shall mean the Internal Revenue Code of 1986, as amended, and as it may be further amended from time to time, any successor statutes thereto, and applicable U.S. Department of Treasury regulations issued pursuant thereto in temporary or final form.
“ Collateral ” shall mean the Property, Improvements and any personal property or other collateral with respect to which a Lien or security interest was granted to Administrative Agent, for the benefit of Lenders, pursuant to the Loan Documents.

-8-


“ Commitment ” shall mean, as to each Lender, such Lender’s obligation to make disbursements pursuant to this Agreement, in an amount up to, but not exceeding the amount set forth for such Lender on Schedule I attached hereto as such Lender’s “Commitment Amount” or as otherwise agreed by the applicable Lenders.
“ Completion Guaranty ” shall mean that certain Completion Guaranty of even date herewith from Savanna Guarantor for the benefit of Administrative Agent, for the benefit of Lenders, as the same may be amended, restated, supplemented or otherwise modified from time to time.
“ Condemnation ” shall mean a temporary or permanent taking by any Governmental Authority as the result or in lieu or in anticipation of the exercise of the right of condemnation or eminent domain, of all or any part of the Property, or any interest therein or right accruing thereto, including any right of access thereto or any change of grade affecting the Property or any part thereof.
“ Condemnation Proceeds ” shall have the meaning set forth in the definition of Net Proceeds.
“ Connection Income Taxes ” means Other Connection Taxes that are imposed on or measured by net income (however denominated) or that are franchise Taxes or branch profits Taxes.
“ Constituent Members ” shall have the meaning set forth in Section 3.1.24(ee)(i) .
“ Construction Consultant ” shall mean any Person (which may be an Affiliate of Administrative Agent) as Administrative Agent may designate and engage to inspect the Capital Expenditures Work and Tenant Improvement Work, as work progresses, and consult with and to provide advice to and to render reports to Administrative Agent. Notwithstanding anything to the contrary contained herein, provided that no Event of Default is then continuing, the same Person shall be the Construction Consultant under both the Loan, the Building Loan and Mezzanine Loan.
“ Construction Management Agreement ” shall mean (i) the Construction Management Agreement or (ii) any replacement construction management agreement entered into by and between Borrower and a replacement construction manager in accordance with the terms of the Loan Documents, in each case, pursuant to which such construction manager is to provide construction management services with respect to the Property.
“ Construction Manager ” shall mean (i) Savcon, LLC, a Delaware limited liability company and (ii) or any other construction manager engaged by Borrower in accordance with the terms and conditions of the Loan Documents.
“ Contracts ” shall mean all contracts, agreements, warranties, guaranties and representations relating to or governing the use, occupancy, operation, management, name, repair and service of the Property entered into by Borrower, Property Manager or their Affiliates.

-9-


“ Control ” shall mean, with respect to any Person, the possession, directly or indirectly, of the power to direct or cause the direction of the management policies or day-to-day activities of a Person, directly or indirectly, through the ownership of voting securities, by contract or otherwise, including, without limitation, having approval or consent rights over the actions or conduct of a Person, and the terms Controlled, Controlling and Common Control shall have correlative meanings.
“ Counterparty ” shall mean (a) the counterparty under the Interest Rate Protection Agreement or (b) a Person that guarantees such counterparty’s obligations under the Interest Rate Protection Agreement or otherwise provides to such counterparty credit support reasonably acceptable to Administrative Agent; provided, however, that such guarantor shall be deemed the “ Counterparty ” for so long as the long-term credit rating issued by the Rating Agencies to such guarantor is better than the long-term credit rating of the actual counterparty under the Interest Rate Protection Agreement.
“ Debt ” shall mean the then outstanding principal amount of the Loan together with all interest accrued and unpaid thereon and all other sums due to the Lenders in respect of the Loan under the Note, this Agreement and any other Loan Document (including, without limitation, all costs and expenses payable to the Lenders thereunder).
“ Debt Service ” shall mean, with respect to any particular period, the sum of the amount of interest and principal (if any) due pursuant to and in accordance with this Agreement with respect to such particular period.
“ Debt Service Coverage Ratio ” or “ DSCR ” shall mean, as of the date of determination, the ratio in which the numerator is the Net Operating Income as of the date of determination and the denominator is the sum of (A) the aggregate Pro Forma Debt Service as of the date of determination plus (B) the aggregate Building Loan Pro Forma Debt Service plus (C) the aggregate Mezzanine Pro Forma Debt Service (collectively, the “ Aggregate Debt Service ”) as of the date of determination. Administrative Agent’s calculation of the Debt Service Coverage Ratio shall be conclusive and binding on Borrower absent manifest error.
“ Debt Yield ” shall mean, as of the date of determination, the ratio in which the numerator is the Net Operating Income as of the date of determination and the denominator is the Aggregate Outstanding Principal Balance.
“ Deemed Consent Mechanics ” shall mean, whenever Administrative Agent’s approval or consent is required pursuant to the provisions of a particular Section of this Agreement (which section expressly references that such approval or consent is subject to the Deemed Consent Mechanics), and so long as no Event of Default or Mezzanine Loan Event of Default has occurred which is then continuing, Administrative Agent’s consent shall be deemed given if:
(A)      the first correspondence from Borrower to Administrative Agent requesting such approval or consent is in an envelope marked “ PRIORITY ” and shall conspicuously state in 14 point or larger bold‑faced type, a legend at the top of the first page thereof stating that “ FIRST NOTICE: THIS IS A REQUEST FOR CONSENT UNDER THE LOAN BY ADMINISTRATIVE AGENT TO BORROWER. FAILURE TO RESPOND TO THIS

-10-


REQUEST WITHIN TEN (10) BUSINESS DAYS MAY RESULT IN THE REQUEST BEING DEEMED GRANTED ”, and is accompanied by the information and documents required under such Section, and any other information reasonably requested by Administrative Agent in writing prior to the expiration of such ten (10) Business Day period in order to adequately review the same has been delivered;
(B)      Administrative Agent has failed to so respond by the tenth (10 th ) Business Day, and Borrower sends to Administrative Agent a second notice requesting approval in an envelope marked “ PRIORITY ” and shall conspicuously state in 14 point or larger bold‑faced type, a legend at the top of the first page thereof stating that “ SECOND AND FINAL NOTICE: THIS IS A REQUEST FOR CONSENT UNDER THE LOAN BY [ADMINISTRATIVE AGENT] TO [BORROWER] TO. IF YOU FAIL TO PROVIDE A RESPONSE (E.G., APPROVAL, DENIAL OR REQUEST FOR CLARIFICATION OR MORE INFORMATION) TO THIS REQUEST FOR APPROVAL IN WRITING WITHIN FIVE (5) BUSINESS DAYS, YOUR APPROVAL SHALL BE DEEMED GIVEN ”; and
(C)      Administrative Agent fails to provide a response (e.g., approval, denial or request for clarification or more information) to such second request for approval within such five (5) Business Day period.
“ Default ” shall mean the occurrence of any event hereunder or under any other Loan Document which, if not cured within the applicable grace, notice or cure period therefor (if any), would be an Event of Default.
“ Default Rate ” shall mean, with respect to the Loan, a rate per annum equal to the lesser of (i) the Maximum Legal Rate or (ii) five percent (5%) above the Applicable Interest Rate.
“ Defaulting Lender ” shall mean any Lender which fails or refuses to perform its obligations under this Agreement within the time period specified for performance of such obligation, or, if no time frame is specified, if such failure or refusal continues for a period of two (2) Business Days after written notice from Administrative Agent (it being acknowledged and agreed that any funding of a Future Advance shall be made on the Requested Advance Date so long as all required conditions to such Future Advance are satisfied); provided that if such Lender cures such failure or refusal, such Lender shall cease to be a Defaulting Lender; provided , further , that such Lender shall be entitled to not more than three (3) cures of a particular obligation under this Agreement during the Term.
“ Defaulting Lender Notice ” shall have the meaning set forth in Section 7.1 .
“ Deposit Account ” shall mean an Eligible Account under the sole dominion and control of Administrative Agent, for the benefit of lenders, at the Deposit Bank.
“ Deposit Bank ” shall mean the bank or banks selected by Administrative Agent to maintain the Deposit Account. Administrative Agent may in its sole discretion change the Deposit Bank from time to time. As of the date hereof, the Deposit Bank is KeyBank National Association, a national banking association.

-11-


“ Determination Date ” shall mean, with respect to each Interest Period, the date that is two (2) London Business Days prior to the fifteenth (15th) day of the calendar month in which such Interest Period commences; provided, however, that Administrative Agent shall have the right to change the Determination Date to any other day upon written notice to Borrower (in which event such change shall then be deemed effective) and, if requested by Administrative Agent, Borrower shall promptly execute an amendment to this Agreement in form reasonably acceptable to Borrower to evidence such change; provided that the “Determination Date” of the Loan and Mezzanine Loan shall always be the same.
“ Downtown Manhattan ” shall mean the area of Manhattan, New York below 14 th Street.
“ Easements ” shall have the meaning set forth in Section 3.1.12 .
“ Eligibility Requirements ” means, with respect to any Person and in each case excluding the Loan, that such Person (i) has total assets (in name or under management or advisement) in excess of $475,000,000, and (except with respect to a pension advisory firm, asset manager or similar fiduciary) either (x) capital/statutory surplus or shareholder’s equity of at least $225,000,000 or (y) market capitalization of at least $375,000,000, and (ii) is regularly engaged in the business of making or owning (or, in the case of a pension advisory firm or similar fiduciary, regularly engaged in managing investments in) commercial real estate loans (including mezzanine loans to direct or indirect owners of commercial properties, which loans are secured by pledges of direct or indirect ownership interests in the owners of such commercial properties) or operating commercial properties.
“ Eligible Account ” shall mean a separate and identifiable account from all other funds held by the holding institution that is either (i) an account or accounts (or subaccounts thereof) maintained with a federal or state-chartered depository institution or trust company which complies with the definition of Eligible Institution, (ii) reasonably acceptable to Administrative Agent or (iii) a segregated trust account or accounts (or subaccounts thereof) maintained with the corporate trust department of a federal depository institution or state chartered depository institution subject to regulations regarding fiduciary funds on deposit similar to Title 12 of the Code of Federal Regulations § 9.10(b), having in either case corporate trust powers, acting in its fiduciary capacity, and a combined capital and surplus of at least $50,000,000, subject to supervision or examination by federal and state authorities and having a long-term unsecured debt rating of “BBB-” or higher by S&P and “A2” or higher by Moody’s and a short-term unsecured debt rating of “A-1” or higher by S&P and “P-1” or higher by Moody’s. An Eligible Account will not be evidenced by a certificate of deposit, passbook or other instrument.
“ Eligible Assignee ” means a Person who is not a Prohibited Person and is either: (i) any Affiliate of Lender or Mezzanine Lender and/or its Affiliates, or (ii) one or more of the following:
(A)      a real estate investment trust, bank, saving and loan association, investment bank, insurance company, trust company, commercial credit corporation, pension plan, pension fund or pension advisory firm, mutual fund, government entity or plan, provided , that , any such Person referred to in this clause (A) satisfies the Eligibility Requirements;

-12-


(B)      an investment company, money management firm or “qualified institutional buyer” within the meaning of Rule 144A under the Securities Act of 1933, as amended, or an institutional “accredited investor” within the meaning of Regulation D under the Securities Act of 1933, as amended, provided , that , any such Person referred to in this clause (B) satisfies the Eligibility Requirements;
(C)      an institution substantially similar to any of the Persons described in clause (ii)(A) , (ii)(B) or (ii)(F) of this definition that satisfies the Eligibility Requirements;
(D)      any Person Controlled by, Controlling or under common Control with any of the Persons described in clause (i) , clause (ii)(A) , (ii)(B) , (ii)(C) or (ii)(F) of this definition that satisfies the Eligibility Requirements; or
(E)      an investment fund, limited liability company, limited partnership or general partnership where a Permitted Fund Manager acts as general partner, managing member or fund manager and at least fifty percent (50%) of the equity interests in such investment vehicle are owned, directly or indirectly, by one or more of the following: a Lender or Mezzanine Lender and their respective Affiliates or an Eligible Assignee (without giving effect to clause (E) of the definition of such term).
“ Eligible Contract Participant ” shall have the meaning set forth in Section 4.1.11(b) .
“ Eligible Institution ” shall mean a depository institution or trust company insured by the Federal Deposit Insurance Corporation the short term unsecured debt obligations or commercial paper of which are rated at least “A-1” by S&P, “P-1” by Moody’s and “F-1” by Fitch (if rated by Fitch) (and the long term unsecured debt obligations of such depository institution are rated at least “A” by Fitch (if rated by Fitch)) in the case of accounts in which funds are held for thirty (30) days or less or, in the case of accounts in which funds are held for more than thirty (30) days, the long term unsecured debt obligations of which are rated at least (i) “A” by S&P, (ii) “A” by Fitch (if rated by Fitch) (and the short term deposits or short term unsecured debt obligations or commercial paper of such depository institution are rated no less than “F1” by Fitch (if rated by Fitch)), and (iii) “A2” by Moody’s, or in the case of Letters of Credit, the long term unsecured debt obligations of which are rated at least (i) “A+” by S&P, (ii) “A+” by Fitch (if rated by Fitch) (and the short term deposits or short term unsecured debt obligations or commercial paper of such depository institution are rated no less than “F1” by Fitch (if rated by Fitch)) and (iii) “A1” by Moody’s; provided, however, that Wells Fargo Bank, N.A. and KeyBank National Association, a national banking association, shall be deemed to be approved by Administrative Agent as an Eligible Institution, and for purposes of the Deposit Bank, the definition of Eligible Institution shall have the meaning set forth in the Cash Management Agreement.
“ Embargoed Person ” shall have the meaning set forth in Section 3.1.42 .
“ Emergency Expenses ” shall have the meaning set forth in Section 4.1.6(f) .
“ Environmental Indemnity ” shall mean that certain Environmental Indemnity Agreement dated as of the date hereof executed by Borrower and Savanna Guarantor in connection with the Loan for the benefit of Administrative Agent, for the benefit of Lenders.

-13-


“ Equipment ” shall have the meaning set forth in the granting clause of the Mortgage.
“ ERISA ” shall have the meaning set forth in Section 4.2.10(a) .
“ ERISA Affiliate ” shall mean each person that together with Borrower would be deemed to be a “single employer” within the meaning of Section 414(b), (c), (m) or (o) of the Code.
“ Event of Default ” shall have the meaning set forth in Section 10.1(a) .
“ Excess Cash Flow ” shall have the meaning ascribed to such term in the Cash Management Agreement.
“ Excluded Taxes ” shall mean any of the following Taxes imposed on or with respect to a Recipient or required to be withheld or deducted from a payment to a Recipient, (a) Taxes imposed on or measured by net income (however denominated), franchise Taxes, and branch profits Taxes, in each case, (i) imposed as a result of the Recipient being organized under the laws of, or having its principal office or, in the case of a Lender, its Applicable Lending Office located in, the jurisdiction imposing such Tax (or any political subdivision thereof) or (ii) that are Other Connection Taxes, (b) in the case of a Lender, U.S. federal withholding Taxes imposed on amounts payable to or for the account of such Lender with respect to an applicable interest in a Loan or commitment pursuant to a law in effect on the date on which (i) such Lender acquires such interest in the Loan or commitment or (ii) such Lender changes its lending office, except in each case to the extent that, pursuant to Section 2.5 , amounts with respect to such Taxes were payable either to such Lender’s assignor immediately before such Lender became a party hereto or to such Lender immediately before it changed its lending office, (c) Taxes attributable to a Lender’s failure to comply with Section 2.5 and (d) any withholding Taxes imposed under FATCA.
“ Extension Fee ” shall mean, with respect to the Second Extension Option and the Third Extension Option, an amount equal to twenty-five (25) basis points (0.25%) of the sum of the Outstanding Principal Balance.
“ Extension Option ” shall have the meaning set forth in Section 2.3.2(b) .
“ Extension Period ” shall mean each of (i) the period commencing on the day immediately following the Initial Maturity Date and ending on the First Extension Maturity Date, (ii) the period commencing on the day immediately following the First Extension Maturity Date and ending on the Second Extension Maturity Date, and (iii) the period commencing on the day immediately following the Second Extension Maturity Date and ending on the Third Extension Maturity Date.
“ Extraordinary Expense ” shall have the meaning set forth in Section 4.1.6(f) .
“ FATCA ” shall mean Sections 1471 through 1474 of the Code, as of the date of this Agreement (or any amended or successor version that is substantively comparable and not materially more onerous to comply with), any current or future regulations or official interpretations thereof, any agreements entered into pursuant to Section 1471(b)(1) of the Code and any fiscal or regulatory

-14-


legislation, rules or practices adopted pursuant to any intergovernmental agreement, treaty or convention among Governmental Authorities and implementing such Sections of the Code.
“ Federal Funds Rate ” shall mean, for any period, a fluctuating interest rate per annum equal for each day during such period to the weighted average of the rates on overnight Federal Funds transactions with members of the Federal Reserve System arranged by Federal Funds brokers, as published for such day (or, if such day is not a Business Day, for the next preceding Business Day) by the Federal Reserve Bank of New York, or, if such rate is not so published for any day which is a Business Day, the average of the quotations for such day on such transactions received by Administrative Agent from three Federal Funds brokers of recognized standing selected by Administrative Agent; provided, however, that if the Federal Funds Rate determined as provided above would be less than LIBOR Floor, then the Federal Funds Rate shall be deemed to be LIBOR Floor.
“ First Extension Maturity Date ” shall mean April 9, 2022.
“ First Extension Option ” shall have the meaning set forth in Section 2.3.2(b) .
“ Fiscal Year ” shall mean each twelve-month period commencing on January 1 and ending on December 31 of such calendar year during each year of the term of the Loan, except that the first Fiscal Year with respect to the Loan shall commence on the Closing Date and end on December 31, 2019. Provided no Event of Default exists, Borrower may change its Fiscal Year with the prior written consent of Administrative Agent, such consent not to be unreasonably withheld, conditioned or delayed.
“ Fitch ” shall mean Fitch, Inc.
“ Foreign Lender ” shall mean a Lender that is not a U.S. Person.
“ Full Replacement Cost ” shall have the meaning set forth in Section 5.1.1(a)(xi) .
“ Funding Collateral ” shall have the meaning set forth in Section 2.6.2 (a)(vi) .
“ Future Advance ” or “ Future Advances ” shall mean, collectively, the Future Advance (Capital Expenditures), Future Advance (TI/LCs) and Future Advance (Interest/Carry Shortfall).
“ Future Advance (Capital Expenditures) ” or “ Future Advances (Capital Expenditures) ” shall mean one or more advances of a portion of the Future Funding Amount in the aggregate of up to Seven Million Three Hundred Fifty Thousand and No/100 Dollars ($7,350,000.00) available to Borrower, pursuant to Section 2.6 of the Building Loan Agreement, to reimburse Borrower or pay third parties directly for the Lenders’ Percentage of the actual cost incurred by or to be incurred by Borrower with respect to Capital Expenditures Work to be completed in accordance with the terms hereof and the Terms of the Building Loan Agreement.
“ Future Advance (Interest/Carry Shortfalls) ” or “ Future Advances (Interest/Carry Shortfall) ” shall mean one or more advances of a portion of the Future Funding Amount in the aggregate of up to Four Million Six Hundred Fifty Thousand and No/100 Dollars ($4,650,000.00) available to Borrower, pursuant to Section 2.6 hereof, to pay for Interest/Carry Shortfall.

-15-


“ Future Advance (TI/LCs) ” or “ Future Advances (TI/LCs) ” shall mean, as applicable, one or more advances of a portion of the Future Funding Amount in the aggregate of up to Thirty Eight Million Five Hundred Fifty Thousand and No/100 Dollars ($38,550,000.00) available to Borrower, pursuant to Section 2.6 of the Building Loan Agreement, to reimburse Borrower or pay third parties directly for Lenders’ Percentage of the actual cost incurred or to be incurred by Borrower with respect to TI/LC Costs, of which $0.00 has been advanced on the date hereof.
“ Future Funding Amount ” shall mean a portion of the Loan and Building Loan, as applicable consisting of Future Advances not to exceed Fifty Million Five Hundred Fifty Thousand and No/100 Dollars $50,550,000.00, in the aggregate, available to be advanced to Borrower in accordance with the terms and conditions set forth in this Agreement and the Building Loan Agreement, as applicable, of which $0.00 has been advanced on the date hereof.
“ Future Funding Reserve Account ” shall have the meaning set forth in Section 6.8.1 .
“ Future Funding Reserve Funds ” shall have the meaning set forth in Section 6.8.1 .
“ GAAP ” shall mean generally accepted accounting principles set forth in the opinions and pronouncements of the Accounting Principles Board and the American Institute of Certified Public Accountants and statements and pronouncements of the Financial Accounting Standards Board (or agencies with similar functions of comparable stature and authority within the accounting profession), or in such other statements by such entity as may be in general use by significant segments of the U.S. accounting profession.
“ Government List ” shall mean any list published by the OFAC (including those executive orders and lists published by OFAC with respect to Specially Designated Nationals and Blocked Persons).
“ Governmental Approvals ” shall mean all approvals, consents, waivers, orders, acknowledgments, authorizations, inspections, signoffs, permits and licenses required under applicable Legal Requirements to be obtained from any Governmental Authority for the use, occupancy and operation of the Improvements, including, without limitation, all land use, building, subdivision, zoning, environmental and similar ordinances and regulations promulgated by any Governmental Authority.
“ Governmental Authority ” shall mean any court, board, agency, commission, office or authority of any nature whatsoever or any governmental unit (federal, state, county, district, municipal, city, foreign or otherwise) whether now or hereafter in existence.
“ Gross Revenue ” shall mean all revenue or other proceeds derived from the ownership, operation, financing or sale of the Property (or any portion thereof) from whatever source, (including, without limitation, Rents, lease termination payments, and any revenue or proceeds received by any Borrower Related Party or Manager relating to the Property), any revenue received in connection with any tax certiorari proceeding and any amounts received by any Borrower Related Party or Manager as a result of any litigation or other legal, administrative or other proceeding relating to the Property (net of reasonable costs and expenses incurred by such Borrower Related Party or

-16-


Manager in accordance herewith in recovering such amounts); provided, however, Gross Revenue shall not include any Awards or Insurance Proceeds (other than business interruption and/or rental loss insurance proceeds) or disbursements of any Reserve Funds from the Accounts or Working Capital Funds from the Working Capital Account.
“ Guarantor ” shall mean KBS Guarantor and Savanna Guarantor, or any successor guarantor(s) thereof in accordance with this Agreement).
“ Guaranties ” shall mean, collectively, the Completion Guaranty, the Carry Guaranty, the Recourse Guaranty and the Environmental Indemnity.
“ Improvements ” shall have the meaning set forth in the granting clause of the Mortgage.
“ Increased Costs ” shall have the meaning set forth in Section 2.5.1 .
“ Indebtedness ” shall mean, for any Person, any indebtedness or other similar obligation for which such Person is obligated (directly or indirectly, by contract, operation of law or otherwise) without duplication: (i) all indebtedness of such Person for borrowed money, for amounts drawn under a letter of credit, or for the deferred purchase price of property for which such Person or its assets is liable; (ii) all unfunded amounts under a loan agreement, letter of credit, or other credit facility for which such Person would be liable if such amounts were advanced thereunder; (iii) all amounts required to be paid by such Person as a guaranteed payment to partners or a preferred or special dividend, including any mandatory redemption of shares or interests; (iv) all indebtedness guaranteed by such Person, directly or indirectly; (v) all obligations under leases that constitute capital leases for which such Person is liable; and (vi) all obligations of such Person under interest rate swaps, caps, floors, collars and other interest hedge agreements, in each case whether such Person is liable contingently or otherwise, as obligor, guarantor or otherwise, or in respect of which obligations such Person otherwise assures a creditor against loss.
“ Indemnified Liabilities ” shall have the meaning set forth in Section 11.13(b) .
“ Indemnified Party ” shall have the meaning set forth in Section 11.13(b) .
“ Indemnified Taxes ” shall mean (a) Taxes, other than Excluded Taxes, imposed on or with respect to any payment made by or on account of any obligation of Borrower under any Loan Document and (b) to the extent not otherwise described in clause (a), Other Taxes.
“ Independent Director ” shall have the meaning set forth in Section 3.1.24(dd) .
“ Individual G uarantor ” shall mean any Guarantor under who is an individual.
“ Initial Advance ” shall have the meaning set forth in Section 2.1.1 .
“ Initial Approved Annual Budget ” shall mean the Annual Budget that has been approved by Administrative Agent as of the date hereof and which is attached hereto as Schedule VII .

-17-


“ Initial Maturity Date ” shall mean April 9, 2021.
“ Initial Term ” shall mean the period from the Closing Date through and including the Initial Maturity Date.
“ Insurance Funds ” shall have the meaning set forth in Section 6.3.1 .
“ Insurance Premiums ” shall mean the premiums due under the Policies.
“ Insurance Proceeds ” shall have the meaning set forth in the definition of Net Proceeds.
“ Insurance Reserve Account ” shall have the meaning set forth in Section 6.3.1 .
“ Intellectual Property ” shall have the meaning set forth in Section 3.1.46 .
“ Intercreditor Agreement ” shall have the meaning set forth in Section 11.29 .
“ Interest/Carry Shortfall ” shall mean the actual or anticipated shortfall in Gross Revenue to pay (or make deposits required by Article 6 hereof as applicable Reserve Funds) the sum of (x) Aggregate Debt Service and (y) Carry Costs for a given period, in each case as set forth in the Approved Annual Budget (including the variances with respect thereto permitted by this Agreement pursuant to Section 4.1.6(d) ).
“ Interest/Carrying Costs Account ” shall have the meaning set forth in Section 6.8.6.
“ Interest Period ” shall mean (a) for the first interest period hereunder, (i) if the Closing Date occurs on or before the fifteenth (15th) day of a calendar month, the period commencing on the Closing Date and ending on (and including) the fourteenth (14th) day of the calendar month in which the Closing Date occurs, and (ii) if the Closing Date occurs on or after the fifteenth (15th) day of a calendar month, the period commencing on the Closing Date and ending on (and including) the fourteenth (14th) day of the following calendar month and (b) for each interest period thereafter commencing April 15, 2019, the period commencing on the fifteenth (15th) day of each calendar month and ending on (and including) the fourteenth (14th) day of the following calendar month; provided that the “Interest Period” under the Loan and the Mezzanine Loan shall always be the same. Each Interest Period as set forth in clause (b) above shall be a full month and shall not be shortened by reason of any payment of the Loan prior to the expiration of such Interest Period.
“ Interest Rate Protection Agreement ” shall mean one or more interest rate caps (together with the schedules relating thereto) in form and substance reasonably satisfactory to Administrative Agent, with a confirmation from the Counterparty in the form reasonably satisfactory to Administrative Agent, between Borrower and, subject to Section 4.1.11 , a Counterparty acceptable to Administrative Agent with a Minimum Counterparty Rating, and all amendments, restatements, replacements, supplements and modifications thereto.
“ Interest Rate Replacement Date ” means the date on which Administrative Agent implements a Substitute Rate.

-18-


“ JV Agreement ” shall mean that certain Limited Liability Company Agreement of KBS SOR SREF III 100 William, LLC by and between SREF III 110 William JV, LLC, a Delaware limited liability company and KBS SOR 110 William JV, LLC, a Delaware limited liability company dated as of December 23, 2013.
“ JV Entity ” shall mean KBS SOR SREF III 110 William, LLC.
“ KBS JV Partner ” shall mean KBS SOR 110 William JV, LLC.
“ KBS Sponsor ” shall mean KBS Strategic Opportunity REIT, Inc.
“ KBS Guarantor ” shall mean KBS SOR Properties, LLC, a Delaware limited liability company.
“ Knotel LOI ” shall mean that certain Letter of Intent from Newmark Knight Frank with respect to the 7 th & 8 th Floors at the Property for Knotel 110 William LLC, a New York limited liability company, as tenant, dated January 25, 2019
“ Lease ” shall mean any lease, sublease or subsublease, letting, license, concession or other agreement (whether written or oral and whether now or hereafter in effect) pursuant to which any Person is granted a possessory interest in, or right to use or occupy all or any portion of any space in the Property, and every modification, amendment or other agreement relating to such lease, sublease, subsublease, or other agreement entered into in connection with such lease, sublease, subsublease, or other agreement and every guarantee of the performance and observance of the covenants, conditions and agreements to be performed and observed by the other party thereto. In no event shall the term “Lease” include any subleases, underleases or similar agreements, except solely to the extent of Borrower’s interest, if any, thereunder.
“ Lease Termination Fee ” shall have the meaning set forth in Section 6.4.1 .
“ Lease Termination Funds ” shall have the meaning set forth in Section 6.4.1 .
“ Lease Termination Reserve Account ” shall have the meaning set forth in Section 6.4.1 .
“ Leasing Agent ” shall mean (as the context may require) (i) Newmark & Company Real Estate, Inc., a New York corporation d/b/a Newmark Grubb Knight & Frank (“ Initial Leasing Agent ”, (ii) Leasing Agent (Savanna) and (iii) or any other leasing agent engaged by Borrower in accordance with the terms and conditions of the Loan Documents.
“ Leasing Agent (Savanna) ” shall mean Savanna Commercial Services LLC.
“ Leasing Agreement ” shall mean (as the context may require) (i) the Rental Agency Agreement, as amended (“ Initial Leasing Agreement ”), (ii) the Leasing Agreement (Savanna) or (iii) any Replacement Leasing Agreement entered into by and between Borrower or Manager and a Leasing Agent in accordance with the terms of the Loan Documents, in each case, pursuant to which the Leasing Agent is to provide leasing services with respect to the Property.

-19-


“ Leasing Agreement (Savanna) ” shall mean that certain Amended and Restated Rental Agency Agreement dated May 2, 2014 between Borrower and Leasing Agent (Savanna).
“ Leasing Commissions ” shall mean the leasing commissions required to be paid by Borrower pursuant to the terms and provisions of the Leasing Agreement for procuring Leases with respect to the Property or any other leasing commission agreement with respect to the Property.
“ Legal Requirements ” shall mean, individually and/or collectively, as the context may require, all federal, state, county, municipal and other governmental statutes, laws, rules, orders, regulations, ordinances, judgments, decrees and injunctions of Governmental Authorities having jurisdiction over the Loan, any Secondary Market Transaction with respect to the Loan, any Borrower Party, the Property or any part thereof or the construction, use, alteration, operation or sale thereof, or any part thereof, whether now or hereafter enacted and in force, including, without limitation, the rules and regulations promulgated pursuant to the Dodd-Frank Wall Street Reform and Consumer Protection Act, zoning and land use laws, the Americans with Disabilities Act of 1990, and all permits, licenses and authorizations and regulations relating thereto, and all covenants, agreements, restrictions and encumbrances contained in any instruments, either of record or known to Borrower, at any time in force affecting the Property or any part thereof, including, without limitation, any which may (i) require repairs, modifications or alterations in or to the Property or any part thereof, or (ii) in any way limit the use and enjoyment thereof.
“ Lender ” shall have the meaning set forth in the introductory paragraph hereto.
“ Lenders’ Percentage ” shall mean 75%.
“ Letter of Credit ” shall mean a standby letter of credit (and any amendment thereof) that (a) is issued by an Eligible Institution or, if not an Eligible Institution, by a bank reasonably acceptable to Administrative Agent, (b) has an expiry date of not less than one (1) year from its issuance, (c) may be drawn upon by presentation by Administrative Agent of a sight draft at a location reasonably satisfactory to Administrative Agent, and (d) is otherwise reasonably satisfactory to Administrative Agent.
“ LIBOR ” shall mean, with respect to each Interest Period, the rate (expressed as a percentage per annum and rounded upward, as necessary, to the next nearest 1/1000 of 1%) equal to the rate reported for deposits in U.S. dollars, for a one-month period, that appears on Bloomberg Screen LIBOR01 Page (or the successor thereto) as of 11:00 a.m., London time, on the related Determination Date; provided that, (i) if such rate does not appear on Bloomberg Screen LIBOR01 Page as of 11:00 a.m., London time, on such Determination Date, Administrative Agent shall request the principal London Office of any four major reference banks in the London interbank market selected by Administrative Agent to provide such bank’s offered quotation (expressed as a percentage per annum) to prime banks in the London interbank market for deposits in U.S. dollars for a one month period as of 11:00 a.m., London time, on such Determination Date for the amounts for a comparable loan at the time of such calculation and, if at least two such offered quotations are so provided, LIBOR shall be the arithmetic mean of such quotations, and (ii) if fewer than two such quotations in clause (i) are so provided, Administrative Agent shall request any three major banks in New York City selected by Administrative Agent to provide such bank’s rate (expressed as a percentage per

-20-


annum) for loans in U.S. dollars to leading European banks for a one-month period as of approximately 11:00 a.m., New York City time on the applicable Determination Date for the amounts for a comparable loan at the time of such calculation and, if at least two such rates are so provided, LIBOR shall be the arithmetic mean of such rates. Administrative Agent’s computation of LIBOR shall be conclusive and binding on Borrower for all purposes, absent manifest error. Notwithstanding anything to the contrary set forth herein, in no event shall LIBOR ever be less than the LIBOR Floor.
“ LIBOR Floor ” shall mean 2.00%.
“ LIBOR Interest Rate ” shall mean with respect to each Interest Period the quotient of (i) LIBOR applicable to the Interest Period divided by (ii) a percentage equal to 100% minus the Reserve Requirement (if any) applicable to the Interest Period.
“ LIBOR Loan ” shall mean the Loan at any time in which the Applicable Interest Rate is calculated at LIBOR Interest Rate plus the Applicable Spread in accordance with the provisions of Article II hereof.
“ LIBOR Rate Discontinued Determination ” shall have the meaning set forth in Section 2.2.3(c) .
“ LIBOR Rate Unavailable Determination ” shall have the meaning set forth in Section 2.2.3(b) .
“ Licenses ” shall have the meaning set forth in Section 3.1.18 .
“ Lien ” shall mean any mortgage, deed of trust, lien, pledge, hypothecation, assignment, security interest, or any other encumbrance, charge or transfer of, or any agreement to enter into or create any of the foregoing, on or affecting the Property or any portion thereof or any direct or indirect interest in Borrower including, without limitation, any conditional sale or other title retention agreement, any financing lease having substantially the same economic effect as any of the foregoing, the filing of any financing statement, and mechanic’s, materialmen’s and other similar liens and encumbrances.
“ LLC Agreement ” shall have the meaning set forth in Section 3.1.24(cc) .
“ Loan ” shall mean the loan in the maximum principal amount of up to Two Hundred Fifteen Million Four Hundred Seventy-Five Thousand and No/100 Dollars ($215,475,000.00), to be advanced by Lenders to Borrower pursuant to this Agreement.
“ Loan Documents ” shall mean, collectively, this Agreement, the Note, the Mortgage, the Assignment of Leases, the Cash Management Agreement, the Clearing Account Agreement, the Working Capital Account Agreement, the Environmental Indemnity, the Recourse Guaranty, the Completion Guaranty, the Assignment of Management Agreement, the Assignment of Project Management Agreement, the Assignment of Leasing Agreement, the Assignment of Construction Management Agreement, the Assignment of Protection Agreement and any other document pertaining to the Property as well as all other documents now or hereafter executed and/or delivered

-21-


in connection with the Loan, as the same may be amended, restated, replaced, supplemented or otherwise modified from time to time.
“ Loan to Value Ratio ” shall mean, as of any date, the ratio, as determined by Administrative Agent, of (a) the Aggregate Outstanding Principal Balance to (b) the Appraised Value of the Property as of such date based on the most recent Appraisal.
“ London Business Day ” shall mean any day other than a Saturday, Sunday or any other day on which commercial banks in London, England are not open for business.
“ Losses ” shall mean actual liabilities, obligations, losses, damages (excluding special, consequential, punitive or indirect damages, unless the same are asserted against Administrative Agent, each Lender or any Indemnified Party by a third party and actually incurred), penalties, actions, judgments, suits, claims, costs, expenses and disbursements of any kind or nature whatsoever (including, without limitation, the reasonable out-of-pocket fees and disbursements of third-party counsel related thereto).
“ Major Lease ” shall mean (i) any Lease which, individually or when aggregated with all other Leases at the Property with the same Tenant or its Affiliate demises 50,000 rentable square feet or more at the Property (which calculation of rentable square feet shall assume the exercise of the following, but only if such exercise would then result in such Lease being greater than 10% of rentable square feet or more at the at the Property (x) all expansion rights, (y) all rights of first refusal to lease additional space at the Property contained in such Lease and (z) all rights of first offer and other preferential rights to lease additional space at the Property contained in such Lease, whether or not such Lease demises 50,000 rentable square feet or more at the time of determination), (ii) any Lease which contains any option, offer, right of first refusal or other similar entitlement to acquire all or any portion of the Property (which such rights shall be deemed to be exclusive of any rights under any Lease to extend the term thereof or to lease additional space at the Property), or (iii) any instrument guaranteeing or providing credit support for any Lease meeting the requirements of clause (i) or (ii) above.
“ Management Agreement ” shall mean that certain Property Management Agreement by and between Borrower and Initial Manager, dated as of August 3, 2016 (the “ Initial Management Agreement ”) or any Replacement Management Agreement entered into by and between Borrower and a Manager in accordance with the terms of the Loan Documents, in each case, pursuant to which the Manager is to provide property management and other services with respect to the Property.
“ Manager ” shall mean Transwestern Commercial Services New York, L.L.C. d/b/a Transwestern, a Delaware limited liability company (“ Initial Manager ”), or any other property manager engaged by Borrower in accordance with the terms and conditions of the Loan Documents.
“ Material Action ” shall mean to file any insolvency or reorganization case or proceeding, to institute proceedings to have Borrower or an SPC Party be adjudicated bankrupt or insolvent, to institute proceedings under any applicable insolvency law, to seek any relief under any law relating to relief from debts or the protection of debtors, to consent to the filing or institution of bankruptcy or insolvency proceedings against Borrower or an SPC Party to file a petition seeking, or consent

-22-


to, reorganization or relief with respect to Borrower under any applicable federal or state law relating to bankruptcy or insolvency, to seek or consent to the appointment of a receiver, liquidator, assignee, trustee, sequestrator, custodian, or any similar official of or for Borrower or an SPC Party or a substantial part of its property, to make any assignment for the benefit of creditors of Borrower or an SPC Party or to take action in furtherance of any of the foregoing.
“ Material Adverse Effect ” shall mean a material adverse effect on (i) the Property (taken as a whole, including, without limitation, the value, use, operation, construction, renovation or leasing thereof), (ii) the business, profits, prospects, management, operations or condition (financial or otherwise) of Borrower, Mezzanine Borrower, Guarantor or the Property, in each case in a manner that would materially and adversely affect the ability of Borrower, Mezzanine Borrower or Guarantor, as applicable, to perform its obligations under the Loan, (iii) the enforceability, validity, perfection or priority of the lien of the Mortgage or the other Loan Documents, (iv) the ability of Borrower to perform its obligations under this Agreement or the other Loan Documents, or (v) the ability of Guarantor to perform its obligations under any Guaranty or the other Loan Documents.
“ Material Agreements ” (i) any general contractor’s agreement, development management agreement, architect’s agreement or engineering agreement, (ii) any cleaning, maintenance, servicer or other contract or agreement of any kind which has a term of more than one (1) year and is not cancelable on sixty (60) days’ or less notice without requiring the payment of termination fees, (iii) any agreement with a Borrower Related Party (other than the Management Agreement, Leasing Agreement Project Management Agreement and the Construction Management Agreement, (iv) any agreement which is, when aggregated with all other contracts and agreements with such Person and their Affiliates, for an aggregate per annum contract price equal to or greater than $1,000,000.00, and (v) any agreement relating to environmental remediation or other environmental matters.
“ Maturity Date ” shall mean the Initial Maturity Date or if the term of the Loan is extended in accordance with the terms of this Agreement, the term “ Maturity Date ” shall mean the First Extension Maturity Date, the Second Extension Maturity Date, or Third Extension Maturity Date as applicable or, in either case, such earlier date on which the final payment of principal of the Note becomes due and payable as therein or herein provided, whether at such stated maturity date, by prepayment, by declaration of acceleration, or otherwise.
“ Maximum Legal Rate ” shall mean the maximum non-usurious interest rate, if any, that at any time or from time to time may be contracted for, taken, reserved, charged or received on the indebtedness evidenced by the Note and as provided for herein or the other Loan Documents, under the laws of such state or states whose laws are held by any court of competent jurisdiction to govern the interest rate provisions of the Loan.
“ Member ” shall have the meaning set forth in Section 3.1.24(cc)(i) .
“ Mezzanine Administrative Agent ” shall mean Invesco CMI Investments, L.P., a Delaware limited partnership.

-23-


“ Mezzanine Borrower ” shall mean 110 William Mezz III, LLC, a Delaware limited liability company.
“ Mezzanine Exercise Event ” shall have the meaning set forth in Section 8.2(c) .
“ Mezzanine Lender ” shall mean, individually or collectively, as the context may require, Invesco CMI Investments, L.P., a Delaware limited partnership, and each other lender that becomes party to the Mezzanine Loan Agreement.
“ Mezzanine Lender’s Percentage ” shall mean 25%.
“ Mezzanine Loan ” shall mean that certain mezzanine loan in the maximum principal amount of up to $87,125,000.00 made on the date hereof by Mezzanine Lender to Mezzanine Borrower, and evidenced and secured by the Mezzanine Loan Documents.
“ Mezzanine Loan Agreement ” shall mean the Mezzanine Loan Agreement dated as of the date hereof and made by and between Mezzanine Borrower, Mezzanine Administrative Agent and Mezzanine Lender.
“ Mezzanine Loan Documents ” shall mean the (i) Mezzanine Loan Agreement, (ii) Promissory Note (Mezzanine) of even date herewith in the maximum principal amount of up to the Mezzanine Loan made by Mezzanine Borrower and payable to Mezzanine Lender (and any successor holder of the Mezzanine Loan), (iii) that certain Pledge and Security Agreement of even date herewith made by Mezzanine Borrower in favor of Mezzanine Administrative Agent, (iv) each UCC financing statement naming Mezzanine Borrower as debtor and Mezzanine Administrative Agent as secured party in connection with the foregoing and (v) any other “Loan Document”, as defined in the Mezzanine Loan Agreement, as each of the foregoing may be modified, amended and restated from time to time in accordance with the terms and provisions of the Mezzanine Loan Documents.
“ Mezzanine Outstanding Principal Balance ” shall have the meaning of “Outstanding Principal Balance” set forth in the Mezzanine Loan Agreement.
“ Mezzanine Pro Forma Debt Service ” shall mean the “Pro Forma Debt Service” as defined in the Mezzanine Loan Agreement.
“ Mezzanine Pro Rata Share ” shall mean the quotient of (a) the Mezzanine Outstanding Principal Balance and (b) Aggregate Outstanding Principal Balance.
“ Minimum Advance Amount ” shall mean $37,500.00.
“ Minimum Counterparty Rating ” shall mean (a) a long-term credit rating from S&P of at least “ A- ” and (b) a long-term credit rating from Moody’s of at least “ A3 ”.
“ Minimum Equity Requirement ” shall have the meaning set forth in Section 4.1.37
“ Minimum Extension Debt Yield ” shall have the meaning set forth in Section 2.3.2(b)(xii) .

-24-


“ Minimum Leasing Parameters ” shall mean, with respect to any Lease, the leasing parameters set forth on Schedule V attached hereto.
“ Minor Lease ” shall mean any Lease that is not a Major Lease.
“ Monthly Debt Service Payment Amount ” shall mean on each Monthly Payment Date through and including the Maturity Date, an amount equal to the interest accruing on the Outstanding Principal Balance at the Applicable Interest Rate (or at the Default Rate, as applicable) for the immediately preceding Interest Period, which interest shall be calculated in accordance with Section 2.2 .
“ Monthly Payment Date ” shall mean the ninth (9 th ) calendar day of each calendar month during the term of the Loan, and if such day is not a Business Day, then the Business Day immediately preceding such day.
“ Moody’s ” shall mean Moody’s Investors Service, Inc.
“ Mortgage ” shall mean, as of the date hereof, (i) that certain Senior Loan Consolidated, Amended and Restated Mortgage, Assignment of Leases and Rents and Security Agreement, dated the date hereof, executed and delivered by Borrower as security for the Loan and encumbering the Property in the amount of $215,475,000.00 and (ii) each Serial Mortgage executed after the date hereof, as each of the same may be amended, restated, replaced, supplemented or otherwise modified from time to time.
“ Mortgage Pro Rata Share ” shall mean the quotient of (a) the sum of (x) the Outstanding Principal Balance and (y) the Building Loan Outstanding Principal Balance and (b) Aggregate Outstanding Principal Balance.
“ Net Operating Income ” shall mean as the date of calculation (i) annualized Gross Revenue (excluding (x) lease termination payments and (y) security deposits) based on in place Rents under Leases with Tenants in occupancy at the Property and paying Rent, but including (x) Rents relating to Leases with Tenants that are reasonably expected to take occupancy within (i) ninety (90) days of the date of calculation or (ii) one hundred eighty (180) days of the date of calculation for investment grade (BBB- or higher) Tenants or New York City and/or New York State agency Tenants, but excluding: (A) Rents relating to any Tenant under a Lease which is more than sixty (60) days delinquent in payment of rent, (B)  Rents relating to Tenants who are month to month, (C) Rents relating to Tenants who are Affiliates of Borrower or Guarantor to the extent such Rents are at above-market rates; and (D) Rents relating to Tenants subject to a Bankruptcy Event unless the applicable Lease has been affirmed in connection with such Bankruptcy Event and (E) any other nonrecurring or extraordinary sources of Gross Revenue less (ii) actual Operating Expenses incurred in connection with the Property for the trailing twelve (12) month period preceding the date of calculation with any reasonable adjustments for any known increases in such Operating Expenses (assuming a base property management fee equal to the greater of: (x) the actual amount paid by Borrower during such twelve (12) month period and (y) one and one half percent (1.5%) of Gross Revenue {inclusive of the cost of the property manager (estimated at approximately $200,000 per annum) and assistant property manager (estimated at approximately $93,000 per annum)}).

-25-


Notwithstanding the foregoing, Gross Revenue from any Tenant that is in a free rent period that exceeds 1.2 months per lease year shall be adjusted by not including in Gross Revenue an amount equivalent to that portion of free rent that exceeds 1.2 months per lease year.
“ Net Proceeds ” shall mean: (i) the net amount of all insurance proceeds received by Administrative Agent, for the benefit of Lenders, under the insurance policies maintained pursuant to Section 5.1.1 as a result of such damage or destruction, after deduction of reasonable costs and expenses (including, but not limited to, reasonable counsel fees), if any, in collecting same (“ Insurance Proceeds ”); or (ii) the net amount of the Award, after deduction of reasonable costs and expenses (including, but not limited to, reasonable counsel fees), if any, in collecting same (“ Condemnation Proceeds ”), whichever the case may be.
“ Net Proceeds Deficiency ” shall have the meaning set forth in Section 5.3.2(f) .
“ New Appraisal ” shall mean an Appraisal of the Property, acceptable to Administrative Agent, dated no more than ninety (90) days prior to the then current Maturity Date.
“ New Non-Consolidation Opinion ” shall mean a bankruptcy substantive non-consolidation opinion provided by outside counsel, in a form reasonably acceptable to Administrative Agent.
“ Non-Consolidation Opinion ” shall mean that certain bankruptcy non-consolidation opinion letter dated the date hereof delivered by Hunton Andrews Kurth LLP in connection with the Loan.
“ Note ” shall have the meaning set forth in Section 2.1.3 .
“ Notice ” shall have the meaning set forth in Section 11.6 .
“ O&M Program ” shall have the meaning set forth in Section 4.1.19 .
“ Obligations ” shall mean, collectively, Borrower’s obligations for the payment of the Debt and the performance of all obligations of Borrower contained in the Loan Documents.
“ OFAC ” shall have the meaning set forth in Section 3.1.43(a) .
“ Officer’s Certificate ” shall mean a certificate delivered to Administrative Agent, for the benefit of Lenders by Borrower which is signed by an authorized senior officer of Borrower (or its general partner or managing member).
“ Open Prepayment Date ” shall mean the Monthly Payment Date occurring in May, 2020.
“ Operating Expenses ” shall mean, for any period, without duplication, all expenses actually paid or payable by Borrower during such period in connection with the operation, management, maintenance, repair and use of the Property, computed in accordance with Accounting Principles. Operating Expenses specifically shall include (i) all expenses incurred in the immediately preceding twelve (12)-month period based on financial statements delivered to Administrative Agent in

-26-


accordance with Section 4.1.6(c) and (d) (or during any shorter period of determination), (ii) property management fees in an amount equal to the management fees actually paid under the Management Agreement, (iii) administrative, payroll, security and general expenses for the Property, (iv) the cost of utilities, inventories and fixed asset supplies consumed in the operation of the Property, (v) costs and fees of independent professionals (including, without limitation, accounting, consultants and other professional expenses, technical consultants, operational experts (including quality assurance inspectors) or other third parties retained to perform services required or permitted hereunder), (vi) [reserved], (vii) operational equipment and other lease payments, (viii) all underwritten reserves required by Administrative Agent hereunder (without duplication of amounts paid from such reserves) and (ix) Taxes and Other Charges (other than income taxes or Other Charges in the nature of income taxes) and insurance premiums. Notwithstanding the foregoing, Operating Expenses shall not include (1) depreciation or amortization, (2) income taxes or Other Charges in the nature of income taxes, (3) any expenses (including legal, accounting and other professional fees, expenses and disbursements) incurred in connection with the making of the Loan or the sale, exchange, transfer, financing or refinancing of all or any portion of the Property or in connection with the recovery of Insurance Proceeds or Awards which are applied to prepay the Note, (4) Capital Expenditures, (5) Debt Service, and (6) any item of expense which would otherwise be considered within Operating Expenses pursuant to the provisions above but is paid directly by any Tenant. To the extent the period of determination of Operating Expenses is less than one year and an Operating Expense relates to an entire calendar year (e.g., real estate taxes), then, for purposes of determining the calculation of such Operating Expense, the same shall be prorated for the relevant period of determination based on the total annual amount paid with respect thereto. Administrative Agent shall calculate Operating Expenses based upon information provided to Administrative Agent by Borrower pursuant to Section 4.1.6 hereof and such determination shall be made in its reasonable discretion.
“ Optional Cash Trap Prepayment Amount ” shall have the meaning set forth in the definition of Cash Trap Period.
“ Optional Extension Prepayment Amount ” shall have the meaning set forth in Section 2.3.2 .
“ Other Charges ” shall mean all ground rents (if any), maintenance charges, impositions other than Taxes, and any other charges, now or hereafter levied or assessed or imposed against the Property or any part thereof by any Governmental Authority.
“ Other Connection Taxes ” shall mean, with respect to any Recipient, Taxes imposed as a result of a present or former connection between such Recipient and the jurisdiction imposing such Tax (other than connections arising from such Recipient having executed, delivered, become a party to, performed its obligations under, received payments under, received or perfected a security interest under, engaged in any other transaction pursuant to or enforced any Loan Document, or sold or assigned an interest in the Loan or any Loan Document).
“ Other Taxes ” shall have the meaning set forth in Section 2.5.3 .

-27-


“ Outstanding Principal Balance ” means, as of any date, the then outstanding principal balance of the Loan.
“ Pace ” shall mean Pace University, a New York not-for-profit corporation, as tenant, under the Pace Lease.
“ Pace Lease ” shall mean that certain Agreement of Lease by and between 110 William Property Investors III, LLC, a Delaware limited liability company, as landlord, and Pace University, a New York not-for-profit corporation, as tenant, dated as of April 24, 2017.
“ Participant ” shall mean any Person that has purchased a participation in this Agreement pursuant to Section 11.25 .
“ Participant Register ” has the meaning specified in Section 9.4(a) .
“ Patriot Act ” shall have the meaning set forth in Section 3.1.43(a) .
“ PCR ” shall mean the Property Condition Report prepared for Mortgage Financing Purposes for the Property dated February 28, 2019 prepared by CBRE, Inc., as Project No. PC90251702.
“ Permitted Encumbrances ” shall mean, collectively, (i) the Liens and security interests created by the Loan Documents, the Building Loan Documents and the Mezzanine Loan Documents, (ii) all Liens, encumbrances and other matters accepted by Administrative Agent, for the benefit of the Lenders, as of closing under the Title Insurance Policy, (iii) Liens, if any, for Taxes imposed by any Governmental Authority not yet due and delinquent, or if due and delinquent, are being contested in good faith in accordance with the terms hereof, (iv) any workers’, mechanics’ or other similar Liens on the Property provided that either (x) any such Lien is bonded or discharged or diligently contested in good faith in accordance with the terms hereof or (y) if such Lien is filed in connection with Tenant Improvement Work being performed by a Tenant, Borrower is using commercially reasonable efforts in accordance with the applicable Lease to cause such Tenant to remove such Lien, (v) as to items created or modified after the date hereof, dedications (or modifications of dedications) of portions of the Property or the grant (or modifications of grants) of easements, restrictions, covenants, reservations, rights-of-way and similar encumbrances, entered into in the ordinary course of business for traffic circulation, ingress, egress, parking, access, utilities or for other similar purposes, which are not monetary encumbrances against the Property, do not create material affirmative obligations on behalf of the Property and which do not, individually or in the aggregate, materially and adversely affect the value, use or operation of the Property, (vi)  Approved Equipment Financing (as defined in Section 4.26 hereof), (vii) Leases entered into in accordance with the Loan Documents, (viii) subordination, non-disturbance and attornment agreements executed with respect to Leases, (ix) memoranda of Leases, and (x) such other title and survey exceptions as Administrative Agent has approved or may approve in writing in Administrative Agent’s sole discretion.
“ Permitted Fund Manager ” means any Person that on the date of determination is not a Prohibited Person, and is: (a) a nationally‑recognized manager of investment funds investing in debt or equity interests relating to commercial real estate; (b) a Person that is a Eligible Assignee

-28-


pursuant to clauses (ii)(A) , (B) , (C) or (D) of the definition thereof; or (c) Mezzanine Lender or its Affiliates; in each case which is investing through a fund with unconditional committed capital of at least $250,000,000.
“ Permitted Indebtedness ” shall have the meaning set forth in Section 4.2.6 .
“ Permitted Transfer ” means any of the following Transfers, but in each case, subject to the terms of Section 8.2 : (a) Transfers of direct or indirect ownership interests in an entity that owns a direct or indirect ownership interest in Borrower for bona fide estate planning purposes by any natural person to one or more of such natural person’s family members or trusts (or other entities) established for the benefit of one or more of such natural person’s immediate family members (but subject in all cases to the terms and conditions of the Guaranties); (b) Transfers of direct or indirect ownership interests in Borrower that occur by operation of law upon the death of a natural person that was the holder of such interest to a member of the immediate family of such interest holder or a trust (or other entity) or family conservatorship established for the benefit of such immediate family member; (c) Transfers of the direct or indirect interests in a Restricted Party to and among the holders thereof as of the date hereof or to other Restricted Parties or holders of direct or indirect interests therein as of the date hereof, (d) Permitted Encumbrances; (e) Transfers of worn out or obsolete personal property that are promptly replaced with property of equivalent value and functionality if reasonably necessary or which is no longer necessary in connection with the operation of any Property; (f) ) existing Leases and Leases that have been approved by Administrative Agent (or that do not require Administrative Agent’s approval) in accordance with this Agreement; (g) the pledge by Mezzanine Borrower of its ownership interests in Borrower pursuant to the Mezzanine Loan Documents and a Mezzanine Exercise Event; (h) the Transfer of publicly traded shares on a United States nationally recognized stock exchange in any indirect equity owner of Borrower; (i) the Transfer of shares in any indirect equity owner of Borrower which is a publicly held real estate investment trust; (j) the Transfer of any direct or indirect interest in Savanna JV Partner, provided Savanna Sponsor continues to own 51% or more of the direct or indirect membership interests in Savanna JV Partner; (k) the Transfer of any direct or indirect interest in KBS JV Partner, provided KBS Sponsor continues to own 51% or more of the direct or indirect membership interests in KBS JV Partner; (l) the Transfer of all or any portion of KBS JV Partner’s ownership interest in the JV Entity to Savanna JV Partner; (m) the Transfer of all or any portion of Savanna JV Partner’s ownership interest in the JV Entity to KBS JV Partner; and (n) the removal of the Savanna JV Partner as the “Managing Member” of the JV Entity upon the occurrence of a “Just Cause Event” (as such term is defined in the Limited Liability Company Agreement of the JV Entity) provided the KBS JV Partner then becomes the sole “Managing Member” of the JV Entity, provided, however, the approval and effectiveness of any Transfer set forth in (l), (m) and (n) is conditioned upon an Acceptable Replacement Guarantor from KBS JV Partner or their Affiliate being put in place.
“ Person ” shall mean any individual, corporation, partnership, limited liability company, joint venture, estate, trust, unincorporated association, any other entity, any federal, state, county or municipal government or any bureau, department or agency thereof and any fiduciary acting in such capacity on behalf of any of the foregoing.
“ Pfandbrief Pledge ” shall have the meaning set forth in Section 9.1.1 .

-29-


“ Policy ” or “ Policies ” shall have the meaning set forth in Section 5.1.1(b) .
“ Post-Foreclosure Plan ” shall have the meaning set forth in Section 13.21 .
“ Prescribed 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 107‑56) (The USA PATRIOT Act), (b) 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.
“ Pro Forma Debt Service ” shall mean, for any date of determination the product of (a) the Outstanding Principal Balance multiplied by (b) a notional annual rate of interest equal to the sum of (x) the average rate shown on the one-month USD LIBOR Forward Curve (as published by Chatham Financial or another similar firm selected by Administrative Agent) for the period of twelve full calendar months following such date of determination plus (y) the Applicable Spread or the Substitute Spread, as applicable.
“ Prohibited Person ” means any Person: (i) listed in the Annex to, or is otherwise subject to the prohibitions of, 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 or any other similar prohibitions contained in the rules and regulations of OFAC or in any enabling legislation or other Executive Orders; (ii) that is owned or controlled by, or acting for or on behalf of, any Person that is listed in the Annex to, or is otherwise subject to the prohibitions of, Executive Order No. 13224; (iii) with whom Administrative Agent or any Lender is prohibited from dealing or otherwise engaging in any transaction by any terrorism or money laundering law, including Executive Order No. 13224; (iv) who commits, threatens, conspires to commit or supports “terrorism” as defined in Executive Order No. 13224; (v) that is named as a “specially designated national and blocked person” on the most current list published by OFAC at its official website or at any replacement website or other replacement official publication of such list; (vi) that is subject to trade restrictions under United States law, including, without limitation, the Patriot Act, the International Emergency Economic Powers Act, 50 U.S.C. §§ 1701 et seq., The Trading with the Enemy Act, 50 U.S.C. App. 1 et seq., and any Executive Orders or regulations promulgated thereunder including those related to Specially Designated Nationals and Specially Designated Global Terrorist; (vii) that is listed on any Government List; (viii) that has been previously convicted of any felony involving a crime or crimes of moral turpitude or for any Patriot Act Offense; (ix) that is currently under investigation by any Governmental Authority for alleged criminal activity; (x) that is operating, organized or resident in a country sanctioned by U.S. law; or (xi) who is an Affiliate of any Person that is described by or that satisfies any of clauses (i) through (x) above.
“ Prohibited Transfer ” shall have the meaning set forth in Section 4.2.1(a) .
“ Project Budget ” shall have the meaning set forth in Section 2.6.2(g) .

-30-


“ Project Management Agreement ” shall mean that certain Project Management Agreement by and between Borrower and Initial Project Manager, dated as of May 2, 2014 (the “ Initial Project Management Agreement ”) or any Replacement Project Management Agreement entered into by and between Borrower and a Project Manager in accordance with the terms of the Loan Documents, in each case, pursuant to which the Project Manager is to provide property management and other services with respect to the Property.
“ Project Manager ” shall mean Savanna Project Management, LLC, a Delaware limited liability company (“ Initial Project Manager ”), or any other project manager engaged by Borrower in accordance with the terms and conditions of the Loan Documents.
“ Property ” shall mean the parcel of real property, the Improvements thereon and all personal property owned by Borrower and encumbered by the Mortgage, together with all appurtenances and other rights pertaining to such property and Improvements, all as more particularly described in the granting clauses of the Mortgage and referred to therein as the “Property”.
“ Property Taxes ” shall mean all real estate and personal property taxes, payments in lieu of taxes, assessments, water rates or sewer rents, now or hereafter levied or assessed or imposed against the Property or part thereof, together with all interest and penalties thereon.
“ Proposed Major Lease ” shall have the meaning set forth in Section 4.1.9(b)(i) .
“ Pro Rata Share ” shall mean, as to each Lender, the ratio, expressed as a percentage, of (a) the amount of such Lender’s Commitment to (b) the aggregate amount of the Commitments of all Lenders hereunder; provided, however, that if at the time of determination the Commitments have terminated or been reduced to zero, the “Pro Rata Share” of each Lender shall be the Pro Rata Share of such Lender in effect immediately prior to such termination or reduction.
“ Protective Advance ” shall mean all sums to be expended in respect of any (or all) of the following: (i) to remove a lien on the Property that is senior to the lien of the Mortgage, (ii) to pay Property Taxes and Other Charges, Insurance Premiums or Operating Expenses, (iii) to pay Approved Costs not paid by (or on behalf of) Borrower or Mezzanine Lender, (iv) to protect and preserve the value or safety of the security of any collateral given as security for the Loan, (v) to pay for expenditures which are emergency in nature, or which are necessary or desirable to prevent or minimize personal injury, the occurrence of life safety or health issues and/or damage or economic harm to the Property, or which are required by applicable law.
“ Qualified Leasing Agent ” shall mean any of the following (i) Initial Leasing Agent or (ii) Savanna Commercial Services, CBRE Group, Inc., Cushman & Wakefield, Jones Lang LaSalle or CB Richard Ellis, or an Affiliate of any of them (provided that, there has been no material adverse change in such managers’ financial condition, business or management operations).
“ Qualified Manager ” shall mean shall mean any of the following: (i) Initial Manager, (ii) CBRE Group, Inc., Cushman & Wakefield, Jones Lang LaSalle or CB Richard Ellis, or an Affiliate of any of them (provided that, there has been no material adverse change in such managers’ financial condition, business or management operations); or (iii) a reputable and experienced professional

-31-


management organization (a) which is then managing at least 3,000,000 aggregate leasable square feet (exclusive of the Property) of office properties in Downtown Manhattan of the same or higher quality as the Property and (b) which is not the subject of any Bankruptcy Event.
“ Qualified Project Manager ” shall mean shall mean any of the following: (i) Initial Project Manager, (ii) CBRE Group, Inc., Cushman & Wakefield, Jones Lang LaSalle or CB Richard Ellis, or an Affiliate of any of them (provided that, there has been no material adverse change in such managers’ financial condition, business or management operations); or (iii) a reputable and experienced professional management organization (a) which is then managing at least 3,000,000 aggregate leasable square feet (exclusive of the Property) of office properties in Downtown Manhattan of the same or higher quality as the Property and (b) which is not the subject of any Bankruptcy Event.
“ Radius ” shall have the meaning set forth in Section 5.1.1(c) .
“ Rating Agency ” shall mean each of Fitch, S&P, Moody’s and any other nationally recognized statistical rating agency designated by Administrative Agent (and any successor to any of the foregoing).
“ Rebalancing Reserve Account ” shall have the meaning set forth in Section 6.7 .
“ Rebalancing Reserve Funds ” shall have the meaning set forth in Section 6.7 .
“ Recipient ” meads Administrative Agent or any Lender, as applicable.
“ Recourse Guaranty ” shall mean, collectively, (i) that certain Guaranty of Recourse Obligations of even date herewith from Savanna Guarantor for the benefit of Administrative Agent, for the benefit of Lenders, as the same may be amended, restated, supplemented or otherwise modified from time to time and (ii) that certain Limited Guaranty of even date herewith from KBS Guarantor for the benefit of Administrative Agent, for the benefit of Lenders, as the same may be amended, restated, supplemented or otherwise modified from time to time.
“ Register ” shall have the meaning set forth in Section 9.4 .
“ Regulation D ” shall mean Regulation D of the Board of Governors of the Federal Reserve System from time to time in effect, including any successor or other Regulation or official interpretation of said Board of Governors relating to reserve requirements applicable to member banks of the Federal Reserve System.
“ Regulatory Change ” shall mean the occurrence, after the date of this Agreement, of any of the following: (a) the adoption or taking effect of any law, rule, regulation or treaty; (b) any change in any law, rule, regulation or treaty or in the administration, interpretation, implementation or application thereof by any Governmental Authority, including, without limitation, with respect to the Dodd-Frank Wall Street Reform and Consumer Protection Act and all requests, rules, guidelines or directives thereunder or issued in connection therewith; or (c) the making or issuance

-32-


of any request, rule, guideline or directive (whether or not having the force of law) by any Governmental Authority.
“ Rent Roll ” shall have the meaning set forth in Section 3.1.22 .
“ Rents ” shall have the meaning set forth in the Mortgage.
“ Replacement Leasing Agreement ” shall mean, collectively, (a) either (i) a leasing agreement with a Qualified Leasing Agent substantially in the same form and substance as the Initial Management Agreement or (ii) a leasing agreement with a Qualified Leasing Agent, which leasing agreement shall be reasonably acceptable to Administrative Agent in form and substance and (b) a new assignment of leasing agreement and subordination of leasing fees substantially in the form delivered to Administrative Agent in connection with the closing of the Loan (or of such other form and substance reasonably acceptable to Administrative Agent, Borrower and the applicable replacement Leasing Agent), in each case, executed and delivered to Administrative Agent by Borrower and such Qualified Leasing Agent at Borrower’s expense.
“ Replacement Management Agreement ” shall mean, collectively, (a) either (i) a management agreement with a Qualified Manager substantially in the same form and substance as the Initial Management Agreement or (ii) a management agreement with a Qualified Manager, which management agreement shall be reasonably acceptable to Administrative Agent in form and substance and (b) a new assignment of management agreement and subordination of management fees substantially in the form delivered to Administrative Agent in connection with the closing of the Loan (or of such other form and substance reasonably acceptable to Administrative Agent, Borrower and the applicable replacement Manager), in each case, executed and delivered to Administrative Agent by Borrower and such Qualified Manager at Borrower’s expense.
“ Replacement Project Management Agreement ” shall mean, collectively, (a) either (i) a project management agreement with a Qualified Project Manager substantially in the same form and substance as the Initial Project Management Agreement or (ii) a project management agreement with a Qualified Project Manager, which management agreement shall be reasonably acceptable to Administrative Agent in form and substance and (b) a new assignment of project management agreement and subordination of management fees substantially in the form delivered to Administrative Agent in connection with the closing of the Loan (or of such other form and substance reasonably acceptable to Administrative Agent, Borrower and the applicable replacement Project Manager), in each case, executed and delivered to Administrative Agent by Borrower and such Qualified Project Manager at Borrower’s expense.
“ REOC ” shall have the meaning set forth in Section 11.27 .
“ Requested Advance Date ” shall have the meaning set forth in Section 2.7.2(a) .
“ Required Records ” shall have the meaning set forth in Section 4.1.6(h) .
“ Requisite Lenders ” shall mean Lenders hereunder (which shall in all instances include Administrative Agent) having (a) more than sixty-six and two-thirds (66 2/3%) of the commitments of all such lenders, or (b) if the commitments have been terminated, more than sixty-six and two-

-33-


thirds (66 2/3%) of the aggregate outstanding amount of the Loan; provided that (a) in determining such percentage at any given time, all then existing Defaulting Lenders will be disregarded and excluded, and the pro rata shares in the Loan shall be redetermined, for voting purposes only, to exclude the pro rata shares of such Defaulting Lenders, and (b) at all times when two or more Lenders are party to this Agreement, the term “Requisite Lenders” shall in no event mean less than two (2) Lenders.
“ Reserve Funds ” shall mean, collectively, the Insurance Funds, the Tax Funds, the Casualty and Condemnation Funds, the Lease Termination Funds, the Rebalancing Reserve Funds, the Future Funding Reserve Funds and the Cash Trap Funds.
“ Reserve Requirement ” shall mean with respect to any Interest Period, the maximum rate of all reserve requirements (including, without limitation, all basic, marginal, emergency, supplemental, special or other reserves and taking into account any transitional adjustments or other schedule changes in reserve requirements during the Interest Period) which are imposed under Regulation D on eurocurrency liabilities (or against any other category of liabilities which includes deposits by reference to which LIBOR is determined or against, any category of extensions of credit or other assets which includes loans by a non-United States office of a depository institution to United States residents or loans which charge interest at a rate determined by reference to such deposits) during the Interest Period and which are applicable to member banks of the Federal Reserve System with deposits exceeding one billion dollars, but without benefit or credit of proration, exemptions or offsets that might otherwise be available from time to time under Regulation D. The determination of the Reserve Requirements shall be based on the assumption that the applicable Lender funded one hundred percent (100%) of its proportionate share of the Loan in the interbank eurodollar market. In the event of any change in the rate of such Reserve Requirements under Regulation D during the Interest Period, or any variation in such requirements based upon amounts or kinds of assets or liabilities, or other factors, including, without limitation, the imposition of Reserve Requirements, or differing Reserve Requirements, on one or more but not all of the holders of the Loan or any participation therein, such Lender may use any reasonable averaging and/or attribution methods which it deems appropriate and practical for determining the rate of such Reserve Requirements which shall be used in the computation of the Reserve Requirements. A Lender’s reasonable computation of same shall be final absent manifest error.
“ Restoration ” shall have the meaning set forth in Section 5.2.1 .
“ Restoration DSCR ” shall mean, as of any date of determination, the ratio of (a) the Net Operating Income of the Property, based on Rents in place (annualized and including business interruption and rental loss insurance proceeds) and Operating Expenses on a pro forma basis, to (b) an amount equal to the annual Aggregate Debt Service.
“ Restoration Threshold ” shall mean an amount equal to one percent (1%) of the Outstanding Principal Balance.
“ Restricted Party ” shall mean Borrower, Mezzanine Borrower, each SPC Party and Guarantor.

-34-


“ S&P ” shall mean S&P Global Ratings, a Standard & Poor’s Financial Services LLC business.
“ Sale or Pledge ” shall mean a voluntary or involuntary sale, conveyance, mortgage, grant, bargain, encumbrance, pledge, assignment, grant of any options with respect to, or any other transfer or disposition (directly or indirectly, voluntarily or involuntarily, by operation of law or otherwise, and whether or not for consideration or of record) of a legal or beneficial interest.
“ SCA ” shall mean the New York City School Construction Authority, a public benefit corporation of the State of New York and the Board of Education of the City School District of the City of New York, a/k/a the New York City Department of Education, a body corporate existing under the Education Law of the State of New York, as tenant under the SCA Lease.
“ SCA Lease ” shall mean that certain Lease by between 110 William Property Investors III, LLC, a Delaware limited liability company, as landlord, and the New York City School Construction Authority, a public benefit corporation of the State of New York, as tenant, dated as of September 11, 2018 as assigned by that certain Assignment of Lease Agreement by and between New York City School Construction Authority, a public benefit corporation of the State of New York and the Board of Education of the City School District of the City of New York, a/k/a the New York City Department of Education, a body corporate existing under the Education Law of the State of New York
“ Savanna Fund III LPA ” shall mean that certain Amended and Restated Agreement of Limited Partnership of Savanna Real Estate Fund III, L.P., dated as of January 12, 2015, as the same may be amended, restated, supplemented or otherwise modified from time to time.
“ Savanna Guarantor ” shall mean, individually and collectively, jointly and severally, Savanna Real Estate Fund III, L.P., a Delaware limited partnership (“ Savanna Fund III ”) and its parallel partnerships.
“ Savanna JV Partner ” shall mean SREF III 110 William JV, LLC.
“ Savanna Sponsor ” shall mean SREF III REIT, L.P.
“ Secondary Market Transactions ” shall have the meaning set forth in Section 9.1.1 .
“ Second Extension Maturity Date ” shall mean April 9, 2023.
“ Second Extension Option ” shall have the meaning set forth in Section 2.3.2(b) .
“ Serial Mortgage ” shall have the meaning set forth in Section 2.6.2(m) .
“ Severed Loan Documents ” shall have the meaning set forth in Section 10.2(e) .
“ Short Interest ” shall have the meaning set forth in Section 2.4.1 .
“ Shortfall ” shall have the meaning set forth in Section 2.6.4 .

-35-


“ Single Member Delaware LLC ” shall mean a single member limited liability company formed under Delaware law which (i) has at least one springing member, which, upon the dissolution of all of the single member or the withdrawal or the disassociation of the single member from such limited liability company, shall immediately become the sole member of such limited liability company, and (ii) complies with the terms and provisions of Section 3.1.24(cc) .
“ SPC Party ” shall mean, if Borrower is a limited partnership or a limited liability company (other than a Single Member Delaware LLC), each general partner or managing member of Borrower.
“ Special Member ” shall have the meaning set forth in Section 3.1.24(cc)(i) .
“ Special Purpose Bankruptcy Remote Entity ” shall mean a corporation, limited liability company or limited partnership which, at all times, complies with the requirements set out in Section 3.1.24 .
“ Sponsor ” shall mean Guarantor.
“ Spread Maintenance Premium ” shall mean, in connection with a prepayment of all or any portion of the Outstanding Principal Balance of the Loan pursuant to the terms hereof, an amount equal to the present value, discounted at LIBOR on the most recent Determination Date with respect to any period when the Loan is a LIBOR Loan (or, with respect to any period when the Loan is a Substitute Rate Loan, discounted at an interest rate that Administrative Agent believes, in its reasonable judgment, would equal LIBOR on such Determination Date if LIBOR was then available) of all future installments of interest which would have been due hereunder through and including the Open Prepayment Date, on the portion of the Outstanding Principal Balance of the Loan being prepaid as if interest accrued on such portion of the principal balance being prepaid at an interest rate per annum equal to the Applicable Spread. The Spread Maintenance Premium shall be reasonably calculated by Administrative Agent and shall be final absent manifest error.
“ Springing Recourse Event ” shall have the meaning set forth in Section 11.22(i) .
“ State ” shall mean the State or Commonwealth in which the Property or any part thereof is located.
“ Substitute Interest Rate Protection Agreement ” shall mean an interest rate cap agreement between a Counterparty having a Minimum Counterparty Rating and Borrower, obtained by Borrower and collaterally assigned to Administrative Agent, for the benefit of Lenders pursuant to this Agreement and shall contain each of the following:
(i)      a term expiring no earlier than the then-applicable Maturity Date;
(ii)      the notional amount of the Substitute Interest Rate Protection Agreement shall be an aggregate amount equal to at least the sum of (x) the Outstanding Principal Balance plus (y) the Building Loan Outstanding Principal Balance;

-36-


(iii)      it provides that the only obligation of Borrower thereunder is the making of a single payment to a Counterparty having a Minimum Counterparty Rating thereunder upon the execution and delivery thereof;
(iv)      it provides to the Lenders and Borrower (as determined by Administrative Agent in its sole but good faith discretion), for the term of the Substitute Interest Rate Protection Agreement, a hedge against rising interest rates that is no less beneficial to Borrower and the Lenders than the Interest Rate Protection Agreement being replaced or to be replaced by the Substitute Interest Rate Protection Agreement; and without limiting any of the provisions of the preceding clauses (i) through (iv) above, it satisfies all of the requirements set forth in Section 4.1.11 hereof.
“ Substitute Rate ” shall have the meaning set forth in Section 2.2.3(c) .
“ Substitute Rate Loan ” shall mean the Loan at any time in which the Applicable Interest Rate is calculated at either the (i) Base Rate or (ii) the Substitute Rate plus the Substitute Spread, each in accordance with the provisions of Section 2.2.3 hereof.
“ Substitute Spread ” shall have the meaning set forth in Section 2.2.3(c) .
“ Survey ” shall mean a survey of the Property prepared by a surveyor licensed in the State and reasonably satisfactory to Administrative Agent and the company or companies issuing the Title Insurance Policy, and containing a certification of such surveyor reasonably satisfactory to Administrative Agent.
“ Tax Funds ” shall have the meaning set forth in Section 6.2.1 .
“ Tax Reserve Account ” shall have the meaning set forth in Section 6.2.1 .
“ Taxes ” shall mean all present or future taxes, levies, imposts, duties, deductions, withholdings (including backup withholding), assessments, fees or other charges imposed by any Governmental Authority, including any interest, additions to tax or penalties thereto.
“ Tenant ” shall mean any Person leasing, subleasing or otherwise occupying any portion of the Property under a Lease or other occupancy agreement.
“ Tenant Direction Letters ” means, collectively, letters, in the form attached hereto as Schedule VI or otherwise in a form and substance reasonably satisfactory to Administrative Agent, addressed to each Tenant at the Property (and any new Tenants with whom Borrower enters into Leases after the date hereof for space at the Property in accordance with this Agreement) executed by Borrower, which letters shall require each Tenant to deliver its respective rent (and all other sums owed by such Tenant to Borrower under the applicable Lease) in accordance with the instructions contained in such letters to the Clearing Account established with the Clearing Bank and controlled by Administrative Agent in accordance with this Agreement.

-37-


“ Tenant Improvement Allowance ” shall mean the amount required to be paid by Borrower to a Tenant under a Lease on account of or in lieu of work performed by such Tenant in the applicable space demised under such Lease.
“ Tenant Improvements ” shall mean the improvements and/or other work affecting any space at the Property, which is required to be constructed and paid for by Borrower pursuant to applicable Leases for such space.
“ Tenant Improvement Work ” shall mean the construction work to be performed by or on behalf of Borrower, as landlord, or a Tenant, as Tenant Improvements under a Lease at the Property entered into pursuant to the terms hereof, including, without limitation, the Build Out Work.
“ Tenant Inducement Costs ” shall mean concessions provided to Tenants in connection with the execution of Leases (including, without limitation, the payment of any lease termination payments).
“ Tenant Letters of Credit ” shall have the meaning set forth in Section 6.11 .
“ Term ” shall mean the Initial Term as the same may be extended by an Extension Option.
“ TI/LC Costs ” shall mean the costs of all Tenant Improvement Work or Tenant Improvement Allowances, Tenant Inducement Costs and Leasing Commission costs associated with Leases at the Property entered into pursuant to the terms hereof, in each case, to be paid by Borrower pursuant to the terms of the applicable Lease.
“ Terrorism Insurance ” shall have the meaning set forth in Section 5.1.1(a)(xi) .
“ The Flood Insurance Acts ” shall have the meaning set forth in Section 5.1.1(i) .
“ Third Extension Maturity Date ” shall mean April 9, 2024.
“ Third Extension Option ” shall have the meaning set forth in Section 2.3.2(b) .
“ Termination Space ” shall have the meaning set forth in Section 6.4.1 .
“ Title Company ” shall mean National Land Tenure and Title Associates, each as agent for Stewart Title Insurance Company and First American Title Insurance Company.
“ Title Insurance Policy ” shall mean an ALTA mortgagee title insurance policy in the form reasonably acceptable to Administrative Agent issued with respect to the Property and insuring the lien of the Mortgage.
“ Transfer ” shall have the meaning set forth in Section 4.2.1(a) .
“ TRIPRA ” shall have the meaning set forth in Section 5.1.1(a)(xi) .

-38-


“ UCC ” or “ Uniform Commercial Code ” shall mean the Uniform Commercial Code as in effect in the State.
“ U.S. Person ” means any Person that is a “ United States Person ” as defined in Section 7701(a)(30) of the Code.
“ U.S. Tax Compliance Certificate ” shall have the meaning set forth in Section 2.5.6(b)(ii)(C) .
“ Unadvanced Amounts ” shall have the meaning set forth in Section 2.7.7 .
“ Updated Information ” shall have the meaning set forth in Section 9.1.2(a) .
“ VCOC ” shall have the meaning set forth in Section 11.28 .
“ Work Charge ” shall have the meaning set forth in Section 4.2.2 .
“ Working Capital Account ” shall have the meaning set forth in Section 2.6.1 .
Working Capital Account Agreement ” shall mean that certain Control Account Agreement dated the date hereof by and among Borrower, Administrative Agent, for the benefit of Lenders, Mezzanine Agent, for the benefit of the Mezzanine Lenders, and Working Capital Bank.
“ Working Capital Bank ” shall mean First Republic Bank.
“ Working Capital Funds ” shall have the meaning set forth in Section 2.6.1 .
“ Zoning Report ” shall mean the zoning report prepared with respect to the Property by the Planning & Zoning Resource Company dated February 28, 2019.
Section 1.2      Principles of Construction .
(a)      All references to sections and schedules are to sections and schedules in or to this Agreement unless otherwise specified. Any reference in this Agreement or in any other Loan Document to any Loan Document shall be deemed to include references to such documents as the same may hereafter be amended, modified, supplemented, extended, replaced and/or restated from time to time (and, in the case of any note or other instrument, to any instrument issued in substitution therefor). Unless otherwise specified, the words “hereof,” “herein,” and “hereunder” and words of similar import when used in this Agreement shall refer to this Agreement as a whole and not to any particular provision of this Agreement. Unless otherwise specified, all meanings attributed to defined terms herein shall be equally applicable to both the singular and plural forms of the terms so defined.
II.      THE LOAN
Section 2.1      The Loan .

-39-


2.1.1      Agreement to Lend and Borrow . Subject to and upon the terms and conditions set forth herein, the Lenders shall make the Loan to Borrower and Borrower shall accept the Loan from the Lenders on the Closing Date an (x) initial advance under the Loan in an amount equal to Two Hundred Ten Million Eight Hundred Twenty-Five and No/100 Dollars ($210,825,000.00) (the “ Initial Advance ”), (y) a Future Advance in the amount of Zero and No/100 Dollars ($0.00) (the “ First Future Funding Advance ”) and (z) if the terms and conditions of Section 2.6 are satisfied, subsequent Future Advances in an aggregate amount not to exceed the Future Funding Amount.
2.1.2      Single Disbursement to Borrower .
(a)      Borrower shall receive only one borrowing hereunder in respect of the Initial Advance and the First Future Funding Advance.
(b)      The Initial Advance, the First Future Funding Advance and each other Future Advance and any other amount borrowed and repaid hereunder in respect of the Loan may not be re-borrowed.
2.1.3      The Note . The Loan shall be evidenced by that certain Senior Loan Consolidated, Amended and Restated Promissory Note of even date herewith, in the maximum principal amount of Two Hundred Fifteen Million Four Hundred Seventy-Five Thousand and No/100 Dollars ($215,475,000.00) made by Borrower and payable to Lenders in evidence of the Loan (as the same may hereafter be amended, supplemented, restated, increased, extended or consolidated from time to time, the “ Note ”) and shall be repaid in accordance with the terms of this Agreement and the Note.
2.1.4      Use of Proceeds . Borrower shall use proceeds of (x) the Initial Advance to (i) refinance existing debt secured by the Property, (ii) fund the Reserve Funds into the Accounts, (iii) pay costs and expenses incurred in connection with the closing of the Loan, and the assignment of the existing mortgage on the Property to Lender, (iv) fund any working capital requirements of the Property, and to the extent any proceeds remain after satisfying clauses (i) through (iv), for such lawful purpose as Borrower shall designate, provided such purpose does not violate the terms of any Loan Documents; and (y) any Future Advance for the purposes contemplated by Section 2.6 hereof.
2.1.5      Loan Advances . Subject to compliance by Borrower with the terms and conditions of this Agreement, Lenders shall make, and Borrower shall accept from Lenders, Future Advances under this Agreement for the applicable purposes or uses permitted as required hereunder. If Lenders are comprised of more than one Person, then no Lender shall be obligated to advance more than its Pro Rata Share of any Future Advance hereunder. The Lenders shall not be required to make Future Advances for the costs incurred by Borrower with respect to materials stored off the Property. No Future Advances or any portion thereof shall be made directly or indirectly for payments to a Borrower Related Party, except (a) as expressly permitted in the Loan Documents, or (b) as otherwise may be approved in writing by Administrative Agent. The obligations of the Lenders to make Future Advances hereunder are several, and not joint, and under no circumstances shall any Lender be obligated to fund more of its Pro Rata Share of any Future Advance or more than its Commitment.

-40-


Section 2.2      The Interest Rate .
2.2.1      Applicable Interest Rate . Subject to the last sentence of this Section 2.2.1 , except as herein provided with respect to interest accruing at the Default Rate, interest on the Note outstanding from time to time shall accrue from the Closing Date up to and including the Maturity Date at the Applicable Interest Rate. In the event that any Event of Default shall have occurred and be continuing, interest on the Obligations shall accrue interest at the Default Rate for the period that such Event of Default is continuing (it being agreed that Administrative Agent and Lenders have no obligation to accept a cure of an Event of Default).
2.2.2      Interest Calculation . Interest on the Note shall be calculated by multiplying (a) the actual number of days elapsed in the period for which the calculation is being made by (b) a daily rate based on a three hundred sixty (360) day year (that is, the Applicable Interest Rate or the Default Rate, as then applicable to the Note, expressed as an annual rate divided by 360) by (c) the Outstanding Principal Balance.
2.2.3      Determination of Interest Rate .
(a)      Each determination by Administrative Agent of the Applicable Interest Rate shall be conclusive and binding for all purposes, absent manifest error.
(b)      Unless and until a Substitute Rate is implemented in accordance with Section 2.2.3(c) hereof, if, for any reason Administrative Agent determines in its sole but good faith discretion (which determination shall be conclusive and binding absent manifest error) that: (i) United States dollar deposits are not being offered to banks in the London interbank Eurodollar market for a period approximately equal to the applicable Interest Period; (ii) reasonable and adequate means do not exist for ascertaining LIBOR for the applicable Interest Period; or (iii) LIBOR does not adequately and fairly reflect the cost to the Lenders of making or maintaining any LIBOR Loan during an applicable Interest Period (any such determination being hereinafter referred to as a “ LIBOR Rate Unavailable Determination ”), then Administrative Agent shall promptly give notice thereof to Borrower. From and after Borrower’s receipt of such notice unless and until a Substitute Rate is implemented in accordance with Section 2.2.3(c) hereof, the Applicable Interest Rate shall be the Base Rate, subject to Section 2.2.3(d) hereof.
(c)      If for any reason Administrative Agent determines in its sole but good (which determination shall be conclusive and binding absent manifest error) that: (i) (a) United States dollar deposits are not being offered to banks in the London interbank Eurodollar market for a period approximately equal to the applicable Interest Period or (b) reasonable and adequate means do not exist for ascertaining LIBOR for the applicable Interest Period, and that such circumstances are unlikely to be temporary; (ii) LIBOR is no longer a widely recognizable benchmark rate for newly originated commercial real estate loans in the United States; or (iii) the applicable supervisor or administrator (if any) of LIBOR, or any governmental authority having or purporting to have jurisdiction over Administrative Agent, has made a public statement identifying a specific date after which LIBOR shall no longer be used for determining interest rates for commercial real estate loans in the United States (any such determination being hereinafter referred to as a “ LIBOR Rate Discontinued Determination ”), then Administrative Agent may designate a replacement rate

-41-


(“ Substitute Rate ”) that Administrative Agent may thereafter elect to implement in lieu of LIBOR in accordance with the terms hereof, and if so implemented, any reference to LIBOR herein shall thereafter be deemed to refer to the Substitute Rate. Such Substitute Rate shall (I) be a market standard reference rate which is then generally being implemented by Administrative Agent and other lenders across commercial real estate loan portfolios as a replacement for LIBOR and (II) be publicly recognized by the International Swaps and Derivatives Association (ISDA) as an alternative to the LIBOR Rate; provided, however, that if the Substitute Rate determined as provided above with respect to any Interest Period shall ever be less than the LIBOR Floor, then the Substitute Rate for such Interest Period shall be deemed to be the LIBOR Floor. If a Substitute Rate is so implemented, Administrative Agent shall designate (which designation shall be conclusive and binding absent manifest error), and implement concurrently with the Substitute Rate, a replacement spread (“ Substitute Spread ”) which shall be equal to the Applicable Spread, adjusted by Administrative Agent, in a manner consistent with Administrative Agent’s treatment of similar mortgage loan facilities, to compensate for any difference between (x) the Substitute Rate and (y) the average of LIBOR for the six (6) months prior to the date of the LIBOR Rate Discontinued Determination, which shall reflect the original intent of the parties with respect to the overall interest rate of the Loan. The Substitute Spread shall replace the Applicable Spread on the Interest Rate Replacement Date and shall thereafter remain constant notwithstanding that the Substitute Rate may fluctuate from time to time. When so implemented, any reference to the Applicable Spread herein shall thereafter be deemed to refer to the Substitute Spread. If a Substitute Rate is implemented in lieu of LIBOR, and a Substitute Spread is implemented in lieu of the Applicable Spread, as set forth above, Borrower agrees to enter into such modifications and/or replacement promissory notes as Administrative Agent deems necessary in order to evidence such replacements provided that any such modifications or replacement promissory notes do not increase the obligations or liabilities of Borrower or decrease any rights of Borrower other than to a de minimis extent. Notwithstanding the foregoing, Administrative Agent agrees that it shall consult with Borrower regarding its selection of a Substitute Rate; provided, however, that final determination of the Substitute Rate shall be made by Administrative Agent in its sole but good faith discretion (and Borrower shall have no right to approve the same).
(d)      If, after the date hereof, pursuant to the terms of this Agreement, the Loan has been converted to a Substitute Rate Loan and any Lender shall determine in its sole but reasonable discretion (which determination shall be conclusive and binding upon Borrower absent manifest error) that the event(s) or circumstance(s) which resulted in such conversion shall no longer be applicable, such Lender shall give notice thereof to Borrower, and the Substitute Rate Loan shall automatically convert to a LIBOR Loan on the effective date set forth in such notice. Notwithstanding any provision of this Agreement to the contrary, in no event shall Borrower have the right to elect to convert a LIBOR Loan to a Substitute Rate Loan.
(e)      If any requirement of law or any change therein or in the interpretation or application thereof, shall hereafter make it unlawful for any Lender to make or maintain a LIBOR Loan as contemplated hereunder, (i) the obligation of such Lender hereunder to make a LIBOR Loan shall be cancelled forthwith and (ii) such Lender may give Borrower and Lender a Lender’s Notice, establishing the Applicable Interest Rate at the Substitute Rate plus the Substitute Spread, in which case the Applicable Interest Rate shall be a rate equal to the Substitute Rate in effect from time to time plus the Substitute Spread and such initial Applicable Interest Rate based on the

-42-


Substitute Rate shall, as closely as reasonably possible, approximate the last Applicable Interest Rate based on LIBOR. In the event the condition necessitating the cancellation of such Lender’s obligation to make a LIBOR Loan hereunder shall cease, such Lender shall promptly notify Borrower and Lender of such cessation and the Loan shall resume its characteristics as a LIBOR Loan in accordance with the terms herein from and after the first day of the Interest Period next following such cessation. Borrower hereby agrees promptly to pay such Lender, upon demand, any additional amounts reasonably necessary to compensate such Lender for any out-of-pocket costs reasonably incurred by such Lender in making any conversion in accordance with this Agreement, including, without limitation, any interest or fees payable by such Lender to lenders of funds obtained by it in order to make or maintain the LIBOR Loan hereunder. Any Lender’s notice of such costs, as certified to Borrower, shall be set forth in reasonable detail and such Lender’s calculation shall be conclusive absent manifest error.
(f)      In the event that, after the date hereof, any change in any requirement of law or in the formal interpretation or application thereof, or compliance by any Lender with any directive (whether or not having the force of law) hereafter issued from any central bank or other Governmental Authority:
(i)      shall hereafter have the effect of reducing the rate of return on any Lender’s capital (other than as a result of an increase in taxes) as a consequence of its obligations hereunder to a level below that which such Lender is reasonably likely to have achieved but for such adoption, change or compliance (taking into consideration such Lender’s policies with respect to capital adequacy) by any amount reasonably deemed by such Lender to be material;
(ii)      shall hereafter impose, modify, increase or hold applicable any material reserve, special deposit, compulsory loan or similar requirement against assets held by, or deposits or other liabilities in or for the account of, advances or loans by, or other credit extended by, or any other acquisition of funds by, any office of any Lender which is not otherwise included in the determination of the rate hereunder (other than as a result of an increase in taxes); or
(iii)      shall hereafter impose on any Lender any other condition and the result of any of the foregoing is to increase the cost to such Lender of making, renewing or maintaining loans or extensions of credit or to reduce any amount receivable hereunder;
and the result of any of the foregoing is to increase the cost to Lender of making, renewing or maintaining the Loan or to reduce any amount receivable hereunder, then, in any such case, subject to the notice requirements in the subsequent sentence, provided that such Lender requests the same of similarly situated borrowers, Borrower shall promptly pay such Lender, upon demand, any additional amounts necessary to compensate such Lender for such additional cost or reduced amount receivable which such Lender deems to be material as reasonably determined by such Lender; provided, however, that Borrower shall not be required under this Section 2.2.3 to pay such Lender additional amounts for additional costs or reduced amounts receivable that are attributable to an increase in taxes imposed on such Lender. If any Lender becomes entitled to claim any additional amounts pursuant to this Section 2.2.3, Administrative Agent shall provide Borrower with not less

-43-


than ten (10) Business Days written notice specifying in reasonable detail the event by reason of which it has become so entitled and the additional amount required to fully compensate such Lender for such additional cost or reduced amount. A certificate as to any additional costs or amounts payable pursuant to the foregoing sentence, executed by an authorized signatory of any Lender and submitted by such Lender to Borrower shall be conclusive in the absence of manifest error. This provision shall survive payment of the Note and the satisfaction of all other obligations of Borrower under this Agreement and the Loan Documents. For the avoidance of doubt, any payments made pursuant to this Section 2.2.3 shall not be deemed a prepayment and no prepayment premium shall be due in connection with such payments.
(g)      Borrower agrees to indemnify each Lender and to hold each Lender harmless from any Losses which such Lender sustains or incurs as a consequence of (i) any default by Borrower in payment of the principal of or interest on a LIBOR Loan, including, without limitation, any such loss or expense arising from interest or fees payable by such Lender to lenders of funds obtained by it in order to maintain a LIBOR Loan hereunder, (ii) any prepayment (whether voluntary or mandatory) of the LIBOR Loan on a day that (A) is not a Monthly Payment Date or (B) is a Monthly Payment Date if Borrower did not give the prior written notice of such prepayment required pursuant to the terms of this Agreement, including, without limitation, such loss or expense arising from interest or fees payable by such Lender to lenders of funds obtained by it in order to maintain the LIBOR Loan hereunder and (iii) the conversion in accordance with the terms hereof of the Applicable Interest Rate to the Substitute Rate plus the Substitute Spread with respect to any portion of the outstanding principal amount of the Loan then bearing interest at a rate other than the Substitute Rate plus the Substitute Spread on a date other than the first day of an Interest Period, including, without limitation, such loss or expenses arising from interest or fees payable by such Lender to lenders of funds obtained by it in order to maintain a LIBOR Loan hereunder (the amounts referred to in clauses (i), (ii) and (iii) are herein referred to collectively as the “ Breakage Costs ”); provided, however, Borrower shall not indemnify Administrative Agent or any Lender from any Losses arising from Administrative Agent’s or any Lender’s willful misconduct or gross negligence. Whenever in this Section 2.2.3 the term “interest or fees payable by any Lender to lenders of funds obtained by it” is used and no such funds were actually obtained from such lenders, it shall include interest or fees which would have been payable by such Lender if it had obtained funds from lenders in order to maintain a LIBOR Loan hereunder. Each Lender will provide to Borrower a statement detailing such Breakage Costs and the calculation thereof.
(h)      The provisions of this Section 2.2.3 shall survive payment of the Note in full and the satisfaction of all other obligations of Borrower under this Agreement and the other Loan Documents.
2.2.4      Usury Savings . This Agreement and the other Loan Documents are subject to the express condition that at no time shall Borrower be required to pay interest on the principal balance of the Loan at a rate which could subject any Lender to either civil or criminal liability as a result of being in excess of the Maximum Legal Rate. If by the terms of this Agreement or the other Loan Documents, Borrower is at any time required or obligated to pay interest on the principal balance due hereunder at a rate in excess of the Maximum Legal Rate, the Applicable Interest Rate or the Default Rate, as the case may be, shall be deemed to be immediately reduced

-44-


to the Maximum Legal Rate and all previous payments in excess of the Maximum Legal Rate shall be deemed to have been payments in reduction of principal and not on account of the interest due hereunder. All sums paid or agreed to be paid to the Lenders for the use, forbearance, or detention of the sums due under the Loan, shall, to the extent permitted by applicable law, be amortized, prorated, allocated, and spread throughout the full stated term of the Loan until payment in full so that the rate or amount of interest on account of the Loan does not exceed the Maximum Legal Rate from time to time in effect and applicable to the Loan for so long as the Loan is outstanding.
Section 2.3      Loan Payments .
2.3.1      Payment Before Maturity Date . Borrower shall make a payment to Administrative Agent, for the benefit of Lenders of interest only on the Closing Date for the initial Interest Period. On the Monthly Payment Date occurring in April 9, 2019 and on each Monthly Payment Date thereafter to and including the Maturity Date, Borrower shall make a payment to Administrative Agent, for the benefit of Lenders equal to the Monthly Debt Service Payment Amount. Borrower shall also pay to Administrative Agent, for the benefit of the Lenders, all amounts required in respect of Reserve Funds as set forth in Article 6 .
2.3.2      Payment on Maturity Date ; Extension Options . (a) Borrower shall pay to Administrative Agent, for the benefit of Lenders on the Maturity Date the Outstanding Principal Balance of the Loan, any Spread Maintenance Premium (if the Maturity Date is before the Open Prepayment Date), all accrued and unpaid interest and all other amounts due hereunder and under the Note, the Mortgage and the other Loan Documents.
(b) Subject to the provisions of this Section 2.3.2 , Borrower shall have the one-time option (the “ First Extension Option ”) to extend the Maturity Date until the First Extension Maturity Date. In the event Borrower shall have exercised the First Extension Option in accordance with the terms and conditions hereof, Borrower shall have the one-time option (the “ Second Extension Option ”) to extend the Maturity Date until the Second Extension Maturity Date. In the event Borrower shall have exercised the Second Extension Option in accordance with the terms and conditions hereof, Borrower shall have the one-time option (the “ Third Extension Option ” and, together with the First Extension Option and the Second Extension Option, each an “ Extension Option ”) to extend the Maturity Date until the Third Extension Maturity Date. Borrower’s right to so extend the Maturity Date shall be subject to the satisfaction of each of the following conditions precedent prior to each such extension (and each such condition shall be satisfied in connection with the exercise of each Extension Option unless such condition is otherwise expressly specified to apply solely to the First Extension Option, the Second Extension Option, or the Third Extension Option as applicable):
(i)      Borrower shall have given Administrative Agent written notice of such extension (x) no later than thirty (30) days prior to the then-current Maturity Date and (y) no earlier than ninety (90) days prior to the then-current Maturity Date (it being agreed that the foregoing notice shall be freely revocable by Borrower so long as Borrower pays Administrative Agent’s out-of-pocket costs in connection therewith) and such revocation shall not impair Borrower’s right to otherwise exercise any applicable Extension Option in accordance with the terms hereof);

-45-


(ii)      No monetary Default or material non-monetary Default which is reasonably likely to have a Material Adverse Effect or Event of Default shall have occurred and be continuing at the time of the delivery of the written extension notice or as of the first day of the relevant Extension Period;
(iii)      if requested by Administrative Agent, Administrative Agent shall have received a title update from the Title Company (x) confirming that the Mortgage remains a valid Lien against the Property, subject only to Permitted Encumbrances, and (y) showing title to the Property vested in Borrower;
(iv)      Borrower shall have paid all out-of-pocket costs and expenses actually incurred by Administrative Agent in connection with such extension, including title and reasonable legal fees and costs;
(v)      Borrower shall have entered into a replacement Interest Rate Protection Agreement for the applicable Extension Period and complied with the provisions of Section 4.1.11 ;
(vi)      the representations and warranties made by Borrower in the Loan Documents or otherwise made by Borrower in connection therewith shall have been true and correct in all material respects on the date on which made and shall also be true and correct in all material respects as if remade upon the exercise of the applicable Extension Option and on the first day of such Extension Period (unless such representations and warranties were made as of a specific date), subject to changes to such representations and warranties required by the passage of time, permitted under the terms of the Loan Documents, or otherwise disclosed to Administrative Agent in writing, so long as such update is not the result of any material breach of a covenant of Borrower under the Loan Documents, and such changes do not result from any Material Adverse Effect or any monetary Default, material non-monetary Default or Event of Default by Borrower;
(vii)      with respect to the Second Extension Option, Borrower shall have paid the Extension Fee on or prior to the First Extension Maturity Date;
(viii)      with respect to the Third Extension Option, Borrower shall have paid the Extension Fee on or prior to the Second Extension Maturity Date;
(ix)      with respect to the Second Extension Option, the Debt Yield as of the First Extension Maturity Date shall be equal to or greater than 7.00%;
(x)      with respect to the Third Extension Option, the Debt Yield as of the Second Extension Maturity Date shall be equal to or greater than 8.00% (the Debt Yield in each of clauses (ix) and (x), the “ Minimum Extension Debt Yield ”);
(xi)      Guarantor continues to comply in all material respects with the covenants contained in the Guaranties, and Guarantor has provided to Administrative Agent a reaffirmation of the same in a form reasonably acceptable to Administrative Agent;

-46-


(xii)      To the extent all or any portion of the Mezzanine Loan is outstanding, Administrative Agent shall have received evidence reasonably acceptable to Administrative Agent that the Mezzanine Loan has been extended or shall be extended concurrently through a date not earlier than the First Extension Maturity Date, Second Extension Maturity Date, or the Third Extension Maturity Date, as applicable;
(xiii)      To the extent all or any portion of the Building Loan is outstanding, Administrative Agent shall have received evidence reasonably acceptable to Administrative Agent that the Building Loan has been extended or shall be extended concurrently through a date not earlier than the First Extension Maturity Date, Second Extension Maturity Date, or the Third Extension Maturity Date, as applicable;
(xiv)      with respect to the Second Extension Option and Third Extension Option, (i) written confirmation in the form of an Officer’s Certificate executed by a duly authorized representative of Borrower and Savanna Fund III, stating that the term of the “Partnership” as defined in the Savanna Fund III LPA has been extended for one additional year in accordance with the Savanna Fund III LPA or (ii) an Acceptable Replacement Guarantor be substituted for Savanna Fund III; notwithstanding the foregoing, at any time after the term of the “Partnership” as defined in the Savanna Fund III LPA has expired and Savanna Fund III is in an orderly liquidation, Administrative Agent may request certification on a monthly basis of Savanna Guarantor’s compliance with the covenants set forth in Section 25 of the Recourse Guaranty;
If Borrower is unable to satisfy all of the foregoing conditions within the applicable time frames for each, Administrative Agent shall have no obligation to extend the Maturity Date hereunder.
Notwithstanding anything to the contrary contained herein, Borrower shall have the right to prepay the Loan in an amount equal to the Mortgage Pro Rata Share of the amount required to achieve the Minimum Extension Debt Yield to exercise the First Extension Option, the Second Extension Option or Third Extension Option, as applicable (any such amount, the “ Optional Extension Prepayment Amount ”), but subject to the applicable terms and conditions of Section 2.4.1 of this Agreement and provided that the Mezzanine Pro Rata Share of the applicable Optional Extension Prepayment Amount is also simultaneously prepaid by Mezzanine Borrower in accordance with the Mezzanine Loan Agreement and provided that Mezzanine Borrower has also complied with the applicable requirements of Section 2.4.1 of the Mezzanine Loan Agreement (as confirmed by Mezzanine Administrative Agent); provided , that Administrative Agent acknowledges and agrees that any optional prepayment in connection with this paragraph shall not result in Borrower being obligated to pay any prepayment penalty, Spread Maintenance Premium or any similar premium or fee. In lieu of payment of the Mortgage Pro Rata Share of the Optional Extension Prepayment Amount, Borrower may at its option (X) deliver (i) to Administrative Agent, for the benefit of Lenders, a Letter of Credit in the face amount of the Mortgage Pro Rata Share of the Optional Extension Prepayment Amount to be held as collateral for the Loan (provided that Mezzanine Borrower shall have simultaneously delivered to Mezzanine Administrative Agent a letter of credit in the face amount of the Mezzanine Pro Rata Share of the applicable Optional Extension Prepayment Amount (to be held as collateral for the Mezzanine Loan in accordance with

-47-


the Mezzanine Loan Documents), so that the sum of the face amount of such Letter of Credit delivered to Administrative Agent, for the benefit of Lenders, plus the face amount of such letter of credit delivered to Mezzanine Administrative Agent shall be equal to the aggregate Optional Extension Prepayment Amount, or (Y) deposit cash in the amount of the Mortgage Pro Rata Share of Optional Extension Prepayment Amount into the Cash Collateral Account (provided that Mezzanine Borrower shall have simultaneously deposited with Mezzanine Administrative Agent cash in the aggregate amount of the Mezzanine Pro Rata Share of the Optional Extension Prepayment Amount (in accordance with the Mezzanine Loan Documents), so that the sum of the amount of cash deposited in the Cash Collateral Account, plus the amount of deposited with Mezzanine Administrative Agent shall be equal to the aggregate Optional Extension Prepayment Amount). . If Borrower elects to deliver to Administrative Agent, for the benefit of Lenders a Letter of Credit pursuant to this Section 2.3.2 , then the Letter of Credit provisions set forth in Schedule VIII shall be applicable. Any collateral provided to Administrative Agent pursuant to (X) or (Y) above shall be released to Borrower upon the Property achieving the Minimum Extension Debt Yield for two (2) consecutive calendar quarters.
2.3.3      Late Payment Charge . If any principal, interest or any other sum due under the Loan Documents (other than the payment of principal and any other amounts due on the Maturity Date), is not paid by Borrower on or before the date on which it is due (unless (A) funds for such payment were available in the applicable Subaccounts (as defined in the Cash Management Agreement) and ear-marked for such payment, (B) Administrative Agent’s access to such sums was not restricted or constrained in any manner by Borrower, any Affiliate of Borrower or any applicable Legal Requirement and (C) no Event of Default was continuing), Borrower shall pay to Administrative Agent, for the benefit of Lenders promptly following written demand an amount equal to the lesser of five percent (5%) of such unpaid sum or the Maximum Legal Rate in order to defray the expense incurred by Administrative Agent in handling and processing such delinquent payment and to compensate Administrative Agent for the loss of the use of such delinquent payment. Any such amount shall be secured by the Mortgage and the other Loan Documents and payable to Administrative Agent, for the benefit of Lenders promptly following written demand.
2.3.4      Method and Place of Payment . (a) Except as otherwise specifically provided herein, all payments and prepayments under this Agreement and the Note shall be made to Administrative Agent, for the benefit of Lenders, not later than 3:00 P.M., New York City time, on the date when due and shall be made in lawful money of the United States of America in immediately available funds at Administrative Agent’s office, and any funds received by Administrative Agent, for the benefit of Lenders after such time shall, for all purposes hereof, be deemed to have been paid on the next succeeding Business Day.
(b)      Whenever any payment to be made hereunder or under any other Loan Document shall be stated to be due on a day which is not a Business Day, the due date thereof shall be the next succeeding Business Day. Whenever any obligation of Borrower, Administrative Agent or Lender is required to be performed hereunder or under any other Loan Document a day which is not a Business Day, such action shall be required to be performed by the next succeeding Business Day.

-48-


(c)      All payments required to be made by Borrower hereunder or under the Note or the other Loan Documents shall be made irrespective of, and without deduction for, any setoff, claim or counterclaim and shall be made irrespective of any defense thereto (other than payment in full of the applicable payment).
Section 2.4      Prepayments .
2.4.1      Voluntary Prepayments . (a)  Except as otherwise provided herein, Borrower shall not have the right to prepay the Loan in whole or in part. Provided no Event of Default has occurred and be continuing, prior to the Open Prepayment Date, Borrower may, upon not less than ten (10) Business Days’ prior written notice to Administrative Agent (or such shorter period of time as may be permitted by Administrative Agent in its sole discretion), prepay the Debt in whole (but not in part except as otherwise contemplated pursuant to the terms hereof, including, without limitation any tender of any Optional Cash Trap Prepayment Amount or Optional Extension Prepayment Amount or a prepayment pursuant to Section 7.1 hereof) on any date with the payment of the Spread Maintenance Premium (plus Short Interest and Breakage Costs). Provided no Event of Default has occurred and be continuing, from and after the Open Prepayment Date, Borrower may, upon not less than ten (10) Business Days’ prior written notice to Administrative Agent (or such shorter period of time as may be permitted by Administrative Agent in its sole discretion), prepay the Debt in whole (but not in part except as otherwise contemplated pursuant to the terms hereof, including, without limitation any tender of any Optional Cash Trap Prepayment Amount or Optional Extension Prepayment Amount or a prepayment pursuant to Section 7.1 hereof) on any date without payment of the Spread Maintenance Premium or any other fee or premium (other than Short Interest and Breakage Costs, if any); provided that Borrower may revoke such notice of prepayment at any time prior to the prepayment date set forth in such notice (subject to payment of any Breakage Costs and any out-of-pocket costs or expenses actually incurred by Administrative Agent or Lenders in connection with such revocation). Any prepayment received by Administrative Agent on a date other than a Monthly Payment Date shall include interest which would have accrued thereon to the next Monthly Payment Date (“ Short Interest ”) and such amounts (i.e., principal and interest prepaid by Borrower) shall be applied to the Loan on the next Monthly Payment Date. Except as otherwise contemplated pursuant to the terms hereof, the Mezzanine Loan and the Building Loan must be simultaneously repaid in full with any voluntary prepayment of the Loan made pursuant to the foregoing.
(b)     Unless an Event of Default exists or if there is an application of Net Proceeds to the Loan or in connection with the tender of any Optional Cash Trap Prepayment Amount or Optional Extension Prepayment Amount or in connection with a prepayment pursuant to Section 7.1 hereof, all principal payments or prepayments made by Borrower and/or Mezzanine Borrower with respect to the Loan, the Building Loan or the Mezzanine Loan shall be applied to amounts owing with respect to the Loan, the Building Loan and the Mezzanine Loan on a pro rata basis (based on the then-outstanding principal amounts of the Loan, the Building Loan and the Mezzanine Loan) in accordance with the Loan Documents, the Building Loan Documents and the Mezzanine Loan Documents, respectively, and Borrower shall cause Mezzanine Borrower to make the applicable pro rata payment of the Mezzanine Loan in accordance with the Mezzanine Loan Documents. Without limitation of any other provisions of the Loan Documents, Borrower shall not permit any

-49-


payment to be made to the Mezzanine Lender (whether principal, interest or otherwise) in respect of the Mezzanine Loan at any time that an Event of Default exists or would exist upon the making of such payment unless the Borrower is concurrently repaying the Debt in full.
2.4.2      Mandatory Prepayments . On each date on which Administrative Agent, for the benefit of Lenders actually receives a distribution of Net Proceeds, and if Administrative Agent is not required to make such Net Proceeds available to Borrower for a Restoration or, if not required, does not elect to make such net Proceeds available to Borrower for a Restoration, Administrative Agent shall apply such Net Proceeds to prepay the Outstanding Principal Balance in an amount equal to one hundred percent (100%) of such Net Proceeds together with interest that would have accrued on such amounts through the next Monthly Payment Date. Notwithstanding anything contained in this Section 2.4.2 hereof to the contrary, in the event Administrative Agent uses Net Proceeds to prepay a portion of the principal balance of the Loan and any accrued and unpaid interest thereon (other than by application of any balance applied to the Debt after Restoration is complete, pursuant to Section 5.3.2(g) ), Borrower may prepay the entire amount of the Loan outstanding after the application of such Net Proceeds on the next Monthly Payment Date. No Spread Maintenance Premium or other prepayment fee shall be due in connection with any prepayment made pursuant to this Section 2.4.2, but subject to payment of any Breakage Costs.
2.4.3      Spread Maintenance Premium Payment . Other than as set forth in Section 2.3.2 , Section 2.4.2 or the definition of Cash Trap Period, payment of all or any part of the principal of the Loan by Borrower, a purchaser at foreclosure or any other Person prior to the Open Prepayment Date (whether or not an Event of Default exists) shall require payment of the Spread Maintenance Premium.
Section 2.5      Regulatory Change; Taxes .
2.5.1      Increased Costs . If any Regulatory Change shall: (i) impose, modify or deem applicable any reserve, special deposit, compulsory loan, insurance charge or similar requirement against assets of, deposits with or for the account of, or credit extended or participated in by, any Lender or any company Controlling such Lender; (ii) subject any Lender or any company Controlling such Lender to any Taxes (other than (A) Indemnified Taxes, (B) Taxes described in clauses (b) through (d) of the definition of Excluded Taxes and (C) Connection Income Taxes) on its loans, loan principal, letters of credit, commitments, or other obligations or its deposits, reserves, other liabilities or capital attributable thereto; or (iii) any other condition, cost or expense (other than Taxes) affecting this Agreement or the portion of the Loan made by such Lender or participation therein; and the result of any of the foregoing shall be to increase the cost to such Lender or any company Controlling such Lender of making, converting to, continuing or maintaining any Loan or of maintaining its obligation to make such Loan, or to reduce the amount of any sum received or receivable by such Lender or any company Controlling such Lender (whether of principal, interest or any other amount) (such increases in cost and reductions in amounts receivable being herein called “ Increased Costs ”), then, upon request of such Lender, and provided that Lender requests the same of similarly situated borrowers, Borrower will pay to such Lender or any company Controlling such Lender, as the case may be, such additional amount or amounts as will compensate such Lender for such Increased Costs.

-50-


2.5.2      Payment Free of Taxes . Any and all payments by or on account of any obligation of Borrower under any Loan Document shall be made without deduction or withholding for any Taxes, except as required by applicable law. If any applicable law (as determined in the good faith discretion of Administrative Agent) requires the deduction or withholding of any Tax from any such payment, then Borrower shall be entitled to make such deduction or withholding and shall timely pay the full amount deducted or withheld to the relevant Governmental Authority in accordance with applicable law and, if such Tax is an Indemnified Tax, then the sum payable by Borrower shall be increased as necessary so that after such deduction or withholding has been made (including such deductions and withholdings applicable to additional sums payable under this Section 2.5.2 ) each Lender receives an amount equal to the sum it would have received had no such deduction or withholding been made.
2.5.3      Payment of Other Taxes by Borrower . Borrower shall timely pay to the relevant Governmental Authority in accordance with applicable law, or at the option of Lender timely reimburse it for the payment of, any present or future stamp or documentary taxes or other excise taxes, charges, or similar levies which arise from any payment made hereunder, or from the execution, delivery or registration of, or otherwise with respect to, this Agreement, the other Loan Documents, or the Loan, except any such Taxes that are Other Connection Taxes imposed with respect to an assignment (other than an assignment made pursuant to Section 2.8.2 ) (hereinafter referred to as “ Other Taxes ”).
2.5.4      Indemnification by Borrower . Borrower shall indemnify each Recipient, within ten (10) days after demand therefor, for the full amount of any Indemnified Taxes (including Indemnified Taxes imposed or asserted on or attributable to amounts payable under this Section 2.5.4 ) payable or paid by such Recipient or required to be withheld or deducted from a payment such Recipient and any reasonable expenses arising therefrom or with respect thereto, whether or not such Indemnified Taxes were correctly or legally imposed or asserted by the relevant Governmental Authority. A certificate as to the amount of such payment or liability delivered to Borrower by Administrative Agent on its own behalf or on behalf of a Lender shall be conclusive absent manifest error.
2.5.5      Evidence of Payments . As soon as practicable after any payment of Taxes by Borrower to a Governmental Authority pursuant to this Section 2.5 , Borrower shall deliver to Administrative Agent the original or a certified copy of a receipt issued by such Governmental Authority evidencing such payment, a copy of the return reporting such payment or other evidence of such payment reasonably satisfactory to Administrative Agent.
2.5.6      Status of Lenders .
(a)      Any Lender that is entitled to an exemption from or reduction of withholding Tax with respect to payments made under any Loan Document shall deliver to Borrower and Administrative Agent, at the time or times reasonably requested by Borrower or Administrative Agent, such properly completed and executed documentation reasonably requested by Borrower or Administrative Agent as will permit such payments to be made without withholding or at a reduced rate of withholding. In addition, a Lender, if reasonably requested by Borrower or Administrative Agent, shall deliver such other documentation prescribed by applicable law or

-51-


reasonably requested by Borrower or Administrative Agent as will enable Borrower or Administrative Agent to determine whether or not such Lender is subject to backup withholding or information reporting requirements. Notwithstanding anything to the contrary in the preceding two sentences, the completion, execution and submission of such documentation (other than such documentation set forth in Sections 2.5.6(b)(i) , (b)(ii) and (b)(iv) below) shall not be required if in such Lender’s reasonable judgment such completion, execution or submission would subject such Lender to any material unreimbursed cost or expense or would materially prejudice the legal or commercial position of such Lender.
(b)      Without limiting the generality of the foregoing,
(i)      if a Lender is a U.S. Person, such Lender shall deliver to Borrower and Administrative Agent on or prior to the date on which such Lender becomes a Lender under this Agreement (and from time to time thereafter upon the reasonable request of Borrower or Administrative Agent), executed copies of IRS Form W-9 certifying that such Lender is exempt from U.S. federal backup withholding tax;
(ii)      any Foreign Lender shall, to the extent it is legally entitled to do so, deliver to Borrower and Administrative Agent (in such number of copies as shall be requested by the recipient) on or prior to the date on which such Foreign Lender becomes a Lender under this Agreement (and from time to time thereafter upon the reasonable request of the Borrower or Administrative Agent), whichever of the following is applicable:
(A)      in the case of a Foreign Lender claiming the benefits of an income tax treaty to which the United States is a party (x) with respect to payments of interest under any Loan Document, executed copies of IRS Form W-8BEN or IRS Form W-8BEN-E establishing an exemption from, or reduction of, U.S. federal withholding Tax pursuant to the “interest” article of such tax treaty and (y) with respect to any other applicable payments under any Loan Document, IRS Form W-8BEN or IRS Form W-8BEN-E establishing an exemption from, or reduction of, U.S. federal withholding Tax pursuant to the “business profits” or “other income” article of such tax treaty;
(B)      executed copies of IRS Form W-8ECI;
(C)      in the case of a Foreign Lender claiming the benefits of the exemption for portfolio interest under Section 881(c) of the Code, (x) a certificate substantially in the form of Exhibit B-1 to the effect that such Foreign Lender is not a “bank” within the meaning of Section 881(c)(3)(A) of the Code, a “10 percent shareholder” of the Borrower within the meaning of Section 881(c)(3)(B) of the Code, or a “controlled foreign corporation” described in Section 881(c)(3)(C) of the Code (a “ U.S. Tax Compliance Certificate ”) and (y) executed copies of IRS Form W-8BEN or IRS Form W-8BEN-E; or
(D)      to the extent a Foreign Lender is not the beneficial owner, executed copies of IRS Form W-8IMY, accompanied by IRS Form W-8ECI, IRS Form W-8BEN, IRS Form W-8BEN-E, a U.S. Tax Compliance Certificate

-52-


substantially in the form of Exhibit B-2 or Exhibit B-3 , IRS Form W-9, and/or other certification documents from each beneficial owner, as applicable; provided that if the Foreign Lender is a partnership and one or more direct or indirect partners of such Foreign Lender are claiming the portfolio interest exemption, such Foreign Lender may provide a U.S. Tax Compliance Certificate substantially in the form of Exhibit B-4 on behalf of each such direct and indirect partner;
(iii)      any Foreign Lender shall, to the extent it is legally entitled to do so, deliver to Borrower and Administrative Agent (in such number of copies as shall be requested by the recipient) on or prior to the date on which such Foreign Lender becomes Administrative Agent under this Agreement (and from time to time thereafter upon the reasonable request of Borrower or Administrative Agent), executed copies of any other form prescribed by applicable law as a basis for claiming exemption from or a reduction in U.S. federal withholding Tax, duly completed, together with such supplementary documentation as may be prescribed by applicable law to permit Borrower or Administrative Agent to determine the withholding or deduction required to be made; and
(iv)      if a payment made to a Lender under any Loan Document would be subject to U.S. federal withholding Tax imposed by FATCA if such Lender were to fail to comply with the applicable reporting requirements of FATCA (including those contained in Section 1471(b) or 1472(b) of the Code, as applicable), such Lender shall deliver to Borrower and Administrative Agent at the time or times prescribed by law and at such time or times reasonably requested by Borrower or Administrative Agent such documentation prescribed by applicable law (including as prescribed by Section 1471(b)(3)(C)(i) of the Code) and such additional documentation reasonably requested by Borrower or Administrative Agent as may be necessary for Borrower and Administrative Agent to comply with their obligations under FATCA and to determine that such Lender has complied with such Lender’s obligations under FATCA or to determine the amount to deduct and withhold from such payment. Solely for purposes of this clause (iv), “ FATCA ” shall include any amendments made to FATCA after the date of this Agreement.
Each Lender agrees that if any form or certification it previously delivered expires or becomes obsolete or inaccurate in any respect, it shall update such form or certification or promptly notify Borrower and Administrative Agent in writing of its legal inability to do so.
2.5.7      Treatment of Certain Refunds . If any party determines, in its sole discretion exercised in good faith, that it has received a refund of any Taxes as to which it has been indemnified pursuant to this Section 2.5 (including by the payment of additional amounts pursuant to this Section 2.5 ), it shall pay to the indemnifying party an amount equal to such refund (but only to the extent of indemnity payments made under this Section with respect to the Taxes giving rise to such refund), net of all out-of-pocket expenses (including Taxes) of such indemnified party incurred in connection with obtaining such refund and without interest (other than any interest paid by the relevant Governmental Authority with respect to such refund). Such indemnifying party, upon the request of such indemnified party, shall repay to such indemnified party the amount paid

-53-


over pursuant to this Section 2.5.7 (plus any penalties, interest or other charges imposed by the relevant Governmental Authority) to the extent that such indemnified party is required to repay such refund to such Governmental Authority. Notwithstanding anything to the contrary in this Section 2.5.7 , in no event will the indemnified party be required to pay any amount to an indemnifying party pursuant to this Section 2.5.7 the payment of which would place the indemnified party in a less favorable net after-Tax position than the indemnified party would have been in if the Tax subject to indemnification and giving rise to such refund had not been deducted, withheld or otherwise imposed and the indemnification payments or additional amounts with respect to such Tax had never been paid. This paragraph shall not be construed to require any indemnified party to make available its Tax returns (or any other information relating to its Taxes that it deems confidential) to the indemnifying party or any other Person.
2.5.8      Survival . Each party’s obligations under this Section 2.5 shall survive the resignation or replacement of Administrative Agent or any assignment of rights by, or the replacement of, a Lender, the termination of the commitments and the repayment, satisfaction or discharge of all obligations under any Loan Document.
2.5.9      Defined Terms . For purposes of this Section 2.5 , the term “applicable law” shall include FATCA.
2.5.10      Indemnification by the Lenders . Each Lender shall severally indemnify Administrative Agent, within 10 days after demand therefor, for (i) any Indemnified Taxes attributable to such Lender (but only to the extent that the Borrower has not already indemnified Administrative Agent for such Indemnified Taxes and without limiting the obligation of the Borrower to do so), (ii) any Taxes attributable to such Lender’s failure to comply with the provisions of Section 9.4(a) relating to the maintenance of a Participant Register and (iii) any Excluded Taxes attributable to such Lender, in each case, that are payable or paid by Administrative Agent in connection with any Loan Document, and any reasonable expenses arising therefrom or with respect thereto, whether or not such Taxes were correctly or legally imposed or asserted by the relevant Governmental Authority. A certificate as to the amount of such payment or liability delivered to any Lender by Administrative Agent shall be conclusive absent manifest error. Each Lender hereby authorizes Administrative Agent to set off and apply any and all amounts at any time owing to such Lender under any Loan Document or otherwise payable by Administrative Agent to the Lender from any other source against any amount due to Administrative Agent under this Section 2.5.10 .
Section 2.6      Working Capital; Advances .
2.6.1      Working Capital . On the date hereof, Lenders have made their Pro Rata Shares in an amount equal to $4,950,000.00 into an account with the Working Capital Bank (the “ Working Capital Account ”).  Amounts deposited pursuant to this Section 2.6.1 are referred to herein as the “ Working Capital Funds ”. Borrower shall use the Working Capital Funds for Property related costs and expenses and Borrower shall not declare or pay any dividends or otherwise declare or make any distribution to Borrower’s members from such Working Capital Funds. The Working Capital Account will be under the sole control and dominion of Administrative Agent, for the benefit of Lenders, except, so long as no Event of Default is continuing, Borrower shall have the right to make withdrawals from the Working Capital Account. Upon the occurrence and during the

-54-


continuance of an Event of Default, Borrower shall no longer have any right to withdraw Working Capital Funds from the Working Capital Account, as further set forth in the Working Capital Account Agreement, and Administrative Agent may apply any Working Capital Funds on deposit in the Working Capital Account to the payment of the Debt in such order, proportion and priority as Administrative Agent may determine in its sole and absolute discretion. Borrower shall pay for all expenses of opening and maintaining the Working Capital Account. Any remaining Working Capital Funds after the Debt has been repaid in full shall be disbursed to Borrower.
At or prior to the Closing Date, Borrower shall establish and maintain the Working Capital Account as a segregated Eligible Account pursuant to the terms of the Working Capital Account Agreement with the Working Capital Bank, which such Working Capital Account shall be in trust for the benefit of Lenders and shall be under the sole dominion and control of Borrower prior to an Event of Default and thereafter, Administrative Agent, for the benefit of Lenders. Borrower (i) hereby grants to Administrative Agent, for the benefit of Lenders a first priority security interest in the Working Capital Account and all deposits at any time contained therein and the proceeds thereof, and (ii) will take all actions necessary to maintain in favor of Administrative Agent, for the benefit of Lenders a perfected first priority security interest in the Working Capital Account, including, without limitation, the execution of any account control agreement required by Administrative Agent. Borrower shall not further pledge, assign or grant any security interest in the Working Capital Account or the monies deposited therein or permit any lien or encumbrance to attach thereto, or any levy to be made thereon, or any UCC-1 financing statements, except those naming Administrative Agent, for the benefit of Lenders as the secured party, to be filed with respect thereto. Borrower will not in any way alter, modify or close the Working Capital Account and will notify Administrative Agent of the account number thereof. Prior to an Event of Default, Borrower shall have the sole right to make withdrawals from the Working Capital Account and all costs and expenses for establishing and maintaining the Working Capital Account shall be paid by Borrower. After an Event of Default, Administrative Agent, for the benefit of Lenders shall have the sole right to make withdrawals from the Working Capital Account and all costs and expenses for establishing and maintaining the Clearing Account shall be paid by Borrower. All monies now or hereafter deposited into the Working Capital Account shall be deemed additional security for the Debt. Borrower shall indemnify Administrative Agent, each Lender and bank and hold Administrative Agent, each Lender and Working Capital Bank harmless from and against any and all actions, suits, claims, demands, liabilities, losses, damages, obligations and costs and expenses (including litigation costs and reasonable attorneys’ fees and expenses) arising from or in any way connected with the Working Capital Account, such Working Capital Account Agreement or the performance of the obligations for which the Working Capital Account was established (unless arising from the gross negligence or willful misconduct of Administrative Agent, any Lender or Clearing Bank, as applicable).
2.6.2      Conditions of Future Advances (Capital Expenditures), Future Advances (TI/LCs) and Future Advances (Interest/Carry Shortfall).
The obligation of Lenders to make their Pro Rata Shares of any Future Advance (Capital Expenditures), Future Advance (TI/LCs) and/or Future Advance (Interest/Carry Shortfall) hereunder shall be subject to the following conditions precedent, all of which conditions precedent must be satisfied, to the extent applicable (and remain satisfied as of the date the Future Advance

-55-


is actually made by Lenders) prior to Lenders making their Pro Rata Shares of any such Future Advance (Capital Expenditures), Future Advance (TI/LCs) and/or Future Advance (Interest/Carry Shortfall) under this Agreement and, upon satisfaction of the following conditions precedent, Lenders shall be obligated to make their Pro Rata Shares of any applicable Future Advance (Capital Expenditures), Future Advance (TI/LCs) and/or Future Advance (Interest/Carry Shortfall).
(a)      General Conditions :
(i)      Borrower’s Requisition . Borrower has delivered to Administrative Agent Borrower’s Requisition (and all deliverables required to be provided in connection therewith pursuant to this Article 2 ), which shall constitute Borrower’s representation and warranty to Administrative Agent that: (a) all costs for the payment of which Administrative Agent has previously advanced funds have in fact been paid, (b) all the representations and warranties contained in Article III of this Agreement continue to be true and correct in all material respects, except to the extent such representation or warranty was made as of a specified earlier date, in which case such representation shall be true and correct in all material respects as of the date made, subject to changes to such representations and warranties disclosed to Administrative Agent in writing, so long as such update is not the result of any breach of a covenant of Borrower under the Loan Documents, and such changes do not result from any monetary Default, material non-monetary Default which is reasonably likely to have a Material Adverse Effect or Event of Default by Borrower, and (c) no monetary Default, material non-monetary Default or Event of Default shall have occurred and be continuing (unless such monetary Default or material non-monetary Default would be cured by funding the applicable Future Advance (Capital Expenditures), Future Advance (TI/LCs) and/or Future Advance (Interest/Carry Shortfall)).
(ii)      No Liens . The Property shall be free from all Liens (other than Permitted Encumbrances).
(iii)      Proceedings . There shall be no governmental actions, proceedings or investigations pending or threatened in writing against or filed by Borrower which is reasonably likely to have a Material Adverse Effect.
(iv)      No Default . On and prior to the date of such Future Advance (Capital Expenditures) or Future Advance (TI/LCs), there shall exist no monetary Default, material non-monetary Default which is reasonably likely to have a Material Adverse Effect or Event of Default (unless such monetary Default or such material non‑monetary Default would be cured by funding the applicable Future Advance (Capital Expenditures), Future Advance (TI/LCs) and/or Future Advance (Interest/Carry Shortfall)).
(v)      Available Commitments . Such Future Advance, together with all other Future Advances previously made hereunder, shall not exceed the aggregate remaining Commitments.

-56-


(vi)      Mezzanine Loan . Mezzanine Lender shall have funded Mezzanine Lender’s Percentage of such Future Advance; provided , however , if Mezzanine Lender shall have failed to fund Mezzanine Lender’s Percentage of any Future Advance, and Mezzanine Borrower has satisfied all conditions precedent to such Future Advance under the Mezzanine Loan Agreement, such that Mezzanine Lender has become a “Defaulting Lender” (as defined in the Mezzanine Loan Agreement) (a “ Mezzanine Funding Failure ”), Borrower shall be permitted to “fund” Mezzanine Lender’s Percentage of any such Future Advance (i.e., Borrower shall provide to Administrative Agent evidence acceptable to Administrative Agent that it has sufficient funds on deposit to be allocated to the Approved Costs which were to be paid by Mezzanine Lender’s Percentage of such Future Advance) provided that (x) no Event of Default is continuing, (y) Mezzanine Borrower is actively pursuing its remedies against such Defaulting Lender (as defined in the Mezzanine Loan Agreement) in accordance with the terms of the Mezzanine Loan Agreement, including, without limitation, Section 7.1 thereof and (z) Borrower delivers to Administrative Agent, for the benefit of Lenders, a Letter of Credit in the face amount of the remaining Future Funding Amount (as defined in the Mezzanine Loan Agreement) or deposits with Administrative Agent cash in the amount of the remaining Future Funding Amount (as defined in the Mezzanine Loan Agreement) (any such collateral, the “ Funding Collateral ”). If Borrower elects to deliver to Administrative Agent, for the benefit of Lenders, a Letter of Credit pursuant to this subclause, then the Letter of Credit provisions set forth in Schedule VIII shall be applicable. Following any Mezzanine Funding Failure, if each of clause (x), (y) and (z) above has been satisfied by Mezzanine Borrower or Borrower, as applicable, and Borrower has not funded Mezzanine Lender’s Percentage of such Future Advance by the date that is two (2) Business Days after the date Mezzanine Lender was required to fund, then Administrative Agent may draw upon the Funding Collateral in an amount equal to Mezzanine Lender’s Percentage of such Future Advance and shall release the same to Borrower (to be applied by Borrower and/or Mezzanine Borrower in accordance with its Requisition). If Borrower or Mezzanine Lender funds Mezzanine Lender’s Percentage of any Future Advance (to be applied by Borrower and/or Mezzanine Borrower in accordance with its Requisition), so long as no Event of Default is continuing, Administrative Agent will release a corresponding amount of the Funding Collateral to Borrower (to be used by Borrower as determined by Borrower).
(vii)      Payment of Fees . Administrative Agent shall have received payment for any and all reasonable fees payable with respect to the applicable Future Advance, including, but not limited to, solely with respect to the Future Advance (Capital Expenditures) and Future Advance (TI/LCs),the reasonable fees and out-of-pocket expenses of the Construction Consultant (which shall not exceed $2,000 per draw (together with amounts paid for any concurrent draw made under the Mezzanine Loan), if any, relating to the Loan, and all other reasonable, out-of-pocket fees, costs and expenses (including, without limitation, reasonably attorneys’ fees) of Administrative Agent relating to the Loan to the extent then due and payable.
(viii)      Materials . Solely with respect to the Future Advance (Capital Expenditures) and Future Advance (TI/LCs), with respect to any materials stored on the Property, the Lenders shall not be required to make Future Advances for the costs incurred

-57-


by Borrower in connection therewith, except to the extent (x) Administrative Agent has received evidence that such materials are covered by the insurance policies required by this Agreement and are identified and protected against loss, theft and damage in a manner acceptable to Administrative Agent and the Construction Consultant, (y) Administrative Agent shall have received bills of sale and other documentation evidencing payment in full of such materials, Borrowers’ ownership thereof following payment of such amount, and the release of any right, title or lien in respect thereof by any vendor after payment of such amount. The costs of any such materials stored at the Property, at any one time, for which Borrower shall have received (or is then requesting) a Future Advance (together with any Future Advance (as defined in the Building Loan) or any Future Advance (as defined in the Mezzanine Loan)), shall not exceed $1,000,000 in the aggregate.
(b)      No Damage . The Improvements shall not have been damaged by fire, explosion, accident, flood or other casualty, unless Administrative Agent shall be satisfied, in the reasonable judgment of Administrative Agent, that sufficient insurance proceeds (net of any deductible) together with any Future Advance Proceeds available for such purpose or other funds provided by Borrower will be available to effect the Restoration thereof prior to the Initial Maturity Date based upon Administrative Agent’s reasonable estimate of the time necessary to perform such Restoration.
(c)      Endorsement to Title Insurance Policy . Solely with respect to the Future Advance (Capital Expenditures) and Future Advance (TI/LCs) (excluding Future Advances (TI/LCs) funded to pay Leasing Commissions, if required by Administrative A g ent, Borrower has delivered to Administrative Agent a “title continuation” reasonably acceptable to Administrative Agent dated as of the date of each Future Advance, which shall show the Mortgage as a first lien on the Property subject only to Permitted Encumbrances and, subject to subsection (l) below, a “pending disbursement” endorsement in a form reasonably acceptable to Administrative Agent, which endorsement shall increase the coverage of the Title Insurance Policy by the amount of the Future Advance through the pending disbursement clause.
(d)      Licenses and Permits : Solely with respect to the Future Advance (Capital Expenditures) and Future Advance (TI/LCs), Borrower shall have delivered to Administrative Agent evidence that (a) any and all building or other permits (if any) required for the continuous construction of the applicable portion of the Capital Expenditures Work or Tenant Improvement Work that is the subject of such Future Advance in accordance with all Legal Requirements have been obtained (and that any and all notices required by any Governmental Authority or by any applicable Legal Requirement to be filed prior to commencement of construction of the improvements contemplated by the Capital Expenditures Work or applicable Lease shall have been filed), and (b) all other material Governmental Approvals, third-party approvals and easements necessary for the construction and completion of the applicable portion of the Capital Expenditures Work or Tenant Improvement Work that is the subject of such Future Advance have been obtained and are in full force and effect.
(e)      Plans : Solely with respect to the Future Advance (Capital Expenditures) and Future Advance (TI/LCs) (excluding Future Advances (TI/LCs) funded to pay Leasing Commissions), Administrative Agent shall have received a complete set of any plans and

-58-


specifications that were prepared for any (A) Capital Expenditures Work and (B) Tenant Improvement Work in each case having a cost in excess of $1,000,000.00, and Administrative Agent shall have approved the same, such approval not to be unreasonably withheld, delayed or conditioned; provided, however, with respect to Tenant Improvement Work, Administrative Agent’s approval under this clause (e) shall be required only to the extent such Tenant Improvement Work is pursuant to a Major Lease which has not been previously approved by Administrative Agent and such approval is required under this Agreement.
(f)      Contracts : Solely with respect to the Future Advance (Capital Expenditures) and Future Advance (TI/LCs) (excluding Future Advances (TI/LCs) funded to pay Leasing Commissions), Borrower shall have delivered to Administrative Agent the general contract for any (A) Capital Expenditures Work and (B) any Tenant Improvement Work in each case having a cost in excess of $1,000,000.00, together with such other Contracts as may be reasonably requested by Administrative Agent, and Administrative Agent shall have approved the same, such approval not to be unreasonably withheld, delayed or conditioned; provided, however, with respect to Tenant Improvement Work, Administrative Agent’s approval under this clause (f) shall be required only to the extent such Tenant Improvement Work is pursuant to a Major Lease which has not been previously approved by Administrative Agent and such approval is required under this Agreement.
(g)      Budget : Solely with respect to the Future Advance (Capital Expenditures) and Future Advance (TI/LCs), (excluding Future Advances (TI/LCs) funded to pay Leasing Commissions), Borrower shall have delivered to Administrative Agent a budget for such Capital Expenditures Work and for such Tenant Improvement Work reflecting the anticipated cost for performing such Capital Expenditures Work and Tenant Improvement Work, and Administrative Agent shall have approved the same, such approval not to be unreasonably withheld, delayed or conditioned (each such budget, as approved by Administrative Agent, a “ Project Budget ”); provided that the initial Project Budget for the Capital Expenditures Work attached hereto as Schedule IX is hereby approved by Administrative Agent.
(h)      Inspection : Solely with respect to the Future Advance (Capital Expenditures) and Future Advance (TI/LCs) (excluding Future Advances (TI/LCs) funded to pay Leasing Commissions) which disbursement will exceed $100,000, in connection with any Tenant Improvement Work or Capital Expenditures Work, Administrative Agent, at its option, may require an inspection of the applicable portion of the Property at Borrower’s expense prior to making a Future Advance in order to verify completion of improvements constituting the applicable Capital Expenditures Work, Tenant Improvement Work or other TI/LC Costs, as the case may be.
(i)      Lease Approval; Capital Expenditures : Solely with respect to the Future Advance (Capital Expenditures) and Future Advance (TI/LCs), Administrative Agent shall have approved (i) the Lease that is the subject of a Future Advance (TI/LCs) to the extent that Administrative Agent’s approval is required under the terms of the Loan Documents and (ii) the TI/LC Costs that are the subject of a Future Advance, unless such TI/LC Costs are either (A) specifically set forth in such Lease approved (or deemed approved) by Administrative Agent pursuant to this Agreement or (B) not specifically set forth in a Lease approved (or deemed approved) by Administrative Agent pursuant to this Agreement, but are capped at a specific amount set forth

-59-


in such approved Lease or are in accordance with the Minimum Leasing Parameters. With respect to advances of the Future Advances (Capital Expenditures), Administrative Agent shall have approved the applicable Capital Expenditures Work or the Capital Expenditures Work shall be included in any Approved Annual Budget. Notwithstanding the foregoing, Administrative Agent shall not be obligated to make or cause to be made any Future Advance of Leasing Commissions until the executed Lease and the agreement pursuant to which any Leasing Commission is due are each delivered to Administrative Agent and such Lease (to the extent that Administrative Agent’s consent is required for such Lease under the terms of the Loan Documents) and such agreement are approved by Administrative Agent (to the extent that Administrative Agent’s approval is required for such agreement under the terms of the Loan Documents).
(j)      Tenant Allowances : Solely with respect to the Future Advance (TI/LCs), in connection with any Tenant Improvement Work performed or to be performed by the tenant under a Lease and Borrower’s obligation thereunder is to pay to such tenant an allowance (all as more specifically provided for in each Lease), Borrower shall (i) provide Administrative Agent with the Lease and identify the section of such Lease detailing the requirements and conditions to Borrower’s obligation to fund under such Lease (together with evidence reasonably satisfactory to Administrative Agent that each of the material conditions has been satisfied), (ii) to the extent Borrower has the right to receive or request the same under such Lease, Borrower shall deliver a budget for such Tenant Improvement Work to Administrative Agent prior to making the first request of a Future Advance with respect to the applicable Tenant Improvement Allowance, together with the plans and specifications for such work, (iii) certify in writing that the conditions have been satisfied and that Borrower is obligated to disburse the funds to the Tenant under such Lease, (iv) use commercially reasonable efforts to cause Tenant to perform all Tenant Improvement Work that is the subject of the Tenant Improvement Allowance in accordance with the Lease and (v) deliver to Administrative Agent, concurrently with the request for any Future Advance, all of the materials delivered by the applicable tenant to Borrower in connection with such Future Advance.
(k)      Final Payment : Solely with respect to the Future Advance (Capital Expenditures) and Future Advance (TI/LCs), in connection with a Future Advance for the final amounts to pay for Tenant Improvement Work or Capital Expenditures Work performed or to be performed by or on behalf of Borrower or by the Tenant with respect to any such Lease, Borrower shall provide Administrative Agent with (A) evidence of payment of all costs and expenses of completing the applicable work and a termination of any existing notices of commencement with respect to such work, (B) a copy of any and all applicable permits, if any, required by Legal Requirements, with respect to any such Tenant Improvements, so as to allow the Tenant to occupy the leased premises as contemplated under such Lease, and (C) an original estoppel certificate in form and substance reasonably acceptable to Administrative Agent executed by the applicable tenant under the Lease for which such request relates, stating that such tenant has accepted the subject tenant improvements and that there are no defaults known to the tenant under such Lease.
(l)      Serial Mortgage : As an accommodation to Borrower, Administrative Agent and the Lenders have agreed that Borrower shall be required to utilize so-called “serial mortgages” to secure any and all Future Advances.  Accordingly, the Mortgage executed on the date hereof shall include a mortgage for a principal amount equal to the Initial Advance plus a Future

-60-


Advance in the total amount of $45,900,000.00. If, at any time, the amount advanced by the Lenders pursuant to this Agreement together with any Future Advance then requested by Borrower shall exceed the aggregate principal amount of the Mortgage, together with each subsequent mortgage recorded pursuant to this Section 2.6.2(a) (each, a “ Serial Mortgage ”), as a condition precedent to the Lenders’ obligation to make any such Future Advance (a) Borrower must execute and deliver to Administrative Agent an additional Serial Mortgage for a principal amount selected by Borrower equal to at least $2,000,000 (or, if less, the then-unfunded aggregate Commitment of the Lenders); (b) in connection with the recordation of any Serial Mortgage, Administrative Agent shall have received a Title Insurance Policy with respect to such Serial Mortgage issued by the Title Company and dated as of the date of the Serial Mortgage, with a pending disbursements endorsement (if any Future Advances to be made following the date of such Serial Mortgage are to be secured by such Serial Mortgage), reinsurance and direct access agreements reasonably acceptable to Administrative Agent, which Title Insurance Policy shall (i) provide coverage in the amount of the Serial Mortgage then being recorded, (ii) insure Administrative Agent that the applicable Serial Mortgage creates a valid Lien on the Property, free and clear of all exceptions from coverage other than Permitted Encumbrances and standard exceptions and exclusions from coverage to the extent set forth in the Title Insurance Policy provided to Administrative Agent in connection with the closing of the Loan, and (iii) name Administrative Agent as the insured; (c) Administrative Agent shall have received evidence that all premiums in respect of the Title Policy and all mortgage recording taxes and filing fees in respect of the Serial Mortgage have been paid; (d) Administrative Agent shall have received an opinion of counsel to Borrower with respect to the Serial Mortgage as may be reasonably required by Administrative Agent, in form and substance satisfactory to Administrative Agent (it being acknowledged and agreed that the form delivered on the date hereof in connection with the closing of the Loan is reasonably satisfactory to Administrative Agent) and (e) Borrower shall pay all out-of-pocket costs and reasonable expenses incurred in connection with the execution of the foregoing documents and the preparation, execution and delivery of the documents contemplated in this subsection (l) .
(m)      Building Loan : Borrower, Administrative Agent and the Lenders acknowledge that Borrower desires to utilize a portion of the Future Advances to pay for “costs of the improvement” (as defined in the New York Lien Law) and that loans utilized to fund same must be formatted as a building loan (the “ Building Loan ”) to comply with the New York State Lien Law. In furtherance thereof, the parties hereto agree as follows:
(A)      The Lenders shall not be required make any Future Advances for “costs of the improvement” unless Borrower is in full compliance with the following provisions of this Section 2.6.2 .
(B)      On the date hereof, Administrative Agent, the Lenders and Borrower have executed and delivered (i) that certain Building Loan Agreement (as the same may be amended, restated, supplemented or otherwise modified from time to time, the “ Building Loan Agreement ”), (ii) that certain Building Loan Mortgage, Assignment of Leases and Rents and Security Agreement in the amount of $45,900,000.00 and (iii) that certain Building Loan Note in the amount of $45,900,000.00 (as such amount may be increased in accordance in accordance with the terms of the Building Loan Agreement, the “ Building Loan Amount ”). If at any

-61-


time amount of the Building Loan shall be increased, Borrower, Administrative Agent and/or the Lenders, as applicable, shall execute and deliver amendments or modifications to, or replacements of, the foregoing documents to reflect the increased Building Loan Amount (which shall include, without limitation, a Serial Mortgage securing no less than $2,000,000, together with (i) an amendment to this Agreement which reduces the Commitment and the amounts set forth in the definitions of each of Future Advance (Capital Expenditures), Future Advance (TI/LCs), Future Advance (Interest/Carry Shortfall) and Future Funding Amount by the corresponding amounts of such items in the Building Loan Agreement, (ii) an amendment and restatement of the Note to reduce the principal balance thereof by then-applicable Building Loan Amount, (iii) a building loan assignment of leases and rents in form and substance substantially similar to the Assignment of Leases Rents, (iv) an affidavit complying with Section 22 of the New York Lien Law which is reasonably acceptable to Borrower and Lender, (v) an affidavit under Section 255 of the New York Real Property Law regarding the building loan assignment of leases and rents, and (vi) any other documents reasonably required by Administrative Agent.
(C)      As a condition precedent to the Lenders’ execution and recordation of any of the documents described in clause (B) above and to the Lender’s obligations to make any advance under the Building Loan Agreement, Borrower shall deliver to Administrative Agent (i) opinions of counsel to Borrower with respect to the enforceability, authorization, creation and perfection of security interest and other similar matters of the documents referenced in clauses (B) in form and substance satisfactory to Administrative Agent (it being acknowledged and agreed that the form delivered on the date hereof in connection with the closing of the Loan is satisfactory to Administrative Agent), (ii) a Title Insurance Policy with respect to the applicable Serial Mortgage issued by the Title Company and dated as of the date of the Building Loan Agreement, with reinsurance, pending disbursement endorsement and direct access agreements reasonably acceptable to Administrative Agent, and each such Title Insurance Policy shall (A) provide coverage in the amount of the applicable Serial Mortgage then being recorded, (B) insure Administrative Agent that the Serial Mortgage creates a valid Lien on the Property, free and clear of all exceptions from coverage other than Permitted Encumbrances and standard exceptions and exclusions from coverage to the extent set forth in the Title Insurance Policy provided to Administrative Agent in connection with the closing of the Loan, and (C) name Administrative Agent as the insured, (iii) evidence that all premiums in respect of such Title Policy and mortgage recording taxes and filing fees in respect of the Serial Mortgage(s) have been paid, and (iv) Administrative Agent shall have received and approved a budget with respect to the costs to be paid by the applicable Future Advances, and (v) Borrower shall pay all reasonable out-of-pocket costs (including, without limitation, reasonable attorneys fees, recording fees and mortgage recording tax) actually incurred by Administrative Agent in connection with the execution of the foregoing documents and the preparation, execution and delivery of the documents contemplated in clause (B) above.

-62-


(D)      The Loan shall be cross-defaulted and cross-collateralized with the Building Loan and the other Building Loan Documents. An Event of Default under this Agreement or any of the other Loan Documents shall constitute an Event of Default under the Building Loan and an Event of Default under the Building Loan Agreement or any of the other Building Loan Documents shall constitute an Event of Default hereunder. Administrative Agent shall have the option to pursue its remedies in any combinations and against any or all of Administrative Agent’s security for the Loan and/or the Building Loan, whether successively, concurrently or otherwise.
(n)      Disbursement of Future Advances (Interest/Carry Shortfall) – Cash Trap Period: To the extent that a Cash Trap Period is continuing, Future Advances (Interest/Carry Shortfall) may be made to deposit into the Deposit Account to pay to Administrative Agent, for the benefit of Lenders the Monthly Debt Service Payment Amount and the Monthly Debt Service Payment Amount (as defined in the Building Loan Agreement) and other Reserve Funds required by Article 6 , which disbursement of such funds to be made in accordance with Section 6.9.1 . Borrower agrees and acknowledges that the insufficiency of the amount of the Future Advances (Interest/Carry Shortfall) or Borrower’s failure to meet the conditions to Future Advances as set forth in this Section 2.6.2 is not intended to, and shall therefore not, constitute a limitation on the obligation of Borrower to pay Debt Service or Carry Costs.
2.6.3      Construction . Borrower shall (a) construct and complete all Tenant Improvement Work within the time period and as required by, and in accordance with, the Leases, (b) construct all Capital Expenditures Work, (c) pay for or caused to be paid for and obtained all permits, licenses and approvals required by any Governmental Authority with respect to such Tenant Improvement Work and Capital Expenditures Work substantially in accordance with the schedule set forth in any Project Budget submitted to Administrative Agent in connection with any Future Advance, (d) cause all such Tenant Improvement Work and Capital Expenditures Work to be performed in a good and workmanlike manner, in compliance with all Legal Requirements in all material respects (including any and all applicable life safety laws, environmental laws and the ADA); (e) cause all Tenant Improvement Work and Capital Expenditures Work to be performed in a manner consistent with any plans and specifications therefor; (f) cause all Tenant Improvement Work and Capital Expenditures Work to be performed without regard to any deficiency of the amount of the proceeds of the Loan available and allocated for such Tenant Improvement Work and/or Capital Expenditures Work; and (g) cause all such Tenant Improvement Work and Capital Expenditures Work to be constructed, installed and completed as applicable, free and clear of all Liens (except for Permitted Encumbrances).
2.6.4      Funding Amount . The parties hereto acknowledge and agree that each Borrower’s Requisition (to Administrative Agent and Mezzanine Administrative Agent) shall be in the aggregate amount of the costs of Capital Expenditures Work and TI/LC Costs (collectively the “ Approved Costs ”) being paid by Borrower. The parties further acknowledge and agree as follows with respect to such Approved Costs: (i) the portion of Approved Costs each Lender is required to fund as a Future Advance pursuant to this Section 2.6 is such Lender’s Pro Rata Share of the Lender’s Percentage of such Approved Costs, (ii) the portion thereof that each Lender is required to fund as

-63-


a Future Advance (as defined in the Building Loan Agreement) pursuant to Section 2.6 thereof is such Lender’s Pro Rata Share of the Percentage of the Approved Costs and (iii) the portion thereof that Mezzanine Lender is required to fund as a Future Advance (as defined in the Mezzanine Loan Agreement) pursuant to Section 2.6 thereof is the Mezzanine Lender’s Percentage of the Approved Costs. For avoidance of doubt and by way of example only, in the event of a Borrower’s Requisition in which the Approved Costs are $1,000,000.00 and all conditions in this Agreement, the Building Loan Agreement and Mezzanine Loan Agreement have been satisfied, then (A) the maximum aggregate amount of the Future Advance to be made by Lenders hereunder (together with “Future Advance”, if any, under the Building Loan Agreement) shall be $750,000.00 and (B) the maximum amount of the Future Advance to be made by the Mezzanine Lender shall be $250,000.00. Borrower shall also be obligated to fund any cost overruns or other amount which needs to be expended in order to enable Borrower to satisfy its obligation under Section 2.6.3 hereof to complete construction of Capital Expenditures Work and Tenant Improvement Work. At any time and from time to time during the term of the Loan, with respect to the aggregate Capital Expenditures Work and Tenant Improvement Work, if Administrative Agent determines in its reasonable discretion that the estimated costs and expenses required to complete and pay for such aggregate Capital Expenditures Work and Tenant Improvement Work exceeds the sum of (a) the projected cost reflected on any approved budgets for such work and (b) the remaining unadvanced amounts available to be advanced under the Loan, the Building Loan and the Mezzanine Loan for the applicable costs, Administrative Agent shall have the right (but not the obligation) to notify Borrower in writing that, the cost of completing such Capital Expenditures Work and Tenant Improvement Work exceeds the approved budgets (the amount of any such deficiency, being herein referred to as the “ Shortfall ”). If Administrative Agent at any time shall deliver any such notice to Borrower, Borrower shall within ten (10) Business Days of delivery thereof, deposit with Administrative Agent, for the benefit of Lenders an amount equal to such Shortfall. For the avoidance of doubt, a Shortfall may exist whether or not Administrative Agent delivers a notice to Borrower; provided, that Borrower’s obligation to make a deposit with Administrative Agent is conditioned on Administrative Agent sending a notice pursuant to the terms of this Section. Administrative Agent shall have no obligation to make further Future Advances until the sums required to be deposited with Administrative Agent have been exhausted and, in any such case, the Loan is back “in balance.” Any such sums not used as provided shall be released to Borrower when and to the extent that Administrative Agent determines that a Shortfall does not exist, provided, however, that should an Event of Default occur, Administrative Agent, in its sole discretion, may apply such amounts either to the remaining costs and expenses to complete the Capital Expenditures Work or Tenant Improvement Work or to the immediate payment of any obligations of Borrower with respect to the Debt.
2.6.5      Quality of Work . No Future Advance or any portion thereof shall be made with respect to defective work or to any Person that has performed work that is defective and that has not been cured, as confirmed by the report of the Construction Consultant, if any, except to the extent that such Future Advance is for the remediation of the defective work. Additionally, Administrative Agent may disburse all or part of any Future Advance before the sum shall become due if Administrative Agent believes it advisable for Administrative Agent to do so, and all such Future Advances or parts thereof shall be deemed to have been made pursuant to this Agreement.

-64-


2.6.6      No Reliance . All conditions and requirements of this Agreement are for the sole benefit of Administrative Agent and Lenders and no other person or party (including, without limitation, the Construction Consultant, if any, any contractor and subcontractors and materialmen) shall have the right to rely on the satisfaction of such conditions and requirements by Borrower. Administrative Agent shall have the right, in its sole and absolute discretion, to waive any such condition or requirement and Borrower shall be authorized to rely on such waiver if and to the extent such waiver is in writing and signed by Administrative Agent.
2.6.7      Miscellaneous . The making of a Future Advance by Lenders shall not constitute Administrative Agent’s approval or acceptance of the construction theretofore completed or materials furnished with respect thereto. Administrative Agent’s inspection and approval of the workmanship and materials used in any Capital Expenditures Work or Tenant Improvement Work, shall impose no liability of any kind on Administrative Agent, the sole obligation of Administrative Agent as the result of such inspection and approval being to make the Future Advances if and to the extent, required by this Agreement.
Section 2.7      Method of Disbursement of Loan Proceeds .
2.7.1      Borrower’s Requisition to Be Submitted to Administrative Agent . At such time as Borrower shall desire to obtain a Future Advance (the date of such Future Advance being required to be a Business Day), Borrower shall complete, execute and deliver to Administrative Agent a Borrower’s Requisition in the form attached hereto as Exhibit A (“ Borrower’s Requisition ”), with respect to a Future Advance, shall be accompanied by:
(a)      with respect to any Future Advance for Tenant Improvement Work or Capital Expenditures Work, duly executed lien waivers, which may be interim lien waivers (for payments to be made from Future Advances for work which is not yet complete) and shall be final lien waivers (for all work which has been completed), as applicable, but in all events such lien waivers may be conditioned upon the payee’s receipt of payment in the applicable amount, from all contractors for all work performed, and all labor or material supplied prior to the date of the Future Advance;
(b)      copies of all invoices, paid receipts, contracts, subcontracts, purchase orders, bills of sale and similar documentation, as applicable, related to each Future Advance so that Administrative Agent can verify all costs set forth in any such Borrower’s Requisition;
(c)      evidence reasonably satisfactory to Administrative Agent that the full amount of the proceeds of the (i) then last preceding Future Advance, (ii) the last preceding Future Advance (as defined in the Building Loan Agreement) and (iii) the last preceding Future Advance (as defined in Mezzanine Loan Agreement) of the Mezzanine Loan have been paid out in full to the Person with respect to whom such Future Advance was made and otherwise in accordance with this Agreement; and
(d)      such other information, documentation and certification as Administrative Agent shall reasonably request, including, without limitation, any documents required pursuant to Section 2.6 above.

-65-


2.7.2      Procedure of Advances .
(a)      Each Borrower’s Requisition shall be submitted to Administrative Agent at least ten (10) Business Days prior to the date of the requested Future Advance (the “ Requested Advance Date ”). Lenders shall make the requested Future Advance on the Requested Advance Date so long as (i) all conditions to such Future Advance are satisfied or waived, (ii) all conditions to a concurrent Future Advance (as defined in the Building Loan Agreement) are satisfied or waived and (iii) subject to Section 2.6.2(a)(vi) , Mezzanine Lender makes its corresponding Future Advance (as defined in the Mezzanine Loan Agreement) on the Requested Advance Date in an amount equal to Mezzanine Lender’s Percentage of the costs to be paid, in part, with such Future Advance; provided that Borrower may revoke such Borrower’s Requisition at any time prior to the Requested Advance Date upon prior notice to Administrative Agent (subject to payment of any Breakage Costs and any out-of-pocket costs or expenses incurred by Administrative Agent or Lenders in connection with such revocation). Borrower shall be permitted to deliver a single Borrower’s Requisition for the Loan, the Building Loan and the Mezzanine Loan.
(b)      In no event shall any Lender be required to advance Future Advance funds in an amount less than its Pro Rata Share of the Minimum Advance Amount (except in respect of any final Future Advance).
2.7.3      Funds Advanced . Each Future Advance made directly to Borrower shall be made by Administrative Agent by wire transfer (or other transfer) to an account designated by Borrower. All proceeds of all Future Advances shall be used by Borrower only for the purposes for which such Future Advances were made or as otherwise may be permitted or required herein.
2.7.4      Direct Future Advances to Third Parties . At Administrative Agent’s option at any time that a monetary Default, material non-monetary Default which is reasonably likely to have a Material Adverse Effect or Event of Default has occurred and is continuing, Administrative Agent may make any or all Future Advances directly or through the Title Company to (i) any contractor, (ii) the Construction Consultant to pay its reasonable fees (which shall not exceed $2,000 per draw, together with any concurrent draw made under the Mezzanine Loan), if applicable, (iii) Administrative Agent’s counsel to pay the reasonable fees incurred by the same, (iv) to pay (x) any out-of-pocket expenses incurred by Administrative Agent which are reimbursable by Borrower under the Loan Documents (including, without limiting the generality of the foregoing, reasonable attorneys’ fees and expenses and other reasonable fees and expenses incurred by Administrative Agent), provided that Borrower shall theretofore have received written notice from Administrative Agent thereof, or (y) following the occurrence and during the continuance of an Event of Default, any other sums due to Administrative Agent under the Note, this Agreement or any of the other Loan Documents, all to the extent that the same are not paid by the respective due dates thereof, and (v) any other Person to whom Administrative Agent determines payment is due. Any portion of the Loan disbursed by Administrative Agent as set forth above shall be deemed disbursed as of the date on which the Person to whom such payment is made receives the same. The execution of this Agreement by Borrower shall, and hereby does, constitute an irrevocable authorization to disburse such Future Advances constituting part of the Loan directly to any such Person or through the Title Company to such Persons subject to and in accordance with this

-66-


Section 2.7.4 as amounts become due and payable to them hereunder and any portion of the Loan so disbursed by Administrative Agent shall be deemed disbursed as of the date on which the Person to whom payment is made receives the same. No further authorization from Borrower shall be necessary to warrant such payment directly of such Future Advances to such relevant Person in accordance herewith, and all such Future Advances so made shall satisfy pro tanto the obligations of Administrative Agent hereunder and shall be secured by the Mortgage and the other Loan Documents as fully as if made directly to Borrower.
2.7.5      Frequency of Advances . Administrative Agent shall have no obligation to make Future Advance (Capital Expenditures) or Future Advance (TI/LCs) more often than once in each calendar month. In addition, Administrative Agent may at any time, in Administrative Agent’s sole discretion and without request therefor from Borrower, make Future Advances to pay amounts that are due to Administrative Agent under, and in accordance with, the Loan Documents. In addition, Administrative Agent may at any time, in Administrative Agent’s sole discretion and without request therefore from Borrower, make Future Advance (Interest/Carry Shortfall) to pay amounts that are due to Administrative Agent under, and in accordance with, the Loan Documents; provided that Administrative Agent shall deliver a written notice (or other written evidence customarily used by Administrative Agent to evidence such advance) to Borrower concurrently with or promptly after such Future Advance.
2.7.6      Advances Do Not Constitute a Waiver . No Future Advance shall constitute a waiver of any of the conditions of Administrative Agent’s obligation to make further Future Advances, nor, in the event Borrower is unable to satisfy any such condition, shall any Future Advance have the effect of precluding Administrative Agent from thereafter declaring such inability to be an Event of Default hereunder.
2.7.7      Availability of Future Advances . Borrower shall have the right to request (which request shall be irrevocable), upon not less than thirty (30) days’ prior written notice and not more than ninety (90) days’ prior written notice to Administrative Agent, which notice (if any) shall be delivered with Borrower’s notice to extend the First Extension Maturity Date given in accordance with Section 2.3.2(i) , that Borrower’s right to request Future Advances of any unadvanced portion of the Future Funding Amount (the “ Unadvanced Amounts ”) be terminated, in which case, and upon approval from Administrative Agent, the Loan shall be permanently reduced by an amount equal to the all or a portion of the Unadvanced Amounts upon the commencement of the Second Extension Period (if any). Any portion of the Unadvanced Amounts that Borrower does not elect to terminate pursuant to this Section 2.7.7 shall be funded into the Future Funding Reserve Account upon the commencement of the Second Extension Period (if any) to be disbursed in accordance with the terms of Section 6.8 .
Section 2.8      Mitigation Obligations; Replacement of Lenders
2.8.1      Designation of a Different Lending Office . If any Lender requests compensation under Section 2.5 , or requires the Borrower to pay any Indemnified Taxes or additional amounts to any Lender or any Governmental Authority for the account of any Lender pursuant to Section 2.5 , then such Lender shall (at the request of the Borrower) use reasonable efforts to designate a different lending office for funding or booking its Loans hereunder or to assign its rights and

-67-


obligations hereunder to another of its offices, branches or affiliates, if, in the judgment of such Lender, such designation or assignment (i) would eliminate or reduce amounts payable pursuant to Section 2.5 in the future, and (ii) would not subject such Lender to any unreimbursed cost or expense and would not otherwise be disadvantageous to such Lender.
2.8.2      Replacement of Lenders . If any Lender requests compensation under Section 2.5 , or if the Borrower is required to pay any Indemnified Taxes or additional amounts to any Lender or any Governmental Authority for the account of any Lender pursuant to Section 2.5 and, in each case, such Lender has declined or is unable to designate a different lending office in accordance with Section 2.8.1 above, then the Borrower may, at its sole expense and effort, upon notice to such Lender, require such Lender to assign and delegate, without recourse, all of its interests, rights (other than its existing rights to payments pursuant to Section 2.5 ) and obligations under this Agreement and the related Loan Documents to an Eligible Assignee that shall assume such obligations (which assignee may be another Lender, if a Lender accepts such assignment). A Lender shall not be required to make any such assignment or delegation if, prior thereto, as a result of a waiver by such Lender or otherwise, the circumstances entitling the Borrower to require such assignment and delegation cease to apply. Notwithstanding the foregoing, in no event shall the terms of this Section 2.8.2 be applicable for so long as there is only one Lender.
III.      REPRESENTATIONS AND WARRANTIES
Section 3.1      Borrower Representations .
Borrower represents and warrants to Administrative Agent and Lenders as of the Closing Date, as of the date of each Future Advance and each other date on which the representations and warranties set forth herein are required to be remade that:
3.1.1      Organization .
(a)      Borrower and each SPC Party (if any) is duly formed, organized, validly existing and in good standing in its jurisdiction of formation with full power and authority to own its assets and conduct its business, and is duly qualified and in good standing in all jurisdictions in which the ownership or lease of the Property or the conduct of its business requires such qualification. Borrower has taken all necessary action to authorize the execution, delivery and performance of this Agreement and the other Loan Documents by it, and has the power and authority to execute, deliver and perform under this Agreement, the other Loan Documents and all the transactions contemplated hereby. Borrower does not own or use any assets other than its interests in the Property and personal property incidental to the business of owning, constructing, renovating, leasing, operating and selling the Property and activities incidental thereto; and Borrower acknowledges and agrees that it is Borrower’s understanding and intent that the Property constitutes “single asset real estate” for purposes of Section 362(d)(3) of the Bankruptcy Code.
(b)      Borrower’s exact legal name is correctly set forth in the first paragraph of this Agreement. Borrower is an organization of the type specified in the first paragraph of this Agreement. Borrower is incorporated or organized under the laws of the state specified in the first paragraph of this Agreement. Borrower’s principal place of business and chief executive office,

-68-


and the place where Borrower keeps its books and records, including recorded data of any kind or nature, regardless of the medium of recording, including software, writings, plans, specifications and schematics, has been for the preceding four (4) months (or, if less than four (4) months, the entire period of the existence of Borrower) and will continue to be the address of Borrower set forth in the first paragraph of this Agreement (unless Borrower notifies Administrative Agent in writing at least twenty (20) days prior to the date of such change).
3.1.2      Proceedings . This Agreement and the other Loan Documents have been duly authorized, executed and delivered by Borrower and, to Borrower’s knowledge, constitute a legal, valid and binding obligation of Borrower, enforceable against Borrower in accordance with their respective terms, except as such enforcement may be limited by bankruptcy, insolvency, reorganization, moratorium or other similar laws affecting the enforcement of creditors’ rights generally, and by general principles of equity (regardless of whether such enforceability is considered in a proceeding at law or in equity). The Loan Documents are not subject to any right of rescission, set-off, counterclaim or defense by any Borrower Party including the defense of usury, nor would the operation of any of the terms of the Loan Documents, or the exercise of any right thereunder, render the Loan Documents unenforceable, and no Borrower Party has asserted any right of rescission, set-off, counterclaim or defense with respect thereto.
3.1.3      No Conflicts . The execution and delivery of this Agreement and the other Loan Documents by Borrower and the performance of its obligations hereunder and thereunder will not conflict with any provision of any law or regulation to which Borrower is subject, or materially conflict with, result in a breach of, or constitute a default under, any of the terms, conditions or provisions of any of Borrower’s organizational documents or any indenture, mortgage, deed of trust, loan agreement, partnership agreement, management agreement or other agreement or instrument to which Borrower is a party or by which Borrower’s is bound, or any order or decree applicable to Borrower, or result in the creation or imposition of any lien, charge or encumbrance on any of Borrower’s assets or property (other than Permitted Encumbrances or otherwise pursuant to the Loan Documents), nor will such action result in any violation of the provisions of any statute or any order, rule or regulation of any Governmental Authority having jurisdiction over Borrower or any of Borrower’s properties or assets, and any consent, approval, authorization, order, registration or qualification of or with any court or any such Governmental Authority required for the execution, delivery and performance by Borrower of this Agreement or any other Loan Documents has been obtained and is in full force and effect.
3.1.4      Litigation . There is no action, suit, proceeding or investigation pending or, to Borrower’s knowledge, threatened (in writing) against Borrower in any court or by or before any other Governmental Authority, that is reasonably likely to result in a Material Adverse Effect. There is no action, suit, proceeding or investigation pending or, to Borrower’s knowledge, threatened against Guarantor or any other Restricted Party, in any court or by or before any other Governmental Authority, that is reasonably likely to result in a Material Adverse Effect.
3.1.5      Agreements . Borrower is not a party to any agreement or instrument or subject to any restriction which is reasonably likely to have a Material Adverse Effect. Borrower is not in default with respect to any order or decree of any court or any order, regulation or demand

-69-


of any Governmental Authority, which default is reasonably likely to result in a Material Adverse Effect. Borrower is not in default in any material respect in the performance, observance or fulfillment of any of the obligations, covenants or conditions contained in any Permitted Encumbrance or any other agreement or instrument to which it is a party or by which it or the Property is bound. Borrower has no material financial obligation (contingent or otherwise) under any indenture, mortgage, deed of trust, loan agreement or other agreement or instrument to which Borrower is a party or by which Borrower or the Property is otherwise bound, other than (a) obligations incurred in the ordinary course of the operation of the Property and (b) obligations under the Loan Documents.
3.1.6      Consents . No consent, approval, authorization or order of any court or Governmental Authority is required for the execution, delivery and performance by Borrower of, or compliance by Borrower with, this Agreement or the other Loan Documents or the consummation of the transactions contemplated hereby, other than those which have been obtained by Borrower.
3.1.7      Title . Borrower has good, marketable and insurable fee simple title to the real property comprising part of the Property and good title to the balance of the Property owned by it, free and clear of all Liens whatsoever, in each case except the Permitted Encumbrances. The Permitted Encumbrances in the aggregate do not, and will not, (i) materially adversely affect (a) the operation or use of the Property, or (b) Borrower’s ability to pay its Obligations in a timely manner, or (ii) materially interfere with the benefits of the security intended to be provided by this Agreement and the other Loan Documents. The Mortgage, when properly recorded in the appropriate records, together with any Uniform Commercial Code financing statements required to be filed in connection therewith, will create (i) a valid, first priority, perfected lien on the Property, subject only to Permitted Encumbrances and (ii) perfected security interests in and to, and perfected collateral assignments of, all personalty located on the Property (including the Leases), all in accordance with the terms thereof, in each case subject only to any Permitted Encumbrances. The filing of a Uniform Commercial Code financing statement covering all personalty of Borrower with the Delaware Secretary of State will create perfected security interests in and to, and perfected collateral assignments of, all personalty, all in accordance with the terms thereof, in each case subject only to any applicable Permitted Encumbrances and such other Liens as are expressly permitted pursuant to the Loan Documents. There are no mechanics’, materialmen’s or other similar liens or claims which have been filed for work, labor or materials affecting the Property which are or may be liens prior to, or equal or coordinate with, the lien of the Mortgage, in each case other than Permitted Encumbrances. None of the Permitted Encumbrances, individually or in the aggregate, materially interfere with the benefits of the security intended to be provided by the Mortgage and this Agreement, materially and adversely affect the value of the Property, materially impair the use or operations of the Property or materially impair Borrower’s ability to pay its obligations in a timely manner.
3.1.8      No Plan Assets . As of the date hereof and throughout the Term of the Loan, (a) Borrower is not and will not be an “employee benefit plan,” as defined in Section 3(3) of ERISA, subject to Title I of ERISA, or (b) none of the assets of Borrower constitutes or will constitute “plan assets” of one or more such plans within the meaning of 29 C.F.R. Section 2510.3-101, as modified by Section 3(42) of ERISA, (c) Borrower is not and will not be a “governmental plan”

-70-


within the meaning of Section 3(32) of ERISA, and (d) transactions by or with Borrower are not and will not be subject to any state statute regulating investments of, or fiduciary obligations with respect to, governmental plans. As of the date hereof, neither Borrower nor any ERISA Affiliate maintains, sponsors or has any obligation to contribute to a “pension plan” (within the meaning of Section 3(2) of ERISA) that is subject to Title IV of ERISA. Borrower’s representations and covenants in this Section 3.1.8 and in Section 4.2.10 below are based on the assumption that no portion of the assets used by any Lender in connection with the transactions contemplated under this Agreement and the other Loan Documents constitutes assets of a (i) “benefit plan investor” within the meaning of Section 3(42) of ERISA, unless each such Lender relied on an available prohibited transaction exemption, all of the conditions of which are and at all times remain satisfied by such Lender or (ii) governmental plan which is subject to any provision which is similar to the prohibited transaction provisions of Title I of ERISA or Section 4975 of the Code (“ Applicable Similar Law ”), unless the acquisition and holding of the Loan or any interest therein does not and will not at any time give rise to a violation of any such Applicable Similar Law.
3.1.9      Compliance . To Borrower’s knowledge and except as disclosed in the PCR or Zoning Report, Borrower and the Property and the use thereof comply in all material respects with all applicable Legal Requirements, including, without limitation, parking, building, zoning and land use laws, ordinances, regulations, and codes. To Borrower’s knowledge, Borrower is not in default or violation of any order, writ, injunction, decree or demand of any Governmental Authority, the violation of which is reasonably likely to result in a Material Adverse Effect. Borrower has not committed any act which may give any Governmental Authority the right to cause Borrower to forfeit the Property or any part thereof or any monies paid in performance of Borrower’s obligations under any of the Loan Documents. The Property is used exclusively for office and retail use and other appurtenant and related uses. Except as set forth in the Zoning Report, in the event that all or any part of the Improvements are destroyed or damaged, said Improvements can be legally reconstructed to their condition prior to such damage or destruction and thereafter exist for the same used without violating any zoning or other ordinances applicable thereto and without the necessity of obtaining any variances or special permits.
3.1.10      Financial Information . All financial reports, documents, instruments, information and financial data, including, without limitation, the statements of cash flow and income and operating expense and evidence of equity, that have been delivered to Administrative Agent in connection with the Loan (i) are true, complete and correct in all material respects, (ii) accurately represent in all material respects the financial condition of Borrower, Guarantor and the Property, as applicable, as of the date of such reports, (iii) to the extent prepared or audited by an independent certified public accounting firm, in the case of financial data and reporting, have been prepared in accordance with Accounting Principles or another acceptable tax based accounting method, throughout the periods covered, except as disclosed therein, and (iv) when taken as a whole, are accurate, correct and sufficiently complete in all material respects to give Administrative Agent true and accurate knowledge of their subject matter and do not contain any material misrepresentation or omission. Borrower does not have any contingent liabilities, liabilities for taxes, unusual forward or long-term commitments or unrealized or anticipated losses from any unfavorable commitments that are known to Borrower and reasonably likely to have a Material Adverse Effect. Since the date of the financial statements delivered to Administrative Agent, there has been no material adverse

-71-


change in the financial condition, operations or business of Borrower or the Property from that set forth in said financial statements.
3.1.11      Condemnation . No Condemnation or other proceeding related thereto has been commenced or, to Borrower’s knowledge, is contemplated with respect to all or any portion of the Property or for the relocation of roadways providing access to the Property.
3.1.12      Utilities and Public Access .
(a)      To Borrower’s knowledge, all easements, cross or reciprocal easements, licenses, air rights and rights-of-way or other similar property interests (collectively, “ Easements ”), if any, necessary for the construction, renovation, completion and full utilization of the Improvements for their intended purposes have been obtained, are described in the Title Insurance Policy and are in full force and effect without default thereunder. The Property has rights of access to public ways (including all required curb cuts). The Property is served by water, sewer, sanitary sewer storm drain facilities and all other public utilities adequate for the use, construction, operation, maintenance and sale of the Improvements as contemplated hereby. All roads and streets necessary for the full utilization of the Improvements for its intended purpose have been completed and dedicated to public use and accepted by such Governmental Authority allowing for the use and operation of, and access to the Improvements. No parking is required to comply with the Leases or applicable Legal Requirements.
(b)      All public utilities necessary for the full use and enjoyment of the Property as intended are located either in the public right‑of‑way abutting the Property (which are connected so as to serve the Property without passing over other property) or in recorded easements serving the Property and such easements are set forth in and insured by the applicable Title Insurance Policy.
3.1.13      Separate Lots . The Property is comprised of one (1) or more parcels which constitute separate tax lots and do not constitute a portion of any other tax lot not a part of the Property.
3.1.14      Assessments . To Borrower’s knowledge, there are no pending or proposed special or other assessments for public improvements or otherwise affecting the Property, nor are there any contemplated improvements to the Property that may result in such special or other assessments.
3.1.15      Enforceability . Borrower has not asserted any right of rescission, set off, counterclaim or defense with respect to the Loan Documents.
3.1.16      Assignment of Leases . The Assignment of Leases creates a valid assignment of, or a valid security interest in, certain rights under the Leases, subject only to a license granted to Borrower to exercise certain rights and to perform certain obligations of the lessor under the Leases, including the right to operate the Property. No Person other than Borrower and Administrative Agent has any interest in or assignment of Borrower’s interest in the Leases or any portion of the Rents due and payable or to become due and payable thereunder.

-72-


3.1.17      Insurance . Borrower has obtained and has delivered to Administrative Agent original or certified copies of all of the Policies or ACORD certificates, with all premiums prepaid thereunder, reflecting the insurance coverages, amounts and other requirements set forth in this Agreement. There are no claims currently outstanding that have been made under any of the Policies, and to Borrower’s knowledge, no Person, including Borrower, has done, by act or omission, anything which would materially impair the coverage of any of the Policies.
3.1.18      Licenses . All certifications, permits, licenses and approvals, including, without limitation, certificates of completion and occupancy permits required of Borrower by any Governmental Authority for the legal use, occupancy and operation of the Property in the manner in which the Property is currently being used, occupied and operated (“ Licenses ”) have been obtained and are in full force and effect.
3.1.19      Flood Zone . None of the Improvements on the Property are located in an area designated or identified as a special flood hazard area by the Federal Emergency Management Agency, the Secretary of Housing and Urban Development, or by such other official as shall from time to time be authorized by federal or state law to make such designation pursuant to the National Flood Insurance Act of 1968, as such act may from time to time be amended, or pursuant to any other national, state, county or city program of flood control, or, if so located the flood insurance required pursuant to Section 5.1.1(a) hereof is in full force and effect with respect to the Property.
3.1.20      Physical Condition . Except as may be disclosed in the PCR, the Property, including, without limitation, all buildings, improvements, parking facilities, sidewalks, storm drainage systems, roofs, plumbing systems, HVAC systems, fire protection systems, electrical systems, equipment, elevators, exterior sidings and doors, landscaping, irrigation systems located thereon and all structural components thereof, are in good condition, order and repair in all material respects; to Borrower’s knowledge, there exists no structural or other material defects or damages in the Property, whether latent or otherwise, and Borrower has not received written notice from any insurance company or bonding company of any defects or inadequacies in the Property, or any part thereof, which would adversely affect the insurability of the same or cause the imposition of extraordinary premiums or charges thereon or of any termination or threatened termination of any policy of insurance or bond.
3.1.21      Boundaries/Survey . Except as set forth in the Survey, all of the improvements which were included in determining the appraised value of the Property lie wholly within the boundaries and building restriction lines of the Property, and no improvements on adjoining properties encroach upon the Property, and no Easements or other encumbrances affecting the Property encroach upon any of the Improvements, so as to materially adversely affect the value or marketability of the Property, except those easements or other encumbrances with respect to which the Title Insurance Policy insures against any losses resulting therefrom. To Borrower’s knowledge, the Survey for the Property delivered to Administrative Agent in connection with this Agreement is accurate and complete in all material respects.
3.1.22      Leases . The rent roll attached hereto as Schedule II (the “ Rent Roll ”) is true, complete and correct in all material respects and the Property is not subject to any Leases other than the Leases described on the Rent Roll. Borrower is the owner and lessor of landlord’s interest

-73-


in the Leases. No Person has any possessory interest in the Property or right to occupy the same except under and pursuant to the provisions of the Leases described on the Rent Roll, arrearage reports and Tenant estoppels delivered to and approved by Administrative Agent. Except as set forth on the Rent Roll, and to Borrower’s knowledge: (i) the Leases are in full force and effect and there are no defaults thereunder by either party, (ii) Borrower has delivered to Administrative Agent all the copies of the Leases in Borrower’s possession, (iii) no Rent (other than security deposits) has been paid more than one (1) month in advance of its due date, (iv)  except as disclosed on Schedule III attached hereto all work to be performed by Borrower under each Lease has been performed as required and has been accepted by the applicable Tenant, (v) any payments, free rent, partial rent, rebate of rent or other payments, credits, allowances or abatements required to be given by Borrower to any Tenant has already been received by such Tenant or are to be received by the Tenant after the date hereof pursuant to the express terms of the applicable Lease, (vi) except as set forth in the Rent Roll, the Tenants under the Leases have accepted possession of and are in occupancy of all of their respective demised Property and have commenced the payment of full, unabated rent under the Leases, (vii) Borrower has delivered to Administrative Agent a true, correct and complete list of all security deposits made by Tenants at the Property which have not been applied (including accrued interest thereon), all of which are held by Borrower in accordance with the terms of the applicable Lease and applicable Legal Requirements, (viii) no Tenant under any Lease (or any sublease) is a Borrower Related Party, (ix) the Tenants under Leases are open for business and paying full, unabated rent and no Tenant has requested to discontinue its business at its demised premises, (x) other than pursuant to the Leasing Agreement, there are no brokerage fees or commissions due and payable in connection with the leasing of space at the Property, and no such fees or commissions will become due and payable in the future in connection with the Leases, including by reason of any extension of such Lease or expansion of the space leased thereunder, and (xi)  no Tenant has or is asserting any claim of offset or other defense, counterclaim or other claim in respect of such Tenant’s obligations or the lessor’s rights under any Lease. No Tenant under any Lease has a right or option pursuant to such Lease or otherwise to purchase all or any part of the leased premises or the building of which the leased premises are a part. Borrower is sole owner of the lessor’s entire right, title and interest in and to the Leases.
3.1.23      Filing and Recording Taxes . All transfer taxes, deed stamps, intangible taxes or other amounts in the nature of transfer taxes required to be paid under applicable Legal Requirements in connection with the transfer of the Property to Borrower have been paid or are being paid simultaneously herewith. All mortgage, mortgage recording, stamp, intangible or other similar tax required to be paid under applicable Legal Requirements in connection with the execution, delivery, recordation, filing, registration, perfection or enforcement of any of the Loan Documents, including, without limitation, the Mortgage, have been paid or are being paid simultaneously herewith. All taxes and governmental assessments due and owing in respect of the Property have been paid, or an escrow of funds in an amount sufficient to cover such payments has been established hereunder or are insured against by the title insurance policy to be issued in connection with the Mortgage or, after the Closing Date, are being contested in accordance with this Agreement.
3.1.24      Special Purpose Bankruptcy Remote Entity . Borrower hereby represents and warrants that as of the formation of Borrower and each SPC Party through and

-74-


including the Closing Date that neither Borrower nor any SPC Party has taken any of the actions prohibited (or failed to take any actions required to be taken) pursuant to the terms and provisions of this Section 3.1.24 . Borrower hereby represents and warrants to, and covenants with, Administrative Agent that as of the date hereof and until such time as the Debt shall be paid in full:
(a)      Borrower does not own and will not own any asset or property other than (i) the Property, and (ii) incidental personal property necessary or desirable for the ownership operation, maintenance, development, repair, leasing, alteration, equipping, financing, management and disposal of the Property.
(b)      Borrower has not and will not engage in any business other than the acquisition, ownership, holding, leasing, management, operation, development and improvement of the Property and Borrower has and will conduct and operate its business as presently conducted and operated.
(c)      Borrower has not and will not enter into any contract or agreement with any Affiliate of Borrower, any constituent party of Borrower or any Affiliate of any constituent party, except 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 other than any such party
(d)      Except for prior financings, which financings will be repaid in full on or prior to the date hereof, Borrower has not incurred and will not incur any Indebtedness, secured or unsecured, direct or contingent (including guaranteeing any obligation), other than Permitted Indebtedness.
(e)      Borrower has not made and will not make any loans or advances to any third party (including any Affiliate or constituent party), and has not and shall not acquire obligations or securities of its Affiliates.
(f)      Borrower has been, is and will intend to remain solvent and Borrower has (either directly or through Manager) paid and will pay its debts and liabilities (including, as applicable, shared personnel and overhead expenses) from its assets as the same shall become due; provided, that, in each such case, there exists and is made available to Borrower sufficient cash flow from the Property to do so and that the foregoing shall not require Guarantor or any other partners, members or other owners of Borrower to make any capital contributions to Borrower.
(g)      Borrower has done or caused to be done and will do or cause to be done all things necessary to observe material organizational formalities and preserve its existence, and Borrower has not, will not, nor will Borrower permit any SPC Party to amend, modify or otherwise change the partnership certificate, partnership agreement, articles of incorporation and bylaws, operating agreement, trust or other organizational documents of Borrower or such SPC Party without the prior consent of Administrative Agent (not to be unreasonably withheld, conditioned or delayed, provided the new borrowing entity is a limited liability company (whether single-member or multi-member) or a limited partnership, in either case formed under Delaware law which meets Administrative Agent’s requirements then applicable to such entities) in any manner that (i) violates the single purpose covenants set forth in this Section 3.1.24 , or (ii) amends, modifies or otherwise

-75-


changes any provision thereof that (A) by its terms cannot be modified at any time when the Loan is outstanding, (B) by its terms cannot be modified without Administrative Agent’s consent, or (C) is otherwise prohibited from being amended or modified pursuant to this Agreement or the other Loan Documents.
(h)      Borrower has maintained and will maintain all of its books, records, financial statements and bank accounts separate from those of its Affiliates and any constituent party. Borrower’s assets have not and will not be listed as assets on the financial statement of any other Person; provided, however, that Borrower’s assets may be included in a consolidated financial statement of its Affiliates provided that (i) appropriate notation shall be made on such consolidated financial statements to indicate the separateness of Borrower and such Affiliates and to indicate that Borrower’s assets and credit are not available to satisfy the debts and other obligations of such Affiliates or any other Person and (ii) such assets shall be listed on Borrower’s own separate balance sheet. Borrower has filed and will file its own tax returns except to the extent Borrower is treated as a “disregarded entity” for tax purposes and is not required to file tax returns under applicable law.
(i)      Borrower has been and will be, and at all times has and will hold itself out to the public as, a legal entity separate and distinct from any other entity (including any Affiliate of Borrower or any constituent party of Borrower), has and shall correct any known misunderstanding regarding its status as a separate entity, has and shall conduct business in its own name, has not and shall not identify itself or any of its Affiliates as a division or part of the other and has and shall maintain and utilize separate stationery, invoices and checks bearing its own name, except in each case for business conducted on behalf of Borrower by Manager pursuant to the terms and provisions of the Management Agreement, which agreement is on commercially-reasonable terms, so long as Manager holds itself out as an agent or representative of Borrower.
(j)      Borrower has maintained and will intend to maintain adequate capital for the normal obligations reasonably foreseeable in a business of its size and character and in light of its contemplated business operations (provided that this clause (j) shall not require any partners, members or other owners of Borrower to make any capital contributions to Borrower) and shall not intentionally make any distribution which shall cause it to have less than adequate capital.
(k)      Neither Borrower nor any constituent party has or will seek or effect the liquidation, dissolution, winding up, liquidation, consolidation or merger, in whole or in part, of Borrower.
(l)      Borrower has not and will not commingle the funds and other assets of Borrower with those of any Affiliate or constituent party or any other Person, and has and will hold all of its assets in its own name.
(m)      Borrower has and will maintain its assets in such a manner that it will not be costly or difficult to segregate, ascertain or identify its individual assets from those of any Affiliate or constituent party or any other Person.

-76-


(n)      Borrower has not and will not guarantee or become obligated for the debts of any other Person and has not and will not hold itself out to be responsible for or have its credit available to satisfy the debts or obligations of any other Person.
(o)      Borrower shall conduct its business so that the assumptions made with respect to Borrower in the Non-Consolidation Opinion and any New Non-Consolidation Opinion shall be true and correct in all respects. In connection with the foregoing, Borrower hereby covenants and agrees that it will comply in all respects with or cause the compliance in all respects with, (i) all of the facts and assumptions relating to the conduct of Borrower set forth in the Non-Consolidation Opinion, and any New Non-Consolidation Opinion, (ii) all the representations, warranties and covenants in this Section 3.1.24 , and (iii) all the organizational documents of Borrower and any SPC Party.
(p)      Other than Manager, Borrower has not permitted, and will not permit any Affiliate or constituent party independent access to its bank accounts.
(q)      Borrower has paid and shall intend to pay from its own funds its own liabilities and expenses, including all Property-related expenses and the salaries of its own employees (if any) from its own funds and has maintained and shall maintain a sufficient number of employees (if any) in light of its contemplated business operations, with it being understood that nothing in this Section 3.1.24(q) shall limit the right of Borrower to share overhead expenses with Affiliates in compliance with Section 3.1.24(t) .
(r)      Borrower has compensated and shall compensate each of its consultants and agents from its funds for services provided to it and has paid and shall pay from and to the extent of its own assets all obligations of any kind incurred.
(s)      Borrower will not, without the unanimous consent of all of its directors or members (including all Independent Directors) take any Material Action.
(t)      Borrower will allocate fairly and reasonably any overhead expenses that are shared with any Affiliate, including shared office space and for services performed by any employee of an Affiliate.
(u)      Other than pursuant to the Loan Documents, Borrower will not pledge its assets to secure the obligations of any other Person.
(v)      Borrower will have no obligation to indemnify its officers, directors, members or partners, as the case may be, unless such obligation is fully subordinated to the Debt and will not constitute a claim against it if cash flow in excess of the amount required to pay the Debt is insufficient to pay such obligation.
(w)      Borrower does not, and will not have any of its obligations guaranteed by any Affiliate and does not and will not permit any Affiliate to hold such Affiliate’s credit out as available to pay the debts of Borrower or pay the debts of Borrower, other than with respect to the Guaranties.

-77-


(x)      Borrower shall not buy or hold evidence of indebtedness issued by any other Person other than Permitted Indebtedness.
(y)      Borrower shall not form, acquire or hold any subsidiary (whether corporate, partnership, limited liability company or other) or own any equity interest in any other entity.
(z)      If Borrower shall have its own board of directors, Borrower shall cause its board of directors to meet at least annually or act pursuant to written consent and keep minutes of such meetings and actions and observe all other limited liability company formalities;
(aa)      Borrower shall cause the directors, officers, agents and other representatives of the Borrower to act at all times with respect to Borrower consistently and in furtherance of the foregoing and in the best interests of the Borrower.
(bb)      If Borrower is a limited partnership or a limited liability company other than a Single Member Delaware LLC, each SPC Party shall comply in all material respects with the terms and provisions of this Section 3.1.24 . Each SPC Party shall either be (i) a Single Member Delaware LLC in accordance with the terms and provisions of clause (cc) below or (ii) a corporation (A) whose sole asset is its interest in Borrower, (B) which has not been and shall not be permitted to engage in any business or activity other than owning an interest in Borrower, (C) which has not been and shall not be permitted to incur any debt, secured or unsecured, direct or contingent (including guaranteeing any obligation), and (D) which has and will at all times own at least a one half of one percent (0.5%) direct equity ownership interest in Borrower. Each SPC Party will at all times comply, and will cause Borrower to comply, with each of the representations, warranties, and covenants contained in this Section 3.1.24 (to the extent applicable) as if such representation, warranty or covenant was made directly by such SPC Party. Upon the withdrawal or the disassociation of an SPC Party from Borrower, to the extent permitted pursuant to the terms and provisions of this Agreement, Borrower shall immediately appoint a new SPC Party whose articles of incorporation or organization are substantially similar to those of such SPC Party and deliver a New Non-Consolidation Opinion with respect to the new SPC Party and its equity owners.
(cc)      In the event Borrower or an SPC Party is a Single Member Delaware LLC, its limited liability company agreement (the “ LLC Agreement ”) shall provide that:
(i)      upon the occurrence of any event that causes the last remaining member (“ Member ”) of Borrower or the SPC Party, as applicable, to cease to be the member of Borrower or the SPC Party, as applicable, (other than (A) upon an assignment by Member of all of its limited liability company interest in Borrower or the SPC Party, as applicable, and the admission of the transferee in accordance with the Loan Documents and the LLC Agreement, or (B) the resignation of Member and the admission of an additional member of Borrower or the SPC Party, as applicable, in accordance with the terms of the Loan Documents and the LLC Agreement), any person acting as Independent Director of Borrower or the SPC Party, as applicable, shall, without any action of any other Person and simultaneously with the Member ceasing to be the member of Borrower or the SPC Party, as applicable, automatically be admitted to Borrower or the SPC Party, as applicable, as a

-78-


member with a 0% economic interest (“ Special Member ”) and shall continue the existence of Borrower or the SPC Party, as applicable, without dissolution;
(ii)      Special Member may not resign from Borrower or the SPC Party, as applicable, or transfer its rights as Special Member unless (A) a successor Special Member has been admitted to Borrower or the SPC Party, as applicable, as a Special Member in accordance with requirements of Delaware law, as applicable, and (B) after giving effect to such resignation or transfer, there remains at least two (2) Independent Directors of Borrower or the SPC Party, as applicable, in accordance with Section 3.1.24(dd) below;
(iii)      Special Member shall automatically cease to be a member of Borrower or the SPC Party, as applicable, upon the admission to Borrower or the SPC Party, as applicable, of the first substitute member;
(iv)      Special Member shall be a member of Borrower or the SPC Party, as applicable, that has no interest in the profits, losses and capital of Borrower or the SPC Party, as applicable, and has no right to receive any distributions of the assets of Borrower or the SPC Party, as applicable;
(v)      pursuant to the applicable provisions of the limited liability company act of the State of Delaware (the “ Act ”), Special Member shall not be required to make any capital contributions to Borrower or the SPC Party, as applicable, and shall not receive a limited liability company interest in Borrower or the SPC Party, as applicable;
(vi)      Special Member, in its capacity as Special Member, may not bind Borrower or the SPC Party, as applicable;
(vii)      except as required by any mandatory provision of the Act, Special Member, in its capacity as Special Member, shall have no right to vote on, approve or otherwise consent to any action by, or matter relating to, Borrower or the SPC Party, as applicable, including, without limitation, the merger, consolidation or conversion of Borrower or the SPC Party, as applicable; provided, however, such prohibition shall not limit the obligations of Special Member, in its capacity as Independent Director, to vote on such matters required by the Loan Documents or the LLC Agreement;
(viii)      upon the occurrence of any event that causes the Member to cease to be a member of Borrower or the SPC Party, as applicable, to the fullest extent permitted by law, the personal representative of Member shall, within ninety (90) days after the occurrence of the event that terminated the continued membership of Member in Borrower or the SPC Party (as applicable) agree in writing (A) to continue Borrower or the SPC Party (as applicable) and (B) to the admission of the personal representative or its nominee or designee, as the case may be, as a substitute member of Borrower or the SPC Party (as applicable) effective as of the occurrence of the event that terminated the continued membership of Member in Borrower or the SPC Party, as applicable;

-79-


(ix)      any action initiated by or brought against Member or Special Member under the Bankruptcy Code or any other Federal or state bankruptcy or insolvency law shall not cause Member or Special Member to cease to be a member of Borrower or the SPC Party, as applicable, and upon the occurrence of such an event, the business of Borrower or the SPC Party (as applicable) shall continue without dissolution; and
(x)      each of Member and Special Member waives any right it might have to agree in writing to dissolve Borrower or the SPC Party, as applicable, upon the occurrence of any action initiated by or brought against Member or Special Member under the Bankruptcy Code or any other Federal or state bankruptcy or insolvency law, or the occurrence of an event that causes Member or Special Member to cease to be a member of Borrower or the SPC Party, as applicable.
In order to implement the admission to Borrower or an SPC Party, as applicable, of Special Member, Special Member shall execute a counterpart to the LLC Agreement. Prior to its admission to Borrower or the SPC Party, as applicable, as Special Member, Special Member shall not be a member of Borrower or the SPC Party, as applicable, but Special Member may serve as an Independent Director of Borrower or the SPC Party, as applicable.
(dd)      The organizational documents of Borrower (to the extent Borrower is a corporation or a Single Member Delaware LLC) or each SPC Party (if Borrower is a limited partnership or a limited liability company other than a Single Member Delaware LLC) shall provide that at all times there shall be at least two (2) duly appointed independent managers of such entity (each, an “ Independent Director ”) who shall (i) not have been at the time of each such individual’s initial appointment, and shall not have been at any time during the preceding five years, and shall not be at any time while serving as Independent Director, either (A) a shareholder (or other equity owner) of, or an officer, director, manager (other than in its capacity as Independent Director), partner, member or employee of, Borrower or any of its respective shareholders, partners, members, subsidiaries or affiliates, (B) a customer of, or supplier to, or other Person who derives any of its purchases or revenues from its activities with, Borrower or any of its respective shareholders, partners, members, subsidiaries or affiliates (other than as an Approved Independent Director Provider), (C) a Person who Controls or is under common Control with any such shareholder, officer, director, partner, member, employee supplier, customer or other Person (other than as an Approved Independent Director Provider), or (D) a member of the immediate family of any such shareholder, officer, director, partner, member, employee, supplier, customer or other Person, (ii) be employed by, in good standing with and engaged by Borrower in connection with, in each case, an Approved Independent Director Provider, and (iii) have had at least three (3) years prior experience as an Independent Director employed and in good standing with an Approved Independent Director Provider.
(ee)      The organizational documents of Borrower (to the extent Borrower is a corporation or a Single Member Delaware LLC) or each SPC Party (if Borrower is a limited partnership or a limited liability company other than a Single Member Delaware LLC) shall further provide that:

-80-


(i) the board of directors or managers of Borrower or the SPC Party, as applicable, and the constituent members of such entities (the “ Constituent Members ”) shall not take any Material Action without the unanimous vote of the entire board of directors or managers, as applicable, and the Constituent Members including the two (2) Independent Directors appointed in accordance with the terms and provisions of Section 3.1.24(dd) ;
(ii) any resignation, removal or replacement of an Independent Director shall not be effective without two (2) Business Days prior written notice to Administrative Agent accompanied by evidence that a replacement Independent Director satisfying the applicable terms and conditions hereof and of the applicable organizational documents shall have replaced such outgoing Independent Director;
(iii) to the fullest extent permitted by applicable law, including Section 18-1101(c) of the Act, and notwithstanding any duty otherwise existing at law or in equity, each Independent Director shall consider only the interests of the Constituent Members, Borrower and the SPC Party, if applicable (including Borrower’s and any such SPC Party’s creditors) in acting or otherwise voting on a Material Action or any other matters provided for herein and the organizational documents of Borrower and any SPC Party (which such fiduciary duties to the Constituent Members, Borrower and any SPC Party (including Borrower’s and any such SPC Party’s respective creditors), in each case, shall be deemed to apply solely to the extent of their respective economic interests in Borrower or any SPC Party, as applicable) exclusive of (x) all other interests (including, without limitation, all other interests of the Constituent Members), (y) the interests of other affiliates of the Constituent Members, Borrower and any SPC Party and (z) the interests of any group of affiliates of which the Constituent Members, Borrower or any SPC Party is a part;
(iv) other than as provided in subsection (iii) above, the Independent Directors shall not have any fiduciary duties to any Constituent Members, any directors of Borrower, any SPC Party or any other Person;
(v) the foregoing shall not eliminate the implied contractual covenant of good faith and fair dealing under applicable law; and
(vi) to the fullest extent permitted by applicable law, including Section 18-1101(e) of the Act, an Independent Director shall not be liable to Borrower, any SPC Party, any Constituent Member or any other Person for breach of contract or breach of duties (including fiduciary duties), unless such Independent Director acted in bad faith or engaged in willful misconduct.
(ff)      Borrower hereby represents and warrants to Administrative Agent that neither Borrower nor any SPC Party has, since Borrower’s and such SPC Party’s formation: (a) failed to be duly formed, validly existing, and in good standing in the applicable jurisdiction(s) of its formation and with respect to Borrower, the State; (b) had any judgments or liens of any nature against it except for (i) liens for Taxes not yet delinquent or being disputed in good faith and (ii) judgments or liens which have been satisfied or settled in full; (c) failed to comply in all material respects with all laws, regulations, and orders applicable to it or failed to receive all licenses and

-81-


permits necessary for it to operate which, in either case, had or would have a Material Adverse Effect; (d) been involved in any dispute with any Governmental Authority which is unresolved as of the Closing Date or failed to pay all Taxes owed prior to the delinquency thereof (or, if later, then with all applicable penalties, interest and other sums due in connection therewith) other than Taxes being disputed in good faith in accordance with the terms and conditions hereof; (e) ever been party to any material lawsuit, arbitration, summons, or legal proceeding (other than with respect to disputes regarding Taxes) that is still pending (other than ordinary tenant/occupant litigation, personal injury and property damage claims that are covered by insurance) or that resulted in a judgment against it that has not been paid in full, settled or otherwise satisfied; (f) failed in any material respects to comply with all separateness covenants contained in its organizational documents since its formation; (g) (i) with respect to Borrower, had any material contingent or actual obligations not related to the Property except (i) to the extent such obligations are (x) covered by insurance, or (y) subject to reimbursement from a third-party and (ii) with respect to SPC Party, had any material contingent or actual obligations; (h) (i) with respect to Borrower, owned any property other than the Property and such personal property incidental, ancillary or related to or necessary or appropriate for the ownership and operation of such tenant-in-common interest in the Property and (ii) with respect to SPC Party, owned any asset other than its ownership interests in the Borrower; (i) engaged in any business unrelated to the acquisition, holding, ownership, operation, management, leasing, sale, transfer, exchange, financing, refinancing, improvement and maintenance of its applicable tenant-in-common interest Property, and activities incidental, ancillary or related thereto or necessary or appropriate therefor; and (j) except as expressly disclosed to Administrative Agent in connection with the closing of the Loan, amended, modified, supplemented, restated, replaced or terminated its organizational documents (or consented to any of the foregoing).
3.1.25      Tax Filings . As of the Closing Date, and on every date thereafter on which these representations are remade, all tax returns required to be filed by or on behalf of Borrower under applicable Legal Requirements have been filed (or effective extensions for filing have been obtained) and all taxes, assessments, fees, and other governmental charges upon or with respect to Borrower or upon any of its properties, income or franchises (including, without limitation, all state, county and municipal mortgage, mortgage recording, stamp, intangible, transfer or other similar tax required to be paid by any Person under applicable Legal Requirements currently in effect in connection with the execution, delivery, recordation, filing, registration, perfection or enforcement of any of the Loan Documents, including, without limitation, the Mortgage) have been paid that are required to be paid when due and in any event prior to the time that the non-payment of such taxes could give rise to a lien on any asset of Borrower. Borrower believes that its tax returns (if any) filed with the applicable taxing authorities properly reflect the income and taxes of Borrower for the periods covered thereby, subject only to reasonable adjustments required by the IRS or other applicable tax authority upon audit. To Borrower’s knowledge, there is no material proposed tax assessment against the Property (or any portion thereof) or, to Borrower’s knowledge, any basis for such assessment which is material and has not been disclosed to Administrative Agent. The Property is separately assessed from all other adjacent land for purposes of real estate taxes, and for all purposes may be dealt with as an independent parcel. The Property is not presently benefitted by any tax abatement. Borrower is and has at all times been properly treated for U.S. federal income tax purposes as a disregarded entity. Borrower has established on its books such charges, accruals

-82-


and reserves in respect of Taxes for all fiscal periods as are required by sound accounting principles consistently applied.
3.1.26      Solvency . Borrower (a) has not entered into the transaction or any Loan Document with the actual intent to hinder, delay, or defraud any creditor and (b) received reasonably equivalent value in exchange for its obligations under the Loan Documents. Giving effect to the Loan, the fair saleable value of Borrower’s assets exceeds and will, immediately following the making of the Loan, exceed Borrower’s total liabilities, including, without limitation, subordinated, unliquidated, disputed and contingent liabilities. The fair saleable value of Borrower’s assets is and will, immediately following the making of the Loan, be greater than Borrower’s probable liabilities, including the maximum amount of its contingent liabilities on its debts as such debts become absolute and matured. Borrower’s assets do not and, immediately following the making of the Loan will not, constitute unreasonably small capital to carry out its business as conducted or as proposed to be conducted. Borrower does not intend to, and does not believe that it will, incur Indebtedness and liabilities (including contingent liabilities and other commitments) beyond its ability to pay such Indebtedness and liabilities as they mature (taking into account the timing and amounts of cash to be received by Borrower and the amounts to be payable on or in respect of obligations of Borrower). No petition in bankruptcy has been filed against Borrower or any Constituent Member of Borrower, and neither of Borrower nor any Constituent Member of Borrower has ever made an assignment for the benefit of creditors or taken advantage of any insolvency act for the benefit of debtors.
3.1.27      Federal Reserve Regulations . No part of the proceeds of the Loan will be used for the purpose of purchasing or acquiring any “margin stock” within the meaning of Regulation U of the Board of Governors of the Federal Reserve System or for any other purpose which would be inconsistent with such Regulation U or any other Regulations of such Board of Governors, or for any purposes prohibited by Legal Requirements or by the terms and conditions of this Agreement or the other Loan Documents.
3.1.28      Organizational Chart . The organizational chart attached as Schedule IV , relating to Borrower, Guarantor and certain Affiliates and other parties, is a true, complete and correct on and as of the date hereof. No Person other than those Persons shown on Schedule IV has, directly or indirectly, any ownership interest in Borrower or Guarantor in excess of twenty percent (20%) of the direct or indirect interests in Borrower or Guarantor, as applicable, or right of Control over Borrower or Guarantor.
3.1.29      Bank Holding Company . Borrower is not a “bank holding company” or a direct or indirect subsidiary of a “bank holding company” as defined in the Bank Holding Company Act of 1956, as amended, and Regulation Y thereunder of the Board of Governors of the Federal Reserve System.
3.1.30      Investment Company Act . Borrower is not (1) an “investment company” or a company “controlled” by an “investment company,” within the meaning of the Investment Company Act of 1940, as amended; (2) a “holding company” or a “subsidiary company” of a “holding company” or an “affiliate” of either a “holding company” or a “subsidiary company” within the meaning of the Public Utility Holding Company Act of 2005, as amended; or (3) subject

-83-


to any other federal or state law or regulation which purports to restrict or regulate its ability to borrow money.
3.1.31      No Bankruptcy Filing . Borrower is not contemplating either the filing of a petition by it under any state or federal bankruptcy or insolvency laws or the liquidation of its assets or property, and Borrower does not have any knowledge of any Person contemplating the filing of any such petition against it.
3.1.32      Full and Accurate Disclosure . No statement of fact made by Borrower in this Agreement or in any of the other Loan Documents contains any untrue statement of a material fact and Borrower has no knowledge that any such statement omits to state any material fact necessary to make the statements contained herein or therein not misleading. There is no fact or circumstance presently known to Borrower which has not been disclosed to Administrative Agent which is reasonably likely to have a Material Adverse Effect. As of the date of this Agreement, Borrower has delivered to Administrative Agent all Leases, all Contracts relating to the Property and all documentation in Borrower’s possession relating to the zoning and entitlement of the Property and has specified in writing to Administrative Agent any contract or agreement relating to the Property where a Borrower Related Party is a party thereto.
3.1.33      Foreign Person . Borrower (or, if borrower is a disregarded entity for U.S. federal income tax purposes, its regarded owner) is not a “foreign person” within the meaning of Section 1445 or 770 of the Code.
3.1.34      No Change in Facts or Circumstances; Disclosure . The information submitted by and on behalf of Borrower to Administrative Agent and all financial statements, reports, certificates and other documents submitted in connection with the Loan or in satisfaction of the terms thereof by Borrower and all statements of fact made by Borrower in this Agreement or in any other Loan Document, are accurate, complete and correct in all material respects. To Borrower’s knowledge, there has been no material adverse change in any condition, fact, circumstance or event that would make the financial statements, rent rolls, reports, certificates or other documents submitted in connection with the Loan inaccurate, incomplete or otherwise misleading in any material respect or that otherwise adversely affects or might materially adversely affect the use, operation or value of the Property or the renovation and leasing of the Property or the business operations or the financial condition of Borrower or the Property.
3.1.35      Management Agreement . The Management Agreement is in full force and effect and (a) there is no default thereunder by Manager thereunder and (b) there is no default thereunder by Borrower thereunder. The Management Agreement was entered into on commercially reasonable arm’s-length terms.
3.1.36      Leasing Agreement . The Leasing Agreement is in full force and effect and (a) to Borrower’s knowledge, there is no default thereunder by Leasing Agent thereunder and (b) to Borrower’s knowledge, there is no default thereunder by Borrower thereunder. The Leasing Agreement was entered into on commercially reasonable arm’s-length terms.

-84-


3.1.37      Construction Management Agreement . The Construction Management Agreement is in full force and effect and (a) to Borrower’s knowledge, there is no default thereunder by Construction Manager thereunder and (b) there is no default thereunder by Borrower thereunder. The Construction Management Agreement was entered into on commercially reasonable arm’s length terms.
3.1.38      Project Management Agreement . The Project Management Agreement is in full force and effect and (a) to Borrower’s knowledge, there is no default thereunder by Project Manager thereunder and (b) there is no default thereunder by Borrower thereunder. The Project Management Agreement was entered into on commercially reasonable arm’s-length terms.
3.1.39      Perfection of Accounts . Borrower hereby represents and warrants to Administrative Agent and the Lenders that:
(a)      Other than in connection with the Loan Documents and except for Permitted Encumbrances, Borrower has not sold or otherwise conveyed the Accounts.
(b)      The Clearing Account, Working Capital Account and the other Accounts constitute “deposit accounts” or “securities accounts” within the meaning of the Uniform Commercial Code.
3.1.40      Material Agreements . With respect to each Material Agreement, Borrower hereby represents that (a)  each Material Agreement is in full force and effect and has not been amended, restated, replaced or otherwise modified (except, in each case, as expressly set forth herein), (b) Borrower has not received any written notice of any uncured defaults under any Material Agreement by any party thereto, (c) all payments and other sums due and payable by or to Borrower under the Material Agreements have been paid in full, (d) no party to any Material Agreement has commenced any action to which Borrower is a party, and Borrower has neither given nor received any notice, for the purpose of terminating any Material Agreement, and (e) to Borrower’s knowledge, the representations made in any estoppel or similar document delivered with respect to any Material Agreement in connection with the Loan are true, complete and correct in all material respects.
3.1.41      Illegal Activity/Forfeiture .
(a)      To Borrower’s knowledge, no portion of the Property has been or will be purchased, improved, equipped or furnished with proceeds of any illegal activity and to the best of Borrower’s knowledge, there are no illegal activities or activities relating to controlled substances (including any regulated by the Controlled Substances Act (21 U.S.C. Sections 801 et seq.), as amended from time to time, and any successor statute) at the Property.
(b)      There has not been and shall never be committed by Borrower, any of its Affiliates or, to Borrower’s knowledge, any other person in occupancy of or involved with the operation or use of the Property any act or omission affording the federal government or any state or local government the right of forfeiture as against the Property or any part thereof or any monies paid in performance of Borrower’s obligations under this Agreement, the Note, the Mortgage, or

-85-


the other Loan Documents. Borrower hereby covenants and agrees not to commit, permit or suffer to exist any act or omission affording such right of forfeiture.
(c)      No Borrower Party nor any of any of their respective directors, officers, employees or Affiliates has taken any action, directly or indirectly, that violates any Anti-Corruption Laws or Anti-Money Laundering Laws.
(d)      No proceeds of the Loan have been used, directly or indirectly, by Borrower or its directors, officers, employees, agents or representatives in furtherance of an offer, payment, promise to pay, or authorization of the payment or giving, of money or anything else of value, to any Person in violation of any Anti-Corruption Laws or Anti-Money Laundering Laws.
3.1.42      Embargoed Person . As of the date hereof and at all times throughout the term of the Loan, including after giving effect to any transfers of interests permitted pursuant to the Loan Documents, (a) none of the funds or other assets of Borrower or Guarantor constitute property of, or are beneficially owned, directly or indirectly, by any person, entity or government subject to trade restrictions under U.S. law, including but not limited to, the International Emergency Economic Powers Act, 50 U.S.C. §§ 1701 et seq., The Trading with the Enemy Act, 50 U.S.C. App. 1 et seq., and any Executive Orders or regulations promulgated thereunder or the Common Foreign and Security Policy consolidated list of persons, groups and entities subject to EU financial sanctions, as the same may be updated from time to time (such list being available on the internet at the following URL: http://ec.europa.eu/external_relations/cfsp/sanctions/list/consol-list.htm) with the result that the investment in Borrower or Guarantor (whether directly or indirectly), is prohibited by Legal Requirements or the Loan made by Lenders is in violation of Legal Requirements (“ Embargoed Person ”); (b) no Embargoed Person has any interest of any nature whatsoever in Borrower or Guarantor with the result that the investment in Borrower or Guarantor (whether directly or indirectly), is prohibited by Legal Requirements or the Loan is in violation of Legal Requirements; and (c) none of the funds of Borrower or Guarantor have been derived from any unlawful activity with the result that the investment in Borrower or Guarantor (whether directly or indirectly), is prohibited by Legal Requirements or the Loan is in violation of Legal Requirements.
3.1.43      Patriot Act .
(a)      All capitalized words and phrases and all defined terms used in the USA Patriot Act of 2001, 107 Public Law 56 (October 26, 2001) and in other statutes and all orders, rules and regulations of the United States government and its various executive departments, agencies and offices related to the subject matter of the Patriot Act, including Executive Order 13224 effective September 24, 2001 (as may be amended from time to time, the “ Patriot Act ”) are incorporated into this Section. Borrower hereby represents and warrants that Borrower and each and every Person that, to Borrower’s knowledge, has an economic interest in Borrower, or, to Borrower’s knowledge, that has or will have an interest in the Property, is: (i) not a “blocked” person listed in the Annex to Executive Order Nos. 12947, 13099 and 13224 and all modifications thereto or thereof (as may be amended from time to time, the “ Annex ”); (ii) in full compliance with the requirements of the Patriot Act and all other requirements contained in the rules and regulations of the Office of Foreign Assets Control, Department of the Treasury (as may be amended from time to time, “ OFAC ”); (iii) operated under policies, procedures and practices, if any, that are in compliance with the Patriot

-86-


Act and available to Administrative Agent and Lenders for their review and inspection during normal business hours and upon reasonable prior notice; (iv) not in receipt of any notice from the Secretary of State or the Attorney General of the United States or any other department, agency or office of the United States claiming a violation or possible violation of the Patriot Act; (v) not listed as a Specially Designated Terrorist or as a “blocked” person on any lists maintained by the OFAC pursuant to the Patriot Act or any other list of terrorists or terrorist organizations maintained pursuant to any of the rules and regulations of the OFAC issued pursuant to the Patriot Act or on any other list of terrorists or terrorist organizations maintained pursuant to the Patriot Act; (vi) not a Person who has been determined by competent authority to be subject to any of the prohibitions contained in the Patriot Act; and (vii) not owned or controlled by or now acting and or will in the future act for or on behalf of any person named in the Annex or any other list promulgated under the Patriot Act or any other person who has been determined to be subject to the prohibitions contained in the Patriot Act. Borrower covenants and agrees that in the event Borrower receives any notice that Borrower (or any of its beneficial owners, affiliates or participants) or any Person that has an interest in the Property become listed on the Annex or any other list promulgated under the Patriot Act or is indicted, arraigned, or custodially detained on charges involving money laundering or predicate crimes to money laundering, Borrower shall immediately notify Administrative Agent. At Administrative Agent’s option, it shall be an Event of Default hereunder if Borrower or Guarantor becomes listed on any list promulgated under the Patriot Act or is indicted, arraigned or custodially detained on charges involving money laundering or predicate crimes to money laundering.
(b)      The Patriot Act requires all financial institutions to obtain, verify and record certain information that identifies individuals or business entities which open an “account” with such financial institution. Consequently, Administrative Agent may from time-to-time request, and Borrower shall provide to Administrative Agent, Borrower’s name, address, tax identification number and/or such other identification information as shall be necessary for Administrative Agent to comply with federal law. An “account” for this purpose may include, without limitation, a deposit account, cash management service, a transaction or asset account, a credit account, a loan or other extension of credit, and/or other financial services product.
(c)      Borrower shall, promptly after written request by Administrative Agent (whether for itself, on behalf of any Lender or any prospective new Lender), furnish or cause to be furnished to Administrative Agent any documentation and such other information or evidence as may be deemed to be reasonably necessary by Administrative Agent to enable Administrative Agent, such Lender or such prospective Lender to carry out and be satisfied with the results of all applicable customer due diligence in connection any applicable “know your customer”, Patriot Act, Embargoed Person and Anti-Money Laundering Laws requirements.
3.1.44      Americans with Disabilities Act Compliance . Except as set forth in the PCR and Zoning Report, to the extent required by Legal Requirements, the Improvements at the Property have been designed, maintained and will continue to be maintained, in strict accordance and full compliance with all of the requirements of the ADA. Borrower shall be responsible for all ADA compliance costs.

-87-


3.1.45      Inventory . Borrower is the owner of all of the Equipment, Fixtures and Personal Property (as such terms are defined in each Mortgage) located on or at the Property and shall not lease any Equipment, Fixtures or Personal Property other than with Administrative Agent’s prior written consent or as expressly permitted hereunder. All of the Equipment, Fixtures and Personal Property are sufficient to operate the applicable Property in the manner required hereunder, in the manner in which it is currently operated.
3.1.46      [Reserved] .
3.1.47      No Other Debt . Except for prior financings which will be repaid in full on or prior to the date hereof, Borrower has not borrowed or received debt financing other than the Debt, and there is no other Indebtedness to which Borrower is a party or by which Borrower or the Property or any excess cash flow or any residual interest therein is bound, whether secured or unsecured, in each case other than Permitted Indebtedness.
3.1.48      Purchase Options . Neither the Property nor any direct interest therein is subject to any purchase options, rights of first refusal, rights of first offer or other similar rights in favor of any Person except as set forth in the Joint Venture Agreement.
3.1.49      Interests in Borrower Certificated . The limited liability company interests in Borrower are and shall at all times during the Term be evidenced by a “certificated security” governed by Article 8 of the UCC. Borrower has “opted in” to Article 8 of the UCC, has not opted out and shall not opt out of such Article 8 of the UCC, and shall cause a registry of the holders of limited liability company interests in Borrower to be maintained at all times.
3.1.50      Labor Relations . Except as set forth on Schedule 3.1.51 , Borrower is not a party to any collective bargaining agreement, and there is no union or any other organization of employees of Borrower (if any) at the Property. Borrower has not received any threats of strikes, work stoppages or any asserted pending demands for collective bargaining by any union or organization of employees of Borrower (if any). Except as set forth on Schedule 3.1.51 , the Property is not subject to or bound by any collective bargaining agreement. Except as disclosed to Administrative Agent in writing, there are no material grievances, disputes, claims of unfair labor practices or controversies against Borrower regarding the Property nor, to Borrower’s knowledge, are there any threats of strikes, work stoppages or demands for collective bargaining by any union or organization of employees of Borrower (if any) regarding the Property. Borrower shall promptly notify Administrative Agent upon the occurrence or threatened occurrence of any of the matters described in the preceding sentence.
Section 3.2      Survival of Representations .
The representations and warranties set forth in Section 3.1 are made as of the Closing Date (or as of another date specifically set forth herein) and shall be remade to the extent and at the times required under this Agreement. All representations, warranties, covenants and agreements made in this Agreement or in the other Loan Documents by Borrower shall be deemed to have been relied upon by Administrative Agent and the Lenders notwithstanding any investigation heretofore or hereafter made by Administrative Agent or any Lender or on their behalf.

-88-


Section 3.3      ERISA .
Each Lender represents and warrants to Borrower, as of the date of this Agreement and during the term of the Loan, that the assets loaned to Borrower will not be “plan assets” (within the meaning of 29 CFR § 2510.3-101, as modified by Section 3(42) of the ERISA).
IV.      BORROWER COVENANTS
Section 4.1      Borrower Affirmative Covenants .
From and after the Closing Date until the repayment in full of the Debt, Borrower hereby covenants and agrees with Administrative Agent and the Lenders that:
4.1.1      Existence; Compliance with Legal Requirements . Borrower shall do or cause to be done all things necessary to preserve, renew and keep in full force and effect its existence, rights, licenses, permits and franchises necessary for the conduct of its business, and comply with all Legal Requirements applicable to it or the Property, including, without limitation, Prescribed Laws. Borrower shall continue to comply with the Patriot Act and OFAC, including, without limitation, the provisions of Sections 3.1.41 and 3.1.42 , throughout the Term of the Loan. There shall never be committed by Borrower, and Borrower shall never permit any other Person in occupancy of or involved with the operation or use of the Property to commit any act or omission affording any Governmental Authority the right of forfeiture against the Property or any part thereof or any monies paid in performance of Borrower’s obligations under any of the Loan Documents. Borrower hereby covenants and agrees not to commit, permit or suffer to exist any act or omission affording such right of forfeiture. Borrower shall at all times maintain, preserve and protect all franchises and trade names and preserve all the remainder of its property used or useful in the conduct of its business and shall keep the Property in reasonably good working order and repair, and from time to time make, or cause to be made, all reasonably necessary repairs, renewals, replacements, betterments and improvements thereto, in each case to the extent commercially reasonable. After prior written notice to Administrative Agent, Borrower, at its own expense, may contest by appropriate legal proceeding promptly initiated and conducted in good faith and with due diligence, the validity of any Legal Requirement, the applicability of any Legal Requirement to Borrower or the Property or any alleged violation of any Legal Requirement, provided that (i) no Event of Default has occurred and remains uncured; (ii) such proceeding shall be permitted under and be conducted in accordance with the provisions of the Mortgage and shall not constitute a default thereunder or under the other Loan Documents and such proceeding shall be conducted in accordance with all applicable Legal Requirements; (iii) none of the Property nor any part thereof or interest therein will be in danger of being sold, forfeited, terminated, cancelled or lost; (iv) Borrower shall promptly upon final determination thereof comply with any such Legal Requirement determined to be valid or applicable or cure any violation of any Legal Requirement; (v) such proceeding shall suspend the enforcement of the contested Legal Requirement against Borrower or the Property; and (vi) Borrower shall furnish such security as may be reasonably required in the proceeding, or as may be reasonably requested by Administrative Agent, to insure compliance with such Legal Requirement, together with all interest and penalties payable in connection therewith. Administrative Agent, for the benefit of Lenders, may apply any such security, as necessary to cause compliance with such Legal Requirement at any time when, in the reasonable

-89-


good faith judgment of Administrative Agent, the validity, applicability or violation of such Legal Requirement is finally established, the Property (or any material part thereof or material interest therein) may reasonably be in danger of being sold, forfeited, terminated, cancelled or lost or there shall be any reasonable danger of the Lien of the Mortgage being primed by any related Lien.
4.1.2      Property Taxes and Other Charges .
(a)      Borrower shall pay, or shall cause its Tenant(s) to pay (to the extent any Tenant is obligated to make such payments under its Lease), all Property Taxes and Other Charges now or hereafter levied or assessed or imposed against the Property or any part thereof as the same become due and payable (and with respect to Property Taxes, prior to the date the same become delinquent); provided, however, Borrower’s obligation to directly pay Property Taxes shall be suspended for so long as Borrower complies with the terms and provisions of Section 6.2 hereof. Upon Administrative Agent’s request, Borrower shall furnish to Administrative Agent receipts for the payment or other evidence satisfactory to Agent that the Property Taxes and the Other Charges have been so paid prior to the date the same shall become delinquent; provided, however, that Borrower is not required to furnish such receipts for payment of Property Taxes so long as Borrower complies with the terms and provisions of Section 6.2 hereof. Borrower shall not permit or suffer and shall promptly discharge any lien or charge against the Property, and shall promptly pay for all utility services provided to the Property. After prior notice to Administrative Agent, Borrower, at its own expense, may contest by appropriate legal proceeding, conducted in good faith and with due diligence, the amount or validity of any Taxes or Other Charges, provided that (i) no Default or Event of Default has occurred and remains uncured; (ii) such proceeding shall be permitted under and be conducted in accordance with all applicable statutes, laws and ordinances; (iii) neither the Property nor any part thereof or interest therein will be in danger of being sold, forfeited, terminated, canceled or lost; (iv) Borrower shall promptly upon final determination thereof pay the amount of any such Taxes or Other Charges, together with all costs, interest and penalties which may be payable in connection therewith; (v) such proceeding shall suspend the collection of Taxes or Other Charges from the Property or Borrower shall have paid the same (or shall cause the same to be paid) under protest; and (vi) unless Borrower is required to deposit the same with the relevant Governmental Authority, Borrower shall deposit with Administrative Agent or Borrower shall furnish such security as may be required in the proceeding, or cash, or other security as may be reasonably required by Administrative Agent, in an amount equal to one hundred ten percent (110%) of the contested amount (less any amount deposited with the relevant Governmental Authority), to insure the payment of any such Taxes or Other Charges, together with all interest and penalties thereon. Administrative Agent may pay over any such cash or other security held by Administrative Agent to the claimant entitled thereto at any time when, in the judgment of Administrative Agent, the entitlement of such claimant is established.
(b)      Borrower shall timely pay, as the same shall become due and payable, all Taxes (other than Property Taxes) levied or imposed upon it or its properties, income or assets, except those that are being contested in good faith by appropriate proceedings, diligently conducted and for which adequate reserves have been established on the books of Borrower in accordance with Accounting Principles. Borrower shall, throughout the duration of any obligation under any Loan Document, remain a disregarded entity.

-90-


4.1.3      Litigation . Borrower shall give prompt notice to Administrative Agent of any litigation or governmental proceedings pending or threatened in writing against the Property, Borrower, or any SPC Party. Borrower shall give prompt notice to Administrative Agent of any litigation or governmental proceedings pending or threatened in writing against Guarantor which are reasonably likely to materially adversely affect Guarantor’s financial condition or business (including Guarantor’s ability to perform its obligations under the other Loan Documents to which Guarantor is a party).
4.1.4      Access to Property . Subject to tenants’ rights under the Leases, Borrower shall permit Administrative Agent, any Construction Consultant and their respective representatives, upon twenty-four (24) hours’ prior written notice to enter upon the Property during normal business hours. Borrower shall reasonably cooperate, and use commercially reasonable efforts to cause Manager to reasonably cooperate, with Administrative Agent and Construction Consultant to enable each Person to perform its functions hereunder. Subject to the rights of Tenant’s under Leases, Administrative Agent, Construction Consultant or their agents, representatives, consultants and employees as part of any inspection may take soil, air, water, building material and other samples from the Property, and shall have the right to undertake testing of such soil, air, water, building material and other samples at Borrower’s cost and expense in the event that, in Administrative Agent’s reasonable opinion, such testing is necessary, and provided that Administrative Agent shall cause any Person performing invasive testing at the Property to maintain (or be covered by) customary and appropriate insurance in light of the testing to be undertaken by such Person; provided that Administrative Agent shall be liable for any damage to the Property caused by any Lender, Administrative Agent or the Construction Consultant’s gross negligence or willful misconduct and provided further that, unless an Event of Default is continuing and/or Administrative Agent reasonably believes that an environmental condition or a violation of environmental law exists with respect to the Property, any such testing in excess of once per calendar year shall be at Administrative Agent’s cost and expense.
4.1.5      Further Assurances; Supplemental Mortgage Affidavits . Borrower shall, at Borrower’s sole cost and expense:
(a)      execute and deliver to Administrative Agent such documents, instruments, certificates, assignments and other writings, and do such other acts reasonably necessary, to evidence, preserve and/or protect the collateral at any time securing or intended to secure the obligations of Borrower under the Loan Documents, as Administrative Agent may reasonably require, provided that any of the foregoing shall not increase the obligations or liabilities of Borrower or decrease any rights of Borrower other than to a de minimis extent;
(b)      cure any defects in the execution and delivery by Borrower or a Borrower Related Party of the Loan Documents and execute and deliver to Administrative Agent such documents, instruments, certificates, assignments and other writings, and do such other acts as reasonably necessary or reasonably requested by Administrative Agent, to evidence, preserve and/or protect the Property any other collateral at any time securing or intended to secure the obligations of Borrower under the Loan Documents, as Administrative Agent may reasonably require including, without limitation, the execution and delivery of all such writings necessary to transfer any licenses

-91-


with respect to the Property into the name of Administrative Agent or its designee after the occurrence, and during the continuance, of an Event of Default, provided that any of the foregoing shall not increase the obligations or liabilities of Borrower or decrease any rights of Borrower other than to a de minimis extent; and
(c)      do and execute all and such further lawful and reasonable acts, conveyances and assurances for the better and more effective carrying out of the intents and purposes of this Agreement and the other Loan Documents, as Administrative Agent shall reasonably require from time to time provided that any of the foregoing shall not increase the obligations or liabilities of Borrower or decrease any rights of Borrower other than to a de minimis extent.
4.1.6      Financial Reporting .
(a)      Borrower will keep and maintain or will cause to be kept and maintained on a Fiscal Year basis in accordance with the Accounting Principles (or such other accounting basis selected by Borrower, consistently applied and reasonably acceptable to Administrative Agent), proper and accurate books, records and accounts reflecting all of the financial affairs of Borrower and all items of income and expense in connection with the operation of the Property. Administrative Agent shall have the right from time to time at all times during normal business hours upon reasonable notice (which may be verbal) to examine such books, records and accounts at the office of Borrower or any other Person maintaining such books, records and accounts and to make such copies or extracts thereof as Administrative Agent shall request. After the occurrence and during the continuance of an Event of Default beyond the expiration of any applicable notice and cure periods, Borrower shall pay any reasonable costs and expenses incurred by Administrative Agent to examine Borrower’s accounting records with respect to the Property, as Administrative Agent shall reasonably determine to be necessary or appropriate in the protection of Administrative Agent’s interest. Upon Administrative Agent’s reasonable written request, Borrower shall furnish to Administrative Agent such other information reasonably necessary and sufficient to fairly represent the financial condition of Borrower and the Property.
(b)      Borrower shall furnish to Administrative Agent annually, within one hundred twenty (120) days following the end of each calendar year, a complete copy of Borrower’s and Guarantor’s annual financial statements prepared in accordance with Accounting Principles including statements of income and expense and cash flow for Borrower and the Property and a balance sheet for Borrower. Borrower’s and Guarantor’s annual financial statements shall be audited by a “big four” accounting firm or another certified public accountant (accompanied by an unqualified opinion from such accounting firm or independent certified public accountant) in form and content reasonably acceptable to Administrative Agent. Borrower’s and Guarantor’s annual financial statements shall be accompanied by an Officer’s Certificate executed by a duly authorized financial officer of Borrower or Guarantor, as applicable, stating that such annual financial statement presents fairly the financial condition and the results of operations of (x) Borrower and the Property (y) or Guarantor, as applicable, in all material respects. Notwithstanding the reporting requirements set forth above for Guarantor, the KBS Guarantor shall only be required to comply with the financial reporting requirements set forth in the Limited Recourse Guaranty.

-92-


(c)      Borrower shall furnish the following items to Administrative Agent within forty-five (45) days after the end of each calendar quarter for quarterly requests: (i) monthly and year-to-date operating statements, noting net operating income and other information necessary and sufficient under the Accounting Principles to fairly represent the financial position and results of operation of the Property during such calendar quarter, all in form reasonably satisfactory to Administrative Agent; (ii) a balance sheet for such calendar quarter; (iii) a comparison of the budgeted income and expenses and the actual income and expenses for each month and year-to-date for the Property, and having annexed to it a general ledger; (iv) a statement that Borrower has not incurred any indebtedness other than Permitted Indebtedness; and (v)  an updated Rent Roll for the Property. Each such statement shall be accompanied by an Officer’s Certificate certifying, to the best of the signer’s knowledge, (1) that such items are true, correct, accurate, and complete in all material respects and fairly present the financial condition and results of the operations of Borrower and the Property in accordance with Accounting Principles (subject to normal year-end adjustments), (2) whether there exists a Default or Event of Default, and if so, the nature thereof, the period of time it has existed and the action then being taken to remedy it, and (3) that as of the date of such Officer’s Certificate, no litigation that is material exists involving Borrower or the Property in which all or substantially all of the potential liability is not covered by insurance, or, if so, specifying such litigation and the actions being taken in relation thereto. Such financial statements shall contain such other information as shall be reasonably requested by Administrative Agent for purposes of calculations to be made by Administrative Agent pursuant to the terms hereof.
(d)      During any Cash Trap Period, Borrower shall, in addition to the quarterly statements referenced in subsection (c) of this Section 4.1.6 , provide monthly reports to Administrative Agent, which shall include all of the items in the quarterly reports (other than items (ii) and (iv) of such subsection (c)) and, with respect to clause 4.1.6(c)(iii), but only if such analysis has otherwise been prepared by Borrower, a detailed explanation of any line item variances that exceed ten percent (10%) or more between budgeted and actual amounts for such period and year-to-date.
(e)      Borrower shall submit to Administrative Agent an Annual Budget no later than thirty (30) days prior to the commencement of such period or Fiscal Year in form reasonably satisfactory to Administrative Agent. The Annual Budget shall be subject to Administrative Agent’s approval not to be unreasonably withheld, conditioned or delayed (each such Annual Budget, an “ Approved Annual Budget ”) and to be subject to the Deemed Consent Mechanics. In the event that Administrative Agent objects to a proposed Annual Budget submitted by Borrower which requires the reasonable approval of Administrative Agent hereunder, Administrative Agent shall advise Borrower of such objections within ten (10) Business Days after receipt thereof (and deliver to Borrower a reasonably detailed description of such objections) and Borrower shall promptly revise such Annual Budget and resubmit the same to Administrative Agent. Administrative Agent shall advise Borrower of any objections to such revised Annual Budget within five (5) Business Days after receipt thereof (and deliver to Borrower a reasonably detailed description of such objections) and Borrower shall promptly revise the same in accordance with the process described in this subsection until Administrative Agent reasonably approves the Annual Budget. Until such time that Administrative Agent approves a proposed Annual Budget that requires the approval of Administrative Agent hereunder, the most recently Approved Annual Budget shall apply; provided

-93-


that, such Approved Annual Budget shall be adjusted to reflect actual increases in Taxes, Insurance Premiums and Other Charges.
(f)      In the event that Borrower must incur an Operating Expense or Capital Expenditure not set forth in the Approved Annual Budget the cost of which exceeds ten percent (10%) of the total Approved Annual Budget (each an “ Extraordinary Expense ”), then Borrower shall promptly deliver to Administrative Agent a reasonably detailed explanation of such proposed Extraordinary Expense for Administrative Agent’s reasonable approval, subject to the Deemed Consent Mechanics.
(g)      Any reports, statements or other information required to be delivered under this Agreement may be delivered in electronic form and prepared using Excel®. Borrower agrees that Administrative Agent may disclose information regarding the Property and Borrower that is provided to Administrative Agent pursuant to this Section 4.1.6 in connection with any Secondary Market Transaction to such parties requesting such information in connection with such Secondary Market Transaction.
(h)      If Borrower fails to provide to Administrative Agent or its designee any of the financial statements, certificates, reports or information (the “ Required Records ”) required by this Section 4.1.6 within the applicable time periods set forth in this Section 4.1.6 , Administrative Agent shall have the option, upon fifteen (15) days’ written notice to Borrower, to gain access to Borrower’s books and records and prepare or have prepared at Borrower’s reasonable expense, any Required Records not delivered by Borrower. In addition, it shall be an Event of Default if any of the following shall occur: (i) any failure of Borrower to provide to Administrative Agent any of the Required Records within the applicable time periods set forth in this Section 4.1.6 , if such failure continues for fifteen (15) days after written notice thereof, (ii) in the event any Required Records shall be materially inaccurate or false, or (iii) in the event of the failure of Borrower to permit Administrative Agent or its representatives to inspect said books, records and accounts upon request of Administrative Agent as required by this Section 4.1.6 .
(i)      Borrower shall furnish to Administrative Agent, within ten (10) Business Days after request (or as soon thereafter as may be reasonably possible), such further detailed information with respect to the operation of the Property and the financial affairs of Borrower as may be reasonably requested by Administrative Agent.
4.1.7      Title to the Property . Borrower will warrant and defend (a) Borrower’s title to the Property and every part thereof, subject only to Liens expressly permitted hereunder (including Permitted Encumbrances) and (b) the validity and priority of the Lien of the Mortgage and the Assignment of Leases on the Property, subject only to Liens expressly permitted hereunder (including Permitted Encumbrances), in each case against the claims of all Persons whomsoever. Borrower shall reimburse Administrative Agent and Lenders for any losses, costs, damages or out-of-pocket expenses (including reasonable attorneys’ fees and court costs) actually incurred by Administrative Agent and/or Lenders if an interest in the Property, other than as permitted hereunder, is claimed by another Person.

-94-


4.1.8      Estoppel Statement . (a)  After request by Administrative Agent, Borrower shall within ten (10) Business Days furnish Administrative Agent with a statement, duly acknowledged and certified, stating (i) the unpaid principal amount of the Note, (ii) the most recent Applicable Interest Rate of the Note, (iii) the date installments of interest and/or principal were last paid, (iv) any offsets or defenses to the payment of the Debt, and (v) that this Agreement and the other Loan Documents have not been modified or if modified, giving particulars of such modification. Unless an Event of Default is continuing, requests made pursuant to this Section 4.1.8 in excess of twice per calendar year shall be at Administrative Agent’s cost and expense.
(b) After request by Borrower, provided no Event of Default exists, Administrative Agent shall within ten (10) Business Days furnish Borrower with a statement, duly acknowledged and certified, stating (i) the unpaid principal amount of the Note, (ii) the current Applicable Interest Rate of the Note, (iii) the date installments of interest and/or principal were last paid, (iv) whether or not Administrative Agent has sent any notice of default under the Loan Documents which remains uncured in the opinion of Administrative Agent, and (v) that this Agreement and the other Loan Documents have not been modified or if modified, giving particulars of such modification.
(c)     Upon Administrative Agent’s request, Borrower shall use commercially reasonable efforts to obtain and deliver to Administrative Agent an estoppel certificate from each Tenant under any Lease; provided that such certificate may be in the form required under such Lease; provided, further, that Borrower shall not be required to request or deliver such certificates more frequently than one (1) time in any twelve (12) month period (other than in connection with an Event of Default or a Secondary Market Transaction, in which case no such limitation shall apply).
4.1.9      Leases .
(a)      Generally . Promptly following written request, Borrower shall furnish Administrative Agent an updated Rent Roll for the Property. Subject to Section 4.1.9(b) , Borrower may not enter into, amend, modify, terminate or grant a waiver of any provision or right of Borrower under any Lease without Administrative Agent’s prior written consent, which, so long as no Event of Default has occurred and is continuing, Administrative Agent shall not unreasonably withhold. All renewals of Leases and all proposed Leases: (A) shall provide for economic terms, including rental rates and net effective rental rates, that are in accordance with the Minimum Leasing Parameters, (B) unless a subordination, non-disturbance and attornment agreement is delivered pursuant to this Section 4.1.9 , shall provide that it is subordinate to the Mortgage and the Assignment of Leases and that the Tenant thereunder will attorn to Administrative Agent and any purchaser at a foreclosure sale, (C) shall be written substantially in accordance with the standard form of Lease which shall have been approved by Administrative Agent (subject to any commercially reasonable changes made in the course of negotiations with the applicable Tenant and such other changes that do not materially and adversely affect the interests of Borrower or Administrative Agent), (D) shall not be with an Affiliate of any Borrower Related Party except on market terms (which terms, notwithstanding anything in this Section 4.19(b)(i) , shall require Administrative Agent’s approval) and (E) shall not contain any option to purchase, any right of first offer to purchase, any right of first refusal to purchase, any right to terminate (except if such termination right is triggered by the destruction or condemnation of substantially all of the Property) or any other terms which would

-95-


materially adversely affect Administrative Agent’s or any Lender’s rights under the Loan Documents. Within ten (10) days after the execution of a Lease or any renewals, amendments or modification of a Lease, Borrower shall deliver to Administrative Agent a copy thereof, together with Borrower’s certification that such Lease (or such renewal, amendment or modification) was entered into in accordance with the terms of this Agreement.
(b)      Approvals .
(i)      Borrower shall not enter into a proposed Major Lease or a proposed, renewal, extension or modification of any Major Lease affecting any of the economic terms, the length of its term or any other material provision thereof (a “ Proposed Major Lease ”) without the prior written consent of Administrative Agent, which consent shall not, so long as no Event of Default is continuing, be unreasonably withheld, conditioned or delayed. Prior to seeking Administrative Agent’s consent to any Proposed Major Lease or amendment or modification thereto, Borrower may, at Borrower’s option, submit a term sheet for a Proposed Major Lease or amendment or modification thereto to Administrative Agent for preliminary conditional approval, provided that Administrative Agent shall retain the right to disapprove any such Proposed Major Lease if subsequent to any preliminary conditional approval (or deemed preliminary conditional approval pursuant to the first paragraph of this Section 4.1.9(b)(i) ) changes are made to the economic or material non-economic terms previously approved (or deemed approved) by Administrative Agent, or additional economic or material non-economic terms are added that had not previously been considered and approved (or deemed approved) by Administrative Agent in connection with such Proposed Major Lease. Administrative Agent has granted its preliminary conditional approval with respect to the ACS Extension Term Sheet and the Knotel LOI subject to the terms of the preceding sentence. If after ten (10) Business Days from receipt of such term sheet Administrative Agent has failed to reject the term sheet and not granted its conditional approval thereto, Borrower may resubmit such term sheet in writing and, if after an additional five (5) Business Days Administrative Agent has still failed to reject the term sheet and not granted its conditional approval thereto, provided that no Event of Default is continuing, such preliminary conditional approval shall be deemed to have been granted, provided, however, that notice is submitted simultaneously with each request for preliminary conditional approval, specifically referencing this Section 4.1.9(b)(i) and notifying Administrative Agent in capital letters and using a 14 point font that failure to respond may result in deemed conditional approval.
(ii)      Prior to seeking Administrative Agent’s consent to any Proposed Major Lease, Borrower shall deliver to Administrative Agent a copy of the Proposed Major Lease blacklined to show changes from the standard form of Lease approved by Administrative Agent and then being used by Borrower. Administrative Agent shall approve or disapprove each Proposed Major Lease within (a) in the event a term sheet with respect to such Proposed Major Lease has been preliminarily conditionally approved (or deemed preliminarily conditionally approved) by Administrative Agent pursuant to Section 4.1.9(b)(i) and there are material deviations from the term sheet, ten (10) Business Days of the receipt by Administrative Agent of a written request for such approval, accompanied by an

-96-


executed or final draft copy of the Proposed Major Lease and (b) in the event a term sheet with respect to such Proposed Major Lease has not been preliminarily conditionally approved (or deemed preliminarily conditionally approved) by Administrative Agent pursuant to Section 4.1.9(b)(i) , ten (10) Business Days of the receipt by Administrative Agent of a written request for such approval, accompanied by an executed or final draft copy of the Proposed Major Lease. Provided that no Event of Default is continuing, if Administrative Agent has failed to reject Borrower’s initial request for approval and not specifically granted in writing its approval thereto as aforesaid within such ten (10) Business Day period, as the case may be, and Borrower provides Administrative Agent with an additional written request for approval (which additional written request, along with the initial request for approval, shall specifically refer to this Section 4.1.9(b)(ii) and shall explicitly state in capital letters and using a 14 point font that failure by Administrative Agent to approve or disapprove within five (5) Business Days may constitute a deemed approval) and Administrative Agent fails to reject or specifically approve the request in writing delivered to Borrower within five (5) Business Days after receipt by Administrative Agent of the additional request, the Proposed Major Lease shall be deemed approved by Administrative Agent, and Borrower shall be entitled to enter into such Proposed Major Lease or proposed renewal, extension or modification of an existing Major Lease. Notwithstanding anything to the contrary contained herein, Borrower shall have the right to execute Proposed Major Leases and any amendments or modifications thereto without Administrative Agent’s prior approval if the lease (or amendment, as applicable) is consistent with the term sheet approved by Administrative Agent and the lease (or amendment, as applicable) does not contain any economic or material non-economic changes to the terms previously approved (or deemed approved) by Administrative Agent.
(iii)      Notwithstanding the provisions of Section 4.1.9(a) and the preceding clauses (i)-(ii) of this Section 4.1.9(b) above, provided that no Event of Default is continuing, renewals, assignments, subleases, amendments and modifications of existing or future Leases and the execution of proposed leases shall not be subject to the prior approval of Administrative Agent provided (i) the proposed lease would be a Minor Lease or the existing or future Lease as amended and modified (but specifically excluding amendments or modifications to Major Leases which would result in such Lease becoming a Minor Lease) or the renewal Lease is a Minor Lease, and (ii) the proposed lease shall meet the requirements of clauses (A) through (E), inclusive of Section 4.1.9(a) . For the avoidance of doubt, any Minor Lease that does not satisfy each of the requirements set forth in this Section 4.1.9(b)(iii) shall be subject to Administrative Agent’s approval, which consent shall not be unreasonably withheld, conditioned or delayed so long as no Event of Default is then continuing, and the deemed approval mechanism set forth in clauses (i)-(ii) of this Section 4.1.9(b) above shall apply in connection with the approval of any such Minor Lease.
(iv)      Borrower shall not permit or consent to any assignment or sublease of any Major Lease without Administrative Agent’s prior written approval (other than assignments or subleases expressly permitted under any Major Lease pursuant to a unilateral right of the Tenant thereunder not requiring the consent of Borrower), which Administrative Agent shall not unreasonably withhold, delay or condition.

-97-


(v)      Upon request by Borrower, Administrative Agent will, at Borrower’s sole cost and expense, execute and deliver its standard form of subordination, non-disturbance and attornment agreement to Tenants under Leases, with such commercially reasonable changes as may be requested by such Tenant and Borrower and which are reasonably acceptable to Administrative Agent. In addition, upon request by Administrative Agent, at Borrower’s expense, Borrower shall use commercially reasonable efforts to obtain from Tenants subordination, non-disturbance and attornment agreements on Administrative Agent’s standard form.
(c)      Covenants . Borrower (i) shall observe and perform the obligations imposed upon the lessor under the Leases in a commercially reasonable manner; (ii) shall enforce the terms, covenants and conditions contained in the Leases upon the part of the Tenants thereunder to be observed or performed in a commercially reasonable manner, provided, however, Borrower shall not terminate or accept a surrender of a Lease without Administrative Agent’s prior approval (except following a default by a Tenant under a Lease that is not a Major Lease and termination of such non-Major Lease will not result in a Cash Trap Period, in which case no approval shall be required so long as Borrower provides Administrative Agent with written notice of such termination); (iii) shall not collect any of the Rents more than one (1) month in advance (other than security deposits); (iv) shall not execute any assignment of lessor’s interest in the Leases or the Rents (except as contemplated by the Loan Documents); and (v) shall not alter, modify or change any Major Lease so as to decrease the amount of or change the payment date for rent, change the expiration date, grant any option for additional space or term, materially reduce the obligations of the Tenant or increase the obligations of the lessor. Borrower shall promptly send copies to Administrative Agent of all written notices of material default which Borrower shall send or receive under the Leases.
(d)      Security Deposits . All security deposits of Tenants, whether held in cash or any other form, shall be held in compliance with all Legal Requirements and shall not be commingled with any other funds of Borrower. During the continuance of an Event of Default, Borrower shall, upon Administrative Agent’s request, if permitted by applicable Legal Requirements, cause all such security deposits (and any interest theretofore earned thereon) to be transferred into the Deposit Account (which shall then be held by Deposit Bank in a separate Account), subject to the terms of the Leases and the Loan Documents. Any bond or other instrument which Borrower is permitted to hold in lieu of cash security deposits under any applicable Legal Requirements (i) shall be maintained in full force and effect in the full amount of such deposits unless replaced by cash deposits as herein above described, (ii) shall be issued by an Eligible Institution reasonably satisfactory to Administrative Agent, (iii) shall, if permitted pursuant to any Legal Requirements, name Administrative Agent, for the benefit of the Lenders, as payee or mortgagee thereunder (or at Administrative Agent’s option, be fully assignable to Administrative Agent), and (iv) shall in all respects comply with any applicable Legal Requirements and otherwise be satisfactory to Administrative Agent. Borrower shall, promptly following written request, provide Administrative Agent with evidence reasonably satisfactory to Administrative Agent of Borrower’s compliance with the foregoing.

-98-


(e)      Proceeding . Borrower shall appear in and defend any action or proceeding arising under, occurring out of, or in any manner connected with, the Leases or the obligations, duties, or liabilities of Borrower, any Tenant or any Lease guarantor. Borrower shall pay all reasonable, out of pocket costs and expenses of Administrative Agent, including reasonable, out of pocket attorneys’ fees, in any action or proceeding in which Administrative Agent may appear.
4.1.10      Alterations . Administrative Agent’s prior approval, which approval may be granted or withheld in Administrative Agent’s sole discretion, shall be required in connection with any alterations to any Improvements (a) that are reasonably likely to have a Material Adverse Effect or (b) are structural in nature. Administrative Agent’s prior approval shall also be required (such approval not to be unreasonably withheld, delayed or conditioned) in connection with any other alterations to any Improvements (that is, alterations which would not be covered by subsection (a) or (b) of this Section 4.1.10 ), the cost of which is reasonably anticipated to exceed the Alteration Threshold. Notwithstanding the foregoing, Administrative Agent’s prior approval shall not be required for (i) Capital Expenditures the cost of which is being funded by Lenders pursuant Article 2 hereof, (ii) Tenant Improvements the cost of which is being funded by Lenders pursuant Article 2 hereof or the Building Loan Agreement, or the Build Out Work (as described in (b) below), (iii) any Restoration in accordance with the terms of the Loan Documents, (iv) any alterations that are in accordance with the Approved Annual Budget (including the variances with respect thereto permitted by this Agreement pursuant to Section 4.1.6(f)) ,and (v) Tenant Improvements being undertaken by a Tenant pursuant to its Lease (to the extent Administrative Agent had an approval right with respect to such Lease and Administrative Agent approved (or was deemed to have approved) such Lease). If the total unpaid amounts incurred and to be incurred with respect to such alterations to the Improvements shall at any time exceed the Alteration Threshold, Borrower shall promptly deliver to Administrative Agent as security for the payment of such amounts and as additional security for Borrower’s obligations under the Loan Documents any of the following: (i) cash, (ii) a Letter of Credit, or (iii) a completion bond or guaranty reasonably acceptable to Administrative Agent from a guarantor reasonably acceptable to Administrative Agent. Such security shall be in an amount equal to the excess of the total unpaid amounts incurred and to be incurred with respect to such alterations to the Improvements (other than such amounts to be paid or reimbursed by Tenants under the Leases) over the Alteration Threshold. Upon completion of any alteration permitted hereunder, the security deposit described in the immediately preceding sentence promptly shall be released to Borrower and the Property shall continue to comply with all requirements relating to parking pursuant to all Legal Requirement and any other agreements to which the Property is subject.
(b) Notwithstanding anything to the contrary set forth in subsection (a) above provided no Event of Default shall exist and be continuing, Borrower shall have the right to construct any number of speculative suites at the Property (the “ Build Out Space ”) and lease (including the offering of tenant improvement allowances in connection therewith) the Build Out Space in accordance with the Section 4.1.9 hereof (any such construction and leasing, the “ Build Out Work ”), provided that (i) no more than 40,000 rentable square feet of vacant space at the Property may qualify as Build Out Space as of any particular date, (ii) shall provide for economic terms, including rental rates and net effective rental rates, that are in accordance with the Minimum Leasing Parameters, (iii) if the Build Out Costs incurred by Borrower in connection with the Build Out Work, on an annual basis,

-99-


exceeds an average of $90.00 per rentable square foot (the “ Build Out Cost Cap ”), then prior to any amounts being advanced by Administrative Agent, Borrower shall fund from equity an amount equal to such excess costs and (iii) the construction of all such Build Out Space shall be completed no later than the then-applicable Maturity Date (assuming that, if any such Build Out Work is to be completed following the Initial Maturity Date, Borrower has not cancelled all Unadvanced Amounts in accordance with Section 2.7.7 ). Borrower shall submit evidence of the average cost of the Build Out Work acceptable to Administrative Agent with any Requisition for Future Advances to be applied to Build Out Costs. Borrower shall construct the Build Out Space in compliance with Section 2.6.3 .
4.1.11      Interest Rate Cap .
(a)      On the date hereof, Borrower has delivered an Interest Rate Protection Agreement to Administrative Agent, which has been approved by Administrative Agent (the “ Closing Date Interest Rate Protection Agreement ”). At all times while the Closing Date Interest Rate Protection Agreement remains in effect, the notional amount required hereunder shall be as set forth in such Closing Date Interest Protection Agreement, except, if at any time the then-notional amount provided in the Closing Date Interest Protection Agreement is less than the sum of (x) the Outstanding Principal Balance plus (y) the Building Loan Outstanding Principal Balance, Administrative Agent, shall have the right, at any time, to require that Borrower deliver a supplemental Interest Rate Protection Agreement such that such supplemental Interest Rate Protection Agreement, together with the Closing Date Interest Protection Agreement, have an aggregate amount equal to at least the sum of (x) the Outstanding Principal Balance plus (y) the Building Loan Outstanding Principal Balance. Following the expiration of the Closing Date Interest Protection Agreement, at all times during the term of the Loan (including during any extension period), Borrower shall maintain in effect an Interest Rate Protection Agreement with a notional amount equal to at least the sum of (x) the Outstanding Principal Balance plus (y) the Building Loan Outstanding Principal Balance and with a Counterparty reasonably acceptable to Administrative Agent having a Minimum Counterparty Rating. The Interest Rate Protection Agreement shall have a strike price equal to or less than the Capped LIBOR Rate.
(b)      Prior to or on the Closing Date, Borrower shall have obtained the Interest Rate Protection Agreement with a term of at least two (2) years. Borrower shall (x) at least thirty (30) days prior to the expiration of the term of any Interest Rate Protection Agreement and (y) as a condition to Borrower exercising its right to extend the term of the Loan for each Extension Period, purchase a new Interest Rate Protection Agreement having a term ending not earlier than the First Extension Maturity Date, the Second Extension Maturity Date or the Third Extension Maturity Date, as applicable, and having a strike price equal to the greater of (x) the Capped LIBOR Rate and (y) a strike price that will cause the DSCR based on the Capped LIBOR Rate to be not less than 1.25x. In the event of any withdrawal of the rating of such Counterparty by any Rating Agency or downgrade of the rating of such Counterparty by any Rating Agency below the Minimum Counterparty Rating, Borrower shall notify Administrative Agent of such downgrade and shall replace the Interest Rate Protection Agreement not later than ten (10) Business Days following such downgrade or withdrawal with an Interest Rate Protection Agreement in form and substance reasonably satisfactory to Administrative Agent (and meeting the requirements set forth in this

-100-


Section 4.1.11 ) from a Counterparty having a Minimum Counterparty Rating; provided, however, that if any Rating Agency withdraws or downgrades the credit rating of the Counterparty below the Minimum Counterparty Rating, Borrower shall not be required to replace the Counterparty under the Interest Rate Protection Agreement provided that within ten (10) Business Days following such downgrade or withdrawal, (y) such Counterparty or an Affiliate thereof posts additional collateral acceptable to Administrative Agent from time to time securing its obligations under the Interest Rate Protection Agreement and shall enter into an ISDA Credit Support Annex (CSA) governed by the law of the State of New York with respect to such additional collateral or (z) an Affiliate of such Counterparty with a Minimum Counterparty Rating delivers a guaranty acceptable to Administrative Agent guaranteeing such Counterparty’s obligations under the Interest Rate Protection Agreement and shall enter into an ISDA Credit Support Annex (CSA) governed by the law of the State of New York with respect to such guaranty. Any new or replacement Interest Rate Protection Agreement required to be delivered by Borrower to Administrative Agent hereunder shall be in form and substance substantially similar to the Interest Rate Protection Agreement in effect as of the date hereof and Borrower shall provide Administrative Agent with an Assignment of Protection Agreement with respect thereto in the form of the Assignment of Protection Agreement, together with an opinion of counsel with respect thereto reasonably acceptable to Administrative Agent. At the time Borrower enters into any Interest Rate Protection Agreement, the Counterparty and Borrower shall each be an “ Eligible Contract Participant ”, as such term is defined under the Commodity Exchange Act, and shall otherwise satisfy all requirements under the Dodd Frank Wall Street Reform and Consumer Protection Act in connection with entering into the Interest Rate Protection Agreement.
(c)      Borrower shall not (i) without the prior written consent of Administrative Agent (such consent not to be unreasonably withheld, conditioned or delayed), materially modify, amend or supplement the terms of the Interest Rate Protection Agreement, (ii) without the prior written consent of Administrative Agent (such consent not to be unreasonably withheld, conditioned or delayed), except in accordance with the terms of the Interest Rate Protection Agreement, cause the termination of the Interest Rate Protection Agreement prior to its stated maturity date, (iii) without the prior written consent of Administrative Agent (such consent not to be unreasonably withheld, conditioned or delayed), except as aforesaid, waive or release any material obligation of the Counterparty (or any successor or substitute party to the Interest Rate Protection Agreement) under the Interest Rate Protection Agreement, (iv) without the prior written consent of Administrative Agent (such consent not to be unreasonably withheld, conditioned or delayed), consent or agree to any act or omission to act on the part of the Counterparty (or any successor or substitute party to the Interest Rate Protection Agreement) which, without such consent or agreement, would constitute a default under the Interest Rate Protection Agreement, (v) fail to exercise promptly and diligently each and every material right which it may have under the Interest Rate Protection Agreement to the extent commercially reasonable, (vi) take or intentionally omit to take any action or intentionally suffer or permit any action to be omitted or taken, the taking or omission of which would result in any right of offset against sums payable under the Interest Rate Protection Agreement or any defense by the Counterparty (or any successor or substitute party to the Interest Rate Protection Agreement) to payment, or (vii) fail to give prompt notice to Administrative Agent of any written notice of default given by or to Borrower under or with respect to the Interest Rate Protection Agreement, together with a complete copy of such notice.

-101-


(d)      In connection with the Interest Rate Protection Agreement delivered on the Closing Date, Borrower shall obtain and deliver to Administrative Agent an opinion of counsel from counsel (which counsel may be in-house counsel for the Counterparty) for the Counterparty upon which Administrative Agent and their successors and assigns may rely, under New York law and, if the Counterparty is a non-U.S. entity, the applicable foreign law, which shall provide in relevant part, that: (i) the Counterparty is duly organized, validly existing, and in good standing under the laws of its jurisdiction of incorporation and has the organizational power and authority to execute and deliver, and to perform its obligations under, the Interest Rate Protection Agreement; (ii) the execution and delivery of the Interest Rate Protection Agreement by the Counterparty, and any other agreement which the Counterparty has executed and delivered pursuant thereto, and the performance of its obligations thereunder have been and remain duly authorized by all necessary action and do not contravene any provision of its certificate of incorporation or by-laws (or equivalent organizational documents) or any law, regulation or contractual restriction binding on or affecting it or its property; (iii) all consents, authorizations and approvals required for the execution and delivery by the Counterparty of the Interest Rate Protection Agreement, and any other agreement which the Counterparty has executed and delivered pursuant thereto, and the performance of its obligations thereunder have been obtained and remain in full force and effect, all conditions thereof have been duly complied with, and no other action by, and no notice to or filing with any governmental authority or regulatory body is required for such execution, delivery or performance; and (iv) the Interest Rate Protection Agreement has been duly executed and delivered by the Counterparty and constitutes the legal, valid and binding obligation of the Counterparty, enforceable against the Counterparty in accordance with its terms, subject to applicable bankruptcy, insolvency and similar laws affecting creditors’ rights generally, and subject, as to enforceability, to general principles of equity (regardless of whether enforcement is sought in a proceeding in equity or at law).
(e)      Notwithstanding anything to the contrary contained in this Section 4.1.11 or elsewhere in this Agreement, if, at any time, Administrative Agent converts the Loan to a Substitute Rate Loan, then:
(i)      within thirty (30) days after such conversion, Borrower shall, unless the prevailing interest rate derivatives markets have not yet converted to or provided a substantiated market in order to reasonably, and in good faith, replace the then-existing Interest Rate Protection Agreement with any interest rate protection agreement at the Substitute Rate, either (A) enter into, make all payments under, and satisfy all conditions precedent to the effectiveness of, a Substitute Interest Rate Protection Agreement (and in connection therewith, but not prior to Borrower taking all the actions described in this clause (i), Borrower shall have the right to terminate any then-existing Interest Rate Protection Agreement) or (B) cause the then-existing Interest Rate Protection Agreement to be modified such that such then-existing Interest Rate Protection Agreement satisfies the requirements of a Substitute Interest Rate Protection Agreement as set forth below in the definition thereof provided that any refund or other proceeds received in connection with or as a result of a conversion shall be released to Borrower to be used to purchase the Substitute Interest Rate Protection Agreement;

-102-


(ii)      following such conversion in lieu of satisfying the condition described in Section 4.1.11(b) with respect to any outstanding Extension Period, Borrower shall instead enter into, make all payments under, and satisfy all conditions precedent to the effectiveness of a Substitute Interest Rate Protection Agreement on or prior to the first day of such Extension Period; and
(iii)      from and after the date of any such conversion, all references to “Interest Rate Protection Agreement” shall be deemed to refer or relate, as applicable, to a Substitute Interest Rate Protection Agreement.
4.1.12      Material Agreements . Borrower shall (a) promptly perform and/or observe in all material respects all of the covenants and agreements required to be performed and observed by it under each Material Agreement to which it is a party in accordance therewith, and take all commercially reasonable efforts to preserve and to keep unimpaired its rights thereunder, (b) promptly notify Administrative Agent in writing of the giving of any written notice of any material default by any party under any Material Agreement of which it is aware, (c) promptly enforce the performance and observance of all of the material covenants and agreements required to be performed and/or observed by the other party under each Material Agreement to which it is a party in a commercially reasonable manner, and (d) not amend, modify, or terminate a Material Agreement in any material respect or enter into a new Material Agreement, in each case without the consent of Administrative Agent, which shall not be unreasonably withheld, conditioned or delayed.
4.1.13      Reserved .
4.1.14      Costs of Enforcement/Remedying Defaults . In the event (a) that the Mortgage is foreclosed in whole or in part or the Note or any other Loan Document is put into the hands of an attorney for collection, suit, action or foreclosure, (b) of the foreclosure of any Lien or mortgage prior to or subsequent to the Mortgage, (c) of the bankruptcy, insolvency, rehabilitation or other similar proceeding in respect of Borrower or Guarantor or an assignment by Borrower or Guarantor for the benefit of its creditors, or (d) Administrative Agent shall remedy or attempt to remedy any Event of Default hereunder, Borrower shall be chargeable with and agrees to pay all reasonable, out of pocket costs incurred by Administrative Agent as a result thereof, including costs of collection and defense (including reasonable, out of pocket attorneys’, experts’, consultants’ and witnesses’ fees and disbursements) in connection therewith and in connection with any appellate proceeding or post‑judgment action involved therein, which shall be due and payable on demand, together with interest thereon from the date incurred by Administrative Agent at the Default Rate, and, in either case, together with all required service or use taxes.
4.1.15      Business and Operations . Borrower will continue to engage in the businesses currently conducted by it, including as and to the extent the same are necessary for the ownership, operation, maintenance, repair, improvement, development, sale, management and leasing of the Property. Borrower will qualify to do business and will remain in good standing under the laws of each jurisdiction as and to the extent the same are required for the ownership and leasing of the Property. Borrower shall at all times cause the Property to be maintained as office, ground floor retail and other appurtenant uses.

-103-


4.1.16      [Reserved] .
4.1.17      Maintenance of Property . Borrower shall cause the Property to be maintained in good and safe working order and repair, reasonable wear and tear, Condemnation and Casualty excepted, and in keeping with the condition and repair of properties of a similar use, value, age, nature and construction. Borrower shall not use, maintain or operate the Property in any manner that constitutes a public or private nuisance or that makes void, voidable, or cancelable, or increases the premium of, any insurance then in force with respect thereto. Borrower shall from time to time make, or cause to be made, all reasonably necessary repairs, renewals, replacements, betterments and improvements to the Property. Borrower shall not make any change in the use of the Property that would materially increase the risk of fire or other hazard arising out of the operation of the Property, or do or knowingly permit to be done thereon anything that may in any way impair the value of the Property in any material respect or the Lien of the Mortgage. Borrower shall not, without the prior written consent of Administrative Agent, 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.
4.1.18      Management Agreement; Leasing Agreement; Construction Management Agreement; Project Management .
(a)      Management Agreement .
(i)      Borrower shall use commercially reasonable efforts to cause Manager to manage and lease the Property in accordance with the Management Agreement. Borrower shall (A) diligently perform and observe, in each case in all material respects, all of the terms, covenants and conditions of the Management Agreement on the part of Borrower to be performed and observed, (B) promptly notify Administrative Agent of any written notice to Borrower of any material default by Borrower in the performance or observance of any of the terms, covenants or conditions of the Management Agreement on the part of Borrower to be performed and observed beyond any applicable grace, notice and cure periods, (C) promptly following receipt of Administrative Agent’s written request, promptly deliver to Administrative Agent a copy of each financial statement, business plan, capital expenditures plan, report and estimate received by it pursuant to the terms of the Management Agreement, and (D) promptly enforce the performance and observance in all material respects of all of the covenants required to be performed and observed by Manager under the Management Agreement. If Borrower shall default in the performance or observance of any term, covenant or condition of the Management Agreement on the part of Borrower to be performed or observed beyond any applicable grace, notice or cure periods, then, without limiting Administrative Agent’s other rights or remedies under this Agreement or the other Loan Documents, and without waiving or releasing Borrower from any of its Obligations hereunder or under the Management Agreement, as applicable, Administrative Agent shall have the right, but shall be under no obligation, to pay any sums and to perform any act as may be appropriate to cause all the terms, covenants and conditions of the Management Agreement on the part of Borrower to be performed or observed. Borrower hereby agrees to pay to Administrative Agent promptly following written demand, all such

-104-


sums so paid and expended by Administrative Agent in connection therewith, together with interest thereon at the Default Rate from the day on which Borrower receives such demand until paid. All sums so paid and expended by Administrative Agent and the interest thereon shall be secured by the legal operation and effect of the Mortgage.
(ii)      Borrower may, without Administrative Agent’s consent, replace the Manager so long as the replacement manager is a Qualified Manager pursuant to a Replacement Management Agreement.
(iii)      Borrower shall not replace Manager, surrender, terminate, cancel, modify, renew or extend the Management Agreement, or enter into any other agreement relating to the management or operation of the Property with Manager or any other Person, or consent to the assignment by the Manager of its interest under the Management Agreement, or waive or release any of its rights and remedies under the Management Agreement, in each case without the express consent of Administrative Agent, which shall not be unreasonably withheld, conditioned or delayed; provided that Administrative Agent’s consent shall not be required for the termination of a Management Agreement if Borrower has previously executed another Qualified Replacement Management Agreement for the Property. In the event that the Management Agreement expires or is terminated (without limiting any obligation of Borrower to obtain Administrative Agent’s consent to any termination or modification of the Management Agreement to the extent required in accordance with the terms and provisions of this Agreement), Borrower shall promptly enter into a Replacement Management Agreement with Manager or another Qualified Manager, as applicable.
(iv)      Administrative Agent shall have the right to require Borrower to replace the Manager with a Person which is not an Affiliate of Borrower and approved by Administrative Agent (such approval, other than during the continuance of an Event of Default, not to be unreasonably withheld, conditioned or delayed) upon the occurrence of any one or more of the following events: (i) at any time following the occurrence and during the continuance of an Event of Default, (ii) upon a change in Control of the Manager (if the Manager is an Affiliate of Sponsor), (iii) if Manager becomes a debtor in a bankruptcy proceeding or (iv) upon the occurrence of a material event of default under the Management Agreement.
(b)      Leasing Agreement .
(i)      Borrower shall use commercially reasonable efforts to cause Leasing Agent to lease and market the Property in accordance with the Leasing Agreement. Borrower shall (A) diligently perform and observe, in each case in all material respects, all of the terms, covenants and conditions of the Leasing Agreement on the part of Borrower to be performed and observed, (B) promptly notify Administrative Agent of any notice to Borrower of any material default by Borrower in the performance or observance of any of the terms, covenants or conditions of the Leasing Agreement on the part of Borrower to be performed and observed, (C) promptly following receipt of Administrative Agent’s written request, deliver to Administrative Agent a copy of each financial statement, business plan,

-105-


leasing plan, capital expenditures plan, report and estimate received by it pursuant to the terms of the Leasing Agreement, and, in accordance with this Agreement or otherwise promptly following written request by Administrative Agent, shall cause Leasing Agent to provide Administrative Agent with reports in regard to the leasing efforts at the Property, and (D) promptly enforce the performance and observance of all of the material covenants required to be performed and observed by Listing Agent under the Leasing Agreement. If Borrower shall default in the performance or observance of any term, covenant or condition of the Leasing Agreement on the part of Borrower to be performed or observed beyond applicable grace, notice and cure periods, then, without limiting Administrative Agent’s other rights or remedies under this Agreement or the other Loan Documents, and without waiving or releasing Borrower from any of its Obligations hereunder or under the Leasing Agreement, as applicable, Administrative Agent shall have the right, but shall be under no obligation, to pay any sums and to perform any act as may be appropriate to cause all the terms, covenants and conditions of the Leasing Agreement on the part of Borrower to be performed or observed. Borrower hereby agrees to pay to Administrative Agent promptly following written demand, all such sums so paid and expended by Administrative Agent in connection therewith, together with interest thereon at the Default Rate from the day on which Borrower receives such demand until paid. All sums so paid and expended by Administrative Agent and the interest thereon shall be secured by the legal operation and effect of the Mortgage.
(ii)      Borrower may, without Administrative Agent’s consent, replace the Leasing Agent so long as the replacement leasing agent is a Qualified Leasing Agent pursuant to a Replacement Leasing Agreement.
(iii)      Borrower shall not replace Leasing Agent, surrender, terminate, cancel, modify, renew or extend the Leasing Agreement, or enter into any other agreement relating to leasing operations at the Property with Leasing Agent or any other Person, or consent to the assignment by the Leasing Agent of its interest under the Leasing Agreement, or waive or release any of its rights and remedies under the Leasing Agreement, in each case without the express consent of Administrative Agent, which shall not be unreasonably withheld, conditioned or delayed; provided that Administrative Agent’s consent shall not be required for the termination of a Leasing Agreement if Borrower has previously or thereafter promptly executes another Qualified Leasing Agreement for the Property. In the event that the Leasing Agreement expires or is terminated (without limiting any obligation of Borrower to obtain Administrative Agent’s consent to any termination or modification of the Leasing Agreement to the extent required in accordance with the terms and provisions of this Agreement), Borrower shall promptly enter into a Replacement Leasing Agreement with Manager or another Qualified Leasing Agent, as applicable.
(iv)      Administrative Agent shall have the right to require Borrower to replace the Leasing Agent with a Person which is not an Affiliate of Borrower and approved by Administrative Agent (such approval, other than during the continuance of an Event of Default, not to be unreasonably withheld, conditioned or delayed) upon the occurrence of any one or more of the following events: (i) at any time following the occurrence and during

-106-


the continuance of an Event of Default, or (ii) if Leasing Agent becomes a debtor in a bankruptcy proceeding.
(c)      Construction Management Agreement .
(i)      Borrower shall cause Construction Manager to manage Capital Expenditures Work and Tenant Improvement Work in accordance with the Construction Management Agreement and this Agreement. Borrower shall (A) diligently perform and observe, in each case in all material respects, all of the terms, covenants and conditions of the Construction Management Agreement on the part of Borrower to be performed and observed, (B) promptly notify Administrative Agent of any notice to Borrower of any material default by Borrower in the performance or observance of any of the terms, covenants or conditions of the Construction Management Agreement on the part of Borrower to be performed and observed, (C) promptly following receipt of Administrative Agent’s written request, deliver to Administrative Agent a copy of each financial statement, business plan, capital expenditures plan, report and estimate received by it pursuant to the terms of the Construction Management Agreement, (D) promptly enforce the performance and observance in all material respects of all of the covenants required to be performed and observed by Construction Manager under the Construction Management Agreement and (E) in the event of any conflict between the terms and conditions of this Agreement and the terms and conditions of the Construction Management Agreement with respect to the performance of Capital Expenditures Work and Tenant Improvement Work, the terms of this Agreement shall control and Borrower shall cause Construction Manager to comply in all material respects with the terms and conditions of this Agreement. If Borrower or Construction Manager shall default in the performance or observance of any term, covenant or condition of the Construction Management Agreement on the part of Borrower to be performed or observed (beyond the expiration of any applicable grace, notice and cure periods), then, without limiting Administrative Agent’s other rights or remedies under this Agreement or the other Loan Documents, and without waiving or releasing Borrower from any of its Obligations hereunder or under the Construction Management Agreement, as applicable, Administrative Agent shall have the right, but shall be under no obligation, to pay any sums and to perform any act as may be appropriate to cause all the terms, covenants and conditions of the Construction Management Agreement on the part of Borrower to be performed or observed. Borrower hereby agrees to pay to Administrative Agent promptly following demand, all such sums so paid and expended by Administrative Agent in connection therewith, together with interest thereon at the Default Rate from the day on which Borrower receives such demand until paid. All sums so paid and expended by Administrative Agent and the interest thereon shall be secured by the legal operation and effect of the Mortgage.
(ii)      Borrower shall not replace Construction Manager, surrender, terminate, cancel, modify, renew or extend the Construction Management Agreement, or enter into any other agreement relating to the Construction Management Agreement or operation of the Property with Construction Manager or any other Person, or consent to the assignment by the Construction Manager of its interest under the Construction Management

-107-


Agreement, or waive or release any of its rights and remedies under the Construction Management Agreement, in each case without the express consent of Administrative Agent, which shall be granted or withheld in Administrative Agent’s sole and absolute discretion.
(iii)      Administrative Agent shall have the right to require Borrower to replace the Construction Manager with a Person which is not an Affiliate of Borrower and approved by Administrative Agent (such approval, other than during the continuance of an Event of Default, not to be unreasonably withheld, conditioned or delayed) upon the occurrence of any one or more of the following events: (i) at any time following the occurrence and during the continuance of an Event of Default, or (ii) if Construction Manager becomes a debtor in a bankruptcy proceeding.
(d)      Project Management Agreement .
(i)      Borrower shall cause Project Manager to manage work at the Improvements in accordance with the Project Management Agreement and this Agreement. Borrower shall (A) diligently perform and observe, in each case in all material respects, all of the terms, covenants and conditions of the Project Management Agreement on the part of Borrower to be performed and observed, (B) promptly notify Administrative Agent of any notice to Borrower of any material default by Borrower in the performance or observance of any of the terms, covenants or conditions of the Project Management Agreement on the part of Borrower to be performed and observed, (C) promptly following receipt of Administrative Agent’s written request, deliver to Administrative Agent a copy of each financial statement, business plan, capital expenditures plan, report and estimate received by it pursuant to the terms of the Project Management Agreement, (D) promptly enforce the performance and observance in all material respects of all of the covenants required to be performed and observed by Project Manager under the Project Management Agreement and (E) in the event of any conflict between the terms and conditions of this Agreement and the terms and conditions of the Project Management Agreement with respect to the performance of Capital Expenditures Work and Tenant Improvement Work, the terms of this Agreement shall control and Borrower shall cause Project Manager to comply in all material respects with the terms and conditions of this Agreement. If Borrower or Project Manager shall default in the performance or observance of any term, covenant or condition of the Project Management Agreement on the part of Borrower to be performed or observed (beyond the expiration of any applicable grace, notice and cure periods), then, without limiting Administrative Agent’s other rights or remedies under this Agreement or the other Loan Documents, and without waiving or releasing Borrower from any of its Obligations hereunder or under the Project Management Agreement, as applicable, Administrative Agent shall have the right, but shall be under no obligation, to pay any sums and to perform any act as may be appropriate to cause all the terms, covenants and conditions of the Project Management Agreement on the part of Borrower to be performed or observed. Borrower hereby agrees to pay to Administrative Agent promptly following demand, all such sums so paid and expended by Administrative Agent in connection therewith, together with interest thereon at the Default Rate from the day on which Borrower receives such demand until

-108-


paid. All sums so paid and expended by Administrative Agent and the interest thereon shall be secured by the legal operation and effect of the Mortgage.
(ii)      Borrower shall not replace Project Manager, surrender, terminate, cancel, modify, renew or extend the Project Management Agreement, or enter into any other agreement relating to the Project Management Agreement or operation of the Property with Project Manager or any other Person, or consent to the assignment by the Project Manager of its interest under the Project Management Agreement, or waive or release any of its rights and remedies under the Project Management Agreement, in each case without the express consent of Administrative Agent, which shall be granted or withheld in Administrative Agent’s sole and absolute discretion.
(iii)      Administrative Agent shall have the right to require Borrower to replace the Project Manager with a Person which is not an Affiliate of Borrower and approved by Administrative Agent (such approval, other than during the continuance of an Event of Default, not to be unreasonably withheld, conditioned or delayed) upon the occurrence of any one or more of the following events: (i) at any time following the occurrence and during the continuance of an Event of Default, or (ii) if Project Manager becomes a debtor in a bankruptcy proceeding.
4.1.19      O&M Plan . Administrative Agent acknowledges that pursuant to the environmental site assessment prepared for the Porperty that an Operations & Maintenance Plan for Asbestos-Containing Materials with respect to the Property is required and shall be prepared with in accordance with a plan acceptable to Administrative Agent (as the same may be amended, supplemented or replaced, the “ O&M Program ”). Borrower covenants and agrees to implement and follow the terms and conditions of the O&M Program during the term of the Loan, including any extension or renewal thereof. Administrative Agent’s requirement that Borrower comply with the O&M Program shall not be deemed to constitute a waiver or modification of any of Borrower’s covenants and agreements with respect to environmental laws, hazardous substances, lead-based paint and asbestos.
4.1.20      Costs . Borrower shall pay when due all costs and expenses required under this Agreement. In addition to Administrative Agent’s right to obtain a New Appraisal at Borrower’s sole cost and expense as specifically set forth in this Agreement, Administrative Agent shall have the right to obtain a New Appraisal at Borrower’s sole cost expense one time per year, except, if an Event of Default has occurred and is continuing, Administrative Agent shall have the right to obtain more than one New Appraisal at Borrower’s sole cost and expense during a calendar year.
4.1.21      Notice of Default . Borrower shall promptly advise Administrative Agent of the occurrence of any monetary Default, material non-monetary Default or Event of Default of which Borrower has actual knowledge.
4.1.22      Cooperate in Legal Proceedings . Borrower shall cooperate fully with Administrative Agent with respect to any proceedings before any court, board or other Governmental Authority or tribunal (including any arbitration or mediation) which is reasonably likely to in any way affect the rights of Administrative Agent hereunder or any rights obtained by Administrative

-109-


Agent under any of the other Loan Documents and, in connection therewith, permit Administrative Agent, at its election and expense, to participate in any such proceedings.
4.1.23      Appraisals . In addition to Administrative Agent’s right to obtain a New Appraisal at Borrower’s sole cost and expense as otherwise specifically set forth in this Agreement, Administrative Agent shall have the right to obtain a New Appraisal at Borrower’s sole cost and expense one time every two (2) years, except, if an Event of Default has occurred, Administrative Agent shall have the right to obtain one or more New Appraisals at Borrower’s sole cost and expense during a calendar year (provided, however, regardless of the obligation for payment of such New Appraisal as set forth above, this shall not limit Administrative Agent’s right to obtain a New Appraisal).
4.1.24      Award and Insurance Benefits . Borrower shall reasonably cooperate with Administrative Agent in obtaining the benefits of any Net Proceeds lawfully or equitably payable in connection with the Property, and Administrative Agent shall be reimbursed for any reasonable, out-of-pocket expenses incurred in connection therewith (including reasonable, out of pocket attorneys’ fees and disbursements) out of such Net Proceeds. No insufficiency of Net Proceeds shall limit Borrower’s reimbursement obligation hereunder.
4.1.25      Principal Place of Business, State of Organization . Except as otherwise expressly permitted in this Agreement, Borrower will not cause or permit any change to be made in its name, identity or corporate or partnership structure. Borrower shall cause its principal place of business and chief executive office, and the place where Borrower keeps its books and records, including recorded data of any kind or nature, regardless of the medium or recording, including software, writings, plans, specifications and schematics, has been for the entire period of the existence of Borrower and will continue to be the address of Borrower set forth at the introductory paragraph of this Agreement, unless Borrower provides Administrative Agent with twenty (20) days prior written notice of any change of the foregoing and adequate information as to the new location of Borrower’s principal place of business, chief executive office and location of its books and records. Borrower shall promptly notify Administrative Agent of any change in its organizational identification number.
4.1.26      Business and Operations . Borrower will continue to engage in the ownership, maintenance, construction, development, renovation, leasing, management and operation of the Property and the personal property related thereto, or make any change in the scope or nature of its business objectives, purposes or operations, or undertake or participate in activities other than the continuance of its present business. Borrower will qualify to do business and will remain in good standing under the laws of the jurisdiction as and to the extent the same are required for the ownership, maintenance, renovation, leasing, management and operation of the Property. Borrower shall at all times during the Term of the Loan, continue to own all of the Equipment, Fixtures and Personal Property which are necessary to operate the Property in the manner required hereunder and in the manner in which it is currently operated.
4.1.27      Performance by Borrower . Borrower shall (i) at all times comply in all material respects with all Easements, covenants, restrictions, declarations or other agreements of record to which Borrower is a party or to which Borrower or the Property is bound, and (ii) without

-110-


the prior written consent of Administrative Agent (not to be unreasonably withheld, conditioned or delayed), will not terminate, or amend or modify in any material respect, any of the foregoing.
4.1.28      Licenses . Borrower shall comply with the following covenants:
(a)      Licenses . Borrower shall keep and maintain all certifications, permits, licenses and approvals (including, without limitation, certificates of completion and occupancy permits required of Borrower) then-required for the legal use, occupancy and operation of the Property for its then-current use, and shall not transfer any of the foregoing (except in connection with a Permitted Transfer or a Transfer otherwise permitted pursuant to the terms of this Agreement).
4.1.29      Business Maintenance . Borrower shall maintain operational requirements for the Property such that the Property is maintained in accordance with the standards consistent with commercially reasonable customs and practices in the area where the Property is located (subject to normal wear and tear), and with the commercially reasonable customs and practice found in the development and management of office properties similar to the Property.
4.1.30      Easements and Restrictions; Zoning . Borrower shall submit to Administrative Agent for Administrative Agent’s reasonable approval prior to the execution thereof by Borrower all proposed Easements, restrictions, covenants, permits, licenses, and other instruments (other than Permitted Encumbrances) which would affect the title to the Property or use of the Property for its intended purposes, accompanied by a Survey for any Easements showing the exact proposed location thereof and such other information as Administrative Agent shall require. Borrower shall not subject the Property or any part thereof to any Easement, restriction or covenant (including any restriction or exclusive use provision in any Lease or other occupancy agreement) which is not a Permitted Encumbrance without the prior approval of Administrative Agent, such approval not to be unreasonably withheld, delayed or conditioned. With respect to any and all existing Easements, restrictions, covenants or operating agreements which benefit or burden the Property as of the Closing Date, any Easement, restriction or covenant to which the Property may hereafter be subjected in accordance with the provisions hereof and any zoning or land use classification of the Property approved by Administrative Agent, Borrower shall: (a) observe and perform the obligations imposed upon Borrower or the Property; (b) not alter, modify or change the same without the prior written approval of Administrative Agent, which approval shall not be unreasonably withheld, conditioned or delayed in the case of any non-material alteration, modification or change thereto; (c) enforce its rights thereunder in a commercially reasonable manner so as to preserve for the benefit of the Property the material benefits of the same; and (d) deliver to Administrative Agent a copy of any written notice of default or other material written notice or correspondence received or delivered by Borrower in respect of the same promptly after Borrower’s receipt or within a reasonable period of time before Borrower’s delivery of such notice or correspondence.
4.1.31      Laborers, Subcontractors and Materialmen . Borrower shall notify Administrative Agent promptly, and in writing, if Borrower receives any written default notice, notice of lien or demand for past due payment, from any contractor, laborer, subcontractor or materialmen. Borrower will also furnish to Administrative Agent at any time and from time to time

-111-


upon reasonable demand by Administrative Agent, lien waivers in form reasonably satisfactory to Administrative Agent bearing a then current date from the applicable contractor(s).
4.1.32      Ownership of Personalty . Borrower shall furnish to Administrative Agent, if Administrative Agent so requests, copies of the fully executed contracts, bills of sale, receipted vouchers and agreements, or any of them in Borrower’s possession and under which Borrower claims title to the materials, articles, fixtures and other personal property used or to be used in the construction or operation of the Improvements.
4.1.33      Purchase of Material Under Conditional Sale Contract . Borrower shall not permit any materials, equipment, fixtures or any other part of the Improvements to be purchased or installed under any security agreement or other arrangements wherein the seller reserves or purports to reserve the right to remove or to repossess any such items or to consider them personal property after their incorporation in the Property, unless previously authorized by Administrative Agent in writing.
4.1.34      After Acquired Property . Borrower hereby grants to Administrative Agent a first Lien security interest in and to all equipment and other personal property owned, leased or licensed by Borrower, whether or not used in the maintenance and/or operation of the Improvements, immediately upon acquisition of same or any part of same following the date hereof.
4.1.35      Special Purpose Bankruptcy Remote Entity . Borrower and each SPC Party shall at all times continue to be a Special Purpose Bankruptcy Remote Entity, in accordance with the terms of this Agreement. Borrower will not own or use any assets other than its interests in the Property and personal property incidental to the business of owning, constructing, operating and selling the Property and activities incidental thereto; without limiting the foregoing, the Property shall be operated as a single property or project, generating substantially all of Borrower’s gross income, it being Borrower’s intent that the Property shall at all times and from time to time constitute “single asset real estate” for purposes of Section 362(d)(3) of the Bankruptcy Code.
4.1.36      Certificate of Occupancy . Borrower shall (a) maintain and keep in full force and effect (i) the permanent certificate of occupancy for the Improvements, or (ii) the temporary certificate of occupancy for the Improvements until receipt of the permanent certificate of occupancy, and (b) replace or renew any temporary certificate of occupancy for the Improvements that expires or otherwise terminates.
4.1.37      Minimum Equity . Savanna Guarantor shall maintain a minimum equity of $20,000,000.00 (the “ Minimum Equity Requirement ”) of cash equity invested in the Property (exclusive of any distributions from cash flow from the Property).
Section 4.2      Borrower Negative Covenants .
From and after the Closing Date until the repayment of the Debt in full, Borrower hereby covenants and agrees with Administrative Agent and Lenders that:

-112-


4.2.1      Due on Sale and Encumbrance; Transfers of Interests .
(a)      Except as provided in Article VIII hereof, without the prior written consent of Administrative Agent (which consent may be granted or withheld in Administrative Agent’s sole and absolute discretion), neither Borrower nor any other Person having a direct or indirect ownership or beneficial interest in Borrower shall sell, convey, mortgage, grant, bargain, encumber, pledge, assign or transfer any interest, direct or indirect, in a Restricted Party, the Property or any part thereof, whether voluntarily or involuntarily (each, a “ Transfer ”), in violation of the covenants and conditions set forth in the Mortgage and this Agreement (collectively, “ Prohibited Transfer ”).
(b)      A Prohibited Transfer shall include, but not be limited to, (i) an installment sales agreement wherein Borrower agrees to sell the Property or any part thereof for a price to be paid in installments; (ii) an agreement by Borrower leasing all or a substantial part of the Property for other than actual occupancy by a Tenant thereunder or a sale, assignment or other transfer of, or the grant of a security interest in, Borrower’s right, title and interest in and to any Leases or any Rents other than in accordance with the Loan Documents; (iii) if a Restricted Party is a corporation, any merger, consolidation or Sale or Pledge of such corporation’s stock or the creation or issuance of new stock in one or a series of transactions; (iv) if a Restricted Party is a limited or general partnership or joint venture, any merger or consolidation or the change, removal, resignation or addition of a general partner or the Sale or Pledge of the partnership interest of any general or limited partner or any profits or proceeds relating to such partnership interests or the creation or issuance of new limited partnership interests; (v) if a Restricted Party is a limited liability company, any merger or consolidation or the change, removal, resignation or addition of a managing member or non-member manager (or if no managing member, any member) or the Sale or Pledge of the membership interest of any member or any profits or proceeds relating to such membership interest; (vi) if a Restricted Party is a trust or nominee trust, any merger, consolidation or the Sale or Pledge of the legal or beneficial interest in a Restricted Party or the creation or issuance of new legal or beneficial interests; (vii) the removal or the replacement of Manager other than in accordance with the Loan Documents; and (viii) any action for partition of the Property (or any portion thereof or interest therein) or any similar action instituted or prosecuted by Borrower or by any other person or entity, pursuant to any contractual agreement or other instrument or under applicable law (including, without limitation, common law).
4.2.2      Liens . Borrower shall not create, incur, assume or suffer to exist any Lien on any portion of the Property or permit any such action to be taken, except for Permitted Encumbrances; provided, however, after prior notice to Administrative Agent, Borrower, at its own expense, may contest by appropriate legal proceeding, promptly initiated and conducted in good faith and with due diligence, the amount or validity or application in whole or in part of any mechanic’s or materialmen’s liens or tax liens (collectively, “ Work Charge ”); provided that (a) no Default or Event of Default has occurred and remains uncured; (b) such proceeding shall be permitted under, and be conducted in accordance with, the provisions of any other instrument to which Borrower is subject and shall not constitute a default thereunder and such proceeding shall be conducted in accordance with all applicable statutes, laws and ordinances; (c) neither the Property nor any part thereof or interest therein will be in danger of being sold, forfeited, terminated, cancelled or lost; (d) Borrower shall promptly upon final determination thereof pay the amount of any claim

-113-


resulting in such Work Charge, together with all costs, interest and penalties which may be payable in connection therewith; (e) such proceeding shall suspend the collection of any claims resulting in such contested Work Charge or Borrower shall have paid the same (or shall have caused the same to be paid) under protest; and (f) Borrower shall furnish such security as may be required in the proceeding, or as may be reasonably requested by Administrative Agent, to insure the payment of any claim resulting in such contested Work Charge, together with all interest and penalties thereon.
4.2.3      Dissolution . Borrower shall not (i) to the fullest extent permitted by law, engage in any dissolution, liquidation or consolidation or merger with or into any other business entity, (ii) engage in any business activity not related to the ownership, management, leasing, selling, financing, maintaining, repairing, restoring, improving and operation of the Property, (iii) transfer, lease or sell, in one transaction or any combination of transactions, all or substantially all of the property or assets of Borrower except to the extent expressly permitted by the Loan Documents, or (iv) cause, permit or suffer any SPC Party to (A) to the fullest extent permitted by law, dissolve, wind up or liquidate or take any action, or omit to take an action, as a result of which such SPC Party would be dissolved, wound up or liquidated in whole or in part, or (B) amend, modify, waive or terminate the certificate of incorporation or bylaws of such SPC Party, in each case without obtaining the prior consent of Administrative Agent, not to be unreasonably withheld, conditioned or delayed.
4.2.4      Change in Business . Borrower shall not enter into any line of business other than the ownership, operation, management, leasing, selling, financing, maintaining, repairing, restoring and improving of the Property and personal property related thereto.
4.2.5      Debt Cancellation . Borrower shall not cancel or otherwise forgive or release any material claim or debt (other than termination of Leases in accordance herewith) owed to Borrower by any Person, except for adequate consideration and in the ordinary course of Borrower’s business.
4.2.6      Indebtedness . Borrower shall not directly or indirectly create, incur or assume any indebtedness other than (i) the Debt, (ii) the Building Loan and (iii) the Mezzanine Loan, (iv) unsecured trade payables incurred in the ordinary course of business relating to the ownership and operation of the Property, which in the case of such unsecured trade payables (A) are not evidenced by a note, (B) do not evidence underlying obligations that exceed, at any time, a maximum aggregate amount of one percent (1%) of the Aggregate Outstanding Principal Balance and (C) are paid within sixty (60) days of the date incurred, and (v) equipment leases entered into on market terms and in the ordinary course of business (“ Approved Equipment Financing ”) (collectively, “ Permitted Indebtedness ”). Notwithstanding the foregoing, KBS SOR (BVI) Holdings, Ltd., KBS Strategic Opportunity Limited Partnership, KBS Strategic Opportunity REIT, Inc., and any of the other parties owning interests in KBS SOR (BVI) Holdings, Ltd., KBS Strategic Opportunity Limited Partnership shall be permitted to obtain loans from, or incur indebtedness from any third party lender (each a “ Corporate Loan ”) and pledge of their respective interests (direct or indirect) in KBS SOR (BVI) Holdings, Ltd., KBS Strategic Opportunity Limited Partnership and KBS SOR Properties, LLC, as security for any such Corporate Loan so long as (i) the ownership interests in Borrower, Mezzanine Borrower, JV Entity, KBS JV Partner and KBS SOR Acquisition XXV, LLC are not pledged to secure such Corporate Loan and (ii) such Corporate Loan is not

-114-


specifically tied to the cash flow of the Property (as contrasted with, for example, the cash flow from a group of properties);
4.2.7      Zoning . Borrower shall not initiate or consent to any zoning reclassification of any portion of the Property or seek any variance under any existing zoning ordinance or use or permit the use of any portion of the Property in any manner that is reasonably likely to result in such use becoming a non-conforming use under any zoning ordinance or any other applicable land use law, rule or regulation, without the prior consent of Administrative Agent, which consent shall not be unreasonably withheld, conditioned or delayed.
4.2.8      No Joint Assessment . Borrower shall not suffer, permit or initiate the joint assessment of the Property (i) with any other real property constituting a tax lot separate from the Property, and (ii) with any portion of the Property which may be deemed to constitute personal property, or any other procedure whereby the lien of any taxes which may be levied against such personal property shall be assessed or levied or charged to the Property.
4.2.9      Principal Place of Business . Borrower shall not (i) change its principal place of business or name from the address and name set forth in the introductory paragraph hereof without, in each instance, (A) first giving Administrative Agent twenty (20) days’ prior notice and (B) taking all action reasonably required by Administrative Agent for the purpose of perfecting or protecting the Lien and security interest of Administrative Agent created pursuant to this Agreement and the other Loan Documents or (ii) change its organizational structure, type of entity, or jurisdiction of organization or incorporation without (A) obtaining the prior written consent of Administrative Agent, not to be unreasonably withheld, conditioned or delayed, and (B) taking all action reasonably required by Administrative Agent for the purpose of perfecting or protecting the Lien and security interest of Administrative Agent on behalf of the Lenders created pursuant to this Agreement and the other Loan Documents. At the request of Administrative Agent, Borrower shall execute a certificate in form reasonably satisfactory to Administrative Agent listing the trade names under which Borrower intends to operate the Property, and representing and warranting that Borrower does business under no other trade name with respect to the Property.
4.2.10      ERISA .
(a)      Except as would not (i) cause a material adverse effect to Borrower or (ii) subject any Lender to any tax or penalty, Borrower shall not engage in any transaction which would cause any obligation, or action taken or to be taken, hereunder (or the exercise by any Lender of any of its rights under the Note, this Agreement or the other Loan Documents) to be a non-exempt (under a statutory or administrative class exemption) prohibited transaction under the Employee Retirement Income Security Act of 1974, as amended (“ ERISA ”).
(b)      Borrower shall deliver to Administrative Agent such certifications or other evidence from time to time throughout the term of the Loan, as requested by Administrative Agent in its sole discretion, that (A) Borrower is not an “employee benefit plan” as defined in Section 3(3) of ERISA, which is subject to Title I of ERISA, or a “governmental plan” within the meaning of Section 3(32) of ERISA; (B) Borrower is not subject to any state statute regulating investments of,

-115-


or fiduciary obligations with respect to, governmental plans; and (C) one or more of the following circumstances is true:
(i)      Equity interests in Borrower are publicly offered securities, within the meaning of 29 C.F.R. §2510.3-101(b)(2);
(ii)      Less than twenty-five percent (25%) of each outstanding class of equity interests in Borrower is held by “benefit plan investors” within the meaning of 29 C.F.R. §2510.3-101(f)(2) as modified by Section 3(42) of ERISA;
(iii)      Borrower qualifies as an “operating company” or a “real estate operating company” within the meaning of 29 C.F.R. §2510.3-101(c) or (e); or
(iv)      The assets of Borrower are not otherwise “plan assets” of one or more “employee benefit plans” (as defined in Section 3(3) of ERISA) subject to Title I of ERISA, within the meaning of 29 C.F.R. §2510.3-101.
4.2.11      No Distributions . Borrower shall not declare or pay any dividends or otherwise declare or make any distribution to Borrower’s members if an Event of Default exists or would occur as a result of the dividend or distribution.
4.2.12      Annual Budget . Except to the extent otherwise expressly permitted hereunder, Borrower shall not materially amend, modify or supplement the Annual Budget without the prior written consent of Administrative Agent, which consent shall not be unreasonably withheld, conditioned or delayed, other than in connection with emergency expenditures for the Property.
4.2.13      Affiliate Transactions . Borrower shall not enter into, or be a party to, any transaction with an Affiliate of any Borrower Related Party, unless Administrative Agent shall have consented to the same in writing, which consent shall not be unreasonably withheld, conditioned or delayed.
Section 4.3      Mezzanine Loan . Borrower has delivered to Administrative Agent true, complete and correct copies of all Mezzanine Loan Documents and none of the Mezzanine Loan Documents have been amended or modified as of the date hereof. There are no documents, instruments or agreements between Mezzanine Administrative Agent, Mezzanine Lender and Mezzanine Borrower other than those set forth in the definition of “Mezzanine Loan Documents”. The Mezzanine Loan Documents are in full force and effect and, as of the Closing Date, no default exists thereunder by any party thereto. Borrower shall not cause, suffer or permit Mezzanine Borrower to enter into any amendment, waiver, supplement, termination or other modification of any Mezzanine Loan Document without the prior written consent of Administrative Agent. Borrower shall cause Mezzanine Borrower to provide Administrative Agent with a copy of any amendment, waiver, supplement, termination or other modification to any Mezzanine Loan Document (to the extent permitted) promptly upon the execution thereof.

-116-


V.      INSURANCE, CASUALTY AND CONDEMNATION
Section 5.1      Insurance .
5.1.1      Insurance Policies . (a) Borrower shall obtain and maintain, or cause to be maintained, insurance for Borrower and the Property providing at least the following coverages:
(i)      comprehensive (all risk or special form) insurance on the Improvements and, if applicable, the personal property at the Property insuring against any peril now or hereafter included within the “Special” or “All Risks” Causes of Loss from (which shall not exclude fire, lightning, windstorm (including named storms), hail, explosion, riot, civil commotion, aircraft, vehicles, and smoke), in each case (A) in an amount equal to one hundred percent (100%) of the “ Full Replacement Cost, ” which for purposes of this Agreement shall mean actual replacement value (exclusive of costs of excavations, foundations, underground utilities and footings) with a waiver of depreciation; (B) to be written on a no coinsurance form or containing an agreed amount endorsement with respect to the Improvements and, if applicable, personal property at the Property waiving all coinsurance provisions; (C) providing for no deductible in excess of Fifty Thousand and No/100 Dollars ($50,000) for all such insurance coverage, except for windstorm and earthquake, which shall provide for no deductible in excess of five percent (5%) of the total insurable value of the Property; and (D) at all times insuring against at least those hazards that are commonly insured against under a “Special” or “All Risks” Causes of Loss form of policy, as the same shall exist on the date hereof, and together with any increase in the scope of coverage provided under such form after the date hereof; and; (E) if any of the Improvements or the use of the Property shall at any time constitute legal non‑conforming structures or use, containing “law and ordinance” coverage including Coverage for Loss to the Undamaged Portion of the Building, Demolition Cost, and Increased Cost of Construction in an amounts acceptable to Administrative Agent. In addition, Borrower shall obtain: (y) if any portion of the Improvements is currently or at any time in the future located in a federally designated “special flood hazard area,” flood hazard insurance in an amount equal to (1) the maximum amount of such insurance available under the National Flood Insurance Act of 1968, the Flood Disaster Protection Act of 1973 or the National Flood Insurance Reform Act of 1994 ( “ The Flood Insurance Acts ”), as each may be amended plus (2) such greater amount as Administrative Agent shall require in its sole discretion; and (z) earthquake insurance in amounts and in form and substance satisfactory to Administrative Agent in the event the Property is located in seismic zone 3 or 4 and the Probable Maximum Loss (PML) or Scenario Expected Loss (SEL) is 20% or greater, provided that the insurance pursuant to clauses (y) and (z) hereof shall be on terms consistent with the comprehensive (all risk) insurance policy required under this subsection (i) .
(ii)      commercial general liability insurance against claims for personal injury, bodily injury, death or property damage occurring upon, in or about the Property, such insurance (A) to be on the so‑called “occurrence” form with a combined limit, excluding umbrella coverage, of not less than One Million and No/100 Dollars ($1,000,000) and an aggregate limit of not less than Two Million and No/100 Dollars ($2,000,000) for

-117-


any policy year (with a per location aggregate if the Property is on a blanket policy); (B) to continue at not less than the aforesaid limit until required to be changed by Administrative Agent by reason of changed economic conditions making such protection inadequate; and (C) to cover at least the following hazards: (1) premises and operations; (2) products and completed operations on an “if any” basis; (3) legal liability arising out of independent contractors, (4) contractual liability for all insured contracts; and (5) contractual liability covering the indemnities contained in Article 9 of the Mortgage to the extent the same is available;
(iii)      business income/loss of rents insurance (A) with loss payable to Administrative Agent, for the benefit of Lenders; (B) covering all risks required to be covered by the insurance provided for in subsection (i) above for a period commencing at the time of loss for such length of time as it takes to repair or replace with the exercise of due diligence and dispatch; (C) containing an extended period of indemnity endorsement which provides that after the physical loss to the Improvements and personal property has been repaired, the continued loss of income will be insured until such income either returns to the same level it was at prior to the loss, or the expiration of twelve (12) months from the date that the Property is repaired or replaced and operations are resumed, whichever first occurs, and notwithstanding that the policy may expire prior to the end of such period; and (D) in an amount equal to one hundred percent (100%) of the projected gross income from the Property for a period from the date of loss to a date (assuming total destruction) which is eighteen (18) months from the date that the Property is repaired or replaced and operations are resumed. The amount of such business income insurance shall be determined prior to the date hereof and at least once each year thereafter based on Borrower’s reasonable estimate of the gross income from the Property for the succeeding eighteen (18) month period. All proceeds payable to Administrative Agent, for the benefit of Lenders pursuant to this subsection shall be held by Administrative Agent, for the benefit of Lenders and shall be applied to the obligations secured by the Loan Documents from time to time due and payable hereunder and under the Note; provided, however, that nothing herein contained shall be deemed to relieve Borrower of its obligations to pay the obligations secured by the Loan Documents on the respective dates of payment provided for in the Note and the other Loan Documents except to the extent such amounts are actually paid out of the proceeds of such business income insurance;
(iv)      at all times during which structural construction, repairs or alterations are being made with respect to the Improvements, and only if the property and liability coverage forms do not otherwise apply, (A) owner’s commercial general liability and umbrella liability insurance covering claims not covered by or under the terms or provisions of the above mentioned commercial general liability insurance policy; and (B) the insurance provided for in subsection (i) above written in a so‑called builder’s risk completed value form (1) on a non‑reporting basis, (2) against all risks insured against pursuant to subsection (i)  above, (3) including permission to occupy the Property, and (4) with an agreed amount endorsement waiving co‑insurance provisions;

-118-


(v)      workers’ compensation, subject to the statutory limits of the state in which the Property is located, and employer’s liability insurance with a limit of at least One Million and No/100 Dollars ($1,000,000) per accident and per disease per employee, and One Million and No/100 Dollars ($1,000,000) for disease aggregate in respect of any work or operations on or about the Property, or in connection with the Property, its operation (if applicable);
(vi)      comprehensive boiler and machinery insurance, if applicable, in amounts as shall be reasonably required by Administrative Agent on terms consistent with the commercial property insurance policy required under subsection (i) above;
(vii)      umbrella and/or excess liability insurance in addition to primary coverage in an amount not less than One Hundred Million and No/100 Dollars ($100,000,000.00) per occurrence on terms consistent with the commercial general liability insurance policy required under subsection (ii) above and (viii) below;
(viii)      commercial auto liability coverage for all owned and non‑owned vehicles, including rented and leased vehicles containing minimum limits per accident, including umbrella coverage, of One Million Dollars ($1,000,000) per accident (if applicable);
(ix)      so‑called “dramshop” insurance or other liability insurance required in connection with the sale of alcoholic beverages, if applicable;
(x)      insurance against employee dishonesty in an amount not less than one (1) month of gross revenue from the Property and with a deductible acceptable to Administrative Agent (if applicable);
(xi)      the insurance required under Section 5.1.1(a)(i)-(iii) and (vii) above shall cover perils of terrorism and acts of terrorism and Borrower shall maintain insurance for loss resulting from perils and acts of terrorism on terms (including amounts) consistent with those required under Section 5.1.1(a)(i)-(iii) and (vii) above at all times during the term of the Loan. If “acts of terrorism” or other similar acts or events or “fire following” such acts or events are hereafter excluded from Borrower’s comprehensive all risk or special form insurance policy or policies required under Sections 5.1.1(a)(i) and 5.1.1(a)(iii) above, Borrower shall obtain an endorsement to such policy or policies, or a separate policy from an insurance provider which satisfies the requirements of Section 5.1.2 , insuring against all such excluded acts or events and “fire following” such acts or events (“ Terrorism Insurance ”), in an amount not less than the sum of 100% of the “ Full Replacement Cost ” and the business income/rent loss insurance required in Section 5.1.1(a)(iii) above; provided that such endorsement or policy shall be in form and substance reasonably satisfactory to Administrative Agent. Notwithstanding the foregoing, for so long as the Terrorism Risk Insurance Act of 2002, as extended and modified by the Terrorism Risk Insurance Program Reauthorization Act of 2015 (“ TRIPRA ”) is in effect (including any extensions thereof or if another federal governmental program is in effect relating to “acts of terrorism” which provides substantially similar protections as TRIPRA),

-119-


Administrative Agent shall accept terrorism insurance which covers against “covered acts” as defined by TRIPRA (or such other program) as full compliance with this Section 5.1.1(a)(xi) as it relates to the risks that are required to be covered hereunder but only in the event that TRIPRA (or such other program) continues to cover both domestic and foreign acts of terrorism. If TRIPRA is discontinued or not renewed, (x) Borrower shall not be required to spend per year on terrorism coverage (on a going forward basis after TRIPRA expires or is otherwise no longer in effect for any reason and following the expiration of the applicable terrorism insurance then in place) an amount in excess of two times (2x)  the annual allocated amount of the total insurance premium that is payable in respect of the Property’s all-risk and business interruption/rental income insurance required under the Loan Documents (without giving effect to the cost of terrorism and earthquake components of such property and business interruption/rental income insurance) obtained as of the date the applicable new terrorism insurance is being obtained (the “ Terrorism Premium Cap ”) and, provided , that in no event shall any Insurance Premiums paid with respect to Policies in effect prior to the date TRIPRA expires or is otherwise no longer in effect for any reason be included for purposes of determining whether the amount of terrorism insurance premiums paid by Borrower for any applicable period exceed the Terrorism Premium Cap, and (y) if the cost of such terrorism coverage exceeds the Terrorism Premium Cap, either (i) Borrower shall purchase the maximum amount of terrorism coverage available with funds equal to the Terrorism Premium Cap, or (ii) Administrative Agent shall purchase such stand-alone terrorism Policy, with Borrower paying such portion of the Insurance Premiums with respect thereto equal to the Terrorism Premium Cap and Administrative Agent paying such portion of the Insurance Premiums in excess of the Terrorism Premium Cap.
(xii)      upon sixty (60) days’ written notice, such other reasonable insurance and in such reasonable amounts as Administrative Agent from time to time may reasonably request against such other insurable hazards which at the time are commonly insured against for property similar to the Property located in or around the region in which the Property is located.
(b)      All insurance provided for in Section 5.1.1(a) shall be obtained under valid and enforceable policies (collectively, the “ Policies ” or, in the singular, the “ Policy ”) and, to the extent not specified above, shall be subject to the reasonable approval of Administrative Agent as to deductibles. Prior to the expiration dates of the Policies theretofore furnished to Administrative Agent, certificates of insurance and complete copies of redacted policies evidencing the Policies, shall be delivered by Borrower to Administrative Agent, for the benefit of Lenders.
(c)      Any blanket insurance Policy shall otherwise provide the same protection as would a separate Policy insuring only the Property in compliance with the provisions of Section 5.1.1 (any such blanket policy, an “ Acceptable Blanket Policy ”). To the extent that the Policies are maintained pursuant to an Acceptable Blanket Policy that covers more than one location within a one-thousand-foot radius of the Property (the “ Radius ”), the limits of such Acceptable Blanket Policy must be sufficient to maintain coverage on a total insured value basis in compliance with the provisions of Section 5.1.1 for each such location within the Radius, including the Property.

-120-


(d)      All Policies of insurance provided for or contemplated by Section 5.1.1(a) shall name Borrower as a named insured and, in the case of liability policies, except for Policies referenced in Section 5.1.1(v) and (viii) shall name Administrative Agent, for the benefit of Lenders as an additional insured, as its interests may appear, and in the case of property policies, including but not limited to boiler and machinery, flood, earthquake and terrorism insurance, shall contain a standard non‑contributing mortgagee clause in favor of Administrative Agent, for the benefit of Lenders providing that the loss thereunder shall be payable to Administrative Agent, for the benefit of Lenders. Borrower shall not procure or permit any of its constituent entities to procure any other insurance coverage which would be on the same level of payment as the Policies or would adversely impact in any way the ability of Administrative Agent or Borrower to collect any proceeds under any of the Policies.
(e)      All property Policies of insurance provided for in Section 5.1.1(a) , shall provide that:
(i)      no act or negligence of Borrower, or anyone acting for Borrower, or of any Tenant or other occupant, or failure to comply with the provisions of any Policy, which might otherwise result in a forfeiture of the insurance or any part thereof, or foreclosure or similar action, shall in any way affect the validity or enforceability of the insurance insofar as Administrative Agent is concerned; and
(ii)      [reserved];
(iii)      [reserved];
(iv)      Neither Administrative Agent nor any Lender shall not be liable for any Insurance Premiums thereon or subject to any assessments thereunder.
(f)      If at any time Administrative Agent is not in receipt of written evidence that all insurance required hereunder is in full force and effect, Administrative Agent shall have the right, without notice to Borrower, to take such action as Administrative Agent deems necessary to protect its interest in the Property, including, without limitation, the obtaining of such insurance coverage as Administrative Agent in its sole discretion deems appropriate and all premiums incurred by Administrative Agent in connection with such action or in obtaining such insurance and keeping it in effect shall be paid by Borrower to Administrative Agent upon demand and until paid shall be secured by the Mortgage and shall bear interest at the Default Rate.
(g)      In the event of foreclosure of the Mortgage or other transfer of title to the Property in extinguishment in whole or in part of the Debt, all right, title and interest of Borrower in and to the Policies that are not blanket Policies then in force concerning the Property and all proceeds payable thereunder shall thereupon vest in the purchaser at such foreclosure or Administrative Agent or other transferee in the event of such other transfer of title.
5.1.2      Insurance Company . The Policies (including, without limitation, any Policies described in Section 5.1.1(h) ) shall be issued by financially sound and responsible insurance companies permitted to do business in the state in which the Property is located and each having a rating of: (1) “ A ” or better by S&P (provided, however for multi-layered policies, (A) if four (4)

-121-


or fewer insurance companies issue the Policies, then at least 75% of the insurance coverage represented by the Policies must be provided by insurance companies with a rating of “ A ” or better by S&P, with no carrier below “ BBB ” with S&P, or (B) if five (5) or more insurance companies issue the Policies, then at least sixty percent (60%) of the insurance coverage represented by the Policies must be provided by insurance companies with a rating of “ A ” or better by S&P, with no carrier below “ BBB ” with S&P) and (2) ” A-:X ” or better in the current Best’s Insurance Reports or  ” A 2 ” or better by Moody’s (if Moody’s rates the insurance company).
Section 5.2      Casualty and Condemnation .
5.2.1      Casualty . If the Property shall sustain a Casualty, Borrower shall give prompt notice of such Casualty to Administrative Agent and shall promptly commence and diligently prosecute to completion the repair and restoration of the Property as nearly as possible to the condition the Property was in immediately prior to such Casualty (a “ Restoration ”) and otherwise in accordance with Section 5.3 , it being understood, however, that Borrower shall not be obligated to restore the Property to the precise condition of the Property prior to such Casualty provided the Property is restored, to the extent practicable and permitted by Legal Requirements, to be of at least equal value and of substantially the same character as prior to the Casualty. Borrower shall pay all costs of such Restoration whether or not such costs are covered by insurance. Administrative Agent may, but shall not be obligated to, make proof of loss if not made promptly by Borrower; provided, however, that any insurance proceeds received by Administrative Agent in respect of such damage or destruction shall be made available to pay the costs of such Restoration at the time or times, and subject to the conditions precedent, specified in Section 5 .3 below; provided, further, however, in the event such insurance proceeds are not made available to Borrower pursuant to the terms of Section 5.3 below, nothing herein shall in any way limit Borrower’s obligation to repair the Property to the extent necessary (i) to protect life and safety at the Property and (ii) to return the Property to a condition where the Property is deemed an architectural whole whereby access to any portion of the Property is not materially impaired and the shell of the applicable Improvements are fully complete and closed. In the event of a Casualty where the loss does not exceed the Restoration Threshold, Borrower may settle and adjust such claim without Administrative Agent’s prior consent; provided that (a) no Event of Default has occurred and is continuing and (b) such adjustment is carried out in a commercially reasonable and timely manner. In the event of a Casualty where the loss does not exceed the Restoration Threshold, Borrower may settle and adjust such claim without Administrative Agent’s prior consent; provided that (a) no Event of Default has occurred and is continuing and (b) such adjustment is carried out in a commercially reasonable and timely manner. In the event of a Casualty where the loss exceeds the Restoration Threshold, or if an Event of Default then exists, Borrower may settle and adjust such claim only with the consent of Administrative Agent (which consent shall not be unreasonably withheld, conditioned or delayed) and Administrative Agent shall have the opportunity to participate, at Borrower’s cost, in any such adjustments. Notwithstanding any Casualty, Borrower shall continue to pay the Debt at the time and in the manner provided for its payment in the Note and in this Agreement.
5.2.2      Condemnation . Borrower shall give Administrative Agent prompt notice of any actual or threatened (in writing) Condemnation by any Governmental Authority of all or any part of the Property and shall deliver to Administrative Agent a copy of any and all papers served

-122-


in connection with such proceedings. Provided no Event of Default has occurred and is continuing and in the event of a Condemnation where the value of the taking does not exceed the Restoration Threshold in Administrative Agent’s reasonable determination, Borrower may settle and compromise such Condemnation; provided that the same is effected in a commercially reasonable and timely manner. In the event a Condemnation where the value of the taking exceeds the Restoration Threshold in Administrative Agent’s reasonable discretion, or if an Event of Default then exists, Borrower may settle and compromise the Condemnation only with the consent of Administrative Agent (which consent shall not be unreasonably withheld or delayed) and Administrative Agent shall have the opportunity to participate, at Borrower’s cost, in any litigation and settlement discussions in respect thereof and Borrower shall from time to time deliver to Administrative Agent all instruments reasonably requested by Administrative Agent to permit such participation. Borrower shall, at its expense, diligently prosecute any such proceedings, and shall consult with Administrative Agent, its attorneys and experts, and cooperate with them in the carrying on or defense of any such proceedings. Notwithstanding any Condemnation, Borrower shall continue to pay the Debt at the time and in the manner provided for its payment in the Note and in this Agreement. Administrative Agent shall not be limited to the interest paid on the Award by any Governmental Authority but shall be entitled to receive out of the Award interest at the rate or rates provided herein or in the Note. If the Property or any portion thereof is taken by any Governmental Authority, Borrower shall promptly commence and diligently prosecute the Restoration of the Property and otherwise comply with the provisions of Section 5.3 . If the Property is sold, through foreclosure or otherwise, prior to the receipt by Administrative Agent of the Award, Administrative Agent shall have the right, whether or not a deficiency judgment on the Note shall have been sought, recovered or denied, to receive the Award, or a portion thereof sufficient to pay the Debt.
5.2.3      Casualty Proceeds . Notwithstanding the last sentence of Section 5.1.1(a)(iii) and provided no Event of Default exists hereunder, proceeds received by Administrative Agent, for the benefit of Lenders on account of the business interruption insurance specified in Section 5.1.1(a)(iii) above with respect to any Casualty shall be deposited by Administrative Agent directly into the Clearing Account but (a) only to the extent it reflects a replacement for (i) lost Rents that would have been due under Leases existing on the date of such Casualty, and/or (ii) lost Rents under Leases that had not yet been executed and delivered at the time of such Casualty which Borrower has proven to the insurance company would have been due under such Leases (and then only to the extent such proceeds disbursed by the insurance company reflect a replacement for such past due Rents) and (b) only to the extent necessary to fully pay Debt Service, make the required monthly reserve deposits and pay Operating Expenses approved by Administrative Agent in accordance herewith. All other such proceeds shall be held by Administrative Agent and disbursed in accordance with Section 5.3 hereof.
Section 5.3      Delivery of Net Proceeds .
5.3.1      Minor Casualty or Condemnation . If a Casualty or Condemnation has occurred to the Property and the Net Proceeds shall be less than the Restoration Threshold and the costs of completing the Restoration shall be less than Restoration Threshold, and provided the conditions set forth in Section 5.3.2(a)(i), (vi), (vii), (xii) below have been met, the Net Proceeds shall be paid directly to Borrower. Promptly after receipt of the Net Proceeds, Borrower shall

-123-


commence and satisfactorily complete with due diligence the Restoration in accordance with the terms of this Agreement. If any Net Proceeds are received by Borrower and may be retained by Borrower pursuant to the terms hereof, such Net Proceeds shall, until completion of the Restoration, be held in trust for Administrative Agent for the benefit of the Lenders and shall be segregated from other funds of Borrower to be used to pay for the cost of Restoration in accordance with the terms hereof.
5.3.2      Major Casualty or Condemnation . (a) If a Casualty or Condemnation has occurred to the Property and the Net Proceeds are equal to or greater than the Restoration Threshold or the costs of completing the Restoration is equal to or greater than the Restoration Threshold, then Administrative Agent shall make the Net Proceeds available for the Restoration, provided that each of the following conditions are met:
(i)      no Event of Default shall have occurred and be continuing;
(ii)      (1) in the event the Net Proceeds are Insurance Proceeds, less than twenty percent (20%) of the rentable floor area of the Improvements on the Property has been damaged, destroyed or rendered unusable as a result of such Casualty or (2) in the event the Net Proceeds are Condemnation Proceeds, less than ten percent (10%) of the land constituting the Property is taken, and such land is located along the perimeter or periphery of the Property, and no portion of the Improvements is located on such land, and, in the case of (1) and (2) Administrative Agent shall determine that, following the applicable Condemnation and any Restoration, the Property shall comply with all applicable law, including zoning, land use or parking applicable to the Property or the use of the Property, including, without limitation, for access, driveways, parking, utilities or drainage;
(iii)      Leases demising in the aggregate a percentage amount equal to or greater than sixty-five percent (65%) of the total rentable space in the Property which has been demised under executed and delivered Leases in effect as of the date of the occurrence of such Casualty or Condemnation, whichever the case may be, shall remain in full force and effect during and after the completion of the Restoration without abatement of rent beyond the time required for Restoration (or with such abatement being offset by business interruption proceeds), notwithstanding the occurrence of any such Casualty or Condemnation, whichever the case may be, and Borrower delivers evidence reasonably satisfactory to Administrative Agent that all Tenants under Leases that will be in effect following the Restoration are required under their Leases to make all necessary repairs and restoration thereto that are not being made by Borrower as part of the Restoration;
(iv)      Borrower shall commence the Restoration as soon as reasonably practicable (but in no event later than ninety (90) days after receipt of the Net Proceeds and all permits and licenses required for the Restoration) and shall diligently pursue the same to satisfactory completion; provided that Borrower applying for approvals, authorizations, certifications, licenses and permits required in connection with such Restoration shall be deemed a commencement of the Restoration;

-124-


(v)      Administrative Agent shall be satisfied that any operating deficits, including all scheduled payments of principal (if any) and interest under the Note, which will be incurred with respect to the Property as a result of the occurrence of any such Casualty or Condemnation, whichever the case may be, will be covered out of (1) the Net Proceeds, (2) the insurance coverage referred to in Section 5.1.1(a)(iii) , if applicable, or (3) by other funds of Borrower;
(vi)      Administrative Agent shall be satisfied that the Restoration will be completed on or before the earliest to occur of (1) the date six (6) months prior to the then-applicable Maturity Date, (2) the earliest date required for such completion under the terms of any Lease, (3) such time as may be required under applicable Legal Requirements or (4) three (3) months prior to the expiration of the insurance coverage referred to in Section 5.1.1(a)(iii) ;
(vii)      the Property and the use thereof after the Restoration will be in compliance with and permitted under all applicable Legal Requirements;
(viii)      the Restoration shall be done and completed by Borrower in an expeditious and diligent fashion (subject to force majeure not to exceed thirty (30) days in the aggregate) and in compliance with all applicable Legal Requirements;
(ix)      such Casualty or Condemnation, as applicable, does not result in the material loss of access to the Property or the related Improvements;
(x)      the Loan to Value Ratio after giving effect to Restoration shall be equal to or less than sixty percent 60%, provided, that, such Loan to Value Ratio shall be calculated pursuant to a New Appraisal (which takes into account the stabilized value of the Property following Restoration);
(xi)      the Debt Service Coverage Ratio, after giving effect to the Restoration, shall be equal to or greater than 1.15:1.00;
(xii)      Borrower shall deliver, or cause to be delivered, to Administrative Agent a signed detailed budget approved in writing by Borrower’s architect or engineer stating the entire estimated cost of completing the Restoration, which budget shall be reasonably acceptable to Administrative Agent; and
(xiii)      the Net Proceeds together with any cash or cash equivalent deposited by Borrower with Administrative Agent are sufficient in Administrative Agent’s reasonable discretion to cover the cost of the Restoration.
(b)      With respect to a Casualty or Condemnation where the Net Proceeds in connection therewith are equal to or greater than the Restoration Threshold or the cost of completing the Restoration is equal to or greater than the Restoration Threshold, such Net Proceeds shall be paid directly to Administrative Agent and held by Administrative Agent, for the benefit of Lenders in an interest‑bearing account and, until disbursed in accordance with the provisions of this

-125-


Section 5.3.2 , shall constitute additional security for the Debt. The Net Proceeds shall be disbursed by Administrative Agent to, or as directed by, Borrower from time to time during the course of the Restoration, upon receipt of evidence reasonably satisfactory to Administrative Agent that (A) all requirements set forth in Section 5.3.2(a) have been satisfied, (B) all materials installed and work and labor performed (except to the extent that they are to be paid for out of the requested disbursement) in connection with the Restoration have been paid for in full, and (C) there exist no notices of pendency, stop orders, mechanic’s or materialman’s liens or notices of intention to file same, or any other liens or encumbrances of any nature whatsoever on the Property arising out of the Restoration which have not been contested, fully bonded to the reasonable satisfaction of Administrative Agent and discharged of record, or fully insured to the reasonable satisfaction of Administrative Agent by the title company issuing the Title Insurance Policy.
(c)      All plans and specifications required in connection with the Restoration shall be subject to prior approval of Administrative Agent and an independent architect selected by Administrative Agent (the “ Casualty Consultant ”), which approval shall not be unreasonably withheld, conditioned or delayed by Administrative Agent and the Casualty Consultant. The plans and specifications shall require that the Restoration be completed in a first‑class workmanlike manner at least equivalent to the quality and character of the original work in the Improvements (provided, however, that in the case of a partial Condemnation, the Restoration shall be done to the extent reasonably practicable after taking into account the consequences of such partial Condemnation), so that upon completion thereof, the Property shall be at least equal in value and general utility to the Property prior to the damage or destruction; it being understood, however, that Borrower shall not be obligated to restore the Property to the precise condition of the Property prior to such Casualty provided the Property is restored, to the extent practicable, to be of at least equal value and of substantially the same character as prior to the Casualty. Borrower shall restore all Improvements such that when they are fully restored and/or repaired, such Improvements and their contemplated use fully comply with all applicable material Legal Requirements and the requirements of any Lease. The identity of the contractors, subcontractors and materialmen engaged in the Restoration, as well as the contracts under which they have been engaged, shall be subject to approval of Administrative Agent and the Casualty Consultant, which approval shall not be unreasonably withheld, conditioned or delayed by Administrative Agent and the Casualty Consultant. All reasonable, out of pocket costs and expenses incurred by Administrative Agent in connection with recovering, holding and advancing the Net Proceeds for the Restoration including, without limitation, reasonable, out of pocket attorneys’ fees and disbursements and the Casualty Consultant’s fees and disbursements, shall be paid by Borrower.
(d)      In no event shall Administrative Agent be obligated to make disbursements of the Net Proceeds in excess of an amount equal to the costs actually incurred from time to time for work in place as part of the Restoration, as certified by the Casualty Consultant, less the Casualty Retainage. The term “ Casualty Retainage ” shall mean, as to each contractor, subcontractor or materialman engaged in the Restoration, an amount equal to ten percent (10%) of the costs actually incurred for work in place as part of the Restoration, as certified by the Casualty Consultant, until the Restoration has been fifty percent (50%) completed, such fifty percent (50%) completion to be certified by the Casualty Consultant, it being understood that upon such fifty percent (50%) completion of such Restoration, such there shall be no Casualty Retainage with respect to costs

-126-


actually incurred by Borrower for work in place as part of such Restoration. The Casualty Retainage shall in no event, and notwithstanding anything to the contrary set forth above in this Section 5.3.2(d) , be less than the amount actually held back by Borrower from contractors, subcontractors and materialmen engaged in the Restoration. The Casualty Retainage shall not be released until the Casualty Consultant certifies to Administrative Agent that the Restoration has been completed in accordance with the provisions of this Section 5.3.2(d) and that all approvals necessary for the re‑occupancy and use of the Property have been obtained from all appropriate Governmental Authorities, and Administrative Agent receives evidence reasonably satisfactory to Administrative Agent that the costs of the Restoration have been paid in full or will be paid in full out of the Casualty Retainage; provided, however, that Administrative Agent will only release the portion of the Casualty Retainage being held with respect to any contractor, subcontractor or materialman engaged in the Restoration as of the date upon which the Casualty Consultant certifies to Administrative Agent that the contractor, subcontractor or materialman has satisfactorily completed all work and has supplied all materials in accordance with the provisions of the contractor’s, subcontractor’s or materialman’s contract, the contractor, subcontractor or materialman delivers the lien waivers and evidence of payment in full of all sums due to the contractor, subcontractor or materialman as may be reasonably requested by Administrative Agent or by the title company issuing the Title Insurance Policy, and Administrative Agent receives an endorsement to the Title Insurance Policy insuring the continued priority of the lien of the Mortgage and evidence of payment of any premium payable for such endorsement. If required by Administrative Agent, the release of any such portion of the Casualty Retainage shall be approved by the surety company, if any, which has issued a payment or performance bond with respect to the contractor, subcontractor or materialman.
(e)      With respect to any Net Proceeds held by Administrative Agent in accordance herewith, Administrative Agent shall not be obligated to make disbursements of the Net Proceeds more frequently than once every calendar month.
(f)      If at any time the Net Proceeds or the undisbursed balance thereof in addition to any amounts set forth in the Annual Budget with respect to the Restoration shall not, in the reasonable opinion of Administrative Agent in consultation with the Casualty Consultant, be sufficient to pay in full the balance of the costs which are estimated by the Casualty Consultant to be incurred in connection with the completion of the Restoration, Borrower shall either (i) deposit the deficiency (the “ Net Proceeds Deficiency ”) with Administrative Agent before any further disbursement of the Net Proceeds shall be made or (ii) provide Administrative Agent with (i) cash, (ii) Letters of Credit, or (iii) a completion bond or guaranty reasonably acceptable to Administrative Agent from a guarantor acceptable to Administrative Agent in the amount of the Net Proceeds Deficiency or otherwise reasonably required by Administrative Agent. The Net Proceeds Deficiency deposited with Administrative Agent shall be held by Administrative Agent and shall be disbursed for costs actually incurred in connection with the Restoration on the same conditions applicable to the disbursement of the Net Proceeds, and until so disbursed pursuant to this Section 5.3.2 shall constitute additional security for the Debt.
(g)      The excess, if any, of the Net Proceeds and the remaining balance, if any, of the Net Proceeds Deficiency deposited with Administrative Agent after the Casualty Consultant certifies to Administrative Agent that the Restoration has been completed in accordance with the

-127-


provisions of this Section 5.3.2 , and the receipt by Administrative Agent of evidence satisfactory to Administrative Agent that all costs incurred in connection with the Restoration have been paid in full, promptly shall be remitted by Administrative Agent to Borrower, provided no Event of Default shall have occurred and shall be continuing under any of the Loan Documents; provided, however, the amount of such excess returned to Borrower in the case of a Condemnation shall not exceed the amount of Net Proceeds Deficiency deposited by Borrower with the balance being applied to the Debt in the manner provided for in Subsection 5.3.2(h) .
(h)      All Net Proceeds not required (i) to be made available for the Restoration or (ii) to be returned to Borrower as excess Net Proceeds pursuant to Section 5.3.2(g) may be applied by Administrative Agent toward the payment of the Debt, whether or not then due and payable, in such order, priority and proportions as Administrative Agent in its sole discretion shall deem proper or, at the discretion of Administrative Agent, may be paid to Borrower for such purposes as Administrative Agent shall designate. For the avoidance of doubt, no fee, premium or penalty of any kind (including, without limitation the Spread Maintenance Premium) shall be due or payable upon any such application of Net Proceeds to the Debt. In the event that the Net Proceeds are in excess of the amount of the Debt and Administrative Agent applies the Net Proceeds to the repayment of the Debt, any such excess shall be paid to Borrower within fifteen (15) Business Days after Administrative Agent has applied the Net Proceeds to repayment of the Debt.
VI.      RESERVE FUNDS
Section 6.1      Cash Management Arrangements .
(a)      Clearing Account .
(i)      Borrower shall establish and maintain a segregated Eligible Account (the “ Clearing Account ”) pursuant to the terms of the Clearing Account Agreement with the Clearing Bank, which such Clearing Account shall be in trust for the benefit of Lenders and shall be under the sole dominion and control of Administrative Agent, for the benefit of Lenders. Borrower (i) hereby grants to Administrative Agent, for the benefit of Lenders a first priority security interest in the Clearing Account and all deposits at any time contained therein and the proceeds thereof, and (ii) will take all actions necessary to maintain in favor of Administrative Agent, for the benefit of Lenders a perfected first priority security interest in the Clearing Account, including, without limitation, the execution of any account control agreement required by Administrative Agent. Borrower shall not further pledge, assign or grant any security interest in the Clearing Account or the monies deposited therein or permit any lien or encumbrance to attach thereto, or any levy to be made thereon, or any UCC-1 financing statements, except those naming Administrative Agent, for the benefit of Lenders as the secured party, to be filed with respect thereto. Borrower will not in any way alter, modify or close the Clearing Account and will notify Administrative Agent of the account number thereof. Except as may be expressly permitted in the Clearing Account Agreement, Administrative Agent, for the benefit of Lenders shall have the sole right to make withdrawals from the Clearing Account and all costs and expenses for establishing and maintaining the Clearing Account shall be paid by Borrower. All monies now or hereafter deposited into the Clearing Account shall be deemed additional security for the Debt.

-128-


Borrower shall indemnify Administrative Agent, each Lender and Clearing Bank and hold Administrative Agent, each Lender and Clearing Bank harmless from and against any and all actions, suits, claims, demands, liabilities, losses, damages, obligations and costs and expenses (including litigation costs and reasonable attorneys’ fees and expenses) arising from or in any way connected with the Clearing Account, the Clearing Account Agreement or the performance of the obligations for which the Clearing Account was established (unless arising from the gross negligence or willful misconduct of Administrative Agent, any Lender or Clearing Bank, as applicable).
(ii)      Borrower shall (and shall cause Manager to) cause each such Tenant to pay all Rent and other Gross Revenue directly into the Clearing Account pursuant to the terms hereof. In furtherance of the foregoing, Borrower shall (or shall cause Manager to) execute and deliver the Tenant Direction Letters addressed to each (A) Tenant existing as of the Closing Date within five (5) Business Days after the Closing Date, and (B) new Tenant pursuant to a Lease executed after the Closing Date in accordance with the terms hereof, concurrently with the execution of such Lease with such Tenant. Without in any way limiting the foregoing, if Borrower, Manager or any of their respective Affiliates receive any Rents or other Gross Revenue or Net Proceeds from the Property, then (i) such amounts shall be deemed to be collateral for the Obligations and shall be held in trust for the benefit of, and as the property of Administrative Agent, for the benefit of Lenders and (ii) Borrower, Manager or such Affiliate shall deposit such amounts in the Clearing Account within two (2) Business Days of receipt thereof.
(iii)      Funds deposited into the Clearing Account shall be swept by the Clearing Bank on a daily basis as follows: (A) if a Cash Trap Period exists, all such funds shall be transferred to the Deposit Account and applied and disbursed in accordance with this Agreement and the Cash Management Agreement and (B) if no Cash Trap Period exists, all such funds shall be disbursed to Borrower as provided in the Clearing Account Agreement.
(b)      Deposit Account . Administrative Agent, for the benefit of Lenders may also establish subaccounts of the Deposit Account which shall at all times be Eligible Accounts (and may be ledger or book entry accounts and not actual accounts) (such subaccounts are referred to herein as “ Accounts ”). The Deposit Account and all other Accounts will be under the sole control and dominion of Administrative Agent, for the benefit of Lenders, and Borrower shall have no right of withdrawal therefrom. Borrower shall pay for all expenses of opening and maintaining all of the above accounts.
Section 6.2      Tax Funds .
6.2.1      Deposits of Tax Funds . On the Closing Date, Borrower shall deposit with Administrative Agent the amount of $1,739,533.21 and, thereafter, on Monthly Payment Date, Borrower shall deposit an amount equal to one-twelfth of the Property Taxes that Administrative Agent estimates will be payable during the next ensuing twelve (12) months which Property Taxes are not the responsibility of Tenants pursuant to Leases which are not then in default, in order to accumulate sufficient funds to pay all such Property Taxes at least ten (10) days prior to their respective due dates. Amounts deposited pursuant to this Section 6.2.1 are referred to herein as the

-129-


“ Tax Funds. ” The Account in which the Tax Funds are held shall hereinafter be referred to as the “ Tax Reserve Account ”. If at any time, Administrative Agent reasonably determines that the Tax Funds will not be sufficient to pay the Property Taxes for the upcoming tax period, Administrative Agent shall notify Borrower of such determination and the monthly deposits for Property Taxes shall be increased by the amount that Administrative Agent reasonably estimates is sufficient to make up the deficiency at least ten (10) days prior to the respective due dates for the Property Taxes; provided that if Borrower receives notice of any deficiency after the date that is ten (10) days prior to the date that such Property Taxes are due, Borrower will deposit such amount within five (5) Business Days after its receipt of such notice.
6.2.2      Release of Tax Funds . Administrative Agent shall apply the Tax Funds to payments of Property Taxes. In making any payment relating to Property Taxes, Administrative Agent may do so according to any bill, statement or estimate procured from the appropriate public office (with respect to Taxes) without inquiry into the accuracy of such bill, statement or estimate or into the validity of any tax, assessment, sale, forfeiture, tax lien or title or claim thereof; provided, however, that if Borrower shall be appealing or contesting the Property Taxes in accordance with this Agreement, Administrative Agent shall pay no greater a portion of the Property Taxes than is required in connection with such an appeal or contest. If the amount of the Tax Funds shall exceed the amounts due for such Property Taxes, Administrative Agent shall credit such excess against future payments to be made to the Tax Funds. Any Tax Funds remaining after the Debt has been repaid in full shall be returned to Borrower in accordance with the terms of Section 6.13 below.
Section 6.3      Insurance Funds .
6.3.1      Deposits of Insurance Funds . On the Closing Date, Borrower shall deposit with Administrative Agent the amount of $174,227.13 and, thereafter, on Monthly Payment Date, Borrower shall deposit on each Monthly Payment Date an amount equal to one‑twelfth of the Insurance Premiums that Administrative Agent estimates will be payable for the renewal of the coverage afforded by the Policies upon the expiration thereof in order to accumulate sufficient funds to pay all such Insurance Premiums at least thirty (30) days prior to the expiration of the Policies. Amounts deposited pursuant to this Section 6.3.1 are referred to herein as the “ Insurance Funds. ” The Account in which the Insurance Funds are held shall hereinafter be referred to as the “ Insurance Reserve Account. ” If at any time, Administrative Agent reasonably determines that the Insurance Funds will not be sufficient to pay the Insurance Premiums, Administrative Agent shall notify Borrower of such determination and the monthly deposits for Insurance Premiums shall be increased by the amount that Administrative Agent estimates is sufficient to make up the deficiency at least thirty (30) days prior to expiration of the Policies. In addition to the foregoing, if Borrower fails to renew the policy or policies required pursuant to Section 5.1 hereof by the date which is seven (7) days prior to the expiration thereof, Borrower agrees to notify Administrative Agent of such failure, and to keep Administrative Agent reasonably apprised of all developments in connection therewith, and if, following such notice, Administrative Agent reasonably believes that Borrower will be unable to bind the policy or policies described in Section 5.1 prior to the expiration thereof, then Administrative Agent shall have the right, without notice to Borrower, to take such action as Administrative Agent deems necessary to protect its interest in the Property, including, without limitation, the obtaining of such insurance coverage as Administrative Agent in its reasonable

-130-


discretion deems appropriate. All premiums incurred by Administrative Agent in connection with such action or in obtaining such insurance and keeping it in effect shall be paid by Borrower to Administrative Agent upon demand and, until paid, shall be secured by the Mortgage and shall bear interest at the Default Rate.
6.3.2      Release of Insurance Funds . Administrative Agent shall apply the Insurance Funds, if any, to payment of Insurance Premiums. In making any payment relating to Insurance Premiums, Administrative Agent may do so according to any bill, statement or estimate procured from the insurer or its agent, without inquiry into the accuracy of such bill, statement or estimate. If the amount of the Insurance Funds shall exceed the amounts due for Insurance Premiums, Administrative Agent shall credit such excess against future payments to be made to the Insurance Premiums. Any Insurance Funds remaining after the Debt has been repaid in full shall be returned to Borrower.
6.3.3      Acceptable Blanket Policy . Notwithstanding anything to the contrary contained in Section 6.3.1 , in the event that an Acceptable Blanket Policy is in effect with respect to the Policies required pursuant to Section 5.1 , provided that no Event of Default has occurred and is continuing, deposits into the Insurance Account required for Insurance Premiums pursuant to Section 6.3.1 above shall be suspended to the extent that Insurance Premiums relate to such Acceptable Blanket Policy. Upon request of Administrative Agent, Borrower shall provide evidence satisfactory to Administrative Agent that the Insurance Premiums payable in connection with such blanket insurance Policies are paid as soon as appropriate evidence is reasonably available. As of the date hereof, an Acceptable Blanket Policy is in effect with respect to the Policies required as of the Closing Date pursuant to Section 5.1 .
Section 6.4      Lease Termination Funds .
6.4.1      Deposits of Lease Termination Funds . In the event that Borrower receives (i) any sums paid with respect to (A) a modification of any Lease or otherwise paid in connection with Borrower taking any action under any Lease (e.g., granting a consent) or waiving any provision thereof, (B) any settlement of claims of Borrower against third parties in connection with any Lease, (C) any rejection, termination, surrender or cancellation of any Lease (including in any bankruptcy case) or any lease buy-out or surrender payment from any Tenant (including any payment relating to unamortized tenant improvements and/or leasing commissions), and (D) any sum received from any Tenant to obtain a consent to an assignment or sublet or otherwise, or any holdover rents or use and occupancy fees from any Tenant or former Tenant (to the extent not being paid for use and occupancy or holdover rent), but in each case excluding any penalties; and/or (ii) as a result of any other extraordinary event any payments or income (in whatever form) derived from or generated by the use, ownership or operation of the Property not otherwise covered by this Agreement or the Cash Management Agreement, in each case to the extent such amount is in excess of $50,000 (individually or collectively, a “ Lease Termination Fee ”), Borrower shall immediately deposit such Lease Termination Fee with Administrative Agent, for the benefit of Lenders, to be utilized for TI/LC Costs that may be incurred with respect to the space relating to such Lease Termination Fee (a “ Termination Space ”). Amounts deposited pursuant to this Section 6.4.1 are

-131-


referred to herein as the “ Lease Termination Funds. ” The Account in which the Lease Termination Funds are held shall hereinafter be referred to as the “ Lease Termination Reserve Account. ”
6.4.2      Release of Lease Termination Funds . Within ten (10) days after Administrative Agent’s receipt of a written request from Borrower, and provided that on the date such request is received by Administrative Agent and on the date such disbursement is to be made no Event of Default shall exist and be continuing, Administrative Agent shall disburse to Borrower the Lease Termination Funds upon such terms and conditions as shall be reasonably determined by Administrative Agent based upon the conditions for disbursement of a Future Advance (TI/LC). Any Lease Termination Funds remaining after the Debt has been repaid in full shall be returned to Borrower.
Section 6.5      Cash Trap Funds .
6.5.1      Deposits into the Cash Trap . Upon the occurrence and during the continuance of a Cash Trap Period, all Rent and Gross Revenue shall be swept on a daily basis from the Clearing Account to the Deposit Account in accordance with Section 6.1 and the Cash Management Agreement. Amounts deposited pursuant to this Section 6.5.1 are referred to herein as the “ Cash Trap Funds ”.
6.5.2      Release of Cash Trap Funds . Within ten (10) days after Administrative Agent’s receipt of a written request from Borrower, and provided that on the date such request is received by Administrative Agent and on the date such disbursement is to be made no monetary Default or material non-monetary Default which is reasonably likely to have a Material Adverse Effect or Event of Default shall exist and be continuing, Administrative Agent shall disburse to Borrower, Cash Trap Funds upon such terms and conditions as shall be reasonably determined by Administrative Agent based upon the conditions for disbursement of Future Advances (TI/LC) and Future Advances (Capital Expenditures); provided, however, Borrower shall not declare or pay any dividends or otherwise declare or make any distribution to Borrower’s members from such Cash Trap Funds for so long as a Cash Trap Period exists. If a Cash Trap Period is no longer in effect, all funds on deposit as Cash Trap Funds shall be promptly disbursed to Borrower. Any Cash Trap Funds remaining after the Debt has been paid in full shall be returned to Borrower.
Section 6.6      Casualty and Condemnation Account . Borrower shall pay, or cause to be paid, to Administrative Agent, for the benefit of Lenders all Insurance Proceeds or Awards due to any Casualty or Condemnation in accordance with the provisions of Sections 5.2 and 5.3 , which amounts shall be transferred into an Account (the “ Casualty and Condemnation Account ”). Amounts deposited from time to time into the Casualty and Condemnation Account pursuant to this Section 6.6 are referred to herein as the “ Casualty and Condemnation Funds ”. All Casualty and Condemnation Funds shall be held, disbursed and/or applied in accordance with the provisions of Section 5.4 hereof and any Casualty and Condemnation Funds remaining after the Debt has been repaid in full shall be returned to Borrower.
Section 6.7      Rebalancing Reserve Account. As and when required under Section 2.6.4 of this Agreement, Borrower shall deposit into an Account (the “ Rebalancing Reserve Account ”) such amounts as required to be deposited by Borrower pursuant to Section 2.6.4 of this Agreement,

-132-


which amounts shall be disbursed to Borrower in express accordance with Section 2.6.2 of this Agreement. Amounts deposited from time to time into the Rebalancing Reserve Account pursuant to this Section 6.7 are referred to herein as the “ Rebalancing Reserve Funds ”. Provided no Event of Default has occurred and is continuing, amounts on deposit in the Rebalancing Reserve Account from time to time shall be disbursed to Borrower in the same manner as if the same were Future Advances (Capital Expenditures) and Future Advances (TI/LCs) under this Agreement (and, for the avoidance of doubt, subject to the same conditions precedent to the receipt of Future Advances (Capital Expenditures) and Future Advances (TI/LCs) hereunder). So long as any amounts are on deposit in the Rebalancing Reserve Account from time to time, Lenders shall not make any further Future Advances (Capital Expenditures) and Future Advances (TI/LCs) until all such amounts are utilized in accordance with the immediately preceding sentence.
Section 6.8      Additional Reserves .
6.8.1      Future Funding Reserve Funds . In the event that there are Unadvanced Amounts that Borrower does not terminate in accordance with Section 2.7.7 , Administrative Agent shall fund such Unadvanced Amounts into an Account to be utilized for TI/LC Costs and the cost of Capital Expenditures. Amounts deposited pursuant to this Section 6.8.1 are referred to herein as the “ Future Funding Reserve Funds. ” The Account in which the Future Funding Reserve Funds are held shall hereinafter be referred to as the “ Future Funding Reserve Account. ”
6.8.2      Release of Future Funding Reserve Funds . Within ten (10) days after Administrative Agent’s receipt of a written request from Borrower, and provided that on the date such request is received by Administrative Agent and on the date such disbursement is to be made no Event of Default shall exist and be continuing, Administrative Agent shall disburse to Borrower the Future Funding Reserve Funds upon such terms and conditions as shall be reasonably determined by Administrative Agent based upon the conditions for disbursement of a Future Advance (TI/LCs) or Future Advance (Capital Expenditures) set forth in Section 2.6 , as applicable. Any Future Funding Reserve Funds remaining after the Debt has been repaid in full shall be disbursed to Borrower.
6.8.3      [Reserved ].
6.8.4      [Reserved] .
6.8.5      [Reserved] .
6.8.6      Interest/Carrying Costs Account .
If at any time the Debt Service Coverage Ratio falls below 1.0 x for any calendar quarter, and Administrative Agent determines there are insufficient unadvanced amounts of the Future Funding Amount allocated to Interest/Carry Shortfall remaining to pay Debt Service and Carry Costs for succeeding calendar quarter, Borrower shall pay to Administrative Agent, for the benefit of Lender an amount equal to the amount that when combined with (a) any funds in any reserves for Debt Service or Carry Costs, and (b) any unadvanced amounts of the Future Funding Amount allocated to Interest/Carry Shortfall, would be sufficient to cover the estimated Debt Service and Carry Cost payments for the succeeding six (6) months (as reasonably determined by Administrative Agent),

-133-


for the purpose of establishing a reserve fund to provide an additional source for the payment of Debt Service and Carry Costs during Term. Administrative Agent will transfer such amount into an Account (the “ Interest/Carrying Costs Account ”). Provided no Event of Default is continuing, on each Monthly Payment Date during the Term, as applicable, if Rents and other income deposited into the Deposit Account during the Interest Period preceding such Monthly Payment Date were insufficient to pay such month’s Debt Service and Carry Costs, Administrative Agent shall cause funds from the Interest/Carrying Costs Account to be applied to the Monthly Debt Service Payment Amount, to be disbursed to the Tax Account and Insurance Account (for any shortfall in required Tax or Insurance Premium deposits, solely to the extent the Borrower is then obligated to fund the Tax Account and Insurance Account) or to the Borrower (for any shortfall in the payment of Operating Expenses for such period, solely to the extent Borrower is then required to be funding reserves for Operating Expenses), as applicable. At such time as the Property has achieved a Debt Service Coverage Ratio of 1.10x for two (2) consecutive calendar quarters based on a Pro Forma Debt Service which shall apply the unadvanced funds in the Interest/Carrying Costs Account to the outstanding principal balance of the Loan for purposes of such calculation, and provided no Event of Default shall have occurred and be continuing, Borrower shall have the right to request that any unadvanced funds in the Interest/Carrying Costs Account (the “ Reserved Amounts ”), be funded by Administrative Agent to Borrower at Borrower’s direction. Notwithstanding anything to the contrary set forth herein, Borrower shall be permitted to use any remaining Working Capital Funds in the Working Capital Account to fund such Interest/Carry Shortfall into the Interest/Carry Cost Reserve Account as may be required hereunder.
Section 6.9      Property Cash Flow Allocation .
6.9.1      Order of Priority of Funds in Deposit Account . On each Monthly Payment Date during any Cash Trap Period except during the continuance of an Event of Default, all funds in the Deposit Account shall be applied on such Monthly Payment Date pursuant to Section 3.4 of the Cash Management Agreement. Excess Cash Flow shall be held in the Cash Collateral Account and disbursed in accordance with Sections 6.5.1 , 6.5.2 , and/or 6.9.2 hereof.
6.9.2      [Reserved] .
6.9.3      Application After Event of Default . Notwithstanding anything to the contrary contained in this Article 6 , upon the occurrence and continuance of an Event of Default, Administrative Agent, at its option, may apply any Gross Revenue then in the possession of Administrative Agent or in the Deposit Account (including any Reserve Funds on deposit in the Deposit Account or any Account), or any Working Capital Funds on deposit in the Working Capital Account, to the payment of the Debt in such order, proportion and priority as Administrative Agent may determine in its sole and absolute discretion. Administrative Agent’s right to withdraw and apply any of the foregoing funds shall be in addition to all other rights and remedies provided to Administrative Agent under the Loan Documents.
Section 6.10      Security Interest in Reserve Funds, Working Capital Funds and Interest on Reserve Funds and Working Capital Funds.

-134-


6.10.1      Grant of Security Interest . Borrower shall be the owner of the Reserve Funds and the Working Capital Funds. Borrower hereby pledges, assigns and grants a security interest to Administrative Agent, as security for payment of the Debt and the performance of all other terms, conditions and covenants of the Loan Documents on Borrower’s part to be paid and performed, in all of Borrower’s right, title and interest in and to the Deposit Account, Accounts, Reserve Funds, Working Capital Funds and Working Capital Account. The Deposit Account, the Accounts, Reserve Funds, Working Capital Funds and Working Capital Account shall be under the sole dominion and control of Administrative Agent, subject to the terms of this Agreement.
6.10.2      Interest on Funds . Interest accrued, if any, on the Reserve Funds shall become part of the applicable Reserve Funds in accordance with the applicable terms and conditions of the Cash Management Agreement. Interest accrued, if any, on the Working Capital Funds shall become part of the Working Capital Funds in accordance with the applicable terms and conditions of the Working Capital Account Agreement.
6.10.3      Income Taxes . Borrower shall report on its federal, state and local income tax returns all interest or income accrued on the Reserve Funds and the Working Capital Funds.
6.10.4      Prohibition Against Further Encumbrance . Borrower shall not, without the prior consent of Administrative Agent, further pledge, assign or grant any security interest in the Deposit Account, the Reserve Funds, the Accounts, the Working Capital Funds, and the Working Capital Account or permit any lien or encumbrance to attach thereto, or any levy to be made thereon, or any UCC‑1 Financing Statements, except those naming Administrative Agent as the secured party, to be filed with respect thereto.
6.10.5      Reserve Fund Indemnification . Provided the Deposit Account, Accounts and the Reserve Funds are held with an FDIC-insured bank, Borrower shall indemnify Administrative Agent and the Lenders and hold Administrative Agent and the Lenders harmless from and against any and all Losses arising from or in any way connected with the Deposit Account, the Accounts, the Reserve Funds, the Working Capital Funds, and the Working Capital Account sums deposited therein or the performance of the obligations for which the Reserve Funds or the Working Capital Funds were established, except to the extent arising from the gross negligence or willful misconduct of Administrative Agent, Lenders or any of their respective agents or employees.
6.10.6      Reserve Fund Fees and Expenses . Borrower acknowledges and agrees that it solely shall be, and shall at all times remain, liable to Administrative Agent for all actual, fees, charges, costs and expenses in connection with the Deposit Account, the Accounts, the Reserve Funds, the Working Capital Funds, and the Working Capital Account, including, without limitation, any monthly or annual fees or charges as may be assessed by Deposit Bank in connection with maintaining the Reserve Funds, and any monthly or annual fees or charges as may be assessed by Working Capital Bank in connection with maintaining the Working Capital Account.

-135-


Section 6.11      Letters of Credit/Security Deposit . Borrower acknowledges that it is currently holding certain letters of credit as security deposits under Leases (each, a “ Tenant Letter of Credit ”). Borrower shall not allow any Tenant Letters of Credit to lapse unless permitted pursuant to the applicable Lease and Borrower shall draw down the proceeds of any Tenant Letter of Credit (to the extent permitted under any applicable Lease) prior to the expiration date thereof. Borrower further agrees that, within ten (10) days of receipt of written demand from Administrative Agent, which shall not be made until the occurrence of an Event of Default, Borrower shall further assign to Administrative Agent each Tenant Letter of Credit and shall deliver to Administrative Agent the original of each Tenant Letter of Credit or, if Borrower has previously drawn down proceeds of a Tenant Letter of Credit and has not applied the same under the Lease, Borrower shall, in lieu of delivery of an assignment of the Tenant Letter of Credit, remit to Administrative Agent the proceeds from the draw on the Letter of Credit). Administrative Agent acknowledges that Borrower’s obligation to maintain, and deliver to Administrative Agent, any Tenant Letter of Credit or proceeds thereof shall in all cases be subject to the terms of the Leases.
VII.      DEFAULTING LENDER
Section 7.1      Defaulting Lender .
If a Lender fails to fund its Pro Rata Share of any Future Advance on or before the time required thereunder, then, Administrative Agent shall promptly notify Borrower and any other Lender that a Lender has become a Defaulting Lender, and in addition to the rights and remedies (including the right to bring an action or suit against the Defaulting Lender) that may be available to the non-Defaulting Lenders and Borrower at law and in equity, and notwithstanding any provision of this Agreement or any other agreement to the contrary, upon not less than ten (10) Business Days’ notice to Administrative Agent and all Lenders (“ Defaulting Lender Notice ”), Borrower may (i) prepay at par the Defaulting Lender’s Pro Rata Share of the Loan, together with accrued and unpaid interest thereon and any other sums then due to such Defaulting Lender pursuant to the terms of this Agreement, excluding any Spread Maintenance Premium or any other prepayment penalty, premium or similar fee or (ii) require that such Defaulting Lender transfer all of its right, title and interest under this Agreement and the other Loan Documents to a proposed lender identified by Borrower that is an Eligible Assignee if such proposed lender agrees to assume all of the obligations of such Defaulting Lender under this Agreement and other Loan Documents, and to purchase all of such Defaulting Lender’s commitment of the Loan for an aggregate consideration equal to the aggregate outstanding principal amount of such Defaulting Lender’s commitment of the Loan, together with any accrued but unpaid interest thereon to the date of such purchase. Notwithstanding the foregoing, if a Defaulting Lender funds its Pro Rata Share of such Future Advance within two (2) Business Days after the date of delivery of a Defaulting Lender Notice, such Lender shall cease to be a Defaulting Lender; provided , that during the Term, a Lender shall be entitled to not more than three (3) cures of a failure to fund a Future Advance on or before the time required thereunder; provided , further , that non-Defaulting Lender(s) shall have the right, following the expiration of the two (2) Business Day period referred to in this sentence and prior to the expiration of the ten (10) Business Day period following delivery of a Defaulting Lender Notice to acquire at par the Defaulting Lender’s Pro Rata Share of the Loan, together with accrued and unpaid interest thereon and any other sums then due to such Defaulting Lender pursuant to the terms of this Agreement,

-136-


excluding any Spread Maintenance Premium or any other prepayment penalty, premium or similar fee and the Commitments of such non-Defaulting Lender(s) shall be increased by the unfunded Commitment of the Defaulting Lender.
VIII.      PERMITTED TRANSFERS
Section 8.1      Due on Sale . The Loan is not assumable and the Loan shall be due on sale.
Section 8.2      Permitted Transfers of Equity Interests .
(a)      Notwithstanding anything to the contrary contained herein, but subject to the conditions set forth in this Section 8.2 , Permitted Transfers (other than those Permitted Transfers described in (c) below (except to the extent set forth therein)) shall be permitted without Administrative Agent’s consent.
(b)      In connection with any proposed Permitted Transfer (other than a Transfer described in clause (i) of the definition with respect to a publicly held real estate investment trust):
(i)      Borrower shall provide Administrative Agent written notice of such Transfer, together with copies of all instruments effecting such Transfer, and a certificate of Borrower certifying that the requirements of this Agreement have been satisfied, not less than ten (10) Business Days prior to the date of such Transfer
(ii)      subject to the terms of Section 8.2(c) below, after giving effect to any Transfer, (A) no change of Control shall occur with respect to Borrower, Mezzanine Borrower or Guarantor (other than a change of Control in the JV Entity to KBS JV Partner as permitted in the JV Agreement provided, however, such transfer shall be conditioned upon an Acceptable Replacement Guarantor from KBS JV Partner or their Affiliate being put in place and (B) Mezzanine Borrower shall own 100% of the direct equity interests in Borrower;
(iii)      Borrower and SPC Party shall each continue to be Special Purpose Bankruptcy Remote Entities;
(iv)      Borrower shall pay all reasonable, out-of-pocket costs and expenses of Administrative Agent in connection with such Permitted Transfer, including, without limitation, all fees and expenses of Administrative Agent’s counsel;
(v)      such transferee shall not be a Prohibited Person;
(vi)      each such Transfer shall be conditioned upon Borrower’s ability to, after giving effect to the equity transfer in question, (A) remake the representations contained herein relating to ERISA matters and the Patriot Act, OFAC and matters concerning Embargoed Persons, and (B) continue to comply with the covenants contained herein relating to ERISA matters and Prescribed Laws, and in each circumstance, to the extent such Transfer would cause the transferee, together with its Affiliates, to increase its

-137-


direct or indirect interest in Borrower to an amount which equals or exceeds ten percent (10%), such Borrower shall deliver a duly executed certificate certifying to the same;
(vii)      prior to any Transfer, as a result of which (and after giving effect to such Transfer), more than forty-nine percent (49%) of the direct or indirect interests in Borrower shall have been transferred to a Person not owning at least forty-nine percent (49%) of the direct or indirect interests in Borrower prior to such Transfer, Borrower shall deliver to Administrative Agent a New Non-Consolidation Opinion with respect to the proposed Transfer, which New Non-Consolidation Opinion shall be reasonably acceptable to Administrative Agent; and
(viii)      in connection with any Transfer in which a Person that did not previously own twenty percent (20%) or more of the aggregate direct and/or indirect ownership interests (at any tier of ownership) in Borrower or Guarantor shall acquire such a twenty percent (20%) direct and/or indirect ownership interest (at any tier of ownership) in Borrower or Guarantor, Borrower shall, at least twenty (20) days before such Permitted Transfer, notify Administrative Agent of the proposed transfer and provide copies of all instruments effectuating such transfer, and any organizational documents that Administrative Agent shall require, and such other information as Administrative Agent shall reasonably request regarding the proposed transferee so as to conduct such background checks, investigations, Patriot Act, the U.S. Bank Secrecy Act, OFAC and other record searches as Administrative Agent shall reasonably (and any regulatory requirements and/or internal compliance, “know your customer” and/or committee requirements of Administrative Agent and any Lender, to the extent such internal requirements are applied on a non-discriminatory basis, shall be deemed reasonable) require (at Borrower’s sole cost and expense), and if Administrative Agent, within fifteen (15) days of receiving such notice from Borrower, sends a notice to Borrower that it has in good faith determined that such Transfer will result in a violation of its legal, regulatory or internal organizational requirements, such Transfer shall not constitute a Permitted Transfer.
(c)      The consummation of a foreclosure of the lien and security interests securing Mezzanine Loan, or an acceptance by Mezzanine Administrative Agent or its designee of a conveyance-in-lieu of such foreclosure shall be permitted hereunder without Administrative Agent’s consent and shall not be subject to the requirements of Section 8.2(b) (a “ Mezzanine Exercise Event ”);
IX.      SECONDARY MARKET TRANSACTION
Section 9.1      Sale of Loan .
9.1.1     Pursuant and subject to Section 11.25 hereof, a Lender shall have the right to (a) without the consent of Borrower, sell, finance or otherwise transfer the Loan (which shall include the aggregate funded and unfunded Commitment with respect to the Loan) or any portion thereof; provided, however, that, so long as no Event of Default is then existing, if the transferee of the Loan (or portion thereof) is not an Eligible Assignee, then Borrower’s consent shall be required with respect to any such sale, financing or other transfer of the Loan or any portion thereof, (b) issue or

-138-


sell one or more participation interests in the Loan, or (c) issue mortgage pass–through certificates or other securities evidencing a beneficial interest in a rated or unrated public offering or private placement secured by or evidencing ownership interests in the Note and the Mortgage; provided, however, that, so long as no Event of Default is then existing, Borrower’s consent shall be required with respect to any such securitization (which consent shall not be unreasonably withheld, conditioned or delayed) ((a), (b) and (c), collectively, “ Secondary Market Transactions ”). With respect to any approval of Borrower required under this Section 9.1.1 , if Borrower fails to respond to a written request from Administrative Agent to Borrower for Borrower’s approval within ten (10) Business Days following Administrative Agent’s delivery of the materials required with respect thereto, Administrative Agent shall deliver a second notice to Borrower stating in bold uppercase letters at the top of such request “FINAL NOTICE -- TIME SENSITIVE RESPONSE REQUIRED WITHIN FIVE (5) BUSINESS DAYS OF RECEIPT, OR DEEMED APPROVAL WILL OCCUR” and if Borrower fails to respond to such second submission within such additional five (5) Business Day period, then such approval shall be deemed to have been given by Borrower.
Notwithstanding anything to the contrary contained herein, without the need to comply with any formal or procedural requirements of this Agreement or any of the Loan Documents, notwithstanding any other provision set forth in this Agreement or any of the other Loan Documents, any Lender may at any time create a security interest in all or any portion of its rights under this Agreement and any other Loan Document (including, without limitation, the advances owing to it) in favor of (i) any Federal Reserve Bank, any Federal Home Loan Bank or the central reserve bank or similar authority of any other country to secure any obligation of Lender to such bank or similar authority (a “ Central Bank Pledge ”) or (ii) the trustee, administrator or receiver (or their respective nominees, collateral agents or collateral trustees) of a mortgage pool securing covered mortgage bonds issued by a German mortgage bank, or any other Person permitted to issue covered mortgage bonds, under German Pfandbrief legislation, as such legislation may be amended and in effect from time to time, on any substitute or successor legislation (a “ Pfandbrief Pledge ”). In the event that the interest of any Lender that is assigned in connection with a Central Bank Pledge or Pfandbrief Pledge is foreclosed upon and transferred to the pledge thereof, such Lender shall have no further liability hereunder with respect to the interest that was the subject of such transfer and the assignee shall be such Lender with respect to such interest. Each Lender shall not be required to notify Borrower of any Central Bank Pledge or Pfandbrief Pledge.
9.1.2     If requested by a Lender, Borrower shall reasonably cooperate at no cost or expense to Borrower, except as set forth in Section 9.6, with such Lender in satisfying the market standards to which such Lender customarily adheres or which may be reasonably required in the marketplace in connection with any Secondary Market Transactions, including, without limitation, to:
(a)      (i) provide updated financial and other information with respect to the Property, Borrower, Mezzanine Borrower, Guarantor or Manager, including any information reasonably required to permit any (proposed) Lender to comply with applicable Anti-Money Laundering Laws, (ii) provide updated budgets relating to the Property, and (iii) provide updated Appraisals, market studies, environmental reviews and reports (Phase I’s and, if appropriate, Phase II’s), property condition reports and other due diligence investigations of the Property (collectively,

-139-


the “ Updated Information ”), together, if customary, with appropriate verification of the Updated Information through letters of auditors or opinions of counsel acceptable to such Lender;
(b)      provide opinions of counsel, which may be relied upon by Administrative Agent such Lender and their respective successors, assigns and Participants customary in Secondary Market Transactions with respect to the Property, Borrower, Mezzanine Borrower, Guarantor and Manager and their respective Affiliates, which counsel and opinions shall be reasonably satisfactory to such Lender;
(c)      provide updated, as of the closing date of the Secondary Market Transaction, representations and warranties made in the Loan Documents (other than those made as of a specific date or modified as disclosed to such Lender) to the extent applicable;
(d)      execute amendments to the Loan Documents and Borrower’s organizational documents and such other documents reasonably requested by such Lender, including, without limitation, those documents required pursuant to Section 9.5 below; provided, however, that Borrower shall not be required to modify or amend any Loan Document if such modification or amendment would (i) change the stated maturity or the amortization of principal as set forth herein or in the Note, (ii) change the interest rate in a manner that would cause the weighted average of the interest rates for all components immediately after the effective date of such modification to be different than the interest rate of the original Note immediately prior to such modification (it being agreed that Borrower shall not be subject to any “rate creep” in connection with this Section 9.1.2 , except that prepayments or repayments of the Outstanding Principal Balance after the occurrence of an Event of Default and/or the application of Net Proceeds pursuant hereto may be applied to the components of the Note sequentially, starting with the most senior component, and, as a result thereof, the weighted average interest rate payable under the Loan may change), (iii) alter the rights or increase the obligations or liabilities of Borrower or Guarantor under the Loan Documents in any non de minimis respect, (iv) subject to Section 9.5 , modify or amend any other economic or other material term of the Loan in a manner that is detrimental to Borrower, or (v) require any additional collateral or the pledge of any interest in Borrower or any Affiliate; and
(e)      at any Lender’s request upon at least two (2) Business Days’ prior notice and during business hours, make such representatives of Borrower requested by such Lender available to meet with any to investors or prospective investors in any potential Secondary Market Transaction at Borrower’s offices;
9.1.3     A Lender may disclose to an assignee (or proposed assignee), Participant (or proposed Participant), underwriter, investor (or proposed investor), lender (or proposed lender), regulator or other Governmental Authority and their representatives (including, without limitation, any commission or agency established pursuant to a legislative act of the United States Congress, the New York State Assembly and/or the applicable legislative body of the state in which the Property is located), accountants, and/or attorneys, representatives or agents of any of the foregoing, any information relating to the Loan and any Person that is a party to a Loan Document; provided, however, that, prior to any such disclosure of non-public or confidential information, any such Person shall be advised of the confidentiality of any non-public or confidential information received

-140-


by it and, except to the extent such Person is a Governmental Authority, required to maintain to confidentiality of such information.
Section 9.2      [Reserved] .
Section 9.3      Servicing . At the option of Administrative Agent, the Loan may be serviced by a servicer/trustee selected by Administrative Agent and Administrative Agent may delegate all or any portion of its responsibilities under this Agreement and the other Loan Documents to such servicer pursuant to a servicing agreement between Administrative Agent and servicer. Borrower shall pay or reimburse Administrative Agent for any fees, including without limitation, any special servicing fees as set forth in Section 11.13 , charged by any servicer in connection with the servicing of the Loan; provided, however, that Borrower shall not be responsible for payment of any set-up fees or any other initial costs relating to or arising under such servicing agreement or any non-special servicing monthly servicing fee due to the servicer under such servicing agreement.
Section 9.4      Register . Borrower hereby designates Administrative Agent to serve as a non-fiduciary agent of Borrower, solely for purposes of this Section 9.4 , to maintain at one of its offices a register for the recordation of the names and addresses of each Lender, and the principal amount (and stated interest) of the Loans (or portions thereof) owing to and/or Future Advances to be funded by, each Lender pursuant to the terms hereof from time to time and each repayment with respect to the principal amount of the Loan of each Lender (the “ Register ”). Failure to make any such recordation, or any error in such recordation shall not affect Borrower’s, Administrative Agent’s or any Lender’s obligations in respect of the Loan. Without limiting the terms and provisions of Section 9.1 hereof, no assignment, sale, negotiation, pledge, hypothecation or other transfer of any part of any Lender’s interest in and to the Loan shall be effective until such Lender shall have provided Administrative Agent with written notice of such transfer and Administrative Agent shall have registered such assignee’s name and address in the Register. The entries in the Register shall be conclusive absent manifest error, and Borrower, Administrative Agent and each Lender shall treat each Person whose name is recorded in the Register pursuant to the terms hereof as a Lender hereunder for all purposes of this Agreement, notwithstanding notice to the contrary. The Register shall be available for inspection by Borrower and any Lender, at any reasonable time and from time to time upon reasonable prior notice. Administrative Agent hereby agrees to indemnify Borrower and to hold Borrower harmless from any actions, suits, claims, demands, liabilities, losses, damages, obligations and actual costs and expenses which Borrower sustains or incurs as a consequence of Administrative Agent maintaining the Register, except to the extent such loss or expense is caused by Borrower’s fraud or willful misconduct.
(a)      Participation Registry . Each Lender that sells a participation interest in the Loan shall, acting solely for this purpose as a non-fiduciary agent of Borrower, maintain a register on which it enters the name and address of each Participant and the principal amounts (and stated interest) of each Participant’s interest in the Loans or other obligations under the Loan Documents (the “ Participant Register ”); provided that no Lender shall have any obligation to disclose all or any portion of the Participant Register (including the identity of any Participant or any information relating to a Participant’s interest in the Loan or its other obligations under any Loan Document) to any Person except to the extent that such disclosure is necessary to establish

-141-


that such Loan or other obligation is in registered form under Section 5f.103-1(c) of the United States Treasury Regulations. The entries in the Participant Register shall be conclusive absent manifest error, and such Lender shall treat each Person whose name is recorded in the Participant Register as the owner of such participation for all purposes of this Agreement notwithstanding any notice to the contrary. For the avoidance of doubt, Administrative Agent (in its capacity as Administrative Agent) shall have no responsibility for maintaining a Participant Register.
(b)      This Section 9.4 , the Register and the Participant Register are intended to be construed so that the Note is at all times maintained in “registered form” within the meaning of Section 5f.103-1(c) of the United States Treasury Regulations (or any other successor provision of such regulations).
Section 9.5      Severance Documentation . Each Lender, without in any way limiting such Lender’s other rights hereunder, in its sole and absolute discretion, shall have the right, at any time (whether prior to or after any Secondary Market Transaction) at no cost and expense to Borrower, except as set forth in Section 9.6 , to require Borrower to execute and deliver “component” notes and/or one or more substitute notes evidencing the portion of the Loan held by such particular Lender (and the term “ Note ” as used in this Agreement and in all the other Loan Documents shall include all such component notes and/or substitute notes but shall exclude any Note replaced by the same), and/or modify the Loan in order to create one or more senior and subordinate notes ( e.g. , an A/B or A/B/C structure) or pari passu notes and/or one or more additional components of the Note or Notes (including the implementation of a mezzanine loan structure secured by a pledge of direct and indirect ownership interests, which may require the creation of additional borrower entities), reduce the number of components of the Note or Notes, revise the interest rate for each component, reallocate the principal balances of the Notes and/or the components (and/or among or between the Loan and the mezzanine loan), eliminate the component structure and/or the multiple note structure of the Loan (including the elimination of the related allocations of principal and interest payments) or divide the Loan into one or more pari passu or mezzanine and mortgage component(s), provided that, in each case, (I) the Outstanding Principal Balance and the aggregate monthly payments required of all components immediately after the effective date of such modification equals the Outstanding Principal Balance and the aggregate monthly payments required immediately prior to such modification, the weighted average of the interest rates for all components immediately after the effective date of such modification equals the interest rate of the original Note immediately prior to such modification (it being agreed that Borrower shall not be subject to any “rate creep” in connection with this Section 9.5 , except that prepayments or repayments of the Outstanding Principal Balance after the occurrence of an Event of Default and/or the application of Net Proceeds pursuant hereto may be applied to the components of the Note sequentially, starting with the most senior component, and, as a result thereof, the weighted average interest rate payable under the Loan may change), (II) Borrower’s obligations and liabilities are not increased and Borrower’s rights are not reduced, in each case other than to a de minimis extent and (III) such modifications do not amend any other economic or material terms of the Loan in a manner that is detrimental to Borrower. Subject to Section 9.1 , at each Lender’s election, each note comprising the Loan may be subject separately to one or more Secondary Market Transactions. Each Lender shall have the right to modify the Note and any components in accordance with this Section 9.5 and, provided that such modification shall comply with the terms of this Section 9.5 ,

-142-


such modification shall become immediately effective. If requested by Administrative Agent, Borrower shall promptly execute an amendment to the Loan Documents that is consistent with this Section 9.5 to evidence any such modification. Additionally, at Administrative Agent’s request (on behalf of any Lender), Borrower shall execute such amendments to Borrower’s organizational documents as may be reasonably requested by any Lender in order to effect a re-sizing of the Loan; provided that any such amendment does not increase the obligations or liabilities of Borrower or decrease any rights of Borrower other than to a de minimis extent. Borrower shall (1) use commercially reasonable efforts to cooperate with all reasonable written requests of any Lender in order to establish the “component” notes (including any mezzanine notes), and (2) execute and deliver such documents as shall be reasonably required by Administrative Agent in connection therewith, all in form and substance reasonably satisfactory to Borrower and Administrative Agent and the requesting Lender, including, without limitation, the severance of security documents if requested, provided, however, that Borrower shall not be required to modify or amend any Loan Document in connection with the creation of any such “component” notes, modification of the Loan or other transaction contemplated by this Section 9.5 if, in each case such modification or amendment would (i) change the weighted interest rate effective immediately prior to such modification, the stated maturity date or the amortization of principal as set forth herein or in the Notes (it being agreed that Borrower shall not be subject to any “rate creep” in connection with this Section 9.5 , except that prepayments or repayments of the Outstanding Principal Balance after the occurrence of an Event of Default and/or the application of Net Proceeds pursuant hereto may be applied to the components of the Note sequentially, starting with the most senior component, and, as a result thereof, the weighted average interest rate payable under the Loan may change), (ii) alter the rights or increase the obligations or liabilities of Borrower or Guarantor under the Loan Documents other than to a de minimis extent, or (iii) modify or amend any other economic or other material term of the Loan in a manner that is detrimental to Borrower. In the event Borrower fails to respond to a request to execute and deliver such documents to a Lender within ten (10) Business Days following such written request by such Lender, Borrower hereby absolutely and irrevocably appoints any such Lender as its true and lawful attorney, coupled with an interest, in its name and stead to make and execute all documents necessary or desirable to effect such transactions, Borrower hereby ratifying all that such attorney shall do by virtue thereof. In connection with any Secondary Market Transaction, Lenders may enter into one or more agreements among themselves (each such agreement, a “ Co-Lender Agreement ”) pertaining to the distribution and application of payments and collections among the Lenders and the duties and obligations of Administrative Agent to the Lenders, including the obligations of Administrative Agent to obtain consent from the Lenders with respect to actions and decisions. In the event of any conflict between this Agreement and a Co-Lender Agreement pertaining to such matters, the Co-Lender Agreement shall control; provided that no Co-Lender Agreement shall increase any obligations or adversely affect any rights of Borrower other than to a de minimis extent. Lenders and Administrative Agent shall have no obligation to disclose any Co-Lender Agreement to Borrower, and Borrower shall not be an intended beneficiary of or otherwise entitled to enforce any Co-Lender Agreement.
Section 9.6      Secondary Market Transaction Expenses . In connection with any Secondary Market Transaction, severance or other transaction permitted pursuant to Sections 9.1 and/or 9.5 in each case occurring after the Closing Date, Borrower shall be responsible to pay for all cost and expenses incurred by Borrower in connection with such Secondary Market Transaction (including,

-143-


without limitation, the costs and expenses of Borrower’s counsel) which, in the aggregate, do not exceed $10,000 (the “ Borrower Transaction Cost Cap ”); provided, however, Borrower shall not be responsible to reimburse Lender for Lender’s cost and expenses (including, without limitation, the costs and expenses of Lender’s counsel) which costs shall be paid by the Lender engaging in such transaction. Notwithstanding the foregoing, for the avoidance of doubt, any costs and expenses incurred in connection with any severance or other transaction in connection with Administrative Agent’s exercise of remedies in accordance with Section 10.2 , including, without limitation, the costs of any severance in accordance with Section 10.2(e) , shall be paid by Borrower and any such costs shall not be included for purposes of calculating the Borrower Transaction Cost Cap.
X.      DEFAULTS
Section 10.1      Event of Default .
(a)      Each of the following events shall constitute an event of default hereunder (an “ Event of Default ”):
(i)      if (A) the payment due on the Maturity Date is not paid when due, (B) any monthly installment of principal and/or interest due under the Note is not paid when due and such failure continues for three (3) Business Days following the due date therefor, (C) any amount required to be deposited into the Reserve Funds is not paid when due and such failure continues for five (5) Business Days after such required deposit date, or (D) any other portion of the Debt is not paid when due and such non-payment referred to under this clause (D) continues for seven (7) Business Days following notice to Borrower that the same is past due and payable;
(ii)      if any of the Property Taxes or Other Charges are not paid within five (5) Business Days following the due date therefor (unless, with respect to Property Taxes, sufficient funds are on deposit with Administrative Agent pursuant to Section 6.2.1 hereof and not made available to Borrower for such purpose in violation of the Loan Documents);
(iii)      if the Policies are not kept in full force and effect, or if certified copies of the Policies are not delivered to Administrative Agent (unless sufficient Insurance Funds are on deposit with Administrative Agent pursuant to Section 6.3.1 hereof and not made available to Borrower for such purpose in violation of the Loan Documents), all as and when required pursuant to the terms hereof;
(iv)      if any representation or warranty made by any Borrower Party herein or in any other Loan Document, or in any report, certificate, financial statement or other instrument, agreement or document furnished to Administrative Agent by Borrower shall have been false or misleading in any material respect as of the date the representation or warranty was made, repeated or deemed repeated; provided , however , that if such representation or warranty which was false or misleading in any material respect is, by its nature, curable and is not reasonably likely (prior to or during the cure period specified in this clause (iv)) to have a Material Adverse Effect, and such representation and warranty

-144-


was not, to the best of such Borrower Party’s knowledge, false or misleading in any material respect when made, then the same shall not constitute an Event of Default unless such Borrower Party has not cured the same promptly and in no event more than thirty (30) days after first obtaining actual knowledge of such breach, it being understood that Borrower hereby indemnifies and holds Administrative Agent and each Lender harmless from any actual losses, costs, damages or expenses (including reasonable attorneys’ fees and court costs) Administrative Agent may incur or suffer as a result of the permitted cure rights set forth in this clause (iv);
(v)      if any Borrower Party (1) shall make an assignment for the benefit of creditors, (2) shall not generally be paying its debts as they become due, or (3) has admitted in writing in any legal proceeding its inability to pay its debts (other than to or at the written request of Administrative Agent or servicer, to Borrower’s counsel or financial advisors, provided such statement is not made by Borrower to promote or encourage any Person to file an involuntary petition under the Bankruptcy Code, or unless Borrower or Guarantor, as applicable, is required or compelled by applicable law to make such admission);
(vi)      if a receiver, liquidator or trustee shall be appointed for any Borrower Party or if any Borrower Party shall be adjudicated as bankrupt or insolvent, or if any petition for bankruptcy, reorganization or arrangement pursuant to federal bankruptcy law, or any similar federal or state law, shall be filed by or against, consented to, or acquiesced in by, any Borrower Party, or if any proceeding for the dissolution or liquidation of Borrower, or Guarantor shall be instituted; provided, however, if such appointment, adjudication, petition or proceeding was involuntary and not consented to by any Borrower Party, upon the same not being discharged, stayed or dismissed within ninety (90) days of commencement or appointment of the same, as applicable, it shall not be an Event of Default;
(vii)      if the Property becomes subject to any mechanic’s, materialman’s or other Lien (other than Permitted Encumbrances) other than a Lien for local real estate taxes and assessments not then due and payable and the Lien shall remain undischarged of record (by payment, bonding or otherwise) for a period of forty-five (45) days or uncontested pursuant to the terms of this Agreement;
(viii)      if any Borrower Party attempts to assign its rights under this Agreement or any of the other Loan Documents or any interest herein or therein in contravention of the Loan Documents;
(ix)      if any of the assumptions contained in the Non-Consolidation Opinion, or in any New Non-Consolidation Opinion delivered to Administrative Agent in connection with the Loan, or in any other non‑consolidation delivered subsequent to the closing of the Loan, is or shall become untrue in any material respect;
(x)      (a) if Borrower breaches any covenant contained in 4.2.3, 4.2.6, 4.2.7, 4.2.8, 4.2.11 or 4.2.13 ,

-145-


(b) if Borrower breaches any covenant in Section 4.2. (except those specifically set forth in (x)(a) above) which is not cured within ten (10) days after notice to Borrower from Lender, in the case of any Default which can be cured by the payment of a sum of money, or for thirty (30) days after notice from Lender in the case of any other Default; provided , however , that if such non‑monetary Default is susceptible of cure but cannot reasonably be cured within such thirty (30) day period and provided further that Borrower shall have commenced to cure such Default within such thirty (30) day period and thereafter diligently and expeditiously proceeds to cure the same, such thirty (30) day period shall be extended for such time as is reasonably necessary for Borrower in the exercise of due diligence to cure such Default, such additional period not to exceed one hundred twenty (120) days;
(xi)      if Borrower or any other SPC Party fails to be a Special Purpose Bankruptcy Remote Entity and such failure is not cured within ten (10) Business Days following written notice thereof;
(xii)      if Borrower or Guarantor fails to comply with the covenants as to the Patriot Act and OFAC as set forth in Section 4.1.1 ;
(xiii)      if Borrower breaches the covenants set forth in Section 4.1.6 hereof and such breach is not cured within ten (10) Business Days of Borrower receiving written notice of the same;
(xiv)      if one or more judgments or decrees shall be entered against (i) Borrower involving in the aggregate a liability in excess of $1,000,000, or (ii) against Guarantor (collectively, if applicable) involving in the aggregate a liability in excess of $5,000,000, and in either case, unless (x) the same shall have been vacated, bonded, satisfied or stayed pending appeal within sixty (60) days from the date of entry of such judgment or (y) Borrower shall have delivered to Administrative Agent evidence that such judgment or decree is fully covered by insurance, subject to deductible or self-retention amounts permitted by this Agreement;
(xv)      the occurrence of a Transfer (other than a Permitted Transfer) or change of Control of a Restricted Party in violation of Section 8.2 hereof; provided, however, that (i) if such breach was inadvertent, immaterial and non-recurring, (ii) if such breach is curable and (iii) if the breach once cured would not result in a Material Adverse Effect, then such breach shall be an Event of Default hereunder only if such condition is not cured within ten (10) days of the first to occur of (A) Borrower’s knowledge of such breach or (B) written notice from Administrative Agent; it being understood that Borrower shall indemnify and hold Administrative Agent and each Lender harmless from any damage, loss, cost or expense Administrative Agent and/or any Lender incurs as a result of the permitted cure rights set forth in this subsection (xiv);
(xvi)      if any Borrower’s Requisition is fraudulently submitted by Borrower or in connection with any Future Advance for services performed or for materials used in or furnished for any construction or renovation costs in connection with Capital Expenditures Work or Tenant Improvement Work, as applicable;

-146-


(xvii)      if the Property shall be taken (other than as a result of a Condemnation in accordance with this Agreement), attached, sequestered on execution or other process of law in any action against Borrower; and such action is not stayed or bonded over in a manner acceptable to Administrative Agent within ten (10) Business Days thereof, or is not capable of being bonded over or stayed in a manner acceptable to Administrative Agent;
(xviii)      [reserved];
(xix)      any failure of Borrower to maintain an Interest Rate Protection Agreement in accordance with the terms hereof that is not cured within ten (10) Business Days;
(xx)      Savanna Guarantor, or applicable Guarantor, fails to comply with the covenants set forth in Section 25 of the Recourse Guaranty;
(xxi)      if any Loan Documents shall fail to be in full force and effect to give Administrative Agent the Liens, rights, powers and privileges purported to be created thereby (provided, however, if such deficiency is susceptible of cure, this shall not be an Event of Default if Borrower shall execute and deliver any applicable replacement document(s) required to correct such deficiency (and cause reputable counsel to provide to Administrative Agent a due authorization, execution and enforceability opinion with respect to such replacement documents) within five (5) Business Days of demand thereof (or receipt of Administrative Agent’s notice to Borrower of such deficiency);
(xxii)      if Borrower or Guarantor:
(a) shall continue to be in Default under any of the other terms, covenants or conditions of this Agreement or the other Loan Documents not specified in subsections (i) through (xxi) above beyond any applicable notice and cure period, or
(b) shall breach any representation, warranty or covenant under any Loan Document beyond the applicable cure period, or if no cure period is stated,
for ten (10) days after written notice to Borrower from Administrative Agent, in the case of any Default which can be cured by the payment of a sum of money, or for thirty (30) days after notice from Administrative Agent in the case of any other Default (unless such other non-monetary Default results from the death or incapacity of an Individual Guarantor, in which case, such period shall be forty-five (45) days); provided , however , that if such non-monetary Default is susceptible of cure but cannot reasonably be cured within such thirty (30) day period or forty-five (45) day period, as applicable, and provided , further , that Borrower or Guarantor shall have commenced to cure such Default within such thirty (30) day period or forty-five (45) day period, as applicable, and thereafter diligently and expeditiously proceeds to cure the same, such thirty (30) day period or forty-five (45) day period, as applicable, shall be extended for such time as is reasonably necessary for Borrower

-147-


or Guarantor in the exercise of due diligence to cure such Default, such additional period not to exceed ninety (90) days.
provided that with respect to a breach by any Guarantor of clauses (v), (vi), and (xx), then the same shall not be an Event of Default if, within ten (10) days of the defaults under clauses (v), (vi), or (xx), as applicable, Borrower identifies an additional Guarantor(s) (which additional Guarantor(s) shall be a Person (i) with a direct or indirect ownership and control interest in Borrower, (ii) with respect to breach of clause (xx) by Savanna Guarantor, together with the other Guarantors (but excluding the defaulting Guarantor) complies with Section 25 of the Recourse Guaranty, and (iii) or is otherwise acceptable to Administrative Agent in its sole discretion, who shall assume all of the obligations of the defaulting Guarantor under the Guaranties within thirty (30) days of the notice from Administrative Agent of the breach of clauses (v), (vi), and (xx) together with a due execution and enforceability opinion with respect to such additional Guarantor(s) in form and substance reasonably acceptable to Administrative Agent (an “ Acceptable Replacement Guarantor ”), it being understood that the defaulting Guarantor(s) shall not be released of its obligations under the Guaranties until the Debt has been paid in full.
(b)      Upon the occurrence and during the continuance of an Event of Default and at any time thereafter Administrative Agent may, in addition to any other rights or remedies available to it pursuant to this Agreement and the other Loan Documents or at law or in equity, take such action, without notice or demand, that Administrative Agent deems advisable to protect and enforce its rights against Borrower and in and to the Property, including, without limitation, declaring the Debt to be immediately due and payable, and Administrative Agent may enforce or avail itself of any or all rights or remedies provided in the Loan Documents against Borrower and the Property, including, without limitation, all rights or remedies available at law or in equity; and upon any Event of Default described in clauses (v) or (vi) above with respect to Borrower and/or SPC Party only, the Debt and all other obligations of Borrower hereunder and under the other Loan Documents shall immediately and automatically become due and payable, without notice or demand, and Borrower hereby expressly waives any such notice or demand, anything contained herein or in any other Loan Document to the contrary notwithstanding.
Section 10.2      Remedies .
(a)      Upon the occurrence and during the continuance of an Event of Default, all or any one or more of the rights, powers, privileges and other remedies available to Administrative Agent against Borrower under this Agreement or any of the other Loan Documents executed and delivered by, or applicable to, Borrower or at law or in equity may be exercised by Administrative Agent at any time and from time to time, whether or not all or any of the Debt shall be declared due and payable, and whether or not Administrative Agent shall have commenced any foreclosure proceeding or other action for the enforcement of its rights and remedies under any of the Loan Documents with respect to the Property. Any such actions taken by Administrative Agent shall be cumulative and concurrent and may be pursued independently, singly, successively, together or otherwise, at such time and in such order as Administrative Agent may determine in its sole discretion, to the fullest extent permitted by law, without impairing or otherwise affecting the other rights and remedies of Administrative Agent permitted by law, equity or contract or as set forth

-148-


herein or in the other Loan Documents. Without limiting the generality of the foregoing, if an Event of Default is continuing (i) Administrative Agent is not subject to any “one action” or “election of remedies” law or rule, and (ii) all liens and other rights, remedies or privileges provided to Administrative Agent shall remain in full force and effect until Administrative Agent has exhausted all of its remedies against the Property and the Mortgage has been foreclosed, sold and/or otherwise realized upon in satisfaction of the Debt or the Debt has been paid in full.
(b)      With respect to Borrower and the Property, nothing contained herein or in any other Loan Document shall be construed as requiring Administrative Agent to resort to the Property for the satisfaction of any of the Debt in any preference or priority, and Administrative Agent may seek satisfaction out of the Property, or any part thereof, in its absolute discretion in respect of the Debt.
(c)      In addition to all remedies conferred it by law and by the terms of this Agreement and the other Loan Documents, upon the occurrence and during the continuance of an Event of Default, Administrative Agent may pursue any one or more of the following remedies concurrently or successively, on its own or through a court appointed receiver, it being the intent hereof that none of such remedies shall be to the exclusion of any other, and with full rights to reimbursement from Borrower and Savanna Guarantor (without any limitation of the rights Administrative Agent or Lender may have under the Guaranties):
(i)      take possession of the Property and complete any construction work at the Property, including, without limitation, the right to avail itself of and procure performance of existing contracts or let any contracts with the same contractors or others and to employ watchmen to protect such Property from injury. Without restricting the generality of the foregoing and for the purposes aforesaid to be exercised during the existence and continuance of an Event of Default, Borrower hereby appoints and constitutes Administrative Agent its lawful attorney-in-fact with full power of substitution to complete any construction work at the Property in the name of Borrower;
(ii)      except as set forth herein, use Reserve Funds to complete any construction work at the Property;
(iii)      retain or employ new general contractors, subcontractors, architects, engineers and inspectors as shall be required for said purposes; to pay, settle or compromise all existing bills and claims which may be liens or security interests, or to avoid such bills and claims becoming liens against the Property, or as may be necessary or desirable for the completion of any construction work at the Property or for the clearance of title to such Property;
(iv)      execute all applications and certificates in the name of Borrower which may be required by, and in accordance with, any of the contracts or agreements;
(v)      prosecute and defend all actions or proceedings in connection with any construction work at the Property; and
(vi)      take any action and require such performance as it deems necessary to be furnished hereunder and to make settlements and compromises with the surety or

-149-


sureties thereunder, and in connection therewith, to execute instruments of release and satisfaction.
(d)      Upon the occurrence and continuance of an Event of Default, Administrative Agent shall have the right from time to time to partially foreclose the Mortgage in any manner and for any amounts secured by the Mortgage then due and payable as determined by Administrative Agent in its sole discretion including, without limitation, the following circumstances: (i) in the event Borrower defaults beyond any applicable grace, notice and cure period in the payment of one or more scheduled payments of principal and interest, Administrative Agent may foreclose the Mortgage to recover such delinquent payments, or (ii) in the event Administrative Agent elects to accelerate less than the entire Outstanding Principal Balance of the Loan, Administrative Agent may foreclose the Mortgage to recover so much of the principal balance of the Loan as Administrative Agent may accelerate and such other sums secured by the Mortgage as Administrative Agent may elect. Notwithstanding one or more partial foreclosures, the Property shall remain subject to the Mortgage to secure payment of sums secured by the Mortgage and not previously recovered.
(e)      In connection with the exercise of remedies after the occurrence and during the continuance of an Event of Default, Administrative Agent shall have the right from time to time to sever the Note and the other Loan Documents into one or more separate notes, mortgages and other security documents (the “ Severed Loan Documents ”) in such denominations as Administrative Agent shall determine in its sole discretion for purposes of evidencing and enforcing its rights and remedies provided hereunder. Borrower shall execute and deliver to Administrative Agent from time to time, promptly after the written request of Administrative Agent, a severance agreement and such other documents as Administrative Agent shall reasonably deem necessary in order to effect the severance described in the preceding sentence, all in form and substance reasonably satisfactory to Administrative Agent. Following the occurrence and during the continuation of an Event of Default, Borrower hereby absolutely and irrevocably appoints Administrative Agent as its true and lawful attorney, coupled with an interest, in its name and stead to make and execute all documents necessary or desirable to effect the aforesaid severance, Borrower ratifying all that its said attorney shall do by virtue thereof; provided, however, Administrative Agent shall not make or execute any such documents under such power until three (3) days after notice has been given to Borrower by Administrative Agent of Administrative Agent’s intent to exercise its rights under such power. Borrower shall not be obligated to pay any costs or expenses of Borrower, Administrative Agent or any other party incurred in connection with the preparation, execution, recording or filing of the Severed Loan Documents and the Severed Loan Documents shall not contain any representations, warranties or covenants not contained in the Loan Documents and any such representations and warranties contained in the Severed Loan Documents will be given by Borrower only as of the Closing Date. The Severed Loan Documents shall not increase Borrower’s or Guarantor’s obligations or decrease Borrower’s or Guarantor’s rights under the Loan Documents other than to a de minimis extent or amend the economic terms of the Loan Documents; provided, however, prepayments or repayments of the Outstanding Principal Balance after the occurrence of an Event of Default or resulting from the application of Net Proceeds may be applied to the components of the Note sequentially, starting with the most senior component, and, as a result thereof, the weighted average interest rate payable under the Loan may change.

-150-


(f)      Any amounts recovered from the Property or any other collateral for the Loan after an Event of Default may be applied by Administrative Agent toward the payment of any interest and/or principal of the Loan and/or any other amounts due under the Loan Documents in such order, priority and proportions as Administrative Agent in its sole discretion shall determine.
Section 10.3      Right to Cure Defaults .
Following the occurrence and during the continuation of an Event of Default, Administrative Agent may, but without any obligation to do so and without notice to or demand on Borrower (except as otherwise provided in any of the Loan Documents and/or required by applicable Legal Requirements) and without releasing Borrower from any obligation hereunder or being deemed to have cured any Event of Default hereunder, make, do or perform any obligation of Borrower hereunder in such manner and to such extent as Administrative Agent may deem necessary. Upon reasonable advance written notice to Borrower and subject to rights of Tenants under the Leases, and following the occurrence and during the continuation of an Event of Default, Administrative Agent is authorized to enter upon the Property for such purposes, or appear in, defend, or bring any action or proceeding to protect its interest in the Property for such purposes, and the cost and expense thereof (including reasonable attorneys’ fees to the extent permitted by law), with interest as provided in this Section 10.3 , shall constitute a portion of the Debt and shall be due and payable to Administrative Agent upon demand. All such costs and expenses incurred by Administrative Agent in remedying such Event of Default or such failed payment or act or in appearing in, defending, or bringing any action or proceeding shall bear interest at the Default Rate, for the period after such cost or expense was incurred into the date of payment to Administrative Agent. All such costs and expenses incurred by Administrative Agent together with interest thereon calculated at the Default Rate shall be deemed to constitute a portion of the Debt and be secured by the liens, claims and security interests provided to Administrative Agent under the Loan Documents and shall be promptly due and payable following written demand by Administrative Agent therefor.
Section 10.4      Remedies Cumulative .
The rights, powers and remedies of Administrative Agent under this Agreement shall be cumulative and not exclusive of any other right, power or remedy which Administrative Agent may have against Borrower pursuant to this Agreement or the other Loan Documents, or existing at law or in equity or otherwise. Administrative Agent’s rights, powers and remedies may be pursued singly, concurrently or otherwise, at such time and in such order as Administrative Agent may determine in Administrative Agent’s sole discretion. No delay or omission to exercise any remedy, right or power accruing during the continuance of an Event of Default shall impair any such remedy, right or power or shall be construed as a waiver thereof, but any such remedy, right or power may be exercised from time to time and as often as may be deemed expedient. A waiver of one Default or Event of Default with respect to Borrower shall not be construed to be a waiver of any subsequent Default or Event of Default by Borrower or to impair any remedy, right or power consequent thereon.

-151-


XI.      MISCELLANEOUS
Section 11.1      Successors and Assigns .
All covenants, promises and agreements in this Agreement, by or on behalf of Borrower and Administrative Agent, for the benefit of Lenders, as applicable, shall inure to the benefit of the respective legal representatives, successors and assigns of Administrative Agent, for the benefit of Lenders and Borrower, as applicable.
Section 11.2      Administrative Agent’s Discretion .
Whenever pursuant to this Agreement Administrative Agent exercises any right given to it to approve or disapprove, or any arrangement or term is to be satisfactory to Administrative Agent, the decision of Administrative Agent to approve or disapprove or to decide whether arrangements or terms are satisfactory or not satisfactory shall (except as is otherwise specifically herein provided) be in the sole discretion of Administrative Agent and shall be final and conclusive. Whenever pursuant to this Agreement Administrative Agent’s right to approve or disapprove is to be reasonably exercised, or any arrangement or term is to be reasonably satisfactory to Administrative Agent, Administrative Agent’s approval shall not be unreasonably withheld, conditioned or delayed.
Section 11.3      Governing Law .
(a)      THIS AGREEMENT WAS NEGOTIATED IN THE STATE OF NEW YORK, WHICH STATE THE PARTIES AGREE HAS A SUBSTANTIAL RELATIONSHIP TO THE PARTIES AND TO THE UNDERLYING TRANSACTION EMBODIED HEREBY, AND IN ALL RESPECTS, INCLUDING, WITHOUT LIMITING THE GENERALITY OF THE FOREGOING, MATTERS OF CONSTRUCTION, VALIDITY AND PERFORMANCE, THIS AGREEMENT, THE NOTE AND THE OTHER LOAN DOCUMENTS AND THE OBLIGATIONS ARISING HEREUNDER AND THEREUNDER SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK APPLICABLE TO CONTRACTS MADE AND PERFORMED IN SUCH STATE (WITHOUT REGARD TO PRINCIPLES OF CONFLICT OF LAWS) AND ANY APPLICABLE LAW OF THE UNITED STATES OF AMERICA, EXCEPT THAT AT ALL TIMES THE PROVISIONS FOR THE CREATION, PERFECTION, PRIORITY AND ENFORCEMENT OF THE LIEN AND SECURITY INTEREST CREATED PURSUANT HERETO AND PURSUANT TO THE OTHER LOAN DOCUMENTS (OTHER THAN WITH RESPECT TO LIENS AND SECURITY INTERESTS IN PROPERTY WHOSE PERFECTION AND PRIORITY IS COVERED BY ARTICLE 9 OF THE UCC (INCLUDING, WITHOUT LIMITATION, THE ACCOUNTS) WHICH SHALL BE GOVERNED BY THE LAW OF THE JURISDICTION APPLICABLE THERETO IN ACCORDANCE WITH SECTIONS 9‑301 THROUGH 9‑307 OF THE UCC AS IN EFFECT IN THE STATE OF NEW YORK) SHALL BE GOVERNED BY AND CONSTRUED ACCORDING TO THE LAW OF THE STATE IN WHICH THE PROPERTY IS LOCATED, IT BEING UNDERSTOOD THAT, TO THE FULLEST EXTENT PERMITTED BY THE LAW OF SUCH STATE, THE LAW OF THE STATE OF NEW YORK SHALL GOVERN THE CONSTRUCTION, VALIDITY AND ENFORCEABILITY OF ALL

-152-


LOAN DOCUMENTS AND ALL OF THE OBLIGATIONS ARISING HEREUNDER OR THEREUNDER. TO THE FULLEST EXTENT PERMITTED BY LAW, BORROWER HEREBY UNCONDITIONALLY AND IRREVOCABLY WAIVES ANY CLAIM TO ASSERT THAT THE LAW OF ANY OTHER JURISDICTION GOVERNS THIS AGREEMENT, THE NOTE AND THE OTHER LOAN DOCUMENTS, AND THIS AGREEMENT, THE NOTE AND THE OTHER LOAN DOCUMENTS SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK PURSUANT TO SECTION 5‑1401 OF THE NEW YORK GENERAL OBLIGATIONS LAW EXCEPT AS SPECIFICALLY SET FORTH ABOVE.
(b)      ANY LEGAL SUIT, ACTION OR PROCEEDING AGAINST ADMINISTRATIVE AGENT, ANY LENDER OR BORROWER ARISING OUT OF OR RELATING TO THIS AGREEMENT MAY AT ADMINISTRATIVE AGENT’S OPTION BE INSTITUTED IN ANY FEDERAL OR STATE COURT IN THE CITY OF NEW YORK, COUNTY OF NEW YORK, PURSUANT TO SECTION 5‑1402 OF THE NEW YORK GENERAL OBLIGATIONS LAW AND BORROWER WAIVES ANY OBJECTIONS WHICH IT MAY NOW OR HEREAFTER HAVE BASED ON VENUE AND/OR FORUM NON CONVENIENS OF ANY SUCH SUIT, ACTION OR PROCEEDING, AND BORROWER HEREBY IRREVOCABLY SUBMITS TO THE JURISDICTION OF ANY SUCH COURT IN ANY SUIT, ACTION OR PROCEEDING. BORROWER DOES HEREBY DESIGNATE AND APPOINT:
Savanna
430 Park Avenue, 12 th  Floor
New York, NY 10022
Attention: General Counsel

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

-153-


Section 11.4      Modification, Waiver in Writing .
No modification, amendment, extension, discharge, termination or waiver of any provision of this Agreement or of any other Loan Document, nor consent to any departure by Borrower therefrom, shall in any event be effective unless the same shall be in a writing signed by the party against whom enforcement is sought, and then such waiver or consent shall be effective only in the specific instance, and for the purpose, for which given. Except as otherwise expressly provided herein, no notice to, or demand on Borrower, shall entitle Borrower to any other or future notice or demand in the same, similar or other circumstances.
Section 11.5      Delay Not a Waiver .
Neither any failure nor any delay on the part of Administrative Agent in insisting upon strict performance of any term, condition, covenant or agreement, or exercising any right, power, remedy or privilege hereunder, or under any other Loan Document, shall operate as or constitute a waiver thereof, nor shall a single or partial exercise thereof preclude any other future exercise, or the exercise of any other right, power, remedy or privilege. In particular, and not by way of limitation, by accepting payment after the due date of any amount payable under this Agreement or any other Loan Document, Administrative Agent shall not be deemed to have waived any right either to require prompt payment when due of all other amounts due under this Agreement or the other Loan Documents, or to declare a default for failure to effect prompt payment of any such other amount. Administrative Agent shall have the right to waive or reduce any time periods that Administrative Agent is entitled to under the Loan Documents in its sole and absolute discretion.
Section 11.6      Notices .
All notices, demands, requests, consents, approvals or other communications (any of the foregoing, a “ Notice ”) required, permitted, or desired to be given hereunder shall be in writing sent by registered or certified mail, postage prepaid, return receipt requested, e-mail (with electronic confirmation of receipt), provided that such notice is also delivered by overnight mail or hand-delivered no later than the next Business Day, or delivered by hand or reputable overnight courier addressed to the party to be so notified at its address hereinafter set forth, or to such other address as such party may hereafter specify in accordance with the provisions of this Section 11.6 . Any Notice shall be deemed to have been received: (a) three (3) days after the date such Notice is so mailed by registered or certified mail, (b) on the date of delivery by hand if delivered during business hours on a Business Day (otherwise on the next Business Day), (c) upon receipt of electronic confirmation if delivered by e-mail and (d) on the next Business Day if sent by an overnight commercial courier, in each case addressed to the parties as follows:
If to Administrative Agent:
INVESCO CMI INVESTMENTS, L.P.
c/o Invesco Real Estate
2001 Ross Avenue, Suite 3400
Dallas, Texas 75201
Attention: Susan Mitchell

-154-


with a copy to:
INVESCO CMI INVESTMENTS, L.P.
c/o Invesco Real Estate
2001 Ross Avenue, Suite 3400
Dallas, Texas 75201
Attention: Rivka Altman

with a copy to:
INVESCO CMI INVESTMENTS, L.P.
c/o Invesco Real Estate
1166 Avenue of the Americas
New York, NY 10036
Attention: Asset Management, 110 William Street

with a copy to:
Greenberg Traurig, P.A.
333 S.E. 2nd Avenue
Miami, Florida 33131
Attention: Richard J. Giusto, Esq. 021497. 999802

If to Lender:
INVESCO CMI INVESTMENTS, L.P.
c/o Invesco Real Estate
2001 Ross Avenue, Suite 3400
Dallas, Texas 75201
Attention: Susan Mitchell

with a copy to:
INVESCO CMI INVESTMENTS, L.P.
c/o Invesco Real Estate
2001 Ross Avenue, Suite 3400
Dallas, Texas 75201
Attention: Rivka Altman

with a copy to:
INVESCO CMI INVESTMENTS, L.P.
c/o Invesco Real Estate
1166 Avenue of the Americas
New York, NY 10036
Attention: Asset Management, 110 William Street

with a copy to:
Greenberg Traurig, P.A.
333 S.E. 2nd Avenue
Miami, Florida 33131
Attention: Richard J. Giusto, Esq. 021497. 999802

And to:
c/o KBS Capital Advisors LLC
800 Newport Center Drive, Suite 700
Newport Beach, California 92660
Attention: General Counsel


-155-


If to Borrower:
c/o Savanna
430 Park Avenue, 12 th  Floor
New York, New York 10022
Attention: Valerie Kitay, General Counsel

with a copy to:
Hunton Andrews Kurth LLP
200 Park Avenue
52 nd  Floor
New York, New York 10166
Attention: Laurie A. Grasso, Esq.

And to:
Sheppard Mullin Richter & Hampton LLP
650 Town Center Drive, 4 th  Floor
Costa Mesa, California 92626
Attention: Scott A. Morehouse, Esq.

Any party may change the address to which any such Notice is to be delivered by furnishing ten (10) days’ written notice of such change to the other parties in accordance with the provisions of this Section 11.6 . Notices shall be deemed to have been given on the date as set forth above, even if there is an inability to actually deliver any such Notice because of a changed address of which no Notice was given, or there is a rejection or refusal to accept any Notice offered for delivery. Notice for any party may be given by its respective counsel.
Section 11.7      Trial by Jury .
BORROWER, ADMINISTRATIVE AGENT AND EACH LENDER EACH HEREBY AGREES NOT TO ELECT A TRIAL BY JURY OF ANY ISSUE TRIABLE OF RIGHT BY JURY, AND WAIVES ANY RIGHT TO TRIAL BY JURY FULLY TO THE EXTENT THAT ANY SUCH RIGHT SHALL NOW OR HEREAFTER EXIST WITH REGARD TO THE LOAN DOCUMENTS, OR ANY CLAIM, COUNTERCLAIM OR OTHER ACTION ARISING IN CONNECTION THEREWITH. THIS WAIVER OF RIGHT TO TRIAL BY JURY IS GIVEN KNOWINGLY AND VOLUNTARILY BY BORROWER, ADMINISTRATIVE AGENT AND EACH LENDER, AND IS INTENDED TO ENCOMPASS INDIVIDUALLY EACH INSTANCE AND EACH ISSUE AS TO WHICH THE RIGHT TO A TRIAL BY JURY WOULD OTHERWISE ACCRUE. EACH PARTY IS HEREBY AUTHORIZED TO FILE A COPY OF THIS SECTION IN ANY PROCEEDING AS CONCLUSIVE EVIDENCE OF THIS WAIVER.
Section 11.8      Headings .
The Article and/or Section headings and the Table of Contents in this Agreement are included herein for convenience of reference only and shall not constitute a part of this Agreement for any other purpose.

-156-


Section 11.9      Severability .
Wherever possible, each provision of this Agreement shall be interpreted in such manner as to be effective and valid under applicable law, but if any provision of this Agreement shall be prohibited by or invalid under applicable law, such provision shall be ineffective to the extent of such prohibition or invalidity, without invalidating the remainder of such provision or the remaining provisions of this Agreement.
Section 11.10      Preferences .
Upon the occurrence and during the continuance of an Event of Default, Lenders shall have the continuing and exclusive right to apply or reverse and reapply any and all payments by Borrower to any portion of the obligations of Borrower hereunder. To the extent Borrower makes a payment or payments to Administrative Agent, for the benefit of Lenders, which payment or proceeds or any part thereof are subsequently invalidated, declared to be fraudulent or preferential, set aside or required to be repaid to a trustee, receiver or any other party under any bankruptcy law, state or federal law, common law or equitable cause, then, to the extent of such payment or proceeds received, the obligations hereunder or part thereof intended to be satisfied shall be revived and continue in full force and effect, as if such payment or proceeds had not been received by Administrative Agent, for the benefit of Lenders.
Section 11.11      Waiver of Notice .
Borrower shall not be entitled to any notices of any nature whatsoever from Administrative Agent except with respect to matters for which this Agreement or the other Loan Documents specifically and expressly provide for the giving of notice by Administrative Agent to Borrower and except with respect to matters for which Borrower is not, pursuant to applicable Legal Requirements, permitted to waive the giving of notice. Borrower hereby expressly waives the right to receive any notice from Administrative Agent with respect to any matter for which this Agreement or the other Loan Documents do not specifically and expressly provide for the giving of notice by Administrative Agent to Borrower.
Section 11.12      Claims Against Administrative Agent and Lender; Remedies of Borrower .
Neither Administrative Agent nor any Lender shall be in default under this Agreement, or under any of the other Loan Documents, unless a written notice specifically setting forth the claim of Borrower shall have been given to Administrative Agent and each Lender within twelve (12) months after Borrower first had knowledge of the occurrence of the event that Borrower alleges gave rise to such claim and Administrative Agent does not remedy or cure the default, if any there be, promptly thereafter. Borrower waives any claim, set-off or defense against Administrative Agent arising by reason of any alleged default by Administrative Agent as to which Borrower does not give such notice timely as aforesaid. Borrower acknowledges that such waiver is or may be essential to Administrative Agent’s ability to enforce Administrative Agent’s remedies without delay and that such waiver therefore constitutes a substantial part of the bargain between Borrower and Administrative Agent with respect to the Loan.

-157-


Section 11.13      Expenses; General Indemnity; Mortgage Tax Indemnity; ERISA Indemnity .
(a)      Subject to Section 9. 6 and 13.11 or otherwise expressly set forth in this Agreement, Borrower shall pay or, if Borrower fails to pay, reimburse Administrative Agent and each Lender upon receipt of written notice from Administrative Agent or any Lender, for all reasonable out-of-pocket costs and expenses (including reasonable, out of pocket attorneys’ fees and disbursements) incurred by Administrative Agent and/or Lenders in connection with (i) the ongoing performance of and compliance with agreements and covenants of Borrower and Guarantor contained in this Agreement and the other Loan Documents, including, without limitation, confirming compliance with environmental and insurance requirements (but excluding monthly servicing fees due to any servicer under any servicing agreement); (ii) Administrative Agent and/or Lender’s ongoing performance of and compliance with all agreements and covenants contained in this Agreement and the other Loan Documents on its part to be performed or complied with after the Closing Date (other than monthly servicing fees due to any servicer under any servicing agreement); (iii) the negotiation, preparation, execution, delivery and administration of any consents, amendments, waivers or other modifications to this Agreement and the other Loan Documents and any other documents or matters requested by Borrower (other than as set forth in Article IX ); (iv) the filing and recording fees and expenses, title insurance and reasonable fees and expenses of counsel for providing to Administrative Agent and/or Lender all required legal opinions, and other similar expenses incurred, in creating and perfecting the Liens in favor of Administrative Agent, for the benefit of Lenders pursuant to this Agreement and the other Loan Documents; (v) enforcing or preserving any rights, in response to third party claims or the prosecuting or defending of any action or proceeding or other litigation or otherwise, in each case against, under or affecting Borrower, this Agreement, the other Loan Documents, the Property, or any other security given for the Loan; (vi) enforcing any obligations of or collecting any payments due from Borrower and Guarantor under this Agreement, the other Loan Documents or with respect to the Property; (vii) following the transfer of the Loan to “special servicing” after an Event of Default or written notice from Borrower or its Affiliate that an Event of Default is imminently likely to occur, any “special servicing” fees (other than as set forth in Article IX ); and (viii) any cost or expense relating to a restructuring of the credit arrangements provided under this Agreement in the nature of a “work out” or of any insolvency or bankruptcy proceedings (including, without limitation, loan servicing or special servicing fees, loan advances, and “work‑out” and/or liquidation fees); provided, however, that Borrower shall not be liable for the payment of any such costs and expenses to the extent the same arise by reason of the gross negligence, illegal acts, fraud or willful misconduct of Administrative Agent and/or Lender. Any costs due and payable to Administrative Agent and/or Lender may be paid to Administrative Agent and/or Lender pursuant to the Cash Management Agreement. Notwithstanding anything to the contrary in any of the Loan Documents, reasonable, out-of-pocket cost shall include for all purposes Administrative Agent and/or Lender’s internal costs of review, such as an appraisal reviews, cost analysis reviews, inspection reviews and environmental reviews, to the extent the same are not materially more costly than corresponding market rates for such services. In addition to the amounts set forth above, Borrower shall pay to Administrative Agent, in equal monthly installments, a loan administration fee equal to $30,000 per annum.

-158-


(b)      Borrower shall indemnify, defend and hold harmless Administrative Agent, each Lender and their respective officers, directors, agents, employees (and the successors and assigns of the foregoing) (each, a “ Indemnified Party ”) from and against any and all Losses (including, without limitation, the reasonable, out of pocket fees and disbursements of counsel for the Indemnified Parties in connection with any investigative, administrative or judicial proceeding commenced or threatened), other than special, treble, consequential or punitive damages (except to the extent required to be paid by Administrative Agent and/or Lender to any third party), that may be imposed on, incurred by, or asserted against the Indemnified Parties in any manner relating to or arising out of (i) any breach by Borrower of its obligations under, or any material misrepresentation by Borrower contained in, this Agreement or the other Loan Documents, or (ii) the use or intended use of the proceeds of the Loan (collectively, the “ Indemnified Liabilities ”); provided, however, that Borrower shall not have any obligation to the Indemnified Parties hereunder to the extent that such Indemnified Liabilities arise from or are exacerbated by the gross negligence, illegal acts, fraud or willful misconduct of any Indemnified Party. To the extent that the undertaking to indemnify, defend and hold harmless set forth in the preceding sentence may be unenforceable because it violates any law or public policy, Borrower shall pay the maximum portion that it is permitted to pay and satisfy under applicable law to the payment and satisfaction of all Indemnified Liabilities incurred by the Indemnified Parties.
(c)      Borrower shall, at its reasonable cost and expense, protect, defend, indemnify, release and hold harmless each Indemnified Party from and against any and all Losses imposed upon or incurred by or asserted against any Indemnified Party and directly or indirectly arising out of (i) any tax (other than Excluded Taxes) on the making and/or recording of the Mortgage, the Note or any of the other Loan Documents, or (ii) any transfer taxes (other than Excluded Taxes) incurred in connection with a foreclosure of the Mortgage by Administrative Agent or its designee (on behalf of the Lenders) and any subsequent transfer of the Property by Administrative Agent or its designee; provided, however, that Borrower shall not have any obligation to the Indemnified Parties hereunder to the extent that such Indemnified Liabilities arise from or are exacerbated by the gross negligence, illegal acts, fraud or willful misconduct of any Indemnified Party.
(d)      Borrower shall, at its reasonable cost and expense, protect, defend, indemnify, release and hold harmless each Indemnified Party from and against any and all Losses (including, without limitation, reasonable, out of pocket attorneys’ fees and costs incurred in the investigation, defense, and settlement of Losses incurred in correcting any non-exempt prohibited transaction, and in obtaining any individual prohibited transaction exemption under ERISA that may be required, in Administrative Agent’s sole reasonable discretion) that Administrative Agent may incur, directly or indirectly, as a result of a default under Sections 3.1.8 and/or 4.2.10 of this Agreement; provided, however, that Borrower shall not have any obligation to the Indemnified Parties hereunder to the extent that such Indemnified Liabilities arise from or are exacerbated by the gross negligence, illegal acts, fraud or willful misconduct of any Indemnified Party.
(e)      The indemnification obligations of Borrower under this Section 11.13 shall survive the repayment of the Loan.

-159-


Section 11.14      Schedules Incorporated .
The Schedules annexed hereto are hereby incorporated herein as a part of this Agreement with the same effect as if set forth in the body hereof.
Section 11.15      Offsets, Counterclaims and Defenses .
Any permitted assignee of a Lender’s interest in and to this Agreement and the other Loan Documents shall take the same free and clear of all offsets, counterclaims or defenses which are unrelated to such documents which Borrower may otherwise have against any assignor of such documents, and no such unrelated counterclaim or defense shall be interposed or asserted by Borrower in any action or proceeding brought by any such assignee upon such documents and any such right to interpose or assert any such unrelated offset, counterclaim or defense in any such action or proceeding is hereby expressly waived by Borrower.
Section 11.16      No Joint Venture or Partnership; No Third-Party Beneficiaries .
(a)      Borrower, Administrative Agent and each Lender intend that the relationships created hereunder and under the other Loan Documents be solely that of borrower and lender. Nothing herein or therein is intended to create a joint venture, partnership, tenancy in common, or joint tenancy relationship between Borrower, Administrative Agent and each Lender nor to grant Administrative Agent or any Lender any interest in the Property other than that of mortgagee, beneficiary or lender.
(b)      This Agreement and the other Loan Documents are solely for the benefit of Administrative Agent, each Lender and Borrower and nothing contained in this Agreement or the other Loan Documents shall be deemed to confer upon anyone other than Administrative Agent, each Lender and Borrower any right to insist upon or to enforce the performance or observance of any of the obligations contained herein or therein. All conditions to the obligations of a Lender to make the Loan hereunder are imposed solely and exclusively for the benefit of such Lender and no other Person shall have standing to require satisfaction of such conditions in accordance with their terms or be entitled to assume that such Lender will refuse to make the Loan in the absence of strict compliance with any or all thereof and no other Person shall under any circumstances be deemed to be a beneficiary of such conditions, any or all of which may be freely waived in whole or in part by such Lender if, in such Lender’s sole discretion, such Lender deems it advisable or desirable to do so.
Section 11.17      Publicity .
All news releases, publicity or advertising by Borrower or its Affiliates through any media intended to reach the general public which refers to the Loan Documents or the financing evidenced by the Loan Documents, Administrative Agent, each Lender, Invesco Real Estate or any of their Affiliates shall be subject to the prior approval of Administrative Agent, not to be unreasonably withheld conditioned or delayed. All news releases, publicity or advertising by Administrative Agent or any Lender or their respective Affiliates through any media intended to reach the general public which refers to the Loan Documents or the financing evidenced by the Loan Documents, Borrower or any of their Affiliates shall be subject to the prior approval of Borrower, not to be unreasonably withheld conditioned or delayed.

-160-


Section 11.18      Waiver of Marshalling of Assets .
To the fullest extent permitted by law, Borrower, for itself and its successors and assigns, waives all rights to a marshalling of the assets of Borrower, Borrower’s members or partners and others with interests in Borrower, and of the Property, and shall not assert any right under any laws pertaining to the marshalling of assets, the sale in inverse order of alienation, homestead exemption, the administration of estates of decedents, or any other matters whatsoever to defeat, reduce or affect the right of Administrative Agent under the Loan Documents to a sale of the Property for the collection of the Debt without any prior or different resort for collection or of the right of Administrative Agent to the payment of the Debt out of the net proceeds of the Property in preference to every other claimant whatsoever.
Section 11.19      Waiver of Setoff .
Borrower hereby irrevocably waives the right to assert any counterclaim (except compulsory counterclaims) in any action or proceeding brought against it by Administrative Agent or any Lender or their respective agents or otherwise to offset any obligation to make the payments required by the Loan Documents.
Section 11.20    Conflict; Construction of Documents; Reliance .
In the event of any conflict between the provisions of this Agreement and any of the other Loan Documents, the provisions of this Agreement shall control. The parties hereto acknowledge that they were represented by competent counsel in connection with the negotiation, drafting and execution of the Loan Documents and that such Loan Documents shall not be subject to the principle of construing their meaning against the party which drafted same. Borrower acknowledges that, with respect to the Loan, Borrower shall rely solely on its own judgment and advisors in entering into the Loan without relying in any manner on any statements, representations or recommendations of Administrative Agent or any Lender or any parent, subsidiary or Affiliate of Administrative Agent or any Lender. No Lender shall be subject to any limitation whatsoever in the exercise of any rights or remedies available to it under any of the Loan Documents or any other agreements or instruments which govern the Loan by virtue of the ownership by it or any parent, subsidiary or Affiliate of Administrative Agent or any Lender of any equity interest any of them may acquire in Borrower, and Borrower hereby irrevocably waives the right to raise any defense or take any action on the basis of the foregoing with respect to Administrative Agent’s or any Lender’s exercise of any such rights or remedies. Borrower acknowledges that Administrative Agent and the Lenders engage in the business of real estate financings and other real estate transactions and investments which may be viewed as adverse to or competitive with the business of Borrower or its Affiliates.
Section 11.21      Brokers and Financial Advisors .
Borrower hereby represents that it has dealt with no financial advisors, brokers, underwriters, placement agents, agents or finders in connection with the transactions contemplated by this Agreement. Borrower shall indemnify, defend and hold Indemnified Parties harmless from and against any and all claims, liabilities, costs and expenses of any kind (including Indemnified Party’s attorneys’ fees and expenses) in any way relating to or arising from a claim by any Person that such

-161-


Person acted on behalf of Borrower, Administrative Agent or any Lender in connection with the transactions contemplated herein. The provisions of this Section 11.21 shall survive the expiration and termination of this Agreement and the payment of the Debt.
Section 11.22      Exculpation .
Subject to the qualifications below, Administrative Agent shall not enforce the liability and obligation of Borrower to perform and observe the obligations contained in the Note, this Agreement, the Mortgage or the other Loan Documents by any action or proceeding wherein a money judgment or any deficiency judgment or other judgment establishing personal liability shall be sought against any Borrower Party, except that Administrative Agent may bring a foreclosure action, an action for specific performance or any other appropriate action or proceeding to enable Administrative Agent to enforce and realize upon its interest under the Note, this Agreement, the Mortgage and the other Loan Documents, or in the Property, the Rents, or any other collateral given to Administrative Agent pursuant to the Loan Documents; provided, however, that, except as specifically provided herein, any judgment in any such action or proceeding shall be enforceable against Borrower only to the extent of Borrower’s interest in the Property, in the Rents and in any other collateral given to Administrative Agent, for the benefit of Lenders, and Administrative Agent and Lenders, by accepting the Note, this Agreement, the Mortgage and the other Loan Documents, shall not sue for, seek or demand any deficiency judgment against Borrower or any Borrower Party, in any such action or proceeding under or by reason of or under or in connection with the Note, this Agreement, the Mortgage or the other Loan Documents. The provisions of this Section 11.22 shall not, however, (a) constitute a waiver, release or impairment of any obligation evidenced or secured by any of the Loan Documents; (b) impair the right of Administrative Agent to name Borrower as a party defendant in any action or suit for foreclosure and sale of the Property under the Mortgage; (c) affect the validity or enforceability of any indemnity, guaranty, or similar instrument made in connection with the Loan or any of the rights and remedies of Administrative Agent thereunder; (d) impair the right of Administrative Agent to obtain the appointment of a receiver; (e) impair the enforcement of the Assignment of Leases; (f) impair the right of Administrative Agent to enforce the provisions of any Guaranty; (g) constitute a prohibition against Administrative Agent to seek a deficiency judgment against Borrower solely in order to fully realize on any security given by Borrower in connection with the Loan or to commence any other appropriate action or proceeding in order for Administrative Agent to exercise its remedies against such security; or (h) constitute a waiver of the right of Administrative Agent to enforce the liability and obligation of Borrower, by money judgment or otherwise, to the extent of any actual Losses incurred by Administrative Agent and/or any Lender (including out-of-pocket attorneys’ fees and costs reasonably incurred, but excluding special, treble, consequential or punitive damages (except to the extent required to be paid by Administrative Agent and/or Lender to any third party) arising out of or in connection with the following:
(a)      willful misconduct, fraud or material misrepresentation by a Borrower Party in connection with the Loan;
(b)      misappropriation or conversion by Borrower of (A) Net Proceeds paid by reason of any loss, damage or destruction to the Property, (B) Awards received in connection with a Condemnation, (C) any Rents or Gross Revenue of any nature, (D) any security deposits, advance

-162-


deposits or any other deposits collected with respect to the Property which are not delivered to Administrative Agent, for the benefit of Lenders, in accordance with the Loan Documents (E) any Reserve Funds or Working Capital Funds or any funds held by Administrative Agent by or on behalf of Borrower under the Loan Documents or (F) any other funds due to Administrative Agent or any Lender, or any other Person, by Borrower under the Loan Documents;
(c)      any intentional material physical waste to all or any portion of the Property, except to the extent that (i) cash flow from the Property is insufficient to prevent such waste or (ii) Administrative Agent was required to under the Loan Documents and failed to make Excess Cash Flow available to Borrower during a Cash Trap Period;
(d)      removal of any portion of a Property or Improvements by any Borrower Related Party in violation of the Loan Documents during the continuance of an Event of Default;
(e)      forfeiture by Borrower of the Property, or any portion thereof, because of the conduct of criminal activity by any Borrower Party or any officer, director, manager, agent or employee of any of the foregoing, and any Person acting at the direction of any of the foregoing;
(f)      failure beyond applicable grace notice and cure periods of Borrower to (A) obtain and maintain the Policies required to be obtained and maintained in accordance with the provisions of the Loan Documents, and/or (B) pay when due any and all Insurance Premiums required to be paid in connection therewith until such time as Borrower is no longer the owner of all or any portion of the Property, in each case, except to the extent that the cash flow from the Property is insufficient to pay such amounts, or to the extent that there are sufficient Insurance Funds on deposit in the Insurance Reserve Account allocated to pay such amounts and Administrative Agent fails to permit the release of such amounts in violation of Section 6.3.1 , and Borrower gives Administrative Agent written notice of such insufficiency at least 30 days’ prior to the date such amounts first become due and payable;
(g)      subject to Borrower’s right to contest the following in accordance with the terms and conditions of the Loan Documents, failure by Borrower to pay when due any and all Taxes and Other Charges, in each case, except to the extent that the cash flow from the Property is insufficient to pay such amounts, or to the extent that there are sufficient Tax Funds on deposit in the Tax Reserve Account allocated to pay such amounts and Administrative Agent fails to permit the release of such amounts in violation of Section 6.2.1 ,
(h)      any material breach by Borrower of the covenants contained in this Agreement or the other Loan Documents relating to the requirement that Borrower shall be a Special Purpose Bankruptcy Remote Entity (other than requirements related to Borrower’s solvency, maintenance of adequate capital, or failure to pay debts to the extent that the cash flow from the Property is insufficient to pay the same);
(i) Unless a court of competent jurisdiction issues a non-appealable final judgment in favor of Borrower or Guarantor, as applicable, in such action, all out-of-pocket costs and expenses (including, without limitation, attorneys’ fees and costs) incurred by Administrative Agent and/or Lender in connection with the interference, whether direct or indirect, by Borrower, any Guarantor

-163-


or any of their respective Affiliates, with Administrative Agent or Lender’s exercise of rights or remedies under the Loan Documents (including any foreclosure action or sale) in accordance with the Loan Documents, whether by making any motion, bringing any counterclaim, claiming any defense, seeking any injunction or other restraint, commencing any action seeking to consolidate any such foreclosure or other enforcement with any other action or otherwise;
(j) any failure to pay mortgage recording, stamp, intangible or other similar tax required to be paid under applicable Legal Requirements in connection with the execution, delivery, recordation, filing, registration, perfection or enforcement of any of the Loan Documents, including, without limitation, the Mortgage or
(k) any losses due to claims made by Pace and/or SCA until the earlier of receipt of (i) and estoppel certificate in form and substance reasonably acceptable to Administrative Agent executed by the applicable tenant under the Lease or (ii) subordination, non-disturbance and attornment agreements executed form and substance reasonably acceptable to Administrative Agent executed by the applicable tenant under the Lease.
Notwithstanding anything to the contrary in this Agreement, the Note or any of the Loan Documents, (A) Administrative Agent and the Lenders shall not be deemed to have waived any right which Administrative Agent and the Lenders may have under Section 506(a), 506(b), 1111(b) or any other provisions of the Bankruptcy Code to file a claim for the full amount of the Debt or to require that all collateral shall continue to secure all of the Debt owing to Lenders in accordance with the Loan Documents, and (B) the Debt shall be fully recourse to Borrower in the event that (each, a “ Springing Recourse Event ”):
(i)      Borrower files a voluntary petition under the Bankruptcy Code or any other Federal or state bankruptcy or insolvency law;
(ii)      any Borrower Related Party solicits or causes to be solicited petitioning creditors for the filing by any Person(s) of any involuntary petition against Borrower under the Bankruptcy Code or any other Federal or state bankruptcy or insolvency law or an involuntary petition is filed against Borrower under the Bankruptcy Code or any other Federal or state bankruptcy or insolvency law by any Person with which any Borrower Related Party colludes or otherwise assists Person;
(iii)      any Borrower Related Party files an answer consenting to, or otherwise acquiescing in, or joining in any involuntary petition filed against Borrower, by any other Person under the Bankruptcy Code or any other Federal or state bankruptcy or insolvency Law (other than a petition filed against Borrower and/or SPC Party by Lender);
(iv)      any Borrower Related Party consents to or join in an application for the appointment of a custodian, receiver, trustee, or examiner for Borrower or any portion of the Property or colludes with or otherwise assists any Person in filing such an application (other than an application by Lender in connection with the enforcement of Lender’s remedies under the Loan Documents;

-164-


(v)      Borrower makes an assignment for the benefit of creditors or admits in any legal proceeding, its insolvency or inability to pay its debts as they become due (provided, that if Borrower is required by applicable law to admit the same in a legal proceeding and Borrower is in fact insolvent, then such admission, in and of itself, shall not be a Springing Recourse Event);
(vi)      Borrower, Mezzanine Borrower or any Guarantor or any other Borrower Party shall contest, or direct any other Person to contest, the validity or enforceability of the Loan Documents and/or shall assert any defense (other than defenses that are raised by Borrower in good faith that are not frivolous as determined by a court of competent jurisdiction), in each case, for the sole purpose of delaying, hindering or impairing Administrative Agent or Lender’s rights or remedies under the Loan Documents, unless a court of competent jurisdiction issues a non-appealable final judgment in Borrower’s favor in such action.;
(vii)      Borrower fails to obtain Administrative Agent’s prior written consent to any Transfer of all or any portion of the Property or any direct or indirect interest (of any form of ownership) in Borrower, in each case other than a Permitted Transfer;
(viii)      Borrower fails to obtain Administrative Agent’s prior written consent to any Indebtedness (other than Permitted Indebtedness) or Lien (other than Permitted Encumbrances) encumbering the Property or any direct interest (of any form of ownership) in the Property or in Borrower if such Lien was filed by, or such filing was affirmatively approved or acquiesced to by, a Borrower Party; and
(ix)      the breach of any covenant contained herein relating to the requirement that Borrower and SPC Party shall each be a Special Purpose Bankruptcy Remote Entity if Borrower or SPC Party, as a result thereof, is subsequently substantively consolidated with any other Person.
Section 11.23      Prior Agreements . This Agreement and the other Loan Documents contain the entire agreement of the parties hereto and thereto in respect of the transactions contemplated hereby and thereby, and all prior agreements among or between such parties, whether oral or written, are superseded by the terms of this Agreement and the other Loan Documents.
Section 11.24      [Reserved] .
Section 11.25      Assignments and Participations .
(a)      Subject to the terms of Article 9 hereof, a Lender may consummate a Secondary Market Transaction without the consent of any Person.
(b)      Subject to the terms of Article 9 hereof, a Lender may, in connection with any Secondary Market Transaction disclose to the assignee or Participant or proposed assignee or participant, as the case may be, any information relating to Borrower or any of its Affiliates or to

-165-


any aspect of the Loan that has been furnished to such Lender by or on behalf of Borrower or any of its Affiliates.
(c)      Upon any assignment of the Loan, the assignee thereunder shall be a party hereto and, to the extent of the interest assigned by such assignment, have the rights and obligations of a Lender under this Agreement. For the avoidance of doubt, a Participant shall not be considered to be an assignee for purposes of this Section 11.25(c) .
(d)      Borrower agrees that each Participant shall be entitled to the benefit of Section 2.5 (subject to the requirements and obligations therein, including the requirements under Section 2.6 (it being understood that the documentation required under Section 2.6 shall be delivered to the participating Lender)); provided that Participant shall not be entitled to receive any greater payment under Section 2.5 , with respect to any participation, than its participating Lender would have been entitled to receive.
Section 11.26      Set‑Off .
In addition to any rights and remedies of Administrative Agent provided by this Agreement and by law, Administrative Agent shall have the right, upon any amount becoming due and payable by Borrower hereunder (whether at the stated maturity, by acceleration or otherwise) to set‑off and appropriate and apply against such amount any and all deposits (general or special, time or demand, provisional or final), in any currency, and any other credits, indebtedness or claims, in any currency, in each case whether direct or indirect, absolute or contingent, matured or unmatured, at any time held or owing by Administrative Agent or any Affiliate thereof to Borrower. Administrative Agent agrees promptly to notify Borrower after any such set‑off and application made by Administrative Agent.
Section 11.27      REOC Status .
Borrower is a “real estate operating company” (a “ REOC ”) as defined in the Department of Labor regulations, located at 29 C.F.R. Section 2510.3-101 and shall at all times qualify as a REOC. Borrower will provide any additional information reasonably requested by Administrative Agent to confirm Borrower’s REOC status.
Section 11.28      Delegation By Lenders; Lenders’ Consultation and Information Right .
(a)      Borrower acknowledges and agrees that one or more direct or indirect members of one more Lenders intend to qualify as a “venture capital operating company” as defined in the Department of Labor regulations, located at 29 C.F.R. Section 2510.3-101 (a “ VCOC ”). Accordingly, Borrower acknowledges and agrees that the approval, consent and inspection rights reserved to such Lenders in this Agreement may be exercised directly by a VCOC and that the exercise of such rights by a VCOC shall be treated as a direct exercise of such rights by the Lender.
(b)      Administrative Agent, on behalf of such Lenders, shall have the right to:

-166-


(i)      consult with and advise Borrower regarding the business operation and management of the Borrower and the Property and the financial and other condition of Borrower or the Property; provided, however, that such consultations shall not include discussions of environmental compliance programs or disposal of hazardous substances. Consultation meetings should occur on a regular basis (no less frequently than quarterly) with Administrative Agent having the right to call special meetings at any reasonable times;
(ii)      receive notice from Borrower of any material development affecting Borrower or the Property and consult with Borrower with respect to such matter;
(iii)      request from Borrower such forecasts, projections and other financial and business data as reasonably required by Administrative Agent;
(iv)      from time to time upon reasonable notice examine the books and records of Borrower at the office of the Borrower (or other person maintaining them) and to make such copies or extracts thereof as Administrative Agent shall desire, at such Lenders’ expense;
(v)      the right, in accordance with the terms of this Agreement, to receive monthly, quarterly and year-end financial reports, including balance sheets, statements of income, shareholder’s equity and cash flow, a management report and schedules of outstanding indebtedness;
(vi)      the right, without restricting any other rights of Administrative Agent, on behalf of the Lenders, under this Agreement (including any similar right), to restrict financing to be obtained with respect to the Property so long as any portion of the Debt remains outstanding;
(vii)      the right, without restricting any other right of Administrative Agent, on behalf of the Lenders, under this Agreement or the other Loan Documents (including any similar right), to restrict, upon the occurrence of an Event of Default, Borrower’s payments of management, consulting, director or similar fees to Affiliates of Borrower from the Rents;
(viii)      the right, without restricting any other rights of Administrative Agent, on behalf of the Lenders, under this Agreement (including any similar right), to approve any operating budget and/or capital budget of Borrower;
(ix)      the right, without restricting any other rights of Administrative Agent, on behalf of the Lenders, under this Agreement (including any similar right), to approve any acquisition by Borrower of any other significant property (other than personal property required for the day to day operation of Property); and
(x)      the right, without restricting any other rights of Administrative Agent, on behalf of the Lenders, under this Agreement (including any similar right), to

-167-


restrict the transfer of interests in Borrower held by its members, and the right to restrict the transfer of interests in such member, except for any transfer that is a Permitted Transfer.
(c)      rights described above may be exercised directly or indirectly by any Person that owns substantially all of the ownership interests in any Lender.  The provisions of this Section are intended to satisfy the requirement of management rights for purposes of the Department of Labor “plan assets” regulation 29 C.F.R., Section 2510.3-101.
Section 11.29      Intercreditor Agreement .
Administrative Agent, Lender, Mezzanine Administrative Agent and Mezzanine Lender are parties to a certain intercreditor agreement dated as of the date hereof (as the same may be amended or modified from time to time, the “ Intercreditor Agreement ”) memorializing their relative rights and obligations with respect to the Loan, the Building Loan and the Mezzanine Loan, Borrower and Mezzanine Borrower, and the Property. Borrower hereby acknowledges and agrees that (i) such Intercreditor Agreement is intended solely for the benefit of Administrative Agent, Lenders, Mezzanine Administrative Agent and Mezzanine Lender and (ii) Borrower and Mezzanine Borrower are not intended third-party beneficiaries of any of the provisions therein and shall not be entitled to rely on any of the provisions contained therein. Neither Administrative Agent nor any Lender shall have no obligation to disclose to Borrower the contents of the Intercreditor Agreement. Borrower’s obligations hereunder are independent of such Intercreditor Agreement and remain unmodified by the terms and provisions thereof.
Section 11.30      Acknowledgment and Consent to Bail-In of EEA Financial Institutions .
Notwithstanding anything to the contrary in this Agreement or any Loan Document or in any other agreement, arrangement or understanding among any such parties, each party hereto acknowledges that any liability of any EEA Financial Institution arising under any Loan Document, to the extent such liability is unsecured, may be subject to the write-down and conversion powers of an EEA Resolution Authority and agrees and consents to, and acknowledges and agrees to be bound by:
(a)    the application of any Write-Down and Conversion Powers by an EEA Resolution Authority to any such liabilities arising hereunder which may be payable to it by any party hereto that is an EEA Financial Institution; and
(b)    the effects of any Bail-in Action on any such liability, including, if applicable:
(i)    a reduction in full or in part or cancellation of any such liability;
(ii)    a conversion of all, or a portion of, such liability into shares or other instruments of ownership in such EEA Financial Institution, its parent undertaking, or a bridge institution that may be issued to it or otherwise conferred on it, and that such shares or other instruments of ownership will be accepted by it in lieu of any rights with respect to any such liability under this Agreement or any other Loan Document; or

-168-


(iii)    the variation of the terms of such liability in connection with the exercise of the write-down and conversion powers of any EEA Resolution Authority.
As used in this Section 11.30 , the following terms have the following meanings ascribed thereto:
“ Bail-In Action ” means the exercise of any Write-Down and Conversion Powers by the applicable EEA Resolution Authority in respect of any liability of an EEA Financial Institution.
“ Bail-In Legislation ” means, with respect to any EEA Member Country implementing Article 55 of Directive 2014/59/EU of the European Parliament (as amended from time to time) and of the Council of the European Union, the implementing law for such EEA Member Country from time to time which is described in the EU Bail-In Legislation Schedule.
“ EEA Financial Institution ” means (a) any credit institution or investment firm established in any EEA Member Country which is subject to the supervision of an EEA Resolution Authority, (b) any entity established in an EEA Member Country which is a parent of an institution described in clause (a) of this definition, or (c) any financial institution established in an EEA Member Country which is a subsidiary of an institution described in clauses (a) or (b) of this definition and is subject to consolidated supervision with its parent.
“ EEA Member Country ” means any of the member states of the European Union, Iceland, Liechtenstein and Norway.
“ EEA Resolution Authority ” means any public administrative authority or any person entrusted with public administrative authority of any EEA Member Country (including any delegee) having responsibility for the resolution of any EEA Financial Institution.
“ EU Bail-In Legislation Schedule ” means the EU Bail-In Legislation Schedule published by the Loan Market Association (or any successor person), as in effect from time to time.
“ Write-Down and Conversion Powers ” means, with respect to any EEA Resolution Authority, the write-down and conversion powers of such EEA Resolution Authority from time to time under the Bail-In Legislation for the applicable EEA Member Country, which write-down and conversion powers are described in the EU Bail-In Legislation Schedule.
XII.      [RESERVED]
XIII.      ADMINISTRATIVE AGENT AND AGREEMENTS AMONG LENDERS
Section 13.1      Appointment; Nature of Relationship .
Administrative Agent is hereby appointed by each Lender as its sole and exclusive contractual representative hereunder and under each other Loan Document, and each Lender irrevocably authorizes Administrative Agent to act as the sole and exclusive contractual representative of such Lender with the rights and duties expressly set forth herein and in the other Loan Documents. Administrative Agent agrees to act as such contractual representative upon the

-169-


express conditions contained in this Article 13 . Notwithstanding the use of the defined term “Administrative Agent,” it is expressly understood and agreed that Administrative Agent shall not have any fiduciary responsibilities to any Lender by reason of this Agreement or any other Loan Document and that Administrative Agent is merely acting as the contractual representative of Lenders with only those duties as are expressly set forth in this Agreement and the other Loan Documents. In its capacity as Lenders’ contractual representative, Administrative Agent (a) does not hereby assume any fiduciary duties to any of Lenders, and (b) is acting as an independent contractor, the rights and duties of which are limited to those expressly set forth in this Agreement and the other Loan Documents. Each Lender hereby agrees to assert with respect to the Loan Documents and administration of the Loan, no claim against Administrative Agent on any agency theory or any other theory of liability for breach of fiduciary duty, all of which claims each Lender hereby waives. Each Lender hereby agrees that, except as otherwise set forth herein, any action taken by the Requisite Lenders in accordance with the provisions of this Agreement or the Loan Documents, and the exercise by the Requisite Lenders of the powers set forth herein or therein, together with such other powers as are reasonably incidental thereto, shall be authorized and binding upon all of the Lenders. As to any matters not expressly provided for by the Loan Documents (including, without limitation, enforcement or collection of any of Borrower’s obligations hereunder), Administrative Agent shall not be required to exercise any discretion or take any action, but shall be required to act or to refrain from acting (and shall be fully protected in so acting or refraining from acting) upon the instructions of the Requisite Lenders (or all of the Lenders if explicitly required under any other provision of this Agreement), and such instructions shall be binding upon all Lenders and all holders of any of the obligations of Borrower; provided, however, that, notwithstanding anything in this Agreement to the contrary, Administrative Agent shall not be required to take any action which exposes Administrative Agent to personal liability or which is contrary to this Agreement or any other Loan Document or applicable law. Not in limitation of the foregoing, Administrative Agent may exercise any right or remedy it or the Lenders may have under any Loan Document upon the occurrence of a Default or Event of Default unless the Requisite Lenders have directed Administrative Agent otherwise. Without limiting the foregoing, no Lender shall have any right of action whatsoever against Administrative Agent as a result of Administrative Agent acting or refraining from acting under this Agreement or the other Loan Documents in accordance with the instructions of the Requisite Lenders, or where applicable, all the Lenders.
Section 13.2      Powers .
Administrative Agent shall have and may exercise such powers under the Loan Documents as are specifically delegated to Administrative Agent by the terms of each thereof, together with such powers as are reasonably incidental thereto. Administrative Agent shall have no implied duties to Lenders, or any obligation to Lenders to take any action thereunder except any action specifically provided by the Loan Documents to be taken by Administrative Agent. Borrower shall be entitled to rely upon any communication or action by Administrative Agent, and shall have no duty to ascertain whether the consent of Requisite Lenders or all Lenders was required or obtained.

-170-


Section 13.3      General Immunity .
Neither Administrative Agent nor any of its directors, officers, agents or employees shall be liable to any Lender for any action lawfully taken or omitted to be taken by it or them hereunder or under any other Loan Document or in connection herewith or therewith except for its or their own gross negligence or willful misconduct.
Section 13.4      No Responsibility for Loan, etc .
Except where the failure to do so constitutes gross negligence or willful misconduct, neither Administrative Agent nor any of its directors, officers, agents or employees shall be responsible for or have any duty to ascertain, inquire into, or verify (i) any statement, warranty or representation made in connection with any Loan Document or any borrowing hereunder; (ii) the performance or observance of any of the covenants or agreements of any obligor under any Loan Document, including, without limitation, any agreement by an obligor to furnish information directly to each Lender; (iii) the satisfaction of any condition specified herein or in any Loan Document; (iv) the validity, effectiveness or genuineness of any Loan Document or any other instrument or writing furnished in connection therewith; or (v) the value, sufficiency, creation, perfection or priority of any interest in any collateral security. Administrative Agent shall have no duty to disclose to Lenders information that is not required to be furnished by Borrower to Administrative Agent at such time, but is voluntarily furnished by Borrower to Administrative Agent (either in its capacity as Administrative Agent or in its individual capacity as a Lender or otherwise).
Section 13.5      Action on Instructions of Lenders .
Administrative Agent shall in all cases be fully protected in acting, or in refraining from acting, hereunder and under any other Loan Document in accordance with written instructions signed by the Requisite Lenders or, where consent of all Lenders is required, all Lenders, and such instructions and any action taken or failure to act pursuant thereto shall be binding on all Lenders and on all holders of the Note. Administrative Agent shall be fully justified in failing or refusing to take any action hereunder and under any other Loan Document unless it shall first be indemnified to its reasonable satisfaction by all Lenders in accordance with their Pro Rata Shares against any and all liability, cost and expense that it may incur by reason of taking or continuing to take any such action.
Section 13.6      Employment of Agents and Counsel .
Administrative Agent may execute any of its duties as Administrative Agent hereunder and under any other Loan Document by or through employees, agents, service providers, and attorneys-in-fact and so long as it exercises reasonable care in the selection of such parties, Administrative Agent shall not be answerable to Lenders, except as to money or securities received by it or its authorized agents, for the default or misconduct of any such parties. Administrative Agent shall be entitled to advice of counsel concerning all matters pertaining to the agency hereby created and its duties hereunder and under any other Loan Document.

-171-


Section 13.7      Reliance on Documents; Counsel .
Administrative Agent shall be entitled to rely upon any note, notice, consent, certificate, affidavit, letter, telegram, statement, paper or document believed by it to be genuine and correct and to have been signed or sent by the proper Person or Persons, and, in respect to legal matters, upon the opinion of counsel selected by Administrative Agent, which counsel may be employees of Administrative Agent.
Section 13.8      Administrative Agent’s Reimbursement and Indemnification .
Lenders agree to reimburse and indemnify Administrative Agent ratably in proportion to their respective Commitments (a) for any reasonable amounts not reimbursed by Borrower for which Administrative Agent is entitled to reimbursement by Borrower under the Loan Documents including out-of-pocket expenses in connection with the preparation, execution, delivery of the Loan Documents (and without limiting the obligation of Borrower to do so), (b) for any other out-of-pocket expenses incurred by Administrative Agent (or its representatives) on behalf of Lenders, in connection with the administration and enforcement of the Loan Documents and (c) for any liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or disbursements of any kind and nature whatsoever which may be imposed on, incurred by or asserted against Administrative Agent in any way relating to or arising out of the Loan Documents or any other document delivered in connection therewith or the transactions contemplated thereby, or the enforcement of any of the terms thereof or of any such other documents, provided that no Lender shall be liable for (y) any of the foregoing to the extent they arise from the gross negligence or willful misconduct of Administrative Agent, or (z) any costs or expenses of Administrative Agent’s in-house legal staff and personnel. The obligations of Lenders under this Section 13.8 shall survive payment of the Obligations and termination of this Agreement.
Section 13.9      Rights as a Lender .
In the event Administrative Agent is a Lender, Administrative Agent shall have the same rights and powers and the same duties and obligations hereunder and under any other Loan Document as any Lender and may exercise the same as though it were not Administrative Agent, and the term “Lender” or “Lenders” shall, at any time when Administrative Agent is a Lender, unless the context otherwise indicates, include Administrative Agent in its individual capacity. Administrative Agent may accept deposits from, lend money to, and generally engage in any kind of trust, debt, equity or other transaction, in addition to those contemplated by this Agreement or any other Loan Document, with Borrower in which Borrower are not restricted hereby from engaging with any other Person.
Section 13.10      Lender Credit Decision .
Each Lender acknowledges that it has, independently and without reliance upon Administrative Agent or any other Lender and based on the financial statements prepared by Guarantor and Borrower and such other documents and information as it has deemed appropriate, made its own credit analysis and decision to enter into this Agreement and the other Loan Documents. Each Lender also acknowledges that it will, independently and without reliance upon Administrative

-172-


Agent or any other Lender and based on such documents and information as it shall deem appropriate at the time, continue to make its own credit decisions in taking or not taking action under this Agreement and the other Loan Documents. Administrative Agent shall not be required to keep itself informed as to the performance or observance by Borrower or any other party or any other document referred to or provided for therein or to inspect the properties or books of, or make any other investigation of, Borrower or any other party. Except for notices, reports and other documents and information expressly required to be furnished to the Lenders by Administrative Agent under this Agreement or any of the other Loan Documents, Administrative Agent shall have no duty or responsibility to provide any Lender with any credit or other information concerning the business, operations, property, financial and other condition or creditworthiness of Borrower, any other party or any other Affiliate thereof which may come into possession of Administrative Agent or any of its officers, directors, employees, agents, attorneys in fact or other Affiliates.
Section 13.11      Successor Administrative Agent .
Administrative Agent may resign at any time by giving written notice thereof to Lenders and Borrower. Administrative Agent may be removed by the Requisite Lenders if Administrative Agent (i) is found by a court of competent jurisdiction in a final, non-appealable judgment to have committed gross negligence or willful misconduct in the course of performing its duties hereunder or (ii) has become or is insolvent or has become the subject of a bankruptcy or insolvency proceeding, or has had a receiver, conservator, trustee or custodian appointed for it, or has taken any action in furtherance of, or indicating its consent to, approval of or acquiescence in any such proceeding or appointment, such removal to be effective on the date specified by the Requisite Lenders. Upon any such resignation or removal, the Requisite Lenders (at no cost or expense to Borrower) shall have the right to appoint, on behalf of Borrower and Lenders, a successor Administrative Agent. If no successor Administrative Agent shall have been so appointed by the Requisite Lenders within thirty days after the resigning Administrative Agent’s giving notice of its intention to resign, then the resigning Administrative Agent shall appoint, on behalf of Borrower and Lenders, a successor Administrative Agent. No successor Administrative Agent shall be deemed to be appointed hereunder until such successor Administrative Agent has accepted the appointment. Upon the acceptance of any appointment as Administrative Agent hereunder by a successor Administrative Agent, such successor Administrative Agent shall thereupon succeed to and become vested with all the rights, powers, privileges and duties of the resigning or removed Administrative Agent. Upon the effectiveness of the resignation or removal of Administrative Agent, the resigning or removed Administrative Agent shall be discharged from its duties and obligations thereafter arising hereunder and under the Loan Documents. After the effectiveness of the resignation or removal of an Administrative Agent, the provisions of this Article 13 shall continue in effect for the benefit of such Administrative Agent in respect of any actions taken or omitted to be taken by it while it was acting as Administrative Agent hereunder and under the other Loan Documents. Notwithstanding anything contained herein to the contrary, Administrative Agent may assign its rights and duties under the Loan Documents to any of its affiliates by giving Borrower and each Lender prior written notice.

-173-


Section 13.12      Amendments and Waivers
(a)      Generally . Except as otherwise expressly provided in this Agreement, (i) any consent or approval required or permitted by this Agreement or in any Loan Document to be given by the Administrative Agent or the Lenders may be given, (ii) any term of this Agreement or of any other Loan Document or the Intercreditor Agreement may be amended, (iii) the performance or observance by the Borrower or any of its Affiliates of any terms of this Agreement or such other Loan Document may be waived, and (iv) the continuance of any Event of Default may be waived (either generally or in a particular instance and either retroactively or prospectively) with, but only with, the written consent of the Requisite Lenders (or Administrative Agent at the written direction of the Requisite Lenders), and, in the case of an amendment to any Loan Document, the written consent of each Borrower Affiliate which is party thereto.
(b)      Unanimous Consent . Notwithstanding the foregoing, no amendment, waiver or consent shall, unless in writing, and signed by all of the Lenders (or Administrative Agent at the written direction of the Lenders), do any of the following:
(i)      increase the Commitments of the Lenders (excluding any increase as a result of an assignment of Loans permitted under Section 10.21 or, for the avoidance of doubt, any Protective Advances permitted under Section 13.19 ) or subject the Lenders to any additional obligations;
(ii)      reduce the principal of, or interest or interest rates that have accrued or that will be charged on the outstanding principal amount of, the Loan;
(iii)      reduce the amount of any fees payable to the Lenders hereunder;
(iv)      postpone any date fixed for any payment of principal of, or interest on, the Loan (including, without limitation, the Maturity Date) or for the payment of fees or any other obligations of Borrower or Guarantor;
(v)      change any Lender’s pro rata share of payments made or received in connection with any Loan (excluding any change as a result of an assignment of Loans permitted under Section 9.1 );
(vi)      amend this Section or amend the definitions of the terms used in this Agreement or the other Loan Documents insofar as such definitions affect the substance of this Section;
(vii)      modify the definition of the term “Requisite Lenders” or modify in any other manner the number or percentage of the Lenders required to make any determinations or waive any rights hereunder or to modify any provision hereof;
(viii)      except and only to the extent contemplated under any Guaranty, release any Guarantor from its obligations under any Guaranty;
(ix)      waive a Default under Section 10.1(a) ;

-174-


(x)      consent to any Transfer that is not a Permitted Transfer; or
(xi)      release or dispose of any collateral for the Loan unless released or disposed of as permitted by, and in accordance with, Section 13.19 .
(c)      Amendment of Administrative Agent’s Duties, Etc. No amendment, waiver or consent unless in writing and signed by Administrative Agent, in addition to the Lenders required hereinabove to take such action, shall affect the rights or duties of Administrative Agent under this Agreement, any of the other Loan Documents. No waiver shall extend to or affect any obligation not expressly waived or impair any right consequent thereon and any amendment, waiver or consent shall be effective only in the specific instance and for the specific purpose set forth therein. No course of dealing or delay or omission on the part of Administrative Agent or any Lender in exercising any right shall operate as a waiver thereof or otherwise be prejudicial thereto. Any Event of Default occurring hereunder shall continue to exist until such time as such Event of Default is waived in writing in accordance with the terms of this Section, notwithstanding any attempted cure or other action by the Borrower, any Affiliate thereof or any other Person subsequent to the occurrence of such Event of Default. Except as otherwise explicitly provided for herein or in any other Loan Document, no notice to or demand upon the Borrower shall entitle the Borrower to other or further notice or demand in similar or other circumstances.
(d)      Standard for Consent. Notwithstanding anything to the contrary contained herein, the Lenders agree that if the Loan Documents impose a standard of determination (such as “reasonableness”) on Administrative Agent or Lender thereunder with respect to a proposed action or decision which would be subject to Requisite Lender or unanimous Lender consent hereunder, then each Lender shall apply and will be held to the same standard with respect to the proposed action or decision, accordingly, for the sake of clarity, if Administrative Agent or Lenders are required to be reasonable with respect to approving or consenting to a given action or item under the Loan Agreement or the other Loan Documents which also requires Requisite Lender or unanimous Lender consent hereunder, then each Lender shall also be reasonable in providing its consent or approval of such action or item.
Section 13.13      Notice of Defaults .
If a Lender becomes aware of a Default or an Event of Default, such Lender shall notify Administrative Agent of such fact provided that the failure to give such notice shall not create liability on the part of a Lender. Upon receipt of such notice that a Default or Event of Default has occurred, Administrative Agent shall notify each Lender thereof.
Section 13.14      Requests for Approval .
If Administrative Agent requests in writing the consent or approval of a Lender, such Lender shall respond and either approve or disapprove definitively in writing to Administrative Agent within ten (10) Business Days (or sooner if such notice specifies a shorter period for responses based on Administrative Agent’s good faith determination that circumstances exist warranting its request for an earlier response) after such written request from Administrative Agent, then Administrative Agent will send a second request to such Lender. In the event any Lender fails to reply to such second

-175-


request for approval from Administrative Agent within five (5) days (or sooner if such notice specifies a shorter period for responses based on Administrative Agent’s good faith determination that circumstances exist warranting its request for an earlier response), which second request shall state in bold lettering: “ LENDER’S RESPONSE IS REQUIRED WITHIN THREE (3) DAYS AFTER RECEIPT OF THIS NOTICE IN ACCORDANCE WITH THE TERMS OF THE LOAN AGREEMENT. FAILURE TO RESPOND WITHIN SUCH TIME PERIOD SHALL BE DEEMED APPROVAL BY LENDER OF THE MATTERS SET FORTH HEREIN ” with the appropriate number of days inserted by Administrative Agent, then such Lender shall be deemed to have approved (and voted in favor of) Administrative Agent’s recommendation with respect to any matters set forth in the request.
Section 13.15      Copies of Documents .
Within fifteen (15) Business Days after a request by a Lender to Administrative Agent for documents furnished to Administrative Agent by Borrower, Administrative Agent shall, to the extent actually provided by Borrower, provide copies of such documents to such Lender.
Section 13.16      Defaulting Lenders .
At such time as a Lender becomes a Defaulting Lender, such Defaulting Lender’s right to vote on matters which are subject to the consent or approval of the Requisite Lenders, each affected Lender or all Lenders shall be immediately suspended until such time as such Lender is no longer a Defaulting Lender, except that the amount of the Commitment of the Defaulting Lender may not be increased or (except as provided herein) decreased without its consent. If a Defaulting Lender has failed to fund its Pro Rata Share of any Loan and until such time as such Defaulting Lender subsequently funds its Pro Rata Share of such Loan, all obligations owing to such Defaulting Lender hereunder shall be subordinated in right of payment, as provided in the following sentence, to the prior payment in full of all principal of, interest on and other sums relating to the amounts funded by the other Lenders which were included in the Loans with respect to which the Defaulting Lender failed to fund its Pro Rata Shares (such principal, interest and fees being referred to as “ Senior Loans ” for the purposes of this Section). All amounts paid by Borrower and otherwise due to be applied to the obligations owing to such Defaulting Lender pursuant to the terms hereof shall first be distributed by Administrative Agent to the other Lenders in accordance with their respective Pro Rata Shares (recalculated for the purposes hereof to exclude the Commitment of the Defaulting Lender) until all Senior Loans have been paid in full. This provision governs only the relationship among Administrative Agent, each Defaulting Lender and the other Lenders; nothing hereunder shall limit the obligation of Borrower to repay the Loans in accordance with the terms of this Agreement. The provisions of this Section shall apply and be effective regardless of whether an Event of Default occurs and is continuing, and notwithstanding (i) any other provision of this Agreement to the contrary, (ii) any instruction of Borrower as to its desired application of payments or (iii) the suspension of such Defaulting Lender’s right to vote on matters which are subject to the consent or approval of the Requisite Lenders or all Lenders.

-176-


Section 13.17      Pro Rata Treatment.
Except to the extent otherwise provided herein: (a) each borrowing from Lenders shall be made from the Lenders, each payment of the fees shall be made for the account of the Lenders, and each termination or reduction of the amount of the Commitments pursuant to this Agreement shall be applied to the respective Commitments of the Lenders, pro rata according to the amounts of their respective Commitments; (b) each payment or prepayment of principal of the Loan by the Borrower shall be made for the account of the Lenders pro rata in accordance with the respective unpaid principal amounts of the Loan held by them, provided that if immediately prior to giving effect to any such payment in respect of the Loan the outstanding principal amount of the Loan shall not be held by the Lenders pro rata in accordance with their respective Commitments in effect at the time the Loan was made, then such payment shall be applied to the Loan in such manner as shall result, as nearly as is practicable, in the outstanding principal amount of the Loan being held by the Lenders pro rata in accordance with their respective Commitments; and (c) each payment of interest on the Loan by the Borrower shall be made for the account of the Lenders pro rata in accordance with the amounts of interest on the Loan then due and payable to the respective Lenders.
Section 13.18      Sharing of Payments, Etc.
Lenders agree among themselves that (i) with respect to all amounts received by them which are applicable to the payment of the obligations of Borrower or Guarantor under the Loan, equitable adjustment will be made so that, in effect, all such amounts will be shared among them ratably in accordance with their Pro Rata Shares in the Loan, whether received by voluntary payment, by counterclaim or cross action or by the enforcement of any or all of such obligations, (ii) if any of them shall by voluntary payment or by the exercise of any right of counterclaim or otherwise, receive payment of a proportion of the aggregate amount of such obligations held by it which is greater than its Pro Rata Share in the Loan of the payments on account of such obligations, the one receiving such excess payment shall purchase, without recourse or warranty, an undivided interest and participation (which it shall be deemed to have done simultaneously upon the receipt of such payment) in such obligations owed to the others so that all such recoveries with respect to such obligations shall be applied ratably in accordance with such Pro Rata Shares; provided, that if all or part of such excess payment received by the purchasing party is thereafter recovered from it, those purchases shall be rescinded and the purchase prices paid for such participations shall be returned to that party to the extent necessary to adjust for such recovery, but without interest except to the extent the purchasing party is required to pay interest in connection with such recovery. Borrower agrees that any Lender so purchasing a participation from another Lender pursuant to this Section 13.18 may, to the fullest extent permitted by law, exercise all its rights of payment with respect to such participation as fully as if such Lender were the direct creditor of Borrower in the amount of such participation.
Section 13.19      Collateral Matters; Protective Advances.
(a)      Each Lender hereby authorizes Administrative Agent, without the necessity of any notice to or further consent from any Lender, from time to time prior to a Default, to take any action with respect to any Collateral or Loan Documents which may be necessary to

-177-


perfect and maintain perfected the Liens upon the Collateral granted pursuant to any of the Loan Documents.
(b)      The Lenders hereby authorize Administrative Agent, at its option and in its discretion, to release any Lien granted to or held by Administrative Agent upon any Collateral (i) upon termination of the Commitments and indefeasible payment and satisfaction in full of all of obligations of Borrower hereunder; (ii) as expressly permitted by, but only in accordance with, the terms of the applicable Loan Document; and (iii) if approved, authorized or ratified in writing by the Requisite Lenders (or such greater number of Lenders as this Agreement or any other Loan Document may expressly provide). Upon request by Administrative Agent at any time, the Lenders will confirm in writing Administrative Agent’s authority to release particular types or items of Collateral pursuant to this Section. In addition to the foregoing, the Lenders hereby authorize Administrative Agent to take such actions and execute, file and/or deliver such documents as are contemplated in Section 2.4 , and the Lenders agree to cooperate with Administrative Agent in connection therewith.
(c)      Upon any sale and transfer of Collateral which is expressly permitted pursuant to the terms of this Agreement, and upon at least five (5) Business Days’ prior written request by the Borrower, Administrative Agent shall (and is hereby irrevocably authorized by the Lenders to) execute such documents as may be necessary to evidence the release of the Liens granted to Administrative Agent for the benefit of the Lenders herein or pursuant hereto upon the Collateral that was sold or transferred; provided, however, that (i) Administrative Agent shall not be required to execute any such document on terms which, in Administrative Agent’s opinion, would expose Administrative Agent to liability or create any obligation or entail any consequence other than the release of such Liens without recourse or warranty and (ii) such release shall not in any manner discharge, affect or impair the obligations of Borrower or any Liens upon (or obligations of the Borrower or any of its Affiliates in respect of) all interests retained by the Borrower or any of its Affiliates, including (without limitation) the proceeds of such sale or transfer, all of which shall continue to constitute part of the Collateral. In the event of any sale or transfer of Collateral, or any foreclosure with respect to any of the Collateral, Administrative Agent shall be authorized to deduct all of the expenses reasonably incurred by Administrative Agent from the proceeds of any such sale, transfer or foreclosure. The foregoing provisions of this Section 13.19(c) shall not be construed to diminish Administrative Agent’s obligations or Borrower’s rights under Section 2.4.
(d)      Administrative Agent shall have no obligation whatsoever to the Lenders or to any other Person to assure that the Collateral exists or is owned by the Borrower or any of its Affiliates or is cared for, protected or insured or that the Liens granted to Administrative Agent herein or pursuant hereto have been properly or sufficiently or lawfully created, perfected, protected or enforced or are entitled to any particular priority, or to exercise or to continue exercising at all or in any manner or under any duty of care, disclosure or fidelity any of the rights, authorities and powers granted or available to Administrative Agent in this Section or in any of the Loan Documents, it being understood and agreed that in respect of the Collateral, or any act, omission or event related thereto, Administrative Agent may act in any manner it may deem appropriate, in its sole discretion, given Administrative Agent’s own interest in the Collateral as one of the Lenders and that

-178-


Administrative Agent shall have no duty or liability whatsoever to the Lenders, except to the extent resulting from its gross negligence or willful misconduct.
(e)      Following the occurrence of a default by Borrower, (or if Administrative Agent reasonably believes it is necessary to prevent the occurrence of a default by Borrower), Administrative Agent may make, and shall be reimbursed by the Lenders (in accordance with their Pro Rata Shares) to the extent not reimbursed by the Borrower for, Protective Advances during any one calendar year with respect to any Property that is Collateral up to the sum of (i) amounts expended to pay real estate taxes, assessments and governmental charges or levies imposed upon such Property; (ii) amounts expended to pay insurance premiums for policies of insurance related to such Property; and (iii) $1,000,000. Protective Advances in excess of said sum during any calendar year for any Property that is Collateral shall require the consent of the Requisite Lenders. The Borrower agrees to pay on demand all Protective Advances.
(f)      Each Lender agrees that it will not take any action, nor institute any actions or proceedings, against Borrower or any other obligor hereunder under the Loan Documents with respect to exercising claims against or rights in the Collateral without the written consent of Requisite Lenders.
Section 13.20      Borrower Default.
(a)      Promptly after Administrative Agent or any Lender acquires actual knowledge that an Event of Default has occurred, such party shall notify the other Lenders in writing of the Event of Default. Promptly after Administrative Agent acquires actual knowledge of the occurrence of an Event of Default, Administrative Agent shall give notice of the Event of Default to Borrower and any other parties to whom notice must be provided under this Agreement. Administrative Agent shall send a copy of that default notice to all Lenders promptly after sending such notice. Neither Administrative Agent nor any Lender shall be deemed to have actual knowledge of the occurrence of an Event of Default unless Administrative Agent or such Lender has received written notice from a Lender or Borrower referring to this Agreement and describing the Event of Default (provided, however, that Administrative Agent shall be deemed to have actual knowledge of any Event of Default described in Section 10.1(a)(i)( A) or (B )) without receipt of a written notice from a Lender or Borrower referring to this Agreement and describing such Event of Default.
(b)      In the event that the Requisite Lenders approve or direct the commencement of a foreclosure proceeding or other exercise of remedies, to the extent not already done so, Administrative Agent shall declare the outstanding principal balance of the Loan, all interest thereon and all other amounts payable under the Loan Documents to be immediately due and payable and shall promptly commence and diligently pursue in a commercially reasonable manner such foreclosure proceeding; provided, that (i) such action is not stayed by any bankruptcy or insolvency proceeding or any other injunction or court order and (ii) Administrative Agent believes in good faith that such action will not expose Administrative Agent to any liability from any party, including, without limitation, Borrower or any Lender. If, after commencing such foreclosure proceeding, Administrative Agent is directed to cease such action or to take another course of action by the Requisite Lenders under the terms of this Agreement, Administrative Agent shall follow such direction.

-179-


(c)      In the event that the Requisite Lenders have not approved the commencement of a foreclosure proceeding or other exercise of remedies within the initial one hundred eighty (180) days following the occurrence of an Event of Default, Administrative Agent shall have the right, without the consent of the Requisite Lenders to commence a foreclosure proceeding or other exercise of remedies in the Administrative Agent’s sole discretion.
Section 13.21      Post-Foreclosure Plans .
If all or any portion of the Collateral is acquired by Administrative Agent as a result of a foreclosure or the acceptance of a deed or assignment in lieu of foreclosure, or is retained in satisfaction of all or any part of the obligations of Borrower hereunder, the title to any such Collateral, or any portion thereof, shall be held in the name of Administrative Agent or a nominee or subsidiary of Administrative Agent, as agent, for the ratable benefit of all Lenders. Administrative Agent shall prepare a recommended course of action for such Collateral (a “ Post-Foreclosure Plan ”), which shall be subject to the approval of the Requisite Lenders. In accordance with the approved Post-Foreclosure Plan, Administrative Agent shall manage, operate, repair, administer, complete, construct, restore or otherwise deal with the Collateral acquired, and shall administer all transactions relating thereto, including, without limitation, employing a management agent, leasing agent and other agents, contractors and employees, including agents for the sale of such Collateral, and the collecting of rents and other sums from such Collateral and paying the expenses of such Collateral. Actions taken by Administrative Agent with respect to the Collateral, which are not specifically provided for in the approved Post-Foreclosure Plan or reasonably incidental thereto, shall require the written consent of the Requisite Lenders by way of supplement to such Post-Foreclosure Plan. Upon demand therefor from time to time, each Lender will contribute its share (based on its Pro Rata Share) of all reasonable costs and expenses incurred by Administrative Agent pursuant to the approved Post-Foreclosure Plan in connection with the construction, operation, management, maintenance, leasing and sale of such Collateral. In addition, Administrative Agent shall render or cause to be rendered to each Lender, on a monthly basis, an income and expense statement for such Collateral, and each Lender shall promptly contribute its Pro Rata Share of any operating loss for such Collateral, and such other expenses and operating reserves as Administrative Agent shall deem reasonably necessary pursuant to and in accordance with the approved Post-Foreclosure Plan. To the extent there is net operating income from such Collateral, Administrative Agent shall, in accordance with the approved Post-Foreclosure Plan, determine the amount and timing of distributions to the Lenders. All such distributions shall be made to the Lenders in accordance with their respective Pro Rata Shares. The Lenders acknowledge and agree that if title to any Collateral is obtained by Administrative Agent or its nominee, such Collateral will not be held as a permanent investment but will be liquidated as soon as practicable. Administrative Agent shall undertake to sell such Collateral, at such price and upon such terms and conditions as the Requisite Lenders reasonably shall determine to be most advantageous to the Lenders. Any purchase money mortgage or deed of trust taken in connection with the disposition of such Collateral in accordance with the immediately preceding sentence shall name Administrative Agent, as agent for the Lenders, as the beneficiary or mortgagee. In such case, Administrative Agent and the Lenders shall enter into an agreement with respect to such purchase money mortgage or deed of trust defining the rights of the Lenders in the same Pro Rata Shares as provided hereunder, which agreement shall be in all material respects similar to this Article insofar as the same is appropriate or applicable.

-180-


Section 13.22      Terminology .
Notwithstanding anything to the contrary in this Agreement, in Articles 1 through 12 , “Lender” shall mean “Administrative Agent for the benefit of the Lenders” or “Administrative Agent, on behalf of the Lenders”, as the context may require.
[NO FURTHER TEXT ON THIS PAGE]


-181-


IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed by their duly authorized representatives, all as of the day and year first above written.
 
ADMINISTRATIVE AGENT:
INVESCO CMI INVESTMENTS, L.P. , a Delaware limited partnership
By: Invesco CMI Investments GP, LLC, a Delaware limited liability company, its general partner

By:     /s/ Paul Michaels                 
Name: Paul Michaels
Title: Proper Officer
 
 
 
LENDER:
INVESCO CMI INVESTMENTS, L.P. ,
a Delaware limited partnership
By: Invesco CMI Investments GP, LLC,
a Delaware limited liability company,
its general partner
By:     /s/ Paul Michaels           
Name: Paul Michaels
Title: Proper Officer

[Signatures Continue On Following Page]


[Signature Page to Senior Loan Agreement]


 
BORROWER:
110 WILLIAM PROPERTY INVESTORS III, LLC
a Delaware limited liability company

By:     /s/ Christopher Schlank          
Name: Christopher Schlank
Title: Authorized Signatory



[Signature Page to Senior Loan Agreement]


SCHEDULE I
COMMITMENTS
INVESCO CMI INVESTMENTS, L.P.    -    100%




SCHEDULE II
RENT ROLL

See Attached.





KBSSORQ12019EX102RENT1.JPG



KBSSORQ12019EX102RENT2.JPG



KBSSORQ12019EX102RENT3.JPG



KBSSORQ12019EX102RENT4.JPG



KBSSORQ12019EX102RENT5.JPG



KBSSORQ12019EX102RENT6.JPG



KBSSORQ12019EX102RENT7.JPG



KBSSORQ12019EX102RENT8.JPG



KBSSORQ12019EX102RENT9.JPG



SCHEDULE III
ONGOING WORK

See Attached.





SCHEDULE IV
ORGANIZATIONAL CHART

[Attached]








KBSSORQ12019EX102SCHIV1.JPG



KBSSORQ12019EX102SCHIV2.JPG



KBSSORQ12019EX102SCHIV3.JPG



SCHEDULE V
MINIMUM LEASING PARAMETERS
KBSSORQ12019EX102SCHV.JPG


Exhibit 10.3
 


MEZZANINE LOAN AGREEMENT
Dated as of March 7, 2019
Between
110 WILLIAM MEZZ III, LLC.,

as Borrower,
LENDERS SIGNATORY HERETO
FROM TIME TO TIME ,
as Lenders,
and
INVESCO CMI INVESTMENTS, L.P.
as Administrative Agent and Lender


 




TABLE OF CONTENTS
 
 
 
Page

 
 
I.
DEFINITIONS; PRINCIPLES OF CONSTRUCTION
1

 
Section 1.1
Definitions
1

 
Section 1.2
Principles of Construction
39

 
 
 
 
II.
THE LOAN
40

 
Section 2.1
The Loan
40

 
Section 2.2
The Interest Rate
41

 
Section 2.3
Loan Payments
45

 
Section 2.4
Prepayments
48

 
Section 2.5
Regulatory Change; Taxes
50

 
Section 2.6
Working Capital; Advances
54

 
Section 2.7
Method of Disbursement of Loan Proceeds
63

 
Section 2.8
Mitigation Obligations; Replacement of Lenders
65

 
 
 
 
III.
REPRESENTATIONS AND WARRANTIES
66

 
Section 3.1
Borrower Representations
66

 
Section 3.2
Survival of Representations
87

 
Section 3.3
ERISA
87

 
 
 
 
IV.
BORROWER COVENANTS
87

 
Section 4.1
Borrower Affirmative Covenants
87

 
Section 4.2
Borrower Negative Covenants
112

 
Section 4.3
Mezzanine Loan
116

 
 
 
 
V.
INSURANCE, CASUALTY AND CONDEMNATION
116

 
Section 5.1
Insurance
116

 
Section 5.2
Casualty and Condemnation
117

 
 
 
 
VI.
RESERVE FUNDS AND SECURITY ACCOUNT FUNDS
118

 
Section 6.1
Reserve Funds and Security Account Funds
118

 
Section 6.2
Security
121

 
 
Interest in Reserve Funds and Security Account Funds
121

 
Section 6.3
Lease Termination Funds
122

 
 
 
 
VII.
DEFAULTING LENDER
122

 
Section 7.1
Defaulting Lender
122

 
 
 
 
VIII.
PERMITTED TRANSFERS
123


-i-


 
Section 8.1
Due on Sale
123

 
Section 8.2
Permitted Transfers of Equity Interests
123

 
 
 
 
IX.
SECONDARY MARKET TRANSACTION
125

 
Section 9.1
Sale of Loan
125

 
Section 9.2
[Reserved]
127

 
Section 9.3
Servicing
127

 
Section 9.4
Register
127

 
Section 9.5
Severance Documentation
128

 
Section 9.6
Secondary Market Transaction Expenses
130

 
 
 
 
X.
DEFAULTS
130

 
Section 10.1
Event of Default
130

 
Section 10.2
Remedies
135

 
Section 10.3
Right to Cure Defaults
137

 
Section 10.4
Remedies Cumulative
138

 
 
 
 
XI.
MISCELLANEOUS
138

 
Section 11.1
Successor and Assigns
138

 
Section 11.2
Administrative Agent's Discretion
138

 
Section 11.3
Governing Law
138

 
Section 11.4
Modification, Waiver in Writing
140

 
Section 11.5
Delay Not a Waiver
140

 
Section 11.6
Notices
141

 
Section 11.7
Trial by Jury
143

 
Section 11.8
Headings
143

 
Section 11.9
Severability
143

 
Section 11.10
Preferences
143

 
Section 11.11
Waiver of Notice
143

 
Section 11.12
Claims Against Administrative Agent and Lender; Remedies of Borrower
144

 
Section 11.13
Expenses; General Indemnity; ERISA Indemnity
144

 
Section 11.14
Schedules Incorporated
146

 
Section 11.15
Offsets, Counterclaims and Defenses
146

 
Section 11.16
No Joint Venture or Partnership; No Third-Party Beneficiaries
146

 
Section 11.17
Publicity
147

 
Section 11.18
Waiver of Marshalling of Assets
147

 
Section 11.19
Waiver of Setoff
147

 
Section 11.20
Conflict; Construction of Documents; Reliance
147

 
Section 11.21
Brokers and Financial Advisors
148

 
Section 11.22
Exculpation
148

 
Section 11.23
Prior Agreements
152

 
Section 11.24
[Reserved]
152

 
Section 11.25
Assignments and Participations
152


-ii-


 
Section 11.26
Set-Off
153

 
Section 11.27
REOC Status
153

 
Section 11.28
Delegation By Lenders; Lenders' Consultation and Information Right
153

 
Section 11.29
Intercreditor Agreement
155

 
Section 11.30
Acknowledgment and Consent to Bail-In of EEA Financial Institutions
155

 
 
 
 
XII.
[RESERVED]
156

 
 
 
 
XIII.
ADMINISTRATIVE AGENT AND AGREEMENTS AMONG LENDERS
156

 
Section 13.1
Appointment; Nature of Relationship
156

 
Section 13.2
Powers
157

 
Section 13.3
General Immunity
157

 
Section 13.4
No Responsibility for Loan, etc
158

 
Section 13.5
Action on Instructions of Lenders
158

 
Section 13.6
Employment of Agents and Counsel
158

 
Section 13.7
Reliance on Documents; Counsel
158

 
Section 13.8
Administrative Agent's Reimbursement and Indemnification
159

 
Section 13.9
Rights as a Lender
159

 
Section 13.10
Lender Credit Decision
159

 
Section 13.11
Successor Administrative Agent
160

 
Section 13.12
Amendments and Waivers
160

 
Section 13.13
Notice of Defaults
162

 
Section 13.14
Requests for Approval
162

 
Section 13.15
Copies of Documents
163

 
Section 13.16
Defaulting Lenders
163

 
Section 13.17
Pro Rata Treatment
163

 
Section 13.18
Sharing of Payments, Etc.
164

 
Section 13.19
Collateral Matters; Protective Advances
164

 
Section 13.20
Borrower Default
166

 
Section 13.21
Post-Foreclosure Plans
167

 
Section 13.22
Terminology
167

 
 
 
 
XIV.
MORTGAGE LOAN
168

 
Section 14.1
Compliance With Mortgage Loan Documents
168

 
Section 14.2
Mortgage Loan Defaults
168

 
 
 
 


-iii-


MEZZANINE LOAN AGREEMENT
THIS MEZZANINE LOAN AGREEMENT , dated as of March 7, 2019 (as amended, restated, replaced, supplemented or otherwise modified from time to time, this “ Agreement ”), among 110 WILLIAM MEZZ III, LLC , a Delaware limited liability company, having an address at c/o Savanna, 430 Park Avenue, 12 th Floor, New York, New York 10022 (together with its successors and/or assigns, “ Borrower ”) and INVESCO CMI INVESTMENTS, L.P. , a Delaware limited partnership having an address at c/o Invesco Real Estate, 2001 Ross Avenue, Suite 3400, Dallas Texas 75201, as administrative agent for the Lenders (in such capacity, together with its successors in such capacity, the “ Administrative Agent ”) and as a Lender, and each of the lenders that is a signatory hereto on the signature pages hereof and each lender that becomes a “Lender” after the date hereof (individually, a “ Lender ” and, collectively, the “ Lenders ”).
All capitalized terms used herein shall have the respective meanings set forth in Article I hereof.
W I T N E S E T H :
WHEREAS, Borrower desires to obtain the Loan from Lenders; and
WHEREAS, Lenders are willing to make the Loan to Borrower, subject to and in accordance with the conditions and terms of this Agreement and the other Loan Documents.
NOW, THEREFORE, in consideration of the covenants set forth in this Agreement, and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto hereby agree, represent and warrant as follows:
I. DEFINITIONS; PRINCIPLES OF CONSTRUCTION
Section 1.1      Definitions .
For all purposes of this Agreement, except as otherwise expressly provided:
“ Acceptable Replacement Guarantor ” shall have the meaning set forth in Section 10.1 (a)(xxii) .
“ Accounting Principles ” shall mean a GAAP or Federal income tax basis or other accounting principles reasonably approved by Administrative Agent.
“ Accounts ” shall have the meaning set forth in Section 6.1(b) of the Senior Loan Agreement.
“ ACS Extension Term Sheet ” shall mean that certain Term Sheet by and between 110 Property Investors III, LLC, a Delaware limited liability company, as landlord, and The City of New York, a municipal corporation, acting through the Department of Citywide Administrative Services (DCAS), for use by the Administration for Children Services (ACS), as tenant, dated as of April 13, 2018.



“ Act ” shall have the meaning set forth in Section 3.1.24(cc)(v) .
“ ADA ” means the Americans with Disabilities Act, of July 26, 1990, Pub. L. No. 101-336, 104 Stat. 327, 42 U.S.C. § 12101 et. seq., as amended from time to time.
“ Administrative Agent ” means Invesco CMI Investments, L.P., in its capacity as contractual representative for the Lenders pursuant to Article XIII hereof, and not in its individual capacity as a Lender, and any successor Administrative Agent appointed pursuant to Article XIII .
“ Affiliate ” shall mean, as to any Person, any other Person that is in direct and/or indirect Control of, is directly and/or indirectly Controlled by or is under common direct and/or indirect ownership or Control with such Person.
“ Aggregate Outstanding Principal Balance ” shall mean the sum of (i) the Outstanding Principal Balance of the Loan, (ii) the Building Loan Outstanding Principal Balance and (iii) the Senior Loan Outstanding Principal Balance.
“ Agreement ” shall have the meaning set forth in the introductory paragraph hereto.
“ ALTA ” shall mean American Land Title Association, or any successor thereto.
“ Alteration Threshold ” shall mean $2,000,000.00, in the aggregate.
“ Annex ” shall have the meaning set forth in Section 3.1.43(a) .
“ Annual Budget ” shall mean the operating expense and capital budget for the Property setting forth, on a month-by-month basis, in reasonable detail, each line item of Mortgage Borrower’s good faith estimate of anticipated Gross Revenue, Operating Expenses and Capital Expenditures for the applicable Fiscal Year.
“ Anti-Corruption Laws ” means: (a) the U.S. Foreign Corrupt Practices Act of 1977, as amended; (b) the U.K. Bribery Act 2010, as amended; and (c) any other anti-bribery or anti-corruption laws, regulations or ordinances in any jurisdiction in which Borrower or any Borrower Party is located or doing business.
“ Anti-Money Laundering Laws ” means applicable laws or regulations in any jurisdiction in which Borrower or any Borrower Party is located or doing business that relates to money laundering, any predicate crime to money laundering, or any financial record keeping and reporting requirements related thereto.
“ Applicable Interest Rate ” means, except as provided in subsections (i) and (ii) below, from the date hereof until the Interest Rate Replacement Date, if any, the rate of interest equal to the sum of: (a) the LIBOR Interest Rate, plus (b) the Applicable Spread; provided, however: (i) if Administrative Agent makes a LIBOR Rate Unavailable Determination, in accordance with Section 2.2.3(b) hereof, then the Applicable Interest Rate with respect to the Loan shall convert to the Base Rate in accordance with said section; and (ii) notwithstanding subsection (i) above, if Administrative Agent should, at any time, make a LIBOR Rate Discontinued Determination, in accordance with

-2-


Section 2.2.3(c) hereof, then from and after the Interest Rate Replacement Date, the Applicable Interest Rate shall be equal to the sum of: (x) the Substitute Rate, plus (y) the Substitute Spread; provided, however, that in no event shall the Applicable Interest Rate ever be less than 2.00%.
“ Applicable Lending Office ” shall mean the “lending office” of a Lender (or of an Affiliate of such Lender) designated for a Lender on the signature page hereof or such other office of such Lender (or an Affiliate of such Lender) as such Lender may from time to time specify to Borrower in writing as the office by which the Loan is to be made and/or maintained by such Lender.
“ Applicable Similar Law ” shall have the meaning set forth in Section 3.1.8 .
“ Applicable Spread ” shall mean 4.90%.
“ Appraisal ” shall mean an “as-is” appraisal of the Property prepared in accordance with the requirements of FIRREA and USPAP, prepared by an independent third-party appraiser, who is State licensed or State certified if required under the laws of the State where the Property is located, who meets the requirements of FIRREA and USPAP and who is otherwise reasonably satisfactory to Administrative Agent.
“ Appraised Value ” shall mean the “as is” appraised value of the Property, as determined by an Appraisal, and in connection with any calculation of the Loan to Value Ratio pursuant to the terms of this Agreement, that is dated not more than ninety (90) days prior to the date of the calculation thereof.
“ Approved Annual Budget ” shall have the meaning set forth in Section 4.1.6(e) .
“ Approved Costs ” shall have the meaning set forth in Section 2.6.4 .
“ Approved Equipment Financing ” shall have the meaning set forth in Section 4.2.6 .
“ Approved Independent Director Provider ” shall mean (A) each of CT Corporation, Corporation Service Company, National Registered Agents, Inc., Wilmington Trust Company, Stewart Management Company, and Lord Securities Corporation and (B) additional national providers of Independent Directors reasonably approved in writing by Administrative Agent.
“ Assignment of Protection Agreement ” shall mean that certain Collateral Assignment of Interest Rate Protection Agreement, dated as of the date hereof, between Borrower and Administrative Agent, for the benefit of Lenders and acknowledged by Counterparty, and any other Collateral Assignment of Interest Rate Protection Agreement hereafter delivered in compliance with Section 4.1.11 hereof.
“ Award ” shall mean any compensation paid by any Governmental Authority in connection with a Condemnation in respect of all or any part of the Property.
“ Bankruptcy Code ” shall mean Title 11 of the United States Code, 11 U.S.C. §101 et seq., as the same may be amended from time to time, and any successor statute or statutes and all rules and regulations from time to time promulgated thereunder, and any comparable foreign laws relating

-3-


to bankruptcy, insolvency or creditors’ rights or any other Federal or state bankruptcy or insolvency law.
“ Bankruptcy Event ” shall mean with respect to any Person: (a) such Person filing a voluntary petition under the Bankruptcy Code or any other federal or state bankruptcy or insolvency law; (b) the filing of an involuntary petition against such Person under the Bankruptcy Code or any other federal or state bankruptcy or insolvency law, or soliciting or causing to be solicited petitioning creditors for any involuntary petition against such Person; (c) such Person filing an answer consenting to or otherwise consenting to or joining in any involuntary petition filed against it, by any other Person under the Bankruptcy Code or any other federal or state bankruptcy or insolvency law, or soliciting or causing to be solicited petitioning creditors for any involuntary petition from any Person; (d) such Person consenting to or acquiescing in or joining in an application for the appointment of a custodian, receiver, trustee, assignee, sequestrator (or similar official), liquidator, or examiner for such Person or any portion of the Property; (e) the filing of a petition against a Person seeking reorganization, arrangement, composition, readjustment, liquidation, dissolution or similar relief under the Bankruptcy Code or any other applicable law; (f) under the provisions of any other law for the relief or aid of debtors, an action taken by any court of competent jurisdiction that allows such court to assume custody or Control of a Person or of the whole or any substantial part of its property or assets; or (g) such Person making an assignment for the benefit of creditors, or admitting, in writing or in any legal proceeding, its insolvency or inability to pay its debts as they become due.
“ Base Rate ” for any Interest Period, shall mean the sum of (a) the Federal Funds Rate, determined as of the Determination Date related to such Interest Period, plus (b) the Base Rate Margin.
“ Base Rate Margin ” shall mean the difference between (a) the Applicable Interest Rate as in effect immediately prior to a LIBOR Rate Unavailable Determination and (b) the Federal Funds Rate in effect as of such LIBOR Rate Unavailable Determination.  Once determined, the Base Rate Margin shall remain constant for so long as the Base Rate shall be in effect.
“ Borrower ” shall have the meaning set forth in the introductory paragraph hereto.
“ Borrower Party ” shall mean each of Borrower, Mortgage Borrower and Guarantor.
“ Borrower Related Party ” means, collectively and individually, any Borrower Party and any Affiliate of any of the foregoing.
“ Borrower Transaction Cost Cap ” shall have the meaning set forth in Section 9.6
“ Borrower’s knowledge ” shall mean the actual knowledge of the parties primarily charged with the operation of the day-to-day activities of Borrower and Mortgage Borrower, which, for the avoidance of doubt, shall include, without limitation, Guarantor and Manager.
“ Borrower’s Requisition ” shall have the meaning set forth in Section 2.7.1.
“ Breakage Costs ” shall have the meaning set forth in Section 2.2.3(g) .

-4-


“ Build Out Cost Cap ” shall have the meaning set forth in Section 4.1.10 .
“ Build Out Costs ” TI/LC Costs incurred by Mortgage Borrower in connection with the Build Out Work.
“ Build Out Space ” shall have the meaning set forth in Section 4.1.10 .
“ Build Out Work ” shall have the meaning set forth in Section 4.1.10 .
“ Building Loan ” shall mean that certain building loan in the maximum principal amount of up to $45,900,000.00 made on the date hereof by Mortgage Lenders to Mortgage Borrower, and evidenced and secured by the Building Loan Documents.
“ Building Loan Agreement ” shall mean that certain Amended and Restated Building Loan Agreement dated as of the date hereof and made by and between Mortgage Borrower, Mortgage Administrative Agent and Mortgage Lenders, as the same may be modified, amended and restated from time to time.
“ Building Loan Documents ” shall mean, collectively, the “Loan Documents” as defined in the Building Loan Agreement.
“Building Loan Outstanding Principal Balance ” shall mean the “Outstanding Principal Balance” as defined in the Building Loan Agreement.
“ Building Loan Pro Forma Debt Service ” shall mean the “Pro Forma Debt Service” as defined in the Building Loan Agreement.
“ Business Day ” shall mean any day other than a Saturday, a Sunday or a legal holiday on which national banks are not open for general business in the State of New York.
“ Capital Expenditures ” shall mean, for any period, amounts expended for replacements and alterations to the Property, excluding any Tenant Improvements, which are required to be capitalized according to Accounting Principles.
“ Capital Expenditures Work ” shall mean any labor performed or materials installed in connection with any Capital Expenditure.
“ Capped LIBOR Rate ” shall mean three and three quarters percent (3.75%).
“ Carry Costs ” shall mean the sum of the following costs associated with the Property for the applicable period or Fiscal Year: (i) Taxes, (ii) Other Charges, (iii) Insurance Premiums, and (iv) without duplication of the items described in clauses (i) – (iii) , Operating Expenses.
“ Carry Guaranty ” shall mean that certain Mezzanine Carry Guaranty of even date herewith from Savanna Guarantor for the benefit of Administrative Agent, for the benefit of Lenders, as the same may be amended, restated, supplemented or otherwise modified from time to time.

-5-


“ Cash Management Agreement ” shall mean that certain Cash Management Agreement of even date herewith among Mortgage Administrative Agent, for the benefit of Mortgage Lenders, Mortgage Borrower, Manager and Deposit Bank as the same may be amended, restated, supplemented or otherwise modified from time to time.
“ Cash Trap Period ” shall mean the following:
(i)      from and after the occurrence of any Event of Default, until Administrative Agent accepts in writing (in its sole and absolute discretion) a cure of the applicable Event of Default (provided that no Cash Trap Period remains in effect pursuant any other clause hereof); or
(ii)      the occurrence of a Bankruptcy Event with respect to Borrower, Mortgage Borrower or Guarantor; or
(iii)      (A) during the First Extension Option, the Debt Yield is less than 5.875%, as reasonably determined by Administrative Agent, until such time as the Debt Yield shall be equal to or greater than 6.125% for two (2) consecutive calendar quarters, as reasonably determined by Administrative Agent, (B) during the Second Extension Period, the Debt Yield is less than 6.50%, as reasonably determined by Administrative Agent, until such time as the Debt Yield shall be equal to or greater than 6.75% for two (2) consecutive calendar quarters, as reasonably determined by Administrative Agent, and (C) during the Third Extension Period, the Debt Yield is less than 7.00%, as reasonably determined by Administrative Agent, until such time as the Debt Yield shall be equal to or greater than 7.25% for two (2) consecutive calendar quarters, as reasonably determined by Administrative Agent (the Debt Yield as set forth in (A), (B) and (C), the then-applicable “ Minimum Cash Trap Debt Yield ”) as reasonably determined by Administrative Agent (in each case, provided that no Cash Trap Period remains in effect pursuant to any other clause hereof), provided, that to the extent necessary to satisfy the condition set forth in this clause (iii), Borrower shall have the right to prepay the Loan in an amount equal to the Mezzanine Pro Rata Share of the prepaid amount to achieve the then-applicable Minimum Cash Trap Debt Yield (any such amount, the “ Optional Cash Trap Prepayment Amount ”), but subject to the applicable terms and conditions of Section 2.4.1 of this Agreement and provided that the Mortgage Pro Rata Share of the Optional Cash Trap Prepayment Amount is also simultaneously prepaid by Mortgage Borrower in accordance with the Mortgage Loan Agreement and provided that Mortgage Borrower has also complied with the applicable requirements of Section 2.4.1 of the Mortgage Loan Agreement; provided , that Administrative Agent acknowledges and agrees that any optional prepayment in connection with this definition shall not result in Borrower being obligated to any prepayment penalty, Spread Maintenance Premium or any similar premium or fee. In lieu of payment of the Mezzanine Pro Rata Share of the Optional Cash Trap Prepayment Amount, Borrower may at its option (X) deliver to Administrative Agent, for the benefit of Lenders, a Letter of Credit in the face amount of the Mezzanine Pro Rata Share of the Optional Cash Trap Prepayment Amount to be held as collateral for the Loan (provided that Mortgage Borrower shall have simultaneously delivered to Mortgage Administrative Agent a letter of credit in the face amount of the Mortgage Pro Rata Share of the Optional Cash Trap Prepayment Amount (in

-6-


accordance with the Mortgage Loan Documents), so that the sum of the face amount of such Letter of Credit delivered to Administrative Agent, for the benefit of Lenders, plus the face amount of such letter of credit delivered to Mortgage Administrative Agent shall be equal to the aggregate Optional Cash Trap Prepayment Amount, or (Y) deposit cash in the amount of the Mezzanine Pro Rata Share of Optional Cash Trap Prepayment Amount with Administrative Agent provided that Mortgage Borrower shall have simultaneously deposited with Mortgage Administrative Agent cash in the aggregate amount of the Mortgage Pro Rata Share of the Optional Cash Trap Prepayment Amount in accordance with the Mortgage Loan Documents), so that the sum of the amount of cash deposited with Administrative Agent, plus the amount of cash deposited with Mortgage Administrative Agent shall be equal to the aggregate Optional Cash Trap Prepayment Amount). If Borrower elects to deliver to Administrative Agent, for the benefit of Lenders, a Letter of Credit pursuant to this definition, then the Letter of Credit provisions set forth in Schedule VIII shall be applicable. Any collateral provided to Administrative Agent pursuant to clause (X) or (Y) above shall be released to Borrower upon the Property achieving the applicable Minimum Cash Trap Debt Yield for two (2) consecutive calendar quarters.
(iv)      from and after the occurrence of an “Event of Default” as defined in and pursuant to the Mezzanine Loan Documents, until Mezzanine Administrative Agent accepts in writing (in its sole and absolute discretion) the cure of the applicable “Event of Default” (provided that no Cash Trap Period remains in effect pursuant to any other clause hereof).
“ Casualty ” shall mean the occurrence of any casualty, damage or injury, by fire or otherwise, to the Property or any part thereof.
“ Central Bank Pledge ” shall have the meaning set forth in Section 9.1.1 .
“ Clearing Account ” shall have the meaning set forth in Section 6.1(a)(i) of the Senior Loan Agreement.
“ Closing Date ” shall mean the date hereof.
“ Co-Lender ” shall have the meaning set forth in Section 9.5 .
“ Code ” shall mean the Internal Revenue Code of 1986, as amended, and as it may be further amended from time to time, any successor statutes thereto, and applicable U.S. Department of Treasury regulations issued pursuant thereto in temporary or final form.
“ Collateral ” shall mean all collateral securing or intended to secure the Debt, including, without limitation, the Pledged Collateral.
“ Commitment ” shall mean, as to each Lender, such Lender’s obligation to make disbursements pursuant to this Agreement, in an amount up to, but not exceeding the amount set forth for such Lender on Schedule I attached hereto as such Lender’s “Commitment Amount” or as otherwise agreed by the applicable Lenders.

-7-


“ Completion Guaranty ” shall mean that certain Mezzanine Completion Guaranty of even date herewith from Savanna Guarantor for the benefit of Administrative Agent, for the benefit of Lenders, as the same may be amended, restated, supplemented or otherwise modified from time to time.
“ Condemnation ” shall mean a temporary or permanent taking by any Governmental Authority as the result or in lieu or in anticipation of the exercise of the right of condemnation or eminent domain, of all or any part of the Property, or any interest therein or right accruing thereto, including any right of access thereto or any change of grade affecting the Property or any part thereof.
“ Condemnation Proceeds ” shall have the meaning set forth in the definition of Net Proceeds.
“ Connection Income Taxes ” means Other Connection Taxes that are imposed on or measured by net income (however denominated) or that are franchise Taxes or branch profits Taxes.
“ Constituent Members ” shall have the meaning set forth in Section 3.1.24(ee)(i) .
“ Construction Consultant ” shall mean any Person (which may be an Affiliate of Administrative Agent) as Administrative Agent may designate and engage to inspect the Capital Expenditures Work and Tenant Improvement Work, as work progresses, and consult with and to provide advice to and to render reports to Administrative Agent. Notwithstanding anything to the contrary contained herein, provided that no Event of Default is then continuing, the same Person shall be the Construction Consultant under the Loan, the Building Loan and Senior Loan.
“ Construction Management Agreement ” shall mean (i) the Construction Management Agreement or (ii) any replacement construction management agreement entered into by and between Mortgage Borrower and a replacement construction manager in accordance with the terms of the Loan Documents, in each case, pursuant to which such construction manager is to provide construction management services with respect to the Property.
“ Construction Manager ” shall mean (i) Savcon, LLC, a Delaware limited liability company or (ii) any other construction manager engaged by Mortgage Borrower in accordance with the terms and conditions of the Loan Documents.
“ Contracts ” shall mean all contracts, agreements, warranties, guaranties and representations relating to or governing the use, occupancy, operation, management, name, repair and service of the Property entered into by Borrower, Property Manager or their Affiliates.
“ Contractual Obligation ” shall mean, as to any Person, any provision of any security issued by such Person or of any agreement, instrument or undertaking to which such Person is a party or by which it or any of its property is bound, or any provision of the foregoing.
“ Control ” shall mean, with respect to any Person, the possession, directly or indirectly, of the power to direct or cause the direction of the management policies or day-to-day activities of a Person, directly or indirectly, through the ownership of voting securities, by contract or otherwise,

-8-


including, without limitation, having approval or consent rights over the actions or conduct of a Person, and the terms Controlled, Controlling and Common Control shall have correlative meanings.
“ Counterparty ” shall mean (a) the counterparty under the Interest Rate Protection Agreement or (b) a Person that guarantees such counterparty’s obligations under the Interest Rate Protection Agreement or otherwise provides to such counterparty credit support reasonably acceptable to Administrative Agent; provided, however, that such guarantor shall be deemed the “ Counterparty ” for so long as the long-term credit rating issued by the Rating Agencies to such guarantor is better than the long-term credit rating of the actual counterparty under the Interest Rate Protection Agreement.
“ Debt ” shall mean the then outstanding principal amount of the Loan together with all interest accrued and unpaid thereon and all other sums due to the Lenders in respect of the Loan under the Note, this Agreement and any other Loan Document (including, without limitation, all costs and expenses payable to the Lenders thereunder).
“ Debt Service ” shall mean, with respect to any particular period, the sum of the amount of interest and principal (if any) due pursuant to and in accordance with this Agreement with respect to such particular period.
“ Debt Service Coverage Ratio ” or “ DSCR ” shall mean, as of the date of determination, the ratio in which the numerator is the Net Operating Income as of the date of determination and the denominator is the sum of (A) the aggregate Pro Forma Debt Service as of the date of determination plus (B) the aggregate Building Loan Pro Forma Debt Service plus (C) the aggregate Senior Loan Pro Forma Debt Service (collectively, the “ Aggregate Debt Service ”) as of the date of determination. Administrative Agent’s calculation of the Debt Service Coverage Ratio shall be conclusive and binding on Borrower absent manifest error.
“ Debt Yield ” shall mean, as of the date of determination, the ratio in which the numerator is the Net Operating Income as of the date of determination and the denominator is the Aggregate Outstanding Principal Balance.
“ Deemed Consent Mechanics ” shall mean, whenever Administrative Agent’s approval or consent is required pursuant to the provisions of a particular Section of this Agreement (which section expressly references that such approval or consent is subject to the Deemed Consent Mechanics), and so long as no Event of Default or Mezzanine Loan Event of Default has occurred which is then continuing, Administrative Agent’s consent shall be deemed given if:
(A)      the first correspondence from Borrower to Administrative Agent requesting such approval or consent is in an envelope marked “ PRIORITY ” and shall conspicuously state in 14 point or larger bold‑faced type, a legend at the top of the first page thereof stating that “ FIRST NOTICE: THIS IS A REQUEST FOR CONSENT UNDER THE LOAN BY ADMINISTRATIVE AGENT TO BORROWER. FAILURE TO RESPOND TO THIS REQUEST WITHIN TEN (10) BUSINESS DAYS MAY RESULT IN THE REQUEST BEING DEEMED GRANTED ”, and is accompanied by the information and documents required under such Section, and any other information reasonably requested by Administrative Agent in writing

-9-


prior to the expiration of such ten (10) Business Day period in order to adequately review the same has been delivered;
(B)      Administrative Agent has failed to so respond by the tenth (10 th ) Business Day, and Borrower sends to Administrative Agent a second notice requesting approval in an envelope marked “ PRIORITY ” and shall conspicuously state in 14 point or larger bold‑faced type, a legend at the top of the first page thereof stating that “ SECOND AND FINAL NOTICE: THIS IS A REQUEST FOR CONSENT UNDER THE LOAN BY [ADMINISTRATIVE AGENT] TO [BORROWER] TO. IF YOU FAIL TO PROVIDE A RESPONSE (E.G., APPROVAL, DENIAL OR REQUEST FOR CLARIFICATION OR MORE INFORMATION) TO THIS REQUEST FOR APPROVAL IN WRITING WITHIN FIVE (5) BUSINESS DAYS, YOUR APPROVAL SHALL BE DEEMED GIVEN ”; and
(C)      Administrative Agent fails to provide a response (e.g., approval, denial or request for clarification or more information) to such second request for approval within such five (5) Business Day period.
“ Default ” shall mean the occurrence of any event hereunder or under any other Loan Document which, if not cured within the applicable grace, notice or cure period therefor (if any), would be an Event of Default.
“ Default Rate ” shall mean, with respect to the Loan, a rate per annum equal to the lesser of (i) the Maximum Legal Rate or (ii) five percent (5%) above the Applicable Interest Rate.
“ Defaulting Lender ” shall mean any Lender which fails or refuses to perform its obligations under this Agreement within the time period specified for performance of such obligation, or, if no time frame is specified, if such failure or refusal continues for a period of two (2) Business Days after written notice from Administrative Agent (it being acknowledged and agreed that any funding of a Future Advance shall be made on the Requested Advance Date so long as all required conditions to such Future Advance are satisfied); provided that if such Lender cures such failure or refusal, such Lender shall cease to be a Defaulting Lender; provided , further , that such Lender shall be entitled to not more than three (3) cures of a particular obligation under this Agreement during the Term.
“ Defaulting Lender Notice ” shall have the meaning set forth in Section 7.1 .
“ Deposit Account ” shall mean an Eligible Account under the sole dominion and control of Mortgage Administrative Agent at the Deposit Bank.
“ Deposit Bank ” shall mean the bank or banks selected by Mortgage Administrative Agent to maintain the Deposit Account. Mortgage Administrative Agent may in its sole discretion change the Deposit Bank from time to time. As of the date hereof, the Deposit Bank is KeyBank National Association, a national banking association.
“ Determination Date ” shall mean, with respect to each Interest Period, the date that is two (2) London Business Days prior to the fifteenth (15th) day of the calendar month in which such Interest Period commences; provided, however, that Administrative Agent shall have the right to change the Determination Date to any other day upon written notice to Borrower (in which event

-10-


such change shall then be deemed effective) and, if requested by Administrative Agent, Borrower shall promptly execute an amendment to this Agreement in form reasonably acceptable to Borrower to evidence such change; provided that the “Determination Date” of the Loan and Mortgage Loan shall always be the same.
“ Downtown Manhattan ” shall mean the area of Manhattan, New York below 14 th Street.
“ Easements ” shall have the meaning set forth in Section 3.1.12 of the Senior Loan Agreement.
“ Eligibility Requirements ” means, with respect to any Person and in each case excluding the Loan, that such Person (i) has total assets (in name or under management or advisement) in excess of $475,000,000, and (except with respect to a pension advisory firm, asset manager or similar fiduciary) either (x) capital/statutory surplus or shareholder’s equity of at least $225,000,000 or (y) market capitalization of at least $375,000,000, and (ii) is regularly engaged in the business of making or owning (or, in the case of a pension advisory firm or similar fiduciary, regularly engaged in managing investments in) commercial real estate loans (including mezzanine loans to direct or indirect owners of commercial properties, which loans are secured by pledges of direct or indirect ownership interests in the owners of such commercial properties) or operating commercial properties.
“ Eligible Account ” shall mean a separate and identifiable account from all other funds held by the holding institution that is either (i) an account or accounts (or subaccounts thereof) maintained with a federal or state-chartered depository institution or trust company which complies with the definition of Eligible Institution, (ii) reasonably acceptable to Administrative Agent or (iii) a segregated trust account or accounts (or subaccounts thereof) maintained with the corporate trust department of a federal depository institution or state chartered depository institution subject to regulations regarding fiduciary funds on deposit similar to Title 12 of the Code of Federal Regulations § 9.10(b), having in either case corporate trust powers, acting in its fiduciary capacity, and a combined capital and surplus of at least $50,000,000, subject to supervision or examination by federal and state authorities and having a long-term unsecured debt rating of “BBB-” or higher by S&P and “A2” or higher by Moody’s and a short-term unsecured debt rating of “A-1” or higher by S&P and “P-1” or higher by Moody’s. An Eligible Account will not be evidenced by a certificate of deposit, passbook or other instrument.
“ Eligible Assignee ” means a Person who is not a Prohibited Person and is either: (i) any Affiliate of any Lender or any Mortgage Lender and/or any of such party’s Affiliates, or (ii) one or more of the following:
(A)      a real estate investment trust, bank, saving and loan association, investment bank, insurance company, trust company, commercial credit corporation, pension plan, pension fund or pension advisory firm, mutual fund, government entity or plan, provided , that , any such Person referred to in this clause (A) satisfies the Eligibility Requirements;
(B)      an investment company, money management firm or “qualified institutional buyer” within the meaning of Rule 144A under the Securities Act of 1933, as amended, or an

-11-


institutional “accredited investor” within the meaning of Regulation D under the Securities Act of 1933, as amended, provided , that , any such Person referred to in this clause (B) satisfies the Eligibility Requirements;
(C)      an institution substantially similar to any of the Persons described in clause (ii)(A) , (ii)(B) or (ii)(F) of this definition that satisfies the Eligibility Requirements;
(D)      any Person Controlled by, Controlling or under common Control with any of the Persons described in clause (i) , clause (ii)(A) , (ii)(B) , (ii)(C) or (ii)(F) of this definition that satisfies the Eligibility Requirements; or
(E)      an investment fund, limited liability company, limited partnership or general partnership where a Permitted Fund Manager acts as general partner, managing member or fund manager and at least fifty percent (50%) of the equity interests in such investment vehicle are owned, directly or indirectly, by one or more of the following: a Lender or a Mortgage Lender and their respective Affiliates or an Eligible Assignee (without giving effect to clause (E) of the definition of such term).
“ Eligible Contract Participant ” shall have the meaning set forth in Section 4.1.11(b) .
“ Eligible Institution ” shall mean a depository institution or trust company insured by the Federal Deposit Insurance Corporation the short term unsecured debt obligations or commercial paper of which are rated at least “A-1” by S&P, “P-1” by Moody’s and “F-1” by Fitch (if rated by Fitch) (and the long term unsecured debt obligations of such depository institution are rated at least “A” by Fitch (if rated by Fitch)) in the case of accounts in which funds are held for thirty (30) days or less or, in the case of accounts in which funds are held for more than thirty (30) days, the long term unsecured debt obligations of which are rated at least (i) “A” by S&P, (ii) “A” by Fitch (if rated by Fitch) (and the short term deposits or short term unsecured debt obligations or commercial paper of such depository institution are rated no less than “F1” by Fitch (if rated by Fitch)), and (iii) “A2” by Moody’s, or in the case of Letters of Credit, the long term unsecured debt obligations of which are rated at least (i) “A+” by S&P, (ii) “A+” by Fitch (if rated by Fitch) (and the short term deposits or short term unsecured debt obligations or commercial paper of such depository institution are rated no less than “F1” by Fitch (if rated by Fitch)) and (iii) “A1” by Moody’s; provided, however, that Wells Fargo Bank, N.A. and KeyBank National Association, a national banking association, shall be deemed to be approved by Administrative Agent as an Eligible Institution, and for purposes of the Deposit Bank, the definition of Eligible Institution shall have the meaning set forth in the Cash Management Agreement.
“ Embargoed Person ” shall have the meaning set forth in Section 3.1.42 .
“ Emergency Expenses ” shall have the meaning set forth in Section 4.1.6(f) .
“ Environmental Indemnity ” shall mean that certain Mezzanine Environmental Indemnity Agreement dated as of the date hereof executed by Borrower and Savanna Guarantor in connection with the Loan for the benefit of Administrative Agent, for the benefit of Lenders.
“ Equipment ” shall have the meaning set forth in the granting clause of the Mortgage.

-12-


“ ERISA ” shall have the meaning set forth in Section 4.2.10(a) .
“ ERISA Affiliate ” shall mean each person that together with Borrower would be deemed to be a “single employer” within the meaning of Section 414(b), (c), (m) or (o) of the Code.
“ Event of Default ” shall have the meaning set forth in Section 10.1(a) .
“ Excess Cash Flow ” shall have the meaning ascribed to such term in the Cash Management Agreement.
“ Excluded Taxes ” shall mean any of the following Taxes imposed on or with respect to a Recipient or required to be withheld or deducted from a payment to a Recipient, (a) Taxes imposed on or measured by net income (however denominated), franchise Taxes, and branch profits Taxes, in each case, (i) imposed as a result of the Recipient being organized under the laws of, or having its principal office or, in the case of a Lender, its Applicable Lending Office located in, the jurisdiction imposing such Tax (or any political subdivision thereof) or (ii) that are Other Connection Taxes, (b) in the case of a Lender, U.S. federal withholding Taxes imposed on amounts payable to or for the account of such Lender with respect to an applicable interest in a Loan or commitment pursuant to a law in effect on the date on which (i) such Lender acquires such interest in the Loan or commitment or (ii) such Lender changes its lending office, except in each case to the extent that, pursuant to Section 2.5 , amounts with respect to such Taxes were payable either to such Lender’s assignor immediately before such Lender became a party hereto or to such Lender immediately before it changed its lending office, (c) Taxes attributable to a Lender’s failure to comply with Section 2.5 and (d) any withholding Taxes imposed under FATCA.
“ Extension Fee ” shall mean, with respect to the Second Extension Option and the Third Extension Option, an amount equal to twenty-five (25) basis points (0.25%) of the sum of the Outstanding Principal Balance.
“ Extension Option ” shall have the meaning set forth in Section 2.3.2(b) .
“ Extension Period ” shall mean each of (i) the period commencing on the day immediately following the Initial Maturity Date and ending on the First Extension Maturity Date, (ii) the period commencing on the day immediately following the First Extension Maturity Date and ending on the Second Extension Maturity Date, and (iii) the period commencing on the day immediately following the Second Extension Maturity Date and ending on the Third Extension Maturity Date.
“ Extraordinary Expense ” shall have the meaning set forth in Section 4.1.6(f) .
“ FATCA ” shall mean Sections 1471 through 1474 of the Code, as of the date of this Agreement (or any amended or successor version that is substantively comparable and not materially more onerous to comply with), any current or future regulations or official interpretations thereof, any agreements entered into pursuant to Section 1471(b)(1) of the Code and any fiscal or regulatory legislation, rules or practices adopted pursuant to any intergovernmental agreement, treaty or convention among Governmental Authorities and implementing such Sections of the Code.

-13-


“ Federal Funds Rate ” shall mean, for any period, a fluctuating interest rate per annum equal for each day during such period to the weighted average of the rates on overnight Federal Funds transactions with members of the Federal Reserve System arranged by Federal Funds brokers, as published for such day (or, if such day is not a Business Day, for the next preceding Business Day) by the Federal Reserve Bank of New York, or, if such rate is not so published for any day which is a Business Day, the average of the quotations for such day on such transactions received by Administrative Agent from three Federal Funds brokers of recognized standing selected by Administrative Agent; provided, however, that if the Federal Funds Rate determined as provided above would be less than LIBOR Floor, then the Federal Funds Rate shall be deemed to be LIBOR Floor.
“ First Extension Maturity Date ” shall mean April 9, 2022.
“ First Extension Option ” shall have the meaning set forth in Section 2.3.2(b) .
“ Fiscal Year ” shall mean each twelve-month period commencing on January 1 and ending on December 31 of such calendar year during each year of the term of the Loan, except that the first Fiscal Year with respect to the Loan shall commence on the Closing Date and end on December 31, 2019. Provided no Event of Default exists, Borrower may change its Fiscal Year with the prior written consent of Administrative Agent, such consent not to be unreasonably withheld, conditioned or delayed.
“ Fitch ” shall mean Fitch, Inc.
“ Foreign Lender ” shall mean a Lender that is not a U.S. Person.
“ Full Replacement Cost ” shall have the meaning set forth in Section 5.1.1(a)(xi) .
“ Funding Collateral ” shall have the meaning set forth in Section 2.6.2 (a)(vi) .
“ Future Advance ” or “ Future Advances ” shall mean, collectively, the Future Advance (Capital Expenditures), Future Advance (TI/LCs) and Future Advance (Interest/Carry Shortfall).
“ Future Advance (Capital Expenditures) ” or “ Future Advances (Capital Expenditures) ” shall mean one or more advances of a portion of the Future Funding Amount in the aggregate of up to Two Million Four Hundred Fifty Thousand and No/100 Dollars ($2,450,000.00) available to Borrower, pursuant to Section 2.6 hereof, to reimburse Borrower and/or Mortgage Borrower or pay third parties directly for the Lenders’ Percentage of the actual cost incurred by or to be incurred by Borrower and/or Mortgage Borrower with respect to Capital Expenditures Work to be completed in accordance with the terms hereof.
“ Future Advance (Interest/Carry Shortfalls) ” or “ Future Advances (Interest/Carry Shortfall) ” shall mean one or more advances of a portion of the Future Funding Amount in the aggregate of up to One Million Five Hundred Fifty Thousand and No/100 Dollars ($1,550,000.00) available to Borrower, pursuant to Section 2.6 hereof, to pay for Interest/Carry Shortfall.

-14-


“ Future Advance (TI/LCs) ” or “ Future Advances (TI/LCs) ” shall mean, as applicable, one or more advances of a portion of the Future Funding Amount in the aggregate of up to Twelve Million Eight Hundred Fifty Thousand and No/100 Dollars ($12,850,000.00) available to Borrower, pursuant to Section 2.6 hereof, to reimburse Borrower and/or Mortgage Borrower or pay third parties directly for Lenders’ Percentage of the actual cost incurred or to be incurred by Borrower and/or Mortgage Borrower with respect to TI/LC Costs, of which $[0] has been advanced on the date hereof.
“ Future Funding Amount ” shall mean a portion of the Loan consisting of Future Advances not to exceed Sixteen Million Eight Hundred Fifty Thousand and No/100 Dollars $16,850,000.00, in the aggregate, available to be advanced to Borrower in accordance with the terms and conditions set forth in this Agreement, of which $[0] has been advanced on the date hereof.
“ Future Funding Reserve Account ” shall have the meaning set forth in Section 6.8.1 of the Senior Loan Agreement.
“ GAAP ” shall mean generally accepted accounting principles set forth in the opinions and pronouncements of the Accounting Principles Board and the American Institute of Certified Public Accountants and statements and pronouncements of the Financial Accounting Standards Board (or agencies with similar functions of comparable stature and authority within the accounting profession), or in such other statements by such entity as may be in general use by significant segments of the U.S. accounting profession.
“ Government List ” shall mean any list published by the OFAC (including those executive orders and lists published by OFAC with respect to Specially Designated Nationals and Blocked Persons).
“ Governmental Approvals ” shall mean all approvals, consents, waivers, orders, acknowledgments, authorizations, inspections, signoffs, permits and licenses required under applicable Legal Requirements to be obtained from any Governmental Authority for the use, occupancy and operation of the Improvements, including, without limitation, all land use, building, subdivision, zoning, environmental and similar ordinances and regulations promulgated by any Governmental Authority.
“ Governmental Authority ” shall mean any court, board, agency, commission, office or authority of any nature whatsoever or any governmental unit (federal, state, county, district, municipal, city, foreign or otherwise) whether now or hereafter in existence.
“ Gross Revenue ” shall mean all revenue or other proceeds derived from the ownership, operation, financing or sale of the Property (or any portion thereof) from whatever source, (including, without limitation, Rents, lease termination payments, and any revenue or proceeds received by any Borrower Related Party or Manager relating to the Property), any revenue received in connection with any tax certiorari proceeding and any amounts received by any Borrower Related Party or Manager as a result of any litigation or other legal, administrative or other proceeding relating to the Property (net of reasonable costs and expenses incurred by such Borrower Related Party or Manager in accordance herewith in recovering such amounts); provided, however, Gross Revenue

-15-


shall not include any Awards or Insurance Proceeds (other than business interruption and/or rental loss insurance proceeds) or disbursements of any Reserve Funds from the Accounts or Security Account Funds from any Security Account.
“ Guarantor ” shall mean KBS Guarantor and Savanna Guarantor, or any successor guarantor(s) thereof in accordance with this Agreement).
“ Guaranties ” shall mean, collectively, the Completion Guaranty, the Carry Guaranty, the Recourse Guaranty and the Environmental Indemnity.
“ Improvements ” shall have the meaning set forth in the granting clause of the Mortgage.
“ Increased Costs ” shall have the meaning set forth in Section 2.5.1 .
“ Indebtedness ” shall mean, for any Person, any indebtedness or other similar obligation for which such Person is obligated (directly or indirectly, by contract, operation of law or otherwise) without duplication: (i) all indebtedness of such Person for borrowed money, for amounts drawn under a letter of credit, or for the deferred purchase price of property for which such Person or its assets is liable; (ii) all unfunded amounts under a loan agreement, letter of credit, or other credit facility for which such Person would be liable if such amounts were advanced thereunder; (iii) all amounts required to be paid by such Person as a guaranteed payment to partners or a preferred or special dividend, including any mandatory redemption of shares or interests; (iv) all indebtedness guaranteed by such Person, directly or indirectly; (v) all obligations under leases that constitute capital leases for which such Person is liable; and (vi) all obligations of such Person under interest rate swaps, caps, floors, collars and other interest hedge agreements, in each case whether such Person is liable contingently or otherwise, as obligor, guarantor or otherwise, or in respect of which obligations such Person otherwise assures a creditor against loss.
“ Indemnified Liabilities ” shall have the meaning set forth in Section 11.13(b) .
“ Indemnified Party ” shall have the meaning set forth in Section 11.13(b) .
“ Indemnified Taxes ” shall mean (a) Taxes, other than Excluded Taxes, imposed on or with respect to any payment made by or on account of any obligation of Borrower under any Loan Document and (b) to the extent not otherwise described in clause (a), Other Taxes.
“ Independent Director ” shall have the meaning set forth in Section 3.1.24(dd) .
“ Individual G uarantor ” shall mean any Guarantor under who is an individual.
“ Initial Advance ” shall have the meaning set forth in Section 2.1.1 .
“ Initial Approved Annual Budget ” shall mean the Annual Budget that has been approved by Administrative Agent as of the date hereof and which is attached hereto as Schedule VII .

-16-


“ Initial Maturity Date ” shall mean April 9, 2021.
“ Initial Term ” shall mean the period from the Closing Date through and including the Initial Maturity Date.
“ Insurance Funds ” shall have the meaning set forth in Section 6.3.1 of the Senior Loan Agreement.
“ Insurance Premiums ” shall mean the premiums due under the Policies.
“ Insurance Proceeds ” shall have the meaning set forth in the definition of Net Proceeds.
“ Insurance Reserve Account ” shall have the meaning set forth in Section 6.3.1 of the Senior Loan Agreement.
“ Intellectual Property ” shall have the meaning set forth in Section 3.1.46 .
“ Intercreditor Agreement ” shall have the meaning set forth in Section 11.29 .
“ Interest/Carry Shortfall ” shall mean the actual or anticipated shortfall in Gross Revenue to pay (or make deposits required by Article 6 hereof as applicable Reserve Funds) the sum of (x) Aggregate Debt Service and (y) Carry Costs for a given period, in each case as set forth in the Approved Annual Budget (including the variances with respect thereto permitted by this Agreement pursuant to Section 4.1.6(d) ).
“ Interest/Carrying Costs Account ” shall have the meaning set forth in Section 6.8.6.
“ Interest Period ” shall mean (a) for the first interest period hereunder, (i) if the Closing Date occurs on or before the fifteenth (15th) day of a calendar month, the period commencing on the Closing Date and ending on (and including) the fourteenth (14th) day of the calendar month in which the Closing Date occurs, and (ii) if the Closing Date occurs on or after the fifteenth (15th) day of a calendar month, the period commencing on the Closing Date and ending on (and including) the fourteenth (14th) day of the following calendar month and (b) for each interest period thereafter commencing April 15, 2019, the period commencing on the fifteenth (15th) day of each calendar month and ending on (and including) the fourteenth (14th) day of the following calendar month; provided that the “Interest Period” under the Loan and the Mortgage Loan shall always be the same. Each Interest Period as set forth in clause (b) above shall be a full month and shall not be shortened by reason of any payment of the Loan prior to the expiration of such Interest Period.
“ Interest Rate Protection Agreement ” shall mean one or more interest rate caps (together with the schedules relating thereto) in form and substance reasonably satisfactory to Administrative Agent, with a confirmation from the Counterparty in the form reasonably satisfactory to Administrative Agent, between Borrower and, subject to Section 4.1.11 , a Counterparty acceptable to Administrative Agent with a Minimum Counterparty Rating, and all amendments, restatements, replacements, supplements and modifications thereto.

-17-


“ Interest Rate Replacement Date ” means the date on which Administrative Agent implements a Substitute Rate.
“ JV Agreement ” shall mean that certain Limited Liability Company Agreement of KBS SOR SREF III 100 William, LLC by and between SREF III 110 William JV, LLC, a Delaware limited liability company and KBS SOR 110 William JV, LLC, a Delaware limited liability company dated as of December 23, 2013.
“ JV Entity ” shall mean KBS SOR SREF III 110 William, LLC.
“ KBS JV Partner ” shall mean KBS SOR 110 William JV, LLC.
“ KBS Sponsor ” shall mean KBS Strategic Opportunity REIT, Inc.
“ KBS Guarantor ” shall mean KBS SOR Properties, LLC, a Delaware limited liability company.
“ Knotel LOI ” shall mean that certain Letter of Intent from Newmark Knight Frank with respect to the 7 th & 8 th Floors at the Property for Knotel 110 William LLC, a New York limited liability company, as tenant, dated January 25, 2019.
“ Lease ” shall mean any lease, sublease or subsublease, letting, license, concession or other agreement (whether written or oral and whether now or hereafter in effect) pursuant to which any Person is granted a possessory interest in, or right to use or occupy all or any portion of any space in the Property, and every modification, amendment or other agreement relating to such lease, sublease, subsublease, or other agreement entered into in connection with such lease, sublease, subsublease, or other agreement and every guarantee of the performance and observance of the covenants, conditions and agreements to be performed and observed by the other party thereto. In no event shall the term “Lease” include any subleases, underleases or similar agreements, except solely to the extent of Mortgage Borrower’s interest, if any, thereunder.
“ Leasing Agent ” shall mean (as the context may require) (i) Newmark & Company Real Estate, Inc., a New York corporation d/b/a Newmark Grubb Knight & Frank (“ Initial Leasing Agent ”, (ii) Leasing Agent (Savanna) and (iii) or any other leasing agent engaged by Mortgage Borrower in accordance with the terms and conditions of the Loan Documents.
“ Leasing Agent (Savanna) ” shall mean Savanna Commercial Services LLC.
“ Leasing Agreement ” shall mean (as the context may require) (i) the Rental Agency Agreement, as amended (“ Initial Leasing Agreement ”), (ii) the Leasing Agreement (Savanna) or (iii) any Replacement Leasing Agreement entered into by and between Mortgage Borrower or Manager and a Leasing Agent in accordance with the terms of the Loan Documents, in each case, pursuant to which the Leasing Agent is to provide leasing services with respect to the Property.

-18-


“ Leasing Agreement (Savanna) ” shall mean that certain Amended and Restated Rental Agency Agreement dated May 2, 2014 between Mortgage Borrower and Leasing Agent (Savanna).
“ Leasing Commissions ” shall mean the leasing commissions required to be paid by Mortgage Borrower pursuant to the terms and provisions of the Leasing Agreement for procuring Leases with respect to the Property or any other leasing commission agreement with respect to the Property.
“ Legal Requirements ” shall mean, individually and/or collectively, as the context may require, all federal, state, county, municipal and other governmental statutes, laws, rules, orders, regulations, ordinances, judgments, decrees and injunctions of Governmental Authorities having jurisdiction over the Loan, any Secondary Market Transaction with respect to the Loan, any Borrower Party, the Property or any part thereof or the construction, use, alteration, operation or sale thereof, or any part thereof, whether now or hereafter enacted and in force, including, without limitation, the rules and regulations promulgated pursuant to the Dodd-Frank Wall Street Reform and Consumer Protection Act, zoning and land use laws, the Americans with Disabilities Act of 1990, and all permits, licenses and authorizations and regulations relating thereto, and all covenants, agreements, restrictions and encumbrances contained in any instruments, either of record or known to Borrower, at any time in force affecting the Property or any part thereof, including, without limitation, any which may (i) require repairs, modifications or alterations in or to the Property or any part thereof, or (ii) in any way limit the use and enjoyment thereof.
“ Lender ” shall have the meaning set forth in the introductory paragraph hereto.
“ Lenders’ Percentage ” shall mean 25%.
“ Letter of Credit ” shall mean a standby letter of credit (and any amendment thereof) that (a) is issued by an Eligible Institution or, if not an Eligible Institution, by a bank reasonably acceptable to Administrative Agent, (b) has an expiry date of not less than one (1) year from its issuance, (c) may be drawn upon by presentation by Administrative Agent of a sight draft at a location reasonably satisfactory to Administrative Agent, and (d) is otherwise reasonably satisfactory to Administrative Agent.
“ LIBOR ” shall mean, with respect to each Interest Period, the rate (expressed as a percentage per annum and rounded upward, as necessary, to the next nearest 1/1000 of 1%) equal to the rate reported for deposits in U.S. dollars, for a one-month period, that appears on Bloomberg Screen LIBOR01 Page (or the successor thereto) as of 11:00 a.m., London time, on the related Determination Date; provided that, (i) if such rate does not appear on Bloomberg Screen LIBOR01 Page as of 11:00 a.m., London time, on such Determination Date, Administrative Agent shall request the principal London Office of any four major reference banks in the London interbank market selected by Administrative Agent to provide such bank’s offered quotation (expressed as a percentage per annum) to prime banks in the London interbank market for deposits in U.S. dollars for a one month period as of 11:00 a.m., London time, on such Determination Date for the amounts for a comparable loan at the time of such calculation and, if at least two such offered quotations are so provided, LIBOR shall be the arithmetic mean of such quotations, and (ii) if fewer than two such quotations in clause (i) are so provided, Administrative Agent shall request any three major banks in New York

-19-


City selected by Administrative Agent to provide such bank’s rate (expressed as a percentage per annum) for loans in U.S. dollars to leading European banks for a one-month period as of approximately 11:00 a.m., New York City time on the applicable Determination Date for the amounts for a comparable loan at the time of such calculation and, if at least two such rates are so provided, LIBOR shall be the arithmetic mean of such rates. Administrative Agent’s computation of LIBOR shall be conclusive and binding on Borrower for all purposes, absent manifest error. Notwithstanding anything to the contrary set forth herein, in no event shall LIBOR ever be less than the LIBOR Floor.
“ LIBOR Floor ” shall mean 2.00%.
“ LIBOR Interest Rate ” shall mean with respect to each Interest Period the quotient of (i) LIBOR applicable to the Interest Period divided by (ii) a percentage equal to 100% minus the Reserve Requirement (if any) applicable to the Interest Period.
“ LIBOR Loan ” shall mean the Loan at any time in which the Applicable Interest Rate is calculated at LIBOR Interest Rate plus the Applicable Spread in accordance with the provisions of Article II hereof.
“ LIBOR Rate Discontinued Determination ” shall have the meaning set forth in Section 2.2.3(c) .
“ LIBOR Rate Unavailable Determination ” shall have the meaning set forth in Section 2.2.3(b) .
“ Lien ” shall mean any mortgage, deed of trust, lien, pledge, hypothecation, assignment, security interest, or any other encumbrance, charge or transfer of, or any agreement to enter into or create any of the foregoing, on or affecting the Property, the Collateral or any portion thereof or any direct or indirect interest in Borrower including, without limitation, any conditional sale or other title retention agreement, any financing lease having substantially the same economic effect as any of the foregoing, the filing of any financing statement, and mechanic’s, materialmen’s and other similar liens and encumbrances.
“ Liquidation Event ” shall mean (i) a Casualty, (ii) a Condemnation, (iii) a Transfer of the Property in connection with realization thereon following an Event of Default under the Mortgage Loan, including, without limitation, a foreclosure sale, (iv) any refinancing or payoff of the Property or the Mortgage Loan permitted hereunder (including any refund of reserves on deposit with Mortgage Lender (but not disbursements therefrom)) or (v) the receipt by Mortgage Borrower of any excess proceeds realized under the Owner’s Policy after application of such proceeds by Mortgage Borrower to cure any title defects.
“ LLC Agreement ” shall have the meaning set forth in Section 3.1.24(cc) .
“ Loan ” shall mean the loan in the maximum principal amount of up to Eighty-Seven Million One Hundred Twenty Five Thousand and No/100 Dollars ($87,125,000.00), to be advanced by Lenders to Borrower pursuant to this Agreement.

-20-


“ Loan Documents ” shall mean, collectively, this Agreement, the Note, the Pledge Agreement, the Environmental Indemnity, the Recourse Guaranty, the Completion Guaranty, the Assignment of Protection Agreement and any other documents now or hereafter executed and/or delivered in connection with the Loan, as the same may be amended, restated, replaced, supplemented or otherwise modified from time to time.
“ Loan to Value Ratio ” shall mean, as of any date, the ratio, as determined by Administrative Agent, of (a) the Aggregate Outstanding Principal Balance to (b) the Appraised Value of the Property as of such date based on the most recent Appraisal.
“ London Business Day ” shall mean any day other than a Saturday, Sunday or any other day on which commercial banks in London, England are not open for business.
“ Losses ” shall mean actual liabilities, obligations, losses, damages (excluding special, consequential, punitive or indirect damages, unless the same are asserted against Administrative Agent, each Lender or any Indemnified Party by a third party and actually incurred), penalties, actions, judgments, suits, claims, costs, expenses and disbursements of any kind or nature whatsoever (including, without limitation, the reasonable out-of-pocket fees and disbursements of third-party counsel related thereto).
“ Major Lease ” shall mean (i) any Lease which, individually or when aggregated with all other Leases at the Property with the same Tenant or its Affiliate demises 50,000 rentable square feet or more at the Property (which calculation of rentable square feet shall assume the exercise of the following, but only if such exercise would then result in such Lease being greater than 10% of rentable square feet or more at the at the Property (x) all expansion rights, (y) all rights of first refusal to lease additional space at the Property contained in such Lease and (z) all rights of first offer and other preferential rights to lease additional space at the Property contained in such Lease, whether or not such Lease demises 50,000 rentable square feet or more at the time of determination), (ii) any Lease which contains any option, offer, right of first refusal or other similar entitlement to acquire all or any portion of the Property (which such rights shall be deemed to be exclusive of any rights under any Lease to extend the term thereof or to lease additional space at the Property), or (iii) any instrument guaranteeing or providing credit support for any Lease meeting the requirements of clause (i) or (ii) above.
“ Management Agreement ” shall mean that certain Property Management Agreement by and between Mortgage Borrower and Initial Manager, dated as of August 3, 2016 (the “ Initial Management Agreement ”) or any Replacement Management Agreement entered into by and between Mortgage Borrower and a Manager in accordance with the terms of the Loan Documents, in each case, pursuant to which the Manager is to provide property management and other services with respect to the Property.
“ Manager ” shall mean Transwestern Commercial Services New York, L.L.C. d/b/a Transwestern, a Delaware limited liability company (“ Initial Manager ”), or any other property manager engaged by Mortgage Borrower in accordance with the terms and conditions of the Loan Documents.

-21-


“ Material Action ” shall mean to file any insolvency or reorganization case or proceeding, to institute proceedings to have Borrower, Mortgage Borrower or an SPC Party be adjudicated bankrupt or insolvent, to institute proceedings under any applicable insolvency law, to seek any relief under any law relating to relief from debts or the protection of debtors, to consent to the filing or institution of bankruptcy or insolvency proceedings against Borrower, Mortgage Borrower or an SPC Party to file a petition seeking, or consent to, reorganization or relief with respect to Borrower and/or Mortgage Borrower under any applicable federal or state law relating to bankruptcy or insolvency, to seek or consent to the appointment of a receiver, liquidator, assignee, trustee, sequestrator, custodian, or any similar official of or for Borrower, Mortgage Borrower or an SPC Party or a substantial part of its property, to make any assignment for the benefit of creditors of Borrower or an SPC Party or to take action in furtherance of any of the foregoing.
“ Material Adverse Effect ” shall mean a material adverse effect on (i) the Property (taken as a whole, including, without limitation, the value, use, operation, construction, renovation or leasing thereof), (ii) the business, profits, prospects, management, operations or condition (financial or otherwise) of Borrower, Mortgage Borrower, Guarantor, the Collateral or the Property, in each case in a manner that would materially and adversely affect the ability of Borrower, Mezzanine Borrower or Guarantor, as applicable, to perform its obligations under the Loan, (iii) the enforceability, validity, perfection or priority of the lien of the Mortgage or the other Loan Documents, (iv) the ability of Borrower to perform its obligations under this Agreement or the other Loan Documents, or the ability of Mortgage Borrower to perform its obligations under the Mortgage Loan Agreement or the other Mortgage Loan Documents, (v) the ability of Guarantor to perform its obligations under any Guaranty or the other Loan Documents, or (vi) the enforceability, validity, perfection or priority of the lien of the Mortgage or the other Mortgage Loan Documents.
“ Material Agreements ” (i) any general contractor’s agreement, development management agreement, architect’s agreement or engineering agreement, (ii) any cleaning, maintenance, servicer or other contract or agreement of any kind which has a term of more than one (1) year and is not cancelable on sixty (60) days’ or less notice without requiring the payment of termination fees, (iii) any agreement with a Borrower Related Party (other than the Management Agreement, Leasing Agreement Project Management Agreement and the Construction Management Agreement, (iv) any agreement which is, when aggregated with all other contracts and agreements with such Person and their Affiliates, for an aggregate per annum contract price equal to or greater than $1,000,000.00, and (v) any agreement relating to environmental remediation or other environmental matters.
“ Maturity Date ” shall mean the Initial Maturity Date or if the term of the Loan is extended in accordance with the terms of this Agreement, the term “ Maturity Date ” shall mean the First Extension Maturity Date, the Second Extension Maturity Date, or Third Extension Maturity Date as applicable or, in either case, such earlier date on which the final payment of principal of the Note becomes due and payable as therein or herein provided, whether at such stated maturity date, by prepayment, by declaration of acceleration, or otherwise.
“ Maximum Legal Rate ” shall mean the maximum non-usurious interest rate, if any, that at any time or from time to time may be contracted for, taken, reserved, charged or received on the indebtedness evidenced by the Note and as provided for herein or the other Loan Documents, under

-22-


the laws of such state or states whose laws are held by any court of competent jurisdiction to govern the interest rate provisions of the Loan.
“ Member ” shall have the meaning set forth in Section 3.1.24(cc)(i) .
“ Minimum Advance Amount ” shall mean $12,500.00 2 .
“ Minimum Counterparty Rating ” shall mean (a) a long-term credit rating from S&P of at least “ A- ” and (b) a long-term credit rating from Moody’s of at least “ A3 ”.
“ Minimum Equity Requirement ” shall have the meaning set forth in Section 4.1.37
“ Minimum Extension Debt Yield ” shall have the meaning set forth in Section 2.3.2(b)(xii) .
“ Minimum Leasing Parameters ” shall mean, with respect to any Lease, the leasing parameters set forth on Schedule V attached hereto.
“ Minor Lease ” shall mean any Lease that is not a Major Lease.
“ Monthly Debt Service Payment Amount ” shall mean on each Monthly Payment Date through and including the Maturity Date, an amount equal to the interest accruing on the Outstanding Principal Balance at the Applicable Interest Rate (or at the Default Rate, as applicable) for the immediately preceding Interest Period, which interest shall be calculated in accordance with Section 2.2 .
“ Monthly Payment Date ” shall mean the ninth (9 th ) calendar day of each calendar month during the term of the Loan, and if such day is not a Business Day, then the Business Day immediately preceding such day.
“ Moody’s ” shall mean Moody’s Investors Service, Inc.
“ Mortgage ” shall mean, (i) that certain Senior Loan Consolidated, Amended and Restated Mortgage, Assignment of Leases and Rents and Security Agreement, dated the date hereof, executed and delivered by Mortgage Borrower as security for the Senior Loan and encumbering the Property and (ii) that certain Amended and Restated Building Loan Mortgage, Assignment of Leases and Rents and security Agreement, dated the date hereof, executed and delivered by Mortgage Borrower as security for the Building Loan and encumbering the Property and (iii) each Serial Mortgage (as defined in the Senior Loan Agreement) executed after the date hereof, as each of the same may be amended, restated, replaced, supplemented or otherwise modified from time to time.
“ Mortgage Administrative Agent ” shall mean Invesco CMI Investments, L.P., a Delaware limited partnership.

                
2 Note: 25% of $50,000 for Mezzanine Lender Share

-23-


“ Mortgage Borrower ” shall mean 110 William Property Investors III, LLC, a Delaware limited liability company.
“ Mortgage Funding Failure ” shall have the meaning set forth in Section 2.6.2(a)(vi).
“ Mortgage Loan Cash Management Accounts ” shall mean, collectively, the Clearing Account and the Deposit Account, including all Accounts established pursuant thereto (as each such term is defined in the Senior Loan Agreement).
“ Mortgage Loan Cash Management Provisions ” shall mean the terms and conditions of the Mortgage Loan Documents relating to cash management and/or security accounts (including, without limitation, those relating to the Cash Management Agreement, Deposit Account Control Agreement, Working Capital Account Agreement and Interest/Carrying Costs Account (as defined in the Senior Loan Agreement).
“ Mortgage Lender ” shall mean, individually or collectively, as the context may require, Invesco CMI Investments, L.P., a Delaware limited partnership, and each other lender that becomes party to the Mortgage Loan Agreement.
“ Mortgage Lender’s Percentage ” shall mean 75%.
“ Mortgage Loan ” shall mean, collectively, the Senior Loan and the Building Loan.
“ Mortgage Loan Agreement ” shall mean, collectively, the Senior Loan Agreement and the Building Loan Agreement.
“ Mortgage Loan Documents ” shall mean, collectively, the “Loan Documents” as defined in the Senior Loan Agreement and the “Loan Documents” as defined in the Building Loan Agreement.
“ Mortgage Outstanding Principal Balance ” shall mean the sum of (i) the “Outstanding Principal Balance” as defined in the Senior Loan Agreement and (ii) the “Outstanding Principal Balance” as defined in the Building Loan Agreement.
“ Mortgage Pro Rata Share ” shall mean the quotient of (a) the sum of (x) the Building Loan Outstanding Principal Balance and (y) the Senior Loan Outstanding Principal Balance and (b) Aggregate Outstanding Principal Balance.
“ Net Operating Income ” shall mean as the date of calculation (i) annualized Gross Revenue (excluding (x) lease termination payments and (y) security deposits) based on in place Rents under Leases with Tenants in occupancy at the Property and paying Rent, but including (x) Rents relating to Leases with Tenants that are reasonably expected to take occupancy within (i) ninety (90) days of the date of calculation or (ii) one hundred eighty (180) days of the date of calculation for investment grade (BBB- or higher) Tenants or New York City and/or New York State agency Tenants, but excluding: (A) Rents relating to any Tenant under a Lease which is more than sixty (60) days delinquent in payment of rent, (B)  Rents relating to Tenants who are month to month, (C) Rents relating to Tenants who are Affiliates of Borrower or Guarantor to the extent such Rents are at

-24-


above-market rates; and (D) Rents relating to Tenants subject to a Bankruptcy Event unless the applicable Lease has been affirmed in connection with such Bankruptcy Event and (E) any other nonrecurring or extraordinary sources of Gross Revenue less (ii) actual Operating Expenses incurred in connection with the Property for the trailing twelve (12) month period preceding the date of calculation with any reasonable adjustments for any known increases in such Operating Expenses (assuming a base property management fee equal to the greater of: (x) the actual amount paid by Mortgage Borrower during such twelve (12) month period and (y) one and one half percent (1.5%) of Gross Revenue {inclusive of the cost of the property manager (estimated at approximately $200,000 per annum) and assistant property manager (estimated at approximately $93,000 per annum)}). Notwithstanding the foregoing, Gross Revenue from any Tenant that is in a free rent period that exceeds 1.2 months per lease year shall be adjusted by not including in Gross Revenue an amount equivalent to that portion of free rent that exceeds 1.2 months per lease year.
“ Net Liquidation Proceeds After Debt Service ” shall mean, with respect to any Liquidation Event, all amounts paid to or received by or on behalf of Mortgage Borrower in connection with such Liquidation Event, including, without limitation, proceeds of any sale, refinancing or other disposition or liquidation, less (i) Lenders’ and/or Mortgage Lenders’ reasonable costs incurred in connection with the recovery thereof, (ii) the costs incurred by Mortgage Borrower in connection with a restoration of the Property made in accordance with the Mortgage Loan Documents, (iii) amounts required or permitted to be deducted therefrom and amounts paid pursuant to the Mortgage Loan Documents to Mortgage Lenders, (iv) in the case of a foreclosure sale, disposition or Transfer of the Property in connection with realization thereof following an Event of Default under the Mortgage Loan, such reasonable and customary out-of-pocket costs and expenses of sale or other disposition (including reasonable attorneys’ fees and brokerage commissions) that are actually incurred, (v) in the case of foreclosure sale, such costs and expenses incurred by Mortgage Lenders under the Mortgage Loan Documents as Mortgage Lenders shall be entitled to received reimbursement for under the terms of the Mortgage Loan Documents, and (vi) in the case of a refinancing of the Mortgage Loan, such costs and expenses (including attorneys’ fees) of such refinancing as shall be reasonable under the circumstances.
“ Net Proceeds ” shall mean: (i) the net amount of all insurance proceeds received by Administrative Agent, for the benefit of Lenders, under the insurance policies maintained pursuant to Section 5.1.1 as a result of such damage or destruction, after deduction of reasonable costs and expenses (including, but not limited to, reasonable counsel fees), if any, in collecting same (“ Insurance Proceeds ”); or (ii) the net amount of the Award, after deduction of reasonable costs and expenses (including, but not limited to, reasonable counsel fees), if any, in collecting same (“ Condemnation Proceeds ”), whichever the case may be.
“ New Appraisal ” shall mean an Appraisal of the Property, acceptable to Administrative Agent, dated no more than ninety (90) days prior to the then current Maturity Date.
“ New Non-Consolidation Opinion ” shall mean a bankruptcy substantive non-consolidation opinion provided by outside counsel, in a form reasonably acceptable to Administrative Agent.

-25-


“ Non-Consolidation Opinion ” shall mean that certain bankruptcy non-consolidation opinion letter dated the date hereof delivered by Hunton Andrews Kurth LLP in connection with the Loan.
“ Note ” shall have the meaning set forth in Section 2.1.3 .
“ Notice ” shall have the meaning set forth in Section 11.6 .
“ O&M Program ” shall have the meaning set forth in Section 4.1.20 .
“ Obligations ” shall mean, collectively, Borrower’s obligations for the payment of the Debt and the performance of all obligations of Borrower contained in the Loan Documents.
“ OFAC ” shall have the meaning set forth in Section 3.1.43(a) .
“ Officer’s Certificate ” shall mean a certificate delivered to Administrative Agent, for the benefit of Lenders by Borrower which is signed by an authorized senior officer of Borrower (or its general partner or managing member).
“ Open Prepayment Date ” shall mean the Monthly Payment Date occurring in May 9, 2020.
“ Operating Expenses ” shall mean, for any period, without duplication, all expenses actually paid or payable by Borrower and/or Mortgage Borrower during such period in connection with the operation, management, maintenance, repair and use of the Property, computed in accordance with Accounting Principles. Operating Expenses specifically shall include (i) all expenses incurred in the immediately preceding twelve (12)-month period based on financial statements delivered to Administrative Agent in accordance with Section 4.1.6(c) and (d) (or during any shorter period of determination), (ii) property management fees in an amount equal to the management fees actually paid under the Management Agreement, (iii) administrative, payroll, security and general expenses for the Property, (iv) the cost of utilities, inventories and fixed asset supplies consumed in the operation of the Property, (v) costs and fees of independent professionals (including, without limitation, accounting, consultants and other professional expenses, technical consultants, operational experts (including quality assurance inspectors) or other third parties retained to perform services required or permitted hereunder), (vi) [reserved], (vii) operational equipment and other lease payments, (viii) all underwritten reserves required by Administrative Agent hereunder (without duplication of amounts paid from such reserves) and (ix) Taxes and Other Charges (other than income taxes or Other Charges in the nature of income taxes) and insurance premiums. Notwithstanding the foregoing, Operating Expenses shall not include (1) depreciation or amortization, (2) income taxes or Other Charges in the nature of income taxes, (3) any expenses (including legal, accounting and other professional fees, expenses and disbursements) incurred in connection with the making of the Loan or the sale, exchange, transfer, financing or refinancing of all or any portion of the Property or in connection with the recovery of Insurance Proceeds or Awards which are applied to prepay the Note, (4) Capital Expenditures, (5) Debt Service, and (6) any item of expense which would otherwise be considered within Operating Expenses pursuant to the provisions above but is paid directly by any Tenant. To the extent the period of determination of Operating Expenses is less than one year and an Operating Expense relates to an entire calendar

-26-


year (e.g., real estate taxes), then, for purposes of determining the calculation of such Operating Expense, the same shall be prorated for the relevant period of determination based on the total annual amount paid with respect thereto. Administrative Agent shall calculate Operating Expenses based upon information provided to Administrative Agent by Borrower pursuant to Section 4.1.6 hereof and such determination shall be made in its reasonable discretion.
“ Optional Cash Trap Prepayment Amount ” shall have the meaning set forth in the definition of Cash Trap Period.
“ Optional Extension Prepayment Amount ” shall have the meaning set forth in Section 2.3.2 .
“ Other Charges ” shall mean all ground rents (if any), maintenance charges, impositions other than Taxes, and any other charges, now or hereafter levied or assessed or imposed against the Property or any part thereof by any Governmental Authority.
“ Other Connection Taxes ” shall mean, with respect to any Recipient, Taxes imposed as a result of a present or former connection between such Recipient and the jurisdiction imposing such Tax (other than connections arising from such Recipient having executed, delivered, become a party to, performed its obligations under, received payments under, received or perfected a security interest under, engaged in any other transaction pursuant to or enforced any Loan Document, or sold or assigned an interest in the Loan or any Loan Document).
“ Other Taxes ” shall have the meaning set forth in Section 2.5.3 .
“ Outstanding Principal Balance ” means, as of any date, the then outstanding principal balance of the Loan.
“ Owner’s Title Policy ” shall mean Mortgage Borrowers’ ALTA title insurance policy(ies) issued with respect to the Property and insuring fee simple title to the Property, together with such endorsements and affirmative coverages as Administrative Agent shall “ Participant ” shall mean any Person that has purchased a participation in this Agreement pursuant to Section 11.25 .
“ Participant Register ” has the meaning specified in Section 9.4(a) .
“ Patriot Act ” shall have the meaning set forth in Section 3.1.43(a) .
“ PCR ” shall mean the Property Condition Report prepared for Mortgage Financing Purposes for the Property dated February 28, 2019 prepared by CBRE, as Project No. PC90251702.
“ Permitted Encumbrances ” shall mean, collectively, (i) the Liens and security interests created by the Loan Documents, the Building Loan Documents and the Senior Loan Documents, (ii) all Liens, encumbrances and other matters accepted by Administrative Agent, for the benefit of the Lenders, as of closing under the Title Insurance Policy (as defined in the Senior Loan Agreement) and the UCC Policy, (iii) Liens, if any, for Taxes imposed by any Governmental Authority not yet due and delinquent, or if due and delinquent, are being contested in good faith in accordance with the terms hereof, (iv) any workers’, mechanics’ or other similar Liens on the Property provided that

-27-


either (x) any such Lien is bonded or discharged or diligently contested in good faith in accordance with the terms hereof or (y) if such Lien is filed in connection with Tenant Improvement Work being performed by a Tenant, Borrower is using commercially reasonable efforts in accordance with the applicable Lease to cause such Tenant to remove such Lien, (v) as to items created or modified after the date hereof, dedications (or modifications of dedications) of portions of the Property or the grant (or modifications of grants) of easements, restrictions, covenants, reservations, rights-of-way and similar encumbrances, entered into in the ordinary course of business for traffic circulation, ingress, egress, parking, access, utilities or for other similar purposes, which are not monetary encumbrances against the Property, do not create material affirmative obligations on behalf of the Property and which do not, individually or in the aggregate, materially and adversely affect the value, use or operation of the Property, (vi)  Approved Equipment Financing (as defined in Section 4.26 hereof), (vii) Leases entered into in accordance with the Loan Documents, (viii) subordination, non-disturbance and attornment agreements executed with respect to Leases, (ix) memoranda of Leases, and (x) such other title and survey exceptions as Administrative Agent has approved or may approve in writing in Administrative Agent’s sole discretion.
“ Permitted Fund Manager ” means any Person that on the date of determination is not a Prohibited Person, and is: (a) a nationally‑recognized manager of investment funds investing in debt or equity interests relating to commercial real estate; (b) a Person that is a Eligible Assignee pursuant to clauses (ii)(A) , (B) , (C) or (D) of the definition thereof; or (c) Mortgage Lender or its Affiliates; in each case which is investing through a fund with unconditional committed capital of at least $250,000,000.
“ Permitted Indebtedness ” shall have the meaning set forth in Section 4.2.6 .
“ Permitted Transfer ” means any of the following Transfers, but in each case, subject to the terms of Section 8.2 : (a) Transfers of direct or indirect ownership interests in an entity that owns a direct or indirect ownership interest in Borrower for bona fide estate planning purposes by any natural person to one or more of such natural person’s family members or trusts (or other entities) established for the benefit of one or more of such natural person’s immediate family members (but subject in all cases to the terms and conditions of the Guaranties); (b) Transfers of direct or indirect ownership interests in Borrower that occur by operation of law upon the death of a natural person that was the holder of such interest to a member of the immediate family of such interest holder or a trust (or other entity) or family conservatorship established for the benefit of such immediate family member; (c) Transfers of the direct or indirect interests in a Restricted Party to and among the holders thereof as of the date hereof or to other Restricted Parties or holders of direct or indirect interests therein as of the date hereof, (d) Permitted Encumbrances; (e) Transfers of worn out or obsolete personal property that are promptly replaced with property of equivalent value and functionality if reasonably necessary or which is no longer necessary in connection with the operation of any Property; (f) ) existing Leases and Leases that have been approved by Administrative Agent (or that do not require Administrative Agent’s approval) in accordance with this Agreement; (g) [reserved]; (h) the Transfer of publicly traded shares on a United States nationally recognized stock exchange in any indirect equity owner of Borrower; (i) the Transfer of shares in any indirect equity owner of Borrower which is a publicly held real estate investment trust; (j) the Transfer of any direct or indirect interest in Savanna JV Partner, provided Savanna Sponsor continues to own 51% or more of the direct or indirect membership interests in Savanna JV Partner; (k) the

-28-


Transfer of any direct or indirect interest in KBS JV Partner, provided KBS Sponsor continues to own 51% or more of the direct or indirect membership interests in KBS JV Partner; (l) the Transfer of all or any portion of KBS JV Partner’s ownership interest in the JV Entity to Savanna JV Partner; (m) the Transfer of all or any portion of Savanna JV Partner’s ownership interest in the JV Entity to KBS JV Partner; and (n) the removal of the Savanna JV Partner as the “Managing Member” of the JV Entity upon the occurrence of a “Just Cause Event” (as such term is defined in the Limited Liability Company Agreement of the JV Entity) provided the KBS JV Partner then becomes the sole “Managing Member” of the JV Entity, provided, however, the approval and effectiveness of any Transfer set forth in (l), (m) and (n) is conditioned upon an Acceptable Replacement Guarantor from KBS JV Partner or their Affiliate being put in place.
“ Person ” shall mean any individual, corporation, partnership, limited liability company, joint venture, estate, trust, unincorporated association, any other entity, any federal, state, county or municipal government or any bureau, department or agency thereof and any fiduciary acting in such capacity on behalf of any of the foregoing.
“ Pfandbrief Pledge ” shall have the meaning set forth in Section 9.1.1 .
“ Pledge Agreement ” shall mean that certain Pledge and Security Agreement, dated as of the date hereof, made by Borrower in favor of Administrative Agent, as the same may be amended, restated, replaced, supplemented or otherwise modified from time to time.
“ Pledged Collateral ” shall mean the one hundred percent (100%) ownership interest of Borrower in Mortgage Borrower.
“ Policies ” shall have the meaning ascribed to such term in the Senior Loan Agreement.
“ Post-Foreclosure Plan ” shall have the meaning set forth in Section 13.21 .
“ Prescribed 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 107‑56) (The USA PATRIOT Act), (b) 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.
“ Pro Forma Debt Service ” shall mean, for any date of determination the product of (a) the Outstanding Principal Balance multiplied by (b) a notional annual rate of interest equal to the sum of (x) the average rate shown on the one-month USD LIBOR Forward Curve (as published by Chatham Financial or another similar firm selected by Administrative Agent) for the period of twelve full calendar months following such date of determination plus (y) the Applicable Spread or the Substitute Spread, as applicable.
“ Prohibited Person ” means any Person: (i) listed in the Annex to, or is otherwise subject to the prohibitions of, Executive Order No. 13224 on Terrorist Financing, effective September 24,

-29-


2001, and relating to Blocking Property and Prohibiting Transactions With Persons Who Commit, Threaten to Commit, or Support Terrorism or any other similar prohibitions contained in the rules and regulations of OFAC or in any enabling legislation or other Executive Orders; (ii) that is owned or controlled by, or acting for or on behalf of, any Person that is listed in the Annex to, or is otherwise subject to the prohibitions of, Executive Order No. 13224; (iii) with whom Administrative Agent or any Lender is prohibited from dealing or otherwise engaging in any transaction by any terrorism or money laundering law, including Executive Order No. 13224; (iv) who commits, threatens, conspires to commit or supports “terrorism” as defined in Executive Order No. 13224; (v) that is named as a “specially designated national and blocked person” on the most current list published by OFAC at its official website or at any replacement website or other replacement official publication of such list; (vi) that is subject to trade restrictions under United States law, including, without limitation, the Patriot Act, the International Emergency Economic Powers Act, 50 U.S.C. §§ 1701 et seq., The Trading with the Enemy Act, 50 U.S.C. App. 1 et seq., and any Executive Orders or regulations promulgated thereunder including those related to Specially Designated Nationals and Specially Designated Global Terrorist; (vii) that is listed on any Government List; (viii) that has been previously convicted of any felony involving a crime or crimes of moral turpitude or for any Patriot Act Offense; (ix) that is currently under investigation by any Governmental Authority for alleged criminal activity; (x) that is operating, organized or resident in a country sanctioned by U.S. law; or (xi) who is an Affiliate of any Person that is described by or that satisfies any of clauses (i) through (x) above.
“ Prohibited Transfer ” shall have the meaning set forth in Section 4.2.1(a) .
“ Project Budget ” shall have the meaning set forth in Section 2.6.2(g) .
“ Project Management Agreement ” shall mean that certain Project Management Agreement by and between Mortgage Borrower and Initial Project Manager, dated as of May 2, 2014 (the “ Initial Project Management Agreement ”) or any Replacement Project Management Agreement entered into by and between Mortgage Borrower and a Project Manager in accordance with the terms of the Loan Documents, in each case, pursuant to which the Project Manager is to provide property management and other services with respect to the Property.
“ Project Manager ” shall mean Savanna Project Management, LLC, a Delaware limited liability company (“ Initial Project Manager ”), or any other project manager engaged by Mortgage Borrower in accordance with the terms and conditions of the Loan Documents.
“ Property ” shall mean the parcel of real property, the Improvements thereon and all personal property owned by Mortgage Borrower and encumbered by the Mortgage, together with all appurtenances and other rights pertaining to such property and Improvements, all as more particularly described in the granting clauses of the Mortgage and referred to therein as the “Property”.
“ Property Taxes ” shall mean all real estate and personal property taxes, payments in lieu of taxes, assessments, water rates or sewer rents, now or hereafter levied or assessed or imposed against the Property or part thereof, together with all interest and penalties thereon.

-30-


“ Proposed Major Lease ” shall have the meaning set forth in Section 4.1.9(b)(i) .
“ Pro Rata Share ” shall mean, as to each Lender, the ratio, expressed as a percentage, of (a) the amount of such Lender’s Commitment to (b) the aggregate amount of the Commitments of all Lenders hereunder; provided, however, that if at the time of determination the Commitments have terminated or been reduced to zero, the “Pro Rata Share” of each Lender shall be the Pro Rata Share of such Lender in effect immediately prior to such termination or reduction.
“ Protective Advance ” shall mean all sums to be expended in respect of any (or all) of the following: (i) to remove a lien on the Property that is senior to the lien of the Mortgage, (ii) to pay Property Taxes and Other Charges, Insurance Premiums or Operating Expenses, (iii) to pay Approved Costs not paid by (or on behalf of) Mortgage Borrower or Mortgage Lender, (iv) to protect and preserve the value or safety of the security of any collateral given as security for the Loan, (v) to pay for expenditures which are emergency in nature, or which are necessary or desirable to prevent or minimize personal injury, the occurrence of life safety or health issues and/or damage or economic harm to the Property, or which are required by applicable law.
“ Qualified Leasing Agent ” shall mean any of the following (i) Initial Leasing Agent or (ii) Savanna Commercial Services, CBRE Group, Inc., Cushman & Wakefield, Jones Lang LaSalle or CB Richard Ellis, or an Affiliate of any of them (provided that, there has been no material adverse change in such managers’ financial condition, business or management operations).
“ Qualified Manager ” shall mean shall mean any of the following: (i) Initial Manager, (ii) CBRE Group, Inc., Cushman & Wakefield, Jones Lang LaSalle or CB Richard Ellis, or an Affiliate of any of them (provided that, there has been no material adverse change in such managers’ financial condition, business or management operations); or (iii) a reputable and experienced professional management organization (a) which is then managing at least 3,000,000 aggregate leasable square feet (exclusive of the Property) of office properties in Downtown Manhattan of the same or higher quality as the Property and (b) which is not the subject of any Bankruptcy Event.
“ Qualified Project Manager ” shall mean shall mean any of the following: (i) Initial Project Manager, (ii) CBRE Group, Inc., Cushman & Wakefield, Jones Lang LaSalle or CB Richard Ellis, or an Affiliate of any of them (provided that, there has been no material adverse change in such managers’ financial condition, business or management operations); or (iii) a reputable and experienced professional management organization (a) which is then managing at least 3,000,000 aggregate leasable square feet (exclusive of the Property) of office properties in Downtown Manhattan of the same or higher quality as the Property and (b) which is not the subject of any Bankruptcy Event.
“ Radius ” shall have the meaning set forth in Section 5.1.1(c) .
“ Rating Agency ” shall mean each of Fitch, S&P, Moody’s and any other nationally recognized statistical rating agency designated by Administrative Agent (and any successor to any of the foregoing).

-31-


“ Rebalancing Reserve Account ” shall have the meaning set forth in Section 6.7 .
“ Rebalancing Reserve Funds ” shall have the meaning set forth in Section 6.7 .
“ Recipient ” meads Administrative Agent or any Lender, as applicable.
“ Recourse Guaranty ” shall mean, collectively, (i) that certain Mezzanine Guaranty of Recourse Obligations of even date herewith from Savanna Guarantor for the benefit of Administrative Agent, for the benefit of Lenders, as the same may be amended, restated, supplemented or otherwise modified from time to time and (ii) that certain Mezzanine Limited Guaranty of even date herewith from KBS Guarantor for the benefit of Administrative Agent, for the benefit of Lenders, as the same may be amended, restated, supplemented or otherwise modified from time to time.
“ Register ” shall have the meaning set forth in Section 9.4 .
“ Regulation D ” shall mean Regulation D of the Board of Governors of the Federal Reserve System from time to time in effect, including any successor or other Regulation or official interpretation of said Board of Governors relating to reserve requirements applicable to member banks of the Federal Reserve System.
“ Regulatory Change ” shall mean the occurrence, after the date of this Agreement, of any of the following: (a) the adoption or taking effect of any law, rule, regulation or treaty; (b) any change in any law, rule, regulation or treaty or in the administration, interpretation, implementation or application thereof by any Governmental Authority, including, without limitation, with respect to the Dodd-Frank Wall Street Reform and Consumer Protection Act and all requests, rules, guidelines or directives thereunder or issued in connection therewith; or (c) the making or issuance of any request, rule, guideline or directive (whether or not having the force of law) by any Governmental Authority.
“ Rent Roll ” shall have the meaning set forth in Section 3.1.22 .
“ Rents ” shall have the meaning set forth in the Mortgage 3 .
“ Replacement Leasing Agreement ” shall mean, collectively, (a) either (i) a leasing agreement with a Qualified Leasing Agent substantially in the same form and substance as the Initial Management Agreement or (ii) a leasing agreement with a Qualified Leasing Agent, which leasing agreement shall be reasonably acceptable to Administrative Agent in form and substance and (b) a new subordination of leasing fees substantially in the form delivered to Administrative Agent in connection with the closing of the Loan (or of such other form and substance reasonably acceptable to Administrative Agent, Borrower and the applicable replacement Leasing Agent), in each case, executed and delivered to Administrative Agent by Borrower and such Qualified Leasing Agent at Borrower’s expense.
“ Replacement Management Agreement ” shall mean, collectively, (a) either (i) a management agreement with a Qualified Manager substantially in the same form and substance
                
3 To confirm definitions to be inclusive of all items previously set forth in the Loan Agreement.

-32-


as the Initial Management Agreement or (ii) a management agreement with a Qualified Manager, which management agreement shall be reasonably acceptable to Administrative Agent in form and substance and (b) a new subordination of management fees substantially in the form delivered to Administrative Agent in connection with the closing of the Loan (or of such other form and substance reasonably acceptable to Administrative Agent, Borrower and the applicable replacement Manager), in each case, executed and delivered to Administrative Agent by Borrower and such Qualified Manager at Borrower’s expense.
“ Replacement Project Management Agreement ” shall mean, collectively, (a) either (i) a project management agreement with a Qualified Project Manager substantially in the same form and substance as the Initial Project Management Agreement or (ii) a project management agreement with a Qualified Project Manager, which management agreement shall be reasonably acceptable to Administrative Agent in form and substance and (b) a new subordination of management fees substantially in the form delivered to Administrative Agent in connection with the closing of the Loan (or of such other form and substance reasonably acceptable to Administrative Agent, Borrower and the applicable replacement Project Manager), in each case, executed and delivered to Administrative Agent by Mortgage Borrower and such Qualified Project Manager at Mortgage Borrower’s or Borrower’s expense.
“ REOC ” shall have the meaning set forth in Section 11.27 .
“ Requested Advance Date ” shall have the meaning set forth in Section 2.7.2(a) .
“ Required Records ” shall have the meaning set forth in Section 4.1.6(h) .
“ Requisite Lenders ” shall mean Lenders hereunder (which shall in all instances include Administrative Agent) having (a) more than sixty-six and two-thirds (66 2/3%) of the commitments of all such lenders, or (b) if the commitments have been terminated, more than sixty-six and two-thirds (66 2/3%) of the aggregate outstanding amount of the Loan; provided that (a) in determining such percentage at any given time, all then existing Defaulting Lenders will be disregarded and excluded, and the pro rata shares in the Loan shall be redetermined, for voting purposes only, to exclude the pro rata shares of such Defaulting Lenders, and (b) at all times when two or more Lenders are party to this Agreement, the term “Requisite Lenders” shall in no event mean less than two (2) Lenders.
“ Reserve Funds ” as defined in the Mortgage Loan Agreement and any reserves held under this Agreement.
“ Reserve Requirement ” shall mean with respect to any Interest Period, the maximum rate of all reserve requirements (including, without limitation, all basic, marginal, emergency, supplemental, special or other reserves and taking into account any transitional adjustments or other schedule changes in reserve requirements during the Interest Period) which are imposed under Regulation D on eurocurrency liabilities (or against any other category of liabilities which includes deposits by reference to which LIBOR is determined or against, any category of extensions of credit or other assets which includes loans by a non-United States office of a depository institution to United States residents or loans which charge interest at a rate determined by reference to such

-33-


deposits) during the Interest Period and which are applicable to member banks of the Federal Reserve System with deposits exceeding one billion dollars, but without benefit or credit of proration, exemptions or offsets that might otherwise be available from time to time under Regulation D. The determination of the Reserve Requirements shall be based on the assumption that the applicable Lender funded one hundred percent (100%) of its proportionate share of the Loan in the interbank eurodollar market. In the event of any change in the rate of such Reserve Requirements under Regulation D during the Interest Period, or any variation in such requirements based upon amounts or kinds of assets or liabilities, or other factors, including, without limitation, the imposition of Reserve Requirements, or differing Reserve Requirements, on one or more but not all of the holders of the Loan or any participation therein, such Lender may use any reasonable averaging and/or attribution methods which it deems appropriate and practical for determining the rate of such Reserve Requirements which shall be used in the computation of the Reserve Requirements. A Lender’s reasonable computation of same shall be final absent manifest error.
“ Restoration ” shall have the meaning set forth in Section 5.2.1 .
“ Restricted Party ” shall mean Borrower, Mortgage Borrower, each SPC Party and Guarantor.
“ S&P ” shall mean S&P Global Ratings, a Standard & Poor’s Financial Services LLC business.
“ Sale or Pledge ” shall mean a voluntary or involuntary sale, conveyance, mortgage, grant, bargain, encumbrance, pledge, assignment, grant of any options with respect to, or any other transfer or disposition (directly or indirectly, voluntarily or involuntarily, by operation of law or otherwise, and whether or not for consideration or of record) of a legal or beneficial interest.
“ Savanna Fund III LPA ” shall mean that certain Amended and Restated Agreement of Limited Partnership of Savanna Real Estate Fund III, L.P., dated as of January 12, 2015, as the same may be amended, restated, supplemented or otherwise modified from time to time.
“ Savanna Guarantor ” shall mean, individually and collectively, jointly and severally, Savanna Real Estate Fund III, L.P., a Delaware limited partnership (“ Savanna Fund III ”) and its parallel partnerships.
“ Savanna JV Partner ” shall mean SREF III 110 William JV, LLC.
“ Savanna Sponsor ” shall mean SREF III REIT, L.P.
“ Secondary Market Transactions ” shall have the meaning set forth in Section 9.1.1 .
“ Second Extension Maturity Date ” shall mean April 9, 2023.
“ Second Extension Option ” shall have the meaning set forth in Section 2.3.2(b) .
“ Security Account ” shall mean each of the “Working Capital Account” and the “Interest/Carrying Costs Account” as each is defined in the Senior Loan Agreement.

-34-


“ Security Account Funds ” shall mean each of the “Working Capital Funds” and the “Reserve Funds” as each is defined in the Senior Loan Agreement.
“ Security Documents ” shall mean, collectively, (i) the Pledge Agreement, (ii) Acknowledgment of Pledge by Mortgage Borrower, (iii) all Uniform Commercial Code financing statements required by this Agreement to be filed with respect to the security interests in personal property created pursuant to the Security Documents, and (iv) all other documents and agreements executed or delivered to Lender by Borrower evidencing, guaranteeing and/or securing the Loan and related to any of the foregoing documents.
“ Senior Loan ” shall mean that certain senior loan in the maximum principal amount of up to $215,475,000.00 made on the date hereof by Mortgage Lenders to Mortgage Borrower, and evidenced and secured by the Senior Loan Documents.
“ Senior Loan Agreement ” shall mean that certain Senior Loan Agreement dated as of the date hereof and made by and between Mortgage Borrower, Mortgage Administrative Agent and Mortgage Lenders, the same may be modified, amended and restated from time to time.
“ Senior Loan Documents ” shall mean, collectively, the “Loan Documents” as defined in the Senior Loan Agreement.
“ Senior Loan Outstanding Principal Balance ” shall mean the “Outstanding Principal Balance” as defined in the Senior Loan Agreement.
“ Senior Loan Pro Forma Debt Service ” shall mean the “Pro Forma Debt Service” as defined in the Senior Loan Agreement.
“ Severed Loan Documents ” shall have the meaning set forth in Section 10.2(e) .
“ Short Interest ” shall have the meaning set forth in Section 2.4.1 .
“ Shortfall ” shall have the meaning set forth in Section 2.6.4 .
“ Single Member Delaware LLC ” shall mean a single member limited liability company formed under Delaware law which (i) has at least one springing member, which, upon the dissolution of all of the single member or the withdrawal or the disassociation of the single member from such limited liability company, shall immediately become the sole member of such limited liability company, and (ii) complies with the terms and provisions of Section 3.1.24(cc) .
“ SPC Party ” shall mean, if Borrower is a limited partnership or a limited liability company (other than a Single Member Delaware LLC), each general partner or managing member of Borrower.
“ Special Member ” shall have the meaning set forth in Section 3.1.24(cc)(i) .
“ Special Purpose Bankruptcy Remote Entity ” shall mean a corporation, limited liability company or limited partnership which, at all times, complies with the requirements set out in Section 3.1.24 .

-35-


“ Sponsor ” shall mean Guarantor.
“ Spread Maintenance Premium ” shall mean, in connection with a prepayment of all or any portion of the Outstanding Principal Balance of the Loan pursuant to the terms hereof, an amount equal to the present value, discounted at LIBOR on the most recent Determination Date with respect to any period when the Loan is a LIBOR Loan (or, with respect to any period when the Loan is a Substitute Rate Loan, discounted at an interest rate that Administrative Agent believes, in its reasonable judgment, would equal LIBOR on such Determination Date if LIBOR was then available) of all future installments of interest which would have been due hereunder through and including the Open Prepayment Date, on the portion of the Outstanding Principal Balance of the Loan being prepaid as if interest accrued on such portion of the principal balance being prepaid at an interest rate per annum equal to the Applicable Spread. The Spread Maintenance Premium shall be reasonably calculated by Administrative Agent and shall be final absent manifest error.
“ Springing Recourse Event ” shall have the meaning set forth in Section 11.22(i) .
“ State ” shall mean the State or Commonwealth in which the Property or any part thereof is located.
“ Substitute Cash Management Accounts ” shall have the meaning set forth in Section 6.1(d).
“ Substitute Interest Rate Protection Agreement ” shall mean an interest rate cap agreement between a Counterparty having a Minimum Counterparty Rating and Borrower, obtained by Borrower and collaterally assigned to Administrative Agent, for the benefit of Lenders pursuant to this Agreement and shall contain each of the following:
(i)      a term expiring no earlier than the then-applicable Maturity Date;
(ii)      the notional amount of the Substitute Interest Rate Protection Agreement shall be an aggregate amount equal to at least the sum of (x) the Outstanding Principal Balance plus (y) the Building Loan Outstanding Principal Balance;
(iii)      it provides that the only obligation of Borrower thereunder is the making of a single payment to a Counterparty having a Minimum Counterparty Rating thereunder upon the execution and delivery thereof;
(iv)      it provides to the Lenders and Borrower (as determined by Administrative Agent in its sole but good faith discretion), for the term of the Substitute Interest Rate Protection Agreement, a hedge against rising interest rates that is no less beneficial to Borrower and the Lenders than the Interest Rate Protection Agreement being replaced or to be replaced by the Substitute Interest Rate Protection Agreement; and without limiting any of the provisions of the preceding clauses (i) through (iv) above, it satisfies all of the requirements set forth in Section 4.1.11 hereof.
“ Substitute Rate ” shall have the meaning set forth in Section 2.2.3(c) .

-36-


“ Substitute Rate Loan ” shall mean the Loan at any time in which the Applicable Interest Rate is calculated at either the (i) Base Rate or (ii) the Substitute Rate plus the Substitute Spread, each in accordance with the provisions of Section 2.2.3 hereof.
“ Substitute Reserves ” shall have the meaning set forth in Section 6.1(b).
“ Substitute Spread ” shall have the meaning set forth in Section 2.2.3(c) .
“ Survey ” shall mean a survey of the Property prepared by a surveyor licensed in the State and reasonably satisfactory to Administrative Agent and the company or companies issuing the Title Insurance Policy, and containing a certification of such surveyor reasonably satisfactory to Administrative Agent.
“ Taxes ” shall mean all present or future taxes, levies, imposts, duties, deductions, withholdings (including backup withholding), assessments, fees or other charges imposed by any Governmental Authority, including any interest, additions to tax or penalties thereto.
“ Tenant ” shall mean any Person leasing, subleasing or otherwise occupying any portion of the Property under a Lease or other occupancy agreement.
“ Tenant Improvement Allowance ” shall mean the amount required to be paid by Mortgage Borrower to a Tenant under a Lease on account of or in lieu of work performed by such Tenant in the applicable space demised under such Lease.
“ Tenant Improvements ” shall mean the improvements and/or other work affecting any space at the Property, which is required to be constructed and paid for by Mortgage Borrower pursuant to applicable Leases for such space.
“ Tenant Improvement Work ” shall mean the construction work to be performed by or on behalf of Mortgage Borrower, as landlord, or a Tenant, as Tenant Improvements under a Lease at the Property entered into pursuant to the terms hereof, including, without limitation, the Build Out Work.
“ Tenant Inducement Costs ” shall mean concessions provided to Tenants in connection with the execution of Leases (including, without limitation, the payment of any lease termination payments).
“ Tenant Letters of Credit ” shall have the meaning set forth in Section 6.11 .
“ Term ” shall mean the Initial Term as the same may be extended by an Extension Option.
“ TI/LC Costs ” shall mean the costs of all Tenant Improvement Work or Tenant Improvement Allowances, Tenant Inducement Costs and Leasing Commission costs associated with Leases at the Property entered into pursuant to the terms hereof, in each case, to be paid by Mortgage Borrower pursuant to the terms of the applicable Lease.
“ Terrorism Insurance ” shall have the meaning set forth in Section 5.1.1(a)(xi) .

-37-


“ The Flood Insurance Acts ” shall have the meaning set forth in Section 5.1.1(i) .
“ Third Extension Maturity Date ” shall mean April 9, 2024.
“ Third Extension Option ” shall have the meaning set forth in Section 2.3.2(b) .
“ Termination Space ” shall have the meaning set forth in Section 6.4.1 .
“ Title Company ” shall mean National Land Tenure and Title Associates, each as agent for Stewart Title Insurance Company and First American Title Insurance Company.
“ Title Insurance Policy ” shall mean an ALTA mortgagee title insurance policy in the form reasonably acceptable to Mortgage Administrative Agent issued with respect to the Property and insuring the lien of the Mortgage.
“ Transfer ” shall have the meaning set forth in Section 4.2.1(a) .
“ UCC ” or “ Uniform Commercial Code ” shall mean the Uniform Commercial Code as in effect in the State.
“ UCC Policy ” means that certain UCC title insurance policy in form reasonably acceptable to Lender issued by the UCC Policy Title Company with respect to the Collateral and insuring the lien of the Pledge Agreement encumbering such Collateral.
“ UCC Policy Title Company ” shall mean First American Title Insurance Company, UCC Division, or any successor title company or companies licensed to issue title insurance in the State and approved by Administrative Agent in its reasonable discretion.
“ U.S. Person ” means any Person that is a “ United States Person ” as defined in Section 7701(a)(30) of the Code.
“ U.S. Tax Compliance Certificate ” shall have the meaning set forth in Section 2.5.6(b)(ii)(C) .
“ Unadvanced Amounts ” shall have the meaning set forth in Section 2.7.7 .
“ Updated Information ” shall have the meaning set forth in Section 9.1.2(a) .
“ VCOC ” shall have the meaning set forth in Section 11.28 .
“ Waived Cash Management Accounts ” shall have the meaning set forth in Section 6.1(d) .
“ Waived Cash Management Provisions ” shall have the meanings set forth in Section 6.1(d) .
“ Waived Reserve Funds ” shall have the meaning set forth in Section 6.1(B ).
“ Work Charge ” shall have the meaning set forth in Section 4.2.2 .

-38-


“ Working Capital Account ” shall have the meaning set forth in Section 2.6.1 of the Senior Loan Agreement.
“Working Capital Account Agreement ” shall have the meaning ascribed to such term in the Senior Loan Agreement.
“ Working Capital Funds ” shall have the meaning ascribed to such term in the Senior Loan Agreement.
“ Zoning Report ” shall mean the zoning report prepared with respect to the Property by the Planning & Zoning Resource Company dated February 28, 2019.
Section 1.2      Principles of Construction .
(a)      All references to sections and schedules are to sections and schedules in or to this Agreement unless otherwise specified. Any reference in this Agreement or in any other Loan Document to any Loan Document shall be deemed to include references to such documents as the same may hereafter be amended, modified, supplemented, extended, replaced and/or restated from time to time (and, in the case of any note or other instrument, to any instrument issued in substitution therefor). Unless otherwise specified, the words “hereof,” “herein,” and “hereunder” and words of similar import when used in this Agreement shall refer to this Agreement as a whole and not to any particular provision of this Agreement. Unless otherwise specified, all meanings attributed to defined terms herein shall be equally applicable to both the singular and plural forms of the terms so defined.
(b)      All references to the Mortgage Loan Agreement or any other Mortgage Loan Document shall mean the Mortgage Loan Agreement or such other Mortgage Loan Document as in effect on the date hereof, as each of the same may hereafter be amended, restated, replaced, supplemented or otherwise modified, but only to the extent that Lender has consented to the foregoing pursuant to Section 14.4 of this Agreement. With respect to terms defined by cross-reference to the Mortgage Loan Documents, such defined terms shall have the definitions set forth in the Mortgage Loan Documents as of the date hereof, and no modifications to the Mortgage Loan Documents shall have the effect of changing such definitions for the purposes of this Agreement unless Lender expressly agrees that such definitions as used in this Agreement have been revised.
(c)      If (i) Borrower is obligated hereunder to undertake any action that may only be undertaken by Mortgage Borrower, or (ii) this Agreement obligates or prohibits Mortgage Borrower to undertake any action, or (iii) this Agreement requires Borrower to “cause” or “not to permit” Mortgage Borrower from taking any action, the applicable provision hereunder or under any of the Loan Documents shall be deemed to require Borrower to exercise its rights as the sole member of the Mortgage Borrower to cause Mortgage Borrower to undertake such action or abstain from taking such action (and, in no event shall Borrower be required to act directly with respect to the Property or in any other manner which would violate any of the covenants contained in Section 3.1.24 of this Agreement or in Section 3.1.24 of the Mortgage Loan Agreement or other similar covenants contained in Borrower’s or Mortgage Borrower’s organizational documents).

-39-


II.      THE LOAN
Section 2.1      The Loan .
2.1.1      Agreement to Lend and Borrow . Subject to and upon the terms and conditions set forth herein, the Lenders shall make the Loan to Borrower and Borrower shall accept the Loan from the Lenders on the Closing Date an (x) initial advance under the Loan in an amount equal to Seventy Million Two Hundred Seventy Five Thousand and No/100 Dollars ($70,275,000.00) (the “ Initial Advance ”), (y) a Future Advance in the amount of Sixteen Million Eight Hundred Fifty Thousand and No/100 Dollars ($16,850,000.00) (the “ First Future Funding Advance ”) and (z) if the terms and conditions of Section 2.6 are satisfied, subsequent Future Advances in an aggregate amount not to exceed the Future Funding Amount.
2.1.2      Single Disbursement to Borrower .
(a)      Borrower shall receive only one borrowing hereunder in respect of the Initial Advance and the First Future Funding Advance.
(b)      The Initial Advance, the First Future Funding Advance and each other Future Advance and any other amount borrowed and repaid hereunder in respect of the Loan may not be re-borrowed.
2.1.3      The Note . The Loan shall be evidenced by that certain Mezzanine Loan Promissory Note of even date herewith, in the maximum principal amount of Eighty-Seven Million One Hundred Twenty Five Thousand and No/100 Dollars ($87,125,000.00) made by Borrower and payable to Lenders in evidence of the Loan (as the same may hereafter be amended, supplemented, restated, increased, extended or consolidated from time to time, the “ Note ”) and shall be repaid in accordance with the terms of this Agreement and the Note.
2.1.4      Use of Proceeds . Borrower shall use proceeds of the Loan to (i) make equity contributions to Mortgage Borrower in order to cause Mortgage Borrower to use such amounts for any use permitted pursuant to Section 2.1.4 of the Mortgage Loan Agreement, and (ii) pay costs and expenses incurred in connection with the closing of the Loan as reasonably approved by Administrative Agent.
2.1.5      Loan Advances . Subject to compliance by Borrower with the terms and conditions of this Agreement, Lenders shall make, and Borrower shall accept from Lenders, Future Advances under this Agreement for the applicable purposes or uses permitted as required hereunder. If Lenders are comprised of more than one Person, then no Lender shall be obligated to advance more than its Pro Rata Share of any Future Advance hereunder. The Lenders shall not be required to make Future Advances for the costs incurred by Borrower with respect to materials stored off the Property. No Future Advances or any portion thereof shall be made directly or indirectly for payments to a Borrower Related Party, except (a) as expressly permitted in the Loan Documents, or (b) as otherwise may be approved in writing by Administrative Agent. The obligations of the Lenders to make Future Advances hereunder are several, and not joint, and under no circumstances shall any Lender be obligated to fund more of its Pro Rata Share of any Future Advance or more than its Commitment.

-40-


Section 2.2      The Interest Rate .
2.2.1      Applicable Interest Rate . Subject to the last sentence of this Section 2.2.1 , except as herein provided with respect to interest accruing at the Default Rate, interest on the Note outstanding from time to time shall accrue from the Closing Date up to and including the Maturity Date at the Applicable Interest Rate. In the event that any Event of Default shall have occurred and be continuing, interest on the Obligations shall accrue interest at the Default Rate for the period that such Event of Default is continuing (it being agreed that Administrative Agent and Lenders have no obligation to accept a cure of an Event of Default).
2.2.2      Interest Calculation . Interest on the Note shall be calculated by multiplying (a) the actual number of days elapsed in the period for which the calculation is being made by (b) a daily rate based on a three hundred sixty (360) day year (that is, the Applicable Interest Rate or the Default Rate, as then applicable to the Note, expressed as an annual rate divided by 360) by (c) the Outstanding Principal Balance.
2.2.3      Determination of Interest Rate .
(a)      Each determination by Administrative Agent of the Applicable Interest Rate shall be conclusive and binding for all purposes, absent manifest error.
(b)      Unless and until a Substitute Rate is implemented in accordance with Section 2.2.3(c) hereof, if, for any reason Administrative Agent determines in its sole but good faith discretion (which determination shall be conclusive and binding absent manifest error) that: (i) United States dollar deposits are not being offered to banks in the London interbank Eurodollar market for a period approximately equal to the applicable Interest Period; (ii) reasonable and adequate means do not exist for ascertaining LIBOR for the applicable Interest Period; or (iii) LIBOR does not adequately and fairly reflect the cost to the Lenders of making or maintaining any LIBOR Loan during an applicable Interest Period (any such determination being hereinafter referred to as a “ LIBOR Rate Unavailable Determination ”), then Administrative Agent shall promptly give notice thereof to Borrower. From and after Borrower’s receipt of such notice unless and until a Substitute Rate is implemented in accordance with Section 2.2.3(c) hereof, the Applicable Interest Rate shall be the Base Rate, subject to Section 2.2.3(d) hereof.
(c)      If for any reason Administrative Agent determines in its sole but good (which determination shall be conclusive and binding absent manifest error) that: (i) (a) United States dollar deposits are not being offered to banks in the London interbank Eurodollar market for a period approximately equal to the applicable Interest Period or (b) reasonable and adequate means do not exist for ascertaining LIBOR for the applicable Interest Period, and that such circumstances are unlikely to be temporary; (ii) LIBOR is no longer a widely recognizable benchmark rate for newly originated commercial real estate loans in the United States; or (iii) the applicable supervisor or administrator (if any) of LIBOR, or any governmental authority having or purporting to have jurisdiction over Administrative Agent, has made a public statement identifying a specific date after which LIBOR shall no longer be used for determining interest rates for commercial real estate loans in the United States (any such determination being hereinafter referred to as a “ LIBOR Rate Discontinued Determination ”), then Administrative Agent may designate a replacement rate

-41-


(“ Substitute Rate ”) that Administrative Agent may thereafter elect to implement in lieu of LIBOR in accordance with the terms hereof, and if so implemented, any reference to LIBOR herein shall thereafter be deemed to refer to the Substitute Rate. Such Substitute Rate shall (I) be a market standard reference rate which is then generally being implemented by Administrative Agent and other lenders across commercial real estate loan portfolios as a replacement for LIBOR and (II) be publicly recognized by the International Swaps and Derivatives Association (ISDA) as an alternative to the LIBOR Rate; provided, however, that if the Substitute Rate determined as provided above with respect to any Interest Period shall ever be less than the LIBOR Floor, then the Substitute Rate for such Interest Period shall be deemed to be the LIBOR Floor. If a Substitute Rate is so implemented, Administrative Agent shall designate (which designation shall be conclusive and binding absent manifest error), and implement concurrently with the Substitute Rate, a replacement spread (“ Substitute Spread ”) which shall be equal to the Applicable Spread, adjusted by Administrative Agent, in a manner consistent with Administrative Agent’s treatment of similar mezzanine loan facilities, to compensate for any difference between (x) the Substitute Rate and (y) the average of LIBOR for the six (6) months prior to the date of the LIBOR Rate Discontinued Determination, which shall reflect the original intent of the parties with respect to the overall interest rate of the Loan. The Substitute Spread shall replace the Applicable Spread on the Interest Rate Replacement Date and shall thereafter remain constant notwithstanding that the Substitute Rate may fluctuate from time to time. When so implemented, any reference to the Applicable Spread herein shall thereafter be deemed to refer to the Substitute Spread. If a Substitute Rate is implemented in lieu of LIBOR, and a Substitute Spread is implemented in lieu of the Applicable Spread, as set forth above, Borrower agrees to enter into such modifications and/or replacement promissory notes as Administrative Agent deems necessary in order to evidence such replacements provided that any such modifications or replacement promissory notes do not increase the obligations or liabilities of Borrower or decrease any rights of Borrower other than to a de minimis extent. Notwithstanding the foregoing, Administrative Agent agrees that it shall consult with Borrower regarding its selection of a Substitute Rate; provided, however, that final determination of the Substitute Rate shall be made by Administrative Agent in its sole but good faith discretion (and Borrower shall have no right to approve the same).
(d)      If, after the date hereof, pursuant to the terms of this Agreement, the Loan has been converted to a Substitute Rate Loan and any Lender shall determine in its sole but reasonable discretion (which determination shall be conclusive and binding upon Borrower absent manifest error) that the event(s) or circumstance(s) which resulted in such conversion shall no longer be applicable, such Lender shall give notice thereof to Borrower, and the Substitute Rate Loan shall automatically convert to a LIBOR Loan on the effective date set forth in such notice. Notwithstanding any provision of this Agreement to the contrary, in no event shall Borrower have the right to elect to convert a LIBOR Loan to a Substitute Rate Loan.
(e)      If any requirement of law or any change therein or in the interpretation or application thereof, shall hereafter make it unlawful for any Lender to make or maintain a LIBOR Loan as contemplated hereunder, (i) the obligation of such Lender hereunder to make a LIBOR Loan shall be cancelled forthwith and (ii) such Lender may give Borrower and Lender a Lender’s Notice, establishing the Applicable Interest Rate at the Substitute Rate plus the Substitute Spread, in which case the Applicable Interest Rate shall be a rate equal to the Substitute Rate in effect from time to time plus the Substitute Spread and such initial Applicable Interest Rate based on the

-42-


Substitute Rate shall, as closely as reasonably possible, approximate the last Applicable Interest Rate based on LIBOR. In the event the condition necessitating the cancellation of such Lender’s obligation to make a LIBOR Loan hereunder shall cease, such Lender shall promptly notify Borrower and Lender of such cessation and the Loan shall resume its characteristics as a LIBOR Loan in accordance with the terms herein from and after the first day of the Interest Period next following such cessation. Borrower hereby agrees promptly to pay such Lender, upon demand, any additional amounts reasonably necessary to compensate such Lender for any out-of-pocket costs reasonably incurred by such Lender in making any conversion in accordance with this Agreement, including, without limitation, any interest or fees payable by such Lender to lenders of funds obtained by it in order to make or maintain the LIBOR Loan hereunder. Any Lender’s notice of such costs, as certified to Borrower, shall be set forth in reasonable detail and such Lender’s calculation shall be conclusive absent manifest error.
(f)      In the event that, after the date hereof, any change in any requirement of law or in the formal interpretation or application thereof, or compliance by any Lender with any directive (whether or not having the force of law) hereafter issued from any central bank or other Governmental Authority:
(i)      shall hereafter have the effect of reducing the rate of return on any Lender’s capital (other than as a result of an increase in taxes) as a consequence of its obligations hereunder to a level below that which such Lender is reasonably likely to have achieved but for such adoption, change or compliance (taking into consideration such Lender’s policies with respect to capital adequacy) by any amount reasonably deemed by such Lender to be material;
(ii)      shall hereafter impose, modify, increase or hold applicable any material reserve, special deposit, compulsory loan or similar requirement against assets held by, or deposits or other liabilities in or for the account of, advances or loans by, or other credit extended by, or any other acquisition of funds by, any office of any Lender which is not otherwise included in the determination of the rate hereunder (other than as a result of an increase in taxes); or
(iii)      shall hereafter impose on any Lender any other condition and the result of any of the foregoing is to increase the cost to such Lender of making, renewing or maintaining loans or extensions of credit or to reduce any amount receivable hereunder;
and the result of any of the foregoing is to increase the cost to Lender of making, renewing or maintaining the Loan or to reduce any amount receivable hereunder, then, in any such case, subject to the notice requirements in the subsequent sentence, provided that such Lender requests the same of similarly situated borrowers, Borrower shall promptly pay such Lender, upon demand, any additional amounts necessary to compensate such Lender for such additional cost or reduced amount receivable which such Lender deems to be material as reasonably determined by such Lender; provided, however, that Borrower shall not be required under this Section 2.2.3 to pay such Lender additional amounts for additional costs or reduced amounts receivable that are attributable to an increase in taxes imposed on such Lender. If any Lender becomes entitled to claim any additional amounts pursuant to this Section 2.2.3, Administrative Agent shall provide Borrower with not less

-43-


than ten (10) Business Days written notice specifying in reasonable detail the event by reason of which it has become so entitled and the additional amount required to fully compensate such Lender for such additional cost or reduced amount. A certificate as to any additional costs or amounts payable pursuant to the foregoing sentence, executed by an authorized signatory of any Lender and submitted by such Lender to Borrower shall be conclusive in the absence of manifest error. This provision shall survive payment of the Note and the satisfaction of all other obligations of Borrower under this Agreement and the Loan Documents. For the avoidance of doubt, any payments made pursuant to this Section 2.2.3 shall not be deemed a prepayment and no prepayment premium shall be due in connection with such payments.
(g)      Borrower agrees to indemnify each Lender and to hold each Lender harmless from any Losses which such Lender sustains or incurs as a consequence of (i) any default by Borrower in payment of the principal of or interest on a LIBOR Loan, including, without limitation, any such loss or expense arising from interest or fees payable by such Lender to lenders of funds obtained by it in order to maintain a LIBOR Loan hereunder, (ii) any prepayment (whether voluntary or mandatory) of the LIBOR Loan on a day that (A) is not a Monthly Payment Date or (B) is a Monthly Payment Date if Borrower did not give the prior written notice of such prepayment required pursuant to the terms of this Agreement, including, without limitation, such loss or expense arising from interest or fees payable by such Lender to lenders of funds obtained by it in order to maintain the LIBOR Loan hereunder and (iii) the conversion in accordance with the terms hereof of the Applicable Interest Rate to the Substitute Rate plus the Substitute Spread with respect to any portion of the outstanding principal amount of the Loan then bearing interest at a rate other than the Substitute Rate plus the Substitute Spread on a date other than the first day of an Interest Period, including, without limitation, such loss or expenses arising from interest or fees payable by such Lender to lenders of funds obtained by it in order to maintain a LIBOR Loan hereunder (the amounts referred to in clauses (i), (ii) and (iii) are herein referred to collectively as the “ Breakage Costs ”); provided, however, Borrower shall not indemnify Administrative Agent or any Lender from any Losses arising from Administrative Agent’s or any Lender’s willful misconduct or gross negligence. Whenever in this Section 2.2.3 the term “interest or fees payable by any Lender to lenders of funds obtained by it” is used and no such funds were actually obtained from such lenders, it shall include interest or fees which would have been payable by such Lender if it had obtained funds from lenders in order to maintain a LIBOR Loan hereunder. Each Lender will provide to Borrower a statement detailing such Breakage Costs and the calculation thereof.
(h)      The provisions of this Section 2.2.3 shall survive payment of the Note in full and the satisfaction of all other obligations of Borrower under this Agreement and the other Loan Documents.
2.2.4      Usury Savings . This Agreement and the other Loan Documents are subject to the express condition that at no time shall Borrower be required to pay interest on the principal balance of the Loan at a rate which could subject any Lender to either civil or criminal liability as a result of being in excess of the Maximum Legal Rate. If by the terms of this Agreement or the other Loan Documents, Borrower is at any time required or obligated to pay interest on the principal balance due hereunder at a rate in excess of the Maximum Legal Rate, the Applicable Interest Rate or the Default Rate, as the case may be, shall be deemed to

-44-


be immediately reduced to the Maximum Legal Rate and all previous payments in excess of the Maximum Legal Rate shall be deemed to have been payments in reduction of principal and not on account of the interest due hereunder. All sums paid or agreed to be paid to the Lenders for the use, forbearance, or detention of the sums due under the Loan, shall, to the extent permitted by applicable law, be amortized, prorated, allocated, and spread throughout the full stated term of the Loan until payment in full so that the rate or amount of interest on account of the Loan does not exceed the Maximum Legal Rate from time to time in effect and applicable to the Loan for so long as the Loan is outstanding.
Section 2.3      Loan Payments .
2.3.1      Payment Before Maturity Date . Borrower shall make a payment to Administrative Agent, for the benefit of Lenders of interest only on the Closing Date for the initial Interest Period. On the Monthly Payment Date occurring in April 9, 2019 and on each Monthly Payment Date thereafter to and including the Maturity Date, Borrower shall make a payment to Administrative Agent, for the benefit of Lenders equal to the Monthly Debt Service Payment Amount. Borrower shall also pay to Administrative Agent, for the benefit of the Lenders, all amounts required in respect of Reserve Funds as set forth in Article 6 .
2.3.2      Payment on Maturity Date ; Extension Options . (a) Borrower shall pay to Administrative Agent, for the benefit of Lenders on the Maturity Date the Outstanding Principal Balance of the Loan, any Spread Maintenance Premium (if the Maturity Date is before the Open Prepayment Date), all accrued and unpaid interest and all other amounts due hereunder and under the Note, the Pledge Agreement and the other Loan Documents.
(b) Subject to the provisions of this Section 2.3.2 , Borrower shall have the one-time option (the “ First Extension Option ”) to extend the Maturity Date until the First Extension Maturity Date. In the event Borrower shall have exercised the First Extension Option in accordance with the terms and conditions hereof, Borrower shall have the one-time option (the “ Second Extension Option ”) to extend the Maturity Date until the Second Extension Maturity Date. In the event Borrower shall have exercised the Second Extension Option in accordance with the terms and conditions hereof, Borrower shall have the one-time option (the “ Third Extension Option ” and, together with the First Extension Option and the Second Extension Option, each an “ Extension Option ”) to extend the Maturity Date until the Third Extension Maturity Date. Borrower’s right to so extend the Maturity Date shall be subject to the satisfaction of each of the following conditions precedent prior to each such extension (and each such condition shall be satisfied in connection with the exercise of each Extension Option unless such condition is otherwise expressly specified to apply solely to the First Extension Option, the Second Extension Option, or the Third Extension Option as applicable):
(i)      Borrower shall have given Administrative Agent written notice of such extension (x) no later than thirty (30) days prior to the then-current Maturity Date and (y) no earlier than ninety (90) days prior to the then-current Maturity Date (it being agreed that the foregoing notice shall be freely revocable by Borrower so long as Borrower pays Administrative Agent’s out-of-pocket costs in connection therewith) and such revocation shall not impair Borrower’s right to otherwise exercise any applicable Extension Option in accordance with the terms hereof);

-45-


(ii)      No monetary Default or material non-monetary Default which is reasonably likely to have a Material Adverse Effect or Event of Default shall have occurred and be continuing at the time of the delivery of the written extension notice or as of the first day of the relevant Extension Period;
(iii)      if requested by Administrative Agent, Administrative Agent shall have received a title update from the Title Company subject only to Permitted Encumbrances, and showing title to the Property vested in Mortgage Borrower;
(iv)      Borrower shall have paid all out-of-pocket costs and expenses actually incurred by Administrative Agent in connection with such extension, including title and reasonable legal fees and costs;
(v)      Borrower shall have entered into a replacement Interest Rate Protection Agreement for the applicable Extension Period and complied with the provisions of Section 4.1.11 ;
(vi)      the representations and warranties made by Borrower in the Loan Documents or otherwise made by Borrower in connection therewith shall have been true and correct in all material respects on the date on which made and shall also be true and correct in all material respects as if remade upon the exercise of the applicable Extension Option and on the first day of such Extension Period (unless such representations and warranties were made as of a specific date), subject to changes to such representations and warranties required by the passage of time, permitted under the terms of the Loan Documents, or otherwise disclosed to Administrative Agent in writing, so long as such update is not the result of any material breach of a covenant of Borrower under the Loan Documents, and such changes do not result from any Material Adverse Effect or any monetary Default, material non-monetary Default or Event of Default by Borrower;
(vii)      with respect to the Second Extension Option, Borrower shall have paid the Extension Fee on or prior to the First Extension Maturity Date;
(viii)      with respect to the Third Extension Option, Borrower shall have paid the Extension Fee on or prior to the Second Extension Maturity Date;
(ix)      with respect to the Second Extension Option, the Debt Yield as of the First Extension Maturity Date shall be equal to or greater than 7.00%;
(x)      with respect to the Third Extension Option, the Debt Yield as of the Second Extension Maturity Date shall be equal to or greater than 8.00% (the Debt Yield in each of clauses (ix) and (x), the “ Minimum Extension Debt Yield ”);
(xi)      Guarantor continues to comply in all material respects with the covenants contained in the Guaranties, and Guarantor has provided to Administrative Agent a reaffirmation of the same in a form reasonably acceptable to Administrative Agent;

-46-


(xii)      To the extent all or any portion of the Mortgage Loan is outstanding, Administrative Agent shall have received evidence reasonably acceptable to Administrative Agent that the Mortgage Loan has been extended or shall be extended concurrently through a date not earlier than the First Extension Maturity Date, Second Extension Maturity Date, or the Third Extension Maturity Date, as applicable;
(xiii)      Reserved;
(xiv)      with respect to the Second Extension Option and Third Extension Option, (i) written confirmation in the form of an Officer’s Certificate executed by a duly authorized representative of Borrower and Savanna Fund III, stating that the term of the “Partnership” as defined in the Savanna Fund III LPA has been extended for one additional year in accordance with the Savanna Fund III LPA or (ii) an Acceptable Replacement Guarantor be substituted for Savanna Fund III; notwithstanding the foregoing, at any time after the term of the “Partnership” as defined in the Savanna Fund III LPA has expired and Savanna Fund III is in an orderly liquidation, Administrative Agent may request certification on a monthly basis of Savanna Guarantor’s compliance with the covenants set forth in Section 25 of the Recourse Guaranty;
If Borrower is unable to satisfy all of the foregoing conditions within the applicable time frames for each, Administrative Agent shall have no obligation to extend the Maturity Date hereunder.
Notwithstanding anything to the contrary contained herein, Borrower shall have the right to prepay the Loan in an amount equal to the Mezzanine Pro Rata Share of the amount required to achieve the Minimum Extension Debt Yield to exercise the First Extension Option, the Second Extension Option or Third Extension Option, as applicable (any such amount, the “ Optional Extension Prepayment Amount ”), but subject to the applicable terms and conditions of Section 2.4.1 of this Agreement and provided that the Mortgage Pro Rata Share of the applicable Optional Extension Prepayment Amount is also simultaneously prepaid by Mortgage Borrower in accordance with the Mortgage Loan Agreement and provided that Mortgage Borrower has also complied with the applicable requirements of Section 2.4.1 of the Mortgage Loan Agreement (as confirmed by Mortgage Administrative Agent); provided , that Administrative Agent acknowledges and agrees that any optional prepayment in connection with this paragraph shall not result in Borrower being obligated to pay any prepayment penalty, Spread Maintenance Premium or any similar premium or fee. In lieu of payment of the Mezzanine Pro Rata Share of the Optional Extension Prepayment Amount, Borrower may at its option (X) deliver (i) to Administrative Agent, for the benefit of Lenders, a Letter of Credit in the face amount of the Mezzanine Pro Rata Share of the Optional Extension Prepayment Amount to be held as collateral for the Loan (provided that Mortgage Borrower shall have simultaneously delivered to Mortgage Administrative Agent a letter of credit in the face amount of the Mortgage Pro Rata Share of the applicable Optional Extension Prepayment Amount (to be held as collateral for the Mortgage Loan in accordance with the Mortgage Loan Documents), so that the sum of the face amount of such Letter of Credit delivered to Administrative Agent, for the benefit of Lenders, plus the face amount of such letter of credit delivered to Mortgage Administrative Agent shall be equal to the aggregate Optional Extension Prepayment Amount, or (Y) deposit cash in the amount of the Mezzanine Pro Rata Share of Optional Extension Prepayment

-47-


Amount with Administrative Agent (provided that Mortgage Borrower shall have simultaneously deposited into the Cash Collateral Account cash in the aggregate amount of the Mortgage Pro Rata Share of the Optional Extension Prepayment Amount (in accordance with the Mortgage Loan Documents), so that the sum of the amount of cash deposited with Administrative Agent, plus the amount of deposited into the Cash Collateral Account shall be equal to the aggregate Optional Extension Prepayment Amount). If Borrower elects to deliver to Administrative Agent, for the benefit of Lenders a Letter of Credit pursuant to this Section 2.3.2 , then the Letter of Credit provisions set forth in Schedule VIII shall be applicable. Any collateral provided to Administrative Agent pursuant to (X) or (Y) above shall be released to Borrower upon the Property achieving the Minimum Extension Debt Yield for two (2) consecutive calendar quarters.
2.3.3      Late Payment Charge . If any principal, interest or any other sum due under the Loan Documents (other than the payment of principal and any other amounts due on the Maturity Date), is not paid by Borrower on or before the date on which it is due, Borrower shall pay to Administrative Agent, for the benefit of Lenders promptly following written demand an amount equal to the lesser of five percent (5%) of such unpaid sum or the Maximum Legal Rate in order to defray the expense incurred by Administrative Agent in handling and processing such delinquent payment and to compensate Administrative Agent for the loss of the use of such delinquent payment. Any such amount shall be secured by the Pledge Agreement and the other Loan Documents and payable to Administrative Agent, for the benefit of Lenders promptly following written demand.
2.3.4      Method and Place of Payment . (a) Except as otherwise specifically provided herein, all payments and prepayments under this Agreement and the Note shall be made to Administrative Agent, for the benefit of Lenders, not later than 3:00 P.M., New York City time, on the date when due and shall be made in lawful money of the United States of America in immediately available funds at Administrative Agent’s office, and any funds received by Administrative Agent, for the benefit of Lenders after such time shall, for all purposes hereof, be deemed to have been paid on the next succeeding Business Day.
(a)      Whenever any payment to be made hereunder or under any other Loan Document shall be stated to be due on a day which is not a Business Day, the due date thereof shall be the next succeeding Business Day. Whenever any obligation of Borrower, Administrative Agent or Lender is required to be performed hereunder or under any other Loan Document a day which is not a Business Day, such action shall be required to be performed by the next succeeding Business Day.
(b)      All payments required to be made by Borrower hereunder or under the Note or the other Loan Documents shall be made irrespective of, and without deduction for, any setoff, claim or counterclaim and shall be made irrespective of any defense thereto (other than payment in full of the applicable payment).
Section 2.4      Prepayments .
2.4.1      Voluntary Prepayments . (a)  Except as otherwise provided herein, Borrower shall not have the right to prepay the Loan in whole or in part. Provided no Event of Default has occurred and be continuing, prior to the Open Prepayment Date, Borrower may,

-48-


upon not less than ten (10) Business Days’ prior written notice to Administrative Agent (or such shorter period of time as may be permitted by Administrative Agent in its sole discretion), prepay the Debt in whole (but not in part except as otherwise contemplated pursuant to the terms hereof, including, without limitation any tender of any Optional Cash Trap Prepayment Amount or Optional Extension Prepayment Amount or a prepayment pursuant to Section 7.1 hereof) on any date with the payment of the Spread Maintenance Premium (plus Short Interest and Breakage Costs). Provided no Event of Default has occurred and be continuing, from and after the Open Prepayment Date, Borrower may, upon not less than ten (10) Business Days’ prior written notice to Administrative Agent (or such shorter period of time as may be permitted by Administrative Agent in its sole discretion), prepay the Debt in whole (but not in part except as otherwise contemplated pursuant to the terms hereof, including, without limitation any tender of any Optional Cash Trap Prepayment Amount or Optional Extension Prepayment Amount or a prepayment pursuant to Section 7.1 hereof) on any date without payment of the Spread Maintenance Premium or any other fee or premium (other than Short Interest and Breakage Costs, if any); provided that Borrower may revoke such notice of prepayment at any time prior to the prepayment date set forth in such notice (subject to payment of any Breakage Costs and any out-of-pocket costs or expenses actually incurred by Administrative Agent or Lenders in connection with such revocation). Any prepayment received by Administrative Agent on a date other than a Monthly Payment Date shall include interest which would have accrued thereon to the next Monthly Payment Date (“ Short Interest ”) and such amounts (i.e., principal and interest prepaid by Borrower) shall be applied to the Loan on the next Monthly Payment Date. Except as otherwise contemplated pursuant to the terms hereof, the Senior Loan and the Building Loan must be simultaneously repaid in full with any voluntary prepayment of the Loan made pursuant to the foregoing.
(b)     Unless an Event of Default exists or if there is an application of Net Proceeds to the Loan or in connection with the tender of any Optional Cash Trap Prepayment Amount or Optional Extension Prepayment Amount or in connection with a prepayment pursuant to Section 7.1 hereof, all principal payments or prepayments made by Borrower and/or Mortgage Borrower with respect to the Loan, the Building Loan or the Senior Loan shall be applied to amounts owing with respect to the Loan, the Building Loan and the Senior Loan on a pro rata basis (based on the then-outstanding principal amounts of the Loan, the Building Loan and the Senior Loan) in accordance with the Loan Documents, the Building Loan Documents and the Mortgage Loan Documents, respectively, and Borrower shall cause Mortgage Borrower to make the applicable pro rata payment of the Mortgage Loan in accordance with the Mortgage Loan Documents. Without limitation of any other provisions of the Loan Documents, Borrower shall not permit any payment to be made to the Mortgage Lenders (whether principal, interest or otherwise) in respect of the Mortgage Loan at any time that an Event of Default exists or would exist upon the making of such payment unless the Borrower is concurrently repaying the Debt in full.
2.4.2      Mandatory Prepayments .
(a)      In the event of any Liquidation Event, Borrower shall cause the related Net Liquidation Proceeds After Debt Service to be deposited with Administrative Agent, which proceeds shall then be applied by Administrative Agent on the next Business Day towards the amount necessary to fully repay the Loan, including all interest accrued to the date of prepayment

-49-


and any other sums then due and payable by Borrower to Administrative Agent. Any amounts of Net Liquidation Proceeds After Debt Service in excess of the Debt shall be paid to Borrower within fifteen (15) Business Days of receipt by Administrative Agent.
(b)      Borrower shall (or shall cause Mortgage Borrower to) notify Administrative Agent of any Liquidation Event not later than three (3) Business Days following the first date on which Borrower (or Mortgage Borrower) has knowledge of such event. Borrower shall be deemed to have knowledge of (i) a sale (other than a foreclosure sale) of the Property on the date on which a contract of sale for such sale is entered into, and a foreclosure sale, on the date notice of such foreclosure sale is given, and (ii) a refinancing of the Property, on the date on which Borrower delivers to Administrative Agent notice of such refinancing in accordance with Section 2.4.1(a). The provisions of this Section 2.4.2 shall not be construed to contravene in any manner the restrictions and other provisions regarding refinancing of the Mortgage Loan or Transfer of the Property set forth in this Agreement and the other Loan Documents.
2.4.3      Spread Maintenance Premium Payment . Other than as set forth in Section 2.3.2 , Section 2.4.2 or the definition of Cash Trap Period, payment of all or any part of the principal of the Loan by Borrower, a purchaser at foreclosure or any other Person prior to the Open Prepayment Date (whether or not an Event of Default exists) shall require payment of the Spread Maintenance Premium.
Section 2.5      Regulatory Change; Taxes .
2.5.1      Increased Costs . If any Regulatory Change shall: (i) impose, modify or deem applicable any reserve, special deposit, compulsory loan, insurance charge or similar requirement against assets of, deposits with or for the account of, or credit extended or participated in by, any Lender or any company Controlling such Lender; (ii) subject any Lender or any company Controlling such Lender to any Taxes (other than (A) Indemnified Taxes, (B) Taxes described in clauses (b) through (d) of the definition of Excluded Taxes and (C) Connection Income Taxes) on its loans, loan principal, letters of credit, commitments, or other obligations or its deposits, reserves, other liabilities or capital attributable thereto; or (iii) any other condition, cost or expense (other than Taxes) affecting this Agreement or the portion of the Loan made by such Lender or participation therein; and the result of any of the foregoing shall be to increase the cost to such Lender or any company Controlling such Lender of making, converting to, continuing or maintaining any Loan or of maintaining its obligation to make such Loan, or to reduce the amount of any sum received or receivable by such Lender or any company Controlling such Lender (whether of principal, interest or any other amount) (such increases in cost and reductions in amounts receivable being herein called “ Increased Costs ”), then, upon request of such Lender, and provided that Lender requests the same of similarly situated borrowers, Borrower will pay to such Lender or any company Controlling such Lender, as the case may be, such additional amount or amounts as will compensate such Lender for such Increased Costs.
2.5.2      Payment Free of Taxes . Any and all payments by or on account of any obligation of Borrower under any Loan Document shall be made without deduction or withholding for any Taxes, except as required by applicable law. If any applicable law (as determined in the good faith discretion of Administrative Agent) requires the deduction or

-50-


withholding of any Tax from any such payment, then Borrower shall be entitled to make such deduction or withholding and shall timely pay the full amount deducted or withheld to the relevant Governmental Authority in accordance with applicable law and, if such Tax is an Indemnified Tax, then the sum payable by Borrower shall be increased as necessary so that after such deduction or withholding has been made (including such deductions and withholdings applicable to additional sums payable under this Section 2.5.2 ) each Lender receives an amount equal to the sum it would have received had no such deduction or withholding been made.
2.5.3      Payment of Other Taxes by Borrower . Borrower shall timely pay to the relevant Governmental Authority in accordance with applicable law, or at the option of Lender timely reimburse it for the payment of, any present or future stamp or documentary taxes or other excise taxes, charges, or similar levies which arise from any payment made hereunder, or from the execution, delivery or registration of, or otherwise with respect to, this Agreement, the other Loan Documents, or the Loan, except any such Taxes that are Other Connection Taxes imposed with respect to an assignment (other than an assignment made pursuant to Section 2.8.2 ) (hereinafter referred to as “ Other Taxes ”).
2.5.4      Indemnification by Borrower . Borrower shall indemnify each Recipient, within ten (10) days after demand therefor, for the full amount of any Indemnified Taxes (including Indemnified Taxes imposed or asserted on or attributable to amounts payable under this Section 2.5.4 ) payable or paid by such Recipient or required to be withheld or deducted from a payment such Recipient and any reasonable expenses arising therefrom or with respect thereto, whether or not such Indemnified Taxes were correctly or legally imposed or asserted by the relevant Governmental Authority. A certificate as to the amount of such payment or liability delivered to Borrower by Administrative Agent on its own behalf or on behalf of a Lender shall be conclusive absent manifest error.
2.5.5      Evidence of Payments . As soon as practicable after any payment of Taxes by Borrower to a Governmental Authority pursuant to this Section 2.5 , Borrower shall deliver to Administrative Agent the original or a certified copy of a receipt issued by such Governmental Authority evidencing such payment, a copy of the return reporting such payment or other evidence of such payment reasonably satisfactory to Administrative Agent.
2.5.6      Status of Lenders .
(a)      Any Lender that is entitled to an exemption from or reduction of withholding Tax with respect to payments made under any Loan Document shall deliver to Borrower and Administrative Agent, at the time or times reasonably requested by Borrower or Administrative Agent, such properly completed and executed documentation reasonably requested by Borrower or Administrative Agent as will permit such payments to be made without withholding or at a reduced rate of withholding. In addition, a Lender, if reasonably requested by Borrower or Administrative Agent, shall deliver such other documentation prescribed by applicable law or reasonably requested by Borrower or Administrative Agent as will enable Borrower or Administrative Agent to determine whether or not such Lender is subject to backup withholding or information reporting requirements. Notwithstanding anything to the contrary in the preceding two sentences, the completion, execution and submission of such documentation (other than such

-51-


documentation set forth in Sections 2.5.6(b)(i) , (b)(ii) and (b)(iv) below) shall not be required if in Lender’s reasonable judgment such completion, execution or submission would subject such Lender to any material unreimbursed cost or expense or would materially prejudice the legal or commercial position of such Lender.
(b)      Without limiting the generality of the foregoing,
(i)      if a Lender is a U.S. Person, such Lender shall deliver to Borrower and Administrative Agent on or prior to the date on which such Lender becomes a Lender under this Agreement (and from time to time thereafter upon the reasonable request of Borrower or Administrative Agent), executed copies of IRS Form W-9 certifying that such Lender is exempt from U.S. federal backup withholding tax;
(ii)      any Foreign Lender shall, to the extent it is legally entitled to do so, deliver to Borrower and Administrative Agent (in such number of copies as shall be requested by the recipient) on or prior to the date on which such Foreign Lender becomes a Lender under this Agreement (and from time to time thereafter upon the reasonable request of the Borrower or Administrative Agent), whichever of the following is applicable:
(A)      in the case of a Foreign Lender claiming the benefits of an income tax treaty to which the United States is a party (x) with respect to payments of interest under any Loan Document, executed copies of IRS Form W-8BEN or IRS Form W-8BEN-E establishing an exemption from, or reduction of, U.S. federal withholding Tax pursuant to the “interest” article of such tax treaty and (y) with respect to any other applicable payments under any Loan Document, IRS Form W-8BEN or IRS Form W-8BEN-E establishing an exemption from, or reduction of, U.S. federal withholding Tax pursuant to the “business profits” or “other income” article of such tax treaty;
(B)      executed copies of IRS Form W-8ECI;
(C)      in the case of a Foreign Lender claiming the benefits of the exemption for portfolio interest under Section 881(c) of the Code, (x) a certificate substantially in the form of Exhibit B-1 to the effect that such Foreign Lender is not a “bank” within the meaning of Section 881(c)(3)(A) of the Code, a “10 percent shareholder” of the Borrower within the meaning of Section 881(c)(3)(B) of the Code, or a “controlled foreign corporation” described in Section 881(c)(3)(C) of the Code (a “ U.S. Tax Compliance Certificate ”) and (y) executed copies of IRS Form W-8BEN or IRS Form W-8BEN-E; or
(D)      to the extent a Foreign Lender is not the beneficial owner, executed copies of IRS Form W-8IMY, accompanied by IRS Form W-8ECI, IRS Form W-8BEN, IRS Form W-8BEN-E, a U.S. Tax Compliance Certificate substantially in the form of Exhibit B-2 or Exhibit B-3 , IRS Form W-9, and/or other certification documents from each beneficial owner, as applicable; provided that if the Foreign Lender is a partnership and one or more direct or indirect partners of

-52-


such Foreign Lender are claiming the portfolio interest exemption, such Foreign Lender may provide a U.S. Tax Compliance Certificate substantially in the form of Exhibit B-4 on behalf of each such direct and indirect partner;
(iii)      any Foreign Lender shall, to the extent it is legally entitled to do so, deliver to Borrower and Administrative Agent (in such number of copies as shall be requested by the recipient) on or prior to the date on which such Foreign Lender becomes Administrative Agent under this Agreement (and from time to time thereafter upon the reasonable request of Borrower or Administrative Agent), executed copies of any other form prescribed by applicable law as a basis for claiming exemption from or a reduction in U.S. federal withholding Tax, duly completed, together with such supplementary documentation as may be prescribed by applicable law to permit Borrower or Administrative Agent to determine the withholding or deduction required to be made; and
(iv)      if a payment made to a Lender under any Loan Document would be subject to U.S. federal withholding Tax imposed by FATCA if such Lender were to fail to comply with the applicable reporting requirements of FATCA (including those contained in Section 1471(b) or 1472(b) of the Code, as applicable), such Lender shall deliver to Borrower and Administrative Agent at the time or times prescribed by law and at such time or times reasonably requested by Borrower or Administrative Agent such documentation prescribed by applicable law (including as prescribed by Section 1471(b)(3)(C)(i) of the Code) and such additional documentation reasonably requested by Borrower or Administrative Agent as may be necessary for Borrower and Administrative Agent to comply with their obligations under FATCA and to determine that such Lender has complied with such Lender’s obligations under FATCA or to determine the amount to deduct and withhold from such payment. Solely for purposes of this clause (iv), “ FATCA ” shall include any amendments made to FATCA after the date of this Agreement.
Each Lender agrees that if any form or certification it previously delivered expires or becomes obsolete or inaccurate in any respect, it shall update such form or certification or promptly notify Borrower and Administrative Agent in writing of its legal inability to do so.
2.5.7      Treatment of Certain Refunds . If any party determines, in its sole discretion exercised in good faith, that it has received a refund of any Taxes as to which it has been indemnified pursuant to this Section 2.5 (including by the payment of additional amounts pursuant to this Section 2.5 ), it shall pay to the indemnifying party an amount equal to such refund (but only to the extent of indemnity payments made under this Section with respect to the Taxes giving rise to such refund), net of all out-of-pocket expenses (including Taxes) of such indemnified party incurred in connection with obtaining such refund and without interest (other than any interest paid by the relevant Governmental Authority with respect to such refund). Such indemnifying party, upon the request of such indemnified party, shall repay to such indemnified party the amount paid over pursuant to this Section 2.5.7 (plus any penalties, interest or other charges imposed by the relevant Governmental Authority) to the extent that such indemnified party is required to repay such refund to such Governmental Authority. Notwithstanding anything to the contrary in this Section 2.5.7 , in no event will the indemnified

-53-


party be required to pay any amount to an indemnifying party pursuant to this Section 2.5.7 the payment of which would place the indemnified party in a less favorable net after-Tax position than the indemnified party would have been in if the Tax subject to indemnification and giving rise to such refund had not been deducted, withheld or otherwise imposed and the indemnification payments or additional amounts with respect to such Tax had never been paid. This paragraph shall not be construed to require any indemnified party to make available its Tax returns (or any other information relating to its Taxes that it deems confidential) to the indemnifying party or any other Person.
2.5.8      Survival . Each party’s obligations under this Section 2.5 shall survive the resignation or replacement of Administrative Agent or any assignment of rights by, or the replacement of, a Lender, the termination of the commitments and the repayment, satisfaction or discharge of all obligations under any Loan Document.
2.5.9      Defined Terms . For purposes of this Section 2.5 , the term “applicable law” shall include FATCA.
2.5.10      Indemnification by the Lenders . Each Lender shall severally indemnify Administrative Agent, within 10 days after demand therefor, for (i) any Indemnified Taxes attributable to such Lender (but only to the extent that the Borrower has not already indemnified Administrative Agent for such Indemnified Taxes and without limiting the obligation of the Borrower to do so), (ii) any Taxes attributable to such Lender’s failure to comply with the provisions of Section 9.4(a) relating to the maintenance of a Participant Register and (iii) any Excluded Taxes attributable to such Lender, in each case, that are payable or paid by Administrative Agent in connection with any Loan Document, and any reasonable expenses arising therefrom or with respect thereto, whether or not such Taxes were correctly or legally imposed or asserted by the relevant Governmental Authority. A certificate as to the amount of such payment or liability delivered to any Lender by Administrative Agent shall be conclusive absent manifest error. Each Lender hereby authorizes Administrative Agent to set off and apply any and all amounts at any time owing to such Lender under any Loan Document or otherwise payable by Administrative Agent to the Lender from any other source against any amount due to Administrative Agent under this Section 2.5.10 .
Section 2.6      Working Capital; Advances .
2.6.1      Working Capital . On the date hereof, Lenders have made their Pro Rata Shares in an amount equal to $1,650,000.00 into the Working Capital Account.  Amounts deposited pursuant to this Section 2.6.1 are referred to herein as the “ Working Capital Funds ”. Borrower shall cause Mortgage Borrower to use the Working Capital Funds for Property related costs and expenses and Borrower shall not permit Mortgage Borrower to declare or pay any dividends or otherwise declare or make any distribution to Mortgage Borrower’s members from such Working Capital Funds. The Working Capital Account will be under the sole control and dominion of Mortgage Administrative Agent, for the benefit of Mortgage Lenders with respect to any Working Capital Future Advances made by the Mortgage Lenders, and for the benefit of Lenders with respect to any Working Capital Advance made by Lenders, except, so long as no Event of Default is continuing, Borrower shall have the right to make withdrawals from the

-54-


Working Capital Account. Upon the occurrence and during the continuance of an Event of Default, Borrower shall no longer have any right to withdraw Working Capital Funds from the Working Capital Account, as further set forth in the Working Capital Account Agreement, and Administrative Agent may apply any Working Capital Funds on deposit in the Working Capital Account to the payment of the Debt in such order, proportion and priority as Administrative Agent may determine in its sole and absolute discretion. Borrower shall pay for all expenses of opening and maintaining the Working Capital Account. 
At or prior to the Closing Date, Borrower shall cause Mortgage Borrower to establish and maintain the Working Capital Account as a segregated Eligible Account pursuant to the terms of the Working Capital Account Agreement with the Working Capital Bank, which such Working Capital Account shall be in trust for the benefit of Lenders and shall be under the sole dominion and control of Mortgage Borrower prior to an Event of Default and thereafter, Mortgage Administrative Agent, for the benefit of Lenders. Subject to the rights of Mortgage Lender under the Mortgage Loan, Borrower shall cause Mortgage Borrower to (i) grant to Administrative Agent, for the benefit of Lenders a first priority security interest in the Working Capital Account and all deposits at any time contained therein and the proceeds thereof, and (ii) will take all actions necessary to maintain in favor of Administrative Agent, for the benefit of Lenders a perfected first priority security interest in the Working Capital Account, including, without limitation, the execution of any account control agreement required by Administrative Agent. Borrower shall not and shall not permit Mortgage Borrower to further pledge, assign or grant any security interest in the Working Capital Account or the monies deposited therein or permit any lien or encumbrance to attach thereto, or any levy to be made thereon, or any UCC-1 financing statements, except those naming Administrative Agent and Mortgage Administrative Agent, for the benefit of Mortgage Lenders and Lenders, as applicable, as the secured party, to be filed with respect thereto. Borrower will not and shall not permit Mortgage Borrower to in any way alter, modify or close the Working Capital Account and will notify Administrative Agent of the account number thereof. Prior to an Event of Default, Mortgage Borrower shall have the sole right to make withdrawals from the Working Capital Account and all costs and expenses for establishing and maintaining the Working Capital Account shall be paid by Mortgage Borrower. After an Event of Default, Mortgage Administrative Agent, for the benefit of Mortgage Lenders and Lenders shall have the sole right to make withdrawals from the Working Capital Account and all costs and expenses for establishing and maintaining the Clearing Account shall be paid by Mortgage Borrower. All monies now or hereafter deposited into the Working Capital Account shall be deemed additional security for the Debt. Borrower shall indemnify Administrative Agent, each Lender and bank and hold Administrative Agent, each Lender and Working Capital Bank harmless from and against any and all actions, suits, claims, demands, liabilities, losses, damages, obligations and costs and expenses (including litigation costs and reasonable attorneys’ fees and expenses) arising from or in any way connected with the Working Capital Account, such Working Capital Account Agreement or the performance of the obligations for which the Working Capital Account was established (unless arising from the gross negligence or willful misconduct of Administrative Agent, any Lender or Clearing Bank, as applicable).

-55-


2.6.2      Conditions of Future Advances (Capital Expenditures), Future Advances (TI/LCs) and Future Advances (Interest/Carry Shortfall).
The obligation of Lenders to make their Pro Rata Shares of any Future Advance (Capital Expenditures), Future Advance (TI/LCs) and/or Future Advance (Interest/Carry Shortfall) hereunder shall be subject to the following conditions precedent, all of which conditions precedent must be satisfied, to the extent applicable (and remain satisfied as of the date the Future Advance is actually made by Lenders) prior to Lenders making their Pro Rata Shares of any such Future Advance (Capital Expenditures), Future Advance (TI/LCs) and/or Future Advance (Interest/Carry Shortfall) under this Agreement and, upon satisfaction of the following conditions precedent, Lenders shall be obligated to make their Pro Rata Shares of any applicable Future Advance (Capital Expenditures), Future Advance (TI/LCs) and/or Future Advance (Interest/Carry Shortfall).
(a)      General Conditions :
(i)      Borrower’s Requisition . Borrower has delivered to Administrative Agent Borrower’s Requisition (and all deliverables required to be provided in connection therewith pursuant to this Article 2 ), which shall constitute Borrower’s representation and warranty to Administrative Agent that: (a) all costs for the payment of which Administrative Agent has previously advanced funds have in fact been paid, (b) all the representations and warranties contained in Article III of this Agreement continue to be true and correct in all material respects, except to the extent such representation or warranty was made as of a specified earlier date, in which case such representation shall be true and correct in all material respects as of the date made, subject to changes to such representations and warranties disclosed to Administrative Agent in writing, so long as such update is not the result of any breach of a covenant of Borrower under the Loan Documents, and such changes do not result from any monetary Default, material non-monetary Default which is reasonably likely to have a Material Adverse Effect or Event of Default by Borrower, and (c) no monetary Default, material non-monetary Default or Event of Default shall have occurred and be continuing (unless such monetary Default or material non-monetary Default would be cured by funding the applicable Future Advance (Capital Expenditures), Future Advance (TI/LCs) and/or Future Advance (Interest/Carry Shortfall)).
(ii)      No Liens . The Collateral and Property shall be free from all Liens (other than Permitted Encumbrances).
(iii)      Proceedings . There shall be no governmental actions, proceedings or investigations pending or threatened in writing against or filed by Borrower or Mortgage Borrower which is reasonably likely to have a Material Adverse Effect.
(iv)      No Default . On and prior to the date of such Future Advance (Capital Expenditures) or Future Advance (TI/LCs), there shall exist no monetary Default, material non-monetary Default which is reasonably likely to have a Material Adverse Effect or Event of Default (unless such monetary Default or such material non‑monetary Default would be cured by funding the applicable Future Advance (Capital Expenditures), Future Advance (TI/LCs) and/or Future Advance (Interest/Carry Shortfall)).

-56-


(v)      Available Commitments . Such Future Advance, together with all other Future Advances previously made hereunder, shall not exceed the aggregate remaining Commitments.
(vi)      Mortgage Loan . Mortgage Lender shall have funded Mortgage Lender’s Percentage of such Future Advance; provided , however , if Mortgage Lender shall have failed to fund Mortgage Lender’s Percentage of any Future Advance, and Mortgage Borrower has satisfied all conditions precedent to such Future Advance under the Mortgage Loan Agreement, such that Mortgage Lender has become a “Defaulting Lender” (as defined in the Mortgage Loan Agreement) (a “ Mortgage Funding Failure ”), Borrower shall be permitted to “fund” Mortgage Lender’s Percentage of any such Future Advance (i.e., Borrower shall provide to Administrative Agent evidence acceptable to Administrative Agent that it has sufficient funds on deposit to be allocated to the Approved Costs which were to be paid by Mortgage Lender’s Percentage of such Future Advance) provided that (x) no Event of Default is continuing, (y) Mortgage Borrower is actively pursuing its remedies against such Defaulting Lender (as defined in the Mortgage Loan Agreement) in accordance with the terms of the Mortgage Loan Agreement, including, without limitation, Section 7.1 thereof and (z) Borrower delivers to Administrative Agent, for the benefit of Lenders, a Letter of Credit in the face amount of the remaining Future Funding Amount (as defined in the Mortgage Loan Agreement) or deposits with Administrative Agent cash in the amount of the remaining Future Funding Amount (as defined in the Mortgage Loan Agreement) (any such collateral, the “ Funding Collateral ”). If Borrower elects to deliver to Administrative Agent, for the benefit of Lenders, a Letter of Credit pursuant to this subclause, then the Letter of Credit provisions set forth in Schedule VIII shall be applicable. Following any Mortgage Funding Failure, if each of clause (x), (y) and (z) above has been satisfied by Mortgage Borrower or Borrower, as applicable, and Borrower has not funded Mortgage Lender’s Percentage of such Future Advance by the date that is two (2) Business Days after the date Mortgage Lender was required to fund, then Administrative Agent may draw upon the Funding Collateral in an amount equal to Mortgage Lender’s Percentage of such Future Advance and shall release the same to Borrower (to be applied by Borrower and/or Mortgage Borrower in accordance with its Requisition). If Borrower or Mortgage Lender funds Mortgage Lender’s Percentage of any Future Advance (to be applied by Borrower and/or Mortgage Borrower in accordance with its Requisition), so long as no Event of Default is continuing, Administrative Agent will release a corresponding amount of the Funding Collateral to Borrower (to be used by Borrower as determined by Borrower).
(vii)      Payment of Fees . Administrative Agent shall have received payment for any and all reasonable fees payable with respect to the applicable Future Advance, including, but not limited to, solely with respect to the Future Advance (Capital Expenditures) and Future Advance (TI/LCs),the reasonable fees and out-of-pocket expenses of the Construction Consultant (which shall not exceed $2,000 per draw (together with amounts paid for any concurrent draw made under the Mortgage Loan), if any, relating to the Loan, and all other reasonable, out-of-pocket fees, costs and expenses (including, without limitation, reasonably attorneys’ fees) of Administrative Agent relating to the Loan to the extent then due and payable.

-57-


(viii)      Materials . Solely with respect to the Future Advance (Capital Expenditures) and Future Advance (TI/LCs), with respect to any materials stored on the Property, the Lenders shall not be required to make Future Advances for the costs incurred by Borrower or Mortgage Borrower in connection therewith, except to the extent (x) Administrative Agent has received evidence that such materials are covered by the insurance policies required by this Agreement and are identified and protected against loss, theft and damage in a manner acceptable to Administrative Agent and the Construction Consultant, (y) Administrative Agent shall have received bills of sale and other documentation evidencing payment in full of such materials, Borrowers’ ownership thereof following payment of such amount, and the release of any right, title or lien in respect thereof by any vendor after payment of such amount. The costs of any such materials stored at the Property, at any one time, for which Borrower shall have received (or is then requesting) a Future Advance (together with any Future Advance (as defined in the Building Loan) or any Future Advance (as defined in the Senior Loan)), shall not exceed $1,000,000 in the aggregate.
(b)      No Damage . The Improvements shall not have been damaged by fire, explosion, accident, flood or other casualty, unless Administrative Agent shall be satisfied, in the reasonable judgment of Administrative Agent, that sufficient insurance proceeds (net of any deductible) together with any Future Advance Proceeds available for such purpose or other funds provided by Borrower or Mortgage Borrower will be available to effect the Restoration thereof prior to the Initial Maturity Date based upon Administrative Agent’s reasonable estimate of the time necessary to perform such Restoration.
(c)      Continuation of Title Insurance Policy . Solely with respect to the Future Advance (Capital Expenditures) and Future Advance (TI/LCs) (excluding Future Advances (TI/LCs) funded to pay Leasing Commissions, if required by Administrative A g ent, Borrower shall have caused Mortgage Borrower to deliver to Administrative Agent a “title continuation” reasonably acceptable to Administrative Agent dated as of the date of each Future Advance, which shall show the Mortgage as a lien on the Property subject only to Permitted Encumbrances.
(d)      Licenses and Permits : Solely with respect to the Future Advance (Capital Expenditures) and Future Advance (TI/LCs), Borrower shall have delivered (or caused to be delivered) to Administrative Agent evidence that (a) any and all building or other permits (if any) required for the continuous construction of the applicable portion of the Capital Expenditures Work or Tenant Improvement Work that is the subject of such Future Advance in accordance with all Legal Requirements have been obtained (and that any and all notices required by any Governmental Authority or by any applicable Legal Requirement to be filed prior to commencement of construction of the improvements contemplated by the Capital Expenditures Work or applicable Lease shall have been filed), and (b) all other material Governmental Approvals, third-party approvals and easements necessary for the construction and completion of the applicable portion of the Capital Expenditures Work or Tenant Improvement Work that is the subject of such Future Advance have been obtained and are in full force and effect.

-58-


(e)      Plans : Solely with respect to the Future Advance (Capital Expenditures) and Future Advance (TI/LCs) (excluding Future Advances (TI/LCs) funded to pay Leasing Commissions), Administrative Agent shall have received a complete set of any plans and specifications that were prepared for any (A) Capital Expenditures Work and (B) Tenant Improvement Work in each case having a cost in excess of $1,000,000.00, and Administrative Agent shall have approved the same, such approval not to be unreasonably withheld, delayed or conditioned; provided, however, with respect to Tenant Improvement Work, Administrative Agent’s approval under this clause (e) shall be required only to the extent such Tenant Improvement Work is pursuant to a Major Lease which has not been previously approved by Administrative Agent and such approval is required under this Agreement.
(f)      Contracts : Solely with respect to the Future Advance (Capital Expenditures) and Future Advance (TI/LCs) (excluding Future Advances (TI/LCs) funded to pay Leasing Commissions), Borrower shall have delivered (or caused to be delivered) to Administrative Agent the general contract for any (A) Capital Expenditures Work and (B) any Tenant Improvement Work in each case having a cost in excess of $1,000,000.00, together with such other Contracts as may be reasonably requested by Administrative Agent, and Administrative Agent shall have approved the same, such approval not to be unreasonably withheld, delayed or conditioned; provided, however, with respect to Tenant Improvement Work, Administrative Agent’s approval under this clause (f) shall be required only to the extent such Tenant Improvement Work is pursuant to a Major Lease which has not been previously approved by Administrative Agent and such approval is required under this Agreement.
(g)      Budget : Solely with respect to the Future Advance (Capital Expenditures) and Future Advance (TI/LCs), (excluding Future Advances (TI/LCs) funded to pay Leasing Commissions), Borrower shall have delivered (or caused to be delivered) to Administrative Agent a budget for such Capital Expenditures Work and for such Tenant Improvement Work reflecting the anticipated cost for performing such Capital Expenditures Work and Tenant Improvement Work, and Administrative Agent shall have approved the same, such approval not to be unreasonably withheld, delayed or conditioned (each such budget, as approved by Administrative Agent, a “ Project Budget ”); provided that the initial Project Budget for the Capital Expenditures Work attached hereto as Schedule IX is hereby approved by Administrative Agent.
(h)      Inspection : Solely with respect to the Future Advance (Capital Expenditures) and Future Advance (TI/LCs) (excluding Future Advances (TI/LCs) funded to pay Leasing Commissions) which disbursement will exceed $100,000, in connection with any Tenant Improvement Work or Capital Expenditures Work, Administrative Agent, at its option, may require an inspection of the applicable portion of the Property at Borrower’s expense prior to making a Future Advance in order to verify completion of improvements constituting the applicable Capital Expenditures Work, Tenant Improvement Work or other TI/LC Costs, as the case may be.
(i)      Lease Approval; Capital Expenditures : Solely with respect to the Future Advance (Capital Expenditures) and Future Advance (TI/LCs), Administrative Agent shall have approved (i) the Lease that is the subject of a Future Advance (TI/LCs) to the extent that Administrative Agent’s approval is required under the terms of the Loan Documents and (ii) the

-59-


TI/LC Costs that are the subject of a Future Advance, unless such TI/LC Costs are either (A) specifically set forth in such Lease approved (or deemed approved) by Administrative Agent pursuant to this Agreement or (B) not specifically set forth in a Lease approved (or deemed approved) by Administrative Agent pursuant to this Agreement, but are capped at a specific amount set forth in such approved Lease or are in accordance with the Minimum Leasing Parameters. With respect to advances of the Future Advances (Capital Expenditures), Administrative Agent shall have approved the applicable Capital Expenditures Work or the Capital Expenditures Work shall be included in any Approved Annual Budget. Notwithstanding the foregoing, Administrative Agent shall not be obligated to make or cause to be made any Future Advance of Leasing Commissions until the executed Lease and the agreement pursuant to which any Leasing Commission is due are each delivered to Administrative Agent and such Lease (to the extent that Administrative Agent’s consent is required for such Lease under the terms of the Loan Documents) and such agreement are approved by Administrative Agent (to the extent that Administrative Agent’s approval is required for such agreement under the terms of the Loan Documents).
(j)      Tenant Allowances : Solely with respect to the Future Advance (TI/LCs), in connection with any Tenant Improvement Work performed or to be performed by the tenant under a Lease and Mortgage Borrower’s obligation thereunder is to pay to such tenant an allowance (all as more specifically provided for in each Lease), Borrower shall cause Mortgage Borrower to (i) provide Administrative Agent with the Lease and identify the section of such Lease detailing the requirements and conditions to Mortgage Borrower’s obligation to fund under such Lease (together with evidence reasonably satisfactory to Administrative Agent that each of the material conditions has been satisfied), (ii) to the extent Mortgage Borrower has the right to receive or request the same under such Lease, Borrower shall cause Mortgage Borrower to deliver a budget for such Tenant Improvement Work to Administrative Agent prior to making the first request of a Future Advance with respect to the applicable Tenant Improvement Allowance, together with the plans and specifications for such work, (iii) certify in writing that the conditions have been satisfied and that Mortgage Borrower is obligated to disburse the funds to the Tenant under such Lease, (iv) use commercially reasonable efforts to cause Mortgage Borrower to cause Tenant to perform all Tenant Improvement Work that is the subject of the Tenant Improvement Allowance in accordance with the Lease and (v) deliver to Administrative Agent, concurrently with the request for any Future Advance, all of the materials delivered by the applicable tenant to Mortgage Borrower in connection with such Future Advance.
(k)      Final Payment : Solely with respect to the Future Advance (Capital Expenditures) and Future Advance (TI/LCs), in connection with a Future Advance for the final amounts to pay for Tenant Improvement Work or Capital Expenditures Work performed or to be performed by or on behalf of Mortgage Borrower or by the Tenant with respect to any such Lease, Borrower shall cause Mortgage Borrower to provide Administrative Agent with (A) evidence of payment of all costs and expenses of completing the applicable work and a termination of any existing notices of commencement with respect to such work, (B) a copy of any and all applicable permits, if any, required by Legal Requirements, with respect to any such Tenant Improvements, so as to allow the Tenant to occupy the leased premises as contemplated under such Lease, and (C) an original estoppel certificate in form and substance reasonably acceptable to Administrative Agent executed by the applicable tenant under the Lease for which such request relates, stating

-60-


that such tenant has accepted the subject tenant improvements and that there are no defaults known to the tenant under such Lease.
(l)      Serial Mortgage : Borrower shall deliver (or cause to be delivered) to Administrative Agent copies of all documents delivered to Mortgage Administrative Agent under Sections 2.6.2(l) and (m) of the Mortgage Loan Agreement as and when such documents are delivered to Administrative Agent.
(m)      Reserved.
2.6.3      Construction . Borrower shall cause Mortgage Borrower to (a) construct and complete all Tenant Improvement Work within the time period and as required by, and in accordance with, the Leases, (b) construct all Capital Expenditures Work, (c) pay for or caused to be paid for and obtained all permits, licenses and approvals required by any Governmental Authority with respect to such Tenant Improvement Work and Capital Expenditures Work substantially in accordance with the schedule set forth in any Project Budget submitted to Administrative Agent in connection with any Future Advance, (d) cause all such Tenant Improvement Work and Capital Expenditures Work to be performed in a good and workmanlike manner, in compliance with all Legal Requirements in all material respects (including any and all applicable life safety laws, environmental laws and the ADA); (e) cause all Tenant Improvement Work and Capital Expenditures Work to be performed in a manner consistent with any plans and specifications therefor; (f) cause all Tenant Improvement Work and Capital Expenditures Work to be performed without regard to any deficiency of the amount of the proceeds of the Loan available and allocated for such Tenant Improvement Work and/or Capital Expenditures Work; and (g) cause all such Tenant Improvement Work and Capital Expenditures Work to be constructed, installed and completed as applicable, free and clear of all Liens (except for Permitted Encumbrances).
2.6.4      Funding Amount . The parties hereto acknowledge and agree that each Borrower’s Requisition (to Administrative Agent and Mortgage Administrative Agent) shall be in the aggregate amount of the costs of Capital Expenditures Work and TI/LC Costs (collectively the “ Approved Costs ”) being paid by Mortgage Borrower. The parties further acknowledge and agree as follows with respect to such Approved Costs: (i) the portion of Approved Costs each Lender is required to fund as a Future Advance pursuant to this Section 2.6 is such Lender’s Pro Rata Share of the Lender’s Percentage of such Approved Costs, (ii) the portion thereof that each Mortgage Lender is required to fund as a Future Advance (as defined in the Building Loan Agreement) pursuant to Section 2.6 of the Building Loan Agreement is such Mortgage Lender’s Pro Rata Share of the Percentage of the Approved Costs and (iii) the portion thereof that Mortgage Lender is required to fund as a Future Advance (as defined in the Senior Loan Agreement) pursuant to Section 2.6 of the Senior Loan Agreement is such Mortgage Lender’s Percentage of the Approved Costs. For avoidance of doubt and by way of example only, in the event of a Borrower’s Requisition in which the Approved Costs are $1,000,000.00 and all conditions in this Agreement, the Building Loan Agreement and Mortgage Loan Agreement have been satisfied, then (A) the maximum aggregate amount of the Future Advance (as defined in each of the Senior Loan Agreement and Building Loan

-61-


Agreement) shall be $750,000.00 and (B) the maximum amount of the Future Advance to be made by the Lenders shall be $250,000.00. Borrower shall also be obligated to fund any cost overruns or other amount which needs to be expended in order to enable Borrower to satisfy its obligation under Section 2.6.3 hereof to complete construction of Capital Expenditures Work and Tenant Improvement Work. At any time and from time to time during the term of the Loan, with respect to the aggregate Capital Expenditures Work and Tenant Improvement Work, if Administrative Agent determines in its reasonable discretion that the estimated costs and expenses required to complete and pay for such aggregate Capital Expenditures Work and Tenant Improvement Work exceeds the sum of (a) the projected cost reflected on any approved budgets for such work and (b) the remaining unadvanced amounts available to be advanced under the Loan, the Building Loan and the Mortgage Loan for the applicable costs, Administrative Agent shall have the right (but not the obligation) to notify Borrower in writing that, the cost of completing such Capital Expenditures Work and Tenant Improvement Work exceeds the approved budgets (the amount of any such deficiency, being herein referred to as the “ Shortfall ”). If Administrative Agent at any time shall deliver any such notice to Borrower, Borrower shall within ten (10) Business Days of delivery thereof, deposit with Mortgage Administrative Agent (with evidence of the same to Administrative Agent) an amount equal to such Shortfall. For the avoidance of doubt, a Shortfall may exist whether or not Administrative Agent delivers a notice to Borrower; provided, that Mortgage Borrower’s obligation to make a deposit with Administrative Agent is conditioned on Administrative Agent sending a notice pursuant to the terms of this Section. Administrative Agent shall have no obligation to make further Future Advances until the sums required to be deposited with Mortgage Administrative Agent have been exhausted and, in any such case, the Loan is back “in balance.”
2.6.5      Quality of Work . No Future Advance or any portion thereof shall be made with respect to defective work or to any Person that has performed work that is defective and that has not been cured, as confirmed by the report of the Construction Consultant, if any, except to the extent that such Future Advance is for the remediation of the defective work. Additionally, Administrative Agent may disburse all or part of any Future Advance before the sum shall become due if Administrative Agent believes it advisable for Administrative Agent to do so, and all such Future Advances or parts thereof shall be deemed to have been made pursuant to this Agreement.
2.6.6      No Reliance . All conditions and requirements of this Agreement are for the sole benefit of Administrative Agent and Lenders and no other person or party (including, without limitation, the Construction Consultant, if any, any contractor and subcontractors and materialmen) shall have the right to rely on the satisfaction of such conditions and requirements by Borrower. Administrative Agent shall have the right, in its sole and absolute discretion, to waive any such condition or requirement and Borrower shall be authorized to rely on such waiver if and to the extent such waiver is in writing and signed by Administrative Agent.
2.6.7      Miscellaneous . The making of a Future Advance by Lenders shall not constitute Administrative Agent’s approval or acceptance of the construction theretofore completed or materials furnished with respect thereto. Administrative Agent’s inspection and approval of the workmanship and materials used in any Capital Expenditures Work or Tenant

-62-


Improvement Work, shall impose no liability of any kind on Administrative Agent, the sole obligation of Administrative Agent as the result of such inspection and approval being to make the Future Advances if and to the extent, required by this Agreement.
Section 2.7      Method of Disbursement of Loan Proceeds .
2.7.1      Borrower’s Requisition to Be Submitted to Administrative Agent . At such time as Borrower shall desire to obtain a Future Advance (the date of such Future Advance being required to be a Business Day), Borrower shall complete, execute and deliver to Administrative Agent a Borrower’s Requisition in the form attached hereto as Exhibit A (“ Borrower’s Requisition ”), with respect to a Future Advance, shall be accompanied by:
(a)      with respect to any Future Advance for Tenant Improvement Work or Capital Expenditures Work, duly executed lien waivers, which may be interim lien waivers (for payments to be made from Future Advances for work which is not yet complete) and shall be final lien waivers (for all work which has been completed), as applicable, but in all events such lien waivers may be conditioned upon the payee’s receipt of payment in the applicable amount, from all contractors for all work performed, and all labor or material supplied prior to the date of the Future Advance;
(b)      copies of all invoices, paid receipts, contracts, subcontracts, purchase orders, bills of sale and similar documentation, as applicable, related to each Future Advance so that Administrative Agent can verify all costs set forth in any such Borrower’s Requisition;
(c)      evidence reasonably satisfactory to Administrative Agent that the full amount of the proceeds of the (i) then last preceding Future Advance, (ii) the last preceding Future Advance (as defined in the Building Loan Agreement) and (iii) the last preceding Future Advance (as defined in Senior Loan Agreement) of the Senior Loan have been paid out in full to the Person with respect to whom such Future Advance was made and otherwise in accordance with this Agreement; and
(d)      such other information, documentation and certification as Administrative Agent shall reasonably request, including, without limitation, any documents required pursuant to Section 2.6 above.
2.7.2      Procedure of Advances .
(a)      Each Borrower’s Requisition shall be submitted to Administrative Agent at least ten (10) Business Days prior to the date of the requested Future Advance (the “ Requested Advance Date ”). Lenders shall make the requested Future Advance on the Requested Advance Date so long as (i) all conditions to such Future Advance are satisfied or waived, (ii) all conditions to a concurrent Future Advance (as defined in the Building Loan Agreement) are satisfied or waived and (iii) subject to Section 2.6.2(a)(vi) , Mortgage Lender makes its corresponding Future Advance (as defined in the Senior Loan Agreement) on the Requested Advance Date in an amount equal to Mortgage Lender’s Percentage of the costs to be paid, in part, with such Future Advance; provided that Borrower may revoke such Borrower’s Requisition at any time prior to the Requested Advance Date upon prior notice to Administrative Agent (subject to payment of any Breakage Costs and any

-63-


out-of-pocket costs or expenses incurred by Administrative Agent or Lenders in connection with such revocation). Borrower shall be permitted to deliver a single Borrower’s Requisition for the Loan, the Building Loan and the Senior Loan.
(b)      In no event shall any Lender be required to advance Future Advance funds in an amount less than its Pro Rata Share of the Minimum Advance Amount (except in respect of any final Future Advance).
2.7.3      Funds Advanced . Each Future Advance made directly to Borrower shall be made by Administrative Agent by wire transfer (or other transfer) to an account designated by Borrower. All proceeds of all Future Advances shall be used by Borrower only for the purposes for which such Future Advances were made or as otherwise may be permitted or required herein.
2.7.4      Direct Future Advances to Third Parties . At Administrative Agent’s option at any time that a monetary Default, material non-monetary Default which is reasonably likely to have a Material Adverse Effect or Event of Default has occurred and is continuing, Administrative Agent may make any or all Future Advances directly or through the Title Company to (i) any contractor, (ii) the Construction Consultant to pay its reasonable fees (which shall not exceed $2,000 per draw, together with any concurrent draw made under the Mortgage Loan), if applicable, (iii) Administrative Agent’s counsel to pay the reasonable fees incurred by the same, (iv) to pay (x) any out-of-pocket expenses incurred by Administrative Agent which are reimbursable by Borrower under the Loan Documents (including, without limiting the generality of the foregoing, reasonable attorneys’ fees and expenses and other reasonable fees and expenses incurred by Administrative Agent), provided that Borrower shall theretofore have received written notice from Administrative Agent thereof, or (y) following the occurrence and during the continuance of an Event of Default, any other sums due to Administrative Agent under the Note, this Agreement or any of the other Loan Documents, all to the extent that the same are not paid by the respective due dates thereof, and (v) any other Person to whom Administrative Agent determines payment is due. Any portion of the Loan disbursed by Administrative Agent as set forth above shall be deemed disbursed as of the date on which the Person to whom such payment is made receives the same. The execution of this Agreement by Borrower shall, and hereby does, constitute an irrevocable authorization to disburse such Future Advances constituting part of the Loan directly to any such Person or through the Title Company to such Persons subject to and in accordance with this Section 2.7.4 as amounts become due and payable to them hereunder and any portion of the Loan so disbursed by Administrative Agent shall be deemed disbursed as of the date on which the Person to whom payment is made receives the same. No further authorization from Borrower shall be necessary to warrant such payment directly of such Future Advances to such relevant Person in accordance herewith, and all such Future Advances so made shall satisfy pro tanto the obligations of Administrative Agent hereunder and shall be secured by the Pledge Agreement and the other Loan Documents as fully as if made directly to Borrower.
2.7.5      Frequency of Advances . Administrative Agent shall have no obligation to make Future Advance (Capital Expenditures) or Future Advance (TI/LCs) more often than once in each calendar month. In addition, Administrative Agent may at any time, in

-64-


Administrative Agent’s sole discretion and without request therefor from Borrower, make Future Advances to pay amounts that are due to Administrative Agent under, and in accordance with, the Loan Documents. In addition, Administrative Agent may at any time, in Administrative Agent’s sole discretion and without request therefore from Borrower, make Future Advance (Interest/Carry Shortfall) to pay amounts that are due to Administrative Agent under, and in accordance with, the Loan Documents; provided that Administrative Agent shall deliver a written notice (or other written evidence customarily used by Administrative Agent to evidence such advance) to Borrower concurrently with or promptly after such Future Advance.
2.7.6      Advances Do Not Constitute a Waiver . No Future Advance shall constitute a waiver of any of the conditions of Administrative Agent’s obligation to make further Future Advances, nor, in the event Borrower is unable to satisfy any such condition, shall any Future Advance have the effect of precluding Administrative Agent from thereafter declaring such inability to be an Event of Default hereunder.
2.7.7      Availability of Future Advances . Borrower shall have the right to request (which request shall be irrevocable), upon not less than thirty (30) days’ prior written notice and not more than ninety (90) days’ prior written notice to Administrative Agent, which notice (if any) shall be delivered with Borrower’s notice to extend the First Extension Maturity Date given in accordance with Section 2.3.2(i) , that Borrower’s right to request Future Advances of any unadvanced portion of the Future Funding Amount (the “ Unadvanced Amounts ”) be terminated, in which case, and upon approval from Administrative Agent, the Loan shall be permanently reduced by an amount equal to the all or a portion of the Unadvanced Amounts upon the commencement of the Second Extension Period (if any). Any portion of the Unadvanced Amounts that Borrower does not elect to terminate pursuant to this Section 2.7.7 shall be funded into the Future Funding Reserve Account upon the commencement of the Second Extension Period (if any) to be disbursed in accordance with the terms of Section 6.8 .
Section 2.8      Mitigation Obligations; Replacement of Lenders
2.8.1      Designation of a Different Lending Office . If any Lender requests compensation under Section 2.5 , or requires the Borrower to pay any Indemnified Taxes or additional amounts to any Lender or any Governmental Authority for the account of any Lender pursuant to Section 2.5 , then such Lender shall (at the request of the Borrower) use reasonable efforts to designate a different lending office for funding or booking its Loans hereunder or to assign its rights and obligations hereunder to another of its offices, branches or affiliates, if, in the judgment of such Lender, such designation or assignment (i) would eliminate or reduce amounts payable pursuant to Section 2.5 in the future, and (ii) would not subject such Lender to any unreimbursed cost or expense and would not otherwise be disadvantageous to such Lender.
2.8.2      Replacement of Lenders . If any Lender requests compensation under Section 2.5 , or if the Borrower is required to pay any Indemnified Taxes or additional amounts to any Lender or any Governmental Authority for the account of any Lender pursuant to Section 2.5 and, in each case, such Lender has declined or is unable to designate a different lending office in accordance with Section 2.8.1 above, then the Borrower may, at its sole expense and effort, upon notice to such Lender, require such Lender to assign and delegate, without recourse,

-65-


all of its interests, rights (other than its existing rights to payments pursuant to Section 2.5 ) and obligations under this Agreement and the related Loan Documents to an Eligible Assignee that shall assume such obligations (which assignee may be another Lender, if a Lender accepts such assignment). A Lender shall not be required to make any such assignment or delegation if, prior thereto, as a result of a waiver by such Lender or otherwise, the circumstances entitling the Borrower to require such assignment and delegation cease to apply. Notwithstanding the foregoing, in no event shall the terms of this Section 2.8.2 be applicable for so long as there is only one Lender.
III.      REPRESENTATIONS AND WARRANTIES
Section 3.1      Borrower Representations .
Borrower represents and warrants to Administrative Agent and Lenders as of the Closing Date, as of the date of each Future Advance and each other date on which the representations and warranties set forth herein are required to be remade that:
3.1.1      Organization .
(a)      Borrower, Mortgage Borrower and each SPC Party (if any) is duly formed, organized, validly existing and in good standing in its jurisdiction of formation with full power and authority to own its assets and conduct its business, and is duly qualified and in good standing in all jurisdictions in which the ownership or lease of the Collateral, the Property or the conduct of its business requires such qualification. Borrower has taken all necessary action to authorize the execution, delivery and performance of this Agreement and the other Loan Documents by it, and has the power and authority to execute, deliver and perform under this Agreement, the other Loan Documents and all the transactions contemplated hereby. Borrower does not own any assets other than its interests in the Collateral. Mortgage Borrower does not own or use any assets other than its interests in the Property and personal property incidental to the business of owning, constructing, renovating, leasing, operating and selling the Property and activities incidental thereto; and Borrower acknowledges and agrees that it is Borrower’s understanding and intent that the Property constitutes “single asset real estate” for purposes of Section 362(d)(3) of the Bankruptcy Code.
(b)      Borrower’s exact legal name is correctly set forth in the first paragraph of this Agreement. Borrower is an organization of the type specified in the first paragraph of this Agreement. Borrower is incorporated or organized under the laws of the state specified in the first paragraph of this Agreement. Borrower’s principal place of business and chief executive office, and the place where Borrower keeps its books and records, including recorded data of any kind or nature, regardless of the medium of recording, including software, writings, plans, specifications and schematics, has been for the preceding four (4) months (or, if less than four (4) months, the entire period of the existence of Borrower) and will continue to be the address of Borrower set forth in the first paragraph of this Agreement (unless Borrower notifies Administrative Agent in writing at least twenty (20) days prior to the date of such change).
3.1.2      Proceedings . This Agreement and the other Loan Documents have been duly authorized, executed and delivered by Borrower and, to Borrower’s knowledge, constitute a legal, valid and binding obligation of Borrower, enforceable against Borrower in

-66-


accordance with their respective terms, except as such enforcement may be limited by bankruptcy, insolvency, reorganization, moratorium or other similar laws affecting the enforcement of creditors’ rights generally, and by general principles of equity (regardless of whether such enforceability is considered in a proceeding at law or in equity). The Loan Documents are not subject to any right of rescission, set-off, counterclaim or defense by any Borrower Party including the defense of usury, nor would the operation of any of the terms of the Loan Documents, or the exercise of any right thereunder, render the Loan Documents unenforceable, and no Borrower Party has asserted any right of rescission, set-off, counterclaim or defense with respect thereto.
3.1.3      No Conflicts . The execution and delivery of this Agreement and the other Loan Documents by Borrower and the performance of its obligations hereunder and thereunder will not conflict with any provision of any law or regulation to which Borrower or Mortgage Borrower is subject, or materially conflict with, result in a breach of, or constitute a default under, any of the terms, conditions or provisions of any of Borrower’s or Mortgage Borrower’s organizational documents or any indenture, mortgage, deed of trust, loan agreement, partnership agreement, management agreement or other agreement or instrument to which Borrower or Mortgage Borrower is a party or by which Borrower or Mortgage Borrower is bound, or any order or decree applicable to Borrower or Mortgage Borrower, or result in the creation or imposition of any lien, charge or encumbrance on any of Borrower’s or Mortgage Borrower’s assets or property (other than Permitted Encumbrances or otherwise pursuant to the Loan Documents and Mortgage Loan Documents), nor will such action result in any violation of the provisions of any statute or any order, rule or regulation of any Governmental Authority having jurisdiction over Borrower or Mortgage Borrower or any of Borrower’s or Mortgage Borrower’s properties or assets, and any consent, approval, authorization, order, registration or qualification of or with any court or any such Governmental Authority required for the execution, delivery and performance by Borrower of this Agreement or any other Loan Documents has been obtained and is in full force and effect.
3.1.4      Litigation . There is no action, suit, proceeding or investigation pending or, to Borrower’s knowledge, threatened (in writing) against Borrower or Mortgage Borrower in any court or by or before any other Governmental Authority, that is reasonably likely to result in a Material Adverse Effect. There is no action, suit, proceeding or investigation pending or, to Borrower’s knowledge, threatened against Guarantor or any other Restricted Party, in any court or by or before any other Governmental Authority, that is reasonably likely to result in a Material Adverse Effect.
3.1.5      Agreements . Borrower is not a party to any agreement or instrument or subject to any restriction which is reasonably likely to have a Material Adverse Effect. Neither Borrower nor Mortgage Borrower is in default with respect to any order or decree of any court or any order, regulation or demand of any Governmental Authority, which default is reasonably likely to result in a Material Adverse Effect. Neither Borrower nor Mortgage Borrower is in default in any material respect in the performance, observance or fulfillment of any of the obligations, covenants or conditions contained in any Permitted Encumbrance or any other agreement or instrument to which it is a party or by which it or the Collateral or Property is bound. Neither Borrower nor Mortgage Borrower has material financial obligation (contingent

-67-


or otherwise) under any indenture, mortgage, deed of trust, loan agreement or other agreement or instrument to which itis a party or by which Borrower, Mortgage Borrower, the Collateral or the Property is otherwise bound, other than (a) obligations incurred in the ordinary course of the operation of the Property and (b) obligations under the Loan Documents.
3.1.6      Consents . No consent, approval, authorization or order of any court or Governmental Authority is required for the execution, delivery and performance by Borrower or Mortgage Borrower of, or compliance by Borrower or Mortgage Borrower with, this Agreement, the Loan Documents, the Mortgage Loan Documents or the consummation of the transactions contemplated hereby, other than those which have been obtained by Borrower and Mortgage Borrower, as applicable.
3.1.7      Title . Borrower is the record owner of and has good title to the Collateral, free and clear of all Liens whatsoever except the Lien of the Loan Documents and Permitted Encumbrances. Mortgage Borrower has good and insurable fee simple title to the to the real property comprising part of the Property and good title to the balance of the Property owned by it, free and clear of all Liens whatsoever, in each case except the Permitted Encumbrances. The Permitted Encumbrances in the aggregate do not, and will not, (i) materially adversely affect (a) the operation or use of the Property, or (b) Borrower’s or Mortgage’s Borrower’s ability to pay its Obligations in a timely manner, or (ii) materially interfere with the benefits of the security intended to be provided by this Agreement and the other Loan Documents. The Pledge Agreement, together with any UCC Financing Statements required to be filed in connection therewith, will create a valid, perfected first priority lien on Borrower’s interest in the Collateral.
3.1.8      No Plan Assets . As of the date hereof and throughout the Term of the Loan, (a) neither Borrower nor Mortgage Borrower is and will not be an “employee benefit plan,” as defined in Section 3(3) of ERISA, subject to Title I of ERISA, or (b) none of the assets of Borrower or Mortgage Borrower constitutes or will constitute “plan assets” of one or more such plans within the meaning of 29 C.F.R. Section 2510.3-101, as modified by Section 3(42) of ERISA, (c) neither Borrower nor Mortgage Borrower is and will not be a “governmental plan” within the meaning of Section 3(32) of ERISA, and (d) transactions by or with Borrower or Mortgage Borrower are not and will not be subject to any state statute regulating investments of, or fiduciary obligations with respect to, governmental plans. As of the date hereof, none of Borrower, Mortgage Borrower nor any ERISA Affiliate maintains, sponsors or has any obligation to contribute to a “pension plan” (within the meaning of Section 3(2) of ERISA) that is subject to Title IV of ERISA. Borrower’s representations and covenants in this Section 3.1.8 and in Section 4.2.10 below are based on the assumption that no portion of the assets used by any Lender in connection with the transactions contemplated under this Agreement and the other Loan Documents constitutes assets of a (i) “benefit plan investor” within the meaning of Section 3(42) of ERISA, unless each such Lender relied on an available prohibited transaction exemption, all of the conditions of which are and at all times remain satisfied by such Lender or (ii) governmental plan which is subject to any provision which is similar to the prohibited transaction provisions of Title I of ERISA or Section 4975 of the Code (“ Applicable Similar Law ”), unless the acquisition and holding of the Loan or any interest therein does not and will not at any time give rise to a violation of any such Applicable Similar Law.

-68-


3.1.9      Compliance . To Borrower’s knowledge and except as disclosed in the PCR or Zoning Report, Borrower, Mortgage Borrower and the Property and the use thereof comply in all material respects with all applicable Legal Requirements, including, without limitation, parking, building, zoning and land use laws, ordinances, regulations, and codes. To Borrower’s knowledge, neither Borrower nor Mortgage Borrower is in default or violation of any order, writ, injunction, decree or demand of any Governmental Authority, the violation of which is reasonably likely to result in a Material Adverse Effect. Neither Borrower nor Mortgage Borrower has committed any act which may give any Governmental Authority the right to cause Mortgage Borrower to forfeit the Property or any part thereof or any monies paid in performance of Borrower’s obligations under any of the Loan Documents. The Property is used exclusively for office and retail use and other appurtenant and related uses. Except as set forth in the Zoning Report, in the event that all or any part of the Improvements are destroyed or damaged, said Improvements can be legally reconstructed to their condition prior to such damage or destruction and thereafter exist for the same used without violating any zoning or other ordinances applicable thereto and without the necessity of obtaining any variances or special permits.
3.1.10      Financial Information . All financial reports, documents, instruments, information and financial data, including, without limitation, the statements of cash flow and income and operating expense and evidence of equity, that have been delivered to Administrative Agent in connection with the Loan (i) are true, complete and correct in all material respects, (ii) accurately represent in all material respects the financial condition of Borrower, Mortgage Borrower, Guarantor, the Collateral and the Property, as applicable, as of the date of such reports, (iii) to the extent prepared or audited by an independent certified public accounting firm, in the case of financial data and reporting, have been prepared in accordance with Accounting Principles or another acceptable tax based accounting method, throughout the periods covered, except as disclosed therein, and (iv) when taken as a whole, are accurate, correct and sufficiently complete in all material respects to give Administrative Agent true and accurate knowledge of their subject matter and do not contain any material misrepresentation or omission. Neither Borrower nor Mortgage Borrower has any contingent liabilities, liabilities for taxes, unusual forward or long-term commitments or unrealized or anticipated losses from any unfavorable commitments that are known to Borrower and reasonably likely to have a Material Adverse Effect. Since the date of the financial statements delivered to Administrative Agent, there has been no material adverse change in the financial condition, operations or business of Borrower, Mortgage Borrower or the Property from that set forth in said financial statements.
3.1.11      Reserved .
3.1.12      Reserved .
3.1.13      Reserved .
3.1.14      Reserved .
3.1.15      Enforceability . Borrower has not asserted any right of rescission, set off, counterclaim or defense with respect to the Loan Documents.
3.1.16      Reserved .

-69-


3.1.17      Reserved .
3.1.18      Reserved .
3.1.19      Reserved .
3.1.20      Reserved .
3.1.21      Reserve d.
3.1.22      Leases . The rent roll attached hereto as Schedule II (the “ Rent Roll ”) is true, complete and correct in all material respects and the Property is not subject to any Leases other than the Leases described on the Rent Roll. Mortgage Borrower is the owner and lessor of landlord’s interest in the Leases. No Person has any possessory interest in the Property or right to occupy the same except under and pursuant to the provisions of the Leases described on the Rent Roll, arrearage reports and Tenant estoppels delivered to and approved by Administrative Agent. Except as set forth on the Rent Roll, and to Borrower’s knowledge: (i) the Leases are in full force and effect and there are no defaults thereunder by either party, (ii) Borrower has delivered (or caused to be delivered) to Administrative Agent all the copies of the Leases in Borrower’s and Mortgage Borrower’s possession, (iii) no Rent (other than security deposits) has been paid more than one (1) month in advance of its due date, (iv)  except as disclosed on Schedule III attached hereto all work to be performed by Mortgage Borrower under each Lease has been performed as required and has been accepted by the applicable Tenant, (v) any payments, free rent, partial rent, rebate of rent or other payments, credits, allowances or abatements required to be given by Mortgage Borrower to any Tenant has already been received by such Tenant or are to be received by the Tenant after the date hereof pursuant to the express terms of the applicable Lease, (vi) except as set forth in the Rent Roll, the Tenants under the Leases have accepted possession of and are in occupancy of all of their respective demised Property and have commenced the payment of full, unabated rent under the Leases, (vii) Borrower has delivered (or has caused to be delivered) to Administrative Agent a true, correct and complete list of all security deposits made by Tenants at the Property which have not been applied (including accrued interest thereon), all of which are held by Mortgage Borrower in accordance with the terms of the applicable Lease and applicable Legal Requirements, (viii) no Tenant under any Lease (or any sublease) is a Borrower Related Party, (ix) the Tenants under Leases are open for business and paying full, unabated rent and no Tenant has requested to discontinue its business at its demised premises, (x) other than pursuant to the Leasing Agreement, there are no brokerage fees or commissions due and payable in connection with the leasing of space at the Property, and no such fees or commissions will become due and payable in the future in connection with the Leases, including by reason of any extension of such Lease or expansion of the space leased thereunder, and (xi)  no Tenant has or is asserting any claim of offset or other defense, counterclaim or other claim in respect of such Tenant’s obligations or the lessor’s rights under any Lease. No Tenant under any Lease has a right or option pursuant to such Lease or otherwise to purchase all or any part of the leased premises or the building of which the leased premises are a part. Mortgage Borrower is sole owner of the lessor’s entire right, title and interest in and to the Leases.

-70-


3.1.23      Filing and Recording Taxes . All transfer taxes, deed stamps, intangible taxes or other amounts in the nature of transfer taxes required to be paid under applicable Legal Requirements in connection with the transfer of the Property to Mortgage Borrower have been paid. All mortgage, mortgage recording, stamp, intangible or other similar tax required to be paid under applicable Legal Requirements in connection with the execution, delivery, recordation, filing, registration, perfection or enforcement of any of the Loan Documents, including, without limitation, the Mortgage, have been paid or are being paid simultaneously herewith. All taxes and governmental assessments due and owing in respect of the Property have been paid, or an escrow of funds in an amount sufficient to cover such payments has been established hereunder or are insured against by the title insurance policy to be issued in connection with the Mortgage or, after the Closing Date, are being contested in accordance with this Agreement.
3.1.24      Special Purpose Bankruptcy Remote Entity . Borrower hereby represents and warrants that as of the formation of Borrower, Mortgage Borrower and each SPC Party through and including the Closing Date that none of Borrower, Mortgage Borrower nor any SPC Party has taken any of the actions prohibited (or failed to take any actions required to be taken) pursuant to the terms and provisions of this Section 3.1.24 . Borrower hereby represents and warrants to, and covenants with, Administrative Agent that as of the date hereof and until such time as the Debt shall be paid in full:
(a)      (i) Borrower does not own and will not own any asset or property other than (A) its portion of the Collateral and (B) incidental personal property necessary for the ownership or operation of the Collateral. Mortgage Borrower does not own and will not own any asset or property other than (A) the Property, and (B) incidental personal property necessary or desirable for the ownership operation, maintenance, development, repair, leasing, alteration, equipping, financing, management and disposal of the Property.
(b)      Mortgage Borrower has not and will not engage in any business other than the acquisition, ownership, holding, leasing, management, operation, development and improvement of the Property and Mortgage Borrower has and will conduct and operate its business as presently conducted and operated. Borrower will not engage in any business other than the ownership of its applicable portion of the Collateral and Borrower has and will conduct and operate its business as presently conducted and operated.
(c)      Neither Borrower nor Mortgage Borrower has nor will not enter into any contract or agreement with any Affiliate of Borrower, Mortgage Borrower, any constituent party of Borrower, Mortgage Borrower or any Affiliate of any constituent party, except 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 other than any such party
(d)      Except for prior financings, which financings will be repaid in full on or prior to the date hereof, neither Borrower nor Mortgage Borrower has incurred nor will incur any Indebtedness, secured or unsecured, direct or contingent (including guaranteeing any obligation), other than Permitted Indebtedness.

-71-


(e)      Neither Borrower nor Mortgage Borrower has made nor will not make any loans or advances to any third party (including any Affiliate or constituent party), and has not and shall not acquire obligations or securities of its Affiliates.
(f)      Each of Borrower and Mortgage Borrower has been, is and will intend to remain solvent and each of Borrower and Mortgage Borrower has (either directly or through the Manager) paid and will pay its debts and liabilities (including, as applicable, shared personnel and overhead expenses) from its assets as the same shall become due; provided, that, in each such case, there exists and is made available to Mortgage Borrower sufficient cash flow from the Property to do so and that the foregoing shall not require Guarantor or any other partners, members or other owners of Borrower or Mortgage Borrower to make any capital contributions to Borrower or Mortgage Borrower.
(g)      Each of Borrower and Mortgage Borrower has done or caused to be done and will do or cause to be done all things necessary to observe material organizational formalities and preserve its existence, and neither Borrower nor Mortgage Borrower has nor will Borrower or Mortgage Borrower permit any SPC Party to amend, modify or otherwise change the partnership certificate, partnership agreement, articles of incorporation and bylaws, operating agreement, trust or other organizational documents of Borrower, Mortgage Borrower or such SPC Party without the prior consent of Administrative Agent (not to be unreasonably withheld, conditioned or delayed, provided the new borrowing entity is a limited liability company (whether single-member or multi-member) or a limited partnership, in either case formed under Delaware law which meets Administrative Agent’s requirements then applicable to such entities) in any manner that (i) violates the single purpose covenants set forth in this Section 3.1.24 , or (ii) amends, modifies or otherwise changes any provision thereof that (A) by its terms cannot be modified at any time when the Loan is outstanding, (B) by its terms cannot be modified without Administrative Agent’s consent, or (C) is otherwise prohibited from being amended or modified pursuant to this Agreement or the other Loan Documents.
(h)      Borrower and Mortgage Borrower each has maintained and will maintain all of its books, records, financial statements and bank accounts separate from those of its Affiliates and any constituent party. Neither Borrower’s nor Mortgage Borrower’s assets have nor will be listed as assets on the financial statement of any other Person; provided, however, that Borrower’s and/or Mortgage Borrower’s assets may be included in a consolidated financial statement of its Affiliates provided that (i) appropriate notation shall be made on such consolidated financial statements to indicate the separateness of Borrower and/or Mortgage Borrower and such Affiliates and to indicate that Borrower’s and/or Mortgage Borrower’s, as applicable, assets and credit are not available to satisfy the debts and other obligations of such Affiliates or any other Person and (ii) such assets shall be listed on Borrower’s and/or Mortgage Borrower’s own separate balance sheet. Each of Borrower and Mortgage Borrower has filed and will file its own tax returns except to the extent Borrower and/or Mortgage Borrower is treated as a “disregarded entity” for tax purposes and is not required to file tax returns under applicable law.
(i)      Borrower and Mortgage Borrower each has been and will be, and at all times has and will hold itself out to the public as, a legal entity separate and distinct from any other entity (including any Affiliate of Borrower, Mortgage Borrower or any constituent party of Borrower

-72-


or Mortgage Borrower), has and shall correct any known misunderstanding regarding its status as a separate entity, has and shall conduct business in its own name, has not and shall not identify itself or any of its Affiliates as a division or part of the other and has and shall maintain and utilize separate stationery, invoices and checks bearing its own name, except in each case for business conducted on behalf of Mortgage Borrower by Manager pursuant to the terms and provisions of the Management Agreement, which agreement is on commercially-reasonable terms, so long as Manager holds itself out as an agent or representative of Mortgage Borrower.
(j)      Each of Borrower and Mortgage Borrower has maintained and will intend to maintain adequate capital for the normal obligations reasonably foreseeable in a business of its size and character and in light of its contemplated business operations (provided that this clause (j) shall not require any partners, members or other owners of Borrower to make any capital contributions to Borrower) and shall not intentionally make any distribution which shall cause it to have less than adequate capital.
(k)      None of Borrower, Mortgage Borrower nor any constituent party has or will seek or effect the liquidation, dissolution, winding up, liquidation, consolidation or merger, in whole or in part, of Borrower and/or Mortgage Borrower.
(l)      Neither Borrower nor Mortgage Borrower has nor will not commingle the funds and other assets of Borrower and/or Mortgage Borrower, as applicable, with those of any Affiliate or constituent party or any other Person, and has and will hold all of its assets in its own name.
(m)      Borrower and Mortgage Borrower has and will maintain its assets in such a manner that it will not be costly or difficult to segregate, ascertain or identify its individual assets from those of any Affiliate or constituent party or any other Person.
(n)      Neither Borrower nor Mortgage Borrower has nor will guarantee or become obligated for the debts of any other Person and has not and will not hold itself out to be responsible for or have its credit available to satisfy the debts or obligations of any other Person.
(o)      Borrower shall conduct its business so that the assumptions made with respect to Borrower in the Non-Consolidation Opinion and any New Non-Consolidation Opinion shall be true and correct in all respects. In connection with the foregoing, Borrower hereby covenants and agrees that it will comply in all respects with or cause the compliance in all respects with, (i) all of the facts and assumptions relating to the conduct of Borrower set forth in the Non-Consolidation Opinion, and any New Non-Consolidation Opinion, (ii) all the representations, warranties and covenants in this Section 3.1.24 , and (iii) all the organizational documents of Borrower and any SPC Party.
(p)      Other than Manager, neither Borrower nor Mortgage Borrower has permitted, nor will not permit any Affiliate or constituent party independent access to its bank accounts.
(q)      Borrower has paid (or caused Mortgage Borrower to pay) and shall intend to pay (or cause Mortgage Borrower to pay) from its own funds its own liabilities and expenses,

-73-


including all Property-related expenses and the salaries of its own employees (if any) from its own funds and has maintained and shall maintain a sufficient number of employees (if any) in light of its contemplated business operations, with it being understood that nothing in this Section 3.1.24(q) shall limit the right of Borrower to share overhead expenses with Affiliates in compliance with Section 3.1.24(t) .
(r)      Borrower has compensated (or caused Mortgage Borrower to compensate) and shall compensate (or cause Mortgage Borrower to compensate) each of its consultants and agents from its funds for services provided to it and has paid and shall pay from and to the extent of its own assets all obligations of any kind incurred.
(s)      Borrower will not, and will not permit Mortgage Borrower to, without the unanimous consent of all of its directors or members (including all Independent Directors, as applicable) take any Material Action.
(t)      Borrower will allocate fairly and reasonably any overhead expenses that are shared with any Affiliate, including shared office space and for services performed by any employee of an Affiliate.
(u)      Other than pursuant to the Loan Documents, Borrower will not pledge its assets to secure the obligations of any other Person.
(v)      Borrower will have no obligation to indemnify its officers, directors, members or partners, as the case may be, unless such obligation is fully subordinated to the Debt and will not constitute a claim against it if cash flow in excess of the amount required to pay the Debt is insufficient to pay such obligation.
(w)      Neither Borrower nor Mortgage Borrower has nor will have any of its obligations guaranteed by any Affiliate and has nor will permit any Affiliate to hold such Affiliate’s credit out as available to pay the debts of Borrower or Mortgage Borrower or pay the debts of Borrower or Mortgage Borrower, other than with respect to the Guaranties.
(x)      Neither Borrower nor Mortgage Borrower shall buy or hold evidence of indebtedness issued by any other Person other than Permitted Indebtedness.
(y)      Neither Borrower nor Mortgage Borrower shall form, acquire or hold any subsidiary (whether corporate, partnership, limited liability company or other) or own any equity interest in any other entity.
(z)      If Borrower shall have its own board of directors, Borrower shall cause its board of directors to meet at least annually or act pursuant to written consent and keep minutes of such meetings and actions and observe all other limited liability company formalities;
(aa)      Borrower shall cause the directors, officers, agents and other representatives of the Borrower to act at all times with respect to Borrower consistently and in furtherance of the foregoing and in the best interests of the Borrower.

-74-


(bb)      If Borrower or Mortgage Borrower is a limited partnership or a limited liability company other than a Single Member Delaware LLC, each SPC Party shall comply in all material respects with the terms and provisions of this Section 3.1.24 . Each SPC Party shall either be (i) a Single Member Delaware LLC in accordance with the terms and provisions of clause (cc) below or (ii) a corporation (A) whose sole asset is its interest in Borrower or Mortgage Borrower, as applicable, (B) which has not been and shall not be permitted to engage in any business or activity other than owning an interest in Borrower or Mortgage Borrower, as applicable, (C) which has not been and shall not be permitted to incur any debt, secured or unsecured, direct or contingent (including guaranteeing any obligation), and (D) which has and will at all times own at least a one half of one percent (0.5%) direct equity ownership interest in Borrower or Mortgage Borrower, as applicable. Each SPC Party will at all times comply, and will cause Borrower and/or Mortgage Borrower, as applicable, to comply, with each of the representations, warranties, and covenants contained in this Section 3.1.24 (to the extent applicable) as if such representation, warranty or covenant was made directly by such SPC Party. Upon the withdrawal or the disassociation of an SPC Party from Borrower and/or Mortgage Borrower, as applicable, to the extent permitted pursuant to the terms and provisions of this Agreement, Borrower and/or Mortgage Borrower, as applicable, shall immediately appoint a new SPC Party whose articles of incorporation or organization are substantially similar to those of such SPC Party and deliver a New Non-Consolidation Opinion with respect to the new SPC Party and its equity owners.
(cc)      In the event Borrower, Mortgage Borrower or an SPC Party is a Single Member Delaware LLC, its limited liability company agreement (the “ LLC Agreement ”) shall provide that:
(i)      upon the occurrence of any event that causes the last remaining member (“ Member ”) of Borrower, Mortgage Borrower or the SPC Party, as applicable, to cease to be the member of Borrower, Mortgage Borrower or the SPC Party, as applicable, (other than (A) upon an assignment by Member of all of its limited liability company interest in Borrower, Mortgage Borrower or the SPC Party, as applicable, and the admission of the transferee in accordance with the Loan Documents and the LLC Agreement, or (B) the resignation of Member and the admission of an additional member of Borrower, Mortgage Borrower or the SPC Party, as applicable, in accordance with the terms of the Loan Documents and the LLC Agreement), any person acting as Independent Director of Borrower, Mortgage Borrower or the SPC Party, as applicable, shall, without any action of any other Person and simultaneously with the Member ceasing to be the member of Borrower, Mortgage Borrower or the SPC Party, as applicable, automatically be admitted to Borrower, Mortgage Borrower or the SPC Party, as applicable, as a member with a 0% economic interest (“ Special Member ”) and shall continue the existence of Borrower, Mortgage Borrower or the SPC Party, as applicable, without dissolution;
(ii)      Special Member may not resign from Borrower, Mortgage Borrower or the SPC Party, as applicable, or transfer its rights as Special Member unless (A) a successor Special Member has been admitted to Borrower, Mortgage Borrower or the SPC Party, as applicable, as a Special Member in accordance with requirements of Delaware law, as applicable, and (B) after giving effect to such resignation or transfer, there remains

-75-


at least two (2) Independent Directors of Borrower, Mortgage Borrower or the SPC Party, as applicable, in accordance with Section 3.1.24(dd) below;
(iii)      Special Member shall automatically cease to be a member of Borrower, Mortgage Borrower or the SPC Party, as applicable, upon the admission to Borrower, Mortgage Borrower or the SPC Party, as applicable, of the first substitute member;
(iv)      Special Member shall be a member of Borrower, Mortgage Borrower or the SPC Party, as applicable, that has no interest in the profits, losses and capital of Borrower, Mortgage Borrower or the SPC Party, as applicable, and has no right to receive any distributions of the assets of Borrower, Mortgage Borrower or the SPC Party, as applicable;
(v)      pursuant to the applicable provisions of the limited liability company act of the State of Delaware (the “ Act ”), Special Member shall not be required to make any capital contributions to Borrower, Mortgage Borrower or the SPC Party, as applicable, and shall not receive a limited liability company interest in Borrower, Mortgage Borrower or the SPC Party, as applicable;
(vi)      Special Member, in its capacity as Special Member, may not bind Borrower, Mortgage Borrower or the SPC Party, as applicable;
(vii)      except as required by any mandatory provision of the Act, Special Member, in its capacity as Special Member, shall have no right to vote on, approve or otherwise consent to any action by, or matter relating to, Borrower, Mortgage Borrower or the SPC Party, as applicable, including, without limitation, the merger, consolidation or conversion of Borrower, Mortgage Borrower or the SPC Party, as applicable; provided, however, such prohibition shall not limit the obligations of Special Member, in its capacity as Independent Director, to vote on such matters required by the Loan Documents or the LLC Agreement;
(viii)      upon the occurrence of any event that causes the Member to cease to be a member of Borrower, Mortgage Borrower or the SPC Party, as applicable, to the fullest extent permitted by law, the personal representative of Member shall, within ninety (90) days after the occurrence of the event that terminated the continued membership of Member in Borrower, Mortgage Borrower or the SPC Party (as applicable) agree in writing (A) to continue Borrower, Mortgage Borrower or the SPC Party (as applicable) and (B) to the admission of the personal representative or its nominee or designee, as the case may be, as a substitute member of Borrower, Mortgage Borrower or the SPC Party (as applicable) effective as of the occurrence of the event that terminated the continued membership of Member in Borrower, Mortgage Borrower or the SPC Party, as applicable;
(ix)      any action initiated by or brought against Member or Special Member under the Bankruptcy Code or any other Federal or state bankruptcy or insolvency law shall not cause Member or Special Member to cease to be a member of Borrower, Mortgage Borrower or the SPC Party, as applicable, and upon the occurrence of such an

-76-


event, the business of Borrower, Mortgage Borrower or the SPC Party (as applicable) shall continue without dissolution; and
(x)      each of Member and Special Member waives any right it might have to agree in writing to dissolve Borrower, Mortgage Borrower or the SPC Party, as applicable, upon the occurrence of any action initiated by or brought against Member or Special Member under the Bankruptcy Code or any other Federal or state bankruptcy or insolvency law, or the occurrence of an event that causes Member or Special Member to cease to be a member of Borrower, Mortgage Borrower or the SPC Party, as applicable.
In order to implement the admission to Borrower, Mortgage Borrower or an SPC Party, as applicable, of Special Member, Special Member shall execute a counterpart to the LLC Agreement. Prior to its admission to Borrower, Mortgage Borrower or the SPC Party, as applicable, as Special Member, Special Member shall not be a member of Borrower, Mortgage Borrower or the SPC Party, as applicable, but Special Member may serve as an Independent Director of Borrower, Mortgage Borrower or the SPC Party, as applicable.
(dd)      The organizational documents of Borrower, Mortgage Borrower (to the extent Borrower and/or Mortgage Borrower is a corporation or a Single Member Delaware LLC) or each SPC Party (if Borrower is a limited partnership or a limited liability company other than a Single Member Delaware LLC) shall provide that at all times there shall be at least two (2) duly appointed independent managers of such entity (each, an “ Independent Director ”) who shall (i) not have been at the time of each such individual’s initial appointment, and shall not have been at any time during the preceding five years, and shall not be at any time while serving as Independent Director, either (A) a shareholder (or other equity owner) of, or an officer, director, manager (other than in its capacity as Independent Director), partner, member or employee of, Borrower or any of its respective shareholders, partners, members, subsidiaries or affiliates, (B) a customer of, or supplier to, or other Person who derives any of its purchases or revenues from its activities with, Borrower or any of its respective shareholders, partners, members, subsidiaries or affiliates (other than as an Approved Independent Director Provider), (C) a Person who Controls or is under common Control with any such shareholder, officer, director, partner, member, employee supplier, customer or other Person (other than as an Approved Independent Director Provider), or (D) a member of the immediate family of any such shareholder, officer, director, partner, member, employee, supplier, customer or other Person, (ii) be employed by, in good standing with and engaged by Borrower in connection with, in each case, an Approved Independent Director Provider, and (iii) have had at least three (3) years prior experience as an Independent Director employed and in good standing with an Approved Independent Director Provider.
(ee)      The organizational documents of Borrower, Mortgage Borrower (to the extent Borrower and/or Mortgage Borrower, as applicable, is a corporation or a Single Member Delaware LLC) or each SPC Party (if Borrower and/or Mortgage Borrower, as applicable, is a limited partnership or a limited liability company other than a Single Member Delaware LLC) shall further provide that:

-77-


(i) the board of directors or managers of Borrower, Mortgage Borrower or the SPC Party, as applicable, and the constituent members of such entities (the “ Constituent Members ”) shall not take any Material Action without the unanimous vote of the entire board of directors or managers, as applicable, and the Constituent Members including the two (2) Independent Directors appointed in accordance with the terms and provisions of Section 3.1.24(dd) ;
(ii) any resignation, removal or replacement of an Independent Director shall not be effective without two (2) Business Days prior written notice to Administrative Agent accompanied by evidence that a replacement Independent Director satisfying the applicable terms and conditions hereof and of the applicable organizational documents shall have replaced such outgoing Independent Director;
(iii) to the fullest extent permitted by applicable law, including Section 18-1101(c) of the Act, and notwithstanding any duty otherwise existing at law or in equity, each Independent Director shall consider only the interests of the Constituent Members, Borrower, Mortgage Borrower and the SPC Party, if applicable (including Borrower’s, Mortgage Borrower’s and any such SPC Party’s creditors) in acting or otherwise voting on a Material Action or any other matters provided for herein and the organizational documents of Borrower, Mortgage Borrower and any SPC Party (which such fiduciary duties to the Constituent Members, Borrower, Mortgage Borrower and any SPC Party (including Borrower’s, Mortgage Borrower’s and any such SPC Party’s respective creditors), in each case, shall be deemed to apply solely to the extent of their respective economic interests in Borrower, Mortgage Borrower or any SPC Party, as applicable) exclusive of (x) all other interests (including, without limitation, all other interests of the Constituent Members), (y) the interests of other affiliates of the Constituent Members, Borrower, Mortgage Borrower and any SPC Party and (z) the interests of any group of affiliates of which the Constituent Members, Borrower, Mortgage Borrower or any SPC Party is a part;
(iv) other than as provided in subsection (iii) above, the Independent Directors shall not have any fiduciary duties to any Constituent Members, any directors of Borrower, Mortgage Borrower, any SPC Party or any other Person;
(v) the foregoing shall not eliminate the implied contractual covenant of good faith and fair dealing under applicable law; and
(vi) to the fullest extent permitted by applicable law, including Section 18-1101(e) of the Act, an Independent Director shall not be liable to Borrower, Mortgage Borrower, any SPC Party, any Constituent Member or any other Person for breach of contract or breach of duties (including fiduciary duties), unless such Independent Director acted in bad faith or engaged in willful misconduct.
(ff)      Borrower hereby represents and warrants to Administrative Agent that neither Borrower, Mortgage Borrower nor any SPC Party has, since Borrower’s, Mortgage Borrower’s and such SPC Party’s formation: (a) failed to be duly formed, validly existing, and in good standing in the applicable jurisdiction(s) of its formation and with respect to Borrower, the State; (b) had any judgments or liens of any nature against it except for (i) liens for Taxes not yet delinquent or being disputed in good faith and (ii) judgments or liens which have been satisfied or settled in full; (c) failed to comply in all material respects with all laws, regulations, and orders

-78-


applicable to it or failed to receive all licenses and permits necessary for it to operate which, in either case, had or would have a Material Adverse Effect; (d) been involved in any dispute with any Governmental Authority which is unresolved as of the Closing Date or failed to pay all Taxes owed prior to the delinquency thereof (or, if later, then with all applicable penalties, interest and other sums due in connection therewith) other than Taxes being disputed in good faith in accordance with the terms and conditions hereof; (e) ever been party to any material lawsuit, arbitration, summons, or legal proceeding (other than with respect to disputes regarding Taxes) that is still pending (other than ordinary tenant/occupant litigation, personal injury and property damage claims that are covered by insurance) or that resulted in a judgment against it that has not been paid in full, settled or otherwise satisfied; (f) failed in any material respects to comply with all separateness covenants contained in its organizational documents since its formation; (g) (i) with respect to Borrower and Mortgage Borrower, had any material contingent or actual obligations not related to the Collateral and Property, as applicable, except (i) to the extent such obligations are (x) covered by insurance, or (y) subject to reimbursement from a third-party and (ii) with respect to SPC Party, had any material contingent or actual obligations; (h) (i) with respect to Borrower, owned any interest other than the Collateral, (ii) with respect to Mortgage Borrower, owned any property other than the Property and such personal property incidental, ancillary or related to or necessary or appropriate for the ownership and operation of such tenant-in-common interest in the Property and (iii) with respect to SPC Party, owned any asset other than its ownership interests in the Borrower; (i) engaged in any business unrelated to the acquisition, holding, ownership, operation, management, leasing, sale, transfer, exchange, financing, refinancing, improvement and maintenance of its applicable tenant-in-common interest Property, and activities incidental, ancillary or related thereto or necessary or appropriate therefor; and (j) except as expressly disclosed to Administrative Agent in connection with the closing of the Loan, amended, modified, supplemented, restated, replaced or terminated its organizational documents (or consented to any of the foregoing).
3.1.25      Tax Filings . As of the Closing Date, and on every date thereafter on which these representations are remade, all tax returns required to be filed by or on behalf of Borrower and Mortgage Borrower under applicable Legal Requirements have been filed (or effective extensions for filing have been obtained) and all taxes, assessments, fees, and other governmental charges upon or with respect to Borrower or Mortgage Borrower or upon any of their properties, income or franchises (including, without limitation, all state, county and municipal mortgage, mortgage recording, stamp, intangible, transfer or other similar tax required to be paid by any Person under applicable Legal Requirements currently in effect in connection with the execution, delivery, recordation, filing, registration, perfection or enforcement of any of the Loan Documents, including, without limitation, the Pledge Agreement) have been paid that are required to be paid when due and in any event prior to the time that the non-payment of such taxes could give rise to a lien on any asset of Borrower. Borrower believes that (x) its tax returns (if any) filed with the applicable taxing authorities properly reflect the income and taxes of Borrower for the periods covered thereby, subject only to reasonable adjustments required by the IRS or other applicable tax authority upon audit and (y) Mortgage Borrower’s tax returns (if any) filed with the applicable taxing authorities properly reflect the income and taxes of Mortgage Borrower for the periods covered thereby, subject only to reasonable adjustments required by the IRS or other applicable tax authority upon audit. To Borrower’s knowledge, there is no material proposed tax assessment against the Property

-79-


(or any portion thereof) or, to Borrower’s knowledge, any basis for such assessment which is material and has not been disclosed to Administrative Agent. The Property is separately assessed from all other adjacent land for purposes of real estate taxes, and for all purposes may be dealt with as an independent parcel. The Property is not presently benefitted by any tax abatement. Borrower is and has at all times been properly treated for U.S. federal income tax purposes as a disregarded entity. Borrower has established on its books such charges, accruals and reserves in respect of Taxes for all fiscal periods as are required by sound accounting principles consistently applied.
3.1.26      Solvency . Neither Borrower nor Mortgage Borrower (a) has entered into the transaction or any Loan Document, or in the case of Mortgage Borrower, any Mortgage Loan Document, with the actual intent to hinder, delay, or defraud any creditor and (b) received reasonably equivalent value in exchange for its obligations under the Loan Documents, or in the case of Mortgage Borrower, the Mortgage Loan Documents. Giving effect to the Loan, the fair saleable value of Borrower’s assets exceeds and will, immediately following the making of the Loan, exceed Borrower’s total liabilities, including, without limitation, subordinated, unliquidated, disputed and contingent liabilities. The fair saleable value of Borrower’s assets is and will, immediately following the making of the Loan, be greater than Borrower’s probable liabilities, including the maximum amount of its contingent liabilities on its debts as such debts become absolute and matured. Borrower’s assets do not and, immediately following the making of the Loan will not, constitute unreasonably small capital to carry out its business as conducted or as proposed to be conducted. Borrower does not intend to, and does not believe that it will, incur Indebtedness and liabilities (including contingent liabilities and other commitments) beyond its ability to pay such Indebtedness and liabilities as they mature (taking into account the timing and amounts of cash to be received by Borrower and the amounts to be payable on or in respect of obligations of Borrower). No petition in bankruptcy has been filed against Borrower, Mortgage Borrower or any Constituent Member of Borrower or Mortgage Borrower, and none of Borrower, Mortgage Borrower nor any Constituent Member of Borrower or Mortgage Borrower has ever made an assignment for the benefit of creditors or taken advantage of any insolvency act for the benefit of debtors.
3.1.27      Federal Reserve Regulations . No part of the proceeds of the Loan will be used for the purpose of purchasing or acquiring any “margin stock” within the meaning of Regulation U of the Board of Governors of the Federal Reserve System or for any other purpose which would be inconsistent with such Regulation U or any other Regulations of such Board of Governors, or for any purposes prohibited by Legal Requirements or by the terms and conditions of this Agreement or the other Loan Documents.
3.1.28      Organizational Chart . The organizational chart attached as Schedule IV , relating to Borrower, Mortgage Borrower, Guarantor and certain Affiliates and other parties, is a true, complete and correct on and as of the date hereof. No Person other than those Persons shown on Schedule IV has, directly or indirectly, any ownership interest in Borrower, Mortgage Borrower or Guarantor in excess of twenty percent (20%) of the direct or indirect interests in Borrower, Mortgage Borrower or Guarantor, as applicable, or right of Control over Borrower, Mortgage Borrower or Guarantor.

-80-


3.1.29      Bank Holding Company . Neither Borrower nor Mortgage Borrower is a “bank holding company” or a direct or indirect subsidiary of a “bank holding company” as defined in the Bank Holding Company Act of 1956, as amended, and Regulation Y thereunder of the Board of Governors of the Federal Reserve System.
3.1.30      Investment Company Act . Neither Borrower nor Mortgage Borrower is (1) an “investment company” or a company “controlled” by an “investment company,” within the meaning of the Investment Company Act of 1940, as amended; (2) a “holding company” or a “subsidiary company” of a “holding company” or an “affiliate” of either a “holding company” or a “subsidiary company” within the meaning of the Public Utility Holding Company Act of 2005, as amended; or (3) subject to any other federal or state law or regulation which purports to restrict or regulate its ability to borrow money.
3.1.31      No Bankruptcy Filing . Neither Borrower nor Mortgage Borrower is contemplating either the filing of a petition by it under any state or federal bankruptcy or insolvency laws or the liquidation of its assets or property, and neither Borrower nor Mortgage Borrower has have any knowledge of any Person contemplating the filing of any such petition against it.
3.1.32      Full and Accurate Disclosure . No statement of fact made by Borrower in this Agreement or in any of the other Loan Documents contains any untrue statement of a material fact and Borrower has no knowledge that any such statement omits to state any material fact necessary to make the statements contained herein or therein not misleading. There is no fact or circumstance presently known to Borrower which has not been disclosed to Administrative Agent which is reasonably likely to have a Material Adverse Effect. As of the date of this Agreement, Borrower has delivered (or caused to be delivered) to Administrative Agent all Leases, all Contracts relating to the Property and all documentation in Borrower’s possession relating to the zoning and entitlement of the Property and has specified in writing to Administrative Agent any contract or agreement relating to the Property where a Borrower Related Party is a party thereto.
3.1.33      Foreign Person . Neither Borrower nor Mortgage Borrower (or, if Borrower and/or Mortgage Borrower, as applicable, is a disregarded entity for U.S. federal income tax purposes, its regarded owner) is a “foreign person” within the meaning of Section 1445 or 770 of the Code.
3.1.34      No Change in Facts or Circumstances; Disclosure . The information submitted by and on behalf of Borrower to Administrative Agent and all financial statements, reports, certificates and other documents submitted in connection with the Loan or in satisfaction of the terms thereof by Borrower and all statements of fact made by Borrower in this Agreement or in any other Loan Document, are accurate, complete and correct in all material respects. To Borrower’s knowledge, there has been no material adverse change in any condition, fact, circumstance or event that would make the financial statements, rent rolls, reports, certificates or other documents submitted in connection with the Loan inaccurate, incomplete or otherwise misleading in any material respect or that otherwise adversely affects or might materially adversely affect the value of the Collateral or the use, operation or value of the Property or the

-81-


renovation and leasing of the Property or the business operations or the financial condition of Borrower, Mortgage Borrower, the Collateral or the Property.
3.1.35      Management Agreement . The Management Agreement is in full force and effect and (a) there is no default thereunder by Manager thereunder and (b) there is no default thereunder by Mortgage Borrower thereunder. The Management Agreement was entered into on commercially reasonable arm’s-length terms.
3.1.36      Leasing Agreement . The Leasing Agreement is in full force and effect and (a) to Borrower’s knowledge, there is no default thereunder by Leasing Agent thereunder and (b) to Borrower’s knowledge, there is no default thereunder by Mortgage Borrower thereunder. The Leasing Agreement was entered into on commercially reasonable arm’s-length terms.
3.1.37      Construction Management Agreement . The Construction Management Agreement is in full force and effect and (a) to Borrower’s knowledge, there is no default thereunder by Construction Manager thereunder and (b) there is no default thereunder by Mortgage Borrower thereunder. The Construction Management Agreement was entered into on commercially reasonable arm’s length terms.
3.1.38      Project Management Agreement . The Project Management Agreement is in full force and effect and (a) to Borrower’s knowledge, there is no default thereunder by Project Manager thereunder and (b) there is no default thereunder by Mortgage Borrower thereunder. The Project Management Agreement was entered into on commercially reasonable arm’s-length terms.
3.1.39      Perfection of Accounts . Borrower hereby represents and warrants to Administrative Agent and the Lenders that:
(a)      Other than in connection with the Loan Documents and except for Permitted Encumbrances, Borrower has not sold or otherwise conveyed the Accounts.
(b)      The Clearing Account, Working Capital Account and the other Accounts constitute “deposit accounts” or “securities accounts” within the meaning of the Uniform Commercial Code.
3.1.40      Material Agreements . With respect to each Material Agreement, Borrower hereby represents that (a)  each Material Agreement is in full force and effect and has not been amended, restated, replaced or otherwise modified (except, in each case, as expressly set forth herein), (b) neither Borrower nor Mortgage Borrower has received any written notice of any uncured defaults under any Material Agreement by any party thereto, (c) all payments and other sums due and payable by or to Borrower or Mortgage Borrower, as applicable, under the Material Agreements have been paid in full, (d) no party to any Material Agreement has commenced any action to which Borrower or Mortgage Borrower is a party, and neither Borrower nor Mortgage Borrower has given or received any notice, for the purpose of terminating any Material Agreement, and (e) to Borrower’s knowledge, the representations made in any estoppel or similar document delivered with respect to any Material Agreement in connection with the Loan are true, complete and correct in all material respects.

-82-


3.1.41      Illegal Activity/Forfeiture .
(a)      To Borrower’s knowledge, no portion of the Property has been or will be purchased, improved, equipped or furnished with proceeds of any illegal activity and to the best of Borrower’s knowledge, there are no illegal activities or activities relating to controlled substances (including any regulated by the Controlled Substances Act (21 U.S.C. Sections 801 et seq.), as amended from time to time, and any successor statute) at the Property.
(b)      There has not been and shall never be committed by Borrower, Mortgage Borrower any of its Affiliates or, to Borrower’s knowledge, any other person in occupancy of or involved with the operation or use of the Property or Collateral any act or omission affording the federal government or any state or local government the right of forfeiture as against the Property, the Collateral or any part thereof or any monies paid in performance of Borrower’s obligations under this Agreement, the Note, the Pledge Agreement, or the other Loan Documents. Borrower hereby covenants and agrees not to commit, permit or suffer to exist any act or omission affording such right of forfeiture.
(c)      No Borrower Party nor any of any of their respective directors, officers, employees or Affiliates has taken any action, directly or indirectly, that violates any Anti-Corruption Laws or Anti-Money Laundering Laws.
(d)      No proceeds of the Loan have been used, directly or indirectly, by Borrower, Mortgage Borrower or their respective directors, officers, employees, agents or representatives in furtherance of an offer, payment, promise to pay, or authorization of the payment or giving, of money or anything else of value, to any Person in violation of any Anti-Corruption Laws or Anti-Money Laundering Laws.
3.1.42      Embargoed Person . As of the date hereof and at all times throughout the term of the Loan, including after giving effect to any transfers of interests permitted pursuant to the Loan Documents, (a) none of the funds or other assets of Borrower, Mortgage Borrower or Guarantor constitute property of, or are beneficially owned, directly or indirectly, by any person, entity or government subject to trade restrictions under U.S. law, including but not limited to, the International Emergency Economic Powers Act, 50 U.S.C. §§ 1701 et seq., The Trading with the Enemy Act, 50 U.S.C. App. 1 et seq., and any Executive Orders or regulations promulgated thereunder or the Common Foreign and Security Policy consolidated list of persons, groups and entities subject to EU financial sanctions, as the same may be updated from time to time (such list being available on the internet at the following URL: http://ec.europa.eu/external_relations/cfsp/sanctions/list/consol-list.htm) with the result that the investment in Borrower, Mortgage Borrower or Guarantor (whether directly or indirectly), is prohibited by Legal Requirements or the Loan made by Lenders is in violation of Legal Requirements (“ Embargoed Person ”); (b) no Embargoed Person has any interest of any nature whatsoever in Borrower, Mortgage Borrower or Guarantor with the result that the investment in Borrower, Mortgage Borrower or Guarantor (whether directly or indirectly), is prohibited by Legal Requirements or the Loan is in violation of Legal Requirements; and (c) none of the funds of Borrower, Mortgage Borrower or Guarantor have been derived from any unlawful activity with the result that the investment in Borrower, Mortgage Borrower or Guarantor (whether directly

-83-


or indirectly), is prohibited by Legal Requirements or the Loan is in violation of Legal Requirements.
3.1.43      Patriot Act .
(a)      All capitalized words and phrases and all defined terms used in the USA Patriot Act of 2001, 107 Public Law 56 (October 26, 2001) and in other statutes and all orders, rules and regulations of the United States government and its various executive departments, agencies and offices related to the subject matter of the Patriot Act, including Executive Order 13224 effective September 24, 2001 (as may be amended from time to time, the “ Patriot Act ”) are incorporated into this Section. Borrower hereby represents and warrants that Borrower, Mortgage Borrower and each and every Person that, to Borrower’s knowledge, has an economic interest in Borrower, Mortgage Borrower or, to Borrower’s knowledge, that has or will have an interest in the Property and Collateral, is: (i) not a “blocked” person listed in the Annex to Executive Order Nos. 12947, 13099 and 13224 and all modifications thereto or thereof (as may be amended from time to time, the “ Annex ”); (ii) in full compliance with the requirements of the Patriot Act and all other requirements contained in the rules and regulations of the Office of Foreign Assets Control, Department of the Treasury (as may be amended from time to time, “ OFAC ”); (iii) operated under policies, procedures and practices, if any, that are in compliance with the Patriot Act and available to Administrative Agent and Lenders for their review and inspection during normal business hours and upon reasonable prior notice; (iv) not in receipt of any notice from the Secretary of State or the Attorney General of the United States or any other department, agency or office of the United States claiming a violation or possible violation of the Patriot Act; (v) not listed as a Specially Designated Terrorist or as a “blocked” person on any lists maintained by the OFAC pursuant to the Patriot Act or any other list of terrorists or terrorist organizations maintained pursuant to any of the rules and regulations of the OFAC issued pursuant to the Patriot Act or on any other list of terrorists or terrorist organizations maintained pursuant to the Patriot Act; (vi) not a Person who has been determined by competent authority to be subject to any of the prohibitions contained in the Patriot Act; and (vii) not owned or controlled by or now acting and or will in the future act for or on behalf of any person named in the Annex or any other list promulgated under the Patriot Act or any other person who has been determined to be subject to the prohibitions contained in the Patriot Act. Borrower covenants and agrees that in the event Borrower receives any notice that Borrower, Mortgage Borrower (or any of their respective beneficial owners, affiliates or participants) or any Person that has an interest in the Property or Collateral become listed on the Annex or any other list promulgated under the Patriot Act or is indicted, arraigned, or custodially detained on charges involving money laundering or predicate crimes to money laundering, Borrower shall immediately notify Administrative Agent. At Administrative Agent’s option, it shall be an Event of Default hereunder if Borrower, Mortgage Borrower or Guarantor becomes listed on any list promulgated under the Patriot Act or is indicted, arraigned or custodially detained on charges involving money laundering or predicate crimes to money laundering.
(b)      The Patriot Act requires all financial institutions to obtain, verify and record certain information that identifies individuals or business entities which open an “account” with such financial institution. Consequently, Administrative Agent may from time-to-time request, and Borrower shall provide to Administrative Agent, Borrower’s name, address, tax identification number and/or such other identification information as shall be necessary for Administrative Agent

-84-


to comply with federal law. An “account” for this purpose may include, without limitation, a deposit account, cash management service, a transaction or asset account, a credit account, a loan or other extension of credit, and/or other financial services product.
(c)      Borrower shall, promptly after written request by Administrative Agent (whether for itself, on behalf of any Lender or any prospective new Lender), furnish or cause to be furnished to Administrative Agent any documentation and such other information or evidence as may be deemed to be reasonably necessary by Administrative Agent to enable Administrative Agent, such Lender or such prospective Lender to carry out and be satisfied with the results of all applicable customer due diligence in connection any applicable “know your customer”, Patriot Act, Embargoed Person and Anti-Money Laundering Laws requirements.
3.1.44      Reserved .
3.1.45      Reserved .
3.1.46      Reserved .
3.1.47      No Other Debt . Except for prior financings which will be repaid in full on or prior to the date hereof, Borrower has not borrowed or received debt financing other than the Debt, and there is no other Indebtedness to which Borrower is a party or by which Borrower, Mortgage Borrower, the Collateral or the Property or any excess cash flow or any residual interest therein is bound, whether secured or unsecured, in each case other than Permitted Indebtedness.
3.1.48      Purchase Options . Neither the Property nor any direct interest therein is subject to any purchase options, rights of first refusal, rights of first offer or other similar rights in favor of any Person except as set forth in the Joint Venture Agreement.
3.1.49      Interests in Borrower Certificated . The limited liability company interests in Mortgage Borrower are and shall at all times during the Term be evidenced by a “certificated security” governed by Article 8 of the UCC. Mortgage Borrower has “opted in” to Article 8 of the UCC, has not opted out and shall not opt out of such Article 8 of the UCC, and shall cause a registry of the holders of limited liability company interests in Mortgage Borrower to be maintained at all times.
3.1.50      Labor Relations . Except as set forth on Schedule 3.1.51 , neither Borrower nor Mortgage Borrower is a party to any collective bargaining agreement, and there is no union or any other organization of employees of Borrower or Mortgage Borrower (if any) at the Property or otherwise. Neither Borrower nor Mortgage Borrower has received any threats of strikes, work stoppages or any asserted pending demands for collective bargaining by any union or organization of employees of Borrower or Mortgage Borrower (if any). Except as set forth on Schedule 3.1.51 , the Property is not subject to or bound by any collective bargaining agreement. Except as disclosed to Administrative Agent in writing, there are no material grievances, disputes, claims of unfair labor practices or controversies against Mortgage Borrower regarding the Property nor, to Borrower’s knowledge, are there any threats of strikes, work stoppages or demands for collective bargaining by any union or organization of employees of Borrower or Mortgage Borrower (if any) regarding the Property or otherwise. Borrower shall promptly notify Administrative Agent

-85-


upon the occurrence or threatened occurrence of any of the matters described in the preceding sentence.
3.1.51      Pledged Collateral .
(a)      Borrower is the sole beneficial owner of the Pledged Collateral and no Lien exists or will exist (except the Permitted Encumbrances) upon the Pledged Collateral at any time (and no right or option to acquire the same exists in favor of any other Person).
(b)      The Pledged Collateral is not and will not be subject to any contractual restriction upon the transfer thereof (except for any such restriction contained in the Pledge Agreement, the organizational documents of Mortgage Borrower on the date hereof or as set forth in this Agreement).
(c)      The chief place of business of Borrower and the office where Borrower keeps its records concerning the Pledged Collateral will be located at all times at the address specified as Borrower’s address in Section 11.6 hereof.
(d)      The Pledged Collateral is represented by instruments or certificates and Borrower has delivered all certificates or instruments representing such securities as collateral to Lender to effect the transfer thereof as required by the Pledge Agreement.
(e)      To Borrower’s knowledge, the Security Documents create a valid security interest in the Pledged Collateral, securing the payment of the Debt, and upon the filing in the appropriate filing offices of the financing statements to be executed and delivered pursuant to this Agreement and the receipt of the original certificates evidencing such interests in the Pledged Collateral, such security interests will be perfected, first priority security interests, and all filings and other actions necessary to perfect such security interests will have been duly taken.
3.1.52      Mortgage Loan . . The Initial Advance under the Mortgage Loan has been funded in the amount of Two Hundred Ten Million Eight Hundred Twenty-Five Thousand and No/100 Dollars ($210,825,000.00) and a Future Advance under the Mortgage Loan has been funded in the amount of Zero and No/100 Dollars ($0.00). The outstanding principal balance of the Mortgage Loan, as of the date hereof, is Two Hundred Ten Million Eight Hundred Twenty-Five Thousand and No/100 Dollars ($210,825,000.00) No default, breach, violation or Event of Default has occurred under the Mortgage Loan Documents which remains uncured or unwaived. Each and every representation and warranty of the Mortgage Borrower and/or any guarantor or indemnitor under any of the Mortgage Loan Documents, made to Mortgage Lender contained in any one or more of the Mortgage Loan Documents is true, correct, complete and accurate in all material respects as of the date hereof and are hereby incorporated into this Agreement and deemed made hereunder as and when made thereunder and shall remain incorporated without regard to any waiver, amendment or other modification thereof by the Mortgage Lender or to whether the related Mortgage Loan Document has been repaid, defeased or otherwise terminated, unless otherwise consented to in writing by Lender.

-86-


Section 3.2      Survival of Representations .
The representations and warranties set forth in Section 3.1 are made as of the Closing Date (or as of another date specifically set forth herein) and shall be remade to the extent and at the times required under this Agreement. All representations, warranties, covenants and agreements made in this Agreement or in the other Loan Documents by Borrower shall be deemed to have been relied upon by Administrative Agent and the Lenders notwithstanding any investigation heretofore or hereafter made by Administrative Agent or any Lender or on their behalf.
Section 3.3      ERISA .
Each Lender represents and warrants to Borrower, as of the date of this Agreement and during the term of the Loan, that the assets loaned to Borrower will not be “plan assets” (within the meaning of 29 CFR § 2510.3-101, as modified by Section 3(42) of the ERISA).
IV.      BORROWER COVENANTS
Section 4.1      Borrower Affirmative Covenants .
From and after the Closing Date until the repayment in full of the Debt, Borrower hereby covenants and agrees with Administrative Agent and the Lenders that:
4.1.1      Existence; Compliance with Legal Requirements . Borrower shall, and shall cause Mortgage Borrower to, or cause to be done all things necessary to preserve, renew and keep in full force and effect its existence, rights, licenses, permits and franchises necessary for the conduct of its business, and comply with all Legal Requirements applicable to it, the Property or the Collateral, including, without limitation, Prescribed Laws. Borrower shall, and shall cause Mortgage Borrower to, continue to comply with the Patriot Act and OFAC, including, without limitation, the provisions of Sections 3.1.41 and 3.1.42 , throughout the Term of the Loan. There shall never be committed by Borrower, and Borrower shall never permit any other Person in occupancy of or involved with the operation or use of the Collateral to commit any act or omission affording any Governmental Authority the right of forfeiture against the Collateral or any part thereof or any monies paid in performance of Borrower’s obligations under any of the Loan Documents. Borrower hereby covenants and agrees not to commit, permit or suffer to exist any act or omission affording such right of forfeiture. Borrower shall at all times maintain, preserve and protect all franchises and trade names and preserve all the remainder of its property used or useful in the conduct of its business and shall cause Mortgage Borrower to keep the Property in reasonably good working order and repair, and from time to time make, or cause to be made, all reasonably necessary repairs, renewals, replacements, betterments and improvements thereto, in each case to the extent commercially reasonable. After prior written notice to Administrative Agent, Borrower, at its own expense, may contest by appropriate legal proceeding promptly initiated and conducted in good faith and with due diligence, the validity of any Legal Requirement, the applicability of any Legal Requirement to Borrower or the Collateral or any alleged violation of any Legal Requirement, provided that (i) no Event of Default has occurred and remains uncured; (ii) such proceeding shall be permitted under and be conducted in accordance with the provisions of the Pledge Agreement and shall not constitute a default thereunder or under the other Loan Documents and such proceeding

-87-


shall be conducted in accordance with all applicable Legal Requirements; (iii) none of the Collateral nor any part thereof or interest therein will be in danger of being sold, forfeited, terminated, cancelled or lost; (iv) Borrower shall promptly upon final determination thereof comply with any such Legal Requirement determined to be valid or applicable or cure any violation of any Legal Requirement; (v) such proceeding shall suspend the enforcement of the contested Legal Requirement against Borrower or the Collateral; and (vi) Borrower shall furnish such security as may be reasonably required in the proceeding, or as may be reasonably requested by Administrative Agent, to insure compliance with such Legal Requirement, together with all interest and penalties payable in connection therewith. Administrative Agent, for the benefit of Lenders, may apply any such security, as necessary to cause compliance with such Legal Requirement at any time when, in the reasonable good faith judgment of Administrative Agent, the validity, applicability or violation of such Legal Requirement is finally established, the Collateral (or any material part thereof or material interest therein) may reasonably be in danger of being sold, forfeited, terminated, cancelled or lost or there shall be any reasonable danger of the Lien of the Pledge Agreement being primed by any related Lien.
4.1.2      Property Taxes and Other Charges .
(a)      Borrower shall cause Mortgage Borrower to pay, or shall cause its Tenant(s) to pay (to the extent any Tenant is obligated to make such payments under its Lease), all Property Taxes and Other Charges now or hereafter levied or assessed or imposed against the Property or any part thereof as the same become due and payable (and with respect to Property Taxes, prior to the date the same become delinquent); provided, however, Borrower’s obligation to directly pay Property Taxes shall be suspended for so long as Borrower causes Mortgage Borrower to comply with the terms and provisions of the Mortgage Loan Agreement. Upon Administrative Agent’s request, Borrower shall furnish to Administrative Agent receipts for the payment or other evidence satisfactory to Agent that the Property Taxes and the Other Charges have been so paid prior to the date the same shall become delinquent; provided, however, that Borrower is not required to furnish such receipts for payment of Property Taxes so long as Borrower complies with the terms and provisions of Section 6.2 hereof. Borrower shall cause Mortgage Borrower to not permit or suffer and shall promptly cause Mortgage Borrower to discharge any lien or charge against the Property, and shall promptly cause Mortgage Borrower to pay for all utility services provided to the Property. After prior notice to Administrative Agent, Borrower, at its own expense, may permit Mortgage Borrower to contest by appropriate legal proceeding, conducted in good faith and with due diligence, the amount or validity of any Taxes or Other Charges, provided that (i) no Default or Event of Default has occurred and remains uncured; (ii) such proceeding shall be permitted under and be conducted in accordance with all applicable statutes, laws and ordinances; (iii) neither the Property nor any part thereof or interest therein will be in danger of being sold, forfeited, terminated, canceled or lost; (iv) Borrower shall promptly upon final determination thereof cause Mortgage Borrower to pay the amount of any such Taxes or Other Charges, together with all costs, interest and penalties which may be payable in connection therewith; (v) such proceeding shall suspend the collection of Taxes or Other Charges from the Property or Borrower shall have paid the same (or shall have caused the same to be paid) under protest; and (vi) unless Mortgage Borrower is required to deposit the same with the relevant Governmental Authority, Mortgage Borrower shall have deposited with Mortgage Administrative Agent or Mortgage Borrower shall furnish such have

-88-


furnished such security as provided in the Mortgage Loan Agreement, to insure the payment of any such Taxes or Other Charges, together with all interest and penalties thereon.
(b)      Borrower shall cause Mortgage Borrower to timely pay or cause to be paid, as the same shall become due and payable, all Taxes (other than Property Taxes) levied or imposed upon it or its properties, income or assets, except those that are being contested in good faith by appropriate proceedings, diligently conducted and for which adequate reserves have been established on the books of Borrower in accordance with Accounting Principles. Borrower shall, throughout the duration of any obligation under any Loan Document, remain a disregarded entity.
4.1.3      Litigation . Borrower shall give prompt notice to Administrative Agent of any litigation or governmental proceedings pending or threatened in writing against the Property, the Collateral, Borrower, Mortgage Borrower or any SPC Party. Borrower shall give prompt notice to Administrative Agent of any litigation or governmental proceedings pending or threatened in writing against Guarantor which are reasonably likely to materially adversely affect Guarantor’s financial condition or business (including Guarantor’s ability to perform its obligations under the other Loan Documents to which Guarantor is a party).
4.1.4      Access to Property . Subject to tenants’ rights under the Leases, Borrower shall, and shall cause Mortgage Borrower to, permit Administrative Agent, any Construction Consultant and their respective representatives, upon twenty-four (24) hours’ prior written notice to enter upon the Property during normal business hours. Borrower shall, and shall cause Mortgage Borrower to, reasonably cooperate, and use commercially reasonable efforts to cause Manager to reasonably cooperate, with Administrative Agent and Construction Consultant to enable each Person to perform its functions hereunder. Subject to the rights of tenant’s under Leases, Administrative Agent, Construction Consultant or their agents, representatives, consultants and employees as part of any inspection may take soil, air, water, building material and other samples from the Property, and shall have the right to undertake testing of such soil, air, water, building material and other samples at Borrower’s or Mortgage Borrower’s cost and expense in the event that, in Administrative Agent’s reasonable opinion, such testing is necessary, and provided that Administrative Agent shall cause any Person performing invasive testing at the Property to maintain (or be covered by) customary and appropriate insurance in light of the testing to be undertaken by such Person; provided that Administrative Agent shall be liable for any damage to the Property caused by any Lender, Administrative Agent or the Construction Consultant’s gross negligence or willful misconduct and provided further that, unless an Event of Default is continuing and/or Administrative Agent reasonably believes that an environmental condition or a violation of environmental law exists with respect to the Property, any such testing in excess of once per calendar year shall be at Administrative Agent’s cost and expense.
4.1.5      Further Assurances . Borrower shall, at Borrower’s sole cost and expense:
(a)      execute and deliver to Administrative Agent such documents, instruments, certificates, assignments and other writings, and do such other acts reasonably necessary, to evidence, preserve and/or protect the collateral at any time securing or intended to secure the obligations of Borrower under the Loan Documents, as Administrative Agent may reasonably

-89-


require, provided that any of the foregoing shall not increase the obligations or liabilities of Borrower or decrease any rights of Borrower other than to a de minimis extent;
(b)      cure any defects in the execution and delivery by Borrower or a Borrower Related Party of the Loan Documents and execute and deliver to Administrative Agent such documents, instruments, certificates, assignments and other writings, and do such other acts as reasonably necessary or reasonably requested by Administrative Agent, to evidence, preserve and/or protect the Property any other collateral at any time securing or intended to secure the obligations of Borrower under the Loan Documents, as Administrative Agent may reasonably require including, without limitation, the execution and delivery of all such writings necessary to transfer any licenses with respect to the Property into the name of Administrative Agent or its designee after the occurrence, and during the continuance, of an Event of Default, provided that any of the foregoing shall not increase the obligations or liabilities of Borrower or decrease any rights of Borrower other than to a de minimis extent; and
(c)      do and execute all and such further lawful and reasonable acts, conveyances and assurances for the better and more effective carrying out of the intents and purposes of this Agreement and the other Loan Documents, as Administrative Agent shall reasonably require from time to time provided that any of the foregoing shall not increase the obligations or liabilities of Borrower or decrease any rights of Borrower other than to a de minimis extent.
4.1.6      Financial Reporting .
(a)      Borrower will keep and maintain or will cause to be kept and maintained on a Fiscal Year basis in accordance with the Accounting Principles (or such other accounting basis selected by Borrower, consistently applied and reasonably acceptable to Administrative Agent), proper and accurate books, records and accounts reflecting all of the financial affairs of Borrower and Mortgage Borrower and all items of income and expense in connection with the operation of the Property. Administrative Agent shall have the right from time to time at all times during normal business hours upon reasonable notice (which may be verbal) to examine such books, records and accounts at the office of Borrower or any other Person maintaining such books, records and accounts and to make such copies or extracts thereof as Administrative Agent shall request. After the occurrence and during the continuance of an Event of Default beyond the expiration of any applicable notice and cure periods, Borrower shall pay any reasonable costs and expenses incurred by Administrative Agent to examine Borrower’s accounting records with respect to the Property, as Administrative Agent shall reasonably determine to be necessary or appropriate in the protection of Administrative Agent’s interest. Upon Administrative Agent’s reasonable written request, Borrower shall furnish (or cause to be furnished) to Administrative Agent such other information reasonably necessary and sufficient to fairly represent the financial condition of Borrower, Mortgage Borrower, the Collateral and the Property.
(b)      Borrower shall, and shall cause Mortgage Borrower to, furnish to Administrative Agent annually, within one hundred twenty (120) days following the end of each calendar year, a complete copy of Borrower’s, Mortgage Borrower’s and Guarantor’s annual financial statements prepared in accordance with Accounting Principles including statements of income and expense and cash flow for Borrower, Mortgage Borrower and the Property and a balance

-90-


sheet for Borrower and Mortgage Borrower. Borrower’s, Mortgage Borrower’s and Guarantor’s annual financial statements shall be audited by a “big four” accounting firm or another certified public accountant (accompanied by an unqualified opinion from such accounting firm or independent certified public accountant) in form and content reasonably acceptable to Administrative Agent. Borrower’s and Guarantor’s annual financial statements shall be accompanied by an Officer’s Certificate executed by a duly authorized financial officer of Borrower or Guarantor, as applicable, stating that such annual financial statement presents fairly the financial condition and the results of operations of (x) Borrower and the Property (y) or Guarantor, as applicable, in all material respects. Notwithstanding the reporting requirements set forth above for Guarantor, the KBS Guarantor shall only be required to comply with the financial reporting requirements set forth in the Limited Recourse Guaranty.
(c)      Borrower shall furnish the following items to Administrative Agent within forty-five (45) days after the end of each calendar quarter for quarterly requests: (i) monthly and year-to-date operating statements, noting net operating income and other information necessary and sufficient under the Accounting Principles to fairly represent the financial position and results of operation of the Property during such calendar quarter, all in form reasonably satisfactory to Administrative Agent; (ii) a balance sheet for such calendar quarter; (iii) a comparison of the budgeted income and expenses and the actual income and expenses for each month and year-to-date for the Property, and having annexed to it a general ledger; (iv) a statement that neither Borrower nor Mortgage Borrower has incurred any indebtedness other than Permitted Indebtedness; and (v)  an updated Rent Roll for the Property. Each such statement shall be accompanied by an Officer’s Certificate certifying, to the best of the signer’s knowledge, (1) that such items are true, correct, accurate, and complete in all material respects and fairly present the financial condition and results of the operations of Borrower, Mortgage Borrower, the Collateral and the Property in accordance with Accounting Principles (subject to normal year-end adjustments), (2) whether there exists a Default or Event of Default, and if so, the nature thereof, the period of time it has existed and the action then being taken to remedy it, and (3) that as of the date of such Officer’s Certificate, no litigation that is material exists involving Borrower, Mortgage Borrower, the Collateral or the Property in which all or substantially all of the potential liability is not covered by insurance, or, if so, specifying such litigation and the actions being taken in relation thereto. Such financial statements shall contain such other information as shall be reasonably requested by Administrative Agent for purposes of calculations to be made by Administrative Agent pursuant to the terms hereof.
(d)      During any Cash Trap Period, Borrower shall, in addition to the quarterly statements referenced in subsection (c) of this Section 4.1.6 , provide monthly reports to Administrative Agent, which shall include all of the items in the quarterly reports (other than items (ii) and (iv) of such subsection (c)) and, with respect to clause 4.1.6(c)(iii), but only if such analysis has otherwise been prepared by Borrower or Mortgage Borrower, a detailed explanation of any line item variances that exceed ten percent (10%) or more between budgeted and actual amounts for such period and year-to-date.
(e)      Borrower shall submit, and shall cause Mortgage Borrower to submit to Administrative Agent an Annual Budget no later than thirty (30) days prior to the commencement of such period or Fiscal Year in form reasonably satisfactory to Administrative Agent. The Annual

-91-


Budget shall be subject to Administrative Agent’s approval not to be unreasonably withheld, conditioned or delayed (each such Annual Budget, an “ Approved Annual Budget ”) and to be subject to the Deemed Consent Mechanics. In the event that Administrative Agent objects to a proposed Annual Budget submitted by Borrower or Mortgage Borrower which requires the reasonable approval of Administrative Agent hereunder, Administrative Agent shall advise Borrower of such objections within ten (10) Business Days after receipt thereof (and deliver to Borrower a reasonably detailed description of such objections) and Borrower shall promptly revise such Annual Budget and resubmit the same to Administrative Agent. Administrative Agent shall advise Borrower of any objections to such revised Annual Budget within five (5) Business Days after receipt thereof (and deliver to Borrower a reasonably detailed description of such objections) and Borrower shall promptly revise the same in accordance with the process described in this subsection until Administrative Agent reasonably approves the Annual Budget. Until such time that Administrative Agent approves a proposed Annual Budget that requires the approval of Administrative Agent hereunder, the most recently Approved Annual Budget shall apply; provided that, such Approved Annual Budget shall be adjusted to reflect actual increases in Taxes, Insurance Premiums and Other Charges.
(f)      In the event that Borrower or Mortgage Borrower must incur an Operating Expense or Capital Expenditure not set forth in the Approved Annual Budget the cost of which exceeds ten percent (10%) of the total Approved Annual Budget (each an “ Extraordinary Expense ”), then Borrower shall promptly deliver to Administrative Agent a reasonably detailed explanation of such proposed Extraordinary Expense for Administrative Agent’s reasonable approval, subject to the Deemed Consent Mechanics.
(g)      Any reports, statements or other information required to be delivered under this Agreement may be delivered in electronic form and prepared using Excel®. Borrower agrees that Administrative Agent may disclose information regarding the Property, the Collateral, Borrower and Mortgage Borrower that is provided to Administrative Agent pursuant to this Section 4.1.6 in connection with any Secondary Market Transaction to such parties requesting such information in connection with such Secondary Market Transaction.
(h)      If Borrower fails to provide to Administrative Agent or its designee any of the financial statements, certificates, reports or information (the “ Required Records ”) required by this Section 4.1.6 within the applicable time periods set forth in this Section 4.1.6 , Administrative Agent shall have the option, upon fifteen (15) days’ written notice to Borrower, to gain access to Borrower’s books and records and prepare or have prepared at Borrower’s reasonable expense, any Required Records not delivered by Borrower. In addition, it shall be an Event of Default if any of the following shall occur: (i) any failure of Borrower to provide to Administrative Agent any of the Required Records within the applicable time periods set forth in this Section 4.1.6 , if such failure continues for fifteen (15) days after written notice thereof, (ii) in the event any Required Records shall be materially inaccurate or false, or (iii) in the event of the failure of Borrower to permit Administrative Agent or its representatives to inspect said books, records and accounts upon request of Administrative Agent as required by this Section 4.1.6 .

-92-


(i)      Borrower shall furnish to Administrative Agent, within ten (10) Business Days after request (or as soon thereafter as may be reasonably possible), such further detailed information with respect to the operation of the Property and the financial affairs of Borrower and Mortgage Borrower as may be reasonably requested by Administrative Agent.
4.1.7      Title to the Collateral . Borrower will warrant and defend the validity and priority Administrative Agent’s (on behalf of the Lender’s) or any Lender’s security interest in the Collateral against the claims of all Persons whomsoever, subject only to Permitted Encumberances. Borrower shall reimburse Administrative Agent and Lenders for any losses, costs, damages or out-of-pocket expenses (including reasonable attorneys’ fees and court costs) actually incurred by Administrative Agent and/or Lenders if an interest in the Collateral, other than as permitted hereunder, is claimed by another Person.
4.1.8      Estoppel Statement . (a)  After request by Administrative Agent, Borrower shall within ten (10) Business Days furnish Administrative Agent with a statement, duly acknowledged and certified, stating (i) the unpaid principal amount of the Note, (ii) the most recent Applicable Interest Rate of the Note, (iii) the date installments of interest and/or principal were last paid, (iv) any offsets or defenses to the payment of the Debt, and (v) that this Agreement and the other Loan Documents have not been modified or if modified, giving particulars of such modification. Unless an Event of Default is continuing, requests made pursuant to this Section 4.1.8 in excess of twice per calendar year shall be at Administrative Agent’s cost and expense.
(b) After request by Borrower, provided no Event of Default exists, Administrative Agent shall within ten (10) Business Days furnish Borrower with a statement, duly acknowledged and certified, stating (i) the unpaid principal amount of the Note, (ii) the current Applicable Interest Rate of the Note, (iii) the date installments of interest and/or principal were last paid, (iv) whether or not Administrative Agent has sent any notice of default under the Loan Documents which remains uncured in the opinion of Administrative Agent, and (v) that this Agreement and the other Loan Documents have not been modified or if modified, giving particulars of such modification.
(c)     Upon Administrative Agent’s request, Borrower shall cause Mortgage Borrower to use commercially reasonable efforts to obtain and deliver to Administrative Agent an estoppel certificate from each Tenant under any Lease; provided that such certificate may be in the form required under such Lease; provided, further, that Borrower shall not be required to request or deliver such certificates more frequently than one (1) time in any twelve (12) month period (other than in connection with an Event of Default or a Secondary Market Transaction, in which case no such limitation shall apply).
4.1.9      Leases .
(a)      Generally . Promptly following written request, Borrower shall cause Mortgage Borrower to furnish Administrative Agent an updated Rent Roll for the Property. Subject to Section 4.1.9(b) , Borrower may not permit Mortgage Borrower to enter into, amend, modify, terminate or grant a waiver of any provision or right of Borrower under any Lease without Administrative Agent’s prior written consent, which, so long as no Event of Default has occurred

-93-


and is continuing, Administrative Agent shall not unreasonably withhold. All renewals of Leases and all proposed Leases: (A) shall provide for economic terms, including rental rates and net effective rental rates, that are in accordance with the Minimum Leasing Parameters, (B) unless a subordination, non-disturbance and attornment agreement is delivered pursuant to this Section 4.1.9 , shall provide that it is subordinate to the Mortgage and the Assignment of Leases and that the Tenant thereunder will attorn to Administrative Agent and any purchaser at a foreclosure sale, (C) shall be written substantially in accordance with the standard form of Lease which shall have been approved by Administrative Agent (subject to any commercially reasonable changes made in the course of negotiations with the applicable Tenant and such other changes that do not materially and adversely affect the interests of Borrower or Administrative Agent), (D) shall not be with an Affiliate of any Borrower Related Party except on market terms (which terms, notwithstanding anything in this Section 4.19(b)(i) , shall require Administrative Agent’s approval) and (E) shall not contain any option to purchase, any right of first offer to purchase, any right of first refusal to purchase, any right to terminate (except if such termination right is triggered by the destruction or condemnation of substantially all of the Property) or any other terms which would materially adversely affect Administrative Agent’s or any Lender’s rights under the Loan Documents. Within ten (10) days after the execution of a Lease or any renewals, amendments or modification of a Lease, Borrower shall deliver (or cause to be delivered) to Administrative Agent a copy thereof, together with Borrower’s certification that such Lease (or such renewal, amendment or modification) was entered into in accordance with the terms of this Agreement.
(b)      Approvals .
(i)      Borrower shall not permit Mortgage Borrower to enter into a proposed Major Lease or a proposed, renewal, extension or modification of any Major Lease affecting any of the economic terms, the length of its term or any other material provision thereof (a “ Proposed Major Lease ”) without the prior written consent of Administrative Agent, which consent shall not, so long as no Event of Default is continuing, be unreasonably withheld, conditioned or delayed. Prior to seeking Administrative Agent’s consent to any Proposed Major Lease or amendment or modification thereto, Borrower may, at Borrower’s option, submit or cause Mortgage Borrower to submit a term sheet for a Proposed Major Lease or amendment or modification thereto to Administrative Agent for preliminary conditional approval, provided that Administrative Agent shall retain the right to disapprove any such Proposed Major Lease if subsequent to any preliminary conditional approval (or deemed preliminary conditional approval pursuant to the first paragraph of this Section 4.1.9(b)(i) ) changes are made to the economic or material non-economic terms previously approved (or deemed approved) by Administrative Agent, or additional economic or material non-economic terms are added that had not previously been considered and approved (or deemed approved) by Administrative Agent in connection with such Proposed Major Lease. Administrative Agent has granted its preliminary conditional approval with respect to the ACS Extension Term Sheet and the Knotel LOI subject to the terms of the preceding sentence. If after ten (10) Business Days from receipt of such term sheet Administrative Agent has failed to reject the term sheet and not granted its conditional approval thereto, Borrower may resubmit, or cause Mortgage Borrower to resubmit such term sheet in writing and, if after an additional five (5) Business Days Administrative Agent has still failed to reject the

-94-


term sheet and not granted its conditional approval thereto, provided that no Event of Default is continuing, such preliminary conditional approval shall be deemed to have been granted, provided, however, that notice is submitted simultaneously with each request for preliminary conditional approval, specifically referencing this Section 4.1.9(b)(i) and notifying Administrative Agent in capital letters and using a 14 point font that failure to respond may result in deemed conditional approval.
(ii)      Prior to seeking Administrative Agent’s consent to any Proposed Major Lease, Borrower shall deliver, or cause Mortgage Borrower to deliver, to Administrative Agent a copy of the Proposed Major Lease blacklined to show changes from the standard form of Lease approved by Administrative Agent and then being used by Mortgage Borrower. Administrative Agent shall approve or disapprove each Proposed Major Lease within (a) in the event a term sheet with respect to such Proposed Major Lease has been preliminarily conditionally approved (or deemed preliminarily conditionally approved) by Administrative Agent pursuant to Section 4.1.9(b)(i) and there are material deviations from the term sheet, ten (10) Business Days of the receipt by Administrative Agent of a written request for such approval, accompanied by an executed or final draft copy of the Proposed Major Lease and (b) in the event a term sheet with respect to such Proposed Major Lease has not been preliminarily conditionally approved (or deemed preliminarily conditionally approved) by Administrative Agent pursuant to Section 4.1.9(b)(i) , ten (10) Business Days of the receipt by Administrative Agent of a written request for such approval, accompanied by an executed or final draft copy of the Proposed Major Lease. Provided that no Event of Default is continuing, if Administrative Agent has failed to reject Borrower’s initial request for approval and not specifically granted in writing its approval thereto as aforesaid within such ten (10) Business Day period, as the case may be, and Borrower provides Administrative Agent with an additional written request for approval (which additional written request, along with the initial request for approval, shall specifically refer to this Section 4.1.9(b)(ii) and shall explicitly state in capital letters and using a 14 point font that failure by Administrative Agent to approve or disapprove within five (5) Business Days may constitute a deemed approval) and Administrative Agent fails to reject or specifically approve the request in writing delivered to Borrower or Mortgage Borrower within five (5) Business Days after receipt by Administrative Agent of the additional request, the Proposed Major Lease shall be deemed approved by Administrative Agent, and Borrower shall be entitled to cause Mortgage Borrower to enter into such Proposed Major Lease or proposed renewal, extension or modification of an existing Major Lease. Notwithstanding anything to the contrary contained herein, Borrower shall have the right to cause Mortgage Borrower to execute Proposed Major Leases and any amendments or modifications thereto without Administrative Agent’s prior approval if the lease (or amendment, as applicable) is consistent with the term sheet approved by Administrative Agent and the lease (or amendment, as applicable) does not contain any economic or material non-economic changes to the terms previously approved (or deemed approved) by Administrative Agent.
(iii)      Notwithstanding the provisions of Section 4.1.9(a) and the preceding clauses (i)-(ii) of this Section 4.1.9(b) above, provided that no Event of Default

-95-


is continuing, renewals, assignments, subleases, amendments and modifications of existing or future Leases and the execution of proposed leases shall not be subject to the prior approval of Administrative Agent provided (i) the proposed lease would be a Minor Lease or the existing or future Lease as amended and modified (but specifically excluding amendments or modifications to Major Leases which would result in such Lease becoming a Minor Lease) or the renewal Lease is a Minor Lease, and (ii) the proposed lease shall meet the requirements of clauses (A) through (E), inclusive of Section 4.1.9(a) . For the avoidance of doubt, any Minor Lease that does not satisfy each of the requirements set forth in this Section 4.1.9(b)(iii) shall be subject to Administrative Agent’s approval, which consent shall not be unreasonably withheld, conditioned or delayed so long as no Event of Default is then continuing, and the deemed approval mechanism set forth in clauses (i)-(ii) of this Section 4.1.9(b) above shall apply in connection with the approval of any such Minor Lease.
(iv)      Borrower shall not permit Mortgage Borrower to permit or consent to any assignment or sublease of any Major Lease without Administrative Agent’s prior written approval (other than assignments or subleases expressly permitted under any Major Lease pursuant to a unilateral right of the Tenant thereunder not requiring the consent of Mortgage Borrower), which Administrative Agent shall not unreasonably withhold, delay or condition.
(c)      Covenants . Borrower shall cause Mortgage Borrower to (i) observe and perform the obligations imposed upon the lessor under the Leases in a commercially reasonable manner; (ii) enforce the terms, covenants and conditions contained in the Leases upon the part of the Tenants thereunder to be observed or performed in a commercially reasonable manner, provided, however, Borrower shall not permit Mortgage Borrower terminate or accept a surrender of a Lease without Administrative Agent’s prior approval (except following a default by a Tenant under a Lease that is not a Major Lease and termination of such non-Major Lease will not result in a Cash Trap Period, in which case no approval shall be required so long as Borrower provides Administrative Agent with written notice of such termination); (iii) not collect any of the Rents more than one (1) month in advance (other than security deposits); (iv) shall not execute any assignment of lessor’s interest in the Leases or the Rents (except as contemplated by the Mortgage Loan Documents); and (v) not alter, modify or change any Major Lease so as to decrease the amount of or change the payment date for rent, change the expiration date, grant any option for additional space or term, materially reduce the obligations of the Tenant or increase the obligations of the lessor. Borrower shall promptly send copies to Administrative Agent of all written notices of material default which Mortgage Borrower shall send or receive under the Leases.
(d)      Security Deposits . All security deposits of Tenants, whether held in cash or any other form, shall be held in compliance with all Legal Requirements and shall not be commingled with any other funds of Borrower or Mortgage Borrower. Borrower shall cause Mortgage Borrower to comply with the provisions of Section 4.19(d) of the Senior Loan Agreement.
(e)      Proceeding . Borrower shall cause Mortgage Borrower to appear in and defend any action or proceeding arising under, occurring out of, or in any manner connected with, the Leases or the obligations, duties, or liabilities of Borrower, any Tenant or any Lease guarantor.

-96-


Borrower shall pay all reasonable, out of pocket costs and expenses of Administrative Agent, including reasonable, out of pocket attorneys’ fees, in any action or proceeding in which Administrative Agent may appear.
4.1.10      Alterations . Administrative Agent’s prior approval, which approval may be granted or withheld in Administrative Agent’s sole discretion, shall be required in connection with any alterations to any Improvements (a) that are reasonably likely to have a Material Adverse Effect or (b) are structural in nature. Administrative Agent’s prior approval shall also be required (such approval not to be unreasonably withheld, delayed or conditioned) in connection with any other alterations to any Improvements (that is, alterations which would not be covered by subsection (a) or (b) of this Section 4.1.10 ), the cost of which is reasonably anticipated to exceed the Alteration Threshold. Notwithstanding the foregoing, Administrative Agent’s prior approval shall not be required for (i) Capital Expenditures the cost of which is being funded by Lenders pursuant Article 2 hereof, (ii) Tenant Improvements the cost of which is being funded by Lenders pursuant Article 2 hereof or the Building Loan Agreement, or the Build Out Work (as described in (b) below), (iii) any Restoration in accordance with the terms of the Loan Documents, (iv) any alterations that are in accordance with the Approved Annual Budget (including the variances with respect thereto permitted by this Agreement pursuant to Section 4.1.6(f)) , and (v) Tenant Improvements being undertaken by a Tenant pursuant to its Lease (to the extent Administrative Agent had an approval right with respect to such Lease and Administrative Agent approved (or was deemed to have approved) such Lease). If the total unpaid amounts incurred and to be incurred with respect to such alterations to the Improvements shall at any time exceed the Alteration Threshold, Borrower shall cause Mortgage Borrower to promptly deliver to Mortgage Administrative Agent (with evidence of same to Administrative Agent) additional security in accordance with Section 4.1.10 of the Mortgage Loan Agreement.
(b) Notwithstanding anything to the contrary set forth in subsection (a) above provided no Event of Default shall exist and be continuing, Borrower shall have the right to cause Mortgage Borrower to construct any number of speculative suites at the Property (the “ Build Out Space ”) and lease (including the offering of tenant improvement allowances in connection therewith) the Build Out Space in accordance with the Section 4.1.9 hereof (any such construction and leasing, the “ Build Out Work ”), provided that (i) no more than 40,000 rentable square feet of vacant space at the Property may qualify as Build Out Space as of any particular date, (ii) shall provide for economic terms, including rental rates and net effective rental rates, that are in accordance with the Minimum Leasing Parameters, (iii) if the Build Out Costs incurred by Mortgage Borrower in connection with the Build Out Work, on an annual basis, exceeds an average of $90.00 per rentable square foot (the “ Build Out Cost Cap ”), then prior to any amounts being advanced by Administrative Agent, Borrower shall cause Mortgage Borrower to fund from equity an amount equal to such excess costs and (iii) the construction of all such Build Out Space shall be completed no later than the then-applicable Maturity Date (assuming that, if any such Build Out Work is to be completed following the Initial Maturity Date, Borrower has not cancelled all Unadvanced Amounts in accordance with Section 2.7.7 ). Borrower shall submit (or cause to be submitted) evidence of the average cost of the Build Out Work acceptable to Administrative Agent with any Requisition for Future Advances to be applied to Build Out Costs. Borrower shall cause Mortgage Borrower to construct the Build Out Space in compliance with Section 2.6.3 .

-97-


4.1.11      Interest Rate Cap .
(a)      On the date hereof, Borrower has delivered an Interest Rate Protection Agreement to Administrative Agent, which has been approved by Administrative Agent (the “ Closing Date Interest Rate Protection Agreement ”). At all times while the Closing Date Interest Rate Protection Agreement remains in effect, the notional amount required hereunder shall be as set forth in such Closing Date Interest Protection Agreement, except, if at any time the then-notional amount provided in the Closing Date Interest Protection Agreement is less than the sum of (x) the Outstanding Principal Balance plus (y) the Building Loan Outstanding Principal Balance, Administrative Agent, shall have the right, at any time, to require that Borrower deliver a supplemental Interest Rate Protection Agreement such that such supplemental Interest Rate Protection Agreement, together with the Closing Date Interest Protection Agreement, have an aggregate amount equal to at least the sum of (x) the Outstanding Principal Balance plus (y) the Building Loan Outstanding Principal Balance. Following the expiration of the Closing Date Interest Protection Agreement, at all times during the term of the Loan (including during any extension period), Borrower shall maintain in effect an Interest Rate Protection Agreement with a notional amount equal to at least the sum of (x) the Outstanding Principal Balance plus (y) the Building Loan Outstanding Principal Balance and with a Counterparty reasonably acceptable to Administrative Agent having a Minimum Counterparty Rating. The Interest Rate Protection Agreement shall have a strike price equal to or less than the Capped LIBOR Rate.
(b)      Prior to or on the Closing Date, Borrower shall have obtained the Interest Rate Protection Agreement with a term of at least two (2) years. Borrower shall (x) at least thirty (30) days prior to the expiration of the term of any Interest Rate Protection Agreement and (y) as a condition to Borrower exercising its right to extend the term of the Loan for each Extension Period, purchase a new Interest Rate Protection Agreement having a term ending not earlier than the First Extension Maturity Date, the Second Extension Maturity Date or the Third Extension Maturity Date, as applicable, and having a strike price equal to the greater of (x) the Capped LIBOR Rate and (y) a strike price that will cause the DSCR based on the Capped LIBOR Rate to be not less than 1.25x. In the event of any withdrawal of the rating of such Counterparty by any Rating Agency or downgrade of the rating of such Counterparty by any Rating Agency below the Minimum Counterparty Rating, Borrower shall notify Administrative Agent of such downgrade and shall replace the Interest Rate Protection Agreement not later than ten (10) Business Days following such downgrade or withdrawal with an Interest Rate Protection Agreement in form and substance reasonably satisfactory to Administrative Agent (and meeting the requirements set forth in this Section 4.1.11 ) from a Counterparty having a Minimum Counterparty Rating; provided, however, that if any Rating Agency withdraws or downgrades the credit rating of the Counterparty below the Minimum Counterparty Rating, Borrower shall not be required to replace the Counterparty under the Interest Rate Protection Agreement provided that within ten (10) Business Days following such downgrade or withdrawal, (y) such Counterparty or an Affiliate thereof posts additional collateral acceptable to Administrative Agent from time to time securing its obligations under the Interest Rate Protection Agreement and shall enter into an ISDA Credit Support Annex (CSA) governed by the law of the State of New York with respect to such additional collateral or (z) an Affiliate of such Counterparty with a Minimum Counterparty Rating delivers a guaranty acceptable to Administrative Agent guaranteeing such Counterparty’s obligations under the Interest Rate Protection Agreement

-98-


and shall enter into an ISDA Credit Support Annex (CSA) governed by the law of the State of New York with respect to such guaranty. Any new or replacement Interest Rate Protection Agreement required to be delivered by Borrower to Administrative Agent hereunder shall be in form and substance substantially similar to the Interest Rate Protection Agreement in effect as of the date hereof and Borrower shall provide Administrative Agent with an Assignment of Protection Agreement with respect thereto in the form of the Assignment of Protection Agreement, together with an opinion of counsel with respect thereto reasonably acceptable to Administrative Agent. At the time Borrower enters into any Interest Rate Protection Agreement, the Counterparty and Borrower shall each be an “ Eligible Contract Participant ”, as such term is defined under the Commodity Exchange Act, and shall otherwise satisfy all requirements under the Dodd Frank Wall Street Reform and Consumer Protection Act in connection with entering into the Interest Rate Protection Agreement.
(c)      Borrower shall not (i) without the prior written consent of Administrative Agent (such consent not to be unreasonably withheld, conditioned or delayed), materially modify, amend or supplement the terms of the Interest Rate Protection Agreement, (ii) without the prior written consent of Administrative Agent (such consent not to be unreasonably withheld, conditioned or delayed), except in accordance with the terms of the Interest Rate Protection Agreement, cause the termination of the Interest Rate Protection Agreement prior to its stated maturity date, (iii) without the prior written consent of Administrative Agent (such consent not to be unreasonably withheld, conditioned or delayed), except as aforesaid, waive or release any material obligation of the Counterparty (or any successor or substitute party to the Interest Rate Protection Agreement) under the Interest Rate Protection Agreement, (iv) without the prior written consent of Administrative Agent (such consent not to be unreasonably withheld, conditioned or delayed), consent or agree to any act or omission to act on the part of the Counterparty (or any successor or substitute party to the Interest Rate Protection Agreement) which, without such consent or agreement, would constitute a default under the Interest Rate Protection Agreement, (v) fail to exercise promptly and diligently each and every material right which it may have under the Interest Rate Protection Agreement to the extent commercially reasonable, (vi) take or intentionally omit to take any action or intentionally suffer or permit any action to be omitted or taken, the taking or omission of which would result in any right of offset against sums payable under the Interest Rate Protection Agreement or any defense by the Counterparty (or any successor or substitute party to the Interest Rate Protection Agreement) to payment, or (vii) fail to give prompt notice to Administrative Agent of any written notice of default given by or to Borrower under or with respect to the Interest Rate Protection Agreement, together with a complete copy of such notice.
(d)      In connection with the Interest Rate Protection Agreement delivered on the Closing Date, Borrower shall obtain and deliver to Administrative Agent an opinion of counsel from counsel (which counsel may be in-house counsel for the Counterparty) for the Counterparty upon which Administrative Agent and their successors and assigns may rely, under New York law and, if the Counterparty is a non-U.S. entity, the applicable foreign law, which shall provide in relevant part, that: (i) the Counterparty is duly organized, validly existing, and in good standing under the laws of its jurisdiction of incorporation and has the organizational power and authority to execute and deliver, and to perform its obligations under, the Interest Rate Protection Agreement; (ii) the execution and delivery of the Interest Rate Protection Agreement by the Counterparty, and

-99-


any other agreement which the Counterparty has executed and delivered pursuant thereto, and the performance of its obligations thereunder have been and remain duly authorized by all necessary action and do not contravene any provision of its certificate of incorporation or by-laws (or equivalent organizational documents) or any law, regulation or contractual restriction binding on or affecting it or its property; (iii) all consents, authorizations and approvals required for the execution and delivery by the Counterparty of the Interest Rate Protection Agreement, and any other agreement which the Counterparty has executed and delivered pursuant thereto, and the performance of its obligations thereunder have been obtained and remain in full force and effect, all conditions thereof have been duly complied with, and no other action by, and no notice to or filing with any governmental authority or regulatory body is required for such execution, delivery or performance; and (iv) the Interest Rate Protection Agreement has been duly executed and delivered by the Counterparty and constitutes the legal, valid and binding obligation of the Counterparty, enforceable against the Counterparty in accordance with its terms, subject to applicable bankruptcy, insolvency and similar laws affecting creditors’ rights generally, and subject, as to enforceability, to general principles of equity (regardless of whether enforcement is sought in a proceeding in equity or at law).
(e)      Notwithstanding anything to the contrary contained in this Section 4.1.11 or elsewhere in this Agreement, if, at any time, Administrative Agent converts the Loan to a Substitute Rate Loan, then:
(i)      within thirty (30) days after such conversion, Borrower shall, unless the prevailing interest rate derivatives markets have not yet converted to or provided a substantiated market in order to reasonably, and in good faith, replace the then-existing Interest Rate Protection Agreement with any interest rate protection agreement at the Substitute Rate, either (A) enter into, make all payments under, and satisfy all conditions precedent to the effectiveness of, a Substitute Interest Rate Protection Agreement (and in connection therewith, but not prior to Borrower taking all the actions described in this clause (i), Borrower shall have the right to terminate any then-existing Interest Rate Protection Agreement) or (B) cause the then-existing Interest Rate Protection Agreement to be modified such that such then-existing Interest Rate Protection Agreement satisfies the requirements of a Substitute Interest Rate Protection Agreement as set forth below in the definition thereof provided that any refund or other proceeds received in connection with or as a result of a conversion shall be released to Borrower to be used to purchase the Substitute Interest Rate Protection Agreement;
(ii)      following such conversion in lieu of satisfying the condition described in Section 4.1.11(b) with respect to any outstanding Extension Period, Borrower shall instead enter into, make all payments under, and satisfy all conditions precedent to the effectiveness of a Substitute Interest Rate Protection Agreement on or prior to the first day of such Extension Period; and
(iii)      from and after the date of any such conversion, all references to “Interest Rate Protection Agreement” shall be deemed to refer or relate, as applicable, to a Substitute Interest Rate Protection Agreement.

-100-


4.1.12      Material Agreements . Borrower shall, and shall cause Mortgage Borrower to (a) promptly perform and/or observe in all material respects all of the covenants and agreements required to be performed and observed by it under each Material Agreement to which it is a party in accordance therewith, and take all commercially reasonable efforts to preserve and to keep unimpaired its rights thereunder, (b) promptly notify Administrative Agent in writing of the giving of any written notice of any material default by any party under any Material Agreement of which it is aware, (c) promptly enforce the performance and observance of all of the material covenants and agreements required to be performed and/or observed by the other party under each Material Agreement to which it is a party in a commercially reasonable manner, and (d) not amend, modify, or terminate a Material Agreement in any material respect or enter into a new Material Agreement, in each case without the consent of Administrative Agent, which shall not be unreasonably withheld, conditioned or delayed.
4.1.13      [Reserved] .
4.1.14      Costs of Enforcement/Remedying Defaults . In the event (a) that the Pledge Agreement is foreclosed in whole or in part or the Note or any other Loan Document is put into the hands of an attorney for collection, suit, action or foreclosure, (b) of the foreclosure of any Lien prior to or subsequent to the Pledge Agreement, (c) of the bankruptcy, insolvency, rehabilitation or other similar proceeding in respect of Borrower, Mortgage Borrower or Guarantor or an assignment by Borrower, Mortgage Borrower or Guarantor for the benefit of its creditors, or (d) Administrative Agent shall remedy or attempt to remedy any Event of Default hereunder, Borrower shall be chargeable with and agrees to pay all reasonable, out of pocket costs incurred by Administrative Agent as a result thereof, including costs of collection and defense (including reasonable, out of pocket attorneys’, experts’, consultants’ and witnesses’ fees and disbursements) in connection therewith and in connection with any appellate proceeding or post‑judgment action involved therein, which shall be due and payable on demand, together with interest thereon from the date incurred by Administrative Agent at the Default Rate, and, in either case, together with all required service or use taxes.
4.1.15      Business and Operations . Borrower will cause Mortgage Borrower to continue to engage in the businesses currently conducted by it, including as and to the extent the same are necessary for the ownership, operation, maintenance, repair, improvement, development, sale, management and leasing of the Property. Borrower will cause Mortgage Borrower to qualify to do business and will remain in good standing under the laws of each jurisdiction as and to the extent the same are required for the ownership and leasing of the Property. Borrower shall cause Mortgage Borrower to at all times cause the Property to be maintained as office, ground floor retail and other appurtenant uses.
4.1.16      [Reserved] .
4.1.17      Maintenance of Property . Borrower shall cause Mortgage Borrower to cause the Property to be maintained in good and safe working order and repair, reasonable wear and tear, Condemnation and Casualty excepted, and in keeping with the condition and repair of properties of a similar use, value, age, nature and construction. Borrower shall not, and shall not permit Mortgage Borrower to, use, maintain or operate the Property in any manner that constitutes a public or private nuisance or that makes void, voidable, or cancelable, or increases the premium

-101-


of, any insurance then in force with respect thereto. Borrower shall and shall cause Mortgage Borrower from time to time make, or cause to be made, all reasonably necessary repairs, renewals, replacements, betterments and improvements to the Property. Borrower shall not, and shall not permit Mortgage Borrower to, make any change in the use of the Property that would materially increase the risk of fire or other hazard arising out of the operation of the Property, or do or knowingly permit to be done thereon anything that may in any way impair the value of the Property in any material respect or the Lien of the Pledge Agreement. Borrower shall not, and shall not permit Mortgage Borrower to, without the prior written consent of Administrative Agent, 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.
4.1.18      Management Agreement; Leasing Agreement; Construction Management Agreement; Project Management .
(a)      Management Agreement .
(i)      Borrower shall cause Mortgage Borrower to use commercially reasonable efforts to cause Manager to manage and lease the Property in accordance with the Management Agreement. Borrower shall cause Mortgage Borrower to (A) diligently perform and observe, in each case in all material respects, all of the terms, covenants and conditions of the Management Agreement on the part of Mortgage Borrower to be performed and observed, (B) promptly notify Administrative Agent of any written notice to Borrower or Mortgage Borrower of any material default by Borrower or Mortgage Borrower in the performance or observance of any of the terms, covenants or conditions of the Management Agreement on the part of Mortgage Borrower to be performed and observed beyond any applicable grace, notice and cure periods, (C) promptly following receipt of Administrative Agent’s written request, promptly deliver to Administrative Agent a copy of each financial statement, business plan, capital expenditures plan, report and estimate received by it pursuant to the terms of the Management Agreement, and (D) promptly enforce the performance and observance in all material respects of all of the covenants required to be performed and observed by Manager under the Management Agreement. If Mortgage Borrower shall default in the performance or observance of any term, covenant or condition of the Management Agreement on the part of Mortgage Borrower to be performed or observed beyond any applicable grace, notice or cure periods, then, without limiting Administrative Agent’s other rights or remedies under this Agreement or the other Loan Documents, and without waiving or releasing Borrower from any of its Obligations hereunder or Mortgage Borrower’s Obligations or under the Management Agreement, as applicable, Administrative Agent shall have the right, but shall be under no obligation, to pay any sums and to perform any act as may be appropriate to cause all the terms, covenants and conditions of the Management Agreement on the part of Mortgage Borrower to be performed or observed. Borrower hereby agrees to pay to Administrative Agent promptly following written demand, all such sums so paid and expended by Administrative Agent in connection therewith, together with interest thereon at the Default Rate from the day on which Borrower receives such demand until paid. All sums so paid and expended by

-102-


Administrative Agent and the interest thereon shall be secured by the legal operation and effect of the Pledge Agreement.
(ii)      Borrower may, without Administrative Agent’s consent, permit Mortgage Borrower to replace the Manager so long as the replacement manager is a Qualified Manager pursuant to a Replacement Management Agreement.
(iii)      Borrower shall not permit Mortgage Borrower to replace Manager, surrender, terminate, cancel, modify, renew or extend the Management Agreement, or enter into any other agreement relating to the management or operation of the Property with Manager or any other Person, or consent to the assignment by the Manager of its interest under the Management Agreement, or waive or release any of its rights and remedies under the Management Agreement, in each case without the express consent of Administrative Agent, which shall not be unreasonably withheld, conditioned or delayed; provided that Administrative Agent’s consent shall not be required for the termination of a Management Agreement if Mortgage Borrower has previously executed another Qualified Replacement Management Agreement for the Property. In the event that the Management Agreement expires or is terminated (without limiting any obligation of Borrower to obtain Administrative Agent’s consent to any termination or modification of the Management Agreement to the extent required in accordance with the terms and provisions of this Agreement), Borrower shall cause Mortgage Borrower to promptly enter into a Replacement Management Agreement with Manager or another Qualified Manager, as applicable.
(iv)      Administrative Agent shall have the right to require Borrower to cause Mortgage Borrower to replace the Manager with a Person which is not an Affiliate of Borrower and approved by Administrative Agent (such approval, other than during the continuance of an Event of Default, not to be unreasonably withheld, conditioned or delayed) upon the occurrence of any one or more of the following events: (i) at any time following the occurrence and during the continuance of an Event of Default, (ii) upon a change in Control of the Manager (if the Manager is an Affiliate of Sponsor), (iii) if Manager becomes a debtor in a bankruptcy proceeding or (iv) upon the occurrence of a material event of default under the Management Agreement.
(b)      Leasing Agreement .
(i)      Borrower shall cause Mortgage Borrower to use commercially reasonable efforts to cause Leasing Agent to lease and market the Property in accordance with the Leasing Agreement. Borrower shall cause Mortgage Borrower to (A) diligently perform and observe, in each case in all material respects, all of the terms, covenants and conditions of the Leasing Agreement on the part of Mortgage Borrower to be performed and observed, (B) promptly notify Administrative Agent of any notice to Borrower or Mortgage Borrower of any material default by Mortgage Borrower in the performance or observance of any of the terms, covenants or conditions of the Leasing Agreement on the part of Mortgage Borrower to be performed and observed, (C) promptly following receipt of Administrative Agent’s written request, deliver to Administrative Agent a copy of each financial statement, business plan, leasing plan, capital expenditures plan, report and

-103-


estimate received by it pursuant to the terms of the Leasing Agreement, and, in accordance with this Agreement or otherwise promptly following written request by Administrative Agent, shall cause Leasing Agent to provide Administrative Agent with reports in regard to the leasing efforts at the Property, and (D) promptly enforce the performance and observance of all of the material covenants required to be performed and observed by Listing Agent under the Leasing Agreement. If Mortgage Borrower shall default in the performance or observance of any term, covenant or condition of the Leasing Agreement on the part of Mortgage Borrower to be performed or observed beyond applicable grace, notice and cure periods, then, without limiting Administrative Agent’s other rights or remedies under this Agreement or the other Loan Documents, and without waiving or releasing Borrower from any of its Obligations hereunder or Mortgage Borrower’s Obligations under the Leasing Agreement, as applicable, Administrative Agent shall have the right, but shall be under no obligation, to pay any sums and to perform any act as may be appropriate to cause all the terms, covenants and conditions of the Leasing Agreement on the part of Mortgage Borrower to be performed or observed. Borrower hereby agrees to pay to Administrative Agent promptly following written demand, all such sums so paid and expended by Administrative Agent in connection therewith, together with interest thereon at the Default Rate from the day on which Borrower receives such demand until paid. All sums so paid and expended by Administrative Agent and the interest thereon shall be secured by the legal operation and effect of the Pledge Agreement.
(ii)      Borrower may, without Administrative Agent’s consent, cause Mortgage Borrower to replace the Leasing Agent so long as the replacement leasing agent is a Qualified Leasing Agent pursuant to a Replacement Leasing Agreement.
(iii)      Borrower shall not permit Mortgage Borrower to replace Leasing Agent, surrender, terminate, cancel, modify, renew or extend the Leasing Agreement, or enter into any other agreement relating to leasing operations at the Property with Leasing Agent or any other Person, or consent to the assignment by the Leasing Agent of its interest under the Leasing Agreement, or waive or release any of its rights and remedies under the Leasing Agreement, in each case without the express consent of Administrative Agent, which shall not be unreasonably withheld, conditioned or delayed; provided that Administrative Agent’s consent shall not be required for the termination of a Leasing Agreement if Mortgage Borrower has previously or thereafter promptly executes another Qualified Leasing Agreement for the Property. In the event that the Leasing Agreement expires or is terminated (without limiting any obligation of Borrower to obtain Administrative Agent’s consent to any termination or modification of the Leasing Agreement to the extent required in accordance with the terms and provisions of this Agreement), Borrower shall promptly cause Mortgage Borrower to enter into a Replacement Leasing Agreement with Manager or another Qualified Leasing Agent, as applicable.
(iv)      Administrative Agent shall have the right to require Borrower to cause Mortgage Borrower to replace the Leasing Agent with a Person which is not an Affiliate of Borrower and approved by Administrative Agent (such approval, other than during the continuance of an Event of Default, not to be unreasonably withheld, conditioned or delayed)

-104-


upon the occurrence of any one or more of the following events: (i) at any time following the occurrence and during the continuance of an Event of Default, or (ii) if Leasing Agent becomes a debtor in a bankruptcy proceeding.
(c)      Construction Management Agreement .
(i)      Borrower shall cause Mortgage Borrower to cause Construction Manager to manage Capital Expenditures Work and Tenant Improvement Work in accordance with the Construction Management Agreement and this Agreement. Borrower shall cause Mortgage Borrower to (A) diligently perform and observe, in each case in all material respects, all of the terms, covenants and conditions of the Construction Management Agreement on the part of Mortgage Borrower to be performed and observed, (B) promptly notify Administrative Agent of any notice to Borrower or Mortgage Borrower of any material default by Mortgage Borrower in the performance or observance of any of the terms, covenants or conditions of the Construction Management Agreement on the part of Mortgage Borrower to be performed and observed, (C) promptly following receipt of Administrative Agent’s written request, deliver to Administrative Agent a copy of each financial statement, business plan, capital expenditures plan, report and estimate received by it pursuant to the terms of the Construction Management Agreement, (D) promptly enforce the performance and observance in all material respects of all of the covenants required to be performed and observed by Construction Manager under the Construction Management Agreement and (E) in the event of any conflict between the terms and conditions of this Agreement and the terms and conditions of the Construction Management Agreement with respect to the performance of Capital Expenditures Work and Tenant Improvement Work, the terms of this Agreement shall control and Borrower shall cause Mortgage Borrower to cause Construction Manager to comply in all material respects with the terms and conditions of this Agreement. If Mortgage Borrower shall default in the performance or observance of any term, covenant or condition of the Construction Management Agreement on the part of Mortgage Borrower to be performed or observed (beyond the expiration of any applicable grace, notice and cure periods), then, without limiting Administrative Agent’s other rights or remedies under this Agreement or the other Loan Documents, and without waiving or releasing Borrower from any of its Obligations hereunder or Mortgage Borrower’s Obligations under the Construction Management Agreement, as applicable, Administrative Agent shall have the right, but shall be under no obligation, to pay any sums and to perform any act as may be appropriate to cause all the terms, covenants and conditions of the Construction Management Agreement on the part of Mortgage Borrower to be performed or observed. Borrower hereby agrees to pay to Administrative Agent promptly following demand, all such sums so paid and expended by Administrative Agent in connection therewith, together with interest thereon at the Default Rate from the day on which Borrower receives such demand until paid. All sums so paid and expended by Administrative Agent and the interest thereon shall be secured by the legal operation and effect of the Pledge Agreement.
(ii)      Borrower shall not permit Mortgage Borrower to replace Construction Manager, surrender, terminate, cancel, modify, renew or extend the Construction Management Agreement, or enter into any other agreement relating to the

-105-


Construction Management Agreement or operation of the Property with Construction Manager or any other Person, or consent to the assignment by the Construction Manager of its interest under the Construction Management Agreement, or waive or release any of its rights and remedies under the Construction Management Agreement, in each case without the express consent of Administrative Agent, which shall be granted or withheld in Administrative Agent’s sole and absolute discretion.
(iii)      Administrative Agent shall have the right to require Borrower to cause Mortgage Borrower to replace the Construction Manager with a Person which is not an Affiliate of Borrower and approved by Administrative Agent (such approval, other than during the continuance of an Event of Default, not to be unreasonably withheld, conditioned or delayed) upon the occurrence of any one or more of the following events: (i) at any time following the occurrence and during the continuance of an Event of Default, or (ii) if Construction Manager becomes a debtor in a bankruptcy proceeding.
(d)      Project Management Agreement .
(i)      Borrower shall cause Mortgage Borrower to cause Project Manager to manage work at the Improvements in accordance with the Project Management Agreement and this Agreement. Borrower shall cause Mortgage Borrower to (A) diligently perform and observe, in each case in all material respects, all of the terms, covenants and conditions of the Project Management Agreement on the part of Mortgage Borrower to be performed and observed, (B) promptly notify Administrative Agent of any notice to Borrower or Mortgage Borrower of any material default by Borrower or Mortgage in the performance or observance of any of the terms, covenants or conditions of the Project Management Agreement on the part of Mortgage Borrower to be performed and observed, (C) promptly following receipt of Administrative Agent’s written request, deliver to Administrative Agent a copy of each financial statement, business plan, capital expenditures plan, report and estimate received by it pursuant to the terms of the Project Management Agreement, (D) promptly enforce the performance and observance in all material respects of all of the covenants required to be performed and observed by Project Manager under the Project Management Agreement and (E) in the event of any conflict between the terms and conditions of this Agreement and the terms and conditions of the Project Management Agreement with respect to the performance of Capital Expenditures Work and Tenant Improvement Work, the terms of this Agreement shall control and Borrower shall cause Mortgage Borrower to Project Manager to comply in all material respects with the terms and conditions of this Agreement. If Mortgage Borrower shall default in the performance or observance of any term, covenant or condition of the Project Management Agreement on the part of Mortgage Borrower to be performed or observed (beyond the expiration of any applicable grace, notice and cure periods), then, without limiting Administrative Agent’s other rights or remedies under this Agreement or the other Loan Documents, and without waiving or releasing Borrower from any of its Obligations hereunder Mortgage Borrower’s Obligations or under the Project Management Agreement, as applicable, Administrative Agent shall have the right, but shall be under no obligation, to pay any sums and to perform any act as may be appropriate to cause all the terms, covenants and conditions of the Project

-106-


Management Agreement on the part of Mortgage Borrower to be performed or observed. Borrower hereby agrees to pay to Administrative Agent promptly following demand, all such sums so paid and expended by Administrative Agent in connection therewith, together with interest thereon at the Default Rate from the day on which Borrower receives such demand until paid. All sums so paid and expended by Administrative Agent and the interest thereon shall be secured by the legal operation and effect of the Pledge Agreement.
(ii)      Borrower shall not permit Mortgage Borrower to replace Project Manager, surrender, terminate, cancel, modify, renew or extend the Project Management Agreement, or enter into any other agreement relating to the Project Management Agreement or operation of the Property with Project Manager or any other Person, or consent to the assignment by the Project Manager of its interest under the Project Management Agreement, or waive or release any of its rights and remedies under the Project Management Agreement, in each case without the express consent of Administrative Agent, which shall be granted or withheld in Administrative Agent’s sole and absolute discretion.
(iii)      Administrative Agent shall have the right to require Borrower to cause Mortgage Borrower to replace the Project Manager with a Person which is not an Affiliate of Borrower and approved by Administrative Agent (such approval, other than during the continuance of an Event of Default, not to be unreasonably withheld, conditioned or delayed) upon the occurrence of any one or more of the following events: (i) at any time following the occurrence and during the continuance of an Event of Default, or (ii) if Project Manager becomes a debtor in a bankruptcy proceeding.
4.1.19      O&M Plan . Borrower covenants and agrees to cause Mortgage Borrower to implement an Operating & Maintenance Plan for Asbestos-Containing Materials with respect to the Property “ O&M Program ”) and to follow the terms and conditions of the O&M Program during the term of the Loan, including any extension or renewal thereof. Administrative Agent’s requirement that Borrower cause Mortgage Borrower to comply with the O&M Program shall not be deemed to constitute a waiver or modification of any of Borrower’s covenants and agreements with respect to environmental laws, hazardous substances, lead-based paint and asbestos.
4.1.20      Costs . Borrower shall pay when due all costs and expenses required under this Agreement. In addition to Administrative Agent’s right to obtain a New Appraisal at Borrower’s sole cost and expense as specifically set forth in this Agreement, Administrative Agent shall have the right to obtain a New Appraisal at Borrower’s sole cost expense one time per year, except, if an Event of Default has occurred and is continuing, Administrative Agent shall have the right to obtain more than one New Appraisal at Borrower’s sole cost and expense during a calendar year.
4.1.21      Notice of Default . Borrower shall promptly advise Administrative Agent of the occurrence of any monetary Default, material non-monetary Default or Event of Default of which Borrower has actual knowledge.

-107-


4.1.22      Cooperate in Legal Proceedings . Borrower shall cooperate fully with Administrative Agent with respect to any proceedings before any court, board or other Governmental Authority or tribunal (including any arbitration or mediation) which is reasonably likely to in any way affect the rights of Administrative Agent hereunder or any rights obtained by Administrative Agent under any of the other Loan Documents and, in connection therewith, permit Administrative Agent, at its election and expense, to participate in any such proceedings.
4.1.23      Appraisals . In addition to Administrative Agent’s right to obtain a New Appraisal at Borrower’s sole cost and expense as otherwise specifically set forth in this Agreement, Administrative Agent shall have the right to obtain a New Appraisal at Borrower’s sole cost and expense one time every two (2) years, except, if an Event of Default has occurred, Administrative Agent shall have the right to obtain one or more New Appraisals at Borrower’s sole cost and expense during a calendar year (provided, however, regardless of the obligation for payment of such New Appraisal as set forth above, this shall not limit Administrative Agent’s right to obtain a New Appraisal).
4.1.24      [Reserved] .
4.1.25      Principal Place of Business, State of Organization . Except as otherwise expressly permitted in this Agreement, Borrower will not cause or permit any change to be made in its name, identity or corporate or partnership structure. Borrower shall cause its principal place of business and chief executive office, and the place where Borrower keeps its books and records, including recorded data of any kind or nature, regardless of the medium or recording, including software, writings, plans, specifications and schematics, has been for the entire period of the existence of Borrower and will continue to be the address of Borrower set forth at the introductory paragraph of this Agreement, unless Borrower provides Administrative Agent with twenty (20) days prior written notice of any change of the foregoing and adequate information as to the new location of Borrower’s principal place of business, chief executive office and location of its books and records. Borrower shall promptly notify Administrative Agent of any change in its organizational identification number.
4.1.26      Business and Operations . Borrower will cause Mortgage Borrower to continue to engage in the ownership, maintenance, construction, development, renovation, leasing, management and operation of the Property and the personal property related thereto, or make any change in the scope or nature of its business objectives, purposes or operations, or undertake or participate in activities other than the continuance of its present business. Borrower will and will cause Mortgage Borrower to qualify to do business and will remain in good standing under the laws of the jurisdiction as and to the extent the same are required for the ownership, maintenance, renovation, leasing, management and operation of the Property. Borrower shall at all times during the Term of the Loan, cause Mortgage Borrower to continue to own all of the Equipment, Fixtures and Personal Property which are necessary to operate the Property in the manner required hereunder and in the manner in which it is currently operated.
4.1.27      Performance by Borrower . Borrower shall cause Mortgage Borrower to (i) at all times comply in all material respects with all Easements, covenants, restrictions, declarations or other agreements of record to which Mortgage Borrower is a party

-108-


or to which Mortgage Borrower or the Property is bound, and (ii) without the prior written consent of Administrative Agent (not to be unreasonably withheld, conditioned or delayed), will not terminate, or amend or modify in any material respect, any of the foregoing.
4.1.28      Licenses . Borrower shall comply with the following covenants:
(a)      Licenses . Borrower shall cause Mortgage Borrower to keep and maintain all certifications, permits, licenses and approvals (including, without limitation, certificates of completion and occupancy permits required of Mortgage Borrower) then-required for the legal use, occupancy and operation of the Property for its then-current use, and shall not transfer (or permit Mortgage Borrower to transfer) any of the foregoing (except in connection with a Permitted Transfer or a Transfer otherwise permitted pursuant to the terms of this Agreement).
4.1.29      Business Maintenance . Borrower shall cause Mortgage Borrower to maintain operational requirements for the Property such that the Property is maintained in accordance with the standards consistent with commercially reasonable customs and practices in the area where the Property is located (subject to normal wear and tear), and with the commercially reasonable customs and practice found in the development and management of office properties similar to the Property.
4.1.30      Easements and Restrictions; Zoning . Borrower shall cause Mortgage Borrower to submit to Administrative Agent for Administrative Agent’s reasonable approval prior to the execution thereof by Mortgage Borrower all proposed Easements, restrictions, covenants, permits, licenses, and other instruments (other than Permitted Encumbrances) which would affect the title to the Property or use of the Property for its intended purposes, accompanied by a Survey for any Easements showing the exact proposed location thereof and such other information as Administrative Agent shall require. Borrower shall not permit Mortgage Borrower to subject the Property or any part thereof to any Easement, restriction or covenant (including any restriction or exclusive use provision in any Lease or other occupancy agreement) which is not a Permitted Encumbrance without the prior approval of Administrative Agent, such approval not to be unreasonably withheld, delayed or conditioned. With respect to any and all existing Easements, restrictions, covenants or operating agreements which benefit or burden the Property as of the Closing Date, any Easement, restriction or covenant to which the Property may hereafter be subjected in accordance with the provisions hereof and any zoning or land use classification of the Property approved by Administrative Agent, Borrower shall cause Mortgage Borrower to: (a) observe and perform the obligations imposed upon Mortgage Borrower or the Property; (b) not alter, modify or change the same without the prior written approval of Administrative Agent, which approval shall not be unreasonably withheld, conditioned or delayed in the case of any non-material alteration, modification or change thereto; (c) enforce its rights thereunder in a commercially reasonable manner so as to preserve for the benefit of the Property the material benefits of the same; and (d) deliver to Administrative Agent a copy of any written notice of default or other material written notice or correspondence received or delivered by Mortgage Borrower in respect of the same promptly after Borrower’s receipt or within a reasonable period of time before Mortgage Borrower’s delivery of such notice or correspondence.

-109-


4.1.31      Laborers, Subcontractors and Materialmen . Borrower shall notify Administrative Agent promptly, and in writing, if Borrower or Mortgage Borrower receives any written default notice, notice of lien or demand for past due payment, from any contractor, laborer, subcontractor or materialmen. Borrower will also furnish or cause to be furnished to Administrative Agent at any time and from time to time upon reasonable demand by Administrative Agent, lien waivers in form reasonably satisfactory to Administrative Agent bearing a then current date from the applicable contractor(s).
4.1.32      Ownership of Personalty . Borrower shall furnish or cause to be furnished to Administrative Agent, if Administrative Agent so requests, copies of the fully executed contracts, bills of sale, receipted vouchers and agreements, or any of them in Mortgage Borrower’s possession and under which Mortgage Borrower claims title to the materials, articles, fixtures and other personal property used or to be used in the construction or operation of the Improvements.
4.1.33      Purchase of Material Under Conditional Sale Contract . Borrower shall not permit any materials, equipment, fixtures or any other part of the Improvements to be purchased or installed under any security agreement or other arrangements wherein the seller reserves or purports to reserve the right to remove or to repossess any such items or to consider them personal property after their incorporation in the Property, unless previously authorized by Administrative Agent in writing.
4.1.34      [Reserved] .
4.1.35      Special Purpose Bankruptcy Remote Entity . Borrower, Mortgage Borrower and each SPC Party shall at all times continue to be a Special Purpose Bankruptcy Remote Entity, in accordance with the terms of this Agreement. Neither Borrower nor Mortgage Borrower will own or use any assets other than its interests in the Property and personal property incidental to the business of owning, constructing, operating and selling the Property, the Collateral and activities incidental thereto; without limiting the foregoing, the Property shall be operated as a single property or project, generating substantially all of Borrower’s gross income, it being Borrower’s intent that the Property shall at all times and from time to time constitute “single asset real estate” for purposes of Section 362(d)(3) of the Bankruptcy Code.
4.1.36      Certificate of Occupancy . Borrower shall cause Mortgage Borrower to (a) maintain and keep in full force and effect (i) the permanent certificate of occupancy for the Improvements, or (ii) the temporary certificate of occupancy for the Improvements until receipt of the permanent certificate of occupancy, and (b) replace or renew any temporary certificate of occupancy for the Improvements that expires or otherwise terminates.
4.1.37      Minimum Equity . Savanna Guarantor shall maintain a minimum equity of $20,000,000.00 (the “ Minimum Equity Requirement ”) of cash equity invested in the Property (exclusive of any distributions from cash flow from the Property).

-110-


4.1.38      Mortgage Loan Covenants. Unless otherwise consented to in writing by Administrative Agent, Borrower shall cause Mortgage Borrower to comply with and not breach any covenants and agreements contained in the Mortgage Loan Agreement and all other Mortgage Loan Documents (including, without limitation, those certain affirmative and negative covenants set forth in Article IV of the Mortgage Loan Agreement) notwithstanding that the Mortgage Loan has been repaid or the Mortgage Loan Documents have otherwise been terminated, unless consented to in writing by Administrative Agent.
4.1.39      Curing. During the continuance of an Event of Default or an Event of Default (as defined in the Mortgage Loan Agreement), Administrative Agent shall have the right, but shall not have the obligation, to (a) cure an “Event of Default” (as defined under the Mortgage Loan Documents) and (b) satisfy any liens, claims or judgments against the Property (i) other than liens permitted by the Mortgage Loan Documents (except for broker’s liens (a) not diligently contested by Borrower or Mortgage Borrower in accordance with all applicable terms hereof and (b) in any event not discharged and removed a record (whether by payment, bonding or otherwise) within ninety (90) days following the filing and/or recordation thereof) and (ii) any liens, claims or judgments (except for broker’s liens (a) not diligently contested by Borrower or Mortgage Borrower in accordance with all applicable terms hereof and (b) in any event not discharged and removed a record (whether by payment, bonding or otherwise) within ninety (90) days following the filing and/or recordation thereof) which are not discharged and removed of record within sixty (60) days following the filing and/or recordation thereof Lender shall give Borrower notice of the same either concurrently with or promptly after exercising its rights in connection with the foregoing. Borrower shall reimburse Lender on demand for any and all reasonable costs incurred by Lender in connection with the foregoing.
4.1.40      Distributions. Any transfer of Mortgage Borrower’s funds from any account or other sources to or for the benefit of Lender pursuant to this Agreement or any other Loan Document, is intended by the parties to constitute, and shall constitute, distributions from Mortgage Borrower to Borrower and shall be treated as such on the books and records of each party. Any transfer of Mortgage Borrower’s funds from any account or other sources to or for the benefit of Borrower pursuant to this Agreement or any other Loan Document, is intended by the parties to constitute, and shall constitute, distributions from Mortgage Borrower to Borrower, and shall be treated as such on the books and records of each party. All such distributions must comply with the requirements of Section 18-607 of the Delaware Limited Liability Company Act. No provisions of the Loan Documents are intended to nor shall they create a debtor-creditor relationship between Mortgage Borrower and Lender.
4.1.41      Limitations on Distributions. Following the occurrence and during the continuance of an Event of Default, Borrower shall not make any distributions to its members.
4.1.42      Other Limitations . Neither Borrower nor any of its Affiliates shall, without the prior written consent of Administrative Agent (which may be furnished or withheld in its sole and absolute discretion), give its consent or approval to any of the following actions or items:

-111-


(a)      except in connection with any repayment in full of the Debt in accordance with the terms hereof, effecting any sale or pledge of any or all of the Property or any portion thereof or any action in connection with or in furtherance of the foregoing;
(b)      creating, incurring, assuming or suffering to exist any additional liens on any portion of the Property (other than Permitted Encumbrances);
(c)      making distributions to the partners, members or shareholders of Mortgage Borrower of property other than cash;
(d)      except as required by the Mortgage Loan Documents, making any determination to restore the Property after a Casualty or Condemnation; or
(e)      making any material modification, amendment, restatement or termination of the Owner’s Title Policy and Borrower shall not (and shall not permit Mortgage Borrower and/or any of its Affiliates to) take any actions or fail to take any actions, in each case, which would invalidate or otherwise materially impair the coverage provided under the Owner’s Title Policy.
4.1.43      Contractual Obligations. Other than the Loan Documents, neither Borrower nor any of its assets shall be subject to any Contractual Obligations and Borrower shall not enter into any agreement, instrument or undertaking by which it or its assets are bound, except for such liabilities, not material in the aggregate, that are incidental to its activities as a regular member of Mortgage Borrower.

Section 4.2      Borrower Negative Covenants .
From and after the Closing Date until the repayment of the Debt in full, Borrower hereby covenants and agrees with Administrative Agent and Lenders that:
4.2.1      Due on Sale and Encumbrance; Transfers of Interests .
(a)      Except as provided in Article VIII hereof, without the prior written consent of Administrative Agent (which consent may be granted or withheld in Administrative Agent’s sole and absolute discretion), neither Borrower nor any other Person having a direct or indirect ownership or beneficial interest in Borrower shall sell, convey, mortgage, grant, bargain, encumber, pledge, assign or transfer any interest, direct or indirect, in a Restricted Party, the Property or any part thereof, whether voluntarily or involuntarily (each, a “ Transfer ”), in violation of the covenants and conditions set forth in the Mortgage and this Agreement (collectively, “ Prohibited Transfer ”).
(b)      A Prohibited Transfer shall include, but not be limited to, (i) an installment sales agreement wherein Borrower agrees to sell the Property or any part thereof for a price to be paid in installments; (ii) an agreement by Borrower leasing all or a substantial part of the Property for other than actual occupancy by a Tenant thereunder or a sale, assignment or other transfer of, or the grant of a security interest in, Borrower’s right, title and interest in and to any Leases or any Rents other than in accordance with the Loan Documents; (iii) if a Restricted Party is a corporation,

-112-


any merger, consolidation or Sale or Pledge of such corporation’s stock or the creation or issuance of new stock in one or a series of transactions; (iv) if a Restricted Party is a limited or general partnership or joint venture, any merger or consolidation or the change, removal, resignation or addition of a general partner or the Sale or Pledge of the partnership interest of any general or limited partner or any profits or proceeds relating to such partnership interests or the creation or issuance of new limited partnership interests; (v) if a Restricted Party is a limited liability company, any merger or consolidation or the change, removal, resignation or addition of a managing member or non-member manager (or if no managing member, any member) or the Sale or Pledge of the membership interest of any member or any profits or proceeds relating to such membership interest; (vi) if a Restricted Party is a trust or nominee trust, any merger, consolidation or the Sale or Pledge of the legal or beneficial interest in a Restricted Party or the creation or issuance of new legal or beneficial interests; (vii) the removal or the replacement of Manager other than in accordance with the Loan Documents; and (viii) any action for partition of the Property (or any portion thereof or interest therein) or any similar action instituted or prosecuted by Borrower or by any other person or entity, pursuant to any contractual agreement or other instrument or under applicable law (including, without limitation, common law).
4.2.2      Liens . Borrower shall not create, incur, assume or suffer to exist any Lien on any portion of the Property or permit any such action to be taken, except for Permitted Encumbrances; provided, however, after prior notice to Administrative Agent, Borrower, at its own expense, may contest by appropriate legal proceeding, promptly initiated and conducted in good faith and with due diligence, the amount or validity or application in whole or in part of any mechanic’s or materialmen’s liens or tax liens (collectively, “ Work Charge ”); provided that (a) no Default or Event of Default has occurred and remains uncured; (b) such proceeding shall be permitted under, and be conducted in accordance with, the provisions of any other instrument to which Borrower is subject and shall not constitute a default thereunder and such proceeding shall be conducted in accordance with all applicable statutes, laws and ordinances; (c) neither the Property nor any part thereof or interest therein will be in danger of being sold, forfeited, terminated, cancelled or lost; (d) Borrower shall promptly upon final determination thereof pay the amount of any claim resulting in such Work Charge, together with all costs, interest and penalties which may be payable in connection therewith; (e) such proceeding shall suspend the collection of any claims resulting in such contested Work Charge or Borrower shall have paid the same (or shall have caused the same to be paid) under protest; and (f) Borrower shall furnish such security as may be required in the proceeding, or as may be reasonably requested by Administrative Agent, to insure the payment of any claim resulting in such contested Work Charge, together with all interest and penalties thereon.
4.2.3      Dissolution . Borrower shall not (i) to the fullest extent permitted by law, engage in any dissolution, liquidation or consolidation or merger with or into any other business entity, (ii) engage in any business activity not related to the ownership, management, leasing, selling, financing, maintaining, repairing, restoring, improving and operation of the Property, (iii) transfer, lease or sell, in one transaction or any combination of transactions, all or substantially all of the property or assets of Borrower except to the extent expressly permitted by the Loan Documents, or (iv) cause, permit or suffer any SPC Party to (A) to the fullest extent permitted by law, dissolve, wind up or liquidate or take any action, or omit to take an action, as a result of which such SPC Party would be dissolved, wound up or liquidated in whole or in part, or (B) amend, modify, waive

-113-


or terminate the certificate of incorporation or bylaws of such SPC Party, in each case without obtaining the prior consent of Administrative Agent, not to be unreasonably withheld, conditioned or delayed.
4.2.4      Change in Business . Borrower shall not enter into any line of business other than the ownership, operation, management, leasing, selling, financing, maintaining, repairing, restoring and improving of the Property and personal property related thereto.
4.2.5      Debt Cancellation . Borrower shall not cancel or otherwise forgive or release any material claim or debt (other than termination of Leases in accordance herewith) owed to Borrower by any Person, except for adequate consideration and in the ordinary course of Borrower’s business.
4.2.6      Indebtedness . Borrower shall not directly or indirectly create, incur or assume any indebtedness other than (i) the Debt, (ii) the Building Loan and (iii) the Mezzanine Loan, (iv) unsecured trade payables incurred in the ordinary course of business relating to the ownership and operation of the Property, which in the case of such unsecured trade payables (A) are not evidenced by a note, (B) do not evidence underlying obligations that exceed, at any time, a maximum aggregate amount of one percent (1%) of the Aggregate Outstanding Principal Balance and (C) are paid within sixty (60) days of the date incurred, and (v) equipment leases entered into on market terms and in the ordinary course of business (“ Approved Equipment Financing ”) (collectively, “ Permitted Indebtedness ”). Notwithstanding the foregoing, KBS SOR (BVI) Holdings, Ltd., KBS Strategic Opportunity Limited Partnership, KBS Strategic Opportunity REIT, Inc., and any of the other parties owning interests in KBS SOR (BVI) Holdings, Ltd., KBS Strategic Opportunity Limited Partnership shall be permitted to obtain loans from, or incur indebtedness from any third party lender (each a “ Corporate Loan ”) and pledge of their respective interests (direct or indirect) in KBS SOR (BVI) Holdings, Ltd., KBS Strategic Opportunity Limited Partnership and KBS SOR Properties, LLC, as security for any such Corporate Loan so long as (i) the ownership interests in Borrower, Mezzanine Borrower, JV Entity, KBS JV Partner and KBS SOR Acquisition XXV, LLC are not pledged to secure such Corporate Loan and (ii) such Corporate Loan is not specifically tied to the cash flow of the Property (as contrasted with, for example, the cash flow from a group of properties);
4.2.7      Zoning . Borrower shall not initiate or consent to any zoning reclassification of any portion of the Property or seek any variance under any existing zoning ordinance or use or permit the use of any portion of the Property in any manner that is reasonably likely to result in such use becoming a non-conforming use under any zoning ordinance or any other applicable land use law, rule or regulation, without the prior consent of Administrative Agent, which consent shall not be unreasonably withheld, conditioned or delayed.
4.2.8      No Joint Assessment . Borrower shall not suffer, permit or initiate the joint assessment of the Property (i) with any other real property constituting a tax lot separate from the Property, and (ii) with any portion of the Property which may be deemed to constitute personal property, or any other procedure whereby the lien of any taxes which may be levied against such personal property shall be assessed or levied or charged to the Property.

-114-


4.2.9      Principal Place of Business . Borrower shall not (i) change its principal place of business or name from the address and name set forth in the introductory paragraph hereof without, in each instance, (A) first giving Administrative Agent twenty (20) days’ prior notice and (B) taking all action reasonably required by Administrative Agent for the purpose of perfecting or protecting the Lien and security interest of Administrative Agent created pursuant to this Agreement and the other Loan Documents or (ii) change its organizational structure, type of entity, or jurisdiction of organization or incorporation without (A) obtaining the prior written consent of Administrative Agent, not to be unreasonably withheld, conditioned or delayed, and (B) taking all action reasonably required by Administrative Agent for the purpose of perfecting or protecting the Lien and security interest of Administrative Agent on behalf of the Lenders created pursuant to this Agreement and the other Loan Documents. At the request of Administrative Agent, Borrower shall execute a certificate in form reasonably satisfactory to Administrative Agent listing the trade names under which Borrower intends to operate the Property, and representing and warranting that Borrower does business under no other trade name with respect to the Property.
4.2.10      ERISA .
(a)      Except as would not (i) cause a material adverse effect to Borrower or (ii) subject any Lender to any tax or penalty, Borrower shall not engage in any transaction which would cause any obligation, or action taken or to be taken, hereunder (or the exercise by any Lender of any of its rights under the Note, this Agreement or the other Loan Documents) to be a non-exempt (under a statutory or administrative class exemption) prohibited transaction under the Employee Retirement Income Security Act of 1974, as amended (“ ERISA ”).
(b)      Borrower shall deliver to Administrative Agent such certifications or other evidence from time to time throughout the term of the Loan, as requested by Administrative Agent in its sole discretion, that (A) Borrower is not an “employee benefit plan” as defined in Section 3(3) of ERISA, which is subject to Title I of ERISA, or a “governmental plan” within the meaning of Section 3(32) of ERISA; (B) Borrower is not subject to any state statute regulating investments of, or fiduciary obligations with respect to, governmental plans; and (C) one or more of the following circumstances is true:
(i)      Equity interests in Borrower are publicly offered securities, within the meaning of 29 C.F.R. §2510.3-101(b)(2);
(ii)      Less than twenty-five percent (25%) of each outstanding class of equity interests in Borrower is held by “benefit plan investors” within the meaning of 29 C.F.R. §2510.3-101(f)(2) as modified by Section 3(42) of ERISA;
(iii)      Borrower qualifies as an “operating company” or a “real estate operating company” within the meaning of 29 C.F.R. §2510.3-101(c) or (e); or

-115-


(iv)      The assets of Borrower are not otherwise “plan assets” of one or more “employee benefit plans” (as defined in Section 3(3) of ERISA) subject to Title I of ERISA, within the meaning of 29 C.F.R. §2510.3-101.
4.2.11      No Distributions . Borrower shall not declare or pay any dividends or otherwise declare or make any distribution to Borrower’s members if an Event of Default exists or would occur as a result of the dividend or distribution.
4.2.12      Annual Budget . Except to the extent otherwise expressly permitted hereunder, Borrower shall not materially amend, modify or supplement the Annual Budget without the prior written consent of Administrative Agent, which consent shall not be unreasonably withheld, conditioned or delayed, other than in connection with emergency expenditures for the Property.
4.2.13      Affiliate Transactions . Borrower shall not enter into, or be a party to, any transaction with an Affiliate of any Borrower Related Party, unless Administrative Agent shall have consented to the same in writing, which consent shall not be unreasonably withheld, conditioned or delayed.
Section 4.3      Mortgage Loan . Borrower has delivered to Administrative Agent true, complete and correct copies of all Mortgage Loan Documents and none of the Mortgage Loan Documents have been amended or modified as of the date hereof. There are no documents, instruments or agreements between Mortgage Administrative Agent, Mortgage Lender and Mortgage Borrower other than those set forth in the definition of “Mortgage Loan Documents”. To Borrower’s knowledge, the Mortgage Loan Documents are in full force and effect and, as of the Closing Date, no default exists thereunder by any party thereto. Borrower shall not cause, suffer or permit Mortgage Borrower to enter into any amendment, waiver, supplement, termination or other modification of any Mortgage Loan Document without the prior written consent of Administrative Agent, which shall not be unreasonably withheld, conditioned or delayed. Borrower shall cause Mortgage Borrower to provide Administrative Agent with a copy of any amendment, waiver, supplement, termination or other modification to any Mortgage Loan Document (to the extent permitted) promptly upon the execution thereof.
V.      INSURANCE, CASUALTY AND CONDEMNATION
Section 5.1      Insurance .
5.1.1      Insurance Policies . Borrower shall cause Mortgage Borrower to (a) maintain at all times during the term of the Loan the Policies (as defined in the Mortgage Loan Agreement) required under the Mortgage Loan Agreement and (b) otherwise satisfy all covenants related thereto as provided in the Mortgage Loan Agreement. Subject to applicable law and the prior rights of Mortgage Lender under the Mortgage Loan, Borrower shall cause Lender to (i) be named as an additional named insured under such of the Policies as may be designated by Lender, (ii) receive such protections and benefits afforded Mortgage Lender under the applicable terms and conditions of the Mortgage Loan Agreement relating to the Policies as may be designated by Lender and (iii) be entitled to such notice and consent rights afforded Mortgage Lender under the applicable terms and conditions of the Mortgage Loan Agreement relating to the Policies as may be designated

-116-


by Lender. Borrower shall not permit the Policies to be canceled without at least thirty (30) days’ prior notice to Lender and any other party named therein as an additional insured. Borrower shall provide Lender with evidence of all such insurance required hereunder and with the other related notices required under the Mortgage Loan Documents, in each case, on or before the date on which Mortgage Borrower is required to provide the same to Mortgage Lender. If at any time Administrative Agent is not in receipt of written evidence that the Policies are in full force and effect, Administrative Agent shall have the right without notice to Borrower, to take such action as Administrative Agent deems necessary to protect its interest in the Property, including, without limitation, the obtaining of such insurance coverage as Lender in its sole discretion deems appropriate, and all expenses incurred by Lender in connection with such action or in obtaining such insurance and keeping it in effect shall be paid by Borrower to Lender promptly following written demand and, until paid, shall be secured by the Pledge Agreement and shall bear interest at the Default Rate. 
Section 5.2      Casualty and Condemnation .
5.2.1      Casualty . If the Property shall sustain a Casualty, Borrower shall give, or shall cause Mortgage Borrower to give, prompt notice of such Casualty to Administrative Agent and shall cause Mortgage Borrower to promptly commence and diligently prosecute to completion the repair and restoration of the Property as nearly as possible to the condition the Property was in immediately prior to such Casualty (a “ Restoration ”) and otherwise in accordance with Section 5.3 of the Senior Loan Agreement, it being understood, however, that Borrower shall not be obligated to cause Mortgage Borrower to restore the Property to the precise condition of the Property prior to such Casualty provided the Property is restored, to the extent practicable and permitted by Legal Requirements, to be of at least equal value and of substantially the same character as prior to the Casualty. Notwithstanding any Casualty, Borrower shall continue to pay the Debt at the time and in the manner provided for its payment in the Note and in this Agreement and the outstanding principal balance of the Loan shall not be reduced until any Net Liquidation Proceeds After Debt Service shall have been actually received and applied by Lender with respect to such Casualty, after the deduction of expenses of collection, to the reduction or discharge of the Debt. If the Property is sold, through foreclosure or otherwise, prior to the receipt by Lender of any Net Liquidation Proceeds After Debt Service with respect to Casualty, Lender shall have the right, whether or not a deficiency judgment on the Note shall have been sought, recovered or denied, to receive Net Liquidation Proceeds After Debt Service with respect to such Casualty, or a portion thereof sufficient to pay the Debt.
5.2.2      Condemnation . Borrower shall give, or shall cause Mortgage Borrower to give, Administrative Agent prompt notice of any actual or threatened (in writing) Condemnation by any Governmental Authority of all or any part of the Property and shall deliver to Administrative Agent a copy of any and all papers served in connection with such proceedings. Administrative Agent shall have the opportunity to participate, at Borrower’s cost, in any litigation and settlement discussions in respect thereof and Borrower shall from time to time deliver to Administrative Agent all instruments reasonably requested by Administrative Agent to permit such participation. Borrower shall, at its expense, cause Mortgage Borrower to diligently prosecute any such proceedings, and shall consult with Administrative Agent, its attorneys and experts, and cooperate with them in the carrying on or defense of any such proceedings. Notwithstanding any

-117-


Condemnation, Borrower shall continue to pay the Debt at the time and in the manner provided for its payment in the Note and in this Agreement and the outstanding principal balance of the Loan shall not be reduced until any Net Liquidation Proceeds After Debt Service shall have been actually received and applied by Lender with respect to such Condemnation, after the deduction of expenses of collection, to the reduction or discharge of the Debt. If the Property is sold, through foreclosure or otherwise, prior to the receipt by Lender of any Net Liquidation Proceeds After Debt Service with respect to a Condemnation, Lender shall have the right, whether or not a deficiency judgment on the Note shall have been sought, recovered or denied, to receive Net Liquidation Proceeds After Debt Service with respect to such Condemnation, or a portion thereof sufficient to pay the Debt.
5.2.3      Restoration . Borrower shall, or shall cause Mortgage Borrower to, deliver to Lender all reports, plans, specifications, documents and other materials that are delivered to Mortgage Lender under Section 5.3 of the Mortgage Loan Agreement, and Lender shall have the same rights (including, without limitation, all approval rights), but subject to the rights of Mortgage Lender under the Mortgage Loan Documents as Mortgage Lender has pursuant to Section 5.3 of the Mortgage Loan Agreement as set forth in connection with a restoration of the Property after Casualty or Condemnation.
VI.      RESERVE FUNDS AND SECURITY ACCOUNT FUNDS
Section 6.1      Reserve Funds and Security Account Funds .
(a)      Borrower shall cause Mortgage Borrower to deposit and maintain each of the Reserve Funds and the Security Account Funds as required under the Mortgage Loan Documents and to perform and comply with all the terms and provisions relating thereto. If requested by Lender, Borrower will promptly provide evidence reasonably acceptable to Lender of compliance with the foregoing. Borrower grants to Lender a first-priority perfected security interest in Borrower’s interest, if any, in each of the Reserve Funds and the Security Account Funds, if any, subject to the prior rights of Mortgage Lender, and any and all monies now or hereafter deposited in each Account or Security Account as additional security for payment of the Debt to the extent Borrower has an interest in same. Subject only to the qualifications regarding Mortgage Lender’s interest in the Reserve Funds and the Security Account Funds, if any, until expended or applied in accordance with the Mortgage Loan Documents or the Loan Documents, Borrower’s interest in the Reserve Funds and the Security Account Funds, if any, shall constitute additional security for the Debt and, upon the occurrence of an Event of Default, Lender may, in addition to any and all other remedies available to Lender, apply any sums then present in any or all of the Reserve Funds and the Security Account Funds to the payment of the Debt in any order in its sole discretion.
(b)      Notwithstanding anything to the contrary contained in this Agreement, if at any time and for any reason the Reserve Funds or the Security Account Funds are no longer being maintained and/or are reduced, waived or modified in any material respect (in each case, including, without limitation, due to any waiver, amendment or refinance) (such Reserve Funds or Security Account Funds, the “ Waived Reserve Funds ”), to the extent permitted to do so pursuant to the Mortgage Loan Documents (if applicable), Borrower shall promptly (i) notify Lender of the same and establish and maintain with Lender and for the benefit of Lender reserves complete in replacement and substitution thereof (the “ Substitute Reserves ”), which Substitute Reserves shall

-118-


be subject to all of the same terms and conditions applicable under the Mortgage Loan Documents, (ii) execute any amendments to this Agreement and/or the Loan Documents relating to the Substitute Reserves reasonably required by Lender (provided such amendments are substantially similar to the provisions set forth in the Mortgage Loan Agreement relating to the same) and shall cause Mortgage Borrower to acknowledge and agree to the same, (iii) remit to the applicable Substitute Reserves (and shall, to the extent not prohibited by the terms of the Mortgage Loan Documents, cause Mortgage Borrower to remit to the applicable Substitute Reserves) any Reserve Funds or Security Account Funds remaining in the Waived Reserve Funds and (iv) upon request by Lender, make a true up payment into the Substitute Reserves (provided, that, such true up payment shall in no event exceed the amount of Reserve Funds required to have been on deposit with Mortgage Lender under the Mortgage Loan Documents as of the applicable date of determination preceding the waiver, modification or reduction thereof, less any amounts remitted into the Substitute Reserves corresponding to such Waived Reserve Funds pursuant to the terms hereof). In no event shall the amount of any Waived Reserve Funds required by Lender exceed the amount of the Reserve Funds and the Security Account Funds required to have been on deposit with the Mortgage Lender under the Mortgage Loan Documents as of the applicable date of determination prior to the waiver, modification or reduction thereof. Borrower shall cause Mortgage Borrower to comply with the Mortgage Loan Cash Management Provisions and shall not (and shall not cause Mortgage Borrower) without Lenders prior written consent, to amend, restate, replace and/or otherwise modify the same. If requested by Lender, Borrower will promptly provide evidence reasonably acceptable to Lender of compliance with the foregoing.
(c)      Borrower grants to Lender a first-priority perfected security interest in Borrower’s interest, if any, in each of the Mortgage Loan Cash Management Accounts and the Security Accounts, if any, subject to the prior rights of Mortgage Lender, and any and all monies now or hereafter deposited in each Mortgage Loan Cash Management Accounts and the Security Accounts as additional security for payment of the Debt to the extent Borrower has an interest in same. Subject to the qualifications regarding Mortgage Lender’s interest in the Mortgage Loan Cash Management Accounts and the Security Accounts, if any, (i) until expended or applied in accordance with the Mortgage Loan Documents or the Loan Documents, Borrower’s interest in the Mortgage Loan Cash Management Accounts and the Security Accounts, if any, shall constitute additional security for the Debt and (ii) upon the occurrence of an Event of Default, Lender may, in addition to any and all other remedies available to Lender, apply any sums then present in any or all of the Mortgage Loan Cash Management Accounts and the Security Accounts to the payment of the Debt in any order in its sole discretion.
(d)      Notwithstanding anything to the contrary contained in this Agreement, if at any time and for any reason the Mortgage Loan Cash Management Accounts or the Security Accounts are no longer being maintained and/or the Mortgage Loan Cash Management Provisions cease to exist or are reduced, waived or modified in any material respect (in each case, including, without limitation, due to any waiver, amendment or refinance) (such accounts, the “ Waived Cash Management Accounts ” and such provisions, the “ Waived Cash Management Provisions ”), to the extent permitted to do so pursuant to the Mortgage Loan Documents (if applicable), Borrower shall promptly (i) notify Lender of the same and establish and maintain with Lender and for the benefit of Lender in replacement and substitution thereof substitute accounts (the “ Substitute Cash

-119-


Management Accounts ”), which Substitute Cash Management Accounts shall be subject to all of the same terms and conditions applicable under the Mortgage Loan Documents, (ii) execute any amendments to this Agreement and/or the Loan Documents implementing the Waived Cash Management Provisions as may be reasonably required by Lender (provided such amendments are substantially similar to the provisions set forth in the Mortgage Loan Agreement relating to the same) and shall cause Mortgage Borrower to acknowledge and agree to the same and (iii) to the extent applicable, remit to the applicable Substitute Cash Management Accounts (and shall cause Mortgage Borrower to remit to the applicable Substitute Cash Management Accounts) any funds remaining in the Waived Cash Management Accounts.
(e)      Borrower grants to Lender a first-priority perfected security interest in Borrower’s interest, if any in each of the Accounts and the Security Account sand any and all sums now or hereafter deposited in the Accounts and the Security Accounts as additional security for payment of the Debt; provided that any rights or security interest afforded to Lender shall be subject to those of Mortgage Administrative Agent and Mortgage Lender. Until expended or applied in accordance herewith, the Accounts and the Security Account and the funds deposited therein shall constitute additional security for the Debt. The provisions of this Section 6.1 (together with the other related provisions of the other Loan Documents) are intended to give Lender “control” of the Accounts and serve as a “security agreement” and a “control agreement” with respect to the same, in each case, within the meaning of the UCC. Borrower acknowledges and agrees that the Accounts are subject to the sole dominion, control and discretion of Lender, its authorized agents or designees, subject to the terms hereof, and Borrower shall have no right of withdrawal with respect to any Account or any Security Account except with the prior written consent of Administrative Agent or as otherwise provided herein or in the Mortgage Loan Documents. The funds on deposit in the Accounts and the Security Accounts shall not constitute trust funds and may be commingled with other monies held by Lender. Notwithstanding anything to the contrary contained herein, unless otherwise consented to in writing by Lender, Borrower shall only be permitted to request (and Lender shall only be required to disburse) Reserve Funds and Security Account Funds on account of the liabilities, costs, work and other matters (as applicable) for which said sums were originally reserved pursuant to the Mortgage Loan Agreement (or, if any time such Reserve Funds are Waived Reserve Funds, pursuant to this Agreement on terms and provisions consistent with the Mortgage Loan Agreement), in each case, as reasonably determined by Lender.
(f)      Mortgage. Borrower shall not, without obtaining the prior written consent of Administrative Agent, further pledge, assign or grant any security interest in the Accounts or the Security Accounts or the sums deposited therein or permit any lien to attach thereto, or any levy to be made thereon, or any UCC-1 Financing Statements, except those naming Lender as the secured party, to be filed with respect thereto. Borrower hereby authorizes Lender to file a financing statement or statements under the UCC in connection with any of the Accounts in the form required to properly perfect Lender’s security interest therein. Borrower agrees that at any time and from time to time, at the expense of Borrower, Borrower will promptly execute and deliver all further instruments and documents, and take all further action, that may be reasonably necessary or desirable, or that Lender may reasonably request, in order to perfect and protect any security interest granted or purported to be granted hereby or to enable Lender to exercise and enforce its rights and remedies hereunder with respect to any Account or any Security Account

-120-


(g)      Notwithstanding anything to the contrary contained herein or in any other Loan Document, upon the occurrence and during the continuance of an Event of Default, without notice from Lender (i) Borrower shall have no rights in respect of the Accounts or the Security Accounts, (ii) Lender may liquidate and transfer any amounts then invested in Permitted Investments (as defined in the Cash Management Agreement) pursuant to the applicable terms hereof to the Accounts or reinvest such amounts in other Permitted Investments (as defined in the Cash Management Agreement) as Lender may reasonably determine is necessary to perfect or protect any security interest granted or purported to be granted hereby or pursuant to the other Loan Documents or to enable Lender to exercise and enforce Lender’s rights and remedies hereunder or under any other Loan Document with respect to any Account or Security Account, and (iii) Lender shall have all rights and remedies with respect to the Accounts and the Security Accounts and the amounts on deposit therein, in addition to all of the rights and remedies available to a secured party under the UCC, and, notwithstanding anything to the contrary contained in this Agreement or in the Pledge Agreement, may apply the amounts of such Accounts as Lender determines in its sole discretion including, but not limited to, payment of the Debt.
Section 6.2      Security Interest in Reserve Funds and Security Account Funds.
6.2.1      Grant of Security Interest . Borrower shall be the owner of the Reserve Funds and the Security Account Funds. Borrower hereby pledges, assigns and grants a security interest to Administrative Agent, as security for payment of the Debt and the performance of all other terms, conditions and covenants of the Loan Documents on Borrower’s part to be paid and performed, in all of Borrower’s right, title and interest in and to the Deposit Account, Accounts, Reserve Funds, Security Account Funds and Security Accounts. The Deposit Account, the Accounts, Reserve Funds, Security Account Funds and Security Accounts shall be under the sole dominion and control of Administrative Agent, subject to the terms of this Agreement and the Mortgage Loan Agreement.
6.2.2      Interest on Funds . Interest accrued, if any, on the Reserve Funds shall become part of the applicable Reserve Funds in accordance with the applicable terms and conditions of the Cash Management Agreement. Interest accrued, if any, on the Working Capital Funds shall become part of the Working Capital Funds in accordance with the applicable terms and conditions of the Working Capital Account Agreement (as defined in the Senior Loan Agreement).
6.2.3      Income Taxes . Borrower shall report on its federal, state and local income tax returns all interest or income accrued on the Reserve Funds and the Security Account Funds.
6.2.4      Prohibition Against Further Encumbrance . Borrower shall not, without the prior consent of Administrative Agent, further pledge, assign or grant any security interest in the Deposit Account, the Reserve Funds, the Accounts, the Security Accounts or the Security Account Funds or permit any lien or encumbrance to attach thereto, or any levy to be made thereon, or any UCC‑1 Financing Statements, except those naming Mortgage Administrative Agent or Administrative Agent as the secured party, to be filed with respect thereto.

-121-


6.2.5      Reserve Fund Indemnification . Provided the Deposit Account, Accounts and the Reserve Funds are held with an FDIC-insured bank, Borrower shall indemnify Administrative Agent and the Lenders and hold Administrative Agent and the Lenders harmless from and against any and all Losses arising from or in any way connected with the Deposit Account, the Accounts, the Reserve Funds, the Security Accounts or the Security Account Funds, the sums deposited therein or the performance of the obligations for which the Reserve Funds or the Security Account Funds were established, except to the extent arising from the gross negligence or willful misconduct of Administrative Agent, Lenders or any of their respective agents or employees.
6.2.6      Reserve Fund Fees and Expenses . Borrower acknowledges and agrees that it solely shall be, and shall at all times remain, liable to Administrative Agent for all actual, fees, charges, costs and expenses in connection with the Deposit Account, the Accounts, the Reserve Funds, the Security Accounts and the Security Account Funds, including, without limitation, any monthly or annual fees or charges as may be assessed by Deposit Bank in connection with maintaining the Reserve Funds, and any monthly or annual fees or charges as may be assessed by Working Capital Bank (as defined in the Senior Loan Agreement) in connection with maintaining the Working Capital Account.
Section 6.3      Letters of Credit/Security Deposit . Borrower acknowledges that Mortgage Borrower is currently holding certain letters of credit as security deposits under Leases (each, a “ Tenant Letter of Credit ”). Borrower shall not permit Mortgage Borrower to allow any Tenant Letters of Credit to lapse unless permitted pursuant to the applicable Lease and Borrower shall draw down the proceeds of any Tenant Letter of Credit (to the extent permitted under any applicable Lease) prior to the expiration date thereof. Borrower further agrees that, subject to the rights of Mortgage Lender under the Mortgage Loan Documents, within ten (10) days of receipt of written demand from Administrative Agent, which shall not be made until the occurrence of an Event of Default, Borrower shall cause Mortgage Borrower to further assign to Administrative Agent each Tenant Letter of Credit and shall deliver to Administrative Agent the original of each Tenant Letter of Credit or, if Borrower has previously drawn down proceeds of a Tenant Letter of Credit and has not applied the same under the Lease, Borrower shall cause Mortgage Borrower to, in lieu of delivery of an assignment of the Tenant Letter of Credit, remit to Administrative Agent the proceeds from the draw on the Letter of Credit). Administrative Agent acknowledges that Borrower’s obligation to cause Mortgage Borrower to maintain, and deliver to Administrative Agent, any Tenant Letter of Credit or proceeds thereof shall in all cases be subject to the terms of the Leases.
VII.      DEFAULTING LENDER
Section 7.1      Defaulting Lender .
If a Lender fails to fund its Pro Rata Share of any Future Advance on or before the time required thereunder, then, Administrative Agent shall promptly notify Borrower and any other Lender that a Lender has become a Defaulting Lender, and in addition to the rights and remedies (including the right to bring an action or suit against the Defaulting Lender) that may be available to the non-Defaulting Lenders and Borrower at law and in equity, and notwithstanding any provision of this Agreement or any other agreement to the contrary, upon not less than ten (10) Business Days’ notice to Administrative Agent and all Lenders (“ Defaulting Lender Notice ”), Borrower may (i)

-122-


prepay at par the Defaulting Lender’s Pro Rata Share of the Loan, together with accrued and unpaid interest thereon and any other sums then due to such Defaulting Lender pursuant to the terms of this Agreement, excluding any Spread Maintenance Premium or any other prepayment penalty, premium or similar fee or (ii) require that such Defaulting Lender transfer all of its right, title and interest under this Agreement and the other Loan Documents to a proposed lender identified by Borrower that is an Eligible Assignee if such proposed lender agrees to assume all of the obligations of such Defaulting Lender under this Agreement and other Loan Documents, and to purchase all of such Defaulting Lender’s commitment of the Loan for an aggregate consideration equal to the aggregate outstanding principal amount of such Defaulting Lender’s commitment of the Loan, together with any accrued but unpaid interest thereon to the date of such purchase. Notwithstanding the foregoing, if a Defaulting Lender funds its Pro Rata Share of such Future Advance within two (2) Business Days after the date of delivery of a Defaulting Lender Notice, such Lender shall cease to be a Defaulting Lender; provided , that during the Term, a Lender shall be entitled to not more than three (3) cures of a failure to fund a Future Advance on or before the time required thereunder; provided , further , that non-Defaulting Lender(s) shall have the right, following the expiration of the two (2) Business Day period referred to in this sentence and prior to the expiration of the ten (10) Business Day period following delivery of a Defaulting Lender Notice to acquire at par the Defaulting Lender’s Pro Rata Share of the Loan, together with accrued and unpaid interest thereon and any other sums then due to such Defaulting Lender pursuant to the terms of this Agreement, excluding any Spread Maintenance Premium or any other prepayment penalty, premium or similar fee and the Commitments of such non-Defaulting Lender(s) shall be increased by the unfunded Commitment of the Defaulting Lender.
VIII.      PERMITTED TRANSFERS
Section 8.1      Due on Sale . The Loan is not assumable and the Loan shall be due on sale. For the avoidance of doubt, except as otherwise expressly set forth herein, a Transfer of the Property or any interest therein (including any Transfer by Mortgage Borrower to Mortgage Administrative Agent, for the benefit of the Mortgage Lenders, whether by foreclosure or a deed in lieu of foreclosure or by any other method) is prohibited under this Agreement and the other Loan Documents.
Section 8.2      Permitted Transfers of Equity Interests .
(a)      Notwithstanding anything to the contrary contained herein, but subject to the conditions set forth in this Section 8.2 , Permitted Transfers (other than those Permitted Transfers described in (c) below (except to the extent set forth therein)) shall be permitted without Administrative Agent’s consent.

-123-


(b)      In connection with any proposed Permitted Transfer (other than a Transfer described in clause (i) of the definition with respect to a publicly held real estate investment trust):
(i)      Borrower shall provide Administrative Agent written notice of such Transfer, together with copies of all instruments effecting such Transfer, and a certificate of Borrower certifying that the requirements of this Agreement have been satisfied, not less than ten (10) Business Days prior to the date of such Transfer
(ii)      subject to the terms of Section 8.2(c) below, after giving effect to any Transfer, (A) no change of Control shall occur with respect to Borrower, Mezzanine Borrower or Guarantor (other than a change of Control in the JV Entity to KBS JV Partner as permitted in the JV Agreement provided, however, such transfer shall be conditioned upon an Acceptable Replacement Guarantor from KBS JV Partner or their Affiliate being put in place and (B) Borrower shall own 100% of the direct equity interests in Mortgage Borrower;
(iii)      Borrower, Mortgage Borrower and SPC Party shall each continue to be Special Purpose Bankruptcy Remote Entities;
(iv)      Borrower shall pay all reasonable, out-of-pocket costs and expenses of Administrative Agent in connection with such Permitted Transfer, including, without limitation, all fees and expenses of Administrative Agent’s counsel;
(v)      such transferee shall not be a Prohibited Person;
(vi)      each such Transfer shall be conditioned upon Borrower’s ability to, after giving effect to the equity transfer in question, (A) remake the representations contained herein relating to ERISA matters and the Patriot Act, OFAC and matters concerning Embargoed Persons, and (B) continue to comply with the covenants contained herein relating to ERISA matters and Prescribed Laws, and in each circumstance, to the extent such Transfer would cause the transferee, together with its Affiliates, to increase its direct or indirect interest in Borrower to an amount which equals or exceeds ten percent (10%), such Borrower shall deliver a duly executed certificate certifying to the same;
(vii)      prior to any Transfer, as a result of which (and after giving effect to such Transfer), more than forty-nine percent (49%) of the direct or indirect interests in Borrower shall have been transferred to a Person not owning at least forty-nine percent (49%) of the direct or indirect interests in Borrower prior to such Transfer, Borrower shall deliver to Administrative Agent a New Non-Consolidation Opinion with respect to the proposed Transfer, which New Non-Consolidation Opinion shall be reasonably acceptable to Administrative Agent; and
(viii)      in connection with any Transfer in which a Person that did not previously own twenty percent (20%) or more of the aggregate direct and/or indirect ownership interests (at any tier of ownership) in Borrower or Guarantor shall acquire such a twenty percent (20%) direct and/or indirect ownership interest (at any tier of ownership)

-124-


in Borrower or Guarantor, Borrower shall, at least twenty (20) days before such Permitted Transfer, notify Administrative Agent of the proposed transfer and provide copies of all instruments effectuating such transfer, and any organizational documents that Administrative Agent shall require, and such other information as Administrative Agent shall reasonably request regarding the proposed transferee so as to conduct such background checks, investigations, Patriot Act, the U.S. Bank Secrecy Act, OFAC and other record searches as Administrative Agent shall reasonably (and any regulatory requirements and/or internal compliance, “know your customer” and/or committee requirements of Administrative Agent and any Lender, to the extent such internal requirements are applied on a non-discriminatory basis, shall be deemed reasonable) require (at Borrower’s sole cost and expense), and if Administrative Agent, within fifteen (15) days of receiving such notice from Borrower, sends a notice to Borrower that it has in good faith determined that such Transfer will result in a violation of its legal, regulatory or internal organizational requirements, such Transfer shall not constitute a Permitted Transfer.
IX.      SECONDARY MARKET TRANSACTION
Section 9.1      Sale of Loan .
9.1.1     Pursuant and subject to Section 11.25 hereof, a Lender shall have the right to (a) without the consent of Borrower, sell, finance or otherwise transfer the Loan (which shall include the aggregate funded and unfunded Commitment with respect to the Loan) or any portion thereof; provided, however, that, so long as no Event of Default is then existing, if the transferee of the Loan (or portion thereof) is not an Eligible Assignee, then Borrower’s consent shall be required with respect to any such sale, financing or other transfer of the Loan or any portion thereof, (b) issue or sell one or more participation interests in the Loan, or (c) issue mortgage pass–through certificates or other securities evidencing a beneficial interest in a rated or unrated public offering or private placement secured by or evidencing ownership interests in the Note and the Mortgage; provided, however, that, so long as no Event of Default is then existing, Borrower’s consent shall be required with respect to any such securitization (which consent shall not be unreasonably withheld, conditioned or delayed) ((a), (b) and (c), collectively, “ Secondary Market Transactions ”). With respect to any approval of Borrower required under this Section 9.1.1 , if Borrower fails to respond to a written request from Administrative Agent to Borrower for Borrower’s approval within ten (10) Business Days following Administrative Agent’s delivery of the materials required with respect thereto, Administrative Agent shall deliver a second notice to Borrower stating in bold uppercase letters at the top of such request “FINAL NOTICE -- TIME SENSITIVE RESPONSE REQUIRED WITHIN FIVE (5) BUSINESS DAYS OF RECEIPT, OR DEEMED APPROVAL WILL OCCUR” and if Borrower fails to respond to such second submission within such additional five (5) Business Day period, then such approval shall be deemed to have been given by Borrower.
Notwithstanding anything to the contrary contained herein, without the need to comply with any formal or procedural requirements of this Agreement or any of the Loan Documents, notwithstanding any other provision set forth in this Agreement or any of the other Loan Documents, any Lender may at any time create a security interest in all or any portion of its rights under this Agreement and any other Loan Document (including, without limitation, the advances owing to it)

-125-


in favor of (i) any Federal Reserve Bank, any Federal Home Loan Bank or the central reserve bank or similar authority of any other country to secure any obligation of Lender to such bank or similar authority (a “ Central Bank Pledge ”) or (ii) the trustee, administrator or receiver (or their respective nominees, collateral agents or collateral trustees) of a mortgage pool securing covered mortgage bonds issued by a German mortgage bank, or any other Person permitted to issue covered mortgage bonds, under German Pfandbrief legislation, as such legislation may be amended and in effect from time to time, on any substitute or successor legislation (a “ Pfandbrief Pledge ”). In the event that the interest of any Lender that is assigned in connection with a Central Bank Pledge or Pfandbrief Pledge is foreclosed upon and transferred to the pledge thereof, such Lender shall have no further liability hereunder with respect to the interest that was the subject of such transfer and the assignee shall be such Lender with respect to such interest. Each Lender shall not be required to notify Borrower of any Central Bank Pledge or Pfandbrief Pledge.
9.1.2     If requested by a Lender, Borrower shall reasonably cooperate at no cost or expense to Borrower, except as set forth in Section 9.6, with such Lender in satisfying the market standards to which such Lender customarily adheres or which may be reasonably required in the marketplace in connection with any Secondary Market Transactions, including, without limitation, to:
(a)      (i) provide updated financial and other information with respect to the Property, Borrower, Mortgage Borrower, Guarantor or Manager, including any information reasonably required to permit any (proposed) Lender to comply with applicable Anti-Money Laundering Laws, (ii) provide updated budgets relating to the Property, and (iii) provide updated Appraisals, market studies, environmental reviews and reports (Phase I’s and, if appropriate, Phase II’s), property condition reports and other due diligence investigations of the Property (collectively, the “ Updated Information ”), together, if customary, with appropriate verification of the Updated Information through letters of auditors or opinions of counsel acceptable to such Lender;
(b)      provide opinions of counsel, which may be relied upon by Administrative Agent such Lender and their respective successors, assigns and Participants customary in Secondary Market Transactions with respect to the Property, Borrower, Mortgage Borrower, Guarantor and Manager and their respective Affiliates, which counsel and opinions shall be reasonably satisfactory to such Lender;
(c)      provide updated, as of the closing date of the Secondary Market Transaction, representations and warranties made in the Loan Documents (other than those made as of a specific date or modified as disclosed to such Lender) to the extent applicable;
(d)      execute amendments to the Loan Documents and Borrower’s organizational documents and such other documents reasonably requested by such Lender, including, without limitation, those documents required pursuant to Section 9.5 below; provided, however, that Borrower shall not be required to modify or amend any Loan Document if such modification or amendment would (i) change the stated maturity or the amortization of principal as set forth herein or in the Note, (ii) change the interest rate in a manner that would cause the weighted average of the interest rates for all components immediately after the effective date of such modification to be different than the interest rate of the original Note immediately prior to such modification (it being agreed that Borrower shall not be subject to any “rate creep” in connection

-126-


with this Section 9.1.2 , except that prepayments or repayments of the Outstanding Principal Balance after the occurrence of an Event of Default and/or the application of Net Liquidation Proceeds After Debt Service pursuant hereto may be applied to the components of the Note sequentially, starting with the most senior component, and, as a result thereof, the weighted average interest rate payable under the Loan may change), (iii) alter the rights or increase the obligations or liabilities of Borrower or Guarantor under the Loan Documents in any non de minimis respect, (iv) subject to Section 9.5 , modify or amend any other economic or other material term of the Loan in a manner that is detrimental to Borrower, or (v) require any additional collateral or the pledge of any interest in Borrower or any Affiliate; and
(e)      at any Lender’s request upon at least two (2) Business Days’ prior notice and during business hours, make such representatives of Borrower requested by such Lender available to meet with any to investors or prospective investors in any potential Secondary Market Transaction at Borrower’s offices;
9.1.3     A Lender may disclose to an assignee (or proposed assignee), Participant (or proposed Participant), underwriter, investor (or proposed investor), lender (or proposed lender), regulator or other Governmental Authority and their representatives (including, without limitation, any commission or agency established pursuant to a legislative act of the United States Congress, the New York State Assembly and/or the applicable legislative body of the state in which the Property is located), accountants, and/or attorneys, representatives or agents of any of the foregoing, any information relating to the Loan and any Person that is a party to a Loan Document; provided, however, that, prior to any such disclosure of non-public or confidential information, any such Person shall be advised of the confidentiality of any non-public or confidential information received by it and, except to the extent such Person is a Governmental Authority, required to maintain to confidentiality of such information.
Section 9.2      [Reserved] .
Section 9.3      Servicing . At the option of Administrative Agent, the Loan may be serviced by a servicer/trustee selected by Administrative Agent and Administrative Agent may delegate all or any portion of its responsibilities under this Agreement and the other Loan Documents to such servicer pursuant to a servicing agreement between Administrative Agent and servicer. Borrower shall pay or reimburse Administrative Agent for any fees, including without limitation, any special servicing fees as set forth in Section 11.13 , charged by any servicer in connection with the servicing of the Loan; provided, however, that Borrower shall not be responsible for payment of any set-up fees or any other initial costs relating to or arising under such servicing agreement or any non-special servicing monthly servicing fee due to the servicer under such servicing agreement.
Section 9.4      Register . Borrower hereby designates Administrative Agent to serve as a non-fiduciary agent of Borrower, solely for purposes of this Section 9.4 , to maintain at one of its offices a register for the recordation of the names and addresses of each Lender, and the principal amount (and stated interest) of the Loans (or portions thereof) owing to and/or Future Advances to be funded by, each Lender pursuant to the terms hereof from time to time and each repayment with respect to the principal amount of the Loan of each Lender (the “ Register ”). Failure to make any such recordation, or any error in such recordation shall not affect Borrower’s, Administrative Agent’s or

-127-


any Lender’s obligations in respect of the Loan. Without limiting the terms and provisions of Section 9.1 hereof, no assignment, sale, negotiation, pledge, hypothecation or other transfer of any part of any Lender’s interest in and to the Loan shall be effective until such Lender shall have provided Administrative Agent with written notice of such transfer and Administrative Agent shall have registered such assignee’s name and address in the Register. The entries in the Register shall be conclusive absent manifest error, and Borrower, Administrative Agent and each Lender shall treat each Person whose name is recorded in the Register pursuant to the terms hereof as a Lender hereunder for all purposes of this Agreement, notwithstanding notice to the contrary. The Register shall be available for inspection by Borrower and any Lender, at any reasonable time and from time to time upon reasonable prior notice. Administrative Agent hereby agrees to indemnify Borrower and to hold Borrower harmless from any actions, suits, claims, demands, liabilities, losses, damages, obligations and actual costs and expenses which Borrower sustains or incurs as a consequence of Administrative Agent maintaining the Register, except to the extent such loss or expense is caused by Borrower’s fraud or willful misconduct.
(a)      Participation Registry . Each Lender that sells a participation interest in the Loan shall, acting solely for this purpose as a non-fiduciary agent of Borrower, maintain a register on which it enters the name and address of each Participant and the principal amounts (and stated interest) of each Participant’s interest in the Loans or other obligations under the Loan Documents (the “ Participant Register ”); provided that no Lender shall have any obligation to disclose all or any portion of the Participant Register (including the identity of any Participant or any information relating to a Participant’s interest in the Loan or its other obligations under any Loan Document) to any Person except to the extent that such disclosure is necessary to establish that such Loan or other obligation is in registered form under Section 5f.103-1(c) of the United States Treasury Regulations. The entries in the Participant Register shall be conclusive absent manifest error, and such Lender shall treat each Person whose name is recorded in the Participant Register as the owner of such participation for all purposes of this Agreement notwithstanding any notice to the contrary. For the avoidance of doubt, Administrative Agent (in its capacity as Administrative Agent) shall have no responsibility for maintaining a Participant Register.
(b)      This Section 9.4 , the Register and the Participant Register are intended to be construed so that the Note is at all times maintained in “registered form” within the meaning of Section 5f.103-1(c) of the United States Treasury Regulations (or any other successor provision of such regulations).
Section 9.5      Severance Documentation . Each Lender, without in any way limiting such Lender’s other rights hereunder, in its sole and absolute discretion, shall have the right, at any time (whether prior to or after any Secondary Market Transaction) at no cost and expense to Borrower, except as set forth in Section 9.6 , to require Borrower to execute and deliver “component” notes and/or one or more substitute notes evidencing the portion of the Loan held by such particular Lender (and the term “ Note ” as used in this Agreement and in all the other Loan Documents shall include all such component notes and/or substitute notes but shall exclude any Note replaced by the same), and/or modify the Loan in order to create one or more senior and subordinate notes ( e.g. , an A/B or A/B/C structure) or pari passu notes and/or one or more additional components of the Note or Notes (including the implementation of a mezzanine loan structure secured by a pledge of

-128-


direct and indirect ownership interests, which may require the creation of additional borrower entities), reduce the number of components of the Note or Notes, revise the interest rate for each component, reallocate the principal balances of the Notes and/or the components (and/or among or between the Loan and the mezzanine loan), eliminate the component structure and/or the multiple note structure of the Loan (including the elimination of the related allocations of principal and interest payments) or divide the Loan into one or more pari passu or mezzanine and mortgage component(s), provided that, in each case, (I) the Outstanding Principal Balance and the aggregate monthly payments required of all components immediately after the effective date of such modification equals the Outstanding Principal Balance and the aggregate monthly payments required immediately prior to such modification, the weighted average of the interest rates for all components immediately after the effective date of such modification equals the interest rate of the original Note immediately prior to such modification (it being agreed that Borrower shall not be subject to any “rate creep” in connection with this Section 9.5 , except that prepayments or repayments of the Outstanding Principal Balance after the occurrence of an Event of Default and/or the application of Net Liquidation Proceeds After Debt Service pursuant hereto may be applied to the components of the Note sequentially, starting with the most senior component, and, as a result thereof, the weighted average interest rate payable under the Loan may change), (II) Borrower’s obligations and liabilities are not increased and Borrower’s rights are not reduced, in each case other than to a de minimis extent and (III) such modifications do not amend any other economic or material terms of the Loan in a manner that is detrimental to Borrower. Subject to Section 9.1 , at each Lender’s election, each note comprising the Loan may be subject separately to one or more Secondary Market Transactions. Each Lender shall have the right to modify the Note and any components in accordance with this Section 9.5 and, provided that such modification shall comply with the terms of this Section 9.5 , such modification shall become immediately effective. If requested by Administrative Agent, Borrower shall promptly execute an amendment to the Loan Documents that is consistent with this Section 9.5 to evidence any such modification. Additionally, at Administrative Agent’s request (on behalf of any Lender), Borrower shall execute such amendments to Borrower’s organizational documents as may be reasonably requested by any Lender in order to effect a re-sizing of the Loan; provided that any such amendment does not increase the obligations or liabilities of Borrower or decrease any rights of Borrower other than to a de minimis extent. Borrower shall (1) use commercially reasonable efforts to cooperate with all reasonable written requests of any Lender in order to establish the “component” notes (including any mezzanine notes), and (2) execute and deliver such documents as shall be reasonably required by Administrative Agent in connection therewith, all in form and substance reasonably satisfactory to Borrower and Administrative Agent and the requesting Lender, including, without limitation, the severance of security documents if requested, provided, however, that Borrower shall not be required to modify or amend any Loan Document in connection with the creation of any such “component” notes, modification of the Loan or other transaction contemplated by this Section 9.5 if, in each case such modification or amendment would (i) change the weighted interest rate effective immediately prior to such modification, the stated maturity date or the amortization of principal as set forth herein or in the Notes (it being agreed that Borrower shall not be subject to any “rate creep” in connection with this Section 9.5 , except that prepayments or repayments of the Outstanding Principal Balance after the occurrence of an Event of Default and/or the application of Net Liquidation Proceeds After Debt Service pursuant hereto may be applied to the components of the Note sequentially, starting with the most senior component, and, as a result thereof, the weighted average interest rate payable

-129-


under the Loan may change), (ii) alter the rights or increase the obligations or liabilities of Borrower or Guarantor under the Loan Documents other than to a de minimis extent, or (iii) modify or amend any other economic or other material term of the Loan in a manner that is detrimental to Borrower. In the event Borrower fails to respond to a request to execute and deliver such documents to a Lender within ten (10) Business Days following such written request by such Lender, Borrower hereby absolutely and irrevocably appoints any such Lender as its true and lawful attorney, coupled with an interest, in its name and stead to make and execute all documents necessary or desirable to effect such transactions, Borrower hereby ratifying all that such attorney shall do by virtue thereof. In connection with any Secondary Market Transaction, Lenders may enter into one or more agreements among themselves (each such agreement, a “ Co-Lender Agreement ”) pertaining to the distribution and application of payments and collections among the Lenders and the duties and obligations of Administrative Agent to the Lenders, including the obligations of Administrative Agent to obtain consent from the Lenders with respect to actions and decisions. In the event of any conflict between this Agreement and a Co-Lender Agreement pertaining to such matters, the Co-Lender Agreement shall control; provided that no Co-Lender Agreement shall increase any obligations or adversely affect any rights of Borrower other than to a de minimis extent. Lenders and Administrative Agent shall have no obligation to disclose any Co-Lender Agreement to Borrower, and Borrower shall not be an intended beneficiary of or otherwise entitled to enforce any Co-Lender Agreement.
Section 9.6      Secondary Market Transaction Expenses . In connection with any Secondary Market Transaction, severance or other transaction permitted pursuant to Sections 9.1 and/or 9.5 in each case occurring after the Closing Date, Borrower shall be responsible to pay for all cost and expenses incurred by Borrower in connection with such Secondary Market Transaction (including, without limitation, the costs and expenses of Borrower’s counsel) which, in the aggregate, do not exceed $10,000 (inclusive of any costs paid by Mortgage Borrower pursuant to Section 9.6 of the Mortgage Loan Agreement) (the “ Borrower Transaction Cost Cap ”); provided, however, Borrower shall not be responsible to reimburse Lender for Lender’s cost and expenses (including, without limitation, the costs and expenses of Lender’s counsel) which costs shall be paid by the Lender engaging in such transaction. Notwithstanding the foregoing, for the avoidance of doubt, any costs and expenses incurred in connection with any severance or other transaction in connection with Administrative Agent’s exercise of remedies in accordance with Section 10.2 , including, without limitation, the costs of any severance in accordance with Section 10.2(e) , shall be paid by Borrower and any such costs shall not be included for purposes of calculating the Borrower Transaction Cost Cap.
X.      DEFAULTS
Section 10.1      Event of Default .
(a)      Each of the following events shall constitute an event of default hereunder (an “ Event of Default ”):

-130-


(i)      if (A) the payment due on the Maturity Date is not paid when due, (B) any monthly installment of principal and/or interest due under the Note is not paid when due and such failure continues for three (3) Business Days following the due date therefor, (C) any amount required to be deposited into the Reserve Funds is not paid when due and such failure continues for five (5) Business Days after such required deposit date, or (D) any other portion of the Debt is not paid when due and such non-payment referred to under this clause (D) continues for seven (7) Business Days following notice to Borrower that the same is past due and payable;
(ii)      [reserved];
(iii)      [reserved];
(iv)      if any representation or warranty made by any Borrower Party herein or in any other Loan Document, or in any report, certificate, financial statement or other instrument, agreement or document furnished to Administrative Agent by Borrower shall have been false or misleading in any material respect as of the date the representation or warranty was made, repeated or deemed repeated; provided , however , that if such representation or warranty which was false or misleading in any material respect is, by its nature, curable and is not reasonably likely (prior to or during the cure period specified in this clause (iv)) to have a Material Adverse Effect, and such representation and warranty was not, to the best of such Borrower Party’s knowledge, false or misleading in any material respect when made, then the same shall not constitute an Event of Default unless such Borrower Party has not cured the same promptly and in no event more than thirty (30) days after first obtaining actual knowledge of such breach, it being understood that Borrower hereby indemnifies and holds Administrative Agent and each Lender harmless from any actual losses, costs, damages or expenses (including reasonable attorneys’ fees and court costs) Administrative Agent may incur or suffer as a result of the permitted cure rights set forth in this clause (iv);
(v)      if any Borrower Party (1) shall make an assignment for the benefit of creditors, (2) shall not generally be paying its debts as they become due, or (3) has admitted in writing in any legal proceeding its inability to pay its debts (other than to or at the written request of Administrative Agent or servicer, to Borrower’s counsel or financial advisors, provided such statement is not made by Borrower to promote or encourage any Person to file an involuntary petition under the Bankruptcy Code, or unless Borrower, Mortgage Borrower or Guarantor, as applicable, is required or compelled by applicable law to make such admission);
(vi)      if a receiver, liquidator or trustee shall be appointed for any Borrower Party or if any Borrower Party shall be adjudicated as bankrupt or insolvent, or if any petition for bankruptcy, reorganization or arrangement pursuant to federal bankruptcy law, or any similar federal or state law, shall be filed by or against, consented to, or acquiesced in by, any Borrower Party, or if any proceeding for the dissolution or liquidation of Borrower, or Guarantor shall be instituted; provided, however, if such appointment, adjudication, petition or proceeding was involuntary and not consented to by any Borrower Party, upon

-131-


the same not being discharged, stayed or dismissed within ninety (90) days of commencement or appointment of the same, as applicable, it shall not be an Event of Default;
(vii)      [reserved];
(viii)      if any Borrower Party attempts to assign its rights under this Agreement or any of the other Loan Documents or any interest herein or therein in contravention of the Loan Documents;
(ix)      if any of the assumptions contained in the Non-Consolidation Opinion, or in any New Non-Consolidation Opinion delivered to Administrative Agent in connection with the Loan, or in any other non‑consolidation delivered subsequent to the closing of the Loan, is or shall become untrue in any material respect;
(x)      (a) if Borrower breaches any covenant contained in 4.2.3, 4.2.6, 4.2.7, 4.2.8, 4.2.11 or 4.2.13 ,
(b) if Borrower breaches any covenant in Section 4.2. (except those specifically set forth in (x)(a) above) which is not cured within ten (10) days after notice to Borrower from Lender, in the case of any Default which can be cured by the payment of a sum of money, or for thirty (30) days after notice from Lender in the case of any other Default; provided , however , that if such non‑monetary Default is susceptible of cure but cannot reasonably be cured within such thirty (30) day period and provided further that Borrower shall have commenced to cure such Default within such thirty (30) day period and thereafter diligently and expeditiously proceeds to cure the same, such thirty (30) day period shall be extended for such time as is reasonably necessary for Borrower in the exercise of due diligence to cure such Default, such additional period not to exceed one hundred twenty (120) days;
(xi)      if Borrower, Mortgage Borrower or any other SPC Party fails to be a Special Purpose Bankruptcy Remote Entity and such failure is not cured within ten (10) Business Days following written notice thereof;
(xii)      if Borrower, Mortgage Borrower or Guarantor fails to comply with the covenants as to the Patriot Act and OFAC as set forth in Section 4.1.1 ;
(xiii)      if Borrower breaches the covenants set forth in Section 4.1.6 hereof and such breach is not cured within ten (10) Business Days of Borrower receiving written notice of the same;
(xiv)      if one or more judgments or decrees shall be entered against (i) Borrower or Mortgage Borrower involving in the aggregate a liability in excess of $1,000,000, or (ii) against Guarantor (collectively, if applicable) involving in the aggregate a liability in excess of $5,000,000, and in either case, unless (x) the same shall have been vacated, bonded, satisfied or stayed pending appeal within sixty (60) days from the date of entry of such judgment or (y) Borrower shall have delivered to Administrative Agent evidence that such judgment or decree is fully covered by insurance, subject to deductible or self-retention amounts permitted by this Agreement;

-132-


(xv)      the occurrence of a Transfer (other than a Permitted Transfer) or change of Control of a Restricted Party in violation of Section 8.2 hereof; provided, however, that (i) if such breach was inadvertent, immaterial and non-recurring, (ii) if such breach is curable and (iii) if the breach once cured would not result in a Material Adverse Effect, then such breach shall be an Event of Default hereunder only if such condition is not cured within ten (10) days of the first to occur of (A) Borrower’s knowledge of such breach or (B) written notice from Administrative Agent; it being understood that Borrower shall indemnify and hold Administrative Agent and each Lender harmless from any damage, loss, cost or expense Administrative Agent and/or any Lender incurs as a result of the permitted cure rights set forth in this subsection (xiv);
(xvi)      if any Borrower’s Requisition or a Working Capital Request Notice is fraudulently submitted by Borrower or in connection with any Future Advance for services performed or for materials used in or furnished for any construction or renovation costs in connection with Capital Expenditures Work or Tenant Improvement Work, as applicable;
(xvii)      if the Property shall be taken (other than as a result of a Condemnation in accordance with this Agreement), attached, sequestered on execution or other process of law in any action against Borrower; and such action is not stayed or bonded over in a manner acceptable to Administrative Agent within ten (10) Business Days thereof, or is not capable of being bonded over or stayed in a manner acceptable to Administrative Agent;
(xviii)      if a Mortgage Loan Event of Default shall occur and be continuing;
(xix)      any failure of Borrower to maintain an Interest Rate Protection Agreement in accordance with the terms hereof that is not cured within ten (10) Business Days;
(xx)      Savanna Guarantor, or applicable Guarantor, fails to comply with the covenants set forth in Section 25 of the Recourse Guaranty;
(xxi)      if any Loan Documents shall fail to be in full force and effect to give Administrative Agent the Liens, rights, powers and privileges purported to be created thereby (provided, however, if such deficiency is susceptible of cure, this shall not be an Event of Default if Borrower shall execute and deliver any applicable replacement document(s) required to correct such deficiency (and cause reputable counsel to provide to Administrative Agent a due authorization, execution and enforceability opinion with respect to such replacement documents) within five (5) Business Days of demand thereof (or receipt of Administrative Agent’s notice to Borrower of such deficiency);
(xxii)      if Borrower or Guarantor:
(a) shall continue to be in Default under any of the other terms, covenants or conditions of this Agreement or the other Loan Documents not specified

-133-


in subsections (i) through (xxi) above beyond any applicable notice and cure period, or
(b) shall breach any representation, warranty or covenant under any Loan Document beyond the applicable cure period, or if no cure period is stated,
for ten (10) days after written notice to Borrower from Administrative Agent, in the case of any Default which can be cured by the payment of a sum of money, or for thirty (30) days after notice from Administrative Agent in the case of any other Default (unless such other non-monetary Default results from the death or incapacity of an Individual Guarantor, in which case, such period shall be forty-five (45) days); provided , however , that if such non-monetary Default is susceptible of cure but cannot reasonably be cured within such thirty (30) day period or forty-five (45) day period, as applicable, and provided , further , that Borrower or Guarantor shall have commenced to cure such Default within such thirty (30) day period or forty-five (45) day period, as applicable, and thereafter diligently and expeditiously proceeds to cure the same, such thirty (30) day period or forty-five (45) day period, as applicable, shall be extended for such time as is reasonably necessary for Borrower or Guarantor in the exercise of due diligence to cure such Default, such additional period not to exceed ninety (90) days.
provided that with respect to a breach by any Guarantor of clauses (v), (vi), and (xx), then the same shall not be an Event of Default if, within ten (10) days of the defaults under clauses (v), (vi), or (xx), as applicable, Borrower identifies an additional Guarantor(s) (which additional Guarantor(s) shall be a Person (i) with a direct or indirect ownership and control interest in Borrower, (ii) with respect to breach of clause (xx) by Savanna Guarantor, together with the other Guarantors (but excluding the defaulting Guarantor) complies with Section 25 of the Recourse Guaranty, and (iii) or is otherwise acceptable to Administrative Agent in its sole discretion, who shall assume all of the obligations of the defaulting Guarantor under the Guaranties within thirty (30) days of the notice from Administrative Agent of the breach of clauses (v), (vi), and (xx) together with a due execution and enforceability opinion with respect to such additional Guarantor(s) in form and substance reasonably acceptable to Administrative Agent (an “ Acceptable Replacement Guarantor ”), it being understood that the defaulting Guarantor(s) shall not be released of its obligations under the Guaranties until the Debt has been paid in full.
(b)      Upon the occurrence and during the continuance of an Event of Default and at any time thereafter Administrative Agent may, in addition to any other rights or remedies available to it pursuant to this Agreement and the other Loan Documents or at law or in equity, take such action, without notice or demand, that Administrative Agent deems advisable to protect and enforce its rights against Borrower and in and to the Property, including, without limitation, declaring the Debt to be immediately due and payable, and Administrative Agent may enforce or avail itself of any or all rights or remedies provided in the Loan Documents against Borrower and the Property, including, without limitation, all rights or remedies available at law or in equity; and upon any Event of Default described in clauses (v) or (vi) above with respect to Borrower and/or SPC Party only, the Debt and all other obligations of Borrower hereunder and under the other Loan Documents shall immediately and automatically become due and payable, without notice or demand, and Borrower

-134-


hereby expressly waives any such notice or demand, anything contained herein or in any other Loan Document to the contrary notwithstanding.
Section 10.2      Remedies .
(a)      Upon the occurrence and during the continuance of an Event of Default, all or any one or more of the rights, powers, privileges and other remedies available to Administrative Agent against Borrower under this Agreement or any of the other Loan Documents executed and delivered by, or applicable to, Borrower or at law or in equity may be exercised by Administrative Agent at any time and from time to time, whether or not all or any of the Debt shall be declared due and payable, and whether or not Administrative Agent shall have commenced any foreclosure proceeding or other action for the enforcement of its rights and remedies under any of the Loan Documents with respect to the Collateral. Any such actions taken by Administrative Agent shall be cumulative and concurrent and may be pursued independently, singly, successively, together or otherwise, at such time and in such order as Administrative Agent may determine in its sole discretion, to the fullest extent permitted by law, without impairing or otherwise affecting the other rights and remedies of Administrative Agent permitted by law, equity or contract or as set forth herein or in the other Loan Documents. Without limiting the generality of the foregoing, if an Event of Default is continuing (i) Administrative Agent is not subject to any “one action” or “election of remedies” law or rule, and (ii) all liens and other rights, remedies or privileges provided to Administrative Agent shall remain in full force and effect until Administrative Agent has exhausted all of its remedies (including any remedies of a secured party under the Uniform Commercial Code, as adopted by the State or States where any of the Collateral is located) against the Collateral and the Pledge Agreement and the Collateral has been foreclosed, sold and/or otherwise realized upon in satisfaction of the Debt or the Debt has been paid in full.
(b)      With respect to Borrower and the Collateral, nothing contained herein or in any other Loan Document shall be construed as requiring Administrative Agent to resort to the Collateral for the satisfaction of any of the Debt in any preference or priority, and Administrative Agent may seek satisfaction out of the Collateral, or any part thereof, in its absolute discretion in respect of the Debt.
(c)      In addition to all remedies conferred it by law and by the terms of this Agreement and the other Loan Documents, upon the occurrence and during the continuance of an Event of Default, Administrative Agent may pursue any one or more of the following remedies concurrently or successively, on its own or through a court appointed receiver, it being the intent hereof that none of such remedies shall be to the exclusion of any other, and with full rights to reimbursement from Borrower and Savanna Guarantor (without any limitation of the rights Administrative Agent or Lender may have under the Guaranties):
(i)      take possession of the Collateral and cause Mortgage Borrower to complete any construction work at the Property, including, without limitation, the right to avail itself of and procure performance of existing contracts or let any contracts with the same contractors or others and to employ watchmen to protect such Property from injury. Without restricting the generality of the foregoing and for the purposes aforesaid to be exercised during the existence and continuance of an Event of Default, Borrower hereby

-135-


appoints and constitutes Administrative Agent its lawful attorney-in-fact with full power of substitution to complete any construction work at the Property in the name of Mortgage Borrower;
(ii)      except as set forth herein, use Reserve Funds to complete any construction work at the Property;
(iii)      retain or employ new general contractors, subcontractors, architects, engineers and inspectors as shall be required for said purposes; to pay, settle or compromise all existing bills and claims which may be liens or security interests, or to avoid such bills and claims becoming liens against the Property, or as may be necessary or desirable for the completion of any construction work at the Property or for the clearance of title to such Property;
(iv)      execute all applications and certificates in the name of Borrower or Mortgage Borrower which may be required by, and in accordance with, any of the contracts or agreements;
(v)      prosecute and defend all actions or proceedings in connection with any construction work at the Property; and
(vi)      take any action and require such performance as it deems necessary to be furnished hereunder and to make settlements and compromises with the surety or sureties thereunder, and in connection therewith, to execute instruments of release and satisfaction.
(d)      Upon the occurrence and continuance of an Event of Default, Administrative Agent shall have the right from time to time to partially foreclose the Collateral in any manner and for any amounts secured by the Pledge Agreement then due and payable as determined by Administrative Agent in its sole discretion including, without limitation, the following circumstances: (i) in the event Borrower defaults beyond any applicable grace, notice and cure period in the payment of one or more scheduled payments of principal and interest, Administrative Agent may foreclose the Pledge Agreement to recover such delinquent payments, or (ii) in the event Administrative Agent elects to accelerate less than the entire Outstanding Principal Balance of the Loan, Administrative Agent may foreclose the Pledge Agreement to recover so much of the principal balance of the Loan as Administrative Agent may accelerate and such other sums secured by the Mortgage as Administrative Agent may elect. Notwithstanding one or more partial foreclosures, the Collateral shall remain subject to the Pledge Agreement to secure payment of sums secured by the Pledge Agreement and not previously recovered.
(e)      In connection with the exercise of remedies after the occurrence and during the continuance of an Event of Default, Administrative Agent shall have the right from time to time to sever the Note and the other Loan Documents into one or more separate notes, pledges and other security documents (the “ Severed Loan Documents ”) in such denominations as Administrative Agent shall determine in its sole discretion for purposes of evidencing and enforcing its rights and remedies provided hereunder. Borrower shall execute and deliver to Administrative Agent from

-136-


time to time, promptly after the written request of Administrative Agent, a severance agreement and such other documents as Administrative Agent shall reasonably deem necessary in order to effect the severance described in the preceding sentence, all in form and substance reasonably satisfactory to Administrative Agent. Following the occurrence and during the continuation of an Event of Default, Borrower hereby absolutely and irrevocably appoints Administrative Agent as its true and lawful attorney, coupled with an interest, in its name and stead to make and execute all documents necessary or desirable to effect the aforesaid severance, Borrower ratifying all that its said attorney shall do by virtue thereof; provided, however, Administrative Agent shall not make or execute any such documents under such power until three (3) days after notice has been given to Borrower by Administrative Agent of Administrative Agent’s intent to exercise its rights under such power. Borrower shall not be obligated to pay any costs or expenses of Borrower, Administrative Agent or any other party incurred in connection with the preparation, execution, recording or filing of the Severed Loan Documents and the Severed Loan Documents shall not contain any representations, warranties or covenants not contained in the Loan Documents and any such representations and warranties contained in the Severed Loan Documents will be given by Borrower only as of the Closing Date. The Severed Loan Documents shall not increase Borrower’s or Guarantor’s obligations or decrease Borrower’s or Guarantor’s rights under the Loan Documents other than to a de minimis extent or amend the economic terms of the Loan Documents; provided, however, prepayments or repayments of the Outstanding Principal Balance after the occurrence of an Event of Default or resulting from the application of Net Proceeds may be applied to the components of the Note sequentially, starting with the most senior component, and, as a result thereof, the weighted average interest rate payable under the Loan may change.
(f)      Any amounts recovered from the Collateral for the Loan after an Event of Default may be applied by Administrative Agent toward the payment of any interest and/or principal of the Loan and/or any other amounts due under the Loan Documents in such order, priority and proportions as Administrative Agent in its sole discretion shall determine.
Section 10.3      Right to Cure Defaults .
Following the occurrence and during the continuation of an Event of Default, Administrative Agent may, but without any obligation to do so and without notice to or demand on Borrower (except as otherwise provided in any of the Loan Documents and/or required by applicable Legal Requirements) and without releasing Borrower from any obligation hereunder or being deemed to have cured any Event of Default hereunder, make, do or perform any obligation of Borrower hereunder in such manner and to such extent as Administrative Agent may deem necessary. Upon reasonable advance written notice to Borrower and subject to rights of Tenants under the Leases, and following the occurrence and during the continuation of an Event of Default, Administrative Agent is authorized to enter upon the Property for such purposes, or appear in, defend, or bring any action or proceeding to protect its interest in the Property for such purposes, and the cost and expense thereof (including reasonable attorneys’ fees to the extent permitted by law), with interest as provided in this Section 10.3 , shall constitute a portion of the Debt and shall be due and payable to Administrative Agent upon demand. All such costs and expenses incurred by Administrative Agent in remedying such Event of Default or such failed payment or act or in appearing in, defending, or bringing any action or proceeding shall bear interest at the Default Rate, for the period after such

-137-


cost or expense was incurred into the date of payment to Administrative Agent. All such costs and expenses incurred by Administrative Agent together with interest thereon calculated at the Default Rate shall be deemed to constitute a portion of the Debt and be secured by the liens, claims and security interests provided to Administrative Agent under the Loan Documents and shall be promptly due and payable following written demand by Administrative Agent therefor.
Section 10.4      Remedies Cumulative .
The rights, powers and remedies of Administrative Agent under this Agreement shall be cumulative and not exclusive of any other right, power or remedy which Administrative Agent may have against Borrower pursuant to this Agreement or the other Loan Documents, or existing at law or in equity or otherwise. Administrative Agent’s rights, powers and remedies may be pursued singly, concurrently or otherwise, at such time and in such order as Administrative Agent may determine in Administrative Agent’s sole discretion. No delay or omission to exercise any remedy, right or power accruing during the continuance of an Event of Default shall impair any such remedy, right or power or shall be construed as a waiver thereof, but any such remedy, right or power may be exercised from time to time and as often as may be deemed expedient. A waiver of one Default or Event of Default with respect to Borrower shall not be construed to be a waiver of any subsequent Default or Event of Default by Borrower or to impair any remedy, right or power consequent thereon.
XI.      MISCELLANEOUS
Section 11.1      Successors and Assigns .
All covenants, promises and agreements in this Agreement, by or on behalf of Borrower and Administrative Agent, for the benefit of Lenders, as applicable, shall inure to the benefit of the respective legal representatives, successors and assigns of Administrative Agent, for the benefit of Lenders and Borrower, as applicable.
Section 11.2      Administrative Agent’s Discretion .
Whenever pursuant to this Agreement Administrative Agent exercises any right given to it to approve or disapprove, or any arrangement or term is to be satisfactory to Administrative Agent, the decision of Administrative Agent to approve or disapprove or to decide whether arrangements or terms are satisfactory or not satisfactory shall (except as is otherwise specifically herein provided) be in the sole discretion of Administrative Agent and shall be final and conclusive. Whenever pursuant to this Agreement Administrative Agent’s right to approve or disapprove is to be reasonably exercised, or any arrangement or term is to be reasonably satisfactory to Administrative Agent, Administrative Agent’s approval shall not be unreasonably withheld, conditioned or delayed.
Section 11.3      Governing Law .
(a)      THIS AGREEMENT WAS NEGOTIATED IN THE STATE OF NEW YORK, WHICH STATE THE PARTIES AGREE HAS A SUBSTANTIAL RELATIONSHIP TO THE PARTIES AND TO THE UNDERLYING TRANSACTION EMBODIED HEREBY, AND IN ALL RESPECTS, INCLUDING, WITHOUT LIMITING THE GENERALITY OF

-138-


THE FOREGOING, MATTERS OF CONSTRUCTION, VALIDITY AND PERFORMANCE, THIS AGREEMENT, THE NOTE AND THE OTHER LOAN DOCUMENTS AND THE OBLIGATIONS ARISING HEREUNDER AND THEREUNDER SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK APPLICABLE TO CONTRACTS MADE AND PERFORMED IN SUCH STATE (WITHOUT REGARD TO PRINCIPLES OF CONFLICT OF LAWS) AND ANY APPLICABLE LAW OF THE UNITED STATES OF AMERICA, EXCEPT THAT AT ALL TIMES THE PROVISIONS FOR THE CREATION, PERFECTION, PRIORITY AND ENFORCEMENT OF THE LIEN AND SECURITY INTEREST CREATED PURSUANT HERETO AND PURSUANT TO THE OTHER LOAN DOCUMENTS (OTHER THAN WITH RESPECT TO LIENS AND SECURITY INTERESTS IN COLLATERAL WHOSE PERFECTION AND PRIORITY IS COVERED BY ARTICLE 9 OF THE UCC (INCLUDING, WITHOUT LIMITATION, THE ACCOUNTS) WHICH SHALL BE GOVERNED BY THE LAW OF THE JURISDICTION APPLICABLE THERETO IN ACCORDANCE WITH SECTIONS 9‑301 THROUGH 9‑307 OF THE UCC AS IN EFFECT IN THE STATE OF NEW YORK) SHALL BE GOVERNED BY AND CONSTRUED ACCORDING TO THE LAW OF THE STATE IN WHICH THE PROPERTY IS LOCATED, IT BEING UNDERSTOOD THAT, TO THE FULLEST EXTENT PERMITTED BY THE LAW OF SUCH STATE, THE LAW OF THE STATE OF NEW YORK SHALL GOVERN THE CONSTRUCTION, VALIDITY AND ENFORCEABILITY OF ALL LOAN DOCUMENTS AND ALL OF THE OBLIGATIONS ARISING HEREUNDER OR THEREUNDER. TO THE FULLEST EXTENT PERMITTED BY LAW, BORROWER HEREBY UNCONDITIONALLY AND IRREVOCABLY WAIVES ANY CLAIM TO ASSERT THAT THE LAW OF ANY OTHER JURISDICTION GOVERNS THIS AGREEMENT, THE NOTE AND THE OTHER LOAN DOCUMENTS, AND THIS AGREEMENT, THE NOTE AND THE OTHER LOAN DOCUMENTS SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK PURSUANT TO SECTION 5‑1401 OF THE NEW YORK GENERAL OBLIGATIONS LAW EXCEPT AS SPECIFICALLY SET FORTH ABOVE.
(b)      ANY LEGAL SUIT, ACTION OR PROCEEDING AGAINST ADMINISTRATIVE AGENT, ANY LENDER OR BORROWER ARISING OUT OF OR RELATING TO THIS AGREEMENT MAY AT ADMINISTRATIVE AGENT’S OPTION BE INSTITUTED IN ANY FEDERAL OR STATE COURT IN THE CITY OF NEW YORK, COUNTY OF NEW YORK, PURSUANT TO SECTION 5‑1402 OF THE NEW YORK GENERAL OBLIGATIONS LAW AND BORROWER WAIVES ANY OBJECTIONS WHICH IT MAY NOW OR HEREAFTER HAVE BASED ON VENUE AND/OR FORUM NON CONVENIENS OF ANY SUCH SUIT, ACTION OR PROCEEDING, AND BORROWER HEREBY IRREVOCABLY SUBMITS TO THE JURISDICTION OF ANY SUCH COURT IN ANY SUIT, ACTION OR PROCEEDING. BORROWER DOES HEREBY DESIGNATE AND APPOINT:

-139-


Savanna
430 Park Avenue, 12 th  Floor
New York, NY 10022
Attention: General Counsel

AS ITS AUTHORIZED AGENT TO TAKE, RECEIVE AND FORWARD PROCESS ON ITS BEHALF SERVICE OF ANY AND ALL PROCESS WHICH MAY BE SERVED IN ANY SUCH SUIT, ACTION OR PROCEEDING IN ANY FEDERAL OR STATE COURT IN NEW YORK, NEW YORK, AND AGREES THAT SERVICE OF PROCESS UPON SAID AGENT AT SAID ADDRESS AND WRITTEN NOTICE OF SAID SERVICE MAILED OR DELIVERED TO BORROWER IN THE MANNER PROVIDED HEREIN SHALL BE DEEMED IN EVERY RESPECT EFFECTIVE SERVICE OF PROCESS UPON BORROWER, IN ANY SUCH SUIT, ACTION OR PROCEEDING IN THE STATE OF NEW YORK. BORROWER (I) SHALL GIVE PROMPT NOTICE TO ADMINISTRATIVE AGENT OF ANY CHANGED ADDRESS OF ITS AUTHORIZED AGENT HEREUNDER, (II) MAY AT ANY TIME AND FROM TIME TO TIME DESIGNATE A SUBSTITUTE AUTHORIZED AGENT WITH AN OFFICE IN NEW YORK, NEW YORK (WHICH SUBSTITUTE AGENT AND OFFICE SHALL BE DESIGNATED AS THE PERSON AND ADDRESS FOR SERVICE OF PROCESS), AND (III) SHALL PROMPTLY DESIGNATE SUCH A SUBSTITUTE IF ITS AUTHORIZED AGENT CEASES TO HAVE AN OFFICE IN NEW YORK, NEW YORK OR IS DISSOLVED WITHOUT LEAVING A SUCCESSOR.
Section 11.4      Modification, Waiver in Writing .
No modification, amendment, extension, discharge, termination or waiver of any provision of this Agreement or of any other Loan Document, nor consent to any departure by Borrower therefrom, shall in any event be effective unless the same shall be in a writing signed by the party against whom enforcement is sought, and then such waiver or consent shall be effective only in the specific instance, and for the purpose, for which given. Except as otherwise expressly provided herein, no notice to, or demand on Borrower, shall entitle Borrower to any other or future notice or demand in the same, similar or other circumstances.
Section 11.5      Delay Not a Waiver .
Neither any failure nor any delay on the part of Administrative Agent in insisting upon strict performance of any term, condition, covenant or agreement, or exercising any right, power, remedy or privilege hereunder, or under any other Loan Document, shall operate as or constitute a waiver thereof, nor shall a single or partial exercise thereof preclude any other future exercise, or the exercise of any other right, power, remedy or privilege. In particular, and not by way of limitation, by accepting payment after the due date of any amount payable under this Agreement or any other Loan Document, Administrative Agent shall not be deemed to have waived any right either to require prompt payment when due of all other amounts due under this Agreement or the other Loan Documents, or to declare a default for failure to effect prompt payment of any such other amount. Administrative Agent shall have the right to waive or reduce any time periods that Administrative Agent is entitled to under the Loan Documents in its sole and absolute discretion.

-140-


Section 11.6      Notices .
All notices, demands, requests, consents, approvals or other communications (any of the foregoing, a “ Notice ”) required, permitted, or desired to be given hereunder shall be in writing sent by registered or certified mail, postage prepaid, return receipt requested, e-mail (with electronic confirmation of receipt), provided that such notice is also delivered by overnight mail or hand-delivered no later than the next Business Day, or delivered by hand or reputable overnight courier addressed to the party to be so notified at its address hereinafter set forth, or to such other address as such party may hereafter specify in accordance with the provisions of this Section 11.6 . Any Notice shall be deemed to have been received: (a) three (3) days after the date such Notice is so mailed by registered or certified mail, (b) on the date of delivery by hand if delivered during business hours on a Business Day (otherwise on the next Business Day), (c) upon receipt of electronic confirmation if delivered by e-mail and (d) on the next Business Day if sent by an overnight commercial courier, in each case addressed to the parties as follows:
If to Administrative Agent:
INVESCO CMI INVESTMENTS, L.P.
c/o Invesco Real Estate
2001 Ross Avenue, Suite 3400
Dallas, Texas 75201
Attention: Susan Mitchell

with a copy to:
INVESCO CMI INVESTMENTS, L.P.
c/o Invesco Real Estate
2001 Ross Avenue, Suite 3400
Dallas, Texas 75201
Attention: Rivka Altman

with a copy to:
INVESCO CMI INVESTMENTS, L.P.
c/o Invesco Real Estate
1166 Avenue of the Americas
New York, NY 10036
Attention: Asset Management, 110 William Street

with a copy to:
Greenberg Traurig, P.A.
333 S.E. 2nd Avenue
Miami, Florida 33131
Attention: Richard J. Giusto, Esq. 021497. 999802

If to Lender:
INVESCO CMI INVESTMENTS, L.P.
c/o Invesco Real Estate
2001 Ross Avenue, Suite 3400
Dallas, Texas 75201
Attention: Susan Mitchell


-141-


with a copy to:
INVESCO CMI INVESTMENTS, L.P.
c/o Invesco Real Estate
2001 Ross Avenue, Suite 3400
Dallas, Texas 75201
Attention: Rivka Altman

with a copy to:
INVESCO CMI INVESTMENTS, L.P.
c/o Invesco Real Estate
1166 Avenue of the Americas
New York, NY 10036
Attention: Asset Management, 110 William Street

with a copy to:
Greenberg Traurig, P.A.
333 S.E. 2nd Avenue
Miami, Florida 33131
Attention: Richard J. Giusto, Esq. 021497. 999802

And to:
c/o KBS Capital Advisors LLC
800 Newport Center Drive, Suite 700
Newport Beach, California 92660
Attention: General Counsel

If to Borrower:
c/o Savanna
430 Park Avenue, 12 th  Floor
New York, New York 10022
Attention: Valerie Kitay, General Counsel

with a copy to:
Hunton Andrews Kurth LLP
200 Park Avenue
52 nd  Floor
New York, New York 10166
Attention: Laurie A. Grasso, Esq.

And to:
Sheppard Mullin Richter & Hampton LLP
650 Town Center Drive, 4 th  Floor
Costa Mesa, California 92626
Attention: Scott A. Morehouse, Esq.


Any party may change the address to which any such Notice is to be delivered by furnishing ten (10) days’ written notice of such change to the other parties in accordance with the provisions of this Section 11.6 . Notices shall be deemed to have been given on the date as set forth above, even if there is an inability to actually deliver any such Notice because of a changed address of which no Notice was given, or there is a rejection or refusal to accept any Notice offered for delivery. Notice for any party may be given by its respective counsel.

-142-


Section 11.7      Trial by Jury .
BORROWER, ADMINISTRATIVE AGENT AND EACH LENDER EACH HEREBY AGREES NOT TO ELECT A TRIAL BY JURY OF ANY ISSUE TRIABLE OF RIGHT BY JURY, AND WAIVES ANY RIGHT TO TRIAL BY JURY FULLY TO THE EXTENT THAT ANY SUCH RIGHT SHALL NOW OR HEREAFTER EXIST WITH REGARD TO THE LOAN DOCUMENTS, OR ANY CLAIM, COUNTERCLAIM OR OTHER ACTION ARISING IN CONNECTION THEREWITH. THIS WAIVER OF RIGHT TO TRIAL BY JURY IS GIVEN KNOWINGLY AND VOLUNTARILY BY BORROWER, ADMINISTRATIVE AGENT AND EACH LENDER, AND IS INTENDED TO ENCOMPASS INDIVIDUALLY EACH INSTANCE AND EACH ISSUE AS TO WHICH THE RIGHT TO A TRIAL BY JURY WOULD OTHERWISE ACCRUE. EACH PARTY IS HEREBY AUTHORIZED TO FILE A COPY OF THIS SECTION IN ANY PROCEEDING AS CONCLUSIVE EVIDENCE OF THIS WAIVER.
Section 11.8      Headings .
The Article and/or Section headings and the Table of Contents in this Agreement are included herein for convenience of reference only and shall not constitute a part of this Agreement for any other purpose.
Section 11.9      Severability .
Wherever possible, each provision of this Agreement shall be interpreted in such manner as to be effective and valid under applicable law, but if any provision of this Agreement shall be prohibited by or invalid under applicable law, such provision shall be ineffective to the extent of such prohibition or invalidity, without invalidating the remainder of such provision or the remaining provisions of this Agreement.
Section 11.10      Preferences .
Upon the occurrence and during the continuance of an Event of Default, Lenders shall have the continuing and exclusive right to apply or reverse and reapply any and all payments by Borrower to any portion of the obligations of Borrower hereunder. To the extent Borrower makes a payment or payments to Administrative Agent, for the benefit of Lenders, which payment or proceeds or any part thereof are subsequently invalidated, declared to be fraudulent or preferential, set aside or required to be repaid to a trustee, receiver or any other party under any bankruptcy law, state or federal law, common law or equitable cause, then, to the extent of such payment or proceeds received, the obligations hereunder or part thereof intended to be satisfied shall be revived and continue in full force and effect, as if such payment or proceeds had not been received by Administrative Agent, for the benefit of Lenders.
Section 11.11      Waiver of Notice .
Borrower shall not be entitled to any notices of any nature whatsoever from Administrative Agent except with respect to matters for which this Agreement or the other Loan Documents specifically and expressly provide for the giving of notice by Administrative Agent to Borrower and except with respect to matters for which Borrower is not, pursuant to applicable Legal

-143-


Requirements, permitted to waive the giving of notice. Borrower hereby expressly waives the right to receive any notice from Administrative Agent with respect to any matter for which this Agreement or the other Loan Documents do not specifically and expressly provide for the giving of notice by Administrative Agent to Borrower.
Section 11.12      Claims Against Administrative Agent and Lender; Remedies of Borrower .
Neither Administrative Agent nor any Lender shall be in default under this Agreement, or under any of the other Loan Documents, unless a written notice specifically setting forth the claim of Borrower shall have been given to Administrative Agent and each Lender within twelve (12) months after Borrower first had knowledge of the occurrence of the event that Borrower alleges gave rise to such claim and Administrative Agent does not remedy or cure the default, if any there be, promptly thereafter. Borrower waives any claim, set-off or defense against Administrative Agent arising by reason of any alleged default by Administrative Agent as to which Borrower does not give such notice timely as aforesaid. Borrower acknowledges that such waiver is or may be essential to Administrative Agent’s ability to enforce Administrative Agent’s remedies without delay and that such waiver therefore constitutes a substantial part of the bargain between Borrower and Administrative Agent with respect to the Loan.
Section 11.13      Expenses; General Indemnity; ERISA Indemnity .
(a)      Subject to Section 9. 6 and 13.11 or otherwise expressly set forth in this Agreement, Borrower shall pay or, if Borrower fails to pay, reimburse Administrative Agent and each Lender upon receipt of written notice from Administrative Agent or any Lender, for all reasonable out-of-pocket costs and expenses (including reasonable, out of pocket attorneys’ fees and disbursements) incurred by Administrative Agent and/or Lenders in connection with (i) the ongoing performance of and compliance with agreements and covenants of Borrower and Guarantor contained in this Agreement and the other Loan Documents, including, without limitation, confirming compliance with environmental and insurance requirements (but excluding monthly servicing fees due to any servicer under any servicing agreement); (ii) Administrative Agent and/or Lender’s ongoing performance of and compliance with all agreements and covenants contained in this Agreement and the other Loan Documents on its part to be performed or complied with after the Closing Date (other than monthly servicing fees due to any servicer under any servicing agreement); (iii) the negotiation, preparation, execution, delivery and administration of any consents, amendments, waivers or other modifications to this Agreement and the other Loan Documents and any other documents or matters requested by Borrower (other than as set forth in Article IX ); (iv) the filing and recording fees and expenses, title insurance and reasonable fees and expenses of counsel for providing to Administrative Agent and/or Lender all required legal opinions, and other similar expenses incurred, in creating and perfecting the Liens in favor of Administrative Agent, for the benefit of Lenders pursuant to this Agreement and the other Loan Documents; (v) enforcing or preserving any rights, in response to third party claims or the prosecuting or defending of any action or proceeding or other litigation or otherwise, in each case against, under or affecting Borrower, this Agreement, the other Loan Documents, the Collateral, or any other security given for the Loan; (vi) enforcing any obligations of or collecting any payments due from Borrower and Guarantor under this Agreement, the other Loan Documents or with respect to the

-144-


Collateral; (vii) following the transfer of the Loan to “special servicing” after an Event of Default or written notice from Borrower or its Affiliate that an Event of Default is imminently likely to occur, any “special servicing” fees (other than as set forth in Article IX ); and (viii) any cost or expense relating to a restructuring of the credit arrangements provided under this Agreement in the nature of a “work out” or of any insolvency or bankruptcy proceedings (including, without limitation, loan servicing or special servicing fees, loan advances, and “work‑out” and/or liquidation fees); provided, however, that Borrower shall not be liable for the payment of any such costs and expenses to the extent the same arise by reason of the gross negligence, illegal acts, fraud or willful misconduct of Administrative Agent and/or Lender. Any costs due and payable to Administrative Agent and/or Lender may be paid to Administrative Agent and/or Lender pursuant to the Cash Management Agreement. Notwithstanding anything to the contrary in any of the Loan Documents, reasonable, out-of-pocket cost shall include for all purposes Administrative Agent and/or Lender’s internal costs of review, such as an appraisal reviews, cost analysis reviews, inspection reviews and environmental reviews, to the extent the same are not materially more costly than corresponding market rates for such services. In addition to the amounts set forth above, Borrower shall pay to Administrative Agent, in equal monthly installments, a loan administration fee equal to $30,000 per annum.
(b)      Borrower shall indemnify, defend and hold harmless Administrative Agent, each Lender and their respective officers, directors, agents, employees (and the successors and assigns of the foregoing) (each, a “ Indemnified Party ”) from and against any and all Losses (including, without limitation, the reasonable, out of pocket fees and disbursements of counsel for the Indemnified Parties in connection with any investigative, administrative or judicial proceeding commenced or threatened), other than special, treble, consequential or punitive damages (except to the extent required to be paid by Administrative Agent and/or Lender to any third party), that may be imposed on, incurred by, or asserted against the Indemnified Parties in any manner relating to or arising out of (i) any breach by Borrower of its obligations under, or any material misrepresentation by Borrower contained in, this Agreement or the other Loan Documents, or (ii) the use or intended use of the proceeds of the Loan (collectively, the “ Indemnified Liabilities ”); provided, however, that Borrower shall not have any obligation to the Indemnified Parties hereunder to the extent that such Indemnified Liabilities arise from or are exacerbated by the gross negligence, illegal acts, fraud or willful misconduct of any Indemnified Party. To the extent that the undertaking to indemnify, defend and hold harmless set forth in the preceding sentence may be unenforceable because it violates any law or public policy, Borrower shall pay the maximum portion that it is permitted to pay and satisfy under applicable law to the payment and satisfaction of all Indemnified Liabilities incurred by the Indemnified Parties.
(c)      Borrower shall, at its reasonable cost and expense, protect, defend, indemnify, release and hold harmless each Indemnified Party from and against any and all Losses imposed upon or incurred by or asserted against any Indemnified Party and directly or indirectly arising out of (i) any tax (other than Excluded Taxes) on the making and/or recording of the Mortgage, the Note or any of the other Loan Documents, or (ii) any transfer taxes (other than Excluded Taxes) incurred in connection with a foreclosure of the Mortgage by Administrative Agent or its designee (on behalf of the Lenders) and any subsequent transfer of the Property by Administrative Agent or its designee; provided, however, that Borrower shall not have any obligation to the Indemnified Parties hereunder to the extent that such Indemnified Liabilities arise from or

-145-


are exacerbated by the gross negligence, illegal acts, fraud or willful misconduct of any Indemnified Party.
(d)      Borrower shall, at its reasonable cost and expense, protect, defend, indemnify, release and hold harmless each Indemnified Party from and against any and all Losses (including, without limitation, reasonable, out of pocket attorneys’ fees and costs incurred in the investigation, defense, and settlement of Losses incurred in correcting any non-exempt prohibited transaction, and in obtaining any individual prohibited transaction exemption under ERISA that may be required, in Administrative Agent’s sole reasonable discretion) that Administrative Agent may incur, directly or indirectly, as a result of a default under Sections 3.1.8 and/or 4.2.10 of this Agreement; provided, however, that Borrower shall not have any obligation to the Indemnified Parties hereunder to the extent that such Indemnified Liabilities arise from or are exacerbated by the gross negligence, illegal acts, fraud or willful misconduct of any Indemnified Party.
(e)      The indemnification obligations of Borrower under this Section 11.13 shall survive the repayment of the Loan.
Section 11.14      Schedules Incorporated .
The Schedules annexed hereto are hereby incorporated herein as a part of this Agreement with the same effect as if set forth in the body hereof.
Section 11.15      Offsets, Counterclaims and Defenses .
Any permitted assignee of a Lender’s interest in and to this Agreement and the other Loan Documents shall take the same free and clear of all offsets, counterclaims or defenses which are unrelated to such documents which Borrower may otherwise have against any assignor of such documents, and no such unrelated counterclaim or defense shall be interposed or asserted by Borrower in any action or proceeding brought by any such assignee upon such documents and any such right to interpose or assert any such unrelated offset, counterclaim or defense in any such action or proceeding is hereby expressly waived by Borrower.
Section 11.16      No Joint Venture or Partnership; No Third-Party Beneficiaries .
(a)      Borrower, Administrative Agent and each Lender intend that the relationships created hereunder and under the other Loan Documents be solely that of borrower and lender. Nothing herein or therein is intended to create a joint venture, partnership, tenancy in common, or joint tenancy relationship between Borrower, Administrative Agent and each Lender nor to grant Administrative Agent or any Lender any interest in the Property other than that of mortgagee, beneficiary or lender.
(b)      This Agreement and the other Loan Documents are solely for the benefit of Administrative Agent, each Lender and Borrower and nothing contained in this Agreement or the other Loan Documents shall be deemed to confer upon anyone other than Administrative Agent, each Lender and Borrower any right to insist upon or to enforce the performance or observance of any of the obligations contained herein or therein. All conditions to the obligations of a Lender to make the Loan hereunder are imposed solely and exclusively for the benefit of such Lender and no other Person shall have standing to require satisfaction of such conditions in accordance with their

-146-


terms or be entitled to assume that such Lender will refuse to make the Loan in the absence of strict compliance with any or all thereof and no other Person shall under any circumstances be deemed to be a beneficiary of such conditions, any or all of which may be freely waived in whole or in part by such Lender if, in such Lender’s sole discretion, such Lender deems it advisable or desirable to do so.
Section 11.17      Publicity .
All news releases, publicity or advertising by Borrower or its Affiliates through any media intended to reach the general public which refers to the Loan Documents or the financing evidenced by the Loan Documents, Administrative Agent, each Lender, Invesco Real Estate or any of their Affiliates shall be subject to the prior approval of Administrative Agent, not to be unreasonably withheld conditioned or delayed. All news releases, publicity or advertising by Administrative Agent or any Lender or their respective Affiliates through any media intended to reach the general public which refers to the Loan Documents or the financing evidenced by the Loan Documents, Borrower or any of their Affiliates shall be subject to the prior approval of Borrower, not to be unreasonably withheld conditioned or delayed.
Section 11.18      Waiver of Marshalling of Assets .
To the fullest extent permitted by law, Borrower, for itself and its successors and assigns, waives all rights to a marshalling of the assets of Borrower, Borrower’s members or partners and others with interests in Borrower, and of the Property, and shall not assert any right under any laws pertaining to the marshalling of assets, the sale in inverse order of alienation, homestead exemption, the administration of estates of decedents, or any other matters whatsoever to defeat, reduce or affect the right of Administrative Agent under the Loan Documents to a sale of the Collateral for the collection of the Debt without any prior or different resort for collection or of the right of Administrative Agent to the payment of the Debt out of the net proceeds of the Collateral in preference to every other claimant whatsoever.
Section 11.19      Waiver of Setoff .
Borrower hereby irrevocably waives the right to assert any counterclaim (except compulsory counterclaims) in any action or proceeding brought against it by Administrative Agent or any Lender or their respective agents or otherwise to offset any obligation to make the payments required by the Loan Documents.
Section 11.20    Conflict; Construction of Documents; Reliance .
In the event of any conflict between the provisions of this Agreement and any of the other Loan Documents, the provisions of this Agreement shall control. The parties hereto acknowledge that they were represented by competent counsel in connection with the negotiation, drafting and execution of the Loan Documents and that such Loan Documents shall not be subject to the principle of construing their meaning against the party which drafted same. Borrower acknowledges that, with respect to the Loan, Borrower shall rely solely on its own judgment and advisors in entering into the Loan without relying in any manner on any statements, representations or recommendations of Administrative Agent or any Lender or any parent, subsidiary or Affiliate of Administrative Agent

-147-


or any Lender. No Lender shall be subject to any limitation whatsoever in the exercise of any rights or remedies available to it under any of the Loan Documents or any other agreements or instruments which govern the Loan by virtue of the ownership by it or any parent, subsidiary or Affiliate of Administrative Agent or any Lender of any equity interest any of them may acquire in Borrower, and Borrower hereby irrevocably waives the right to raise any defense or take any action on the basis of the foregoing with respect to Administrative Agent’s or any Lender’s exercise of any such rights or remedies. Borrower acknowledges that Administrative Agent and the Lenders engage in the business of real estate financings and other real estate transactions and investments which may be viewed as adverse to or competitive with the business of Borrower or its Affiliates.
Section 11.21      Brokers and Financial Advisors .
Borrower hereby represents that it has dealt with no financial advisors, brokers, underwriters, placement agents, agents or finders in connection with the transactions contemplated by this Agreement. Borrower shall indemnify, defend and hold Indemnified Parties harmless from and against any and all claims, liabilities, costs and expenses of any kind (including Indemnified Party’s attorneys’ fees and expenses) in any way relating to or arising from a claim by any Person that such Person acted on behalf of Borrower, Administrative Agent or any Lender in connection with the transactions contemplated herein. The provisions of this Section 11.21 shall survive the expiration and termination of this Agreement and the payment of the Debt.
Section 11.22      Exculpation .
Subject to the qualifications below, Administrative Agent shall not enforce the liability and obligation of Borrower to perform and observe the obligations contained in the Note, this Agreement, the Pledge Agreement or the other Loan Documents by any action or proceeding wherein a money judgment or any deficiency judgment or other judgment establishing personal liability shall be sought against any Borrower Party, except that Administrative Agent may bring a foreclosure action, an action for specific performance or any other appropriate action or proceeding to enable Administrative Agent to enforce and realize upon its interest under the Note, this Agreement, the Pledge Agreement and the other Loan Documents, or in the Property, the Collateral, the Rents, or any other collateral given to Administrative Agent pursuant to the Loan Documents; provided, however, that, except as specifically provided herein, any judgment in any such action or proceeding shall be enforceable against Borrower only to the extent of Borrower’s interest in the Property, in the Collateral, in the Rents and in any other collateral given to Administrative Agent, for the benefit of Lenders, and Administrative Agent and Lenders, by accepting the Note, this Agreement, the Pledge Agreement and the other Loan Documents, shall not sue for, seek or demand any deficiency judgment against Borrower or any Borrower Party, in any such action or proceeding under or by reason of or under or in connection with the Note, this Agreement, the Pledge Agreement or the other Loan Documents. The provisions of this Section 11.22 shall not, however, (a) constitute a waiver, release or impairment of any obligation evidenced or secured by any of the Loan Documents; (b) impair the right of Administrative Agent to name Borrower as a party defendant in any action or suit for foreclosure and sale of the Property under the Pledge Agreement; (c) affect the validity or enforceability of any indemnity, guaranty, or similar instrument made in connection with the Loan or any of the rights and remedies of Administrative Agent thereunder; (d) impair the right of

-148-


Administrative Agent to obtain the appointment of a receiver; (e) [reserved]; (f) impair the right of Administrative Agent to enforce the provisions of any Guaranty; (g) constitute a prohibition against Administrative Agent to seek a deficiency judgment against Borrower solely in order to fully realize on any security given by Borrower in connection with the Loan or to commence any other appropriate action or proceeding in order for Administrative Agent to exercise its remedies against such security; or (h) constitute a waiver of the right of Administrative Agent to enforce the liability and obligation of Borrower, by money judgment or otherwise, to the extent of any actual Losses incurred by Administrative Agent and/or any Lender (including out-of-pocket attorneys’ fees and costs reasonably incurred, but excluding special, treble, consequential or punitive damages (except to the extent required to be paid by Administrative Agent and/or Lender to any third party) arising out of or in connection with the following:
(a)      willful misconduct, fraud or material misrepresentation by a Borrower Party in connection with the Loan;
(b)      misappropriation or conversion by Borrower or Mortgage Borrower of (A) Net Proceeds paid by reason of any loss, damage or destruction to the Property, (B) Awards received in connection with a Condemnation, (C) any Rents or Gross Revenue of any nature, (D) any security deposits, advance deposits or any other deposits collected with respect to the Property which are not delivered to Mortgage Administrative Agent, for the benefit of Lenders, in accordance with the Mortgage Loan Documents (E) any Reserve Funds or Security Account Funds or any funds held by Administrative Agent under this Agreement or by Mortgage administrative Agent under the Mortgage Loan Documents by or on behalf of Borrower and/or Mortgage Borrower or (F) any other funds due to Administrative Agent or any Lender, or any other Person, by Borrower under the Loan Documents;
(c)      any intentional material physical waste to all or any portion of the Property, except to the extent that (i) cash flow from the Property is insufficient to prevent such waste or (ii) Administrative Agent was required to under the Loan Documents and failed to make Excess Cash Flow available to Borrower during a Cash Trap Period;
(d)      removal of any portion of a Property or Improvements by any Borrower Related Party in violation of the Loan Documents during the continuance of an Event of Default;
(e)      forfeiture by Mortgage Borrower of the Property, or any portion thereof, because of the conduct of criminal activity by any Borrower Party or any officer, director, manager, agent or employee of any of the foregoing, and any Person acting at the direction of any of the foregoing;
(f)      failure beyond applicable grace notice and cure periods of Borrower to cause Mortgage Borrower to (A) obtain and maintain the Policies required to be obtained and maintained in accordance with the provisions of the Loan Documents, and/or (B) pay when due any and all Insurance Premiums required to be paid in connection therewith until such time as Mortgage Borrower is no longer the owner of all or any portion of the Property, in each case, except to the extent that the cash flow from the Property is insufficient to pay such amounts, or to the extent that there are sufficient Insurance Funds on deposit in the Insurance Reserve Account allocated to

-149-


pay such amounts and Mortgage Administrative Agent fails to permit the release of such amounts in violation of Section 6.3.1 of the Senior Loan Agreement and Borrower gives Administrative Agent written notice of such insufficiency at least 30 days’ prior to the date such amounts first become due and payable;
(g)      subject to Mortgage Borrower’s right to contest the following in accordance with the terms and conditions of the Loan Documents, failure by Borrower to cause Mortgage Borrower to pay when due any and all Taxes and Other Charges, in each case, except to the extent that the cash flow from the Property is insufficient to pay such amounts, or to the extent that there are sufficient Tax Funds on deposit in the Tax Reserve Account allocated to pay such amounts and Mortgage Administrative Agent fails to permit the release of such amounts in violation of Section 6.2.1 of the Senior Loan Agreement;
(h)      any material breach by Borrower or Mortgage Borrower of the covenants contained in this Agreement or the other Loan Documents relating to the requirement that Borrower shall be a Special Purpose Bankruptcy Remote Entity (other than requirements related to Borrower’s and Mortgage Borrower’s solvency, maintenance of adequate capital, or failure to pay debts to the extent that the cash flow from the Property is insufficient to pay the same);
(i)      unless a court of competent jurisdiction issues a non-appealable final judgment in favor of Borrower or Guarantor, as applicable, in such action, all out-of-pocket costs and expenses (including, without limitation, attorneys’ fees and costs) incurred by Administrative Agent and/or Lender in connection with the interference, whether direct or indirect, by Borrower, any Guarantor or any of their respective Affiliates, with Administrative Agent or Lender’s exercise of rights or remedies under the Loan Documents (including any foreclosure action or sale) in accordance with the Loan Documents, whether by making any motion, bringing any counterclaim, claiming any defense, seeking any injunction or other restraint, commencing any action seeking to consolidate any such foreclosure or other enforcement with any other action or otherwise; and
(j)      any failure to pay mortgage recording, stamp, intangible or other similar tax required to be paid under applicable Legal Requirements in connection with the execution, delivery, recordation, filing, registration, perfection or enforcement of any of the Loan Documents or Mortgage Loan Documents, including, without limitation, the Mortgage.
(k)      any liabilities accruing prior to a UCC foreclosure sale, a UCC strict foreclosure, an assignment-in-lieu of foreclosure or other enforcement action under the Loan Documents (collectively, an “ Equity Collateral Enforcement Action ”; and the date on which an Equity Collateral Enforcement Action is consummated, an “ Equity Collateral Transfer Date ”), arising out of or relating to the action or inaction of any Borrower Related Party (including, without limitation, any aged payable or cost to terminate a contract, including payment during a notice period) that remain unpaid following the Equity Collateral Transfer Date;
Notwithstanding anything to the contrary in this Agreement, the Note or any of the Loan Documents, (A) Administrative Agent and the Lenders shall not be deemed to have waived any right which Administrative Agent and the Lenders may have under Section 506(a), 506(b), 1111(b) or any other provisions of the Bankruptcy Code to file a claim for the full amount of the Debt or to

-150-


require that all collateral shall continue to secure all of the Debt owing to Lenders in accordance with the Loan Documents, and (B) the Debt shall be fully recourse to Borrower in the event that (each, a “ Springing Recourse Event ”):
(i)      Borrower or Mortgage Borrower files a voluntary petition under the Bankruptcy Code or any other Federal or state bankruptcy or insolvency law;
(ii)      any Borrower Related Party solicits or causes to be solicited petitioning creditors for the filing by any Person(s) of any involuntary petition against Borrower or Mortgage Borrower under the Bankruptcy Code or any other Federal or state bankruptcy or insolvency law or an involuntary petition is filed against Borrower or Mortgage Borrower under the Bankruptcy Code or any other Federal or state bankruptcy or insolvency law by any Person with which any Borrower Related Party colludes or otherwise assists Person;
(iii)      any Borrower Related Party files an answer consenting to, or otherwise acquiescing in, or joining in any involuntary petition filed against Borrower or Mortgage Borrower, by any other Person under the Bankruptcy Code or any other Federal or state bankruptcy or insolvency Law (other than a petition filed against Borrower and/or SPC Party by Lender);
(iv)      any Borrower Related Party consents to or join in an application for the appointment of a custodian, receiver, trustee, or examiner for Borrower or any portion of the Property or colludes with or otherwise assists any Person in filing such an application (other than an application by Lender in connection with the enforcement of Lender’s remedies under the Loan Documents;
(v)      Borrower or Mortgage Borrower makes an assignment for the benefit of creditors or admits in any legal proceeding, its insolvency or inability to pay its debts as they become due (provided, that if Borrower is required by applicable law to admit the same in a legal proceeding and Borrower is in fact insolvent, then such admission, in and of itself, shall not be a Springing Recourse Event);
(vi)      Borrower, Mortgage Borrower or any Guarantor or any other Borrower Party shall contest, or direct any other Person to contest, the validity or enforceability of the Loan Documents and/or shall assert any defense (other than defenses that are raised by Borrower in good faith that are not frivolous as determined by a court of competent jurisdiction), in each case, for the sole purpose of delaying, hindering or impairing Administrative Agent or Lender’s rights or remedies under the Loan Documents, unless a court of competent jurisdiction issues a non-appealable final judgment in Borrower’s favor in such action;
(vii)      Borrower fails to obtain Administrative Agent’s prior written consent to any Transfer of all or any portion of the Property or any direct or indirect interest (of any form of ownership) in Borrower or Mortgage Borrower, in each case other than a Permitted Transfer;

-151-


(viii)      Borrower fails to obtain Administrative Agent’s prior written consent to any Indebtedness (other than Permitted Indebtedness) or Lien (other than Permitted Encumbrances) encumbering the Collateral, the Property or any direct interest (of any form of ownership) in the Collateral, the Property or in Borrower or Mortgage Borrower if such Lien was filed by, or such filing was affirmatively approved or acquiesced to by, a Borrower Party;
(ix)      the breach of any covenant contained herein relating to the requirement that Borrower, Mortgage Borrower and SPC Party shall each be a Special Purpose Bankruptcy Remote Entity if Borrower, Mortgage Borrower or SPC Party, as a result thereof, is subsequently substantively consolidated with any other Person
(x)      any Borrower Related Party causes or permits Mortgage Borrower to amend or otherwise modify its organizational documents in order to amend or repeal its election to be governed by Article 8 of the UCC, or any termination or cancellation of the limited liability company membership certificate evidencing Borrower’s one hundred percent (100%) ownership interest in Mortgage Borrower, as delivered to Administrative Agent on the Closing Date in connection with the Pledge Agreement; and
(xi)      any Borrower Related Party acquires, directly or indirectly, any direct or indirect interest in the Mortgage Loan.
Section 11.23      Prior Agreements . This Agreement and the other Loan Documents contain the entire agreement of the parties hereto and thereto in respect of the transactions contemplated hereby and thereby, and all prior agreements among or between such parties, whether oral or written, are superseded by the terms of this Agreement and the other Loan Documents.
Section 11.24      [Reserved] .
Section 11.25      Assignments and Participations .
(a)      Subject to the terms of Article 9 hereof, a Lender may consummate a Secondary Market Transaction without the consent of any Person.
(b)      Subject to the terms of Article 9 hereof, a Lender may, in connection with any Secondary Market Transaction disclose to the assignee or Participant or proposed assignee or participant, as the case may be, any information relating to Borrower or any of its Affiliates or to any aspect of the Loan that has been furnished to such Lender by or on behalf of Borrower or any of its Affiliates.
(c)      Upon any assignment of the Loan, the assignee thereunder shall be a party hereto and, to the extent of the interest assigned by such assignment, have the rights and obligations of a Lender under this Agreement. For the avoidance of doubt, a Participant shall not be considered to be an assignee for purposes of this Section 11.25(c) .
(d)      Borrower agrees that each Participant shall be entitled to the benefit of Section 2.5 (subject to the requirements and obligations therein, including the requirements under

-152-


Section 2.6 (it being understood that the documentation required under Section 2.6 shall be delivered to the participating Lender)); provided that Participant shall not be entitled to receive any greater payment under Section 2.5 , with respect to any participation, than its participating Lender would have been entitled to receive.
Section 11.26      Set‑Off .
In addition to any rights and remedies of Administrative Agent provided by this Agreement and by law, Administrative Agent shall have the right, upon any amount becoming due and payable by Borrower hereunder (whether at the stated maturity, by acceleration or otherwise) to set‑off and appropriate and apply against such amount any and all deposits (general or special, time or demand, provisional or final), in any currency, and any other credits, indebtedness or claims, in any currency, in each case whether direct or indirect, absolute or contingent, matured or unmatured, at any time held or owing by Administrative Agent or any Affiliate thereof to Borrower. Administrative Agent agrees promptly to notify Borrower after any such set‑off and application made by Administrative Agent.
Section 11.27      REOC Status .
Mortgage Borrower is a “real estate operating company” (a “ REOC ”) as defined in the Department of Labor regulations, located at 29 C.F.R. Section 2510.3-101 and shall at all times qualify as a REOC. Borrower will cause Mortgage Borrower provide any additional information reasonably requested by Administrative Agent to confirm Mortgage Borrower’s REOC status.
Section 11.28      Delegation By Lenders; Lenders’ Consultation and Information Right .
(a)      Borrower acknowledges and agrees that one or more direct or indirect members of one more Lenders intend to qualify as a “venture capital operating company” as defined in the Department of Labor regulations, located at 29 C.F.R. Section 2510.3-101 (a “ VCOC ”). Accordingly, Borrower acknowledges and agrees that the approval, consent and inspection rights reserved to such Lenders in this Agreement may be exercised directly by a VCOC and that the exercise of such rights by a VCOC shall be treated as a direct exercise of such rights by the Lender.
(b)      Administrative Agent, on behalf of such Lenders, shall have the right to:
(i)      consult with and advise Borrower regarding the business operation and management of the Borrower, Mortgage Borrower, the Collateral and the Property and the financial and other condition of Borrower, Mortgage Borrower, the Collateral or the Property; provided, however, that such consultations shall not include discussions of environmental compliance programs or disposal of hazardous substances. Consultation meetings should occur on a regular basis (no less frequently than quarterly) with Administrative Agent having the right to call special meetings at any reasonable times;
(ii)      receive notice from Borrower of any material development affecting Borrower or the Property and consult with Borrower and Mortgage Borrower with respect to such matter;

-153-


(iii)      request from Borrower such forecasts, projections and other financial and business data as reasonably required by Administrative Agent;
(iv)      from time to time upon reasonable notice examine the books and records of Borrower at the office of the Borrower (or other person maintaining them) and to make such copies or extracts thereof as Administrative Agent shall desire, at such Lenders’ expense;
(v)      the right, in accordance with the terms of this Agreement, to receive monthly, quarterly and year-end financial reports, including balance sheets, statements of income, shareholder’s equity and cash flow, a management report and schedules of outstanding indebtedness;
(vi)      the right, without restricting any other rights of Administrative Agent, on behalf of the Lenders, under this Agreement (including any similar right), to restrict financing to be obtained with respect to the Property so long as any portion of the Debt remains outstanding;
(vii)      the right, without restricting any other right of Administrative Agent, on behalf of the Lenders, under this Agreement or the other Loan Documents (including any similar right), to restrict, upon the occurrence of an Event of Default, Borrower’s payments of management, consulting, director or similar fees to Affiliates of Borrower from the Rents;
(viii)      the right, without restricting any other rights of Administrative Agent, on behalf of the Lenders, under this Agreement (including any similar right), to approve any operating budget and/or capital budget of Borrower;
(ix)      the right, without restricting any other rights of Administrative Agent, on behalf of the Lenders, under this Agreement (including any similar right), to approve any acquisition by Borrower of any other significant property (other than personal property required for the day to day operation of Property); and
(x)      the right, without restricting any other rights of Administrative Agent, on behalf of the Lenders, under this Agreement (including any similar right), to restrict the transfer of interests in Borrower held by its members, and the right to restrict the transfer of interests in such member, except for any transfer that is a Permitted Transfer.
(c)      rights described above may be exercised directly or indirectly by any Person that owns substantially all of the ownership interests in any Lender.  The provisions of this Section are intended to satisfy the requirement of management rights for purposes of the Department of Labor “plan assets” regulation 29 C.F.R., Section 2510.3-101.
Section 11.29      Intercreditor Agreement .
Administrative Agent, Lender, Mortgage Administrative Agent and Mortgage Lender are parties to a certain intercreditor agreement dated as of the date hereof (as the same may be amended

-154-


or modified from time to time, the “ Intercreditor Agreement ”) memorializing their relative rights and obligations with respect to the Loan, the Building Loan and the Mortgage Loan, Borrower and Mortgage Borrower, and the Property. Borrower hereby acknowledges and agrees that (i) such Intercreditor Agreement is intended solely for the benefit of Administrative Agent, Lenders, Mortgage Administrative Agent and Mortgage Lender and (ii) Borrower and Mortgage Borrower are not intended third-party beneficiaries of any of the provisions therein and shall not be entitled to rely on any of the provisions contained therein. Neither Administrative Agent nor any Lender shall have no obligation to disclose to Borrower the contents of the Intercreditor Agreement. Borrower’s obligations hereunder are independent of such Intercreditor Agreement and remain unmodified by the terms and provisions thereof.
Section 11.30      Acknowledgment and Consent to Bail-In of EEA Financial Institutions .
Notwithstanding anything to the contrary in this Agreement or any Loan Document or in any other agreement, arrangement or understanding among any such parties, each party hereto acknowledges that any liability of any EEA Financial Institution arising under any Loan Document, to the extent such liability is unsecured, may be subject to the write-down and conversion powers of an EEA Resolution Authority and agrees and consents to, and acknowledges and agrees to be bound by:
(a)    the application of any Write-Down and Conversion Powers by an EEA Resolution Authority to any such liabilities arising hereunder which may be payable to it by any party hereto that is an EEA Financial Institution; and
(b)    the effects of any Bail-in Action on any such liability, including, if applicable:
(i)    a reduction in full or in part or cancellation of any such liability;
(ii)    a conversion of all, or a portion of, such liability into shares or other instruments of ownership in such EEA Financial Institution, its parent undertaking, or a bridge institution that may be issued to it or otherwise conferred on it, and that such shares or other instruments of ownership will be accepted by it in lieu of any rights with respect to any such liability under this Agreement or any other Loan Document; or
(iii)    the variation of the terms of such liability in connection with the exercise of the write-down and conversion powers of any EEA Resolution Authority.
As used in this Section 11.30 , the following terms have the following meanings ascribed thereto:
“ Bail-In Action ” means the exercise of any Write-Down and Conversion Powers by the applicable EEA Resolution Authority in respect of any liability of an EEA Financial Institution.
“ Bail-In Legislation ” means, with respect to any EEA Member Country implementing Article 55 of Directive 2014/59/EU of the European Parliament (as amended from time to

-155-


time) and of the Council of the European Union, the implementing law for such EEA Member Country from time to time which is described in the EU Bail-In Legislation Schedule.
“ EEA Financial Institution ” means (a) any credit institution or investment firm established in any EEA Member Country which is subject to the supervision of an EEA Resolution Authority, (b) any entity established in an EEA Member Country which is a parent of an institution described in clause (a) of this definition, or (c) any financial institution established in an EEA Member Country which is a subsidiary of an institution described in clauses (a) or (b) of this definition and is subject to consolidated supervision with its parent.
“ EEA Member Country ” means any of the member states of the European Union, Iceland, Liechtenstein and Norway.
“ EEA Resolution Authority ” means any public administrative authority or any person entrusted with public administrative authority of any EEA Member Country (including any delegee) having responsibility for the resolution of any EEA Financial Institution.
“ EU Bail-In Legislation Schedule ” means the EU Bail-In Legislation Schedule published by the Loan Market Association (or any successor person), as in effect from time to time.
“ Write-Down and Conversion Powers ” means, with respect to any EEA Resolution Authority, the write-down and conversion powers of such EEA Resolution Authority from time to time under the Bail-In Legislation for the applicable EEA Member Country, which write-down and conversion powers are described in the EU Bail-In Legislation Schedule.
XII.      [RESERVED]
XIII.      ADMINISTRATIVE AGENT AND AGREEMENTS AMONG LENDERS
Section 13.1      Appointment; Nature of Relationship .
Administrative Agent is hereby appointed by each Lender as its sole and exclusive contractual representative hereunder and under each other Loan Document, and each Lender irrevocably authorizes Administrative Agent to act as the sole and exclusive contractual representative of such Lender with the rights and duties expressly set forth herein and in the other Loan Documents. Administrative Agent agrees to act as such contractual representative upon the express conditions contained in this Article 13 . Notwithstanding the use of the defined term “Administrative Agent,” it is expressly understood and agreed that Administrative Agent shall not have any fiduciary responsibilities to any Lender by reason of this Agreement or any other Loan Document and that Administrative Agent is merely acting as the contractual representative of Lenders with only those duties as are expressly set forth in this Agreement and the other Loan Documents. In its capacity as Lenders’ contractual representative, Administrative Agent (a) does not hereby assume any fiduciary duties to any of Lenders, and (b) is acting as an independent contractor, the rights and duties of which are limited to those expressly set forth in this Agreement and the other Loan Documents. Each Lender hereby agrees to assert with respect to the Loan Documents and administration of the Loan, no claim against Administrative Agent on any agency

-156-


theory or any other theory of liability for breach of fiduciary duty, all of which claims each Lender hereby waives. Each Lender hereby agrees that, except as otherwise set forth herein, any action taken by the Requisite Lenders in accordance with the provisions of this Agreement or the Loan Documents, and the exercise by the Requisite Lenders of the powers set forth herein or therein, together with such other powers as are reasonably incidental thereto, shall be authorized and binding upon all of the Lenders. As to any matters not expressly provided for by the Loan Documents (including, without limitation, enforcement or collection of any of Borrower’s obligations hereunder), Administrative Agent shall not be required to exercise any discretion or take any action, but shall be required to act or to refrain from acting (and shall be fully protected in so acting or refraining from acting) upon the instructions of the Requisite Lenders (or all of the Lenders if explicitly required under any other provision of this Agreement), and such instructions shall be binding upon all Lenders and all holders of any of the obligations of Borrower; provided, however, that, notwithstanding anything in this Agreement to the contrary, Administrative Agent shall not be required to take any action which exposes Administrative Agent to personal liability or which is contrary to this Agreement or any other Loan Document or applicable law. Not in limitation of the foregoing, Administrative Agent may exercise any right or remedy it or the Lenders may have under any Loan Document upon the occurrence of a Default or Event of Default unless the Requisite Lenders have directed Administrative Agent otherwise. Without limiting the foregoing, no Lender shall have any right of action whatsoever against Administrative Agent as a result of Administrative Agent acting or refraining from acting under this Agreement or the other Loan Documents in accordance with the instructions of the Requisite Lenders, or where applicable, all the Lenders.
Section 13.2      Powers .
Administrative Agent shall have and may exercise such powers under the Loan Documents as are specifically delegated to Administrative Agent by the terms of each thereof, together with such powers as are reasonably incidental thereto. Administrative Agent shall have no implied duties to Lenders, or any obligation to Lenders to take any action thereunder except any action specifically provided by the Loan Documents to be taken by Administrative Agent. Borrower shall be entitled to rely upon any communication or action by Administrative Agent, and shall have no duty to ascertain whether the consent of Requisite Lenders or all Lenders was required or obtained.
Section 13.3      General Immunity .
Neither Administrative Agent nor any of its directors, officers, agents or employees shall be liable to any Lender for any action lawfully taken or omitted to be taken by it or them hereunder or under any other Loan Document or in connection herewith or therewith except for its or their own gross negligence or willful misconduct.

-157-


Section 13.4      No Responsibility for Loan, etc .
Except where the failure to do so constitutes gross negligence or willful misconduct, neither Administrative Agent nor any of its directors, officers, agents or employees shall be responsible for or have any duty to ascertain, inquire into, or verify (i) any statement, warranty or representation made in connection with any Loan Document or any borrowing hereunder; (ii) the performance or observance of any of the covenants or agreements of any obligor under any Loan Document, including, without limitation, any agreement by an obligor to furnish information directly to each Lender; (iii) the satisfaction of any condition specified herein or in any Loan Document; (iv) the validity, effectiveness or genuineness of any Loan Document or any other instrument or writing furnished in connection therewith; or (v) the value, sufficiency, creation, perfection or priority of any interest in any collateral security. Administrative Agent shall have no duty to disclose to Lenders information that is not required to be furnished by Borrower to Administrative Agent at such time, but is voluntarily furnished by Borrower to Administrative Agent (either in its capacity as Administrative Agent or in its individual capacity as a Lender or otherwise).
Section 13.5      Action on Instructions of Lenders .
Administrative Agent shall in all cases be fully protected in acting, or in refraining from acting, hereunder and under any other Loan Document in accordance with written instructions signed by the Requisite Lenders or, where consent of all Lenders is required, all Lenders, and such instructions and any action taken or failure to act pursuant thereto shall be binding on all Lenders and on all holders of the Note. Administrative Agent shall be fully justified in failing or refusing to take any action hereunder and under any other Loan Document unless it shall first be indemnified to its reasonable satisfaction by all Lenders in accordance with their Pro Rata Shares against any and all liability, cost and expense that it may incur by reason of taking or continuing to take any such action.
Section 13.6      Employment of Agents and Counsel .
Administrative Agent may execute any of its duties as Administrative Agent hereunder and under any other Loan Document by or through employees, agents, service providers, and attorneys-in-fact and so long as it exercises reasonable care in the selection of such parties, Administrative Agent shall not be answerable to Lenders, except as to money or securities received by it or its authorized agents, for the default or misconduct of any such parties. Administrative Agent shall be entitled to advice of counsel concerning all matters pertaining to the agency hereby created and its duties hereunder and under any other Loan Document.
Section 13.7      Reliance on Documents; Counsel .
Administrative Agent shall be entitled to rely upon any note, notice, consent, certificate, affidavit, letter, telegram, statement, paper or document believed by it to be genuine and correct and to have been signed or sent by the proper Person or Persons, and, in respect to legal matters, upon the opinion of counsel selected by Administrative Agent, which counsel may be employees of Administrative Agent.

-158-


Section 13.8      Administrative Agent’s Reimbursement and Indemnification .
Lenders agree to reimburse and indemnify Administrative Agent ratably in proportion to their respective Commitments (a) for any reasonable amounts not reimbursed by Borrower for which Administrative Agent is entitled to reimbursement by Borrower under the Loan Documents including out-of-pocket expenses in connection with the preparation, execution, delivery of the Loan Documents (and without limiting the obligation of Borrower to do so), (b) for any other out-of-pocket expenses incurred by Administrative Agent (or its representatives) on behalf of Lenders, in connection with the administration and enforcement of the Loan Documents and (c) for any liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or disbursements of any kind and nature whatsoever which may be imposed on, incurred by or asserted against Administrative Agent in any way relating to or arising out of the Loan Documents or any other document delivered in connection therewith or the transactions contemplated thereby, or the enforcement of any of the terms thereof or of any such other documents, provided that no Lender shall be liable for (y) any of the foregoing to the extent they arise from the gross negligence or willful misconduct of Administrative Agent, or (z) any costs or expenses of Administrative Agent’s in-house legal staff and personnel. The obligations of Lenders under this Section 13.8 shall survive payment of the Obligations and termination of this Agreement.
Section 13.9      Rights as a Lender .
In the event Administrative Agent is a Lender, Administrative Agent shall have the same rights and powers and the same duties and obligations hereunder and under any other Loan Document as any Lender and may exercise the same as though it were not Administrative Agent, and the term “Lender” or “Lenders” shall, at any time when Administrative Agent is a Lender, unless the context otherwise indicates, include Administrative Agent in its individual capacity. Administrative Agent may accept deposits from, lend money to, and generally engage in any kind of trust, debt, equity or other transaction, in addition to those contemplated by this Agreement or any other Loan Document, with Borrower in which Borrower are not restricted hereby from engaging with any other Person.
Section 13.10      Lender Credit Decision .
Each Lender acknowledges that it has, independently and without reliance upon Administrative Agent or any other Lender and based on the financial statements prepared by Guarantor and Borrower and such other documents and information as it has deemed appropriate, made its own credit analysis and decision to enter into this Agreement and the other Loan Documents. Each Lender also acknowledges that it will, independently and without reliance upon Administrative Agent or any other Lender and based on such documents and information as it shall deem appropriate at the time, continue to make its own credit decisions in taking or not taking action under this Agreement and the other Loan Documents. Administrative Agent shall not be required to keep itself informed as to the performance or observance by Borrower or any other party or any other document referred to or provided for therein or to inspect the properties or books of, or make any other investigation of, Borrower or any other party. Except for notices, reports and other documents and information expressly required to be furnished to the Lenders by Administrative Agent under this Agreement or any of the other Loan Documents, Administrative Agent shall have no duty or

-159-


responsibility to provide any Lender with any credit or other information concerning the business, operations, property, financial and other condition or creditworthiness of Borrower, any other party or any other Affiliate thereof which may come into possession of Administrative Agent or any of its officers, directors, employees, agents, attorneys in fact or other Affiliates.
Section 13.11      Successor Administrative Agent .
Administrative Agent may resign at any time by giving written notice thereof to Lenders and Borrower. Administrative Agent may be removed by the Requisite Lenders if Administrative Agent (i) is found by a court of competent jurisdiction in a final, non-appealable judgment to have committed gross negligence or willful misconduct in the course of performing its duties hereunder or (ii) has become or is insolvent or has become the subject of a bankruptcy or insolvency proceeding, or has had a receiver, conservator, trustee or custodian appointed for it, or has taken any action in furtherance of, or indicating its consent to, approval of or acquiescence in any such proceeding or appointment, such removal to be effective on the date specified by the Requisite Lenders. Upon any such resignation or removal, the Requisite Lenders (at no cost or expense to Borrower) shall have the right to appoint, on behalf of Borrower and Lenders, a successor Administrative Agent. If no successor Administrative Agent shall have been so appointed by the Requisite Lenders within thirty days after the resigning Administrative Agent’s giving notice of its intention to resign, then the resigning Administrative Agent shall appoint, on behalf of Borrower and Lenders, a successor Administrative Agent. No successor Administrative Agent shall be deemed to be appointed hereunder until such successor Administrative Agent has accepted the appointment. Upon the acceptance of any appointment as Administrative Agent hereunder by a successor Administrative Agent, such successor Administrative Agent shall thereupon succeed to and become vested with all the rights, powers, privileges and duties of the resigning or removed Administrative Agent. Upon the effectiveness of the resignation or removal of Administrative Agent, the resigning or removed Administrative Agent shall be discharged from its duties and obligations thereafter arising hereunder and under the Loan Documents. After the effectiveness of the resignation or removal of an Administrative Agent, the provisions of this Article 13 shall continue in effect for the benefit of such Administrative Agent in respect of any actions taken or omitted to be taken by it while it was acting as Administrative Agent hereunder and under the other Loan Documents. Notwithstanding anything contained herein to the contrary, Administrative Agent may assign its rights and duties under the Loan Documents to any of its affiliates by giving Borrower and each Lender prior written notice.
Section 13.12      Amendments and Waivers
(a)      Generally . Except as otherwise expressly provided in this Agreement, (i) any consent or approval required or permitted by this Agreement or in any Loan Document to be given by the Administrative Agent or the Lenders may be given, (ii) any term of this Agreement or of any other Loan Document or the Intercreditor Agreement may be amended, (iii) the performance or observance by the Borrower or any of its Affiliates of any terms of this Agreement or such other Loan Document may be waived, and (iv) the continuance of any Event of Default may be waived (either generally or in a particular instance and either retroactively or prospectively) with, but only with, the written consent of the Requisite Lenders (or Administrative Agent at the written direction

-160-


of the Requisite Lenders), and, in the case of an amendment to any Loan Document, the written consent of each Borrower Affiliate which is party thereto.
(b)      Unanimous Consent . Notwithstanding the foregoing, no amendment, waiver or consent shall, unless in writing, and signed by all of the Lenders (or Administrative Agent at the written direction of the Lenders), do any of the following:
(i)      increase the Commitments of the Lenders (excluding any increase as a result of an assignment of Loans permitted under Section 10.21 or, for the avoidance of doubt, any Protective Advances permitted under Section 13.19 ) or subject the Lenders to any additional obligations;
(ii)      reduce the principal of, or interest or interest rates that have accrued or that will be charged on the outstanding principal amount of, the Loan;
(iii)      reduce the amount of any fees payable to the Lenders hereunder;
(iv)      postpone any date fixed for any payment of principal of, or interest on, the Loan (including, without limitation, the Maturity Date) or for the payment of fees or any other obligations of Borrower or Guarantor;
(v)      change any Lender’s pro rata share of payments made or received in connection with any Loan (excluding any change as a result of an assignment of Loans permitted under Section 9.1 );
(vi)      amend this Section or amend the definitions of the terms used in this Agreement or the other Loan Documents insofar as such definitions affect the substance of this Section;
(vii)      modify the definition of the term “Requisite Lenders” or modify in any other manner the number or percentage of the Lenders required to make any determinations or waive any rights hereunder or to modify any provision hereof;
(viii)      except and only to the extent contemplated under any Guaranty, release any Guarantor from its obligations under any Guaranty;
(ix)      waive a Default under Section 10.1(a) ;
(x)      consent to any Transfer that is not a Permitted Transfer; or
(xi)      release or dispose of any collateral for the Loan unless released or disposed of as permitted by, and in accordance with, Section 13.19 .
(c)      Amendment of Administrative Agent’s Duties, Etc. No amendment, waiver or consent unless in writing and signed by Administrative Agent, in addition to the Lenders required hereinabove to take such action, shall affect the rights or duties of Administrative Agent under this Agreement, any of the other Loan Documents. No waiver shall extend to or affect any

-161-


obligation not expressly waived or impair any right consequent thereon and any amendment, waiver or consent shall be effective only in the specific instance and for the specific purpose set forth therein. No course of dealing or delay or omission on the part of Administrative Agent or any Lender in exercising any right shall operate as a waiver thereof or otherwise be prejudicial thereto. Any Event of Default occurring hereunder shall continue to exist until such time as such Event of Default is waived in writing in accordance with the terms of this Section, notwithstanding any attempted cure or other action by the Borrower, any Affiliate thereof or any other Person subsequent to the occurrence of such Event of Default. Except as otherwise explicitly provided for herein or in any other Loan Document, no notice to or demand upon the Borrower shall entitle the Borrower to other or further notice or demand in similar or other circumstances.
(d)      Standard for Consent. Notwithstanding anything to the contrary contained herein, the Lenders agree that if the Loan Documents impose a standard of determination (such as “reasonableness”) on Administrative Agent or Lender thereunder with respect to a proposed action or decision which would be subject to Requisite Lender or unanimous Lender consent hereunder, then each Lender shall apply and will be held to the same standard with respect to the proposed action or decision, accordingly, for the sake of clarity, if Administrative Agent or Lenders are required to be reasonable with respect to approving or consenting to a given action or item under the Loan Agreement or the other Loan Documents which also requires Requisite Lender or unanimous Lender consent hereunder, then each Lender shall also be reasonable in providing its consent or approval of such action or item.
Section 13.13      Notice of Defaults .
If a Lender becomes aware of a Default or an Event of Default, such Lender shall notify Administrative Agent of such fact provided that the failure to give such notice shall not create liability on the part of a Lender. Upon receipt of such notice that a Default or Event of Default has occurred, Administrative Agent shall notify each Lender thereof.
Section 13.14      Requests for Approval .
If Administrative Agent requests in writing the consent or approval of a Lender, such Lender shall respond and either approve or disapprove definitively in writing to Administrative Agent within ten (10) Business Days (or sooner if such notice specifies a shorter period for responses based on Administrative Agent’s good faith determination that circumstances exist warranting its request for an earlier response) after such written request from Administrative Agent, then Administrative Agent will send a second request to such Lender. In the event any Lender fails to reply to such second request for approval from Administrative Agent within five (5) days (or sooner if such notice specifies a shorter period for responses based on Administrative Agent’s good faith determination that circumstances exist warranting its request for an earlier response), which second request shall state in bold lettering: “ LENDER’S RESPONSE IS REQUIRED WITHIN THREE (3) DAYS AFTER RECEIPT OF THIS NOTICE IN ACCORDANCE WITH THE TERMS OF THE LOAN AGREEMENT. FAILURE TO RESPOND WITHIN SUCH TIME PERIOD SHALL BE DEEMED APPROVAL BY LENDER OF THE MATTERS SET FORTH HEREIN ” with the appropriate number of days inserted by Administrative Agent, then such Lender shall be deemed

-162-


to have approved (and voted in favor of) Administrative Agent’s recommendation with respect to any matters set forth in the request.
Section 13.15      Copies of Documents .
Within fifteen (15) Business Days after a request by a Lender to Administrative Agent for documents furnished to Administrative Agent by Borrower, Administrative Agent shall, to the extent actually provided by Borrower, provide copies of such documents to such Lender.
Section 13.16      Defaulting Lenders .
At such time as a Lender becomes a Defaulting Lender, such Defaulting Lender’s right to vote on matters which are subject to the consent or approval of the Requisite Lenders, each affected Lender or all Lenders shall be immediately suspended until such time as such Lender is no longer a Defaulting Lender, except that the amount of the Commitment of the Defaulting Lender may not be increased or (except as provided herein) decreased without its consent. If a Defaulting Lender has failed to fund its Pro Rata Share of any Loan and until such time as such Defaulting Lender subsequently funds its Pro Rata Share of such Loan, all obligations owing to such Defaulting Lender hereunder shall be subordinated in right of payment, as provided in the following sentence, to the prior payment in full of all principal of, interest on and other sums relating to the amounts funded by the other Lenders which were included in the Loans with respect to which the Defaulting Lender failed to fund its Pro Rata Shares (such principal, interest and fees being referred to as “ Senior Loans ” for the purposes of this Section). All amounts paid by Borrower and otherwise due to be applied to the obligations owing to such Defaulting Lender pursuant to the terms hereof shall first be distributed by Administrative Agent to the other Lenders in accordance with their respective Pro Rata Shares (recalculated for the purposes hereof to exclude the Commitment of the Defaulting Lender) until all Senior Loans have been paid in full. This provision governs only the relationship among Administrative Agent, each Defaulting Lender and the other Lenders; nothing hereunder shall limit the obligation of Borrower to repay the Loans in accordance with the terms of this Agreement. The provisions of this Section shall apply and be effective regardless of whether an Event of Default occurs and is continuing, and notwithstanding (i) any other provision of this Agreement to the contrary, (ii) any instruction of Borrower as to its desired application of payments or (iii) the suspension of such Defaulting Lender’s right to vote on matters which are subject to the consent or approval of the Requisite Lenders or all Lenders.
Section 13.17      Pro Rata Treatment.
Except to the extent otherwise provided herein: (a) each borrowing from Lenders shall be made from the Lenders, each payment of the fees shall be made for the account of the Lenders, and each termination or reduction of the amount of the Commitments pursuant to this Agreement shall be applied to the respective Commitments of the Lenders, pro rata according to the amounts of their respective Commitments; (b) each payment or prepayment of principal of the Loan by the Borrower shall be made for the account of the Lenders pro rata in accordance with the respective unpaid principal amounts of the Loan held by them, provided that if immediately prior to giving effect to any such payment in respect of the Loan the outstanding principal amount of the Loan shall not be held by the Lenders pro rata in accordance with their respective Commitments in effect at the time

-163-


the Loan was made, then such payment shall be applied to the Loan in such manner as shall result, as nearly as is practicable, in the outstanding principal amount of the Loan being held by the Lenders pro rata in accordance with their respective Commitments; and (c) each payment of interest on the Loan by the Borrower shall be made for the account of the Lenders pro rata in accordance with the amounts of interest on the Loan then due and payable to the respective Lenders.
Section 13.18      Sharing of Payments, Etc.
Lenders agree among themselves that (i) with respect to all amounts received by them which are applicable to the payment of the obligations of Borrower or Guarantor under the Loan, equitable adjustment will be made so that, in effect, all such amounts will be shared among them ratably in accordance with their Pro Rata Shares in the Loan, whether received by voluntary payment, by counterclaim or cross action or by the enforcement of any or all of such obligations, (ii) if any of them shall by voluntary payment or by the exercise of any right of counterclaim or otherwise, receive payment of a proportion of the aggregate amount of such obligations held by it which is greater than its Pro Rata Share in the Loan of the payments on account of such obligations, the one receiving such excess payment shall purchase, without recourse or warranty, an undivided interest and participation (which it shall be deemed to have done simultaneously upon the receipt of such payment) in such obligations owed to the others so that all such recoveries with respect to such obligations shall be applied ratably in accordance with such Pro Rata Shares; provided, that if all or part of such excess payment received by the purchasing party is thereafter recovered from it, those purchases shall be rescinded and the purchase prices paid for such participations shall be returned to that party to the extent necessary to adjust for such recovery, but without interest except to the extent the purchasing party is required to pay interest in connection with such recovery. Borrower agrees that any Lender so purchasing a participation from another Lender pursuant to this Section 13.18 may, to the fullest extent permitted by law, exercise all its rights of payment with respect to such participation as fully as if such Lender were the direct creditor of Borrower in the amount of such participation.
Section 13.19      Collateral Matters; Protective Advances.
(a)      Each Lender hereby authorizes Administrative Agent, without the necessity of any notice to or further consent from any Lender, from time to time prior to a Default, to take any action with respect to any Collateral or Loan Documents which may be necessary to perfect and maintain perfected the Liens upon the Collateral granted pursuant to any of the Loan Documents.
(b)      The Lenders hereby authorize Administrative Agent, at its option and in its discretion, to release any Lien granted to or held by Administrative Agent upon any Collateral (i) upon termination of the Commitments and indefeasible payment and satisfaction in full of all of obligations of Borrower hereunder; (ii) as expressly permitted by, but only in accordance with, the terms of the applicable Loan Document; and (iii) if approved, authorized or ratified in writing by the Requisite Lenders (or such greater number of Lenders as this Agreement or any other Loan Document may expressly provide). Upon request by Administrative Agent at any time, the Lenders will confirm in writing Administrative Agent’s authority to release particular types or items of Collateral pursuant to this Section. In addition to the foregoing, the Lenders hereby authorize

-164-


Administrative Agent to take such actions and execute, file and/or deliver such documents as are contemplated in Section 2.4 , and the Lenders agree to cooperate with Administrative Agent in connection therewith.
(c)      Upon any sale and transfer of Collateral which is expressly permitted pursuant to the terms of this Agreement, and upon at least five (5) Business Days’ prior written request by the Borrower, Administrative Agent shall (and is hereby irrevocably authorized by the Lenders to) execute such documents as may be necessary to evidence the release of the Liens granted to Administrative Agent for the benefit of the Lenders herein or pursuant hereto upon the Collateral that was sold or transferred; provided, however, that (i) Administrative Agent shall not be required to execute any such document on terms which, in Administrative Agent’s opinion, would expose Administrative Agent to liability or create any obligation or entail any consequence other than the release of such Liens without recourse or warranty and (ii) such release shall not in any manner discharge, affect or impair the obligations of Borrower or any Liens upon (or obligations of the Borrower or any of its Affiliates in respect of) all interests retained by the Borrower or any of its Affiliates, including (without limitation) the proceeds of such sale or transfer, all of which shall continue to constitute part of the Collateral. In the event of any sale or transfer of Collateral, or any foreclosure with respect to any of the Collateral, Administrative Agent shall be authorized to deduct all of the expenses reasonably incurred by Administrative Agent from the proceeds of any such sale, transfer or foreclosure. The foregoing provisions of this Section 13.19(c) shall not be construed to diminish Administrative Agent’s obligations or Borrower’s rights under Section 2.4.
(d)      Administrative Agent shall have no obligation whatsoever to the Lenders or to any other Person to assure that the Collateral exists or is owned by the Borrower or any of its Affiliates or is cared for, protected or insured or that the Liens granted to Administrative Agent herein or pursuant hereto have been properly or sufficiently or lawfully created, perfected, protected or enforced or are entitled to any particular priority, or to exercise or to continue exercising at all or in any manner or under any duty of care, disclosure or fidelity any of the rights, authorities and powers granted or available to Administrative Agent in this Section or in any of the Loan Documents, it being understood and agreed that in respect of the Collateral, or any act, omission or event related thereto, Administrative Agent may act in any manner it may deem appropriate, in its sole discretion, given Administrative Agent’s own interest in the Collateral as one of the Lenders and that Administrative Agent shall have no duty or liability whatsoever to the Lenders, except to the extent resulting from its gross negligence or willful misconduct.
(e)      Following the occurrence of a default by Borrower, (or if Administrative Agent reasonably believes it is necessary to prevent the occurrence of a default by Borrower), Administrative Agent may make, and shall be reimbursed by the Lenders (in accordance with their Pro Rata Shares) to the extent not reimbursed by the Borrower for, Protective Advances during any one calendar year with respect to any Property that is Collateral up to the sum of (i) amounts expended to pay real estate taxes, assessments and governmental charges or levies imposed upon such Property; (ii) amounts expended to pay insurance premiums for policies of insurance related to such Property; and (iii) $1,000,000. Protective Advances in excess of said sum during any calendar year for any Property that is Collateral shall require the consent of the Requisite Lenders. The Borrower agrees to pay on demand all Protective Advances.

-165-


(f)      Each Lender agrees that it will not take any action, nor institute any actions or proceedings, against Borrower or any other obligor hereunder under the Loan Documents with respect to exercising claims against or rights in the Collateral without the written consent of Requisite Lenders.
Section 13.20      Borrower Default.
(a)      Promptly after Administrative Agent or any Lender acquires actual knowledge that an Event of Default has occurred, such party shall notify the other Lenders in writing of the Event of Default. Promptly after Administrative Agent acquires actual knowledge of the occurrence of an Event of Default, Administrative Agent shall give notice of the Event of Default to Borrower and any other parties to whom notice must be provided under this Agreement. Administrative Agent shall send a copy of that default notice to all Lenders promptly after sending such notice. Neither Administrative Agent nor any Lender shall be deemed to have actual knowledge of the occurrence of an Event of Default unless Administrative Agent or such Lender has received written notice from a Lender or Borrower referring to this Agreement and describing the Event of Default (provided, however, that Administrative Agent shall be deemed to have actual knowledge of any Event of Default described in Section 10.1(a)(i)( A) or (B )) without receipt of a written notice from a Lender or Borrower referring to this Agreement and describing such Event of Default.
(b)      In the event that the Requisite Lenders approve or direct the commencement of a foreclosure proceeding or other exercise of remedies, to the extent not already done so, Administrative Agent shall declare the outstanding principal balance of the Loan, all interest thereon and all other amounts payable under the Loan Documents to be immediately due and payable and shall promptly commence and diligently pursue in a commercially reasonable manner such foreclosure proceeding; provided, that (i) such action is not stayed by any bankruptcy or insolvency proceeding or any other injunction or court order and (ii) Administrative Agent believes in good faith that such action will not expose Administrative Agent to any liability from any party, including, without limitation, Borrower or any Lender. If, after commencing such foreclosure proceeding, Administrative Agent is directed to cease such action or to take another course of action by the Requisite Lenders under the terms of this Agreement, Administrative Agent shall follow such direction.
(c)      In the event that the Requisite Lenders have not approved the commencement of a foreclosure proceeding or other exercise of remedies within the initial one hundred eighty (180) days following the occurrence of an Event of Default, Administrative Agent shall have the right, without the consent of the Requisite Lenders to commence a foreclosure proceeding or other exercise of remedies in the Administrative Agent’s sole discretion.

-166-


Section 13.21      Post-Foreclosure Plans .
If all or any portion of the Collateral is acquired by Administrative Agent as a result of a foreclosure or the acceptance of a deed or assignment in lieu of foreclosure, or is retained in satisfaction of all or any part of the obligations of Borrower hereunder, the title to any such Collateral, or any portion thereof, shall be held in the name of Administrative Agent or a nominee or subsidiary of Administrative Agent, as agent, for the ratable benefit of all Lenders. Administrative Agent shall prepare a recommended course of action for such Collateral (a “ Post-Foreclosure Plan ”), which shall be subject to the approval of the Requisite Lenders. In accordance with the approved Post-Foreclosure Plan, Administrative Agent shall manage, operate, repair, administer, complete, construct, restore or otherwise deal with the Collateral acquired, and shall administer all transactions relating thereto, including, without limitation, employing a management agent, leasing agent and other agents, contractors and employees, including agents for the sale of such Collateral, and the collecting of rents and other sums from such Collateral and paying the expenses of such Collateral. Actions taken by Administrative Agent with respect to the Collateral, which are not specifically provided for in the approved Post-Foreclosure Plan or reasonably incidental thereto, shall require the written consent of the Requisite Lenders by way of supplement to such Post-Foreclosure Plan. Upon demand therefor from time to time, each Lender will contribute its share (based on its Pro Rata Share) of all reasonable costs and expenses incurred by Administrative Agent pursuant to the approved Post-Foreclosure Plan in connection with the construction, operation, management, maintenance, leasing and sale of such Collateral. In addition, Administrative Agent shall render or cause to be rendered to each Lender, on a monthly basis, an income and expense statement for such Collateral, and each Lender shall promptly contribute its Pro Rata Share of any operating loss for such Collateral, and such other expenses and operating reserves as Administrative Agent shall deem reasonably necessary pursuant to and in accordance with the approved Post-Foreclosure Plan. To the extent there is net operating income from such Collateral, Administrative Agent shall, in accordance with the approved Post-Foreclosure Plan, determine the amount and timing of distributions to the Lenders. All such distributions shall be made to the Lenders in accordance with their respective Pro Rata Shares. The Lenders acknowledge and agree that if title to any Collateral is obtained by Administrative Agent or its nominee, such Collateral will not be held as a permanent investment but will be liquidated as soon as practicable. Administrative Agent shall undertake to sell such Collateral, at such price and upon such terms and conditions as the Requisite Lenders reasonably shall determine to be most advantageous to the Lenders. Any purchase money mortgage or deed of trust taken in connection with the disposition of such Collateral in accordance with the immediately preceding sentence shall name Administrative Agent, as agent for the Lenders, as the beneficiary or mortgagee. In such case, Administrative Agent and the Lenders shall enter into an agreement with respect to such purchase money mortgage or deed of trust defining the rights of the Lenders in the same Pro Rata Shares as provided hereunder, which agreement shall be in all material respects similar to this Article insofar as the same is appropriate or applicable.
Section 13.22      Terminology .
Notwithstanding anything to the contrary in this Agreement, in Articles 1 through 12 , “Lender” shall mean “Administrative Agent for the benefit of the Lenders” or “Administrative Agent, on behalf of the Lenders”, as the context may require.

-167-


XIV.      MORTGAGE LOAN
Section 14.1    Compliance With Mortgage Loan Documents . Borrower shall (or shall cause Mortgage Borrower to): (a) pay all principal, interest and other sums required to be paid by Mortgage Borrower under and pursuant to the provisions of the Mortgage Loan Documents; (b) diligently perform and observe all of the terms, covenants and conditions of the Mortgage Loan Documents on the part of Mortgage Borrower to be performed and observed, unless such performance or observance shall be waived in writing by Mortgage Lender; (c) promptly notify Lender of the giving of any notice by Mortgage Lender to Mortgage Borrower or Borrower of any default by Mortgage Borrower in the performance or observance of any of the terms, covenants or conditions of the Mortgage Loan Documents on the part of Mortgage Borrower to be performed or observed and deliver to Lender a true copy of each such notice; (d) deliver a true, correct and complete copy of all notices, demands, requests or material correspondence (including electronically transmitted items) given or received by Mortgage Borrower or Guarantor to or from the Mortgage Lender or its agent; and (e) not enter into or be bound by any Mortgage Loan Documents that are not approved by Lender (it being acknowledged and agreed that all Mortgage Loan Documents entered into on the date hereof are approved by Lender). Without limiting the foregoing, Borrower shall cause Mortgage Borrower to fund all reserves required to be funded pursuant to the Mortgage Loan Documents. In the event of a refinancing of the Mortgage Loan permitted by the terms of this Agreement, Borrower will cause all reserves on deposit with Mortgage Lender to be utilized by Mortgage Borrower to reduce the amount due and payable to the Mortgage Lender or alternatively shall be remitted to Lender as a mandatory prepayment of the Loan.
Section 14.2    Mortgage Loan Defaults.
(a)    Without limiting the generality of the other provisions of this Agreement, and without waiving or releasing Borrower from any of its obligations hereunder, if there shall occur any Event of Default under the Mortgage Loan Documents, Borrower hereby expressly agrees that Lender shall have the immediate right, without prior notice to Borrower, but shall be under no obligation: (x) to pay all or any part of the Mortgage Loan and any other sums that are then due and payable, and to perform any act or take any action on behalf of Borrower and/or Mortgage Borrower as may be appropriate, to cause all of the terms, covenants and conditions of the Mortgage Loan Documents on the part of Mortgage Borrower to be performed or observed thereunder to be promptly performed or observed; and (y) to pay any other amounts and take any other action as Lender, in its sole and absolute discretion, shall deem reasonably necessary to protect or preserve the rights and interests of Lender in the Loan and/or the Collateral. All sums so paid and the out-of-pocket costs and expenses incurred by Lender in exercising rights under this Section 14.2 (including attorneys’ fees) (i) shall constitute additional advances of the Loan to Borrower, (ii) shall increase the then unpaid principal, (iii) shall bear interest at the Default Rate for the period from the date that such costs or expenses were incurred to the date of payment to Lender, (iv) shall constitute a portion of the Debt, and (v) shall be secured by the Security Documents.
(b)    Borrower hereby indemnifies Lender from and against all actual out-of-pocket liabilities, obligations, losses, damages, penalties, assessments, actions, or causes of action, judgments, suits, claims, demands, costs, expenses (including reasonable attorneys’ and other

-168-


professional fees, whether or not suit is brought, and settlement costs) and disbursements of any kind or nature whatsoever which may be imposed on, incurred by or asserted against Lender as a result of the foregoing actions. Lender shall have no obligation to Borrower, Mortgage Borrower or any other party to make any such payment or performance. Borrower shall not impede, interfere with, hinder or delay, and shall not permit Mortgage Borrower to impede, interfere with, hinder or delay, any effort or action on the part of Lender to cure any default or asserted default under the Mortgage Loan, or to otherwise protect or preserve Lender’s interests in the Loan and the Collateral following a default or asserted default under the Mortgage Loan unless such actions are defenses and counterclaims raised in good faith.
(c)    Any default or breach by Mortgage Borrower under the Mortgage Loan Documents which is not cured prior to the expiration of any applicable grace, notice or cure period afforded to Mortgage Borrower under the Mortgage Loan Documents shall constitute an Event of Default, without regard to any subsequent payment or performance of any such obligations by Lender. Borrower hereby grant Lender and any person designated by Lender the right, subject to the rights of tenants, to enter upon any Property at any time following the occurrence and during the continuance of any Event of Default, or the assertion by Mortgage Lender that an Event of Default has occurred under the Mortgage Loan Documents, for the purpose of taking any such action or to appear in, defend or bring any action or proceeding to protect Borrower’s, Mortgage Borrower’s and/or Lender’s interest. Lender may take such action as Lender deems reasonably necessary or desirable to carry out the intents and purposes of this subsection (including communicating with Mortgage Lender with respect to any “Event of Default” under the Mortgage Loan), without prior notice to, or consent from, Borrower. Lender shall have no obligation to complete any cure or attempted cure undertaken or commenced by Lender.
(d)    If Lender shall receive a copy of any notice of default under the Mortgage Loan Documents sent by Mortgage Lender to Mortgage Borrower, such notice shall constitute full protection to Lender for any action taken or omitted to be taken by Lender, in good faith, in reliance thereon. As a material inducement to Lender’s making the Loan, Borrower hereby absolutely and unconditionally release and waive all claims against Lender arising out of Lender’s exercise of its rights and remedies provided in this Section 14.2, except for Lender’s gross negligence or willful misconduct. In the event that Lender makes any payment in respect of the Mortgage Loan, Lender shall be subrogated to all of the rights of Mortgage Lender under the Mortgage Loan Documents against any Property, in addition to all other rights it may have under the Loan Documents.
Section 14.3    Mortgage Loan Estoppels . Borrower shall (or shall cause Mortgage Borrower to), from time to time, but not more than once per year (except if an Event of Default exists), use reasonable efforts to obtain from Mortgage Lender s certificate of estoppel with respect to compliance by Mortgage Borrower with the terms of the Mortgage Loan Documents as may be reasonably requested by Lender. In the event or to the extent that Mortgage Lender is not legally obligated to deliver such certificates of estoppel and is unwilling to deliver the same, or is legally obligated to deliver such certificates of estoppel but breaches such obligation, then Borrower shall not be in breach of this provision so long as Borrower furnishes to Lender an estoppel executed by Borrower and Mortgage Borrower expressly representing to Lender the information reasonably requested by Lender regarding compliance by Mortgage Borrower with the terms of the Mortgage

-169-


Loan Documents. Borrower hereby indemnifies Lender from and against all Losses which may be imposed on, incurred by, or asserted against Lender based on any material intentional misrepresentation relating to the Mortgage Loan which was misrepresented in such estoppel executed by Borrower and Mortgage Borrower.
Section 14.4    No Amendment to Mortgage Loan Documents . Without obtaining the prior written consent of Administrative Agent, Borrower shall not cause or permit Mortgage Borrower to (i) enter into any amendment or modification of any of the Mortgage Loan Documents, (ii) grant to Mortgage Lender any consent or waiver or (iii) exercise any remedy available to Mortgage Borrower under the Mortgage Loan Documents. Borrower shall cause Mortgage Borrower to provide Lender with a copy of any amendment or modification to the Mortgage Loan Documents within five (5) days after the execution thereof. Notwithstanding the foregoing, Borrower shall not be required to obtain Administrative Agent’s consent in connection with (i) the entering into and the recording (if applicable) of the Building Loan Agreement, the Building Loan Documents and/or any Serial Mortgages (as defined in the Mortgage Loan Agreement) in accordance with Sections 2.6.2(m) and (n) of the Mortgage Loan Agreement, and (ii) the amendment of the Mortgage Loan Agreement, in each case in accordance with Section 2.6.2(n) of the Mortgage Loan Agreement.
Section 14.5    Deed in Lieu of Foreclosure. Without the express prior written consent of Administrative Agent, Borrower shall not, and Borrower shall not cause, suffer or permit Mortgage Borrower to, enter into any deed-in-lieu or consensual foreclosure with or for the benefit of Mortgage Lender or any of its affiliates. Without the express prior written consent of Administrative Agent, Borrower shall not, and Borrower shall not cause, suffer or permit Mortgage Borrower to, enter into any consensual sale or other transaction in connection with the Mortgage Loan which could diminish, modify, terminate, impair or otherwise adversely affect the interests of Lender or Borrower, the Collateral or any portion thereof or any interest therein or of Mortgage Borrower in the Property owned by such Mortgage Borrower or portion thereof or any interest therein.
Section 14.6    Refinancing or Prepayment of the Mortgage Loan. Other than mandatory prepayments under the Mortgage Loan Documents, neither Borrower nor Mortgage Borrower shall make any partial or full prepayments of amounts owing under the Mortgage Loan or refinance the Mortgage Loan without the prior written consent of Administrative Agent, unless such refinancing results in the concurrent payment in full of the Debt.
Section 14.7    Independent Approval Rights . If any action, proposed action or other decision is consented to or approved by Mortgage Lender, such consent or approval shall not be binding or controlling on Lender. Borrower hereby acknowledges and agrees that (i) the risks of Mortgage Lender in making the Mortgage Loan are different from the risks of Lender in making the Loan, (ii) in determining whether to grant, deny, withhold or condition any requested consent or approval, Mortgage Lender and Lender may reasonably reach different conclusions, and (iii) Lender has an absolute independent right to grant, deny, withhold or condition any requested consent or approval based on its own point of view, but subject to the standards of consent set forth herein. Furthermore, the denial by Lender of a requested consent or approval shall not create any liability or other obligation of Lender if the denial of such consent or approval results directly or indirectly in a Mortgage Loan Event of Default, and Borrower hereby waives any claim of liability against Lender

-170-


arising from any such denial unless Lender has not complied with any applicable standard for consent
[NO FURTHER TEXT ON THIS PAGE]


-171-


IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed by their duly authorized representatives, all as of the day and year first above written.
 
ADMINISTRATIVE AGENT:
INVESCO CMI INVESTMENTS, L.P. , a Delaware limited partnership
By: Invesco CMI Investments GP, LLC, a Delaware limited liability company, its general partner

By:     /s/ Paul Michaels                     
Name: Paul Michaels
Title: Proper Officer

 
LENDER:
INVESCO CMI INVESTMENTS, L.P. , a Delaware limited partnership
By: Invesco CMI Investments GP, LLC, a Delaware limited liability company, its general partner

By:     /s/ Paul Michaels                      
Name: Paul Michaels
Title: Proper Officer

[Signatures Continue On Following Page]


[Signature Page to Mezzanine Loan Agreement]


 
BORROWER:
110 WILLIAM MEZZ III, LLC,
a Delaware limited liability company

By:     /s/ Christopher Schlank            
Name: Christopher Schlank
Title: Authorized Signatory




[Signature Page to Mezzanine Loan Agreement]

Exhibit 10.4
MEZZANINE LOAN PROMISSORY NOTE
$87,125,000.00    New York, New York
March 7, 2019
FOR VALUE RECEIVED 110 WILLIAM MEZZ III, LLC , a Delaware limited liability company, having an address at c/o Savanna, 430 Park Avenue, 12 th Floor, New York, New York 10022 (“ Borrower ”), as maker, hereby unconditionally promises to pay to INVESCO CMI INVESTMENTS, L.P. , a Delaware limited partnership, having an address at c/o Invesco Real Estate, 2001 Ross Avenue, Suite 3400, Dallas, Texas 75201 (together with its successors and assigns, “ Lender ”), or at such other place as the holder hereof may from time to time designate in writing, the principal sum of EIGHTY-SEVEN MILLION ONE HUNDRED TWENTY-FIVE THOUSAND AND NO/100 DOLLARS ($87,125,000.00), or so much thereof as is advanced, in lawful money of the United States of America, with interest thereon to be computed from the date of this Mezzanine Loan Promissory Note at the Applicable Interest Rate (as defined in the Loan Agreement (as defined below)), and to be paid in accordance with the terms of this Mezzanine Loan Promissory Note, dated as of the date hereof (as the same may be amended, restated, replaced, supplemented or otherwise modified from time to time, this “ Note ”) and that certain Mezzanine Loan Agreement, dated as of the date hereof, between Borrower and Lender (as the same may be amended, restated, replaced, supplemented or otherwise modified from time to time, the “ Loan Agreement ”). All capitalized terms not defined herein shall have the respective meanings set forth in the Loan Agreement.
ARTICLE 1: PAYMENT TERMS
Borrower agrees to pay the principal sum of this Note and interest on the unpaid principal sum of this Note from time to time outstanding at the rates and at the times specified in Article II of the Loan Agreement and the outstanding balance of the principal sum of this Note and all accrued and unpaid interest thereon shall be due and payable on the Maturity Date.
ARTICLE 2: DEFAULT AND ACCELERATION
Subject to and in accordance with the terms of the Loan Agreement, the Debt shall without notice become immediately due and payable at the option of Lender if any payment required in this Note is not paid on or prior to the date when due or if not paid on the Maturity Date or occurrence of any Event of Default.
ARTICLE 3: LOAN DOCUMENTS
This Note is secured by the Pledge Agreement and the other Loan Documents. All of the terms, covenants and conditions contained in the Loan Agreement, the Pledge Agreement and the other Loan Documents are hereby made part of this Note to the same extent and with the same force and effect as if they were fully set forth herein. In the event of a conflict or inconsistency between the terms of this Note and the Loan Agreement, the terms and provisions of the Loan Agreement shall govern.


ARTICLE 4: SAVINGS CLAUSE
Notwithstanding anything to the contrary contained herein or in any other Loan Documents, (a) all agreements and communications between Borrower and Lender are hereby and shall automatically be limited so that, after taking into account all amounts deemed interest, the interest contracted for, charged or received by Lender with respect to the Loan shall never exceed the Maximum Legal Rate, (b) in calculating whether any interest exceeds the Maximum Legal Rate, all such interest shall be amortized, prorated, allocated and spread over the full amount and term of all principal indebtedness of Borrower to Lender, and (c) if through any contingency or event, Lender receives or is deemed to receive interest on the Loan in excess of the Maximum Legal Rate, any such excess shall be deemed to have been applied toward payment of the principal of any and all then outstanding indebtedness of Borrower to Lender, or if there is no such indebtedness, shall immediately be returned to Borrower.
ARTICLE 5: NO ORAL CHANGE
This Note may not be modified, amended, waived, extended, changed, discharged or terminated orally or by any act or failure to act on the part of Borrower or Lender, but only by an agreement in writing signed by the party against whom enforcement of any modification, amendment, waiver, extension, change, discharge or termination is sought.
ARTICLE 6: WAIVERS
Except to the extent required by applicable law, Borrower and all others who may become liable for the payment of all or any part of the Debt do hereby severally waive presentment and demand for payment, notice of dishonor, notice of intention to accelerate, notice of acceleration, protest and notice of protest and non-payment and all other notices of any kind. No release of any security for the Debt or extension of time for payment of this Note or any installment hereof, and no alteration, amendment or waiver of any provision of this Note, the Loan Agreement or the other Loan Documents made by agreement between Lender or any other Person shall release, modify, amend, waive, extend, change, discharge, terminate or affect the liability of Borrower or any other Person who may become liable for the payment of all or any part of the Debt under this Note, the Loan Agreement or the other Loan Documents. No notice to or demand on Borrower shall be deemed to be a waiver of the obligation of Borrower or of the right of Lender to take further action without further notice or demand as provided for in this Note, the Loan Agreement or the other Loan Documents. If Borrower is a partnership or limited liability company, the agreements herein contained shall remain in force and be applicable, notwithstanding any changes in the Persons comprising the partnership or limited liability company, and the term “Borrower,” as used herein, shall include any alternate or successor partnership or limited liability company, but any predecessor partnership or limited liability company shall not thereby be released from any liability. If Borrower is a corporation, the agreements contained herein shall remain in full force and be applicable notwithstanding any changes in the Persons comprising, or the officers and directors relating to, the corporation, and the term “Borrower,” as used herein, shall include any alternative or successor corporation, but any predecessor corporation shall not be relieved of liability hereunder. (Nothing in the foregoing sentence shall be construed as a consent to, or a waiver of, any prohibition or

2

restriction on transfers of interests in such partnership, limited liability company or corporation, which may be set forth in the Loan Agreement, the Pledge Agreement or any other Loan Document.)
ARTICLE 7: TRANSFER
Upon the transfer of this Note in accordance with the terms of the Loan Agreement, Borrower hereby waiving notice of any such transfer, Lender may deliver all the collateral, granted, pledged or assigned pursuant to the Loan Documents, or any part thereof, to the transferee who shall thereupon become vested with all the rights herein or under applicable law given to Lender with respect thereto, and Lender following written notice to Borrower, to the extent such notice is required under the Loan Agreement, Lender shall thereafter forever be relieved and fully discharged from any liability or responsibility in the matter; but Lender shall retain all rights and obligations hereby given to it with respect to any liabilities and the collateral not so transferred.

ARTICLE 8: EXCULPATION
The provisions of Section 11.22 of the Loan Agreement are hereby incorporated by reference into this Note to the same extent and with the same force as if fully set forth herein. In the event of any conflict or inconsistency between the provisions of Section 11.22 of the Loan Agreement, on the one hand, and the provisions of this Note on the other, the provisions of Section 11.22 of the Loan Agreement shall govern and control.
ARTICLE 9: GOVERNING LAW
The governing law and related provisions contained in Section 11.3 of the Loan Agreement are hereby incorporated by reference as if fully set forth herein.

ARTICLE 10: NOTICES
All notices or other written communications hereunder shall be delivered in accordance with Section 11.6 of the Loan Agreement.
[NO FURTHER TEXT ON THIS PAGE]


3


IN WITNESS WHEREOF, Borrower has duly executed this Note as of the day and year first above written.
BORROWER :
110 WILLIAM MEZZ III, LLC ,
a Delaware limited liability company


By: /s/ Christopher Schlank        
Name: Christopher Schlank
Title: Authorized Signatory


[Signature Page to Mezzanine Promissory Note]

Exhibit 10.5
SENIOR LOAN CONSOLIDATED, AMENDED AND RESTATED PROMISSORY NOTE
$215,475,000.00    New York, New York
March 7, 2019
FOR VALUE RECEIVED 110 WILLIAM PROPERTY INVESTORS III, LLC , a Delaware limited liability company, having an address at c/o Savanna, 430 Park Avenue, 12 th Floor, New York, New York 10022 (“ Borrower ”), as maker, hereby unconditionally promises to pay to INVESCO CMI INVESTMENTS, L.P. , a Delaware limited partnership, having an address at c/o Invesco Real Estate, 2001 Ross Avenue, Suite 3400, Dallas, Texas 75201 (together with its successors and assigns, “ Lender ”), or at such other place as the holder hereof may from time to time designate in writing, the principal sum of TWO HUNDRED FIFTEEN MILLION FOUR HUNDRED SEVENTY FIVE AND NO/100 DOLLARS ($215,475,000.00), or so much thereof as is advanced, in lawful money of the United States of America, with interest thereon to be computed from the date of this Senior Loan Consolidated, Amended and Restated Promissory Note at the Applicable Interest Rate (as defined in the Loan Agreement (as defined below)), and to be paid in accordance with the terms of this Senior Loan Consolidated, Amended and Restated Promissory Note, dated as of the date hereof (as the same may be amended, restated, replaced, supplemented or otherwise modified from time to time, this “ Note ”) and that certain Senior Loan Agreement, dated as of the date hereof, between Borrower and Lender (as the same may be amended, restated, replaced, supplemented or otherwise modified from time to time, the “ Loan Agreement ”). All capitalized terms not defined herein shall have the respective meanings set forth in the Loan Agreement.
W I T N E S S E T H :
WHEREAS, Lender is the holder of those certain instruments more particularly described on Schedule 1 attached hereto and made part hereof, in the aggregate unpaid principal amount of $215,475,000.00 (collectively, the “ Existing Notes ”).
WHEREAS, Lender and Borrower have agreed to consolidate, amend and restate the terms and provisions of the Existing Notes as provided herein.
WHEREAS, Lender and Borrower intend the above recitals to be a material part of this Note.
NOW, THEREFORE, in consideration of the foregoing recitals, which are incorporated into the operative provisions of this Note by this reference, and for other good and valuable consideration, receipt and sufficiency of which are hereby acknowledged, Borrower agrees with Lender as follows:
A. The Existing Notes are hereby amended, restated and consolidated in their entirety so that together they shall constitute in law but one indebtedness in the maximum principal amount of up to TWO HUNDRED FIFTEEN MILLION FOUR HUNDRED SEVENTY FIVE AND NO/100 DOLLARS ($215,475,000.00), together with the interest thereon as hereinafter provided. The


terms, covenants, conditions and provisions of the Existing Notes are hereby modified, amended and restated in their entirety so that henceforth the terms, covenants, conditions and provisions of the Existing Notes shall read and be as set forth in this Note and Borrower agrees to comply with and be subject to all of the terms, covenants and conditions of this Note;
B. The parties hereto certify that this Note evidences the existing debt evidenced by the Existing Notes and evidences no further or other principal indebtedness. Neither this Note nor anything contained herein shall be construed as a novation of the Borrower’s indebtedness to Lender evidenced by the Existing Notes, which shall remain in full force and effect as hereby confirmed, modified, restated, amended and consolidated;
C. This Note is an extension and continuation of the debt evidenced by the Existing Notes and is issued in replacement of and substitution for the Existing Notes; and
D. The indebtedness under the Existing Notes, as consolidated, modified and restated in their entirety pursuant to this Note, and the obligations of Borrower thereunder, are hereby ratified and confirmed, and shall remain in full force and effect until the full performance and satisfaction of all obligations of Borrower under the Loan Agreement and other Loan Documents.
FOR VALUE RECEIVED, Borrower promises to pay to Lender, or at such place as the holder hereof may from time to time designate in writing, the principal sum of up to TWO HUNDRED FIFTEEN MILLION FOUR HUNDRED SEVENTY FIVE AND NO/100 DOLLARS ($215,475,000.00), in lawful money of the United States of America, with interest on the unpaid principal balance from time to time outstanding at the Applicable Interest Rate to be computed in the manner, at the times and subject to the provisions of Article II of the Senior Loan Agreement dated as of the date hereof among Borrower, Administrative Agent and the Lenders.
ARTICLE 1: PAYMENT TERMS
Borrower agrees to pay the principal sum of this Note and interest on the unpaid principal sum of this Note from time to time outstanding at the rates and at the times specified in Article II of the Loan Agreement and the outstanding balance of the principal sum of this Note and all accrued and unpaid interest thereon shall be due and payable on the Maturity Date.
ARTICLE 2: DEFAULT AND ACCELERATION
Subject to and in accordance with the terms of the Loan Agreement, the Debt shall without notice become immediately due and payable at the option of Lender if any payment required in this Note is not paid on or prior to the date when due or if not paid on the Maturity Date or occurrence of any Event of Default.
ARTICLE 3: LOAN DOCUMENTS
This Note is secured by the Mortgage and the other Loan Documents. All of the terms, covenants and conditions contained in the Loan Agreement, the Mortgage and the other Loan Documents are hereby made part of this Note to the same extent and with the same force and effect

2

as if they were fully set forth herein. In the event of a conflict or inconsistency between the terms of this Note and the Loan Agreement, the terms and provisions of the Loan Agreement shall govern.
ARTICLE 4: SAVINGS CLAUSE
Notwithstanding anything to the contrary contained herein or in any other Loan Documents, (a) all agreements and communications between Borrower and Lender are hereby and shall automatically be limited so that, after taking into account all amounts deemed interest, the interest contracted for, charged or received by Lender with respect to the Loan shall never exceed the Maximum Legal Rate, (b) in calculating whether any interest exceeds the Maximum Legal Rate, all such interest shall be amortized, prorated, allocated and spread over the full amount and term of all principal indebtedness of Borrower to Lender, and (c) if through any contingency or event, Lender receives or is deemed to receive interest on the Loan in excess of the Maximum Legal Rate, any such excess shall be deemed to have been applied toward payment of the principal of any and all then outstanding indebtedness of Borrower to Lender, or if there is no such indebtedness, shall immediately be returned to Borrower.
ARTICLE 5: NO ORAL CHANGE
This Note may not be modified, amended, waived, extended, changed, discharged or terminated orally or by any act or failure to act on the part of Borrower or Lender, but only by an agreement in writing signed by the party against whom enforcement of any modification, amendment, waiver, extension, change, discharge or termination is sought.
ARTICLE 6: WAIVERS
Except to the extent required by applicable law, Borrower and all others who may become liable for the payment of all or any part of the Debt do hereby severally waive presentment and demand for payment, notice of dishonor, notice of intention to accelerate, notice of acceleration, protest and notice of protest and non-payment and all other notices of any kind. No release of any security for the Debt or extension of time for payment of this Note or any installment hereof, and no alteration, amendment or waiver of any provision of this Note, the Loan Agreement or the other Loan Documents made by agreement between Lender or any other Person shall release, modify, amend, waive, extend, change, discharge, terminate or affect the liability of Borrower or any other Person who may become liable for the payment of all or any part of the Debt under this Note, the Loan Agreement or the other Loan Documents. No notice to or demand on Borrower shall be deemed to be a waiver of the obligation of Borrower or of the right of Lender to take further action without further notice or demand as provided for in this Note, the Loan Agreement or the other Loan Documents. If Borrower is a partnership or limited liability company, the agreements herein contained shall remain in force and be applicable, notwithstanding any changes in the Persons comprising the partnership or limited liability company, and the term “Borrower,” as used herein, shall include any alternate or successor partnership or limited liability company, but any predecessor partnership or limited liability company shall not thereby be released from any liability. If Borrower is a corporation, the agreements contained herein shall remain in full force and be applicable notwithstanding any changes in the Persons comprising, or the officers and directors relating to, the corporation, and the term “Borrower,” as used herein, shall include any alternative or successor

3

corporation, but any predecessor corporation shall not be relieved of liability hereunder. (Nothing in the foregoing sentence shall be construed as a consent to, or a waiver of, any prohibition or restriction on transfers of interests in such partnership, limited liability company or corporation, which may be set forth in the Loan Agreement, the Mortgage or any other Loan Document.)
ARTICLE 7: TRANSFER
Upon the transfer of this Note in accordance with the terms of the Loan Agreement, Borrower hereby waiving notice of any such transfer, Lender may deliver all the collateral mortgaged, granted, pledged or assigned pursuant to the Loan Documents, or any part thereof, to the transferee who shall thereupon become vested with all the rights herein or under applicable law given to Lender with respect thereto, and Lender following written notice to Borrower, to the extent such notice is required under the Loan Agreement, Lender shall thereafter forever be relieved and fully discharged from any liability or responsibility in the matter; but Lender shall retain all rights and obligations hereby given to it with respect to any liabilities and the collateral not so transferred.

ARTICLE 8: EXCULPATION
The provisions of Section 11.22 of the Loan Agreement are hereby incorporated by reference into this Note to the same extent and with the same force as if fully set forth herein. In the event of any conflict or inconsistency between the provisions of Section 11.22 of the Loan Agreement, on the one hand, and the provisions of this Note on the other, the provisions of Section 11.22 of the Loan Agreement shall govern and control.
ARTICLE 9: GOVERNING LAW
The governing law and related provisions contained in Section 11.3 of the Loan Agreement are hereby incorporated by reference as if fully set forth herein.

ARTICLE 10: NOTICES
All notices or other written communications hereunder shall be delivered in accordance with Section 11.6 of the Loan Agreement.
[NO FURTHER TEXT ON THIS PAGE]


4


IN WITNESS WHEREOF, Borrower has duly executed this Note as of the day and year first above written.
BORROWER :
110 WILLIAM PROPERTY INVESTORS III, LLC ,
a Delaware limited liability company


By: /s/ Christopher Schlank        
Name: Christopher Schlank
Title: Authorized Signatory

[Signature Page to Senior Loan Consolidated, Amended and Restated Promissory Note]

LENDER :
INVESCO CMI INVESTMENTS, L.P.,
a Delaware limited partnership

By:    Invesco CMI Investments GP, LLC,
a Delaware limited liability company,
its general partner


By: /s/ Paul Michaels        
Name: Paul Michaels
Title: Proper Officer


[Signature Page to Senior Loan Consolidated, Amended and Restated Promissory Note]

Exhibit 10.6










THIS INSTRUMENT PREPARED BY
AND WHEN RECORDED RETURN TO:

Greenberg Traurig, P.A.
333 S.E. 2nd Avenue
Miami, Florida 33131
Attention: Richard J. Giusto, Esq.
 
 
(SPACE ABOVE THIS LINE FOR RECORDER’S USE)


110 WILLIAM PROPERTY INVESTORS III, LLC
(Mortgagor)

to

INVESCO CMI INVESTMENTS, L.P.
as administrative agent for the benefit of certain Lenders
(Mortgagee)



BUILDING LOAN CONSOLIDATED, AMENDED AND RESTATED MORTGAGE, ASSIGNMENT OF LEASES AND RENTS
AND SECURITY AGREEMENT


Dated:
March 7, 2019
 
 
 
 
Property Location:
110 William Street
New York, New York
New York County
 
 
 
 
Block:
77
 
Lot:
8
 


BUILDING LOAN CONSOLIDATED, AMENDED AND RESTATED MORTGAGE, ASSIGNMENT OF LEASES AND RENTS AND SECURITY AGREEMENT (this “ Security Instrument ”), made as of March 7, 2019, by and between 110 WILLIAM PROPERTY INVESTORS III, LLC , a Delaware limited liability company, having an address at c/o Savanna, 430 Park Avenue, 12th Floor, New York, New York 10022 (“ Borrower ”) for the benefit of INVESCO CMI INVESTMENTS, L.P. , a Delaware limited partnership, having an address at c/o Invesco Real Estate, 2001 Ross Avenue, Suite 3400, Dallas, Texas 75201, as administrative agent for the benefit of Lenders (together with its successors and assigns, “ Mortgagee ”).
Borrower, Morgan Stanley Mortgage Capital Holdings LLC, a New York limited liability company, as administrative agent for Morgan Stanley Bank, N.A., a national banking association, and the other Lenders (as defined in the Original Building Loan Agreement (defined below)) (“ Original BLA Lenders ”), have entered into a Building Loan Agreement dated as of March 6, 2017 (the “ Original Building Loan Agreement ”), pursuant to which Original BLA Lenders made a secured loan to Borrower in the aggregate original principal amount of $27,338,496.00 (“ Original Building Loan ”), of which $2,529,835.76 has been advanced to Borrower to date.
Borrower, Mortgagee and Lenders have entered into an Amended and Restated Building Loan Agreement dated as of the date hereof (as amended, modified, restated, consolidated or supplemented from time to time, the “ Loan Agreement ”) pursuant to which Lenders are making a secured loan to Borrower increasing the Original Building Loan to the aggregate principal amount of $45,900,000.00 (the “ Loan ”). Capitalized terms used herein without definition are used as defined in the Loan Agreement.
Mortgagee is the holder of the mortgages listed on Schedule 1 annexed hereto and made a part hereof (collectively, the “ Existing Mortgages ”).
The aggregate outstanding principal amount secured by the Existing Mortgages is $27,338,496.00.
Mortgagee is the holder of that certain Building Loan Gap Mortgage, dated as of the date hereof, made by Borrower in favor of Mortgagee (the “ Gap Mortgage ” and together with the Existing Mortgages, collectively, the “ Original Mortgages ”).
The aggregate outstanding principal amount secured by the Gap Mortgage is $18,561,504.00. Borrower and Mortgagee desire to consolidate the liens of the Original Mortgages to form a second mortgage lien encumbering the Premises (defined below) and the Improvements (defined below) and as so consolidated to modify, extend and restate the terms thereof, to partially secure payment of the consolidated, amended and restated notes evidenced by that certain Building Loan Consolidated, Amended and Restated Promissory Note dated the date hereof made by Borrower to Lender in such principal amount (as the same may be amended, modified, restated, severed, consolidated, renewed, replaced, or supplemented from time to time, the “ Note ”).



Borrower and Mortgagee desire to consolidate, amend and restate the terms and provisions of the Original Mortgages upon the terms and provisions set for herein so as to constitute a restatement in full of the Original Mortgages, which Original Mortgages shall hereinafter be deemed to be superseded in their entirety by this Security Instrument (as same may be amended, modified restated, severed, consolidated, renewed, replaced or supplemented from time to time) securing the principal sum of $45,900,000.00, together with interest thereon as hereafter provided.
To secure the payment of the Note and all sums which may or shall become due thereunder or under any of the other documents evidencing, securing or executed in connection with the Loan (the Note, this Security Instrument, the Loan Agreement and such other documents, as any of the same may, from time to time, be modified, amended or supplemented, being hereinafter collectively referred to as the “ Loan Documents ”), including (i) the payment of interest and other amounts which would accrue and become due but for the filing of a petition in bankruptcy (whether or not a claim is allowed against Borrower for such interest or other amounts in any such bankruptcy proceeding) or the operation of the automatic stay under Section 362(a) of Title 11 of the United States Code (the “ Bankruptcy Code ”), and (ii) the costs and expenses of enforcing any provision of any Loan Document (all such sums being hereinafter collectively referred to as the “ Debt ”), Borrower has given, granted, bargained, sold, alienated, enfeoffed, conveyed, confirmed, warranted, pledged, assigned and hypothecated and by these presents does hereby give, grant, bargain, sell, alien, enfeoff, convey, confirm, warrant, pledge, assign and hypothecate unto Mortgagee, WITH POWER OF SALE, subject to the terms and conditions of the Loan Agreement, the land described in Exhibit A (the “ Premises ”), and the buildings, structures, fixtures and other improvements now or hereafter located thereon (the “ Improvement s ”);
TOGETHER WITH, all right, title, interest and estate of Borrower now owned, or hereafter acquired, in and to the following property, rights, interests and estates (the Premises, the Improvements, and the property, rights, interests and estates hereinafter described are collectively referred to herein as the “ Property ”):
(a)    all easements, rights‑of‑way, strips and gores of land, streets, ways, alleys, passages, sewer rights, water, water courses, water rights and powers, air rights and development rights, rights to oil, gas, minerals, coal and other substances of any kind or character, and all estates, rights, titles, interests, privileges, liberties, tenements, hereditaments and appurtenances of any nature whatsoever, in any way belonging, relating or pertaining to the Premises and the Improvements; and the reversion and reversions, remainder and remainders, and all land lying in the bed of any street, road, highway, alley or avenue, opened, vacated or proposed, in front of or adjoining the Premises, to the center line thereof; and all the estates, rights, titles, interests, dower and rights of dower, curtesy and rights of curtesy, property, possession, claim and demand whatsoever, both at law and in equity, of Borrower of, in and to the Premises and the Improvements and every part and parcel thereof, with the appurtenances thereto;
(b)    all machinery, furniture, furnishings, equipment, computer software and hardware, fixtures (including all heating, air conditioning, plumbing, lighting, communications and elevator fixtures), inventory, materials, supplies and other articles of personal property and accessions thereof, renewals and replacements thereof and substitutions therefor, and other property of every kind and nature, tangible or intangible, owned by Borrower, or in which

2


Borrower has or shall have an interest, now or hereafter located upon the Premises or the Improvements, or appurtenant thereto, and usable in connection with the present or future operation and occupancy of the Premises and the Improvements (hereinafter collectively referred to as the “ Equipment ”), including any leases of, deposits in connection with, and proceeds of any sale or transfer of any of the foregoing, and the right, title and interest of Borrower in and to any of the Equipment that may be subject to any “security interest” as defined in the Uniform Commercial Code, as in effect in the State where the Property is located (the “ UCC ”), superior in lien to the lien of this Security Instrument. Notwithstanding the foregoing, Equipment shall not include any property belonging to the Manager or tenants under Leases (as hereinafter defined) except to the extent that Borrower shall have any right or interest therein;
(c)    all awards or payments, including interest thereon, that may heretofore or hereafter be made with respect to the Premises or the Improvements, whether from the exercise of the right of eminent domain or condemnation (including any transfer made in lieu of or in anticipation of the exercise of such right), or for a change of grade, or for any other injury to or decrease in the value of the Premises or Improvements;
(d)    all leases and other agreements or arrangements heretofore or hereafter entered into affecting the use, enjoyment or occupancy of, or the conduct of any activity upon or in, the Premises or the Improvements, including any extensions, renewals, modifications or amendments thereof, in each case entered into by or on behalf of Borrower (or its predecessor in interest) (hereinafter collectively referred to as the “ Leases ”) all rents, additional rents, early termination fees or payments or other termination fees or payments, rent equivalents, moneys payable as damages (including payments by reason of the rejection of a Lease in a bankruptcy proceeding) or in lieu of rent or rent equivalents, subject to the terms of the applicable Leases, royalties (including all oil and gas or other mineral royalties and bonuses), income, fees, receivables, receipts, revenues, deposits (including security, utility and other deposits), accounts, cash, issues, profits, charges for services rendered, and other consideration of whatever form or nature received by or paid to or for the account of or benefit of Borrower or its agents or employees from any and all sources arising from or attributable to the Premises and the Improvements, including all receivables, customer obligations, installment payment obligations and other obligations now existing or hereafter arising or created out of the sale, lease, sublease, license, concession or other grant of the right of the use and occupancy of the Premises or the Improvements, or rendering of services by Borrower or any of its agents or employees, and proceeds, if any, from business interruption or other loss of income insurance (hereinafter collectively referred to as the “ Rents ”), together with all proceeds from the sale or other disposition of the Leases and the right to receive and apply the Rents to the payment of the Debt;
(e)    all proceeds of and any unearned premiums on any insurance policies covering the Property, including the right to receive and apply the proceeds of any insurance, judgments, or settlements made in lieu thereof, for damage to the Property;
(f)    the right, in the name and on behalf of Borrower, upon the occurrence and during the continuance of an Event of Default, to appear in and defend any action or proceeding brought with respect to the Property and to commence any action or proceeding to protect the interest of Mortgagee in the Property;

3


(g)    all accounts (including reserve accounts maintained by Borrower under the Loan Documents ), escrows, documents, instruments, chattel paper, claims, deposits and general intangibles, as the foregoing terms are defined in the UCC, and all franchises, trade names, trademarks, symbols, service marks, books, records, plans, specifications, designs, drawings, surveys, title insurance policies, permits, consents, licenses, management agreements, contract rights (including any contract with any architect or engineer or with any other provider of goods or services for or in connection with any construction, repair or other work upon the Property), approvals, actions, refunds of real estate taxes and assessments (and any other governmental impositions related to the Property) and causes of action that now or hereafter relate to, are derived from or are used in connection with the Property, or the use, operation, maintenance, occupancy or enjoyment thereof or the conduct of any business or activities thereon (hereinafter collectively referred to as the “ Intangibles ”); and
(h)    all proceeds, products, offspring, rents and profits from any of the foregoing, including those from sale, exchange, transfer, collection, loss, damage, disposition, substitution or replacement of any of the foregoing.
Without limiting the generality of any of the foregoing, in the event that a case under the Bankruptcy Code is commenced by or against Borrower, pursuant to Section 552(b)(2) of the Bankruptcy Code, the security interest granted by this Security Instrument shall automatically extend to all Rents acquired by the Borrower after the commencement of the case and shall constitute cash collateral under Section 363(a) of the Bankruptcy Code.
TO HAVE AND TO HOLD the Property unto and to the use and benefit of Lender and its successors and assigns, forever;
PROVIDED, HOWEVER, these presents are upon the express condition that, if Borrower shall well and truly pay to Mortgagee, for the benefit of Lenders the Debt at the time and in the manner provided in the Loan Documents and shall well and truly abide by and comply in all material respects, with each and every covenant and condition set forth in the Loan Documents in a timely manner (giving effect to any applicable grace, notice and cure periods), these presents and the estate hereby granted shall cease, terminate and be void; provided, that upon request by Borrower, Mortgagee shall, at Borrower’s sole cost and expense, execute and deliver for recording all customary documentation reasonably requested by Borrower to evidence such termination (including, without limitation, a recordable mortgage satisfaction or any other documentation required by a title company). Borrower shall pay all of Mortgagee’s reasonable attorney’s fees and disbursements incurred in connection with the aforesaid documentation;
AND Borrower represents and warrants to and covenants and agrees with Mortgagee as follows:
PART I - GENERAL PROVISIONS
1. Payment of Debt and Incorporation of Covenants, Conditions and Agreements . Borrower shall pay the Debt at the time and in the manner provided in the Loan Documents. All the covenants, conditions and agreements contained in the Loan Documents are

4


hereby made a part of this Security Instrument to the same extent and with the same force as if fully set forth herein. Without limiting the generality of the foregoing, Borrower (i) agrees to insure, repair, maintain and restore damage to the Property, pay Taxes and Other Charges, and comply with Legal Requirements, in accordance with the Loan Agreement, and (ii) agrees that the Insurance Proceeds and Awards for Condemnation shall be settled, held and applied in accordance with the Loan Agreement. In the event of any conflict between this Security Instrument and the Loan Agreement, the terms of the Loan Agreement shall govern.
2.      Leases and Rents .
(a)      Borrower does hereby absolutely and unconditionally assign to Mortgagee all of Borrower’s right, title and interest in all current and future Leases and Rents, it being intended by Borrower that this assignment constitutes a present, absolute assignment and not an assignment for additional security only. Such assignment shall not be construed to bind Mortgagee to the performance of any of the covenants or provisions contained in any Lease or otherwise impose any obligation upon Mortgagee. Nevertheless, subject to the terms of this paragraph, Mortgagee grants to Borrower a revocable license to operate and manage the Property and to collect, receive, use and enjoy the Rents subject to the requirements of the Loan Agreement (including the deposit of Rents into the Clearing Account). Upon an Event of Default, without the need for notice or demand, the license granted to Borrower herein shall automatically be revoked, and Lender shall immediately be entitled to possession of all Rents in the Clearing Account, the Deposit Account (including all Subaccounts thereof) and all Rents collected thereafter (including Rents past due and unpaid), whether or not Mortgagee enters upon or takes control of the Property, provided , that such revocation shall only be effective while an Event of Default is continuing. Borrower hereby grants and assigns to Lender the right, at its option, upon revocation of the license granted herein, to enter upon the Property in person, by agent or by court‑appointed receiver to collect the Rents, subject to the rights of tenants under Leases. Any Rents collected after the revocation of such license may be applied toward payment of the Debt in such priority and proportions as Mortgagee in its sole discretion shall deem proper.
(b)      Borrower shall not enter into, modify, amend, cancel, terminate or renew any Lease except as provided in Section 4.1.9 of the Loan Agreement.
3.      Use of Property . Borrower shall not initiate, join in, acquiesce in or consent to any change in any private restrictive covenant, zoning law or other public or private restriction, limiting or defining the uses which may be made of the Property in violation of the Loan Agreement. If under applicable zoning provisions the use of the Property is or shall become a nonconforming use, Borrower shall not cause or permit such nonconforming use to be discontinued or abandoned without the consent of Mortgagee, in violation of the Loan Agreement. Borrower shall not (i) change the use of the Property, (ii) permit or suffer to occur any waste on or to the Property or (iii) take any steps to convert the Property to a condominium or cooperative form of ownership without the prior written consent of Mortgagee., in violation of the Loan Agreement

5


4.      Transfer or Encumbrance of the Property .
(a)      Borrower acknowledges that (i) Mortgagee has examined and relied on the creditworthiness and experience of the principals of Borrower in owning and operating properties such as the Property in agreeing to make the Loan, (ii) Mortgagee will continue to rely on Borrower’s ownership of the Property as a means of maintaining the value of the Property as security for the Debt, and (iii) Mortgagee has a valid interest in maintaining the value of the Property so as to ensure that, should Borrower default in the repayment of the Debt, Mortgagee can recover the Debt (pursuant to the Loan Agreement) by a sale of the Property. Borrower shall not sell, convey, alienate, mortgage, encumber, pledge or otherwise transfer the Property or any part thereof, or suffer or permit any Transfer to occur, other than a Permitted Transfer, without the prior written consent of Mortgagee. Notwithstanding anything to the contrary contained herein, this Security Instrument shall not constitute a modification of any other provisions in any other Loan Documents which prohibit, limit or restrict the right of Borrower to transfer the Property or the right of any party to transfer any interest, directly or indirectly, in Borrower.
(b)      Mortgagee shall not be required to demonstrate any actual impairment of its security or any increased risk of default hereunder in order to declare the Debt immediately due and payable upon a Transfer in violation of this Paragraph 4. This provision shall apply to every sale, conveyance, alienation, mortgage, encumbrance, pledge or transfer of the Property (and every other Transfer) in violation of this Paragraph 4 regardless of whether voluntary or not. Any Transfer made in contravention of this Paragraph 4 shall be null and void and of no force and effect. Borrower agrees to bear and shall pay or reimburse Mortgagee on demand for all reasonable out-of-pocket expenses (including reasonable out of pocket attorneys’ fees and disbursements, title search costs and title insurance endorsement premiums) incurred by Mortgagee in connection with the review, approval and documentation of any Permitted Transfer.
5.      Changes in Laws Regarding Taxation . If any law is enacted or adopted or amended after the date of this Security Instrument which deducts the Debt from the value of the Property for the purpose of taxation or which imposes a tax, either directly or indirectly, on the Debt or Mortgagee’s interest in the Property, Borrower will, upon written demand by Mortgagee , pay such tax, with interest and penalties thereon, if any. If Mortgagee is advised by its counsel that the payment of such tax or interest and penalties by Borrower would be unlawful, taxable to Mortgagee or unenforceable, or would provide the basis for a defense of usury, then Mortgagee shall have the option, by written notice of not less than 120 days, to declare the Debt immediately due and payable without premium or penalty. Borrower shall pay no premium or penalty, including, without limitation, any prepayment premium, if Lender shall declare the Debt immediately due and payable pursuant to the terms of this Section 5.
6.      No Credits on Account of the Debt . Borrower shall not claim or demand or be entitled to any credit on account of the Debt for any part of the Taxes or Other Charges assessed against the Property, and no deduction shall otherwise be made or claimed from the assessed value of the Property for real estate tax purposes by reason of this Security Instrument or the Debt, if such credit or deduction would increase the amount of Taxes or Other Charges required to be paid by Mortgagee. If such claim, credit or deduction shall be required by law, Mortgagee shall have the

6


option, by written notice of not less than 120 days, to declare the Debt immediately due and payable, without any premium or penalty. Borrower shall pay no premium or penalty, including, without limitation, any prepayment premium, if Lender shall declare the Debt immediately due and payable pursuant to the terms of this Section 6.
7.      Further Acts, Etc . Borrower shall, at its sole cost, do execute, acknowledge and deliver all and every such further acts, deeds, conveyances, mortgages, assignments, notices of assignment, transfers and assurances as Mortgagee shall, from time to time, reasonably require, for the better assuring, conveying, assigning, transferring, and confirming unto Mortgagee the property and rights hereby mortgaged, given, granted, bargained, sold, alienated, enfeoffed, conveyed, confirmed, pledged, assigned and hypothecated or intended now or hereafter so to be, or which Borrower may be or may hereafter become bound to convey or assign to Mortgagee, or for carrying out the intention or facilitating the performance of the terms of this Security Instrument, or for filing, registering or recording this Security Instrument (but in no event will Borrower be required to incur, suffer or accept (except to a de mimimis extent) any lesser rights or greater obligations than as currently set forth in the Loan Documents). Upon foreclosure, the appointment of a receiver or any other relevant action, Borrower shall, at its sole cost, cooperate fully and completely to effect the assignment or transfer of any license, permit, agreement or any other right necessary or useful to the operation of the Property. Borrower grants to Mortgagee an irrevocable power of attorney coupled with an interest, which shall be exercisable upon the occurrence and during the continuance of an Event of Default, for the purpose of exercising and perfecting any and all rights and remedies available to Mortgagee at law and in equity, including such rights and remedies available to Mortgagee pursuant to this paragraph.
8.      Recording of Security Instrument, Etc . Borrower forthwith upon the execution and delivery of this Security Instrument and thereafter, from time to time, shall cause this Security Instrument, and any security instrument creating a lien or security interest or evidencing the lien hereof upon the Property and each instrument of further assurance to be filed, registered or recorded in such manner and in such places as may be required by any present or future law in order to publish notice of and fully to protect the lien or security interest hereof upon, and the interest of Mortgagee in, the Property. Borrower shall pay all filing, registration or recording fees, all expenses incident to the preparation, execution and acknowledgment of and all federal, state, county and municipal, taxes, duties, imposts, documentary stamps, assessments and charges arising out of or in connection with the execution and delivery of, this Security Instrument, any Security Instrument supplemental hereto, any other security instrument with respect to the Property or any instrument of further assurance, except where prohibited by law so to do. Borrower shall hold harmless and indemnify Mortgagee, its successors and assigns, against any liability incurred by reason of the imposition under applicable Legal Requirements of any tax on the making or recording of this Security Instrument.
9.      Right to Cure Defaults . Upon the occurrence and during the continuance of any Event of Default, Mortgagee may, but without any obligation to do so and without notice to or demand on Borrower and without releasing Borrower from any obligation hereunder, perform the obligations that gave rise to the Event of Default in such manner and to such extent as Mortgagee may deem necessary to protect the security hereof. Subject to the rights of Tenants under Leases, Mortgagee is authorized to enter upon the Property for such purposes or appear in, defend or bring

7


any action or proceeding to protect its interest in the Property or to foreclose this Security Instrument or collect the Debt, and the out-of-pocket cost and expense thereof (including reasonable out-of-pocket attorneys’ fees and disbursements to the extent permitted by law), with interest thereon at the Default Rate for the period after written notice from Mortgagee that such out-of-pocket cost or expense was incurred and continuing until the date of payment to Mortgagee, shall constitute a portion of the Debt, shall be secured by this Security Instrument and the other Loan Documents and shall be due and payable to Mortgagee promptly following written demand to Borrower therefor.
10.      Remedies .
(a)      Upon the occurrence and during the continuance of any Event of Default and subject to the provisions of the Loan Agreement, Mortgagee may take such action, without notice or demand, as it deems advisable to protect and enforce its rights against Borrower and in and to the Property, by Mortgagee itself or otherwise, including the following actions, each of which may be pursued concurrently or otherwise, at such time and in such order as Mortgagee may determine, in its sole discretion, to the extent permitted by applicable law, without impairing or otherwise affecting the other rights and remedies of Mortgagee:
(i)          declare the entire Debt to be immediately due and payable;
(ii)          institute a proceeding or proceedings, judicial or nonjudicial, to the extent permitted by law, by advertisement or otherwise, for the complete foreclosure of this Security Instrument, in which case the Property may be sold for cash or upon credit in one or more parcels or in several interests or portions and in any order or manner;
(iii)          with or without entry, to the extent permitted and pursuant to the procedures provided by applicable law, institute proceedings for the partial foreclosure of this Security Instrument for the portion of the Debt then due and payable, subject to the continuing lien of this Security Instrument for the balance of the Debt not then due;
(iv)          sell for cash or upon credit the Property and all estate, claim, demand, right, title and interest of Borrower therein and rights of redemption thereof, pursuant to the power of sale, to the extent permitted by law, or otherwise, at one or more sales, as an entirety or in parcels, at such time and place, upon such terms and after such notice thereof as may be required or permitted by law;
(v)          institute an action, suit or proceeding in equity for the specific performance of any covenant, condition or agreement contained herein or in any other Loan Document;
(vi)          recover judgment on the Note either before, during or after any proceeding for the enforcement of this Security Instrument;
(vii)          apply for the appointment of a trustee, receiver, liquidator or conservator of the Property, without notice and without regard for the adequacy

8


of the security for the Debt and without regard for the solvency of the Borrower or of any person, firm or other entity liable for the payment of the Debt;
(viii)          subject to the terms of this Security Instrument and the Assignment of Leases enforce Mortgagee’s interest in the Leases and Rents and enter into or upon the Property, subject to rights of tenants under Leases, either personally or by its agents, nominees or attorneys and dispossess Borrower and its agents and employees therefrom, and thereupon Mortgagee may (A) use, operate, manage, control, insure, maintain, repair, restore and otherwise deal with the Property and conduct the business thereat; (B) complete any construction on the Property in such manner and form as Mortgagee deems advisable; (C) make alterations, additions, renewals, replacements and improvements to or on the Property; (D) exercise all rights and powers of Borrower with respect to the Property, whether in the name of Borrower or otherwise, including the right to make, cancel, enforce or modify Leases, obtain and evict tenants, and demand, sue for, collect and receive Rents; and (E) apply the receipts from the Property to the payment of the Debt, after deducting therefrom all out-of-pocket expenses (including reasonable out-of-pocket attorneys’ fees and disbursements) incurred in connection with the aforesaid operations and all amounts necessary to pay the Taxes, insurance and other charges in connection with the Property, as well as just and reasonable compensation for the services of Mortgagee, and its counsel, agents and employees; in each case, in accordance with the standards applicable to Lender under the Loan Documents;
(ix)          require Borrower to pay monthly in advance to Lender, or any receiver appointed to collect the Rents, the fair and reasonable rental value for the use and occupation of any portion of the Property occupied by Borrower, and require Borrower to vacate and surrender possession of the Property to Lender or to such receiver, and, in default thereof, evict Borrower by summary proceedings or otherwise; or
(x)          pursue such other rights and remedies as may be available at law or in equity or under the UCC, including the right to receive and/or establish a lock box for all Rents and proceeds from the Intangibles and any other receivables or rights to payments of Borrower relating to the Property.
In the event of a sale, by foreclosure or otherwise, of less than all of the Property, this Security Instrument shall continue as a lien on the remaining portion of the Property.
(b)      Subject to the provisions of the Loan Agreement, the proceeds of any sale made under or by virtue of this Paragraph 10, together with any other sums which then may be held by Mortgagee under this Security Instrument, whether under the provisions of this paragraph or otherwise, shall be applied by Mortgagee to the payment of the Debt in such priority and proportion as Mortgagee in its sole discretion shall deem proper.
(c)      Mortgagee may adjourn from time to time any sale by it to be made under or by virtue of this Security Instrument by announcement at the time and place appointed for such sale or for such adjourned sale or sales; and, except as otherwise provided by any applicable law, Mortgagee, without further notice or publication, may make such sale at the time and place to which the same shall be so adjourned.

9


(d)      Upon the completion of any sale or sales pursuant hereto, Mortgagee, or an officer of any court empowered to do so, shall execute and deliver to the accepted purchaser or purchasers a good and sufficient instrument, or good and sufficient instruments, conveying, assigning and transferring all estate, right, title and interest in and to the property and rights sold. Mortgagee is hereby irrevocably appointed the true and lawful attorney of Borrower (for exercise only upon the occurrence and during the continuance of any Event of Default), in its name and stead, to make all necessary conveyances, assignments, transfers and deliveries of the Property and rights so sold and for that purpose Mortgagee may execute all necessary instruments of conveyance, assignment and transfer, and may substitute one or more persons with like power, Borrower hereby ratifying and confirming all that its said attorney or such substitute or substitutes shall lawfully do by virtue hereof. Any sale or sales made under or by virtue of this Paragraph 10, whether made under the power of sale herein granted or under or by virtue of judicial proceedings or of a judgment or decree of foreclosure and sale, shall operate to divest all the estate, right, title, interest, claim and demand whatsoever, whether at law or in equity, of Borrower in and to the properties and rights so sold, and shall be a perpetual bar both at law and in equity against Borrower and against any and all persons claiming or who may claim the same, or any part thereof, from, through or under Borrower.
(e)      Upon any sale made under or by virtue of this Paragraph 10, whether made under a power of sale or under or by virtue of judicial proceedings or of a judgment or decree of foreclosure and sale, Mortgagee may bid for and acquire the Property or any part thereof and in lieu of paying cash therefor may make settlement for the purchase price by crediting upon the Debt the net sales price after deducting therefrom the out-of-pocket expenses of the sale and costs of the action and any other sums which Mortgagee is authorized to deduct under this Security Instrument or any other Loan Document.
(f)      No recovery of any judgment by Mortgagee and no levy of an execution under any judgment upon the Property or upon any other property of Borrower shall affect in any manner or to any extent the lien of this Security Instrument upon the Property or any part thereof, or any liens, rights, powers or remedies of Mortgagee hereunder, but such liens, rights, powers and remedies of Mortgagee shall continue unimpaired as before.
(g)      Mortgagee may terminate or rescind any proceeding or other action brought in connection with its exercise of the remedies provided in this Paragraph 10 at any time before the conclusion thereof, as determined in Mortgagee’s sole discretion and without prejudice to Mortgagee.
(h)      Mortgagee may resort to any remedies and the security given by this Security Instrument or in any other Loan Document in whole or in part, and in such portions and in such order as determined by Mortgagee’s sole discretion. No such action shall in any way be considered a waiver of any rights, benefits or remedies evidenced or provided by any Loan Document. The failure of Mortgagee to exercise any right, remedy or option provided in any Loan Document shall not be deemed a waiver of such right, remedy or option or of any covenant or obligation secured by any Loan Document. No acceptance by Mortgagee of any payment after the occurrence of any Event of Default and no payment by Mortgagee of any obligation for which Borrower is liable hereunder shall be deemed to waive or cure any Event of Default, or Borrower’s

10


liability to pay such obligation. No sale of all or any portion of the Property, no forbearance on the part of Mortgagee, and no extension of time for the payment of the whole or any portion of the Debt or any other indulgence given by Mortgagee to Borrower, shall operate to release or in any manner affect the interest of Mortgagee in the remaining Property or the liability of Borrower to pay the Debt. No waiver by Mortgagee shall be effective unless it is in writing and then only to the extent specifically stated. All costs and expenses of Mortgagee in exercising its rights and remedies under this Paragraph 10 (including reasonable attorneys’ fees and disbursements to the extent permitted by law), shall be paid by Borrower immediately upon notice from Mortgagee, with interest at the Default Rate for the period after notice from Mortgagee, and such costs and expenses shall constitute a portion of the Debt and shall be secured by this Security Instrument.
(i)      The interests and rights of Mortgagee under the Loan Documents shall not be impaired by any indulgence, including (i) any renewal, extension or modification which Lender may grant with respect to any of the Debt, (ii) any surrender, compromise, release, renewal, extension, exchange or substitution which Mortgagee may grant with respect to the Property or any portion thereof or (iii) any release or indulgence granted to any maker, endorser, guarantor or surety of any of the Debt.
11.      Right of Entry . In addition to any other rights or remedies granted under this Security Instrument, Mortgagee and its agents shall have the right to enter and inspect the Property at any reasonable time during business hours throughout the term of this Security Instrument, subject to the rights of tenants under Leases. Upon the occurrence and during the continuance of an Event of Default, the cost of any inspections or audits shall be borne by Borrower, including the actual cost of all follow up or additional investigations or inquiries deemed reasonably necessary by Mortgagee. The cost of such inspections, if not paid for by Borrower within ten (10) Business Days following written demand, may be added to the principal balance of the sums due under the Note and this Security Instrument and shall bear interest thereafter until paid at the Default Rate.
12.      Security Agreement . This Security Instrument is both a real property Security Instrument and a “security agreement” within the meaning of the UCC. The Property includes both real and personal property and all other rights and interests, whether tangible or intangible in nature, of Borrower in the Property. Borrower by executing and delivering this Security Instrument has granted and hereby grants to Mortgagee, as security for the Debt, a security interest in the Property to the full extent that the Property may be subject to the UCC (such portion of the Property so subject to the UCC being called in this paragraph the “ Collateral ”). This Security Instrument shall also constitute a “fixture filing” for the purposes of the UCC. As such, this Security Instrument covers all items of the Collateral that are or are to become fixtures. Information concerning the security interest herein granted may be obtained from the parties at the addresses of the parties set forth in the first paragraph of this Security Instrument. If an Event of Default shall occur and be continuing, Mortgagee, in addition to any other rights and remedies which it may have, shall have and may exercise immediately and without demand, any and all rights and remedies granted to a secured party upon default under the UCC, including, without limiting the generality of the foregoing, the right to take possession of the Collateral or any part thereof, and to take such other measures as Mortgagee may deem necessary for the care, protection and preservation of the Collateral. During the continuance of an Event of Default, upon request or demand of Mortgagee,

11


Borrower shall at its expense assemble the Collateral and make it available to Mortgagee at a convenient place in New York reasonably acceptable to Mortgagee. Borrower shall pay to Mortgagee within five (5) Business Days of promptly following written demand any and all expenses, including reasonable attorneys’ fees and disbursements, incurred or paid by Mortgagee in protecting the interest in the Collateral and in enforcing the rights hereunder with respect to the Collateral (but excluding special, punitive, or consequential damages, unless asserted against Borrower by a third party) . Any notice of sale, disposition or other intended action by Mortgagee with respect to the Collateral, sent to Borrower in accordance with the provisions hereof at least ten (10) Business Days prior to such action, shall constitute commercially reasonable notice to Borrower. The proceeds of any disposition of the Collateral, or any part thereof, may be applied by Mortgagee to the payment of the Debt in such priority and proportions as Mortgagee in its sole discretion shall deem proper. In the event of any change in name, identity or structure of Borrower, Borrower shall notify Mortgagee thereof and promptly after request shall execute, file and record such UCC forms as are necessary to maintain the priority of Mortgagee’s lien upon and security interest in the Collateral, and shall pay all expenses and fees in connection with the filing and recording thereof. If Mortgagee shall require the filing or recording of additional UCC forms or continuation statements, Borrower shall, promptly after request, execute, file and record such UCC forms or continuation statements as Mortgagee reasonably shall deem necessary, and shall pay all expenses and fees in connection with the filing and recording thereof, it being understood and agreed, however, that no such additional documents shall increase Borrower’s obligations or decrease Borrower’s rights under the Loan Documents. Borrower hereby irrevocably appoints Mortgagee as its attorney‑in‑fact, coupled with an interest, to file with the appropriate public office on its behalf any financing or other statements naming Mortgagee, as secured party, and Borrower, as debtor, in connection with the Collateral covered by this Security Instrument.
13.      Actions and Proceedings . Following the occurrence and during the continuance of an Event of Default, Mortgagee has the right to appear in and defend any action or proceeding brought with respect to the Property and to bring any action or proceeding, in the name and on behalf of Borrower, which Mortgagee, in its sole discretion, decides should be brought to protect its or their interest in the Property. To the extent permitted by applicable law, Mortgagee shall, at its option, be subrogated to the lien of any mortgage or other security instrument discharged in whole or in part by the Debt, and any such subrogation rights shall constitute additional security for the payment of the Debt.
14.      Marshalling and Other Matters . To the extent permitted by applicable law, Borrower hereby waives, to the extent permitted by law, the benefit of all appraisement, valuation, stay, extension, reinstatement and redemption laws now or hereafter in force and all rights of marshalling in the event of any sale hereunder of the Property or any part thereof or any interest therein. Further, to the extent permitted by applicable law, Borrower hereby expressly waives any and all rights of redemption from sale under any order or decree of foreclosure of this Security Instrument on behalf of Borrower, and on behalf of each and every person acquiring any interest in or title to the Property subsequent to the date of this Security Instrument and on behalf of all persons to the extent permitted by applicable law. The lien of this Security Instrument shall be absolute and unconditional and shall not in any manner be affected or impaired by any acts or omissions whatsoever of Mortgagee and, without limiting the generality of the foregoing, the lien hereof shall not be impaired by (i) any acceptance by Mortgagee of any other security for any portion

12


of the Debt, (ii) any failure, neglect or omission on the part of Mortgagee to realize upon or protect any portion of the Debt or any collateral security therefor or (iii) any release (except as to the property released), sale, pledge, surrender, compromise, settlement, renewal, extension, indulgence, alteration, changing, modification or disposition of any portion of the Debt or of any of the collateral security therefor; and Mortgagee may foreclose, or exercise any other remedy available to Mortgagee under other Loan Documents without first exercising or enforcing any of its remedies under this Security Instrument, and any exercise of the rights and remedies of Mortgagee hereunder shall not in any manner impair the Debt or the liens of any other Loan Document or any of Mortgagee’s rights and remedies thereunder.
15.      Notices . All notices, consents, approvals and requests required or permitted hereunder shall be in writing, and shall be sent, and shall be deemed effective, as provided in the Loan Agreement.
16.      Inapplicable Provisions . If any term, covenant or condition of this Security Instrument is held to be invalid, illegal or unenforceable in any respect, this Security Instrument shall be construed without such provision.
17.      Headings . The paragraph headings in this Security Instrument are for convenience of reference only and are not to be construed as defining or limiting, in any way, the scope or intent of the provisions hereof.
18.      Duplicate Originals . This Security Instrument may be executed in any number of duplicate originals and each such duplicate original shall be deemed to be an original.
19.      Definitions . Unless the context clearly indicates a contrary intent or unless otherwise specifically provided herein, words used in this Security Instrument may be used interchangeably in singular or plural form; and the word “ Borrower ” shall mean “each Borrower and any subsequent owner or owners of the Property or any part thereof or any interest therein,” the word “ Mortgagee ” shall mean “Mortgagee and any subsequent holder of the Note,” the words “ Property ” shall include any portion of the Property and any interest therein, the word “ including ” means “including but not limited to” and the words “ attorneys’ fees ” shall include any and all reasonable out-of-pocket attorneys’ fees, paralegal and law clerk fees, including fees at the pre‑trial, trial and appellate levels incurred or paid by Mortgagee in protecting its interest in the Property and Collateral and enforcing its rights hereunder.
20.      Homestead . Borrower hereby waives and renounces all homestead and exemption rights provided by the Constitution and the laws of the United States and of any state, in and to the Property as against the collection of the Debt, or any part thereof.
21.      Assignments . Mortgagee shall have the right to assign or transfer its rights under this Security Instrument without limitation in accordance with the terms of the Loan Agreement. Any assignee or transferee pursuant to the terms of the Loan Agreement, shall be entitled to all the benefits afforded Mortgagee under this Security Instrument.
22.      Waiver of Jury Trial . EACH OF BORROWER AND MORTGAGEE HEREBY WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, THE RIGHT TO TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM,

13


WHETHER IN CONTRACT, TORT OR OTHERWISE, RELATING DIRECTLY OR INDIRECTLY TO THE LOAN EVIDENCED BY THE NOTE, THE APPLICATION FOR THE LOAN EVIDENCED BY THE NOTE, THIS SECURITY INSTRUMENT OR THE OTHER LOAN DOCUMENTS OR ANY ACTS OR OMISSIONS OF MORTGAGEE OR LENDER, ITS OFFICERS, EMPLOYEES, DIRECTORS OR AGENTS IN CONNECTION THEREWITH.
23.      Consents . Any consent or approval by Mortgagee in any single instance shall not be deemed or construed to be Mortgagee’s consent or approval in any like matter arising at a subsequent date, and the failure of Mortgagee to promptly exercise any right, power, remedy, consent or approval provided herein or at law or in equity shall not constitute or be construed as a waiver of the same nor shall Mortgagee be estopped from exercising such right, power, remedy, consent or approval at a later date. Any consent or approval requested of and granted by Mortgagee pursuant hereto shall be narrowly construed to be applicable only to Borrower and the matter identified in such consent or approval and no third party shall claim any benefit by reason thereof, and any such consent or approval shall not be deemed to constitute Mortgagee a venturer or partner with Borrower nor shall privity of contract be presumed to have been established with any such third party. If Mortgagee deems it to be in its best interest to retain assistance of persons, firms or corporations (including attorneys, title insurance companies, appraisers, engineers and surveyors) with respect to a request for consent or approval, Borrower shall reimburse Mortgagee for all costs reasonably incurred in connection with the employment of such persons, firms or corporations.
24.      Loan Repayment . Provided no Event of Default exists, this Security Instrument will be satisfied and discharged of record by Mortgagee prior to the Maturity Date only in accordance with the terms and provisions set forth in the Loan Agreement.
25.      Intentionally Omitted .
26.      Governing Law . THE LAWS OF THE STATE OF NEW YORK (WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF LAWS (OTHER THAN §§ 5-1401 AND 5-1402 OF THE NEW YORK GENERAL OBLIGATIONS LAW)) SHALL GOVERN ALL MATTERS RELATING TO THIS SECURITY INSTRUMENT AND THE OTHER LOAN DOCUMENTS AND ALL OF THE INDEBTEDNESS OR OBLIGATIONS ARISING HEREUNDER OR THEREUNDER PURSUANT TO SECTION 5-1401 OF THE NEW YORK GENERAL OBLIGATIONS LAW. ALL PROVISIONS OF THE LOAN AGREEMENT INCORPORATED HEREIN BY REFERENCE SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK (WITHOUT REGARD TO CONFLICT OF LAW PROVISIONS THEREOF) PURSUANT TO SECTION 5-1401 OF THE NEW YORK GENERAL OBLIGATIONS LAW. EACH OF BORROWER AND ADMINISTRATIVE AGENT (A) AGREES THAT ANY SUIT, ACTION OR OTHER LEGAL PROCEEDING ARISING OUT OF OR RELATING TO THIS SECURITY INSTRUMENT MAY BE BROUGHT IN A COURT OF RECORD IN THE COUNTY WHERE THE PROPERTY IS LOCATED OR IN THE COURTS OF THE UNITED STATES OF AMERICA LOCATED IN SAID COUNTY, (B) CONSENTS TO THE JURISDICTION OF EACH SUCH COURT IN ANY SUCH SUIT, ACTION OR PROCEEDING AND (C) WAIVES ANY OBJECTION WHICH IT MAY HAVE TO THE LAYING OF VENUE OF ANY SUCH SUIT,

14


ACTION OR PROCEEDING IN ANY OF SUCH COURTS AND ANY CLAIM THAT ANY SUCH SUIT, ACTION OR PROCEEDING HAS BEEN BROUGHT IN AN INCONVENIENT FORUM. EACH PARTY HERETO IRREVOCABLY CONSENTS TO THE SERVICE OF ANY AND ALL PROCESS IN ANY SUCH SUIT, ACTION OR PROCEEDING BY SERVICE OF COPIES OF SUCH PROCESS TO BORROWER AT ITS ADDRESS PROVIDED HEREIN.
27.      Exculpation . The liability of Borrower hereunder is limited pursuant to Section 11.22 of the Loan Agreement.
The following Sections 28 through 35, inclusive, relating to the laws of the State of New York, shall apply to this Security Instrument, notwithstanding any provision of this Security Instrument or of any other Loan Document to the contrary:
28.      Section 13 of the Lien Law . Pursuant to Section 13 of the Lien Law of New York (the “ Lien Law ”), Borrower shall receive the advances secured by this Security Instrument and shall hold the right to receive such advances as a trust fund to be applied first for the purpose of paying the “cost of improvement,” as such quoted term is defined and used in the Lien Law, and shall apply such advances first to the payment of such cost before using any part of the total of same for any other purpose. Borrower shall strictly comply with Section 13 of the Lien Law and shall indemnify and hold Mortgagee harmless against any and all loss, liability, actual out-of-pocket cost or expense, including, without limitation, any judgments, reasonable attorneys’ fees, costs of appeal bonds and printing costs, arising out of or relating to any proceeding instituted by any claimant alleging a violation by Borrower of the Lien Law, including, without limitation, any section of Article 3-A of the Lien Law, excluding consequential damages (except to the extent such consequential damages are owed by it to a third party).
29.      Section 291-f of the RPL . In addition to any other right or remedy contained in this Security Instrument or in any other Loan Document, Mortgagee shall have all of the rights against lessees of the Property, or any part(s) thereof, as are set forth in Section 291-f of the Real Property Law of New York, subject to the terms and conditions of the Loan Agreement. The clauses, covenants and conditions contained in this Security Instrument and in the other Loan Documents shall be construed as affording to Mortgagee rights additional to, and not exclusive of, the rights conferred under the provisions of said Section 291-f.
30.      Section 254, et al., of RPL . The clauses, covenants and conditions contained in this Security Instrument shall be construed as affording to Lender rights additional to, and not exclusive of, the rights conferred under the provisions of Sections 254, 271 and 272 of the New York Real Property Law, subject to the terms and conditions of the Loan Agreement. Without in any way limiting the foregoing, Borrower hereby specifically covenants and agrees, pursuant to Section 254.10 of the New York Real Property Law, that the holder of this Security Instrument, in any action to foreclose it, shall be entitled to the appointment of a receiver. In the event of any conflict, inconsistency or ambiguity between the provisions of this Security Instrument or the provisions of the other Loan Documents, on the one hand, and the provisions of subsection 4 of said Section 254, on the other hand, the provisions of this Security Instrument and the other Loan Documents shall control.

15


31.      Commercial Property . Borrower represents and warrants that this Security Instrument does not encumber real property principally improved or to be improved by one or more structures containing in the aggregate not more than six (6) residential dwelling units having their own separate cooking facilities.
32.      Payment of Transfer Taxes . Upon any foreclosure of this Security Instrument, any transfer in lieu of foreclosure, or any other applicable Transfer, Borrower shall pay (i) any New York State Real Estate Transfer Tax payable pursuant to Article 31 of the Tax Law of the State of New York (as the same may be amended, supplemented and/or replaced from time to time, the “ State Transfer Tax Law ”), and (ii) any New York City Real Property Transfer Tax payable pursuant to the applicable laws of the City of New York (as the same may be amended, supplemented and/or replaced from time to time, the “ City Transfer Tax Law ”), and, in default thereof, Mortgagee may pay the same and the amount of such payment, together with interest thereon at the Default Rate from the date of demand until paid, shall be added to the Debt and be secured by this Security Instrument. Borrower shall, at any time promptly upon written request therefor by Mortgagee, execute and deliver such affidavits, questionnaires and documents as may be necessary to enable Mortgagee to comply with the State Transfer Tax Law and/or the City Transfer Tax Law. Borrower hereby indemnifies and agrees to hold Mortgagee harmless from and against any loss, reasonable and actual out-of-pocket cost, damage and expense (including, without limitation, reasonable out-of-pocket attorneys’ fees) that Mortgagee may suffer or incur by reason of Borrower’s failure to comply with its obligations under this Section, excluding special, punitive or consequential damages (except to the extent such consequential damages are owed by it to a third party). The foregoing indemnity shall survive any termination of this Security Instrument, whether by foreclosure, deed in lieu of foreclosure, or otherwise.
33.      MAXIMUM AMOUNT SECURED . NOTWITHSTANDING ANY PROVISION SET FORTH IN THIS SECURITY INSTRUMENT TO THE CONTRARY, THE MAXIMUM AMOUNT OF PRINCIPAL INDEBTEDNESS SECURED BY THIS SECURITY INSTRUMENT AT EXECUTION, OR WHICH UNDER ANY CONTINGENCY MAY BECOME SECURED HEREBY AT ANY TIME HEREAFTER, IS FORTY FIVE MILLION NINE HUNDRED THOUSAND AND NO/100 DOLLARS ($45,900,000.00), PLUS ALL INTEREST AND OTHER CHARGES PAYABLE UNDER THE NOTE AND ALL AMOUNTS EXPENDED IN ACCORDANCE WITH THIS SECURITY INSTRUMENT AND THE LOAN AGREEMENT BY MORTGAGEE OR ANY LENDER AFTER DEFAULT BY BORROWER (A) FOR THE PAYMENT OF REAL ESTATE TAXES, CHARGES OR ASSESSMENTS WHICH ARE IMPOSED BY LAW UPON THE PROPERTY; (B) TO MAINTAIN THE INSURANCE REQUIRED TO BE MAINTAINED BY BORROWER PURSUANT TO THIS SECURITY INSTRUMENT AND THE OTHER LOAN DOCUMENTS; (C) FOR ANY EXPENSES INCURRED IN MAINTAINING THE PROPERTY AND UPHOLDING THE LIEN OF THIS SECURITY INSTRUMENT, INCLUDING, BUT NOT LIMITED TO, THE EXPENSE OF ANY LITIGATION TO PROSECUTE OR DEFEND THE RIGHTS AND LIEN CREATED BY THIS SECURITY INSTRUMENT; (D) FOR ANY AMOUNT, COST OR CHARGE TO WHICH LENDER BECOME SUBROGATED, UPON PAYMENT, WHETHER UNDER RECOGNIZED PRINCIPLES OF LAW OR EQUITY, OR UNDER EXPRESS STATUTORY AUTHORITY; AND

16


ALSO TOGETHER WITH INTEREST ON ALL OF THE FOREGOING AMOUNTS IN CLAUSES (A) THROUGH (D) AT SUCH RATES AS PROVIDED FOR IN THE NOTE.
34.      Assignment of Mortgage . Mortgagee shall, upon the written request and at the expense of Borrower (for payment of the actual out-of-pocket fees and expenses of Mortgagee’s counsel to prepare necessary assignments and/or satisfactions), use commercially reasonable efforts to deliver an assignment of this Security Instrument (together with the Note and an allonge thereto (or an affidavit of lost note)) in lieu of a release or satisfaction hereof upon the payment of the Debt in full with cash, provided that other than containing a representation (A) that Mortgagee or any Lender shall not have previously transferred its rights under this Security Instrument or the Note, (B) that Mortgagee and each Lender’s interest therein is not currently encumbered, (C) that the signatory is authorized to execute and deliver such assignment on behalf of Mortgagee, and (D) of the outstanding principal balance of the Note, the instrument of assignment shall be without representation or warranty by, or recourse to, Mortgagee or any Lender, in any event whatsoever, and without limitation of the foregoing, Mortgagee shall have no obligation to execute a Section 275 Affidavit (whether as a separate affidavit or part of the instrument of assignment).
35.      Multiple Mortgages . This Security Instrument is intended to be subordinate and junior in lien to that certain Senior Loan Consolidated, Amended and Restated Mortgage, Assignment of Leases and Rents and Security Agreement dated as of the date hereof, which grants Mortgagee a first place lien on the Property encumbered thereby.

[THE REMAINDER OF THE PAGE IS INTENTIONALLY BLANK]


17


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

BORROWER:

110 WILLIAM PROPERTY INVESTORS III, LLC ,
a Delaware limited liability company

By: /s/ Christopher Schlank            
Name: Christopher Schlank
Title: Authorized Signatory




ACKNOWLEDGMENT

STATE OF NEW YORK        )
)    ss.:
COUNTY OF NEW YORK        )

On the 5th day of March in the year 2019, before me, the undersigned, a Notary Public in and for said State, personally appeared     Christopher Schlank         , personally known to me or proved to me on the basis of satisfactory evidence to be the individual whose name is subscribed to the within instrument and acknowledged to me that he executed the same in his capacity, and that by his signature on the instrument, the individual, or the person upon behalf of which the individual acted, executed the instrument.


/s/ Amy Miller        
Notary Public (SEAL)



[Signature Page to Building Loan Consolidated, Amended and Restated Mortgage, Assignment of Leases and Rents and Security Agreement]


MORTGAGEE:

INVESCO CMI INVESTMENTS, L.P. ,
a Delaware limited partnership

By:    Invesco CMI Investments GP, LLC,
a Delaware limited liability company,
its general partner




By:     /s/ Paul Michaels            
Name:    Paul Michaels
Title: Proper Officer




ACKNOWLEDGMENT

STATE OF TEXAS            )
)    ss.:
COUNTY OF DALLAS        )

On the 5th day of March in the year 2019, before me, the undersigned, a Notary Public in and for said State, personally appeared     Paul Michaels         , personally known to me or proved to me on the basis of satisfactory evidence to be the individual whose name is subscribed to the within instrument and acknowledged to me that he executed the same in his capacity, and that by his signature on the instrument, the individual, or the person upon behalf of which the individual acted, executed the instrument.


/s/ Omar Felipe        
Notary Public (SEAL)


[Signature Page to Building Loan Consolidated, Amended and Restated Mortgage, Assignment of Leases and Rents and Security Agreement]

Exhibit 10.7
BUILDING LOAN CONSOLIDATED, AMENDED AND RESTATED PROMISSORY NOTE
$45,900,000.00    New York, New York
March 7, 2019
FOR VALUE RECEIVED 110 WILLIAM PROPERTY INVESTORS III, LLC , a Delaware limited liability company, having an address at c/o Savanna, 430 Park Avenue, 12 th Floor, New York, New York 10022 (“ Borrower ”), as maker, hereby unconditionally promises to pay to INVESCO CMI INVESTMENTS, L.P. , a Delaware limited partnership, having an address at c/o Invesco Real Estate, 2001 Ross Avenue, Suite 3400, Dallas, Texas 75201 (together with its successors and assigns, “ Lender ”), or at such other place as the holder hereof may from time to time designate in writing, the principal sum of FORTY FIVE MILLION NINE HUNDRED THOUSAND AND NO/100 DOLLARS ($45,900,000.00), or so much thereof as is advanced, in lawful money of the United States of America, with interest thereon to be computed from the date of this Building Loan Consolidated, Amended and Restated Promissory Note at the Applicable Interest Rate (as defined in the Loan Agreement (as defined below)), and to be paid in accordance with the terms of this Building Loan Consolidated, Amended and Restated Promissory Note, dated as of the date hereof (as the same may be amended, restated, replaced, supplemented or otherwise modified from time to time, this “ Note ”) and that certain Amended and Restated Building Loan Agreement, dated as of the date hereof, between Borrower and Lender (as the same may be amended, restated, replaced, supplemented or otherwise modified from time to time, the “ Loan Agreement ”). All capitalized terms not defined herein shall have the respective meanings set forth in the Loan Agreement.
W I T N E S S E T H :
WHEREAS, Lender is the holder of those certain instruments more particularly described on Schedule 1 attached hereto and made part hereof, in the aggregate unpaid principal amount of $45,900,000.00 (collectively, the “ Existing Notes ”).
WHEREAS, Lender and Borrower have agreed to consolidate, amend and restate the terms and provisions of the Existing Notes as provided herein.
WHEREAS, Lender and Borrower intend the above recitals to be a material part of this Note.
NOW, THEREFORE, in consideration of the foregoing recitals, which are incorporated into the operative provisions of this Note by this reference, and for other good and valuable consideration, receipt and sufficiency of which are hereby acknowledged, Borrower agrees with Lender as follows:
A. The Existing Notes are hereby amended, restated and consolidated in their entirety so that together they shall constitute in law but one indebtedness in the maximum principal amount of up to FORTY FIVE MILLION NINE HUNDRED THOUSAND AND NO/100 DOLLARS ($45,900,000.00), together with the interest thereon as hereinafter provided. The terms, covenants,



conditions and provisions of the Existing Notes are hereby modified, amended and restated in their entirety so that henceforth the terms, covenants, conditions and provisions of the Existing Notes shall read and be as set forth in this Note and Borrower agrees to comply with and be subject to all of the terms, covenants and conditions of this Note;
B. The parties hereto certify that this Note evidences the existing debt evidenced by the Existing Notes and evidences no further or other principal indebtedness. Neither this Note nor anything contained herein shall be construed as a novation of the Borrower’s indebtedness to Lender evidenced by the Existing Notes, which shall remain in full force and effect as hereby confirmed, modified, restated, amended and consolidated;
C. This Note is an extension and continuation of the debt evidenced by the Existing Notes and is issued in replacement of and substitution for the Existing Notes; and
D. The indebtedness under the Existing Notes, as consolidated, modified and restated in their entirety pursuant to this Note, and the obligations of Borrower thereunder, are hereby ratified and confirmed, and shall remain in full force and effect until the full performance and satisfaction of all obligations of Borrower under the Loan Agreement and other Loan Documents.
FOR VALUE RECEIVED, Borrower promises to pay to Lender, or at such place as the holder hereof may from time to time designate in writing, the principal sum of up to FORTY FIVE MILLION NINE HUNDRED THOUSAND AND NO/100 DOLLARS ($45,900,000.00), in lawful money of the United States of America, with interest on the unpaid principal balance from time to time outstanding at the Applicable Interest Rate to be computed in the manner, at the times and subject to the provisions of Article II of the Building Loan Agreement dated as of the date hereof among Borrower, Administrative Agent and the Lenders.
ARTICLE 1: PAYMENT TERMS
Borrower agrees to pay the principal sum of this Note and interest on the unpaid principal sum of this Note from time to time outstanding at the rates and at the times specified in Article II of the Loan Agreement and the outstanding balance of the principal sum of this Note and all accrued and unpaid interest thereon shall be due and payable on the Maturity Date.
ARTICLE 2: DEFAULT AND ACCELERATION
Subject to and in accordance with the terms of the Loan Agreement, the Debt shall without notice become immediately due and payable at the option of Lender if any payment required in this Note is not paid on or prior to the date when due or if not paid on the Maturity Date or occurrence of any Event of Default.
ARTICLE 3: LOAN DOCUMENTS
This Note is secured by the Mortgage and the other Loan Documents. All of the terms, covenants and conditions contained in the Loan Agreement, the Mortgage and the other Loan Documents are hereby made part of this Note to the same extent and with the same force and effect

2


as if they were fully set forth herein. In the event of a conflict or inconsistency between the terms of this Note and the Loan Agreement, the terms and provisions of the Loan Agreement shall govern.
ARTICLE 4: SAVINGS CLAUSE
Notwithstanding anything to the contrary contained herein or in any other Loan Documents, (a) all agreements and communications between Borrower and Lender are hereby and shall automatically be limited so that, after taking into account all amounts deemed interest, the interest contracted for, charged or received by Lender with respect to the Loan shall never exceed the Maximum Legal Rate, (b) in calculating whether any interest exceeds the Maximum Legal Rate, all such interest shall be amortized, prorated, allocated and spread over the full amount and term of all principal indebtedness of Borrower to Lender, and (c) if through any contingency or event, Lender receives or is deemed to receive interest on the Loan in excess of the Maximum Legal Rate, any such excess shall be deemed to have been applied toward payment of the principal of any and all then outstanding indebtedness of Borrower to Lender, or if there is no such indebtedness, shall immediately be returned to Borrower.
ARTICLE 5: NO ORAL CHANGE
This Note may not be modified, amended, waived, extended, changed, discharged or terminated orally or by any act or failure to act on the part of Borrower or Lender, but only by an agreement in writing signed by the party against whom enforcement of any modification, amendment, waiver, extension, change, discharge or termination is sought.
ARTICLE 6: WAIVERS
Except to the extent required by applicable law, Borrower and all others who may become liable for the payment of all or any part of the Debt do hereby severally waive presentment and demand for payment, notice of dishonor, notice of intention to accelerate, notice of acceleration, protest and notice of protest and non-payment and all other notices of any kind. No release of any security for the Debt or extension of time for payment of this Note or any installment hereof, and no alteration, amendment or waiver of any provision of this Note, the Loan Agreement or the other Loan Documents made by agreement between Lender or any other Person shall release, modify, amend, waive, extend, change, discharge, terminate or affect the liability of Borrower or any other Person who may become liable for the payment of all or any part of the Debt under this Note, the Loan Agreement or the other Loan Documents. No notice to or demand on Borrower shall be deemed to be a waiver of the obligation of Borrower or of the right of Lender to take further action without further notice or demand as provided for in this Note, the Loan Agreement or the other Loan Documents. If Borrower is a partnership or limited liability company, the agreements herein contained shall remain in force and be applicable, notwithstanding any changes in the Persons comprising the partnership or limited liability company, and the term “Borrower,” as used herein, shall include any alternate or successor partnership or limited liability company, but any predecessor partnership or limited liability company shall not thereby be released from any liability. If Borrower is a corporation, the agreements contained herein shall remain in full force and be applicable notwithstanding any changes in the Persons comprising, or the officers and directors relating to, the corporation, and the term “Borrower,” as used herein, shall include any alternative or successor

3


corporation, but any predecessor corporation shall not be relieved of liability hereunder. (Nothing in the foregoing sentence shall be construed as a consent to, or a waiver of, any prohibition or restriction on transfers of interests in such partnership, limited liability company or corporation, which may be set forth in the Loan Agreement, the Mortgage or any other Loan Document.)
ARTICLE 7: TRANSFER
Upon the transfer of this Note in accordance with the terms of the Loan Agreement, Borrower hereby waiving notice of any such transfer, Lender may deliver all the collateral mortgaged, granted, pledged or assigned pursuant to the Loan Documents, or any part thereof, to the transferee who shall thereupon become vested with all the rights herein or under applicable law given to Lender with respect thereto, and Lender following written notice to Borrower, to the extent such notice is required under the Loan Agreement, Lender shall thereafter forever be relieved and fully discharged from any liability or responsibility in the matter; but Lender shall retain all rights and obligations hereby given to it with respect to any liabilities and the collateral not so transferred.

ARTICLE 8: EXCULPATION
The provisions of Section 11.22 of the Loan Agreement are hereby incorporated by reference into this Note to the same extent and with the same force as if fully set forth herein. In the event of any conflict or inconsistency between the provisions of Section 11.22 of the Loan Agreement, on the one hand, and the provisions of this Note on the other, the provisions of Section 11.22 of the Loan Agreement shall govern and control.
ARTICLE 9: GOVERNING LAW
The governing law and related provisions contained in Section 11.3 of the Loan Agreement are hereby incorporated by reference as if fully set forth herein.

ARTICLE 10: NOTICES
All notices or other written communications hereunder shall be delivered in accordance with Section 11.6 of the Loan Agreement.
[NO FURTHER TEXT ON THIS PAGE]

4


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

 
BORROWER :

110 WILLIAM PROPERTY INVESTORS III, LLC
a Delaware limited liability company



By:     /s/ Nicholas Bienstock               
Name: Nicholas Bienstock
Title: Authorized Signatory



[Signature Page to Building Loan Consolidated, Amended and Restated Promissory Note]


 
LENDER :

INVESCO CMI INVESTMENTS, L.P.,
a Delaware limited partnership

By: Invesco CMI Investments GP, LLC,
           a Delaware limited liability company,
           its general partner

By:     /s/ Paul Michaels               
Name: Paul Michaels
Title: Proper Officer


[Signature Page to Building Loan Consolidated, Amended and Restated Promissory Note]

Exhibit 10.8










THIS INSTRUMENT PREPARED BY
AND WHEN RECORDED RETURN TO:

Greenberg Traurig, P.A.
333 S.E. 2nd Avenue
Miami, Florida 33131
Attention: Richard J. Giusto, Esq.

 
 
(SPACE ABOVE THIS LINE FOR RECORDER’S USE)




110 WILLIAM PROPERTY INVESTORS III, LLC
(Mortgagor)

to

INVESCO CMI INVESTMENTS, L.P.
as administrative agent for the benefit of certain Lenders
(Mortgagee)


BUILDING LOAN GAP MORTGAGE



 
Dated:
March 7, 2019
 
 
 
 
 
 
Property Location:
110 William Street
New York, New York
New York County
 
 
 
 
 
 
Block:
77
 
 
Lot:
8
 



BUILDING LOAN GAP MORTGAGE
This BUILDING LOAN GAP MORTGAGE (this “ Mortgage ”), made as of March 7, 2019, by 110 WILLIAM PROPERTY INVESTORS III, LLC , a Delaware limited liability company, having an address at c/o Savanna, 430 Park Avenue, 12th Floor, New York, New York 10022 (“ Borrower ”), to INVESCO CMI INVESTMENTS, L.P. , a Delaware limited partnership, having an address at c/o Invesco Real Estate, 2001 Ross Avenue, Suite 3400, Dallas, Texas 75201, administrative agent for benefit of the Lenders (together with its successors and assigns, “ Mortgagee ”).
Borrower, Morgan Stanley Mortgage Capital Holdings LLC, a New York limited liability company, as administrative agent for Morgan Stanley Bank, N.A., a national banking association, and the other Lenders (as defined in the Original Building Loan Agreement (defined below)) (“ Original BLA Lenders ”), have entered into a Building Loan Agreement dated as of March 6, 2017 (the “ Original Building Loan Agreement ”), pursuant to which Original BLA Lenders made a secured loan to Borrower in the aggregate original principal amount of $27,338,496.00 (“ Original Building Loan ”), of which $2,529,835.76 has been advanced to Borrower to date.
Borrower, Mortgagee and Lenders have entered into an Amended and Restated Building Loan Agreement dated as of the date hereof (as amended, modified, restated, consolidated or supplemented from time to time, the “ Loan Agreement ”) pursuant to which Lenders are making a secured loan to Borrower increasing the Original Building Loan to the aggregate principal amount of $ 45,900,000.00 (the “ Loan ”). Capitalized terms used herein without definition are used as defined in the Loan Agreement.
WITNESSETH, that to secure the payment of an indebtedness in the sum of EIGHTEEN MILLION FIVE HUNDRED SIXTY ONE THOUSAND FIVE HUNDRED FOUR and 00/100 Dollars ($ 18,561,504.00 ), lawful money of the United States of America, to be paid with interest thereon, according to a certain Building Loan Gap Note, of even date herewith, made by Borrower, as maker, to Lender, as holder (the “ Gap Note ”) and pursuant to that certain Loan Agreement, Borrower hereby irrevocably mortgages, grants, bargains, sells, conveys, transfers, pledges, sets over and assigns, and grants a security interest, to and in favor of Lender, WITH POWER OF SALE, subject to the terms and conditions of the Loan Agreement, all of Borrower’s right, title and interest in and to the land described in Exhibit “A” (the “ Premises ”), and the buildings, structures, fixtures and other improvements now or hereafter located thereon (the “ Improvements ”);
TOGETHER WITH, all right, title, interest and estate of Borrower now owned, or hereafter acquired, in and to the following property, rights, interests and estates (the Premises, the Improvements, and the property, rights, interests and estates hereinafter described are collectively referred to herein as the “ Property ”):
(a)    all easements, rights‑of‑way, strips and gores of land, streets, ways, alleys, passages, sewer rights, water, water courses, water rights and powers, air rights and development rights, rights to oil, gas, minerals, coal and other substances of any kind or character, and all estates, rights, titles, interests, privileges, liberties, tenements, hereditaments and appurtenances of any nature whatsoever, in any way belonging, relating or pertaining to the Premises and the Improvements; and the reversion and reversions, remainder and remainders, and all land lying in the bed of any street, road, highway, alley or avenue, opened, vacated or proposed, in front of or adjoining the Premises, to the center line thereof; and all the estates, rights, titles, interests, dower and rights of dower, curtesy and rights of curtesy, property, possession, claim and demand whatsoever, both at law and in equity, of Borrower of, in and to the Premises and the Improvements and every part and parcel thereof, with the appurtenances thereto;



(b)    all machinery, furniture, furnishings, equipment, computer software and hardware, fixtures (including all heating, air conditioning, plumbing, lighting, communications and elevator fixtures), inventory, materials, supplies and other articles of personal property and accessions thereof, renewals and replacements thereof and substitutions therefor, and other property of every kind and nature, tangible or intangible, owned by Borrower, or in which Borrower has or shall have an interest, now or hereafter located upon the Premises or the Improvements, or appurtenant thereto, and usable in connection with the present or future operation and occupancy of the Premises and the Improvements (hereinafter collectively referred to as the “ Equipment ”), including any leases of, deposits in connection with, and proceeds of any sale or transfer of any of the foregoing, and the right, title and interest of Borrower in and to any of the Equipment that may be subject to any “security interest” as defined in the Uniform Commercial Code, as in effect in the State where the Property is located (the “ UCC ”), superior in lien to the lien of this Mortgage. Notwithstanding the foregoing, Equipment shall not include any property belonging to the Manager or tenants under Leases (as hereinafter defined) except to the extent that Borrower shall have any right or interest therein;
(c)    all awards or payments, including interest thereon, that may heretofore or hereafter be made with respect to the Premises or the Improvements, whether from the exercise of the right of eminent domain or condemnation (including any transfer made in lieu of or in anticipation of the exercise of such right), or for a change of grade, or for any other injury to or decrease in the value of the Premises or Improvements;
(d)    all leases and other agreements or arrangements heretofore or hereafter entered into affecting the use, enjoyment or occupancy of, or the conduct of any activity upon or in, the Premises or the Improvements, including any extensions, renewals, modifications or amendments thereof, in each case entered into by or on behalf of Borrower (or its predecessor in interest) (hereinafter collectively referred to as the “ Leases ”) all rents, additional rents, early termination fees or payments or other termination fees or payments, rent equivalents, moneys payable as damages (including payments by reason of the rejection of a Lease in a bankruptcy proceeding) or in lieu of rent or rent equivalents, subject to the terms of the applicable Leases, royalties (including all oil and gas or other mineral royalties and bonuses), income, fees, receivables, receipts, revenues, deposits (including security, utility and other deposits), accounts, cash, issues, profits, charges for services rendered, and other consideration of whatever form or nature received by or paid to or for the account of or benefit of Borrower or its agents or employees from any and all sources arising from or attributable to the Premises and the Improvements, including all receivables, customer obligations, installment payment obligations and other obligations now existing or hereafter arising or created out of the sale, lease, sublease, license, concession or other grant of the right of the use and occupancy of the Premises or the Improvements, or rendering of services by Borrower or any of its agents or employees, and proceeds, if any, from business interruption or other loss of income insurance (hereinafter collectively referred to as the “ Rents ”), together with all proceeds from the sale or other disposition of the Leases and the right to receive and apply the Rents to the payment of the Debt;
(e)    all proceeds of and any unearned premiums on any insurance policies covering the Property, including the right to receive and apply the proceeds of any insurance, judgments, or settlements made in lieu thereof, for damage to the Property;
(f)    the right, in the name and on behalf of Borrower, upon the occurrence and during the continuance of an Event of Default, to appear in and defend any action or proceeding brought with respect to the Property and to commence any action or proceeding to protect the interest of Mortgagee in the Property;
(g)    all accounts (including reserve accounts maintained by Borrower under the Loan Documents), escrows, documents, instruments, chattel paper, claims, deposits and general intangibles, as the foregoing terms are defined in the UCC, and all franchises, trade names, trademarks, symbols, service

2


marks, books, records, plans, specifications, designs, drawings, surveys, title insurance policies, permits, consents, licenses, management agreements, contract rights (including any contract with any architect or engineer or with any other provider of goods or services for or in connection with any construction, repair or other work upon the Property), approvals, actions, refunds of real estate taxes and assessments (and any other governmental impositions related to the Property) and causes of action that now or hereafter relate to, are derived from or are used in connection with the Property, or the use, operation, maintenance, occupancy or enjoyment thereof or the conduct of any business or activities thereon (hereinafter collectively referred to as the “ Intangibles ”); and
(h)    all proceeds, products, offspring, rents and profits from any of the foregoing, including those from sale, exchange, transfer, collection, loss, damage, disposition, substitution or replacement of any of the foregoing.
Without limiting the generality of any of the foregoing, in the event that a case under the Bankruptcy Code is commenced by or against Borrower, pursuant to Section 552(b)(2) of the Bankruptcy Code, the security interest granted by this Mortgage shall automatically extend to all Rents acquired by Borrower after the commencement of the case and shall constitute cash collateral under Section 363(a) of the Bankruptcy Code.
TO HAVE AND TO HOLD the Property unto and to the use and benefit of Mortgagee and its successors and assigns, forever;
PROVIDED, HOWEVER, these presents are upon the express condition that, if Borrower shall well and truly pay to Mortgagee, for the benefit of Mortgagee the Debt at the time and in the manner provided in the Loan Documents and shall well and truly abide by and comply in all material respects, with each and every covenant and condition set forth in the Loan Documents in a timely manner (giving effect to any applicable grace, notice and cure periods), these presents and the estate hereby granted shall cease, terminate and be void; provided, that upon request by Borrower, Mortgagee shall, at Borrower’s sole cost and expense, execute and deliver for recording all customary documentation reasonably requested by Borrower to evidence such termination (including, without limitation, a recordable mortgage satisfaction or any other documentation required by a title company). Borrower shall pay all of Mortgagee’s reasonable attorney’s fees and disbursements incurred in connection with the aforesaid documentation;
AND Borrower represents and warrants to and covenants and agrees with Mortgagee as follows:
1. Payment of Debt and Incorporation of Covenants, Conditions and Agreements . Borrower shall pay the Debt at the time and in the manner provided in the Loan Documents. All the covenants, conditions and agreements contained in the Loan Documents are hereby made a part of this Mortgage to the same extent and with the same force as if fully set forth herein.
2.      Transfer or Encumbrance of the Property . Borrower shall not sell, convey, alienate, mortgage, encumber, pledge or otherwise transfer the Property or any part thereof, or suffer or permit any Transfer to occur in violation of the Loan Agreement.
3.      Taxation . Borrower will pay all taxes, assessments, sewer rents or water rates when same become due and payable, and in default thereof, Mortgagee may pay the same. Borrower shall not claim or demand or be entitled to any credit on account of the Debt for any part of the Taxes assessed against the Property, and no deduction shall otherwise be made or claimed from the assessed value of the Property for real estate tax purposes by reason of this Mortgage or the Debt.

3


4.      Improvements . Borrower represents that this Mortgage does not encumber real property principally improved or to be improved by one or more structures containing in the aggregate more than six residential dwelling units, each having its own separate cooking facilities.
5.      Right to Cure Defaults . During the continuance of any Event of Default, Mortgagee may, but without any obligation to do so and without notice to or demand on Borrower and without releasing Borrower from any obligation hereunder, perform the obligations in Default in such manner and to such extent as Mortgagee may deem necessary to protect the security hereof.
6.      Remedies . During the continuance of any Event of Default, Mortgagee may take such action, without notice or demand, as it deems advisable to protect and enforce its rights against Borrower and in and to the Property, by Mortgagee itself or otherwise, including declare the entire Debt to be immediately due and payable.
7.      Section 13 of the Lien Law . Pursuant to Section 13 of the Lien Law of New York (the “ Lien Law ”), Borrower shall receive the advances secured by this Mortgage and shall hold the right to receive such advances as a trust fund to be applied first for the purpose of paying the “cost of improvement,” as such quoted term is defined and used in the Lien Law, and shall apply such advances first to the payment of such cost before using any part of the total of same for any other purpose. Borrower shall strictly comply with Section 13 of the Lien Law and shall indemnify and hold Mortgagee and each Lender harmless against any and all loss, liability, actual out-of-pocket cost or expense, including, without limitation, any judgments, reasonable attorneys’ fees, costs of appeal bonds and printing costs, arising out of or relating to any proceeding instituted by any claimant alleging a violation by Borrower of the Lien Law, including, without limitation, any section of Article 3-A of the Lien Law, excluding consequential damages (except to the extent such consequential damages are owed by it to a third party). This Paragraph 7 shall apply to this Mortgage, notwithstanding any provision of this Mortgage or of any other Loan Document to the contrary.
8.      Governing Law . WITH RESPECT TO MATTERS RELATING TO THE CREATION, PERFECTION AND PROCEDURES RELATING TO THE ENFORCEMENT OF THIS MORTGAGE , THIS MORTGAGE SHALL BE GOVERNED BY, AND BE CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE IN WHICH THE PROPERTY IS LOCATED, IT BEING UNDERSTOOD THAT, EXCEPT AS EXPRESSLY SET FORTH ABOVE IN THIS SECTION AND TO THE FULLEST EXTENT PERMITTED BY THE LAW OF SUCH STATE, THE LAW OF THE STATE OF NEW YORK SHALL GOVERN ALL MATTERS RELATING TO THIS MORTGAGE AND THE OTHER LOAN DOCUMENTS AND ALL OF THE INDEBTEDNESS OR OBLIGATIONS ARISING HEREUNDER OR THEREUNDER. ALL PROVISIONS OF THE LOAN AGREEMENT INCORPORATED HEREIN BY REFERENCE SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK, AS SET FORTH IN THE GOVERNING LAW PROVISION OF THE LOAN AGREEMENT.
9.      Duplicate Originals . This Mortgage may be executed in any number of duplicate originals and each such duplicate original shall be deemed to be an original.
10.      Definitions .     Capitalized terms used but not defined herein shall have the meanings assigned thereto in the Loan Agreement.
11.      Multiple Mortgages .     This Mortgage is intended to be subordinate and junior in lien to that certain Senior Loan Gap Mortgage dated as of the date hereof, which grants Mortgagee a first place lien on the Property encumbered thereby.

4


[THE REMAINDER OF THE PAGE IS INTENTIONALLY BLANK]


5


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

 
BORROWER :

110 WILLIAM PROPERTY INVESTORS III, LLC
a Delaware limited liability company



By:     /s/ Christopher Schlank               
Name: Christopher Schlank
Title: Authorized Signatory



ACKNOWLEDGMENT

STATE OF NEW YORK        )
)    ss.:
COUNTY OF NEW YORK        )

On the 5th day of March in the year 2019, before me, the undersigned, a Notary Public in and for said State, personally appeared     Christopher Schlank         , personally known to me or proved to me on the basis of satisfactory evidence to be the individual whose name is subscribed to the within instrument and acknowledged to me that he executed the same in his capacity, and that by his signature on the instrument, the individual, or the person upon behalf of which the individual acted, executed the instrument.


/s/ Amy Miller            
Notary Public (SEAL)


[Signature Page to Building Loan Gap Mortgage]

Exhibit 10.9
BUILDING LOAN GAP NOTE

$18,561,504.00    March 7, 2019
For value received, 110 WILLIAM PROPERTY INVESTORS III, LLC , a Delaware limited liability company, having an address at c/o Savanna, 430 Park Avenue, 12th Floor, New York, New York 10022 (“ Borrower ”), promises to pay to INVESCO CMI INVESTMENTS, L.P. , a Delaware limited partnership, at its at its address at c/o Invesco Real Estate, 2001 Ross Avenue, Suite 3400, Dallas, Texas 75201 (together with its successors and assigns “ Lender ”), or at such place as the holder hereof may from time to time designate in writing, the principal sum of EIGHTEEN MILLION FIVE HUNDRED SIXTY ONE THOUSAND FIVE HUNDRED FOUR AND NO/100 DOLLARS ($18,561,504.00), in lawful money of the United States of America, with interest on the unpaid principal balance from time to time outstanding to be computed from the date hereof at the rate set forth in that certain Amended and Restated Building Loan Agreement, dated as of the date hereof, between Borrower and Lender (as the same may be amended, modified, supplemented, restated or replaced from time to time, the “ Loan Agreement ”).

IT IS HEREBY EXPRESSLY AGREED, that the said principal sum evidenced by this Building Loan Gap Note (“ Note ”) shall become due at the option of the holder thereof on the happening of any event by which, under the terms of the Loan Agreement, said principal sum shall become due and payable; also, that all of the covenants, conditions and agreements contained in the Loan Agreement are hereby made part of this instrument.

Presentment for payment, notice of dishonor, protest and notice of protest are hereby waived.

This Note is secured by the Building Loan Gap Mortgage made by Borrower to Lender, of even date herewith.

This Note may not be changed or terminated orally.

Section 11.3 of the Loan Agreement is hereby incorporated by reference herein.

If Borrower consists of more than one person or party, the obligations and liabilities of each such person or party shall be joint and several.

[THE REMAINDER OF THE PAGE IS INTENTIONALLY BLANK]




IN WITNESS WHEREOF, Borrower has executed this Note as of the date first written above.

 
BORROWER :

110 WILLIAM PROPERTY INVESTORS III, LLC
a Delaware limited liability company



By:     /s/ Christopher Schlank               
Name: Christopher Schlank
Title: Authorized Signatory


[Signature Page to Building Loan Gap Note]

Exhibit 10.10










THIS INSTRUMENT PREPARED BY
AND WHEN RECORDED RETURN TO:

Greenberg Traurig, P.A.
333 S.E. 2nd Avenue
Miami, Florida 33131
Attention: Richard J. Giusto, Esq.
 
 
(SPACE ABOVE THIS LINE FOR RECORDER’S USE)


110 WILLIAM PROPERTY INVESTORS III, LLC
(Mortgagor)

to

INVESCO CMI INVESTMENTS, L.P.
as administrative agent for the benefit of certain Lenders
(Mortgagee)



SENIOR LOAN CONSOLIDATED, AMENDED AND RESTATED MORTGAGE, ASSIGNMENT OF LEASES AND RENTS
AND SECURITY AGREEMENT



Dated:
March 7, 2019
 
 
 
 
Property Location:
110 William Street
New York, New York
New York County
 
 
 
 
Block:
77
 
Lot:
8
 



SENIOR LOAN CONSOLIDATED, AMENDED AND RESTATED MORTGAGE, ASSIGNMENT OF LEASES AND RENTS AND SECURITY AGREEMENT (this “ Security Instrument ”), made as of March 7, 2019, by and between 110 WILLIAM PROPERTY INVESTORS III, LLC , a Delaware limited liability company, having an address at c/o Savanna, 430 Park Avenue, 12th Floor, New York, New York 10022 (“ Borrower ”) for the benefit of INVESCO CMI INVESTMENTS, L.P. , a Delaware limited partnership, having an address at c/o Invesco Real Estate, 2001 Ross Avenue, Suite 3400, Dallas, Texas 75201, as administrative agent for the benefit of Lenders (together with its successors and assigns, “ Mortgagee ”).
Borrower, Mortgagee and Lenders have entered into a Senior Loan Agreement dated as of the date hereof (as amended, modified, restated, consolidated or supplemented from time to time, the “ Loan Agreement ”) pursuant to which Lenders are making a secured loan to Borrower in the aggregate original principal amount of $215,475,000.00 (the “ Loan ”). Capitalized terms used herein without definition are used as defined in the Loan Agreement.
Mortgagee is the holder of the mortgages listed on Schedule 1 annexed hereto and made a part hereof (collectively, the “ Existing Mortgages ”).
The aggregate outstanding principal amount secured by the Existing Mortgages is $205,000,000.00.
Mortgagee is the holder of that certain Senior Loan Gap Mortgage, dated as of the date hereof, made by Borrower in favor of Mortgagee (the “ Gap Mortgage ” and together with the Existing Mortgages, collectively, the “ Original Mortgages ”).
The aggregate outstanding principal amount secured by the Gap Mortgage is $10,475,000.00. Borrower and Mortgagee desire to consolidate the liens of the Original Mortgages to form a single first mortgage lien encumbering the Premises (defined below) and the Improvements (defined below) and as so consolidated to modify, extend and restate the terms thereof, to partially secure payment of the consolidated, amended and restated notes evidenced by that certain Senior Loan Consolidated, Amended and Restated Promissory Note dated the date hereof made by Borrower to Lender in such principal amount (as the same may be amended, modified, restated, severed, consolidated, renewed, replaced, or supplemented from time to time, the “ Note ”).
Borrower and Mortgagee desire to consolidate, amend and restate the terms and provisions of the Original Mortgages upon the terms and provisions set for herein so as to constitute a restatement in full of the Original Mortgages, which Original Mortgages shall hereinafter be deemed to be superseded in their entirety by this Security Instrument (as same may be amended, modified restated, severed, consolidated, renewed, replaced or supplemented from time to time) securing the principal sum of $215,475,000.00, together with interest thereon as hereafter provided.

To secure the payment of the Note and all sums which may or shall become due thereunder or under any of the other documents evidencing, securing or executed in connection with the Loan (the Note, this Security Instrument, the Loan Agreement and such other documents,


as any of the same may, from time to time, be modified, amended or supplemented, being hereinafter collectively referred to as the “ Loan Documents ”), including (i) the payment of interest and other amounts which would accrue and become due but for the filing of a petition in bankruptcy (whether or not a claim is allowed against Borrower for such interest or other amounts in any such bankruptcy proceeding) or the operation of the automatic stay under Section 362(a) of Title 11 of the United States Code (the “ Bankruptcy Code ”), and (ii) the costs and expenses of enforcing any provision of any Loan Document (all such sums being hereinafter collectively referred to as the “ Debt ”), Borrower has given, granted, bargained, sold, alienated, enfeoffed, conveyed, confirmed, warranted, pledged, assigned and hypothecated and by these presents does hereby give, grant, bargain, sell, alien, enfeoff, convey, confirm, warrant, pledge, assign and hypothecate unto Mortgagee, WITH POWER OF SALE, subject to the terms and conditions of the Loan Agreement, the land described in Exhibit A (the “ Premises ”), and the buildings, structures, fixtures and other improvements now or hereafter located thereon (the “ Improvement s ”);
TOGETHER WITH, all right, title, interest and estate of Borrower now owned, or hereafter acquired, in and to the following property, rights, interests and estates (the Premises, the Improvements, and the property, rights, interests and estates hereinafter described are collectively referred to herein as the “ Property ”):
(a)    all easements, rights‑of‑way, strips and gores of land, streets, ways, alleys, passages, sewer rights, water, water courses, water rights and powers, air rights and development rights, rights to oil, gas, minerals, coal and other substances of any kind or character, and all estates, rights, titles, interests, privileges, liberties, tenements, hereditaments and appurtenances of any nature whatsoever, in any way belonging, relating or pertaining to the Premises and the Improvements; and the reversion and reversions, remainder and remainders, and all land lying in the bed of any street, road, highway, alley or avenue, opened, vacated or proposed, in front of or adjoining the Premises, to the center line thereof; and all the estates, rights, titles, interests, dower and rights of dower, curtesy and rights of curtesy, property, possession, claim and demand whatsoever, both at law and in equity, of Borrower of, in and to the Premises and the Improvements and every part and parcel thereof, with the appurtenances thereto;
(b)    all machinery, furniture, furnishings, equipment, computer software and hardware, fixtures (including all heating, air conditioning, plumbing, lighting, communications and elevator fixtures), inventory, materials, supplies and other articles of personal property and accessions thereof, renewals and replacements thereof and substitutions therefor, and other property of every kind and nature, tangible or intangible, owned by Borrower, or in which Borrower has or shall have an interest, now or hereafter located upon the Premises or the Improvements, or appurtenant thereto, and usable in connection with the present or future operation and occupancy of the Premises and the Improvements (hereinafter collectively referred to as the “ Equipment ”), including any leases of, deposits in connection with, and proceeds of any sale or transfer of any of the foregoing, and the right, title and interest of Borrower in and to any of the Equipment that may be subject to any “security interest” as defined in the Uniform Commercial Code, as in effect in the State where the Property is located (the “ UCC ”), superior in lien to the lien of this Security Instrument. Notwithstanding the foregoing, Equipment shall not include any property belonging to the Manager

2

or tenants under Leases (as hereinafter defined) except to the extent that Borrower shall have any right or interest therein;

(c)    all awards or payments, including interest thereon, that may heretofore or hereafter be made with respect to the Premises or the Improvements, whether from the exercise of the right of eminent domain or condemnation (including any transfer made in lieu of or in anticipation of the exercise of such right), or for a change of grade, or for any other injury to or decrease in the value of the Premises or Improvements;
(d)    all leases and other agreements or arrangements heretofore or hereafter entered into affecting the use, enjoyment or occupancy of, or the conduct of any activity upon or in, the Premises or the Improvements, including any extensions, renewals, modifications or amendments thereof, in each case entered into by or on behalf of Borrower (or its predecessor in interest) (hereinafter collectively referred to as the “ Leases ”) all rents, additional rents, early termination fees or payments or other termination fees or payments, rent equivalents, moneys payable as damages (including payments by reason of the rejection of a Lease in a bankruptcy proceeding) or in lieu of rent or rent equivalents, subject to the terms of the applicable Leases, royalties (including all oil and gas or other mineral royalties and bonuses), income, fees, receivables, receipts, revenues, deposits (including security, utility and other deposits), accounts, cash, issues, profits, charges for services rendered, and other consideration of whatever form or nature received by or paid to or for the account of or benefit of Borrower or its agents or employees from any and all sources arising from or attributable to the Premises and the Improvements, including all receivables, customer obligations, installment payment obligations and other obligations now existing or hereafter arising or created out of the sale, lease, sublease, license, concession or other grant of the right of the use and occupancy of the Premises or the Improvements, or rendering of services by Borrower or any of its agents or employees, and proceeds, if any, from business interruption or other loss of income insurance (hereinafter collectively referred to as the “ Rents ”), together with all proceeds from the sale or other disposition of the Leases and the right to receive and apply the Rents to the payment of the Debt;
(e)    all proceeds of and any unearned premiums on any insurance policies covering the Property, including the right to receive and apply the proceeds of any insurance, judgments, or settlements made in lieu thereof, for damage to the Property;
(f)    the right, in the name and on behalf of Borrower, upon the occurrence and during the continuance of an Event of Default, to appear in and defend any action or proceeding brought with respect to the Property and to commence any action or proceeding to protect the interest of Mortgagee in the Property;
(g)    all accounts (including reserve accounts maintained by Borrower under the Loan Documents ), escrows, documents, instruments, chattel paper, claims, deposits and general intangibles, as the foregoing terms are defined in the UCC, and all franchises, trade names, trademarks, symbols, service marks, books, records, plans, specifications, designs, drawings, surveys, title insurance policies, permits, consents, licenses, management agreements, contract rights (including any contract with any architect or engineer or with any other provider of goods or

3

services for or in connection with any construction, repair or other work upon the Property), approvals, actions, refunds of real estate taxes and assessments (and any other governmental impositions related to the Property) and causes of action that now or hereafter relate to, are derived from or are used in connection with the Property, or the use, operation, maintenance, occupancy or enjoyment thereof or the conduct of any business or activities thereon (hereinafter collectively referred to as the “ Intangibles ”); and
(h)    all proceeds, products, offspring, rents and profits from any of the foregoing, including those from sale, exchange, transfer, collection, loss, damage, disposition, substitution or replacement of any of the foregoing.
Without limiting the generality of any of the foregoing, in the event that a case under the Bankruptcy Code is commenced by or against Borrower, pursuant to Section 552(b)(2) of the Bankruptcy Code, the security interest granted by this Security Instrument shall automatically extend to all Rents acquired by the Borrower after the commencement of the case and shall constitute cash collateral under Section 363(a) of the Bankruptcy Code.
TO HAVE AND TO HOLD the Property unto and to the use and benefit of Lender and its successors and assigns, forever;
PROVIDED, HOWEVER, these presents are upon the express condition that, if Borrower shall well and truly pay to Mortgagee, for the benefit of Lenders the Debt at the time and in the manner provided in the Loan Documents and shall well and truly abide by and comply in all material respects, with each and every covenant and condition set forth in the Loan Documents in a timely manner (giving effect to any applicable grace, notice and cure periods), these presents and the estate hereby granted shall cease, terminate and be void; provided, that upon request by Borrower, Mortgagee shall, at Borrower’s sole cost and expense, execute and deliver for recording all customary documentation reasonably requested by Borrower to evidence such termination (including, without limitation, a recordable mortgage satisfaction or any other documentation required by a title company). Borrower shall pay all of Mortgagee’s reasonable attorney’s fees and disbursements incurred in connection with the aforesaid documentation;
AND Borrower represents and warrants to and covenants and agrees with Mortgagee as follows:
PART I - GENERAL PROVISIONS
1. Payment of Debt and Incorporation of Covenants, Conditions and Agreements . Borrower shall pay the Debt at the time and in the manner provided in the Loan Documents. All the covenants, conditions and agreements contained in the Loan Documents are hereby made a part of this Security Instrument to the same extent and with the same force as if fully set forth herein. Without limiting the generality of the foregoing, Borrower (i) agrees to insure, repair, maintain and restore damage to the Property, pay Taxes and Other Charges, and comply with Legal Requirements, in accordance with the Loan Agreement, and (ii) agrees that the Insurance Proceeds and Awards for Condemnation shall be settled, held and applied in accordance with the

4

Loan Agreement. In the event of any conflict between this Security Instrument and the Loan Agreement, the terms of the Loan Agreement shall govern.
2.      Leases and Rents .
(a)      Borrower does hereby absolutely and unconditionally assign to Mortgagee all of Borrower’s right, title and interest in all current and future Leases and Rents, it being intended by Borrower that this assignment constitutes a present, absolute assignment and not an assignment for additional security only. Such assignment shall not be construed to bind Mortgagee to the performance of any of the covenants or provisions contained in any Lease or otherwise impose any obligation upon Mortgagee. Nevertheless, subject to the terms of this paragraph, Mortgagee grants to Borrower a revocable license to operate and manage the Property and to collect, receive, use and enjoy the Rents subject to the requirements of the Loan Agreement (including the deposit of Rents into the Clearing Account). Upon an Event of Default, without the need for notice or demand, the license granted to Borrower herein shall automatically be revoked, and Lender shall immediately be entitled to possession of all Rents in the Clearing Account, the Deposit Account (including all Subaccounts thereof) and all Rents collected thereafter (including Rents past due and unpaid), whether or not Mortgagee enters upon or takes control of the Property, provided , that such revocation shall only be effective while an Event of Default is continuing. Borrower hereby grants and assigns to Lender the right, at its option, upon revocation of the license granted herein, to enter upon the Property in person, by agent or by court‑appointed receiver to collect the Rents, subject to the rights of tenants under Leases. Any Rents collected after the revocation of such license may be applied toward payment of the Debt in such priority and proportions as Mortgagee in its sole discretion shall deem proper.
(b)      Borrower shall not enter into, modify, amend, cancel, terminate or renew any Lease except as provided in Section 4.1.9 of the Loan Agreement.
3.      Use of Property . Borrower shall not initiate, join in, acquiesce in or consent to any change in any private restrictive covenant, zoning law or other public or private restriction, limiting or defining the uses which may be made of the Property in violation of the Loan Agreement. If under applicable zoning provisions the use of the Property is or shall become a nonconforming use, Borrower shall not cause or permit such nonconforming use to be discontinued or abandoned without the consent of Mortgagee, in violation of the Loan Agreement. Borrower shall not (i) change the use of the Property, (ii) permit or suffer to occur any waste on or to the Property or (iii) take any steps to convert the Property to a condominium or cooperative form of ownership without the prior written consent of Mortgagee., in violation of the Loan Agreement
4.      Transfer or Encumbrance of the Property .
(a)      Borrower acknowledges that (i) Mortgagee has examined and relied on the creditworthiness and experience of the principals of Borrower in owning and operating properties such as the Property in agreeing to make the Loan, (ii) Mortgagee will continue to rely on Borrower’s ownership of the Property as a means of maintaining the value of the Property as security for the Debt, and (iii) Mortgagee has a valid interest in maintaining the value of the Property so as to ensure that, should Borrower default in the repayment of the Debt, Mortgagee can recover

5

the Debt (pursuant to the Loan Agreement) by a sale of the Property. Borrower shall not sell, convey, alienate, mortgage, encumber, pledge or otherwise transfer the Property or any part thereof, or suffer or permit any Transfer to occur, other than a Permitted Transfer, without the prior written consent of Mortgagee. Notwithstanding anything to the contrary contained herein, this Security Instrument shall not constitute a modification of any other provisions in any other Loan Documents which prohibit, limit or restrict the right of Borrower to transfer the Property or the right of any party to transfer any interest, directly or indirectly, in Borrower.
(b)      Mortgagee shall not be required to demonstrate any actual impairment of its security or any increased risk of default hereunder in order to declare the Debt immediately due and payable upon a Transfer in violation of this Paragraph 4. This provision shall apply to every sale, conveyance, alienation, mortgage, encumbrance, pledge or transfer of the Property (and every other Transfer) in violation of this Paragraph 4 regardless of whether voluntary or not. Any Transfer made in contravention of this Paragraph 4 shall be null and void and of no force and effect. Borrower agrees to bear and shall pay or reimburse Mortgagee on demand for all reasonable out-of-pocket expenses (including reasonable out of pocket attorneys’ fees and disbursements, title search costs and title insurance endorsement premiums) incurred by Mortgagee in connection with the review, approval and documentation of any Permitted Transfer.
5.      Changes in Laws Regarding Taxation . If any law is enacted or adopted or amended after the date of this Security Instrument which deducts the Debt from the value of the Property for the purpose of taxation or which imposes a tax, either directly or indirectly, on the Debt or Mortgagee’s interest in the Property, Borrower will, upon written demand by Mortgagee , pay such tax, with interest and penalties thereon, if any. If Mortgagee is advised by its counsel that the payment of such tax or interest and penalties by Borrower would be unlawful, taxable to Mortgagee or unenforceable, or would provide the basis for a defense of usury, then Mortgagee shall have the option, by written notice of not less than 120 days, to declare the Debt immediately due and payable without premium or penalty. Borrower shall pay no premium or penalty, including, without limitation, any prepayment premium, if Lender shall declare the Debt immediately due and payable pursuant to the terms of this Section 5.
6.      No Credits on Account of the Debt . Borrower shall not claim or demand or be entitled to any credit on account of the Debt for any part of the Taxes or Other Charges assessed against the Property, and no deduction shall otherwise be made or claimed from the assessed value of the Property for real estate tax purposes by reason of this Security Instrument or the Debt, if such credit or deduction would increase the amount of Taxes or Other Charges required to be paid by Mortgagee. If such claim, credit or deduction shall be required by law, Mortgagee shall have the option, by written notice of not less than 120 days, to declare the Debt immediately due and payable, without any premium or penalty. Borrower shall pay no premium or penalty, including, without limitation, any prepayment premium, if Lender shall declare the Debt immediately due and payable pursuant to the terms of this Section 6.

6

7.      Further Acts, Etc . Borrower shall, at its sole cost, do execute, acknowledge and deliver all and every such further acts, deeds, conveyances, mortgages, assignments, notices of assignment, transfers and assurances as Mortgagee shall, from time to time, reasonably require, for the better assuring, conveying, assigning, transferring, and confirming unto Mortgagee the property and rights hereby mortgaged, given, granted, bargained, sold, alienated, enfeoffed, conveyed, confirmed, pledged, assigned and hypothecated or intended now or hereafter so to be, or which Borrower may be or may hereafter become bound to convey or assign to Mortgagee, or for carrying out the intention or facilitating the performance of the terms of this Security Instrument, or for filing, registering or recording this Security Instrument (but in no event will Borrower be required to incur, suffer or accept (except to a de mimimis extent) any lesser rights or greater obligations than as currently set forth in the Loan Documents). Upon foreclosure, the appointment of a receiver or any other relevant action, Borrower shall, at its sole cost, cooperate fully and completely to effect the assignment or transfer of any license, permit, agreement or any other right necessary or useful to the operation of the Property. Borrower grants to Mortgagee an irrevocable power of attorney coupled with an interest, which shall be exercisable upon the occurrence and during the continuance of an Event of Default, for the purpose of exercising and perfecting any and all rights and remedies available to Mortgagee at law and in equity, including such rights and remedies available to Mortgagee pursuant to this paragraph.
8.      Recording of Security Instrument, Etc . Borrower forthwith upon the execution and delivery of this Security Instrument and thereafter, from time to time, shall cause this Security Instrument, and any security instrument creating a lien or security interest or evidencing the lien hereof upon the Property and each instrument of further assurance to be filed, registered or recorded in such manner and in such places as may be required by any present or future law in order to publish notice of and fully to protect the lien or security interest hereof upon, and the interest of Mortgagee in, the Property. Borrower shall pay all filing, registration or recording fees, all expenses incident to the preparation, execution and acknowledgment of and all federal, state, county and municipal, taxes, duties, imposts, documentary stamps, assessments and charges arising out of or in connection with the execution and delivery of, this Security Instrument, any Security Instrument supplemental hereto, any other security instrument with respect to the Property or any instrument of further assurance, except where prohibited by law so to do. Borrower shall hold harmless and indemnify Mortgagee, its successors and assigns, against any liability incurred by reason of the imposition under applicable Legal Requirements of any tax on the making or recording of this Security Instrument.
9.      Right to Cure Defaults . Upon the occurrence and during the continuance of any Event of Default, Mortgagee may, but without any obligation to do so and without notice to or demand on Borrower and without releasing Borrower from any obligation hereunder, perform the obligations that gave rise to the Event of Default in such manner and to such extent as Mortgagee may deem necessary to protect the security hereof. Subject to the rights of Tenants under Leases, Mortgagee is authorized to enter upon the Property for such purposes or appear in, defend or bring any action or proceeding to protect its interest in the Property or to foreclose this Security Instrument or collect the Debt, and the out-of-pocket cost and expense thereof (including reasonable out-of-pocket attorneys’ fees and disbursements to the extent permitted by law), with interest thereon at the Default Rate for the period after written notice from Mortgagee that such out-of-pocket cost or

7

expense was incurred and continuing until the date of payment to Mortgagee, shall constitute a portion of the Debt, shall be secured by this Security Instrument and the other Loan Documents and shall be due and payable to Mortgagee promptly following written demand to Borrower therefor.
10.      Remedies .
(a)      Upon the occurrence and during the continuance of any Event of Default and subject to the provisions of the Loan Agreement, Mortgagee may take such action, without notice or demand, as it deems advisable to protect and enforce its rights against Borrower and in and to the Property, by Mortgagee itself or otherwise, including the following actions, each of which may be pursued concurrently or otherwise, at such time and in such order as Mortgagee may determine, in its sole discretion, to the extent permitted by applicable law, without impairing or otherwise affecting the other rights and remedies of Mortgagee:
(i)          declare the entire Debt to be immediately due and payable;
(ii)          institute a proceeding or proceedings, judicial or nonjudicial, to the extent permitted by law, by advertisement or otherwise, for the complete foreclosure of this Security Instrument, in which case the Property may be sold for cash or upon credit in one or more parcels or in several interests or portions and in any order or manner;
(iii)          with or without entry, to the extent permitted and pursuant to the procedures provided by applicable law, institute proceedings for the partial foreclosure of this Security Instrument for the portion of the Debt then due and payable, subject to the continuing lien of this Security Instrument for the balance of the Debt not then due;
(iv)          sell for cash or upon credit the Property and all estate, claim, demand, right, title and interest of Borrower therein and rights of redemption thereof, pursuant to the power of sale, to the extent permitted by law, or otherwise, at one or more sales, as an entirety or in parcels, at such time and place, upon such terms and after such notice thereof as may be required or permitted by law;
(v)          institute an action, suit or proceeding in equity for the specific performance of any covenant, condition or agreement contained herein or in any other Loan Document;
(vi)          recover judgment on the Note either before, during or after any proceeding for the enforcement of this Security Instrument;
(vii)          apply for the appointment of a trustee, receiver, liquidator or conservator of the Property, without notice and without regard for the adequacy of the security for the Debt and without regard for the solvency of the Borrower or of any person, firm or other entity liable for the payment of the Debt;

8

(viii)          subject to the terms of this Security Instrument and the Assignment of Leases enforce Mortgagee’s interest in the Leases and Rents and enter into or upon the Property, subject to rights of tenants under Leases, either personally or by its agents, nominees or attorneys and dispossess Borrower and its agents and employees therefrom, and thereupon Mortgagee may (A) use, operate, manage, control, insure, maintain, repair, restore and otherwise deal with the Property and conduct the business thereat; (B) complete any construction on the Property in such manner and form as Mortgagee deems advisable; (C) make alterations, additions, renewals, replacements and improvements to or on the Property; (D) exercise all rights and powers of Borrower with respect to the Property, whether in the name of Borrower or otherwise, including the right to make, cancel, enforce or modify Leases, obtain and evict tenants, and demand, sue for, collect and receive Rents; and (E) apply the receipts from the Property to the payment of the Debt, after deducting therefrom all out-of-pocket expenses (including reasonable out-of-pocket attorneys’ fees and disbursements) incurred in connection with the aforesaid operations and all amounts necessary to pay the Taxes, insurance and other charges in connection with the Property, as well as just and reasonable compensation for the services of Mortgagee, and its counsel, agents and employees; in each case, in accordance with the standards applicable to Lender under the Loan Documents;
(ix)          require Borrower to pay monthly in advance to Lender, or any receiver appointed to collect the Rents, the fair and reasonable rental value for the use and occupation of any portion of the Property occupied by Borrower, and require Borrower to vacate and surrender possession of the Property to Lender or to such receiver, and, in default thereof, evict Borrower by summary proceedings or otherwise; or
(x)          pursue such other rights and remedies as may be available at law or in equity or under the UCC, including the right to receive and/or establish a lock box for all Rents and proceeds from the Intangibles and any other receivables or rights to payments of Borrower relating to the Property.
In the event of a sale, by foreclosure or otherwise, of less than all of the Property, this Security Instrument shall continue as a lien on the remaining portion of the Property.
(b)      Subject to the provisions of the Loan Agreement, the proceeds of any sale made under or by virtue of this Paragraph 10, together with any other sums which then may be held by Mortgagee under this Security Instrument, whether under the provisions of this paragraph or otherwise, shall be applied by Mortgagee to the payment of the Debt in such priority and proportion as Mortgagee in its sole discretion shall deem proper.
(c)      Mortgagee may adjourn from time to time any sale by it to be made under or by virtue of this Security Instrument by announcement at the time and place appointed for such sale or for such adjourned sale or sales; and, except as otherwise provided by any applicable law, Mortgagee, without further notice or publication, may make such sale at the time and place to which the same shall be so adjourned.

9

(d)      Upon the completion of any sale or sales pursuant hereto, Mortgagee, or an officer of any court empowered to do so, shall execute and deliver to the accepted purchaser or purchasers a good and sufficient instrument, or good and sufficient instruments, conveying, assigning and transferring all estate, right, title and interest in and to the property and rights sold. Mortgagee is hereby irrevocably appointed the true and lawful attorney of Borrower (for exercise only upon the occurrence and during the continuance of any Event of Default), in its name and stead, to make all necessary conveyances, assignments, transfers and deliveries of the Property and rights so sold and for that purpose Mortgagee may execute all necessary instruments of conveyance, assignment and transfer, and may substitute one or more persons with like power, Borrower hereby ratifying and confirming all that its said attorney or such substitute or substitutes shall lawfully do by virtue hereof. Any sale or sales made under or by virtue of this Paragraph 10, whether made under the power of sale herein granted or under or by virtue of judicial proceedings or of a judgment or decree of foreclosure and sale, shall operate to divest all the estate, right, title, interest, claim and demand whatsoever, whether at law or in equity, of Borrower in and to the properties and rights so sold, and shall be a perpetual bar both at law and in equity against Borrower and against any and all persons claiming or who may claim the same, or any part thereof, from, through or under Borrower.
(e)      Upon any sale made under or by virtue of this Paragraph 10, whether made under a power of sale or under or by virtue of judicial proceedings or of a judgment or decree of foreclosure and sale, Mortgagee may bid for and acquire the Property or any part thereof and in lieu of paying cash therefor may make settlement for the purchase price by crediting upon the Debt the net sales price after deducting therefrom the out-of-pocket expenses of the sale and costs of the action and any other sums which Mortgagee is authorized to deduct under this Security Instrument or any other Loan Document.
(f)      No recovery of any judgment by Mortgagee and no levy of an execution under any judgment upon the Property or upon any other property of Borrower shall affect in any manner or to any extent the lien of this Security Instrument upon the Property or any part thereof, or any liens, rights, powers or remedies of Mortgagee hereunder, but such liens, rights, powers and remedies of Mortgagee shall continue unimpaired as before.
(g)      Mortgagee may terminate or rescind any proceeding or other action brought in connection with its exercise of the remedies provided in this Paragraph 10 at any time before the conclusion thereof, as determined in Mortgagee’s sole discretion and without prejudice to Mortgagee.
(h)      Mortgagee may resort to any remedies and the security given by this Security Instrument or in any other Loan Document in whole or in part, and in such portions and in such order as determined by Mortgagee’s sole discretion. No such action shall in any way be considered a waiver of any rights, benefits or remedies evidenced or provided by any Loan Document. The failure of Mortgagee to exercise any right, remedy or option provided in any Loan Document shall not be deemed a waiver of such right, remedy or option or of any covenant or obligation secured by any Loan Document. No acceptance by Mortgagee of any payment after the occurrence of any Event of Default and no payment by Mortgagee of any obligation for which

10

Borrower is liable hereunder shall be deemed to waive or cure any Event of Default, or Borrower’s liability to pay such obligation. No sale of all or any portion of the Property, no forbearance on the part of Mortgagee, and no extension of time for the payment of the whole or any portion of the Debt or any other indulgence given by Mortgagee to Borrower, shall operate to release or in any manner affect the interest of Mortgagee in the remaining Property or the liability of Borrower to pay the Debt. No waiver by Mortgagee shall be effective unless it is in writing and then only to the extent specifically stated. All costs and expenses of Mortgagee in exercising its rights and remedies under this Paragraph 10 (including reasonable attorneys’ fees and disbursements to the extent permitted by law), shall be paid by Borrower immediately upon notice from Mortgagee, with interest at the Default Rate for the period after notice from Mortgagee, and such costs and expenses shall constitute a portion of the Debt and shall be secured by this Security Instrument.
(i)      The interests and rights of Mortgagee under the Loan Documents shall not be impaired by any indulgence, including (i) any renewal, extension or modification which Lender may grant with respect to any of the Debt, (ii) any surrender, compromise, release, renewal, extension, exchange or substitution which Mortgagee may grant with respect to the Property or any portion thereof or (iii) any release or indulgence granted to any maker, endorser, guarantor or surety of any of the Debt.
11.      Right of Entry . In addition to any other rights or remedies granted under this Security Instrument, Mortgagee and its agents shall have the right to enter and inspect the Property at any reasonable time during business hours throughout the term of this Security Instrument, subject to the rights of tenants under Leases. Upon the occurrence and during the continuance of an Event of Default, the cost of any inspections or audits shall be borne by Borrower, including the actual cost of all follow up or additional investigations or inquiries deemed reasonably necessary by Mortgagee. The cost of such inspections, if not paid for by Borrower within ten (10) Business Days following written demand, may be added to the principal balance of the sums due under the Note and this Security Instrument and shall bear interest thereafter until paid at the Default Rate.
12.      Security Agreement . This Security Instrument is both a real property Security Instrument and a “security agreement” within the meaning of the UCC. The Property includes both real and personal property and all other rights and interests, whether tangible or intangible in nature, of Borrower in the Property. Borrower by executing and delivering this Security Instrument has granted and hereby grants to Mortgagee, as security for the Debt, a security interest in the Property to the full extent that the Property may be subject to the UCC (such portion of the Property so subject to the UCC being called in this paragraph the “ Collateral ”). This Security Instrument shall also constitute a “fixture filing” for the purposes of the UCC. As such, this Security Instrument covers all items of the Collateral that are or are to become fixtures. Information concerning the security interest herein granted may be obtained from the parties at the addresses of the parties set forth in the first paragraph of this Security Instrument. If an Event of Default shall occur and be continuing, Mortgagee, in addition to any other rights and remedies which it may have, shall have and may exercise immediately and without demand, any and all rights and remedies granted to a secured party upon default under the UCC, including, without limiting the generality of the foregoing, the right to take possession of the Collateral or any part thereof, and to take such

11

other measures as Mortgagee may deem necessary for the care, protection and preservation of the Collateral. During the continuance of an Event of Default, upon request or demand of Mortgagee, Borrower shall at its expense assemble the Collateral and make it available to Mortgagee at a convenient place in New York reasonably acceptable to Mortgagee. Borrower shall pay to Mortgagee within five (5) Business Days of promptly following written demand any and all expenses, including reasonable attorneys’ fees and disbursements, incurred or paid by Mortgagee in protecting the interest in the Collateral and in enforcing the rights hereunder with respect to the Collateral (but excluding special, punitive, or consequential damages, unless asserted against Borrower by a third party) . Any notice of sale, disposition or other intended action by Mortgagee with respect to the Collateral, sent to Borrower in accordance with the provisions hereof at least ten (10) Business Days prior to such action, shall constitute commercially reasonable notice to Borrower. The proceeds of any disposition of the Collateral, or any part thereof, may be applied by Mortgagee to the payment of the Debt in such priority and proportions as Mortgagee in its sole discretion shall deem proper. In the event of any change in name, identity or structure of Borrower, Borrower shall notify Mortgagee thereof and promptly after request shall execute, file and record such UCC forms as are necessary to maintain the priority of Mortgagee’s lien upon and security interest in the Collateral, and shall pay all expenses and fees in connection with the filing and recording thereof. If Mortgagee shall require the filing or recording of additional UCC forms or continuation statements, Borrower shall, promptly after request, execute, file and record such UCC forms or continuation statements as Mortgagee reasonably shall deem necessary, and shall pay all expenses and fees in connection with the filing and recording thereof, it being understood and agreed, however, that no such additional documents shall increase Borrower’s obligations or decrease Borrower’s rights under the Loan Documents. Borrower hereby irrevocably appoints Mortgagee as its attorney‑in‑fact, coupled with an interest, to file with the appropriate public office on its behalf any financing or other statements naming Mortgagee, as secured party, and Borrower, as debtor, in connection with the Collateral covered by this Security Instrument.
13.      Actions and Proceedings . Following the occurrence and during the continuance of an Event of Default, Mortgagee has the right to appear in and defend any action or proceeding brought with respect to the Property and to bring any action or proceeding, in the name and on behalf of Borrower, which Mortgagee, in its sole discretion, decides should be brought to protect its or their interest in the Property. To the extent permitted by applicable law, Mortgagee shall, at its option, be subrogated to the lien of any mortgage or other security instrument discharged in whole or in part by the Debt, and any such subrogation rights shall constitute additional security for the payment of the Debt.
14.      Marshalling and Other Matters . To the extent permitted by applicable law, Borrower hereby waives, to the extent permitted by law, the benefit of all appraisement, valuation, stay, extension, reinstatement and redemption laws now or hereafter in force and all rights of marshalling in the event of any sale hereunder of the Property or any part thereof or any interest therein. Further, to the extent permitted by applicable law, Borrower hereby expressly waives any and all rights of redemption from sale under any order or decree of foreclosure of this Security Instrument on behalf of Borrower, and on behalf of each and every person acquiring any interest in or title to the Property subsequent to the date of this Security Instrument and on behalf of all persons to the extent permitted by applicable law. The lien of this Security Instrument shall be

12

absolute and unconditional and shall not in any manner be affected or impaired by any acts or omissions whatsoever of Mortgagee and, without limiting the generality of the foregoing, the lien hereof shall not be impaired by (i) any acceptance by Mortgagee of any other security for any portion of the Debt, (ii) any failure, neglect or omission on the part of Mortgagee to realize upon or protect any portion of the Debt or any collateral security therefor or (iii) any release (except as to the property released), sale, pledge, surrender, compromise, settlement, renewal, extension, indulgence, alteration, changing, modification or disposition of any portion of the Debt or of any of the collateral security therefor; and Mortgagee may foreclose, or exercise any other remedy available to Mortgagee under other Loan Documents without first exercising or enforcing any of its remedies under this Security Instrument, and any exercise of the rights and remedies of Mortgagee hereunder shall not in any manner impair the Debt or the liens of any other Loan Document or any of Mortgagee’s rights and remedies thereunder.
15.      Notices . All notices, consents, approvals and requests required or permitted hereunder shall be in writing, and shall be sent, and shall be deemed effective, as provided in the Loan Agreement.
16.      Inapplicable Provisions . If any term, covenant or condition of this Security Instrument is held to be invalid, illegal or unenforceable in any respect, this Security Instrument shall be construed without such provision.
17.      Headings . The paragraph headings in this Security Instrument are for convenience of reference only and are not to be construed as defining or limiting, in any way, the scope or intent of the provisions hereof.
18.      Duplicate Originals . This Security Instrument may be executed in any number of duplicate originals and each such duplicate original shall be deemed to be an original.
19.      Definitions . Unless the context clearly indicates a contrary intent or unless otherwise specifically provided herein, words used in this Security Instrument may be used interchangeably in singular or plural form; and the word “ Borrower ” shall mean “each Borrower and any subsequent owner or owners of the Property or any part thereof or any interest therein,” the word “ Mortgagee ” shall mean “Mortgagee and any subsequent holder of the Note,” the words “ Property ” shall include any portion of the Property and any interest therein, the word “ including ” means “including but not limited to” and the words “ attorneys’ fees ” shall include any and all reasonable out-of-pocket attorneys’ fees, paralegal and law clerk fees, including fees at the pre‑trial, trial and appellate levels incurred or paid by Mortgagee in protecting its interest in the Property and Collateral and enforcing its rights hereunder.
20.      Homestead . Borrower hereby waives and renounces all homestead and exemption rights provided by the Constitution and the laws of the United States and of any state, in and to the Property as against the collection of the Debt, or any part thereof.

13

21.      Assignments . Mortgagee shall have the right to assign or transfer its rights under this Security Instrument without limitation in accordance with the terms of the Loan Agreement. Any assignee or transferee pursuant to the terms of the Loan Agreement, shall be entitled to all the benefits afforded Mortgagee under this Security Instrument.
22.      Waiver of Jury Trial . EACH OF BORROWER AND MORTGAGEE HEREBY WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, THE RIGHT TO TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM, WHETHER IN CONTRACT, TORT OR OTHERWISE, RELATING DIRECTLY OR INDIRECTLY TO THE LOAN EVIDENCED BY THE NOTE, THE APPLICATION FOR THE LOAN EVIDENCED BY THE NOTE, THIS SECURITY INSTRUMENT OR THE OTHER LOAN DOCUMENTS OR ANY ACTS OR OMISSIONS OF MORTGAGEE OR LENDER, ITS OFFICERS, EMPLOYEES, DIRECTORS OR AGENTS IN CONNECTION THEREWITH.
23.      Consents . Any consent or approval by Mortgagee in any single instance shall not be deemed or construed to be Mortgagee’s consent or approval in any like matter arising at a subsequent date, and the failure of Mortgagee to promptly exercise any right, power, remedy, consent or approval provided herein or at law or in equity shall not constitute or be construed as a waiver of the same nor shall Mortgagee be estopped from exercising such right, power, remedy, consent or approval at a later date. Any consent or approval requested of and granted by Mortgagee pursuant hereto shall be narrowly construed to be applicable only to Borrower and the matter identified in such consent or approval and no third party shall claim any benefit by reason thereof, and any such consent or approval shall not be deemed to constitute Mortgagee a venturer or partner with Borrower nor shall privity of contract be presumed to have been established with any such third party. If Mortgagee deems it to be in its best interest to retain assistance of persons, firms or corporations (including attorneys, title insurance companies, appraisers, engineers and surveyors) with respect to a request for consent or approval, Borrower shall reimburse Mortgagee for all costs reasonably incurred in connection with the employment of such persons, firms or corporations.
24.      Loan Repayment . Provided no Event of Default exists, this Security Instrument will be satisfied and discharged of record by Mortgagee prior to the Maturity Date only in accordance with the terms and provisions set forth in the Loan Agreement.
25.      Intentionally Omitted .
26.      Governing Law . THE LAWS OF THE STATE OF NEW YORK (WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF LAWS (OTHER THAN §§ 5-1401 AND 5-1402 OF THE NEW YORK GENERAL OBLIGATIONS LAW)) SHALL GOVERN ALL MATTERS RELATING TO THIS SECURITY INSTRUMENT AND THE OTHER LOAN DOCUMENTS AND ALL OF THE INDEBTEDNESS OR OBLIGATIONS ARISING HEREUNDER OR THEREUNDER PURSUANT TO SECTION 5-1401 OF THE NEW YORK GENERAL OBLIGATIONS LAW. ALL PROVISIONS OF THE LOAN AGREEMENT INCORPORATED HEREIN BY REFERENCE SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK (WITHOUT REGARD TO CONFLICT OF LAW PROVISIONS THEREOF) PURSUANT TO

14

SECTION 5-1401 OF THE NEW YORK GENERAL OBLIGATIONS LAW. EACH OF BORROWER AND ADMINISTRATIVE AGENT (A) AGREES THAT ANY SUIT, ACTION OR OTHER LEGAL PROCEEDING ARISING OUT OF OR RELATING TO THIS SECURITY INSTRUMENT MAY BE BROUGHT IN A COURT OF RECORD IN THE COUNTY WHERE THE PROPERTY IS LOCATED OR IN THE COURTS OF THE UNITED STATES OF AMERICA LOCATED IN SAID COUNTY, (B) CONSENTS TO THE JURISDICTION OF EACH SUCH COURT IN ANY SUCH SUIT, ACTION OR PROCEEDING AND (C) WAIVES ANY OBJECTION WHICH IT MAY HAVE TO THE LAYING OF VENUE OF ANY SUCH SUIT, ACTION OR PROCEEDING IN ANY OF SUCH COURTS AND ANY CLAIM THAT ANY SUCH SUIT, ACTION OR PROCEEDING HAS BEEN BROUGHT IN AN INCONVENIENT FORUM. EACH PARTY HERETO IRREVOCABLY CONSENTS TO THE SERVICE OF ANY AND ALL PROCESS IN ANY SUCH SUIT, ACTION OR PROCEEDING BY SERVICE OF COPIES OF SUCH PROCESS TO BORROWER AT ITS ADDRESS PROVIDED HEREIN.
27.      Exculpation . The liability of Borrower hereunder is limited pursuant to Section 11.22 of the Loan Agreement.
The following Sections 28 through 35, inclusive, relating to the laws of the State of New York, shall apply to this Security Instrument, notwithstanding any provision of this Security Instrument or of any other Loan Document to the contrary:

28.      Section 13 of the Lien Law . Pursuant to Section 13 of the Lien Law of New York (the “ Lien Law ”), Borrower shall receive the advances secured by this Security Instrument and shall hold the right to receive such advances as a trust fund to be applied first for the purpose of paying the “cost of improvement,” as such quoted term is defined and used in the Lien Law, and shall apply such advances first to the payment of such cost before using any part of the total of same for any other purpose. Borrower shall strictly comply with Section 13 of the Lien Law and shall indemnify and hold Mortgagee harmless against any and all loss, liability, actual out-of-pocket cost or expense, including, without limitation, any judgments, reasonable attorneys’ fees, costs of appeal bonds and printing costs, arising out of or relating to any proceeding instituted by any claimant alleging a violation by Borrower of the Lien Law, including, without limitation, any section of Article 3-A of the Lien Law, excluding consequential damages (except to the extent such consequential damages are owed by it to a third party).
29.      Section 291-f of the RPL . In addition to any other right or remedy contained in this Security Instrument or in any other Loan Document, Mortgagee shall have all of the rights against lessees of the Property, or any part(s) thereof, as are set forth in Section 291-f of the Real Property Law of New York, subject to the terms and conditions of the Loan Agreement. The clauses, covenants and conditions contained in this Security Instrument and in the other Loan Documents shall be construed as affording to Mortgagee rights additional to, and not exclusive of, the rights conferred under the provisions of said Section 291-f.

15

30.      Section 254, et al., of RPL . The clauses, covenants and conditions contained in this Security Instrument shall be construed as affording to Lender rights additional to, and not exclusive of, the rights conferred under the provisions of Sections 254, 271 and 272 of the New York Real Property Law, subject to the terms and conditions of the Loan Agreement. Without in any way limiting the foregoing, Borrower hereby specifically covenants and agrees, pursuant to Section 254.10 of the New York Real Property Law, that the holder of this Security Instrument, in any action to foreclose it, shall be entitled to the appointment of a receiver. In the event of any conflict, inconsistency or ambiguity between the provisions of this Security Instrument or the provisions of the other Loan Documents, on the one hand, and the provisions of subsection 4 of said Section 254, on the other hand, the provisions of this Security Instrument and the other Loan Documents shall control.
31.      Commercial Property . Borrower represents and warrants that this Security Instrument does not encumber real property principally improved or to be improved by one or more structures containing in the aggregate not more than six (6) residential dwelling units having their own separate cooking facilities.
32.      Payment of Transfer Taxes . Upon any foreclosure of this Security Instrument, any transfer in lieu of foreclosure, or any other applicable Transfer, Borrower shall pay (i) any New York State Real Estate Transfer Tax payable pursuant to Article 31 of the Tax Law of the State of New York (as the same may be amended, supplemented and/or replaced from time to time, the “ State Transfer Tax Law ”), and (ii) any New York City Real Property Transfer Tax payable pursuant to the applicable laws of the City of New York (as the same may be amended, supplemented and/or replaced from time to time, the “ City Transfer Tax Law ”), and, in default thereof, Mortgagee may pay the same and the amount of such payment, together with interest thereon at the Default Rate from the date of demand until paid, shall be added to the Debt and be secured by this Security Instrument. Borrower shall, at any time promptly upon written request therefor by Mortgagee, execute and deliver such affidavits, questionnaires and documents as may be necessary to enable Mortgagee to comply with the State Transfer Tax Law and/or the City Transfer Tax Law. Borrower hereby indemnifies and agrees to hold Mortgagee harmless from and against any loss, reasonable and actual out-of-pocket cost, damage and expense (including, without limitation, reasonable out-of-pocket attorneys’ fees) that Mortgagee may suffer or incur by reason of Borrower’s failure to comply with its obligations under this Section, excluding special, punitive or consequential damages (except to the extent such consequential damages are owed by it to a third party). The foregoing indemnity shall survive any termination of this Security Instrument, whether by foreclosure, deed in lieu of foreclosure, or otherwise.
33.      MAXIMUM AMOUNT SECURED . NOTWITHSTANDING ANY PROVISION SET FORTH IN THIS SECURITY INSTRUMENT TO THE CONTRARY, THE MAXIMUM AMOUNT OF PRINCIPAL INDEBTEDNESS SECURED BY THIS SECURITY INSTRUMENT AT EXECUTION, OR WHICH UNDER ANY CONTINGENCY MAY BECOME SECURED HEREBY AT ANY TIME HEREAFTER, IS TWO HUNDRED FIFTEEN MILLION FOUR HUNDRED SEVENTY FIVE THOUSAND NO/100 DOLLARS ($215,475,000.00), PLUS ALL INTEREST AND OTHER CHARGES PAYABLE UNDER THE NOTE AND ALL AMOUNTS EXPENDED IN ACCORDANCE WITH THIS SECURITY INSTRUMENT AND

16

THE LOAN AGREEMENT BY MORTGAGEE OR ANY LENDER AFTER DEFAULT BY BORROWER (A) FOR THE PAYMENT OF REAL ESTATE TAXES, CHARGES OR ASSESSMENTS WHICH ARE IMPOSED BY LAW UPON THE PROPERTY; (B) TO MAINTAIN THE INSURANCE REQUIRED TO BE MAINTAINED BY BORROWER PURSUANT TO THIS SECURITY INSTRUMENT AND THE OTHER LOAN DOCUMENTS; (C) FOR ANY EXPENSES INCURRED IN MAINTAINING THE PROPERTY AND UPHOLDING THE LIEN OF THIS SECURITY INSTRUMENT, INCLUDING, BUT NOT LIMITED TO, THE EXPENSE OF ANY LITIGATION TO PROSECUTE OR DEFEND THE RIGHTS AND LIEN CREATED BY THIS SECURITY INSTRUMENT; (D) FOR ANY AMOUNT, COST OR CHARGE TO WHICH LENDER BECOME SUBROGATED, UPON PAYMENT, WHETHER UNDER RECOGNIZED PRINCIPLES OF LAW OR EQUITY, OR UNDER EXPRESS STATUTORY AUTHORITY; AND ALSO TOGETHER WITH INTEREST ON ALL OF THE FOREGOING AMOUNTS IN CLAUSES (A) THROUGH (D) AT SUCH RATES AS PROVIDED FOR IN THE NOTE.
34.      Assignment of Mortgage . Mortgagee shall, upon the written request and at the expense of Borrower (for payment of the actual out-of-pocket fees and expenses of Mortgagee’s counsel to prepare necessary assignments and/or satisfactions), use commercially reasonable efforts to deliver an assignment of this Security Instrument (together with the Note and an allonge thereto (or an affidavit of lost note)) in lieu of a release or satisfaction hereof upon the payment of the Debt in full with cash, provided that other than containing a representation (A) that Mortgagee or any Lender shall not have previously transferred its rights under this Security Instrument or the Note, (B) that Mortgagee and each Lender’s interest therein is not currently encumbered, (C) that the signatory is authorized to execute and deliver such assignment on behalf of Mortgagee, and (D) of the outstanding principal balance of the Note, the instrument of assignment shall be without representation or warranty by, or recourse to, Mortgagee or any Lender, in any event whatsoever, and without limitation of the foregoing, Mortgagee shall have no obligation to execute a Section 275 Affidavit (whether as a separate affidavit or part of the instrument of assignment).
35.      Multiple Mortgages . This Security Instrument is intended to be senior and prior in lien to the Building Loan Security Instrument securing repayment of “Advances” (as such term is defined in the Building Loan Agreement) made pursuant to the Building Loan Agreement, all of which such “Advances” may be disbursed and advanced from time to time after the execution and delivery of such Building Loan Security Instrument.

[THE REMAINDER OF THE PAGE IS INTENTIONALLY BLANK]


17


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

 
BORROWER :

110 WILLIAM PROPERTY INVESTORS III, LLC
a Delaware limited liability company



By:     /s/ Christopher Schlank               
Name: Christopher Schlank
Title: Authorized Signatory



ACKNOWLEDGMENT

STATE OF NEW YORK        )
)    ss.:
COUNTY OF NEW YORK        )

On the 5th day of March in the year 2019, before me, the undersigned, a Notary Public in and for said State, personally appeared     Christopher Schlank         , personally known to me or proved to me on the basis of satisfactory evidence to be the individual whose name is subscribed to the within instrument and acknowledged to me that he executed the same in his capacity, and that by his signature on the instrument, the individual, or the person upon behalf of which the individual acted, executed the instrument.


/s/ Amy Miller        
Notary Public (SEAL)




[Signature Page to Senior Loan Consolidated, Amended and Restated Mortgage, Assignment of Leases and Rents and Security Agreement]

 
MORTGAGEE:

INVESCO CMI INVESTMENTS, L.P.,
a Delaware limited partnership

By: Invesco CMI Investments GP, LLC,
           a Delaware limited liability company,
           its general partner

By:     /s/ Paul Michaels               
Name: Paul Michaels
Title: Proper Officer



ACKNOWLEDGMENT

STATE OF TEXAS            )
)    ss.:
COUNTY OF DALLAS        )

On the 5th day of March in the year 2019, before me, the undersigned, a Notary Public in and for said State, personally appeared     Paul Michaels             , personally known to me or proved to me on the basis of satisfactory evidence to be the individual whose name is subscribed to the within instrument and acknowledged to me that he executed the same in his capacity, and that by his signature on the instrument, the individual, or the person upon behalf of which the individual acted, executed the instrument.


/s/ Omar Felipe        
Notary Public (SEAL)


2

Exhibit 10.11










THIS INSTRUMENT PREPARED BY
AND WHEN RECORDED RETURN TO:

Greenberg Traurig, P.A.
333 S.E. 2nd Avenue
Miami, Florida 33131
Attention: Richard J. Giusto, Esq.

 
 
(SPACE ABOVE THIS LINE FOR RECORDER’S USE)




110 WILLIAM PROPERTY INVESTORS III, LLC
(Mortgagor)

to

INVESCO CMI INVESTMENTS, L.P.
as administrative agent for the benefit of certain Lenders
(Mortgagee)


SENIOR LOAN GAP MORTGAGE



Dated:
March 7, 2019
 
 
 
 
Property Location:
110 William Street
New York, New York
New York County
 
 
 
 
Block:
77
 
Lot:
8
 



SENIOR LOAN GAP MORTGAGE

This SENIOR LOAN GAP MORTGAGE (this “ Mortgage ”), made as of March 7, 2019, by 110 WILLIAM PROPERTY INVESTORS III, LLC , a Delaware limited liability company, having an address at c/o Savanna, 430 Park Avenue, 12th Floor, New York, New York 10022 (“ Borrower ”), to INVESCO CMI INVESTMENTS, L.P. , a Delaware limited partnership, having an address at c/o Invesco Real Estate, 2001 Ross Avenue, Suite 3400, Dallas, Texas 75201, administrative agent for benefit of the Lenders (together with its successors and assigns, “ Mortgagee ”).
WITNESSETH, that to secure the payment of an indebtedness in the sum of TEN MILLION FOUR HUNDRED SEVENTY FIVE THOUSAND AND NO/100 DOLLARS ($ 10,475,000.00 ), lawful money of the United States of America, to be paid with interest thereon, according to a certain Senior Loan Gap Note, of even date herewith, made by Borrower, as maker, to Lender, as holder (the “ Gap Note ”) and pursuant to that certain Senior Loan Agreement between Borrower and Lender dated as of the date hereof (as amended, modified, restated, replaced or supplemented from time to time, the “ Loan Agreement ”), Borrower hereby irrevocably mortgages, grants, bargains, sells, conveys, transfers, pledges, sets over and assigns, and grants a security interest, to and in favor of Lender, WITH POWER OF SALE, subject to the terms and conditions of the Loan Agreement, all of Borrower’s right, title and interest in and to the land described in Exhibit “A” (the “ Premises ”), and the buildings, structures, fixtures and other improvements now or hereafter located thereon (the “ Improvements ”);

TOGETHER WITH, all right, title, interest and estate of Borrower now owned, or hereafter acquired, in and to the following property, rights, interests and estates (the Premises, the Improvements, and the property, rights, interests and estates hereinafter described are collectively referred to herein as the “ Property ”):
(a)    all easements, rights‑of‑way, strips and gores of land, streets, ways, alleys, passages, sewer rights, water, water courses, water rights and powers, air rights and development rights, rights to oil, gas, minerals, coal and other substances of any kind or character, and all estates, rights, titles, interests, privileges, liberties, tenements, hereditaments and appurtenances of any nature whatsoever, in any way belonging, relating or pertaining to the Premises and the Improvements; and the reversion and reversions, remainder and remainders, and all land lying in the bed of any street, road, highway, alley or avenue, opened, vacated or proposed, in front of or adjoining the Premises, to the center line thereof; and all the estates, rights, titles, interests, dower and rights of dower, curtesy and rights of curtesy, property, possession, claim and demand whatsoever, both at law and in equity, of Borrower of, in and to the Premises and the Improvements and every part and parcel thereof, with the appurtenances thereto;
(b)    all machinery, furniture, furnishings, equipment, computer software and hardware, fixtures (including all heating, air conditioning, plumbing, lighting, communications and elevator fixtures), inventory, materials, supplies and other articles of personal property and accessions thereof, renewals and replacements thereof and substitutions therefor, and other property of every kind and nature, tangible or intangible, owned by Borrower, or in which Borrower has or shall have an interest, now or hereafter located upon the Premises or the Improvements, or appurtenant thereto, and usable in connection with the present or future operation and occupancy of the Premises and the Improvements (hereinafter collectively referred to as the “ Equipment ”), including any leases of, deposits in connection with, and proceeds of any sale or transfer of any of the foregoing, and the right, title and interest of Borrower in and to any of the Equipment that may be subject to any “security interest” as defined in the Uniform Commercial Code, as in effect in the State where the Property is located (the “ UCC ”), superior in lien to the lien of this Mortgage. Notwithstanding



the foregoing, Equipment shall not include any property belonging to the Manager or tenants under Leases (as hereinafter defined) except to the extent that Borrower shall have any right or interest therein;
(c)    all awards or payments, including interest thereon, that may heretofore or hereafter be made with respect to the Premises or the Improvements, whether from the exercise of the right of eminent domain or condemnation (including any transfer made in lieu of or in anticipation of the exercise of such right), or for a change of grade, or for any other injury to or decrease in the value of the Premises or Improvements;
(d)    all leases and other agreements or arrangements heretofore or hereafter entered into affecting the use, enjoyment or occupancy of, or the conduct of any activity upon or in, the Premises or the Improvements, including any extensions, renewals, modifications or amendments thereof, in each case entered into by or on behalf of Borrower (or its predecessor in interest) (hereinafter collectively referred to as the “ Leases ”) all rents, additional rents, early termination fees or payments or other termination fees or payments, rent equivalents, moneys payable as damages (including payments by reason of the rejection of a Lease in a bankruptcy proceeding) or in lieu of rent or rent equivalents, subject to the terms of the applicable Leases, royalties (including all oil and gas or other mineral royalties and bonuses), income, fees, receivables, receipts, revenues, deposits (including security, utility and other deposits), accounts, cash, issues, profits, charges for services rendered, and other consideration of whatever form or nature received by or paid to or for the account of or benefit of Borrower or its agents or employees from any and all sources arising from or attributable to the Premises and the Improvements, including all receivables, customer obligations, installment payment obligations and other obligations now existing or hereafter arising or created out of the sale, lease, sublease, license, concession or other grant of the right of the use and occupancy of the Premises or the Improvements, or rendering of services by Borrower or any of its agents or employees, and proceeds, if any, from business interruption or other loss of income insurance (hereinafter collectively referred to as the “ Rents ”), together with all proceeds from the sale or other disposition of the Leases and the right to receive and apply the Rents to the payment of the Debt;
(e)    all proceeds of and any unearned premiums on any insurance policies covering the Property, including the right to receive and apply the proceeds of any insurance, judgments, or settlements made in lieu thereof, for damage to the Property;
(f)    the right, in the name and on behalf of Borrower, upon the occurrence and during the continuance of an Event of Default, to appear in and defend any action or proceeding brought with respect to the Property and to commence any action or proceeding to protect the interest of Mortgagee in the Property;
(g)    all accounts (including reserve accounts maintained by Borrower under the Loan Documents), escrows, documents, instruments, chattel paper, claims, deposits and general intangibles, as the foregoing terms are defined in the UCC, and all franchises, trade names, trademarks, symbols, service marks, books, records, plans, specifications, designs, drawings, surveys, title insurance policies, permits, consents, licenses, management agreements, contract rights (including any contract with any architect or engineer or with any other provider of goods or services for or in connection with any construction, repair or other work upon the Property), approvals, actions, refunds of real estate taxes and assessments (and any other governmental impositions related to the Property) and causes of action that now or hereafter relate to, are derived from or are used in connection with the Property, or the use, operation, maintenance, occupancy or enjoyment thereof or the conduct of any business or activities thereon (hereinafter collectively referred to as the “ Intangibles ”); and

2


(h)    all proceeds, products, offspring, rents and profits from any of the foregoing, including those from sale, exchange, transfer, collection, loss, damage, disposition, substitution or replacement of any of the foregoing.

Without limiting the generality of any of the foregoing, in the event that a case under the Bankruptcy Code is commenced by or against Borrower, pursuant to Section 552(b)(2) of the Bankruptcy Code, the security interest granted by this Mortgage shall automatically extend to all Rents acquired by Borrower after the commencement of the case and shall constitute cash collateral under Section 363(a) of the Bankruptcy Code.

TO HAVE AND TO HOLD the Property unto and to the use and benefit of Mortgagee and its successors and assigns, forever;

PROVIDED, HOWEVER, these presents are upon the express condition that, if Borrower shall well and truly pay to Mortgagee, for the benefit of Mortgagee the Debt at the time and in the manner provided in the Loan Documents and shall well and truly abide by and comply in all material respects, with each and every covenant and condition set forth in the Loan Documents in a timely manner (giving effect to any applicable grace, notice and cure periods), these presents and the estate hereby granted shall cease, terminate and be void; provided, that upon request by Borrower, Mortgagee shall, at Borrower’s sole cost and expense, execute and deliver for recording all customary documentation reasonably requested by Borrower to evidence such termination (including, without limitation, a recordable mortgage satisfaction or any other documentation required by a title company). Borrower shall pay all of Mortgagee’s reasonable attorney’s fees and disbursements incurred in connection with the aforesaid documentation;

AND Borrower represents and warrants to and covenants and agrees with Mortgagee as follows:
1. Payment of Debt and Incorporation of Covenants, Conditions and Agreements . Borrower shall pay the Debt at the time and in the manner provided in the Loan Documents. All the covenants, conditions and agreements contained in the Loan Documents are hereby made a part of this Mortgage to the same extent and with the same force as if fully set forth herein.
2.      Transfer or Encumbrance of the Property . Borrower shall not sell, convey, alienate, mortgage, encumber, pledge or otherwise transfer the Property or any part thereof, or suffer or permit any Transfer to occur in violation of the Loan Agreement.
3.      Taxation . Borrower will pay all taxes, assessments, sewer rents or water rates when same become due and payable, and in default thereof, Mortgagee may pay the same. Borrower shall not claim or demand or be entitled to any credit on account of the Debt for any part of the Taxes assessed against the Property, and no deduction shall otherwise be made or claimed from the assessed value of the Property for real estate tax purposes by reason of this Mortgage or the Debt.
4.      Improvements . Borrower represents that this Mortgage does not encumber real property principally improved or to be improved by one or more structures containing in the aggregate more than six residential dwelling units, each having its own separate cooking facilities.
5.      Right to Cure Defaults . During the continuance of any Event of Default, Mortgagee may, but without any obligation to do so and without notice to or demand on Borrower and without releasing Borrower from any obligation hereunder, perform the obligations in Default in such manner and to such extent as Mortgagee may deem necessary to protect the security hereof.

3


6.      Remedies . During the continuance of any Event of Default, Mortgagee may take such action, without notice or demand, as it deems advisable to protect and enforce its rights against Borrower and in and to the Property, by Mortgagee itself or otherwise, including declare the entire Debt to be immediately due and payable.
7.      Section 13 of the Lien Law . Pursuant to Section 13 of the Lien Law of New York (the “ Lien Law ”), Borrower shall receive the advances secured by this Mortgage and shall hold the right to receive such advances as a trust fund to be applied first for the purpose of paying the “cost of improvement,” as such quoted term is defined and used in the Lien Law, and shall apply such advances first to the payment of such cost before using any part of the total of same for any other purpose. Borrower shall strictly comply with Section 13 of the Lien Law and shall indemnify and hold Mortgagee and each Lender harmless against any and all loss, liability, actual out-of-pocket cost or expense, including, without limitation, any judgments, reasonable attorneys’ fees, costs of appeal bonds and printing costs, arising out of or relating to any proceeding instituted by any claimant alleging a violation by Borrower of the Lien Law, including, without limitation, any section of Article 3-A of the Lien Law, excluding consequential damages (except to the extent such consequential damages are owed by it to a third party). This Paragraph 7 shall apply to this Mortgage, notwithstanding any provision of this Mortgage or of any other Loan Document to the contrary.
8.      Governing Law . WITH RESPECT TO MATTERS RELATING TO THE CREATION, PERFECTION AND PROCEDURES RELATING TO THE ENFORCEMENT OF THIS MORTGAGE , THIS MORTGAGE SHALL BE GOVERNED BY, AND BE CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE IN WHICH THE PROPERTY IS LOCATED, IT BEING UNDERSTOOD THAT, EXCEPT AS EXPRESSLY SET FORTH ABOVE IN THIS SECTION AND TO THE FULLEST EXTENT PERMITTED BY THE LAW OF SUCH STATE, THE LAW OF THE STATE OF NEW YORK SHALL GOVERN ALL MATTERS RELATING TO THIS MORTGAGE AND THE OTHER LOAN DOCUMENTS AND ALL OF THE INDEBTEDNESS OR OBLIGATIONS ARISING HEREUNDER OR THEREUNDER. ALL PROVISIONS OF THE LOAN AGREEMENT INCORPORATED HEREIN BY REFERENCE SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK, AS SET FORTH IN THE GOVERNING LAW PROVISION OF THE LOAN AGREEMENT.
9.      Duplicate Originals . This Mortgage may be executed in any number of duplicate originals and each such duplicate original shall be deemed to be an original.
10.      Definitions .     Capitalized terms used but not defined herein shall have the meanings assigned thereto in the Loan Agreement.
[THE REMAINDER OF THE PAGE IS INTENTIONALLY BLANK]


4


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

 
BORROWER :

110 WILLIAM PROPERTY INVESTORS III, LLC
a Delaware limited liability company



By:     /s/ Christopher Schlank               
Name: Christopher Schlank
Title: Authorized Signatory




ACKNOWLEDGMENT

STATE OF NEW YORK        )
)    ss.:
COUNTY OF NEW YORK        )

On the 5th day of March in the year 2019, before me, the undersigned, a Notary Public in and for said State, personally appeared     Christopher Schlank         , personally known to me or proved to me on the basis of satisfactory evidence to be the individual whose name is subscribed to the within instrument and acknowledged to me that he executed the same in his capacity, and that by his signature on the instrument, the individual, or the person upon behalf of which the individual acted, executed the instrument.


/s/ Amy Miller            
Notary Public (SEAL)

[Signature Page to Senior Loan Gap Mortgage]

Exhibit 10.12
SENIOR LOAN GAP NOTE

$10,475,000.00    March 7, 2019
For value received, 110 WILLIAM PROPERTY INVESTORS III, LLC , a Delaware limited liability company, having an address at c/o Savanna, 430 Park Avenue, 12th Floor, New York, New York 10022 (“ Borrower ”), promises to pay to INVESCO CMI INVESTMENTS, L.P. , a Delaware limited partnership, at its at its address at c/o Invesco Real Estate, 2001 Ross Avenue, Suite 3400, Dallas, Texas 75201 (together with its successors and assigns “ Lender ”), or at such place as the holder hereof may from time to time designate in writing, the principal sum of TEN MILLION FOUR HUNDRED SEVENTY FIVE THOUSAND AND NO/100 DOLLARS ($10,475,000.00), in lawful money of the United States of America, with interest on the unpaid principal balance from time to time outstanding to be computed from the date hereof at the rate set forth in that certain Senior Loan Agreement, dated as of the date hereof, between Borrower and Lender (as the same may be amended, modified, supplemented, restated or replaced from time to time, the “ Loan Agreement ”).

IT IS HEREBY EXPRESSLY AGREED, that the said principal sum evidenced by this Senior Loan Gap Note (“ Note ”) shall become due at the option of the holder thereof on the happening of any event by which, under the terms of the Loan Agreement, said principal sum shall become due and payable; also, that all of the covenants, conditions and agreements contained in the Loan Agreement are hereby made part of this instrument.

Presentment for payment, notice of dishonor, protest and notice of protest are hereby waived.

This Note is secured by the Senior Loan Gap Mortgage made by Borrower to Lender, of even date herewith.

This Note may not be changed or terminated orally.

Section 11.3 of the Loan Agreement is hereby incorporated by reference herein.

If Borrower consists of more than one person or party, the obligations and liabilities of each such person or party shall be joint and several.

[THE REMAINDER OF THE PAGE IS INTENTIONALLY BLANK]




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

 
BORROWER :

110 WILLIAM PROPERTY INVESTORS III, LLC
a Delaware limited liability company



By:     /s/ Christopher Schlank               
Name: Christopher Schlank
Title: Authorized Signatory



[Signature Page to Senior Loan Gap Note]

Exhibit 10.13
PLEDGE AND SECURITY AGREEMENT
(110 William Street)
THIS PLEDGE AND SECURITY AGREEMENT (as amended, modified and supplemented and in effect, from time to time, this “ Agreement ”), dated as of March 7, 2019, is made by 110 WILLIAM MEZZ III, LLC , a Delaware limited liability company, having an address at c/o Savanna, 430 Park Avenue, 12th Floor, New York, New York 10022 (the “ Pledgor ”) in favor of INVESCO CMI INVESTMENTS, L.P. , a Delaware limited partnership with an address in c/o Invesco Real Estate, 2001 Ross Avenue, Suite 3400, Dallas, Texas 75201, as administrative agent, for the benefit of Lenders from time to time party to the Loan Agreement (as defined below) (together with its successors and assigns, the “ Lender ”).
R E C I T A L S:
A.    Lender, in its capacity as senior lender (“ Senior Lender ”), is making a (i) senior loan in the original principal amount of up to $215,475,000.00 (the “ Senior Loan ”) to 110 WILLIAM PROPERTY INVESTORS III, LLC , a Delaware limited liability company (“ Property Owner ”), to be advanced pursuant to that certain Senior Loan Agreement and other senior loan documents of even date herewith (the “ Senior Loan Documents ”) and (ii) building loan in the original principal amount of up to $45,900,000.00 (the “ Building Loan ” and together with Senior Loan, collectively, the “ Mortgage Loan ”) to Property Owner, to be advanced pursuant to that certain Amended and Restated Building Loan Agreement and other building loan documents of even date herewith (the “ Building Loan Documents ” and together with the Senior Loan Documents, collectively, the “ Mortgage Loan Documents ”).
B.    Pursuant to that certain Mezzanine Loan Agreement, dated as of the date hereof, between Pledgor , as borrower, and Lender, as lender (as same may hereafter be amended, restated, replaced, supplemented or otherwise modified, the “ Loan Agreement ”), Lender agreed to make a loan in the maximum principal amount of $87,125,000.00 (the “ Loan ”) to Pledgor. Capitalized terms used but not otherwise defined herein shall have the meanings given to such terms in the Loan Agreement.
C.    To secure Pledgor’s obligations under the Loan Documents, Lender has required Pledgor to, among other things, pledge, and by this Agreement Pledgor does pledge, to Lender all of Pledgor’s right, title and interest in, to and under the Collateral (as defined below).
NOW, THEREFORE, in consideration of the foregoing and in order to induce Lender to make the Loan, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, Pledgor hereby agrees for the benefit of Lender as follows:
ARTICLE I - GRANT OF SECURITY INTEREST; COLLATERAL
Section 1.1.      Collateral . As security for (i) the full and punctual payment of the Debt, whether such Debt or any portion thereof becomes due periodically, at stated maturity, by prepayment, declaration, acceleration, demand or otherwise (including, without limitation, the



payment of amounts that would become due but for the operation of the automatic stay under Section 362(a) of the Bankruptcy Code, 11 U.S.C. § 362(a), whether allowed or allowable as claims), and (ii) the performance of Pledgor’s other obligations under the Loan Agreement, this Agreement and the other Loan Documents (the obligations described in clauses (i) and (ii) of this Section 1.1 are herein, collectively, the “ Secured Obligations ”), Pledgor hereby grants, pledges, hypothecates, transfers and assigns to Lender a first priority and continuing lien on, and first priority security interest, in, and, in furtherance of such grant, pledge, hypothecation, transfer and assignment, hereby transfers and assigns to Lender as collateral security, all of Pledgor’s right, title, ownership, equity and other interests in and to the following, whether now owned or hereafter acquired, now existing or hereafter arising and wherever located (collectively, the “ Collateral ”):
(a)      One hundred percent (100%) of the limited liability company membership interests (whether now existing or hereafter acquired, the “ Pledged Equity ”) in and to Property Owner;
(b)      all rights, privileges, general intangibles, payments intangibles, voting rights, authority and power arising from Pledgor’s interest in the Pledged Equity;
(c)      the capital of Pledgor and any and all profits, losses, Distributions (as defined below), and allocations attributable to the Pledged Equity as well as the proceeds of any Distribution thereof, whether arising under the terms of any Organizational Agreement (as defined below) of the Property Owner or otherwise;
(d)      all other payments, if any, due or to become due, to Pledgor and all other present and future claims by Pledgor against the Property Owner in respect of the Pledged Equity, under or arising out of (i) any Organizational Agreement of the Property Owner, (ii) monies loaned or advanced, for services rendered or otherwise, (iii) any other contractual obligations, commercial tort claims, supporting obligations, damages, insurance proceeds, condemnation awards or other amounts due to Pledgor from the Property Owner or with respect to the Pledged Equity;
(e)      Pledgor’s claims, rights, powers, privileges, authority, options, security interests, liens and remedies, if any, under or arising out of the ownership of the Pledged Equity;
(f)      to the extent permitted by applicable law, Pledgor’s rights in the Property Owner pursuant to any Organizational Agreement of the Property Owner, or at law, to exercise and enforce every right, power, remedy, authority, option and privilege of Pledgor relating to the Pledged Equity, including, without limitation, the right following the occurrence and during the continuance of an Event of Default under the Loan Documents, to (i) execute any instruments and to take any and all other actions on behalf of and in the name of Pledgor in respect of the Pledged Equity, (ii) exercise any and all voting, consent, management and similar rights of Pledgor in or with respect to the Property Owner, (iii) exercise any election (including, but not limited to, election of remedies) or option or to give or receive any notice, consent, amendment, waiver or approval with respect to the Property Owner, (iv) enforce or execute any checks, or other instruments or orders of the Property Owner, and (v) file any claims and to take any action in connection with any of the foregoing, together with full power and authority to demand, receive, enforce and collect any of the foregoing or any property of the Property Owner;

Page 2


(g)      all Investment Property (as such term is defined in Section 9-102 of the UCC (as defined below), issued by or relating to the Property Owner, or otherwise relating to the Pledged Equity;
(h)      all other ownership and similar interests (“ Equity Interests ”) and other property, securities, and assets now existing or hereafter acquired by Pledgor relating to the Property Owner, including, without limitation, as a result of any consolidation, combinations, mergers, reorganizations, acquisitions, exchange offers, recapitalizations of any type, contributions to capital, splits, spin-offs, or similar actions or the exercise of options or other rights relating to the Pledged Equity;
(i)      to the extent not otherwise included above in this Section 1.1 , all assets and personal property of Pledgor, including, without limitation, all of Pledgor’s accounts, equipment, fixtures, inventory, goods, accessions, software, general intangibles, payment intangibles, deposit accounts, documents, instruments, money, chattel paper (whether electronic or intangible), investment property, letters of credit, letters of credit rights, supporting obligations, commercial tort claims, oil, gas and mineral rights (whether before extraction or as extracted collateral);
(j)      all partnership certificates, member certificates, stock certificates, or any other instrument, note, chattel paper or certificate (including, without limitation, all “certificated securities” within the meaning of Section 8-102 of the UCC) (whether or not qualifying as Investment Property) representing the Pledged Equity in the Property Owner and any interest of Pledgor in the entries on the books of any financial intermediary pertaining to such certificates or other documents or instruments, and all options and warrants for the purchase of any Equity Interests now or hereafter held in the name of, or acquired by, Pledgor (collectively, “ Certificated Securities ”), and all Certificated Securities in the Property Owner from time to time acquired by Pledgor in any manner, and any interest of Pledgor in the entries on the books of any financial intermediary pertaining to such Certificated Securities, and all securities convertible into and options, warrants, dividends, cash, instruments and other rights and options from time to time received, receivable or otherwise distributed in respect of or in exchange for any or all of such Certificated Securities (including, without limitation, all rights to request or cause the issuer thereof to register any or all of the Collateral under federal and state securities laws to the maximum extent possible under any agreement for such registration rights), and all put rights, tag-along rights and other rights pertaining to the sale or other transfer of such Collateral, together, in each case, with all rights under any Organizational Agreement of the Property Owner pertaining to such rights; and
(k)      (i) all “proceeds” (as such term is defined in Section 9-102 of the UCC) of any or all of the foregoing (whether cash or non-cash proceeds, including, without limitation, insurance proceeds), (ii) whatever is receivable or received when any of the Collateral is sold, collected, exchanged or otherwise disposed of, whether such disposition is voluntary or involuntary, and includes, without limitation, all rights to payment, including return premiums, with respect to any insurance relating thereto and also includes all interest, dividends and other property receivable or received on account of any of the Collateral or proceeds thereof, and in any event, shall include all Distributions or other income from any of the Collateral, all collections thereon or all Distributions with respect thereto, and (iii) all proceeds, products, accessions, rents, profits, income, benefits, substitutions and replacements of and to any of the Collateral. The inclusion of proceeds in the

Page 3


Collateral does not authorize Pledgor to sell, dispose of or otherwise use the Collateral in any manner not specifically permitted by the Loan Documents.
Section 1.2.      Definitions . As used herein, the following terms shall have the following respective meanings:
(a)      “ Distributions ” means all dividends, distributions, liquidation proceeds, cash, profits, instruments and other property and payments or economic benefits or interests to which Pledgor is entitled with respect to the Property Owner whether or not received by or otherwise distributed to Pledgor, whether such dividends, distributions, liquidation proceeds, cash, profits, instruments and other property and economic benefits are paid or distributed by the Pledged Equity in respect of operating profits, sales, exchanges, refinancing, condemnations or insured losses of the Property Owner’s assets, the liquidation of the Property Owner’s assets and affairs, management fees, guaranteed payments, repayment of loans, reimbursement of expenses or otherwise in respect of or in exchange for any or all of the Pledged Equity.
(b)      “ Organizational Agreement ” means, as to any Person, collectively, as applicable, the partnership agreement, the limited liability company operating agreement, and the articles or certificate of organization, by-laws, certificate of formation and other organizational and governing documents, in each case, of the applicable Person.
(c)      “ UCC ” means the Uniform Commercial Code, as in effect from time to time in the State of New York.
Section 1.3.      Perfection of Security Interest . On or before the date hereof (the “ Closing Date ”), Pledgor shall:
(a) deliver to Lender the Certificated Securities (substantially in the form attached hereto as Exhibit A ) representing all of the Pledged Equity duly endorsed or subscribed in blank, or accompanied by stock powers or other appropriate instruments of transfer endorsed in blank by Pledgor and ‑‑enter into such other arrangements as Lender deems necessary or advisable to give control of any Investment Property to Lender within the meaning of Section 8-106 of the UCC, all of which shall be in form and content acceptable to Lender;
(b) in addition to the provisions of Section 1.3 (a) above, deliver to Lender an assignment of membership interest (the “ Assignment of Interest ”), substantially in the form attached hereto as Exhibit B , transferring all of the Pledged Equity in blank, duly executed by Pledgor and undated;
(c) cause the Property Owner to execute and deliver the Agreement and Acknowledge of Pledge substantially in the form attached hereto as Exhibit C (the “ Property Owner Acknowledgement ”); and
(d) promptly take all other actions reasonably required or deemed advisable by Lender to perfect the security interest of Lender in the Collateral under applicable law, including, without limitation, filing UCC financing statements in favor of Lender relating to the Collateral.

Page 4


It is the intention of Pledgor and Lender that at all times while any portion of the Debt remains unpaid, the Pledged Equity shall constitute Investment Property, and, to that end, Pledgor shall take, and shall cause the Property Owner to take, all commercially reasonable action to obtain such classification pursuant to the UCC.
Section 1.4.      Continuing Security Interest . This Agreement shall create a continuing security interest in the Collateral and shall remain in full force and effect until the payment in full of the Debt.
Section 1.5.      Security Interest Absolute . All rights of Lender to the security interests granted to Lender hereunder, and all obligations of Pledgor hereunder, shall be absolute and unconditional, irrespective of:
(i)
any lack of validity or enforceability of any of the Loan Documents, including this Agreement, or
(ii)
the failure of Lender to assert any claim or demand or to enforce any right or remedy against the Property Owner or any other person (including Pledgor) under the provisions of any of the Loan Documents or otherwise; or
(iii)
any change in the time, manner or place of payment of, or in any other term of, any of the Secured Obligations; or
(iv)
any reduction, limitation, impairment or termination of any of the Secured Obligations for any reason, including any claim of waiver, release, surrender, alteration or compromise; or
(v)
any amendment to, rescission, waiver or other modification of, or any consent to or departure from, any of the terms of any of the Loan Documents; or
(vi)
any addition, exchange, release or surrender, or non-perfection of any security interest in, any collateral (including the Collateral) securing the Secured Obligations, or any amendment to or waiver or release of or addition to or consent to departure from any guaranty, for any of the Secured Obligations; or
(vii)
any other circumstance which might otherwise constitute a defense available to, or a legal or equitable discharge of, the Property Owner, any surety, any other obligor or any other debtor.
Section 1.6.      Waiver of Subrogation . To the extent permitted by law, Pledgor hereby irrevocably waives any claim or other right which it may now have or hereafter acquire against the Property Owner in connection with this Agreement or any other Loan Document, including any right of subrogation or reimbursement or any right to participate in any claim or remedy of the

Page 5


Lender against the Property Owner. If any amount shall be paid to Pledgor in violation of the preceding sentence and the Secured Obligations shall not have been finally paid and performed in full, such amount shall be deemed to have been paid to Pledgor for the benefit of, and held in trust for, Lender, and shall promptly be paid to Lender to be credited and applied, at Lender’s option, against the Secured Obligations, whether matured or unmatured in such order as Lender shall promptly determine.
ARTICLE II - POWERS OF PLEDGOR PRIOR TO AN EVENT OF DEFAULT
Section 2.1.      Distributions; Exercise of Pledgor’s Rights . Unless an Event of Default has occurred and is continuing, and subject to the terms of this Agreement and the other Loan Documents, Pledgor shall be conditionally entitled to (a) receive cash Distributions allocable to the Collateral, and (b) exercise (but only in a manner that will not (i) violate or be inconsistent with the terms hereof or of any other Loan Document or (ii) have the effect of impairing the position or interests of Lender) the voting, consent, administration, management and all other powers, rights and remedies of Pledgor with respect to the Collateral under the Organizational Agreements of the Property Owner (including all other rights and powers thereunder which are pledged hereunder or otherwise). If Pledgor shall become entitled to receive or shall receive from the Property Owner during the continuance of any Event of Default, (A) any non-cash Distribution as an addition to, on account of, in substitution of, or in exchange for the Collateral or any part thereof, or (B) any cash Distributions, then in each case, the same shall immediately be remitted to Lender (in the exact form received, with Pledgor’s endorsement or assignment or other instrument as Lender may deem appropriate) to be held as additional Collateral for the Secured Obligations or for application thereto, as applicable, and until so remitted, shall be received and held by Pledgor in trust for, and as agent for, Lender.
Section 2.2.      Termination of Pledgor’s Rights . Upon the occurrence and during the continuance of an Event of Default, all powers, rights and remedies of Pledgor, which are conditionally permitted pursuant to Section 2.1 hereof, shall cease and the provisions of Article 4 hereof shall apply, provided, however, upon any cure of such Event of Default accepted by Lender, the powers, rights and remedies of Pledgor under Section 2.1 shall be restored.
ARTICLE III - REPRESENTATIONS, WARRANTIES AND
COVENANTS OF PLEDGOR
Pledgor hereby covenants for Lender’s benefit, and represents and warrants to Lender as follows:
Section 3.1.      Percentage Ownership . The Pledged Equity constitutes, and shall at all times until the Debt is indefeasibly paid in full constitute, one hundred percent (100%) of the issued and outstanding membership and ownership interests in the Property Owner and Pledgor owns, and shall at all times in the future own until the Debt is indefeasibly paid in full, one hundred percent (100%) of the Pledged Equity. Pledgor does not have outstanding any options or similar rights or other agreements to acquire or sell or otherwise transfer all or any portion of any Pledged Equity.

Page 6


Section 3.2.      Title to Collateral . Pledgor validly acquired, and is the sole legal and beneficial owner, of the Collateral free and clear of all Liens except such Liens as are created pursuant to this Agreement and/or the other Loan Documents. Pledgor will have like title in, and the right to pledge, any other property at any time hereafter acquired by Pledgor and pledged to Lender as Collateral hereunder.
Section 3.3.      Defense of Title . Pledgor will, at its sole cost and expense subject to the terms of the Loan Agreement, (i) defend Lender’s right, title and interest in and to the Collateral against the claims and demands of all third Persons and (ii) take all actions as from time to time may be necessary or appropriate to preserve the Lien (and the first priority thereof) on the Collateral created pursuant to this Agreement.
Section 3.4.      No Transfer of Collateral . Except for the Transfer effected by this Agreement, Pledgor shall not Transfer the Collateral, or any portion thereof, or suffer or permit any Transfer thereof to occur except a Transfer expressly permitted by the terms of the Loan Agreement. Any purported Transfer made in violation of this Section 3.4 shall (i) be void and of no force and effect and (ii) constitute an immediate Event of Default without notice or opportunity to cure except as set forth in the Loan Agreement.
Section 3.5.      Perfected Security Interest . Giving effect to this Agreement, Lender has, with respect to all Collateral owned by Pledgor on the Closing Date, and will have with respect to any other property at any time hereafter acquired by Pledgor and pledged to Lender as Collateral hereunder, a valid, perfected and continuing first Lien upon, and security interest in, the Collateral and no other Person has any interest or right therein or claim with respect thereto.
Section 3.6.      No Financing Statements . Except for financing statements filed or to be filed in favor of Lender as secured party, or such other financing statements with Lender’s prior written consent, which may be withheld in Lender’s sole discretion, there are not now, and will not in the future be, and Pledgor will not authorize, consent or direct to be filed, any financing statements under the UCC covering any or all of the Collateral, and no such financing statements are, or will be, filed in any public office. This Section 3.6 remains subject to the terms and conditions of the Loan Agreement.
Section 3.7.      Certificated Securities . All of the Pledged Equity is issued in the form of Certificated Securities and such Certificated Securities have been duly and validly issued in the name of Pledgor. Pledgor has delivered to Lender all Certificated Securities constituting the Pledged Equity, duly indorsed in blank within the meaning of the UCC and otherwise in compliance with the terms of Section 1.3 hereof. The Certificated Securities have been in the physical possession of Pledgor at all times prior to such delivery to Lender. There are no Certificated Securities evidencing any Equity Interest in the Property Owner other than those evidencing the Pledged Equity, except for those certain certificates delivered pursuant to prior financings each of which has been marked as canceled. Pledgor covenants and agrees that it shall not permit the Property Owner to convert existing Equity Interests, or issue new Equity Interests. Notwithstanding the foregoing, Pledgor shall promptly notify Lender if any Equity Interest with respect to the Property Owner (whether now owned or hereafter acquired by Pledgor) is not evidenced by a Certificated Security, and Pledgor shall promptly thereafter take all actions required to perfect the security interest of Lender in such

Page 7


Pledged Equity under applicable law and otherwise take all actions required under Section 1.3 hereof in respect thereto.
Section 3.8.      Valid Issuance, Fully Paid and Non-Assessable, Etc . The Pledged Equity has been duly authorized and validly created and issued and is fully paid and non-assessable. Pledgor is not, and will not become, a party to or otherwise be or become bound by any agreement, other than this Agreement and the other Loan Documents, which restricts in any manner the rights of any present or future holder of any of the Pledged Equity with respect thereto. There are no setoffs, counterclaims or defenses with respect to the Collateral owned by Pledgor and no agreement, oral or written, has been made with any other Person under which any deduction or discount may be claimed with respect to such Collateral and, to Pledgor’s knowledge,‑‑ there is no fact or circumstance which would prohibit or prevent Pledgor from assigning to Lender, and granting to Lender a security interest in, the Collateral.
Section 3.9.      Organizational Agreements . Attached hereto as Schedule 3.9 is a list of all of the Organizational Agreements of the Property Owner. The Organizational Agreements of the Property Owner are in full force and effect and have not been modified or amended except as listed on Schedule 3.9 hereto. Pledgor has delivered all Organizational Agreements of Property Owner to Lender as of the date hereof. Pledgor is not in default of any of its obligations under the Organizational Agreements of the Property Owner or of Pledgor. Pledgor shall not allow the Property Owner to (a) amend any provision of its Organizational Agreements, except to the extent expressly permitted by the Loan Agreement, (b) dissolve, liquidate, wind-up, merge or consolidate with any other Person, or (c) Transfer any of its assets or properties to any Person except to the extent expressly permitted by the Loan Documents. The Organizational Agreements of the Property Owner provide that (i) all owners of Equity Interests therein are authorized to pledge and assign all Equity Interests to Lender, and that such pledge and assignment shall include all voting, management and control rights and is not limited to economic rights; (ii) neither the exercise by Lender of any right or remedy under the Loan Documents, including, foreclosure of the Pledged Equity, nor the transfer to Lender or its successor or assign of title to the Pledged Equity, shall constitute a default or breach, or give rise to any right of first refusal or option to purchase under the Organizational Agreements of the Property Owner or any other Person; (iii) until the Debt is paid in full: (A) no owners of Equity Interests in the Property Owner shall be entitled to withdraw as a member from the Property Owner or assign, encumber, or convey any interest in the Property Owner (except in favor of Lender pursuant to the Loan Documents); (B) no Equity Interests in the Property Owner shall be created, issued, redeemed, exchanged, diluted or modified; (C) the Property Owner shall not be dissolved, either voluntarily or as the result of the withdrawal or removal of any owners of Equity Interests in the Property Owner; and (D) the Organizational Agreements of Property Owner shall not be modified or terminated except to the extent expressly permitted by the Loan Agreement; (iv) the Pledged Equity is and shall continue to be governed by Article 8 of the UCC; and (v) upon realization of the Equity Interests by Lender pursuant to the Loan Documents, Lender has the right to terminate (without the payment of any money and without any other restriction, condition precedent or condition subsequent) all non-member managers, managing members, officers, directors and other Persons capable of acting on behalf of the Property Owner except as set forth in the Loan Agreement.

Page 8


Section 3.10.      Authority, Enforceability, Etc . The execution, delivery and performance of this Agreement by Pledgor will not cause a violation of or a default under the Organizational Agreements of Pledgor or of the Property Owner. The execution and delivery of this Agreement and the performance of Pledgor’s obligations hereunder will not, to Pledgor’s knowledge, conflict with or result in a breach of the terms or provisions of any (i) Legal Requirement, (ii) agreement to which Pledgor or the Property Owner is a party or by which any of their respective assets are bound, or (iii) judgment, decree, arbitration award, or pending litigation to which Pledgor or the Property Owner is subject. To Pledgor’s knowledge, no approval by, authorization or consent of, or filing with any governmental authority or any other Person is necessary in connection with the execution, delivery and performance by Pledgor of this Agreement, or if such approval, authorization, or consent is necessary, it has been obtained and written evidence thereof has been delivered to Lender. This Agreement constitutes the valid and legally binding obligations of Pledgor and is fully enforceable against Pledgor in accordance with its terms, subject to the effects of bankruptcy, insolvency, reorganization, moratorium or similar laws affecting the enforcement of creditors’ rights generally and limitations imposed by general principles of equity.
Section 3.11.      Taxes . Pledgor will, from time to time, timely pay and discharge (or cause to be paid or discharged) all taxes, assessments and other governmental charges imposed upon the Collateral or any part thereof or upon the income or profits therefrom, and also all taxes, assessments and other governmental charges imposed upon the lien or interest of Lender under this Agreement or in respect of the Collateral.
Section 3.12.      Principal Place of Business, Etc . Pledgor does not use and will not use any trade name and has not done and will not do business under any name other than its actual name set forth herein. The principal place of business of Pledgor is c/o Savanna, 430 Park Avenue, 12th Floor, New York, New York 10022 and Pledgor does not have any other place of business. The jurisdiction of formation of Pledgor is set forth in the signature block of Pledgor. No change has been, or will be made, in the jurisdiction of formation or place of business of Pledgor, without the prior written consent of Lender, which consent shall not be unreasonably withheld, conditioned or delayed.
Section 3.13.      Irrevocable Proxy Regarding Article 8 Matters . Solely with respect to Article 8 Matters (as defined below) and irrespective of whether or not an Event of Default has occurred and is continuing, Pledgor hereby irrevocably grants and appoints Lender, from the date of this Agreement until the termination of this Agreement in accordance with its terms, as Pledgor’s true and lawful proxy, for and in Pledgor’s name, place and stead to vote the Pledged Equity, whether directly or indirectly, beneficially or of record, now owned or hereafter acquired, with respect to Article 8 Matters. The proxy granted and appointed in this Section 3.13 shall include, without limitation, the right to sign Pledgor’s name (as a member of the Property Owner) to any consent, certificate or other document relating to an Article 8 Matter and the Pledged Equity that applicable law may permit or require, to cause the Pledged Equity to be voted in accordance with the terms of this Section 3.13 . Pledgor hereby represents and warrants that Pledgor has not granted any proxies or powers of attorney with respect to Article 8 Matters or otherwise with respect to the Pledged Equity, other than those granted to Lender hereunder or under the other Loan Documents and those granted in connection with prior financings. Pledgor will not give a subsequent proxy or power of attorney or enter into any voting agreement with respect to the Pledged Equity or any

Page 9


Article 8 Matter and any attempt to do so shall be void and of no force or effect. The proxy granted and appointed in this Section 3.13 is (i) coupled with an interest and shall be effective, automatically and without the necessity of any action by any Person (including, without limitation, any transfer of any Pledged Equity on the record books of the Property Owner), and (ii) in addition to the proxy granted and appointed pursuant to Section 4.8 of this Agreement.
As used herein, “ Article 8 Matter ” means any action, decision, determination or election by Property Owner or its member(s) that its membership interests or other equity interests, or any of them, be, or cease to be, a “security” as defined in and governed by Article 8 of the UCC, and all other matters related to any such action, decision, determination or election.
ARTICLE IV - EVENT OF DEFAULT/REMEDIES
Section 4.1.      Event of Default . As used in this Agreement, an “ Event of Default ” shall mean the occurrence of any one or more of the following:
(a)      any failure in the observance or performance by Pledgor of any of its obligations, covenants or duties hereunder beyond the applicable cure period, or if no cure period is stated, for ten (10) days after written notice to Pledgor from Lender, in the case of any failure which can be cured by the payment of a sum of money, or for thirty (30) days after written notice from Lender in the case of any other Default; provided, however, that if such non-monetary failure is susceptible of cure but cannot reasonably be cured within such thirty (30) day period and provided, further, that Pledgor shall have commenced to cure such failure within such thirty (30) day period and thereafter diligently and expeditiously proceeds to cure the same, such thirty (30) day period shall be extended for such time as is reasonably necessary for Pledgor in the exercise of due diligence to cure such failure, such additional period not to exceed ninety (90) days; or
(b)      any representation or warranty made herein proves to be false or misleading in any material respect provided, that if such misrepresentation was not knowingly made by Pledgor and is capable of being cured and such misrepresentation did not result in a Material Adverse Effect, then Pledgor shall have the right to cure such matter within the applicable notice and cure periods set forth in (a) above; or
(c)      the occurrence of an Event of Default as defined in the Loan Agreement.
Section 4.2.      Transfer Rights . Upon the occurrence of, and during the continuance of, an Event of Default, Lender shall have the right, at any time and from time to time, in its discretion, in addition to all other rights and remedies under this Agreement, the other Loan Documents and the UCC and applicable Legal Requirements, to effect the Transfer of any or all of the Collateral in any one or more of the following ways:
(a)      Register all or any part of the Collateral in the name of, or Transfer all or any part of the Collateral to, Lender, a nominee or nominees, or designee or designees, of Lender (including, without limitation, deposit any and all of the Collateral to Lender with any committee, depository, transfer agent, registrar or other designated agency upon such terms and conditions as Lender may determine); or

Page 10


(b)      Sell, resell, assign and deliver any or all of the Collateral or any other security for the Secured Obligations (whether in whole or in part and at the same or different times) and all right, title and interest, claim and demand therein and right of redemption thereof, at public or private sale, for cash or upon credit (by Lender only), in accordance with the applicable procedures specified in Section 5 hereof.
Section 4.3.      Voting Rights, Receipt of Distributions, Etc . Upon the occurrence of, and during the continuance of, an Event of Default, Lender may, in its discretion, from time to time, exercise, either by itself or by its nominee or designee, in the name of Pledgor, the rights, powers and remedies granted to Lender hereunder and under the other Loan Documents in respect of the Collateral at any time prior to effecting the Transfer of such Collateral to Lender or its nominee or designee, or any third Person purchasers. Such rights and remedies shall include, without limitation, the right to (a) exercise all voting, consent, managerial and other rights relating to the Pledged Equity, whether in Pledgor’s name or otherwise, including, without limitation, the right to appoint officers, directors, managers and other similar positions and to terminate any Person acting in such capacity, (b) demand, sue for, receive and collect all Distributions and make application thereof to the Debt in such order of priority as Lender shall elect, and (c) exercise Pledgor’s rights, if any, of conversion, exchange, or subscription, or any other rights, privileges or options pertaining to any of the Pledged Equity, including, without limitation, the right to exchange, in Lender’s discretion, any and all of the Pledged Equity upon the merger, consolidation, reorganization, recapitalization or other readjustment of the Property Owner. Each of the rights, powers and remedies exercised by Lender under this Section 4.3 shall be without liability to Lender, except to account for property actually received by Lender. Pledgor hereby irrevocably authorizes and directs the Property Owner, on receipt by Property Owner of written notice from Lender to such effect, to deem and treat Lender or its nominee in all respects as a member (and not merely an assignee of a member) of the Property Owner, entitled to exercise all the rights, powers and privileges thereof, to receive all Distributions, to be credited with the capital account and to have all other rights, powers and privileges pertaining to the Pledged Equity to which Pledgor would have been entitled had Pledgor not executed this Agreement. Pledgor agrees to take all such actions and to execute all such documents as may be requested by Lender or that may otherwise be appropriate to give effect to Lender’s rights under this Section 4.3 .
Section 4.4.      Certain Additional Rights and Remedies . Upon the occurrence of, and during the continuance of, an Event of Default, Lender may, at its discretion, from time to time, without notice to, or consent of, Pledgor or any other Person (to the extent permitted by applicable law), but without affecting any of the Secured Obligations, in the name of Pledgor or in the name of Lender: (a) notify any Person to make payment and performance directly to Lender rather than Pledgor, (b) extend the time of payment and performance of, compromise or settle for cash, credit or otherwise, and upon any terms and conditions, any obligations owing to Pledgor, or claims of Pledgor under any Organizational Agreement of the Property Owner, (c) file any claims, commence, maintain or discontinue any actions, suits or other proceedings deemed by Lender necessary or advisable for the purpose of collecting upon or enforcing any Organizational Agreement of the Property Owner, and (d) execute any instrument and do all other things deemed necessary or advisable by Lender to protect and preserve and realize upon the Collateral or any portion thereof and the other rights contemplated hereby. In addition, Lender shall have the right, in its discretion, at any time upon the occurrence and during the continuance of an Event of Default and without

Page 11


notice to Pledgor, to transfer the Collateral to any Person to whom the Pledged Interests may be transferred in accordance with the provisions of this Agreement.
Section 4.5.      Lender Self-Help Rights .
(a)      Upon the occurrence of, and during the continuance of, an Event of Default, Lender shall have the right, but not the obligation, to take any appropriate action as it may deem necessary or advisable to (i) cure any Event of Default, (ii) cause any term, covenant, condition or obligation required under this Agreement or under any other Loan Document to be promptly performed or observed on behalf of Pledgor or the Property Owner or (iii) protect the Collateral and any property or assets of the Property Owner.
(b)      Lender shall not be obligated to perform or discharge any obligation of Pledgor or the Property Owner as a result of this Agreement or any other Loan Document. The acceptance by Lender of this Agreement shall not at any time or in any event obligate Lender to (i) appear in or defend any action or proceeding relating to the Collateral to which it is not a party, or (ii) take any action hereunder or thereunder, or expend any money or incur any expenses or perform or discharge any obligation, duty or liability under the Collateral.
Section 4.6.      UCC Remedies, Etc . Upon the occurrence of, and during the continuance of, an Event of Default, Lender may (i) exercise any and all of the rights and remedies of a secured party under the UCC and (ii) exercise any and all other rights and remedies that may be available to Lender at law and/or in equity.
Section 4.7.      Power of Attorney .
(a)      Without limiting any rights or powers granted to Lender while no Event of Default is continuing, Pledgor hereby irrevocably authorizes and empowers Lender, and its assigns and transfers to Lender, and constitutes and appoints Lender and its assigns, Pledgor’s true and lawful attorney-in-fact and as its agent with full power of substitution to, upon the occurrence of, and during the continuance of, an Event of Default (i) proceed from time to time in Pledgor’s name, in order to more fully vest in Lender all of the rights, powers and remedies provided for in this Agreement, including, without limitation, those rights, powers and remedies specified in Article 4 and Article 5 hereof and (ii) otherwise accomplish the purposes of this Agreement.
(b)      Lender and any of its assigns, or their respective nominees, may, to the extent permitted by applicable law, either pursuant to the aforementioned power-of-attorney or otherwise, take any action and execute any instrument that Lender determines necessary or advisable to accomplish any of the matters contemplated by Section 4.7(a)(i) and/or Section 4.7(a)(ii) hereof, including without limitation: (i) execute and file proofs of claim with respect to any or all of the Collateral against the Property Owner and vote such claims with respect to all or any portion of such Collateral (A) for or against any proposal or resolution, (B) for a trustee or trustees or for a receiver or receivers or for a committee of creditors, and/or (C) for the acceptance or rejection of any proposed arrangement, plan of reorganization, composition or extension; (ii) receive, endorse and collect all drafts, checks and other instruments for the payment of money made payable to Pledgor representing any interest, payment of principal or other distribution payable in respect of

Page 12


the Collateral; (iii) execute endorsements, assignments or other instruments of conveyance or transfer in respect of any property which currently is, or may become, a part of the Collateral hereunder; and (iv) execute releases and negotiate settlements, as appropriate, including on account of, or in exchange for, any or all of the Collateral, or any payment or distribution received by Pledgor, or Lender on Pledgor’s behalf.
(c)      The foregoing power-of-attorney is irrevocable and coupled with an interest, and any similar or dissimilar powers previously given by Pledgor in respect of the Collateral or the Property Owner to any Person other than Lender are hereby revoked. The power-of-attorney granted herein shall terminate automatically upon the termination of this Agreement in accordance with the terms hereof.
Section 4.8.      Irrevocable Proxy During Event of Default . Without limiting the other terms and provisions of this Agreement, Pledgor hereby irrevocably grants and appoints Lender, from the date of this Agreement until the termination of this Agreement in accordance with its terms, as Pledgor’s true and lawful proxy, for and in Pledgor’s name, place and stead to vote the Pledged Equity, whether directly or indirectly, beneficially or of record, now owned or hereafter acquired, with respect to any and all matters that Pledgor is, or may in the future become, entitled to vote upon, provided , that , in all cases, the proxy granted and appointed in this Section 4.8 may only be exercised by Lender upon the occurrence and during the continuance of an Event of Default. The proxy granted and appointed in this Section 4.8 (i) shall include, without limitation, the right to sign Pledgor’s name (as a member of the Property Owner) to any consent, certificate or other document relating to the Pledged Equity that applicable law may permit or require, to cause the Pledged Equity to be voted in accordance with the terms of this Section 4.8 , (ii) is coupled with an interest and shall be effective, automatically and without the necessity of any action by any Person (including, without limitation, any transfer of any Pledged Equity on the record books of the Property Owner) upon the occurrence and during the continuance of an Event of Default, and (iii) in addition to the proxy granted and appointed pursuant to Section 3.13 of this Agreement.
Section 4.9.      Remedies Cumulative, Etc . The obligations of Pledgor under this Agreement shall be absolute and unconditional and shall remain in full force and effect without regard to, and shall not be released, suspended, discharged, terminated or otherwise affected by, any circumstances or occurrence except as specifically provided in this Agreement. The rights, powers and remedies of Lender under this Agreement and the other Loan Documents shall be cumulative and not exclusive of, and shall not be conditioned or contingent on the pursuit by Lender of, any other right, power or remedy which Lender may have against Pledgor or any other Person liable for, and/or that pledged collateral to secure, the Secured Obligations or any portion thereof whether pursuant to this Agreement, the other Loan Documents, existing at law or in equity or otherwise. Lender’s rights, powers and remedies may be pursued singly, concurrently or otherwise, at such time and in such order as Lender may determine in Lender’s discretion. Lender shall have no duty to exercise any of the aforesaid rights, powers and remedies and shall not be responsible for any failure to do so or delay in so doing.
Section 4.10.      Waiver of Notice . Pledgor hereby waives notice of acceptance hereof, and except as otherwise specifically provided herein, Pledgor hereby waives any and all notices or

Page 13


demands with respect to any exercise by Lender of any rights, powers or remedies which Lender may have or to which Lender may be entitled with respect to the Collateral.
Section 4.11.      Legal Requirements; Waiver by Pledgor . The exercise by Lender of any right, power or remedy under this Agreement shall be subject to applicable provisions of any applicable statutes and laws if and only to the extent that any such provisions cannot, in accordance applicable law, be waived. In each case where there exists no prohibition, under applicable law, on Pledgor waiving such provisions, Pledgor hereby waives the applicability and benefit of such provisions in respect to Lender exercising its rights, powers and remedies under this Agreement.
ARTICLE V - SALE OF THE COLLATERAL
Section 5.1.      Certain Matters Relating to the Sale of Collateral . In connection with any sale or other disposition of all or any part of the Collateral pursuant to the terms of this Agreement, Lender may grant options and may impose reasonable conditions and requirements, including, without limitation, requiring that (i) any purchaser represent that any “securities” constituting any part of the Collateral are being purchased for its own account for investment only and not with a view to distribution or resale thereof and (ii) any purchaser be eligible to acquire the Collateral under the Mortgage Loan Documents and the Intercreditor Agreement. If all or any of the Collateral is sold at any sale by Lender to a third Person upon credit, Lender shall not be liable for the failure of the purchaser to purchase or pay for the same and, in the event of any such failure, Lender may resell such Collateral. It is expressly agreed that Lender may exercise its rights with respect to less than all of the Collateral, leaving unexercised its rights with respect to the remainder of the Collateral; provided , however , that such partial exercise shall in no way restrict or jeopardize Lender’s right to exercise its rights with respect to the remaining Collateral at a later time or times. To the extent permitted under applicable law, Pledgor hereby waives and releases any and all rights of redemption with respect to the sale of any Collateral.
Section 5.2.      Sale Procedures . No demand, advertisement or notice shall be required in connection with any sale or other disposition of all or any part of the Collateral pursuant to the terms of this Agreement, except that Lender shall give Pledgor at least ten (10) days’ prior written notice of the time and place of any public sale or of the time and the place at which any private sale or other disposition is to be made, which notice Pledgor hereby acknowledges and agrees is reasonable. All other demands, advertisements and notices are hereby waived by Pledgor. The notice of such sale shall (a) in case of a public sale, state the time and place fixed for such sale, (b) in case of a sale at a broker’s board or on a securities exchange, state the board or exchange at which such sale is to be made and the day on which the Collateral, or the portion thereof so being sold, first will be offered for sale at such board or exchange and (c) in the case of a private sale, state the date after which such sale may be consummated. Any public sale shall be held at such time or times within ordinary business hours and at such place or places as Lender may fix in the notice of such sale.
Section 5.3.      Adjournment; Credit Sale . Lender shall not be obligated to make any sale of the Collateral if it shall determine not to do so, regardless of the fact that notice of sale may have been given, and Lender may without notice or publication adjourn any public or private sale, and such sale may, without further notice, be made at the time and place to which the same was so adjourned. Upon any sale of all or any portion of the Collateral, Lender (or its nominee or designee)

Page 14


may purchase all or any portion of the Collateral being sold, free and clear of, and discharged from, any trusts, claims, equity or right of redemption of Pledgor, all of which are hereby waived and released by Pledgor to the fullest extent permitted by law, and may make payment therefor by credit against any of the Secured Obligations in lieu of cash or any other obligations.
Section 5.4.      Expenses of Sale . In the case of any sale or other disposition of all or any part of the Collateral pursuant to the terms of this Agreement, Pledgor shall be responsible for the payment of all reasonable costs and expenses of every kind in any way relating to the sale and delivery of the Collateral and in any way relating to the preparation for and processing of such sale, including, without limitation, reasonable out-of-pocket brokers’ fees and expenses, Lender’s reasonable attorneys’ fees and disbursements and any and all taxes (or similar impositions) of any kind imposed on, or relating to, the sale of the Collateral (collectively, the “ Sale Expenses ”). The proceeds of the sale of the Collateral shall be available to cover such Sale Expenses, and, after deducting such Sale Expenses from the proceeds of the sale, Lender shall apply any remaining amounts in the manner set forth in Section 5.9 hereof.
Section 5.5.      Private Sale . Lender shall not incur any liability as a result of the sale of the Collateral, or any part thereof, at any private sale pursuant to this Agreement conducted in a commercially reasonable manner, it being agreed upon and understood by Pledgor that some or all of the Collateral is or may be of one or more types that threaten to decline speedily in value and that are not customarily sold in a recognized market. Pledgor hereby waives any claims against Lender arising by reason of the fact that the price at which the Collateral may have been sold at such a private sale was less than the price which might have been obtained at a public sale or was less than the aggregate amount of the Debt, even if Lender accepts the first offer received and does not offer the Collateral to more than one potential offeree.
Section 5.6.      Securities Laws .
(a)      Pledgor recognizes that, by reason of certain prohibitions contained in the Securities Act of 1933, as amended (the “ Securities Act ”), Lender may be compelled, with respect to any sale of all or any part of the Collateral, to limit purchasers to those who will agree, among other things, to acquire the Collateral for their own account, for investment and not with a view to the distribution or resale thereof (the “ Securities Limitation ”). Pledgor acknowledges that any such sales may be at prices and on terms, in each case, less favorable to Lender than those obtainable through a sale without the Securities Limitation and that Lender shall have no obligation to delay any sale of the Collateral for the period of time necessary to permit the issuer thereof to register it for public sale. Pursuant to Section 9-603 of the UCC, Pledgor agrees that the applicability of the Securities Limitation in respect of any foreclosure sale of the Collateral shall not cause such sale to not be commercially reasonable; provided, that for the avoidance of doubt, Lender acknowledges that none of Pledgor, any other Mezzanine Borrower or Guarantor shall have any liability to Lender in connection with any foreclosure by Lender in violation of any such agreement between Lender and Senior Lender.

Page 15


(b)      Pledgor is aware that Section 9-610(c) of the UCC may restrict Lender’s ability to purchase the Collateral at a private sale. Pledgor is also aware that Securities and Exchange Commission (the “ SEC ”) staff personnel have, over a period of years, issued various No-Action Letters that describe procedures which, in the view of the SEC staff, permit a foreclosure sale of securities to occur in a manner that is public for purposes of Part 6 of Article 9 of the UCC, yet not public for purposes of Section 4(2) of the Securities Act. Pledgor is also aware that Lender may wish to purchase the Pledged Equity or any portion thereof that is sold at a foreclosure sale, and Pledgor believes and agrees that such purchases would be appropriate in circumstances in which such interests are sold in substantial conformity with the principles set forth in such No-Action Letters. Section 9-603 of the UCC permits Pledgor to agree on the standards for determining whether Lender has complied with its obligations under Section 9-610 of the UCC. Pursuant to Section 9-603 of the UCC, Pledgor specifically agrees that a foreclosure sale conducted in substantial conformity with the principles set forth in such No-Action Letters (a) shall be considered to be a “public disposition” for purposes of Section 9-610(c) of the UCC; (b) will be considered commercially reasonable notwithstanding that Lender has not registered or sought to register the interests under the Securities Act, even if Pledgor or the Property Owner agree to pay, or reimburse Lender for, all costs of the registration process; and (c) shall be considered to be commercially reasonable, notwithstanding that Lender purchases such interests at such a sale.
Section 5.7.      Limitation on Sale to Only Eligible Purchasers . Pledgor recognizes that, by reason of certain provisions of, respectively, the Mortgage Loan Documents and the Intercreditor Agreement, Lender may be compelled, with respect to any sale of all or any part of the Collateral, to limit prospective purchasers to those who are, among other things, eligible under the terms of the Mortgage Loan Documents and the Intercreditor Agreement to acquire the Pledged Equity (the “ Eligible Purchaser Limitation ”). Pledgor acknowledges that the Eligible Purchaser Limitation may, in respect of any sale of the Collateral by Lender, (i) substantially reduce the number of potential prospective purchasers that would, but for the existence of the Eligible Purchaser Limitation, be interested in acquiring the Collateral, and (ii) result in prices and terms, in each case, less favorable to Lender than those obtainable through a sale where the Eligible Purchaser Limitation did not apply. Pursuant to Section 9-603 of the UCC, Pledgor agrees that the applicability of the Eligible Purchaser Limitation in respect of any foreclosure sale of the Collateral shall not cause such sale to not be commercially reasonable.
Section 5.8.      Additional Sale Provisions .    Pledgor agrees that Lender shall not have any general duty or obligation to make any effort to obtain or pay any particular price for any Pledged Equity sold by Lender pursuant to this Agreement. Lender, may, in its sole discretion, among other things, accept the first offer received, or decide to approach or not to approach any potential purchasers. Without in any way limiting Lender’s right to conduct a foreclosure sale in any manner which is considered commercially reasonable, Pledgor hereby agrees that any foreclosure sale conducted in accordance with the following provisions (including, without limitation, the requirement herein that Pledgor shall have received not less than ten (10) days prior written notice of any such sale) shall be considered a commercially reasonable sale and hereby irrevocably waives any right to contest or set aside any such sale:
(a)      Lender conducts the foreclosure sale in the State of New York,

Page 16


(b)      The foreclosure sale is conducted in accordance with the laws of the State of New York,
(c)      Less than ten (10) days in advance of the foreclosure sale, Lender notifies Pledgor at the address set forth herein of the time and place of such foreclosure sale,
(d)      The foreclosure sale is conducted by a broker or another auctioneer licensed in the State of New York, and
(e)      The notice of the date, time and location of the foreclosure sale is published in the New York Times or Wall Street Journal (or such other daily newspaper widely circulated in New York, New York) for at least three (3) days prior to the date of the foreclosure sale.
Section 5.9.      Pledgor hereby waives any claims against Lender arising by reason of the fact that the price at which any of the Collateral was sold was less than the aggregate amount of the Secured Obligations.
Section 5.10.      Receipt of Sales Proceeds . Upon any sale or other disposition of all or any part of the Collateral pursuant to the terms of this Agreement, the receipt of the proceeds by Lender or the officer making the sale shall be a sufficient discharge to the purchaser or purchasers of the Collateral so sold, and such purchaser or purchasers shall not be obligated to see to the application of any part of the purchase money paid over to Lender or such officer or be answerable in any way for the misapplication or non-application thereof.
Section 5.11.      Application of Collateral Proceeds and Distributions . All proceeds from the sale of all or any portion of the Collateral received by Lender, shall be applied by Lender in the following order of priority: (i) first, against the Sale Expenses, (ii) second, against the Debt in such order and priority Lender shall elect and (iii) the balance, if any, to such Persons as may be entitled to same in accordance with applicable law. All Distributions now or at any time hereafter received or retained by Lender pursuant to the provisions of this Agreement shall be applied by Lender against the Debt in such order and priority Lender shall elect following the occurrence of an Event of Default.
Section 5.12.      Admission as Member; Lender Authority . If the Pledged Equity is sold or otherwise transferred to Lender, its nominee or any third Person (each, in such capacity, an “ Enforcement Transferee ”) by an assignment-in-lieu of foreclosure, strict foreclosure, public or private sale or otherwise in connection with Lender exercising its remedies under this Agreement (each, an “ Enforcement Transfer ”), the following shall apply (all without the necessity of any further action on the part of Pledgor): (A) the Enforcement Transferee shall, automatically upon such Enforcement Transfer, be admitted as a new member and owner of Property Owner to the extent of the Pledged Equity so transferred to such Enforcement Transferee, and (B) Pledgor shall, from and after such Enforcement Transfer, no longer be a member or owner of the Property Owner and Pledgor shall be deemed to have withdrawn as member and owner of Property Owner, in each case, to the extent such Pledged Equity has been so transferred. Pledgor hereby irrevocably authorizes and directs Property Owner, upon each Enforcement Transfer (a) to deem and treat the Enforcement Transferee in all respects as a member (and not merely an assignee of a member) of

Page 17


Property Owner, entitled to exercise all the rights, powers and privileges (including, without limitation, the right to vote on or take any action with respect to company matters pursuant to the Organizational Agreements of the Property Owner, to receive all Distributions, and to be credited with the members’ capital attributable to the Pledged Equity so transferred) appertaining to such membership interests to which Pledgor would have been entitled had Pledgor’s memberships interests not been transferred to the Enforcement Transferee and (b)(i) to file an amended certificate of formation, (ii) to amend the Organizational Agreements of Property Owner in any manner deemed appropriate by the Enforcement Transferee, and (iii) to execute and deliver consents of members providing for the admission of the Enforcement Transferee as a member of the Property Owner in place of Pledgor. The foregoing authorization and instructions to Property Owner are irrevocable, may be relied upon by Property Owner and may not be modified in any manner other than by Lender sending to Property Owner a written notice terminating such authorization and direction. Furthermore, in connection with any Enforcement Transfer, Lender may and, is hereby irrevocably authorized by Pledgor to, at any time and from time to time, (x) complete the Assignment of Interest by inserting the Effective Date (as defined therein) and the name of the Enforcement Transferee thereunder and deliver to such Enforcement Transferee each Assignment of Interest so executed and delivered by Pledgor, (y) otherwise execute, complete and date, any endorsements, assignments and other instruments and documents necessary or deemed advisable by Lender to effectuate an Enforcement Transfer, (z) do all other things, take such actions and/or execute such documents and instruments as Lender deems appropriate or advisable to effectuate any Enforcement Transfer.
Section 5.13.      No Marshaling/Preferences . Lender shall have no obligation to marshal any assets in favor of Pledgor or any other Person or against, or in payment of, any or all of the Debt. To the extent Pledgor makes a payment or payments to Lender, which payment or proceeds or any part thereof are subsequently invalidated, declared to be fraudulent or preferential, set aside or required to be repaid to a trustee, receiver or any other Person under any bankruptcy law, state or federal law, common law or equitable cause, then, to the extent of such payment or proceeds received, the Secured Obligations intended to be satisfied shall be revived and continue in full force and effect, as if such payment or proceeds had not been received by Lender.
ARTICLE VI - MISCELLANEOUS PROVISIONS
Section 6.1.      Further Assurances . Pledgor hereby agrees to sign and deliver to Lender financing statements, continuation statements and other documents, agreements, and instruments, all in form and content acceptable to Lender, and perform such further acts, in each case, as Lender may, from time to time, reasonably request or which are reasonably necessary or advisable to (i) establish and maintain a valid and perfected security interest in the Collateral (and to pay any filing fees relative thereto) and (ii) to further assure and/or confirm Lender’s rights and remedies hereunder. Without limiting the foregoing, upon the occurrence and during the continuance of an Event of Default, Pledgor authorizes Lender, to the extent permitted by law, to file such financing statements and amendments thereto and continuations thereof relating to all or any part of the Collateral without the signature of Pledgor (including, to the extent permitted by law, to file a photographic or other reproduction of this Agreement), provided that Lender will promptly upon written request provide copies of any such filings to Pledgor.

Page 18


Section 6.2.      No Release, Etc . No delay or omission to exercise any remedy, right or power accruing upon a default or an Event of Default shall impair any such remedy, right or power or shall be construed as a waiver thereof, but any such remedy, right or power may be exercised from time to time and as often as may be deemed by Lender to be expedient. A waiver of any default or Event of Default shall not be construed to be a waiver of any subsequent default or Event of Default or to impair any remedy, right or power of Lender. Any and all of Lender’s rights with respect to any Collateral shall continue unimpaired, and Pledgor shall be and remain obligated in accordance with the terms hereof, notwithstanding, among other things: (a) any renewal, extension, amendment or modification of, or addition or supplement to, or deletion from, this Agreement or any other Loan Document or any other instrument or agreement referred to therein, or any assignment or transfer of any thereof; (b) any waiver, consent, delay, extension of time, indulgence or other action or inaction under or in respect of this Agreement or any other Loan Document; (c) any exercise or non‑exercise of any right, remedy, power or privilege under or in respect of this Agreement or any other Loan Document; (d) any sale, exchange, release, surrender, or substitution of, or realization upon, any Collateral (except to the extent otherwise specifically agreed to in writing by Lender) or any other security held by Lender to secure the Secured Obligations; (e) the furnishing to or acceptance by Lender of any additional security to secure the Secured Obligations; (f) any right of offset, claim or defense of any party against Lender, under the Loan Documents or otherwise; or (g) any lack of perfection of, invalidity, irregularity or unenforceability of all or any part of the Secured Obligations or of any security therefor.
Section 6.3.      Indemnification . Pledgor hereby agrees to defend and indemnify Lender and its directors, officers, employees and agents from, and hold each of them harmless against, any and all losses, liabilities, claims, damages, costs and expenses (including, without limitation, reasonable attorneys’ fees and disbursements) incurred by any of them arising out of or by reason of any claim, investigation, suit or other proceeding (1) relating to or arising out of the acts or omissions of Pledgor under this Agreement or the Organizational Agreements of the Property Owner and/or (2) Lender’s Lien on any Collateral, provided , that , the indemnity set forth in this Section 6.3 shall exclude any such losses, liabilities, claims, damages, costs or expenses incurred by reason of the gross negligence or willful misconduct of the Person to be indemnified hereunder. Any sums that may be payable by Pledgor under this Section 6.3 , together with interest thereon at the Default Rate from the applicable date(s) that any such amount is incurred or otherwise becomes due, shall be payable by Pledgor promptly following written demand therefor made by Lender and shall be constitute a portion of the Debt and be secured by the Collateral.
Section 6.4.      Expenses . All costs, expenses (including, without limitation, the Sale Expenses, reasonable attorneys’ fees and disbursements and payments made to third Persons under this Agreement or otherwise), and other amounts incurred by, or on behalf of, Lender in exercising any of Lender’s rights, remedies and/or powers under this Agreement (including, without limitation, under Article 4 hereof and in connection with any Bankruptcy Proceeding) and/or under any other Loan Document, together with interest thereon at the Default Rate from the applicable date(s) that any such cost, expense or other amount is incurred by Lender, shall be payable by Pledgor to Lender promptly following written demand made therefor by Lender and shall be constitute a portion of the Debt and be secured by the Collateral.

Page 19


Section 6.5.      Notices . All notices, consents, approvals, demands and requests required or permitted hereunder shall be given in the manner set forth in the Loan Agreement.
Section 6.6.      Governing Law. THIS AGREEMENT AND THE OBLIGATIONS ARISING HEREUNDER SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK APPLICABLE TO CONTRACTS MADE AND PERFORMED IN SUCH STATE AND ANY APPLICABLE LAW OF THE UNITED STATES OF AMERICA. TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, PLEDGOR AND LENDER HEREBY UNCONDITIONALLY AND IRREVOCABLY WAIVE ANY CLAIM TO ASSERT THAT THE LAW OF ANY OTHER JURISDICTION GOVERNS THIS AGREEMENT AND THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK PURSUANT TO § 5-1401 OF THE NEW YORK GENERAL OBLIGATIONS LAW.
Section 6.7.      Severability . Wherever possible, each provision of this Agreement shall be interpreted in such manner as to be effective and valid under applicable law, but if any provision of this Agreement shall be prohibited by or invalid under applicable law, such provision shall be ineffective to the extent of such prohibition or invalidity, without invalidating the remainder of such provision or the remaining provisions of this Agreement.
Section 6.8.      Lender Reliance . Lender shall be entitled to rely in good faith upon any writing or other document (including, without limitation, any telegram or e-mail) or any telephone conversation reasonably believed by it to be genuine and correct and to have been signed, sent or made by the proper Person (but Lender shall be entitled to such additional evidence of authority or validity as it may, in its discretion, request, but it shall have no obligation to make any such request).
Section 6.9.      Modification; Waiver in Writing . No modification, amendment, extension, discharge, termination or waiver of any provision of this Agreement, nor consent to any departure by Pledgor therefrom, shall in any event be effective unless the same shall be in a writing signed by the party against whom enforcement is sought, and then such waiver or consent shall be effective only in the specific instance, and for the purpose, for which given. Except as otherwise expressly provided herein, no notice to, or demand on Pledgor, shall entitle Pledgor to any other or future notice or demand in the same, similar or other circumstances.
Section 6.10.      Number and Gender . All references to sections and exhibits are to sections and exhibits in or to this Agreement unless otherwise specified. Unless otherwise specified, the words “hereof,” “herein” and “hereunder” and words of similar import when used in this Agreement shall refer to this Agreement as a whole and not to any particular provision, article, section or other subdivision of this Agreement. Unless otherwise specified, all meanings attributed to defined terms herein shall be equally applicable to both the singular and plural forms of the terms so defined. Whenever the context may require, any pronouns used herein shall include the corresponding masculine, feminine or neuter forms, and the singular form of nouns and pronouns shall include the plural and vice versa.

Page 20


Section 6.11.      Headings, Etc . The headings and captions of various paragraphs of this Agreement are for the convenience of reference only and are not to be construed as defining or limiting, in any way, the scope or intent of the provisions hereof.
Section 6.12.      Rule of Construction. Each of the parties hereto acknowledge that they were represented by competent counsel in connection with the negotiation, drafting and execution of this Agreement, and that this Agreement shall not be subject to the principle of construing its meaning against the party which drafted (or arranged for the drafting of) same.
Section 6.13.      Other Interests of Lender . Lender shall not be subject to any limitation whatsoever in the exercise of any rights or remedies available to it under this Agreement or any other Loan Document by virtue of any ownership by Lender or any Affiliate of Lender of any direct or indirect equity interest any of them have, or may acquire in, Pledgor, Property Owner or their respective Affiliates, and Pledgor hereby waives the right to raise any defense or take any action on the basis of the foregoing with respect to Lender’s exercise of any such rights or remedies.
Section 6.14.      Counterparts . This Agreement may be executed in several counterparts, each of which counterparts shall be deemed an original instrument and all of which together shall constitute a single Agreement. The failure of any party hereto to execute this Agreement, or any counterpart hereof, shall not relieve the other signatories from their obligations hereunder.
Section 6.15.      Remedies of Pledgor . If a claim or adjudication is made that Lender or its agents or nominees, has acted unreasonably, or has unreasonably delayed acting, in any case where by law or under this Agreement or the other Loan Documents, Lender or such agent or nominee, as the case may be, has an obligation to act reasonably or promptly, Pledgor agrees that neither Lender nor its agents, shall be liable for any monetary damages, and Pledgor’s sole remedies shall be limited to commencing an action seeking injunctive relief or declaratory judgment. Pledgor agrees that any action or proceeding to determine whether Lender has acted reasonably shall be determined by an action seeking declaratory judgment.
Section 6.16.      Limitations on Lender’s Duties Regarding Collateral . Lender’s sole duty with respect to the custody, safekeeping and physical preservation of the Collateral in its possession, under Section 9-207 of the UCC or otherwise, shall be to deal with any such Collateral in substantially the same manner as Lender deals with similar securities and property for its own account. Except as expressly provided in the preceding sentence, Lender shall not have any duty whatsoever concerning the Collateral, including, without limitation, pertaining to (i) the collection or protection of the Collateral or any income thereon or payments with respect thereto, or concerning the preservation of any rights relating thereto; and (ii) Lender exercising any rights, powers or remedies with respect to the Collateral, it being understood and agreed upon that such rights, powers and rights are conferred on Lender hereunder and under the other Loan Documents solely to protect Lender’s interest in the Collateral and, accordingly, shall not impose any duty upon Lender to exercise any such rights, powers or remedies. Neither Lender nor any of its Affiliates nor their respective directors, officers, employees, agents or attorneys shall be (x) liable for failure to demand, collect or realize upon any of the Collateral or for any delay in doing so or shall be under any obligation to sell or otherwise dispose of any Collateral upon the request of Pledgor or any other Person, or (y) liable for any other action taken or omitted to be taken by any such Person or Persons

Page 21


relative to any of the Collateral hereunder or otherwise, except for such Person’s or Persons’ own gross negligence or willful misconduct.
Section 6.17.      Entire Agreement . This Agreement and the other Loan Documents embody the final, entire agreement of Pledgor and Lender with respect to the Secured Obligations and supersedes any and all prior commitments, agreements, representations, and understandings, whether written or oral, relating to the subject matter hereof. This Agreement together with the other Loan Documents are intended by Pledgor and Lender as a final and complete expression of the terms of the Agreement, and no course of dealing between Pledgor and Lender, no course of performance, no trade practices, and no evidence of prior, contemporaneous or subsequent oral agreements or discussions or other extrinsic evidence of any nature shall be used to contradict, vary, supplement or modify any term of this Agreement other than the Loan Agreement. There are no oral agreements between Pledgor and Lender.
Section 6.18.      Waiver of Right to Trial by Jury . PLEDGOR, AND BY ACCEPTANCE HEREOF, LENDER, EACH HEREBY AGREES NOT TO ELECT A TRIAL BY JURY OF ANY ISSUE TRIABLE OF RIGHT BY JURY, AND WAIVES ANY RIGHT TO TRIAL BY JURY FULLY TO THE EXTENT THAT ANY SUCH RIGHT SHALL NOW OR HEREAFTER EXIST WITH REGARD TO THIS AGREEMENT, OR ANY CLAIM, COUNTERCLAIM OR OTHER ACTION ARISING IN CONNECTION HEREWITH. THIS WAIVER OF RIGHT TO TRIAL BY JURY IS GIVEN KNOWINGLY AND VOLUNTARILY BY PLEDGOR AND LENDER, AND IS INTENDED TO ENCOMPASS INDIVIDUALLY EACH INSTANCE AND EACH ISSUE AS TO WHICH THE RIGHT TO A TRIAL BY JURY WOULD OTHERWISE ACCRUE. EACH PARTY IS HEREBY AUTHORIZED TO FILE A COPY OF THIS PARAGRAPH IN ANY PROCEEDING AS CONCLUSIVE EVIDENCE OF THIS WAIVER BY THE OTHER PARTY.
Section 6.19.      Successors and Assigns . This Agreement and all obligations of Pledgor hereunder shall be binding upon the successors and assigns of Pledgor, except that Pledgor, unless otherwise expressly provided in the Loan Agreement and then only to the extent provided therein, shall not have the right to assign its rights hereunder or any interest herein without the prior written consent of Lender. Lender shall have the right to assign its interest in this Agreement and all rights and remedies of Lender hereunder shall inure to the benefit of Lender and its participants, successors and assigns. Neither this Agreement nor anything set forth herein is intended to, nor shall it, confer any rights on any Person other than the parties hereto and all third party rights are expressly negated.
Section 6.20.      Termination . Upon the indefeasible payment and performance in full of the Debt, this Agreement shall terminate . In furtherance of the forgoing, at the request of Pledgor and at Pledgor’s sole cost and expense, Lender agrees to execute and deliver to Pledgor any such documents reasonably acceptable to Lender to evidence such termination.
Section 6.21.      Limitation on Liability . The liability of Pledgor and its direct and indirect owners hereunder shall be subject to the provisions of Section 11.22 of the Loan Agreement.
[Pledgor Signature Appears on Next Page]


Page 22


IN WITNESS WHEREOF, Pledgor has caused this Pledge and Security Agreement to be executed and delivered by its duly authorized officer on the date first set forth above.

 
PLEDGOR:

110 WILLIAM MEZZ III, LLC
a Delaware limited liability company



By:     /s/ Christopher Schlank               
Name: Christopher Schlank
Title: Authorized Signatory


[Signature Page to Pledge and Security Agreement]


Exhibit 31.1
Certification of Chief Executive Officer pursuant to
Section 302 of the Sarbanes-Oxley Act of 2002
I, Keith D. Hall, certify that:
1.
I have reviewed this quarterly report on Form 10-Q of KBS Strategic Opportunity REIT, Inc.;
2.
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.
The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
a)
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
b)
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
c)
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
d)
Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
5.
The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
a)
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
b)
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
    
Date:
May 14, 2019
By:
/S / K EITH  D. H ALL
 
 
 
Keith D. Hall
 
 
 
Chief Executive Officer and Director
 
 
 
(principal executive officer)




Exhibit 31.2
Certification of Chief Financial Officer pursuant to
Section 302 of the Sarbanes-Oxley Act of 2002
I, Jeffrey K. Waldvogel, certify that:
1.
I have reviewed this quarterly report on Form 10-Q of KBS Strategic Opportunity REIT, Inc.;
2.
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.
The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
a)
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
b)
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
c)
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
d)
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
5.
The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
a)
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
b)
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date:
May 14, 2019
By:
/S/ J EFFREY  K. W ALDVOGEL
 
 
 
Jeffrey K. Waldvogel
 
 
 
Chief Financial Officer
 
 
 
(principal financial officer)




Exhibit 32.1
Certification pursuant to 18 U.S.C. Section 1350,
as Adopted pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002
In connection with the Quarterly Report on Form 10-Q of KBS Strategic Opportunity REIT, Inc. (the “Registrant”) for the quarter ended March 31, 2019, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), the undersigned, Keith D. Hall, Chief Executive Officer and Director of the Registrant, hereby certifies, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that, to the best of his knowledge and belief:
1.
The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
2.
The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Registrant.

Date:
May 14, 2019
By:
/ S / K EITH  D. H ALL
 
 
 
Keith D. Hall
 
 
 
Chief Executive Officer and Director
 
 
 
(principal executive officer)





Exhibit 32.2
Certification pursuant to 18 U.S.C. Section 1350,
as Adopted pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002
In connection with the Quarterly Report on Form 10-Q of KBS Strategic Opportunity REIT, Inc. (the “Registrant”) for the quarter ended March 31, 2019, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), the undersigned, Jeffrey K. Waldvogel, the Chief Financial Officer of the Registrant, hereby certifies, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that, to the best of his knowledge and belief:
1.
The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
2.
The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Registrant.

Date:
May 14, 2019
By:
/S/ J EFFREY  K. W ALDVOGEL
 
 
 
Jeffrey K. Waldvogel
 
 
 
Chief Financial Officer
 
 
 
(principal financial officer)