-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, LzulwPhmJzZoWoZxJ/gJLckC7kDD+hyqA3X/SFIlYnFp2d6FaS1U5IKFghuthk/h 1A319Dn+6WOTB2KvmjzpLw== 0000950130-00-000847.txt : 20000225 0000950130-00-000847.hdr.sgml : 20000225 ACCESSION NUMBER: 0000950130-00-000847 CONFORMED SUBMISSION TYPE: SC 13E3/A PUBLIC DOCUMENT COUNT: 4 FILED AS OF DATE: 20000224 GROUP MEMBERS: MCNEIL INVESTORS, INC. GROUP MEMBERS: MCNEIL PARTNERS, L.P. GROUP MEMBERS: MCNEIL REAL ESTATE FUND XXVI LP GROUP MEMBERS: ROBERT A. MCNEIL GROUP MEMBERS: WHITEHALL STREET REAL ESTATE LMT PART XI GROUP MEMBERS: WXI/MCN REALTY L.L.C. GROUP MEMBERS: WXI/MNL REAL ESTATE, L.L.C. SUBJECT COMPANY: COMPANY DATA: COMPANY CONFORMED NAME: MCNEIL REAL ESTATE FUND XXVI LP CENTRAL INDEX KEY: 0000793307 STANDARD INDUSTRIAL CLASSIFICATION: REAL ESTATE [6500] IRS NUMBER: 330168395 STATE OF INCORPORATION: CA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: SC 13E3/A SEC ACT: SEC FILE NUMBER: 005-46941 FILM NUMBER: 552164 BUSINESS ADDRESS: STREET 1: 13760 NOEL RD STE 700 LB70 CITY: DALLAS STATE: TX ZIP: 75240 BUSINESS PHONE: 2144485800 MAIL ADDRESS: STREET 2: 13760 NOEL ROAD SUITE 700 LB 70 CITY: DALLAS STATE: TX ZIP: 75240 FORMER COMPANY: FORMER CONFORMED NAME: SOUTHMARK EQUITY PARTNERS III LTD DATE OF NAME CHANGE: 19920413 FILED BY: COMPANY DATA: COMPANY CONFORMED NAME: MCNEIL REAL ESTATE FUND XXVI LP CENTRAL INDEX KEY: 0000793307 STANDARD INDUSTRIAL CLASSIFICATION: REAL ESTATE [6500] IRS NUMBER: 330168395 STATE OF INCORPORATION: CA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: SC 13E3/A BUSINESS ADDRESS: STREET 1: 13760 NOEL RD STE 700 LB70 CITY: DALLAS STATE: TX ZIP: 75240 BUSINESS PHONE: 2144485800 MAIL ADDRESS: STREET 2: 13760 NOEL ROAD SUITE 700 LB 70 CITY: DALLAS STATE: TX ZIP: 75240 FORMER COMPANY: FORMER CONFORMED NAME: SOUTHMARK EQUITY PARTNERS III LTD DATE OF NAME CHANGE: 19920413 SC 13E3/A 1 AMENDMENT NO. 1 TO THE SCHEDULE 13E-3 SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 AMENDMENT NO.1 TO THE SCHEDULE 13E-3 (Final Amendment) Rule 13e-3 Transaction Statement (Pursuant to Section 13(e) of the Securities Exchange Act of 1934) McNeil Real Estate Fund XXVI, L.P. --------------------------------------- (Name of Issuer) McNeil Real Estate Fund XXVI, L.P. McNeil Partners, L.P. McNeil Investors, Inc. Robert A. McNeil WXI/McN Realty L.L.C. WXI/MNL Real Estate, L.L.C. Whitehall Street Real Estate Limited Partnership XI --------------------------------------- (Name of Person(s) Filing Statement) Units of Limited Partnership Interest --------------------------------------- (Title of Class of Securities) N/A --------------------------------------- (CUSIP Number of Class of Securities) Jonathan Langer Vice President WXI/McN Realty L.L.C. 85 Broad Street New York, New York 10004 (212) 902-1000 --------------------------------------- (Name, Address and Telephone Number of Persons Authorized to Receive Notices and Communications on Behalf of Person(s) Filing Statement) with a copy to: Martha E. McGarry, Esq. Gary Israel, Esq. W. Scott Wallace, Esq. Skadden, Arps, Slate, Sullivan & Cromwell Haynes & Boone, LLP Meagher & Flom LLP 125 Broad Street 901 Main Street, Suite 3100 Four Times Square New York, New York 10004 Dallas, Texas 75202 New York, New York 10036 (212) 558-4000 (214) 651-5000 (212) 735-3000 This statement is filed in connection with (check the appropriate box): (a) [X] The filing of solicitation materials or an information statement subject to Regulation 14A, Regulation 14C or Rule 13e-3(c) under the Securities Exchange Act of 1934. (b) [ ] The filing of a registration statement under the Securities Act of 1933. (c) [ ] A tender offer. (d) [ ] None of the above. Check the following box if the soliciting materials or information statement referred to in checking box (a) are preliminary copies: [_] Calculation of Filing Fee - ------------------------------------------------------------------------------- Transaction Amount of valuation* Filing Fee** - ------------------------------------------------------------------------------- $ 22,497,974 $ 4,499.59 - ------------------------------------------------------------------------------- * For purposes of calculating the filing fee only. This calculation assumes the exchange of 86,530,671 units of limited partner interest in the Issuer at $0.26 per unit in cash. ** The amount of the filing fee, calculated in accordance with Rule 0-11(c) of the Securities Exchange Act of 1934, as amended, equals 1/50th of one percent of the aggregate value of cash exchanged for such units. [X] Check box if any part of the fee is offset by Rule 0-11(a)(2) and identify the filing with which the offsetting fee was previously paid. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing. Amount Previously Paid: $ 4,499.59 Filing Party: McNeil Real Estate Fund XXVI, L.P. Form or Registration No.: Schedule 14A Date Filed: August 3, 1999 INTRODUCTION This Final Amendment to Rule 13e-3 Transaction Statement (this "Final Amendment") is being jointly filed by each of (1) McNeil Real Estate Fund XXVI, L.P., a California limited partnership (the "Partnership"), (2) McNeil Partners, L.P., a Delaware limited partnership (the "General Partner"), (3) McNeil Investors, Inc., a Delaware corporation and the general partner of the General Partner ("McNeil Investors"), (4) Robert A. McNeil, the sole stockholder of McNeil Investors, (v) WXI/McN Realty L.L.C., a Delaware limited liability company (the "Purchaser"), (6) WXI/MNL Real Estate, L.L.C., a Delaware limited liability company and the managing member of the Purchaser ("WXI/MNL Real Estate"), and (7) Whitehall Street Real Estate Limited Partnership XI, a Delaware limited partnership and the managing member of WXI/MNL Real Estate ("Whitehall" and, collectively with the Partnership, the General Partner, McNeil Investors, Robert A. McNeil, WXI/McN Realty and WXI/MNL Real Estate, the "Filing Persons"), pursuant to Section 13(e) of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), and Rule 13e-3 thereunder, to amend and supplement the definitive Rule 13e-3 Transaction Statement on Schedule 13E-3, jointly filed by the Filing Persons with the Securities and Exchange Commission (the "SEC") on December 14, 1999 (the "Transaction Statement"). Unless otherwise indicated herein, each capitalized term used but not defined herein shall have the meaning assigned to such term in the Transaction Statement or in the Definitive Proxy Statement on Schedule 14A of the Partnership filed by the Partnership with the SEC on December 14, 1999 (the "Proxy Statement"). This Final Amendment is being filed with the SEC pursuant to the requirements of Rule 13e-3(d)(3) promulgated under the Exchange Act, to reflect the results of the transactions contemplated by the Master Agreement with respect to the Partnership. Except as expressly set forth in this Final Amendment, all information in the Transaction Statement remains unchanged. ITEM 6. SOURCE AND AMOUNTS OF FUNDS OR OTHER CONSIDERATION. Item 6 is hereby amended and supplemented by adding the following information: On January 31, 2000, a subsidiary of the Purchaser entered into a loan agreement (the "Commercial Loan Agreement") with General Electric Capital Corporation ("GECC") pursuant to which GECC has agreed to lend to such subsidiary up to an aggregate amount of approximately $109,185,728 to partially finance the acquisition of the McNeil Partnerships and to provide a working capital and leasing facility with respect to certain commercial properties owned by the McNeil Partnerships. The foregoing description is qualified in its entirety by reference to the Commercial Loan Agreement, which is attached as Exhibit (a)(1) hereto and is incorporated herein by reference in its entirety. On January 31, 2000, subsidiaries of the Purchaser entered into a loan agreement, made as of January 1, 2000 (the "Multifamily Loan Agreement") with Amresco Capital, L.P. ("Amresco") pursuant to which Amresco has agreed to lend to such subsidiaries up to an aggregate amount of approximately $195,783,261 to partially finance the acquisition of the McNeil Partnerships. The foregoing description is qualified in its entirety by reference to the Multifamily Loan Agreement, which is attached as Exhibit (a)(2) hereto and is incorporated herein by reference in its entirety. ITEM 16. ADDITIONAL INFORMATION. Item 16 is hereby amended and supplemented by adding the following information. The transactions contemplated by the Master Agreement, including the merger of a separate newly formed subsidiary of the Purchaser with and into the Partnership (the "Merger"), were approved by the limited partners of the Partnership on January 21, 2000. Such transactions were consummated with respect to the Partnership on February 15, 2000, and the Merger became effective on such date upon the filing of a Certificate of Merger with the Secretary of State of the State of California. As a result of the Merger, each limited partner unit in the Partnership has been converted into the right to receive $0.26 in cash. In addition, a special cash distribution of approximately $0.0212 per unit was declared as of February 15, 2000, payable to limited partners holding limited partner units immediately prior to the effective time of the Merger. As a result of and following the Merger, all the issued and outstanding limited partner units in the Partnership are directly or indirectly beneficially owned by the Purchaser. Accordingly, the Partnership has filed a Certification and Notice of Termination of Registration on Form 15 with the SEC. ITEM 17. MATERIAL TO BE FILED AS EXHIBITS. Item 17 is hereby amended and supplemented by adding the following exhibits: (a)(1) Loan Agreement, dated January 31, 2000, between WXI/MCN Comercial Real Estate Limited Partnership and General Electric Capital Corporation (a)(2) Loan Agreement, made as of January 1, 2000, among WXI/MCN Multifamily Real Estate Limited Partnership, Brendon Way Fund XII Associates, Castle Bluff Fund XII Associates, L.P., Embarcadero Associates and Amresco Capital, L.P. (d)(4) Press Release issued by McNeil Partners, L.P. dated February 15, 2000 SIGNATURE After due inquiry and to the best of its knowledge and belief, the undersigned certifies that the information set forth in this statement is true, complete and correct. Dated: February 17, 2000 McNEIL REAL ESTATE FUND XXVI, L.P. By: WXI/MCN Gen-Par I, L.L.C. Its: General Partner By: WXI/McN Realty L.L.C. Its: Managing Member By: /s/ Jonathan Langer _________________________ Name: Jonathan Langer Title: Vice President McNEIL PARTNERS, L.P. By: McNeil Investors, Inc. Its: General Partner By: /s/ Robert A. McNeil __________________________ Name: Robert A. McNeil Title: Chaiman of the Board McNEIL INVESTORS, INC. By: /s/ Robert A. McNeil __________________________ Name: Robert A. McNeil Title: Chairman of the Board /s/ Robert A. McNeil _________________________ Name: ROBERT A. McNEIL WXI/McN REALTY L.L.C. By: /s/ Jonathan Langer _________________________ Name: Jonathan Langer Title: Vice President WXI/MNL REAL ESTATE, L.L.C. By: Whitehall Street Real Estate Limited Partnership XI Its: Managing Member By: WH Advisors, L.L.C. XI Its: General Partner By: /s/ Jonathan Langer _________________________ Name: Jonathan Langer Title: Vice President WHITEHALL STREET REAL ESTATE LIMITED PARTNERSHIP XI By: WH Advisors, L.L.C. XI Its: General Partner By: /s/ Jonathan Langer _________________________ Name: Jonathan Langer Title: Vice President EXHIBIT INDEX The Exhibit Index is hereby amended and supplemented by adding the following exhibits: (a)(1) Loan Agreement, dated January 31, 2000, between WXI/MCN Comercial Real Estate Limited Partnership and General Electric Capital Corporation (a)(2) Loan Agreement, made as of January 1, 2000, among WXI/MCN Multifamily Real Estate Limited Partnership, Brendon Way Fund XII Associates, Castle Bluff Fund XII Associates, L.P., Embarcadero Associates and Amresco Capital, L.P. (d)(4) Press Release issued by McNeil Partners, L.P. dated February 15, 2000 EX-99.(A)(1) 2 LOAN AGREEMENT DATED 01/31/2000 Loan Agreement ================================================================================ U.S. $109,185,728.00 LOAN AGREEMENT BETWEEN WXI/MCN COMMERCIAL REAL ESTATE LIMITED PARTNERSHIP, AS BORROWER AND GENERAL ELECTRIC CAPITAL CORPORATION, AS LENDER JANUARY 31, 2000 (WHITEHALL/MCNEIL PORTFOLIO) ================================================================================ LOAN AGREEMENT This Loan Agreement ("AGREEMENT") is entered into as of January 31, 2000 between GENERAL ELECTRIC CAPITAL CORPORATION, a New York corporation ("LENDER"), and WXI/MCN COMMERCIAL REAL ESTATE LIMITED PARTNERSHIP, a Delaware limited partnership ("BORROWER"). Capitalized terms used in the Recitals shall have the meanings ascribed to such terms hereinbelow. RECITALS WHEREAS, Borrower desires to obtain the Loan from Lender for the purposes of (i) financing or refinancing the Properties and (ii) funding Working Capital Advances; WHEREAS, Borrower and Lender desire to set forth the terms and conditions of the Loan and of each Advance made hereunder; NOW, THEREFORE, in consideration of the mutual promises contained herein and the payment of $10 and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, Lender and Borrower agree as follows: ARTICLE 1 CERTAIN DEFINITIONS Section 1.1 CERTAIN DEFINITIONS. As used herein, the following terms have the meanings indicated: (1) "ACQUISITION ADVANCE" means an Advance made for the purpose of financing or refinancing an Additional Property, if any. (2) "ACQUISITION ADVANCE TERMINATION DATE" means June 1, 2000. (3) "ADDITIONAL PROPERTIES" means, collectively, the properties designated as "Additional Properties" on Schedule 1.1(B). (4) "ADJUSTED ANNUAL DEBT SERVICE" means, as of the date of calculation, subject to the adjustment set forth below in this paragraph, annual debt service calculated on the outstanding balance of the Loan on the calculation date (taking into account, in the case of a release of a Property, the application of the Release Payment to the outstanding balance of the Loan), at the greater of the then current interest rate payable under the Loan and the average interest rate for the prior six month period (such greater interest rate, as applicable, the "APPLICABLE RATE"), provided in each case that such annual debt service shall be reduced by amounts that would be payable (based on such interest rate) to Borrower under any interest rate swap, cap, collar or similar agreement entered into by Borrower in connection with the Loan (assuming, for purposes of determining the amount payable under any such agreement, that the interest rate applied under the respective agreement is the Applicable Rate) provided the benefits of such agreement are pledged to Lender as further security for the Loan. (For example, if the current interest rate payable under the Loan is 8% and the average interest rate for the six month period prior to determining Adjusted Annual Debt Service was 7%, then annual debt service shall be determined using the 8% rate and, for purposes of determining the amounts payable under any interest rate swap, cap, call or of similar agreement, the rate used to calculate the counterparty's obligations shall be deemed to have been 8% for such prior six month period.) (5) "ADJUSTED LOAN BASIS" means, with respect to any Property, the amount set forth opposite the reference to such Property on the attached Schedule 1.1(B) under the caption "Loan Basis," and as such Loan Basis may be increased or decreased pursuant to the terms hereof. (6) "ADJUSTED OPERATING CASH FLOW" shall mean, for any period, the sum of Operating Cash Flow for such period (but excluding income from or expenses related to (a) any interest rate swap, cap, collar, or similar agreement entered into by Borrower in connection with the Loan, and (b) any Properties previously released or to be released in connection with the calculation of Adjusted Operating Cash Flow). Notwithstanding the foregoing, no lump sum nonrecurring Operating Expense or Gross Receipt, as reasonably determined by Lender, shall be included in determining annualized Adjusted Operating Cash Flow for purposes of this definition. Similarly, the determination of annualized Adjusted Operating Cash Flow for purposes of this paragraph shall be adjusted, as reasonably determined by Lender, to reflect annualized decreases or increases in Operating Expenses or Gross Receipts resulting from anticipated major events. The determination of Adjusted Operating Cash Flow for purposes of this definition shall be based upon the lesser of market occupancy or the actual occupancy rate of each Property (but in no event greater than a 95% occupancy rate) and shall assume as part of Operating Expenses (i) the greater of the actual property management fees incurred by Borrower or a fee equal to 3% of gross rental receipts from the Properties, and (ii) annual replacement reserves of $0.25 per square foot). In addition, based upon, among other things, the operating statements provided to Lender by Borrower (if available), Lender shall consider such adjustments to the annualized Adjusted Operating Cash Flow as it deems reasonably appropriate, which considerations may take into account nonrecurring periods where one or more Properties were not generating gross receipts or were generating significantly lower gross receipts. (7) "ADVANCE" means each advance of the Loan made by Lender to Borrower pursuant to and in accordance with the terms and conditions of this Agreement, -2- including the Initial Advance and each Working Capital Advance and each Acquisition Advance. (8) "AFFILIATE" means, with respect to any Person, any Person that directly or indirectly through one or more intermediaries controls or is controlled by or is under common control with such Person. (9) "AGREEMENT" means this Loan Agreement, together with all Exhibits and Schedules hereto. (10) "AGREEMENT REGARDING MANAGEMENT AGREEMENT" means the Agreement Regarding Asset Management Agreement executed by Holding Company and Asset Manager in favor of Lender, in form and substance satisfactory to Lender. (11) "ANCILLARY AGREEMENTS" means any supplemental agreement, undertaking, instrument, document or other writing executed by Borrower as a condition to Advances under this Agreement or otherwise in connection herewith, including the Loan Documents. (12) "APPROVED PLANS" has the meaning set forth in Section 3.2 hereof. (13) "ARCHITECT" means any architect and/or inspecting engineer, chosen by Borrower and reasonably satisfactory to Lender, that is retained in connection with any Work or the construction of any Capital Improvements or Tenant Improvements. (14) "ASSET BUSINESS PLAN"means a "Portfolio Business Plan" as such term is defined in the Asset Management Agreement. (15) "ASSET MANAGEMENT AGREEMENT" means that certain Portfolio Advisory Agreement dated as of January 31, 2000, executed by Holding Company and Asset Manager, regarding the Properties. (16) "ASSET MANAGEMENT FEE" means the portion of the "Portfolio Advisory Fee" payable under the Asset Management Agreement which is allocable to the Properties. (17) "ASSET MANAGER" means Archon Group, L.P., a Delaware limited partnership, or its permitted successors or assigns, or any replacement asset manager reasonably acceptable to Lender. (18) "ASSIGNMENT OF LEASES" means each first priority assignment of rents and leases executed by Borrower for the benefit of Lender with respect to a Property, in form and substance satisfactory to Lender. -3- (19) "BORROWER PARTY" means Whitehall and any general partner of Borrower. (20) "BORROWING DATE CERTIFICATE" means a certificate executed by Borrower in favor of Lender, in form and substance satisfactory to Lender, in which Borrower shall confirm certain matters regarding Borrower and the Properties as of the Closing Date. (21) "BUSINESS DAY" means a day other than a Saturday, a Sunday, or a day on which national banks located in the State of New York are not open for general banking business. (22) "CAPITAL EXPENDITURES" means all commercially reasonable payments for necessary and customary replacements or substitutions to improvements to any Property, including remediation of deferred maintenance. (23) "CAPITAL LEASE" means, with respect to any Person, a lease of any property (whether real, personal or mixed) by such Person as lessee that, in accordance with GAAP, either would be required to be classified and accounted for as a capital lease on a balance sheet of such Person or otherwise be disclosed as such in a note to such balance sheet. (24) "CAPITAL LEASE OBLIGATION" means, with respect to any Capital Lease, the amount of the obligation of the lessee thereunder that, in accordance with GAAP, would appear on a balance sheet of such lessee in respect of such Capital Lease or otherwise be disclosed in a note to such balance sheet. (25) "CAPITAL TRANSACTION" means, with respect to any Property (a) a sale or refinancing of the whole of such Property, (b) an event giving rise to an insurance recovery or a condemnation award to the extent such insurance recovery or condemnation award exceeds the actual out-of-pocket cost of repair or restoration to such Property or the portion thereof affected by the event which gave rise to such insurance recovery or condemnation award, (c) a Complete Taking or (d) any financing or refinancing of, or sale of, a partial interest in such Property, if permitted under the terms of this Agreement. (26) "CASH ON CASH LIMIT" means, as of the date of calculation, the Loan balance resulting in a 12.04% Cash On Cash Return, calculated by dividing (a) the amount of Adjusted Operating Cash Flow which would be used as of such date in calculating Cash On Cash Return by (b) .1204; provided, however, that upon making each Acquisition Advance (if any), the Cash On Cash Return percentage used above in this definition shall be revised to equal the Cash On Cash Return for the Properties (including the Additional Property added in connection with such Acquisition Advance) as of the date of such Acquisition Advance, which revision shall be confirmed in writing by the parties, and shall be effective for the balance of the Term (unless such revised percentage is replaced as the result of a subsequent Acquisition Advance). -4- (27) "CASH ON CASH RETURN" means, as of the date of calculation, the quotient, expressed as a percentage, obtained by dividing (a) Adjusted Operating Cash Flow from all Properties which constitute Collateral on the calculation date, determined for the twelve (12) month period prior to such date of calculation, by (b) the outstanding balance of the Loan on the calculation date (taking into account, in the case of a release of a Property, the application of the Release Payment to the outstanding Loan balance). Lender agrees that calculations of Cash On Cash Return after the Closing Date will be performed in a manner reasonably consistent with the underwriting practices, procedures and policies which were followed by Lender in verifying satisfaction of the Cash On Cash Return closing condition contained in Part A of Schedule 2.1. (28) "CHARGES" means all federal, state, county, city, municipal, local, foreign or other governmental (including PBGC) taxes at the time due and payable, levies, assessments, charges, liens, claims or encumbrances upon or relating to (i) the Properties, (ii) the Obligations, (iii) Borrower's employees, payroll, income or gross receipts, (iv) Borrower's ownership or use of any of the Properties, or (v) any other aspect of Borrower's business. (29) "CHARGES ACCOUNT" has the meaning set forth in Section 3.4 hereof. (30) "CLOSING DATE" means the date on which Lender makes the Initial Advance. (31) "CODE" means the Uniform Commercial Code of the jurisdiction with respect to which such term is used, as in effect from time to time. (32) "COLLATERAL" means the collateral covered by the Collateral Documents. (33) "COLLATERAL ASSIGNMENT OF CONTRACTS" means each Collateral Assignment of Contracts, Licenses and Permits executed by Borrower in favor of Lender, in form and substance satisfactory to Lender. (34) "COLLATERAL ASSIGNMENT OF INTEREST RATE CAP AGREEMENT" means each Collateral Assignment of Interest Rate Cap Agreement executed by Borrower in favor of Lender, substantially in the form of Exhibit "C" hereto. (35) "COLLATERAL DOCUMENTS" means the Collateral Assignments of Contracts, the Assignments of Leases, the Deeds of Trust, the Collateral Assignments of Interest Rate Cap Agreement and any other deeds of trust, mortgages, security agreements, pledge agreements, financing statements or similar documents now or hereafter executed to secure (or perfect a security interest granted to secure) any or all of the Obligations. -5- (36) "COMPLETE TAKING" means a taking or condemnation by any competent Governmental Authority of the whole of any Property or so much thereof that the part not so taken or condemned cannot feasibly be used or reconverted for use as a building of the type and character existing immediately prior to such taking or condemnation. (37) "CONTRACT RATE" has the meaning set forth in Section 2.2 hereof. (38) "DEBT SERVICE COVERAGE RATIO" means, as of the date of calculation, the ratio of (a) Adjusted Operating Cash Flow from all Properties which constitute Collateral on the calculation date, determined for the six-month period ending on such date of calculation adjusted to reflect a one-year period, to (b) Adjusted Annual Debt Service. (39) "DEBT SERVICE COVERAGE RATIO LIMIT" means, as of the date of calculation, the Loan balance resulting in a 1.32 to 1.00 Debt Service Coverage Ratio, calculated by dividing (a) the amount of Adjusted Operating Cash Flow which would be used as of such date in calculating the Debt Service Coverage Ratio by (b) the product obtained by multiplying (i) the Contract Rate (expressed as a decimal) by (ii) 1.32; provided, however, that upon making each Acquisition Advance, the Debt Service Coverage Ratio used above in this definition shall be revised to equal the Debt Service Coverage Ratio for the Properties (including the Additional Property added in connection with such Acquisition Advance) as of the date of such Acquisition Advance, which revision shall be confirmed in writing by the parties and shall be effective for the balance of the Term (unless such revised ratio is replaced as the result of a subsequent Acquisition Advance). (40) "DEED OF TRUST" means each first priority deed of trust, mortgage and security agreement executed by Borrower in favor of Lender, creating a first priority lien against a Property, in form and substance satisfactory to Lender. (41) "DEFAULT PROPERTY" has the meaning set forth in Section 10.1 hereof. (42) "DEFAULT RATE" means the lesser of (a) the maximum rate of interest allowed by applicable Laws, and (b) three percent (3%) per annum in excess of the Contract Rate. (43) "EARLY TERMINATION DATE" has the meaning set forth in Section 2.3 hereof. (44) "ENVIRONMENTAL LAWS" has the meaning set forth in Section 4.1 hereof. (45) "ENVIRONMENTAL LIABILITIES AND COSTS" has the meaning set forth in Section 4.1 hereof. -6- (46) "ENVIRONMENTAL SITE ASSESSMENT" means an environmental engineering report (Phase I and, when necessary or appropriate in Lender's judgment, Phase II) for each Property prepared by an engineer engaged by Lender at Borrower's expense, and in a manner satisfactory to Lender, based upon an investigation relating to and making appropriate inquiries concerning the existence of Hazardous Materials on or about such Property, and the past or present discharge, disposal, release or escape of any such substances, all consistent with good customary and commercial practice. (47) "ERISA" means the Employee Retirement Income Security Act of 1974 (or any successor legislation thereto), as amended from time to time. (48) "EVENT OF DEFAULT" has the meaning set forth in Article 10. (49) "EXTENSION NOTICE" has the meaning set forth in Section 2.3 hereof. (50) "FEDERAL RESERVE BOARD" has the meaning set forth in Section 6.14 hereof. (51) "FIDELITY FEDERAL GROUND LEASES" means, collectively, the ground leases described in Exhibit "E" hereto, as the same may from time-to-time be modified or amended as permitted under the Loan Documents. (52) "FIDELITY FEDERAL PROPERTY" means the Property described in Exhibit "D-8" hereto. (53) "FISCAL YEAR" means the calendar year. Subsequent changes of the fiscal year of Borrower shall not change the term "Fiscal Year," unless Lender shall consent in writing to such changes. (54) "GAAP" means generally accepted accounting principles in the United States of America as in effect from time to time. (55) "GECC" means General Electric Capital Corporation, a New York corporation. (56) "GOVERNMENTAL AUTHORITY" means any nation or government, any state or other political subdivision thereof, and any agency, department or other entity exercising executive, legislative, judicial, regulatory or administrative functions of or pertaining to government. (57) "GROSS RECEIPTS" means, for any period, all rental and other cash income (other than any proceeds in respect of a Capital Transaction) actually received by, on behalf of, or for the account of Borrower from any source in respect of the Properties, including rental receipts (including percentage rents and room charges) from Tenants, advance rentals or prepaid rents (but only to the extent not required to be segregated under -7- any applicable Law), reimbursements from Tenants for their share of utilities, services and supplies and other operating expenses under Leases, Security Deposit forfeitures, proceeds from letters of credit or other credit enhancements (except to the extent applied to the Loan balance or to the items for which such credit enhancements were originally provided, as otherwise required in this Agreement), proceeds from rental or business interruption insurance, parking, concessions and vending fees, food and beverage income, laundry income, and furniture rentals, but excluding (a) Security Deposits made by Tenants until such deposits are applied by Borrower pursuant to the applicable Lease, (b) capital contributions or loans made to Borrower by any of the partners in Borrower, and (c) Advances under the Loan. (58) "GUARANTEED INDEBTEDNESS" means, as to any Person, any obligation of such Person guaranteeing any indebtedness, lease, dividend, or other obligation ("primary obligations") of any other Person (the "primary obligor") in any manner including any obligation or arrangement of such Person (a) to purchase or repurchase any such primary obligation, (b) to advance or supply funds (i) for the purchase or payment of any such primary obligation or (ii) to maintain working capital or equity capital of the primary obligor or otherwise to maintain the net worth or solvency or any balance sheet condition of the primary obligor, (c) to purchase property, securities or services primarily for the purpose of assuring the owner of any such primary obligation of the ability of the primary obligor to make payment of such primary obligation, or (d) to indemnify the owner of such primary obligation against loss in respect thereof. (59) "HAZARDOUS MATERIALS" has the meaning set forth in Section 4.1 hereof. (60) "HAZARDOUS SUBSTANCES INDEMNITY AGREEMENT" means the hazardous substances indemnity agreement executed by Borrower and Whitehall in favor of Lender with respect to the Properties, in form and substance satisfactory to Lender. (61) "HOLDING COMPANY" means WXI/McN Realty L.L.C., a Delaware limited liability company. (62) "IMPAIRED PROPERTY" has the meaning set forth in Section 8.18. (63) "INDEBTEDNESS" of any Person shall mean (a) all indebtedness of such Person for borrowed money or for the deferred purchase price of property or services (including reimbursement and all other obligations with respect to surety bonds, letters of credit and bankers' acceptances, whether or not matured, but not including obligations to trade creditors incurred in the ordinary course of business), (b) all obligations of such Person evidenced by notes, bonds, debentures or similar instruments, (c) all indebtedness created or arising under any conditional sale or other title retention agreements with respect to property acquired by such Person, (d) all Capital Lease Obligations, (e) all Guaranteed Indebtedness, (f) all Indebtedness referred to in clause (a), (b), (c), (d) or (e) above secured by (or for which the holder of such Indebtedness has an existing right, contingent or -8- otherwise, to be secured by) any Lien upon or in property (including accounts and contract rights) owned by such Person, even though such Person has not assumed or become liable for the payment of such Indebtedness, (g) as to Borrower and any Borrower Party, the Obligations, and (h) all liabilities under Title IV of ERISA. (64) "INITIAL ADVANCE" means the initial Advance made by Lender to Borrower on the Closing Date in the maximum amount of $99,185,728, less the sum of the amounts in the "Loan Basis" column on Schedule 1.1(B) for the properties identified on such Schedule as Additional Properties (if any). The Initial Advance shall be made for the purpose of financing or refinancing the Initial Properties and paying certain Loan closing costs. (65) "INITIAL PROPERTIES" means the properties described in Exhibits "D-1" through "D-21" attached hereto, excluding any such properties identified as "Additional Properties" on Schedule 1.1(B). (66) "INTEREST PAYMENT DATE" has the meaning set forth in Section 2.3 hereof. (67) "IRC" means the Internal Revenue Code of 1986, as amended, and any successor thereto. (68) "IRS" means the Internal Revenue Service, or any successor thereto. (69) "LAWS" means all federal, state and local laws, rules, regulations, ordinances and codes. (70) "LEASE BUY OUT CONSIDERATION" means all amounts paid to Borrower by any tenant under a Lease as consideration for terminating such Lease prior to its stated expiration date. (71) "LEASES" means all written rights to use any portion of any Property in which Borrower is the lessor. (72) "LEASING COSTS" means, with respect to any Property, leasing commissions payable to brokers who are not Affiliates of Borrower, which are commercially reasonable and customary for the area where the Property is located. (73) "LENDER" means GECC and any future holder of all or any portion of the Note. (74) "LIBOR RATE" means the U.S. Dollar rate listed on page 3750 (i.e., the LIBOR page) of the Telerate News Services titled "BRITISH BANKER ASSOCIATION INTEREST SETTLEMENT RATES" for a designated maturity of one (1) month determined as of 11:00 a.m. London Time on the second (2nd) full Eurodollar Business Day next preceding the first day -9- of each month with respect to which interest is payable under the Loan (unless such date is not a Business Day in which event the next succeeding Eurodollar Business Day which is also a Business Day will be used). If the Telerate News Services (1) publishes more than one (1) such LIBOR Rate, the average of such rates shall apply, or (2) ceases to publish the LIBOR Rate, then the LIBOR Rate shall be determined from such substitute financial reporting service as Lender in its discretion shall determine. The term "EURODOLLAR BUSINESS DAY", shall mean any day on which banks in the City of London are generally open for interbank or foreign exchange transactions. (75) "LIEN" means any mortgage or deed of trust (including any Deed of Trust), pledge, hypothecation, assignment, deposit arrangement, lien, Charge that becomes a lien on real property, claim, security interest, easement or encumbrance, or preference, priority or other security agreement of any kind or nature whatsoever (including any lease or title retention agreement, any financing lease having substantially the same economic effect as any of the foregoing, and the filing of, or agreement to give, any financing statement perfecting a security interest under the Code or comparable Law of any jurisdiction). (76) "LOAN" means the loan to be made by Lender to Borrower under this Agreement up to the Maximum Loan Amount. (77) "LOAN DOCUMENTS" means this Agreement, the Note, the Borrowing Date Certificate, the Collateral Documents, the Hazardous Substances Indemnity Agreement, the Agreement Regarding Asset Management Agreement, the Whitehall Indemnity and all other agreements, instruments, documents and certificates evidencing, securing, governing or otherwise pertaining to the Loan. (78) "MAJOR WORK" has the meaning set forth in Section 3.2 hereof. (79) "MATERIAL ADVERSE EFFECT" shall mean a material adverse effect on (a) the assets, operations or financial condition of Borrower taken as a whole, (b) Borrower's ability to pay the Obligations in accordance with the terms thereof and otherwise comply with the terms of this Agreement, (c) any Property individually or (d) Lender's Liens (individually or collectively) on the Collateral or the priority of any such Lien. (80) "MATERIAL AGREEMENT" shall mean any material written or oral agreement, contract, commitment or understanding requiring payments, pledges, or performance executed or assumed by Borrower in connection with the Properties (other than the Loan Documents) which provides for payments by Borrower over the term of any such agreement, contract, commitment or understanding in excess of One Hundred Thousand and No/100 Dollars ($100,000.00) and which is not cancelable by Borrower upon sixty (60) days' or less notice without liability for further payment other than a nominal penalty and which is not assignable without consent of the other party thereto. For purposes of clarification, this term shall not include Leases currently in effect or entered into in accordance with the terms hereof. -10- (81) "MATERIAL LEASE" has the meaning set forth in Section 5.4 hereof. (82) "MATURITY DATE" means the earliest of (a) January 31, 2003, as such date may be extended pursuant to the provisions of Section 2.3(3), (b) the Early Termination Date, or (c) any other date on which the entire Loan is required to be paid in full, by acceleration or otherwise, under this Agreement or any of the other Loan Documents. (83) "MAXIMUM LIABILITY" has the meaning set forth in Section 12.1 hereof. (84) "MAXIMUM LOAN AMOUNT" means $109,185,728.00. (85) "MCNEIL" means McNeil Partners, L.P., a Delaware limited partnership. (86) "NET CAPITAL PROCEEDS" shall mean, with respect to a Capital Transaction, (a) the cash proceeds (including cash equivalents) therefrom plus (b) the cash proceeds (including cash equivalents) of the disposition of any non-cash consideration, in each case received by or for the account of Borrower, less the ordinary and customary direct selling expenses incurred by Borrower in connection with such Capital Transaction (including then customary brokerage commissions for assets similar to the affected Property and a disposition fee to the Asset Manager of up to one percent (1%) of the Consideration (as defined in the Asset Management Agreement) received by Borrower). (87) "NON-STORAGE LEASES" means the Leases, other than the Leases for any portion of the Storage Properties. (88) "NOTE" means the Promissory Note of even date herewith, in the stated principal amount of One Hundred Nine Million One Hundred Eighty-Five Thousand Seven Hundred Twenty-Eight and No/100 Dollars ($109,185,728.00) executed by Borrower, and payable to the order of Lender, in evidence of the Loan. (89) "NOTICE OF ADDITIONAL ADVANCE" means a notice, substantially in the form of Exhibit "A" hereto, which Borrower shall deliver to Lender in connection with each requested Advance and which shall specify the requested date and amount of such Advance. (90) "OBLIGATIONS" shall mean all loans, advances, debts, liabilities and obligations for monetary amounts (whether such amounts are liquidated or determinable) owing by Borrower to Lender, and all present or future covenants and duties regarding such amounts, of any kind or nature, whether evidenced by any note, agreement or other instrument, arising under any of the Loan Documents. This term includes all interest, charges, expenses, attorneys' fees and any other sum chargeable to Borrower under any of the Loan Documents. -11- (91) "OPERATING CASH FLOW" shall mean, for any period, the excess, if any, of (a) cumulative Gross Receipts from all Properties and from any other source of Borrower for the period in question (including from any interest rate cap or other hedging device) over (b) cumulative Operating Expenses (excluding debt service) for all Properties for such period. (92) "OPERATING EXPENSES" shall mean, for any period, all ordinary, normal and necessary cash expenses directly or indirectly incurred by or for the account of Borrower in respect of any Property as would be incurred by owners of assets similar to the Properties and which would be considered operating expenses under GAAP, including payments under the Fidelity Federal Ground Leases, repair and maintenance costs, Charges in respect of the Properties, litigation costs, fees paid to property managers and expenses properly reimbursable to the property managers and which would otherwise be an operating expense hereunder, including Reserves therefor; but excluding (a) any completed Capital Transactions and the expenses (including adjustments and prorations) incurred in any completed Capital Transaction, (b) any amounts in respect of the Asset Management Fee or any other fee, compensation or reimbursement payable to Asset Manager under the Asset Management Agreement, or Asset Manager's or Borrower's general partner's overhead and operating expenses, (c) any item for which a Reserve has been previously established and considered an Operating Expense, and (d) any costs, fees or expenses related to or in connection with the negotiation or consummation of the transactions contemplated by this Agreement. Notwithstanding the foregoing, it is understood and agreed that to the extent that any of the foregoing are funded out of the Loan, such expenses shall not be deemed to be Operating Expenses. (93) "OTHER TAXES" has the meaning set forth in Section 8.10 hereof. (94) "PARTIAL RELEASE NOTICE" has the meaning set forth in Section 2.4 hereof. (95) "PARTNERSHIP AGREEMENT" means that certain Amended and Restated Agreement of Limited Partnership of WXI/MCN Commercial Real Estate Limited Partnership, dated as of January 31, 2000. (96) "PERMITTED ENCUMBRANCES" means the following encumbrances: (a) Liens for taxes or assessments or other governmental charges or levies, either not yet due and payable or to the extent that nonpayment thereof is permitted by the terms of this Agreement; (b) workers', mechanics', or other similar liens on the Properties arising after the Closing Date in the ordinary course of business and securing indebtedness which can be realized by foreclosure on any Property and which (i) with respect to such Property shall not exceed $100,000 at any time outstanding, and (ii) with respect to all of the Properties shall not exceed, in the aggregate, $1,000,000 at any time outstanding, and which are being contested in good faith to the extent and in the manner expressly permitted under this Agreement; (c) deposits securing or in lieu of surety, appeal or customs bonds in proceedings to which Borrower is a party; (d) any attachment or judgment Lien, provided that the -12- judgment it secures shall, within 60 days after the entry thereof, have been discharged or execution thereof stayed pending appeal, or shall have been discharged within 60 days after the expiration of any such stay; (e) any additional permitted liens expressly allowed by any provision of the Loan Documents; (f) mechanics' liens, which are subordinate to the Lien of the applicable Deed of Trust, arising out of work performed by or materials furnished to or on behalf of Tenants for which Borrower is not indebted; (g) with respect to each Property, such exceptions to title as appear on Schedule B to the Title Policy delivered to and accepted by Lender with respect to such Property; and (h) easements, rights-of-way, restrictions (including zoning restrictions), defects or irregularities in title and other similar title matters not, in any material respect, interfering with the operation, use or value of the property encumbered or affected (provided that the foregoing clause (h) shall in no way be deemed a waiver by Lender of, or otherwise operate to impair, any rights or remedies Lender may have under the Title Policies with respect to items described in such clause which are not excluded from coverage under such policies). (97) "PERSON" means any individual, corporation, partnership, joint venture, association, joint stock company, trust, trustee, estate, limited liability company, unincorporated organization, real estate investment trust, government or any agency or political subdivision thereof, or any other form of entity. (98) "PLAN" means, with respect to Borrower, at any time, an employee benefit plan, as defined in Section 3(3) of ERISA, which Borrower maintains, contributes to, or has an obligation to contribute to on behalf of participants employed by Borrower. (99) "POTENTIAL DEFAULT" means the occurrence of any event or condition which, with the giving of notice, the passage of time, or both, would constitute an Event of Default. (100) "PROPERTIES" means, collectively, (a) the Initial Properties, (b) each Additional Property, if any, which is financed or refinanced with an Acquisition Advance, and (c) as to each property described in clauses (a) or (b) above, all other "Property" described in the Deed of Trust encumbering such property. (101) "PROPERTY BASIS" means, with respect to a particular Property, the amount set forth opposite the reference to such Property on the attached Schedule 1.1(B) under the caption "Property Basis." (102) "PROPERTY DOCUMENTS" has the meaning set forth in Section 6.23. (103) "PURCHASE AGREEMENT" means that certain Master Agreement dated as of June 24, 1999, by and among Holding Company, McNeil, the "McNeil Partnerships" described therein, McNeil Investors, Inc., McNeil Real Estate Management, Inc., McNeil Summerhill, Inc. and Robert A. McNeil (104) "RELEASE" has the meaning set forth in Section 4.1 hereof. -13- (105) "RELEASE PAYMENT" has the meaning set forth in Section 2.4 hereof. (106) "REMEDIAL ACTION" has the meaning set forth in Section 4.1 hereof. (107) "RESERVES" means (a) any reserves required by the terms of the Loan Documents, (b) reserves for ordinary trade payables coming due within the next 30 day period, and (c) reserves established by Borrower and approved by Lender, for doubtful accounts, returns, allowances, contingent liabilities, Operating Expenses and the like, in each case as may be, or as may otherwise be required in accordance with GAAP. (108) "SECURITY DEPOSITS" shall have the meaning set forth in Section 5.6 hereof. (109) "SELLER" means, collectively, the "Participating McNeil Partnerships" (as defined in the Purchase Agreement) which at any time held title to one or more Properties. (110) "SHAREHOLDER LITIGATION" means any litigation (whether a court proceeding, arbitration, mediation, administrative action or otherwise) heretofore or hereafter commenced by any limited partners in the Sellers against the Sellers, the general partner(s) of the Sellers, Borrower, Borrower's general partner, Holding Company, Whitehall and/or Lender in connection with, arising from or relating to the Purchase Agreement, any of the other "Transaction Documents" described therein, any of the "Proxy Statements" described therein, any of the transactions contemplated by any of the foregoing, any challenge to the fairness or the bidding process leading up to such transactions (or any of them), and/or any of the matters upon which any of the plaintiffs' claims in the class action litigation described in Section 8.1(d) of the Purchase Agreement were based, in whole or in part. (111) "STATE" means the State of New York. (112) "STORAGE PROPERTIES" means, collectively, those Properties which have a "Self Storage" property type designation on Schedule 1.1(A). (113) "TAXES" has the meaning set forth in Section 8.10 hereof. (114) "TENANT" means the tenant or lessee under any Lease or any other occupant of any Property pursuant to any legal right. (115) "TENANT ALLOWANCES" means, with respect to Leases executed after the Closing Date (a) moving expenses of the Tenant not to exceed three dollars ($3.00) per square foot of rentable space to be leased by such Tenant under the Lease and (b) buyout payments to a Tenant to pay or reimburse such Tenant for amounts required to be paid to the landlord of the space which was leased and surrendered by such Tenant for terminating such lease prior to its stated expiration date, provided that such moving expenses and buyout -14- payments are commercially reasonable and customary for the area in which the particular Property is located. (116) "TENANT IMPROVEMENTS" means (a) tenant improvements which are paid for by Borrower or reimbursed to Tenants in connection with Leases which are commercially reasonable and customary for the area in which the particular Property is located and (b) Tenant Allowances. (117) "TERM" means the period commencing as of the Closing Date and ending on the close of business on the Maturity Date. (118) "TITLE COMPANY" means Lawyers Title Insurance Corporation. (119) "TITLE POLICY" means with respect to each Property, an ALTA mortgagee's title insurance policy as more particularly described on Schedule 2.1 attached hereto. (120) "TO BORROWER'S KNOWLEDGE" means to the knowledge of Whitehall and any Persons which are Affiliates of Whitehall prior to the Closing Date, but without any imputed knowledge from (a) any prior owner of any the Properties, (b) any Persons which, prior to the Closing Date, are Affiliates of any such prior owner, or (c) any other Persons which, prior to the Closing Date, were partners, directors, officers, members, principals, trustees, stockholders, consultants or employees of any such prior owner or any such Affiliate. (121) "WHITEHALL" means Whitehall Street Real Estate Limited Partnership XI, a Delaware limited partnership. (122) "WHITEHALL XII" means Whitehall Street Real Estate Limited Partnership XII, a Delaware limited partnership. (123) "WHITEHALL INDEMNITY" means that certain Indemnification Agreement executed by Whitehall and Whitehall XII in favor of Lender with respect to Shareholder Litigation, in form and substance satisfactory to Lender. (124) "WHITEHALL NET WORTH" means the "Net Worth" of Whitehall and Whitehall XII as defined in the Whitehall Indemnity. (125) "WORK" has the meaning set forth in Section 3.2 hereof. (126) "WORKING CAPITAL ADVANCE" means an Advance made by Lender to Borrower for the purpose of reimbursing Borrower for, or paying for, certain costs in respect of Capital Expenditures, Tenant Improvements and/or Leasing Costs. (127) "WORKING CAPITAL ADVANCE ALLOCATION" means $10,000,000.00. -15- (128) "WORKING CAPITAL BUDGET" means, for any Property, the budget approved by Lender setting forth the amount of Working Capital Advances allocated to pay Capital Expenditures, Tenant Improvements and Leasing Costs incurred in connection with such Property. ARTICLE 2 LOAN TERMS Section 2.1 THE LOAN ADVANCES. (1) PURPOSES. Lender agrees to make to Borrower the Loan, to be funded in one or more Advances and repaid in accordance with this Agreement, for the following purposes: (a) to finance or refinance the Properties and pay certain Loan closing costs; and (b) to fund Working Capital Advances. (2) AMOUNTS. The aggregate amount of all Advances on a cumulative basis shall not exceed the Maximum Loan Amount. In addition, the aggregate amount of all Working Capital Advances, on a cumulative basis, shall not exceed the Working Capital Advance Allocation. (3) FREQUENCY. Advances shall not be made more frequently than once per calendar month. (4) INITIAL ADVANCE. Provided Borrower has satisfied all terms and conditions described in Part A of Schedule 2.1 hereto, Lender shall disburse the Initial Advance on the Closing Date as follows: (a) An amount equal to the commitment fee owing to Lender, plus all other sums owing to Lender described in Part A of Schedule 2.1 hereto, shall be disbursed to Lender in payment of such sums; (b) The amount specified in Lender's escrow and recording instructions shall be disbursed by wire transfer to the Title Company for credit to the escrow established to consummate the Loan closing, which shall be disbursed by the Title Company in accordance with Lender's escrow and recording instructions to finance the acquisition of the Properties and to pay certain Loan closing costs; and (c) The balance of the Initial Advance by wire transfer to Borrower (or as otherwise requested by Borrower). -16- (5) WORKING CAPITAL ADVANCES. During the initial Term, Lender shall make Working Capital Advances to Borrower subject to and in accordance with the following terms and conditions: (a) Working Capital Advances for each Property shall be made in accordance with the allocations set forth in the Working Capital Budget for such Property. The Working Capital Budgets for the Properties are set forth in Schedule 2.1(5) hereof. Unless Lender otherwise consents in writing, Borrower shall not, on a cumulative, aggregate basis, reallocate more than five percent (5.0%) of the Loan funds within a Working Capital Budget. Subject to Lender's prior written consent in each instance, Borrower may reallocate demonstrated surplus Loan funds (i) among categories within any Working Capital Budget (except that such consent is not required to the extent such reallocation is permitted under the immediately preceding sentence), or (ii) under any Working Capital Budget to the Working Capital Budget of one or more other Properties (whether such reallocation is requested in connection with a sale of a Property, the failure to add an Additional Property to the Properties, or otherwise). (b) As to each Working Capital Advance, Borrower shall have satisfied the terms and conditions set forth in Parts B and C of Schedule 2.1 hereto. (c) The amount of each Working Capital Advance shall in no event exceed the lesser of (i) an amount which, when added to the Loan balance, results in a sum equal to the Cash On Cash Limit, or (ii) eighty percent (80%) of the actual costs incurred by Borrower from third parties in respect of the Tenant Improvements, Leasing Costs or Capital Expenditures for which such Advance is requested. In no event shall any Working Capital Advance be used to pay or reimburse Borrower for any commissions, fees, expenses or costs charged by or to be paid for services rendered by Borrower or Borrower's Affiliates. (d) Each Working Capital Advance shall be in an amount not less than Fifty Thousand Dollars ($50,000). (6) ACQUISITION ADVANCES. As to each Additional Property (if any), Lender shall make an Acquisition Advance to Borrower to finance or refinance such Additional Property and to pay certain Loan funding costs in connection therewith, subject to and in accordance with the following terms and conditions: (a) The amount of the Acquisition Advance shall not exceed the least of (i) the amount designated as the "Loan Basis" amount for such Additional Property, as set forth on Schedule 1.1(B), (ii) an amount which, when added to the then existing Loan balance, results in a 10.75% Cash On Cash Return, (iii) an amount which, when added to the then current Loan balance, results in a 1.15 to 1.00 Debt Service Coverage Ratio, and (iv) an amount equal to eighty percent (80%) of the acquisition costs incurred by Borrower for such Additional Property, including the -17- costs of any interest rate cap agreement (or amendment thereto) which Borrower is required to obtain in connection with such Acquisition Advance under the terms of this Agreement. Lender shall determine Borrower's satisfaction of the foregoing condition based upon an updated Operating Cash Flow audit of the Additional Property and each of the Properties. (b) As to each Acquisition Advance, Borrower shall have satisfied the conditions specified in paragraphs 1, 4, 9, 13, 14, 15, 16, 19, 20, 24, 26, 28, 29, 30, 31, 32, 35, 36, 40, 41 and 42 of Part A of Schedule 2.1. (c) Borrower shall have satisfied the terms and conditions set forth in Part B of Schedule 2.1. (d) No new or additional information shall have become known to Lender since the Closing Date which Lender, in it sole discretion, determines would cause any of the environmental or engineering reports with respect to the Additional Property, which were reviewed by Lender prior to the Closing Date, to be inaccurate in any material respect. (e) Borrower shall have paid to Lender, as the balance of the commitment fee owing with respect to the Additional Property, an amount equal to .67% of the amount of the Acquisition Advance funded. (f) Borrower shall have confirmed in writing the revised Cash On Cash Limit and the revised Debt Service Coverage Ratio Limit as determined by Lender in connection with the addition of the Additional Property to the Properties. (g) Notwithstanding anything to the contrary contained in this Agreement, Borrower shall not be entitled to any Acquisition Advance after the Acquisition Advance Termination Date, and all undisbursed Loan proceeds available for Acquisition Advances but which are not advanced on or before the Acquisition Advance Termination Date shall be cancelled. (7) TIMING OF ADDITIONAL ADVANCES. Each Advance following the Initial Advance shall be made no later than 5:00 p.m. (New York City time) on the fifth (5th) Business Day after receipt by Lender of a Notice of Additional Advance for the requested Advance and satisfaction of all conditions to making such Advance (as specified in this Section 2.1 and in Schedule 2.1 hereof). (8) NO REVOLVING ADVANCES. The Loan is not a revolving credit loan, and Borrower is not entitled to any readvances of any portion of the Loan which it may (or is otherwise required to) prepay pursuant to the provisions of this Agreement. -18- Section 2.2 INTEREST RATE; LATE CHARGE. (1) CONTRACT RATE. The outstanding principal balance of the Loan (including any amounts added to principal under the Loan Documents) shall bear interest at a rate of interest equal to three hundred twenty-five (325) basis points in excess of the LIBOR Rate (the "CONTRACT RATE"). (2) COMPUTATION OF INTEREST. Interest shall be computed on the basis of a fraction, the denominator of which is three hundred sixty (360) and the numerator of which is the actual number of days elapsed from the date of the Initial Advance or the date on which the immediately preceding payment was due. (3) LATE CHARGE. If Borrower fails to pay any installment of interest or principal within five (5) days after the date on which the same is due (other than the payment due on the Maturity Date), Borrower shall pay to Lender a late charge on such past-due amount, as liquidated damages and not as a penalty, equal to two percent (2%) of such amount, notwithstanding the date on which such payment is actually paid to Lender; provided, however, that if any court of competent jurisdiction determines that such delinquency charge under this Section 2.2(3) is not liquidated damages for such delinquency (as contemplated by Borrower and Lender), and is deemed to be interest in excess of the maximum amount of interest allowed by applicable Law, the amount actually collected by Lender in excess of such lawful amount shall be applied in accordance with the provisions of Section 11.3 hereof. While any Event of Default exists, the Loan shall bear interest at the Default Rate. Section 2.3 TERMS OF PAYMENT. The Loan shall be payable as follows: (1) INTEREST. Commencing on March 1, 2000, Borrower shall pay interest in arrears on the first Business Day of each month (the "INTEREST PAYMENT DATE") until the Maturity Date, when all amounts secured by and outstanding under the Loan Documents shall be paid in full. (2) PRINCIPAL AMORTIZATION. During the initial Term, the Loan shall be an interest-only loan and Borrower shall not be required to make any regularly scheduled principal amortization payments. If the Term is extended for one or both of the 12-month periods contemplated by Section 2.3(3) below (each, an "EXTENSION PERIOD"), then commencing on March 1, 2003, and continuing on each Interest Payment Date thereafter until all Obligations are paid in full, Borrower shall make monthly principal amortization payments in accordance with this Section 2.3(2), which payments shall be applied to the outstanding principal balance of the Loan. For each Extension Period, Lender shall calculate the total amount of principal payments payable for such Extension Period based upon a 25-year amortization schedule, an amortization period which begins on February 1, 2003, a fixed interest rate equal to the Contract Rate in effect as of February 1 of such Extension Period, and the outstanding principal balance of the Loan as of February 1 of such Extension Period. The amount of the monthly principal amortization payment for a given Extension -19- Period shall be the amount determined by dividing the aggregate amount of all monthly principal amortization payments payable for such Extension Period (calculated as set forth above) by twelve (12). The foregoing notwithstanding, upon application of any Release Payment or any other permitted or required prepayment of the Loan (other than the amortization payments required by this Section 2.3(2)) to the Loan balance, Lender shall recalculate the amount of the monthly principal amortization payments owing for the remainder of the then current Extension Period, based upon the new Loan balance and the Contract Rate then in effect, and such revised principal amortization payment shall be due commencing on the first Interest Payment Date occurring after the date the Release Payment (or such other permitted or required prepayment) is made. (3) MATURITY. On the Maturity Date, Borrower shall pay to Lender all outstanding principal, accrued and unpaid interest, and any other amounts due under the Loan Documents. Subject to the provisions of this paragraph, Borrower, at its option, may extend the Term for two (2) 12-month periods, by giving written notice (the "EXTENSION NOTICE") to Lender of Borrower's election to obtain each such extension not less than sixty (60) days prior to the expiration of the original Term or the first extension period, as applicable. If Borrower elects to so extend the Term, all of the other terms and conditions of this Agreement and the other Loan Documents shall remain in full force and effect and unmodified except that all undisbursed Loan funds shall be canceled as of the original Maturity Date and Borrower shall have no further right to extend the Term after the second extension. Borrower's right to extend the Term is subject to the satisfaction of each of the following conditions as to each extension: (a) No Event of Default has occurred and is continuing on the date on which Borrower gives Lender the Extension Notice and on the last day of the then existing Term; (b) The Cash On Cash Return equals or exceeds twelve and one-half percent (12.50%), and (b) the Debt Service Coverage Ratio equals or exceeds 1.40 to 1.00; (c) Borrower shall have paid to Lender an extension fee (for each such extension) equal to one-quarter of one percent (0.25%) of the outstanding principal balance of the Loan (it being the parties' understanding and agreement that any portion of the Maximum Loan Amount which is undisbursed as of the end of the initial Term shall be canceled and no longer available for disbursement); (d) Borrower shall have completed (i) all structural repairs described in paragraph 2 on Schedule 8.19 which, in accordance with such paragraph (and any revised work plan agreed to by the parties pursuant thereto), are required to be completed prior to commencement of such extension, and (ii) all Remedial Action described in paragraph 3 on Schedule 8.19 hereof (including the delivery of all required "closure" or "no further action" letters with respect to such Remedial Action); -20- (e) Borrower shall execute and deliver such other instruments, certificates, opinions of counsel and documentation as Lender shall reasonably request in order to preserve, confirm or secure the Liens and security granted to Lender by the Loan Documents, including any amendments, modifications or supplements to any of the Loan Documents, endorsements to Title Policies and, if required by Lender, estoppel and other certificates; and (f) Borrower shall pay for any and all reasonable out-of-pocket costs and expenses, including reasonable attorneys' fees and disbursements, incurred by Lender in connection with or arising out of the extension of the Term. (4) PREPAYMENT. Except as provided below, at any time during the Term, upon not less than ten (10) days' prior written notice to Lender, Borrower may prepay the Loan in whole or in part without premium or penalty, provided that each such prepayment shall be accompanied by the payment of accrued and unpaid interest on the principal amount being prepaid, through the date of prepayment, and any other costs or expenses which are payable to Lender in accordance with the terms hereof or any other Loan Document. The foregoing notwithstanding, prior to August 1, 2001, the Loan shall be closed to prepayment in whole, and partial prepayment shall only be permitted in connection with a sale or other transfer of a Property to a Person which is not an Affiliate of Borrower or Whitehall. From and after August 1, 2001, Loan shall be closed to partial prepayment from a refinance (whether by third party financing, additional capital contributions, or otherwise) of one or more Properties and from a sale or other transfer or conveyance of one or more Properties to an Affiliate of Borrower or Whitehall. A prepayment premium equal to two percent (2.0%) of the outstanding principal balance of the Loan shall be payable if an Event of Default occurs and the Loan is accelerated prior to August 1, 2001. Borrower acknowledges that the prepayment premium required by this Section 2.3(4) constitutes partial compensation to Lender for the costs of reinvesting the Loan proceeds and for loss of the contracted rate of return on the Loan. Furthermore, Borrower acknowledges that the loss that may be sustained by Lender as a result of such prepayment by Borrower is not susceptible of precise calculation and the prepayment premium represents the good faith effort of Borrower and Lender to compensate Lender for such loss. Borrower confirms that Lender's agreement to make the Loan at the interest rate and on the other terms set forth herein constitutes adequate and valuable consideration, given individual weight by Borrower, for the prepayment provision set forth in this Section. Notwithstanding anything to the contrary contained in this Section 2.3(4), none of the foregoing restrictions on prepayments of the Loan shall apply to a prepayment resulting from a sale, transfer or refinance of the Fidelity Federal Property (provided that the release of such Property shall be subject to Section 2.4). (5) EARLY LOAN ACCELERATION. Notwithstanding anything to the contrary contained in this Agreement, if at any time (a) the outstanding principal balance of the Loan is less than Fifteen Million Dollars ($15,000,000) and (b) the Cash On Cash Return is less than twelve percent (12.0%), Lender shall have the right to accelerate the Loan, whereupon all amounts due under the Loan Documents shall become due and payable without any -21- penalty or premium on the date which is one hundred twenty (120) days (the "EARLY TERMINATION DATE") after the date that Lender provides Borrower with notice of its intent to accelerate the Loan pursuant to the provisions of this paragraph; provided that Borrower shall have the right to repay the Loan without penalty or premium (including the premium contemplated in Section 2.3(4) above, if payable) on any earlier date after Borrower's receipt of such notice. Borrower shall pay to Lender, in immediately available funds, all outstanding principal, accrued and unpaid interest, and any other amounts due under the Loan Documents as of the Early Termination Date (or as of such earlier date on which Borrower elects to repay the Loan, as permitted in this paragraph). (6) APPLICATION OF PAYMENTS. All payments received by Lender under the Loan Documents shall be applied: first, to any fees and expenses due to Lender under the Loan Documents; second, to any Default Rate interest or late charges; third, to accrued and unpaid interest; and fourth, to the principal sum and other amounts owing under the Loan Documents. (7) LENDER ADVANCES TO COVER BORROWER'S PAYMENTS. Lender is authorized to, and at is sole option may, make advances on behalf of Borrower for payment of all fees, expenses, charges, costs, principal, interest and other sums incurred or payable by Borrower hereunder when and as Borrower fails to promptly pay any such amounts (after any applicable grace period). To the extent permitted by Law, any such advances made by Lender shall be added to the Obligations, shall bear interest from the date advanced until paid at the Default Rate and shall be secured by the Collateral. (8) RECEIPT OF PAYMENTS. Borrower shall make each payment under this Agreement not later than 2:00 p.m. (New York City time) on the day when due in lawful money of the United States of America in immediately available funds to Lender's depository bank in the United States as designated by Lender from time to time for deposit in Lender's depositary account. For purposes only of computing interest hereunder, all payments shall be applied by Lender to the Loan on the date payment has been credited by Lender's depository bank to Lender's account in immediately available funds. Section 2.4 COLLATERAL; RELEASES OF COLLATERAL. The Loan and all other Obligations (other than Borrower's Obligations under the Hazardous Substances Indemnity Agreement) shall be secured by the Collateral. Except as expressly set forth below in this Section, Lender shall have no obligation to release any of the Collateral until all Obligations have been paid and performed in full and all obligations of Lender under this Agreement and the other Loan Documents have terminated. Borrower shall be entitled to obtain the release of a Property from the Lien of the Loan Documents in connection with a Capital Transaction (excluding a Capital Transaction consisting of an event giving rise to an insurance recovery or condemnation award in excess of repair/restoration costs), provided that all of the following conditions are satisfied: (1) Borrower provides Lender with reasonable prior written notice (the "PARTIAL RELEASE NOTICE") of the proposed release together with copies of any documents which Borrower requests that Lender execute in connection with such proposed release. -22- (2) Concurrently with Lender's release of the Property, Borrower shall pay to Lender an amount (the "RELEASE PAYMENT") determined as follows: (a) if, after giving effect to the proposed release, (i) the Loan balance does not exceed the least of (A) eighty percent (80%) of the sum of the Property Basis amounts for all the then remaining Properties, (B) the Cash On Cash Limit, and (C) the Debt Service Coverage Ratio Limit, and (ii) the Discounted Release Amount (defined below) is less than the Discounted Funding Amount (defined below), then the Release Payment shall be equal to one-hundred ten percent (110%) of the Adjusted Loan Basis of the Property to be released; or (b) if either or both of the conditions specified in subparagraph (a) immediately above are not satisfied, then the Release Payment shall be equal to one-hundred twenty percent (120%) of the Adjusted Loan Basis of the Property to be released; provided, however, if the release involves an Impaired Property or a Default Property (pursuant to Borrower's rights to obtain a release of such Property set forth elsewhere in this Agreement), then the Release Payment shall be equal to the Adjusted Loan Basis of such Property. Notwithstanding the foregoing, in no event shall the Release Payment for any Property exceed the then outstanding Obligations. As used above, "DISCOUNTED RELEASE AMOUNT" means, as of any date, the aggregate difference between the Release Payments paid by Borrower that were calculated pursuant to subparagraph (a) immediately above (including, for purposes of such calculation, the Release Payment to be paid in connection with the proposed release assuming it is calculated pursuant to subparagraph (a) above) and the amount of such Release Payments which would have been paid by Borrower if such Release Payments had been calculated in accordance with subparagraph (b) immediately above. As used above, "DISCOUNTED FUNDING AMOUNT" means the lesser of (x) $4,300,000, and (y) the positive difference, if any, obtained by subtracting the amount of the Initial Advance from an amount equal to eighty percent (80%) of the aggregate acquisition costs for all Properties. (3) Except as provided in this paragraph, no Event of Default has occurred and is continuing on the date on which Borrower gives Lender the Partial Release Notice and on the date of delivery of the release; provided, however, if the Property to be released is a Default Property and the only Event of Default which exists is the Event of Default which caused such Property to be designated as a Default Property (and which arises from the occurrence of a breach, default, failure of condition or other event for which no cure period is provided), then this condition shall be waived so long as the Default Property is released within 10 days of notice from Lender, as required in the last paragraph of Section 10.1. In addition, Lender shall release a Property which is the subject of a Complete Taking notwithstanding the existence of an Event of Default, if and only if (a) Borrower has otherwise satisfied the conditions set forth in this Section 2.4 to the release of such Property, and (b) Borrower pays to Lender, as the Release Payment for such Property, an amount equal -23- to 100% of the Net Capital Proceeds from the Complete Taking (it being understood by the parties that if no Event of Default exists, the amount to be paid by Borrower shall be the Release Payment as determined in accordance with the paragraph (2) above). (4) Borrower shall execute and deliver such other instruments, certificates, opinions of counsel and documentation as Lender shall reasonably request in order to preserve, confirm or secure the Liens and security granted to Lender by the Loan Documents, including any amendments, modifications or supplements to any of the Loan Documents and partial release endorsements to the existing Title Policies. (5) Borrower shall pay for any and all reasonable out-of-pocket costs and expenses incurred in connection with any proposed release, including reasonable attorneys' fees and disbursements and all title insurance premiums for any endorsements to any existing Title Policies reasonably required by Lender in connection with such proposed release. (6) Borrower shall deliver to Lender evidence reasonably satisfactory to Lender that all amounts owing to any parties in connection with the transaction relating to the proposed release have been paid in full, or are simultaneously paid in full at closing, or adequate Reserves therefor are established by Borrower in cash with respect to contingent or other liabilities that may arise out of such transaction. (7) Unless the proposed release will repay the Loan in full (and terminate all of Lender's obligations hereunder), or the proposed release involves the Fidelity Federal Property or an Impaired Property or a Default Property, the release shall be in connection with a sale or other transfer of the Property to a Person which is not an Affiliate of Borrower or Whitehall. If the proposed release involves the Fidelity Federal Property or an Impaired Property or a Default Property, then concurrently with the release Borrower shall transfer the Property to an entity which may be related to Borrower, so long as Borrower is not directly or indirectly liable on a recourse basis for any of such entity's indebtedness or obligations to any Person. (8) If the Release Payment to be paid in connection with the proposed release would reduce the Loan Balance to an amount less than $30,000,000, then in addition to the foregoing conditions, such release shall be subject to the additional condition that either (a) the Fidelity Federal Property has been previously released, or is being concurrently released, in accordance with this Section 2.4, or (b) Borrower shall have delivered to Lender a consent to encumbrance and estoppel, substantially in the form previously provided by Lender to Borrower, executed by each of the lessors under the Fidelity Federal Ground Leases (and by any Person owning a fee interest in any portion of the Fidelity Federal Property). Section 2.5 ADJUSTMENTS TO ADJUSTED LOAN BASIS. The Adjusted Loan Basis for each Property shall be increased dollar for dollar for Working Capital Advances and other Advances which relate directly to such Property. The Adjusted Loan Basis for each Property shall be decreased dollar for dollar for prepayments of principal which relate directly to such Property (e.g., -24- casualty or condemnation proceeds, or a Release Payment) and any prepayment proceeds in excess of the Adjusted Loan Basis (e.g., the excess portion of the Release Payment for any specific Property) and any other prepayment of principal not directly related to a specific Property shall be allocated by Lender among the Properties, on a pro rata basis, in accordance with each Property's Adjusted Loan Basis. Section 2.6 CAPITAL ADEQUACY; INCREASED COSTS; ILLEGALITY. (1) If Lender shall determine that any new applicable Law adopted after the Closing Date regarding capital adequacy, or any change after the Closing Date in any existing Law, or any change after the Closing Date in the interpretation or administration thereof by any Governmental Authority, central bank or comparable agency charged with the interpretation or administration thereof or compliance by Lender (or its lending office) with any request or directive regarding capital adequacy (whether or not having the force of law) of any such Governmental Authority, central bank or comparable agency, has or would have the effect of reducing the rate of return on Lender's capital as a consequence of its obligations hereunder or credit extended by it hereunder to a level below that which Lender could have achieved but for such adoption, change or compliance by an amount deemed by Lender to be material, then from time to time as promptly specified by Lender in writing, Borrower shall pay such additional amount or amounts as will compensate Lender for such reduction; provided that Borrower shall not be required to pay any amounts pursuant to this paragraph (1) to a subsequent holder of the Note to the extent that such amounts would not have been payable had GECC continued to hold the Note. (2) Upon the occurrence of any of the events set forth in paragraph (1) above, Lender shall promptly notify Borrower in writing of the occurrence of such event. If requested by Borrower, in connection with any demand for payment pursuant to this Section, Lender shall provide to Borrower a summary setting forth in reasonable detail the basis for such demand, the amount required to be paid by Borrower to Lender and the computations made by Lender to determine such amount (which computations shall be deemed conclusive absent manifest error). ARTICLE 3 INSURANCE, CONDEMNATION, DEPOSITS AND RESERVES Section 3.1 INSURANCE. Borrower shall maintain insurance with respect to the Properties as follows: (1) PROPERTY; BUSINESS INTERRUPTION. Borrower shall keep the buildings and the improvements located on each Property insured (a) against loss or damage by fire, lightning, windstorm, tornado, hail and such other further and additional hazards of whatever kind or nature as are now or hereafter may be covered by standard extended coverage "all risk" endorsements (including vandalism, malicious mischief and damage by water (other -25- than flood)) of whatsoever kind, in an amount not less than one hundred percent (100%) of the full replacement cost of such improvements including the cost of debris removal, but excluding the value of foundations and excavation and surface parking, (b) against loss or damage by earthquake, including subsidence, as reasonably required by Lender, and (c) against loss of rentals and business interruption due to any of the foregoing causes, in an amount not less than twelve (12) months anticipated gross rental income or gross business earnings, as applicable. (2) LIABILITY. Borrower shall maintain commercial general liability insurance with respect to each Property and the operations related thereto, whether conducted on or off such Property, against liability for personal injury, including bodily injury and death, and property damage in an amount not less than $1,000,000 per Property and per occurrence, with a $4,000,000 per Property umbrella policy. Such liability insurance shall be on an occurrence basis, shall provide (but need not specifically describe) coverage for sprinkler leakage liability and water damage legal liability, and shall specifically include premises operations, products liability, and broad form contractual coverage. Borrower also shall maintain motor vehicle liability for all owned and non-owned vehicles, including rented and leased vehicles. (3) WORKERS' COMPENSATION. Workers' compensation for employees of Borrower as required by applicable Law. (4) FORM AND QUALITY. All casualty and business interruption or rental income insurance provided hereunder shall name Lender under a standard "non-contributory mortgagee" endorsement or its equivalent, which shall be acceptable to Lender, and liability insurance shall be evidenced by certificates of insurance issued to Lender and naming Lender as additional insured. All property insurance shall provide for loss payable to Lender as provided in this Agreement, shall be provided by insurance companies which have a Best's rating of at least "A-IX" or otherwise shall be acceptable to Lender in its reasonable discretion. Every policy of insurance shall contain an agreement by the insurer that it will not cancel such policy except after thirty (30) days prior written notice to Lender, if obtainable (but in no event less than ten (10) days) and that any loss payable thereunder shall be payable notwithstanding any act or negligence of Lender and Borrower which might, absent such agreement, result in a forfeiture of all or a part of such insurance payment and notwithstanding (a) occupancy or use of the Property for purposes more hazardous than permitted by the terms of such policy, (b) any foreclosure or other action or proceeding taken by Lender pursuant to the Deed of Trust encumbering the Property or (c) any change in title to or ownership of the Property. All deductible amounts under the insurance policies required to be carried pursuant to this Section 3.1 shall be subject to Lender's reasonable approval. At Lender's request, Borrower shall deliver to Lender copies of, or (at Borrower's option) certificates of insurance for, all such policies of insurance. If any insurance required to be provided hereunder shall expire, be withdrawn, become void by breach of any condition thereof by Borrower with respect to any Property, or become void or questionable by reason of the failure or impairment of the capital of any insurer, Borrower immediately shall obtain new or additional insurance which shall conform to the requirements hereof. -26- Borrower shall not take out any separate or additional insurance which is contributing in the event of loss unless it is properly endorsed and otherwise satisfactory to Lender in all respects. Lender shall have the right to conduct a periodic audit of Borrower's procedures in respect of insurance matters and Borrower shall cooperate with Lender therein. (5) EVIDENCE OF INSURANCE. Borrower shall (a) pay as they become due all premiums for the insurance required hereunder, and (b) not later than thirty (30) days if available (but in no event less than ten (10) days) prior to the expiration of each such policy, deliver a certificate of insurance evidencing the insurance required to be provided hereunder for a period of not less than one year, marked "premium paid," or accompanied by such other evidence of payment as shall be reasonably satisfactory to Lender. (6) LENDER'S RIGHT TO PLACE INSURANCE. If Borrower shall be in default of its obligation to insure any Property in accordance with the provisions hereof, Lender, at its option and without notice, may (but shall have no obligation to) obtain such insurance from year to year, and pay the premium or premiums therefor, and, in such event, the amount of all such premiums paid by Lender (a) shall be deemed to be Obligations, (b) shall be secured by the Collateral prior to any right or title to, or interest in, or claim upon, the Collateral subordinate to the Lien of Lender on the Collateral, and (c) shall be immediately due and payable, on demand, together with interest thereon at the Default Rate, from the date of any such payment by Lender to the date of repayment to Lender. (7) INCREASES IN INSURANCE AMOUNTS. Borrower shall increase the amount of all-risk casualty insurance required to be provided pursuant to the provisions of Section 3.1 hereof at the time that each such policy of insurance is renewed (but, in any event, not less frequently than once during each twelve (12) month period) by using the F.W. Dodge Building Index (or, if such index is no longer available, such other similar available index acceptable to Lender) to determine whether there shall have been an increase in the replacement cost of the improvement since the most recent adjustment to any such policy and, if there shall have been any such increase, the amount of insurance required to be provided hereunder shall be adjusted accordingly. (8) COMPLIANCE WITH POLICY REQUIREMENTS. Borrower promptly shall comply with (a) all of the provisions of each such insurance policy affecting the Properties, and (b) all of the requirements of the insurers thereunder applicable to Borrower or to any improvements located on the Properties or to the use, manner of use, occupancy, possession, operation, maintenance, alteration, repair or restoration of any of the improvements located on the Properties, even if such compliance would necessitate structural changes or improvements or would result in interference with the use or enjoyment of the Properties or any portion thereof. (9) ADDITIONAL INSURANCE. Lender shall have the right from time to time to require Borrower to procure such other and additional insurance, and increased amounts, relating to the Properties in such amounts and against such insurable events or occurrences as Lender may reasonably require and which are consistent with industry practice for assets -27- similar to the Properties, including (a) if the Property is located in a federally designated "special flood hazard zone", flood, including surface water; and (b) contingent liability from the operation of any building Laws pertaining to non-conforming property. Section 3.2 CASUALTY; USE AND APPLICATION OF INSURANCE PROCEEDS. In the event of damage or destruction to any Property, or any portion thereof, whether insured or uninsured, Borrower and Lender shall proceed as follows: (1) Borrower promptly shall give written notice of such damage or destruction to Lender (and upon such notification, Schedule 6.5 hereof shall be deemed to have been automatically amended to reflect the matters contained in such notification) and promptly shall cause the Property to be secured in a safe manner and thereafter to prepare and submit a budget, and after approval thereof, shall commence and diligently continue to perform repair, restoration and rebuilding of the portion of the Property so damaged or destroyed (the "WORK") to restore the Property in full compliance with all legal requirements so that the Property shall be at least equal in value and quality and general utility as it was prior to the damage or destruction and, if the cost of the Work as estimated by Lender shall exceed the sum of $100,000 ("MAJOR WORK"), then Borrower, prior to the commencement of the Work, shall furnish to Lender (a) complete plans and specifications for the Work (approved by all Governmental Authorities whose approval is required at such time), for Lender's approval, which approval shall not be unreasonably withheld or delayed, which plans and specifications (as approved by Lender, the "APPROVED PLANS") shall bear the signed approval thereof by the Architect and shall be accompanied by the Architect's signed estimate, bearing the Architect's seal, of the entire cost of completing the Work; (b) certified or photostatic copies of all permits and approvals required by Law in connection with the commencement and conduct of the Work; and (c) a payment and performance bond for and/or guaranty of the payment for and completion of, the Work, which bond or guaranty shall be in form reasonably satisfactory to Lender, shall be signed by a surety or sureties, or guarantor or guarantors, as the case may be, who are reasonably acceptable to Lender, and shall be in an amount of not less than one hundred ten percent (110%) of the Architect's estimate of the entire cost of completing the Work. (2) Borrower shall not commence any Work until Borrower shall have complied with the requirements referred to in paragraph (1) above, and after commencing the Work, Borrower shall perform the Work diligently in a good and workmanlike manner and in good faith in accordance with the Approved Plans, if applicable, and in compliance with all applicable Laws. (3) The casualty insurance policies required to be maintained in accordance with this Agreement shall provide that the proceeds shall be paid in accordance with the provisions of this paragraph. If the proceeds exceed One Hundred Thousand Dollars ($100,000), Borrower promptly shall deliver to Lender any proceeds which are paid directly to Borrower by the casualty insurance carrier. All proceeds delivered to Lender as aforesaid, together with all proceeds paid directly to Lender on account of damage or destruction to the Property, less the cost, if any, to Lender of such recovery and of paying out such proceeds -28- (including reasonable attorneys' fees and other third party out-of-pocket costs allocable to inspecting the Work and reviewing the plans and specifications therefor), upon written request of Borrower, shall be applied by Lender to the payment of the cost of the Work and shall be paid out from time to time as the Work progresses to Borrower and/or, at Lender's option exercisable from time to time, directly to the contractor, subcontractors, materialmen, laborers, engineers, architects and other persons rendering services or materials in connection with the Work, except as otherwise hereinafter provided, but subject to the following conditions, any of which Lender may waive: (a) If the Work to be done is Major Work, as reasonably determined by Lender, the Architect shall administer the Work. (b) Each request for payment shall be made at least ten (10) days prior to the requested date of disbursement and shall be accompanied by a certificate of an officer of the general partner of Borrower stating that (i) all of the Work completed has been done in a good and workmanlike manner and in material compliance with the Approved Plans (if applicable), and in accordance with all applicable provisions of Law; (ii) the sum requested is justly required to reimburse Borrower for payments by Borrower to, or is justly due to, the contractor, subcontractors, materialmen, laborers, engineers, architects or other persons rendering services or supplying materials in connection with the Work (giving a brief description of such services and materials), and that when added to all sums previously paid out by Lender, if any, the resulting sum does not exceed the value of the Work done to the date of such certificate; and (iii) the amount of proceeds remaining in the hands of Lender, together with other funds otherwise available to Borrower, will be sufficient on completion of the Work to pay for the same in full (giving in such reasonable detail as Lender may require an estimate of the cost of such completion and, if such other funds are required, as to the sources of such funds). If the Work is structural or Major Work, as reasonably determined by Lender, then each request for payment therefor also shall be accompanied by a certificate of the Architect confirming, in Architect's professional opinion, the matters listed in clauses (i) and (ii) of the preceding sentence. (c) Each request shall be accompanied by waivers or releases of liens, reasonably satisfactory to Lender, covering that part of the Work previously paid for, if any, and by a search prepared by a title company or other evidence satisfactory to Lender showing that any mechanic's lien or other lien or instrument for the retention of title relative to the Work which has been filed with respect to the Property or any part thereof, other than Permitted Encumbrances and those which may have been approved by Lender, have been discharged of record by bonding or otherwise. (d) None of the Material Leases in effect immediately prior to the damage or destruction shall have been canceled, nor contain any still exercisable right to cancel, due to such damage or destruction. -29- (e) There shall be no Event of Default on the part of Borrower under this Agreement or any other Loan Documents. (f) With respect to the final advance only (which shall include any retainage previously held back by Lender) the request for any payment after the Work has been completed shall be accompanied by a copy of any certificate or certificates required by Law to render occupancy and operation of the Property legal. (4) Upon completion of the Work and payment in full therefor, or upon failure on the part of Borrower promptly to commence or diligently to continue the Work, or at any time upon request by Borrower, the amount of any proceeds then or thereafter in the hands of Lender shall be applied by Lender to the Loan balance. (5) In the event the Work to be done is not Major Work, the proceeds shall be paid to Borrower to be applied toward the cost of the Work, subject to the provisions of the foregoing paragraphs (1), (2), (3) and (4) above, other than those applicable to Major Work. (6) If: (a) within sixty (60) days after the occurrence of any damage or destruction to a Property or any portion thereof requiring Major Work in order to restore the Property, Borrower fails to submit to Lender for Lender's approval plans and specifications for the repair, restoration and rebuilding of the Property so damaged or destroyed (approved by the Architect and by all Governmental Authorities whose approval is required at such time); or (b) within ninety (90) days after such plans and specifications are approved by all such Governmental Authorities, other parties and Lender, Borrower fails to promptly commence such repair, restoration and rebuilding; or (c) thereafter Borrower fails to diligently continue such repair, restoration and rebuilding or is more than 30 days delinquent in the payment to mechanics, materialmen or others of the costs incurred in connection with such Work (other than as a result of Lender's improper failure to release the insurance proceeds for such Work and other than payment delays associated with amounts which Borrower is contesting in good faith to the extent and in the manner expressly permitted under this Agreement); or (d) in the case of any damage or destruction to the Property or any part thereof not requiring Major Work in order to restore the Property, as determined by Lender, if Borrower fails to promptly repair, restore and rebuild the Property so damaged or destroyed, or if Borrower in any other respect fails to comply with its restoration obligations under this Section 3.2, then, in addition to all other rights herein set forth, and after giving Borrower ten (10) days' written notice of the nonfulfillment of one or more of the foregoing conditions, Lender may, at its option, perform or cause to be performed such repair, restoration and rebuilding, and may take such other steps as it deems advisable to perform such Work; provided, however, that Lender shall be permitted to give such shorter notice (and in such manner) as is reasonably practical in case of emergency circumstances. Lender may apply all or a portion of the proceeds (without the need to fulfill any other requirements of this Section 3.2) to reimburse Lender for all amounts expended or incurred by it in -30- connection with the performance of such work, and any excess costs shall be paid by Borrower to Lender upon demand. Section 3.3 CONDEMNATION. (1) Borrower, immediately upon obtaining actual knowledge of the institution of any proceedings for the condemnation of any Property or any portion thereof, shall notify Lender of the pendency of such proceedings (and upon such notification, Schedule 6.4 hereof shall be deemed to have automatically been modified to reflect the matters contained in such notification). Lender, at its election and in its discretion, may participate in any such proceedings and Borrower, from time to time, shall deliver to Lender all instruments requested by Lender to permit such participation. All awards which are payable to Borrower from a condemnation or other taking, or purchase in lieu thereof, of any Property or any portion thereof, shall be paid and applied in accordance with the provisions of this Section 3.3. All such awards are hereby assigned to and shall be paid to Lender. Borrower, upon request by Lender, shall make, execute and deliver any and all instruments requested for the purposes of confirming the assignment of the aforesaid awards and compensation to Lender free and clear of any Liens. Borrower hereby authorizes Lender to collect and receive such awards, to give proper receipts and acquittances therefor and, to apply the same in the manner set forth in this Agreement. (2) In the event that a portion of any Property is taken or condemned so that there is less than a Complete Taking, then Borrower promptly shall commence and diligently continue to repair, restore, replace or rebuild the Property in accordance with the provisions of Section 3.2 hereof, as if such taking or condemnation had resulted in a casualty to the Property, and the proceeds of any award paid to Lender in connection therewith, shall be made available to Borrower for such purposes; provided, however, that in such event Borrower shall comply with, and such proceeds shall be disbursed to Borrower in accordance with, the provisions of Section 3.2 hereof. In the event of a Complete Taking, all Net Capital Proceeds therefrom shall be applied in accordance with the release provisions in Section 2.4. (3) Notwithstanding any taking by eminent domain, alteration of the grade of any street or other injury to or decrease in value of any Property by any Governmental Authority, Borrower shall continue to make all payments due hereunder and under the other Loan Documents. Section 3.4 DEPOSITS. (1) CHARGES. Borrower shall segregate in a separate account held by Borrower in a depository acceptable to Lender (the "CHARGES ACCOUNT") and deposit therein on or before the twenty-fifth (25th) day of each month from and after the Closing Date until the Obligations have been paid in full, an amount equal to one-twelfth (1/12th) of the annual Charges in respect of all Properties. Such deposits shall be used by Borrower to pay such Charges prior to delinquency or any earlier date that any interest or penalty can be imposed thereon. On the Closing Date, Borrower shall deposit into the Charges Account an amount -31- which when added to the monthly deposits required to be made thereafter pursuant to this Section is sufficient to pay the next installment of such Charges. From time to time, on demand by Lender, Borrower shall pay into the Charges Account additional sums sufficient to permit payment of the next due installments of such Charges, if, and to the extent that, the required monthly deposits thereafter falling due before the respective payment dates would otherwise be insufficient to permit the full payment thereof. (2) GENERAL REQUIREMENTS FOR FUNDS IN SEGREGATED ACCOUNTS. Borrower shall irrevocably instruct and shall cause all depositories maintaining any segregated accounts required under the terms of this Agreement (including the Charges Account, the Security Deposits and Lease Buy Out Consideration accounts and accounts in respect of any Impaired Properties) to, within five (5) days after demand from Lender, deposit all funds deposited in such segregated accounts maintained by Borrower into segregated accounts maintained by Lender. Thereafter, Borrower shall cause all deposits which Borrower otherwise would have been required to make into Borrower's segregated accounts to be deposited in such accounts maintained by Lender. Borrower shall contemporaneously with the delivery of such deposits to Lender, deliver to Lender any security deposit in the form of a letter of credit, certificate of deposit or similar non-cash form of credit enhancement which exceeds $50,000. Upon any Event of Default, Lender may apply any funds deposited in the accounts maintained by Lender or Borrower to the payment of or to the performance of any Obligation, except for any Security Deposit which, under the terms of the Lease to which it relates, must be maintained in a segregated account. Borrower hereby designates Lender as its attorney-in-fact, which designation is irrevocable and coupled with an interest, to draw upon the accounts of Borrower in the name of Borrower and to apply the funds therein as provided in the immediately preceding sentence. As additional security for the Obligations, Borrower hereby pledges to Lender, and grants to Lender a security interest in, all Charges Accounts and all other segregated accounts required under this Agreement (including the accounts maintained by Lender to the extent Borrower has any interest therein), and all funds at any time on deposit therein. Prior to the Closing Date, Borrower and Lender shall have executed and delivered a notice to the depository at which any such account is held (if such account is located in any state in which Lender determines such notice is necessary or appropriate in connection with the pledge of, and grant of security interest in, such account), which notice shall be substantially in the form of Exhibit "B" hereto. Borrower shall deliver to Lender monthly reports of all balances and activity with respect to each of the segregated accounts required by the terms of this Agreement and any other information reasonably requested by Lender. -32- ARTICLE 4 ENVIRONMENTAL MATTERS Section 4.1 CERTAIN DEFINITIONS. As used herein, the following terms have the meanings indicated: (1) "ENVIRONMENTAL LAWS" means all Laws, now or hereafter in effect, and in each case as amended or supplemented from time to time, and any judicial or administrative interpretation thereof, including any applicable judicial or administrative order, consent decree or judgment, relative to the applicable Property, relating to the regulation and protection of the environment and natural resources (including ambient air, surface water, groundwater, wetlands, land surface or subsurface strata, wildlife, aquatic species and vegetation). "Environmental Laws" shall include Comprehensive Environmental Response, Compensation, and Liability Act of 1980, as amended (42 U.S.C. ss. 9601 et seq.) ("CERCLA"); the Hazardous Material Transportation Act, as amended (49 U.S.C. ss. 1801 et seq.); the Federal Insecticide, Fungicide, and Rodenticide Act, as amended (7 U.S.C. ss. 136 et seq.); the Resource Conservation and Recovery Act, as amended (42 U.S.C. ss. 6901 et seq.) ("RCRA"); the Toxic Substance Control Act, as amended (15 U.S.C. ss. 2601 et seq.); the Clean Air Act, as amended (42 U.S.C. ss. 740 et seq.); the Federal Water Pollution Control Act, as amended (33 U.S.C. ss. 1251 et seq.); those portions of the Occupational Safety and Health Act, as amended (29 U.S.C. ss. 651 et seq.) ("OSHA") concerning Hazardous Materials; and the Safe Drinking Water Act, as amended (42 U.S.C. ss. 300f et seq.), and any and all regulations promulgated thereunder, and all analogous state and local counterparts or equivalents and any environmental transfer of ownership notification or approval statutes such as the New Jersey Industrial Site Recovery Act (N.J. Stat. Ann. ss. 13:1K-6 et seq.) ("ISRA"). (2) "ENVIRONMENTAL LIABILITIES AND COSTS" means, as to any Person, all liabilities, obligations, responsibilities, Remedial Actions, losses, damages, punitive damages, consequential damages, treble damages, costs and expenses (including all fees, disbursements and expenses of counsel, experts and consultants and costs of investigation and feasibility studies), fines, penalties, sanctions and interest incurred as a result of any claim or demand pending or threatened by any other Person, whether based in contract, tort, implied or express warranty, strict liability, criminal or civil statute or common law (including any thereof arising under any Environmental Law, permit, order or agreement with any Governmental Authority or other Person) and which relate to any environmental condition regulated under any Environmental Law or in connection with any other environmental matter or a Release or threatened Release in connection with any Property. (3) "HAZARDOUS MATERIALS" means (a) petroleum or chemical products, whether in liquid, solid, or gaseous form, or any fraction or by-product thereof, (b) asbestos or asbestos-containing materials, (c) polychlorinated biphenyls (pcbs), (d) radon gas, (e) underground storage tanks, (f) any explosive or radioactive substances, (g) lead or lead-based paint, or (h) any other substance, material, waste or mixture which is or shall be -33- listed, defined, or otherwise determined by any Governmental Authority to be hazardous, toxic, dangerous or otherwise regulated, controlled or giving rise to liability under any Environmental Laws. (4) "RELEASE" means, as to any Person, any release, spill, emission, leaking, pumping, injection, deposit, disposal, discharge, dispersal, leaching or migration of any Hazardous Materials in violation of Environmental Law into the indoor or outdoor environment or into or out of any property owned by such Person, including the movement of Hazardous Materials in violation of Environmental Law through or in the air, soil, surface water, ground water or property, any disposal, any discharge, spillage, uncontrolled loss, seepage or filtration of any Hazardous Materials in violation of Environmental Law. (5) "REMEDIAL ACTION" means all actions required by Environmental Law to (a) clean up, remove, treat or in any other way address Hazardous Materials in the indoor or outdoor environment, (b) prevent the Release or threat of Release or minimize the further Release of Hazardous Materials so they do not migrate or endanger or threaten to endanger public health or welfare or the indoor or outdoor environment, or (c) perform pre-remedial studies and investigations and post-remedial monitoring and care. Section 4.2 REPRESENTATIONS AND WARRANTIES ON ENVIRONMENTAL MATTERS. As of the Closing Date, except as disclosed in the reports listed on Schedule 4.2 hereof, to Borrower's knowledge, (1) no Hazardous Material is now or was formerly used, stored, generated, manufactured, installed, disposed of or otherwise present at or about any Property or any property adjacent to such Property (except for cleaning and other products currently used in connection with the routine maintenance or repair of any Property in full compliance with Environmental Laws), (2) all permits, licenses, approvals and filings required by Environmental Laws have been obtained, and the use, operation and condition of the Property does not, and did not previously, violate any Environmental Laws, and (3) no civil, criminal or administrative action, suit, claim, hearing, investigation or proceeding has been brought or been threatened, nor have any settlements been reached by or with any parties or any liens imposed in connection with any Property concerning Hazardous Materials or Environmental Laws, nor have any written notices concerning Hazardous Materials or Environmental Laws been received from any Person in connection with any assets or activities of Borrower or any Property. Borrower further represents and warrants that (a) to its knowledge (i) neither Borrower nor any other party is or has been involved in operations at or near any of the Properties which operations could lead to (A) the imposition of liability on Borrower, or on any subsequent or former owner of any of the Properties or (B) the creation of a lien on any of the Properties under the Environmental Laws or under any similar laws or regulations, and (ii) Borrower has not permitted any tenant or occupant of any of the Properties to engage in any activity that could impose liability under the Environmental Laws on Borrower or any other owner of any of the Properties, (b) neither Borrower any other party will be involved in operations at or near any of the Properties which operations could lead to (i) the imposition of liability on Borrower, or on any subsequent or former owner of any of the Properties or (ii) the creation of a lien on any of the Properties under the Environmental Laws or under any similar laws or regulations, and (c) Borrower will not permit any tenant or occupant of any of the Properties to engage in any activity -34- that could impose liability under the Environmental Laws on Borrower or any other owner of any of the Properties. Section 4.3 COVENANTS ON ENVIRONMENTAL MATTERS. (1) Borrower shall (a) comply strictly and in all respects with the requirements of the Environmental Laws and shall notify Lender within 10 days of Borrower's obtaining knowledge in the event of (i) any Release at, upon, under or within any of the Properties or (ii) discovery of any Hazardous Materials at, upon, under or within any of the Properties where such discovered Hazardous Materials may result in Environmental Liabilities and Costs and (b) forward promptly to Lender copies of all orders, notices, permits, applications and other communications and reports Borrower receives in connection with any Release or the presence of any Hazardous Materials or any other matters relating to the Environmental Laws as all of the above may affect any of the Properties or any other properties owned by Borrower. Without limiting the foregoing, Borrower specifically covenants and agrees to complete the Remedial Action described in paragraph 3 of Schedule 8.19 hereof, for the Properties identified therein, within the time frame(s) set forth therein for the completion of such work. (2) To the extent that Lender reasonably believes that circumstances exist that require additional environmental testing to be performed on the Properties, promptly upon the written request of Lender from time to time, Borrower shall provide Lender, at Borrower's expense, with an environmental site assessment or environmental audit report prepared by an environmental engineering firm mutually acceptable to Lender and Borrower, to assess with a reasonable degree of certainty the presence or absence of any Hazardous Materials and the potential costs in connection with Remedial Action of any Hazardous Materials found on, under, at or within any of the Properties. (3) Subject to the provisions of Section 12.1 hereof, Borrower and its partners shall at all times indemnify and hold harmless Lender against and from any and all Environmental Liabilities and Costs, including reasonable attorneys' fees, litigation costs and any costs of settlement, suffered or incurred by Lender, including those with respect to: (a) any Release, the threat of a Release, or the presence of any Hazardous Materials affecting any of the Properties, whether or not the same originates or emanates from any of the Properties or any contiguous real property, including any loss of value of any of the Properties as a result of any of the foregoing; (b) any costs of Remedial Action incurred by the United States Government or any costs incurred by any other Person or damages from injury to, destruction of, or loss of natural resources, including reasonable costs of assessing such injury, destruction or loss incurred pursuant to any Environmental Laws; and/or -35- (c) liability for personal injury or property damage arising under any statutory or common law tort theory, including damages assessed for the maintenance of a public or private nuisance or for the carrying on of an abnormally dangerous activity at or near any of the Properties. The provisions of this Section 4.3 shall apply whether or not the Environmental Protection Agency, any other federal agency or any state or local environmental agency has taken or threatened any action in connection with the presence of any Hazardous Materials. Notwithstanding the foregoing or anything else to the contrary in the Loan Documents, in no event shall Borrower or its partners indemnify Lender for any Environmental Liabilities and Costs caused by (i) actions taken solely and negligently by Lender, its successors and assigns (including any purchaser at a foreclosure sale), or (ii) the presence of Hazardous Materials on any Property which is brought on a Property during the time that Lender or its successors or assigns (including a purchaser at a foreclosure sale) takes actual physical possession and control of such Property (except to the extent caused by Borrower). (4) In the event of any Release, the threat of a Release, or the presence of any Hazardous Materials, where such may result in Environmental Liabilities and Costs, affecting any Property, whether or not the same originates or emanates from any Property or any contiguous real property, or if Borrower shall fail to comply with any of the requirements of the Environmental Laws, Lender may at its election, but without the obligation so to do, give such notices and/or cause such work to be performed and/or take any and all other actions as Lender shall reasonably deem necessary in order to abate such Release, remove the Hazardous Materials to the extent required by the Environmental Laws, cure Borrower's noncompliance with Environmental Laws or take such steps as it deems necessary to remove any lien imposed by federal or state authorities under Environmental Laws. (5) If prior to the Maturity Date Lender reasonably determines after consultation with Borrower (a) that Borrower faces a material risk of sustaining an Environmental Liability and Cost (other than the cost of any Remedial Action in respect of any Property that will continue to be owned by Borrower) and (b) that, taking into account Borrower's then existing assets and other liabilities, the outstanding Obligations, available insurance coverage, the availability of indemnification or contribution from other parties (such as prior owners or owners of nearby properties) and other relevant factors, such as an orderly (not forced) disposition of the Properties, there is a material risk that Borrower may be unable to satisfy such contingent Environmental Liability and Cost if and when it becomes due and to pay and perform all of the Obligations when due in full, such that the partners in Borrower might become obligated in respect of the Loan on a recourse basis as provided in Section 12.1 hereof, then by notice to Borrower, Lender may require Borrower to establish and fund to the extent of monies otherwise available to Borrower for distribution to its partners, a Reserve in a reasonable amount to satisfy such material risk and to maintain such funded Reserve in such amount and until such time as Lender can reasonably determine that such Reserve is no longer needed to satisfy the requirements of clauses (a) and (b) of this sentence. In such event, Borrower, notwithstanding the foregoing provisions of this -36- Section 4.3, shall be required, after making payments otherwise required on the Loan, to apply any additional Operating Cash Flow or Net Capital Proceeds to fund such Reserve before making any distributions to the partners in Borrower. Borrower may, not more often than once each quarter, require Lender to confirm that it requires continuation of such Reserve and Lender shall set forth its reasons for so requiring. Borrower will cooperate with Lender and make available to it such information as Lender may reasonably request for purposes of making any such determination regarding a Reserve, and Lender shall in good faith consider any relevant information in respect of such matter provided to it by Borrower or any of its partners. (6) In the event of a dispute between Lender and Borrower or any partners in Borrower as to whether Borrower faces a material risk of sustaining an Environmental Liability and Cost as set forth in clause (a) of paragraph (5) above or the estimated dollar amount of such material risk, then Borrower shall pick an appropriate consultant and Lender shall pick an appropriate consultant, and the two consultants shall confer and jointly determine whether or not Borrower faces a material risk and the estimated dollar amount of such material risk as more fully set forth in clause (a) of paragraph (5) above. If the two consultants cannot agree within thirty (30) days after being appointed as consultants as to whether such a material risk exists or the estimated dollar amount of such material risk, the two consultants will, within seven (7) days after the expiration or such thirty (30) day period, jointly select a third consultant and within thirty (30) days of its selection, the third consultant shall issue its written determination as to whether such a material risk exists and the estimated dollar amount of such material risk, which determination shall be final and binding on all parties. In the event that the two consultants shall be unable to timely agree on the selection of a third consultant, the third consultant shall be selected by the President of the American Arbitration Association. In the event of a dispute between Lender and Borrower or any partners in Borrower in respect of the establishment or continuation of any such Reserve, such Reserve shall be established or continued in the interim while such dispute is resolved. No such resolution shall constitute a limitation on or waiver of Lender's right to seek recourse (subject to the provisions of Section 12.1 hereof) from the partners in Borrower to the extent of distributions made to them by Borrower in the event Lender becomes liable in respect of any Environmental Liability and Cost of Borrower against which it is entitled to indemnity from Borrower or in the event the Loan is not repaid in full by reason of Borrower sustaining any such Environmental Liability and Cost. Section 4.4 NO WAIVER. Notwithstanding any provision in this Article 4 or elsewhere in the Loan Documents, or any rights or remedies granted by the Loan Documents, Lender does not waive and expressly reserves all rights and benefits now or hereafter accruing to Lender under any "security interest" or "secured creditor" exceptions under applicable Environmental Laws, as the same may be amended. No action taken by Lender pursuant to the Loan Documents shall be deemed or construed to be a waiver or relinquishment of any such rights or benefits under the "security interest exception." -37- ARTICLE 5 LEASING MATTERS Section 5.1 REPRESENTATIONS AND WARRANTIES ON LEASES. Borrower represents and warrants to Lender with respect to all Leases that: (1) the rent roll delivered to Lender for each Property is true and correct as of the date of such rent roll (provided that if Whitehall has owned a direct or indirect interest in Borrower for less than two (2) months prior to the Closing Date, the foregoing representation and warranty is made to Borrower's knowledge), and the Leases are valid and in and full force and effect; (2) the Leases are in writing, and there are no oral agreements with respect thereto; (3) the copies of the Leases delivered to Lender are true and complete; (4) to Borrower's knowledge, except as set forth in Schedule 5.1(A), neither the landlord nor any Tenant is in material default under any of the Leases; (5) except as set forth in Schedule 5.1(B), (a) Borrower has no knowledge, after due inquiry, of any notice of termination or default with respect to any Non-Storage Lease and (b) to Borrower's knowledge, after due inquiry, not more than 5% of the Leases at any Storage Property are the subject of any notices of termination or default; (6) Borrower has not assigned or pledged any of the Leases, the rents or any interests therein except to Lender; (7) except as set forth in the rent roll delivered to Lender, and except as set forth in Schedule 5.1(C), no Tenant or other party has an option to purchase all or any portion of any Property; (8) except as set forth in Schedule 5.1(D), no Tenant has the right to terminate its Lease prior to expiration of the stated term of such lease; (9) except as set forth in Schedule 5.1(E), there are no leasing commissions that are owing in connection with any Leases or tenancies in effect as of the Closing Date; and (10) except as set forth in Schedule 5.1(F), no tenant has prepaid more than one month's rent in advance (except for bona fide security deposits not in excess of an amount equal to two month's rent). Section 5.2 GENERAL LEASE REQUIREMENTS. Each Lease hereafter entered into by Borrower shall (1) not permit the Tenant thereunder to terminate or invalidate the terms of the Lease as a result of any action taken by Lender to enforce any right or remedy under the Loan Documents, including any sale of the Property or any portion thereof pursuant to the power of sale or otherwise, (2) include a subordination clause providing that the Lease and the interest of the Tenant thereunder in the Property are in all respects subject and subordinate to the Loan Documents, (3) provide that, at the option of Lender or the purchaser at a foreclosure sale or the grantee in a voluntary conveyance in lieu of such sale, the Tenant thereunder shall attorn to Lender or to such purchaser or grantee under all of the terms of the Lease and recognize such entity as the lessor under the Lease for the balance of the term of the Lease, and (4) provide that, in the event of the enforcement by Lender of the rights and remedies provided by law or in equity or by the Loan Documents, any Person succeeding to the interest of Borrower as a result of such enforcement shall not be bound by any prepayment of installments of rent for more than thirty (30) days in advance of the time when the same shall become due or any amendment, modification, extension, cancellation or renewal of the Lease made without the prior written consent of Lender. Any Lease which is in a form approved by Lender after the Closing Date shall be deemed to comply with this Section. -38- Section 5.3 COVENANTS. Borrower shall deliver to Lender, promptly after demand by Lender, a rent roll for each Property in form and substance satisfactory to Lender. Borrower shall promptly deliver to Lender a fully executed copy of any new Non-Storage Lease upon execution of the same, and shall promptly deliver to Lender upon Lender's request a fully executed copy of all other Leases not previously delivered to Lender. Borrower shall not (1) assign, mortgage or otherwise encumber any of the Leases or any of the rents due or to become due thereunder or to which Lender may now or hereafter become entitled, or (2) accept prepayments of installments of rent for more than thirty (30) days in advance of the time when the same shall become due or to anticipate the rents thereunder, except for Security Deposits, provided that Borrower may accept prepayments of rent installments up to six months in advance for Leases covering not more than ten percent (10%) of the leasable space within each Storage Property. Section 5.4 ADDITIONAL COVENANTS REGARDING MATERIAL LEASES. All Leases covering at least 10,000 rentable square feet, and any combination of Leases which collectively cover at least 10,000 rentable square feet of any Property and which are entered into with a single Tenant or with Tenants who are Affiliates of each other, shall be referred to herein as "MATERIAL LEASES". As to any Material Leases, Borrower shall (1) promptly perform all of the material provisions of the Material Leases on the part of the lessor thereunder to be performed; (2) promptly enforce all of the material provisions of the Material Leases on the part of the Tenants thereunder to be performed; (3) not cancel, terminate or accept a surrender of any Material Lease, or refrain from taking any action which would result in the termination of a Material Lease by any Tenant thereunder, unless the Tenant thereunder is in default or such action is otherwise commercially prudent and all Lease Buy Out Consideration, if any, is deposited and used in the manner set forth below in this Article 5; (4) appear in and prosecute or defend any action or proceeding arising under, growing out of, or in any manner connected with, the Material Leases or the obligations of the lessor or the lessees thereunder, as the case may be; (5) provide Lender with a copy of each notice of default received by Borrower from the Tenant under any Material Lease immediately upon receipt thereof and deliver to Lender a copy of each notice of default sent by Borrower to a Tenant under any Material Lease simultaneously with its delivery of such notice under such Material Lease; and (6) promptly notify Lender of all material disputes and claims in respect of any Material Leases and not settle or adjust any such material claims or disputes without Lender's consent. In addition, Borrower shall not (a) consent to any assignment or subletting of any Material Lease if the assignor or sublessor thereof would be relieved from liability thereafter accruing under such Material Lease; (b) discount any rents under any Material Lease or otherwise refrain from taking any action with respect to a Material Lease which would result in the diminution of the rents thereunder; and (c) without Lender's prior consent, enter into, modify, amend, extend, renew, or otherwise change in any material manner, any of the terms covenants or conditions of, any Material Lease. Without limiting the foregoing, Borrower shall not enter into, extend or modify any new or existing Material Lease affecting a Property for base rentals which are less than the lesser of (i) the average aggregate base rentals for all Leases affecting such Property, and (ii) the fair market rental for similar space in other buildings similarly situated. -39- Section 5.5 LENDER'S CONSENT TO DEVIATIONS. Borrower shall obtain Lender's prior, written consent to any deviations from the leasing covenants set forth in this Article 5. Lender shall not unreasonably withhold its consent to any such request, except with respect to requests to deviate from the minimum rent requirements for Material Leases as set forth above, in which event Lender may withhold its consent in its sole and absolute discretion. If Lender does not respond to Borrower's request for consent to a deviation from the leasing covenants set forth herein within ten (10) days after receipt of Borrower's request, Lender shall be deemed to have consented to such request, provided, however, that with respect to any request to deviate from the minimum rent requirements for Material Leases set forth above, Lender's failure to respond within such 10-day period shall be deemed a rejection of such request. Section 5.6 SECURITY DEPOSITS; LEASE BUY OUT CONSIDERATION. Borrower shall maintain all security deposits paid or payable under any Lease ("SECURITY DEPOSITS"), and separately maintain all Lease Buy Out Consideration paid by Tenants, in separate accounts held by Borrower in a depository institution acceptable to Lender. Security Deposit funds held in such account for any Lease shall be used to repay the Tenant which paid the Security Deposit to Borrower or as otherwise provided in the applicable Lease. Any Lease Buy Out Consideration received by Borrower or its agents with respect to space within a Property shall be used by Borrower to pay for any Tenant Improvements, Capital Expenditures, Leasing Costs or marketing costs in connection with that Property. The segregated accounts for Security Deposits and Lease Buy Out Consideration required by this Section shall be subject to the general provisions of this Agreement pertaining to any segregated account which Borrower is required to maintain in accordance with the terms of this Agreement. Provided no Event of Default shall then be existing under this Agreement, if a Property in connection with which any Lease Buy Out Consideration was paid or any Security Deposits are held will be released from the lien of the applicable Deed of Trust in accordance with this Agreement, any amounts in the account holding such Lease Buy Out Consideration and/or Security Deposits applicable to such Property shall be released, concurrently with such release, to Borrower. The monthly reports which Borrower is required to provide Lender in connection with the Security Deposits accounts and Lease Buy Out Consideration accounts shall identify, as to each such account, the source Properties of the Security Deposits or Lease Buy Out Consideration therein, and the amount of Security Deposit or Lease Buy Out Consideration funds in such account allocable to each such Property. Section 5.7 SUBORDINATION AGREEMENTS; TENANT ESTOPPELS. Without limiting Borrower's obligation to provide Lender with subordination, nondisturbance and attornment agreements as required by Lender as a condition to the Initial Advance and (as to the applicable Additional Property) each Acquisition Advance, upon request by Lender, Borrower shall use reasonable good faith efforts to cause the Tenants under Material Leases selected by Lender to execute and deliver to Lender subordination, nondisturbance and attornment agreements with respect to such Tenant's Lease within forty-five (45) calendar days of the date of Lender's request (on a form provided by Lender to Borrower). Borrower's failure to obtain a subordination, nondisturbance and attornment agreement as to any Material Lease within the aforementioned 45-day period shall not constitute a Potential Default so long as Borrower has used reasonable, good faith efforts to obtain such subordination, nondisturbance and attornment agreement during such period. In addition, from time to time at Lender's request, Borrower shall request from each Tenant (and shall deliver to -40- Lender upon receipt from such Tenant) a written estoppel in the form required by such Tenant's Lease (or if no form is specified, in form and substance satisfactory to Lender) confirming, among other things, the term, rent, and other provisions and matters relating to such Lease; provided, however, that Borrower's obligation with respect to such estoppel certificates shall be limited to requesting such estoppel certificates from Tenants and (if accurate) informing such Tenants of their Lease obligation to provide such estoppel certificates. No Potential Default shall be caused by the failure of one or more Tenants to provide an estoppel certificate after such request is made. ARTICLE 6 REPRESENTATIONS AND WARRANTIES To induce Lender to make the Loan, Borrower makes the following representations and warranties to Lender, each and all of which shall be true and correct as of the date of execution and delivery of this Agreement, and shall survive the execution and delivery of this Agreement; provided, however, that the representations and warranties contained herein and in the other Loan Documents with respect to the Properties are subject to the matters detailed in Schedules 6.4, 6.5, 6.6, 6.7, 6.17 and 6.19 hereof. Section 6.1 PARTNERSHIP AND ORGANIZATIONAL EXISTENCE; COMPLIANCE WITH LAW. Each of Borrower and the general partner of Borrower (1) is a limited partnership or limited liability company, as the case may be, duly organized, validly existing and in good standing under the laws of its state of organization; (2) is duly qualified to do business and is in good standing under the laws of each jurisdiction where its ownership or lease of property or the conduct of its business requires such qualification; (3) has the requisite organizational or partnership (as applicable) power and authority and the legal right to own, pledge, mortgage or otherwise encumber and operate its properties, to lease the properties it operates under lease, and to conduct its business as now, heretofore and proposed to be conducted; (4) has all material licenses, permits, consents or approvals from or by, and has made all material filings with, and has given all material notices to, all Governmental Authorities having jurisdiction, to the extent required for such ownership, operation and conduct; (5) is in compliance with its certificate of formation and operating agreement or certificate of limited partnership and partnership agreement (as applicable); and (6) is in compliance with all applicable provisions of Law, except where the failure to be in compliance would not have a Material Adverse Effect. Section 6.2 PARTNERSHIP OR ORGANIZATIONAL POWER; AUTHORIZATION; ENFORCEABLE OBLIGATIONS. The execution, delivery and performance by Borrower of the Loan Documents, Ancillary Agreements and all instruments and documents to be delivered by Borrower and by its partners, to the extent they are parties thereto, and the creation of all Liens provided for herein and therein: (1) are within Borrower's and its partners' partnership and/or organizational power; (2) have been duly authorized by all necessary or proper partnership and/or organizational action; (3) are not in contravention of any provision of Borrower's or its partners' respective partnership agreement and/or certificate or certificate of formation and/or operating agreement; (4) do not violate any Law, or any order or decree of any court or Governmental Authority; (5) do not conflict with or result in -41- the breach or termination of, constitute a default under or accelerate any performance required by, any indenture, mortgage, deed of trust, lease, agreement or other instrument to which Borrower or any of its partners is a party or by which Borrower or its partners or any of their property is bound; (6) do not result in the creation or imposition of any Lien upon any of the property of Borrower or its partners other than those in favor of Lender, all pursuant to the Loan Documents; and (7) do not require the consent or approval of any Governmental Authority or any other Person, other than such consents and approvals as have been duly obtained, made or complied with on or prior to the Closing Date. Each of the Loan Documents has been duly executed and delivered for the benefit of or on behalf of Borrower and, where a party thereto, its partners, and each constitutes a legal, valid and binding obligation of Borrower, and, to the extent they are parties thereto, its partners, enforceable against each of them in accordance with its terms. Section 6.3 OWNERSHIP OF COLLATERAL; LIENS. (1) Borrower owns good and marketable title to the Collateral; (2) none of the Collateral is subject to any Liens, except Permitted Encumbrances; and (3) Borrower has received all assignments, waivers, consents and other documents, and duly effected all recordings, filings and other actions necessary to establish, protect and perfect Borrower's right, title and interest in and to the Collateral. Section 6.4 CONDEMNATION. As of the Closing Date, except as expressly set forth in Schedule 6.4 hereof, Borrower has not received any notice, and has no knowledge, of any pending, threatened or contemplated condemnation proceeding affecting any Property or any part thereof, or any proposed termination or impairment of any parking at any Property or any part thereof in lieu of condemnation. Section 6.5 CASUALTY. To Borrower's knowledge, as of the Closing Date, except as expressly set forth in Schedule 6.5 hereof, no portion of any Property has suffered any material damage by fire or other casualty loss which has not heretofore been completely repaired and restored to its original condition and no portion of any Property is located in a special flood hazard area as designated by any Federal Governmental Authorities and which is not covered by flood insurance required pursuant to insurance provisions hereof. Section 6.6 MATERIAL AGREEMENTS. As of the Closing Date, Borrower is not directly, indirectly or contingently obligated with respect to any Material Agreement relating to any Property except as expressly set forth in Schedule 6.6 hereof. Section 6.7 PROPERTY COMPLIANCE. To Borrower's knowledge, as of the Closing Date, except as expressly set forth in Schedule 6.7 hereof, each Property complies with all applicable subdivision, platting, building, land use, environmental, safety, traffic, fire and zoning Laws and requirements, except when the failure to so comply would not have a Material Adverse Effect for such Property. Section 6.8 ACCESS. To Borrower's knowledge, as of the Closing Date, each Property has access to and from public streets and roads adequate for its intended use, and all such streets and roads have been completed, dedicated to the public use and accepted for all purposes (including, but not limited to, maintenance) by the appropriate Governmental Authority. -42- Section 6.9 UTILITY SERVICES. To Borrower's knowledge, as of the Closing Date, all utility services are available and operational in sufficient size and capacity for the operation of each Property. Section 6.10 PERMITS. To Borrower's knowledge, as of the Closing Date, all material licenses, permits, inspections, authorizations, certifications and approvals required by all Governmental Authorities having jurisdiction over each Property have been performed or issued and paid for and are in full force and effect. Section 6.11 NO DEFAULT. To Borrower's knowledge, Borrower is not in default nor is any third party in default, under or with respect to any contract, agreement, lease or other instrument to which it is a party, except for any default which (either individually or collectively with other defaults arising out of the same event or events) would not have a Material Adverse Effect. Section 6.12 OTHER VENTURES/SINGLE PURPOSE ENTITY. Borrower is not engaged in any joint venture or partnership with any other Person. Borrower's sole purpose is to own and operate the Properties, and Borrower does not own any assets other than the Properties and the other Collateral. Borrower will not conduct any other business transactions except as contemplated by this Loan Agreement. Section 6.13 INVESTMENT COMPANY ACT. Borrower is not required to register as an "investment company" under the Investment Company Act of 1940, as amended. The making of the Loan by Lender, the application of the proceeds and repayment thereof by Borrower and the consummation of the transactions contemplated by this Agreement and the other Loan Documents will not violate any applicable provision of such Act or any applicable rule, regulation or order issued by the Securities and Exchange Commission thereunder which is binding on Borrower. Section 6.14 MARGIN REGULATIONS. Borrower does not own any "margin security," as that term is defined in Regulation U of the Board of Governors of the Federal Reserve System (the "FEDERAL RESERVE BOARD"), and the proceeds of the Loan will be used only for the purposes contemplated hereunder. The Loan will not be used, directly or indirectly, for the purpose of purchasing or carrying any margin security, for the purpose of reducing or retiring any indebtedness which was originally incurred to purchase or carry any margin security or for any other purpose which might cause any of the loans under this Agreement to be considered a "purpose credit" within the meaning of Regulations T, U or X of the Federal Reserve Board. Borrower will not take or permit any agent acting on its behalf to take any action which might cause this Agreement or any document or instrument delivered pursuant hereto to violate any regulation of the Federal Reserve Board. Section 6.15 TAXES. To Borrower's knowledge, (1) all federal, state, local and foreign tax returns, reports and statements required to be filed by Borrower have been filed with the appropriate Governmental Authority and all Charges and other impositions shown thereon to be due and payable have been paid prior to the date on which any fine, penalty, interest or late charge may -43- be added thereto for nonpayment thereof, or any such fine, penalty, interest, late charge or loss has been paid; (2) Borrower has paid when due and payable all Charges required to be paid by it; (3) Proper and accurate amounts have been withheld by Borrower from their respective employees for all periods in full and complete compliance with the tax, social security and unemployment withholding provisions of applicable Law and such withholdings have been timely paid to the respective Governmental Authorities; (4) Borrower has not executed or filed with the IRS or any other Governmental Authority any agreement or other document extending, or having the effect of extending, the period for assessment or collection of any Charges; (5) Borrower has not agreed or been requested to make any adjustment under IRC Section 481(a) by reason of a change in accounting method or otherwise; and (6) Borrower has no obligation under any written tax sharing agreement. If, at any time after the Closing Date, Borrower has knowledge that any of the statements made in clauses (1) through (6) of the immediately preceding sentence is untrue or incorrect, and failure to remedy the condition that gave rise to the untrue or incorrect statement would have a Material Adverse Effect, then notwithstanding that Borrower had no knowledge of the incorrect or untrue nature of such statement as of the Closing Date, Borrower shall diligently cure such condition to a sufficient extent that such condition would no longer have a Material Adverse Effect. Section 6.16 ERISA. There are no Plans maintained or contributed to by Borrower. Section 6.17 NO LITIGATION. To Borrower's knowledge, except as set forth in Schedule 6.17 hereof, no action, claim or proceeding is now pending or, to the knowledge of Borrower, threatened against Borrower, at law, in equity or otherwise, before any court, board, commission, agency or instrumentality of any federal, state, or local government or of any agency or subdivision thereof, or before any arbitrator or panel of arbitrators, which, if determined adversely, could have a Material Adverse Effect. No such claim, action or proceeding questions the validity of any of the Loan Documents or any action taken or to be taken pursuant thereto, or would have either individually or in the aggregate a Material Adverse Effect. Lender acknowledges that Borrower has provided Lender with the "Seller Disclosure Letter" (as defined in the Purchase Agreement), including Schedule 4.7 thereto regarding litigation matters. Section 6.18 BROKERS. No broker or finder acting on behalf of Borrower (other than Goldman, Sachs & Co.) brought about the obtaining, making or closing of the loans made pursuant to this Agreement and Borrower has no obligation to any Person (other than Goldman, Sachs & Co.) in respect of any finder's or brokerage fees in connection with the loan contemplated by this Agreement. Section 6.19 PURCHASE AGREEMENT. A true and complete copy of the Purchase Agreement (including all exhibits, schedules and amendments thereto) has been delivered to Lender, and a true and complete copy of each document delivered at the closing under the Purchase Agreement has been delivered to Lender. Neither Borrower nor, to the best of Borrower's knowledge, any other party is in default under the Purchase Agreement or under any instrument or document to be delivered in connection therewith. Except as disclosed in Schedule 6.19 hereof, Borrower (including any predecessor-in-interest to Borrower) has not claimed any breach of a representation or warranty by the Seller under the Purchase Agreement. -44- Section 6.20 EMPLOYMENT AND LABOR AGREEMENTS. There are no employment, consulting or management agreements covering management of Borrower and there are no collective bargaining agreements or other labor agreements covering any employees of Borrower. Section 6.21 LIENS. The Liens granted to Lender pursuant to the Collateral Documents are first priority Liens in and to the Collateral described therein, subject to Permitted Encumbrances, and upon completion of any necessary filings and recordings, will be fully perfected. Section 6.22 FULL DISCLOSURE. To Borrower's knowledge, no information contained in this Agreement, the other Loan Documents, or any written statement furnished by or on behalf of Borrower pursuant to the terms of this Agreement contains any untrue statement of a material fact or omits to state a material fact necessary to make the statements contained herein or therein not misleading in light of the circumstances under which made and in light of the written disclosures made by Borrower to Lender. Section 6.23 PROPERTY DOCUMENTS. Borrower has delivered to Lender true and correct copies of all material documents related to the Properties in Whitehall's possession or in the possession of any agent or Affiliate of Whitehall immediately prior to the Closing Date (collectively, "PROPERTY DOCUMENTS") prior to the Closing Date (other than confidential internal Borrower or Whitehall memoranda and privileged communications between Borrower or Whitehall and their respective attorneys), and there are no other material documents, reports (including, without limitation, environmental and engineering reports), files, correspondence, surveys and other material information of any kind whatsoever which are in Whitehall's possession or in the possession of any agent or Affiliate of Whitehall immediately prior to the Closing Date and which have not been delivered to Lender. Section 6.24 RENT ROLL. The rent roll previously delivered by Borrower to Lender for each Property is a true and accurate copy of the rent roll for such Property as of the date of such rent roll; provided that if Whitehall has owned a direct or indirect interest Borrower for less than two (2) months prior to the Closing Date, the foregoing representation is made to Borrower's knowledge. Section 6.25 GROUND LEASE REPRESENTATIONS. There are no ground leases affecting any of the Properties, other than the Fidelity Federal Ground Leases. Section 6.26 PROPERTY INFORMATION. The information in Schedule 1.1(A) hereof with respect to each Property is correct except to the extent that the actual square footage, acreage or number of units is not less than 95% of the square footage, acreage or number of units set forth on said Schedule 1.1(A) for each Property. Section 6.27 ACQUISITION COST AND EQUITY INVESTMENT. The information in Schedule 6.27 hereof sets forth the portion of the total purchase price, total cash equity, Whitehall cash equity, McNeil cash equity and closing costs for all assets acquired by Holding Company or its Affiliates pursuant to the Purchase Agreement, allocated by Holding Company to each of the -45- Initial Properties (and will be allocated to each of the Additional Properties, if acquired) and to all Initial Properties and Additional Properties in the aggregate. As of the Closing Date, the capital accounts for Whitehall and McNeil in the Holding Company will reflect their respective equity amounts as set forth at the bottom of Schedule 6.27. The total Whitehall equity amount set forth at the bottom of Schedule 6.27 represents cash equity allocated to the Initial Properties and Additional Properties. ARTICLE 7 FINANCIAL REPORTING AND INFORMATION Section 7.1 FINANCIAL STATEMENTS AND NOTICES. Borrower covenants and agrees that from and after the Closing Date it shall deliver, or cause to be delivered, to Lender: (1) MONTHLY REPORTS. Monthly, all written statements, reports and financial information delivered to Holding Company by the Asset Manager pursuant to Sections 4.4.1, 4.4.2, 5.2.1(a) and (b), and 7.2 (and any other provision) of the Asset Management Agreement including monthly property operating statements, monthly rent rolls, aged tenant delinquency reports, and monthly accounting and bank statements of all escrow and segregated accounts maintained by Borrower pursuant to this Agreement. (2) QUARTERLY REPORTS. Within 45 days after the end of each fiscal quarter, commencing with the quarter ending March 31, 2000, a copy of the unaudited balance sheet of Borrower as of the close of such quarter and the related statement of income and cash flows for that portion of the Fiscal Year ending as of the close of such quarter, all prepared by the general partner of Borrower and Asset Manager in accordance with GAAP (subject to the terms set forth herein and to normal year-end adjustments and excluding footnotes and supporting schedules, if same are not available (provided that such footnotes and supporting schedules are promptly delivered to Lender when same become available)) and accompanied by the certification on behalf of Borrower of the general partner of Borrower that all such financial statements are complete and correct and present fairly in accordance with GAAP (subject to normal year-end adjustments) the financial position, the results of operations and the cash flows of Borrower as at the end of such quarter and for the period then ended, and that there was no Event of Default in existence as of such time. (3) ANNUAL REPORTS. Within ninety (90) days after the close of each Fiscal Year, commencing with the Fiscal Year ending December 31, 2000, a copy of the annual audited financial statements of Borrower, consisting of balance sheets and statements of income and capital accounts and cash flows (setting forth beginning with the reports for the Fiscal Year ending December 31, 2001 in comparative form in each case the figures for the previous Fiscal Year), which financial statements shall be prepared in accordance with GAAP, certified (only with respect to the financial statements) without qualification by the independent certified public accountants regularly retained by Borrower, or any other firm of independent certified public accountants of recognized national standing selected by Borrower, and acceptable to Lender, and accompanied by (a) a report from such accountants -46- to the effect that in connection with their audit examination, nothing has come to their attention to cause them to believe that a Potential Default or Event of Default had occurred and (b) a certification of the general partner of Borrower that (i) all such financial statements are complete and correct and present fairly in accordance with GAAP the financial position, the results of operations and the cash flows of Borrower as at the end of such year and for the period then ended, (ii) all Operating Cash Flow and Net Capital Proceeds have been applied in accordance with the provisions of this Agreement and (iii) that there was no Event of Default in existence as of such time. (4) BUDGETS. Within six (6) months after the Closing Date, Borrower shall submit to Lender for Lender's review and approval (not to be unreasonably withheld) a detailed, 3-year capital budget for each Property. Such capital budgets shall include, where applicable, any then-remaining capital repair work identified in paragraph 1 on Schedule 8.19. Thereafter, within thirty (30) days prior to the beginning of each Fiscal Year, Borrower shall submit to Lender for Lender's review a detailed capital budget for each Property for such Fiscal Year. (5) EVENTS OF DEFAULT; MATERIAL EVENTS. As soon as practicable, but in any event within two (2) Business Days after Borrower becomes aware of the existence of any Event of Default, or any development or other information which would have a Material Adverse Effect, telephonic or facsimile notice specifying the nature of such Event of Default or development or information, including the anticipated effect thereof, which notice shall be promptly confirmed in writing within five (5) days. (6) PAYMENT OF CHARGES. Periodic accounting of payments made in respect of Charges imposed upon each Property and amounts available in the Charges Account in respect of the Property and, at Lender's request, copies of tax bills marked "paid" in respect of each Property or canceled checks evidencing payment of such tax bills. Section 7.2 OTHER INFORMATION. Borrower shall deliver to Lender such additional information regarding Borrower, its subsidiaries, its business, and any Property within 30 days after Lender's reasonable request therefor, provided that Borrower has reasonable access to such information at reasonable cost. Section 7.3 AUDITS. At Lender's request, Lender may audit the determination of Gross Receipts, Operating Expenses, Operating Cash Flow, Capital Expenditures, Net Capital Proceeds and all escrow or segregated accounts maintained by Borrower including escrow or segregated accounts for Security Deposits, Charges, Lease Buy Out Consideration, and Operating Cash Flow required to be maintained by Borrower pursuant to the terms hereof, which audit may be conducted by Lender or its representatives reviewing Borrower's books and records (at Lender's expense except as provided below). Borrower shall pay to Lender, travel expenses and reasonable out-of-pocket costs incurred by Lender in performing any single audit in any calendar year and, in addition to such audit, any audit performed by Lender or its agent in connection with (1) Working Capital Advances or Acquisition Advances, (2) a request from Borrower to release any Property from the Lien of the Loan Documents, or (3) an extension of the Term. If any audit performed by, -47- or on behalf of, Lender discloses that Borrower's statement of Gross Receipts, Operating Expenses, Operating Cash Flow, Capital Expenditures, escrow or segregated accounts (for Security Deposits, Charges, Lease Buy Out Consideration or Operating Cash Flow), Net Capital Proceeds or similar financial information is misstated or is otherwise incorrect by greater than 5% of Borrower's reported amount, then Borrower shall pay to Lender the full cost of Lender's audit. Notwithstanding the foregoing, during any period that an Event of Default has occurred and is continuing, Borrower shall be responsible for the full cost and expense of any Lender investigation or audit conducted by Lender. Section 7.4 COMMUNICATION WITH ACCOUNTANTS. Borrower authorizes Lender to communicate directly with Borrower's independent certified public accountants and authorizes those accountants to disclose to Lender any and all financial statements and other supporting financial documents and schedules including copies of any management letter with respect to the business, financial condition and other affairs of Borrower. ARTICLE 8 AFFIRMATIVE COVENANTS Borrower covenants and agrees that, unless Lender shall otherwise consent in writing, from and after the Closing Date and until the Maturity Date: Section 8.1 MAINTENANCE OF EXISTENCE AND CONDUCT OF BUSINESS. Borrower shall (1) do or cause to be done all things necessary to preserve and keep in full force and effect its existence as a limited partnership, and, unless the loss of same shall not have a Material Adverse Effect, its rights, licenses, privileges and franchises; (2) continue to conduct its business only as permitted hereunder; (3) not make any changes in its business objectives, purposes or operations in any way that would have a Material Adverse Effect; and (4) transact business only in the name of WXI/MCN Commercial Real Estate Limited Partnership or in each case such other names as Borrower shall specify to Lender in writing not less than thirty (30) days prior to the first date such name is used by Borrower. Section 8.2 PAYMENT OF INDEBTEDNESS. (1) Borrower shall, using Gross Receipts from all of the Properties, (a) pay and discharge or cause to be paid and discharged all Obligations, as and when due and payable (subject to any notice or grace periods provided in the Loan Documents), (b) pay and discharge or cause to be paid and discharged (i) prior to the day that any interest or penalty can be imposed thereon, all Charges imposed upon Borrower, its income and profits, or any of its property (real, personal or mixed), and (ii) lawful claims for labor, materials, supplies and services used by or supplied to Borrower before any thereof shall become in default (subject to any applicable notice or grace periods) and (c) to the extent not paid from Loan proceeds, pay all Capital Expenditures and other Indebtedness related to any of the Properties as and when such amounts come due. -48- (2) Borrower may in good faith contest, by proper legal actions or proceedings, the validity or amount of any Charges or claims arising under clause (b) of paragraph (1) above, provided that at the time of commencement of any such action or proceeding, and during the pendency thereof (a) no Event of Default shall be continuing; (b) adequate Reserves with respect thereto are maintained on the books of Borrower, in accordance with GAAP; (c) such contest operates to suspend collection of the contested Charges or claims and is maintained and prosecuted continuously with diligence; (d) none of the Properties would be subject to forfeiture or loss or any Lien by reason of the institution or prosecution of such contest; (e) Borrower shall promptly pay or discharge such contested Charges and all additional charges, interest, penalties and expenses, if any, and shall deliver to Lender evidence acceptable to Lender of such compliance, payment or discharge, if such contest is terminated or discontinued adversely to Borrower; and (f) Lender has not advised Borrower in writing that Lender reasonably believes that nonpayment or nondischarge thereof would have a Material Adverse Effect. Notwithstanding the foregoing, Borrower shall have the right to pay the Charges or claims arising under clause (b) of paragraph (1) above and in good faith contest by proper legal action or proceedings, the validity or amount of such Charges or claims. (3) If Borrower shall be in default of its obligations to pay and discharge any Charges as provided in paragraph (1) above and provided no contest as described in and as permitted under paragraph (2) above is in process, Lender, at its option and without notice, may pay such Charges and, in such event, the amount of such Charges so paid by Lender (a) shall be added to the Obligations, (b) shall be secured by the Collateral, and (c) shall be immediately due and payable, on demand, together with interest thereon at the Default Rate from the date of any such payment by Lender to the date of any repayment to Lender. Section 8.3 BOOKS AND RECORDS. Borrower shall keep adequate records and books of account with respect to its business activities, in which proper entries, reflecting all of its financial transactions, are made in accordance with GAAP. Section 8.4 LITIGATION. Borrower shall notify Lender in writing, promptly upon learning thereof, of any litigation commenced against Borrower, and of the institution against Borrower of any uninsured suit or administrative proceeding that, in either case, if determined adversely would have a Material Adverse Effect. Any such notification shall be deemed to automatically update Schedule 6.17 hereto to reflect the matters contained in such notification. Section 8.5 COMPLIANCE WITH LAW. Subject to Borrower's right to contest Charges to the extent and in the manner expressly permitted elsewhere in this Agreement, Borrower shall comply with all Laws applicable to Borrower, and each Property, including, with respect to Borrower only, ERISA, those regarding the collection, payment and deposit of employees' income, unemployment and social security taxes, except in each case where the failure to so comply will not have a Material Adverse Effect. -49- Section 8.6 MAINTENANCE OF PROPERTY. (1) Borrower shall, with respect to each Property, (a) maintain the Property and the improvements located thereon in good repair, order and condition; (b) make all necessary repairs, renewals, replacements, additions and improvements to the Property; (c) not abandon the Property; (d) not permit or suffer any waste to occur in respect of the Property; (e) refrain from impairing or diminishing the value or integrity of the Property or the priority and security of the Lien of Lender on the Property; (f) not remove, demolish or materially alter any of the Property without the prior written consent of Lender in each instance, except that, Borrower shall have the right to remove and dispose of, free of the Lien of Lender, such fixtures as may, from time to time, become worn out or obsolete, provided that, simultaneously with such removal, any such fixtures shall be replaced with other fixtures that shall have the value and utility equal to that of the replaced fixtures and which shall be free of any security agreement or other Liens of any kind or nature whatsoever, and by such removal and replacement, Borrower shall be deemed to have subjected such replacement fixtures to the Lien of the Deed of Trust encumbering such Property; (g) not execute any conditional bill of sale, chattel mortgage or other security instrument covering any of the equipment located at any Property or purchase any equipment unless ownership of the same will vest unconditionally in Borrower, free from encumbrances on delivery to the Property; (h) not make or permit to be made or installed, any alterations or additions to the Property if doing so would, in the opinion of Lender, impair to any extent the value of the Property; and (i) not make, suffer or permit any nuisance to exist on the Property or any portions thereof, except as to each of the covenants (a) through (i), to the extent that the failure to do so (or to refrain from doing so, as applicable) would not have a Material Adverse Effect. (2) Borrower shall not permit, by any act or omission, any building or any other improvement located on any property which is not subject to the Lien of a Deed of Trust to rely upon any Property or any portion thereof or any interest therein to fulfill any legal requirements. Borrower shall not impair or permit the impairment of, by any act or omission, the integrity of any Property as one or more lots separate and apart from all other premises owned by any other Person. Except as reflected in or otherwise contemplated by an Asset Business Plan, Borrower shall not initiate, or permit the initiation of, or join in, any zoning change, easement or other modification of zoning regulations in respect of any Property that would result in a Material Adverse Effect. Except as otherwise permitted herein, Borrower shall not (i) impose any restrictions, covenant or encumbrance upon any Property, execute or file any subdivision plot affecting any Property or consent to the annexation of any Property to any municipality that would result in a Material Adverse Effect, or (ii) permit or suffer the Property to be used by the public or any Person in such manner as might make possible a claim of adverse usage or possession or of any implied right or easement. -50- Section 8.7 AGREEMENTS. Borrower shall notify Lender of any Material Agreements entered into after the Closing Date. Borrower shall perform, within all required time periods (after giving effect to any applicable notice or grace periods), all of its obligations and enforce all of its rights under each Material Agreement to which it is a party if the failure to perform such obligations or enforce such rights would have a Material Adverse Effect. Section 8.8 EMPLOYEE PLANS. Borrower shall not adopt any Plan without the consent of Lender. Section 8.9 ACCESS. Lender and any of its officers, employees and/or agents shall have the right, exercisable as frequently as Lender (or any representative of Lender) reasonably determines to be appropriate, during normal business hours (or at such other times as may reasonably be requested by Lender or any representative of Lender) to inspect any Property. Lender and any of its officers, employees and/or agents shall have the right, exercisable as frequently as Lender (or any representative of Lender) reasonably determines to be appropriate, during normal business hours (or at such other times as may reasonably be requested by Lender or any representative of Lender), to inspect, audit and make extracts from all of Borrower's records, files and books of account at Lender's cost except in those instances in which Lender's audit costs are to be paid by Borrower, as provided for elsewhere in this Agreement. Borrower shall deliver any document or instrument reasonably necessary for Lender (or any representative of Lender), as any of them may request, to obtain records from any service bureau maintaining records for Borrower. Borrower shall instruct its banking and other financial institutions and its Asset Manager to make available to Lender such information and records as Lender (or any representative of Lender) may reasonably request. Section 8.10 TAXES ON PAYMENTS OR SECURITY. (1) To the extent permitted by applicable Law and subject to the last sentence of this paragraph, any and all payments by Borrower hereunder or under the Note shall be made free and clear of and without deduction for any and all present or future taxes, levies, mortgage recording taxes, imposts, deductions, charges or withholdings, and all liabilities with respect thereto, excluding franchise taxes or taxes imposed on or measured by the net or gross income, capital or gross receipts of Lender (all such non-excluded taxes, levies, imposts, deductions, charges, withholdings and liabilities being hereinafter referred to as "TAXES"). If Borrower shall be required by Law to deduct any Taxes from or in respect of any sum payable hereunder or under the Note (for which Lender will not be able to obtain a refund or credit against taxes other than with respect to the receipt of payments pursuant to the Note), (a) the sum payable to Lender shall be increased as may be necessary so that after making all required deductions (including deductions applicable to additional sums payable under this Section), Lender receives an amount equal to the sum it would have received had no such deductions been made (but only to the extent that Lender is not able to obtain a refund or credit of such amounts deducted), (b) Borrower shall make such deductions, and (c) Borrower shall pay the full amount deducted to the relevant taxing or other authority in accordance with applicable Law. Borrower will not be required to pay any amounts pursuant to this paragraph (1) for Taxes to a subsequent holder of the Note to the extent that GECC would not have been required to pay such Taxes. -51- (2) To the extent permitted by applicable Law and subject to the last sentence of this paragraph, Borrower agrees to pay any present or future stamp or documentary taxes or any other sales, transfer, excise or property taxes, charges or similar levies that arise from any payment made hereunder or under the Note or from the execution, sale, transfer, delivery or registration of, or otherwise with respect to, this Agreement or the Note, the Loan Documents and any other agreements and instruments contemplated thereby (hereinafter referred to as "OTHER TAXES") except for excluded taxes described in paragraph (1) above. Borrower will not be required to pay any amounts to a subsequent holder of the Note as provided in this paragraph (2) to the extent that Other Taxes would not have been payable had GECC continued to hold the Note. (3) To the extent permitted by applicable Law, Borrower shall indemnify Lender for the full amount of Taxes or Other Taxes (including any Taxes or Other Taxes imposed by any jurisdiction on amounts payable under this Section), but not excluded taxes described in paragraph (1) above or Taxes or Other Taxes imposed due to any action of Lender, paid by Lender and any liability (including penalties, interest and expenses) arising therefrom or with respect thereto, whether or not such Taxes or Other Taxes were correctly or legally asserted. This indemnification shall be made within ninety (90) days from the date Lender makes written demand therefor. (4) Within ninety (90) days after the date of any payment of Taxes, Borrower shall furnish to Lender, at the address to which notices to Lender are to be sent under this Agreement, the original or a certified copy of a receipt evidencing payment thereof. (5) Without prejudice to the survival of any other agreement of Borrower, the agreements and obligations of Borrower and Lender contained in this Section shall survive the payment in full of principal and interest hereunder and under the Note and the termination of this Agreement. (6) Lender shall promptly notify Borrower in writing upon receipt by Lender of notice of any pending or threatened federal, state or local tax audits or assessments for which Borrower would be required to indemnify Lender pursuant to this Section. Borrower shall be entitled to participate at its own expense in the defense of any tax claim which may be subject to indemnification by Borrower pursuant to this Section. Lender shall not settle any such tax claim without the prior written consent of Borrower. (7) If Lender is entitled to a refund or credit relating to amounts which Borrower has paid Lender pursuant to this Section, Lender shall promptly pay to Borrower the amount of such refund or credit together with any interest thereon upon receipt thereof. Upon reliance of an opinion of counsel that provides that there is a reasonable basis for such claim, Borrower can require Lender to file all necessary or appropriate tax forms to obtain a refund or credit of an amount for which Borrower has indemnified Lender. -52- Section 8.11 ENFORCEMENT. At Borrower's sole cost and expense, Borrower will appear in and defend any action growing out of or in any manner connected with the Collateral Documents, or the obligations or liabilities of Borrower or any other party thereunder, or any guarantee thereof, and Lender, if made a party to any such action, may employ counsel and incur and pay the necessary costs and expenses and reasonable attorneys' fees, and all such sums, together with interest thereon at the Default Rate, shall immediately be due from Borrower, shall be added to the Obligations and secured by the Collateral. Section 8.12 [Intentionally Deleted.]. Section 8.13 [Intentionally Deleted.]. Section 8.14 MAINTENANCE OF REPRESENTATIONS; SUPPLEMENTAL DISCLOSURE. Borrower shall cause the representations set forth in Article 6 hereof (other than with respect to the representations that are given to the knowledge of Borrower, as to which no further representation shall be deemed given) to remain true as of the date of the funding of any Advance (i.e., the representations shall be updated and made as of such later dates rather than restated at such later dates as of the Closing Date, except that no such update shall be required if the matter to be disclosed would not have a Material Adverse Effect). Lender's remedies for a breach of any such updated representation regarding any Property shall be the same as for a breach of a representation, as described in Section 8.18. From time to time as may be necessary (in the event that such information is not otherwise delivered by Borrower to Lender pursuant to this Agreement), so long as there are Obligations outstanding hereunder, Borrower will supplement or amend each Schedule or representation herein with respect to any matter hereafter arising which, if existing or occurring at the date of this Agreement, would have been required to be set forth or described in such Schedule or as an exception to such representation or which is necessary to correct any information in such Schedule or representation which has been rendered inaccurate thereby, provided, however, that any notice delivered to Lender hereunder in respect of any information that relates to a representation shall be deemed to constitute an exception to such representation whether or not such information would otherwise appear on a Schedule. Section 8.15 PROPERTY DOCUMENTS; ASSET BUSINESS PLANS. Borrower shall promptly deliver to Lender true and correct copies of any and all Property Documents (other than internal Borrower memoranda and communications between Borrower and its counsel) received by Borrower at any time during the term of the Loan. Borrower shall deliver to Lender copies of all Asset Business Plans (including annual budgets) within the time periods set forth for delivery of such Asset Business Plans (including annual budgets) to Borrower pursuant to the Asset Management Agreement, subject to reasonable extensions. Section 8.16 INTEREST RATE CAP AGREEMENT. Within ninety (90) days after the Closing Date, Borrower agrees to enter into an interest rate cap agreement or other hedging device in connection with the Loan, which agreement or hedging device shall be submitted to Lender for Lender's approval, which approval shall not be unreasonably delayed or withheld. Borrower shall, upon execution of such agreement, deliver to Lender the Collateral Assignment of Interest Rate Cap Agreement, duly executed and delivered by Borrower in favor of Lender, together with the consent -53- of the counterparty thereunder to such collateral assignment. The original interest rate cap agreement shall at all times cover the outstanding Loan balance, plus the then undisbused Working Capital Allocation. Thereafter, within thirty (30) days after any Acquisition Advance for an Additional Property, Borrower shall amend the original interest rate cap agreement, or obtain a separate interest rate cap agreement, covering such Advance and all prior Advances not then covered by an interest rate cap agreement, which amendment or separate agreement shall be subject to Lender's prior approval (which shall not be unreasonably delayed or withheld). Upon execution of any such amendment or new agreement, Borrower shall deliver to Lender an amendment to the existing Collateral Assignment of Interest Rate Cap Agreement, or an additional Collateral Assignment of Interest Rate Cap Agreement, covering such amendment or new agreement, together with the consent of the counterparty thereunder to such collateral assignment, in each case in form and substance reasonably satisfactory to Lender. Section 8.17 INDEMNIFICATION. Subject to the provisions of Section 12.1 hereof, Borrower shall indemnify and hold Lender harmless from and against any and all suits, actions, proceedings, claims, damages, losses, liabilities and expenses (including reasonable attorneys' fees and disbursements, including those incurred upon any appeal) which may be instituted or asserted against or incurred by Lender as the result of its having entered into any of the Loan Documents or extended credit hereunder, including any suits, actions, proceedings, claims, damages, losses, liabilities or expenses arising in connection with any brokerage, finders' or other commissions or fees which any broker or other Person claims is owing in connection with Borrower's acquisition of the Properties or in connection with the Loan or the transactions contemplated by the Loan Documents (except to the extent such Person claims that such commissions or fees are owing solely by virtue of its dealings with Lender). Section 8.18 IMPAIRED PROPERTY. Notwithstanding anything herein to the contrary, if any representation or covenant herein, or in any other Loan Document, with respect to any Property has been breached and, in Lender's reasonable opinion, such breach impairs the value of such Property (any such Property being referred to herein as an "IMPAIRED PROPERTY") by at least five percent (5%) of its Property Basis or $250,000, whichever is less, then (unless Borrower proves to Lender's reasonable satisfaction that such breach was appropriately considered in the determination of the initial Property Basis of the Impaired Property, or Borrower establishes a cash Reserve which is sufficient in Lender's reasonable judgment to cure such breach and is deposited into a segregated account pledged to Lender such that Lender shall have a first priority perfected lien upon such Reserve, in either which case, no default shall be deemed to exist) Borrower shall either (1) cure such breach to Lender's reasonable satisfaction, or (2) at Borrower's option (a) pay to Lender the Adjusted Loan Basis for the Impaired Property and the other sums payable to Lender hereunder in connection with a release of such Property (at which time Lender shall release such Property from the Lien of the Loan Documents), or (b) pay to Lender such sum as will, in Lender's reasonable opinion, reduce the Adjusted Loan Basis of such Impaired Property to an amount equal to not more than eighty-five percent (85%) of the fair market value of such Property, as determined by Lender in its reasonable discretion; provided, however, that the option described in clause (b) shall not be available if such breach impairs the value of the Impaired Property by at least twenty-five percent (25%) of its Property Basis. At Borrower's option, and without prepayment premium or penalty, Borrower can pay the amount described in clauses (a) or (b) either in a lump sum payment or -54- through payment to Lender of one hundred percent (100%) of Operating Cash Flow, after payment of (1) debt service on the Loan and (2) the Asset Management Fee (except to the extent deducted as an Operating Expense in determining Operating Cash Flow), until such sum has been paid in full. In the event Borrower has elected to make such payments from Operating Cash Flow and such Operating Cash Flow is not sufficient to complete the payments required by said clauses (a) or (b) within 180 days after the date Lender asserted the respective breach in question, then upon the expiration of said 180 day period, Borrower shall be required to pay an amount which, together with all such prior payments received by Lender from Operating Cash Flow, shall be sufficient to make such payment as described in clauses (a) or (b) above. Lender's remedies as set forth in this Section shall be exercisable by Lender at any time and from time to time during the term of the Loan. Section 8.19 PROPERTY-SPECIFIC COVENANTS. Borrower shall perform the covenants (if any) set forth in Schedule 8.19 hereof applicable to one or more specific Properties. ARTICLE 9 NEGATIVE COVENANTS Borrower covenants and agrees that, without Lender's prior written consent, from and after the Closing Date: Section 9.1 MERGERS, ETC. Borrower shall not directly or indirectly, by operation of law or otherwise, merge with, consolidate with, acquire all or substantially all of the assets or capital stock of, or otherwise combine with, any Person. Section 9.2 INVESTMENTS; LOANS AND ADVANCES. Except as otherwise permitted by Sections 9.3 or 9.5 hereof, Borrower shall not make any investment in, or make or accrue loans or advances of money to, any Person through the direct or indirect holding of securities or otherwise, except (1) direct obligations of the United States, or obligations unconditionally guaranteed by the United States, (2) commercial paper rated in the highest grade by Standard & Poor's or Moody's Investors Service, Inc., and (3) time deposits with, including certificates of deposit issued by, bankers acceptances issued by, and repurchase agreements with respect to investments described in clauses (1) and (2) with, any office located in the United States of any bank, trust company or savings association which is organized under the Laws of the United States or any state thereof and has total assets aggregating at least $500,000,000, provided in each case that such investment matures within one year from the date of acquisition thereof by Borrower. Section 9.3 INDEBTEDNESS. (1) Borrower shall not create, incur, assume or permit to exist any Indebtedness, except (a) Indebtedness secured by Liens permitted under Section 9.7 hereof, (b) the Loan, (c) Indebtedness specifically approved in writing by Lender, (d) Guaranteed Indebtedness incurred solely by endorsement of instruments or items of payment for deposit to the general account of Borrower except for surety bonds and performance guarantees -55- entered into in the ordinary course of Borrower's business, and (e) Indebtedness incurred in connection with the indemnifications given to the Title Company in connection with the issuance of the Title Policies and endorsements required pursuant hereto which Indebtedness shall be subordinate in all respects to the Obligations (it being specifically agreed, however, that payments made under the indemnifications prior to an Event of Default for the purpose of paying delinquent real estate taxes shall not be a default hereunder). (2) Borrower shall not engage in any sale-leaseback or similar transaction involving any of the Collateral. Section 9.4 STRUCTURE; TRANSFERS. (1) Borrower shall not amend the Partnership Agreement in any way that would have a Material Adverse Effect. (2) No general or limited partner of Borrower shall assign, transfer, sell, convey, encumber, pledge or hypothecate, whether directly or indirectly, by operation of law or otherwise, any of the partnership interests in Borrower or permit any change in its ownership. Notwithstanding anything to the contrary contained in this Agreement or in any other Loan Document, so long as Whitehall directly or indirectly retains ultimate decision making authority over the management and operations of Borrower, the foregoing shall not prohibit (a) transfers of interests between entities which are directly or indirectly wholly owned by Whitehall or Holding Company provided that no cash is distributed to the transferor in connection with such a transfer, (b) sales, transfers and conveyances of limited partnership interests in Whitehall, (c) the encumbrance, pledge or hypothecation of limited partnership interests in Whitehall and (d) any assignment, transfer, sale, conveyance, encumbrance, pledge or hypothecation by McNeil of all or any portion of its interest in Holding Company, but only to the extent (i) permitted without Board of Manager approval under Section 9.1(b) of the First Amended and Restated Limited Liability Company Operating Agreement of WXI/McN Realty L.L.C. dated as of January 31, 2000 (as in effect as of the Closing Date) (the "HOLDING COMPANY OPERATING AGREEMENT"), or (ii) approved in advance in writing by Lender, which approval shall not be unreasonably withheld or delayed; provided, however, that in any case under this clause (d), the approval, voting, appointment and other rights under the Holding Company Operating Agreement of any subsequent holder of any of McNeil's interest in the Holding Company shall not be any greater than the approval, voting, appointment and other rights of McNeil under the Holding Company Operating Agreement as of the Closing Date. In addition, Holding Company may transfer its interest in the Borrower and in Borrower's general partner to a new entity ("NEW HOLDING COMPANY"), upon satisfaction of all of the following conditions: (A) Borrower or Holding Company provides Lender written notice of Holding Company's election to transfer such interest at least forty five (45) days prior to the proposed effective date of such transfer, (B) no Event of Default has occurred and is continuing on the date on which Lender receives Borrower's or Holding Company's notice or on the effective date of such transfer, (C) the ownership of New Holding Company shall be identical to the ownership of Holding Company, (D) Borrower shall have delivered to Lender, legal opinions of Sullivan & -56- Cromwell, counsel to Borrower and Whitehall, addressing the same matters regarding the New Holding Company as are addressed with respect to Holding Company in the original legal opinion provided by Sullivan & Cromwell as of the Closing Date, and confirming (in light of such transfer) such matters covered in such original opinion as Lender reasonably requires, (E) the Asset Management Agreement shall have been terminated with respect to the Properties and concurrently replaced with a new asset management agreement between Borrower and the Asset Manager covering only the Properties (on the same terms and conditions as the Asset Management Agreement), and Borrower and the Asset Manager shall have executed and delivered to Lender, along with the new asset management agreement, a collateral assignment of such asset management agreement in form and substance satisfactory to Lender, and (F) Borrower and New Holding Company shall have delivered to Lender such other documents or items as Lender reasonably requires. (3) Borrower shall not take any action or forbear from taking any action (including, without limitation, the granting of consents to actions taken or proposed to be taken by others) that would cause Borrower to be taxable as a corporation for federal income tax purposes. Section 9.5 MAINTENANCE OF BUSINESS. Borrower shall not engage in any business other than the business currently contemplated by its Partnership Agreement. Section 9.6 AFFILIATE TRANSACTIONS. (1) Borrower shall not enter into or be a party to any transaction with any Affiliate of Borrower, except for (a) transactions contemplated by this Agreement with respect to the refinancing of a Property, (b) the Asset Management Agreement, and (c) any other arrangement, provided that the terms are (i) commercially reasonable and competitive with amounts that would be paid to or received from third parties on an "arm's-length" basis and (ii) reduced to a writing covering all material aspects of such arrangement. (2) Borrower shall not enter into any agreement or transaction to pay to any Person any management or similar fee based on or related to Borrower's operating performance or income or any percentage thereof, nor pay any management or similar fee to an Affiliate. Section 9.7 LIENS. Borrower shall not create or permit any Lien (unless Borrower proves to Lender's reasonable satisfaction that any such Lien was appropriately considered in the determination of the initial Property Basis of such Property) on any of its properties or assets except: (1) presently existing or hereinafter created Liens in favor of Lender; (2) Permitted Encumbrances (provided that Borrower also may permit a Lien on each Property for current but not delinquent property taxes, assessments or other governmental charges or levies against such Property); -57- (3) Liens securing Indebtedness specifically approved by Lender in writing; (4) non-monetary Liens which individually or in the aggregate would not have a Material Adverse Effect; and (5) monetary Liens which individually or in the aggregate would not have a Material Adverse Effect and for which Borrower has established a reserve with Lender necessary for the removal of such Lien, and Borrower is diligently pursuing cure and/or contesting the Lien in accordance with Section 8.2(2) hereof. Section 9.8 EVENTS OF DEFAULT. Borrower shall not take or omit to take any action, which act or omission would constitute (1) a Potential Default or an Event of Default pursuant to, or noncompliance with any of, the terms of any of the Loan Documents or the Ancillary Agreements, or (2) a material default or an event of default (after notice and applicable grace periods set forth in such other contract or instrument) pursuant to, or noncompliance with, any other contract or instrument to which it is a party or by which it or any of its property is bound, or any document creating a Lien, unless such default, event of default or non-compliance would not have a Material Adverse Effect; provided, however, that for purposes of this clause (2), no Material Adverse Effect shall be deemed to have occurred as a result of a material adverse effect on any Property individually unless such material adverse effect shall also result in a Material Adverse Effect on Borrower or the Properties as a whole. Section 9.9 GROUND LEASES. Except for the Fidelity Federal Ground Leases, Borrower will not directly or indirectly become or remain liable as lessee or as guarantor or other surety with respect to any ground leases. Section 9.10 MATERIAL AGREEMENTS. Borrower shall not enter into any Material Agreements. ARTICLE 10 EVENTS OF DEFAULT; RIGHTS AND REMEDIES Section 10.1 EVENTS OF DEFAULT. The occurrence of any one or more of the following events (regardless of the reason therefor) shall constitute an "EVENT OF DEFAULT" hereunder: (1) Borrower shall fail to make any payment of principal of, or interest on or any other amount owing in respect of, the Loan, or any of the other Obligations when due and payable or declared due and payable, and such failure shall have remained unremedied for a period of five (5) Business Days after such failure, except that with respect to expenses payable under this Agreement, or other Obligations owing under any Loan Document other than this Agreement, such failure shall have remained unremedied for a -58- period of five (5) Business Days after Borrower has received notice of such failure from Lender. (2) Borrower shall fail or neglect to perform, keep or observe any other provision of this Agreement or of any of the other Loan Documents, or Borrower shall fail or neglect to perform, keep or observe any of the provisions of any other Loan Document and the same shall remain unremedied for a period of thirty (30) days after Borrower shall receive written notice of any such failure from Lender; provided, however, if such failure or neglect is of the type which is curable but which cannot be cured within such 30-day period, such failure or neglect shall not be an Event of Default if Borrower, within such 30-day period, has commenced and thereafter is diligently pursuing such cure, in which event Borrower shall have such additional time as is reasonably required to effect such cure, but in no event in excess of 180 days; and provided further that a breach of a covenant with respect to one or more Properties shall not constitute an Event of Default hereunder if such breach gives rise to Lender's remedies with respect to an Impaired Property, so long as Borrower is performing its obligations under the provisions hereof concerning Impaired Properties. (3) Any representation or warranty herein, or in any other Loan Document, or in any written statement pursuant thereto or hereto, report, financial statement, or certificate made or delivered to Lender by Borrower shall be untrue or incorrect in any material respect, as of the date when made or deemed made (including those made or deemed made in connection with each Advance) and such representation or warranty, if made by Borrower after the Closing Date, shall, if the condition that gave rise to the breach of representation or warranty is capable of being cured, remain untrue or incorrect for a period ending on the first to occur of (a) thirty (30) days after Borrower has received written notice of the falsity or inaccuracy of such representation or warranty from Lender, or (b) thirty (30) days after Borrower shall become aware of such falsity or inaccuracy; provided, however, that if the breach of the representation or warranty is of a nature which is curable but which cannot be cured within such 30-day period such failure shall not be an Event of Default if Borrower, within such 30-day period, shall have commenced to cure the condition that gave rise to the breach of representation or warranty and thereafter diligently pursues such cure, in which event Borrower shall have such additional time as is reasonably required to effect such cure, but in no event in excess of one hundred eighty (180) days; and provided further that a breach of a representation or warranty shall not constitute an Event of Default hereunder if such breach gives rise to Lender's remedies with respect to an Impaired Property, so long as Borrower is performing its obligations under the provisions hereof concerning Impaired Properties. (4) Any of the assets of Borrower to which in excess of $100,000 in aggregate Adjusted Loan Basis has been allocated shall be attached, seized, levied upon or subjected to a writ or distress warrant, or come within the possession of any receiver, trustee, custodian or assignee for the benefit of creditors of Borrower and shall remain unstayed or undismissed for thirty (30) consecutive days; or any Person other than Borrower shall apply for the appointment of a receiver, trustee or custodian for any of the assets of Borrower and -59- such application shall remain unstayed or undismissed for thirty (30) consecutive days; or Borrower shall have concealed, removed or permitted to be concealed or removed, any part of its property, with intent to hinder, delay or defraud its creditors or any of them or made or suffered a transfer of any of its property or the incurring of an obligation which may be fraudulent under any bankruptcy, fraudulent conveyance or other similar Law. (5) A case or proceeding shall have been commenced against Borrower in a court having competent jurisdiction seeking a decree or order in respect of such Borrower (a) under Title 11 of the United States Code, as now constituted or hereafter amended, or any other applicable federal, state or foreign bankruptcy or other similar Law, (b) appointing a custodian, receiver, liquidator, assignee, trustee or sequestrator (or similar official) of such Borrower or of any substantial part of its properties, or (c) ordering the winding-up or liquidation of the affairs of Borrower, and such case or proceeding shall remain undismissed or unstayed for thirty (30) consecutive days or such court shall enter a decree or order granting the relief sought in such case or proceeding. (6) Borrower shall (a) file a petition seeking relief under Title 11 of the United States Code, as now constituted or hereafter amended, or any other applicable federal, state or foreign bankruptcy or other similar Law, (b) consent to the institution of proceedings thereunder or to the filing of any such petition or to the appointment of or taking possession by a custodian, receiver, liquidator, assignee, trustee or sequestrator (or similar official) of Borrower or of any substantial part of its properties, (c) admit in writing its inability to pay its debts generally as such debts become due, or (d) take any action in furtherance of any such action. (7) Final judgment or judgments (after the expiration of all times to appeal therefrom) for the payment of money in excess of $250,000 in the aggregate shall be rendered against Borrower and the same shall not be (i) fully covered (taking into account the deductible) by insurance maintained by Borrower in accordance with the requirements of this Agreement, or (ii) vacated, stayed, bonded, paid or discharged for a period of thirty (30) days. (8) Any provision of any Collateral Document, after delivery thereof shall for any reason (other than being contrary to applicable Law or public policy, and other than by Lender's acts) cease to be valid or enforceable in accordance with its terms, or any security interest created under any Collateral Document shall cease to be a valid and perfected first priority security interest or Lien (subject to Permitted Encumbrances and except as otherwise stated therein and other than being contrary to applicable Law or public policy, and other than by Lender's acts) in any of the Collateral purported to be covered thereby. (9) Asset Manager defaults under the Asset Management Agreement beyond applicable grace periods or ceases to act as manager under the Asset Management Agreement (unless Lender has failed to approve an extension of the Asset Management Agreement upon its expiration) unless in each case Borrower has replaced Asset Manager -60- as manager with a manager satisfactory to Lender in its reasonable discretion within thirty (30) days. (10) The occurrence of any "Event of Default" under the Whitehall Indemnity. (11) The occurrence of any breach or default under any Fidelity Federal Ground Lease beyond any applicable grace or cure period, or the occurrence of any other event which would entitle the landlord under any Fidelity Federal Ground Lease to terminate the Fidelity Federal Ground Lease to which it is a party. Notwithstanding anything to the contrary herein or in the other Loan Documents, if an Event of Default (which arises from the occurrence of a breach, default, failure of condition or other event for which no cure period is provided herein) or a Potential Default occurs hereunder or under another Loan Document because a representation or warranty or a covenant is breached as it affects a particular Property (a "DEFAULT PROPERTY"), such Event of Default or Potential Default may be cured by paying to Lender, as the Release Payment for such Default Property, the Adjusted Loan Basis for the Default Property (together with all other sums payable to Lender in connection with a release of such Property) within ten (10) days of written notice from Lender (as to any such Event of Default), or within the applicable cure period provided in this Section 10.1 (as to any such Potential Default), in which event Lender shall release all of its Liens on the Default Property and all of the personal property Collateral related solely thereto. Lender agrees that an Event of Default arising under Section 10.1(11) shall cause the Fidelity Federal Property to be a Default Property, and that such an Event of Default is curable under this paragraph. Section 10.2 REMEDIES. (1) If any Event of Default (other than an Event of Default which is curable under the last paragraph of Section 10.1 and as to which the ten-day cure period has not yet expired) shall have occurred and be continuing, (a) Lender may, without notice, terminate this facility with respect to funding further Advances, whereupon no additional Loan proceeds shall be funded hereunder, and/or (b) Lender may: (i) without notice, declare all Obligations to be forthwith due and payable, whereupon all such Obligations shall become and be due and payable, without presentment, demand, protest or further notice of any kind, all of which are expressly waived by Borrower; provided, however, that upon the occurrence of an Event of Default specified in Sections 10.1(4), (5) or (6) hereof, such Obligations shall become due and payable without declaration, notice or demand by Lender; and (ii) exercise all remedies available to Lender in the Loan Documents, at law, in equity or otherwise. (2) Upon the occurrence of an Event of Default Lender shall have the right to request Borrower to, and Borrower shall, execute new promissory notes (and appropriate amendments to the other Loan Documents) aggregating the then outstanding balance due on the Loan. Borrower hereby designates Lender as its attorney-in-fact to -61- execute any such documents on behalf of Borrower, such appointment being coupled with interest, and such designation shall be irrevocable. Section 10.3 WAIVERS BY BORROWER Except as otherwise provided for in this Agreement and applicable Law, Borrower waives (1) presentment, demand and protest and notice of presentment, dishonor, notice of intent to accelerate and notice of acceleration, (2) all rights to notice and a hearing prior to Lender's taking possession or control of, or to Lender's replevy, attachment or levy upon, the Properties or any bond or security which might be required by any court prior to allowing Lender to exercise any of its remedies, and (3) the benefit of all valuation, appraisal and exemption Laws. Borrower acknowledges that it has been advised by counsel of its choice with respect to this Agreement, the other Loan Documents and the transactions evidenced by this Agreement and the other Loan Documents. Section 10.4 RIGHT OF SET-OFF. Upon the occurrence and during the continuance of any Event of Default, Lender is hereby authorized at any time and from time to time, to the fullest extent permitted by Law, to set off and apply any and all deposits (general or special, time or demand, provisional or final) at any time held (other than deposits held by Borrower in trust for other persons, such as Security Deposits, and other such deposits) and other indebtedness at any time owing by Lender to or for the credit or the account of Borrower against any and all of the Obligations of Borrower now or hereafter existing under this Agreement and the Note held by Lender, irrespective of whether or not Lender shall have made any demand under this Agreement or any such Note and although such obligations may be unmatured. Lender agrees promptly to notify Borrower after any such set-off and application made by such Lender; provided, however, that the failure to give such notice shall not affect the validity of such set-off and application. The rights of Lender under this Section are in addition to other rights and remedies (including other rights of set-off) which Lender may have. ARTICLE 11 MISCELLANEOUS Section 11.1 NOTICES. Except as otherwise provided herein, whenever it is provided herein that any notice, demand, request, consent, approval, declaration or other communication shall or may be given to or served upon any of the parties by another, or whenever any of the parties desires to give or serve upon another any communication with respect to this Agreement, each such notice, demand, request, consent, approval, declaration or other communication shall be in writing and either shall be delivered in person with receipt acknowledged, by a nationally recognized overnight delivery service (such as Federal Express), or by registered or certified mail, return receipt requested, postage prepaid, or telecopied and confirmed by telecopy answerback, addressed as follows: -62- (a) If to Lender, at: General Electric Capital Corporation c/o GE Capital Realty Group, Inc. 16479 Dallas Parkway, Suite 400 Addison, Texas 75001-2512 Attention: Asset Manager (Whitehall/McNeil Portfolio) Telecopy Number: (972) 447-2660 with copies to: General Electric Capital Corporation 292 Long Ridge Road Stamford, Connecticut 06927 Attention: Kevin L. Korsh, Esq. (Whitehall/McNeil Portfolio) Telecopy Number: (203) 357-6768 (b) If to Borrower, at: WXI/MCN Commercial Real Estate Limited Partnership 100 Crescent Court, Suite 1000 Dallas, Texas 75201 Attention: Todd Williams Telecopy Number: (214) 855-6305 with copies to: Whitehall Street Real Estate Limited Partnership XI 85 Broad Street, 10th Floor New York, New York 10004 Attention: Chief Financial Officer Telecopy Number: (212) 357-5505 and to: Archon Group, L.P. 600 E. Las Colinas Boulevard, Suite 400 Irving, Texas 75039 Attention: Elizabeth W. Lambert Telecopy Number: (972) 368-3699 -63- and to: Sullivan & Cromwell 125 Broad Street New York, New York 10004 Attention: Gary Israel, Esq. Telecopy Number: (212) 558-3588 (c) If to Whitehall, at: Whitehall Street Real Estate Limited Partnership XI 85 Broad Street, 10th Floor New York, New York 10004 Attention: Chief Financial Officer Telecopy Number: (212) 357-5505 and to: Sullivan & Cromwell 125 Broad Street New York, New York 10004 Attention: Gary Israel, Esq. Telecopy Number: (212) 558-3588 or at such other address as may be substituted by notice given as herein provided. The giving of any notice required hereunder may be waived in writing by the party entitled to receive such notice. Every notice, demand, request, consent, approval, declaration or other communication hereunder shall be deemed to have been duly given or served on the date on which personally delivered, with receipt acknowledged, telecopied and confirmed by telecopy answerback, or the next Business Day if sent by a nationally recognized courier service, or three (3) Business Days after the same shall have been deposited in the United States mail. Failure or delay in delivering copies of any notice, demand, request, consent, approval, declaration or other communication to the persons designated above to receive copies shall in no way adversely affect the effectiveness of such notice, demand, request, consent, approval, declaration or other communication. Section 11.2 AMENDMENTS AND WAIVERS. No amendment or waiver of any provision of the Loan Documents shall be effective unless in writing and signed by the party against whom enforcement is sought. Section 11.3 LIMITATION ON INTEREST. It is the intention of the parties hereto to conform strictly to applicable usury Laws. Accordingly, all agreements between Borrower and Lender with respect to the Loan are hereby expressly limited so that in no event, whether by reason of acceleration of maturity or otherwise, shall the amount paid or agreed to be paid to Lender or charged by Lender for the use, forbearance or detention of the money to be lent hereunder or otherwise, exceed the maximum amount allowed by Law. If the Loan would be usurious under -64- applicable Law (including the Laws of the State and the Laws of the United States of America), then, notwithstanding anything to the contrary in the Loan Documents: (1) the aggregate of all consideration which constitutes interest under applicable Law that is contracted for, taken, reserved, charged or received under the Loan Documents shall under no circumstances exceed the maximum amount of interest allowed by applicable Law, and any excess shall be credited on the Note by the holder thereof (or, if the Note has been paid in full, refunded to Borrower); and (2) if maturity is accelerated by reason of an election by Lender, or in the event of any prepayment, then any consideration which constitutes interest may never include more than the maximum amount allowed by applicable Law. In such case, excess interest, if any, provided for in the Loan Documents or otherwise, to the extent permitted by applicable Law, shall be amortized, prorated, allocated and spread from the date of advance until payment in full so that the actual rate of interest is uniform through the term hereof. If such amortization, proration, allocation and spreading is not permitted under applicable Law, then such excess interest shall be canceled automatically as of the date of such acceleration or prepayment and, if theretofore paid, shall be credited on the Note (or, if the Note has been paid in full, refunded to Borrower). The terms and provisions of this Section shall control and supersede every other provision of the Loan Documents. The Loan Documents are contracts made under and shall be construed in accordance with and governed by the Laws of the State, except that if at any time the Laws of the United States of America permit Lender to contract for, take, reserve, charge or receive a higher rate of interest than is allowed by the Laws of the State (whether such federal laws directly so provide or refer to the Law of any state), then such federal Laws shall to such extent govern as to the rate of interest which Lender may contract for, take, reserve, charge or receive under the Loan Documents. Section 11.4 INVALID PROVISIONS. If any provision of any Loan Document is held to be illegal, invalid or unenforceable, such provision shall be fully severable; the Loan Documents shall be construed and enforced as if such illegal, invalid or unenforceable provision had never comprised a part thereof; the remaining provisions thereof shall remain in full effect and shall not be affected by the illegal, invalid, or unenforceable provision or by its severance therefrom; and in lieu of such illegal, invalid or unenforceable provision there shall be added automatically as a part of such Loan Document a provision as similar in terms to such illegal, invalid or unenforceable provision as may be possible to be legal, valid and enforceable. Section 11.5 REIMBURSEMENT OF EXPENSES. Borrower shall pay all reasonable out-of-pocket expenses of Lender in connection with underwriting this Loan and the preparation of the Loan Documents (including all environmental appraisals, structural appraisals and travel expenses (whether or not such travel expense is incurred by third parties or in-house staff)) and the closing and administration of the Loan made pursuant hereto (including the reasonable fees and expenses of all of its counsel and advisors retained in connection with the Loan Documents and the transactions contemplated thereby and advice in connection therewith) and all fees and expenses of Lender. If, at any time or times, regardless of the existence of an Event of Default (except with respect to paragraphs (3) and (4) below, which shall be subject to an Event of Default having occurred and be continuing), Lender shall employ counsel or other advisors for advice or other representation or shall incur reasonable legal or other costs and expenses in connection with: -65- (1) any amendment, modification or waiver of, or consent with respect to, any of the Loan Documents or advice in connection with the administration of the Loan made pursuant hereto or its rights hereunder or thereunder; (2) any litigation, contest, dispute, suit, proceeding or action, whether instituted by Lender, Borrower or any other Person, in any way relating to the Properties, any of the Loan Documents or any other agreements to be executed or delivered in connection herewith (including any lenders' liability claim, contest, dispute, suit, proceeding or action); (3) any attempt to enforce any rights of Lender against Borrower or any other Person, that may be obligated to Lender by virtue of any of the Loan Documents; (4) any attempt to verify, protect, collect, sell, liquidate or otherwise dispose of the Properties; then, and in any such event, the attorneys' and other parties' fees arising from such services, including those of any appellate proceedings, and all reasonable expenses, costs, charges and other fees incurred by such counsel and others in any way or respect arising in connection with or relating to any of the events or actions described in this Section shall be payable, on demand, by Borrower to Lender and shall be additional Obligations secured under this Agreement and the other Loan Documents. Without limiting the generality of the foregoing, such expenses, costs, charges and fees may include: reasonable paralegal fees, costs and expenses; accountants' and investment bankers' fees, costs and expenses; court costs and expenses; photocopying and duplicating expenses; court reporter fees, costs and expenses; long distance telephone charges; air express charges; telegram charges; secretarial overtime charges; and expenses for travel, lodging and food paid or incurred in connection with the performance of such legal services. Section 11.6 APPROVALS; THIRD PARTIES; CONDITIONS. All approval rights retained or exercised by Lender with respect to leases, contracts, plans, studies and other matters are solely to facilitate Lender's credit underwriting, and shall not be deemed or construed as a determination that Lender has passed on the adequacy thereof for any other purpose and may not be relied upon by Borrower or any other Person. This Agreement is for the sole and exclusive use of Lender and Borrower and may not be enforced, nor relied upon, by any Person other than Lender and Borrower. All conditions of the obligations of Lender hereunder, including the obligation to make Advances, are imposed solely and exclusively for the benefit of Lender, its successors and assigns, and no other Person shall have standing to require satisfaction of such conditions or be entitled to assume that Lender will refuse to make Advances in the absence of strict compliance with any or all of such conditions, and no other Person shall, under any circumstances, be deemed to be a beneficiary of such conditions, any and all of which may be freely waived in whole or in part by Lender at any time in Lender's sole discretion. Section 11.7 LENDER NOT IN CONTROL; NO PARTNERSHIP/MEMBERSHIP. None of the covenants or other provisions contained in this Agreement shall, or shall be deemed to, give Lender the right or power to exercise control over the affairs or management of Borrower, the power of Lender being limited to the rights to exercise the remedies referred to in the Loan Documents. The -66- relationship between Borrower and Lender is, and at all times shall remain, solely that of debtor and creditor. No covenant or provision of the Loan Documents is intended, nor shall it be deemed or construed, to create a partnership, joint venture, agency or common interest in profits or income between Lender and Borrower or to create an equity in any Property in Lender. Lender neither undertakes nor assumes any responsibility or duty to Borrower or to any other person with respect to any Property or the Loan, except as expressly provided in the Loan Documents; and notwithstanding any other provision of the Loan Documents: (1) Lender is not, and shall not be construed as, a partner, joint venturer, alter ego, manager, controlling person or other business associate or participant of any kind of Borrower or its stockholders, members, or partners and Lender does not intend to ever assume such status; (2) Lender shall in no event be liable for any Indebtedness, expenses or losses incurred or sustained by Borrower; and (3) Lender shall not be deemed responsible for or a participant in any acts, omissions or decisions of Borrower or its stockholders, members, or partners. Lender and Borrower disclaim any intention to create any partnership, joint venture, agency or common interest in profits or income between Lender and Borrower, or to create an equity in any Property in Lender, or any sharing of liabilities, losses, costs or expenses. Section 11.8 TIME OF THE ESSENCE. Time is of the essence with respect to this Agreement. Section 11.9 SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon and inure to the benefit of Lender and Borrower and the respective successors and assigns of Lender and Borrower, provided that neither Borrower nor any other Borrower Party shall, without the prior written consent of Lender, assign any rights, duties or obligations hereunder. Lender may sell, assign, transfer or negotiate to one or more other lenders, commercial banks, insurance companies, other financial institutions or any other Person acceptable to Lender all or a portion of its rights and obligations under the Loan Documents, provided, however, that (1) each such sale, assignment, transfer or negotiation shall be of a constant, and not a varying, percentage of all of the assigning Lender's rights and obligations under the Loan Documents, (2) any such sale, assignment, transfer or negotiation shall not require Borrower to file a registration statement with the Securities and Exchange Commission or apply to qualify the Note under the blue sky laws of any state, or otherwise participate in the selling process in a manner which could give rise to liability of Borrower under Sections 11 or 12 of the Securities Act of 1933 or other federal or state securities Laws, (3) acceptance of such assignment by any assignee shall constitute the agreement of such assignee to be bound by the terms of this Agreement applicable to Lender, (4) GECC shall have the exclusive right to control all decisions by Lender under the Loan Documents, and (5) such sale, assignment or other transfer shall not result in any increased cost to Borrower. From and after the effective date of such an assignment, (a) the assignee thereunder shall, in addition to the rights and obligations hereunder held by it immediately prior to such effective date, have the rights and obligations hereunder that have been assigned to it pursuant to such assignment and (b) the assignor Lender thereunder shall, to the extent that rights and obligations hereunder have been assigned by it pursuant to such assignment, relinquish its rights and be released from its obligations under this Agreement (and, in the case of an assignment and acceptance covering all or the remaining portion of an assigning Lender's rights and obligations under this Agreement, such Lender shall cease to be a party hereto). Borrower agrees that it will use its best efforts to assist and cooperate, at Lender's cost and -67- expense, with Lender in any manner reasonably requested by Lender to effect the sale of any participation in, or any assignment of, any of the Loan Documents or of any portion thereof or interest therein, including assistance in the preparation of appropriate disclosure documents or placement memoranda. In the event Lender assigns or otherwise transfers all or any part of the Note in accordance with the provisions of this Section, Borrower shall, upon the request of Lender, issue a new Note to effectuate such assignment or transfer, provided that the total principal amount of all of the Notes does not exceed the outstanding Loan balance plus the amount of undisbursed Loan funds then available for disbursement, and the total amounts payable under the Notes are not greater than the amounts payable prior to such assignment or transfer. Section 11.10 RENEWAL, EXTENSION OR REARRANGEMENT. All provisions of the Loan Documents shall apply with equal effect to each and all promissory notes and amendments thereof hereinafter executed which in whole or in part represent a renewal, extension, increase or rearrangement of the Loan. For portfolio management purposes, during the Term Lender may elect to divide the Loan into two or more separate loans evidenced by separate promissory notes so long as the payment and other obligations of Borrower are not effectively increased or otherwise modified. Borrower agrees to cooperate with Lender and to execute such documents as Lender reasonably may request to effect such division of the Loan. Section 11.11 WAIVERS. No course of dealing on the part of Lender, its officers, employees, consultants or agents, nor any failure or delay by Lender with respect to exercising any right, power or privilege of Lender under any of the Loan Documents, shall operate as a waiver thereof, it being understood that any waivers must be in writing and executed by the party giving such waiver. Section 11.12 CUMULATIVE RIGHTS. Rights and remedies of Lender under the Loan Documents shall be cumulative, and the exercise or partial exercise of any such right or remedy shall not preclude the exercise of any other right or remedy. Section 11.13 CONSTRUCTION. Words used in this Agreement and the other Loan Documents in the singular, where the context so permits, shall be deemed to include the plural and vice versa. The definitions of words in the singular in this Agreement and the other Loan Documents shall apply to such words when used in the plural where the context so permits and vice versa. Any reference to a Loan Document or Ancillary Agreement shall be deemed to be a reference to such Loan Document or Ancillary Agreement as it may hereafter from time to time be amended, modified, supplemented or restated in accordance with the terms hereof. Any accounting term used in this Agreement shall have, unless otherwise specifically provided herein, the meaning customarily given such term in accordance with GAAP, and all financial computations hereunder shall be computed, unless otherwise specifically provided herein, in accordance with GAAP consistently applied. That certain terms or computations are explicitly modified by the phrase "in accordance with GAAP" shall in no way be construed to limit the foregoing. -68- Section 11.14 PHRASES. When used in this Agreement and the other Loan Documents, the word "include(s)" means "include(s), without limitation," the word "including" means "including, but not limited to," the phrase "satisfactory to Lender" means "in form and substance satisfactory to Lender in all respects," the phrase "with Lender's consent" or "with Lender's approval" means such consent or approval at Lender's discretion, the phrase "acceptable to Lender" means "acceptable to Lender at Lender's sole discretion." The words "herein," "hereof" and "hereunder" and other words of similar import refer to this Agreement as a whole, including the Exhibits and Schedules hereto, as the same may from time to time be amended, modified or supplemented and not to any particular section, subsection or clause contained in this Agreement. Section 11.15 EXHIBITS AND SCHEDULES. The exhibits and schedules attached to this Agreement are incorporated herein and shall be considered a part of this Agreement for the purposes stated herein. Section 11.16 TITLES OF ARTICLES, SECTIONS AND SUBSECTIONS. All titles or headings to articles, sections, subsections or other divisions of this Agreement and the other Loan Documents or the exhibits hereto and thereto are only for the convenience of the parties and shall not be construed to have any effect or meaning with respect to the other content of such articles, sections, subsections or other divisions, such other content being controlling as to the agreement between the parties hereto. Section 11.17 PUBLICITY. Lender and Borrower will cooperate with respect to an agreed-upon press release and any other official public statements to be released by either of them with respect to the making of the Loan. Neither Lender nor Borrower shall issue or shall permit any of its Affiliates to issue any other press release or other official public statement with respect to the making of the Loan except with the consent of the other, provided that nothing contained herein shall restrict either Lender or Borrower or any Affiliate thereof from making any public disclosure it reasonably believes is required by Law or any oral response to any press inquiry. Section 11.18 SURVIVAL. Except as otherwise expressly provided for in the Loan Documents, no termination or cancellation (regardless of cause or procedure) of any financing arrangement under this Agreement shall in any way affect or impair the powers, obligations, duties, rights and liabilities of Borrower or the rights of Lender relating to any transaction or event occurring prior to such termination. Except as otherwise expressly provided herein or in any other Loan Document, all undertakings, agreements, covenants, warranties and representations contained in the Loan Documents shall survive such termination or cancellation and shall continue in full force and effect until such time as all of the Obligations have been paid in full in accordance with the terms of the agreements creating such Obligations, at which time the same shall terminate. Notwithstanding anything to the contrary set forth herein or in the Hazardous Substances Indemnity Agreement, Lender, Borrower and Whitehall (by separately executing this Agreement) specifically agree that the indemnities set forth in Article 4 hereof and in the Hazardous Substances Indemnity Agreement shall survive the full repayment of the Obligations only with respect to any claim or demand pending or threatened for Environmental Liabilities and Costs that is actually known to Borrower as of the date all Obligations are satisfied. -69- Section 11.19 GOVERNING LAW. EXCEPT AS OTHERWISE EXPRESSLY PROVIDED IN ANY OF THE LOAN DOCUMENTS, IN ALL RESPECTS, INCLUDING ALL MATTERS OF CONSTRUCTION, VALIDITY AND PERFORMANCE, THIS AGREEMENT AND THE OBLIGATIONS ARISING HEREUNDER SHALL BE GOVERNED BY, AND CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK APPLICABLE TO CONTRACTS MADE AND PERFORMED IN SUCH STATE, WITHOUT REGARD TO THE PRINCIPLES THEREOF REGARDING CONFLICT OF LAWS, AND ANY APPLICABLE LAWS OF THE UNITED STATES OF AMERICA. LENDER AND BORROWER AGREE TO SUBMIT TO PERSONAL JURISDICTION AND TO WAIVE ANY OBJECTION AS TO VENUE IN THE COUNTY OF NEW YORK, STATE OF NEW YORK. NOTHING HEREIN SHALL PRECLUDE LENDER OR BORROWER FROM BRINGING SUIT OR TAKING OTHER LEGAL ACTION IN ANY OTHER JURISDICTION. Section 11.20 ENTIRE AGREEMENT. This Agreement and the other Loan Documents embody the entire agreement and understanding between Lender and Borrower and supersede all prior agreements and understandings between such parties relating to the subject matter hereof and thereof. Accordingly, the Loan Documents may not be contradicted by evidence of prior, contemporaneous, or subsequent oral agreements of the parties. There are no unwritten oral agreements between the parties with respect to the Loan Documents or the transactions contemplated thereby. Except as otherwise provided in this Agreement or any of the other Loan Documents by specific reference to the applicable provisions of this Agreement, if any provision contained in this Agreement is in conflict with, or inconsistent with, any provision in any of the other Loan Documents, the provision contained in this Agreement shall govern and control. Section 11.21 COUNTERPARTS. This Agreement may be executed in multiple counterparts, each of which shall constitute an original, but all of which shall constitute one document. Section 11.22 WAIVER OF JURY TRIAL. TO THE MAXIMUM EXTENT PERMITTED BY LAW, BORROWER, LENDER AND WHITEHALL HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVE THE RIGHT TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION BASED HEREON, ARISING OUT OF, UNDER OR IN CONNECTION WITH THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT, OR ANY COURSE OF CONDUCT, COURSE OF DEALING, STATEMENT (WHETHER VERBAL OR WRITTEN) OR ACTION OF ANY PARTY OR ANY EXERCISE BY ANY PARTY OF THEIR RESPECTIVE RIGHTS UNDER THE LOAN DOCUMENTS OR IN ANY WAY RELATING TO THE LOAN OR ANY PROPERTY (INCLUDING ANY ACTION TO RESCIND OR CANCEL THIS AGREEMENT, AND ANY CLAIM OR DEFENSE ASSERTING THAT THIS AGREEMENT WAS FRAUDULENTLY INDUCED OR IS OTHERWISE VOID OR VOIDABLE). THIS WAIVER IS A MATERIAL INDUCEMENT FOR LENDER TO ENTER THIS AGREEMENT. -70- Section 11.23 AUTHORIZED SIGNATURE. Until Lender shall be notified by Borrower to the contrary, the signature upon any document or instrument delivered pursuant hereto of any one (1) of the officers of the general partner of Borrower listed in Schedule 11.23 hereto (as the same may be amended by notice given hereunder) shall bind Borrower and be deemed to be the act of Borrower, affixed pursuant to and in accordance with the Partnership Agreement of Borrower and the approval of the partners of Borrower. Section 11.24 POWER OF ATTORNEY. Notwithstanding anything contained herein or in any other Loan Document to the contrary, in the exercise of any remedy pursuant to any of the Loan Documents, Lender shall act as a prudent lender would act in similar circumstances in creating liabilities for, or settling liabilities against Borrower pursuant to any power of attorney granted under any of the Loan Documents. Section 11.25 ACKNOWLEDGMENT BY WHITEHALL. BY SEPARATELY EXECUTING THIS AGREEMENT IN THE SPACE PROVIDED BELOW, WHITEHALL HEREBY ACKNOWLEDGES THAT IT SHALL BE PERSONALLY LIABLE, JOINTLY AND SEVERALLY, FOR THE MATTERS SPECIFIED IN CLAUSES (1), (2), (3), (4) AND (5) OF SECTION 12.1 HEREOF (SUBJECT TO THE LIMITATIONS SET FORTH IN SECTION 12.1). IN CONNECTION WITH THE ASSUMPTION OF SUCH LIABILITY, WHITEHALL HEREBY MAKES, IN FAVOR OF LENDER, THE WAIVERS, AGREEMENTS AND UNDERSTANDINGS AS ARE SET FORTH IN SCHEDULE 11.25, WHICH WAIVERS, AGREEMENTS AND UNDERSTANDINGS ARE INCORPORATED IN THIS SECTION BY THIS REFERENCE AS THOUGH SET FORTH IN FULL HEREIN. ARTICLE 12 LIMITATIONS ON LIABILITY Section 12.1 LIMITATION ON LIABILITY. Except as otherwise provided below, Lender's recourse shall be limited to the Collateral and no partners of Borrower or any of their Affiliates or their affiliated companies, officers, directors, shareholders, members or any other Person, disclosed or undisclosed, shall be personally liable for the repayment of any of the Obligations, except that the Borrower, Whitehall and the general and limited partners (subject to the last sentence of this Section) in the Borrower (but not The Goldman Sachs Group, Inc. and not any direct or indirect general or limited partners or shareholders, members, officers, directors or employees of the general or limited partners in Whitehall) shall be personally liable (1) for the Borrower's fraud (but only to the extent of actual damages suffered by Lender caused by such fraud), (2) whether prior to or after an Event of Default for the Borrower's misappropriation (i.e., application in violation of the terms of this Agreement) of insurance proceeds, condemnation awards, Operating Cash Flow, Net Capital Proceeds, Lease Buy Out Consideration, Security Deposits and any other amounts required to be held by Borrower in escrow or segregated accounts pursuant to the terms hereof and any other escrow deposits, but only to the extent of the amounts so misapplied and received by such partner, (3) for all Environmental Liabilities and Costs to the extent indemnifiable under Article 4 hereof or under the Hazardous Substances Indemnity Agreements, (4) for failure to -71- maintain any insurance coverage required under this Agreement or any other Loan Document, (5) a breach of the representations and warranties set forth in Section 6.18, and (6) for all matters for which Whitehall is indemnifying Lender pursuant to the Whitehall Indemnity. By separately executing this Agreement and as further consideration for the making of the Loan by Lender, Whitehall agrees that it shall be jointly and severally (except as otherwise expressly stated in this Section) liable and responsible for the liabilities referenced in (1) through (5) above, but Whitehall shall be liable only to the extent of: (a) until such time as all of the Obligations have been paid in full, an amount equal to the greater of (the "MAXIMUM LIABILITY"): (i) Twelve Million Dollars ($12,000,000); and (ii) fifty percent (50%) of the outstanding principal balance of the Loan, calculated as of the date Lender delivers written notice to Borrower and/or Whitehall of the existence of a claim, and (b) from and after such time as all of the Obligations have been paid in full, Ten Million Dollars ($10,000,000), and in all cases the Maximum Liability shall be reduced by any amounts theretofore paid by Whitehall pursuant to this Section. Lender agrees to look first to the assets of Borrower in connection with the satisfaction of any claim or liability arising from Section 8.17 or this Section but Lender shall have the right to proceed against Whitehall and any of Borrower's partners as stated above (subject to the last sentence of this Section) with respect to the liabilities referenced in (1) through (5) above in the event Borrower disputes or denies such liability or otherwise fails to hold Lender harmless in accordance with the terms of Section 8.17. Nothing contained in this Section 12.1 (or in any other provision of this Agreement) shall in any way limit Whitehall's liability under the Whitehall Indemnity. Notwithstanding anything set forth herein to the contrary, it is specifically agreed and understood that the liability of the limited partners (other than Whitehall) of the Borrower under this Section shall be limited to fraud committed by a limited partner (but only to the extent committed by such limited partner) and the matters set forth in clause (2) above of this Section with respect to each such limited partner. Section 12.2 LIMITATION ON LIABILITY OF LENDER'S OFFICERS, EMPLOYEES, ETC. Any obligation or liability whatsoever of Lender which may arise at any time under this Agreement or any other Loan Document shall be satisfied, if at all, out of the Lender's assets only. No such obligation or liability shall be personally binding upon, nor shall resort for the enforcement thereof be had to, the property of any of Lender's shareholders, directors, officers, employees or agents, regardless of whether such obligation or liability is in the nature of contract, tort or otherwise. EXECUTED as of the date first written above. "LENDER": GENERAL ELECTRIC CAPITAL CORPORATION, a New York corporation By: -------------------------------------- Paul St. Arnauld, Authorized Signatory -72- "BORROWER": WXI/MCN COMMERCIAL REAL ESTATE LIMITED PARTNERSHIP, a Delaware limited partnership By: WXI/MCN Commercial Gen-Par, L.L.C., a Delaware limited liability company, its General Partner By: WXI/McN Realty L.L.C., a Delaware limited liability company, its Managing Member By: --------------------------- --------------------------- [Printed Name and Title] "WHITEHALL": WHITEHALL STREET REAL ESTATE LIMITED PARTNERSHIP XI, a Delaware limited partnership By: WH Advisors, L.L.C. XI, a Delaware limited liability company, its General Partner By: --------------------------------- --------------------------------- [Printed Name and Title] -73-
SCHEDULE 1.1(A) PROPERTY INFORMATION UNITS/NRSF/ NAME ADDRESS CITY STATE ASSETS PROPERTY TYPE - ---- ------- ---- ----- ------ ------------- Century Park 1771 E. Flamingo Road Las Vegas NV 113,837 Office Kellogg Office 26 W. Dry Creek Circle Littleton CO 112,736 Office One Corp. Ctr. I 7401 Metro Blvd. Edina MN 110,837 Office Westwood Office Tampa FL 121,714 Office One Corp. Ctr. III 7300 Metro Blvd. Edina MN 110,788 Office La Plaza Center 4220 S. Maryland Pkwy Las Vegas NV 108,375 Office Continental Plaza Scottsdale AZ 54,537 Office Fidelity Federal 555 E. Ocean Blvd. Long Beach CA 124,485 Office Northwest Plaza 3181 W. Siebenthaler Avenue Dayton OH 443,114 Retail River Bay Plaza Hwy 301 S. & Gibsonton Road Riverview FL 79,298 Retail Redwood Plaza 700 N. Redwood Road Salt Lake City UT 104,211 Retail Towne Center Greenway & K-15 Highway Derby KS 93,522 Retail Springwood Plaza 10160B W. Florissant Dellwood MO 88,189 Retail Kendall Sunset 8890 SW 72nd Street Miami FL 85,437 Self Storage Burbank Self Storage 175 W. Verdugo Avenue Burbank CA 79,636 Self Storage Fountainbleau 8900 NW 12th Street Miami FL 74,629 Self Storage AAA Century 3846 W. Century Blvd. Inglewood CA 54,325 Self Storage Airport AAA Sentry 2048 S. State Road 7 N. Lauderdale FL 79,386 Self Storage Forest Hill 3455 Forest Hills Blvd. West Palm Beach FL 52,822 Self Storage Margate Self Storage 1880 N. State Road 7 Margate FL 50,984 Self Storage Military Trail 2300 N. Military Trail West Palm Beach FL 54,267 Self Storage
SCHEDULE 1.1(A) SCHEDULE 1.1(B) BASIS ALLOCATIONS PROPERTY PROPERTY BASIS LOAN BASIS -------- -------------- ---------- Century Park $ 9,291,480 $ 7,899,688 Kellogg Office $ 10,541,179 $ 8,962,192 One Corp. Ctr. I $ 9,556,065 $ 8,124,640 One Corp. Ctr. III $ 9,419,698 $ 8,008,700 Westwood Office * $ 9,939,577 $ 8,450,705 La Plaza Center $ 7,297,688 $ 6,204,551 Continental Plaza * $ 4,524,470 $ 3,846,739 Fidelity Federal $ 3,727,582 $ 3,169,219 Northwest Plaza $ 5,738,280 $ 4,878,730 River Bay Plaza $ 4,856,996 $ 4,129,456 Redwood Plaza $ 3,460,088 $ 2,941,794 Towne Center $ 2,568,542 $ 2,183,794 Springwood Plaza $ 2,185,075 $ 1,857,768 Kendall Sunset $ 6,876,958 $ 5,846,843 Burbank Self Storage $ 6,341,459 $ 5,391,558 Fountainbleau $ 4,253,302 $ 3,616,190 AAA Sentry $ 3,446,282 $ 2,930,056 AAA Century Airport $ 3,191,947 $ 2,713,818 Forest Hill $ 3,474,702 $ 2,954,219 Military Trail $ 3,012,739 $ 2,561,454 Margate Self Storage $ 2,956,470 $ 2,513,614 TOTAL $116,660,579 $ 99,185,728 ============ ============ * Additional Properties SCHEDULE 1.1(B) SCHEDULE 2.1 ADVANCE CONDITIONS Part A - Initial Advance Part B - General Conditions to Subsequent Advances Part C - Working Capital Advances PART A - INITIAL ADVANCE Lender shall not be obligated to make any portion of the Initial Advance available to Borrower unless and until Borrower shall have delivered to Lender, in form and substance satisfactory to Lender and, as to any documents (unless otherwise indicated), dated the Closing Date: 1. This Agreement, the Note and the Collateral Documents, the Hazardous Substances Indemnity Agreement(s), the Whitehall Indemnity, and all other Ancillary Agreements reasonably requested by Lender, in each case executed by Borrower and, as applicable, each Borrower Party (and any other party thereto other than Lender). 2. The payment to Lender of a commitment fee of $1,030,255 (less any portion of Borrower's $300,000 good faith deposit applied thereto). 3. A Borrowing Date Certificate, duly executed and delivered by Borrower. 4. Opinions of Sullivan & Cromwell, counsel to Borrower in respect of the Loan Documents governed by New York law and formation and authority matters regarding Borrower and the Borrower Parties; opinions of O'Melveny & Myers LLP, counsel to Borrower in respect of the Collateral Documents governed by California law; opinions of Greenberg Traurig, counsel to Borrower in respect of the Collateral Documents governed by Florida law; and opinions of local counsel of Lender in each jurisdiction in which one or more Properties are located; in each case addressing such matters regarding the Borrower, each Borrower Party, the Loan, the Loan Documents and/or the Properties as Lender may reasonably specify. 5. A copy of the Partnership Agreement, and all amendments thereto, certified as true and correct as of the Closing Date by the general partner of Borrower. 6. A copy of Borrower's certificate of limited partnership from Delaware certified as of a recent date by the appropriate Governmental Authority. 7. Resolutions of the board of directors or board of managers (as applicable) of the sole member of the general partner of Borrower, certified by an authorized officer or manager of such member within a recent date prior to the Closing Date, to be duly adopted and in full force and effect on such date, authorizing (a) the consummation of each of the transactions contemplated SCHEDULE 2.1 -- Page 1 by this Agreement and the Loan Documents and Ancillary Agreements to which Borrower is a party and (b) specific managers or officers to execute and deliver this Agreement, the other Loan Documents and the Ancillary Agreements to which Borrower is a party. 8. Certificates of an authorized officer or manager of the sole member of general partner of Borrower, dated within a recent date prior to the Closing Date, as to the incumbency of the officers or representatives of such member authorized by the company resolutions delivered to Lender (pursuant to paragraph (7) above) to execute and deliver this Agreement, the other Loan Documents and other Ancillary Agreements, and any other certificate or other document to be delivered pursuant hereto or thereto, together with a certification of the incumbency of such authorized officer or manager, as the case may be. 9. Governmental certificates, dated the most recent practicable date prior to the Closing Date, with telecopy updates where available, showing that Borrower and the general partner of Borrower are each organized and in good standing in the jurisdiction of their organization and showing that Borrower is qualified as a foreign limited partnership in good standing in all states in which any of the Properties are located (except to the extent that the local counsel opinions delivered pursuant to paragraph (4) above provide that qualification in a particular state is not required in order to own, operate, lease, finance or otherwise deal with the Properties located in such state). 10. A copy of the organizational charter and all amendments thereto of the general partner of Borrower and of the Holding Company, in each case certified as of a recent date by the Secretary of State of the jurisdiction of its organization, and a copy of the operating agreement of such general partner and the Holding Company, certified by an authorized officer or manager of the Holding Company as true and correct as of a recent date. 11. A partnership certificate of Whitehall and a consent of manager of Whitehall's general partner certified by the Secretary or an Assistant Secretary of such general partner, in each case within a recent date prior to the Closing Date, to be duly adopted and in force and effect on such date, authorizing (a) the consummation of the transactions contemplated by this Agreement and the Loan Documents and Ancillary Agreements to which Whitehall is a party, and (b) specific officers to execute and deliver this Agreement and the other Loan Documents and Ancillary Agreements to which Whitehall is a party. 12. Certificates of the Secretary, an Assistant Secretary or a Vice President of the general partner of Whitehall, dated within a recent date prior to the Closing Date, as to the incumbency of the officers or representatives of such general partner authorized by the company consent delivered to Lender (as required herein) to execute and deliver this Agreement and the other Loan Documents and Ancillary Agreements to which Whitehall is a party, and any other certificate or other document to be delivered by Whitehall pursuant hereto or thereto, together with a certification of the incumbency of such Secretary or Assistant Secretary, as the case may be. 13. Financing Statements (Form UCC-1) in form sufficient to be duly filed under the Uniform Commercial Code of each jurisdiction as may be necessary or, in the reasonable opinion of Lender, desirable to perfect the security interests created by the Deeds of Trust and the other SCHEDULE 2.1 -- Page 2 Collateral Documents pertaining to the Properties in the personal property and fixtures described therein. 14. Certified copies of Requests for Information or Copies (Form UCC-11), or equivalent reports in respect of Borrower in the jurisdictions for which UCC-1 Financing Statements are required, together with copies of financing statements referenced therein (none of which shall cover property to be covered by the Deeds of Trust or other Collateral Documents pertaining to the Properties). 15. Evidence that all other actions necessary or, in the opinion of Lender, desirable to perfect and protect the security interests created by the Deeds of Trust and the other Collateral Documents pertaining to the Properties, have been or will be taken. 16. An ALTA 1970 mortgagee policy of title insurance issued by the Title Company for each of the Deeds of Trust, naming Lender as the insured, with reinsurance and endorsements as Lender may require (including variable rate, survey, creditors' rights (if applicable), comprehensive coverage, first loss, tie-in, last dollar, future advances, access, zoning (with parking), subdivision, doing business, usury, separate tax lot and contiguity endorsements), containing no exceptions or exclusions other than Permitted Encumbrances or as may be approved by Lender in writing, insuring that the insured Deed of Trust is a valid, first-priority Lien on the Property encumbered thereby and related collateral, and in an insured amount as required by Lender. 17. A certified and complete copy of the Purchase Agreement together with such consents to sale, waivers of rights and remedies, and releases of interest as Lender or its counsel may determine to be necessary or prudent to be obtained from any Person who may be entitled to claim an interest in any of the Properties or a right arising from the sale, conveyance or transfer of any of the Properties to Borrower. 18. Current title, municipal violation, tax and bankruptcy searches (and any other searches which Lender may require) for Borrower, any Borrower Party and such other parties as Lender shall require in its sole discretion. 19. Evidence of insurance as required by this Agreement. 20. A current "as-built" survey of each of the Properties, dated or updated to a date not earlier than thirty (30) days prior to the Closing Date, certified to Lender and the Title Company, prepared by a licensed surveyor reasonably acceptable to Lender and the Title Company, and conforming to Lender's current standard survey requirements. 21. A current engineering report with respect to each Property, covering, among other matters, inspection of heating and cooling systems, roof and structural details and showing no failure of compliance with building plans and specifications, applicable legal requirements (including requirements of the Americans with Disabilities Act) and fire, safety and health standards. As requested by Lender, such report shall also include an assessment of such Property's tolerance for earthquake and seismic activity. Borrower shall also provide Lender with copies of utility letters SCHEDULE 2.1 -- Page 3 from applicable service providers evidencing that each Property has adequate and sufficient utility service for the use and purposes intended by Borrower. 22. A current Environment Site Assessment for each of the Properties. 23. If required by Lender, a current MAI appraisal for each Property. 24. A current rent roll for each Property, certified by Borrower (provided that any rent roll delivered for a Property owned directly or indirectly by Whitehall or an Affiliate of Whitehall for less than two (2) months prior to the Closing Date shall be certified by Borrower to its knowledge), together with all Non-Storage Leases not previously delivered to Lender. Such rent roll shall include the following information: (a) tenant names; (b) unit/suite numbers; (c) area of each demised premises and total area of the related Property (stated in net rentable square feet); (d) rental rate (including escalations), stated in gross amount and in amount per net rentable square foot per year; (e) lease term (commencement, expiration and renewal options); (f) expense passthroughs; (g) cancellation/termination provisions; (h) security deposit; and (i) material operating covenants and co-tenancy clauses. 25. Copies of the Asset Management Agreement and the property management agreements for the Properties, certified by Borrower as being true, correct and complete. 26. Copies of all Material Agreements, which Material Agreements must be approved in advance by Lender and, if required by Lender, must be subordinated, in all respects, to the Loan Documents. 27. Borrower shall establish all accounts and escrows as required by the terms of this Agreement and deliver to Lender satisfactory evidence thereof. 28. Evidence that the Properties and the operation thereof comply with all legal requirements, including that all requisite certificates of occupancy, building permits, and other licenses, certificates, approvals or consents required of any Governmental Authority have been issued without variance or condition and that there is no litigation, action, citation, injunctive proceedings, or like matter pending or threatened with respect to the validity of such matters. Borrower shall provide Lender with copies of all certificates of occupancy and, if required by Lender, shall deliver letters from applicable zoning, building and municipal agencies evidencing the foregoing. 29. No change shall have occurred in the financial condition of Borrower or any Borrower Party or in the Operating Cash Flow of any of the Properties, or in the financial condition of any major or anchor tenant, which would have, in Lender's reasonable judgment, a Material Adverse Effect. 30. No condemnation or adverse zoning or usage change proceeding shall have occurred or shall have been threatened against any of the Properties; none of the Properties shall have suffered any significant damage by fire or other casualty which has not been repaired; no Law, SCHEDULE 2.1 -- Page 4 moratorium, injunctive proceeding, restriction, litigation, action, citation or similar proceeding or matter shall have been enacted, adopted, or threatened by any Governmental Authority, which would have, in Lender's judgment, a Material Adverse Effect. 31. All fees and commissions payable to real estate brokers, mortgage brokers, or any other brokers or agents in connection with the Loan or the acquisition of the Properties have been paid. 32. The representations and warranties contained in this Loan Agreement and in all other Loan Documents are true and correct as of the date of the disbursement of the Initial Advance. 33. No Potential Default or Event of Default has occurred and is continuing. 34. A letter, executed by Borrower, addressed to its independent certified public accountants instructing them to comply with the provisions of Section 7.4 hereof. 35. To the extent invoices have been submitted to Borrower and evidenced to Lender, payment of all reasonable fees and expenses of (a) Lender's outside counsel, Sheppard, Mullin, Richter & Hampton LLP, (b) all special local counsel retained by Lender in connection with any of the Loan Documents and the transactions contemplated hereby and (c) all third party costs and expenses incurred by Lender in connection with the transaction contemplated by this Agreement, including costs of environmental appraisals, structural reports and travel expenses. 36. Estoppel certificates and, where required by Lender, subordination, nondisturbance and attornment agreements from Tenants under Leases as shall be satisfactory to Lender. 37. Lender shall have verified, based upon Lender's audit, a Cash On Cash Return of at least 10.75% and a Debt Service Coverage Ratio of at least 1.15 to 1.00. 38. Lender shall have verified that the amount of the Initial Advance does not exceed eighty percent (80%) of the aggregate acquisition costs for all Properties. 39. Lender shall have verified that the amount of the Initial Advance does not exceed 85.021% of Lender's determination of the aggregate value of the Properties, as set forth in the "Property Basis" column of Schedule 1.1(B). 40. Lender shall have determined that no developments have occurred with respect to any pending Shareholder Litigation since the date Lender obtained credit approval for the Loan (October 21, 1999) (the "CREDIT APPROVAL DATE") which have a reasonable possibility of resulting in a Material Adverse Effect, and no new or additional information regarding any pending Shareholder Litigation shall have become known to Lender since the Credit Approval Date of such on account of which Lender determines that such pending Shareholder Litigation has a reasonable possibility of resulting in a Material Adverse Effect or a material adverse effect on the Holding SCHEDULE 2.1 -- Page 5 Company. Without limiting the foregoing, none of the Properties shall be subject to any lis pendens or other notice of pending action with respect to any Shareholder Litigation. In addition, Lender shall have determined that there is no other pending or threatened Shareholder Litigation (not disclosed in writing by Borrower to Lender prior to the Credit Approval Date) which has a reasonable possibility of resulting in a Material Adverse Effect or a material adverse effect on the Holding Company. 41. The transactions contemplated by the Purchase Agreement, as they relate to the Properties, shall have been consummated in all material respects (including consideration paid and conditions precedent) in accordance with the terms and conditions set forth in the final "Proxy Statements" (as defined in the Purchase Agreement) dated December 14, 1999, and none of the material terms of the proposed transactions described in such Proxy Statements shall have been waived, modified, amended or supplemented in any material respect. 42. Such other documents or items as Lender reasonably may require. All material documents related to the Properties and other Property Documents, if any, in Borrower's possession (other than internal Borrower memoranda and communications between Borrower and its counsel) prior to Closing Date shall have been delivered to Lender. Lender agrees that upon funding the Initial Advance, the conditions set forth in this Part A shall be deemed satisfied (other than those conditions waived as a requirement of the initial funding but reserved in writing by Lender as a condition to subsequent Advances). PART B - GENERAL CONDITIONS TO SUBSEQUENT ADVANCES In addition to the specific conditions set forth elsewhere in this Agreement for the particular type of Advance requested, each Advance following the Initial Advance shall be subject to Lender's receipt, review, approval and/or confirmation of the following, each in form and content satisfactory to Lender in its reasonable discretion: 1. Borrower shall have delivered to Lender a Notice of Additional Advance for the requested Advance. 2. Borrower shall have satisfied any conditions waived by Lender as a requirement to funding the Initial Advance but reserved in writing by Lender as a condition for subsequent Advances. 3. There shall exist no Potential Default and no Event of Default (currently and after giving effect to the requested Advance); provided that (a) if the Advance is a Working Capital Advance, then the foregoing requirement regarding Potential Defaults shall apply only to monetary Potential Defaults, and (b) if the Advance is an Acquisition Advance, then the foregoing requirement regarding potential defaults shall apply only to monetary Potential Defaults and those nonmonetary SCHEDULE 2.1 -- Page 6 Potential Defaults for which Lender has delivered notice to Borrower under Section 10.1(2) and which Lender reasonably determined would have a Material Adverse Effect. 4. The representations and warranties contained in this Loan Agreement and in all other Loan Documents are true and correct (other than with respect to the representations that are given to the knowledge of Borrower, as to which no further representation shall be deemed given) on and as of the Closing Date and as of the date of the requested Advance (i.e., the representations shall be updated as of such dates rather than restated at such time as of the Closing Date, except that no such update shall be required if the matter to be disclosed would not have a Material Adverse Effect), other than breaches of representations or warranties for which Lender has remedies under Section 8.18 so long as Borrower is performing its obligations thereunder. 5. The requested Advance shall be secured by the Loan Documents, subject only to Permitted Encumbrances and to those exceptions to title approved by Lender at the time of Loan closing, provided that if the Title Policies and the endorsements originally issued thereto do not insure the priority of the requested Advance as required herein, such priority shall be evidenced by such additional endorsements to each Title Policy as are satisfactory to Lender. 6. Borrower shall have paid Lender's reasonable out-of-pocket costs and expenses in connection with such advance (including title and recording charges, taxes and filing fees and costs and expenses of Lender's inspecting engineer and attorneys). 7. A certification from a duly authorized officer of the general partner of Borrower, certifying that there have been no changes, alterations or improvements to any Property which would cause the survey, or any notes or certifications thereon with respect to such Property, to be inaccurate or in need of modification. 8. If the Adjusted Loan Basis for any Property is being adjusted to reflect the Advance, Borrower shall have amended any applicable Collateral Document that contains a maximum indebtedness provision that is based upon such Adjusted Loan Basis to increase such maximum indebtedness, if it is not already equal, to 120% of the Adjusted Loan Basis calculated after such Advance, and Borrower shall have paid all additional mortgage recording taxes which may be due on account of such reallocation and all recording charges and filing fees incurred in connection with recording any amended Collateral Documents. The acceptance by Borrower of the proceeds of any Advance shall be deemed to constitute, as of the date of such acceptance, a confirmation by Borrower of the granting and continuance of Lender's Liens pursuant to the Collateral Documents. PART C - WORKING CAPITAL ADVANCES In addition to the applicable terms and conditions set forth in Section 2.1 hereof, and the general conditions set forth in Part B above, each Working Capital Advance shall also be subject SCHEDULE 2.1 -- Page 7 to Lender's receipt, review, approval and/or confirmation of the following, at Borrower's cost and expense, each in form and substance reasonably satisfactory to Lender: 1. Lender shall have approved the Working Capital Budget for the Property for which the Working Capital Advance is requested. 2. Copies of any invoices to be paid with such Working Capital Advance and, to the extent not previously delivered to Lender, evidence of the payment of any invoice submitted with the immediately preceding request for a Working Capital Advance. 3. Borrower shall have executed and delivered to Lender copies of all documents, agreements, certificates, affidavits, searches or other instruments which Lender and its counsel determine are necessary to comply with state Laws applicable to building and construction loans. 4. Borrower shall not use any portion of any Working Capital Advance for payment of any costs or expenses other than those for which such Advance was requested and approved. 5. A certificate of the Architect stating that, in the professional opinion of the Architect (or such other professional as may be reasonably satisfactory to Lender), if an architect customarily would be retained for such Capital Expenditures and Tenant Improvements, or a certificate of an officer of the general partner of Borrower stating that: (a) all of such Capital Expenditures and Tenant Improvements completed have been done in a good and workmanlike manner and in material compliance with the approved plans and specifications, if any, and in accordance with all applicable provisions of Law; (b) the sum requested is justly required to reimburse Borrower for payments by Borrower to, or is justly due to, the contractor, subcontractors, materialmen, laborers, engineers, architects or other persons rendering services or supplying materials in connection with such Capital Expenditures and Tenant Improvements (giving a brief description of such services and materials), and that when added to all sums previously paid out by Lender, if any, the resulting sum does not exceed the value of the such Capital Expenditures and Tenant Improvements done to the date of such certificate; and (c) with respect to the certificate of the general partner of Borrower only, the amount of the requested Working Capital Advance (as allocated to such Property) will be sufficient (together with other funds otherwise available to Borrower) on completion of such Capital Expenditures and Tenant Improvements to pay for the same in full (giving in such reasonable detail as Lender may require an estimate of the cost of such completion and if such other funds are required as to the sources of such funds). SCHEDULE 2.1 -- Page 8 6. With respect to Capital Expenditures or Tenant Improvements the cost of which (in the aggregate with respect to the completion of the entire project) is or is estimated to equal or exceed $150,000: (a) waivers or releases of liens, reasonably satisfactory to Lender, covering that part of such Capital Expenditures and Tenant Improvements previously paid for, if any; (b) the request for any payment after such Capital Expenditures and Tenant Improvements have been completed shall be accompanied by a copy of any certificate or certificates required by Law to render occupancy and operation of the Property legal; (c) a construction consultant retained by Lender shall have inspected and approved such Capital Expenditures or Tenant Improvements (as applicable), at Borrower's cost and expense; (d) evidence satisfactory to Lender (including compliance letters from applicable Governmental Authorities) that the Property in connection with which the Working Capital Advance is being made is not in violation of any zoning, building, health, fire, traffic, environmental, wetlands, coastal or other rules, regulations, ordinances, statutes and requirements applicable thereto; (e) Lender shall retain an amount equal to 10% of the cost to perform such Capital Expenditures, until delivery of acceptable final lien waivers or releases from all contractors performing such Capital Expenditures; and (f) Lender shall retain an amount equal to 10% of the cost to perform such Tenant Improvements until Lender receives delivery of acceptable final lien waivers or releases from all contractors performing such Tenant Improvements. 7. As to Tenant Improvements in which the cost in the aggregate for the completion of the entire project equals or exceeds $50,000, an estoppel certificate, from the Tenant for which such Tenant Improvements are being performed, in form and content reasonably acceptable to Lender. 8. Proof reasonably satisfactory to Lender that the respective expenses for which any prior Working Capital Advance was funded have been paid in full. 9. With respect to any Tenant Improvement or Leasing Cost to be paid with such Working Capital Advance, copies of the applicable Leases in the form required in this Agreement and, with respect to Leasing Costs, a copy of the commission agreement (or other evidence reasonably satisfactory to Lender) indicating that no more than one-half of the commission is payable on the date the applicable Lease is executed and the balance is payable on the date the Tenant occupies the premises which are being leased to the Tenant. In no event shall any Working SCHEDULE 2.1 -- Page 9 Capital Advance with respect to a Leasing Cost exceed the portion of the Leasing Cost then due and payable as provided in the immediately preceding sentence. 10. With respect to any Tenant Allowance, such supporting documentation and information as may reasonably be required by Lender. 11. With respect to any funding to be advanced for Tenant Improvements and Leasing Costs: (a) the aggregate amount of all Working Capital Advances for any Lease shall not exceed $20.00 per square foot for Tenant Improvements; (b) the aggregate amount of Working Capital Advances for any Leasing Costs shall not exceed 7.5% of the total rent payable under the respective Lease during the initial term of the Lease, or as to any renewal, 4.5% of the total rent payable under the respective Lease during the renewal term; (c) in the event the amount of Working Capital Advances for Tenant Improvements and Leasing Commissions for any single Lease exceeds $400,000.00, Lender shall have the right to approve such Lease prior to making any such advance; (d) any remaining balance of the Lease Buy Out Consideration with respect to the space for which the Tenant Improvement will be constructed, shall be used by Borrower for such Tenant Improvement prior to using or requesting any Working Capital Advance therefor. Notwithstanding the foregoing, the limitations for Tenant Improvements and Leasing Costs set forth in the immediately preceding clauses (a) and (b) respectively may be reasonably increased to such amount as may be requested by Borrower, provided that Borrower is able to demonstrate to Lender's reasonable satisfaction that the increased amount requested by Borrower is consistent with the market in the relevant geographic market. 12. The Lease, with respect to which a Working Capital Advance is being made for Tenant Improvements, Leasing Costs or Capital Expenditures, shall (a) have been entered into on or after the Closing Date (or the renewal thereof shall have been entered into on or after the Closing Date); (b) be in a lease form reasonably acceptable to Lender; (c) contain standard subordination and attornment provisions and shall otherwise contain terms and provisions which are consistent with market terms for similar properties in the area, including the terms regarding rents, concessions, tenant improvements, term (which shall not in any event be less than three (3) years in order for such Lease to qualify for a Working Capital Advance), renewals and leasing costs; (d) provide for a rental rate in any one year of not less than eighty percent of the annual average rental for the entire term thereof; (e) provide with respect to Leases which are not triple net, for base year operating expense stops for purposes of calculating each Tenant's operating expense escalation for each Property which are, in the aggregate, equal to then current operating expenses for such Property plus or minus ten percent (10%); and (f) provide that if the Tenant has the right or option to terminate the Lease prior to its stated expiration date, such Tenant shall reimburse Borrower for the unamortized cost of Tenant Improvements and Leasing Costs paid for by Borrower. 13. With respect to any funding to be advanced for Capital Expenditures, in no event shall the Working Capital Advances with respect to any single Property exceed (in the aggregate for all Capital Expenditures made in respect of such Property) the total amount of Loan funds allocated to Capital Expenditures in the approved Working Capital Budget for such Property. In no event shall a Working Capital Advance for Capital Expenditures, Tenant Improvements or SCHEDULE 2.1 -- Page 10 Leasing Costs be available for Work or Major Work required in connection with any casualty or condemnation. 14. With respect to Capital Expenditures and Tenant Improvements, Borrower shall have delivered to Lender, to the extent not previously delivered to Lender: (a) if the cost thereof is equal to or greater than $100,000, complete plans and specifications for such Capital Expenditures and Tenant Improvements (approved by all Governmental Authorities whose approval is required at such time), for Lender's approval, which approval shall not be unreasonably withheld or delayed, which plans and specifications shall bear the signed approval thereof by an Architect and shall be accompanied by the Architect's signed estimate, bearing the Architect's seal, of the entire cost of completing such Capital Expenditures and Tenant Improvements; (b) certified or photostatic copies of all permits and approvals required by Law in connection with the commencement and conduct such Capital Expenditures and Tenant Improvements; and (c) if the cost thereof is equal to or greater than $250,000, and if required by Lender, a payment and performance bond for and/or guaranty of the payment for and completion of such Capital Expenditures and Tenant Improvements, which bond or guaranty shall be in form reasonably satisfactory to Lender, and shall be signed by a surety or sureties, or guarantor or guarantors, as the case may be, who are reasonably acceptable to Lender, and shall be in an amount of not less than one hundred ten percent (110%) of the Architect's estimate of the entire cost of completing such Capital Expenditures and Tenant Improvements; provided, however, that no such performance bond or guaranty shall be required if Borrower has completed and paid for such Capital Expenditures or Tenant Improvements and is seeking a Loan disbursement to reimburse Borrower for such costs. SCHEDULE 2.1 -- Page 11 SCHEDULE 2.1(5) WORKING CAPITAL BUDGETS FOR PROPERTIES TENANT LEASING CAPITAL PROPERTY IMPROVEMENTS COSTS EXPENDITURES TOTAL -------- ------------ ----- ------------ ----- Century Park $ 625,000 $ 302,000 $ 372,000 $ 1,299,000 Kellogg Office $ 463,000 $ 174,000 $ 200,000 $ 837,000 One Corp. Ctr. I $ 386,000 $ 139,000 $ 200,000 $ 725,000 Westwood Office $ 329,000 $ 170,000 $ 299,000 $ 798,000 One Corp. Ctr. III $ 519,000 $ 213,000 $ 153,000 $ 885,000 La Plaza Center $ 943,000 $ 414,000 $ 316,000 $ 1,672,000 Continental Plaza $ 284,000 $ 130,000 $ 193,000 $ 608,000 Fidelity Federal $ 594,000 $ 178,000 $ 639,000 $ 1,411,000 Northwest Plaza $ 276,000 $ 137,000 $ 333,000 $ 745,000 River Bay Plaza $ 64,000 $ 23,000 $ 33,000 $ 120,000 Redwood Plaza $ 30,000 $ 16,000 $ 40,000 $ 86,000 Towne Center $ 90,000 $ 50,000 $ 47,000 $ 187,000 Springwood Plaza $ 52,000 $ 27,000 $ 31,000 $ 111,000 Kendall Sunset $ -- $ -- $ 24,000 $ 24,000 Burbank Self Storage $ -- $ -- $ 10,000 $ 10,000 Fountainbleau $ -- $ -- $ 118,000 $ 118,000 AAA Century Airport $ -- $ -- $ 221,000 $ 221,000 AAA Sentry $ -- $ -- $ 45,000 $ 45,000 Forest Hill $ -- $ -- $ 39,000 $ 39,000 Margate Self Storage $ -- $ -- $ 29,000 $ 29,000 Military Trail $ -- $ -- $ 32,000 $ 32,000 TOTAL $ 4,655,000 $ 1,973,000 $ 3,372,000 $10,000,000 =========== =========== =========== =========== SCHEDULE 2.1(5)
SCHEDULE 4.2 ENVIRONMENTAL REPORTS PROPERTY NAME REPORT TITLE CONSULTANT DATE =========================================================================================================================== Continental Plaza Office Building Phase I ESA ERM 6-21-91 Phase I ESA PSI 1-15-98 Phase I ESA Update PSI 5-1-99 - --------------------------------------------------------------------------------------------------------------------------- Fidelity Federal Plaza Phase I ESA ERM 7-10-91 Comprehensive Asbestos Bulk Survey ATEC 6-7-93 Operations & Maintenance Program ATEC 6-15-93 Phase I ESA PSI 1-29-98 Asbestos O&M Program McNeil - Asbestos Containing Material Removal PSI 10-6-98 Confirmation Phase I ESA Update PSI 5-1-99 - --------------------------------------------------------------------------------------------------------------------------- Kellogg Office Building Phase I ESA ERM 7-10-91 Phase I ESA PSI Jan -98 Secondary Containment GTG (PSI) 1-7-98 Phase I ESA Update PSI 5-1-99 - --------------------------------------------------------------------------------------------------------------------------- Westwood Office Building Phase I ESA ERM 6-21-91 Phase I ESA, Engineering Property RERC 8-19-93 Condition Survey and ADA Survey Phase I ESA PSI 1-23-98 Phase II ESA PSI 9-30-98 Phase I ESA Update PSI 5-1-99 City of Tampa letter City of Tampa 12-17-99 - --------------------------------------------------------------------------------------------------------------------------- One Corporate Center I Office Bldg. Phase I ESA ERM 6-21-91 Phase I ESA Law 3-21-95 Phase I ESA PSI Jan -98 Asbestos O&M Program PSI 4-29-98 Radon Testing Results PSI 10-6-98 Phase I ESA Update PSI 5-1-99 - --------------------------------------------------------------------------------------------------------------------------- One Corporate Center III Office Bldg. Phase I ESA ERM 6-21-91 Phase I ESA Law 3-21-95 Phase I ESA PSI Jan -98 Asbestos O&M Program PSI 4-29-98 Phase I ESA Update PSI 5-1-99 - --------------------------------------------------------------------------------------------------------------------------- La Plaza Center Level I Environmental Assessment and Dressler 1-10-92 Asbestos Screening Phase I ESA PSI 1-14-98 Asbestos O&M Program PSI 4-29-98 Phase I ESA Update PSI 5-1-99 - --------------------------------------------------------------------------------------------------------------------------- Century Park Phase I ESA ERM 7-10-91 Phase I ESA PSI 1-14-98 Phase I ESA Update PSI 5-1-99 - ---------------------------------------------------------------------------------------------------------------------------
SCHEDULE 4.2 -- Page 1
PROPERTY NAME REPORT TITLE CONSULTANT DATE =========================================================================================================================== River Bay Plaza Phase I ESA ERM 7-9-91 Phase I Environmental Assessment ECT Jan -92 Phase I ESA Update ECT 4-28-97 Phase I ESA PSI 1-23-98 Phase II ESA PSI 9-30-98 Phase I ESA Update PSI 5-1-99 Limited Phase II ESA PSI 6-17-99 - --------------------------------------------------------------------------------------------------------------------------- Towne Center Shopping Center Phase I ESA ERM 7-9-91 Phase I ESA PSI 1-26-98 Lead in the Domestic Water Testing PSI 3-2-98 Asbestos O&M Program PSI 4-29-98 Asbestos Containing Material Removal PSI 10-6-98 Confirmation Phase I ESA Update PSI 5-1-99 - --------------------------------------------------------------------------------------------------------------------------- Springwood Plaza Shopping Center Phase I ESA ERM 7-9-91 Phase I ESA PSI 1-15-98 Asbestos O&M Program PSI 4-29-98 Phase I ESA Update PSI 5-1-99 - --------------------------------------------------------------------------------------------------------------------------- Northwest Plaza Phase I ESA ERM 7-9-91 Asbestos Bulk Sampling Survey Helix Env. 12-22-93 Phase I ESA PSI 1-23-98 Lead-based Paint O&M Program PSI 6-24-98 Asbestos O&M Program PSI 6-24-98 Phase II ESA PSI 9-25-98 Phase I ESA Update PSI 5-1-99 Phase II ESA PSI 6-1-99 - --------------------------------------------------------------------------------------------------------------------------- Redwood Plaza Phase I ESA PSI 1-23-98 Asbestos O&M Program McNeil - Subsurface Environmental Investigation PSI 10-01-98 Limited Soil and Groundwater PSI 3-26-99 Investigation Voluntary Cleanup Program Application PSI 3-26-99 Phase I ESA Update PSI 5-1-99 Voluntary Cleanup Program Response State of Utah 6-1-99 Assessment of Potential Impact to Off-Site PSI 12-2-99 Wells PSI 12-7-99 PSI 12-21-99 - --------------------------------------------------------------------------------------------------------------------------- Burbank Self Storage Phase I ESA ERM 6-21-91 Phase I ESA PSI 1-23-98 Phase I ESA Update PSI 5-1-99 Phase II ESA PSI 6-1-99 - --------------------------------------------------------------------------------------------------------------------------- AAA Century Airport Self Storage Phase I ESA ERM 6-21-91 Phase I ESA PSI 1-23-98 Phase I ESA Update PSI 5-1-99 - --------------------------------------------------------------------------------------------------------------------------- Margate Self Storage Phase I ESA ERM 6-21-91 Phase I ESA PSI 1-23-98 Lead in the Domestic Water Testing PSI 6-23-98 Phase I ESA Update PSI 5-1-99 - --------------------------------------------------------------------------------------------------------------------------- Fountainbleau Self Storage Phase I ESA Phase I ESA Update - ---------------------------------------------------------------------------------------------------------------------------
SCHEDULE 4.2 -- Page 2
PROPERTY NAME REPORT TITLE CONSULTANT 5-17-99E =========================================================================================================================== Kendall Sunset Self Storage Phase I ESA ERM 6-21-91 Phase I ESA Law 3-21-95 Phase I ESA PSI 1-23-98 Lead in the Domestic Water Testing PSI 3-2-98 Phase I ESA Update PSI 4-26-99 - --------------------------------------------------------------------------------------------------------------------------- AAA Sentry Self Storage Phase I ESA ERM 6-4-91 Phase I ESA PSI 1-23-98 Phase II ESA PSI 10-5-98 Phase I ESA Update PSI 5-1-99 - --------------------------------------------------------------------------------------------------------------------------- Forest Hill Self Storage Phase I ESA ERM 6-21-91 Phase I ESA PSI 1-23-98 Lead in the Domestic Water Testing PSI 6-23-98 Phase I ESA Update PSI 5-1-99 - --------------------------------------------------------------------------------------------------------------------------- Military Trail Self Storage Phase I ESA ERM 6-21-91 Phase I ESA PSI 1-23-98 Lead in the Domestic Water Testing PSI 3-2-98 Phase I ESA Update PSI 5-1-99 Phase II ESA PSI 6-1-99 - ---------------------------------------------------------------------------------------------------------------------------
SCHEDULE 4.2 -- Page 3
SCHEDULE 5.1(A) TENANT DELINQUENCIES ASSET NAME SECTION COMMENT ====================================================================================================================== Century Park 5.1(4) Rockwell Mortgage has vacated, but still paying rent. - ---------------------------------------------------------------------------------------------------------------------- La Plaza 5.1(4) Universal Accounting has vacated, but still paying rent. - ---------------------------------------------------------------------------------------------------------------------- Springwood Plaza 5.1(4) Hub Cleaners, tenant went dark in October 1999. Lease expires 1/31/00. Tenant owes $7,105.05. - ---------------------------------------------------------------------------------------------------------------------- Springwood Plaza 5.1(4) Grace Home Health Care, tenant went dark in November 1999. Lease expires 10/31/31. Tenant owes $9,631.84. Tenant offered to settle for $1,500 cash. - ---------------------------------------------------------------------------------------------------------------------- Towne Center 5.1(4) South Kansas Title went dark. Landlord received a letter from tenant that they were vacating effective 12/31/99, and paid through 12/31/99. Their lease does not expire until August 31, 2000. - ---------------------------------------------------------------------------------------------------------------------- Towne Center 5.1(4) Genco Mortgage has moved out and paid rent through their lease dated January 18, 2000. - ----------------------------------------------------------------------------------------------------------------------
SCHEDULE 5.1(A)
SCHEDULE 5.1(B) NOTICES OF TERMINATION OR DEFAULT ASSET NAME SECTION COMMENT ====================================================================================================================== 555 E. Ocean 5.1(5) SPCL Shipping Agency, Inc. (697/sf) recently went dark, but still paying rent. Landlord received a letter from the tenant dated January 21, 2000 asking to terminate their lease effective March 31, 2000 with a termination fee of keeping tenant's security deposit of $3,897.60. Tenant's termination date is October 31, 2000 and has no right to terminate. Landlord to negotiate. - ---------------------------------------------------------------------------------------------------------------------- 555 E. Ocean 5.1(5) Gulf & Atlantic Maritime Services (1,678/sf) recently went dark. Landlord negotiated and has received a termination fee of $20,000 that Tenant. The agreement and check are in route to Landlord. Existing tenant, Canada Maritime Agencies will absorb the premises with tenant improvements. - ----------------------------------------------------------------------------------------------------------------------
SCHEDULE 5.1(B)
SCHEDULE 5.1(C) PURCHASE OPTIONS ASSET NAME SECTION COMMENT ====================================================================================================================== Springwood Plaza 5.1(7) Schnuck Market, Inc. Tenant has right of first refusal to purchase shopping center. Tenant has 20 days after actual physical receipt of such notice and other data to elect to purchase or decline. - ----------------------------------------------------------------------------------------------------------------------
SCHEDULE 5.1(C)
SCHEDULE 5.1(D) LEASE TERMINATION RIGHTS ASSET NAME SECTION COMMENT ====================================================================================================================== Century Park 5.1(8) Department of Business and Industry are a State agency funded on an annual basis. Should the Department not be funded for the upcoming year, Tenant has a right to terminate. - ---------------------------------------------------------------------------------------------------------------------- La Plaza 5.1(8) State of Nevada, Department of Human Resources/ Division of Child and Family Services is a State agency funded on an annual basis. Should this Department not be funded in the upcoming year, Tenant has a right to terminate. - ---------------------------------------------------------------------------------------------------------------------- La Plaza 5.1(8) State of Nevada, Department of Human Resources/ Health Division/Bureau of Licensure and Certification is a State agency funded on an annual basis. Should this Department not be funded in the upcoming year, Tenant has a right to terminate. - ---------------------------------------------------------------------------------------------------------------------- La Plaza 5.1(8) State of Nevada/Board of Pharmacy is a State agency funded on an annual basis. Should this Department not be funded in the upcoming year, Tenant has a right to terminate. - ---------------------------------------------------------------------------------------------------------------------- La Plaza 5.1(8) State of Nevada/State Contractors Board is an agency funded on an annual basis. Should this Department not be funded in the upcoming year, Tenant has a right to terminate. - ---------------------------------------------------------------------------------------------------------------------- Northwest Plaza 5.1(8) $100 Store may terminate of competing store causes 10% decrease in sales. 90 days notice required. - ---------------------------------------------------------------------------------------------------------------------- Northwest Plaza 5.1(8) Check Into Cash may terminate if Kroger is dark for 12 months or if new laws cause cancellation of lease or reduced fee income. 60 days notice and 20% fee of remaining base rent. - ---------------------------------------------------------------------------------------------------------------------- Northwest Plaza 5.1(8) Fashion Cents may terminate if Kroger or Elder Beerman vacate or abandon their space. - ----------------------------------------------------------------------------------------------------------------------
SCHEDULE 5.1(D) -- Page 1
ASSET NAME SECTION COMMENT ====================================================================================================================== Northwest Plaza 5.1(8) Fiesta Salons my terminate if 2 spaces on either side of tenant are used for adult entertainment, massage parlor, game room, bar, lounge, restaurant, or pizza delivery. - ---------------------------------------------------------------------------------------------------------------------- Northwest Plaza 5.1(8) Katie's Hallmark my terminate if landlord leases to another tenant who's business is primarily is selling party supplies, greeting cards, or gift wrap and occupying 8,000 sq. ft. or less. If Kroger or Elder Beerman vacate tenant goes to lesser of base rent or 7% percentage rent. If replacement is not found tenant may terminate with 3 months notice. - ---------------------------------------------------------------------------------------------------------------------- Northwest Plaza 5.1(8) Kay-Bee Toy Works may terminate after 36th month if sales between months 25 and 36 do not equal $850,629.60, 90 days notice required. - ---------------------------------------------------------------------------------------------------------------------- Northwest Plaza 5.1(8) Radio Shack may terminate if one year sales are under $350,000 or the center is under 60% leased or if an anchor tenant vacates and no replacement found within 9 months. 60 days notice required. - ---------------------------------------------------------------------------------------------------------------------- Plaza Westlake 5.1(8) Check 'N Go, with 6 months notice to Landlord, has right to terminate lease last day of 3rd year. Last day of 3rd year is August 31, 2001. - ---------------------------------------------------------------------------------------------------------------------- Redwood Plaza 5.1(8) Under schedule B section 10 of the Lease with Drivers License Division/Motor Vehicle Division. They have the right to terminate their lease if space requirements of the lease are altered by a Federal Act or an act of the Utah State Legislature upon sixty (60) days notice. - ---------------------------------------------------------------------------------------------------------------------- River Bay Plaza 5.1(8) Walgreens has the right and option to terminate their lease as of the last day of each of the following full calendar months: 180th, 240th, 360th & the 420th by providing Landlord 12 months prior written notice. Page 5, Section 3(c). - ---------------------------------------------------------------------------------------------------------------------- Springwood Plaza 5.1(8) Countrywide Home Loans, Inc. Anytime after 12th month, tenant can buyout lease for a lump sum payment of $7,000.00. Tenant must give 90 days notice. - ----------------------------------------------------------------------------------------------------------------------
SCHEDULE 5.1(D) -- Page 2
ASSET NAME SECTION COMMENT ====================================================================================================================== Springwood Plaza 5.1(8) Ombudsman Educational Services may terminate lease if Riverview school district cancels contract. 90 days notice required. Tenant to reimburse Landlord for unamortized tenant improvements and leasing commission up to $25,000. Tenant my also cancel lease with 60 days written notice each year. - ---------------------------------------------------------------------------------------------------------------------- Springwood Plaza 5.1(8) Priamerica Financial Services my terminate lease with 60 days notice if grocery is not opened for 9 months. - ---------------------------------------------------------------------------------------------------------------------- Springwood Plaza 5.1(8) Great Clips may terminate with 30 days notice if grocery ceases operation. - ---------------------------------------------------------------------------------------------------------------------- Westwood Center 5.1(8) The State of Florida (Office of the Attorney General) has an option to terminate, without penalty, in the event a State owned building becomes available to the Lessee for occupancy by providing Six months advance written notice. (Please note that the State of Florida pays in arrears!) - ----------------------------------------------------------------------------------------------------------------------
SCHEDULE 5.1(D) -- Page 3
SCHEDULE 5.1(E) LEASING COMMISSIONS OWING ASSET NAME SECTION COMMENT ====================================================================================================================== 555 E. Ocean 5.1(9) A leasing commission is due McNeil Real Estate Mgmt., Inc. employee, Centa Branca for William H. Burford (1,723/sf) in the amount of $325.65 for a renewal of a 36 month lease. - ---------------------------------------------------------------------------------------------------------------------- 555 E. Ocean 5.1(9) A leasing commission is due McNeil Real Estate Mgmt., Inc. employee, Centa Branca for Canada Maritime Agencies (3,789/sf) in the amount of $1,648.22 for a renewal and relocation 60 month lease. - ---------------------------------------------------------------------------------------------------------------------- Century Park 5.1(9) Neal Lewis CPA has executed a 36 month lease extension. New expiration date is 11/30/02. - ---------------------------------------------------------------------------------------------------------------------- Century Park 5.1(9) Lease document out to Rogers Benefit for execution for a 36 month lease extension. New expiration date is 02/28/03. No outside Brokers were involved in the renewal. - ---------------------------------------------------------------------------------------------------------------------- One Corporate Center I 5.1(9) In-house commission of $1,088.85 for U.S. Aviation renewal. - ---------------------------------------------------------------------------------------------------------------------- One Corporate Center I 5.1(9) In-house commission of $444.47 for RBMG, Inc. expansion. - ---------------------------------------------------------------------------------------------------------------------- La Plaza 5.1(9) Carol Kuhlow has executed a 13 month lease extension. New expiration date is 12/31/00. - ---------------------------------------------------------------------------------------------------------------------- Plaza Westlake 5.1(9) Outside broker commission due CB Richard Ellis for $6,400 for Heartland Luxury Bath. - ---------------------------------------------------------------------------------------------------------------------- Westwood Center 5.1(9) In-house commission of $472.49, Office of the Attorney General expansion into Ste. 650. - ---------------------------------------------------------------------------------------------------------------------- Westwood Center 5.1(9) In-house commission of $353.40, Staffing Now, Inc. 1,240 sf. (expansion/renewal). - ----------------------------------------------------------------------------------------------------------------------
SCHEDULE 5.1(E)
SCHEDULE 5.1(F) PREPAID RENTS ASSET NAME SECTION COMMENT ====================================================================================================================== 555 E. Ocean 5.1(10) SPCL Shipping Agency, Inc. (697/sf) has given Landlord a check of $1,611.30 for payment of rent for February and March, 2000. Check has not been deposited and is being held for the borrower at the close of escrow. - ---------------------------------------------------------------------------------------------------------------------- Century Park 5.1(10) Kenrich has a new subtenant, holding 3 months security deposit. - ----------------------------------------------------------------------------------------------------------------------
SCHEDULE 5.1(F) SCHEDULE 6.4 CONDEMNATION PROCEEDINGS None. SCHEDULE 6.4 SCHEDULE 6.5 CASUALTIES AND FLOOD ZONE PROPERTIES None. SCHEDULE 6.5 SCHEDULE 6.6 MATERIAL AGREEMENTS None. SCHEDULE 6.6 SCHEDULE 6.7 PROPERTY COMPLIANCE None. SCHEDULE 6.7 SCHEDULE 6.17 LITIGATION None. SCHEDULE 6.17 SCHEDULE 6.19 CLAIMS UNDER PURCHASE AGREEMENT None. SCHEDULE 6.19 SCHEDULE 6.27 ACQUISITION COST AND EQUITY INVESTMENT
GE ALLOCATIONS BID NEW LOAN CLOSING FINANCING PROCEEDS COSTS COSTS ALL-IN COST MCNEIL REAL ESTATE FUND X, LTD. 1,719,722 2,643,351 66 LA PLAZA Business Center $7,705,186 $6,204,551 $108,893 $167,377 7,981,456 MCNEIL REAL ESTATE FUND XIV, LTD. 79 Redwood $3,038,110 $2,941,794 $42,936 $65,996 3,147,042 MCNEIL REAL ESTATE FUND XXIV, LTD. 71 River Bay $4,400,593 $4,129,456 $62,191 $95,593 4,558,377 75 Springwood Plaza $2,073,795 $1,857,768 $29,308 $45,048 2,148,151 73 Towne Center $2,376,569 $2,183,794 $33,587 $51,625 2,461,781 MCNEIL REAL ESTATE FUND XXV, LTD. 67 Century Park $11,223,379 $7,899,688 $158,614 $243,802 11,625,795 61 Fidelity Federal Plaza $3,515,083 $3,169,219 $49,677 $76,357 3,641,116 62 Kellogg Office Building $11,166,350 $8,962,192 $157,808 $242,563 11,566,721 76 Northwest Plaza $8,567,884 $4,878,730 $121,085 $186,118 8,875,087 MCNEIL REAL ESTATE FUND XXVI, LTD. 60 Continental Plaza $4,763,507 $3,846,739 $67,320 $103,476 4,934,304 63 Westwood Office Bldg $9,448,210 $8,450,705 $133,526 $205,241 9,786,977 MCNEIL REAL ESTATE FUND XXVII, LTD. 82 AAA Century Airport Self Storage $3,722,462 $2,713,818 $52,607 $80,862 3,855,932 86 AAA Sentry Self Storage $3,567,964 $2,930,056 $50,424 $77,506 3,695,894 81 Burbank Personal Storage $6,436,023 $5,391,558 $90,957 $139,808 6,666,788 87 Forest Hill Self Storage $3,392,729 $2,954,219 $47,948 $73,699 3,514,376 84 Fountainbleau Self Storage $4,360,154 $3,616,190 $61,620 $94,714 4,516,488 85 Kendall Sunset Self Storage $7,113,117 $5,846,843 $100,526 $154,516 7,368,159 83 Margate Self Storage $3,048,479 $2,513,614 $43,082 $66,221 3,157,782 88 Military Trail Self Storage $2,979,007 $2,561,454 $42,101 $64,712 3,085,819 64 One Corporate Center I $9,700,177 $8,124,640 $137,087 $210,714 10,047,978 65 One Corporate Center III $9,087,370 $8,008,700 $128,427 $197,402 9,413,199 121,686,148 99,185,728 1,719,722 2,643,351 126,049,222 All in $126,049,222 Debt 99,185,728.0 Equity $26,863,493.64 106,441,971 WH 13,589,275.121 MC Neil 13,274,218.515
GE ALLOCATIONS (cont.) 49.414% 10.497% 89.503% MCNEIL TOTAL CASH TOTAL EQUITY EQUITY EQUITY IMPLIED EQUITY MCNEIL REAL ESTATE FUND X, LTD. 66 LA PLAZA Business Center 1,776,905 878,033 92,167 785,866 MCNEIL REAL ESTATE FUND XIV, LTD. 79 Redwood 205,248 101,420 10,646 90,774 MCNEIL REAL ESTATE FUND XXIV, LTD. 71 River Bay 428,921 211,945 22,248 189,697 75 Springwood Plaza 290,383 143,489 15,062 128,427 73 Towne Center 277,987 137,364 14,419 122,945 MCNEIL REAL ESTATE FUND XXV, LTD. 67 Century Park 3,726,107 1,841,203 193,271 1,647,932 61 Fidelity Federal Plaza 471,897 233,182 24,477 208,704 62 Kellogg Office Building 2,604,529 1,286,991 135,095 1,151,896 76 Northwest Plaza 3,996,357 1,974,744 207,289 1,767,455 MCNEIL REAL ESTATE FUND XXVI, LTD. 60 Continental Plaza 1,087,565 537,405 56,411 480,993 63 Westwood Office Bldg 1,336,272 660,300 69,312 590,988 MCNEIL REAL ESTATE FUND XXVII, LTD. 82 AAA Century Airport Self Storage 1,142,114 564,359 59,241 505,119 86 AAA Sentry Self Storage 765,838 378,428 39,724 338,705 81 Burbank Personal Storage 1,275,230 630,137 66,145 563,991 87 Forest Hill Self Storage 560,157 276,793 29,055 247,738 84 Fountainbleau Self Storage 900,298 444,870 46,698 398,172 85 Kendall Sunset Self Storage 1,521,316 751,737 78,910 672,827 83 Margate Self Storage 644,168 318,307 33,413 284,894 88 Military Trail Self Storage 524,365 259,108 27,199 231,909 64 One Corporate Center I 1,923,338 950,390 99,762 850,628 65 One Corporate Center III 1,404,499 694,013 72,851 621,163 26,863,494 13,274,219 1,393,395 11,880,824
SCHEDULE 8.19 PROPERTY-SPECIFIC COVENANTS 1. EXERCISE OF PURCHASE OPTION. On or before December 5, 2000, Borrower shall have delivered to Lender evidence that Borrower has exercised its purchase option under the Fidelity Federal Ground Lease described in paragraph 2 of Exhibit "E". Thereafter, Borrower shall diligently and in accordance with the provisions of such Fidelity Federal Ground Lease proceed to close its acquisition of the fee estate in the portion of the Property covered by such Fidelity Federal Ground Lease. Borrower and Lender intend that the Deed of Trust which encumbers such Fidelity Federal Ground Lease shall automatically encumber the fee estate, and any other estate in the applicable Property, upon Borrower's acquisition thereof, without further amendment or modification to such Deed of Trust. However, if required by Lender, Borrower shall execute such amendments to such Deed of Trust and the other Loan Documents, and Borrower shall obtain such endorsements to the applicable Title Policy, as reasonably required by Lender to confirm the validity and first position lien priority of such Deed of Trust on the fee interest (and/or such other interest) acquired by Borrower. Notwithstanding the foregoing, Borrower shall have no obligations under this paragraph 1 if Borrower has obtained the release of the Property subjected to the Fidelity Federal Ground Leases from the Lien of the Loan Documents in accordance with Section 2.4. 2. POST CLOSING STRUCTURAL REPAIRS. Within twelve (12) months after the Closing Date, Borrower shall have completed, Lien-free and in accordance with applicable Laws, at least $1,000,000 of the repairs described in the table set forth below for the designated Properties (as such work is more particularly described in the engineering reports for such Properties prepared by Lender's consultant(s) in connection with the Loan closing). For purposes of determining Borrower's satisfaction of the $1,000,000 requirement in the preceding sentence, any amounts spent for any structural repair item in excess of the "Estimated Cost" of such item (as set forth in the table below) shall be excluded from such calculation. Within twelve (12) months after the Closing Date Borrower and Lender shall discuss and agree upon a work plan (including a completion schedule) for the repairs described below which, as of such time, have yet to be completed. Unless Lender has agreed to a revised work plan which provides to the contrary, all such repair work shall be completed by or before the initial Maturity Date.
PROPERTY STRUCTURAL REPAIRS ESTIMATED COST ============================================================================================================== AAA Century Airport EXTERIORS - painting, exterior entrance doors 3,450 - painting, exterior stucco and T 1-11 29,250 --------------------------------------------------------------------------- ROOFING - roofing, built-up, rip-off & replace, 4-plies 45,500 - downspouts, aluminum, 2" x 3", .020" gauge 1,530 - replace missing faux mansard roof tiles 1,500 - replace faux mansard roof tiles 41,600 - --------------------------------------------------------------------------------------------------------------
SCHEDULE 8.19 -- Page 1
PROPERTY STRUCTURAL REPAIRS ESTIMATED COST ============================================================================================================== INTERIORS - painting, interior walls, floors and ceilings 10,400 --------------------------------------------------------------------------- ELECTRICAL SYSTEM - exit signs, add additional exit signs 3,000 - emergency lighting, add 3,000 --------------------------------------------------------------------------- GARAGES/CARPORTS/SELF STORAGE BUILDINGS - leasing office carpeting/VCT 15,000 --------------------------------------------------------------------------- VERTICAL TRANSPORTATION - full load testing, elevators 5,000 --------------------------------------------------------------------------- ADA - upgrade, elevator cab 1,200 - upgrade toilet room, office 1,000 - -------------------------------------------------------------------------------------------------------------- $161,430 - -------------------------------------------------------------------------------------------------------------- AAA Sentry SITE - asphalt pavement crack repair 225 - repair settlement at septic tank 66 - repair asphalt low area at main gate 250 - replace concrete sidewalk sections 180 - chain link fence repairs/replacements 2,400 - wood fence repairs/replacements 600 - replace lawn irrigation pump 1,900 --------------------------------------------------------------------------- EXTERIORS - repair step cracking in exterior walls 150 - repair punched-in section of exterior wall 55 - repair cracking in balcony floor 50 --------------------------------------------------------------------------- ROOFING - correct ponding deficiencies 1,500 - correct alligatoring 187.50 --------------------------------------------------------------------------- INTERIORS - concrete floor crack repair 2,500 - provide new office furniture 2,500 --------------------------------------------------------------------------- HEATING, VENTILATION AND AIR-CONDITIONING - replace Rheem rooftop unit (RTU) - 2.5 ton 6,850 - replace HVAC package unit at grade 1,100 - replace ductwork in office closet 100 - install passive ventilation at storage units 10,000 --------------------------------------------------------------------------- Y2K ISSUES - security system upgrade 1,500 $32,113.50 - -------------------------------------------------------------------------------------------------------------- Burbank ROOFING - replace asphalt shingle roofing 1,500 --------------------------------------------------------------------------- HEATING, VENTILATION & AIR CONDITIONING - A/C, individual, DX air cooled condenser 2 ton 2,200 - --------------------------------------------------------------------------------------------------------------
SCHEDULE 8.19 -- Page 2
PROPERTY STRUCTURAL REPAIRS ESTIMATED COST ============================================================================================================== FIRE PROTECTION & LIFE SAFETY - emergency lighting, add 3,000 --------------------------------------------------------------------------- ADA - correct misc ADA toilet deficiencies 1,000 - -------------------------------------------------------------------------------------------------------------- $7,700 - -------------------------------------------------------------------------------------------------------------- Century Park SITE - repair/replace damaged framing at interior 6,000 courtyard pergolas - rebuild drive aisle to the south of Building B 4,000 --------------------------------------------------------------------------- STRUCTURE - repair damaged fireproofing at structure in garage 3,500 --------------------------------------------------------------------------- EXTERIOR - deteriorated vision glass and gasket need 10,000 replacement at both buildings for aesthetic purposes --------------------------------------------------------------------------- ROOF - continual maintenance at building connections and 2,000 roof --------------------------------------------------------------------------- VERTICAL TRANSPORTATION - normal maintenance due to age of equipment 5,000 --------------------------------------------------------------------------- HVAC - replace two cooling towers and rebuild enclosure 55,000 - replace boilers 17,500 - replace 10%/year of tenant heat pumps 24,000 --------------------------------------------------------------------------- LIFE SAFETY/FIRE - install gypsum board at mechanical/electrical 2,000 rooms and fire caulk --------------------------------------------------------------------------- ADA - stripe pavement for parking and graphics 600 - rebuild all bathrooms 60,000 - install appropriate elevator controls 12,000 - -------------------------------------------------------------------------------------------------------------- $201,600 - -------------------------------------------------------------------------------------------------------------- Continental Plaza SITE - repair damaged masonry wall fence on north and 2,500 west property elevations, repaint as necessary --------------------------------------------------------------------------- STRUCTURE - second-level balcony concrete is cracked and 25,000 allows moisture to migrate to lower surface. M/O recommends consideration of concrete replacement. --------------------------------------------------------------------------- EXTERIOR - patch/repair minor stucco cracking at perimeter 38,000 walls and repaint building - --------------------------------------------------------------------------------------------------------------
SCHEDULE 8.19 -- Page 3
PROPERTY STRUCTURAL REPAIRS ESTIMATED COST ============================================================================================================== ROOF - replace remaining roof areas with new mineral 20,000 impregnated modified roof --------------------------------------------------------------------------- VERTICAL TRANSPORTATION - provide maintenance 2,000 --------------------------------------------------------------------------- LIFE SAFETY/FIRE - install fire caulk/safe at all electrical rooms 2,000 --------------------------------------------------------------------------- ADA - rebuild restroom entries and interiors 16,000 - -------------------------------------------------------------------------------------------------------------- $105,500 - -------------------------------------------------------------------------------------------------------------- Fidelity Federal Plaza Office SITE Building - Recaulk plaza and building perimeter 14,350 - Reseal parking ramp 7,200 --------------------------------------------------------------------------- STRUCTURE - Detailed non-linear structural analysis 20,000 --------------------------------------------------------------------------- ROOF - Perform annual roof maintenance and repairs 1,500 - Properly flash exhaust fan penetrations at east 2,400 wing low roof - Install roof drains at low roof 9,000 - Reinstall loose reglets around columns and tower 1,000 walls --------------------------------------------------------------------------- VERTICAL TRANSPORTATION - Install skirt switch brushes 16,000 - Annual maintenance budget 35,000 --------------------------------------------------------------------------- HVAC - Replace boilers with low Nox boilers as required 50,000 by SCAQMD - Replace chiller which has exceeded the normal 140,000 service life --------------------------------------------------------------------------- ELECTRICAL - Replace architectural lighting for tower 9,600 --------------------------------------------------------------------------- LIFE SAFETY/FIRE - Provide exit corridor at tenth floor fitness club 9,900 --------------------------------------------------------------------------- Y2K - Building/parking security system 5,000 - -------------------------------------------------------------------------------------------------------------- $320,950 - -------------------------------------------------------------------------------------------------------------- Forest Hill SITE - chain link fence repairs/replacements as needed 1,000 - seal coat parking lot and restripe 7,463 --------------------------------------------------------------------------- HEATING, VENTILATION & AIR CONDITIONING - replace air condenser - 2 ton 3,600 - replace air handler - 2 ton 5,400 - replace air condenser - 3 ton 1,000 - replace DX air handler - 3 ton 1,200 - --------------------------------------------------------------------------------------------------------------
SCHEDULE 8.19 -- Page 4
PROPERTY STRUCTURAL REPAIRS ESTIMATED COST ============================================================================================================== - -------------------------------------------------------------------------------------------------------------- $19,663 - -------------------------------------------------------------------------------------------------------------- Fountainbleau INTERIORS - concrete floor crack repair 1,250 --------------------------------------------------------------------------- FIRE PROTECTION - install smoke detectors in interior corridors 1,430 --------------------------------------------------------------------------- Y2K ISSUES - security system upgrade 1,500 --------------------------------------------------------------------------- ADA - change toilet sink to allow wheelchair use 1,000 - -------------------------------------------------------------------------------------------------------------- $5,180 - -------------------------------------------------------------------------------------------------------------- Kellogg Executive Suites SITE - replace broken concrete sidewalk and revise 2,275 drainage at southwest corner of building - parking area repairs 7,000 - rout and seal joint at top of concrete retaining wall, 600 lower level parking area, east side --------------------------------------------------------------------------- EXTERIOR - replacing sealant at all exterior caulk joints, brick 7,000 control joints, and brick window joints - repair damaged soffit areas 1,000 - masonry crack repairs at exterior stairs 1,000 --------------------------------------------------------------------------- ROOF - coping parapet and counterflashing 1,500 --------------------------------------------------------------------------- HVAC - replace missing refrigerant pipe insulation and 1,000 install filter/dryer on one stage that does not already have this equipment. - provide complete calibration and review of 1,500 operation and pneumatic and digital controls. --------------------------------------------------------------------------- ELECTRICAL - complete infrared scan of the electrical system 1,000 --------------------------------------------------------------------------- ADA - provide six additional accessible spaces including 1,200 one van accessible space - provide visual alarms to meet ADA requirements 19,800 - provide accessible toilet partition hardware 2,000 - provide accessible door hardware at corridors 5,000 - -------------------------------------------------------------------------------------------------------------- $51,875 - -------------------------------------------------------------------------------------------------------------- Kendall Sunset SITE - apply emulsified sealcoat (2 coats) and silica sand 5,772 to asphalt pavement - asphalt pavement crack repair 1,050 - repair concrete sidewalk sections 6,000 --------------------------------------------------------------------------- EXTERIORS - exterior site painting 1,036 - --------------------------------------------------------------------------------------------------------------
SCHEDULE 8.19 -- Page 5
PROPERTY STRUCTURAL REPAIRS ESTIMATED COST ============================================================================================================== INTERIORS - concrete floor crack repair 1,250 --------------------------------------------------------------------------- HEATING, VENTILATION & AIR CONDITIONING 1,100 - Replace HVAC package unit at grade --------------------------------------------------------------------------- Y2K ISSUES - security system upgrade 1,500 --------------------------------------------------------------------------- ADA - change toilet sink to allow wheelchair use 1,000 - -------------------------------------------------------------------------------------------------------------- $18,708 - -------------------------------------------------------------------------------------------------------------- La Plaza Business Center SITE - repair/replace masonry wall along north side of 7,500 property. Repair masonry trash enclosure. - replacement of building entryway slabs 3,000 --------------------------------------------------------------------------- EXTERIOR - replace deteriorated reflective glass 6,000 - remove animal nesting from eaves/clear ventilation 2,000 path --------------------------------------------------------------------------- INTERIOR - install fire-rate material for ceilings of 1,500 mechanical/utility rooms --------------------------------------------------------------------------- VERTICAL TRANSPORTATION - replace elevator in Building C due to reaching end 50,000 of useful life --------------------------------------------------------------------------- HVAC - Replace HVAC package and split systems 26,000 --------------------------------------------------------------------------- ADA - add vertical signage to accessible parking spaces 300 - recreate parking spot at Building D, south side, for 1,000 ADA space width requirements - -------------------------------------------------------------------------------------------------------------- $97,300 - -------------------------------------------------------------------------------------------------------------- Margate SITE - chain link fence repairs/replacements 1,000 - landscaping upgrades 5,000 --------------------------------------------------------------------------- STRUCTURAL SYSTEM - continued monitoring of rear slab at Building D 1,000 --------------------------------------------------------------------------- EXTERIORS - repair spalling in grade level slabs 1,100 --------------------------------------------------------------------------- ROOFING - repair seams in aluminum coated built-up roof 1,000 --------------------------------------------------------------------------- INTERIORS - concrete floor crack repair 2,500 --------------------------------------------------------------------------- FIRE PROTECTION - install smoke detectors in interior corridors 1,287 - --------------------------------------------------------------------------------------------------------------
SCHEDULE 8.19 -- Page 6
PROPERTY STRUCTURAL REPAIRS ESTIMATED COST ============================================================================================================== Y2K ISSUES - security system upgrade 5,000 - -------------------------------------------------------------------------------------------------------------- $17,887 - -------------------------------------------------------------------------------------------------------------- Military Trail SITE - chain link fence repairs/replacements as needed 1,000 - seal coat parking lot and restripe 3,914 --------------------------------------------------------------------------- HEATING, VENTILATION & AIR CONDITIONING 3,600 - replace air condenser - 2 ton 5,400 - replace air handler - 2 ton 1,000 - replace air condenser - 3 ton 1,200 - replace DX air handler - 3 ton 1,600 - replace mini warehouse ventilation fan - -------------------------------------------------------------------------------------------------------------- $17,714 - -------------------------------------------------------------------------------------------------------------- Northwest SITE - concrete flatwork repairs 2,000 - install sump pump 2,000 - install wood planter 1,000 - concrete wheelstops and splashblocks, install 1,500 --------------------------------------------------------------------------- ROOFING - roofs, maintenance & repair 26,600 --------------------------------------------------------------------------- ADA 1,750 - signage, install at retail entries - -------------------------------------------------------------------------------------------------------------- $34,850 - -------------------------------------------------------------------------------------------------------------- One Corporate Center I SITE - restripe parking spaces after reseal is complete 1,500 - repair and replace failed landscape timber retaining 8,000 wall to the east of the structure --------------------------------------------------------------------------- STRUCTURE - provide vertical caulk joint at cracked walls in stair 1,000 towers --------------------------------------------------------------------------- EXTERIOR - replace mechanically fastened EPDM membrane 32,400 with adhered membrane at westernmost roof area --------------------------------------------------------------------------- VERTICAL TRANSPORTATION - locate Phase I and II Fire Service instruction signs 200 to be near the key switches in each car station - -------------------------------------------------------------------------------------------------------------- $43,100 - -------------------------------------------------------------------------------------------------------------- One Corporate Center III SITE - restripe parking spaces after reseal is complete 1,500 - repair ponding areas in asphalt paving 1,000 - repair damaged concrete precast planter at south 2,500 entrance to structure --------------------------------------------------------------------------- STRUCTURE - provide vertical caulk joint at cracked walls in stair 1,000 towers - --------------------------------------------------------------------------------------------------------------
SCHEDULE 8.19 -- Page 7
PROPERTY STRUCTURAL REPAIRS ESTIMATED COST ============================================================================================================== EXTERIOR - repair damaged concrete curbs around the site. 500 --------------------------------------------------------------------------- VERTICAL TRANSPORTATION - locate Phase I and II fire S+A3 service instruction 200 signs to be near the key switches in each car station - -------------------------------------------------------------------------------------------------------------- $6,700 - -------------------------------------------------------------------------------------------------------------- Redwood SITE - parking lot striping - 4" wide 1,084 - chain link fence repairs/replacements 1,000 - concrete curb replacement 1,050 - replace defective sight light luminaries 2,400 --------------------------------------------------------------------------- EXTERIORS - reseal concrete tilt-up wall panel joints 5,000 --------------------------------------------------------------------------- ROOFING - perform annual roofing maintenance & repairs 4,000 --------------------------------------------------------------------------- ADA - renovate toilet rooms to comply with ADA 12,500 - -------------------------------------------------------------------------------------------------------------- $27,034 - -------------------------------------------------------------------------------------------------------------- River Bay SITE - chain link fence repairs/replacements as needed 1,000 - lift canopies on trees for site visibility 1,800 --------------------------------------------------------------------------- ROOFING - transfer EPDM roof warranty 1,000 - infrared/moisture survey of BUR and EPDM roofs 1,970 - remedial repairs at grease conditions 1,000 - replace rotted and rusted gutters 1,000 --------------------------------------------------------------------------- PLUMBING SYSTEMS - annual backflow prevention device inspection 3,800 --------------------------------------------------------------------------- HEATING, VENTILATION & AIR CONDITIONING - replace RTU, 5 ton average size 2,600 - -------------------------------------------------------------------------------------------------------------- $14,170 - -------------------------------------------------------------------------------------------------------------- Springwood SITE - repair sections of asphalt pavement 6,500 --------------------------------------------------------------------------- EXTERIORS - repair damaged brick corners of building 1,750 --------------------------------------------------------------------------- ROOFING - roofing, shingle, rip-off and replace 5,011 - repair roof flashings at various locations of 3,500 building --------------------------------------------------------------------------- MECHANICAL SYSTEMS - replace three (3) RTU's 7,500 - -------------------------------------------------------------------------------------------------------------- $24,261 - --------------------------------------------------------------------------------------------------------------
SCHEDULE 8.19 -- Page 8
PROPERTY STRUCTURAL REPAIRS ESTIMATED COST ============================================================================================================== Towne SITE - concrete pavement, sidewalk & ramp repairs 2,400 --------------------------------------------------------------------------- EXTERIORS - install replacement hollow metal doors 1,500 --------------------------------------------------------------------------- ROOFING - repair roof edge at Suite 1 building 750 - repair roof flashings at rear of building 25,135 --------------------------------------------------------------------------- MECHANICAL SYSTEMS - replace three (3) RTU's 7,500 - -------------------------------------------------------------------------------------------------------------- $37,285 - -------------------------------------------------------------------------------------------------------------- Westwood Office Building SITE - repair front and side parking area asphalt paving, 5,000 sealcoat and restripe --------------------------------------------------------------------------- STRUCTURE - repair spalled concrete at embeds along exposed 5,000 edges of the double tees in the parking garage and seal exposed mesh reinforcement at upper deck topping --------------------------------------------------------------------------- EXTERIOR - repair/repoint cracks in CMU walls at the parking 1,500 garage - remove rust and repaint exterior stairs and embeds 3,500 at the parking garage - paint exterior soffits and CMU at parking structure 5,000 --------------------------------------------------------------------------- INTERIOR - complete installation of lever-style hardware on 2,500 doors --------------------------------------------------------------------------- HVAC - replace condensing unit for split system in elevator 3,500 equipment room --------------------------------------------------------------------------- ELECTRICAL - infrared scan of electrical systems 1,000 --------------------------------------------------------------------------- ADA - complete renovations of public restrooms on floors 21,000 2-8 for adaptable ADA compliance. - renovate first floor restrooms for adaptable ADA 17,500 compliance - install additional audible/visual alarms to comply 9,000 with ADA and NFPA 72 requirements - -------------------------------------------------------------------------------------------------------------- $74,500 - --------------------------------------------------------------------------------------------------------------
3. POST CLOSING REMEDIAL ACTION. Borrower shall complete the Remedial Action described in the table set forth below for the designated Properties, which Remedial Action shall be completed Lien-free, in accordance with all applicable Environmental Laws, and within the applicable time period set forth below. Such Remedial Action is more particularly described in the environmental reports for such Properties prepared by [Lender's] [Borrower's] SCHEDULE 8.19 -- Page 9 consultants in connection with the Loan closing. Completion of the Remedial Action for each Property shall including obtaining a "closure" or "no further action" letter from the lead Governmental Authority having jurisdiction over the Remedial Action and the Property. If Borrower has completed all Remedial Action at a Property within the applicable time period set forth in the table below but is waiting for the appropriate Governmental Authority to issue a "closure" or "no further action" letter with respect to such Remedial Action, then Borrower shall have an additional twelve (12) months beyond the designated completion date to obtain such letter. PROPERTY REMEDIAL ACTION COMPLETION DATE =========================================================================== River Bay Plaza Borrower to undertake a site 01-31-02 characterization and remediate to applicable standards, if necessary. No further action letter required from State of Florida. --------------------------------------------------------------------------- Military Trail Borrower to undertake a site 01-31-02 characterization and remediate to applicable standards, if necessary. No further action letter required from State of Florida. --------------------------------------------------------------------------- Redwood Plaza Borrower to undertake a site 01-31-02 characterization and remediate to applicable standards, if necessary. No further action letter required from State of Utah. --------------------------------------------------------------------------- 4. ZONING LETTERS FOR FLORIDA PROPERTIES. Borrower shall use commercially reasonable efforts to obtain, as soon as reasonably practical after the Closing Date, from the applicable local Governmental Authorities, zoning letters addressed to Lender which are otherwise substantially identical to the zoning letters for such Properties delivered to Lender prior to the Closing Date. Borrower shall endeavor to obtain such revised zoning letters within thirty (30) days after the Closing Date. 5. EVIDENCE OF QUALIFICATION TO DO BUSINESS AND GOOD STANDING. Within thirty (30) days after the Closing Date, Borrower shall provide certified copies of governmental certificates, dated on or after the Closing Date, showing that Borrower is qualified as a foreign limited partnership in good standing in all states in which any of the Properties are located. 6. TENANT ESTOPPEL CERTIFICATES AND/OR SNDA'S. Borrower shall use commercially reasonable efforts to obtain, as soon as reasonably practical after the Closing Date, a tenant estoppel certificate or a subordination, nondisturbance and attornment agreement (in either case substantially in the form previously provided to Borrower by Lender) for the following Tenants: (a) Safeway at Redwood Plaza, (b) Kroger's at Northwest Plaza, and (c) Elder Beerman's at Northwest Plaza. SCHEDULE 8.19 -- Page 10 7. CHARGES ACCOUNT. Within ten (10) days after the Closing Date, Borrower shall have established the Charges Account and shall have delivered to Lender a Depository Account Agreement executed by Borrower and the depository institution at which the Charges Account is maintained, which Depository Account Agreement shall be substantially in the form previously approved by Lender. Until such time Borrower has satisfied the requirements of the immediately preceding sentence, the Loan funds which would have been funded into the Charges Account to satisfy Borrower's deposit obligation on the Closing Date (as set forth in Section 3.4(1)) shall be held by Lender in an account maintained by Lender 8. UCC TERMINATION. Within thirty (30) days after the Closing Date, Borrower shall have delivered to Lender evidence that Borrower has obtained and filed a UCC termination statement (executed by the appropriate secured party) to eliminate the fixture filing currently recorded in favor of PNC Bank in the Hennepin County, MN records against the One Corporate Center I and One Corporate Center II Properties. 9. REVISED MILITARY TRAIL SURVEY. Within ten (10) days after the Closing Date, Borrower shall have delivered to Lender and its counsel a revised ALTA survey for the Military Trail Property, which revised survey shall plot both the fee parcel(s) and easement parcel(s) which are included within the legal description for that Property. 10. REVISED TOWNE CENTER SURVEY. Within ten (10) days after the Closing Date, Borrower shall have delivered to Lender and its counsel a revised ALTA survey for the Towne Center Property, which revised survey shall include the legal description for that Property shown in the Title Company's pro forma policy delivered to Lender on or before the Closing Date. SCHEDULE 8.19 -- Page 11 SCHEDULE 11.23 AUTHORIZED SIGNATORIES 1. Officers of Holding Company (the sole member of WXI/MCN Commercial Gen-Par, L.L.C.) Name Title - -------------------- ------------------------- Stuart M. Rothenberg Director & Vice President Daniel M. Neidich President Michael K. Klingher Vice President Kevin D. Naughton Vice President, Secretary & Treasurer Ralph F. Rosenberg Vice President & Assistant Secretary Edward Siskind Vice President & Assistant Treasurer Todd A. Williams Vice President, Assistant Secretary & Assistant Treasurer Elizabeth A. O'Brien Vice President & Assistant Secretary Angie Madison Vice President & Assistant Secretary G. Douglas Gunn Vice President & Assistant Secretary Steven M. Feldman Vice President Alan S. Kava Vice President Brian J. Lahey Vice President & Assistant Treasurer Mitchell S. Weiss Assistant Treasurer & Assistant Secretary Elizabeth M. Burban Vice President & Assistant Secretary Susan L. Sack Vice President Brahm S. Cramer Vice President & Assistant Secretary Zubin P. Irani Vice President & Assistant Secretary Paul R. Milosevich Vice President & Assistant Secretary Josephine Mortelliti Vice President Richard Powers Vice President & Assistant Secretary Jonathan A. Langer Vice President & Assistant Secretary Ronald L. Bernstein Vice President & Assistant Secretary Jerome S. Karr Vice President & Assistant Secretary Daniel H. Klebes Vice President Kim C. Bradley Vice President Phillippe Camu Vice President Jean de Pourtales Vice President James R. Garman Vice President Thomas Heslip Vice President Douglas A. Kessler Vice President Lahlou A. Khelifi Vice President Steve S. Lin Vice President Eli Muraidekh Vice President Takenori Takahashi Vice President Paul R. Vogel Vice President Larry Goodwin Vice President SCHEDULE 11.23 SCHEDULE 11.25 SURETYSHIP PROVISIONS 1. THIRD PARTY OBLIGATIONS. Except as expressly provided herein, Whitehall (referred to herein as a "THIRD PARTY OBLIGOR") waives notice of default, presentment, demand for payment, protest, notice of protest, notice of nonpayment or dishonor, and all other notices and demands of any kind whatsoever; and Third Party Obligor consents and agrees that Lender may, from time to time, without notice or demand and without affecting the enforceability of Sections 12.1 and 11.25: (a) supplement, modify, amend, extend, renew, accelerate or otherwise change the time for payment or the terms of the Obligations or any part thereof, including any increase or decrease of the rate(s) of interest thereon; (b) supplement, modify, amend, or waive, or enter into or give any agreement, approval or consent with respect to, the Obligations or any part thereof, or any security or guaranties, or any condition, covenant, default, remedy, right, representation or term thereof or thereunder; (c) accept new or additional instruments, documents or agreements in exchange for or relative to the Obligations or any part thereof; (d) accept partial payments on the Obligations; (e) receive and hold additional security or guaranties for the Obligations or any part thereof; (f) release, reconvey, terminate, waive, abandon, fail to perfect, subordinate, exchange, substitute, transfer and/or enforce any security or guaranties, and apply any security and direct the order or manner of sale thereof as Lender in its sole and absolute discretion may determine; (g) release any Person from any personal liability with respect to the Obligations or any part thereof; (h) settle, release on terms satisfactory to Lender or by operation of applicable Laws, or otherwise liquidate or enforce any Obligations, including any Obligations arising under Section 12.1 of the Loan Agreement (the "NONRECOURSE CARVE-OUTS") and any security or guaranty in any manner, consent to the transfer of any security, and bid and purchase at any sale; (i) amend, modify, waive, supplement or terminate the Loan Agreement, the Note or any of the other Loan Documents; and (j) consent to the merger, change or any other restructuring or termination of the existence of Borrower or any other Person, and correspondingly restructure the Obligations, and any such merger, change, restructuring or termination shall not affect the enforceability or security hereof. 2. RIGHTS INDEPENDENT. Third Party Obligor's obligations with respect to the Nonrecourse Carve-Outs are independent of those of any other Person, and upon the occurrence and during the continuance of an Event of Default (subject to the limitations set forth in Section 12.1), Lender may proceed in the enforcement of Third Party Obligor's obligations independently of any other right or remedy that Lender may at any time hold with respect to the Nonrecourse Carve-Outs or any security therefor (except as expressly set forth in Section 12.1). Except as set forth in Section 12.1, Third Party Obligor waives any right to require Lender to: (a) proceed against Borrower or any guarantor or other Person; (b) proceed against or exhaust any security for the Nonrecourse Carve-Outs; (c) give notice of the terms, time and place of any public or private sale of any real or personal property security for the Nonrecourse Carve-Outs; or (d) pursue any other remedy in Lender's power whatsoever. SCHEDULE 11.25 -- Page 1 3.4. DEFERRAL OF RIGHTS OF SUBROGATION. Notwithstanding anything to the contrary elsewhere contained herein or in any other document to which Third Party Obligor is a party, Third Party Obligor hereby expressly agrees that, until payment and performance in full of all Obligations, Third Party Obligor shall not assert, with respect to Borrower and its successors and assigns (including any surety) and any other Person, any and all rights at law or in equity to subrogation, to reimbursement, to exoneration, to contribution, to setoff or to any other rights that could accrue to a surety against a principal, to a guarantor against a maker or obligor, to an accommodation party against the party accommodated, or to a holder or transferee against a maker, and which Third Party Obligor may have or hereafter acquire against Borrower or any other Person in connection with or as a result of Third Party Obligor's execution, delivery and/or performance of Sections 12.1 and 11.25 of the Loan Agreement or any other document relating to the Nonrecourse Carve-Outs to which Third Party Obligor is a party. Third Party Obligor agrees that, until payment and performance in full of all Obligations, it shall not have or assert any such rights against Borrower or its successors and assigns or any other Person (including any surety), either directly or as an attempted setoff to any action commenced against Third Party Obligor by Borrower (as borrower or in any other capacity), Lender or any other Person. Third Party Obligor hereby acknowledges and agrees that this waiver is intended to benefit Borrower and Lender and shall not limit or otherwise affect Third Party Obligor's liability hereunder, under any other document to which Third Party Obligor is a party, or the enforceability hereof or thereof. 4. CONDITION OF BORROWER. Third Party Obligor represents and warrants to Lender that: (a) the Loan Agreement is being separately executed by Third Party Obligor at Borrower's request; and (b) Third Party Obligor has established adequate means of obtaining from Borrower on a continuing basis financial and other information pertaining to Borrower's businesses. Third Party Obligor hereby waives and relinquishes any duty on the part of Lender to disclose to any matter, fact or thing relating to the business, operation or condition of Borrower and its assets now known or hereafter known by Lender during the life of the Loan Agreement. With respect to any Obligations, Lender need not inquire into the power of Borrower or the officers, partners or agents acting or purporting to act on its behalf. 5. DEED OF TRUST ON REAL PROPERTY. Third Party Obligor acknowledges that all or a portion of the Nonrecourse Carve-Outs is or may be secured by one or more deed(s) of trust covering certain interests in real property. Third Party Obligor authorizes Lender, at its sole option, without notice or demand and without affecting the liability of Third Party Obligor for the Nonrecourse Carve-Outs, to foreclose any or all of the deed(s) of trust and the interests in real property secured thereby by nonjudicial sale, or to exercise any other right or remedy with respect to the deed(s) of trust or the property covered thereby. No such action by Lender shall release or limit the liability of Third Party Obligor for the Nonrecourse Carve-Outs, even if the effect of that action is to deprive Third Party Obligor of the right to reimbursement from Borrower for any sums paid by Third Party Obligor to Lender with respect to the Nonrecourse Carve-outs. Third Party Obligor waives any right to receive notice of any judicial or nonjudicial sale or foreclosure of any real property subject to any deed of trust securing the Nonrecourse Carve-Outs and the failure of Third Party Obligor to receive any such notice shall not impair or affect Third Party Obligor's liability hereunder. SCHEDULE 11.25 -- Page 2 6. LIMITATION. Notwithstanding anything to the contrary contained in this Schedule 11.25, Third Party Obligor does not waive, and shall retain the right to raise, defenses or rights of setoff that would have been available to Third Party Obligor had it been named as a "Borrower" under the Loan Agreement, other than any defenses available to the Borrower based upon any applicable anti-deficiency laws or "one form of action" or "security first" laws (the benefits and protections of which are waived by Third Party Obligor). 7. EFFECT OF WAIVERS. Third Party Obligor warrants and agrees that each of the waivers set forth herein is made with Third Party Obligor's full knowledge of its significance and consequences, and that under the circumstances, the waivers are reasonable and not contrary to public policy or Law. If any waivers are determined to be contrary to any applicable Law or public policy, such waivers shall be effective only to the maximum extent permitted by Law. SCHEDULE 11.25 -- Page 3 EXHIBIT "A" FORM OF NOTICE OF ADDITIONAL ADVANCE Date: ________________________ General Electric Capital Corporation - ------------------------------------ - ------------------------------------ Attention: Region Operations Manager Gentlemen: The undersigned, WXI/MCN Commercial Real Estate Limited Partnership, refers to the Loan Agreement, dated as of January 31, 2000 (the "Loan Agreement", the terms defined therein being used herein as therein defined), between the undersigned and GENERAL ELECTRIC CAPITAL CORPORATION, and hereby gives you notice, irrevocably, pursuant to the Loan Agreement, that the undersigned hereby requests an Advance under the Loan Agreement, and in that connection sets forth below the information relating to such Advance as required by the Loan Agreement: The date of the requested Advance shall be __________, 200__. The aggregate amount of the requested Advance is $__________. The Advance shall be a ["WORKING CAPITAL"] ["ACQUISITION"] Advance, and shall be used for the following purposes: ______________________________________ - -------------------------------------------------------------------------------. The undersigned hereby certifies that the statements contained in paragraph 4 of Part B of Schedule 2.1 of the Loan Agreement are true on the date hereof, and will be true on the date of the requested Advance, before and after giving effect thereto and to the application of the proceeds therefrom. Attached are all invoices and documents required by the applicable EXHIBIT "A" -- Page 1 provisions of Schedule 2.1 to the Loan Agreement and the amended Collateral Documents referred to in Part B of Schedule 2.1 of the Loan Agreement. Very truly yours, WXI/MCN COMMERCIAL REAL ESTATE LIMITED PARTNERSHIP, a Delaware limited partnership By: WXI/MCN Commercial Gen-Par, L.L.C., a Delaware limited liability company, its General Partner By: WXI/McN Realty L.L.C., a Delaware limited liability company, its Managing Member By: ------------------------------ ------------------------------ [Printed Name and Title] EXHIBIT "A" -- Page 2 EXHIBIT "B" FORM OF NOTICE TO DEPOSITORY (Borrower's Letterhead) ________________, 2000 CERTIFIED MAIL -- RETURN RECEIPT REQUESTED - ---------------------------------- - ---------------------------------- - ---------------------------------- - ---------------------------------- Attn: ----------------------------- Re: WXI/MCN Commercial Real Estate Limited Partnership ("BORROWER") and General Electric Capital Corporation ("LENDER") Deposit Account No. (the "ACCOUNT") ---------------------------------------------- Ladies and Gentlemen: You are hereby notified that Borrower has granted to Lender a security interest in, and has pledged to Lender as security, all monies at any time deposited into or otherwise held in the Account (including without limitation any interest earned on and added to the funds in the Account). The security interest has been granted, and the pledge made, to secure the payment and performance of obligations of Borrower to Lender. The Account is an account of Borrower maintained by you at your address given above. Borrower represents and warrants that its tax identification number for tax reporting purposes is 75-2780394, and Borrower shall treat all income, gains and losses from amounts in the Account as its income or loss for Federal and State income tax purposes. It is our understanding that (1) the Account has been established and will be maintained to allow withdrawals by Borrower alone until you have received notice from Lender that an Event of Default has occurred with respect to the obligations secured by the Account, after which withdrawals may be made only by Lender (either alone or, at Lender's option, by Lender and Borrower jointly), (2) you have not been previously advised of any security interest or liens on the Account, and (3) you are not aware of any claims against the Account other than claims of Lender. If you are unable to confirm any of this information, please immediately notify Mr. Paul St. Arnauld of Lender at 1528 Walnut Street, 9th Floor, Philadelphia, Pennsylvania 19102 (telephone: 215-772-2903). EXHIBIT "B" -- Page 1 The security interest of Lender in the Account shall continue in full force and effect until you are notified to the contrary in writing by Lender. In addition, this notice may not be revoked or modified except by Lender in writing. Please acknowledge your receipt of this notice by signing the enclosed copy of this letter and returning it to Mr. Paul St. Arnauld at the address given above (it being understood that your failure to do so shall in no way be deemed to ineffectuate this notice, or be deemed non-receipt of this notice by you). Very truly yours, WXI/MCN COMMERCIAL REAL ESTATE LIMITED PARTNERSHIP, a Delaware limited partnership By: WXI/MCN Commercial Gen-Par, L.L.C., a Delaware limited liability company, its General Partner By: WXI/McN Realty L.L.C., a Delaware limited liability company, its Managing Member By: ------------------------------------- ------------------------------------- [Printed Name and Title] GENERAL ELECTRIC CAPITAL CORPORATION, a New York corporation By: ------------------------------------------------- ------------------------------------------------- [Printed Name and Title] EXHIBIT "B" -- Page 2 RECEIPT ACKNOWLEDGED: - ------------------------------------------ By: -------------------------------------- -------------------------------------- [Printed Name and Title] EXHIBIT "B" -- Page 3 EXHIBIT "C" FORM OF COLLATERAL ASSIGNMENT OF INTEREST RATE CAP AGREEMENT [Attached] EXHIBIT "C" EXHIBIT "D-1" PROPERTY DESCRIPTION (Century Park) That certain real property situated in the City of Las Vegas and County of Clark, State of Nevada, described as follows: Government Lot Nine (9), being situated in the Northeast Quarter (NEl/4) of the Northwest Quarter (NWl/4) of Section 23, Township 21 South, Range 61 East, M.D.M. EXCEPTING THEREFROM the interest in and to the Northerly 50.00 feet and the Easterly 40.00 feet of said land as conveyed to Clark County for road and incidental purposes by Deed recorded April 23, 1963 as Document No. 353944 in Official Records; and by Deed recorded December 6, 1967 as Document No. 674402, in the Official Records of Clark County, Nevada. ALSO EXCEPTING THEREFROM that certain spandrel area situate within the Northeast (NE) corner of the East Half (El/2) of the Northeast Quarter (NEl/4) of the Northeast Quarter (NEl/4) of the Northwest Quarter (NWl/4) of Section 23, Township 21 South, Range 61 East, M.D.M., Nevada; also being the Southwest (SW) corner of the intersection of Flamingo Road and Spencer Street, bounded as follows: on the North by the South line of the North 50.00 feet thereof; on the East by the West line of the East 40.00 feet thereof; on the Southwest (SW) by the arc of a curve concave Southwesterly, having a radius of 25.00 feet and being tangent to the South line of said North 50.00 feet and the West line of said East 40.00 feet as conveyed to Clark County, by Deed recorded October 14, 1980 as Document No. 1255253, Official Records. and further described as: Beginning at a point that is South 50.43 feet and West 62.64 feet from the Northeast corner of Lot 9, in the East Half (El/2) of the Northeast Quarter (NEl/4) of the Northwest Quarter (NWl/4) of Section 23, Township 21 South, Range 61 East, M.D.M., said point also being South 62.00 feet and West 61.14 feet from a Department of Transportation Monument in the intersection of Flamingo Road and Spencer Avenue; THENCE around a curve to the right 34.87 feet, said curve having a radius of 25 feet with a cord bearing South 46(degree)10'l2" East 34.87 feet; THENCE South 1(degree)56'59" East 568.01 feet; THENCE North 89(degree)5l'36" West 302.67 feet; THENCE North 25(degree)06'46" West 589.59 feet; THENCE North 89(degree)36'35" East 279.93 feet POINT OF BEGINNING. EXHIBIT "D-1" EXHIBIT "D-2" PROPERTY DESCRIPTION (Kellogg Office) That certain real property situated in the City of Littleton and County of Arapahoe, State of Colorado, described as follows: A parcel of land being all of Lot 11, and the Southeasterly 59.00 feet of Lot 12, Block 3, Highline Professional Center and a portion of Lot 1, Block 2, Highline Professional Center South, said parcel being more particularly described as follows: A tract of land located in the Northwest one-quarter of Section 34 and the Southwest one-quarter of Section 27, Township 5 South, Range 68 West of the Sixth Principal Meridian, County of Arapahoe, State of Colorado, described as follows: Commencing at the Northeast corner of the Northwest one-quarter of said Section 34; thence S89(degree)49'50"W and along the North line of the Northwest one-quarter of said Section 34 a distance of 525.49 feet to a point on the Southwesterly right-of-way line of Dry Creek Circle, said point being a point on curve, also being the Point of Beginning; thence along said Southwesterly right-of-way line of Dry Creek Circle and along the arc of a curve to the left whose center bears N30(degree)08'52"E having a delta of 2l(degree)36'44", a radius of 255.93 feet, a distance of 96.54 feet; thence S40(degree)49'0l"E a distance of 38.43 feet to a point on the Westerly right-of-way line of West Dry Creek Court; thence Southerly along the Westerly right-of-way line of West Dry Creek Court the following 3 courses: (l) S00(degree)10'10"E, 33.79 feet to a point of curve. (2) Along the arc of a curve left having a delta of ll(degree)l7'52", a radius of 275.33 feet, a distance of 54.29 feet measured along the arc to a point of tangent. (3) S11(degree)28'02"E, 5.41 feet; Thence S49(degree)53'll"W, 243.11 feet to a point on curve, said point being on the Easterly right-of-way line of the Denver Water Board's Highline Canal; thence Northwesterly along said Easterly right-of-way line the following 6 courses: 1) Along the arc of a curve left whose center bears S54(degree)40'14"W having a delta of 25(degree)27'07", A radius of 152.97 feet, a distance of 67.95 feet measured along the arc to a point of tangent. 2) N60(degree)46'53"W, 192.40 feet to point of curve. 3) Along the arc of a curve right having a delta of l7(degree)06'00", a radius of 930.37 feet, distance oF 277.67 feet measured along the arc to a point of tangent. EXHIBIT "D-2" -- Page 1 of 2 4) N43(degree)40'53"W, 0.88 feet. 5) N89(degree)43'14"E, 0.39 feet. 6) N43(degree)33'21"W a distance of 100.31 feet; Thence N49(degree)53'll"E a distance of 400.89 feet to a point on the Southwesterly right-of-way line of Dry Creek Circle; thence S35(degree)30'30"E and along said Southwesterly right-of-way line a distance of 315.52 feet to a point of curve, thence along the arc of a curve left having a delta of 24(degree)20'38", a radius of 255.93 feet, a distance of 108.74 feet to the Point of Beginning, County of Arapahoe, State of Colorado. EXHIBIT "D-2" -- Page 2 of 2 EXHIBIT "D-3" PROPERTY DESCRIPTION (One Corporate Center I) That certain real property situated in the City of Edina and County of Hennepin, State of Minnesota, described as follows: PARCEL 1: Lot 1, Block 1, One Corporate Center, together with the benefits and appurtenant easements created pursuant to that Mutual Parking and Easement Agreement filed as Document No. 4472140, according to the recorded plat thereof, Hennepin County, Minnesota. PARCEL 2: Lot 1, Block 1, One Corporate Center Phase 3, according to the recorded plat thereof, Hennepin County, Minnesota. EXHIBIT "D-3" EXHIBIT "D-4" PROPERTY DESCRIPTION (Westwood Office) That certain real property situated in the City of Tampa and County of Hillsborough, State of Florida, described as follows: For a point of reference, commence at the Southeast corner of the Southwest 1/4 of the Northwest 1/4 of Section 16, Township 29 South, Range 18 East, Hillsborough County, Florida; run thence North 50.00 feet along the East boundary thereof and the centerline of Lois Avenue; thence South 89(degree)52'00" West, 42.00 feet to the intersection of the North right of way line of West Spruce Street and the West right of way line of Lois Avenue for the POINT OF BEGINNING of the herein described parcel; thence continue South 89(degree)52'00" West, 358.00 feet along the North right of way line of said West Spruce Street; thence North 380.00 feet; thence North 89(degree)52'00" East, 358.00 feet to a point on the West right of way line of Lois Avenue; thence South 380.00 feet along the said West right of way line to the POINT OF BEGINNING. EXHIBIT "D-4" EXHIBIT "D-5" PROPERTY DESCRIPTION (One Corporate Center III) That certain real property situated in the City of Edina and County of Hennepin, State of Minnesota, described as follows: PARCEL 1: Lot 1, Block 1, One Corporate Center, together with the benefits and appurtenant easements created pursuant to that Mutual Parking and Easement Agreement filed as Document No. 4472140, according to the recorded plat thereof, Hennepin County, Minnesota. PARCEL 2: Lot 1, Block 1, One Corporate Center Phase 3, according to the recorded plat thereof, Hennepin County, Minnesota. EXHIBIT "D-5" EXHIBIT "D-6" PROPERTY DESCRIPTION (La Plaza Center) That certain real property situated in the City of Las Vegas and County of Clark, State of Nevada, described as follows: PARCEL I: That portion of the Northwest Quarter (NW 1/4) of the Northwest Quarter (NW 1/4) of Section 23, Township 21 South, Range 61 East, M.D.B.&M., more particularly described as Parcel 1, as shown by Parcel map in File 7, Page 61 of Parcel Maps, recorded November 14, 1975 as Document No. 529370 of Official Records, Clark County, Nevada. PARCEL II: That portion of the Northwest Quarter (NW 1/4) of the Northwest Quarter (NW 1/4) of Section 23, Township 21 South, Range 61 East, M.D.B.&M., more particularly described as Parcel 2, as shown by Parcel map in File 7, Page 61 of Parcel Maps, recorded November 14, 1975 as Document No. 529370 of Official Records, Clark County, Nevada. PARCEL III: Government Lot Eighteen (18) in Section 23, Township 21 South, Range 61 East, M.D.B.&M. EXCEPTING THEREFROM the North 340 feet thereof as replatted into Lot 2 and a portion of Lot 1 as shown by Parcel Map filed in File 7, Page 61 of Parcel Maps, recorded November 14, 1975 as Document No. 529370 of Official Records, Clark County, Nevada. FURTHER EXCEPTING THEREFROM the East thirty feet (30'), the South thirty feet (30') and the "spandrel area" in the Southeast corner thereof, as dedicated to the County of Clark for road purposes by Deed recorded April 8, 1977 in Book 726 as Document No. 685029 in the Office of the County Recorder of Clark County, Nevada. Said Parcels I, II and III being more particularly described by metes and bounds as follows: That portion of the Northwest Quarter (NW1/4) of the Northwest Quarter (NW1/4) of Section 23, Township 21 South, Range 61 East, M.D.B.&M., more particularly described as follows: COMMENCING at the Southwest Corner of the Northwest Quarter (NW1/4) of the Northwest Quarter (NW1/4) of said Section 23; thence North 03(degree)15'00" West along the West line thereof a distance of 277.21 feet; thence South 89(degree)50'30" East a distance of 50.09 feet to a point on the Easterly right-of-way line of Maryland Parkway (100.00 feet wide), said point being the TRUE POINT OF BEGINNING; thence continuing South 89(degree)50'30" East a distance of 291.61 feet; thence South 03(degree)06'33" East a distance of 250.31 feet to a point on the Northerly right-of-way line of EXHIBIT "D-6" -- Page 1 of 2 Rochelle Avenue (60.00 feet wide); thence South 89(degree)18'15" East along said Northerly right-of-way line a distance of 295.24 feet to a point on a tangent curve concave to the Northwest having a radius of 15.00 feet; thence Northeasterly along the arc of said curve through a central angle of 93(degree)39'5l" an arc length of 24.52 feet to a point on the Westerly right-of-way line of Escondido Street (60.00 feet wide); thence North 02(degree)58'06" West along said Westerly right-of-way line a distance of 577.71 feet; thence North 89(degree)50'30" West a distance of 604.96 feet to a point on the Easterly right-of-way line of the aforementioned Maryland Parkway; thence South 03(degree)15'00" East along said Easterly right-of-way line a distance of 340.60 feet to the TRUE POINT OF BEGINNING. EXHIBIT "D-6" -- Page 2 of 2 EXHIBIT "D-7" PROPERTY DESCRIPTION (Continental Plaza) That certain real property situated in the City of Scottsdale and County of Maricopa, State of Arizona, described as follows: The North half of the Southeast quarter of the Northeast quarter of the Southeast quarter of Section 22, Township 3 North, Range 4 East of the Gila and Salt River Base and Meridian, Maricopa County, Arizona. EXHIBIT "D-7" EXHIBIT "D-8" PROPERTY DESCRIPTION (Fidelity Federal) That certain real property situated in the City of Long Beach and County of Los Angeles, State of California, described as follows: EXHIBIT "D-8" EXHIBIT "D-9" PROPERTY DESCRIPTION (Northwest Plaza) That certain real property situated in the City of Dayton and County of Montgomery, State of Ohio, described as follows: PARCEL 1: Located in the City of Dayton, County of Montgomery, State of Ohio and being all of Lots 79601 and 79602 and part of Lot 79603, all of the revised and consecutive numbers of lots on the Plat of said City of Dayton, Ohio and being a tract of land described as follows: Beginning at the northeast corner of Lot 79601, said point being in the west line of Philadelphia Drive, said west line being forty-five and 00/100 (45.00) feet west of and measured at right angles to the centerline of said Philadelphia Drive; thence with the west line of said Philadelphia Drive, South one degree five minutes (0l(degree) 05'), West for six hundred forty-five and 25/100 (645.25) feet to the northeast corner of Lot 79600 of the revised and consecutive numbers of lots on the Plat of said City of Dayton, Ohio; thence with the north line of said Lot 79600, South eighty-eight degrees five minutes (88(degree) 05') West for one hundred forty-five and 54/100 (145.54) feet to the northwest corner of said Lot 79600; thence with the west line of said Lot 79600, and with its southward extension, South one degree fifty-five minutes (01(degree) 55') East for three hundred ten and 00/100 (310.00) feet to the southeast corner of said Lot 79601, said point being in the north line of Siebenthaler Avenue, said north line of Siebenthaler Avenue being forty-five and 00/100 (45.00) feet north of and measured at right angles to the centerline of said Siebenthaler Avenue; thence with the north line of said Siebenthaler Avenue, South eighty-eight degrees five minutes (88(degree) 5') West for six hundred ninety-three and 22/100 (693.22) feet; thence North one degree fifty-five minutes (01(degree) 55') West for five hundred forty-nine and 00/100 (549.00) feet; thence South eighty-eight degrees five minutes (88(degree) 05') West for one hundred and 50/100 (100.50) feet; thence South one degree fifty-five minutes (01(degree) 55') East for forty-four and 00/100 (44.00) feet; thence North eighty-eight degrees five minutes (88(degree) 05') East for two hundred twenty-one and 20/100 (221.20) feet; thence North one degree fifty-five minutes (01(degree) 55') West for four hundred forty and 68/100 (440.68) feet to a point in the north line of said Lot 79603; thence with the north lines of said Lots 79603, 79602 and 79601, North eighty-seven degrees forty minutes (87(degree) 40') East for one thousand one hundred ninety-four and 26/100 (1194.26) feet to the point of beginning, containing 20.689 acres more or less, according to a survey of said premises by A. Bodenstein, Registered Surveyor, State of Ohio. PARCEL II: EXHIBIT "D-9" -- Page 1 of 2 Located in the City of Dayton, County of Montgomery, State of Ohio, and being part of Lot 79603 of the revised and consecutive numbers of lots on the Plat of said City of Dayton, Ohio, and being a tract of land described as follows: Beginning at the southwest corner of said Lot 79603, said point being in the north line of Siebenthaler Avenue, said north line being forty-five and 00/100 (45.00) feet north of the centerline of said Siebenthaler Avenue; thence with the west line of said Lot 79603, North one degree fifty-five minutes (01(degree) 55') West for nine hundred forty and 62/100 (940.62) feet to a point in the north line of said Lot 79603; thence with the north line of said Lot 79603, North eighty-seven degrees forty minutes (87(degree) 40') East for six hundred ninety-five and 41/100 (695.41) feet; thence South one degree fifty-five minutes (01(degree) 55') East for four hundred forty and 68/100 (440.68) feet; thence North eighty-eight degrees five minutes (88(degree) 05') East for two hundred twenty-one and 20/100 (221.20) feet; thence North one degree fifty-five minutes (01(degree) 55') West for forty-four and 00/100 (44.00) feet; thence North eighty-eight degrees five minutes (88(degree) 05') East for one hundred and 50/100 (100.50) feet; thence South one degree fifty-five minutes (01(degree) 55') East for five hundred forty-nine and 00/100 (549.00) feet to a point in the south line of said Lot 79603, and in the north line of said Siebenthaler Avenue; thence with the south line of said Lot 79603 and with the north line of said Siebenthaler Avenue, South eighty-eight degrees five minutes (88(degree) 05') West for one thousand seventeen and 09/100 (1017.09) feet to the point of beginning, containing 18.887 acres more or less, according to a survey of said premises by A. Bodenstein, Registered Surveyor, State of Ohio, dated August 14, 1980. EXHIBIT "D-9" -- Page 2 of 2 EXHIBIT "D-10" PROPERTY DESCRIPTION (River Bay Plaza) That certain real property situated in the City of Riverview and County of Hillsborough, State of Florida, described as follows: Commence at the Northwest corner of the Southeast 1/4 of Section 20, Township 30 South, Range 20 East, Hillsborough County, Florida and run thence North 89(degree) 08' 28" East along the North boundary of said Southeast 1/4, a distance of 132.22 feet to the East right of way line of U.S. Highway No. 301 (S.R. No. 43); run thence South 0(degree) 01' 41" West along said right of way line, 253.50 feet to the POINT OF BEGINNING; continue thence South 0(degree) 01' 41" West along said right of way line, 239.21 feet; run thence North 89(degree) 20' 11" East, 150.00 feet; thence run South 0(degree) 0l' 41" West, 150.00 feet to the North right of way line of Uncle Tom Road; run thence North 89(degree) 20' 11" East along said right of way line, a distance of 616.25 feet; thence run South 0(degree) 07' 58" West 10.00 feet; thence run North 89(degree) 20' 11" East, 40.00 feet; thence run North 0(degree) 07' 58" East, a distance of 551.97 feet; thence South 89(degree) 08' 28" West, 657.31 feet; run thence South 0(degree) 01' 41" West, 150.00 feet; run thence South 89(degree) 08' 28" West, 150.00 feet to the POINT OF BEGINNING. AND Commence at the Northwest corner of the Southeast 1/4 of Section 20, Township 30 South, Range 20 East, Hillsborough County, Florida and run thence North 89(degree) 08' 28" East along the North boundary of said Southeast 1/4, a distance of 132.22 feet to the East right of way line of U.S. Highway No. 301 (S.R. No. 43) for the POINT OF BEGINNING; continue thence North 89(degree) 08' 28" East, 807.47 feet; thence run South 0(degree) 07' 58" West, 103.50 feet; run thence South 89(degree) 08' 28" West, 807.31 feet to said East right of way line of U.S. Highway 301 (S.R. No. 43); run thence North 0(degree) 01' 41" East along said right of way line, 103.50 feet to the POINT OF BEGINNING. LESS AND EXCEPT that part of the hereinabove described lands for additional road right of way for Gibsonton Drive Extension as set forth in Order of Taking recorded in O.R. Book 5222, Page 636, Public Records of Hillsborough County, Florida. EXHIBIT "D-10" EXHIBIT "D-11" PROPERTY DESCRIPTION (Redwood Plaza) That certain real property situated in the City of Salt Lake City and County of Salt Lake, State of Utah, described as follows: Beginning at a point that is North 47.68 feet and West 66.84 feet from a monument at the intersection of Redwood Road and 700 North, said monument is located South 89 deg. 51'52" East 1173.55 feet from a monument at the intersection of Starcrest Drive and 700 North, said monument is also located North 288.51 feet and West 89.35 feet from the South quarter corner of Section 27, Township 1 North, Range 1 West, Salt Lake Base and Meridian; thence North 44 deg. 12'39" East 12.89 feet; thence North 0 deg. 15'07" East 710.74 feet; thence North 89 deg. 51'50" West 534.20 feet; thence South 0 deg. 15'07" West 382.04 feet; thence South 89 deg. 51'50" East 4.28 feet; thence South 0 deg. 42'24" West 337.98 feet; thence South 89 deg. 51'50" East 523.66 feet to the point of beginning. EXHIBIT "D-11" EXHIBIT "D-12" PROPERTY DESCRIPTION (Towne Center) That certain real property situated in the City of Derby and County of Sedgwick, State of Kansas, described as follows: Lot 1, Block 1, K-15 Plaza Second Addition, Derby, Sedgwick County, Kansas. EXHIBIT "D-12" EXHIBIT "D-13" PROPERTY DESCRIPTION (Springwood Plaza) That certain real property situated in the City of Dellwood and County of St. Louis, State of Missouri, described as follows: A parcel of ground in the Southwestern 1/4 of Section 6, Township 46 North, Range 7 East, St. Louis County, Missouri, said parcel being more particularly described as follows: Beginning at the point of intersection of the Eastern line of Florissant Avenue with the Northern line of property described in deed to John B. Parnello and wife recorded in Book 4402 page 112, St. Louis County Recorder's Office; thence along the Eastern line of Florissant Avenue the following courses and distances: North 01 degrees 16 minutes East, 202.30 feet, North 06 degrees 58-1/2 minutes East, 115.57 feet and North 01 degree 16 minutes East, 201.78 feet; thence Southeastwardly 67.70 feet along a curve to the left having a radius of 75.00 feet to a point of tangency; thence South 82 degrees 36-1/4 minutes East, 64.92 feet; thence South 89 degrees 41 minutes East, 162.44 feet; thence North 01 degrees 16 minutes East, 200.00 feet; thence South 89 degrees 41 minutes East, 351.13 feet to the Western line of Dellwood Hills Plat No. 2; thence South 01 degree 16 minutes West, 675.30 feet along the Western line of Dellwood Hills Plat No. 2 and along the Western line of Dellwood Hills to the Northern line of said John B. Parnello property; thence North 89 degrees 41 minutes West, 645.13 feet along the Northern line of said John B. Parnello property to the Eastern line of Florissant Avenue and the point of beginning. EXHIBIT "D-13" EXHIBIT "D-14" PROPERTY DESCRIPTION (Kendall Sunset) That certain real property situated in the City of Miami and County of Dade, State of Florida, described as follows: Tract A, of NATIONAL SELF STORAGE, according to the Plat thereof, recorded in Plat Book 128, Page 64, of the Public Records of Miami-Dade County, Florida. Tax Folio Number: 30-4033-035-0010 EXHIBIT "D-14" EXHIBIT "D-15" PROPERTY DESCRIPTION (Burbank Self Storage) That certain real property situated in the City of Burbank and County of Los Angeles, State of California, described as follows: PARCEL 3, IN THE CITY OF BURBANK, IN THE COUNTY OF LOS ANGELES, STATE OF CALIFORNIA, AS SHOWN ON PARCEL MAP 15782, FILED IN BOOK 165 PAGES 19 AND 20 OF PARCEL MAPS, IN THE OFFICE OF THE COUNTY RECORDER OF SAID COUNTY. SAID LAND BEING MORE PARTICULARLY DESCRIBED AS FOLLOWS: BEGINNING AT THE NORTHERLY CORNER OF SAID PARCEL 3; THENCE SOUTH 48(degree)46'16" EAST A DISTANCE OF 327.25 FEET TO A POINT ON THE NORTHWESTERLY RIGHT OF WAY LINE OF VERDUGO AVENUE; THENCE, ALONG SAID RIGHT OF WAY, SOUTH 41(degree)13'44" WEST, A DISTANCE OF 206.84 FEET TO THE BEGINNING OF A TANGENT CURVE, CONCAVE NORTHERLY AND HAVING A RADIUS OF 150.00 FEET; THENCE ALONG SAID CURVE, THROUGH A CENTRAL ANGLE OF 89(degree)59'06", A DISTANCE OF 23.56 FEET TO A POINT ON THE NORTHEASTERLY RIGHT OF WAY LINE OF LAKE STREET; THENCE, ALONG SAID RIGHT OF WAY, NORTH 48(degree)47'10" WEST, A DISTANCE OF 289.36 FEET; THENCE, LEAVING SAID RIGHT OF WAY, NORTH 35(degree)20'11" EAST, A DISTANCE OF 223.09 FEET TO THE POINT OF BEGINNING. EXHIBIT "D-15" EXHIBIT "D-16" PROPERTY DESCRIPTION (Fountainbleau) That certain real property situated in the City of Miami and County of Dade, State of Florida, described as follows: Tract D, of SECOND ADDITION TO EXPRESSWAY INDUSTRIAL PARK, according to the Plat thereof, recorded in Plat Book 118, Page 25, of the Public Records of Miami-Dade County, Florida. Tax Folio No. 30-3033-014-00201 EXHIBIT "D-16" EXHIBIT "D-17" PROPERTY DESCRIPTION (AAA Century Airport) That certain real property situated in the City of Inglewood and County of Los Angeles, State of California, described as follows: LOTS 8, 9 AND THE WEST 50 FEET OF LOT 10 OF THE LOCKHAVEN TRACT, IN THE CITY OF INGLEWOOD, IN THE COUNTY OF LOS ANGELES, STATE OF CALIFORNIA, AS PER MAP RECORDED IN BOOK 17, PAGE(S) 87 OF MAPS, IN THE OFFICE OF THE COUNTY RECORDER OF SAID COUNTY. THE ABOVE DESCRIBED PARCEL OF LAND IS MORE PARTICULARLY DESCRIBED AS FOLLOWS: BEGINNING AT THE NORTHWEST CORNER OF LOT 8 OF THE LOCKHAVEN TRACT, IN THE CITY OF INGLEWOOD, IN THE COUNTY OF LOS ANGELES, STATE OF CALIFORNIA, AS PER MAP RECORDED IN BOOK 17, PAGE 87 OF MAPS, IN THE OFFICE OF THE COUNTY RECORDER OF SAID COUNTY; THENCE ALONG THE NORTH LINE OF SAID LOT 8, SOUTH 89(degree) 57' 50" EAST 250.00 FEET TO THE NORTHEAST CORNER OF THE WEST 50.00 FEET OF LOT 10 OF SAID TRACT; THENCE ALONG THE EASTERLY LINE OF SAID WEST 50.00 FEET, SOUTH 00(degree) 00' 00" EAST 304.08 FEET THENCE NORTH 89(degree) 57' 50" WEST 250.00 FEET TO THE SOUTHWEST CORNER OF SAID LOT 8; THENCE ALONG THE WEST LINE OF SAID LOT 8, NORTH 00(degree) 00' 00" WEST 304.08 FEET TO THE POINT OF BEGINNING. EXHIBIT "D-17" EXHIBIT "D-18" PROPERTY DESCRIPTION (AAA Sentry) That certain real property situated in the City of North Lauderdale and County of Broward, State of Florida, described as follows: All that part of Tract 7 in Block 96 of PALM BEACH FARMS COMPANY PLAT NO. THREE, according to the Plat thereof, as recorded in Plat Book 2, at Pages 45 through 54, inclusive, of the Public Records of Palm Beach County, Florida, described as follows: Beginning at the intersection of the North line of said Tract 7, and the West right-of-way line of Sunshine State Parkway (300 feet right-of-way) thence North 89(degree) 08' 44" West, along the North line of said Tract 7, a distance of 352.84 feet to a point 237.78 feet East of (as measured along the North line) of the Northwest corner of said Tract 7; thence South 0(degree) 51' 16" West a distance of 300 feet; thence North 89(degree) 08' 44" West, along a line 300 feet South of (as measured at right angles) and parallel with the North line of said Tract 7, a distance of 200 feet to a point on the proposed Easterly non-vehicular access right-of-way line of State Road No. 7 (U.S. #441) and a point on a curve; thence Southerly along said proposed Easterly non-vehicular access right-of-way line and along a curve to the right whose tangent bears South 01(degree) 00' 09" West; with a radius of 17,288.73 feet and a central angle of 01(degree) 08' 55" an arc distance of 95.12 feet to a point; thence South 80(degree) 52' 54" East, a distance of 225.98 feet to a point on the said West right-of-way line of Sunshine State Parkway; thence North 38(degree) 30' 33" East along West right-of-way line a distance of 540.09 feet to the Point oF Beginning. N/K/A as a portion of Tract A, THE CUMMINGS PLAT NO. 1, according to the Plat thereof, recorded in Plat Book 126, Page 35, of the Public Records of Broward County, Florida. Tax Folio NO. 49-42-07-09-0011. EXHIBIT "D-18" EXHIBIT "D-19" PROPERTY DESCRIPTION (Forest Hill) That certain real property situated in the City of West Palm Beach and County of Palm Beach, State of Florida, described as follows: The South one-half (S 1/2) of the West one-half (W 1/2) of Lot 4, Block 4, LESS the East 100 feet of the South 260 feet of the East one-half (E 1/2) of the West one-half (W 1/2) of Lot 4, Block 4, all of the sub-division of Section 7, Township 44 South, Range 43 East, according to the Palm Beach Plantations Company Plat thereof on file in the Office of the Clerk of the Circuit Court, in and for Palm Beach County, Florida, in Plat Book 10, Page 20, TOGETHER WITH the West 12 feet of the South 600 feet of the East one-half (E 1/2) of the said Lot 4, Block 4, of Section 7, Township 44 South, Range 43 East, according to the said Plat in Plat Book 10, Page 20, less and excepting therefrom the rights-of-way of Davis Road and Forest Hill Boulevard as now laid out and in use on the West 40 feet and the South 60 feet thereof; being more particularly described as follows: COMMENCE at the Southwest corner of Lot 4, Block 4, all of the Sub-Division of SECTION 7, TOWNSHIP 44 SOUTH, RANGE 43 EAST, according to the PALM BEACH PLANTATIONS COMPANY PLAT, thereof on file in the Office of the Clerk of the Circuit Court, in and for Palm Beach County, Florida, in Plat Book 10, Page 20; thence N 00(degree) 31' 45" W along the West boundary of said Lot 4, a distance of 81.39 feet; thence N 89(degree) 28' 15" E, a distance of 40.04 feet to the POINT OF BEGINNING; thence N 00(degree) 31' 45" W along the East Right-of-Way line of Davis Road, a distance of 586.39 feet; thence S 87(degree) 25' 21" E, a distance of 291.15 feet; thence S 00(degree) 09' 25" W along the East line of the West 1/2 of said Lot 4, a distance of 70.08 feet; thence S 88(degree) 05' 30" E, a distance of 12.57 feet; thence S 00(degree) 30' 21" E, a distance of 540.78 feet to a point on the Northerly Right-of-Way line of Forest Hills Boulevard; thence N 87(degree) 34' 29" W, along said North Right-of-Way line, a distance of 11.99 feet; thence N 00(degree) 31' 35" W, a distance of 200.30 feet; thence N 87(degree) 20' 26" W, a distance of 100.72 feet; thence S 00(degree) 41' 29" E, a distance of 200.15 feet to a point on the aforementioned Right-of-Way line of Forest Hills Boulevard; thence N 87(degree) 16' 01" W, along said Right-of-Way line, a distance of 167.00 feet; thence continuing along said Right-of-Way line, N 43(degree) 53' 32" W, a distance of 34.26 feet to the POINT OF BEGINNING. Tax Folio No. 00-43-44-07-00-000-52 EXHIBIT "D-19" EXHIBIT "D-20" PROPERTY DESCRIPTION (Margate Self Storage) That certain real property situated in the City of Margate and County of Broward, State of Florida, described as follows: Lot 6 of MEARS COMMERCIAL PARK, according to the Plat thereof, recorded in Plat Book 107, Page 12, of the Public Records of Broward County, Florida; said lands situate, lying and being in Broward County, Florida. Tax Folio No. 8230-09-0060 EXHIBIT "D-20" EXHIBIT "D-21" PROPERTY DESCRIPTION (Military Trail) That certain real property situated in the City of West Palm Beach and County of Palm Beach, State of Florida, described as follows: A parcel of land lying in the SW 1/4 of the NW 1/4 of the SE 1/4 of Section 24, Township 43 South, Range 42 East, Palm Beach County, Florida, being more particularly described as follows: COMMENCING at the Southwest corner of the said SW 1/4; thence North 01(degree) 23' 24" East, along the West line of said SW 1/4, a distance of 170.00 feet; thence South 89(degree) 08' 36" East, along the North line of the South 170.0 feet of said SW 1/4, a distance of 60.00 feet to the East Right-of-Way line of Military Trail and the POINT OF BEGINNING; thence continue South 89(degree) 08' 36" East, along the said North line of the South 170.00 feet, a distance of 210.00 feet; thence South 01(degree) 23' 24" West, along the East line of the West 270.00 feet of said SW 1/4, a distance of 170.00 feet; thence South 89(degree) 08' 36" East, along the South line of said SW 1/4, a distance of 403.72 feet; thence North 01(degree) 21' 13" East, along the East line of said SW 1/4, a distance of 490.02 feet; thence North 89(degree) 01' 48" West, along the South line of the North 170.00 feet of said SW 1/4, a distance of 218.40 feet; thence South 00(degree) 51' 24" West, a distance of 220.45 feet; thence North 89(degree) 08' 36" West, a distance of 397.05 feet to the said East Right-of-Way of Military Trail; thence South 01(degree) 23' 24" West, along said East right-of-way line, a distance of 100.00 feet to the POINT OF BEGINNING. PARCEL 2 - EASEMENT ESTATE: TOGETHER WITH a Non Exclusive Mutual Driveway Easement for pedestrian and vehicular ingress and egress along part of a common property line as recorded in Official Records Book 5087, Page 831 and as modified in Official Records Book 5126, Page 14, of the Public Records of Palm Beach County, Florida, more particularly described as follows: BEING a parcel of land lying in the Southeast one-quarter (SE 1/4) of Section 24, Township 43 South, Range 42 East, Palm Beach County, Florida, and being more particularly described as follows: COMMENCING at the South quarter corner of said Section 24; thence North 01(degree) 23' 24" East along the West line of said Southeast one-quarter (SE 1/4) of Section 24, a distance of 1493.28 feet; thence departing said West line, South 88(degree) 36' 36" East, a distance of 60.00 feet to a point on the East right-of-way line of Military Trail (S.R. 809), as now laid out and in use; thence North 01(degree) 23' 24" East along said East right-of-way line, a distance of 100.00 feet to the POINT OF BEGINNING of an Access Easement; thence continue North 01(degree) 23' 24" East, a distance of 15.00 feet; thence South 89(degree) 08' 36" East, a distance of 13.63 feet to the beginning of a curve concave to the Southwest EXHIBIT "D-21" -- Page 1 of 2 having a radius of 46.00 feet and a central angle of 47(degree) 37' 49"; thence Southeasterly along the arc of said curve, a distance of 38.24 feet; thence North 89(degree) 08' 36" West, a distance of 47.76 feet to the POINT OF BEGINNING. The bearings shown herein are relative to an assumed meridian; the North/South Mid-Section line of Section 24-43-42 is assumed to bear North 01(degree) 23' 24" West. EXHIBIT "D-21" -- Page 2 of 2 EXHIBIT "E" DESCRIPTION OF FIDELITY FEDERAL GROUND LEASES 1. The leasehold estate and interest in the real property described as Parcels 3, 4 and 5 on Exhibit "B" attached hereto, which leasehold estate and interest was created by that certain Lease of Real Property dated May 12, 1965, by and between Mitchell Land and Improvement Co., as lessor, and Fidelity Federal Savings and Loan Association, as lessee, a short form of which was recorded in Book M-2285, Page 23, Official Records of Los Angeles County, California, as amended by an instrument entitled Amendment of Lease Description recorded in Book M-2445, Page 583, said Official Records. 2. The leasehold estate and interest of Tenant (including an option to purchase) in the real property described as Parcel 1 and 2 on Exhibit "B" attached hereto, which leasehold estate and interest was created by that certain Lease of Real Property dated August 1, 1965, by and between Clare D. Hamman, AKA Clare Hamman and Helen S. Hamman, as lessor, and Fidelity Federal Savings and Loan Association, as lessee, a short form of which was recorded in Book M-2341, Page 3, Official Records of Los Angeles County, California, as amended by an instrument entitled Amendment of Lease Description recorded in Book M-2447, Page 519, said Official Records. 3. The sub-leasehold estate and interest (including a right of first refusal) in the real property described as Parcel 6 on Exhibit "B" attached hereto, which sub-leasehold estate and interest was created by that certain Sub-lease of Real Property dated February 28, 1975, between Fidelity Federal Savings and Loan Association, as sub-lessor, and Wilshire Woods, Inc., as sub-lessee, a short form of which was recorded in Book M-4934, Page 771, Official Records of Los Angeles County, California. 4. The sub-leasehold estate and interest (including a right of first refusal) in the real property described as Parcel 7 on Exhibit "B" attached hereto, which sub-leasehold estate and interest was created by that certain Sub-lease of Real Property dated February 28, 1975, between Fidelity Federal Savings and Loan Association, as sub-lessor, and Wilshire Woods, Inc., as sub-lessee, a short form of which was recorded in Book M-4934, Page 776, Official Records of Los Angeles County, California. EXHIBIT "E"
TABLE OF CONTENTS Page ---- ARTICLE 1 CERTAIN DEFINITIONS..........................................................................1 Section 1.1 Certain Definitions....................................................................1 ARTICLE 2 LOAN TERMS..................................................................................15 Section 2.1 The Loan Advances.....................................................................15 Section 2.2 Interest Rate; Late Charge............................................................18 Section 2.3 Terms of Payment......................................................................19 Section 2.4 Collateral; Releases of Collateral....................................................22 Section 2.5 Adjustments to Adjusted Loan Basis....................................................24 Section 2.6 Capital Adequacy; Increased Costs; Illegality.........................................24 ARTICLE 3 INSURANCE, CONDEMNATION, DEPOSITS AND RESERVES..............................................25 Section 3.1 Insurance.............................................................................25 Section 3.2 Casualty; Use and Application of Insurance Proceeds...................................27 Section 3.3 Condemnation..........................................................................30 Section 3.4 Deposits..............................................................................31 ARTICLE 4 ENVIRONMENTAL MATTERS.......................................................................32 Section 4.1 Certain Definitions...................................................................32 Section 4.2 Representations and Warranties on Environmental Matters...............................33 Section 4.3 Covenants on Environmental Matters....................................................34 Section 4.4 No Waiver.............................................................................36 ARTICLE 5 LEASING MATTERS.............................................................................36 Section 5.1 Representations and Warranties on Leases..............................................36 Section 5.2 General Lease Requirements............................................................37 Section 5.3 Covenants.............................................................................37 Section 5.4 Additional Covenants Regarding Material Leases........................................38 Section 5.5 Lender's Consent to Deviations........................................................38 Section 5.6 Security Deposits; Lease Buy Out Consideration........................................38 Section 5.7 Subordination Agreements; Tenant Estoppels............................................39 ARTICLE 6 REPRESENTATIONS AND WARRANTIES..............................................................39 Section 6.1 Partnership and Organizational Existence; Compliance with Law.........................40 Section 6.2 Partnership or Organizational Power; Authorization; Enforceable Obligations...........................................................................40 Section 6.3 Ownership of Collateral; Liens........................................................40 Section 6.4 Condemnation..........................................................................41 Section 6.5 Casualty..............................................................................41 Section 6.6 Material Agreements...................................................................41 Section 6.7 Property Compliance...................................................................41
-i- Section 6.8 Access................................................................................41 Section 6.9 Utility Services......................................................................41 Section 6.10 Permits...............................................................................41 Section 6.11 No Default............................................................................41 Section 6.12 Other Ventures/Single Purpose Entity..................................................41 Section 6.13 Investment Company Act................................................................42 Section 6.14 Margin Regulations....................................................................42 Section 6.15 Taxes.................................................................................42 Section 6.16 ERISA.................................................................................42 Section 6.17 No Litigation.........................................................................43 Section 6.18 Brokers...............................................................................43 Section 6.19 Purchase Agreement....................................................................43 Section 6.20 Employment and Labor Agreements.......................................................43 Section 6.21 Liens.................................................................................43 Section 6.22 Full Disclosure.......................................................................43 Section 6.23 Property Documents....................................................................43 Section 6.24 Rent Roll.............................................................................44 Section 6.25 Ground Lease Representations..........................................................44 Section 6.26 Property Information..................................................................44 Section 6.27 Acquisition Cost and Equity Investment................................................44 ARTICLE 7 FINANCIAL REPORTING AND INFORMATION.........................................................44 Section 7.1 Financial Statements and Notices......................................................44 Section 7.2 Other Information.....................................................................46 Section 7.3 Audits................................................................................46 Section 7.4 Communication with Accountants........................................................46 ARTICLE 8 AFFIRMATIVE COVENANTS.......................................................................46 Section 8.1 Maintenance of Existence and Conduct of Business......................................47 Section 8.2 Payment of Indebtedness...............................................................47 Section 8.3 Books and Records.....................................................................48 Section 8.4 Litigation............................................................................48 Section 8.5 Compliance with Law...................................................................48 Section 8.6 Maintenance of Property...............................................................48 Section 8.7 Agreements............................................................................49 Section 8.8 Employee Plans........................................................................49 Section 8.9 Access................................................................................49 Section 8.10 Taxes on Payments or Security.........................................................49 Section 8.11 Enforcement...........................................................................51 Section 8.12 Intentionally Deleted.................................................................51 Section 8.13 Intentionally Deleted.................................................................51 Section 8.14 Maintenance of Representations; Supplemental Disclosure...............................51 Section 8.15 Property Documents; Asset Business Plans..............................................52 Section 8.16 Interest Rate Cap Agreement...........................................................52 Section 8.17 Indemnification.......................................................................52
-ii- Section 8.18 Impaired Property.....................................................................52 Section 8.19 Property-Specific Covenants...........................................................53 ARTICLE 9 NEGATIVE COVENANTS..........................................................................53 Section 9.1 Mergers, Etc..........................................................................53 Section 9.2 Investments; Loans and Advances.......................................................53 Section 9.3 Indebtedness..........................................................................54 Section 9.4 Structure; Transfers..................................................................54 Section 9.5 Maintenance of Business...............................................................55 Section 9.6 Affiliate Transactions................................................................55 Section 9.7 Liens.................................................................................56 Section 9.8 Events of Default.....................................................................56 Section 9.9 Ground Leases.........................................................................56 Section 9.10 Material Agreements...................................................................56 ARTICLE 10 EVENTS OF DEFAULT; RIGHTS AND REMEDIES......................................................57 Section 10.1 Events of Default.....................................................................57 Section 10.2 Remedies..............................................................................59 Section 10.3 Waivers by Borrower...................................................................60 Section 10.4 Right of Set-Off......................................................................60 ARTICLE 11 MISCELLANEOUS...............................................................................60 Section 11.1 Notices...............................................................................60 Section 11.2 Amendments and Waivers................................................................62 Section 11.3 Limitation on Interest................................................................62 Section 11.4 Invalid Provisions....................................................................63 Section 11.5 Reimbursement of Expenses.............................................................63 Section 11.6 Approvals; Third Parties; Conditions..................................................64 Section 11.7 Lender Not in Control; No Partnership/Membership......................................64 Section 11.8 Time of the Essence...................................................................65 Section 11.9 Successors and Assigns................................................................65 Section 11.10 Renewal, Extension or Rearrangement...................................................66 Section 11.11 Waivers...............................................................................66 Section 11.12 Cumulative Rights.....................................................................66 Section 11.13 Construction..........................................................................66 Section 11.14 Phrases...............................................................................66 Section 11.15 Exhibits and Schedules................................................................67 Section 11.16 Titles of Articles, Sections and Subsections..........................................67 Section 11.17 Publicity.............................................................................67 Section 11.18 Survival..............................................................................67 Section 11.19 GOVERNING LAW.........................................................................67 Section 11.20 Entire Agreement......................................................................68 Section 11.21 Counterparts..........................................................................68 Section 11.22 WAIVER OF JURY TRIAL..................................................................68 Section 11.23 Authorized Signature..................................................................68
-iii- Section 11.24 Power of Attorney.....................................................................68 Section 11.25 ACKNOWLEDGMENT BY WHITEHALL...........................................................69 ARTICLE 12 LIMITATIONS ON LIABILITY....................................................................69 Section 12.1 Limitation on Liability...............................................................69 Section 12.2 Limitation on Liability of Lender's Officers, Employees, Etc..........................70
-iv- SCHEDULES SCHEDULE 1.1(A) - PROPERTY INFORMATION SCHEDULE 1.1(B) - BASIS ALLOCATIONS SCHEDULE 2.1 - ADVANCE CONDITIONS SCHEDULE 2.1(5) - WORKING CAPITAL BUDGETS FOR PROPERTIES SCHEDULE 4.2 - ENVIRONMENTAL REPORTS SCHEDULE 5.1(A) - TENANT DELINQUENCIES SCHEDULE 5.1(B) - NOTICES OF TERMINATION OR DEFAULT SCHEDULE 5.1(C) - PURCHASE OPTIONS SCHEDULE 5.1(D) - LEASE TERMINATION RIGHTS SCHEDULE 5.1(E) - LEASING COMMISSIONS OWING SCHEDULE 5.1(F) - PREPAID RENTS SCHEDULE 6.4 - CONDEMNATION PROCEEDINGS SCHEDULE 6.5 - CASUALTIES AND FLOOD ZONE PROPERTIES SCHEDULE 6.6 - MATERIAL AGREEMENTS SCHEDULE 6.7 - PROPERTY COMPLIANCE SCHEDULE 6.17 - LITIGATION SCHEDULE 6.19 - CLAIMS UNDER PURCHASE AGREEMENT SCHEDULE 6.27 - ACQUISITION COST AND EQUITY INVESTMENT SCHEDULE 8.19 - PROPERTY-SPECIFIC COVENANTS SCHEDULE 11.23 - AUTHORIZED SIGNATORIES SCHEDULE 11.25 - SURETYSHIP PROVISIONS -v- EXHIBITS EXHIBIT "A" - FORM OF NOTICE OF ADDITIONAL ADVANCE EXHIBIT "B" - FORM OF NOTICE TO DEPOSITORY EXHIBIT "C" - FORM OF COLLATERAL ASSIGNMENT OF INTEREST RATE CAP AGREEMENT EXHIBIT "D-1" - PROPERTY DESCRIPTION (Century Park) EXHIBIT "D-2" - PROPERTY DESCRIPTION (Kellogg Office) EXHIBIT "D-3" - PROPERTY DESCRIPTION (One Corporate Center I) EXHIBIT "D-4" - PROPERTY DESCRIPTION (Westwood Office) EXHIBIT "D-5" - PROPERTY DESCRIPTION (One Corporate Center III) EXHIBIT "D-6" - PROPERTY DESCRIPTION (La Plaza Center) EXHIBIT "D-7" - PROPERTY DESCRIPTION (Continental Plaza) EXHIBIT "D-8" - PROPERTY DESCRIPTION (Fidelity Federal) EXHIBIT "D-9" - PROPERTY DESCRIPTION (Northwest Plaza) EXHIBIT "D-10" - PROPERTY DESCRIPTION (River Bay Plaza) EXHIBIT "D-11" - PROPERTY DESCRIPTION (Redwood Plaza) EXHIBIT "D-12" - PROPERTY DESCRIPTION (Towne Center) EXHIBIT "D-13" - PROPERTY DESCRIPTION (Springwood Plaza) EXHIBIT "D-14" - PROPERTY DESCRIPTION (Kendall Sunset) EXHIBIT "D-15" - PROPERTY DESCRIPTION (Burbank Self Storage) EXHIBIT "D-16" - PROPERTY DESCRIPTION (Fountainbleau) EXHIBIT "D-17" - PROPERTY DESCRIPTION (AAA Century Airport) EXHIBIT "D-18" - PROPERTY DESCRIPTION (AAA Sentry) EXHIBIT "D-19" - PROPERTY DESCRIPTION (Forest Hill) EXHIBIT "D-20" - PROPERTY DESCRIPTION (Margate Self Storage) EXHIBIT "D-21" - PROPERTY DESCRIPTION (Military Trail) EXHIBIT "E" - DESCRIPTION OF FIDELITY FEDERAL GROUND LEASES -vi- LIST OF DEFINED TERMS Acquisition Advance............................................................1 Acquisition Advance Termination Date...........................................1 Additional Properties..........................................................1 Adjusted Annual Debt Service...................................................1 Adjusted Loan Basis............................................................2 Adjusted Operating Cash Flow...................................................2 Advance ......................................................................2 Affiliate......................................................................3 Agreement......................................................................3 Agreement Regarding Management Agreement.......................................3 Ancillary Agreements...........................................................3 Applicable Rate................................................................2 Approved Plans.................................................................3 Architect......................................................................3 Asset Business Plan............................................................3 Asset Management Agreement.....................................................3 Asset Management Fee...........................................................3 Asset Manager..................................................................3 Assignment of Leases...........................................................3 Borrower ......................................................................1 Borrower Party.................................................................3 Borrowing Date Certificate.....................................................3 British Banker Association Interest Settlement Rates...........................9 Business Day...................................................................4 Capital Expenditures...........................................................4 Capital Lease..................................................................4 Capital Lease Obligation.......................................................4 Capital Transaction............................................................4 Cash On Cash Limit.............................................................4 Cash On Cash Return............................................................4 Charges ......................................................................5 Charges Account................................................................5 Closing Date...................................................................5 Code ......................................................................5 Collateral.....................................................................5 Collateral Assignment of Contracts.............................................5 Collateral Assignment of Interest Rate Cap Agreement...........................5 Collateral Documents...........................................................5 Complete Taking................................................................5 Contract Rate..................................................................5 Debt Service Coverage Ratio....................................................6 Debt Service Coverage Ratio Limit..............................................6 -vii- Deed of Trust..................................................................6 Default Property...............................................................6 Default Rate...................................................................6 Discounted Funding Amount.....................................................23 Discounted Release Amount.....................................................22 Early Termination Date.........................................................6 Environmental Laws.............................................................6 Environmental Liabilities and Costs............................................6 Environmental Site Assessment..................................................6 ERISA ......................................................................6 Eurodollar Business Day........................................................9 Event of Default...............................................................7 Extension Notice...............................................................7 Extension Period..............................................................19 Federal Reserve Board..........................................................7 Fidelity Federal Ground Leases.................................................7 Fidelity Federal Property......................................................7 Fiscal Year....................................................................7 GAAP ......................................................................7 GECC ......................................................................7 Governmental Authority.........................................................7 Gross Receipts.................................................................7 Guaranteed Indebtedness........................................................8 Hazardous Materials............................................................8 Hazardous Substances Indemnity Agreement.......................................8 Holding Company................................................................8 Holding Company Operating Agreement...........................................54 Impaired Property..............................................................8 Indebtedness...................................................................8 Initial Advance................................................................8 Initial Properties.............................................................9 Interest Payment Date..........................................................9 IRC ......................................................................9 IRS ......................................................................9 Laws ......................................................................9 Lease Buy Out Consideration....................................................9 Leases ......................................................................9 Leasing Costs..................................................................9 Lender ......................................................................9 LIBOR Rate.....................................................................9 Lien ......................................................................9 Loan .....................................................................10 Loan Documents................................................................10 Major Work....................................................................10 Material Adverse Effect.......................................................10 -viii- Material Agreement............................................................10 Material Lease................................................................10 Material Leases...............................................................38 Maturity Date.................................................................10 Maximum Liability.............................................................10 Maximum Loan Amount...........................................................10 McNeil .....................................................................10 Net Capital Proceeds..........................................................11 New Holding Company...........................................................55 Non-Storage Leases............................................................11 Note .....................................................................11 Notice of Additional Advance..................................................11 Obligations...................................................................11 Operating Cash Flow...........................................................11 Operating Expenses............................................................11 Other Taxes...................................................................12 Partial Release Notice........................................................12 Partnership Agreement.........................................................12 Permitted Encumbrances........................................................12 Person .....................................................................12 Plan .....................................................................13 Potential Default.............................................................13 Properties....................................................................13 Property Basis................................................................13 Property Documents............................................................13 Purchase Agreement............................................................13 Release .....................................................................13 Release Payment...............................................................13 Remedial Action...............................................................13 Reserves .....................................................................13 Security Deposits.............................................................13 Seller .....................................................................13 Shareholder Litigation........................................................14 State .....................................................................14 Storage Properties............................................................14 Taxes .....................................................................14 Tenant .....................................................................14 Tenant Allowances.............................................................14 Tenant Improvements...........................................................14 Term .....................................................................14 Title Company.................................................................14 Title Policy..................................................................14 To Borrower's Knowledge.......................................................14 Whitehall.....................................................................15 Whitehall XII.................................................................15 -ix- Whitehall Indemnity...........................................................15 Whitehall Net Worth...........................................................15 Work..........................................................................15 Working Capital Advance.......................................................15 Working Capital Advance Allocation............................................15 Working Capital Budget........................................................15 SCHEDULE 2.1 Credit Approval Date...........................................................1 SCHEDULE 11.25 Nonrecourse Carve-Outs.........................................................1 Third Party Obligor............................................................1 -x- EX-99.(A)(2) 3 LOAN AGREEMENT DATED 01/01/2000 TERM LOAN AGREEMENT TERM LOAN AGREEMENT THIS TERM LOAN AGREEMENT (this "Agreement") is made as of January 1, 2000 among WXI/MCN MULTIFAMILY REAL ESTATE LIMITED PARTNERSHIP, a Delaware limited partnership, BRENDON WAY FUND XII ASSOCIATES, an Indiana general partnership, CASTLE BLUFF FUND XII ASSOCIATES L.P., a Texas limited partnership, and EMBARCADERO ASSOCIATES, a Georgia general partnership (each a "Borrower" and collectively the "Borrowers"), and AMRESCO CAPITAL, L.P., a Delaware limited partnership ("Lender"). RECITALS A. Each of the Borrowers owns one or more Multifamily Residential Properties (capitalized terms used but not defined shall have the meanings ascribed to such terms in Article I of this Agreement) as more particularly described in Exhibit A to this Agreement. B. The Borrowers have requested that the Lender lend up to a maximum amount of $195,783,261 to the Borrowers on a joint and several basis. C. To secure the obligations of the Borrowers under this Agreement and the other Loan Documents issued in connection with the Term Loan, the Borrowers shall create a Collateral Pool in favor of the Lender. The Collateral Pool shall be comprised of (i) Security Instruments on all of the Multifamily Residential Properties owned by each of the Borrowers and (ii) any other Security Documents executed by any of the Borrowers pursuant to this Agreement or any other Loan Documents. D. Each of the Security Documents shall be cross-defaulted (i.e., a default under any Security Document, or under this Agreement, shall constitute a default under each Security Document, and this Agreement) and cross-collateralized (i.e., each Security Instrument shall secure all of the Borrowers' obligations under this Agreement and the other Loan Documents issued in connection with the Term Loan). E. Subject to the terms, conditions and limitations of this Agreement, the Lender has agreed to make the Term Loan. NOW, THEREFORE, the Borrowers and the Lender, in consideration of the mutual promises and agreements contained in this Agreement, hereby agree as follows: ARTICLE I DEFINITIONS For all purposes of this Agreement, the following terms shall have the respective meanings set forth below: "Additional Mortgaged Properties" means the Multifamily Residential Properties identified on Exhibit A as Additional Mortgaged Properties. "Affiliate" means, as applied to any Person, any other Person directly or indirectly controlling, controlled by, or under common control with, that Person. For the purposes of this definition, "control" (including with correlative meanings, the terms "controlling," "controlled by" and "under common control with"), as applied to any Person, means the possession, directly or indirectly, of the power to direct or cause the direction of the management (other than property management) and policies of that Person, whether through the ownership of voting securities, partnership interests or by contract or otherwise. "Agreement" means this Term Loan Agreement, as it may be amended, supplemented or otherwise modified from time to time, including all Recitals and Exhibits to this Agreement, each of which is hereby incorporated into this Agreement by this reference. "Allocable Facility Amount" means the portion of the Term Loan allocated to a particular Mortgaged Property as set forth on Exhibit B attached hereto minus principal payments of the Term Loan paid to Lender and allocated to such Mortgaged Property as determined in accordance with the information on Schedule C to the Term Note. "Applicable Law" means (a) all applicable provisions of all constitutions, statutes, rules, regulations and orders of all governmental bodies, all Governmental Approvals and all orders, judgments and decrees of all courts and arbitrators, (b) all zoning, building, environmental and other laws, ordinances, rules, regulations and restrictions of any Governmental Authority affecting the ownership, management, use, operation, maintenance or repair of any Mortgaged Property, including the Americans with Disabilities Act (if applicable), the Fair Housing Amendment Act of 1988 and Hazardous Materials Laws, (c) any building permits or any conditions, easements, rights-of-way, covenants, restrictions of record or any recorded or unrecorded agreement affecting or concerning any Mortgaged Property including planned development permits, condominium declarations, and reciprocal easement and regulatory agreements with any Governmental Authority, (d) all laws, ordinances, rules and regulations, whether in the form of rent control, rent stabilization or otherwise, that limit or impose conditions on the amount of rent that may be collected from the units of any Mortgaged Property, and (e) requirements of insurance companies or similar organizations, affecting the operation or 2 use of any Mortgaged Property or the consummation of the transactions to be effected by this Agreement or any of the other Loan Documents. "Appraisal" means an appraisal of a Multifamily Residential Property or Multifamily Residential Properties conforming to the requirements of Chapter 5 of Part III of the DUS Guide, and accepted by the Lender. "Asset Management Agreement" shall mean the Portfolio Advisory Agreement between WXI/McN Realty L.L.C. and the Asset Manager as amended or modified from time to time. "Asset Manager" shall mean Archon Group, L.P., a Delaware limited partnership, or such successor manager as shall be hired by the Borrowers. "Assignment of Management Agreement" means each Assignment of Management Agreement with respect to each Mortgaged Property by and between each Borrower and the Manager for the benefit of Lender as the same may be amended, modified or supplemented from time to time. "Authorized Representative" means those persons acceptable to Lender and duly appointed and identified as such by each Borrower, in a writing delivered to Lender which Authorized Representative shall initially be those persons listed on Schedule 1 attached hereto, each with the authority to act alone or with one or more persons as may be specified in such Schedule 1. "Bankruptcy Code" means Title 11 of the United States Code entitled "Bankruptcy," as now and hereafter in effect, or any successor statute. "Bankruptcy Event" means one or more of the following events: (a) any Borrower or any Borrower Party shall file any voluntary petition under any Chapter of the Bankruptcy Code, or shall file any petition for dissolution or liquidation or take other action to dissolve or liquidate, or shall in any manner seek any relief under any local, state, federal or other insolvency laws or other laws providing for relief of debtors; or (b) any involuntary petition under any Chapter of the Bankruptcy Code shall be filed against any Borrower or any Borrower Party, or any Borrower or any Borrower Party directly or indirectly becomes the subject of any proceedings pursuant to any local, state, federal or other insolvency laws or laws providing for relief of debtors, or in equity, either at the present time or at any time hereafter, if and only if a Borrower, a Borrower Party or any Affiliate of a Borrower or a Borrower Party has acted in concert or conspired with such creditors of a Borrower or a Borrower Party (other than Lender) to cause the filing thereof with the intent to interfere with enforcement rights of Lender after the occurrence of an Event of Default; or 3 (c) any Borrower Party or any Affiliate of a Borrower Party shall file an involuntary petition against any Borrower or any Borrower Party under any Chapter of the Bankruptcy Code or under any insolvency, reorganization, or similar proceeding under State law. "Borrower" or "Borrowers" shall have the meanings set forth in the first paragraph of this Agreement, and their permitted successors and assigns. "Borrower Party" means any General Partner or any Key Principal. "Borrowing Agent" means WXI/MCN Multifamily Real Estate Limited Partnership, a Delaware limited partnership, and its permitted successors and assigns. "Business Day" means a day on which each of Fannie Mae and Lender is open for business. "Business Plan" for any period means a business plan for operation of the Mortgaged Properties for such period, including operating budgets, projected rental rates, capital expenditure, budgets, leasing plans and other items standard and customary for operation of real properties similar to the Mortgaged Properties. "Calendar Quarter" means, with respect to any year, any of the following three month periods: (a) January-February-March; (b) April-May-June; (c) July-August-September; and (d) October-November- December. "Closing Date" means the Initial Closing Date and each date after the Initial Closing Date on which the funding of any remaining amount of the Term Loan is required to take place as the result of a Term Loan Request. "Collateral" means, the Mortgaged Properties and other collateral from time to time or at any time encumbered by the Security Instruments, or any other property securing any of the Borrowers' obligations under the Loan Documents. "Collateral Addition Description Package" has the meaning set forth in Section 3.03-A. "Collateral Addition Request" has the meaning set forth in Section 3.01-A. "Collateral Agreement" shall have the meaning given that term in each Security Instrument. "Collateral Pool" means the aggregate total of the Collateral. "Collateral Release Request" shall have the meaning set forth in Section 4.02(a). 4 "Collateral Release Property" shall have the meaning set forth in Section 4.02(a). "Completion/Repair and Security Agreement" means the Master Completion/Repair and Security Agreement, dated January 31, 2000, by and among the Borrowers and AMRESCO Capital, L.P., as the same may be amended, modified or supplemented from time to time as permitted under this Agreement. "Compliance Certificate" means a certificate of the Borrowers in the form attached as Exhibit C to this Agreement. "Condemnation" with respect to any Mortgaged Property, means (a) any action or proceeding for the taking of such Mortgaged Property, or any part thereof or interest therein, for public or quasi-public use under the power of eminent domain, by reason of any public improvement or condemnation proceeding, or in any other similar manner or (b) the conveyancing of such Mortgaged Property under the threat or contemplation of any action or proceeding described in clause (a). "Condemnation Proceeds" means the proceeds of any Condemnation. "Conditions to Closing" shall have the meaning set forth in Article III. "Contractual Obligation" means, 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 any of its property is bound. "Contribution Agreement" means the Affiliate Contribution and Indemnity Agreement entered into on January 31, 2000 by and among each of the Borrowers. "Controlled Group" means all members of a controlled group of corporations and all trades or businesses (whether or not incorporated) under common control which, together with any Borrower, are treated as a single employer under Section 414 of the Code. "Delaware Borrower" means WXI/MCN Multifamily Real Estate Limited Partnership and its successors and assigns. "DUS Guide" means the Fannie Mae Multifamily Delegated Underwriting and Servicing (DUS) Guide, as such Guide may be amended from time to time, including exhibits to the DUS Guide and amendments in the form of Lender Memos, Guide Updates and Guide Announcements (and, if such Guide is no longer used by Fannie Mae, the term "DUS Guide" as used in this Agreement means the Fannie Mae Multifamily Negotiated Transactions Guide, as such Guide may be amended from time to time, including amendments in the form of Lender Memos, Guide Updates and Guide Announcements). All references to specific articles and sections of, and exhibits to, the 5 DUS Guide shall be deemed references to such articles, sections and exhibits as they may be amended, modified, updated, superseded, supplemented or replaced from time to time. "DUS Underwriting Requirements" means the overall underwriting requirements for Multifamily Residential Properties as set forth in the DUS Guide. "Environmental Report" means any Phase I environmental report and any additional environmental report delivered to Lender with respect to the Property. "ERISA" means the Employee Retirement Income Security Act of 1974, as amended from time to time. "Event of Default" means any event defined to be an "Event of Default" under Article XI. "Fannie Mae" means the federally-chartered and stockholder-owned corporation organized and existing under the Federal National Mortgage Association Charter Act, 12 U.S.C. 1716 et seq and its successors and assigns. "Fraudulent Transfer Laws" shall have the meaning set forth in Section 14.10-A. "Future Additional Mortgaged Property Term Loan" means a Term Loan made by Lender to the Borrowers after the Initial Closing Date pursuant to Article III-A. "Future Excess Proceeds Term Loan" means a Term Loan made by Lender to the Borrowers after the Initial Closing Date pursuant to Article III-B. "Future Term Loan" means, as the context requires, either or both of a Future Additional Mortgaged Property Term Loan and a Future Excess Proceeds Term Loan. "Future Term Loan Request" shall have the meaning set forth in Section 3.01-A. "GAAP" means generally accepted accounting principles in the United States in effect from time to time, consistently applied. "Georgia Borrower" means Embarcadero Associates and its successors and assigns. "General Partner" means each general partner of each Borrower. "Governmental Approval" means an authorization, permit, consent, approval, license, registration or exemption from registration or filing with, or report to, any Governmental Authority. 6 "Governmental Authority" means any court, board, agency, commission, office or authority of any nature whatsoever for any governmental unit (federal, state, county, district, municipal, city or otherwise) whether now or hereafter in existence. "Gross Revenues" means, for any period, with respect to a Mortgaged Property, all gross rents collected from or on behalf of tenants at the Mortgaged Property (other than unforfeited tenant security deposits), any other income, receipts or withdrawals from reserves (but only to the extent such reserves were included as Operating Expenses at the times they were set aside) derived from the Mortgaged Property (including from the use or operation thereof) without regard to its source, including, without limitation, tenant reimbursements for utilities, services and supplies, security deposit forfeitures, parking rents or fees, concessions and vending fees and laundry income and proceeds from rental interruption insurance, but excluding Insurance Proceeds (other than proceeds from rental interruption insurance), Condemnation Proceeds, unearned portions of prepaid rent, other refundable items, interest on any account into which refundable items are deposited, and proceeds from the sale or other disposition of all or any portion of the Mortgaged Property. "Hazardous Materials", with respect to any Mortgaged Property, shall have the meaning given that term in the Security Instrument encumbering the Mortgaged Property. "Hazardous Materials Law", with respect to any Mortgaged Property, shall have the meaning given that term in the Security Instrument encumbering the Mortgaged Property. "Hazardous Substance Activity" means any storage, holding, existence, release, spill, leaking, pumping, pouring, injection, escaping, deposit, disposal, dispersal, leaching, migration, use, treatment, emission, discharge, generation, processing, abatement, removal, disposition, handling or transportation of any Hazardous Materials from, under, into or on any Mortgaged Property in violation of Hazardous Materials Laws, including the discharge of any Hazardous Materials emanating from any Mortgaged Property in violation of Hazardous Materials Laws through the air, soil, surface water, groundwater or property and also including the abandonment or disposal of any barrels, containers and other receptacles containing any Hazardous Materials from or on any Mortgaged Property in violation of Hazardous Materials Laws, in each case whether sudden or nonsudden, accidental or nonaccidental. "Impositions" means, with respect to any Mortgaged Property, all real estate and personal property taxes, water, sewer and vault charges and all other taxes, levies, assessments, common charges and other similar charges, general and special, ordinary and extraordinary, foreseen and unforeseen, of every kind and nature whatsoever, which at any time prior to, at or after the execution of this Agreement may be assessed, levied or imposed upon such Mortgaged Property or the rents or the ownership, use, occupancy or enjoyment thereof, and any interest, costs or penalties with respect to any of the foregoing. 7 "Indebtedness" means, with respect to any Person, as of any specified date, without duplication, all: (a) indebtedness of such Person for borrowed money or for the deferred purchase price of property or services (other than (i) current trade liabilities incurred in the ordinary course of business and payable in accordance with customary practices, and (ii) for construction of improvements to property, if such person has a non-contingent contract to purchase such property); (b) other indebtedness of such Person which is evidenced by a note, bond, debenture or similar instrument; (c) obligations of such Person under any lease of property, real or personal, the obligations of the lessee in respect of which are required by GAAP to be capitalized on a balance sheet of the lessee or to be otherwise disclosed as such in a note to such balance sheet; (d) obligations of such Person in respect of acceptances (as defined in Article 3 of the Uniform Commercial Code of the State of New York) issued or created for the account of such Person; (e) liabilities secured by any Lien on any property owned by such Person even though such Person has not assumed or otherwise become liable for the payment of such liabilities; and (f) as to any Person ("guaranteeing person"), any obligation of (a) the guaranteeing person or (b) another Person (including any bank under any letter of credit) to induce the creation of a primary obligation (as defined below) with respect to which the guaranteeing person has issued a reimbursement, counterindemnity or similar obligation, in either case guaranteeing, or in effect guaranteeing, any indebtedness, lease, dividend or other obligation ("primary obligations") of any third person ("primary obligor") in any manner, whether directly or indirectly, including any obligation of the guaranteeing person, whether or not contingent, to (1) purchase any such primary obligation or any property constituting direct or indirect security therefor, (2) advance or supply funds for the purchase or payment of any such primary obligation or to maintain working capital or equity capital of the primary obligor or otherwise to maintain the net worth or solvency of the primary obligor, (3) purchase property, securities or services primarily for the purpose of assuring the owner of any such primary obligation of the ability of the primary obligor to make payment of such primary obligation (other than construction of improvements to property, if the primary obligor has a non-contingent contract to purchase such property), or (4) otherwise assure or hold harmless the owner of any such primary obligation against loss in respect of the primary obligation, provided, however, that the term "Contingent Obligation" shall not include endorsements of instruments for deposit or collection in the ordinary course of business. The amount of 8 any Contingent Obligation of any guaranteeing person shall be deemed to be the lesser of (i) an amount equal to the stated or determinable amount of the primary obligation in respect of which such Contingent Obligation is made and (ii) the maximum amount for which such guaranteeing person may be liable pursuant to the terms of the instrument embodying such Contingent Obligation, unless such primary obligation and the maximum amount for which such guaranteeing person may be liable are not stated or determinable, in which case the amount of such Contingent Obligation shall be such guaranteeing person's maximum reasonably anticipated liability in respect thereof as determined by such guaranteeing person in good faith. "Indiana Partnership" means Brendon Way Fund XII Associates and its successors and assigns. "Initial Closing Date" means the date on which the Initial Term Loan is advanced, which shall be on or promptly after the date of the execution and delivery of this Agreement. "Initial Mortgaged Properties" means the Multifamily Residential Properties identified on Exhibit A as Initial Mortgaged Properties and which represent the Multifamily Residential Properties which are made part of the Collateral Pool on the Initial Closing Date. "Initial Term Loan" means the term loan made by Lender to the Borrower on a joint and several basis pursuant to the terms of this Agreement in an amount equal to $181,370,917. "Insurance Policy" means, with respect to a Mortgaged Property, the insurance coverage and insurance certificates evidencing such insurance required to be maintained pursuant to the Security Instrument encumbering the Mortgaged Property. "Insurance Proceeds" means all insurance proceeds, damages, claims and rights of action and the right thereto under any insurance policies with respect to a casualty or otherwise insuring and relating to any portion of any Mortgaged Property. "Interest Rate" means the interest rate on a Future Term Loan determined in accordance with the procedures set forth in Article III-A. "Interest Rate Lock Agreement" has the meaning set forth in Section 3.02-A. "Internal Revenue Code" means the Internal Revenue Code of 1986, as amended. Each reference to the Internal Revenue Code shall be deemed to include (a) any successor internal revenue law and (b) the applicable regulations whether final, temporary or proposed. 9 "Key Principal" or "Key Principals" means (i) Whitehall Street Real Estate Limited Partnership XI and Whitehall Street Real Estate Limited Partnership XII; and (ii) any other Person that has agreed to act as such acceptable to Fannie Mae in its sole and absolute discretion, and in each case its permitted successor and assigns. "Key Principal Guaranty" means the Key Principal Exceptions to Non-recourse Guaranty dated as of January 31, 2000 executed and delivered by each Key Principal, as the same may be amended, supplemented or modified from time to time. "Knowledge" or "knowledge" by any Borrower means that a member of Senior Management has knowledge of the fact in question. "Lease" means any lease, any sublease or subsublease, 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 any Mortgaged 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. "Lender" shall have the meaning set forth in the first paragraph of this Agreement. "Lien" means any mortgage, deed of trust, deed to secure debt, security interest or other lien or encumbrance (including both consensual and non-consensual liens and encumbrances). "Loan Documents" means this Agreement, the Note, the Key Principal Guaranty, the Security Documents, all documents executed by any Borrower pursuant to the Conditions to Closing set forth in Article III of this Agreement and any other documents executed by any Borrower from time to time in connection with this Agreement or the transactions contemplated by this Agreement. "Manager" means AMS Management L.L.C. or any successor entity hired to manage any Mortgaged Property and approved by Fannie Mae. "Material Adverse Effect" means, with respect to any circumstance, act, condition or event of whatever nature (including any adverse determination in any litigation, arbitration, or governmental investigation or proceeding), whether singly or in conjunction with any other event or events, act or acts, condition or conditions, or circumstance or circumstances, whether or not related, a material adverse change in or a materially adverse effect upon any of (a) the business, operations, property or condition (financial or otherwise) of the Delaware Borrower or the Borrowers taken as a whole, (b) the ability of the Delaware Borrower or the Borrowers taken as a whole to perform the Obligations for which they are liable, (c) the validity, priority, perfection or enforceability 10 of this Agreement or any other Loan Document or the rights or remedies of the Lender under any Loan Document, (d) the Lender's ability to have recourse against any Mortgaged Property, or (e) the value of any Mortgaged Property. "Material Adverse Effect - Portfolio Wide" has the same meaning as Material Adverse Effect except that clause (e) of the definition of Material Adverse Effect shall be deemed to read "the value of all of the Mortgaged Properties taken as a whole". "Maturity Date" means February 1, 2007. "Maximum Percentage" shall have the meaning set forth on Exhibit A for each Mortgaged Property. "Maximum Rate" means the maximum interest rate which the Lender may designate for a Future Term Loan. "Maximum Term Loan Amount" means $195,783,261. "MBS" means a mortgage-backed security. A MBS which is "backed" by a Term Loan means that it is backed by an interest in the Term Note and the Collateral Pool securing the Term Note, which interest permits the holder of the MBS to participate in the Term Note and the Collateral Pool to the extent of such Term Loan. "MBS Commitment" has the meaning set forth in Section 3.02-A. "Mortgaged Properties" means collectively, the Additional Mortgaged Properties (but for purposes of representations, warranties and covenants by any Borrower, only after they are acquired by such Borrower) and the Initial Mortgaged Properties, but excluding each Collateral Release Property from and after the date of the release of the Collateral Release Property from the Collateral Pool. "Multiemployer Plan" shall have the meaning set forth in Section 4001(a)(3) of ERISA. "Multifamily Residential Property" means a residential property, located in the United States, containing five or more dwelling units in which not more than twenty percent (20%) of the net rentable area is or will be rented to non-residential tenants, and conforming to the requirements of Sections 201 and 203 of Part III of the DUS Guide. "Note" means the Term Note. "Obligations" means the aggregate of the obligations of the Borrowers under this Agreement and the other Loan Documents. 11 "Operating Expenses" means, for any period, with respect to a Mortgaged Property, the aggregate of all direct, ordinary, normal, recurring and necessary expenses thereof including, without duplication, (a) Impositions, (b) property and liability insurance premiums, (c) wages, salaries and benefits of personnel employed on site to manage, lease, maintain and operate the Mortgaged Property, (d) costs or expenses of utility services to the Mortgaged Property and tenant spaces to the extent payable by the respective Borrower, (e) costs or expenses of providing security services to the Mortgaged Property, if any, (f) costs or expenses of in-house or outside service arrangements for landscaping, janitorial, window washing and cleaning, trash, debris, make ready units, cable and satellite television and other services, (g) expenses of maintaining, repairing and cleaning the grounds, parking, amenities, exterior and interior spaces of the Mortgaged Property, (h) expenses of repairing and maintaining in good operable condition the mechanical, structural, electrical, elevator, heating, ventilating, air conditioning and plumbing systems, (i) property management fees payable to parties other than any Borrower (and specifically including management fees paid to any Affiliate of any Borrower), (j) administrative expenses including advertising incurred at the site of the Mortgaged Property, (k) legal fees associated with lease documentation and tenant matters and legal, accounting and other professional fees relating to the operation of the Mortgaged Property, (l) the replacement and repair amount with respect to the Mortgaged Property which shall equal the aggregate amount of the replacement reserve deposits as determined by the Lender during the period as set forth on the applicable Replacement Reserve Agreement irrespective of the waiver by Fannie Mae of the obligation to fund the deposits, (m) costs for water and sewage fees, and (n) any other property operation items that are not treated as capitalized expenses under GAAP. All of the foregoing (including Impositions) shall be computed on an accrual basis and in accordance with GAAP consistently applied. During any period any Mortgaged Property is managed by an Affiliate of any Borrower, Operating Expenses shall also include the amount, if any, by which management fees paid by owners of similar properties in the same geographic location exceed management fees then payable by such Borrower. In addition, for all purposes Operating Expenses shall exclude (i) payments on the Obligations, (ii) depreciation and amortization, (iii) all legal, accounting and professional fees not included in clause (k) above, and (iv) items that would be treated as capital expenses under GAAP consistently applied. All of the foregoing shall be presented in accordance with Borrower's customary form of operating statements. "Organizational Certificate" means a certificate of each Borrower in the form attached as Exhibit D to this Agreement. "Organizational Documents" means all certificates, instruments and other documents pursuant to which an organization is organized or operates, including but not limited to, (i) with respect to a corporation, its articles of incorporation and bylaws, (ii) with respect to a limited partnership, its limited partnership certificate and partnership agreement, (iii) with respect to a general partnership or joint venture, its partnership or joint venture agreement and (iv) with respect to a limited liability company, its articles of organization and operating agreement. 12 "Outstanding" means, when used in connection with promissory notes or other debt instruments, for a specified date, promissory notes or other debt instruments which have been issued, but have not been repaid in full as of the specified date. "Ownership Interests" means, with respect to any entity, any ownership interests in the entity and any economic rights (such as a right to distributions, net cash flow or net income) to which the owner of such ownership interests is entitled. "Partnership Agreement" means each of (a) the Agreement of Limited Partnership of WXI/MCN Multifamily Real Estate Limited Partnership dated as of January 31, 2000, by and between WXI/MCN Multifamily Gen-Par, L.L.C., a Delaware limited liability company, as general partner, and WXI/McN Realty L.L.C., a Delaware limited liability company, as limited partner, (b) the Amended and Restated Agreement of General Partnership of Brendon Way Fund XII Associates dated as of January 31, 2000, by and between WXI/MCN Gen-Par II, L.L.C., a Delaware limited liability company, as a general partner, and WXI/MCN Real Estate XII Limited Partnership, a California limited partnership, as a general partner, (c) the Amended and Restated Agreement of Limited Partnership of Castle Bluff Fund XII Associates L.P. dated as of January 31, 2000, by and between Castle Bluff Corporation, a Texas corporation, as general partner, and WXI/MCN Real Estate XII Limited Partnership, a California limited partnership, as limited partner, and (d) the Amended and Restated Agreement of General Partnership of Embarcadero Associates dated as of January 31, 2000, by and between WXI/MCN Gen-Par I, L.L.C., a Delaware limited liability company, as a general partner, and WXI/MCN Real Estate XIV Limited Partnership, a California limited partnership, as a general partner, as each of the same may be amended, modified or supplemented from time to time as permitted under this Agreement. "PBGC" means the Pension Benefit Guaranty Corporation or any entity succeeding to any or all of its functions under ERISA. "Permits" means all permits, or similar licenses or approvals issued and/or required by an applicable Governmental Authority or any Applicable Law in connection with the ownership, use, occupancy, leasing, management, operation, repair, maintenance or rehabilitation of any Mortgaged Property or any Borrower's business. "Permitted Liens" means, with respect to a Mortgaged Property, (i) the exceptions to title to the Mortgaged Property set forth in the Title Insurance Policy for the Mortgaged Property which are approved by the Lender, (ii) the Security Instrument encumbering the Mortgaged Property, (iii) Liens for taxes and other Impositions not yet delinquent, (iv) Liens in respect of property imposed by law arising in the ordinary course of business such as materialmen's, mechanics', warehousemen's, carriers', landlords' and other nonconsensual statutory Liens which (a) are not yet due and payable or (b) are released of record or otherwise remedied to the Lender's satisfaction within 60 days of the date of commencement of enforcement of any such Lien or before such earlier date on 13 which the respective Borrower's interest in the applicable property is subject to forfeiture by enforcement of any such Lien, (v) easements, rights-of-way, restrictions (including zoning restrictions), matters of plat, minor defects or irregularities in title, license or lease agreements for laundry, cable tv, telephone and other similar Liens which, in the aggregate, do not materially reduce the value of the Mortgaged Property or materially interfere with the operation and use of, or the ordinary conduct of business on, the Mortgaged Property (provided that any laundry or cable tv licenses or leases shall not be a Permitted Lien if it does not comply with Section 108 of Part III of the DUS Guide), (vi) rights of existing and future tenants and residents as tenants only pursuant to written Leases, (vii) any attachment or judgment Lien with respect to a claim provided that such claim does not remain unpaid, unstayed on appeal, undischarged, unbonded, not fully insured or undismissed for a period of 60 days, and (viii) any other Liens approved by the Lender. "Person" means an individual, an estate, a trust, a corporation, a partnership, a limited liability company or any other organization or entity (whether governmental or private). "Potential Event of Default" means any event which, with the giving of notice or the passage of time, or both, would constitute an Event of Default. "Prepayment Premium" shall have the meaning of such term set forth in the Note. "Property" means any estate or interest in any kind of property or asset, whether real, personal or mixed, and whether tangible or intangible. "Rate Lock Deposit" means a deposit equal to two percent (2.0%) of the principal amount of a proposed Future Term Loan. "Release Closing Date" means the date upon which a release requested in a Collateral Release Request is required to take place. "Release Price" shall have the meaning set forth in Section 4.02(c). "Rent Roll" means, with respect to any Multifamily Residential Property, a rent roll prepared and certified by the owner and Manager of the Multifamily Residential Property, on Fannie Mae Form 4243, as set forth in Exhibit III-3 of the DUS Guide, or on each Borrower's customary forms in existence on the date hereof or as otherwise approved by Lender. "Rents" shall have the meaning set forth in each Security Instrument. "Replacement Reserve Agreement" means the Master Replacement Reserve and Security Agreement, reasonably required by the Lender, and completed in accordance with the requirements of the DUS Guide. 14 "Request" means either or both of a Future Term Loan Request and a Collateral Release Request. "Rescinded Payment" shall have the meaning set forth in Section 14.09-A. "Satisfaction Date" shall have the meaning set forth in the Key Principal Guaranty. "Security" has the meaning ascribed to such term in the Securities Act of 1933, as amended. "Security Documents" means the Security Instruments, the Collateral Agreements, the Replacement Reserve Agreement, UCC fixture filings, UCC financing statements and any other documents executed by any Borrower from time to time to secure any of the Borrowers' obligations under the Loan Documents. "Security Instrument" means, for each Mortgaged Property, a separate Multifamily Mortgage, Deed of Trust or Deed to Secure Debt, Assignment of Leases and Rents and Security Agreement given by the respective Borrower to or for the benefit of the Lender to secure the obligations of the Borrowers under the Loan Documents. With respect to each Mortgaged Property owned by each Borrower, the Security Instrument shall be substantially in the form published by Fannie Mae for use in the state in which the Mortgaged Property is located. "Senior Management" means the partner overseeing REPIA at The Goldman Sachs Group, Inc. ("Goldman"), the Chief Financial Officer of REPIA at Goldman, each Vice President of Finance of REPIA at Goldman, the Director of Portfolio Management at Archon Group L.P., and the Designated Portfolio Manager at Archon Group L.P. (or comparable officers of any party who may replace Archon Group L.P. as Asset Manager). "Servicer" means Amresco Services, L.P., a Delaware limited partnership, or any other Person designated by Fannie Mae. "Single-Purpose" means, with respect to a Person which is any form of partnership or corporation or limited liability company, that such Person at all times since its formation: (i) has been a duly formed and existing partnership, corporation or limited liability company, as the case may be; (ii) has been duly qualified in each jurisdiction in which such qualification was at such time necessary for the conduct of its business; (iii) has complied with the provisions of its organizational documents and the laws of its jurisdiction of formation in all respects; 15 (iv) has observed all customary formalities regarding its partnership or corporate existence, as the case may be; (v) has accurately maintained its financial statements, accounting records and other partnership or corporate documents separate from those of any other Person; (vi) has not commingled its assets or funds with those of any other Person; (vii) has accurately maintained its own bank accounts and books and accounts separate from those of any other Person; (viii) has paid its own liabilities from its own separate assets; (ix) has identified itself in all dealings with creditors under its own name and as a separate and distinct entity; (x) has not identified itself as being a division or a part of any other Person; (xi) has not identified any other Person as being a division or a part of such Person; (xii) has been adequately capitalized in light of its contemplated business operations; (xiii) has not assumed, guaranteed or become obligated for the liabilities of any other Person or held out its credit as being available to satisfy the obligations of any other Person (but this shall not apply to the liability of a general partner for the debts of a partnership in which it is a general partner); (xiv) has not acquired obligations or securities of any other Person; (xv) has not made loans or advances to any other Person (but this shall not apply to advances by a general partner to a partnership in which it is a general partner); (xvi) has not entered into and was not a party to any transaction with any Affiliate of such Person, except in the ordinary course of business and on terms which are no less favorable to such Person than would be obtained in a comparable arm's-length transaction with an unrelated third party; (xvii) has conducted its own business in its own name; 16 (xviii) has paid the salaries of its own employees, if any, and maintained a sufficient number of employees in light of its contemplated business operations; (xix) has allocated fairly and reasonably any overhead for shared office space; (xx) has not pledged its assets for the benefit of any other entity or made any loans or advances to any person or entity; (xxi) has not engaged in a non-exempt prohibited transaction described in Section 406 of ERISA or Section 4975 of the Internal Revenue Code; (xxii) has engaged in the business practice of using separate stationery, invoices and checks; and (xxiii) has corrected any known misunderstanding regarding its separate identity. "SMSA" means a "standard metropolitan statistical area," as defined from time to time by the United States Office of Management and Budget. "Special Completion/Repair and Security Agreement" means the Special Completion/Repair and Security Agreement, dated January 31, 2000, by and between WXI/MCN Multifamily Real Estate Limited Partnership and AMRESCO Capital, L.P., as the same may be amended, modified or supplemented from time to time as permitted under this Agreement. "Subordinated Obligations" shall have the meaning set forth in Section 14.06-A. "Subsidiary" means, when used with reference to a specified Person, (i) any Person that, directly or indirectly, through one or more intermediaries, is controlled by the specified Person, (ii) any Person of which the specified Person is, directly or indirectly, the owner of more than 50% of any voting class of Ownership Interests or (iii) any Person (A) which is a partnership and (B) of which the specified Person is a general partner and owns more than 50% of the partnership interests. "Surveys" means the as-built surveys of the Mortgaged Properties prepared in accordance with the requirements of Section 113 of the DUS Guide, or otherwise approved by the Lender. "Taxes" means all taxes, assessments, vault rentals and other charges, if any, general, special or otherwise, including all assessments for schools, public betterments and general or local improvements, which are levied, assessed or imposed by any public authority or quasi-public authority, and which, if not paid, will become a lien, on the Mortgaged Properties. 17 "Term Loan" means the Initial Term Loan and any Future Term Loan made by Lender to the Borrowers on a joint and several basis pursuant to the terms of this Agreement. "Term Note" means the promissory note dated January 31, 2000 issued by the Borrowers on a joint and several basis to the Lender to evidence the Borrowers' obligation to repay the Term Loan, as the same may be amended, supplemented or modified from time to time. "Texas Partnership" means Castle Bluff Fund XII Associates L.P. and its successors and assigns. "Tie-In Endorsement" means an endorsement to a Title Insurance Policy which contains substantially the same coverages, and is subject to substantially the same or fewer exceptions (or such other exceptions as the Lender may approve), as the form attached as Exhibit E to this Agreement. "Title Company" means Lawyers Title Insurance Company or such other nationally recognized title insurance company meeting the requirements of the DUS Guide and which Lender may reasonably approve. "Title Insurance Policies" means the mortgagee's policies of title insurance issued by the Title Company from time to time relating to each of the Security Instruments, conforming to the requirements of Section 111 of the DUS Guide, together with such endorsements, coinsurance, reinsurance and direct access agreements with respect to such policies as the Lender may, from time to time, consider necessary or appropriate, whether or not required by the DUS Guide including Tie-In Endorsements, if available, and with a limit of liability under the policy (subject to the limitations contained in Sections 6(a)(i) and 6(a)(iii) of the Stipulations and Conditions of the policy) satisfactory to Lender. "Transfer" means (A) a sale, conveyance, assignment, grant, lease, transfer or other disposition (whether voluntary, involuntary or by operation of law); (B) the granting, creating or attachment of a lien, encumbrance or security interest (whether voluntary, involuntary or by operation of law); (C) the issuance or other creation of an ownership interest in a legal entity, including a partnership interest, interest in a limited liability company or corporate stock; (D) the issuance or other creation of any rights to participate in the revenues, income or profits of a person or a legal entity; (E) the issuance or the creation of any options, warrants or other securities that are convertible or exchangeable into ownership interests in a legal entity or rights to participate in the revenues, income or profits of a person or a legal entity; (F) the withdrawal, retirement, removal or involuntary resignation of a partner in a partnership or a member or manager in a limited liability company; or (G) the merger, dissolution, liquidation, or consolidation of a legal entity. For purposes of determining whether a Transfer of an interest has occurred, a person or entity shall be deemed to have effected or suffered to occur a Transfer of any such interest if such interest is or becomes subject to a pledge, 18 lien, or other security interest described in clause (B) above (regardless of whether or not such pledge is subsequently enforced or foreclosed by the pledgee or holder of such lien or other security interest) and, in the case of the issuance of any options or convertible or exchangeable securities described in clause (E) above, there shall be given effect to the exercise, conversion or exchange of such securities. "Transfer" does not include (i) a conveyance of a Mortgaged Property at a judicial or non-judicial foreclosure sale under this Instrument or (ii) a Mortgaged Property becoming part of a bankruptcy estate by operation of law under the United States Bankruptcy Code. For purposes of defining the term "Transfer," the term "partnership" shall mean a general partnership, a limited partnership, a joint venture and a limited liability partnership, and the term "partner" shall mean a general partner, a limited partner and a joint venturer. The term "suffer to occur" as used herein is intended to mean that, if any of the events or circumstances referred to herein occur, any Borrower will be deemed to have suffered those events or circumstances to occur, even if such Borrower was powerless to prevent those events or circumstances. "Warrantors" means the Authorized Representatives and members of Senior Management. ARTICLE II THE TERM LOAN SECTION 2.01 Term Loan Commitment. The Lender agrees, subject to the terms and conditions of this Agreement, to make the Term Loan to the Borrowers in a principal amount of up to the Maximum Term Loan Amount. The Term Loan shall bear interest at the interest rate or interest rates stated in the Note. The Term Loan shall be made in a single advance or in a number of advances pursuant to the terms and conditions of this Agreement. The Term Loan shall be evidenced by the Term Note. Repayment of the Term Loan shall be made in accordance with the terms of the Term Note and with the terms of this Agreement. In the event the full amount of the Term Loan is not advanced by Lender to the Borrowers by May 1, 2000, the obligation of the Lender to advance any remaining amount of the Term Loan shall terminate. SECTION 2.02 Borrowing Agency Provisions. (a) Each Borrower hereby irrevocably designates the Borrowing Agent to be its agent and in such capacity to receive all Term Loan proceeds, receive all notices on behalf of the Borrowers under this Agreement, make all requests under this Agreement, and execute, deliver and receive all instruments, certificates, requests, documents, writings and further assurances now or hereafter required hereunder, on behalf of such Borrower or Borrowers, and hereby authorizes the Lender to pay over all loan proceeds hereunder in accordance with the request of the Borrowing Agent. (b) The handling of this credit facility as a co-borrowing facility with a borrowing agent in the manner set forth in this Agreement is solely as an accommodation to 19 Borrowers and at their request. Neither the Lender nor Fannie Mae shall incur liability to Borrowers as a result thereof. To induce Lender and Fannie Mae to do so and in consideration thereof, each Borrower hereby indemnifies the Lender and Fannie Mae and holds Lender and Fannie Mae harmless from and against any and all liabilities, expenses, losses, damages and claims of damage or injury asserted against Lender or Fannie Mae by any Person arising from or incurred by reason of the handling of the financing arrangements of the Borrowers as provided herein, reliance by Lender or Fannie Mae on any request or instruction from Borrowing Agent or any other action taken by the Lender or Fannie Mae with respect to this Section 2.02 except due to willful misconduct or gross (not mere) negligence by the indemnified party. SECTION 2.03 Disbursement of Term Loan. Subject to the satisfaction of the Conditions to Closing, the Lender shall make the proceeds of the Initial Term Loan available to the Borrowers on the Initial Closing Date, or on such other Business Day as agreed upon by the Borrowing Agent and the Lender, by wire transfer of immediately available funds to an account or such accounts designated in writing by the Borrowing Agent. SECTION 2.04 Payment of Principal and Interest. Principal and interest shall be paid and applied as set forth in the Term Note. The Borrowers shall be obligated to pay all late charges, a Default Rate of interest, the Prepayment Premium, loan charges and costs and expenses required to be paid under the Term Note. The Term Loan shall be subject to voluntary and involuntary prepayments as set forth in and subject to the conditions set forth in the Term Note including, without limitation, the requirement to pay the Prepayment Premium. SECTION 2.05 Joint and Several Obligations. Subject to the provisions of Section 14.10-A, all of the Borrowers shall have joint and several liability for all Obligations. ARTICLE III CONDITIONS TO CLOSING SECTION 3.01 Conditions to Closing. The obligation of the Lender to make the Initial Term Loan is subject to the following conditions precedent: (a) Payment of Expenses. The payment by the Borrowers of the Lender's fees and expenses payable in accordance with this Agreement for which the Lender has presented an invoice on or before the Closing Date. (b) No Material Adverse Change. There has been no material adverse change in the financial condition, business or prospects of any Borrower or in the physical condition (including as the result of any casualty), operating performance or value of any of the Mortgaged Properties since the date of application to Lender. (c) No Default. There shall exist no Event of Default or Potential Event of Default on the Closing Date. 20 (d) Representations and Warranties. All representations and warranties made by each Borrower in the Loan Documents shall be true and correct in all material respects on the Closing Date with the same force and effect as if such representations and warranties had been made on and as of the Closing Date. (e) No Condemnation or Casualty. There shall not be pending or threatened any condemnation or other taking, whether direct or indirect, against any Mortgaged Property, and there shall not have occurred any casualty to any improvements located on any Mortgaged Property. (f) Delivery of Certificate. The Borrowers shall deliver a Compliance Certificate to Lender. (g) Title Company Deliveries. The delivery to the Title Company, for filing and/or recording in all applicable jurisdictions, of all applicable Loan Documents required by the Lender, including duly executed and delivered original copies of the Security Instruments covering the Mortgaged Properties and UCC-1 Financing Statements covering the portion of the Collateral comprised of personal property, and other appropriate instruments, in form and substance satisfactory to the Lender and in form proper for recordation, as may be necessary in the opinion of the Lender to perfect the Liens created by the applicable Security Instruments and any other Loan Documents creating a Lien in favor of the Lender, and the payment of all taxes, fees and other charges payable in connection with such execution, delivery, recording and filing; (h) Loan Documents. The receipt by the Lender of fully executed original copies of each Loan Document duly executed and delivered by the parties thereto, each of which shall be in full force and effect. (i) Opinion. The receipt by the Lender of favorable opinions of counsel to the Borrowers and any Key Principal, as to the due organization and qualification of the Borrower and Key Principal, the due authorization, execution, delivery and enforceability of each Loan Document executed in connection with the extension of the Term Loan, and such other matters as the Lender may require. (j) UCC Financing Statements. The completion and delivery to the Title Company of UCC Financing Statements relating to, without limitation, each Security Instrument. (k) Organizational Documents of the Borrowers and their respective General Partners. The receipt by the Lender of: (i) a copy, certified to be accurate and complete by an authorized officer of the General Partner of each Borrower, of the document, authorizing such General Partner, in its capacity as General Partner of the respective Borrower, to execute, deliver and perform the Loan Documents, and in its corporate capacity to execute, deliver and perform the Loan Documents to which the respective Borrower and/or the General 21 Partner are parties and other matters contemplated thereby, and of all other documents evidencing any other necessary action (which certification shall state that such approvals are in full force and effect on the Closing Date); (ii) copies, certified to be accurate and complete by an authorized officer of a General Partner acting on behalf of the respective Borrower, of each General Partner's organizational documents and any amendments thereto (which certification shall state that such documents, as amended, are in full force and effect on the Closing Date), together with Certificates of Good Standing issued by the Secretary of State of their respective states of organization and evidence of its good standing and that it is qualified to do business in each jurisdiction in which such good standing and/or qualification is necessary to the conduct of its business and where the failure to be so qualified would materially adversely affect the validity or ability of the respective Borrower to perform its obligations under this Agreement and the other Loan Documents; (iii) copies, certified to be accurate and complete by an authorized officer of the General Partner of each Borrower, of the certificate of limited partnership and Partnership Agreement of the respective Borrower and any amendments thereto (which certification shall state that such documents, as amended, are in full force and effect on the Closing Date), together with Certificates of Good Standing issued by the Secretary of State of their respective states of organizations and Certificates of Authority to Do Business from each State in which Mortgaged Property is located and in which such foreign qualification is necessary; (iv) copies, certified to be accurate and complete by an authorized officer of the General Partner of each Borrower, of all consents, licenses and approvals necessary for the respective Borrower to enter into the Loan Documents and the transactions contemplated by this Agreement and the other Loan Documents. (l) Organizational Documents of the Key Principals and the General Partner of each Key Principal. The receipt by the Lender of: (i) a copy, certified to be accurate and complete by an authorized officer of the general partner of each Key Principal, of each document, authorizing each general partner, in its capacity as general partner of the respective Key Principal, to execute, deliver and perform the Loan Documents to which such Key Principals are a party, and in its corporate capacity to execute, deliver and perform the Loan Documents to which such Key Principals are a party, and other matters contemplated thereby, and of all other documents evidencing any other necessary action (which certification shall state that such approvals are in full force and effect on the Closing Date); 22 (ii) copies, certified to be accurate and complete by an authorized officer the general partner of each Key Principal acting on behalf of the respective Key Principal, of each such general partner's organizational documents and any amendments thereto (which certification shall state that such documents, as amended, are in full force and effect on the Closing Date), together with Certificates of Good Standing issued by the Secretary of State of their respective states of organization and evidence of its good standing and that it is qualified to do business in each jurisdiction in which Mortgaged Property is located and in which the failure to be so qualified would materially adversely affect the validity or ability of each Key Principal to perform its obligations under this Agreement and the other Loan Documents; (iii) copies, certified to be accurate and complete by an authorized officer of the general partner of each respective Key Principal, of the certificate of limited partnership and Partnership Agreement of each respective Key Principal and any amendments thereto (which certification shall state that such documents, as amended, are in full force and effect on the Closing Date), together with Certificates of Good Standing issued by the Secretary of State of Delaware; (iv) copies, certified to be accurate and complete by an authorized officer of the general partner of each Key Principal, of all consents, licenses and approvals necessary for each Key Principal to enter into the Loan Documents to which it is a party and the transactions contemplated by this Agreement and the other Loan Documents. (m) Miscellaneous. Each Borrower shall deliver to Lender the Contribution Agreement and such other consents, documents, certificates, closing statements and other items as Lender may require. SECTION 3.02 Delivery of Property-Related Documents. It shall be a condition precedent to the funding of the Initial Term Loan that the Lender receive each of the following, each dated as of the Closing Date, in form and substance satisfactory to the Lender in all respects: (a) A favorable opinion of local counsel to the Borrowers as to the enforceability of the Security Instrument, and any other Loan Documents governed by local law, executed in connection with the Request. (b) A commitment for the Title Insurance Policy applicable to each Initial Mortgaged Property and a pro forma Title Insurance Policy based on such commitment. (c) A certificate of insurance and Environmental Report applicable to each Initial Mortgaged Property. (d) The Survey applicable to each Initial Mortgaged Property. 23 (e) Evidence satisfactory to the Lender of compliance of each Initial Mortgaged Property with property laws as required by Sections 205 and 206 of Part III of the DUS Guide. (f) An Appraisal of each Initial Mortgaged Property. (g) A Replacement Reserve Agreement, providing for the establishment of a replacement reserve account, to be pledged to the Lender, in which the owner shall (unless waived by the Lender) periodically deposit amounts for replacements for improvements at the Mortgaged Property and as additional security for the Borrowers' obligations under the Loan Documents. (h) A Completion/Repair and Security Agreement, the Special Completion/Repair and Security Agreement and any other required Collateral Agreement, on the standard form required by the DUS Guide. (i) An Assignment of Management Agreement, on the standard form required by the DUS Guide. (j) An Assignment of Leases and Rents, if the Lender determines one to be necessary or desirable, provided that the provisions of any such assignment shall be substantively identical to those in the Security Instrument covering the Collateral, with such modifications as may be necessitated by applicable state or local law. ARTICLE III-A FUTURE ADDITIONAL MORTGAGED PROPERTY TERM LOANS SECTION 3.01-A Future Additional Mortgaged Property Term Loans. In order to obtain a Future Additional Mortgaged Property Term Loan, the Borrowers may from time to time deliver to the Lender each of (i) a written request for a Future Additional Mortgaged Property Term Loan ("Future Additional Mortgaged Property Term Loan Request") in the form attached as Exhibit F to this Agreement, (ii) a written request for adding Collateral as set forth in Section 3.03-A ("Collateral Addition Request"), and (iii) the underwriting documentation required to be delivered by the Borrowers to the Lender pursuant to Section 3.03-A(c). Each Future Additional Mortgaged Property Term Loan Request shall be accompanied by a designation of the principal amount of the Future Additional Mortgaged Property Term Loan. Each Future Additional Mortgaged Property Term Loan shall mature on the Maturity Date, have a yield maintenance period and yield maintenance premium equal to the yield maintenance period and yield maintenance premium of the Initial Term Loan and have an amortization period consistent with the amortization period set forth in Exhibit B. Each Future Additional Mortgaged Property Term Loan shall bear interest at a rate per annum equal to the Interest Rate as determined pursuant to the terms of Section 3.02-A. If all conditions contained in Sections 3.02-A, 3.03-A and 3.04-A 24 are satisfied, the Lender shall make the requested Future Additional Mortgaged Property Term Loan, at a closing to be held at offices designated by the Lender on a Closing Date selected by the Lender, which date shall not be more than five (5) Business Days after the Borrowing Agent's receipt of the Rate Confirmation Form, as set forth in Section 3.02-A(c) (or on such other date to which the Borrowers and the Lender may agree). SECTION 3.02-A Interest on Future Terms Loans. Provided that the Closing Date for a Future Additional Mortgaged Property Term Loan is on or prior to March 14, 2000, Borrower will have the right to obtain such Future Additional Mortgaged Property Term Loan at the same interest rate applicable to the Initial Term Loan pursuant to the terms and conditions of the Addendum to Rate Lock Agreement dated as of January 31, 2000 among the Borrowers and Lender. Otherwise, the interest rate for each Future Additional Mortgaged Property Term Loan shall be set in accordance with the following procedures: (a) Rate Setting. If the Borrower satisfies all of the conditions set forth in Section 3.03-A and Section 3.04-A, then, the Borrowers may submit to the Lender a completed and executed document in the form attached as Exhibit G to this Agreement ("Interest Rate Lock Agreement"), together with the Rate Lock Deposit, before 1:00 p.m. Washington, D.C. time on any Business Day. (b) Rate Confirmation. Within one (1) Business Day after receipt of the Rate Lock Deposit and completed and executed Interest Rate Lock Agreement, the Lender shall solicit bids from institutional investors selected by the Lender based on information in the Interest Rate Lock Agreement, and provided the actual Interest Rate on the Future Additional Mortgaged Property Term Loan would be at or below the Maximum Rate, shall obtain a commitment ("MBS Commitment") for the purchase of Fannie Mae MBS having the bid terms described in the Interest Rate Lock Agreement, and shall immediately deliver to the Borrowing Agent by facsimile transmission a completed document in the form of Exhibit H ("Rate Confirmation Form"). (c) Rate Lock Deposit. In the event that the Lender obtains an MBS Commitment and the Lender fails to fulfill the MBS Commitment because the Future Additional Mortgaged Property Term Loan is not made, the Lender shall retain the Rate Lock Deposit as liquidated damages, as set forth in the Interest Rate Lock Agreement. SECTION 3.03-A Additions of Collateral. The procedure for adding Collateral set forth in this Section 3.03-A shall apply to all additions of Collateral in connection with a Future Additional Mortgaged Property Term Loan requested by the Borrowers pursuant to this Agreement. Notwithstanding anything contained herein, Borrower may not add the properties known as Harbor Club I or Harbor Club III, unless such properties are added pursuant to the same Collateral Addition Request. (a) Request. The Borrowers shall deliver a Collateral Addition Request to the Lender, in the form attached as Exhibit I to this Agreement, to add one or more Multifamily Residential Properties to the Collateral Pool. In the event the Request is made prior to 25 February 10, 2000, the Request shall be accompanied by a certificate executed by an Authorized Representative stating that there has been no material adverse change in the information shown on the most recent Rent Roll and Operating Statement relating to the Additional Mortgaged Property from the date of the Rent Roll and Operating Statement to the date of the Request. In the event the Request is made after February 10, 2000 but prior to March 15, 2000, the Request shall be accompanied by a current operating statement and current Rent Roll with respect to each proposed Additional Mortgaged Property. In the event the request is made on or after March 15, 2000, each Collateral Addition Request shall be accompanied by the information required in the prior sentence and the following: (i) pro forma balance sheets for the Delaware Borrower and (ii) the 1999 year-end balance sheet of the Key Principal, if available or, if not available, a certificate from an Authorized Representative to the effect that the Key Principal has not breached its Net Worth covenant set forth in Section 5 of the Key Principal Guaranty. (b) Additional Information. The Borrowers shall promptly deliver to the Lender any additional information concerning the proposed Additional Mortgaged Property that the Lender may from time to time reasonably request. (c) Underwriting. If the respective Borrower owns or is about to acquire any Additional Mortgaged Property and delivers to the Lender a Collateral Addition Request, together with the underwriting documentation required pursuant to Section 3.03-A(a), on or before March 15, 2000, the Lender shall determine the amount of the proposed Future Additional Mortgaged Property Term Loan based on the Lender's evaluation of the information provided pursuant to Section 3.03-A(a) in accordance with the DUS Underwriting Requirements. In no event shall the amount of any Future Additional Mortgaged Property Term Loan allocated to a proposed Additional Mortgaged Property result in a debt service coverage ratio of below 1.25:1 or a loan to value ratio of above 80%, in each case calculated in accordance with DUS Underwriting Requirements. SECTION 3.04-A Conditions Precedent to Future Additional Mortgaged Property Term Loans. The obligation of the Lender to make a requested Future Additional Mortgaged Property Term Loan is subject to the following conditions precedent: (a) The receipt by the Lender of a Future Additional Mortgaged Property Term Loan Request; (b) The receipt by the Lender of a Collateral Addition Request, together with the underwriting documentation delivered pursuant to Section 3.03-A(c); (c) The receipt by the Lender of an executed Interest Rate Lock Agreement, together with the Rate Lock Deposit defined therein; (d) The approval by the Lender of the proposed Additional Mortgaged Properties; (e) The amount of the Future Additional Mortgaged Property Term Loan shall not exceed the amount by which (i) the sum of the principal amount of the Initial Term Loan and the 26 principal amount of any previously advanced Future Additional Mortgaged Property Term Loan is less than (ii) the Maximum Term Loan Amount. (f) If required by the Lender, amendments to the Security Instruments, reflecting the addition of the Additional Mortgaged Property to the Collateral Pool, and the receipt by the Lender of an endorsement to each Title Insurance Policy applicable to each Mortgaged Property, amending the effective date of the Title Insurance Policy to the Closing Date of the proposed Future Additional Mortgaged Property Term Loan, and showing no additional exceptions to coverage other than the exceptions shown on the Initial Closing Date and other exceptions approved by the Lender; (g) The receipt of a commitment for the Title Insurance Policy applicable to each Additional Mortgaged Property and a pro forma Title Insurance Policy based on such commitment including a Future Additional Mortgaged Property Term Loan and Rate Adjustment Endorsements in the forms of Exhibit L and a Tie-In Endorsement; (h) If any Title Insurance Policy for any Additional Mortgaged Property contains a Tie-In Endorsement, an endorsement to each other Title Insurance Policy containing a Tie-In Endorsement, adding a reference to the Additional Mortgaged Property; (i) The receipt by the Lender of a Future Term Loan origination fee equal to 1/2 of 1% of the principal amount of the Future Term Loan and all legal fees and expenses payable by the Borrower pursuant to Section 10.03(b); (j) The receipt by the Lender of an Organizational Certificate; (k) The receipt by the Lender of the deposit required under the Replacement Reserve Agreement; (l) The receipt by the Lender of the deposit required under the Completion/Repair and Security Agreement and the deposit required under any Special Completion Repair and Security Agreement; (m) The satisfaction of all Conditions to Closing set forth in Section 3.01(a), (b), (c), (f), (g), (h) and (j) and the satisfaction of all the Conditions set forth in Section 3.02 (as if Section 3.02 referred to the Additional Mortgaged Properties being added to the Collateral Pool instead of the Initial Mortgaged Properties) except for the conditions set forth in Sections 3.02(b), (e) and (h); (n) There shall not be pending or threatened any condemnation or other taking, whether direct or indirect, against any Mortgaged Property, and there shall not have occurred any casualty to any improvements located on any Mortgaged Property, which in the case of any such condemnation or taking or casualty would have or may reasonably be expected to have a Material Adverse Effect - Portfolio Wide; 27 (o) There has been no material adverse change in the financial condition, business or prospects of any Borrower or in the physical condition (including as the result of any casualty) operating performance or value of any of the Mortgaged Properties since the Initial Closing Date which would have or could reasonably be expected to have a Material Adverse Effect - Portfolio Wide; (p) The representations and warranties set forth in Section 6.01(f), (h), (l), (m), (n), (p) and (q) and in Section 6.02 shall be true and correct on the Closing Date with the same force and effect as if such representations and warranties had been made on or as of the Closing Date (except that such Sections shall be deemed to refer only to matters relating to the Additional Mortgaged Properties being added to the Collateral Pool); (q) The representations and warranties set forth in Section 6.01(b), (c), (d), (e), (g) shall be true and correct on the Closing Date with the same force and effect as if such representations and warranties had been made on and as of the Closing Date; (r) Receipt by Lender of a lien search by Title Company relating to all the Mortgaged Properties showing no new liens, encumbrances or other matters adversely affecting title since the Initial Closing Date; (s) Receipt by Lender of a T-3 endorsement to the title insurance policy relating to the Mortgaged Properties located in Texas insuring that there are no new liens, encumbrances or other matters adversely affecting title since the date of the issuance of such title insurance policies; and (t) The delivery of a written acknowledgment by Borrower of the portion of the Term Loan allocated to each Mortgaged Property, as reasonably determined by Lender and reflected in a revised Exhibit B prepared by Lender. ARTICLE III - B FUTURE EXCESS PROCEEDS TERM LOAN SECTION 3.01-B Future Excess Proceeds Term Loan. In order to obtain a Future Excess Proceeds Term Loan the Borrowers must deliver to the Lender within forty-five (45) days of the Initial Closing Date, current Rent Rolls and operating statements for each of the Mortgaged Properties, each certified by an Authorized Representative. In addition, the Borrowers shall promptly deliver to the Lender any additional information concerning the Mortgaged Properties that the Lender may from time to time reasonably request. Any Future Excess Proceeds Term Loan shall mature on the Maturity Date, have a yield maintenance period and yield maintenance premium equal to the yield maintenance period and yield maintenance premium of the Initial Term Loan and have an amortization period consistent with the amortization period set forth in Exhibit B. Each Future Excess Proceeds Term Loan shall bear interest at a rate per annum equal to the Interest Rate as determined pursuant to the terms of Section 3.03-B. If all conditions 28 contained in Sections 3.01-B, 3.02-B, 3.03-B and 3.04-B are satisfied, the Lender shall make the Future Excess Proceeds Term Loan, at a closing to be held at offices designed by the Lender on a Closing Date selected by the Lender, which date shall not be more than five (5) Business Days after the Borrowing Agent's receipt of the Rate Confirmation Form or on such other date on which the Borrower and Lender may agree but in any event no later than May 1, 2000. Section 3.02-B Determination of Amount of Future Excess Proceeds Term Loan. In the underwriting process, Lender shall rely on the cost allocation and underwriting values used in the underwriting of the Initial Term Loan. Based on the information provided by Borrower to Lender pursuant to the terms of Section 3.01-B, Lender shall take the following steps to determine the amount, if any, of the Future Excess Proceeds Term Loan. 1. Lender shall evaluate each Mortgaged Property on a stand alone basis and shall determine the maximum amount of the Term Loan which can be allocated to each Mortgaged Property resulting from a debt service coverage ratio of not less than 1.25:1 and a loan to value ratio of not greater than 80%, in each case calculated in accordance with DUS Underwriting Requirements (in relation to each Mortgaged Property, the "Post-Closing Allocation Amount" and in relation to all Mortgaged Properties, the "Post-Closing Loan Amount"). 2. Lender shall compare the original principal amount of the Initial Term Loan (the "Closing Loan Amount") allocated to each Mortgaged Property (the "Closing Allocation Amount") with the Post-Closing Allocation Amount relating to each Mortgaged Property. Lender shall calculate for each Mortgaged Property the amount, if any, by which the Closing Allocation Amount exceeds the Post-Closing Allocation Amount (such amount, if any, in relation to each Mortgaged Property, the "Allocation Deficit" and in relation to all the Mortgaged Properties the "Aggregate Allocation Deficit"). If the Post-Closing Loan Amount minus the Aggregate Allocation Deficit exceeds the Closing Loan Amount (such excess, the "Aggregate Surplus"), then, pursuant to the terms and conditions of this Article III-B, Lender shall advance a Future Excess Proceeds Term Loan. Such Future Excess Proceeds Term Loan shall be an amount which approximately equals the Aggregate Surplus. The actual principal amount of the Future Excess Proceeds Term Loan will be determined at the time the interest rate is determined in accordance with the provisions of Section 3.03-B below and in accordance with DUS Underwriting Requirements. Lender shall allocate the principal amount of the Future Excess Proceeds Term Loan to each Mortgaged Property. SECTION 3.03-B Interest on Future Excess Proceeds Term Loans. The interest rate for each Future Excess Proceeds Term Loan shall be set in accordance with the following procedures: (a) Rate Setting. If the Borrower satisfies all of the conditions set forth in Section 3.01-B, Section 3.02-B and 3.04-B then, the Borrowers may submit to the Lender a complete and executed document in the form attached as Exhibit G (the Interest Rate Lock Agreement), together with the Rate Lock Deposit, before 1:00 p.m. Washington, D.C. time on any Business Day prior to April 24, 2000. (b) Rate Confirmation. Within one (1) Business Day after receipt of the Rate 29 Lock Deposit and completed and executed Interest Rate Lock Agreement, the Lender shall solicit bids from institutional investors selected by the Lender based on information in the Interest Rate Lock Agreement, and provided the actual Interest Rate on the Future Excess Proceeds Term Loan would be at or below the Maximum Rate, shall obtain a commitment ("MBS Commitment") for the purchase of Fannie Mae MBS having the bid terms described in the Interest Rate Lock Agreement, and shall immediately deliver to the Borrowing Agent by facsimile transmission a completed document in the form of Exhibit H ("Rate Confirmation Form"). (c) Rate Lock Deposit. In the event that the Lender obtains an MBS Commitment and the Lender fails to fulfill the MBS Commitment because the Future Excess Proceeds Term Loan is not made the Lender shall retain the Rate Lock Deposit as liquidated damages, as set forth in the Interest Rate Lock Agreement. SECTION 3.04-B Conditions Precedent to Future Excess Proceeds Term Loan. The obligation of the Lender to make a requested Future Excess Proceeds Term Loan is also subject to the following conditions precedent: (a) The receipt by the Lender of all the underwriting documentation required by Section 3.01-B; (b) The receipt by the Lender of an executed Interest Rate Lock Agreement, together with the Rate Lock Deposit defined therein; (c) The amount of the Future Excess Proceeds Term Loan shall not exceed the amount by which the sum of the principal amount of the Initial Term Loan and the principal amount of any previously advanced Future Term Loan is less than the Maximum Term Loan Amount; (d) The receipt by the Lender of a Future Term Loan origination fee equal to 1/2 of 1% of the principal amount of the Future Term Loan and all legal fees and expenses payable by the Borrower pursuant to Section 10.03(b); (e) The receipt by the Lender of an Organizational Certificate; (f) The satisfaction of all Conditions to Closing set forth in Section 3.01(a), (b), (c), (d), (f) and (h) and the satisfaction of all the Conditions set forth in Section 3.02, except for the conditions set forth in Section 3.02(b), (e) and (h); (g) There shall not be pending or threatened any condemnation or other taking, whether direct or indirect, against any Mortgaged Property, and there shall not have occurred any casualty to any improvements located on any Mortgaged Property, which in the case of any such condemnation or taking or casualty would have or may reasonably be expected to have a Material Adverse Effect - Portfolio Wide; 30 (h) There has been no material adverse change in the financial condition, business or prospects of any Borrower or in the physical condition (including as the result of any casualty) operating performance or value of any of the Mortgaged Properties since the Initial Closing Date which would have or could reasonably be expected to have a Material Adverse Effect - Portfolio Wide; (i) Receipt by Lender of a lien search by Title Company relating to all the Mortgaged Properties showing no new liens, encumbrances or other matters adversely affecting title since the Initial Closing Date; (j) Receipt by Lender of a T-3 endorsement to the title insurance policy relating to the Mortgaged Properties located in Texas insuring that there are no new liens, encumbrances or other matters adversely affecting title since the date of the issuance of such title insurance policy; and (k) The delivery of a written acknowledgment by Borrower of the portion of the Term Loan allocated to each Mortgaged Property, as reasonably determined by Lender and reflected in a revised Exhibit B prepared by Lender. ARTICLE IV RELEASES OF COLLATERAL SECTION 4.01 Right to Obtain Releases of Collateral. Subject to the terms and conditions of this Article, the Borrowers shall have the right to obtain a release of Collateral from the Collateral Pool. SECTION 4.02 Procedure for Obtaining Releases of Collateral. (a) Request. In order to obtain a release of Collateral from the Collateral Pool, the Borrowing Agent may deliver a written request for the release of Collateral from the Collateral Pool ("Collateral Release Request") to the Lender, in the form attached as Exhibit M to this Agreement. The Collateral Release Request shall not be effective unless it is accompanied by the name, address and location of the Mortgaged Property to be released from the Collateral Pool ("Collateral Release Property"). (b) Release Closing. If all conditions contained in Section 4.03 are satisfied, the Lender shall cause the Collateral Release Property to be released from the Collateral Pool, at a closing to be held at offices designated by the Lender on a Release Closing Date selected by the Lender, and Lender shall use its commercially reasonable efforts to cause such Release Closing Date to occur within 14 days and in any event will cause it to occur no later than 30 days after the Lender's receipt of the Collateral Release Request (or on such other date to which the Borrowing Agent and the Lender may agree) by executing and delivering, and causing all applicable parties to execute and deliver, all at the sole cost and expense of the Borrowers, instruments, in the form customarily used by the Lender for releases in the jurisdiction governing 31 the perfection of the security interest being released, releasing the applicable Security Instrument as a Lien on the Collateral Release Property, and UCC-3 Termination Statements terminating the UCC-1 Financing Statements perfecting a Lien on the portion of the Collateral Release Property comprised of personal property and such other documents and instruments as the Borrowing Agent may reasonably request evidencing the release of the applicable Collateral from any lien securing the Obligations (including a termination of any restriction on the use of any accounts relating to the Collateral Release Property) and the release and return to the Borrowing Agent of any and all escrowed amounts relating thereto. The instruments referred to in the preceding sentence are referred to in this Article as the "Collateral Release Documents." (c) Release Price. The "Release Price" for each Mortgaged Property means 100% of the Allocable Facility Amount for the Mortgaged Property to be released. In addition to the Release Price, the Borrower shall pay to the Lender all other amounts due under the Note including interest on the principal amount of the Note being prepaid. If the Release Closing Date occurs on a date other than the last Business Day of a calendar month, the Borrowers shall pay to Lender an amount equal to the interest on the amount of the principal amount of the Note being prepaid for the entire month in which the Release Closing Date occurs. The Borrowers agree that any Release Price relating to the Mortgaged Properties known as Harbour Club I and Harbour Club III located in Belleville, Michigan must be paid on the same date, i.e., the release of one such Mortgaged Property from the Collateral Pool may only take place if the other such Mortgaged Property is simultaneously released. (d) Application of Release Price. The Release Price shall be treated and applied as an optional prepayment under the Note pursuant to Section 10 of the Note and may be paid only on the last Business Day of a calendar month. If the Release Closing Date occurs on a day other than the last Business Day of a calendar month, the Lender shall hold the payments as additional Collateral in an interest bearing account until the last Business Day of such month, at which time the Lender shall apply the amounts held by it (including interest earned thereon) to the amount of the prepayment of the Note. SECTION 4.03 Conditions Precedent to Release of Collateral Release Property from the Collateral. The obligation of the Lender to release a Collateral Release Property from the Collateral Pool by executing and delivering the Collateral Release Documents on the Release Closing Date is subject to the satisfaction of the following conditions precedent on or before the Release Closing Date: (a) Receipt by the Lender of the Release Price in accordance with Section 4.02; (b) Receipt by the Lender of all legal fees and expenses payable by the Borrowers in connection with the release pursuant to Section 10.03(b); (c) Receipt by the Lender on the Release Closing Date of one or more counterparts of each Collateral Release Document, dated as of the Release Closing Date, signed 32 by each of the parties (other than the Lender) who is a party to such Collateral Release Document; (d) If reasonably required by the Lender, amendments to the Note and the Security Instruments, reflecting the release of the Collateral Release Property from the Collateral Pool and, as to any Security Instrument so amended, the receipt by the Lender of an endorsement to the Title Insurance Policy insuring the Security Instrument, amending the effective date of the Title Insurance Policy to the Release Closing Date and showing no additional exceptions to coverage other than the exceptions shown on the Closing Date and other exceptions approved by the Lender; (e) If the Lender reasonably determines the Collateral Release Property to be one phase of a project, and one or more other phases of the project are Mortgaged Properties which will remain in the Collateral Pool ("Remaining Mortgaged Properties"), the Lender's determination that the Remaining Mortgaged Properties can be operated separately from the Collateral Release Property and any other phases of the project which are not Mortgaged Properties. In making this determination, the Lender shall evaluate whether the Remaining Mortgaged Properties comply with the terms of Sections 203 and 208 of the DUS Guide, which, as of the date of this Agreement, require, among other things, that a phase which constitutes collateral for a loan made in accordance with the terms of the DUS Guide (i) have adequate ingress and egress to existing public roadways, either by location of the phase on a dedicated, all-weather road or by access to such a road by means of a satisfactory easement, (ii) have access which is sufficiently attractive and direct from major thoroughfares to be conducive to continued good marketing, (iii) have a location which is not (A) inferior to other phases, (B) such that inadequate maintenance of other phases would have a significant negative impact on the phase, and (C) such that the phase is visible only after passing through the other phases of the project and (iv) comply with such other issues as are dictated by prudent practice. Lender agrees that this paragraph (e) only applies to Harbour Club I and Harbour Club III; (f) Receipt by the Lender of endorsements to the Tie-In Endorsements of the Title Insurance Policies, if deemed reasonably necessary by the Lender, to reflect the release; (g) Receipt by the Lender on the Release Closing Date of a writing, dated as of the Release Closing Date, signed by the Borrowers, in the form attached as Exhibit N to this Agreement, pursuant to which the Borrowers confirm that their obligations under the Loan Documents are not adversely affected by the release of the Collateral Release Property from the Collateral; (h) Payment by the Borrowers of the Prepayment Premium, if any; and (i) The satisfaction of all of the following conditions: (i) The payment by the Borrowers of the Lender's fees and expenses payable in accordance with this Agreement for which Lender has presented an invoice on or before the Release Closing Date; 33 (ii) There shall not be pending or threatened any condemnation or other taking, whether direct or indirect against any Mortgaged Property, and there shall not have occurred any casualty to any improvements located on any Mortgaged Property, which in the case of any such condemnation or taking or casualty would have or may reasonably be expected to have a Material Adverse Effect Portfolio Wide; (iii) The receipt by the Lender of the following, each dated as of the Release Closing Date, in form and substance satisfactory to the Lender in all respects: A) A Compliance Certificate; B) An Organizational Certificate; and C) Such other documents, instruments, approvals (and, if requested by the Lender, certified duplicates of executed copies thereof) and opinions as the Lender may reasonably request. (i) There shall exist no Event of Default or Potential Event of Default on the Release Closing Date and, after giving effect to the transaction requested in the Collateral Release Request, no Event of Default or Potential Event of Default shall have occurred provided that if a Potential Event of Default exists on the proposed Release Closing Date by virtue of a notice from Lender in accordance with Section 11.01(g) or in the event of the failure of any Borrower to comply with any Governmental Authority as set forth in Section 11.01(m) which Potential Event of Default in Lender's reasonable judgment (x) is with respect to a particular Mortgaged Property and (y) is being corrected by action instituted by the respective Borrower and is being pursued diligently and in good faith, then the existence of such Potential Event of Default shall not be a condition to such Collateral Release Request provided that Borrowers satisfy all other conditions set forth in this Section 4.03 and pledge and deposit with Lender an amount equal to the gross proceeds of the sale of the Collateral Release Property net of all third-party non-affiliate transaction costs minus the Release Price. Such deposit shall be held by Servicer in a custodial account pursuant to the DUS Guide and shall be (i) released to the Borrowing Agent if and when the Potential Event of Default is cured or (ii) if an Event of Default occurs, applied in Lender's discretion. In addition, if a Potential Event of Default has occurred that in the reasonable judgment of Lender is with respect to a particular Mortgaged Property, then the existence of such Potential Event of Default shall not be a condition to a Collateral Release Request for the release of such Collateral Release Property provided that the Borrowers satisfy all other conditions set forth in this Section 4.03. 34 ARTICLE V TRANSFERS OF THE MORTGAGED PROPERTY OR INTERESTS IN BORROWER SECTION 5.01 Transfers and Events that Constitute an Event of Default. Subject to the provisions of Section 5.02, the occurrence of any of the following events shall constitute an Event of Default under this Agreement and each Security Instrument: (1) a Transfer of all or any part of any Mortgaged Property or any interest in any Mortgaged Property (including, without limitation, any legal or equitable interest therein); or (2) a Transfer which results in any Borrower not being a GSG Controlled Entity; or (3) a Transfer which results in WXI/McN Realty, L.L.C. owning, directly or indirectly, less than 51% of the limited partnership interests in any Borrower which is a limited partnership or less than 51% of the general partnership interests in any Borrower which is a general partnership; or (4) a Transfer which results in WXI/MNL Real Estate L.L.C. (i) owning, directly or indirectly, less than 51% of the membership interests in WXI/McN Realty L.L.C. or (ii) no longer Controlling WXI/McN Realty L.L.C.; or (5) a Transfer which results in Whitehall XI (i) owning, directly or indirectly less than 51% of the membership interests in WXI/MNL Real Estate L.L.C. or (ii) no longer Controlling WXI/MNL Real Estate L.L.C.; or (6) a Transfer with respect to any Person who is at the time of reference a Key Principal which results in such Person not being a GSG Controlled Entity; or (7) a Transfer which results in any general partner of any Borrower not being a GSG Controlled Entity; or (8) a conversion of any Borrower or Whitehall from one type of legal entity into another type of legal entity, whether or not there is a Transfer, including without limitation, any transaction affecting any Borrower described in clause (G) of the definition of "Transfer". Lender shall not be required to demonstrate any actual impairment of its security or any increased risk of default in order to exercise any of its remedies with respect to an Event of 35 Default under this Section 5.01. SECTION 5.02 Exceptions to Events of Default. The occurrence of any of the following events shall not constitute an Event of Default under this Agreement or any Security Instrument, notwithstanding any provision of Section 5.01 to the contrary: (1) a Transfer to which Lender has consented pursuant to the provisions of Section 5.03; (2) a Transfer that occurs by devise, descent, or by operation of law upon the death of a natural person; (3) the grant of a leasehold interest in an individual dwelling unit for a term of two years or less not containing an option to purchase; (4) a Transfer of obsolete, worn out or no longer useful Personalty or Fixtures (as such terms are defined in the Security Instruments) in the normal course of any Borrower's maintenance or improvement with respect to the Mortgaged Properties in accordance with terms hereof and the Security Instruments; (5) the grant of an easement, if before the grant Lender determines that the easement will not materially affect the operation or value of the affected Mortgaged Property or Lender's interest in the Mortgaged Property, and the Borrowers pay to Lender, upon demand, all costs and expenses incurred by Lender in connection with reviewing Borrowers' request; (6) the creation of any Permitted Lien; (7) the release by Lender of any Mortgaged Property from the lien of a Security Instrument pursuant to Article IV of this Agreement; (8) conversion of Whitehall XI or Whitehall XII from one type of legal entity into another type of legal entity, or merger or consolidation of Whitehall XI or Whitehall XII with or into another legal entity, provided that (i) the surviving entity is a GSG Controlled Entity, (ii) the surviving entity satisfies the minimum net worth requirement applicable to it, if any such requirement is applicable at the time in question, pursuant to Section 5 of the Key Principal Guaranty executed by it, (iii) the surviving entity is bound by all of the terms and provisions of the Key Principal Guaranty executed by Whitehall XI and Whitehall XII and (iv) the Lender shall receive such documentation (including an opinion of counsel as to items (i) and (iii) above) as Lender shall reasonably require to confirm the foregoing; 36 SECTION 5.03 Procedure for Approval. Lender may, in its sole and absolute discretion, from time to time, consent to an event that would otherwise constitute an Event of Default under Sections 5.01 and 5.02, including, without limitation, a Transfer of a Controlling Interest in any Borrower, which would otherwise permit Lender to accelerate the indebtedness secured hereby or to exercise its remedies permitted under the Loan Documents including Section 43 of the Security Instruments. It is understood and agreed that Lender shall not consent to a Transfer constituting an assumption of the Term Loan in part or in whole. In the event the Borrowing Agent requests such a consent from the Lender, the Borrowers shall pay to Lender a $3,000 non-refundable application fee, and if such consent is granted, a fee equal to one percent (1%) of the sums secured by the applicable Security Instruments. In addition, the Borrowers shall be required to reimburse Lender and Loan Servicer (as defined in the Security Instruments) for all of Lender's and Loan Servicer's fees, costs and expenses, including, without limitation, reasonable legal fees and expenses, incurred in connection with considering such a request, and all other fees, costs and expenses incurred in connection with reviewing documentation required by Lender to analyze and evaluate all aspects of such Transfer, including without limitation, any Transfer of a Controlling Interest in any Borrower, to the extent such amounts exceed $3,000, irrespective of whether or not the request for consent is approved or denied by Lender in its discretion. SECTION 5.04 Certain Definitions. For purposes of this Section and this Agreement, the following terms shall have the meanings set forth below: (1) "Controlling Interest" shall mean, with respect to any entity, ownership interests in such entity that confer upon the legal or beneficial holder thereof Control of such entity. (2) "Whitehall XI" means Whitehall Street Real Estate Limited Partnership XI, a Delaware limited partnership or any entity resulting from the merger or consolidation of Whitehall permitted pursuant to Section 5.02(8). (3) "Whitehall XII" means Whitehall Street Real Estate Limited Partnership XII, a Delaware limited partnership or any entity resulting from the merger or consolidation of Whitehall permitted pursuant to Section 5.02(8). (4) "Whitehall" means Whitehall XI, or Whitehall XII, or both, as the context requires. (5) WXI/McN Realty L.L.C. means WXI/McN Realty L.L.C., a Delaware limited liability company. (6) WXI/MNL Real Estate, L.L.C. means WXI/MNL Real Estate L.L.C., a Delaware limited liability company. 37 (7) "GSG" means The Goldman Sachs Group, Inc., a Delaware corporation, or any successor thereto, including, without limitation, any Person who succeeds to substantially all of the business of The Goldman Sachs Group, Inc. (8) "GSG Controlled Entity" means a partnership, corporation, limited liability company, business trust or other business entity of which GSG has, directly or indirectly, Control. (9) "Control" (or any variation of such term) of one entity (the "controlled entity") by another (the "controlling entity") means, subject to clauses (a) and (b) below, that the controlling entity has the power, directly or indirectly, to direct or cause the direction of the management and policies of the controlled entity, whether through the ownership of voting securities, by contract, or otherwise. (a) Except in the case of determining "Control" over Whitehall as provided in subsection (b) below, a controlling entity shall be deemed not to have control of a controlled entity, unless the following circumstances also exist: (i) if the controlled entity is a corporation, the controlling entity owns more than 51% of the shares of the controlled entity's capital stock that have voting power to elect directors, including shares that have voting power by reason of the occurrence of one or more conditions or contingencies; (ii) if the controlled entity is a limited partnership, the controlling entity Controls (in accordance with the balance of this definition) the sole general partner or all of the general partners of the partnership; (iii) if the controlled entity is a general partnership or a joint venture, the controlling entity owns more than 51% of the partnership or joint venture interest in such entity; (iv) if the controlled entity is a limited liability company, the controlling entity owns more than 51% of the equity interests in the limited liability company and Controls (in accordance with the balance of this definition) a majority of the managers or members of the limited liability company, or (v) if the controlled entity is a business trust, the controlling entity owns more than 51% of the equity interests in the business trust and Controls (in accordance with the balance of this definition) a majority of the trustees of the business trust. (b) In the case of determining whether an entity has "Control" over Whitehall, "Control" means that the controlling entity has the sole power and authority, directly or indirectly, to direct or cause the direction of the management and policies of the controlled entity, whether through the ownership of voting securities, by contract, or 38 otherwise, without the need for any approval from any shareholder, member, partner or other owner of such controlled entity or any other person or entity, except for: (i) the rights of approval conferred on the Lender to the extent provided in the Loan Documents; (ii) rights conferred on a shareholder, member, partner or other owner (r) as matter of statutory, regulatory, decisional or common law; (s) to consent or withhold consent to a merger, consolidation, dissolution or liquidation; (t) to consent or withhold consent to a sale or other disposition of all or substantially all of the entity's assets; and (u) to consent or withhold consent to a fundamental change in investment policies. ARTICLE VI REPRESENTATIONS AND WARRANTIES SECTION 6.01 Representations and Warranties of the Borrowers. Each Borrower hereby represents and warrants to the Lender as follows: (a) Due Organization; Qualification. WXI/MCN Multifamily Real Estate Limited Partnership is a limited partnership duly organized, validly existing and in good standing under the laws of Delaware. Castle Bluff Fund XII Associates L.P. is a limited partnership duly organized, validly existing and in good standing under the laws of Texas. Brendon Way Fund XII Associates is a general partnership duly organized and validly existing under the laws of Indiana. Embarcadero Associates is a general partnership duly organized and validly existing under the laws of Georgia. Each Borrower is duly qualified to do business, and is in good standing, in each state in which any Mortgaged Property is located and in each other jurisdiction in which such qualification and/or standing is necessary to the conduct of its business and where the failure to be so qualified would adversely affect the validity of, the enforceability of, or the ability of the Borrower to perform its obligations under, this Agreement and the other Loan Documents. Each General Partner of each Borrower is a duly organized and validly existing limited liability company or limited partnership duly qualified to do business in and in good standing under the laws of its respective state of organization and in each other jurisdiction in which such qualification and/or standing is necessary to the conduct of its business and where the failure to be so qualified would adversely affect the validity, the enforceability, or the ability of any Borrower to perform its obligations under this Agreement and the other Loan Documents. The Partnership Agreement of each Borrower has been duly executed and delivered by each partner, is a legal and valid and binding agreement, enforceable in accordance with its terms, and is in full force and effect. Each Borrower has its principal place of business, principal office and office where it keeps its records at the notice address set forth for the Borrowing Agent in 39 Section 16.08 of this Agreement. The partners of each Borrower and the percentage of their ownership interests and/or capital accounts of such partners are as set forth in Schedule 2 attached hereto. (b) Power and Authority. Each Borrower has the requisite power and authority (i) to own its properties and to carry on its business as now conducted and as contemplated to be conducted in connection with the performance of the Obligations hereunder and under the other Loan Documents and (ii) to execute and deliver this Agreement and the other Loan Documents and to carry out the transactions contemplated by this Agreement and the other Loan Documents. (c) Due Authorization. The execution, delivery and performance of this Agreement and the other Loan Documents have been duly authorized by all necessary action and proceedings by or on behalf of each Borrower, and no further approvals or filings of any kind, including any approval of or filing with any Governmental Authority, are required by or on behalf of any Borrower as a condition to the valid execution, delivery and performance by such Borrower of this Agreement or any of the other Loan Documents. (d) Valid and Binding Obligations. This Agreement and the other Loan Documents have been duly authorized, executed and delivered by each Borrower and constitute the legal, valid and binding obligations of each Borrower, enforceable against each Borrower in accordance with their respective terms, except as such enforceability may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or similar laws or equitable principles affecting the enforcement of creditors' rights generally or by equitable principles or by the exercise of discretion by any court. (e) Non-contravention; No Liens. Neither the execution and delivery of this Agreement and the other Loan Documents, nor the fulfillment of or compliance with the terms and conditions of this Agreement and the other Loan Documents nor the performance of the Obligations: (1) does or will conflict with or result in any breach or violation of any Applicable Law enacted or issued by any Governmental Authority or other agency having jurisdiction over any Borrower, any of the Mortgaged Properties or any other portion of the Collateral or other assets of any Borrower or any judgment or order applicable to any Borrower or to which any Borrower, any of the Mortgaged Properties or other assets of any Borrower are subject; (2) does or will conflict with or result in any breach or violation of, or constitute a default under, any of the terms, conditions or provisions of any Borrower's Organizational Documents, any indenture, existing agreement or other instrument to which any Borrower is a party or to which any Borrower, any of the Mortgaged Properties or any other portion of the Collateral or other assets of any Borrower are subject; 40 (3) does or will result in or require the creation of any Lien on all or any portion of the Collateral or any of the Mortgaged Properties, except for the Permitted Liens; or (4) does or will require the consent or approval of any creditor of any Borrower, any Governmental Authority or any other Person except such consents or approvals which have already been obtained. (f) Pending Litigation or other Proceedings. Except as set forth on Schedule 3 attached hereto, there is no pending or, to the best knowledge of each Warrantor, threatened action, suit, proceeding or investigation, at law or in equity, before any court, board, body or official of any Governmental Authority or arbitrator against or affecting any Mortgaged Property or any other portion of the Collateral or other assets of any Borrower, which, if decided adversely to any Borrower, would have, or may reasonably be expected to have, a Material Adverse Effect. No Borrower is in default with respect to any order of any Governmental Authority. (g) Solvency. Neither any Borrower, any General Partner, nor any Key Principal is insolvent (within the meaning of any applicable federal or state law relating to bankruptcy or fraudulent transfers) and will not be rendered insolvent by the transactions contemplated by the provisions of this Agreement and the other Loan Documents. Taking into account the benefits to each Borrower arising pursuant to the Contribution Agreements, in connection with the execution and delivery of each Security Instrument and the other Loan Documents (and the delivery to, or for the benefit of, Lender of any collateral contemplated thereunder), and the incurrence by each Borrower of the Obligations: (i) each Borrower did not receive less than a reasonably equivalent value in exchange for such transfer or incurrence of the Obligations; and (ii) each Borrower (A) was solvent on the date that such transfer was made or such Obligations were incurred, and did not become insolvent as a result of such transfer or incurrence of the Obligations; (B) is not engaged in a business or a transaction, or is not about to engage in a business or a transaction, for which any property remaining with such Borrower is an unreasonably small capital; and (C) does not intend to incur, and does not believe that it will incur, debts that would be beyond such Borrower's ability to pay as such debts matured. 41 The present fair saleable value of each Borrower's assets is not less than the amount that will be required to pay each Borrower's probable liability on its existing debts (including the Obligations). There (i) is no pending or, to any Borrower's knowledge, threatened or contemplated, bankruptcy, reorganization, receivership, insolvency or like proceeding, whether voluntary or involuntary, affecting any Borrower, any General Partner, or any Key Principal or any Mortgaged Property and (ii) has been no assertion or exercise of jurisdiction over any Borrower, any General Partner or any Key Principal or any Mortgaged Property by any court empowered to exercise bankruptcy powers. Neither any Borrower, any General Partner, nor any Key Principal is currently the subject of any judgment unsatisfied of record or docketed in any court of the state in which any Mortgaged Property is located or in any court located in the United States. (h) No Contractual Defaults. There are no defaults by any Borrower or, to the knowledge of any Warrantor, by any other Person under any contract to which any Borrower is a party relating to any Mortgaged Property, including any management, rental, service, supply, security, maintenance or similar contract, other than defaults which do not have, and are not reasonably expected to have, a Material Adverse Effect. No Borrower nor, to the knowledge of any Warrantor, any other Person, has received notice or has any knowledge of any existing circumstances in respect of which it could receive any notice of default or breach in respect of any contracts affecting or concerning any Mortgaged Property other than defaults which do not have, and are not reasonably expected to have, a Material Adverse Effect. No event has occurred and is continuing, or would result from the execution of this Agreement, or any other transaction contemplated hereby, which constitutes a Potential Event of Default or an Event of Default. There are no Potential Events of Default or Events of Default. (i) Compliance with the Loan Documents. Each Borrower is in compliance with all provisions of the Loan Documents to which it is a party or by which it is bound. The representations and warranties made by each Borrower in the Loan Documents are true, complete and correct as of the Closing Date and do not contain any untrue statement of material fact or omit to state a material fact required to be stated therein or necessary in order to make the statements made therein, in light of the circumstances under which they were made, not misleading. (j) ERISA. Each Borrower is in compliance in all material respects with all applicable provisions of ERISA and has not incurred any liability to the PBGC for a Plan under Title IV of ERISA. None of the assets of any Borrower constitute plan assets (within the meaning of Department of Labor Regulation ss. 2510.3-101) of any employee benefit plan subject to Title I of ERISA. Neither any Borrower nor any member of such Borrower's Controlled Group is or ever has been obligated to contribute to any Multiemployer Plan. (k) Financial Information. The financial projections relating to each Borrower and delivered to the Lender on or prior to the date hereof, if any, were prepared on the basis of assumptions believed by the Warrantors, in good faith at the time of preparation, to be reasonable and each Borrower is not aware of any fact or information that would lead it to believe that such assumptions are incorrect or misleading in any material respect. The financial statements of each 42 Borrower which have been furnished to the Lender present fairly the financial condition of each Borrower, as of its date in accordance with GAAP, applied on a consistent basis, and since the date of the most recent of such financial statements no event has occurred which would have, or may reasonably be expected to have a Material Adverse Effect, and there has not been any material transaction entered into by each Borrower other than transactions in the ordinary course of business. No Borrower has material contingent obligations which are not disclosed in its most recent financial statements. No material adverse change in the financial condition of any General Partner or any Key Principal has occurred between the respective dates of the financial statements which were furnished to Lender relating to such entities and the date hereof. (l) Accuracy of Information. Each Borrower has disclosed to the Lender in writing any fact or circumstance known to the Warrantors concerning Mortgaged Property zoning/legal compliance, insurance coverage, access to public streets, availability of utilities, provision of service, existing matters of title and survey, leases, and current property taxes/assessments, which has had, or in the reasonable judgment of such Borrower could reasonably be expected to have, a Material Adverse Effect. All information, reports and other papers and data furnished by each Borrower, any General Partner or any Key Principal to the Lender were, at the time the same were so furnished, complete and correct in all material respects, or based on good faith estimates on the date as of which such information is stated or certified. Each Borrower has disclosed to the Lender in writing any and all facts known to the Warrantors that have had, or in the reasonable judgment of any Borrower could reasonably be expected to have a Material Adverse Effect. In response to each inquiry to each Borrower relating to any Borrower, each Mortgaged Property and the transactions contemplated by the Loan Documents made by the Lender or Fannie Mae, each Borrower has not to the knowledge of the Warrantors omitted to state a material fact necessary in order to make the response to each inquiry, in light of the circumstances under which such response was made, not misleading. (m) No Conflicts of Interest. To the best knowledge of the Warrantors, no member, officer, agent or employee of the Lender has been or is in any manner interested, directly or indirectly, in that Person's own name, or in the name of any other Person, in the Loan Documents, any Borrower or any Mortgaged Property, in any contract for property or materials to be furnished or used in connection with such Mortgaged Property or in any aspect of the transactions contemplated by the Loan Documents. (n) Governmental Approvals. No Governmental Approval not already obtained or made is required for the execution and delivery of this Agreement or any other Loan Document or the performance of the terms and provisions hereof or thereof by any Borrower. (o) Governmental Orders. No Borrower is presently under any cease or desist order or other orders of a similar nature, temporary or permanent, of any Governmental Authority which would have the effect of preventing or hindering performance of its duties hereunder, nor are there any proceedings presently in progress or to its knowledge contemplated which would, if successful, lead to the issuance of any such order. 43 (p) No Reliance. Each Borrower acknowledges, represents and warrants that it understands the nature and structure of the transactions contemplated by this Agreement and the other Loan Documents, that it is familiar with the provisions of all of the documents and instruments relating to such transactions; that it understands the risks inherent in such transactions, including the risk of loss of all or any of the Mortgaged Properties; and that it has not relied on the Lender or Fannie Mae for any guidance or expertise in analyzing the financial or other consequences of the transactions contemplated by this Agreement or any other Loan Document or otherwise relied on the Lender or Fannie Mae in any manner in connection with interpreting, entering into or otherwise in connection with this Agreement, any other Loan Document or any of the matters contemplated hereby or thereby. (q) Compliance with Applicable Law. Each of the following statements is subject to those matters disclosed in Schedule 4. Each Borrower is in compliance with Applicable Law, including all Governmental Approvals, if any, except for such items of noncompliance that, singly or in the aggregate, have not had and are not reasonably expected to cause, a Material Adverse Effect. To the knowledge of the Warrantors, each Borrower has disclosed all violations of all Applicable Laws. There are no state or local Applicable Laws regarding rents, occupancy or resale restrictions which adversely affect any Mortgaged Property. All rental restrictions relating to any Mortgaged Property as a result of any federal government loan or assistance have been fully terminated. To the knowledge of the Warrantors, there is no evidence of any illegal activities relating to controlled substances on any Mortgaged Property. (r) Single Purpose Entity. The Delaware Partnership and each General Partner is a Single Purpose entity. The only real or personal property owned by the Georgia Borrower are the Mortgaged Properties known as Embarcadero Club Apartments and Tanglewood Village Apartments and assets related to or arising out of the ownership, the operations and maintenance of such Mortgaged Properties. The only real or personal property owned by the Indiana Borrower is the Mortgaged Property known as Brendon Way Apartments and assets related to or arising out of the ownership, the operations and maintenance of such Mortgaged Property. The only real or personal property owned by the Texas Borrower is the Mortgaged Property known as Castle Bluff Apartments and assets related to or arising out of the ownership, the operations and maintenance of such Mortgaged Property. None of the Georgia Borrower, the Indiana Borrower and the Texas Borrower (i) is engaged in any business or activity other than in connection with the ownership, management and operation of any Mortgaged Property or (ii) owes any Indebtedness other than Indebtedness relating to the Term Loan or secured by Permitted Liens. To the knowledge of the Warrantors, each of the Georgia Borrower, the Indiana Borrower and the Texas Borrower is a Single Purpose entity. (s) Lines of Business. No Borrower is engaged in any businesses other than the acquisition, ownership, development, leasing or management of the Mortgaged Properties, and the conduct of these businesses does not violate its Organizational Documents pursuant to which it is formed. (t) Disclosure of Indebtedness. Other than as set forth on Schedule 5 attached hereto, no Borrower has any outstanding Indebtedness. 44 (u) Reserved. (v) Absence of Default in Payment of Indebtedness. No Borrower is in default in the payment of the principal of or interest on any of its indebtedness for borrowed money, if any, and no event of default under any instrument under and subject to which any indebtedness has been incurred, has occurred and is continuing, and no event has occurred and is continuing under the provisions of any such instrument which with the lapse of time or the giving of notice, or both, would constitute an event of default under any such instrument. (w) No Transfer of Interests in any Borrower. Except as otherwise disclosed in writing to Fannie Mae or the Lender, no Transfer of any Controlling Interest in any Borrower has occurred and is continuing since the date of the application submitted by any Borrower to the Lender. SECTION 6.02 Representations and Warranties of the Borrowers Relating to Mortgaged Properties. Each Borrower hereby represents and warrants to the Lender as follows with respect to each of the Mortgaged Properties owned by such Borrower (as set forth on Exhibit A hereto) and with respect to other related subject matter as set forth below. (a) Title. The Borrower has good, valid, marketable and indefeasible title in fee to each Mortgaged Property, free and clear of all Liens whatsoever except the Permitted Liens. If a Mortgaged Property is a condominium, as defined by the statutes in effect in the jurisdiction in which such Mortgaged Property is located, a legal, valid and binding declaration establishing such condominium is in full force and effect and the Borrower has good, valid, marketable and indefeasible title in fee to each and every condominium unit and its appurtenant undivided interest in the applicable common elements related to each condominium unit subject to such declaration and the condominium units and their appurtenant interests created by the declaration in the aggregate comprise the entire integrated structure of which each such unit is a part. Each Mortgage, if and when properly recorded in the appropriate records, together with any Uniform Commercial Code financing statements required to be filed in connection therewith, will create a valid, perfected first lien on the Mortgaged Property to which it relates (including the Leases, the rents and all rights to collect rents thereunder), which, in the case of a condominium, includes each and every condominium unit and its appurtenant undivided interest in the applicable common elements related to each condominium unit, subject only to Permitted Liens. Except for any Permitted Liens, there are no Liens or claims for work, labor or materials affecting any Mortgaged Property which are or may be prior to, subordinate to, or of equal priority with, the Liens created by the Security Documents. The Borrower represents and warrants that the Permitted Liens do not have, and may not reasonably be expected to have, a Material Adverse Effect. (b) Taxes. The Borrower has filed all property and similar tax returns required to have been filed by it with respect to each Mortgaged Property and has paid and discharged, or caused to be paid and discharged, all installments for the payment of real estate, property or similar taxes due to date, and all other material Impositions imposed against, 45 affecting or relating to each Mortgaged Property other than those which have not become due, together with any fine, penalty, interest or cost for nonpayment pursuant to such returns or pursuant to any assessments received by it. To Borrower's knowledge, there are not presently pending any special assessments except as otherwise disclosed by Borrower in writing to Lender prior to the date hereof against any Mortgaged Property or any part thereof. The Borrower has no knowledge of any tax, levy or other governmental or private assessment or charge in respect of any Mortgaged Property which has been enacted and is not effective on the date hereof or has been proposed and which has not been disclosed in writing to the Lender or Fannie Mae. (c) Zoning. Except as set forth in Schedule 4, each Mortgaged Property complies in all material respects with all Applicable Laws affecting such Mortgaged Property and without limiting the foregoing, all Permits, including certificates of occupancy, have been issued and are in full force and effect. Except as set forth on Schedule 4, neither the Borrower nor, to the knowledge of the Borrower, any former owner of any Mortgaged Property has received any written notification or threat of any actions or proceedings regarding the noncompliance or nonconformity of such Mortgaged Property with Applicable Laws or Permits, nor is the Borrower otherwise aware of any such pending actions or proceedings. (d) Liability for Hazardous Substances. Except as disclosed in any Environmental Report or otherwise disclosed in writing by the Borrower to the Lender before the date of this Agreement, to the knowledge of the Warrantors, the Borrower has no liability, contingent or otherwise, in connection with any Hazardous Substance Activity on or affecting any Mortgaged Property in violation of Hazardous Materials Laws as in effect as of the Closing Date. (e) Prohibited Activities or Conditions. Except as disclosed in any Environmental Report or otherwise disclosed in writing by the Borrower to the Lender before the date of this Agreement, (a) to the knowledge of the Warrantors, no Prohibited Activities or Conditions exist or have existed at, upon, under or within any Mortgaged Property that have not been remedied and (b) the Borrower has not at any time caused or permitted any Prohibited Activities or Conditions to exist at, upon, under or within any Mortgaged Property. (f) Hazardous Materials. Except as disclosed in any Environmental Report or otherwise disclosed in writing by the Borrower to the Lender before the date of this Agreement, (i) neither the Borrower nor, to the knowledge of the Warrantors, any other party has been or is involved in operations at any Mortgaged Property which operations could reasonably be expected to lead to (A) the imposition of liability on the Borrower under any Hazardous Materials Law in effect as of the date of this Agreement, or on any subsequent or former owner of such Mortgaged Property, or (B) the creation of a Lien with respect to a liability on such Mortgaged Property under any Hazardous Materials Law in effect as of the date hereof; (ii) the Borrower has not permitted any tenant or occupant of such Mortgaged Property to engage in any activity that could reasonably be expected to impose a claim or liability under any Hazardous Materials Law in effect as of the date hereof on such tenant or occupant, on the Borrower or on any other subsequent or former owner of such Mortgaged Property; and (iii) the Borrower has 46 not received, and has no knowledge of the issuance of, any claim, citation or notice of any Governmental Actions. (g) Reserved. (h) Rent Roll. The Borrower has executed and delivered to the Lender a Rent Roll for each Mortgaged Property. Each Rent Roll sets forth each and every unit subject to a Lease as of the date of the Rent Roll. The information set forth on the Rent Roll is true, correct and complete in all material respects as of its date and there has occurred no material adverse change in the information shown on the Rent Roll from the date of the Rent Roll to the Closing Date. (i) Status of Landlord under Leases. Except for any assignment of leases and rents which is a Permitted Lien or which is to be released in connection with the consummation of the transactions contemplated by this Agreement, the Borrower is the owner and holder of the landlord's interest under each of the Leases of units in each Mortgaged Property and there are no prior enforceable outstanding assignments of any such Lease, or any portion of the rents, additional rents, charges, issues or profits due and payable or to become due and payable thereunder. The Borrower has not granted any possessory interest in any Mortgaged Property or right to occupy the same except under and pursuant to provisions of existing Leases. (j) Enforceability of Leases. The Borrower has delivered to the Lender a true and correct copy of its current form of apartment Lease for the units in each Mortgaged Property. The Borrower leases apartment units in each Mortgaged Property in the ordinary course of its business. Each unit in each Mortgaged Property that is not vacant and that has been leased by Borrower has been leased pursuant to the Lease delivered to the Lender, with no material modifications thereto, or pursuant to a previously used form that is not materially less advantageous to the Borrower, except as disclosed in writing to the Lender. Each Lease constitutes the legal, valid and binding obligation of the Borrower and, to the knowledge of the Borrower, of each of the other parties thereto, and except as disclosed in writing to the Lender, no notice of any default by the Borrower which remains uncured has been delivered to Borrower by any tenant under any Lease. (k) No Lease Options. All premises demised to tenants under Leases for the units in each Mortgaged Property are occupied by such tenants as tenants only. No Lease contains any option to purchase, right of first refusal or any other similar provision which is enforceable against the Borrower. No option to purchase, right of first refusal or similar right which is enforceable against the Borrower exists with respect to any Mortgaged Property. (l) Insurance. The Borrower has delivered to the Lender certificates of insurance currently in effect as of the date of this Agreement with respect to each Mortgaged Property. Each such insurance policy complies in all respects with the requirements set forth in the Security Documents. All insurance premiums which have become due and payable have been paid. 47 (m) Tax Parcels. Each Mortgaged Property is on one or more separate tax parcels, and each such parcel or parcels is separate and apart from any other property. (n) Encroachments. Except as may be shown on the Survey for each Mortgaged Property delivered to the Lender, none of the improvements located on any Mortgaged Property encroaches upon the property of any other Person nor lies outside of the boundaries and building restriction lines of such Mortgaged Property and no improvement located on property adjoining any Mortgaged Property lies within the boundaries of or in any way encroaches upon such Mortgaged Property. (o) Independent Unit. Except as otherwise disclosed by Borrower in writing to Lender in connection with the application for the Term Loan, each of the following statements in this Section 6.02(o) is true. Each Mortgaged Property is an independent unit which does not rely on any drainage, sewer, access, parking, structural or other facilities located on any property not included in such Mortgaged Property or on public or utility easements for the (a) fulfillment of any zoning, building code or other requirement of any Governmental Authority that has jurisdiction over such Mortgaged Property, (b) structural support or (c) the fulfillment of the requirements of any Lease or other agreement affecting such Mortgaged Property. The Borrower, directly or indirectly, has the right to use all amenities, easements, public or private utilities, parking, access routes or other items necessary or currently used for the operation of each Mortgaged Property. All public utilities are installed and operating at each Mortgaged Property and all billed installation and connection charges have been paid in full. Each Mortgaged Property is either (a) contiguous to, or (b) benefits from an irrevocable unsubordinated easement permitting access from such Mortgaged Property to a physically open, dedicated public street, and has all necessary permits for ingress and egress and is adequately serviced by public water, sewer systems and utilities. No building or other improvement not located on any Mortgaged Property relies on any part of such Mortgaged Property to fulfill any zoning requirements, building code or other requirement of any Governmental Authority that has jurisdiction over such Mortgaged Property for structural support or to furnish to such building or improvement any essential building systems or utilities. (p) Condition of Mortgaged Property. Except as otherwise disclosed by Borrower in writing to Lender in connection with the application for the Term Loan each of the following statements in this Section 6.02(p) is true. Each Mortgaged Property is in good condition, order and repair, there exist no structural or other material defects in any Mortgaged Property, whether latent or otherwise, and the Borrower has not received notice from any insurance company or bonding company of any defects or inadequacies in any Mortgaged Property, or any part of it, which would adversely affect the insurability of any Mortgaged Property or cause the imposition of extraordinary premiums or charges for insurance or of any termination or threatened termination of any policy of insurance or bond. To the best knowledge of the Borrower, no claims have been made against any contractor, architect or other party with respect to the condition of any Mortgaged Property or the existence of any structural or other material defect therein. Each Mortgaged Property has not been materially damaged by fire, or other casualty which damage has not been fully repaired or for which insurance proceeds have not been received or are not expected to be received except as disclosed in writing to Fannie Mae 48 or the Lender; there are no proceedings pending for partial or total condemnation of any Mortgaged Property except as disclosed in writing to Fannie Mae or the Lender. No Mortgaged Property is under construction or substantial rehabilitation. (q) Title Insurance. The title insurance policy issued on the Closing Date, relating to each Mortgaged Property and naming Fannie Mae as the insured accurately reflects all liens and encumbrances known by the Borrower to exist on, or which otherwise affect, each respective Mortgaged Property. (r) Affiliate Contracts. Except for the contracts set forth on Schedule 6 attached hereto, the Borrower has not entered into any Contractual Obligation, lease or other agreement with any Person that directly or indirectly controls, is controlled by, or is under common control with, the Borrower for the provision of any service, materials or supplies to any Mortgaged Property (including, without limitation, any contract, Lease or agreement for the provision of property management services, cable television services or equipment, gas, electric or other utilities, security services or equipment, parking services, laundry services or equipment or telephone services or equipment). (s) Commercial Leases. Except as disclosed on Schedule 7 attached hereto, there are no commercial leases affecting any Mortgaged Property. Neither the Borrower, the Key Principals the General Partner nor any Affiliate of the Borrower, the Key Principals or the General Partner is an Affiliate or otherwise related to the lessee under any cable television lease relating to any Mortgaged Property. SECTION 6.03 Representations and Warranties of the Lender. The Lender hereby represents and warrants to the Borrower as follows: (a) Due Organization. The Lender is a limited partnership duly organized, validly existing and in good standing under the laws of the State of Delaware. (b) Power and Authority. The Lender has the requisite power and authority to execute and deliver this Agreement and to perform its obligations under this Agreement. (c) Due Authorization. The execution and delivery by the Lender of this Agreement, and the consummation by it of the transactions contemplated thereby, and the performance by it of its obligations thereunder, have been duly and validly authorized by all necessary action and proceedings by it or on its behalf. ARTICLE VII AFFIRMATIVE COVENANTS OF THE BORROWER Each Borrower agrees and covenants with the Lender as follows: 49 SECTION 7.01 [RESERVED.] SECTION 7.02 Maintenance of Existence. Each Borrower shall maintain its existence and continue to be a limited partnership or a general partnership (as the case may be), organized and in good standing (if applicable) under the laws of its respective state of organization and continue to be duly qualified to do business in and shall remain in good standing (if applicable) in each state in which any Mortgaged Property is located and in each other jurisdiction in which such qualification and/or standing is necessary to the conduct of its business and where the failure to be so qualified would adversely affect the validity, the enforceability, or the ability of the Borrower to perform its obligations under this Agreement and the other Loan Documents. Each General Partner shall maintain its existence and continue to be a limited liability company organized and in good standing under the laws of its respective state of organization, and continue to be duly qualified to do business in and shall remain in good standing in each jurisdiction in which such qualification and/or standing is necessary to the conduct of its business and where the failure to be so qualified would materially adversely affect the validity, the enforceability or the ability of any Borrower to perform its obligations under this Agreement and the other Loan Documents. SECTION 7.03 [RESERVED.] SECTION 7.04 Financial Statements; Accountants' Reports; Other Information. Each Borrower shall keep and maintain at all times complete and accurate books of account and records in sufficient detail to correctly reflect (x) all of their own financial transactions and assets and (y) the results of the operation of each Mortgaged Property and copies of all written contracts, Leases and other material instruments which affect each Mortgaged Property (including bills, invoices and contracts for electrical service, gas service, water and sewer service, waste management service, telephone service and management services). In addition, each Borrower shall furnish, or cause to be furnished, to the Lender: (a) Annual Financial Statements. As soon as available, and in any event within 120 days after the close of each Borrower's fiscal year, the Borrowing Agent shall deliver the balance sheets, statement of income, partners' equity and retained earnings and statements of cash flow of each Borrower and each Key Principal for such fiscal year, all in reasonable detail and stating in comparative form the respective figures for the corresponding date and period in the prior fiscal year, prepared in accordance with GAAP, consistently applied, and accompanied by a certificate of each Borrower (or each Borrower's independent certified public accountants if requested by the Lender in its discretion) to the effect that such financial statements have been prepared in accordance with GAAP, consistently applied, and that such financial statements fairly present the results of its operations and financial condition for the periods and dates indicated, with such certification to be free of exceptions and qualifications as to the scope of the audit or as to the going concern nature of the business. (b) Quarterly Financial Statements. As soon as available, and in any event within 45 days after each of the first three fiscal quarters of each fiscal year, the unaudited 50 balance sheet of each Borrower as of the end of such fiscal quarter, the unaudited statement of income and retained earnings of each Borrower and the unaudited statement of cash flows of each Borrower for the portion of the fiscal year ended with the last day of such quarter, all in reasonable detail and stating in comparative form the respective figures for the corresponding date and period in the previous fiscal year, accompanied by a certificate of each Borrower's Authorized Representative to the effect that such financial statements have been prepared in accordance with GAAP, consistently applied, and that such financial statements fairly present the results of its operations and financial condition for the periods and dates indicated subject to year end adjustments in accordance with GAAP. (c) Quarterly Property Statements. As soon as available, and in any event within 30 days after each Calendar Quarter, a statement of income and expenses of each Mortgaged Property accompanied by a certificate of each Borrower's Authorized Representative to the effect that each such statement of income and expenses fairly presents the operations of each such Mortgaged Property for the period indicated. (d) Annual Property Statements. On an annual basis within one-hundred twenty (120) days of the end of its fiscal year, an annual statement of income and expenses of each Mortgaged Property accompanied by a certificate of each Borrower's Authorized Representative to the effect that each such statement of income and expenses fairly presents the operations of each such Mortgaged Property for the period indicated. At Lender's request each Borrower shall provide to Lender, at Borrower's expense, certified annual statements of income and expenses of each Mortgaged Property prepared by an independent certified public accountant satisfactory to the Lender. (e) Updated Rent Rolls. Upon the Lender's request (but not more frequently than quarterly), a current Rent Roll for each Mortgaged Property, showing the name of each tenant, and for each tenant, the space occupied, the lease expiration date, the rent payable, the rent paid and any other information requested by the Lender and accompanied by a certificate of such Borrower's Authorized Representative to the effect that the information set forth in such Rent Roll is true and correct in all material respects as of its date and contains all of the information as and when requested by the Lender. (f) Security Deposit Information. Upon the Lender's request, an accounting of all security deposits held in connection with any Lease of any part of any Mortgaged Property, including the name and identification number of the accounts in which such security deposits are held, the name and address of the financial institutions in which such security deposits are held and the name and telephone number of the person to contact at such financial institution, along with any authority or release necessary for the Lender to access information regarding such accounts. (g) Securities Law Reporting Information. If, and for so long as, any Borrower or any Key Principal is a reporting company under the Securities and Exchange Act of 1934, promptly upon becoming available, (a) copies of all financial statements, reports and proxy statements sent or made available generally by Borrower or any Key Principal, or any of their 51 Affiliates, to their respective security holders, (b) all regular and periodic reports and all registration statements (other than the exhibits thereto and any registration statements on Form S-8 or a similar form) and prospectuses, if any, filed by Borrower or any Key Principal, or any of their Affiliates, with the Securities and Exchange Commission or other Governmental Authorities, and (c) all press releases and other statements made available generally by Borrower or any Key Principal, or any of their Affiliates, to the public concerning material developments in the business of Borrower or other party. (h) Accountants' Reports. Within 30 days after any Borrower's receipt, copies of any reports or management letters submitted to any Borrower by its independent certified public accountants in connection with the examination of its financial statements made by such accountants (except for reports otherwise provided pursuant to subsection (a) above). (i) Business Plan. Promptly after finalization thereof, the Business Plan of each Borrower for the year then in progress within 90 days after the end of each calendar year. (j) Complaints. Within 10 days after any Borrower's receipt, copies of any complaint filed against any Borrower or any Mortgaged Property management alleging any violation of fair housing law, handicap access or the Americans with Disabilities Act and any final administrative or judicial dispositions of such complaints. (k) Asset Manager Reports. Promptly, after receipt, the reports delivered by the Asset Manager under Section 4.4 and 5.2.1(a) of the Asset Management Agreement as in effect as of the date hereof. (l) [RESERVED.] (m) Other Reports. Promptly upon receipt thereof, all schedules, financial statements or other similar reports delivered by any Borrower pursuant to the Loan Documents or requested by the Lender with respect to any Borrower's business affairs or condition (financial or otherwise) or any of the Mortgaged Properties. (n) Certification. All certifications required to be delivered pursuant to this Section 7.04 shall run directly to and be for the benefit of Lender and Fannie Mae. SECTION 7.05 Certificate of Compliance. Each Borrower shall deliver to the Lender concurrently with the delivery of the financial statements and/or reports required to be delivered pursuant to Section 7.04 (a) and (b) above a certificate signed by its Authorized Representative or by it stating that, to the best knowledge of such individual following reasonable inquiry, (i) no event described in Section 7.08 has occurred or that notice has been given, and (ii) no Event of Default or Potential Event of Default has occurred, or if an Event of Default or Potential Event of Default has occurred, specifying the nature thereof in reasonable detail and the action which Borrower is taking or proposes to take with respect thereto. Any certificate required by this Section 7.05 shall run directly to and be for the benefit of Lender and Fannie Mae. 52 SECTION 7.06 Maintain Licenses. Each Borrower shall procure and maintain in full force and effect all licenses, Permits, charters and registrations which are material to the conduct of its business and shall abide by and satisfy all terms and conditions of all such licenses, Permits, charters and registrations. SECTION 7.07 Access to Records; Discussions With Officers and Accountants. To the extent permitted by law and in addition to the applicable requirements of the Security Instruments, each Borrower shall permit the Lender: (a) to inspect, make copies and abstracts of, and have reviewed or audited, such of Borrower's books and records as may relate to the Obligations or any Mortgaged Property; (b) to discuss Borrower's affairs, finances and accounts with Senior Management and, solely with respect to any information specific to any Mortgaged Property, any site manager of such Mortgaged Property; (c) to discuss Borrower's affairs, finances and accounts with its independent public accountants, provided that Borrower's Authorized Representative has been given the opportunity by the Lender to be a party to such discussions; and (d) to receive any other information that the Lender deems necessary or relevant in connection with the Term Loan, any Loan Document, or the Obligations. Each Borrower shall maintain complete and accurate books and records (i) reflecting all of its business affairs and transactions in accordance with GAAP consistently applied and any applicable regulations, (ii) in sufficient detail to correctly reflect the results of the operation of each Mortgaged Property, and (iii) of all written contracts, leases and other instruments which affect any Mortgaged Property (including but not limited to all bills, invoices and contracts for electrical service, gas service, water and sewer service, waste management service, telephone service and management services). Lender shall have reasonable access to each Borrower's books and records and the books and records relating to the transactions contemplated by the Loan Documents. The books and records of each Borrower and the books and records relating to the transactions contemplated by the provisions of the Loan Documents shall be maintained at the address of the Borrowing Agent set forth in Section 16.08 of this Agreement, unless any Borrower shall otherwise advise Lender in writing. Notwithstanding the foregoing, prior to an Event of Default or Potential Event of Default, all inspections shall be conducted with prior notice at reasonable times during normal business hours and during a Potential Event of Default all such inspections shall be conducted with one day prior notice. 53 SECTION 7.08 Inform the Lender of Material Events. Each Borrower shall promptly inform the Lender in writing of any of the following (and shall deliver to the Lender copies of any related written communications, complaints, orders, judgments and other documents relating to the following) of which any member of Senior Management has actual knowledge: (a) Defaults. The occurrence of any Event of Default or any Potential Event of Default under this Agreement or any other Loan Document; (b) [RESERVED.]; (c) Legal Proceedings. The commencement or threat of, or amendment to, any proceedings by or against any Borrower in any Federal, state or local court or before any Governmental Authority, or before any arbitrator, which, if adversely determined, would have, or at the time of determination may reasonably be expected to have, a Material Adverse Effect; (d) Bankruptcy Proceedings. The commencement of any proceedings by or against any Borrower, any General Partner or any Key Principal under any applicable bankruptcy, reorganization, liquidation, insolvency or other similar law now or hereafter in effect or of any proceeding in which a receiver, liquidator, trustee or other similar official is sought to be appointed for any such party; (e) Regulatory Supervision or Penalty. The receipt of notice from any Governmental Authority having jurisdiction over any Borrower that (A) any Borrower is being placed under regulatory supervision, (B) any license, Permit, charter, membership or registration material to the conduct of any Borrower's business or the Mortgaged Properties is to be suspended or revoked or (C) any Borrower is to cease and desist any practice, procedure or policy employed by it, as the case may be, in the conduct of its business, and such cessation would have, or may reasonably be expected to have, a Material Adverse Effect; (f) Environmental Claim. The receipt from any Governmental Authority or other Person of any notice of violation, claim, demand, abatement, order or other order or direction (conditional or otherwise) for any damage, including personal injury (including sickness, disease or death), tangible or intangible property damage, contribution, indemnity, indirect or consequential damages, damage to the environment, pollution, contamination or other adverse effects on the environment, removal, cleanup or remedial action or for fines, penalties or restrictions, resulting from or based upon (a) the existence or occurrence, or the alleged existence or occurrence, of a Hazardous Substance Activity or (b) the violation, or alleged violation, of any Hazardous Materials Laws in connection with any Mortgaged Property or any of the other assets of any Borrower; (g) Tax Audit. The receipt of notice from the Internal Revenue Service or any state or local tax authority of any assessment relating to the tax treatment of any Borrower as other than a partnership; 54 (h) Trade Creditor Defaults. The failure of the Delaware Borrower to pay any trade liabilities to any Persons pursuant to any Contractual Obligations in an amount in excess of $500,000 in the aggregate or the failure of any other Borrower to pay any trade liabilities to any Persons pursuant to any Contractual Obligations in an amount in excess of $100,000 in the aggregate; (i) Material Adverse Effects. The occurrence of any act, omission, change or event which has a Material Adverse Effect subsequent to the date of the most recent audited financial statements of any Borrower delivered by it pursuant to Section 7.04; (j) Accounting Changes. Any material change in any Borrower's accounting policies or financial reporting practices; (k) Change in Senior Management. Any change in the identity of any member of Senior Management or any Key Principal. SECTION 7.09 Single-Purpose Entities. Each Borrower shall at all times maintain and conduct itself as a Single-Purpose entity. SECTION 7.10 Inspection. Each Borrower shall permit any Person designated by the Lender: (i) to make entries upon and inspections of the Mortgaged Properties; and (ii) to otherwise verify, examine and inspect the amount, quantity, quality, value and/or condition of, or any other matter relating to, any Mortgaged Property; provided, however, that prior to an Event of Default or Potential Event of Default, all such entries, examinations and inspections shall be conducted with prior notice to the Borrower that owns the applicable Mortgaged Property at reasonable times during normal business hours and during a Potential Event of Default all such entries, examinations and inspections shall be conducted with one day prior notice to the Borrower that owns the applicable Mortgaged Property. SECTION 7.11 Compliance with Applicable Laws. Each Borrower shall comply in all material respects with all Applicable Laws now or hereafter affecting any Mortgaged Property or any part of any Mortgaged Property or requiring any alterations, repairs or improvements to any Mortgaged Property. Each Borrower shall procure and continuously maintain in full force and effect, and shall abide by and satisfy all material terms and conditions of all Permits. Borrower shall be deemed to be in compliance with all Applicable Laws relating to and despite the matters disclosed on Schedule 4 as required by the prior sentence during the period in which and so long as Borrower completes the repairs specified in Schedule 4 by May 1, 2000. SECTION 7.12 Warranty of Title. Each Borrower shall warrant and defend (a) the title to each Mortgaged Property and every part of each Mortgaged Property, subject only to Permitted Liens, and (b) the validity and priority of the lien of the applicable Loan Documents, subject only to Permitted Liens, in each case against the claims of all Persons whatsoever. SECTION 7.13 Defense of Actions. Each Borrower shall appear in and defend any action or proceeding purporting to affect the security for this Agreement or the rights or power of the 55 Lender hereunder, and shall pay all reasonable out-of-pocket costs and expenses, including the cost of evidence of title and reasonable attorneys' fees, in any such action or proceeding in which the Lender may appear. If any Borrower fails to perform any of the covenants or agreements contained in this Agreement, or if any action or proceeding is commenced that is not diligently defended by it which affects in any material respect the Lender's interest in any Mortgaged Property or any part thereof, including eminent domain, code enforcement or proceedings of any nature whatsoever under any Applicable Law, whether now existing or hereafter enacted or amended, then the Lender may, but without obligation to do so and without notice to or demand upon the Borrowing Agent or the applicable Borrower and without releasing any Borrower from any Obligation, make such appearances, disburse such sums and take such action as the Lender deems necessary or appropriate to protect the Lender's interest, including disbursement of attorney's fees, entry upon such Mortgaged Property to make repairs or take other action to protect the security of said Mortgaged Property, and payment, purchase, contest or compromise of any encumbrance, charge or lien which in the judgment of the Lender appears to be prior or superior to the Loan Documents. In the event (i) that any Security Instrument is foreclosed in whole or in part or that any Loan Document is put into the hands of an attorney for collection, suit, action or foreclosure, or (ii) of the foreclosure of any mortgage, deed to secure debt, deed of trust or other security instrument prior to or subsequent to any Security Instrument or any Loan Document in which proceeding the Lender is made a party or (iii) of the bankruptcy of any Borrower or any Key Principal or an assignment by any Borrower or Key Principal for the benefit of their respective creditors, such Borrower or any Key Principal shall be chargeable with and agrees to pay all reasonable out-of-pocket costs of collection and defense, including actual attorneys' fees in connection therewith and in connection with any appellate proceeding or post-judgment action involved therein, which shall be due and payable together with all required service or use taxes. SECTION 7.14 Insurance Escrow. (a) So long as no Event of Default has occurred and is continuing, Lender hereby waives the obligations of Borrower under Section 7 of each Security Instrument with respect to the escrow of premiums for insurance (the "Required Escrow Payments"). During any period in which the obligation to pay the Required Escrow Payments has been waived pursuant to this Section 7.14, each Borrower shall do one of the following: (1) Each Borrower shall pay such insurance premiums directly to the payee thereof and send to the Lender invoices and paid receipts, or other documentation satisfactory to Lender, evidencing payment of insurance premiums on the earlier of the date that such insurance is due and payable or thirty (30) days prior to the expiration date of the insurance policy, and shall include all such payments in its monthly and annual property income and expense data; or (2) at least 15 days prior to the expiration date of the insurance policy (the "Expiring Policy") each Borrower shall provide to Lender written proof that the expiration date of the Expiring Policy has been extended by at least 30 days certified by the issuer of the insurance policy. Then, at least 10 days before the original expiration date (not the extended expiration date) of 56 the Expiring Policy, each Borrower shall either (i) deliver to Lender written proof certified by the issuer of the insurance policy that an insurance policy replacing the Expiring Policy, or an extension of the Expiring Policy, has been obtained, for a period of at least one year after the original expiration date of the Expiring Policy (as applicable, the "Renewal Policy"), and paid receipts or other documentation establishing that it has paid its portion of the insurance premium for the Renewal Policy or (ii) deliver an amount equal to its portion of such insurance premium as reasonably determined by the Lender (the "Deposit"). If any Borrower delivers the Deposit to Lender, Lender shall hold the Deposit in a custodial account meeting the requirements of the DUS Guide, and shall only disburse the Deposit (plus interest) as follows: (A) Whenever any Borrower delivers to Lender written proof certified by the issuer of the insurance policy that the Renewal Policy has been obtained and paid receipts or documentation establishing that it has paid its portion of the insurance premium, Lender shall disburse the Deposit (plus interest) to the Borrowing Agent (unless Lender has already disbursed it pursuant to paragraph (B) below) (the "Borrower Disbursement"). (B) If, at any time before any Borrower has delivered the proof referred to in paragraph (A) above, the expiration date of the Expiring Policy, as it may have been extended from time to time according to certificates issued by the issuer to Lender, is less than 30 days in the future, Lender may disburse the Deposit (plus interest) to purchase the required insurance on behalf of the Borrower (the "Purchase Event"). (b) Lender's waiver of the Required Escrow Payments shall, at the option of Lender, be revoked upon the occurrence of any of the following events, and each Borrower's obligations under Section 7 of the Security Instruments shall immediately be reinstated: (1) an Event of Default; or (2) a Purchase Event; or (3) a Borrower Disbursement has not taken place within three months after original expiration date of the Expiring Policy; or (4) any Borrower's failure to perform its obligations under paragraph (1) and (2) of subsection (a); or (5) any Borrower's failure to perform its obligations under paragraph (1) of subsection (a) unless it performs its alternative obligations under paragraph (2) of subsection (a). 57 SECTION 7.15 ERISA. Each Borrower shall at all times remain in compliance in all material respects with all applicable provisions of ERISA and similar requirements of the PBGC. SECTION 7.16 Loan Document Taxes. If any tax, assessment or Imposition (other than a tax imposed on or measured by, the net income or capital (including branch profits tax) of the Lender (or any transferee or assignee thereof, including a participation holder)) ("Loan Document Taxes") is levied, assessed or charged by the United States, or any State in the United States, or any political subdivision or taxing authority thereof or therein upon any of the Loan Documents or the obligations secured thereby, the interest of the Lender in the Mortgaged Properties, or the Lender by reason of or as holder of the Loan Documents, each Borrower shall pay all such Loan Document Taxes to, for, or on account of the Lender (or provide funds to the Lender for such payment, as the case may be) as they become due and payable and shall promptly furnish proof of such payment to the Lender, as applicable. In the event of passage of any law or regulation permitting, authorizing or requiring such Loan Document Taxes to be levied, assessed or charged, which law or regulation in the opinion of counsel to the Lender may prohibit each Borrower from paying the Loan Document Taxes to or for the Lender, each Borrower shall enter into such further instruments as may be permitted by law to obligate it to pay such Loan Document Taxes. In addition, such Borrower shall pay all documentary stamp, recording, transfer, mortgage, intangible or filing or other taxes or fees and any and all liabilities with respect thereto, or resulting therefrom which may be payable or determined to be payable in connection with the execution and delivery of, or consummation or administration of any of the transactions contemplated by, or any amendment, supplement or modification of, or any waiver or consent under or in respect of or filing of record, recordation, release or discharge of, this Agreement, the Security Instruments, or any other Loan Document. All amounts due under this Section 7.16 shall be payable within 10 days after delivery of written notice from the Lender to the Borrowing Agent unless a non-appealable judicial order requires that any such payments must be made on an earlier date in which case payment shall be made by such date on written demand therefor. SECTION 7.17 Further Assurances. Each Borrower, at the request of the Lender, shall execute and deliver and, if necessary, file or record such statements, documents, agreements, UCC financing and continuation statements and such other instruments and take such further action as the Lender from time to time may request as reasonably necessary, desirable or proper to carry out more effectively the purposes of this Agreement or any of the other Loan Documents or to subject the Collateral to the lien and security interests of the Loan Documents or to evidence, perfect or otherwise implement, to assure the lien and security interests intended by the terms of the Loan Documents or in order to exercise or enforce its rights under the Loan Documents. SECTION 7.18 [RESERVED.] SECTION 7.19 [RESERVED.] SECTION 7.20 [RESERVED.] 58 SECTION 7.21 Affiliate Contracts. Except as set forth on Schedule 6, each Borrower shall not enter into any Contractual Obligation, lease or other agreement with any person that directly or indirectly controls, is controlled by, or is under common control with it for the provision of any service, materials or supplies to any Mortgaged Property (including, without limitation, any contract, lease or agreement for the provision of property management services, cable television services or equipment, gas, electric or other utilities, security services or equipment, parking services, laundry services or equipment or telephone services or equipment). SECTION 7.22 Manager; Management Fees. If any Manager is removed by Lender pursuant to the terms and conditions of the Loan Documents, each Borrower agrees to use commercially reasonable efforts to hire a new Manager on or prior to the effective date of termination unless otherwise directed by Lender. Any new Manager must be approved in writing by Lender prior to being hired which approval shall be granted if Lender determines that such proposed Manager is qualified in accordance with the criteria set forth in Section 701 of the DUS Guide. The management agreement between the applicable Borrowers or Borrower and the new Manager must be approved in writing by Lender and the applicable Borrower or Borrowers and new Manager must execute and deliver to Lender a new Assignment of Management Agreement. During any period in which any Mortgaged Property is managed by a subsidiary of any Borrower or of any Affiliate of any Borrower or any member of any Borrower, the management fee paid to such management entity in respect of such Property shall not exceed the Maximum Percentage of the Gross Revenues of such Property as specified on Exhibit A. SECTION 7.23 [RESERVED.] SECTION 7.24 [RESERVED.] SECTION 7.25 Ownership of Mortgaged Properties. Each Borrower shall be the sole owner of each of the Mortgaged Properties free and clear of any Liens other than Permitted Liens. SECTION 7.26 Post-Closing Requirements (a) Not later than March 1, 2000, (i) Borrower will deliver to Lender a Survey of each Initial Mortgaged Property for which Borrower did not deliver a Survey on or before the Initial Closing Date which Survey shall include, without limitation, a certification of the Surveyor as set forth in paragraph 5 of the Surveyor's Certificate required by the DUS Guide referencing the respective Title Insurance Policy delivered on January 31, 2000 and (ii) the Title Company shall issue an endorsement to those Title Insurance Policies relating to Mortgaged Properties where the legal description in Schedule A (and Exhibit A attached thereto) of such Title Insurance Policies does not conform with the legal description set forth in the Survey with respect to such Mortgaged Properties, insuring that the legal description contained in the Security Instruments relating to such Mortgaged Properties is the same as the property described in Schedule A (and Exhibit A attached thereto) of such Title Insurance Policy and as the property described in such Survey (the "Survey Endorsement"). Borrower's failure to deliver any such Survey or Survey Endorsement shall be an Event of Default. Lender agrees that such an Event of Default relates solely to the 59 Initial Mortgaged Properties for which the Surveys or Survey Endorsement are not delivered and may be cured pursuant to the last paragraph of Section 11.01. (b) After the Initial Closing Date, Borrower will deliver to Lender the following good standing certificates or opinions of Borrower's local counsel: (1) Not later than March 1, 2000 or March 15, 2000 with respect to the state of Ohio (the "Initial Good Standing Deadline"), Borrowers will deliver a good standing certificate with respect to the Delaware Borrower, Texas Borrower and each General Partner of such Borrowers issued by the secretary of state (or similar officer) of every state in which the Delaware Borrower and the Texas Borrower owns a Mortgaged Property except to the extent any such good standing certificate was delivered on or before the Initial Closing Date (a "Missing Good Standing State"). (2) The Initial Good Standing Deadline in any Missing Good Standing State will be extended through May 31, 2000 if Borrower's local counsel in such Missing Good Standing State delivers, not later than the Initial Good Standing Deadline, a legal opinion addressed to Lender to the effect that the Delaware Borrower's failure, or the Texas Borrower's failure, or either such Borrower's General Partner's failure, or all such failures, as the case may be, to be duly qualified and in good standing in the state in question will not (i) impair the legal right or ability of either such Borrower (which will be represented by its General Partner) to employ legal process in such state to evict a tenant of the Mortgaged Property in such state for nonpayment of rent, or if it does impair that legal ability, such impairment will end when such Borrower, or such Borrower's General Partner, or both, as the case may be, becomes duly qualified and in good standing in such state (including with respect to tenant defaults that occur before it becomes duly qualified and in good standing), and (ii) impair the ability of Lender to enforce the terms and provisions of the Loan Documents against such Borrowers. (3) Notwithstanding paragraph (1), no good standing certificate will be required with respect to any such Borrower's General Partner in any state in which local counsel delivers a legal opinion addressed to Lender to the effect that such Borrower's General Partner is not required to be qualified as a foreign corporation in such state or that the failure of such Borrower's General Partner to be duly qualified and in good standing in the state in question does not materially and adversely affect such Borrower's General Partner or such Borrower. ARTICLE VIII NEGATIVE COVENANTS OF THE BORROWER Each Borrower, with respect to itself, agrees and covenants with the Lender that, at all times during the Term of this Agreement: SECTION 8.01 Other Activities. Each Borrower shall not: 60 (i) acquire any real or personal property other than any Mortgaged Property and assets related to the operations and maintenance of any Mortgaged Property or engage in any business or activity other than in connection with the ownership, management and operation of any Mortgaged Property; (ii) amend, modify, supplement or waive any terms or provisions of its Partnership Agreement without the prior written consent of Fannie Mae, provided that such consent shall not be withheld, after request therefor, if the proposed change is not inconsistent with the terms of the Loan Documents, and will not have a Material Adverse Effect or result in a Potential Event of Default or Event of Default; (iii) use, or permit to be used, any Mortgaged Property for any uses or purposes other than as a Multifamily Residential Property; (iv) either directly or indirectly sell, transfer, exchange or otherwise dispose of any of its assets except as permitted hereunder or by each Mortgage; (v) dissolve or liquidate in whole or in part (except that it is understood that sales of Mortgaged Properties in accordance with the Loan Documents and distribution of the resulting sales proceeds shall not be regarded as dissolution or liquidation, even though the long-run effect will be to result in the eventual dissolution or liquidation of any Borrower); or (vi) merge or consolidate with any Person. SECTION 8.02 [RESERVED.] SECTION 8.03 Zoning. No Borrower shall initiate or consent to any zoning reclassification of any Mortgaged Property or seek any variance under any zoning ordinance or use or permit the use of any Mortgaged Property in any manner that could result in the use becoming a nonconforming use under any zoning ordinance or any other applicable land use law, rule or regulation. SECTION 8.04 Liens. No Borrower shall create, incur, assume or suffer to exist any Lien on any Mortgaged Property or any part of any Mortgaged Property, except the Permitted Liens. SECTION 8.05 Sale. No Borrower shall sell, convey, transfer, assign or otherwise relinquish any Mortgaged Property or any part of any Mortgaged Property or any interest therein without the prior written consent of Lender, other than (a) as may be permitted by the Loan Documents, or (b) to enter into Leases for units or other space in any Mortgaged Property to any tenant in the ordinary course of business. SECTION 8.06 Indebtedness. No Borrower shall now or at any time in the future be obligated with respect to Indebtedness other than (i) the Obligations, (ii) obligations defined in subsection (c) of the definition of "Indebtedness" which are capital leases permitted as Permitted Liens and (iii) payments owing under the Contribution Agreement. 61 SECTION 8.07 Principal Place of Business. No Borrower shall change its principal place of business or the location of its books and records, each as set forth in Section 6.01, without first giving 30 days' prior written notice to the Lender. SECTION 8.08 [RESERVED] SECTION 8.09 Condominiums. No Borrower shall submit any Mortgaged Property to a condominium regime during the Term of this Agreement. SECTION 8.10 Restrictions on Partnership Distributions. No Borrower shall make any distributions of any nature or kind whatsoever to the owners of its Ownership Interests as such if, at the time of such distribution, an Event of Default has occurred and remains uncured. ARTICLE IX INDEMNIFICATION, LIABILITY AND OTHER MATTERS SECTION 9.01 Indemnification. Each Borrower hereby releases the Lender, Fannie Mae, the Servicer and their respective officers, directors, members, shareholders, officials, agents, independent contractors and employees from, and covenants and agrees to indemnify, hold harmless and defend the Lender, Fannie Mae, the Servicer and their respective officers, members, directors, shareholders, officials, agents, independent contractors and employees and each of them (each an "indemnified party") from and against (a) any and all claims, joint or several, by or on behalf of any person arising from any cause whatsoever in connection with the transactions provided for in the Loan Documents or otherwise in connection with each Mortgaged Property or the execution or amendment of any document relating thereto; (b) any and all claims, joint or several, arising from any cause whatsoever in connection with the approval of the financing of any Mortgaged Property; (c) any and all claims, joint or several, arising from any act or omission of any Borrower or any of its agents, servants, employees or licensees, in connection with the Loan Documents or any Mortgaged Property; (d) any certifications or representations made by any person other than the party seeking indemnification in connection therewith and the carrying out by any Borrower of any of the transactions contemplated by the Loan Documents; (e) any and all claims arising in connection with the operations of any Mortgaged Property, or the conditions, occupancy, use, possession, conduct or management of work done in or about, or from the planning, design, acquisition, installation or construction of, any Mortgaged Property or any part of any Mortgaged Property or with respect to any act, event, condition or circumstance in connection with any Mortgaged Property; (f) any and all losses, claims, damages, liabilities or expenses, joint or several, arising out of or connected with the exercise by the Lender, Fannie Mae, or the Servicer of their respective powers or duties under any of the Loan Documents; (g) the misfeasance or malfeasance of, or theft committed by any director, officer, employee, partner or agent of any Borrower; (h) the violation by any Borrower of any federal or state laws, rules or regulations relating to the maximum amount of interest permitted to be received on account of the loan of money; (i) representations or warranties of any Borrower contained in this Agreement, any Loan Document 62 or in any certificate furnished or delivered to the Lender, Fannie Mae or the Servicer shall have been false when made; (j) any and all claims by any other Person in connection with such Person having an interest in any Mortgaged Property, other than with respect to a Permitted Lien; and (k) all reasonable costs, counsel fees, expenses or liabilities incurred in connection with any such claim or proceeding referred to in clause (a) through (j) above; provided, however, that the foregoing indemnification shall not be effective to the extent such damages are determined by a court of competent jurisdiction by final and nonappealable judgment to have resulted from the gross negligence or willful misconduct of the indemnified party. In the event that any action or proceeding is brought against any indemnified party with respect to which indemnity may be sought hereunder, the Borrowers, upon written notice from the indemnified party to the Borrowing Agent, shall assume the investigation and defense thereof, including the employment of counsel selected by the Borrowing Agent but reasonably acceptable to the indemnified party, and shall assume the payment of all expenses related thereto, with full power to litigate, compromise or settle the same in its sole discretion, provided that such indemnified party shall have the right to review and approve or disapprove any such compromise or settlement. Each indemnified party shall have the right, if such indemnified party shall reasonably conclude in good faith that a conflict of interest exists, to employ separate counsel in any such action or proceeding and participate in the investigation and defense thereof, and the Borrowers shall pay the reasonable fees and expenses of such separate counsel. In the event that an indemnified party does not conclude that a conflict of interest exists and yet such party prefers to employ separate counsel in such action or proceeding, it may do so at its own cost and expense. If separate counsel are employed as described above, the Borrowers and any such indemnified party agree to cooperate as may reasonably be required in order to ensure the proper and adequate defense of any such action, suit or proceeding, including, but not limited to, making available to each other, and their counsel and accountants, all books and records relating to such action, suit or proceeding. If any such counsel reasonably determines that the rendering of such assistance will adversely affect the defense or interests of its client, such counsel shall not be required to comply with the terms of the immediately preceding sentence. Notwithstanding any Transfer of any Mortgaged Property to another owner, the Borrowers shall remain obligated to indemnify each indemnified party pursuant to this Section with respect to acts occurring prior to the date of transfer of legal title to such Mortgaged Property (irrespective of when a claim is actually made). SECTION 9.02 Survival. The indemnity provisions of Section 9.01 shall survive the termination of this Agreement and foreclosure of any Security Instrument or other disposition of any Mortgaged Property to the fullest extent permitted by law. All amounts due under Section 9.01 shall be payable within 30 days after delivery of written notice from Lender or Servicer to the Borrowing Agent unless judicial order requires that any such payments must be made on an earlier date in which case payment shall be made by such date on written demand therefor. Notwithstanding anything to the contrary contained herein, any liability of a Borrower (and any trustee or other person or persons winding up the affairs of such Borrower pursuant to Section 17-803 of the Delaware Revised Limited Partnership Act or the equivalent provisions of any other Applicable Law under which a Borrower is organized) shall be deemed satisfied in full 63 and fully discharged (and such Borrower and any partner, controlling Person or Affiliate thereof shall be forever released) on (A) the date that is one year after the Obligations are paid in full (the "Satisfaction Date"), or (B) solely with respect to any claim or demand pending or threatened for environmental liabilities that is actually known to such Borrower as of the Satisfaction Date, the later to occur of (i) the date that is one year after the Satisfaction Date or (ii) the date on which liquidation of such Borrower and final distribution of the assets of such Borrower occurs pursuant to Section 17-804 of the Delaware Revised Uniform Limited Partnership Act or the equivalent provisions of any other Applicable Law under which a Borrower is organized. SECTION 9.03 Liability of the Borrowers. The obligation of the Borrowers to make any and all payments to Lender required by this Agreement shall not be subject to diminution by set-off, recoupment, counterclaim (other than mandatory counterclaims), abatement or otherwise. SECTION 9.04 Lender, Fannie Mae and Servicer Not Liable. Neither the Lender, Fannie Mae, the Servicer nor any of their respective officials, officers, directors, members, shareholders, agents, independent contractors or employees shall be responsible for or liable to any Borrower or any of its officials, officers, directors, shareholders, members, partners, affiliates, independent contractors or employees for (i) any act or omission of the Lender, Fannie Mae, the Servicer or any other Person made in good faith with respect to the validity, sufficiency, accuracy or genuineness of documents, or of any endorsement(s) thereon (except for documents and endorsements provided by the Lender, Fannie Mae or the Servicer, as applicable), even if such documents should be in fact prove to be in any or all respects invalid, insufficient, fraudulent or forged; (ii) for errors, omissions, interruptions or delays in transmission or delivery of any messages, by mail, cable, telegraph, telex, telecopier or otherwise; (iii) for any loss or delay in the transmission or otherwise of any document or draft required in order to make a Term Loan; and (iv) for any consequences arising from causes beyond the control of the Lender, Fannie Mae or the Servicer, as applicable. In furtherance and not in limitation of the foregoing, the Lender (or Fannie Mae or the Servicer) may accept documents that appear on their face to be valid and in order, without any responsibility for further investigation. None of the above shall affect, impair, or prevent the vesting of any rights or powers of the Lender, Fannie Mae or the Servicer under this Agreement. In furtherance and extension and not in limitation of the specific provisions set forth above, any action taken or omitted by the Lender, Fannie Mae or the Servicer under or in connection with any Loan Document or any related certificates or other documents, if taken or omitted in good faith, shall be binding upon each Borrower and shall not put the Lender, Fannie Mae or the Servicer under any resulting liability to any Borrower. SECTION 9.05 WAIVERS AND CONSENTS. EACH BORROWER AGREES TO BE BOUND BY THIS AGREEMENT AND, TO THE EXTENT PERMITTED BY LAW, (A) WAIVES AND RENOUNCES ANY AND ALL REDEMPTION AND EXEMPTION RIGHTS AND THE BENEFIT OF ALL VALUATION AND APPRAISAL PRIVILEGES AGAINST THE INDEBTEDNESS AND OBLIGATIONS EVIDENCED BY THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS OR BY ANY EXTENSION OR RENEWAL OF THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS; (B) WAIVES 64 PRESENTMENT AND DEMAND FOR PAYMENT, NOTICES OF NONPAYMENT AND OF DISHONOR, PROTEST OF DISHONOR AND NOTICE OF PROTEST; (C) WAIVES ALL NOTICES IN CONNECTION WITH THE DELIVERY AND ACCEPTANCE OF THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS AND ALL OTHER NOTICES IN CONNECTION WITH THE PERFORMANCE, DEFAULT OR ENFORCEMENT OF THE PAYMENT OF ANY OBLIGATIONS UNDER THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS EXCEPT AS REQUIRED BY THIS AGREEMENT OR THE OTHER LOAN DOCUMENTS; (D) AGREES THAT ITS LIABILITIES UNDER THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS SHALL NOT BE CONDITIONED ON THE LIABILITY OF ANY OTHER PERSON; AND (E) AGREES THAT ANY CONSENT, WAIVER OR FORBEARANCE UNDER THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS WITH RESPECT TO AN EVENT SHALL OPERATE ONLY FOR SUCH EVENT AND NOT FOR ANY SUBSEQUENT EVENT. SECTION 9.06 WAIVER OF CLAIMS. IN ORDER TO INDUCE LENDER TO EXECUTE AND DELIVER THE AGREEMENT, EACH BORROWER HEREBY REPRESENTS AND WARRANTS THAT IT HAS NO CLAIMS, SET-OFFS OR DEFENSES AS OF THE CLOSING DATE IN CONNECTION WITH THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT OR IN CONNECTION WITH ANY OF THE OTHER LOAN DOCUMENTS. TO THE EXTENT ANY SUCH CLAIMS, SET-OFFS OR DEFENSES MAY EXIST, WHETHER KNOWN OR UNKNOWN, THEY ARE EACH HEREBY WAIVED AND RELINQUISHED IN THEIR ENTIRETY. ARTICLE X FEES SECTION 10.01 Origination Fees. The Borrowers shall pay to the Lender an origination fee ("Origination Fee") equal to the greater of (i) 1/2 of 1% of the original principal amount of the Term Loan or (ii) $600,000. The Borrowers shall pay the Origination Fee on the Initial Closing Date. SECTION 10.02 [RESERVED.] SECTION 10.03 Legal Fees and Expenses (a) Legal Fees. The Borrowers shall pay, or reimburse the Lender for, all out-of-pocket legal fees and expenses incurred by the Lender and by Fannie Mae in connection with the preparation, review and negotiation of this Agreement and any other Loan Documents executed on the date of this Agreement. On the date of this Agreement, the Borrowers shall pay all such legal fees and expenses not previously paid or for which funds have not been previously provided. 65 (b) Fees and Expenses Associated with all Requests. With respect to all Requests after the Closing Date, the Borrowers shall pay, or reimburse the Lender for, all costs and expenses incurred by the Lender, including the out-of-pocket legal fees and expenses incurred by the Lender in connection with the preparation, review and negotiation of all documents, instruments and certificates to be executed and delivered in connection with each Request, the performance by the Lender of any of its obligations with respect to the Request, the satisfaction of all conditions precedent to the Borrowers' rights or the Lender's obligations with respect to the Request, and all transactions related to any of the foregoing, including all other costs and expenses in connection with a Request. The obligations of the Borrowers under this subsection shall be absolute and unconditional, regardless of whether the transaction requested in the Request actually occurs. The Borrowers shall pay such costs and expenses to the Lender on the Closing Date or, as the case may be, after demand by the Lender when the Lender determines that such Request will not close. ARTICLE XI EVENTS OF DEFAULT SECTION 11.01 Events of Default. Each of the following events shall constitute an "Event of Default" under this Agreement, whatever the reason for such event and whether it shall be voluntary or involuntary, or within or without the control of any Borrower, or be effected by operation of law or pursuant to any judgment or order of any court or any order, rule or regulation of any Governmental Authority: (a) the occurrence of a default under any Loan Document beyond the cure period, if any, set forth therein or the failure by any Key Principal to pay any amount owing under a Key Principal Guaranty; or (b) the failure by the Borrowers to pay when due any amount payable by the Borrowers under the Note, any Security Instrument, this Agreement or any other Loan Document including any fees, costs or expenses; or (c) the failure by the Borrowers to pay any amounts due and owing under Sections 16.03 hereof within five (5) days after the receipt of written notice from the Lender that such amounts are due and owing; or (d) any Borrower shall fail to observe or perform any term, covenant, condition or agreement set forth in Sections 7.07, 7.08, 7.10, 7.14, 7.21, 7.22, 7.25, and 7.26 Article V and VIII; or (e) any Borrower shall fail to observe or perform any term, covenant, condition or agreement set forth in Section 7.02 within ten (10) days of knowledge by any Borrower of such failure; or 66 (f) the failure by any Borrower to perform or observe any covenant set forth in Sections 7.04, 7.05, 7.09, 7.12 and 7.13 within ten (10) days after receipt of notice from the Lender identifying such failure; or (g) the failure by any Borrower to perform or observe any term, covenant, condition or agreement set forth in this Agreement not specified in paragraphs (a) though (f) above within thirty (30) days after receipt of notice from the Lender identifying such failure; provided, however, that if such failure shall be such that, in Lender's sole and exclusive judgment, it cannot be corrected within such period, it shall not constitute an Event of Default if such failure is correctable, in Lender's sole and exclusive judgment, without resulting in a Material Adverse Effect and if corrective action is instituted by any Borrower within such period and pursued diligently and in good faith, to Lender's sole and exclusive satisfaction, until the failure is corrected, and provided further that any such failure shall have been cured within 90 days of receipt of notice of such failure; or (h) any warranty, representation or other written statement made by or on behalf of any Borrower, any General Partner or any Key Principal contained in this Agreement, any other Loan Document or in any instrument furnished in compliance with or in reference to any of the foregoing, is false or misleading in any material respect on any date when made or deemed made; or (i) failure by the Key Principal to maintain a Net Worth as defined in and to the extent required under the Key Principal Guaranty, as applicable; provided, however, such failure shall not be an Event of Default, if, within thirty (30) days of knowledge by any Borrower of such failure, the Borrowing Agent proposes to Lender one or more substitute "Key Principals" who have executed a Key Principal Guaranty including the same Net Worth requirement and otherwise identical to the existing Key Principal Guaranty in all material respects (the effectiveness of which shall be conditioned on Lender's approval of such substitute Key Principal) and the Lender shall have approved in its discretion such substitute Key Principal within 60 days thereafter; or (j) any Borrower or any General Partner or any Key Principal shall (A) commence a voluntary case under the Federal bankruptcy laws (as now or hereafter in effect), (B) file a petition seeking to take advantage of any other laws, domestic or foreign, relating to bankruptcy, insolvency, reorganization, debt adjustment, winding up or composition or adjustment of debts, (C) consent to or fail to contest in a timely and appropriate manner any petition filed against it in an involuntary case under such bankruptcy laws or other laws, (D) apply for or consent to, or fail to contest in a timely and appropriate manner, the appointment of, or the taking of possession by, a receiver, custodian, trustee or liquidator of itself or of a substantial part of its property, domestic or foreign, (E) admit in writing its inability to pay, or generally not be paying, its debts as they become due, (F) make a general assignment for the benefit of creditors, (G) assert that any Borrower has no liability or obligations under this Agreement or any other Loan Document to which it is a party; (H) take any action for the purpose of effecting any of the foregoing; or (I) suffer an attachment or other judicial seizure of 67 any substantial portion of its assets or suffer an execution of a substantial portion of its assets and such seizure is not discharged or released by bonding or the posting of other security acceptable in form and substance to Lender within thirty days; or (J) a case or other proceeding shall be commenced against any Borrower or any General Partner or any Key Principal in any court of competent jurisdiction seeking (x) relief under the Federal bankruptcy laws (as now or hereafter in effect) or under any other laws, domestic or foreign, relating to bankruptcy, insolvency, reorganization, winding up or composition or adjustment of debts, or (y) the appointment of a trustee, receiver, custodian, liquidator or the like of such Borrower, such General Partner or such Key Principal, or of all or a substantial part of the property, domestic or foreign, of such Borrower, such General Partner or such Key Principal and any such case or proceeding shall continue undismissed or unstayed for a period of 60 consecutive calendar days, or any order granting the relief requested in any such case or proceeding against such Borrower, such General Partner or such Key Principal (including an order for relief under such Federal bankruptcy laws) shall be entered; or (k) if any provision of this Agreement or any other Loan Document or the lien and security interest purported to be created hereunder or under any Loan Document shall at any time for any reason cease to be valid and binding in accordance with its terms on any Borrower or any General Partner, or any Key Principal, as the case may be, or shall be declared to be null and void, or the validity or enforceability hereof or thereof or the validity or priority of the lien and security interest created hereunder or under any other Loan Document shall be contested by any Borrower or any General Partner, or any Key Principal seeking to establish the invalidity or unenforceability hereof or thereof, or any Borrower, any General Partner, or any Key Principal, as the case may be, shall deny that it has any further liability or obligation hereunder or thereunder; or (l) an event constituting an "Event of Default" under Article V; (m) the failure by any Borrower to comply with any requirement of any Governmental Authority within 30 days after written notice of such requirement shall have been given to such Borrower by such Governmental Authority; provided that, if action is commenced and diligently pursued by such Borrower within such 30 days, then such Borrower shall have an additional 30 days to comply with such requirement; or (n) a dissolution or liquidation for any reason (whether voluntary or involuntary) of any Borrower; or (o) any judgment against any Borrower, any attachment or other levy against any portion of any Borrower's assets with respect to a claim or claims in an amount in excess of $250,000 individually or $500,000 in the aggregate remains unpaid, unstayed on appeal, undischarged, unbonded, not fully insured or undismissed for a period of 60 days. Notwithstanding anything to the contrary herein or in the other Loan Documents, if an Event of Default shall occur hereunder or under another Loan Document because a representation, warranty, affirmative covenant, negative covenant or other provision hereunder or thereunder 68 shall be breached or violated which in Lender's sole and exclusive judgment is with respect to a particular Mortgaged Property (other than any misappropriation of funds collected in respect thereof except for any misappropriation consisting of (i) theft by an employee of a Manager that is not an Affiliate of any Borrower or (ii) theft by an employee of a Manager or Asset Manager that is in each case an Affiliate of any Borrower if all losses occasioned thereby are fully covered by insurance), such Event of Default shall be deemed cured, upon Borrowers' satisfaction of the conditions set forth in Article IV relating to the release of such Mortgaged Property from the Collateral Pool within 30 days of knowledge by the Borrower of the Event of Default. The existence of such cure right by the Borrowers shall not in any way limit or restrict Lender's right to exercise any and all remedies set forth in Article XII; provided, however, if any Borrower releases such Mortgaged Property pursuant to the provisions of Article IV as described in the preceding sentence and at the time of such release no other Event of Default has occurred and is continuing, Lender shall cease exercising its remedies and discontinue any proceedings it may have initiated and the parties shall be restored to their former positions and rights hereunder. Upon such payment and the satisfaction of the conditions set forth in Article IV relating to the release of such Mortgaged Property, so long as no other Event of Default shall have occurred and be continuing hereunder (other than one that is simultaneously being cured pursuant to this paragraph), Lender shall release all Liens on such Mortgaged Property. ARTICLE XII REMEDIES SECTION 12.01 Remedies; Waivers. Upon the occurrence of an Event of Default, the Lender may do any one or more of the following (without presentment, protest or notice of protest, all of which are expressly waived by each Borrower): (a) by written notice to the Borrowing Agent, to be effective upon dispatch declare the principal of, and interest on, the Term Loan and all other sums owing by the Borrowers to the Lender under any of the Loan Documents forthwith due and payable, whereupon the principal of, and interest on, the Term Loan and all other sums owing by the Borrowers to the Lender under any of the Loan Documents will become forthwith due and payable. (b) pursue any other remedies available to it under any of the Loan Documents. (c) pursue all remedies available to it at law or in equity, including obtaining specific performance and injunctive relief. (d) have access to and have the right to inspect, examine, have audited and make copies of books and records and any and all accounts, data, and income tax and other tax returns of each Borrower. 69 (e) terminate contracts or employment arrangements providing for the management or maintenance of the Property and terminate any obligation to make Future Term Loans. SECTION 12.02 Waivers; Rescission of Declaration. The Lender shall have the right, to be exercised in its complete discretion, to waive any breach hereunder (including the occurrence of an Event of Default), by a writing setting forth the terms, conditions, and extent of such waiver signed by the Lender and delivered to the Borrowing Agent. Unless such writing expressly provides to the contrary, any waiver so granted shall extend only to the specific event or occurrence which gave rise to the waiver and not to any other similar event or occurrence which occurs subsequent to the date of such waiver. SECTION 12.03 The Lender's Right to Protect Collateral and Perform Covenants and Other Obligations. If any Borrower fails to perform the covenants and agreements contained in this Agreement or any of the other Loan Documents, then the Lender at the Lender's option may make such appearances, disburse such sums and take such action as the Lender deems necessary, in its sole discretion, to protect the Lender's interest, including (i) disbursement of attorneys' fees, (ii) entry upon the Mortgaged Property to make repairs and replacements, (iii) procurement of satisfactory insurance as provided in paragraph 5 of the Security Instrument encumbering the Mortgaged Property, and (iv) if the Security Instrument is on a leasehold, exercise of any option to renew or extend the ground lease on behalf of the respective Borrower and the curing of any default of such Borrower in the terms and conditions of the ground lease. Any amounts disbursed by the Lender pursuant to this Section, with interest thereon, shall become additional indebtedness of the Borrowers secured by the Loan Documents. Unless the Borrowing Agent and the Lender agree to other terms of payment, such amounts shall be immediately due and payable and shall bear interest from the date of disbursement at the interest rate set forth in the Note unless collection from the Borrowers of interest at such rate would be contrary to applicable law, in which event such amounts shall bear interest at the highest rate which may be collected from the Borrowers under applicable law. Nothing contained in this Section shall require the Lender to incur any expense or take any action hereunder. SECTION 12.04 No Remedy Exclusive. Unless otherwise expressly provided, no remedy herein conferred upon or reserved is intended to be exclusive of any other available remedy, but each remedy shall be cumulative and shall be in addition to other remedies given under the Loan Documents or existing at law or in equity. SECTION 12.05 No Waiver. No delay or omission to exercise any right or power accruing under any Loan Document upon the happening of any Event of Default or Potential Event of Default shall impair any such right or power or shall be construed to be a waiver thereof, but any such right and power may be exercised from time to time and as often as may be deemed expedient. SECTION 12.06 No Notice. In order to entitle the Lender to exercise any remedy reserved to the Lender in this Article, it shall not be necessary to give any notice, other than such notice as 70 may be required under the applicable provisions of this Agreement or any of the other Loan Documents. SECTION 12.07 Application of Payments. Except as otherwise expressly provided in the Loan Documents, and unless applicable law provides otherwise, (i) all payments received by the Lender from the Borrowers under the Loan Documents shall be applied by the Lender against any amounts then due and payable under the Loan Documents by the Borrowers, in any order of priority that the Lender may determine and (ii) the Borrowers shall have no right to determine the order of priority or the allocation of any payment it makes to the Lender. SECTION 12.08 No Requirement of Tender of Performance. Nothing in this Agreement shall require or be construed to require Lender to accept tender of performance of any of the Borrowers' obligations under this Agreement after the expiration of any time period set forth in this Agreement for the performance of such obligations and the expiration of any applicable cure periods, if any. ARTICLE XIII RIGHTS OF FANNIE MAE SECTION 13.01 [RESERVED.] SECTION 13.02 Assignment of Rights. Each Borrower acknowledges and consents to the assignment to Fannie Mae of all of the rights of the Lender under this Agreement and all other Loan Documents, including the right and power to make all decisions on the part of the Lender to be made under this Agreement and the other Loan Documents, but Fannie Mae, by virtue of this assignment, shall not be obligated to perform the obligations of Lender to fund the Term Loan under this Agreement. The Servicer shall service the Term Loan. SECTION 13.03 Release of Collateral. Each Borrower hereby acknowledges that, after the assignment of Loan Documents contemplated in Section 13.02, the Lender shall not have the right or power to effect a release of any Collateral pursuant to Article IV. Each Borrower acknowledges that the Security Instruments provide for the release of the Collateral under Article IV. Accordingly, no Borrower shall look to the Lender for performance of any obligations set forth in Article IV, but shall look solely to the party secured by the Collateral (i.e., Fannie Mae) to be released for such performance. The Lender represents and warrants to the Borrowers that the party secured by the Collateral shall be subject to the release provisions contained in Article IV by virtue of the release provisions in each Security Instrument. SECTION 13.04 Replacement of Lender. At the request of Fannie Mae, the Borrowing Agent and the Lender shall agree to the assumption by another 71 lender designated by Fannie Mae, of all of the obligations of the Lender under this Agreement and the other Loan Documents, and/or any related servicing obligations, and, at Fannie Mae's option, the concurrent release of the Lender from its obligations under this Agreement and the other Loan Documents, and/or any related servicing obligations, and shall execute all releases, modifications and other documents which Fannie Mae determines are necessary or desirable to effect such assumption. SECTION 13.05 Fannie Mae and Lender Fees and Expenses. Each Borrower agrees that any provision providing for the payment of fees, costs or expenses incurred or charged by the Lender pursuant to this Agreement shall be deemed to provide for the Borrowers' payment of all fees, costs and expenses incurred or charged by the Lender or Fannie Mae in connection with the matter for which fees, costs or expenses are payable. SECTION 13.06 Third-Party Beneficiary. Each Borrower hereby acknowledges and agrees that Fannie Mae is a third party beneficiary of all of the representations, warranties and covenants made by each Borrower to, and all rights under this Agreement conferred upon, the Lender, and, by virtue of its status as third-party beneficiary and/or assignee of the Lender's rights under this Agreement, Fannie Mae shall have the right to enforce all of the provisions of this Agreement against any and all of the Borrowers. ARTICLE XIV INSURANCE, REAL ESTATE TAXES AND REPLACEMENT RESERVES SECTION 14.01 Insurance and Real Estate Taxes. Each Borrower shall (unless waived by Lender) establish funds for taxes, insurance premiums and certain other charges for each Mortgaged Property to the extent required by Section 7(a) of the Security Instrument for each Mortgaged Property. SECTION 14.02 Replacement Reserves. Each of the Borrowers shall execute the Replacement Reserve Agreement for the Mortgaged Properties and shall (unless waived by the Lender) make all deposits for replacement reserves in accordance with the terms of the Replacement Reserve Agreement. ARTICLE XIV-A CROSS-GUARANTY AND OTHER INTERBORROWER MATTERS Section 14.01-A Cross-Guaranty. Each Borrower, on a joint and several basis, hereby irrevocably guarantees to the Lender and its successors and assigns, the full and prompt payment (whether at stated maturity, by acceleration or otherwise) and performance of, all Obligations owed or hereafter owing to the Lender by each other Borrower. In addition, each 72 Borrower, on a joint and several basis, hereby irrevocably guarantees to Lender the full and prompt payment when due, whether at maturity or earlier, by reason of acceleration or otherwise, and at all times thereafter, of all amounts for which each other Borrower would have been liable under Section 15.01(d) of the Term Loan Agreement in respect of Section 18 of the Security Instruments, had it not been for the termination of such other Borrower's obligations in respect thereof pursuant to the last sentence of Section 18(o) of the Security Instruments executed by such other Borrower. Each Borrower agrees that its guaranty obligation hereunder is an unconditional guaranty of payment and performance and not merely a guaranty of collection. The guaranty obligations of each Borrower under this Article XIV-A shall not be subject to any counterclaim, set-off, recoupment, deduction, cross-claim or defense based upon any claim any Borrower may have against Lender or any other Borrower. Section 14.02-A Waivers by Borrowers and Other Rights. (a) The obligations of each Borrower under this Article XIV-A shall survive any foreclosure proceeding, any foreclosure sale, any delivery of any deed in lieu of foreclosure, and any release of record of the Security Instruments. The obligations of each Borrower under this Article XIV-A shall be performed without demand by the Lender and shall be unconditional irrespective of the genuineness, validity, regularity or enforceability of this Agreement, the Note, the Security Instruments, or any other Loan Document, and without regard to any other circumstance which might otherwise constitute a legal or equitable discharge of a surety or a guarantor. Each Borrower hereby waives the benefit of all principles or provisions of law, statutory or otherwise, which are or might be in conflict with the terms of this Article XIV-A and agrees that its obligations shall not be affected by any circumstances, whether or not referred to in this Article XIV-A, which might otherwise constitute a legal or equitable discharge of a surety or a guarantor. Each Borrower hereby waives the benefits of any right of discharge under any and all statutes or other laws relating to guarantors or sureties and any other rights of sureties and guarantors thereunder. Without limiting the generality of the foregoing, each Borrower hereby waives, to the fullest extent permitted by law, diligence in collecting the indebtedness of such Borrower to the Lender, any rights or defenses based upon an offset by any Borrower against any obligation now or hereafter owed to such Borrower by any other Borrower, presentment, demand for payment, protest, all notices with respect to the Term Loan Agreement and the Note which may be required by statute, rule of law or otherwise to preserve the Lender's rights against such Borrower under this Article XIV-A, including notice of acceptance, notice of any amendment of the Loan Documents, notice of the occurrence of any default, potential Event of Default or Event of Default, notice of intent to accelerate, notice of acceleration, notice of dishonor, notice of foreclosure, notice of protest, and notice of the incurring by any Borrower of any obligation or indebtedness. Each Borrower also waives, to the fullest extent permitted by law, all rights to require the Lender to (a) proceed against any Borrower or any other guarantor of Borrower's payment or performance with respect to the Obligations, (b) if any Borrower or any guarantor is a partnership, proceed against any General Partner of such Borrower or the guarantor, (c) proceed against or exhaust any Collateral held by the Lender to secure the repayment of the Obligations, or (d) pursue any other remedy it may now or hereafter have against any Borrower or any General Partner of such Borrower. It is agreed among each Borrower and Lender that all of the 73 foregoing waivers and the other provisions of this Article XIV-A are of the essence of the transaction contemplated by this Agreement and other Loan Documents and that but for the provisions of this Article XIV-A and such waivers the Lender would decline to enter into this Agreement. (b) At any time or from time to time any number of times, without notice to any Borrower in its capacity as guarantor and without affecting the liability of any Borrower, (a) the time for payment of the principal of or interest on the Term Loan may be extended or the Term Loan may be renewed in whole or in part; (b) the time any Borrower's performance of or compliance with any covenant or agreement contained in the Term Loan Agreement, the Note, the Security Instruments or any other Loan Document, whether presently existing or hereinafter entered into, may be extended or such performance or compliance may be waived; (c) the maturity of the Term Loan may be accelerated as provided in the Term Loan Agreement, the Note, the Security Instruments, or any other Loan Document; (d) the Note, the Security Instruments, or any other Loan Document may be modified or amended by Lender and Borrowers in any respect, including an increase in the principal amount; and (e) and security for the Term Loan may be modified, exchanged, surrendered or otherwise dealt with or additional security may be pledged or mortgaged for the Term Loan. (c) The obligations of the Borrowers under this Agreement shall be absolute, unconditional and irrevocable and shall be paid and performed strictly in accordance with the terms of this Agreement under all circumstances whatsoever, including, without limitation, the following circumstances: (a) any invalidity or unenforceability of any of the Loan Documents or any other agreement or instrument related to the Loan Documents; (b) the existence of any claim, set-off, defense or other right which any Borrower may have at any time against Lender or any other Person, whether in connection with this Agreement, any of the other Loan Documents, any Mortgaged Property, or any unrelated transaction; (c) the surrender or impairment of any security for the performance or observance of any of the agreements or terms of this Agreement or the other Loan Documents; or (d) defect in title to any Mortgaged Property, any acts or circumstances that may constitute failure of consideration, destruction of, damage to or condemnation of any Mortgaged Property, commercial frustration of purpose, or any change in the tax or other laws of the United States of America or of the State or any political subdivision of either. (d) The provisions of this Section 14.02-A(c) override all other provisions of Sections 14.01-A and 14.02-A. Each Borrower to the extent it is deemed a guarantor shall have the right to assert all defenses and counterclaims that would have been available to it if it had been treated as a Borrower (jointly and severally with the other Borrowers) instead of as a guarantor, except for the following defenses, which each Borrower waives: (a) any other Borrower's lack of legal capacity, the defense of ultra vires, failure of due authorization or execution of any of the Loan Documents and any similar defenses based on matters personal to any other Borrower or any other Borrower's ability (or lack thereof) to enter into and perform its obligations under the Loan Documents; 74 (b) discharge of any other Borrower by reason of insolvency proceedings or bankruptcy proceedings or any similar discharge by reason of any of the events described in Section 11.01(j) of the Term Loan Agreement; (c) usury; (d) discharge of any other Borrower under an applicable statute of limitations; and (e) discharge of any other Borrower pursuant to the last sentence of Section 18(o) of the Security Instruments executed by any other Borrower. Section 14.03-A No Impairment. Each Borrower agrees that the provisions of this Article XIV-A are for the benefit of the Lender and its successors, transferees, endorsees and assigns, and nothing herein contained shall impair, as between any other Borrower and the Lender, the obligations of such other Borrower under the Loan Documents. Section 14.04-A No Subrogation. No Borrower shall have the right of, and hereby waives any claim for, subrogation, contribution, indemnity or reimbursement (other than claims for contribution and indemnity under the Contribution Agreement) against any other Borrower or any General Partner of any other Borrower by reason of any payment by such Borrower under this Article XIV-A, whether such right or claim arises at law or in equity or under any contract (other than claims for contribution and indemnity under the Contribution Agreement) or statute or otherwise, until the Obligations have been paid in full and all the Loan Documents have been terminated. Section 14.05-A [RESERVED]. Section 14.06-A Election of Remedies. The Lender, in its discretion, may (a) bring suit against any one or more of the Borrowers, jointly and severally, without any requirement that the Lender first proceed against any other Borrower or any other Person; (b) compromise or settle with any one or more of the Borrowers, or any other Person, for such consideration as the Lender may deem proper; (c) release one or more of the Borrowers, or any other Person, from liability; and (d) otherwise deal with any Borrower and any other Person, or any one or more of them, in any manner, or resort to any of the Collateral at any time held by it for performance of the Obligations or any other source or means of obtaining payment of the Obligations, and no such action shall impair the rights of the Lender to collect from any Borrower any amount guaranteed by any Borrower under this Article XIV-A. Nothing contained in this paragraph shall in any way affect or impair the rights or obligations of any Borrower with respect to any other Borrower. Section 14.07-A Subordination of Other Obligations. 75 (a) Each Borrower hereby irrevocably and unconditionally agrees that all amounts payable from time to time to such Borrower by any other Borrower pursuant to any agreement (including the Contribution Agreement), whether secured or unsecured, whether of principal, interest or otherwise, other than the amounts referred to in this Article XIV-A (collectively, the "Subordinated Obligations"), shall be and such rights, claims and indebtedness are, hereby deferred, postponed and fully subordinated in time and right of payment to the prior payment, performance and satisfaction in full of the Obligations; provided, however, that payments may be received by any Borrower in accordance with, and only in accordance with, the provisions of Section 14.07-A(b) hereof. (b) Until the Obligations have been finally paid in full and all the Loan Documents have been terminated, each Borrower irrevocably and unconditionally agrees it will not ask, demand, sue for, take or receive, directly or indirectly, by set-off, redemption, purchase or in any other manner whatsoever, any payment with respect to, or any security or guaranty for, the whole or any part of the Subordinated Obligations, and in issuing notes, documents, instruments or agreements of any kind evidencing the Subordinated Obligations, each Borrower hereby agrees that it will not receive any payment of any kind on account of the Subordinated Obligations, so long as any of the Obligations under the Loan Documents are outstanding or any of the terms and conditions of any of the Loan Documents are in effect; provided, however, that, notwithstanding anything to the contrary contained herein, if no Potential Event of Default or Event of Default or any other event or condition which would constitute an Event of Default after notice or lapse of time or both has occurred and is continuing under the Loan Documents, then payments may be received by such Borrower in respect of the Subordinated Obligations in accordance with and provided that such Borrower and the other Borrowers make such payment in full and strict compliance with the Contribution Agreement. Except as aforesaid, each Borrower agrees not to accept any payment or satisfaction of any kind of indebtedness of any other Borrower in respect of the Subordinated Obligations and hereby assigns such rights or indebtedness to the Lender, including the right to file proofs of claim and to vote thereon in connection with any case under the Bankruptcy Code, including the right to vote on any plan of reorganization. In the event that any payment on account of Subordinated Obligations shall be received by any Borrower in violation of the foregoing, such payment shall be held in trust for the benefit of the Lender, and any amount so collected shall be turned over to the Lender upon demand for application to the Obligations. Section 14.08-A Insolvency and Liability of Other Borrowers. So long as any of the Obligations are outstanding, if a petition under the Bankruptcy Code is filed by or against any Borrower, the other Borrowers agree that Lender has the right to file all claims against such Borrower in any bankruptcy or other proceeding in which the filing of claims is required by law in connection with indebtedness owed by such Borrower to the other Borrowers. In all such cases, the Person or Persons authorized to pay such claims shall pay to the Lender the full amount thereof and Lender agrees to pay such Borrower any amounts received in excess of the amount necessary to pay the Obligations. Such Borrowers hereby assign to the Lender, as additional Collateral, all of such Borrowers' rights to all such payments to which such Borrowers would otherwise be entitled but not to exceed the full amount of the Obligations. In the event that, notwithstanding 76 the foregoing, any such payment shall be received by any Borrower before the Obligations shall have been finally paid in full and all the Loan Documents have been terminated, such payment shall be held in trust for the benefit of and shall be paid over to the Lender upon demand. Furthermore, notwithstanding the foregoing, the liability of each Borrower hereunder shall in no way be affected by: (a) the release or discharge of any other Borrower in any creditors', receivership, bankruptcy or other proceedings; or (b) the impairment, limitation or modification of the liability of any other Borrower or the estate of any other Borrower in bankruptcy resulting from the operation of any present or future provisions of the Bankruptcy Code or other statute or from the decision in any court. Section 14.09-A Preferences, Fraudulent Conveyances, Etc. If the Lender is required to refund, or voluntarily refunds, any payment received from any Borrower because such payment is or may be avoided, invalidated, declared fraudulent, set aside or determined to be void or voidable as a preference, fraudulent conveyance, impermissible setoff or a diversion of trust funds under the bankruptcy laws or for any similar reason, including without limitation any judgment, order or decree of any court or administrative body having jurisdiction over any Borrower or any of its property, or upon or as a result of the appointment of a receiver, intervenor, custodian or conservator of, or trustee or similar officer for, any Borrower or any substantial part of its property, or otherwise, or any statement or compromise of any claim effected by the Lender with any Borrower or any other claimant (a "Rescinded Payment"), then the other Borrowers' liability to the Lender shall continue in full force and effect, or the other Borrowers' liability to the Lender shall be reinstated and renewed, as the case may be, with the same effect and to the same extent as if the Rescinded Payment had not been received by the Lender, notwithstanding the cancellation or termination of any of the Loan Documents, and regardless of whether the Lender contested the order requiring the return of such payment. In addition, the other Borrowers shall pay, or reimburse the Lender for, all expenses (including all reasonable attorneys' fees, court costs and related disbursements) incurred by the Lender in the defense of any claim that a payment received by the Lender in respect of all or any part of the Obligations must be refunded. The provisions of this Section 14.09-A shall survive the termination of the Loan Documents. Section 14.10-A Maximum Liability of Each Borrower. Notwithstanding anything contained in this Agreement or any of the Loan Documents to the contrary, if the obligations of any Borrower under this Agreement or the other Loan Documents exceed the limitations imposed under any Fraudulent Transfer Law (as hereinafter defined), then such liability of such Borrower shall be limited to a maximum aggregate amount equal to the largest amount that would not render its obligations under this Agreement or the other Loan Documents subject to avoidance as a fraudulent transfer or conveyance under Section 548 of Title 11 of the United States Code or any applicable provisions of comparable state law (collectively, the "Fraudulent Transfer Laws"), in each case after giving effect to all other liabilities of such Borrower, contingent or otherwise, that 77 are relevant under the Fraudulent Transfer Laws (specifically excluding, however, any liabilities of such Borrower in respect of indebtedness to any other Borrower or any other Person that is an Affiliate of the other Borrowers to the extent that such indebtedness would be discharged in an amount equal to the amount paid by such Borrower in respect of the Obligations) and after giving effect (as assets) to the value (as determined under the applicable provisions of the Fraudulent Transfer Laws) of any rights to subrogation, reimbursement, indemnification or contribution of such Borrower pursuant to applicable law or pursuant to the terms of any agreement including the Contribution Agreement. Section 14.11-A Liability Cumulative. The liability of each Borrower under this Article XIV-A shall be cumulative with all liabilities of such Borrower to the Lender under this Agreement and the other Loan Documents to which such Borrower is a party or in respect of any Obligations of any other Borrower. ARTICLE XV LIMITS ON PERSONAL LIABILITY SECTION 15.01 Limits on Personal Liability. (a) Except as otherwise provided in this Section 15.01, no Borrower nor any partners of any Borrower or other persons owning any direct or indirect interests in any Borrower shall have personal liability under this Agreement, or any Loan Document for the repayment of the Obligations thereunder or for the performance of any other obligations of any Borrower under the Agreement and the Loan Documents, and Lender's only recourse for the satisfaction of the Obligations and the performance of such other obligations shall be Lender's exercise of its rights and remedies with respect to Mortgaged Properties and any other collateral held by Lender as security for such Obligations. This limitation on each Borrower's liability shall not limit or impair Lender's enforcement of its rights against any guarantor of the Obligations or any obligations of any Borrower. (b) Each Borrower shall be personally liable to Lender for the repayment of a portion of the Obligations equal to any loss or damage suffered by Lender as a result of (1) failure of any Borrower to pay to Lender upon demand after an Event of Default, all Rents to which Fannie Mae is entitled under Section 3 of each Security Instrument and the amount of all security deposits collected by any Borrower from tenants then in residence (net of all prior disbursements therefrom pursuant to the applicable leases); or (2) failure of any Borrower to apply all insurance proceeds and condemnation proceeds as required by each Mortgage; or (3) failure of any Borrower to either deliver to Lender upon written demand all books and records relating to any Mortgaged Property after the occurrence and during the continuation of an Event of Default or to permit Lender or its agents to audit any Borrower's books and records as required by Section 14(d) of each Security Instrument; or (4) fraud or written material misrepresentation by any Borrower, any Key Principal, or any officer, director, partner, member or employee of any Borrower in connection with the application for or creation of the Obligations or any request for any action or consent by Lender; or (5) failure to apply Rents, 78 first, to the payment of reasonable Operating Expenses (other than Mortgaged Property management fees that are not currently payable pursuant to the term of an Assignment of Management Agreement or any other agreement with Lender executed in connection with this Agreement) and then to amounts ("Debt Service Amounts") payable under this Agreement or any Loan Document, except in the case of the foregoing clauses (1), (2) and (5) that the Borrowers will not be personally liable (i) to the extent that the applicable Borrower lacks the legal right to direct the disbursement of such sums or to deposit, apply or pay such funds because of a bankruptcy, receivership or similar judicial proceeding, and except to the extent such action by the applicable Borrower (a) would violate a court order of a court of competent jurisdiction sought or obtained by a Person unaffiliated with and not acting jointly or in concert with any Borrower or a Key Principal or (b) is subject to a competing claim of a Person unaffiliated with and not acting jointly or in concert with any Borrower or a Key Principal (provided that no Borrower shall be relieved from liability hereunder as a consequence of any such competing claim unless such Borrower has deposited the disputed amount into a court of competent jurisdiction pursuant to a valid interpleader or comparable action duly commenced), or (ii) with respect to Rents that are distributed to any Borrower's partners if at the time of distribution such Borrower has paid all Operating Expenses and Debt Service Amounts for the previous months of the same calendar year in which the distribution is made; or (6) any willful or wanton act of any Borrower which causes material damage to any Mortgaged Property; or (7) distributions in violation of Section 8.10. (c) Each Borrower shall become personally liable to Lender for the repayment of all of the Obligations upon the occurrence of any of the following Events of Default: (1) Any Borrower's acquisition of any property or operation of any business not permitted by Section 33 of each Mortgage; or (2) a Bankruptcy Event or (3) a Transfer that is an Event of Default under Article V provided, however, if such Transfer arises from the grant of a leasehold interest or the grant of an easement which fails to satisfy the requirements set forth in Section 5.02, each Borrower shall not be personally liable to Lender for repayment of all the Obligations if Borrower cures such Event of Default within 30 days to Lender's satisfaction. (d) Each Borrower shall be personally liable to Lender for full recourse liability under any and all indemnification obligations contained in Section 18 of each Mortgage. (e) To the extent that any Borrower has personal liability under this Section 15.01, Lender may exercise its rights against any Borrower personally without regard to whether Lender has exercised any rights against any Mortgaged Property or any other security, or pursued any rights against any guarantor, or pursued any other rights available to Lender under the Loan Documents or applicable law. For purposes of this Section 15.01, the term "Mortgaged Property" shall not include any funds that (1) have been applied by any Borrower as required or permitted by any Security Instrument prior to the occurrence of the Event of Default, or (2) any Borrower was unable to apply as required or permitted by such Security Instrument because of a bankruptcy, receivership or similar judicial proceeding. 79 ARTICLE XVI MISCELLANEOUS PROVISIONS SECTION 16.01 Counterparts. To facilitate execution, this Agreement may be executed in any number of counterparts. It shall not be necessary that the signatures of, or on behalf of, each party, or that the signatures of all persons required to bind any party, appear on each counterpart, but it shall be sufficient that the signature of, or on behalf of, each party, appear on one or more counterparts. All counterparts shall collectively constitute a single agreement. It shall not be necessary in making proof of this Agreement to produce or account for more than the number of counterparts containing the respective signatures of, or on behalf of, all of the parties hereto. SECTION 16.02 Amendments, Changes and Modifications. This Agreement may be amended, changed, modified, altered or terminated only by written instrument or written instruments signed by all of the parties hereto. SECTION 16.03 Payment of Costs, Fees and Expenses. The Borrowers shall pay, on demand, all fees, costs, charges or expenses (including the fees and expenses of attorneys, accountants and other experts) incurred by the Lender in connection with: (a) Any amendment, consent or waiver to this Agreement or any of the Loan Documents (whether or not any such amendments, consents or waivers are entered into). (b) [RESERVED.] (c) The enforcement of, or preservation of rights or remedies under, this Agreement or any other Loan Documents or in connection with the foreclosure upon, sale of or other disposition of any Collateral granted pursuant to the Loan Documents. (d) The reasonable fees and disbursements of Lender's counsel and accountants, including fees and expenses relating to any collection, disbursement or application of insurance or condemnation awards, proceeds, damages or other payments including, without limitation, all costs incurred in connection with the application of insurance or condemnation awards to restore or repair any Property, including, reasonable appraiser fees. Any attorneys' fees and expenses payable by the Borrowers pursuant to this Section shall be recoverable separately from and in addition to any other amount included in such judgment, and such obligation is intended to be severable from the other provisions of this Agreement and to survive and not be merged into any such judgment. Any amounts payable by the Borrowers pursuant to this Section, with interest thereon if not paid when due, shall become additional indebtedness of the Borrowers secured by the Loan Documents. Such amounts shall bear interest from the date such amounts are due until paid in full at the interest rate applicable to the Term Loan unless collection from the Borrowers of interest at such rate would be contrary to applicable law, in which event such amounts shall bear interest at the highest rate which may be collected from the Borrowers under applicable law. The provisions of this Section are 80 cumulative with, and do not exclude the application and benefit to the Lender of, any provision of any other Loan Document relating to any of the matters covered by this Section. SECTION 16.04 Payment Procedure. All payments to be made to the Lender pursuant to this Agreement or any of the Loan Documents shall be made in lawful currency of the United States of America and in immediately available funds by wire transfer to an account designated by the Lender before 1:00 p.m. (Washington, D.C. time) on the date when due. SECTION 16.05 Payments on Business Days. In any case in which the date of payment to the Lender or the expiration of any time period hereunder occurs on a day which is not a Business Day, then such payment or expiration of such time period need not occur on such date but may be made on the next succeeding Business Day with the same force and effect as if made on the day of maturity or expiration of such period, except that interest shall continue to accrue for the period after such date to the next Business Day. SECTION 16.06 CHOICE OF LAW; CONSENT TO JURISDICTION; WAIVER OF JURY TRIAL. NOTWITHSTANDING ANYTHING IN THE NOTE, THE SECURITY DOCUMENTS OR ANY OF THE OTHER LOAN DOCUMENTS TO THE CONTRARY, EACH OF THE TERMS AND PROVISIONS, AND RIGHTS AND OBLIGATIONS OF EACH BORROWER UNDER THE NOTE, AND UNDER THE OTHER LOAN DOCUMENTS, SHALL BE GOVERNED BY, INTERPRETED, CONSTRUED AND ENFORCED PURSUANT TO AND IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK (EXCLUDING THE LAW APPLICABLE TO CONFLICTS OR CHOICE OF LAW) EXCEPT TO THE EXTENT OF PROCEDURAL AND SUBSTANTIVE MATTERS RELATING ONLY TO (1) THE CREATION, PERFECTION AND FORECLOSURE OF LIENS AND SECURITY INTERESTS, AND ENFORCEMENT OF THE RIGHTS AND REMEDIES, AGAINST THE MORTGAGED PROPERTIES, WHICH MATTERS SHALL BE GOVERNED BY THE LAWS OF THE JURISDICTION IN WHICH THE MORTGAGED PROPERTY IS LOCATED AND (2) THE PERFECTION, THE EFFECT OF PERFECTION AND NON-PERFECTION AND FORECLOSURE OF DEPOSIT ACCOUNTS, WHICH MATTERS SHALL BE GOVERNED BY THE LAWS OF THE JURISDICTION IN WHICH THE DEPOSIT ACCOUNT IS LOCATED. EACH BORROWER AGREES THAT ANY CONTROVERSY ARISING UNDER OR IN RELATION TO THE NOTE, THE SECURITY DOCUMENTS OR ANY OTHER LOAN DOCUMENT SHALL BE, EXCEPT AS OTHERWISE PROVIDED HEREIN, LITIGATED IN THE STATE OF NEW YORK. THE LOCAL AND FEDERAL COURTS AND AUTHORITIES WITH JURISDICTION IN THE STATE OF NEW YORK SHALL, EXCEPT AS OTHERWISE PROVIDED HEREIN, HAVE JURISDICTION OVER ALL CONTROVERSIES WHICH MAY ARISE UNDER OR IN RELATION TO THE LOAN DOCUMENTS, INCLUDING THOSE CONTROVERSIES RELATING TO THE EXECUTION, JURISDICTION, BREACH, ENFORCEMENT OR COMPLIANCE WITH THE NOTE, THE SECURITY DOCUMENTS OR ANY OTHER ISSUE ARISING UNDER, RELATING TO, OR IN CONNECTION WITH ANY OF THE LOAN DOCUMENTS. EACH BORROWER IRREVOCABLY CONSENTS TO SERVICE, JURISDICTION, AND VENUE OF SUCH COURTS FOR ANY LITIGATION ARISING FROM THE NOTE, 81 THE SECURITY DOCUMENTS OR ANY OF THE OTHER LOAN DOCUMENTS, AND WAIVES ANY OTHER VENUE TO WHICH IT MIGHT BE ENTITLED BY VIRTUE OF DOMICILE, HABITUAL RESIDENCE OR OTHERWISE. EACH BORROWER HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVES, TO THE FULLEST EXTENT IT MAY LEGALLY AND EFFECTIVELY DO SO, ANY OBJECTION WHICH IT MAY NOW OR HEREAFTER HAVE TO THE LAYING OF VENUE OF ANY SUIT, ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE LOAN DOCUMENTS, IN THE STATE OF NEW YORK OR FEDERAL COURT. EACH BORROWER HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, THE DEFENSE OF ANY INCONVENIENT FORUM TO THE MAINTENANCE OF SUCH ACTION OR PROCEEDING IN ANY SUCH COURT. EACH BORROWER IRREVOCABLY CONSENTS TO SERVICE OF PROCESS IN THE MANNER PROVIDED FOR NOTICES IN SECTION 16.08. NOTHING IN THIS AGREEMENT WILL AFFECT THE RIGHT OF ANY PARTY TO THIS AGREEMENT TO SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY LAW. NOTHING CONTAINED HEREIN, HOWEVER, SHALL PREVENT THE LENDER FROM BRINGING ANY SUIT, ACTION OR PROCEEDING OR EXERCISING ANY RIGHTS AGAINST ANY BORROWER, AND AGAINST THE COLLATERAL IN ANY OTHER JURISDICTION. INITIATING SUCH SUIT, ACTION OR PROCEEDING OR TAKING SUCH ACTION IN ANY OTHER JURISDICTION SHALL IN NO EVENT CONSTITUTE A WAIVER OF THE AGREEMENT CONTAINED HEREIN THAT THE LAWS OF THE STATE OF NEW YORK SHALL GOVERN THE RIGHTS AND OBLIGATIONS OF EACH BORROWER AND THE LENDER AS PROVIDED HEREIN OR THE SUBMISSION HEREIN BY EACH BORROWER TO PERSONAL JURISDICTION WITHIN THE STATE OF NEW YORK. EACH BORROWER (I) COVENANTS AND AGREES NOT TO ELECT A TRIAL BY JURY WITH RESPECT TO ANY ISSUE ARISING UNDER ANY OF THE LOAN DOCUMENTS TRIABLE BY A JURY AND (II) WAIVES ANY RIGHT TO TRIAL BY JURY TO THE EXTENT THAT ANY SUCH RIGHT SHALL NOW OR HEREAFTER EXIST. THIS WAIVER IS INTENDED TO ENCOMPASS INDIVIDUALLY EACH INSTANCE AND EACH ISSUE AS TO WHICH THE RIGHT TO A JURY TRIAL WOULD OTHERWISE ACCRUE. FURTHER, EACH BORROWER HEREBY CERTIFIES THAT NO REPRESENTATIVE OR AGENT OF LENDER (INCLUDING, BUT NOT LIMITED TO, LENDER'S COUNSEL) HAS REPRESENTED, EXPRESSLY OR OTHERWISE, TO SUCH BORROWER THAT LENDER WILL NOT SEEK TO ENFORCE THE PROVISIONS OF THIS SECTION. THE FOREGOING PROVISIONS WERE KNOWINGLY, WILLINGLY AND VOLUNTARILY AGREED TO BY EACH BORROWER UPON CONSULTATION WITH INDEPENDENT LEGAL COUNSEL SELECTED BY SUCH BORROWER'S FREE WILL. SECTION 16.07 Severability. In the event any provision of this Agreement or in any other Loan Document shall be held invalid, illegal or unenforceable in any jurisdiction, such provision will be severable from the remainder hereof as to such jurisdiction and the validity, legality and enforceability of the remaining provisions will not in any way be affected or impaired in any jurisdiction. 82 SECTION 16.08 Notices. (a) Manner of Giving Notice. Each notice, direction, certificate or other communication hereunder (in this Section referred to collectively as "notices" and singly as a "notice") which any party is required or permitted to give to the other party pursuant to this Agreement shall be in writing and shall be deemed to have been duly and sufficiently given if: (1) personally delivered with proof of delivery thereof (any notice so delivered shall be deemed to have been received at the time so delivered); (2) sent by Federal Express (or other similar overnight courier) designating morning delivery (any notice so delivered shall be deemed to have been received on the Business Day it is delivered by the courier); (3) sent by United States registered or certified mail, return receipt requested, postage prepaid, at a post office regularly maintained by the United States Postal Service (any notice so sent shall be deemed to have been received on the Business Day it is delivered); or (4) sent by telecopier or facsimile machine which automatically generates a transmission report that states the date and time of the transmission, the length of the document transmitted, and the telephone number of the recipient's telecopier or facsimile machine (to be confirmed with a copy thereof sent in accordance with paragraphs (1), (2) or (3) above within two Business Days) (any notice so delivered shall be deemed to have been received (i) on the date of transmission, if so transmitted before 5:00 p.m. (local time of the recipient) on a Business Day, or (ii) on the next Business Day, if so transmitted on or after 5:00 p.m. (local time of the recipient) on a Business Day or if transmitted on a day other than a Business Day); addressed to the parties as follows: As to any Borrower, to the Borrowing Agent: WXI/MCN Multifamily Real Estate Limited Partnership 100 Crescent Court Suite 1000 Dallas, TX 75201 Telecopy: (214) 855-6305 Attn: Doug Gunn 83 with a copy to: WXI/MCN Multifamily Real Estate Limited Partnership 85 Broad Street, 19th Floor New York, NY 10004 Telecopy: (212) 357-5505 Attn: Chief Financial Officer with a copy to: WXI/MCN Multifamily Real Estate Limited Partnership c/o Archon Group, L.P. 600 East Las Colinas Boulevard Suite 400 Irving, TX 75039 Telecopy: (972) 368-3698 Attn: Elizabeth W. Lambert with a copy to: Arent Fox Kintner Plotkin & Kahn PLLC 1050 Connecticut Avenue, NW Washington, DC 20036-5339 Telecopy: (202) 857-6395 Attn: Alan S. Dubin, Esq. As to the Lender: AMRESCO Capital, L.P. 700 North Pearl, Suite 2400, LB #342 Dallas, TX 75201-7424 Attn: Vice President, Multifamily Finance Telecopy: (214) 720-1505 with a copy to: AMRESCO Capital, L.P. c/o AMRESCO Services, L.P. 245 Peachtree Center Avenue. N.E., Suite 1800 Atlanta, GA 30303-1231 Attn: Vice President, Loan Servicing Phone: (800) 982-0692 or (404) 654-2418 Fax: (404) 654-2623 84 with a copy to: AMRESCO Capital, L.P. 700 North Pearl, Suite 2400, LB #342 Dallas, TX 75201-7424 Attn: General Counsel Telecopy: (214) 999-7495 As to Fannie Mae: Fannie Mae 3939 Wisconsin Avenue, N.W. Washington, D.C. 20016-2899 Telecopy: (202) 752-5016 Attn: Vice President for Multifamily Asset Management with a copy to: Torys 237 Park Avenue New York, NY 10017 Telecopy: (212) 682-0200 Attn: David L. Dubrow, Esq. As to any Trustee to a Security Instrument: to the address that is indicated on page one of each Security Instrument for each Mortgaged Property (b) Change of Notice Address; Refusal. Any party may, except in the case of the Borrowers with respect to their designation of the Borrowing Agent as the agent for the receipt of notices, by notice given pursuant to this Section, change the person or persons and/or address or addresses, or designate an additional person or persons or an additional address or addresses, for its notices, but notice of a change of address shall only be effective upon receipt. Each party agrees that it shall not refuse or reject delivery of any notice given hereunder, that it shall acknowledge, in writing, receipt of the same upon request by the other party and that any notice rejected or refused by it shall be deemed for all purposes of this Agreement to have been received by the rejecting party on the date so refused or rejected, as conclusively established by the records of the U.S. Postal Service, the courier service or facsimile. Lender and the Borrowers agree that if Lender is obligated to send a notice to the Borrowing Agent under this Agreement, Lender shall endeavor to send a copy to the other parties set forth above at the addresses specified above; provided, however, any failure on the part of Lender to send such copies of any 85 notices shall not render invalid or otherwise affect the validity of any such notice to the Borrowers properly delivered thereunder. SECTION 16.09 Further Assurances and Corrective Instruments. (a) Further Assurances. To the extent permitted by law, the parties hereto agree that they shall, from time to time, execute, acknowledge and deliver, or cause to be executed, acknowledged and delivered, such supplements hereto and such further instruments as the Lender or the Borrowing Agent may request and as may be required in the reasonable opinion of the Lender or its counsel to effectuate the intention of or facilitate the performance of this Agreement or any Loan Document. (b) Further Documentation. Without limiting the generality of subsection (a), in the event any further documentation or information is required by the Lender to correct patent mistakes in the Loan Documents, materials relating to the Title Insurance Policies or the funding of the Term Loan, the Borrowers shall provide, or cause to be provided to the Lender, at their cost and expense, such documentation or information. The Borrowers shall execute and deliver to the Lender such documentation, including any amendments, corrections, deletions or additions to the Notes, the Security Instruments or the other Loan Documents as is reasonably required by the Lender. SECTION 16.10 Term of this Agreement. This Agreement shall continue in effect until the Termination Date. SECTION 16.11 Assignments; Third-Party Rights. No Borrower shall assign this Agreement, or delegate any of its obligations hereunder, without the prior written consent of the Lender. The Lender may assign its rights and obligations under this Agreement separately or together, without any Borrower's consent, only to Fannie Mae, but may not delegate its obligations under this Agreement unless required to do so pursuant to Section 13.04. SECTION 16.12 Headings. Article and Section headings used herein are for convenience of reference only, are not part of this Agreement and are not to affect the construction of, or to be taken into consideration in interpreting, this Agreement. SECTION 16.13 General Interpretive Principles. For purposes of this Agreement, except as otherwise expressly provided or unless the context otherwise requires, (i) the terms defined in Article I, Section 5.04, and elsewhere in this Agreement have the meanings assigned to them in this Agreement and include the plural as well as the singular, and the use of any gender herein shall be deemed to include the other genders; (ii) accounting terms not otherwise defined herein have the meanings assigned to them in accordance with GAAP; (iii) references herein to "Articles," "Sections," "subsections," "paragraphs" and other subdivisions without reference to a document are to designated Articles, Sections, subsections, paragraphs and other subdivisions of this Agreement; (iv) a reference to a subsection without further reference to a Section is a reference to such subsection as contained in the same Section in which the reference appears, and this rule shall also apply to paragraphs and other subdivisions; (v) a reference to an Exhibit or a 86 Schedule without a further reference to the document to which the Exhibit or Schedule is attached is a reference to an Exhibit or Schedule to this Agreement; (vi) the words "herein," "hereof," "hereunder" and other words of similar import refer to this Agreement as a whole and not to any particular provision; and (vii) the word "including" means "including, but not limited to." SECTION 16.14 Interpretation. The parties hereto acknowledge that each party and their respective counsel have participated in the drafting and revision of this Agreement and the Loan Documents. Accordingly, the parties agree that any rule of construction which disfavors the drafting party shall not apply in the interpretation of this Agreement and the Loan Documents or any amendment or supplement or exhibit hereto or thereto. SECTION 16.15 [RESERVED.] SECTION 16.16 Survival of Representation and Warranties. All statements contained in any Loan Document, or in any certificate, financial statement or other instrument delivered by or on behalf of any Borrower (but excluding any certificates delivered by any Persons formerly in control of a Borrower) pursuant to or in connection with this Agreement (including but not limited to any such statement made in or in connection with any amendment hereto or thereto) shall constitute representations and warranties made under this Agreement. All representations and warranties made under this Agreement (i) shall be made and shall be true at and as of the date of this Agreement and (ii) shall survive the execution and delivery of this Agreement, regardless of any investigation made by Lender or on its behalf. SECTION 16.17 Decisions in Writing. Any approval, designation, determination, selection, action or decision of the Lender must be in writing to be effective. SECTION 16.18 Closing Date. The parties agree that this Agreement is dated as of the date first above written for the convenience of the parties, and agree that it shall be effective on, from and after, and all representations and warranties shall be made as of January 31, 2000. [THE REMAINDER OF THIS PAGE IS LEFT INTENTIONALLY BLANK] 87 IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the day and year first above written. BORROWERS: WXI/MCN MULTIFAMILY REAL ESTATE LIMITED PARTNERSHIP, a Delaware limited partnership By: WXI/MCN Multifamily Gen-Par, L.L.C., a Delaware limited liability company, its General Partner By: WXI/McN Realty L.L.C., a Delaware limited liability company, its Managing Member By: --------------------------- Name: ---------------------- Title: --------------------- BRENDON WAY FUND XII ASSOCIATES, an Indiana general partnership By: WXI/MCN Gen-Par II, L.L.C., a Delaware limited liability company, its General Partner By: WXI/McN Realty L.L.C., a Delaware limited liability company, its Managing Member By: --------------------------- Name: ---------------------- Title: --------------------- CASTLE BLUFF FUND XII ASSOCIATES L.P., a Texas limited partnership By: Castle Bluff Corporation, a Texas corporation, its General Partner By: -------------------------------- Name: --------------------------- Title: -------------------------- S-1 EMBARCADERO ASSOCIATES, a Georgia general partnership By: WXI/MCN Gen-Par I, L.L.C., a Delaware limited liability company, its General Partner By: WXI/McN Realty L.L.C., a Delaware limited liability company, its Managing Member By: --------------------------- Name: ---------------------- Title: --------------------- S-2 LENDER: AMRESCO CAPITAL, L.P., a Delaware limited partnership By: AMRESCO Mortgage Capital, Inc., a Delaware corporation Its: Sole General Partner By: -------------------------------- Name: --------------------------- Title: -------------------------- S-3 EXHIBIT A
SCHEDULE OF MORTGAGED PROPERTIES INITIAL MORTGAGED PROPERTY BORROWER MAXIMUM PERCENTAGE -------------------------- -------- ------------------ (for purposes of Section 7.22) 1. Berkley Hills Apartments, Madison, TN............. WXI/MCN Multifamily Real Estate 4.00% Limited Partnership 2. Brendon Way Apartments, Indianapolis, IN.......... Brendon Way Fund XII Associates 3.50% 3. Castle Bluff Apartments, Kentwood, MI............. Castle Bluff Fund XII Associates 4.00% L.P. 4. Cedar Run Apartments, Lexington, KY............... WXI/MCN Multifamily Real Estate 4.50% Limited Partnership 5. Embarcadero Club Apartments, College Park, GA..... Embarcadero Associates 4.00% 6. Fairfax Apartments, Tallahassee, FL............... WXI/MCN Multifamily Real Estate 4.00% Limited Partnership 7. Forest Park Village Apartments, Columbus, OH...... WXI/MCN Multifamily Real Estate 4.00% Limited Partnership 8. Harbour Club I Apartments, Belleville, MI......... WXI/MCN Multifamily Real Estate 3.25% Limited Partnership 9. Harbour Club II Apartments, Belleville, MI........ WXI/MCN Multifamily Real Estate 3.25% Limited Partnership 10. Harbour Club III Apartments, Belleville, MI....... WXI/MCN Multifamily Real Estate 3.25% Limited Partnership 11. Heather Square Apartments, Dallas, TX............. WXI/MCN Multifamily Real Estate 4.00% Limited Partnership 12. Knollwood Apartments, Kansas City, MO............. WXI/MCN Multifamily Real Estate 4.00% Limited Partnership 13. Pennbrook Place Apartments, Dallas, TX............ WXI/MCN Multifamily Real Estate 4.00% Limited Partnership 14. Pine Hills Apartments, Livingston, TX............. WXI/MCN Multifamily Real Estate 4.00% Limited Partnership 15. Regency Park Apartments, Fort Wayne, IN........... WXI/MCN Multifamily Real Estate 4.25% Limited Partnership
A-1
INITIAL MORTGAGED PROPERTY BORROWER MAXIMUM PERCENTAGE -------------------------- -------- ------------------ (for purposes of Section 7.22) 16. Rock Creek Apartments, Portland, OR............... WXI/MCN Multifamily Real Estate 4.00% Limited Partnership 17. Rolling Hills Apartments, Louisville, KY................................................ WXI/MCN Multifamily Real Estate 4.00% Limited Partnership 18. Ruskin Place Apartments, Lincoln, NE.............. WXI/MCN Multifamily Real Estate 4.00% Limited Partnership 19. Sheraton Hills Apartments, Nashville, TN.......... WXI/MCN Multifamily Real Estate 4.00% Limited Partnership 20. Sleepy Hollow Apartments, Cleveland, TX........... WXI/MCN Multifamily Real Estate 5.00% Limited Partnership 21. Summer Hill Apartments, Dallas, TX................ WXI/MCN Multifamily Real Estate 3.75% Limited Partnership 22. Sun Valley Apartments, Charlotte, NC.............. WXI/MCN Multifamily Real Estate 4.00% Limited Partnership 23. Tanglewood Village Apartments, Carson Village, NV................................................ Embarcadero Associates 3.25% 24. The Village Apartments, Gresham, OR............... WXI/MCN Multifamily Real Estate 3.50% Limited Partnership 25. Westgate Apartments, Lansing, MI.................. WXI/MCN Multifamily Real Estate 4.00% Limited Partnership
ADDITIONAL MORTGAGED PROPERTY BORROWER MAXIMUM PERCENTAGE ----------------------------- -------- ------------------ (for purposes of Section 7.22) 1. Amargosa Creek Apartments, Lancaster, CA.......... WXI/MCN Multifamily Real Estate 4.00% Limited Partnership 2. Cedarwood Hills Apartments, Cedar Rapids, IA...... WXI/MCN Multifamily Real Estate 4.00% Limited Partnership
S-2 EXHIBIT B ALLOCABLE FACILITY AMOUNTS ALLOCABLE PROPERTY/LOCATION FACILITY ----------------- AMOUNT ------ 1. Berkley Hills Apartments, Madison, TN.................... $5,887,779 2. Brendon Way Apartments, Indianapolis, IN................. 17,981,923 3. Castle Bluff Apartments, Kentwood, MI.................... 5,837,889 4. Cedar Run Apartments, Lexington, KY...................... 3,169,180 5. Embarcadero Club Apartments, College Park, GA............ 10,883,084 6. Fairfax Apartments, Tallahassee, FL...................... 2,435,228 7. Forest Park Village Apartments, Columbus, OH............. 11,119,542 8. Harbour Club I Apartments, Belleville, MI................ 10,214,176 9. Harbour Club II Apartments, Belleville, MI............... 6,900,324 10. Harbour Club III Apartments, Belleville, MI.............. 12,778,134 11. Heather Square Apartments, Dallas, TX.................... 7,370,931 12. Knollwood Apartments, Kansas City, MO.................... 8,046,766 13. Pennbrook Place Apartments, Dallas, TX................... 5,691,965 14. Pine Hills Apartments, Livingston, TX.................... 2,693,440 15. Regency Park Apartments, Fort Wayne, IN.................. 3,956,776 16. Rock Creek Apartments, Portland, OR...................... 10,032,123 17. Rolling Hills Apartments, Louisville, KY................. 10,531,177 18. Ruskin Place Apartments, Lincoln, NE..................... 7,646,432 19. Sheraton Hills Apartments, Nashville, TN................. 6,126,581 20. Sleepy Hollow Apartments, Cleveland, TX.................. 2,044,358 21. Summer Hill Apartments, Dallas, TX....................... 5,725,662 22. Sun Valley Apartments, Charlotte, NC..................... 8,560,000 23. Tanglewood Village Apartments, Carson Village, NV........ 4,838,936 24. The Village Apartments, Gresham, OR...................... 4,711,414 25. Westgate Apartments, Lansing, MI......................... 6,187,097 B-1 EXHIBIT C COMPLIANCE CERTIFICATE The undersigned (the "BORROWING AGENT") hereby certify to AMRESCO Capital, L.P., a California limited partnership (the "Lender"), and Fannie Mae on behalf of the Borrowers as follows: ARTICLE I. AGREEMENT. Each Borrower is a party to that certain Term Loan Agreement, dated as of January 1, 2000, by and among the Borrowers and the Lender (as amended from time to time, the "AGREEMENT"). The rights of the Lender under the Agreement have been assigned to Fannie Mae. This Certificate is issued pursuant to the terms of the Agreement. ARTICLE II. SATISFACTION OF CONDITIONS. The Borrowing Agent hereby represents, warrants and covenants to the Lender on behalf of the Borrowers that all conditions to the Request with respect to which this Certificate is issued have been satisfied. ARTICLE III. CAPITALIZED TERMS. All capitalized terms used but not defined in this Certificate shall have the meanings ascribed to such terms in the Agreement. Dated: _______________, ____ THE BORROWING AGENT: WXI/MCN MULTIFAMILY REAL ESTATE LIMITED PARTNERSHIP, a Delaware limited partnership By: WXI/MCN Multifamily Gen-Par, L.L.C., a Delaware limited liability company, its general partner By: WXI/McN Realty, L.L.C., a Delaware limited liability company, its managing member By: -------------------------------- Name: --------------------------- Title: -------------------------- C-1 EXHIBIT D ORGANIZATIONAL CERTIFICATE (DELAWARE BORROWER) I, _______________, hereby certify as follows: SECTION 1. POSITION. I am the _______________ of WXI/McN Realty L.L.C., a Delaware limited liability company, which is the Managing Member of WXI/MCN Multifamily Gen-Par, L.L.C., a Delaware limited liability company, which is the general partner of WXI/MCN Multifamily Real Estate Limited Partnership, a Delaware limited partnership (the "BORROWER"), and I am authorized to deliver this Certificate on behalf of the Borrowers. SECTION 2. TERM LOAN AGREEMENT. The Borrowers entered into that certain Agreement, dated as of January 1, 2000, between the Borrowers and the Lender (as amended from time to time, the "TERM LOAN AGREEMENT"). The rights of the Lender under the Term Loan Agreement have been assigned to Fannie Mae. This Certificate is issued pursuant to the terms of the Term Loan Agreement. SECTION 3. DUE AUTHORIZATION OF REQUEST. I hereby certify that no action by the partners of the Borrowing Agent is necessary to duly authorize the execution and delivery of, and the consummation of the transaction contemplated by, the Request with respect to which this Certificate is delivered, or, if such action is necessary, that attached as Exhibit A to this Certificate is a true copy of resolutions authorizing such action duly adopted at a meeting of the partners. Any such resolutions are in full force and effect and are unmodified as of the date of this Certificate. SECTION 4. NO CHANGES. Since the date of the most recent Organizational Certificate delivered to the Lender or, if there have been none, since the date of the Term Loan Agreement, there have been no changes in any of the Organizational Documents of any Borrower, except as set forth in Exhibit B to this Certificate, and each Borrower remains in good standing or is duly qualified in each of the jurisdictions in which it is required to be in good standing or duly qualified under the terms of the Term Loan Agreement. [SECTION 5. INCUMBENCY CERTIFICATE. ONE OR MORE OF THE PERSONS AUTHORIZED TO EXECUTE AND DELIVER ANY DOCUMENTS REQUIRED TO BE DELIVERED IN CONNECTION WITH THE REQUEST ARE SET FORTH BELOW, AND A SPECIMEN SIGNATURE OF EACH HAS BEEN PREVIOUSLY DELIVERED TO THE LENDER. WXI/MCN REALTY L.L.C.: 1) [NAME, TITLE] 2) [NAME, TITLE] 3) [NAME, TITLE] 4) [NAME, TITLE]] [INCLUDE THIS SECTION 5 IF A CHANGE IS BEING MADE FROM THE MOST RECENT INCUMBENCY CERTIFICATE.] SECTION [5./6.] CAPITALIZED TERMS. All capitalized terms used but not defined in this Certificate shall have the meanings ascribed to such terms in the Term Loan Agreement. D-1 Dated: _________________, _____ THE BORROWER: WXI/MCN Multifamily Real Estate Limited Partnership a Delaware limited partnership By: WXI/MCN Multifamily Gen-Par, L.L.C., a Delaware limited liability company, its general partner By: WXI/McN Multifamily Gen-Par, L.L.C., a Delaware limited liability company, its managing member By: -------------------------------- Name: --------------------------- Title: -------------------------- D-2 EXHIBIT E TIE-IN ENDORSEMENT To be annexed to and form a part of Policy No. ________________. The said policy is hereby amended in the following manner: The Company acknowledges that the land described in Schedule A of this policy is part of the security for an indebtedness in the amount of [$____________] which indebtedness is also secured by mortgages or deeds of trust which are insured concurrently by the following policies: Policy No. County State Amount - ---------- ------ ----- ------ E-1 Anything to the contrary notwithstanding in Paragraph 6(a)(ii) of the Conditions and Stipulations of the Policy, the insurance coverage afforded in this Policy is aggregated with the insurance coverage in all of the other policies identified in this endorsement so the effective insurance coverage is [$______________]. The total liability of the Company under this and all policies identified in this endorsement shall not exceed such amount, but its liability in this Policy for the land described in Schedule A remains limited by the provisions of Paragraph 6(a)(i) and 6(a)(iii) of the Conditions and Stipulations of this Policy. Any payment by the Company on this or any of the Policies listed in this Endorsement shall reduce pro tanto the liability of the Company under all policies, and the amount so paid shall be deemed a payment under all policies. The total liability of the Company under said Policy and any prior endorsements attached thereto shall not exceed, in the aggregate, the face amount of said Policy, as the same may be specifically amended in dollar amount by this or any prior endorsements, and the costs which the Company is obligated under the provisions of said Policy to pay. Nothing herein contained shall be construed as extending or changing the effective date of said commitment or policy unless otherwise expressly stated. This endorsement is made a part of said Policy and is subject to the exclusions, schedules, endorsements, conditions, stipulations and terms thereof, except as modified by the provisions hereof. Executed this ____ day of _______, 2000. --------------------------------- COUNTERSIGNED: ________________________, President - ------------------- __________________________ Attest:___________________, Secretary Authorized Signatory E-2 EXHIBIT F FUTURE ADDITIONAL MORTGAGED PROPERTY TERM LOAN REQUEST THE TERM LOAN AGREEMENT PURSUANT TO WHICH THIS REQUEST IS DELIVERED REQUIRES YOU TO MAKE THE REQUESTED FUTURE ADDITIONAL MORTGAGED PROPERTY TERM LOAN, IF ALL CONDITIONS CONTAINED IN SECTIONS 3.02-A, 3.03-A AND 3.04-A OF THE TERM LOAN AGREEMENT ARE SATISFIED, AT A CLOSING TO BE HELD AT OFFICES DESIGNATED BY YOU ON A CLOSING DATE SELECTED BY YOU, AND OCCURRING ON A DATE WHICH SHALL NOT BE MORE THAN 5 BUSINESS DAYS, AFTER THE BORROWING AGENT'S RECEIPT OF THE RATE CONFIRMATION FORM (OR ON SUCH OTHER DATE TO WHICH WE MAY AGREE). - --------------------, ------ VIA: _______________________ AMRESCO Capital, L.P. 700 North Pearl, Suite 2400 Dallas, TX 75201 Attention: Vice President, Multifamily Finance [NOTE: SUBJECT TO CHANGE IN THE EVENT LENDER OR ITS ADDRESS CHANGES] Re: FUTURE ADDITIONAL MORTGAGED PROPERTY TERM LOAN REQUEST issued pursuant to Term Loan Agreement, dated as of January 1, 2000, by and among the undersigned (the "Borrowers") and the Lender (as amended from time to time, the "Term Loan Agreement") Ladies and Gentlemen: This constitutes a Future Additional Mortgaged Property Term Loan Request pursuant to the terms of the above-referenced Term Loan Agreement. SECTION 1. REQUEST. The Borrowers hereby request that the Lender make a Future Additional Mortgaged Property Term Loan in accordance with the terms of the Term Loan Agreement. Following is the information required by the Term Loan Agreement with respect to this Request: ITEM 1. Amount. The amount of the Future Additional Mortgaged Property Term Loan shall be $_______________. ITEM 2. Maturity Date. The Maturity Date of the Future Additional Mortgaged Property Term Loan is as follows: February 1, 2007. F-1 ITEM 3. Accompanying Documents and Deposit. This Future Additional Mortgaged Property Term Loan Request is being delivered together with (i) a Collateral Addition Request and a Collateral Addition Description Package, (ii) the underwriting documentation required to be delivered by us pursuant to Section 3.03-A of the Term Loan Agreement and (iii) the Rate Lock Deposit. ITEM 4. Closing Documents. All documents, instruments and certificates required to be delivered pursuant to the conditions contained in Sections 3.02-A, 3.03-A and 3.04-A of the Term Loan Agreement, including, but not limited to (i) a Rate Setting Form, (ii) a Compliance Certificate, and (iii) an Organizational Certificate will be delivered on or before the Closing Date. ITEM 5. Wiring Information. Please wire the Future Additional Mortgaged Property Term Loan on or before the Closing Date into our account in accordance with the following wiring information: ------------------------------------------- ------------------------------------------- ------------------------------------------- ------------------------------------------- ------------------------------------------- SECTION 2. AVAILABLE COMMITMENT. The information contained in the following table is true, correct and complete, to the undersigned's knowledge. The undersigned acknowledges and agrees that the final determination of the information shall be made by the Lender. - -------------------------------------------------------------------------------- Currently Available Principal Amount - -------------------------------------------------------------------------------- Proposed Amount of Future Additional Mortgaged Property Term Loan - -------------------------------------------------------------------------------- Remaining Available Principal Amount after the Proposed Future Term Loan - -------------------------------------------------------------------------------- SECTION 3. CAPITALIZED TERMS. All capitalized terms used but not defined in this Request shall have the meanings ascribed to such terms in the Term Loan Agreement. F-2 Sincerely, THE BORROWERS: WXI/MCN MULTIFAMILY REAL ESTATE LIMITED PARTNERSHIP, a Delaware limited partnership By: WXI/MCN Multifamily Gen-Par, L.L.C., a Delaware limited liability company, its General Partner By: WXI/McN Realty L.L.C., a Delaware limited liability company, its Managing Member By: -------------------------------- Name: --------------------------- Title: -------------------------- BRENDON WAY FUND XII ASSOCIATES, an Indiana general partnership By: WXI/MCN Gen-Par II, L.L.C., a Delaware limited liability company, its General Partner By: WXI/McN Realty L.L.C., a Delaware limited liability company, its Managing Member By: -------------------------------- Name: --------------------------- Title: -------------------------- CASTLE BLUFF FUND XII ASSOCIATES, L.P., a Texas limited partnership By: Castle Bluff Corporation, a Texas corporation, its General Partner By: ------------------------------------- Name: -------------------------------- Title: ------------------------------- F-3 EMBARCADERO ASSOCIATES, a Georgia general partnership By: WXI/MCN Gen-Par I, L.L.C., a Delaware limited liability company, its General Partner By: WXI/McN Realty L.L.C., a Delaware limited liability company, its Managing Member By: -------------------------------- Name: --------------------------- Title: -------------------------- LENDER: AMRESCO CAPITAL, L.P., a Delaware limited partnership By: AMRESCO Mortgage Capital, Inc., a Delaware corporation Its: Sole General Partner By: ------------------------------------ Name: ------------------------------- Title: ------------------------------ F-4 WXI/MCN Real Estate Limited Partnership - --------- ---, ---- Page 1 EXHIBIT G WXI/MCN Multifamily Real Estate Limited Partnership 100 Crescent Court VIA FACSIMILE AND OVERNIGHT MAIL Suite 1000 Dallas, Texas 75201 Attention: Doug Gunn RE: INTEREST RATE LOCK RELATED TO A PROPOSED FUTURE TERM LOAN TO WXI/MCN MULTIFAMILY REAL ESTATE LIMITED PARTNERSHIP, BRENDON WAY FUND XII ASSOCIATES, CASTLE BLUFF FUND XII ASSOCIATES L.P. AND EMBARCADERO ASSOCIATES (COLLECTIVELY REFERRED TO AS "BORROWERS"), BY AMRESCO CAPITAL, L.P. ("LENDER"). Ladies/Gentlemen: Capitalized terms not defined herein shall have the meanings given to the same in the Term Loan Agreement among Borrowers and Lender, dated as of January 1, 2000 (the "Term Loan Agreement"). This Agreement (herein so called) confirms that in connection with the Term Loan Agreement, and in consideration of the mutual covenants and agreements set forth herein, we agree as follows: 1. The undertakings by Lender described below are contingent upon Lender's receipt of (i) a fully executed copy of this Agreement and (ii) a deposit equal to two percent (2.0%) of the proposed amount of the Loan (the "Rate Lock Deposit"), which Rate Lock Deposit shall be non-refundable except as set forth hereinbelow. Within the 48 hour period immediately following Lender's receipt of the latter of the items described in (i) and (ii) preceding, Lender is authorized by Borrowers to "lock" the interest rate payable on the Future Term Loan at a fixed rate not to exceed the following maximum rate per annum (the "Maximum Rate"): _________________ percent (______%) per annum BORROWERS' INITIALS: ___________ KEY PRINCIPAL(S)' INITIALS: ________ Subject to (i) the Maximum Rate limitation and (ii) to any election by the Borrowers to buy down the Interest Rate, the rate at which Lender locks the interest rate on the Future Term Loan shall be the interest rate on the Future Term Loan. In the event that the DSCR for any Additional Mortgaged Property is less than 1.25:1, Lender's only recourse shall be to reduce the amount of the proposed Future Term Loan allocated to such Additional Mortgaged Property to a level that results in (i) the DSCR for such Additional Mortgaged Property being 1.25:1, and (ii) the G-1 WXI/MCN Real Estate Limited Partnership - --------- ---, ---- Page 2 Maximum LTV for such Additional Mortgaged Property not exceeding 80%; all in accordance with the terms of the DUS Guide Underwriting Requirements. 2. The Rate Lock Deposit will not bear interest and shall be refundable to Borrowers only in the event of one of the following: (a) The Future Term Loan closes and funds on or before _________ __, _____ (the "Designated Closing Date") in accordance with the terms of the Term Loan Agreement; (b) If no Designated Closing Date is specified in the blank in the preceding paragraph 2(a), the Future Term Loan closes and funds on or before an alternative closing date (agreed to by the Borrowers and the Lender) in accordance with the terms of the Term Loan Agreement; or (c) Within the time period prescribed above, Lender is unable by use of reasonable efforts to lock the interest rate on the Future Term Loan at a rate equal to or less than the Maximum Rate. In the event of 2(a), 2(b) or 2(c), the Rate Lock Deposit (net of the sum by which loan expenses exceed any deposits placed by Borrowers with Lender), shall be refunded to Borrowers by Lender promptly after the occurrence of such event. If neither 2(a), 2(b) or 2(c) above are applicable, then Lender will be entitled to retain the Rate Lock Deposit in full as liquidated damages. If Lender is entitled under this Section 2 to retain the Rate Lock Deposit, Borrowers acknowledge and agree that such fee is intended to compensate Lender for the costs, administrative expenses and risks associated with Lender's entering into a forward trade agreement with an investor to purchase the prospective mortgage backed security that Lender expects to be issued by Fannie Mae in payment of the Future Term Loan at the time Fannie Mae purchases same from Lender, including, without limitation, breakage fees (e.g. out-of-pocket losses or expenses incurred or paid by Lender in connection with the establishment and termination of the Interest Rate if locked pursuant to this Agreement and the Term Loan Agreement is terminated for any reason without the Future Term Loan being closed and funded). Borrowers acknowledge and agree that (a) during the period of time occurring from the point of rate lock to the closing and funding of the Future Term Loan and purchase thereof by Fannie Mae, Lender will be exposed to market interest rate fluctuations and (b) the damages described in this paragraph are difficult to ascertain and that the Rate Lock Deposit is a fair and reasonable estimate of such damages. EXCEPT AS DESCRIBED ABOVE IN THIS SECTION 2, THE RATE LOCK DEPOSIT (OR ANY PORTION THEREOF) SHALL NOT BE REFUNDABLE UNDER ANY OTHER CIRCUMSTANCES. 3. Lender's agreement to lock the interest rate under this Agreement has no bearing on G-2 WXI/MCN Real Estate Limited Partnership - --------- ---, ---- Page 3 whether Lender will be satisfied as to all of the conditions under Sections 3.02-A, 3.03-A and 3.04-A of the Term Loan Agreement for making the Future Term Loan. 4. THIS AGREEMENT SHALL BE DEEMED TO BE EXECUTED IN AND PERFORMABLE IN, AND GOVERNED BY THE SUBSTANTIVE LAWS OF, THE STATE OF TEXAS (WITHOUT REGARD TO ANY CONFLICT OF LAWS PRINCIPLES). 5. This Agreement may be executed in any number of counterparts, each of which when so executed shall be deemed to be an original, but all such counterparts together constitute one and the same instrument. 6. Borrowers may not, without the prior written consent of Lender, assign, transfer or set over to another, in whole or in part, all or any part of its benefits, rights, duties and obligations hereunder. Borrowers agree that Lender may assign its benefits, rights, duties and obligations under this Agreement, without the consent of Borrowers, to any potential purchaser of the Future Term Loan. 7. This Agreement may be amended, changed or modified by Borrowers and Lender only by an instrument in writing setting forth the terms of such change, modification or amendment, and signed by each party. 8. All notices, demands, consents or requests that are either required or desired to be given or furnished hereunder shall be in writing and shall be sent to the appropriate party at the following addresses: (i) if to Borrowers, to the Borrowing Agent at the address set forth on the first page hereof; and (ii) if to Lender, at the address set forth on the first page hereof, to the attention of the undersigned. Any such notice sent by means of telecopy shall be deemed to be received on the day such telecopy is sent once orally confirmed by the sender via telephone. 9. This Agreement constitutes the entire and final agreement between Borrowers and Lender with respect to the subject matter hereof, and there are no other agreements, understandings, undertakings, representations or warranties among the parties hereto with respect to the subject matter hereof except as set forth herein. If the foregoing is in accordance with your understanding of our agreement, please sign and return to the undersigned a counterpart hereof, whereupon this Agreement and your acceptance shall represent a binding agreement by and among Borrowers and Lender. G-3 WXI/MCN Real Estate Limited Partnership - --------- ---, ---- Page 4 AMRESCO CAPITAL, L.P., A DELAWARE LIMITED PARTNERSHIP By: AMRESCO Mortgage Capital, Inc., a Delaware corporation Its sole General Partner By: ______________________________ Name: ___________________________ Title: ____________________________ THE FOREGOING AGREEMENT IS HEREBY CONFIRMED AND ACCEPTED AS OF THE DATE FIRST WRITTEN ABOVE. WXI/MCN MULTIFAMILY REAL ESTATE LIMITED PARTNERSHIP, a Delaware limited partnership By: WXI/MCN Multifamily Gen-Par, L.L.C., a Delaware limited liability company, its General Partner By: WXI/McN Realty L.L.C., a Delaware limited liability company, its Managing Member By: -------------------------------- Name: --------------------------- Title: -------------------------- BRENDON WAY FUND XII ASSOCIATES, an Indiana general partnership By: WXI/MCN Gen-Par II, L.L.C., a Delaware limited liability company, its General Partner By: WXI/McN Realty L.L.C., a Delaware limited liability company, its Managing Member By: -------------------------------- Name: --------------------------- Title: -------------------------- G-4 WXI/MCN Real Estate Limited Partnership - --------- ---, ---- Page 5 CASTLE BLUFF FUND XII ASSOCIATES, L.P., a Texas limited partnership By: Castle Bluff Corporation, a Texas corporation, its General Partner By: ------------------------------------- Name: -------------------------------- Title: ------------------------------- EMBARCADERO ASSOCIATES, a Georgia general partnership By: WXI/MCN Gen-Par I, L.L.C., a Delaware limited liability company, its General Partner By: WXI/McN Realty L.L.C., a Delaware limited liability company, its Managing Member By: -------------------------------- Name: --------------------------- Title: -------------------------- LENDER: AMRESCO CAPITAL, L.P., a Delaware limited partnership By: AMRESCO Mortgage Capital, Inc., a Delaware corporation Its: Sole General Partner By: ------------------------------------ Name: ------------------------------- Title: ------------------------------ G-5 EXHIBIT H RATE CONFIRMATION FORM Pursuant to Section 3.02-A(b) of that certain Term Loan Agreement dated as of January 1, 2000, as amended from time to time, the "TERM LOAN AGREEMENT") among AMRESCO Capital, L.P., a Delaware limited partnership, (the "LENDER"), and WXI/MCN Multifamily Real Estate Limited Partnership, a Delaware limited partnership, Brendon Way Fund XII Associates, an Indiana general partnership, Castle Bluff Fund XII Associates L.P., a Texas limited partnership and Embarcadero Associates, a Georgia general partnership (the "BORROWERS"), and the Rate Setting Form dated ______________, from the Borrowers to the Lender, the Lender hereby confirms that it has obtained a commitment for the purchase of a Fannie Mae MBS with the following terms: Future Term Loan Amount $_______________________ Term/Maturity Date ___ months; Maturity Date: February 1, 2007 Interest Rate ______ % Closing Date no later than ________________________ H-1 Dated: ____________________, ______ THE LENDER: AMRESCO Capital, L.P., a Delaware limited partnership By: AMRESCO Mortgage Capital, Inc., a Delaware corporation Its: Sole General Partner By: ------------------------------------------ Name: ------------------------------------- Title: ------------------------------------ Rate Setting Date: ____________________, ______, ___:___ AM/PM Eastern Time H-2 EXHIBIT I COLLATERAL ADDITION REQUEST THE TERM LOAN AGREEMENT PURSUANT TO WHICH THIS REQUEST IS DELIVERED REQUIRES THAT (1) IF YOU CONSENT TO THE ADDITION OF THE PROPOSED ADDITIONAL MORTGAGED PROPERTY TO THE COLLATERAL POOL, (2) WE ELECT TO CAUSE THE PROPOSED ADDITIONAL MORTGAGED PROPERTY TO BE ADDED TO THE COLLATERAL POOL AND (3) ALL CONDITIONS CONTAINED IN SECTIONS 3.02-A, 3.03-A AND 3.04-A OF THE TERM LOAN AGREEMENT ARE SATISFIED, THEN YOU SHALL PERMIT THE PROPOSED ADDITIONAL MORTGAGED PROPERTY TO BE ADDED TO THE COLLATERAL POOL, AT A CLOSING TO BE HELD AT OFFICES DESIGNATED BY YOU ON A CLOSING DATE SELECTED BY YOU, AND OCCURRING WITHIN 5 BUSINESS DAYS AFTER THE BORROWING AGENT'S RECEIPT OF THE RATE CONFIRMATION FORM (OR ON SUCH OTHER DATE TO WHICH WE MAY AGREE). - --------------------, ------ VIA: ------------------------ AMRESCO Capital, L.P. 700 North Pearl Suite 2400 Dallas, Texas 75201 Attention: Vice President, Multifamily Finance [NOTE: SUBJECT TO CHANGE IN THE EVENT LENDER OR ITS ADDRESS CHANGES] Re: COLLATERAL ADDITION REQUEST issued pursuant to Term Loan Agreement, dated as of January 1, 2000, among the undersigned (the "BORROWERS") and the Lender (as amended from time to time, the "TERM LOAN AGREEMENT") Ladies and Gentlemen: This constitutes a Collateral Addition Request pursuant to the terms of the above-referenced Term Loan Agreement. SECTION 1. REQUEST. The Borrowers hereby request that the Multifamily Residential Property described in this Request be added to the Collateral Pool in accordance with the terms of the Term Loan Agreement. Following is the information required by the Term Loan Agreement with respect to this Request: (a) Collateral Addition Description Package. Attached to this Request is all information and documents relating to the Additional Mortgaged Property required by Section 3.03-A of the Term Loan Agreement; and I-1 (b) Accompanying Documents. All reports, certificates and documents required to be delivered pursuant to the conditions contained in Sections 3.02-A, 3.03-A and 3.04-A of the Term Loan Agreement will be delivered on or before the Closing Date. SECTION 2. CAPITALIZED TERMS. All capitalized terms used but not defined in this Request shall have the meanings ascribed to such terms in the Term Loan Agreement. Sincerely, THE BORROWERS: WXI/MCN MULTIFAMILY REAL ESTATE LIMITED PARTNERSHIP, a Delaware limited partnership By: WXI/MCN Multifamily Gen-Par, L.L.C., a Delaware limited liability company, its General Partner By: WXI/McN Realty L.L.C., a Delaware limited liability company, its Managing Member By: -------------------------------- Name: --------------------------- Title: -------------------------- BRENDON WAY FUND XII ASSOCIATES, an Indiana general partnership By: WXI/MCN Gen-Par II, L.L.C., a Delaware limited liability company, its General Partner By: WXI/McN Realty L.L.C., a Delaware limited liability company, its Managing Member By: -------------------------------- Name: --------------------------- Title: -------------------------- I-2 CASTLE BLUFF FUND XII ASSOCIATES L.P., a Texas limited partnership By: Castle Bluff Corporation, a Texas corporation, its General Partner By: ------------------------------------- Name: -------------------------------- Title: ------------------------------- EMBARCADERO ASSOCIATES, a Georgia general partnership By: WXI/MCN Gen-Par I, L.L.C., a Delaware limited liability company, its General Partner By: WXI/McN Realty L.L.C., a Delaware limited liability company, its Managing Member By: -------------------------------- Name: --------------------------- Title: -------------------------- I-3 EXHIBIT L FUTURE ADDITIONAL MORTGAGED PROPERTY TERM LOAN RATE ADJUSTMENT ENDORSEMENTS See the attached forms. L-1 EXHIBIT M COLLATERAL RELEASE REQUEST THE TERM LOAN AGREEMENT PURSUANT TO WHICH THIS REQUEST IS DELIVERED REQUIRES FOR THERE TO OCCUR A CLOSING WITHIN 30 DAYS AFTER YOUR RECEIPT OF THIS REQUEST, SUBJECT TO SATISFACTION OF ALL CONDITIONS CONTAINED IN SECTION 4.03 OF THE TERM LOAN AGREEMENT. REFERENCE IS MADE TO THE TERM LOAN AGREEMENT FOR THE SCOPE OF THE LENDER'S OBLIGATIONS WITH RESPECT TO THIS REQUEST. - --------------------, ------ VIA: ----------------------- AMRESCO Capital, L.P. 700 North Pearl, Suite 2400, LB #342 Dallas, TX 75201-7424 Attn: Vice President, Multifamily Finance AMRESCO Services, L.P. 245 Peachtree Center Avenue. N.E., Suite 1800 Atlanta, GA 30303-1231 Attn: Vice President, Loan Servicing [NOTE: SUBJECT TO CHANGE IN THE EVENT LENDER OR ITS ADDRESS CHANGES] Re: COLLATERAL RELEASE REQUEST issued pursuant to Term Loan Agreement, dated __________, by and between the undersigned (the "BORROWERS") and the Lender (as amended from time to time, the "TERM LOAN AGREEMENT") Ladies and Gentlemen: This constitutes a Collateral Release Request pursuant to the terms of the above-referenced Term Loan Agreement. SECTION 1. REQUEST. The Borrowers hereby request that the Collateral Release Property described in this Request be released from the Collateral Pool in accordance with the terms of the Term Loan Agreement. Following is the information required by the Term Loan Agreement with respect to this Request: M-1 (a) Description of Collateral Release Property. The name, address and location (county and state) of the Mortgaged Property, or other designation of the Collateral, to be released from the Collateral Pool is as follows: Name: ------------------------------------------------ Address: ------------------------------------------------ ------------------------------------------------ Location: ------------------------------------------------ (b) Accompanying Documents. All documents, instruments and certificates required to be delivered pursuant to the conditions contained in Section 4.03 of the Term Loan Agreement will be delivered on or before the Closing Date. SECTION 2. RELEASE PRICE. The Borrowers shall pay the Release Price, or such portion thereof, and all other amounts as is required pursuant to Sections 4.02 of the Term Loan Agreement as a condition to the closing of the release of the Collateral Release Property from the Collateral Pool. SECTION 3. CAPITALIZED TERMS. All capitalized terms used but not defined in this Request shall have the meanings ascribed to such terms in the Term Loan Agreement. Sincerely, THE BORROWING AGENT: WXI/MCN Multifamily Real Estate Limited Partnership a Delaware limited partnership By: WXI/MCN Multifamily Gen-Par, L.L.C., a Delaware limited liability company, its general partner By: WXI/McN Realty, L.L.C., a Delaware limited liability company, its Managing Member By: ------------------------------- Name: -------------------------- Title: ------------------------- M-2 EXHIBIT N BORROWERS' CONFIRMATION OF OBLIGATIONS THIS BORROWER CONFIRMATION OF OBLIGATIONS (the "CONFIRMATION OF OBLIGATIONS") is made on the ______ day of _____, _____, by and among ___________________________, a Delaware limited partnership, [OTHER BORROWERS] (each a "Borrower" and collectively the "Borrowers") and AMRESCO CAPITAL, L.P., a Delaware limited partnership ("LENDER"), and Fannie Mae, a federally-chartered and stockholder-owned corporation organized and existing under the Federal National Mortgage Association Charter Act, 12 U.S.C. ss. 1716 et seq. ("FANNIE MAE"). RECITALS A. The Borrowers and the Lender are parties to that certain Term Loan Agreement, dated _________________ (as amended from time to time, the "TERM LOAN AGREEMENT"). B. All of the Lender's right, title and interest in the Term Loan Agreement and the Loan Documents executed in connection with the Term Loan Agreement or the transactions contemplated by the Term Loan Agreement have been assigned to Fannie Mae pursuant to that certain Assignment of Term Loan Agreement and Other Loan Documents, dated ____________ (the "TERM LOAN ASSIGNMENT"). Fannie Mae has designated the Lender as the servicer of the Term Loan. C. The Borrowing Agent has delivered to the Lender a Collateral Release Request pursuant to the Term Loan Agreement to release a Collateral Release Property from the Collateral Pool. D. The Lender has consented to the Collateral Release Request. E. Each Borrower is executing this Confirmation of Obligations pursuant to the Term Loan Agreement to confirm it remains liable for all of its obligations under the Term Loan Agreement and the other Loan Documents notwithstanding the release of the Collateral Release Property from the Collateral Pool. NOW, THEREFORE, each Borrower, in consideration of the Lender's consent to the release of the Collateral Release Property from the Collateral Pool and other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, hereby agree as follows: SECTION 1. CONFIRMATION OF OBLIGATIONS. Each Borrower confirms that none of its obligations under the Term Loan Agreement and the Loan Documents is affected by the release of the Collateral Release Property from the Collateral, and each of its respective obligations under the Term Loan Agreement and the Loan Documents shall remain in full force and effect, and each Borrower shall be fully liable (subject to Section 15 of the Term Loan Agreement) for the observance of all such obligations, notwithstanding the release of the Collateral Release Property from the Collateral Pool. SECTION 2. BENEFICIARIES. This Confirmation of Obligations is made for the express benefit of both the Lender and Fannie Mae. N-1 SECTION 3. CAPITALIZED TERMS. All capitalized terms used in this Confirmation of Obligations which are not specifically defined herein shall have the respective meanings set forth in the Term Loan Agreement. SECTION 4. COUNTERPARTS. This Confirmation of Obligations may be executed in counterparts by the parties hereto, and each such counterpart shall be considered an original and all such counterparts shall constitute one and the same instrument. IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the day and year first above written. [SIGNATURES ON THE FOLLOWING PAGES] N-2 THE BORROWERS: WXI/MCN MULTIFAMILY REAL ESTATE LIMITED PARTNERSHIP, a Delaware limited partnership By: WXI/MCN Multifamily Gen-Par, L.L.C., a Delaware limited liability company, its General Partner By: WXI/McN Realty L.L.C., a Delaware limited liability company, its Managing Member By: -------------------------------- Name: --------------------------- Title: -------------------------- BRENDON WAY FUND XII ASSOCIATES, an Indiana general partnership By: WXI/MCN Gen-Par II, L.L.C., a Delaware limited liability company, its General Partner By: WXI/McN Realty L.L.C., a Delaware limited liability company, its Managing Member By: -------------------------------- Name: --------------------------- Title: -------------------------- CASTLE BLUFF FUND XII ASSOCIATES L.P., a Texas limited partnership By: Castle Bluff Corporation, a Texas corporation, its General Partner By: ------------------------------------- Name: -------------------------------- Title: ------------------------------- N-3 EMBARCADERO ASSOCIATES, a Georgia general partnership By: WXI/MCN Gen-Par I, L.L.C., a Delaware limited liability company, its General Partner By: WXI/McN Realty L.L.C., a Delaware limited liability company, its Managing Member By: -------------------------------- Name: --------------------------- Title: ------------------------- N-4 AGREED TO AND ACKNOWLEDGED: By: WHITEHALL STREET REAL ESTATE LIMITED PARTNERSHIP XI, a Delaware limited partnership By: WH Advisors, L.L.C. XI, a Delaware limited liability company, its general partner By: -------------------------------- Name: Title: By: WHITEHALL STREET REAL ESTATE LIMITED PARTNERSHIP XII, a Delaware limited partnership By: WH Advisors, L.L.C. XII, a Delaware limited liability company, its general partner By: -------------------------------- Name: Title: N-5 THE LENDER: AMRESCO CAPITAL, L.P., a Delaware limited partnership By: AMRESCO Mortgage Capital, Inc., a Delaware corporation Its: Sole General Partner By: ------------------------------- Name: -------------------------- Title: ------------------------- N-6 FANNIE MAE: By: ------------------------------------------ Name: ------------------------------------- Title: ------------------------------------ N-7 SCHEDULE 1 LIST OF AUTHORIZED REPRESENTATIVES (1) The following individuals each qualify as an "Authorized Representative" as said term is defined in Article I of the Term Loan Agreement between [Borrowers] and AMRESCO Capital, L.P.: NAME OFFICE Daniel M. Neidich President Michael K. Klingher Vice-President Kevin D. Naughton Vice-President Ralph F. Rosenberg Vice-President Stuart M. Rothenberg Vice-President Edward M. Siskind Vice-President David M. Weil Vice-President Todd A. Williams Vice-President Elizabeth A. O'Brien Vice-President Katharine K. Lauer Vice-President Elizabeth M. Burban Vice-President Angie Madison Vice-President G. Douglas Gunn Vice-President Susan L. Sack Vice-President Steven M. Feldman Vice-President Alan S. Kava Vice-President Brian J. Lahey Vice-President Brahm S. Cramer Vice-President Larry J. Goodwin Vice-President Ronald L. Bernstein Assistant Vice President Zubin P. Irani Assistant Vice President Kevin D. Naughton Secretary Kevin D. Naughton Treasurer Ralph F. Rosenberg Assistant Secretary Todd A. Williams Assistant Secretary Katharine K. Lauer Assistant Secretary Elizabeth A. O'Brien Assistant Secretary Elizabeth M. Burban Assistant Secretary Angie Madison Assistant Secretary G. Douglas Gunn Assistant Secretary Ronald L. Bernstein Assistant Secretary Zubin P. Irani Assistant Secretary Brahm S. Cramer Assistant Secretary Larry J. Goodwin Assistant Secretary Edward M. Siskind Assistant Treasurer Todd A. Williams Assistant Treasurer Brian J. Lahey Assistant Treasurer Mitchell S. Weiss Assistant Treasurer SCHEDULE 2 BORROWER/PARTNERS PERCENTAGE - ----------------- OWNERSHIP INTEREST ------------------ WXI/MCN Multifamily Real Estate Limited Partnership WXI/MCN Multifamily Gen-Par, L.L.C. 1% WXI/McN Realty L.L.C. 99% Brendon Way Fund XII Associates WXI/MCN Gen-Par II, L.L.C. 1% WXI/ MCN Real Estate XII Limited Partnership 99% Castle Bluff Fund XII Associates L.P. Castle Bluff Corporation 1% WXI/ MCN Real Estate XII Limited Partnership 99% Embarcadero Associates WXI/MCN Gen-Par I, L.L.C. 1% WXI/ MCN Real Estate XIV Limited Partnership 9% SCHEDULE 3 PENDING LITIGATION OR OTHER PROCEEDINGS None. SCHEDULE 4 NONCOMPLIANCE/NONCONFORMITY WITH APPLICABLE LAWS OR PERMITS 1) Harbour Club - a letter dated 1/28/00 regarding Harbour's non-compliance for docking facilities constructed at the Harbor Club, Ltd. Condominiums under DEQ Permit No. 98-10-1133. 2) Various pool permits as disclosed to Lender. SCHEDULE 5 DISCLOSURE OF INDEBTEDNESS None. SCHEDULE 6 CONTRACTUAL OBLIGATIONS Management Agreement by and between applicable Borrower and AMS Management, L.L.C. (one for each Mortgaged Property) Portfolio Advisory Agreement by and between WXI/McN Realty L.L.C. and Archon Group, L.P. SCHEDULE 7 COMMERCIAL LEASES Miscellaneous laundry room leases - all disclosed to Lender. EXECUTION COPY - -------------------------------------------------------------------------------- TERM LOAN AGREEMENT among WXI/MCN MULTIFAMILY REAL ESTATE LIMITED PARTNERSHIP, a Delaware limited partnership and BRENDON WAY FUND XII ASSOCIATES, an Indiana general partnership and CASTLE BLUFF FUND XII ASSOCIATES L.P., a Texas limited partnership and EMBARCADERO ASSOCIATES, a Georgia general partnership and AMRESCO CAPITAL, L.P., a Delaware limited partnership dated as of January 1, 2000 - --------------------------------------------------------------------------------
TABLE OF CONTENTS Page ---- RECITALS..........................................................................................................1 ARTICLE I.........................................................................................................1 ARTICLE II.......................................................................................................18 2.01 Term Loan Commitment.........................................................................18 2.02 Borrowing Agency Provisions..................................................................19 2.03 Disbursement of Term Loan....................................................................19 2.04 Payment of Principal and Interest............................................................20 2.05 Joint and Several Obligations................................................................20 ARTICLE III......................................................................................................20 3.01 Conditions to Closing........................................................................20 3.02 Delivery of Property-Related Documents.......................................................23 ARTICLE III-A....................................................................................................24 3.01-A Future Additional Mortgaged Property Term Loans..............................................24 3.02-A Interest on Future Terms Loans...............................................................24 3.03-A Additions of Collateral......................................................................25 3.04-A Conditions Precedent to Future Additional Mortgaged Property Term Loans........................................................................................26 ARTICLE III-B....................................................................................................28 3.01-B Future Excess Proceeds Term Loan.............................................................28 3.02-B Determination of Amount of Future Excess Proceeds Term Loan..................................28 3.03-B Interest on Future Excess Proceeds Term Loans................................................29 3.04-B Conditions Precedent to Future Excess Proceeds Term Loan.....................................29 ARTICLE IV.......................................................................................................30 4.01 Right to Obtain Releases of Collateral.......................................................30 4.02 Procedure for Obtaining Releases of Collateral...............................................31 4.03 Conditions Precedent to Release of Collateral Release Property from the Collateral...............................................................................32 ARTICLE V........................................................................................................34 5.01 Transfers and Events that Constitute an Event of Default.....................................34 5.02 Exceptions to Events of Default..............................................................35 5.03 Procedure for Approval.......................................................................36 5.04 Certain Definitions..........................................................................36 ARTICLE VI.......................................................................................................38 6.01 Representations and Warranties of the Borrowers..............................................38 6.02 Representations and Warranties of the Borrowers Relating to Mortgaged Properties.........................................................................44 6.03 Representations and Warranties of the Lender.................................................48
i ARTICLE VII......................................................................................................48 7.01 [Reserved.]..................................................................................48 7.02 Maintenance of Existence.....................................................................48 7.03 [Reserved.]..................................................................................49 7.04 Financial Statements; Accountants' Reports; Other Information................................49 7.05 Certificate of Compliance....................................................................51 7.06 Maintain Licenses............................................................................51 7.07 Access to Records; Discussions With Officers and Accountants.................................51 7.08 Inform the Lender of Material Events.........................................................52 7.09 Single-Purpose Entities......................................................................54 7.10 Inspection...................................................................................54 7.11 Compliance with Applicable Laws..............................................................54 7.12 Warranty of Title............................................................................54 7.13 Defense of Actions...........................................................................54 7.14 Insurance Escrow.............................................................................55 7.15 ERISA........................................................................................56 7.16 Loan Document Taxes..........................................................................56 7.17 Further Assurances...........................................................................57 7.18 [Reserved.]..................................................................................57 7.19 [Reserved.]..................................................................................57 7.20 [Reserved.]..................................................................................57 7.21 Affiliate Contracts..........................................................................57 7.22 Manager; Management Fees.....................................................................57 7.23 [Reserved.]..................................................................................58 7.24 [Reserved.]..................................................................................58 7.25 Ownership of Mortgaged Properties............................................................58 7.26 Post-Closing Requirements....................................................................58 ARTICLE VIII.....................................................................................................59 8.01 Other Activities.............................................................................59 8.02 [Reserved.]..................................................................................60 8.03 Zoning.......................................................................................60 8.04 Liens........................................................................................60 8.05 Sale.........................................................................................60 8.06 Indebtedness.................................................................................60 8.07 Principal Place of Business..................................................................60 8.08 [Reserved.]..................................................................................60 8.09 Condominiums.................................................................................60 8.10 Restrictions on Partnership Distributions....................................................60 ARTICLE IX.......................................................................................................61 9.01 Indemnification..............................................................................61 9.02 Survival.....................................................................................62 9.03 Liability of the Borrowers...................................................................62 9.04 Lender, Fannie Mae and Servicer Not Liable...................................................63 9.05 Waivers and Consents.........................................................................63
ii 9.06 Waiver of Claims.............................................................................64 ARTICLE X........................................................................................................64 10.01 Origination Fees.............................................................................64 10.02 [Reserved.]..................................................................................64 10.03 Legal Fees and Expenses......................................................................64 ARTICLE XI.......................................................................................................65 11.01 Events of Default............................................................................65 ARTICLE XII......................................................................................................68 12.01 Remedies; Waivers............................................................................68 12.02 Waivers; Rescission of Declaration...........................................................68 12.03 The Lender's Right to Protect Collateral and Perform Covenants and Other Obligations............................................................................68 12.04 No Remedy Exclusive..........................................................................69 12.05 No Waiver....................................................................................69 12.06 No Notice....................................................................................69 12.07 Application of Payments......................................................................69 12.08 No Requirement of Tender of Performance......................................................69 ARTICLE XIII.....................................................................................................70 13.01 [Reserved.]..................................................................................70 13.02 Assignment of Rights.........................................................................70 13.03 Release of Collateral........................................................................70 13.04 Replacement of Lender........................................................................70 13.05 Fannie Mae and Lender Fees and Expenses......................................................70 13.06 Third-Party Beneficiary......................................................................70 ARTICLE XIV......................................................................................................71 14.01 Insurance and Real Estate Taxes..............................................................71 14.02 Replacement Reserves.........................................................................71 ARTICLE XIV-A....................................................................................................71 14.01-A Cross-Guaranty...............................................................................71 14.02-A Waivers by Borrowers and Other Rights........................................................71 14.03-A No Impairment................................................................................73 14.04-A No Subrogation...............................................................................73 14.05-A [Reserved]...................................................................................74 14.06-A Election of Remedies.........................................................................74 14.07-A Subordination of Other Obligations...........................................................74 14.08-A Insolvency and Liability of Other Borrowers..................................................75 14.09-A Preferences, Fraudulent Conveyances, Etc.....................................................75 14.10-A Maximum Liability of Each Borrower...........................................................76 14.11-A Liability Cumulative.........................................................................76 ARTICLE XV.......................................................................................................76 15.01 Limits on Personal Liability.................................................................76
iii ARTICLE XVI......................................................................................................78 16.01 Counterparts.................................................................................78 16.02 Amendments, Changes and Modifications........................................................78 16.03 Payment of Costs, Fees and Expenses..........................................................78 16.04 Payment Procedure............................................................................79 16.05 Payments on Business Days....................................................................79 16.06 Choice of Law; Consent to Jurisdiction; Waiver of Jury Trial.................................79 16.07 Severability.................................................................................81 16.08 Notices......................................................................................81 16.09 Further Assurances and Corrective Instruments................................................84 16.10 Term of this Agreement.......................................................................84 16.11 Assignments; Third-Party Rights..............................................................84 16.12 Headings.....................................................................................84 16.13 General Interpretive Principles..............................................................84 16.14 Interpretation...............................................................................85 16.15 [Reserved.]..................................................................................85 16.16 Survival of Representation and Warranties....................................................85 16.17 Decisions in Writing.........................................................................85 16.18 Closing Date.................................................................................85
EXHIBIT A - Schedule of Mortgaged Properties EXHIBIT B - Initial Allocable Facility Amounts EXHIBIT C - Compliance Certificate EXHIBIT D - Organizational Certificate (Each Borrower) EXHIBIT E - Tie-In Endorsement EXHIBIT F - Future Term Loan Request EXHIBIT G - Interest Rate Lock Agreement EXHIBIT H - Rate Confirmation Form EXHIBIT I - Collateral Addition Request EXHIBIT J - [Reserved] EXHIBIT K - [Reserved] EXHIBIT L - Future Term Loan Endorsement EXHIBIT M - Collateral Release Request EXHIBIT N - Borrowers' Confirmation of Obligations Schedule 1 - Authorized Representatives Schedule 2 - Partners of Borrowers/Percentage of Ownership Interest Schedule 3 - Pending Litigation or other Proceedings Schedule 4 - Noncompliance/Nonconformity with Applicable Laws or Permits Schedule 5 - Disclosure of Indebtedness Schedule 6 - Contractual Obligations Schedule 7 - Commercial Leases iv EX-99.(D)(4) 4 PRESS RELEASE DATED 01/31/2000 Exhibit 99(d)(4) McNEIL PARTNERS AND WXI/McN REALTY ANNOUNCE CLOSING OF ACQUISITION OF McNEIL REAL ESTATE FUNDS XX and XXVI NEW YORK, New York, February 15, 2000 - McNeil Partners, L.P., a privately- held sponsor of real estate partnerships, and WXI/McN Realty L.L.C. (the "Company"), an affiliate of Whitehall Street Real Estate Limited Partnership XI, a real estate investment fund managed by Goldman, Sachs & Co., announced the closing of the acquisition by the Company of McNeil Real Estate Funds XX and XXVI (collectively, the "Participating Partnerships"). The Company has also acquired certain assets of McNeil Real Estate Management, Inc. ("McREMI"), the real estate investment and management company controlled by Robert A. McNeil. The closing of the transactions follows the approval of the transactions by the limited partners of Fund XXVI and Fund XX at meetings held on January 21, 2000 and February 2, 2000, respectively. Pursuant to the terms of the acquisition agreement, the limited partners in each of the Participating Partnerships will receive cash merger consideration in exchange for their limited partnership interests. In addition, each Participating Partnership has declared a special distribution to its limited partners equal to its positive modified net working capital balance as of the closing date of the transaction. The aggregate amount of merger consideration and modified net working capital distribution to be received by limited partners of the respective Participating Partnerships has met or exceeded the amounts identified in their respective proxy statements, as amended and supplemented, which was $105 per unit for Fund XX and $0.28 per unit for Fund XXVI. The acquisitions of the two Participating Partnerships and the assets of McREMI completes the transaction first announced on June 24, 1999. Previously, on January 31, 2000, the Company acquired 12 publicly-traded real estate limited partnerships, two partnerships wholly-owned by affiliates of McNeil Partners and additional assets of McREMI. Source: McNeil Partners, L.P. Contact: Carole J. McNeil of McNeil Partners, L.P., 972-448-5800 -----END PRIVACY-ENHANCED MESSAGE-----