EXECUTION

 

Exhibit 10.2

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CREDIT AGREEMENT

 

$200,000,000 Revolving Credit Facility

 

Dated as of September 15, 2003

 

among

 

CATELLUS DEVELOPMENT CORPORATION

 

and

 

CATELLUS LAND AND DEVELOPMENT CORPORATION,

 

as Borrowers,

 

BANK OF AMERICA, N.A.,

as Administrative Agent, Swing Line Lender, and L/C Issuer,

 

FLEET NATIONAL BANK,

as Syndication Agent,

 

BANK ONE, NA,

as Documentation Agent,

 

WELLS FARGO BANK, NATIONAL ASSOCIATION,

as Managing Agent,

 

UNION BANK OF CALIFORNIA, N.A.,

as Managing Agent,

 

and

 

The Other Lenders Party Hereto

 

BANC OF AMERICA SECURITIES LLC,

as

Sole Lead Arranger and Sole Book Manager

 

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TABLE OF CONTENTS

 

Section

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       Page

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ARTICLE I.

 

DEFINITIONS AND ACCOUNTING TERMS

   1

1.01

 

Defined Terms

   1

1.02

 

Other Interpretive Provisions

   31

1.03

 

Accounting Terms

   32

1.04

 

Rounding

   32

1.05

 

References to Agreements and Laws

   32

1.06

 

Times of Day

   32

1.07

 

Letter of Credit Amounts.

   32

ARTICLE II.

 

THE COMMITMENTS AND CREDIT EXTENSIONS

   33

2.01

 

Committed Loans

   33

2.02

 

Borrowings, Conversions and Continuations of Committed Loans

   33

2.03

 

Letters of Credit

   35

2.04

 

Swing Line Loans

   42

2.05

 

Prepayments

   44

2.06

 

Termination or Reduction of Commitments

   45

2.07

 

Repayment of Loans

   46

2.08

 

Interest

   46

2.09

 

Fees

   47

2.10

 

Computation of Interest and Fees

   47

2.11

 

Evidence of Debt

   47

2.12

 

Payments Generally

   48

2.13

 

Sharing of Payments

   49

2.14

 

Extension of Maturity Date

   50

2.15

 

Increase in Commitments

   51

2.16

 

Replacement Documentation

   52

ARTICLE III.

 

TAXES, YIELD PROTECTION AND ILLEGALITY

   52

3.01

 

Taxes

   52

3.02

 

Illegality

   53

3.03

 

Inability to Determine Rates

   54

3.04

 

Increased Cost and Reduced Return; Capital Adequacy Reserves on Eurodollar Rate
Loans

   54

3.05

 

Funding Losses

   55

3.06

 

Matters Applicable to all Requests for Compensation

   56

3.07

 

Survival

   56

ARTICLE IV.

 

CONDITIONS PRECEDENT TO CREDIT EXTENSIONS AND REIT CONVERSION

   56

4.01

 

Conditions of Initial Credit Extension

   56

4.02

 

Conditions to all Credit Extensions

   59

4.03

 

Conditions of Maintenance of Commitments and Extensions of Credit After the REIT
Conversion Date

   60

4.04

 

Conditions of Maintenance of Commitments and Extensions of Credit After the REIT
Election Date

   63

ARTICLE V.

 

REPRESENTATIONS AND WARRANTIES

   64

5.01

 

Existence, Qualification and Power; Compliance with Laws

   64

 

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5.02

 

Authorization; No Contravention

   65

5.03

 

Governmental Authorization; Other Consents

   65

5.04

 

Binding Effect

   65

5.05

 

Financial Statements; No Material Adverse Effect

   65

5.06

 

Litigation

   66

5.07

 

No Default

   66

5.08

 

Ownership of Property; Liens

   66

5.09

 

Environmental Compliance

   66

5.10

 

Insurance

   67

5.11

 

Taxes

   67

5.12

 

ERISA Compliance

   67

5.13

 

Subsidiaries; Pledge of Capital Stock

   68

5.14

 

Margin Regulations; Investment Company Act; Public Utility Holding Company Act

   68

5.15

 

Disclosure

   69

5.16

 

Compliance with Laws

   69

5.17

 

Tax Shelter Regulations

   69

5.18

 

Intellectual Property; Licenses, Etc.

   69

5.19

 

Violation of Laws; Permits

   70

5.20

 

Borrowing Base Assets

   70

5.21

 

Leases and Ground Leases

   70

5.22

 

Notes Receivable

   70

5.23

 

Solvency

   71

5.24

 

Additional Representations and Warranties as of the REIT Conversion Date

   71

5.25

 

Additional Representations and Warranties as of the REIT Election Date

   72

ARTICLE VI.

 

AFFIRMATIVE COVENANTS

   73

6.01

 

Financial Statements

   73

6.02

 

Certificates; Other Information

   73

6.03

 

Notices

   75

6.04

 

Payment of Obligations

   76

6.05

 

Preservation of Existence, Etc

   76

6.06

 

Maintenance of Properties

   76

6.07

 

Maintenance of Insurance

   77

6.08

 

Compliance with Laws

   77

6.09

 

Books and Records

   77

6.10

 

Inspection Rights

   77

6.11

 

Use of Proceeds

   78

6.12

 

Additional Guarantors and Pledge of Capital Stock; Release of Guarantors and
Pledges of Guarantor Capital

Stock

   78

6.13

 

Pledge by REIT Guarantor; Pledge and Delivery of Notes Receivable

   80

6.14

 

Borrowing Base Certificate

   82

ARTICLE VII.

 

NEGATIVE COVENANTS

   82

7.01

 

Liens

   82

7.02

 

Investments and Development Costs

   83

7.03

 

Indebtedness

   84

7.04

 

Fundamental Changes

   85

7.05

 

Dispositions

   86

7.06

 

Restricted Payments

   87

7.07

 

Change in Nature of Business

   88

7.08

 

Transactions with Affiliates

   88

 

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7.09

 

Burdensome Agreements

   88

7.10

 

Use of Proceeds

   88

7.11

 

Financial Covenants

   89

7.12

 

Fundamental Changes and REIT Covenants

   89

ARTICLE VIII.

 

EVENTS OF DEFAULT AND REMEDIES

   90

8.01

 

Events of Default

   90

8.02

 

Remedies Upon Event of Default

   93

8.03

 

Application of Funds

   93

ARTICLE IX.

 

ADMINISTRATIVE AGENT

   94

9.01

 

Appointment and Authorization of Administrative Agent

   94

9.02

 

Delegation of Duties

   94

9.03

 

Liability of Administrative Agent

   95

9.04

 

Reliance by Administrative Agent

   95

9.05

 

Notice of Default

   96

9.06

 

Credit Decision; Disclosure of Information by Administrative Agent

   96

9.07

 

Indemnification of Administrative Agent

   96

9.08

 

Administrative Agent in its Individual Capacity

   97

9.09

 

Successor Administrative Agent

   97

9.10

 

Administrative Agent May File Proofs of Claim

   98

9.11

 

Agent Under Other Loan Documents, Collateral, Release of Collateral and Release
of Guaranty Matters

   99

9.12

 

Other Agents; Arrangers and Managers

   99

ARTICLE X.

 

MISCELLANEOUS

   100

10.01

 

Amendments, Etc.

   100

10.02

 

Notices and Other Communications; Facsimile Copies

   101

10.03

 

No Waiver; Cumulative Remedies

   102

10.04

 

Attorney Costs, Expenses and Taxes

   102

10.05

 

Indemnification by Loan Parties

   103

10.06

 

Payments Set Aside

   104

10.07

 

Successors and Assigns

   104

10.08

 

Confidentiality

   107

10.09

 

Set-off

   108

10.10

 

Interest Rate Limitation

   109

10.11

 

Counterparts

   109

10.12

 

Integration

   109

10.13

 

Survival of Representations and Warranties

   109

10.14

 

Severability

   109

10.15

 

Tax Forms

   110

10.16

 

Replacement of Lenders

   111

10.17

 

Governing Law

   112

10.18

 

Waiver of Right to Trial by Jury

   112

10.19

 

Time of the Essence

   113

SIGNATURES

   S-1

 

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SCHEDULES

2.01

  

Commitments and Pro Rata Shares

5.01

  

Jurisdictions of organizational and qualification for each Loan Document Party

5.06

  

Litigation

5.12

  

ERISA Disclosure

5.13

  

Subsidiaries and Other Investment Affiliates

5.21

  

Ground Lease Property

5.22(a)

  

Notes Receivable

5.22(b)

  

Intercompany Notes Receivable not subject to a Pledge

5.22(c)

  

Notes Receivable (principal outstanding more than $1,000,000) not subject to a
Pledge

7.03

  

Existing Indebtedness

7.11

  

Financial Covenants

7.12

  

Anticipated Fundamental Changes

10.02

  

Administrative Agent’s Office, Certain Addresses for Notices

EXHIBITS

         

Form of

A

  

Committed Loan Notice

B

  

Swing Line Loan Notice

C

  

Note

D

  

Compliance Certificate

E

  

Assignment and Assumption

F(1)

  

Guaranty (REIT Guarantor)

F(2)

  

Guaranty (Subsidiary)

F(3)

  

Guaranty (Borrower)

G

  

Intentionally Left Blank

H

  

Borrowing Base Certificate

I(1)

  

Pledge Agreement

I(2)

  

Pledge Agreement (Intercompany Promissory Note)

J

  

REIT Conversion Compliance Certificate

K

  

Loan Document Assumption and Affirmation

L

  

Supplemental Signature Page (New Lender)

 

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CREDIT AGREEMENT

 

This CREDIT AGREEMENT (“Agreement”) is entered into as of September 15, 2003,
among CATELLUS DEVELOPMENT CORPORATION, a Delaware corporation (the “Pre-REIT
Conversion Borrower” or the “OP Borrower”), CATELLUS LAND AND DEVELOPMENT
CORPORATION, a Delaware corporation (the “TRS Borrower”, and together with the
OP Borrower, each, a “Borrower” and together, the “Borrowers”), each lender from
time to time party hereto (collectively, the “Lenders” and individually, a
“Lender”), BANK OF AMERICA, N.A., as Administrative Agent, Swing Line Lender and
L/C Issuer, FLEET NATIONAL BANK, as Syndication Agent, BANK ONE, NA, as
Documentation Agent, WELLS FARGO BANK, NATIONAL ASSOCIATION, as Managing Agent,
and UNION BANK OF CALIFORNIA, N.A., as Managing Agent.

 

A. Each Borrower has requested that the Lenders provide a revolving credit
facility, and the Lenders are willing to do so on the terms and conditions set
forth herein.

 

B. In consideration of the mutual covenants and agreements herein contained, the
parties hereto covenant and agree as follows:

 

ARTICLE I.

DEFINITIONS AND ACCOUNTING TERMS

 

1.01 Defined Terms. As used in this Agreement, the following terms shall have
the meanings set forth below:

 

“Adjusted Aggregate NOI” means, for any fiscal quarter for any Real Property,
(a) the Aggregate NOI of such Real Property, minus (b) the Adjusted CAPEX of
such Real Property.

 

“Adjusted CAPEX” means, in respect of a reserve for any Real Property, capital
expenditures for replacements for any fiscal quarter, the greater of (a) $0.10
per square foot (calculated on an annual basis), or (b) actual expenditures for
replacements (on a trailing four fiscal quarter basis), excluding, however,
one-time expenditures that increase the rentable area of any Real Property,
enhance the value of any Real Property (as opposed to maintaining the value of
such Real Property), change the use of any Real Property, represent improvements
to recently acquired Real Property contemplated at the time of the acquisition,
or expenditures that are reimbursable by third parties not affiliated with any
Loan Party.

 

“Administrative Agent” means Bank of America in its capacity as administrative
agent under any of the Loan Documents, or any successor administrative agent.

 

“Administrative Agent’s Office” means the Administrative Agent’s address and, as
appropriate, account as set forth on Schedule 10.02, or such other address or
account as the Administrative Agent may from time to time notify the Borrowers
and the Lenders.

 

“Administrative Questionnaire” means an Administrative Questionnaire in a form
supplied by the Administrative Agent.

 

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“Affiliate” means, with respect to any Person, another Person that directly, or
indirectly through one or more intermediaries, Controls or is Controlled by or
is under common Control with the Person specified. “Control” means the
possession, directly or indirectly, of the power to direct or cause the
direction of the management or policies of a Person, whether through the ability
to exercise voting power, by contract or otherwise. “Controlling” and
“Controlled” have meanings correlative thereto. Without limiting the generality
of the foregoing, a Person shall be deemed to be Controlled by another Person if
such other Person possesses, directly or indirectly, power to vote 10% or more
of the securities having ordinary voting power for the election of directors,
managing general partners or the equivalent.

 

“Agent-Related Persons” means the Administrative Agent, together with its
Affiliates (including, in the case of Bank of America in its capacity as the
Administrative Agent, the Arranger), and the officers, directors, employees,
agents and attorneys-in-fact of such Persons and Affiliates.

 

“Aggregate Commitments” means the Commitments of all the Lenders.

 

“Aggregate NOI” means, for any fiscal quarter for any Real Property, (a) the
gross operating income for such fiscal quarter of such Real Property (determined
in accordance with GAAP; provided, however, that rentals included in gross
operating income shall (i) be based upon the actual cash rentals payable to the
owner of such Real Property during such fiscal quarter, without giving effect to
straight-line rental accounting under GAAP, and (ii) exclude all deferred
rentals for such fiscal quarter), adjusted by deducting the aggregate amount of
all reasonable and customary property expenses, including operating costs,
maintenance and repair costs and administrative costs, management fees, real
estate taxes and insurance premiums attributable to such Real Property for such
fiscal quarter; plus (b) all interest income of any Loan Party relating to such
Real Property.

 

“Agreement” means this Credit Agreement.

 

“Allocable Share” means the Loan Parties’ pro rata share of the capital
investment in any Investment Affiliate or Subsidiary.

 

“Applicable Capitalization Rate” means, for any Real Property, 9.25%.

 

“Applicable Rate” means the following percentages per annum, based upon the
Consolidated Leverage Ratio as set forth in the most recent Compliance
Certificate received by the Administrative Agent pursuant to Section 6.02(a):

 

Pricing
Level

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Consolidated
Leverage Ratio

--------------------------------------------------------------------------------

 

Eurodollar Rate
+ margin below;

Letters of Credit

--------------------------------------------------------------------------------

 

Base Rate +
margin below

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I

  <50%   1.65%   0%

II

  ³ 50% and < 55%   1.85%   0%

III

  ³ 55% and < 60%   2.00%   0.15%

IV

  ³ 60%   2.25%   0.25%

 

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Any increase or decrease in the Applicable Rate resulting from a change in the
Consolidated Leverage Ratio shall become effective with respect to all
Outstanding Amounts as of the first Business Day immediately following the date
a Compliance Certificate is delivered pursuant to Section 6.02(a); provided,
however, that if a Compliance Certificate is not delivered when due in
accordance with such Section, then Pricing Level IV shall apply as of the first
Business Day after the date on which such Compliance Certificate was required to
have been delivered and shall remain in effect until delivery of such Compliance
Certificate, in which case the Applicable Rate shall be calculated in accordance
with such Compliance Certificate on the first Business Day following delivery
thereof. The Applicable Rate in effect from the Closing Date shall be determined
based upon Pricing Level III.

 

“Applicable Unused Fee Rate” means the following percentages per annum, based
upon the Usage Percentage:

 

Usage Percentage

--------------------------------------------------------------------------------

 

Applicable Unused
Fee Rate

--------------------------------------------------------------------------------

<33%

  0.30%

³33% and <66%

  0.25%

³66%

  0.20%

 

The Applicable Unused Fee Rate shall be calculated for every calendar quarter.

 

“Arranger” means Banc of America Securities LLC, in its capacity as sole lead
arranger and sole book manager.

 

“Assignment and Assumption” means an Assignment and Assumption substantially in
the form of Exhibit E.

 

“Attorney Costs” means and includes all fees, expenses and disbursements of any
law firm or other external counsel and, without duplication, the allocated cost
of internal legal services and all expenses and disbursements of internal
counsel.

 

“Attributable Indebtedness” means, on any date, (a) in respect of any capital
lease of any Person, the capitalized amount thereof that would appear on a
balance sheet of such Person prepared as of such date in accordance with GAAP,
and (b) in respect of any Synthetic Lease Obligation, the capitalized amount of
the remaining lease payments under the relevant lease that would appear on a
balance sheet of such Person prepared as of such date in accordance with GAAP if
such lease were accounted for as a capital lease.

 

“Audited Financial Statements” means (a) the audited consolidated balance sheet
of the Consolidated Group for the fiscal year ended December 31, 2002, and the
related consolidated statements of income or operations, shareholders’ equity
and cash flows for such fiscal year of the Consolidated Group, including the
notes thereto; and (b) as applicable, any subsequent audited financial
statements of the Consolidated Group delivered pursuant to Section 6.01(a).

 

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“Availability Period” means the period from and including the Closing Date to
the earliest of (a) the Maturity Date, (b) the date of termination of the
Aggregate Commitments pursuant to Section 2.06, and (c) the date of termination
of the commitment of each Lender to make Loans and of the obligation of the of
the L/C Issuer to make L/C Credit Extensions pursuant to Section 8.02.

 

“Bank of America” means Bank of America, N.A. and its successors.

 

“Base Rate” means for any day a fluctuating rate per annum equal to the higher
of (a) the Federal Funds Rate plus 1/2 of 1% and (b) the rate of interest in
effect for such day as publicly announced from time to time by Bank of America
as its “prime rate.” The “prime rate” is a rate set by Bank of America based
upon various factors including Bank of America’s costs and desired return,
general economic conditions and other factors, and is used as a reference point
for pricing some loans, which may be priced at, above, or below such announced
rate. Any change in such rate announced by Bank of America shall take effect at
the opening of business on the day specified in the public announcement of such
change.

 

“Base Rate Committed Loan” means a Committed Loan that is a Base Rate Loan.

 

“Base Rate Loan” means a Loan that bears interest based on the Base Rate.

 

“Borrower” means, individually, the OP Borrower or the TRS Borrower, and
“Borrowers” means, collectively, the OP Borrower and the TRS Borrower.

 

“Borrowing” means a Committed Borrowing or a Swing Line Borrowing, as the
context may require.

 

“Borrowing Base” means, as of any date of determination, the sum of the
following (without double counting):

 

(a) the Eligible Stabilized Operating Property Value multiplied by 65%;

 

(b) the Eligible Ground Lease Property Value multiplied by 65%, in an amount not
to exceed 10% of the Borrowing Base Availability;

 

(c) the sum of the (1) Eligible Lease-Up Property Value, plus (2) the Eligible
WIP Value, multiplied by 50%, in an amount not to exceed 20% of the Borrowing
Base Availability;

 

(d) the Eligible Unimproved Land Value multiplied by 25%, in an amount not to
exceed 20% of the Borrowing Base Availability;

 

(e) the book value (in accordance with GAAP) of Eligible Cash owned by the Loan
Parties, less a $20,000,000 reserve, in an amount not to exceed 20% of the
Borrowing Base Availability;

 

(f) the Eligible Notes Receivable Value multiplied by 25%, in an amount not to
exceed 10% of the Borrowing Base Availability; and

 

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(g) the Eligible Mission Bay Block 28 Value multiplied by 50%, in an amount not
to exceed 25% of the Borrowing Base Availability;

 

provided, however, that (y) all Real Property included in the Borrowing Base and
subject to an Eligible Bond Transaction shall not exceed 30% of the Borrowing
Base Availability; and (z) if, on the date of determination, (i) Eligible
Mission Bay Block 28 is included in the Borrowing Base, the aggregate total of
clauses (b) through (g) above shall not exceed 55% of the Borrowing Base
Availability, and (ii) no Eligible Mission Bay Block 28 is included in the
Borrowing Base, the aggregate total of clauses (b) through (f) above shall not
exceed 45% of the Borrowing Base Availability.

 

“Borrowing Base Availability” means the lesser of (a) the Aggregate Commitments,
or (b) the Borrowing Base.

 

“Borrowing Base Certificate” means a certificate signed by a Responsible Officer
of each Borrower, in substantially the form of Exhibit H, with such changes
thereto as the Administrative Agent may from time to time reasonably request,
and including the addition of any assets that become Eligible Borrowing Base
Assets after the delivery of any previous Borrowing Base Certificate, and the
deletion of any assets that are no longer Eligible Borrowing Base Assets as of
the delivery of the previous Borrowing Base Certificate.

 

“Business Day” means any day other than a Saturday, Sunday or other day on which
commercial banks are authorized to close under the Laws of, or are in fact
closed in, the state of California, New York or the state where the
Administrative Agent’s Office is located and, if such day relates to any
Eurodollar Rate Loan, means any such day on which dealings in Dollar deposits
are conducted by and between banks in the London interbank eurodollar market.

 

“Capital Stock” means all shares, interests, participations or other equivalents
(however designated) of capital stock of a corporation, all equivalent ownership
interests in a Person (other than a corporation), including partnership
interests and membership interests, and all warrants, rights or options to
purchase or other arrangements or rights to acquire any of the foregoing,
provided that in no event shall the term “Capital Stock” include convertible
notes.

 

“Cash Collateralize” has the meaning specified in Section 2.03(g).

 

“Cash Equivalents” means (a) marketable direct obligations issued or
unconditionally guaranteed by the United States Government or issued by an
agency thereof and backed by the full faith and credit of the United States, in
each case maturing within one year after the date of acquisition thereof; (b)
marketable direct obligations issued by any state of the United States of
America or any political subdivision of any such state or any public
instrumentality thereof maturing within 90 days after the date of acquisition
thereof and, at the time of acquisition, having one of the two highest ratings
obtainable from S&P and Moody’s (or, if at any time either or both of S&P and
Moody’s shall not be rating such obligations, then from two such other
nationally recognized rating services as may be acceptable to the Administrative
Agent) and not listed for possible down-grade in Credit Watch published by S&P;
(c) commercial paper, other than commercial paper issued by any Borrower, the
REIT Guarantor or any of its Affiliates, maturing no more than 90 days after the
date of creation thereof and, at the time of acquisition,

 

5

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having a rating of at least A-1 or P-1 from either S&P or Moody’s (or, if at any
time neither Standard & Poor’s nor Moody’s shall be rating such obligations,
then the highest rating from such other nationally recognized rating services as
may be acceptable to the Administrative Agent); (d) shares of any money market
mutual fund rated at least AAA or its equivalent by either S&P or Moody’s; (e)
shares of any money market mutual fund whose investment policy restricts it to
investments in ‘first tier’ securities as defined by the SEC; and (f) domestic
certificates of deposit or time deposits or bankers’ acceptances maturing within
90 days after the date of acquisition thereof, overnight securities repurchase
agreements, or reverse repurchase agreements secured by any of the foregoing
types of securities or debt instruments issued, in each case, by (i) any
commercial bank organized under the laws of the United States of America or any
state thereof or the District of Columbia having combined capital and surplus of
not less than $250,000,000, or (ii) any Lender.

 

“Change of Control” means the following:

 

(a) With respect to the Pre-REIT Conversion Borrower (prior to the REIT
Conversion) and the REIT Guarantor (after the REIT Conversion), an event or
series of events by which:

 

(i) any “person” or “group” (as such terms are used in Sections 13(d) and 14(d)
of the Securities Exchange Act of 1934, but excluding any employee benefit plan
of such person or its subsidiaries, and any person or entity acting in its
capacity as trustee, agent or other fiduciary or administrator of any such plan)
becomes the “beneficial owner” (as defined in Rules 13d-3 and 13d-5 under the
Securities Exchange Act of 1934, except that a person or group shall be deemed
to have “beneficial ownership” of all securities that such person or group has
the right to acquire (such right, an “option right”), whether such right is
exercisable immediately or only after the passage of time), directly or
indirectly, of 25% or more of the equity securities of such Person entitled to
vote for members of the board of directors or equivalent governing body of such
Person on a fully-diluted basis (and taking into account all such securities
that such person or group has the right to acquire pursuant to any option
right); or

 

(ii) during any period of 12 consecutive months, a majority of the members of
the board of directors or other equivalent governing body of such Person cease
to be composed of individuals (A) who were members of that board or equivalent
governing body on the first day of such period, (B) whose election or nomination
to that board or equivalent governing body was approved by individuals referred
to in clause (A) above constituting at the time of such election or nomination
at least a majority of that board or equivalent governing body or (C) whose
election or nomination to that board or other equivalent governing body was
approved by individuals referred to in clauses (A) and (B) above constituting at
the time of such election or nomination at least a majority of that board or
equivalent governing body (excluding, in the case of both clause (B) and clause
(C), any individual whose initial nomination for, or assumption of office as, a
member of that board or equivalent governing body occurs as a result of an
actual or threatened solicitation of proxies or consents for the election or
removal of one or more directors by any person or group other than a
solicitation for the election of one or more directors by or on behalf of the
board of directors).

 

6

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(b) With respect to the Post-REIT Conversion Borrower, an event or series of
events by which:

 

(i) after the REIT Conversion Date, the REIT Guarantor no longer owns a majority
of the outstanding Capital Stock of the Post-REIT Conversion Borrower; or

 

(ii) after the REIT Conversion Date, the REIT Guarantor no longer serves as the
sole general partner of the Post-REIT Conversion Borrower.

 

(c) With respect to the TRS Borrower, an event or series of events by which the
OP Borrower no longer owns 100% of the outstanding Capital Stock of the TRS
Borrower, directly or indirectly.

 

“Closing Date” means the first date all the conditions precedent in Section 4.01
are satisfied or waived in accordance with Section 4.01 (or, in the case of
Section 4.01(b) or 4.01(c), waived by the Person entitled to receive the
applicable payment).

 

“Code” means the Internal Revenue Code of 1986.

 

“Collateral” has the meaning as defined in each Pledge Agreement.

 

“Collateral Document” means, collectively, (a) each Pledge Agreements and
related stock powers and assignments, and (b) any amendments, supplements,
modifications, renewals, replacements, consolidations, substitutions and
extensions of any of the foregoing.

 

“Commitment” means, as to each Lender, its obligation to (a) make Committed
Loans to the Borrowers pursuant to Section 2.01, (b) purchase participations in
L/C Obligations, and (c) purchase participations in Swing Line Loans, in an
aggregate principal amount at any one time outstanding not to exceed the amount
set forth opposite such Lender’s name on Schedule 2.01 or in the Assignment and
Assumption pursuant to which such Lender becomes a party hereto, as applicable,
as such amount may be adjusted from time to time in accordance with this
Agreement.

 

“Committed Borrowing” means a borrowing consisting of simultaneous Committed
Loans of the same Type and, in the case of Eurodollar Rate Loans, having the
same Interest Period made by each of the Lenders pursuant to Section 2.01.

 

“Committed Loan” has the meaning specified in Section 2.01.

 

“Committed Loan Notice” means a notice of (a) a Committed Borrowing, (b) a
conversion of Committed Loans from one Type to the other, or (c) a continuation
of Eurodollar Rate Loans, pursuant to Section 2.02(a), which, if in writing,
shall be substantially in the form of Exhibit A.

 

“Completed” means, with respect to any item of Real Property, that the
construction of all improvements (or discreet phase(s) thereof, if applicable)
has been completed, certificates of occupancy shall have been issued with
respect to such improvements (or other evidence thereof

 

7

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reasonably satisfactory to the Administrative Agent), and such improvements
shall be available for immediate occupancy and/or lease in the normal course of
business.

 

“Compliance Certificate” means a certificate substantially in the form of
Exhibit D.

 

“Condemnation” means any condemnation proceeding involving any Unencumbered Pool
Property or any portion thereof or any parking facility used in connection
therewith that has been commenced or, to the knowledge of a Responsible Officer
of any Loan Party, that is contemplated by any Governmental Authority.

 

“Consolidated Group” means, (a) before the REIT Conversion Date, the OP Borrower
and its consolidated Subsidiaries; and (b) after the REIT Conversion Date, the
REIT Guarantor and its consolidated Subsidiaries.

 

“Consolidated Leverage Ratio” means, as of any date of determination, the
percentage derived from the ratio of (a) Consolidated Total Liabilities (as
defined in Schedule 7.11), to (b) Total Asset Value (as defined in Schedule
7.11) for the fiscal quarter most recently ended.

 

“Contractual Obligation” means, as to any Person, any provision of any security
issued by such Person or of any agreement, instrument or other undertaking to
which such Person is a party or by which it or any of its property is bound.

 

“Control” has the meaning specified in the definition of “Affiliate.”

 

“Controlled Investment Affiliate” means any Investment Affiliate of which the
operational management of such Investment Affiliate, or the oversight of a
third-party management company managing the operations of such Investment
Affiliate, is controlled, directly or indirectly, through one or more
intermediaries, by a Loan Party.

 

“Credit Extension” means each of the following: (a) a Borrowing, and (b) an L/C
Credit Extension.

 

“Debt Rating” means, as of any date of determination, the rating as determined
by either S&P or Moody’s (collectively, the “Debt Ratings”) of the
non-credit-enhanced, senior unsecured long-term debt of The Gap, provided that
if a Debt Rating is issued by each of the foregoing rating agencies, then the
higher of such Debt Ratings shall apply.

 

“Debtor Relief Laws” means the Bankruptcy Code of the United States, and all
other liquidation, conservatorship, bankruptcy, assignment for the benefit of
creditors, moratorium, rearrangement, receivership, insolvency, reorganization,
or similar debtor relief Laws of the United States or other applicable
jurisdictions from time to time in effect and affecting the rights of creditors
generally.

 

“Default” means any event or condition that constitutes an Event of Default or
that, with the giving of any notice, the passage of time, or both, would be an
Event of Default.

 

“Default Rate” means an interest rate equal to (a) the Base Rate plus (b) the
Applicable Rate, if any, applicable to Base Rate Loans plus (c) 3% per annum;
provided, however, that with

 

8

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respect to a Eurodollar Rate Loan, the Default Rate shall be an interest rate
equal to the interest rate (including any Applicable Rate) otherwise applicable
to such Loan plus 3% per annum, in each case to the fullest extent permitted by
applicable Laws.

 

“Defaulting Lender” means any Lender that (a) has failed to fund any portion of
the Committed Loans, participations in L/C Obligations or participations in
Swing Line Loans required to be funded by it hereunder within one Business Day
of the required funding date, (b) or has otherwise failed to pay over to the
Administrative Agent or any other Lender any other amount required to be paid by
it hereunder within one Business Day of the date when due, unless the subject of
a good faith dispute, or (c) has been deemed insolvent or become the subject of
a bankruptcy or insolvency proceeding.

 

“Development” means, with respect to any Real Property project under
construction, that the real estate is owned in fee simple title by the owner
thereof, and that construction contracts have been entered into and all
necessary building permits have been obtained, until the construction of all
improvements (or discreet phase(s) thereof, if applicable) of such project shall
have been Completed.

 

“Development Cost” means all costs incurred in connection with construction
work-in-progress, the cost of improvements to real property under construction
and the cost of the underlying real property and improvements, including,
without limitation, all such costs associated with real property subject to
Eligible Bond Transactions, Permitted Bond Transactions and Safe Harbor
Transactions.

 

“Development Property” means any Lease-Up Property and any WIP, provided,
however, that any such property shall no longer be considered “Development
Property” 12 months after the issuance of a certificate of occupancy (or other
evidence thereof reasonably satisfactory to the Administrative Agent) for such
property.

 

“Disposition” or “Dispose” means the sale, transfer, exclusive license or other,
similar disposition (including any sale and leaseback transaction) of any
property by any Person, including any sale, assignment, transfer or other
disposal with or without recourse of any notes or accounts receivable or any
rights and claims associated therewith; provided, however, that “Dispose” shall
not include (a) any lease or Ground Lease of any Real Property or Unimproved
Land in the Ordinary Course of Business, or (b) any transfer of Real Property in
connection with an Eligible Bond Transaction.

 

“Distributions” means the declaring or making by any Borrower, the REIT
Guarantor or any Subsidiary of (i) any distribution to the REIT Guarantor or any
other Person (other than to any Borrower, any Guarantor (other than the REIT
Guarantor) or a Wholly-Owned Subsidiary of a Borrower) of any properties,
including cash, rights, obligations, or limited liability company interests or
units, on account of any stock, membership interests or partnership interests in
any Borrower, the REIT Guarantor or any Subsidiary; or (ii) any purchase,
redemption or acquisition for value of any of the stock, limited liability
company interests or partnership interests of any Borrower, the REIT Guarantor
or any Subsidiary, now or hereafter outstanding.

 

“Dollar” and “$” mean lawful money of the United States.

 

9

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“E&P Distribution” means the special dividend to shareholders of the Pre-REIT
Conversion Borrower or, after the REIT Conversion Date, the REIT Guarantor (as
applicable) of accumulated earnings and profits of the Pre-REIT Conversion
Borrower and the REIT Guarantor (as applicable) estimated as of December 31,
2003, in an amount not to exceed $300,000,000, all as more fully described in
the S-4.

 

“Eligible Assignee” has the meaning specified in Section 10.07(g).

 

“Eligible Bond Transactions” means a transaction wherein a Loan Party is the
sole holder of revenue bonds issued by a public or governmental entity pursuant
to which such public or governmental entity (a) acquires real property (the
“Project”) from a Loan Party with bond proceeds, (b) leases such Project to a
Loan Party at a rental sufficient to pay debt service on such revenue bonds, (c)
pledges, mortgages or otherwise encumbers such Project and the revenues
therefrom to the Loan Party, as the sole holder of the revenue bonds, as
security for repayment of such revenue bonds, and (d) grants to such Loan Party
a purchase option to repurchase such Real Property upon the maturity of the
revenue bonds at a nominal price.

 

“Eligible Borrowing Base Assets” means all Eligible Stabilized Operating
Property, Eligible Ground Lease Property, Eligible Lease-Up Property, Eligible
WIP, Eligible Unimproved Land, Eligible Cash, Eligible Notes Receivable and
Eligible Mission Bay Block 28.

 

“Eligible Cash” means all Dollar-denominated cash and Cash Equivalents owned by
any Loan Party, including without limitation, cash held as part of a Section
1031 Exchange Account, which cash and Cash Equivalents are subject to no Liens
or restrictions (other than such restrictions as are customarily part of a
Section 1031 Exchange Agreement). Any such cash shall be maintained in deposit
accounts at Bank of America or at another financial institution with total
assets in excess of $10,000,000,000.

 

“Eligible Ground Lease Property” means all Ground Lease Property that is (a)
100% owned in fee simple title by any Loan Party or is subject to an Eligible
Bond Transaction; (b) subject to no Lien, other than Permitted Liens; (b)
located in the United States; (c) Environmentally Compliant; and (d) to the
knowledge of a Responsible Officer of any Loan Party, free from any Material
Defect. In addition, to qualify as “Eligible Ground Lease Property,” the
Administrative Agent must have confirmed its receipt of satisfactory evidence
that the rentals under the Ground Lease for such Ground Lease Property are
non-cancellable for the entire term of the Ground Lease.

 

“Eligible Ground Lease Property Value” means the value of all Eligible Ground
Lease Property, determined as follows:

 

(a) Eligible Ground Lease Property owned in fee simple title (or, with respect
to Eligible Ground Lease Property subject to an Eligible Bond Transaction,
leased) by any Loan Party for less than one fiscal quarter shall be valued at
its cost, in accordance with GAAP;

 

(b) Eligible Ground Lease Property owned in fee simple title (or, with respect
to Eligible Ground Lease Property subject to an Eligible Bond Transaction,
leased) by any Loan Party for at least one and less than four fiscal quarters
shall be valued by calculating the

 

10

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annualized Aggregate NOI for such Eligible Ground Lease Property for the most
recent fiscal quarter, capitalized at the Applicable Capitalization Rate; and

 

(c) Eligible Ground Lease Property owned in fee simple title (or, with respect
to Eligible Ground Lease Property subject to an Eligible Bond Transaction,
leased) by any Loan Party for four or more fiscal quarters shall be valued at
the Aggregate NOI for such Eligible Ground Lease Property for the four most
recent fiscal quarters, capitalized at the Applicable Capitalization Rate.

 

“Eligible Lease-Up Property” means all Lease-Up Property that is (a) 100% owned
in fee simple title by any Loan Party; (b) subject to no Lien, other than
Permitted Liens; (b) located in the United States; (c) Environmentally
Compliant; and (d) free from any Material Defect; provided, however, that any
such Lease-Up Property that does not so qualify to be treated as Stabilized
Operating Property 30 months after the receipt of a certificate of occupancy (or
other evidence thereof reasonably satisfactory to the Administrative Agent)
shall cease to qualify as Eligible Lease-Up Property and shall no longer be
included in the Borrowing Base.

 

“Eligible Lease-Up Property Value” means the value of all Eligible Lease-Up
Property, determined as follows:

 

(a) for a period of up to 12 months after the receipt of a certificate of
occupancy (or other evidence thereof reasonably satisfactory to the
Administrative Agent), such Eligible Lease-Up Property shall be valued at its
book value, in accordance with GAAP; and

 

(b) for the period of 12 through 30 months after the receipt of a certificate of
occupancy (or other evidence thereof reasonably satisfactory to the
Administrative Agent), such Eligible Lease-Up Property shall be valued at the
annualized Aggregate NOI for such Eligible Lease-Up Property based upon the most
recent fiscal quarter, capitalized at the Applicable Capitalization Rate.

 

“Eligible Mission Bay Block 28” means Mission Bay Block 28 during the period
from the Closing Date to the second anniversary of the Closing Date, provided
that (a) Mission Bay Block 28 (i) is 100% owned in fee simple title by a Loan
Party; (ii) subject to no Lien, other than a Permitted Lien; (iii) remains
unoccupied and 100% leased to The Gap pursuant to The Gap Lease; (iv) is
Environmentally Compliant; and (v) is free from any Material Defect; (b) all
rentals payable under The Gap Lease are current and are not overdue for a period
in excess of ten Business Days; and (c) no default or event of default has
occurred and is continuing under The Gap Lease.

 

“Eligible Mission Bay Block 28 Value” means the value of Eligible Mission Bay
Block 28, determined as follows:

 

(a) if The Gap has a Debt Rating of at least Ba2 or BB or better, the Eligible
Mission Bay Block 28 shall be valued at the annualized Aggregate NOI for such
Eligible Mission Bay Block 28 based upon the most recent fiscal quarter,
capitalized at the Applicable Capitalization Rate; and

 

11

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(b) if The Gap has a Debt Rating of less than Ba2 or BB, the Eligible Mission
Bay Block 28 shall be valued at its book value in accordance with GAAP;

 

provided, however, that after the second anniversary of the Closing Date, or if
Mission Bay Block 28 is no longer leased to The Gap, then Mission Bay Block 28
shall not qualify as Eligible Mission Bay Block 28, and shall only be included
in the Borrowing Base if such property otherwise qualifies as Stabilized
Operating Property or a Lease-Up Property, as applicable.

 

“Eligible Notes Receivable” means any such Notes Receivable which (a) are 100%
owned by a Loan Party; (b) are subject to no Lien, other than an assignment for
the benefit of the Lenders; (c) have been validly assigned to the Administrative
Agent, for the benefit of the Lenders, pursuant to the procedures set forth in
Section 6.13(b); (d) represent performing loans owed to a Loan Party that are
not in default and under which payments are not more than 30 days past due, (e)
are secured by Real Property, Unimproved Land or other collateral acceptable to
the Administrative Agent in its sole discretion; (f) are not Intercompany Notes
Receivable; (g) are not Notes Receivable of an obligor that is an Affiliate of a
Loan Party or a Subsidiary; and (h) which are otherwise reasonably acceptable to
the Administrative Agent, taking into account factors such as the payment term
of the Notes Receivable, the financial stability of the obligor thereunder, the
recourse nature of the obligation, and the value of the collateral securing such
Notes Receivable.

 

“Eligible Notes Receivable Value” means the value of all Eligible Notes
Receivable, determined by the book value of such Eligible Notes Receivable in
accordance with GAAP.

 

“Eligible Stabilized Operating Property” means all Stabilized Operating Property
that is (a) 100% owned in fee simple title by any Loan Party or subject to an
Eligible Bond Transaction; (b) subject to no Lien, other than Permitted Liens;
(c) located in the United States; (d) Environmentally Compliant; and (e) free
from any Material Defect.

 

“Eligible Stabilized Operating Property Value” means the value of all Eligible
Stabilized Operating Property, determined as follows:

 

(a) Eligible Stabilized Operating Property owned by a Loan Party in fee simple
title (or, if subject to an Eligible Bond Transaction, leased by such Loan
Party) for less than one fiscal quarter shall be valued at its book value, in
accordance with GAAP;

 

(b) Eligible Stabilized Operating Property owned by a Loan Party in fee simple
title (or, if subject to an Eligible Bond Transaction, leased by such Loan
Party) for at least one and less than four fiscal quarters shall be valued by
calculating the annualized Aggregate NOI for such Eligible Stabilized Operating
Property based upon the most recent fiscal quarter, minus a capital reserve
equal to $0.10 per square foot, capitalized at the Applicable Capitalization
Rate; and

 

(c) Eligible Stabilized Operating Property owned by a Loan Party in fee simple
title (or, if subject to an Eligible Bond Transaction, leased by such Loan
Party) for four or more fiscal quarters shall be valued at the Aggregate NOI for
such Eligible Stabilized Operating Property for the four most recent fiscal
quarters, minus a capital reserve equal to $0.10 per square foot, capitalized at
the Applicable Capitalization Rate.

 

12

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“Eligible Unimproved Land” means all Unimproved Land that meets each of the
following criteria: (a) such Unimproved Land is 100% owned in fee simple title
by any Loan Party; (b) such Unimproved Land is subject to no Lien, other than
Permitted Liens; (b) such Unimproved Land is located in the United States; (c)
such Unimproved Land is Environmentally Compliant; (d) the owner’s intended use
of such Unimproved Land is permissible under the applicable general plan or its
equivalent, and under any applicable specific plan, zoning classification or
development agreement; (e) such Unimproved Land has access to roads adequate for
the owner’s intended use and Development of such Unimproved Land; and (f) such
Unimproved Land is entitled to access to, or the availability of, utilities
adequate for the owner’s intended use and Development of such Unimproved Land.

 

“Eligible Unimproved Land Value” means all Eligible Unimproved Land valued at
its book value, in accordance with GAAP.

 

“Eligible WIP” means all WIP that is (a) 100% owned in fee simple title by any
Loan Party or subject to an Eligible Bond Transaction; (b) subject to no Lien,
other than Permitted Liens; (b) located in the United States; (c)
Environmentally Compliant; and (d) free from any Material Defect.

 

“Eligible WIP Value” means the value of all Eligible WIP, valued at its book
value, in accordance with GAAP.

 

“Environmental Laws” means any and all Federal, state, local, and foreign
statutes, laws, regulations, ordinances, rules, judgments, orders, decrees,
permits, concessions, grants, franchises, licenses, agreements or governmental
restrictions relating to pollution and the protection of the environment or the
release of any materials into the environment, including those related to
Hazardous Materials.

 

“Environmental Liability” means any liability, contingent or otherwise
(including any liability for damages, costs of environmental remediation, fines,
penalties or indemnities), of any Loan Document Party or any Subsidiary directly
or indirectly resulting from or based upon (a) violation of any Environmental
Law, (b) the generation, use, handling, transportation, storage, treatment or
disposal of any Hazardous Materials, (c) exposure to any Hazardous Materials,
(d) the release or threatened release of any Hazardous Materials into the
environment or (e) any contract, agreement or other consensual arrangement
pursuant to which liability is assumed or imposed with respect to any of the
foregoing.

 

“Environmentally Compliant” means, with respect to any Real Property, Unimproved
Land or Ground Lease Property, (i) there are no Hazardous Materials on the
property at levels that require cleanup or remediation under any applicable
Environmental Law, (ii) in the event remediation was required with respect to
such property, such remediation has been completed pursuant to the requirements
of all applicable Environmental Laws and the owner of such property has received
no further action status or other equivalent approval (if required or
appropriate) from the applicable Governmental Authority, and (iii) to the extent
Hazardous Materials are stored, used and disposed of on the property, such
Hazardous Materials are stored, used and disposed of in compliance with all
applicable Environmental Laws and are in such quantities and of such type as are
(x) customarily stored and used on properties similar to such

 

13

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property, (y) used in respective tenants’ Ordinary Course of Business, if
applicable, or (z) customarily used in the course of construction, if
applicable.

 

“ERISA” means the Employee Retirement Income Security Act of 1974.

 

“ERISA Affiliate” means any trade or business (whether or not incorporated)
under common control with any Borrower within the meaning of Section 414(b) or
(c) of the Code (and Sections 414(m) and (o) of the Code for purposes of
provisions relating to Section 412 of the Code).

 

“ERISA Event” means (a) a Reportable Event with respect to a Pension Plan; (b) a
withdrawal by any Borrower or any ERISA Affiliate from a Pension Plan subject to
Section 4063 of ERISA during a plan year in which it was a substantial employer
(as defined in Section 4001(a)(2) of ERISA) or a cessation of operations that is
treated as such a withdrawal under Section 4062(e) of ERISA; (c) a complete or
partial withdrawal by any Borrower or any ERISA Affiliate from a Multiemployer
Plan or notification that a Multiemployer Plan is in reorganization; (d) the
filing of a notice of intent to terminate, the treatment of a Plan amendment as
a termination under Sections 4041(c) or 4041A of ERISA, or the commencement of
proceedings by the PBGC to terminate a Pension Plan or Multiemployer Plan; (e)
an event or condition which constitutes grounds under Section 4042 of ERISA for
the termination of, or the appointment of a trustee to administer, any Pension
Plan or Multiemployer Plan; or (f) the imposition of any liability under Title
IV of ERISA, other than for PBGC premiums due but not delinquent under Section
4007 of ERISA, upon any Borrower or any ERISA Affiliate.

 

“Eurodollar Rate” means for any Interest Period with respect to any Eurodollar
Rate Loan:

 

(a) the rate per annum equal to the rate determined by the Administrative Agent
to be the offered rate that appears on the page of the Telerate screen (or any
successor thereto) that displays an average British Bankers Association Interest
Settlement Rate for deposits in Dollars (for delivery on the first day of such
Interest Period) with a term equivalent to such Interest Period, determined as
of approximately 11:00 a.m. (London time) two Business Days prior to the first
day of such Interest Period, or

 

(b) if the rate referenced in the preceding clause (a) does not appear on such
page or service or such page or service shall not be available, the rate per
annum equal to the rate determined by the Administrative Agent to be the offered
rate on such other page or other service that displays an average British
Bankers Association Interest Settlement Rate for deposits in Dollars (for
delivery on the first day of such Interest Period) with a term equivalent to
such Interest Period, determined as of approximately 11:00 a.m. (London time)
two Business Days prior to the first day of such Interest Period, or

 

(c) if the rates referenced in the preceding clauses (a) and (b) are not
available, the rate per annum determined by the Administrative Agent as the rate
of interest at which deposits in Dollars for delivery on the first day of such
Interest Period in same day funds in the approximate amount of the Eurodollar
Rate Loan being made, continued or converted by Bank of America and with a term
equivalent to such Interest Period would be offered by Bank of

 

14

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America’s London Branch to major banks in the London interbank eurodollar market
at their request at approximately 4:00 p.m. (London time) two Business Days
prior to the first day of such Interest Period.

 

“Eurodollar Rate Loan” means a Committed Loan that bears interest at a rate
based on the Eurodollar Rate.

 

“Event of Default” has the meaning specified in Section 8.01.

 

“Extension Effective Date” has the meaning specified in Section 2.14.

 

“Federal Funds Rate” means, for any day, the rate per annum equal to the
weighted average of the rates on overnight Federal funds transactions with
members of the Federal Reserve System arranged by Federal funds brokers on such
day, as published by the Federal Reserve Bank on the Business Day next
succeeding such day; provided that (a) if such day is not a Business Day, the
Federal Funds Rate for such day shall be such rate on such transactions on the
next preceding Business Day as so published on the next succeeding Business Day,
and (b) if no such rate is so published on such next succeeding Business Day,
the Federal Funds Rate for such day shall be the average rate (rounded upward,
if necessary, to a whole multiple of 1/100 of 1%) charged to Bank of America on
such day on such transactions as determined by the Administrative Agent.

 

“Fee Letter” means the letter agreement, dated June 10, 2003, among the OP
Borrower, the Administrative Agent and the Arranger.

 

“Floating Rate Debt” means any Indebtedness listed in paragraph (a) of the
definition thereof that bears interest at a rate that is subject to periodic
adjustment (either automatically by reference to a fluctuating base or market
rate of interest or at the option of the lender) at any time prior to the
maturity date of such Indebtedness.

 

“Foreign Lender” has the meaning specified in Section 10.15(a)(i).

 

“FRB” means the Board of Governors of the Federal Reserve System of the United
States.

 

“Funds From Operations” means, with respect to the REIT Guarantor and its
Subsidiaries, on a consolidated basis, net income calculated in accordance with
GAAP, excluding gains (or losses) from sales of property, plus real estate
depreciation and amortization (excluding amortization of financing costs), and
after adjustments for unconsolidated partnerships and joint ventures (with
adjustments for unconsolidated partnerships and joint ventures calculated to
reflect funds from operations on the same basis), as more fully described in the
REIT Guarantor’s reports and statements filed with the SEC.

 

“GAAP” means generally accepted accounting principles in the United States set
forth in the opinions and pronouncements of the Accounting Principles Board and
the American Institute of Certified Public Accountants and statements and
pronouncements of the Financial Accounting Standards Board or such other
principles as may be approved by a significant segment of the

 

15

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accounting profession in the United States, that are applicable to the
circumstances as of the date of determination, consistently applied.

 

“Governmental Authority” means any nation or government, any state or other
political subdivision thereof, any agency, authority, instrumentality,
regulatory body, court, administrative tribunal, central bank or other entity
exercising executive, legislative, judicial, taxing, regulatory or
administrative powers or functions of or pertaining to government.

 

“Ground Lease” means any lease of land under which the tenant (a) is the fee
owner of the improvements thereon and the ground lessee of the land; and (b)
assumes all responsibility for the payment of all obligations relating to the
leased property and the improvements thereon.

 

“Ground Lease Property” means any Real Property or Unimproved Land subject to a
Ground Lease.

 

“Guarantee” means, as to any Person, without duplication, (a) any obligation,
contingent or otherwise, of such Person guaranteeing or having the economic
effect of guaranteeing any Indebtedness or other obligation payable or
performable by another Person (the “primary obligor”) in any manner, whether
directly or indirectly, and including any obligation of such Person, direct or
indirect, (i) to purchase or pay (or advance or supply funds for the purchase or
payment of) such Indebtedness or other obligation, (ii) to purchase or lease
property, securities or services for the purpose of assuring the obligee in
respect of such Indebtedness or other obligation of the payment or performance
of such Indebtedness or other obligation, (iii) to maintain working capital,
equity capital or any other financial statement condition or liquidity or level
of income or cash flow of the primary obligor so as to enable the primary
obligor to pay such Indebtedness or other obligation, or (iv) entered into for
the purpose of assuring in any other manner the obligee in respect of such
Indebtedness or other obligation of the payment or performance thereof or to
protect such obligee against loss in respect thereof (in whole or in part), or
(b) any Lien on any assets of such Person securing any Indebtedness or other
obligation of any other Person, whether or not such Indebtedness or other
obligation is assumed by such Person; provided, however, that the term
“Guarantee” shall not include (y) endorsements for deposit or collection in the
Ordinary Course of Business, or (z) stand-by letter of credit obligations and
completion guarantees described in the definition of “Contingent Obligations.”
The amount of any Guarantee shall be deemed to be an amount equal to the stated
or determinable amount of the related primary obligation, or portion thereof, in
respect of which such Guarantee is made or, if not stated or determinable, the
maximum reasonably anticipated liability in respect thereof as determined by the
guaranteeing Person in good faith. The term “Guarantee” as a verb has a
corresponding meaning.

 

“Guarantor” means each Person that is a party to a Guaranty, including (a) on
the Closing Date, each Borrower; (b) on the Closing Date, SF Pacific Properties
Inc., a Delaware corporation, CCG Ontario, LLC, a Delaware limited liability
company, Catellus Residential Group, Inc., a California corporation, Santa Fe
Bayfront Venture, a California general partnership, Catellus Westminster
Company, LLC, a Delaware limited liability company, and Plato REIT, LLC, a
Delaware limited liability company; (c) as of the REIT Conversion Date, the REIT
Guarantor; (d) as of the REIT Conversion Date, each Material Subsidiary and
owner of Unencumbered Pool Property that has not already executed a Guaranty
(subject to the limitations

 

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set forth in clause (i) of Section 6.12(c)); and (e) each other Person that
becomes a party to a Guaranty pursuant to Section 6.12 (subject to the
limitations set forth in clause (i) of Section 6.12(c)).

 

“Guaranty” means each Guaranty made by each Guarantor in favor of the
Administrative Agent and the Lenders, substantially in the form of Exhibit F(1)
(with respect to the Guaranty of the REIT Guarantor to be executed as of the
REIT Conversion Date), or substantially in the form of Exhibit F(3) (with
respect to the Guaranty of each Borrower to be executed on the Closing Date), or
substantially in the form of Exhibit F(2) (with respect to the Guaranty of each
other Guarantor to be executed on the Closing Date or on any date thereafter).

 

“Hazardous Materials” means all explosive or radioactive substances or wastes
and all hazardous or toxic substances, wastes or other pollutants, including
petroleum or petroleum distillates, asbestos or asbestos-containing materials,
polychlorinated biphenyls, radon gas, infectious or medical wastes and all other
substances or wastes of any nature regulated pursuant to any Environmental Law.

 

“Indebtedness” means, as to any Person at a particular time, without
duplication, all of the following, whether or not included as indebtedness or
liabilities in accordance with GAAP:

 

(a) all obligations of such Person for borrowed money and all obligations of
such Person evidenced by bonds, debentures, notes, loan agreements or other
similar instruments;

 

(b) all obligations of such Person arising under commercial letters of credit;

 

(c) all obligations of such Person arising under bankers’ acceptances, bank
guaranties and similar instruments excluding, however, those items described in
the definition of “Contingent Obligations,” as defined in Schedule 7.11);

 

(d) net obligations of such Person under any Swap Contract;

 

(e) all obligations of such Person to pay the deferred purchase price of
property or services (other than trade accounts payable in the Ordinary Course
of Business);

 

(f) indebtedness (excluding prepaid interest thereon) secured by a Lien on
property owned by such Person (including indebtedness arising under conditional
sales or other title retention agreements), whether or not such indebtedness
shall have been assumed by such Person or is limited in recourse;

 

(g) capital leases and Synthetic Lease Obligations;

 

(h) the book value of any bonds issued under a Permitted Bond Transaction and
held by a Person, other than a Loan Party;

 

(i) all obligations of such Person under financing or borrowing arrangements
secured by, or linked to, the obligation to such Person to issue Capital Stock
in the future, but excluding employee stock options, convertible debentures and
notes issued by such Person, or

 

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the conversion rights of the holders of limited partnership units of the OP
Borrower into shares of the REIT Guarantor; and

 

(j) all Guarantees of such Person in respect of any of the foregoing, excluding,
however, any such completion guarantees which constitute “Contingent
Obligations,” as defined in Schedule 7.11.

 

For all purposes hereof, the Indebtedness of any Person shall include the
Indebtedness of any partnership or joint venture (other than a joint venture
that is itself a corporation or limited liability company) in which such Person
is a general partner or a joint venturer, unless and to the extent such
Indebtedness is expressly made non-recourse to, or otherwise capped with respect
to, such Person. The amount of any net obligation under any Swap Contract on any
date shall be deemed to be the Swap Termination Value thereof as of such date.
The amount of any capital lease or Synthetic Lease Obligation as of any date
shall be deemed to be the amount of Attributable Indebtedness in respect thereof
as of such date.

 

“Indemnified Liabilities” has the meaning set forth in Section 10.05.

 

“Indemnitees” has the meaning set forth in Section 10.05.

 

“Initial Term” means the period from and including the Closing Date to September
15, 2006.

 

“Intercompany Notes Receivable” means any Notes Receivable under which a Loan
Party or a Subsidiary is the obligor, payor or borrower and a Loan Party or a
Subsidiary is the holder, payee or lender.

 

“Interest Payment Date” means, (a) as to any Loan other than a Base Rate Loan,
the last day of each Interest Period applicable to such Loan and the Maturity
Date; provided, however, that if any Interest Period for a Eurodollar Rate Loan
exceeds three months, the respective dates that fall every three months after
the beginning of such Interest Period shall also be Interest Payment Dates; and
(b) as to any Base Rate Loan (including a Swing Line Loan), the last Business
Day of each calendar month and the Maturity Date.

 

“Interest Period” means, as to each Eurodollar Rate Loan, the period commencing
on the date such Eurodollar Rate Loan is disbursed or converted to or continued
as a Eurodollar Rate Loan and ending on the date one, two, three or six months
thereafter, as selected by any Borrower in its Committed Loan Notice; provided
that:

 

(a) any Interest Period that would otherwise end on a day that is not a Business
Day shall be extended to the next succeeding Business Day unless such Business
Day falls in another calendar month, in which case such Interest Period shall
end on the next preceding Business Day;

 

(b) any Interest Period that begins on the last Business Day of a calendar month
(or on a day for which there is no numerically corresponding day in the calendar
month at the end of such Interest Period) shall end on the last Business Day of
the calendar month at the end of such Interest Period; and

 

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(c) no Interest Period shall extend beyond the Maturity Date.

 

“Investment” means any direct or indirect acquisition or investment in any other
Person or in the Indebtedness of such Person, whether by means of (a) the
purchase or other acquisition of Capital Stock, partnership interests or other
securities of or equity interests in such Person; (b) a loan, advance or capital
contribution to, Guarantee or assumption of debt of, or purchase or other
acquisition of any other debt or equity participation or interest in, such
Person, including any partnership or joint venture interest in such Person; (c)
the purchase or acquisition of any Indebtedness of such Person, including any
such Indebtedness secured by real or personal property, such as a
mortgage-backed note; or (d) the purchase or other acquisition (in one
transaction or a series of transactions) of assets of such Person that
constitute a business unit. For purposes of covenant compliance, the amount of
any Investment shall be book value of such Investment, in accordance with GAAP.

 

“Investment Affiliate” means a Person in which any Loan Party directly or
indirectly, has a capital Investment of no less than 10% of the aggregate
capital investment of such Person.

 

“IRS” means the United States Internal Revenue Service.

 

“Laws” means, collectively, all international, foreign, Federal, state and local
statutes, treaties, rules, guidelines, regulations, ordinances, codes and
administrative or judicial precedents or authorities, including the
interpretation or administration thereof by any Governmental Authority charged
with the enforcement, interpretation or administration thereof, and all
applicable administrative orders, directed duties, licenses, authorizations and
permits of, and agreements with, any Governmental Authority, in each case
whether or not having the force of law.

 

“L/C Advance” means, with respect to each Lender, such Lender’s funding of its
participation in any L/C Borrowing in accordance with its Pro Rata Share.

 

“L/C Borrowing” means an extension of credit resulting from a drawing under any
Letter of Credit which has not been reimbursed on the date when made or
refinanced as a Committed Borrowing.

 

“L/C Credit Extension” means, with respect to any Letter of Credit, the issuance
thereof or extension of the expiry date thereof, or the renewal or increase of
the amount thereof.

 

“L/C Issuer” means Bank of America in its capacity as issuer of Letters of
Credit hereunder, or any successor issuer of Letters of Credit hereunder.

 

“L/C Obligations” means, as at any date of determination, the aggregate undrawn
amount of all outstanding Letters of Credit plus the aggregate of all
Unreimbursed Amounts, including all L/C Borrowings.

 

“Lease-Up Property” means any Real Property not subject to a Ground Lease that
has been Completed, but less than 70% of the improvements therein are occupied
by tenants, under written leases, who have commenced paying rent.

 

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“Lender” has the meaning specified in the introductory paragraph hereto and, as
the context requires, includes the L/C Issuer and the Swing Line Lender.

 

“Lending Office” means, as to any Lender, the office or offices of such Lender
described as such in such Lender’s Administrative Questionnaire, or such other
office or offices as a Lender may from time to time notify the Borrowers and the
Administrative Agent.

 

“Letter of Credit” means any letter of credit issued hereunder. A Letter of
Credit may be a direct pay letter of credit or a standby letter of credit.

 

“Letter of Credit Application” means an application and agreement for the
issuance or amendment of a Letter of Credit in the form from time to time in use
by the L/C Issuer.

 

“Letter of Credit Expiration Date” means the day that is not later than 30 days
prior to the Maturity Date then in effect (or, if such day is not a Business
Day, the next preceding Business Day).

 

“Letter of Credit Sublimit” means an amount equal to $50,000,000. The Letter of
Credit Sublimit is part of, and not in addition to, the Aggregate Commitments.

 

“Lien” means any mortgage, pledge, hypothecation, assignment, deposit
arrangement, encumbrance, lien (statutory or other), charge, or preference,
priority or other security interest or preferential arrangement of any kind or
nature whatsoever (including any conditional sale or other title retention
agreement, and any financing lease having substantially the same economic effect
as any of the foregoing).

 

“Loan” means an extension of credit by a Lender to a Borrower under Article II
in the form of a Committed Loan or a Swing Line Loan.

 

“Loan Document Assumption and Affirmation” means an assumption and affirmation
of this Agreement and each other Loan Document to be executed by each Borrower,
the REIT Guarantor and each other Loan Document Party as of the REIT Conversion
Date, substantially in the form of Exhibit K hereto.

 

“Loan Document Parties” means, collectively, the OP Borrower, the TRS Borrower,
each Guarantor and each other Subsidiary that is a party to a Loan Document.

 

“Loan Documents” means this Agreement, each Note, each Letter of Credit
Application, each Letter of Credit, the Fee Letter, each Pledge Agreement, each
Guaranty, each Request for Credit Extension, any Loan Document Assumption and
Affirmation, and any document, instrument or agreement from time to time
executed by any Loan Party or any Subsidiary thereof and delivered in connection
with this Agreement.

 

“Loan Parties” means, collectively, the OP Borrower, the TRS Borrower, and each
Guarantor.

 

“Material Adverse Effect” means (a) a material adverse change in, or a material
adverse effect upon, the operations, business, properties, condition (financial
or otherwise) or prospects

 

20

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of (i) the Borrowers and the REIT Guarantor, taken as a whole, or (ii) the Loan
Parties, taken as a whole, or (iii) the Loan Document Parties and the
Subsidiaries taken as a whole; (b) a material impairment of the ability of any
Loan Document Party to perform its Obligations; or (c) a material adverse effect
upon the legality, validity, binding effect or enforceability against any Loan
Document Party of any Loan Document to which it is a party.

 

“Material Defect” means, with respect to a material portion of the improvements
upon any Real Property or any parking facility used in connection therewith, any
Condemnation, any material damage, deficiency or structural defect, including
any such damage caused by fire, earthquake, flood or other casualty, any
construction defect, any defect or deficiency caused by deferred maintenance,
any significant violations of building or safety codes, or the lack of access to
or availability of adequate water, gas, telephone, electrical supply, storm and
sanitary sewage facilities and means of access to and from public streets or
highways. For the purposes of this definition, a “Material Defect” is one that
would diminish the fair market value of such Real Property by 15% from the fair
market value of the same Real Property, without such Material Defect.

 

“Material Subsidiary” means (a) any direct or indirect Subsidiary of any
Borrower, or (b) any direct or indirect Subsidiary of the REIT Guarantor (other
than any Borrower) as to which the Borrowers’ and the REIT Guarantor’s aggregate
pro rata share of the consolidated assets of such Subsidiary (as reflected on
the GAAP-prepared financial statements of such Subsidiary) exceeds $25,000,000
as of the end of any fiscal quarter, with “pro rata” share being the Borrowers’
and the REIT Guarantor’s aggregate effective direct or indirect percentage
ownership of the capital investment in such Subsidiary.

 

“Maturity Date” means the later of (a) September 15, 2006 and (b) if maturity is
extended pursuant to Section 2.14, such extended maturity date as determined
pursuant to such Section.

 

“Mission Bay Block 28” means the Real Property located at 10 Terry A. Francois
Boulevard, AKA 550 Terry A. Francois Boulevard, San Francisco, California.

 

“Moody’s” means Moody’s Investors Service, Inc. and any successor thereto.

 

“Multiemployer Plan” means any employee benefit plan of the type described in
Section 4001(a)(3) of ERISA, to which any Borrower or any ERISA Affiliate makes
or is obligated to make contributions, or during the preceding five plan years,
has made or been obligated to make contributions.

 

“Non-Recourse Indebtedness” means, with respect to any Person, Indebtedness of
that Person with respect to which recourse to such Person for payment is
contractually limited to specific assets encumbered by a Lien securing such
Indebtedness. Notwithstanding the foregoing, Indebtedness of any Person shall
not fail to constitute Non-Recourse Indebtedness by reason of the inclusion in
any document evidencing, governing, securing or otherwise relating to such
Indebtedness to the effect that such Person shall be liable, beyond the assets
securing such Indebtedness, for (a) misapplied moneys, including insurance and
condemnation proceeds and security deposits, (b) liabilities (including
environmental liabilities) of the holders of such Indebtedness and their
affiliates to third parties, (c) breaches of customary representations and

 

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warranties given to the holders of such Indebtedness, (d) commission of waste
with respect to any part of the collateral securing such Indebtedness, (e)
recovery of rents, profits or other income attributable to the collateral
securing such Indebtedness collected more than one month in advance of the due
date thereof, or following a default, (f) fraud, gross negligence or willful
misconduct, (g) breach of any covenants regarding compliance with ERISA; (h) the
filing of a voluntary bankruptcy; (i) enforcement costs in excess of the costs
of an uncontested foreclosure; and (j) the failure to pay taxes resulting in a
Lien on the collateral securing such Indebtedness.

 

“Note” means a promissory note made by a Borrower in favor of a Lender
evidencing Loans made by such Lender to such Borrower, substantially in the form
of Exhibit C.

 

“Notes Receivable” means any negotiable instrument or other writing that
evidences a right to the payment of a monetary obligation and that is not itself
a security agreement or a lease and that is of a type that, in the ordinary
course of business, is transferred by delivery of an endorsement or assignment.

 

“Obligations” means all advances to, and debts, liabilities, obligations,
covenants and duties of, any Loan Document Party arising under any Loan Document
or otherwise with respect to any Loan or Letter of Credit, whether direct or
indirect (including those acquired by assumption), absolute or contingent, due
or to become due, now existing or hereafter arising and including interest and
fees that accrue after the commencement by or against any Loan Document Party
any proceeding under any Debtor Relief Laws naming such Person as the debtor in
such proceeding, regardless of whether such interest and fees are allowed claims
in such proceeding.

 

“OP Borrower” means (a) before the REIT Conversion Date, Catellus Development
Corporation, a Delaware corporation; and (b) after the REIT Conversion Date, the
Post-REIT Conversion Borrower.

 

“Ordinary Course of Business” means, in respect of any transaction involving a
Person, the ordinary course of such Person’s business, substantially as intended
to be conducted currently by any such Person as of the Closing Date or the REIT
Conversion Date and as contemplated under Section 7.07, and undertaken by such
Person in good faith and not for purposes of evading any covenant or restriction
in any Contractual Obligation of such Person. For purposes of clarification, any
business or activity constituting “Ordinary Course of Business” as defined
hereunder for any Loan Party or Subsidiary shall also constitute “Ordinary
Course of Business” for each other Loan Party and Subsidiary.

 

“Organization Documents” means, (a) with respect to any corporation, the
certificate or articles of incorporation and the bylaws (or equivalent or
comparable constitutive documents with respect to any non-U.S. jurisdiction);
(b) with respect to any limited liability company, the certificate or articles
of formation or organization and operating agreement; and (c) with respect to
any partnership, joint venture, trust or other form of business entity, the
partnership, joint venture or other applicable agreement of formation or
organization and any agreement, instrument, filing or notice with respect
thereto filed in connection with its formation or organization with the
applicable Governmental Authority in the jurisdiction of its formation or

 

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organization and, if applicable, any certificate or articles of formation or
organization of such entity.

 

“Outstanding Amount” means (i) with respect to Committed Loans and Swing Line
Loans on any date, the aggregate outstanding principal amount thereof after
giving effect to any borrowings and prepayments or repayments of Committed Loans
and Swing Line Loans, as the case may be, occurring on such date; and (ii) with
respect to any L/C Obligations on any date, the amount of such L/C Obligations
on such date after giving effect to any L/C Credit Extension occurring on such
date and any other changes in the aggregate amount of the L/C Obligations as of
such date, including as a result of any reimbursements of outstanding unpaid
drawings under any Letters of Credit or any reductions in the maximum amount
available for drawing under Letters of Credit taking effect on such date.

 

“Participant” has the meaning specified in Section 10.07(d).

 

“PBGC” means the Pension Benefit Guaranty Corporation.

 

“Pension Plan” means any “employee pension benefit plan” (as such term is
defined in Section 3(2) of ERISA), other than a Multiemployer Plan, that is
subject to Title IV of ERISA and is sponsored or maintained by any Borrower or
any ERISA Affiliate or to which any Borrower or any ERISA Affiliate contributes
or has an obligation to contribute, or in the case of a multiple employer or
other plan described in Section 4064(a) of ERISA, has made contributions at any
time during the immediately preceding five plan years.

 

“Permitted Bond Transactions” means the issuance of revenue bonds by a public or
governmental entity pursuant to which such public or governmental entity (a)
acquires real property (the “Project”) of a Loan Party or Subsidiary with bond
proceeds, (b) leases such Project to a Loan Party or Subsidiary at a rental
sufficient to pay debt service on such revenue bonds, and (c) pledges, mortgages
or otherwise encumbers such Project and the revenues therefrom to the holders of
the revenue bonds, as security for repayment of such revenue bonds.

 

“Permitted Contest” means the contest by any Person (the “Obligee”) of the
payment of any taxes, assessments or other governmental charges, or charges of
suppliers, carriers, warehousemen, mechanics, materialmen, repairmen or similar
charges arising in the Ordinary Course of Business (“Charges”), and any contest
of a Lien under Section 6.04(b), provided that (a) the contest of any such
Charges or Lien is conducted by the Obligee in good faith, by appropriate
proceedings; (b) adequate reserves with respect to such contest are maintained
on the books of the Obligee, in accordance with GAAP; (c) such contest is
maintained and prosecuted continuously and with diligence and operates to
suspend collection or enforcement of such Lien or such Charges and any Lien in
respect thereof, (d) no Collateral, Unencumbered Pool Property or other material
portion of any other property of the Obligee becomes subject to a Lien or
becomes subject to forfeiture or loss as a result of such contest, (e) the
Obligee promptly pays or discharges all contested Liens and Charges and delivers
to the Administrative Agent evidence reasonably acceptable to the Administrative
Agent of such compliance, payment or discharge, if and when such contest is
terminated or discontinued adversely to such Obligee or the conditions set forth
in clauses (a) through (d) above are no longer met; and (f) the Administrative
Agent has not advised the OP Borrower in writing that the Administrative Agent
reasonably believes that

 

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the nonpayment or nondischarge of such Charges or Lien by the Obligee is
reasonably expected to have or result in a Material Adverse Effect.

 

“Permitted Liens” means:

 

(a) Liens granted to the Administrative Agent pursuant to any Loan Document;

 

(b) Liens for taxes, assessments and other governmental charges not yet
delinquent or which are being contested pursuant to a Permitted Contest;

 

(c) carriers’, warehousemen’s, mechanics’, materialmen’s, repairmen’s or other
like Liens arising in the Ordinary Course of Business which are not overdue for
a period of more than 30 days or which are being contested pursuant to a
Permitted Contest;

 

(d) pledges or deposits in the Ordinary Course of Business in connection with
workers’ compensation, unemployment insurance and other similar legislation,
other than any Lien imposed by ERISA;

 

(e) deposits to secure the performance of bids, trade contracts and leases
(other than Indebtedness), statutory obligations, surety bonds (other than bonds
related to judgments or litigation), performance bonds and other obligations of
a like nature incurred in the Ordinary Course of Business;

 

(f) easements, rights-of-way, restrictions and other similar encumbrances
affecting real property which, in the aggregate, are not substantial in amount,
and which do not in any case materially detract from the value of the property
subject thereto or materially interfere with the ordinary conduct of the
business of the applicable Person;

 

(g) liens, assessments and other encumbrances in favor of governmental taxing
authorities, such as Community Facility Districts or other Mello Roos type
assessment and/or tax districts, burdening specific items of real property;

 

(h) leases and Ground Leases entered into in the Ordinary Course of Business,
including any purchase options granted to lessees under such leases and Ground
Leases; and

 

(i) Liens in favor of a Loan Party, as the holder of the revenue bonds issued
under an Eligible Bond Transaction, securing the repayment obligations of such
revenue bonds.

 

“Person” means any natural person, corporation, limited liability company,
trust, joint venture, association, company, partnership, Governmental Authority
or other entity.

 

“Plan” means any “employee benefit plan” (as such term is defined in Section
3(3) of ERISA) maintained by any Borrower or, with respect to any such plan that
is subject to Section 412 of the Code or Title IV of ERISA, any ERISA Affiliate.

 

“Pledge Agreement” means each pledge agreement or accession agreement to each
pledge agreement in favor of the Administrative Agent, executed by each Loan
Party and

 

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Subsidiary, if and as required under Section 6.12(b) or Section 6.13,
substantially in the form of Exhibit I(1) attached hereto or, with respect to
the pledge of any Intercompany Notes Receivable, substantially in the form of
Exhibit I(2) attached hereto.

 

“Post-REIT Conversion Borrower” means Catellus Operating Limited Partnership, a
Delaware limited partnership, the entity into which the Pre-REIT Conversion
Borrower will merge, which entity will be the surviving entity of such merger
and will succeed to and continue the business of the Pre-REIT Conversion
Borrower.

 

“Post-REIT Conversion Net Offering Proceeds” means all cash proceeds received by
the REIT Guarantor on or after the REIT Conversion Date, as a result of the sale
of common, preferred or other classes of stock in the REIT Guarantor, minus (i)
attorneys’ fees and disbursements, (ii) accountants’ fees, (iii) underwriters’
or placement agents’ fees, discounts or commissions, (iv) brokerage,
consultants’ and other fees, (v) printing, registration and related expenses,
(vi) proceeds received from stock issued as a result of employees exercising
stock options under an employee stock option plan, and (vii) other customary
fees and expenses, in each case, actually incurred in connection with such sale.

 

“Pre-REIT Conversion Borrower” means Catellus Development Corporation, a
Delaware corporation, corporation identification number 2049941.

 

“Pre-REIT Conversion Net Offering Proceeds” means all cash proceeds received by
the Borrower before the REIT Conversion Date and after March 31, 2002, as a
result of the sale of common, preferred or other classes of stock in the OP
Borrower, minus (i) attorneys’ fees and disbursements, (ii) accountants’ fees,
(iii) underwriters’ or placement agents’ fees, discounts or commissions, (iv)
brokerage, consultants’ and other fees, (v) printing, registration and related
expenses, in each case, actually incurred in connection with such sale, (vi)
proceeds received from stock issued as a result of employees exercising stock
options under an employee stock option plan, and (vii) other customary fees and
expenses, in each case, actually incurred in connection with such sale.

 

“Pro Rata Share” means, with respect to each Lender at any time, a fraction
(expressed as a percentage, carried out to the ninth decimal place), the
numerator of which is the amount of the Commitment of such Lender at such time
and the denominator of which is the amount of the Aggregate Commitments at such
time; provided that if the commitment of each Lender to make Loans and the
obligation of the L/C Issuer to make L/C Credit Extensions have been terminated
pursuant to Section 8.02, then the Pro Rata Share of each Lender shall be
determined based on the Pro Rata Share of such Lender immediately prior to such
termination and after giving effect to any subsequent assignments made pursuant
to the terms hereof. The initial Pro Rata Share of each Lender is set forth
opposite the name of such Lender on Schedule 2.01 or in the Assignment and
Assumption pursuant to which such Lender becomes a party hereto, as applicable.

 

“Real Property” means any real estate that is improved or is under Development
to be improved with one or more office, industrial buildings, retail buildings,
business parks, multifamily apartment buildings, or a mix of any such
improvements, but excluding any Unimproved Land.

 

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“Recourse Indebtedness” means any Indebtedness of a Person that is not
Non-Recourse Indebtedness.

 

“Register” has the meaning set forth in Section 10.07(c).

 

“REIT” means a real estate investment trust as defined in Section 856 of the
Internal Revenue Code or any successor thereto.

 

“REIT Conversion” means the restructuring of Pre-REIT Conversion Borrower,
pursuant to which the Pre-REIT Conversion Borrower will merge with and into the
Post-REIT Conversion Borrower, with the Post-REIT Conversion Borrower being the
surviving entity of such merger. As of the date of the REIT Conversion, the
Post-REIT Conversion Borrower will be 100% owned and controlled by the REIT
Guarantor and, at all times thereafter, the Post-REIT Conversion Borrower will
be at least majority-owned and controlled by the REIT Guarantor.

 

“REIT Conversion Compliance Certificate” means a certificate of a Responsible
Officer of the Post-REIT Conversion Borrower, as of the REIT Conversion Date,
substantially in the form of Exhibit J to this Agreement

 

“REIT Conversion Date” means the date that the REIT Conversion is finalized,
which shall be the effective date of the merger of the Pre-REIT Conversion
Borrower with and into the Post-REIT Conversion Borrower.

 

“REIT Election” means an election by the REIT Guarantor to be taxed as a REIT,
to be filed with the REIT Guarantor’s United States federal income tax return
for the taxable year in which the REIT Guarantor intends for such election to
become effective.

 

“REIT Election Date” means the date that the REIT Guarantor files its United
States federal income tax return which includes the REIT Election.

 

“REIT Guarantor” means Catellus SubCo, Inc., a Delaware corporation, that,
following consummation of the REIT Conversion will be a publicly traded, New
York Stock Exchange listed corporation, that will directly or indirectly own
100% of the outstanding partnership interests of the Post-REIT Conversion
Borrower as of the REIT Conversion Date and will own a majority of the
partnership interests of the Post-REIT Conversion Borrower at all times
thereafter, and that will execute a Guaranty of the Obligations effective the
REIT Conversion Date.

 

“Reportable Event” means any of the events set forth in Section 4043(c) of
ERISA, other than events for which the 30 day notice period has been waived.

 

“Request for Credit Extension” means (a) with respect to a Borrowing, conversion
or continuation of Committed Loans, a Committed Loan Notice, (b) with respect to
an L/C Credit Extension, a Letter of Credit Application, and (c) with respect to
a Swing Line Loan, a Swing Line Loan Notice.

 

“Required Lenders” means, as of any date of determination, Lenders having at
least 66-2/3% of the Aggregate Commitments or, if the commitment of each Lender
to make Loans and

 

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the obligation of the L/C Issuer to make L/C Credit Extensions have been
terminated pursuant to Section 8.02, Lenders holding in the aggregate at least
66-2/3% of the Total Outstandings (with the aggregate amount of each Lender’s
risk participation and funded participation in L/C Obligations and Swing Line
Loans being deemed “held” by such Lender for purposes of this definition);
provided that the Commitment of, and the portion of the Total Outstandings held
or deemed held by, any Defaulting Lender shall be excluded for purposes of
making a determination of Required Lenders.

 

“Responsible Officer” means the chief executive officer, president, chief
financial officer, treasurer, assistant treasurer, controller, or a vice
president of strategic planning of a Loan Party. Any document delivered
hereunder that is signed by a Responsible Officer of a Loan Party shall be
conclusively presumed to have been authorized by all necessary corporate,
partnership and/or other action on the part of such Loan Party and such
Responsible Officer shall be conclusively presumed to have acted on behalf of
such Loan Party.

 

“S-4” means the Form S-4 of Catellus SubCo, Inc., filed with the Securities and
Exchange Commission on May 2, 2003, as the same may be amended from time to
time.

 

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

 

“Safe Harbor Transaction” means a transaction entered into in the Ordinary
Course of Business, in which: (a) a Loan Party or a Subsidiary designates
certain real property as an exchange property for acquisition by an unaffiliated
third-party exchange accommodator entity (a “Tax Accommodator”) and the Loan
Party or a Subsidiary has certain contractual rights with respect to such real
property but the Tax Accommodator acquires the ownership interests in such real
property, (b) a Loan Party or Subsidiary advances loan funds on either a secured
or an unsecured basis to such Tax Accommodator for the acquisition and
improvement of such real property, and (c) within one-hundred eighty days of the
acquisition and loan, a Loan Party or Subsidiary utilizes such real property in
the completion of a transaction governed by a Section 1031 Exchange Agreement
covering real property owned by a Loan Party or Subsidiary.

 

“SEC” means the Securities and Exchange Commission, or any Governmental
Authority succeeding to any of its principal functions.

 

“Section 1031 Exchange Account” means an exchange account, established pursuant
to a Section 1031 Exchange Agreement, into which the proceeds of sale of Real
Property or Unimproved Land have been deposited by any Loan Party, pending
completion of an exchange intended to be tax-deferred under Section 1031 of the
Code.

 

“Section 1031 Exchange Agreement” means a written agreement, in form and
substance reasonably acceptable to the Administrative Agent, entered into
between a Loan Party and a qualified exchange intermediary reasonably acceptable
to the Administrative Agent, providing (a) for the sale of an Real Property or
Unimproved Land intended to be tax-deferred under Section 1031 of the Code; and
(b) for the return to the applicable Loan Party of the balance held in the
Section 1031 Exchange Account upon the closure of the Section 1031 Exchange
Account pursuant to such Section 1031 Exchange Agreement.

 

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“Solvent” means, with respect to any Person, that as of the date of
determination: (a) the fair valuation of the sum of such Person’s debt
(including contingent liabilities) does not exceed all of its property, at a
fair valuation on a going-concern basis; (b) the Person reasonably expects to be
able to pay the liabilities on such Person’s then existing debts as they become
absolute and matured; (c) such Person’s capital is not unreasonably small in
relation to its business or any contemplated or undertaken transaction; and (d)
such Person does not intend to incur, or believe (nor should it reasonably
believe) that it will incur, debts beyond its ability to pay such debts as they
become due. For purposes of this definition, the amount of any contingent
liability at any time shall be computed as the amount that, in light of all of
the facts and circumstances existing at such time, represents the amount that
can reasonably be expected to become an actual or matured liability
(irrespective of whether such contingent liabilities meet the criteria for
accrual under Statement of Financial Accounting Standards No. 5).

 

“Stabilized Operating Property” means items of Real Property not subject to a
Ground Lease that have been Completed, provided that at least 80% of the
improvements of all such Completed Real Property, on an aggregate basis, are
occupied by tenants, under written leases, who have commenced paying rent.
Notwithstanding the foregoing, from and after receipt of a certificate of
occupancy (or other evidence thereof reasonably satisfactory to the
Administrative Agent), any Lease-Up Property must initially be at least 70%
occupied by tenants, under written leases, who have commenced paying rent,
before such Lease-Up Property may qualify as a Stabilized Operating Property.

 

“Subsidiary” of a Person means a corporation, partnership, joint venture,
limited liability company or other business entity of which more than 50% of the
shares of Capital Stock or other interests having ordinary voting power for the
election of directors or other governing body (other than securities or
interests having such power only by reason of the happening of a contingency)
are at the time beneficially owned, or the management of which is otherwise
controlled, directly, or indirectly through one or more intermediaries, or both,
by such Person. Unless otherwise specified, all references herein to a
“Subsidiary” or to “Subsidiaries” shall refer to (a) before the REIT Conversion
Date, a direct or indirect Subsidiary or Subsidiaries of the OP Borrower (other
than the TRS Borrower) and, (b) after the REIT Conversion Date, a direct or
indirect Subsidiary or Subsidiaries of (i) the OP Borrower (other than the TRS
Borrower), (ii) the TRS Borrower, and/or (iii) the REIT Guarantor (other than
either Borrower).

 

“Super Majority-Owned Subsidiary” means a Subsidiary of any Loan Party, 90% or
more of the stock, partnership interests, membership interests or other equity
or other beneficial interests (in the case of Persons other than corporations)
of which is owned directly or indirectly by any Loan Party.

 

“Swap Contract” means (a) any and all rate swap transactions, basis swaps,
credit derivative transactions, forward rate transactions, commodity swaps,
commodity options, forward commodity contracts, equity or equity index swaps or
options, bond or bond price or bond index swaps or options or forward bond or
forward bond price or forward bond index transactions, interest rate options,
forward foreign exchange transactions, cap transactions, floor transactions,
collar transactions, currency swap transactions, cross-currency rate swap
transactions, currency options, spot contracts, or any other similar
transactions or any combination of any of the foregoing (including any options
to enter into any of the foregoing),

 

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whether or not any such transaction is governed by or subject to any master
agreement, and (b) any and all transactions of any kind, and the related
confirmations, which are subject to the terms and conditions of, or governed by,
any form of master agreement published by the International Swaps and
Derivatives Association, Inc., any International Foreign Exchange Master
Agreement, or any other master agreement (any such master agreement, together
with any related schedules, a “Master Agreement”), including any such
obligations or liabilities under any Master Agreement.

 

“Swap Termination Value” means, in respect of any one or more Swap Contracts,
after taking into account the effect of any legally enforceable netting
agreement relating to such Swap Contracts, (a) for any date on or after the date
such Swap Contracts have been closed out and termination value(s) determined in
accordance therewith, such termination value(s), and (b) for any date prior to
the date referenced in clause (a), the amount(s) determined as the
mark-to-market value(s) for such Swap Contracts, as determined based upon one or
more mid-market or other readily available quotations provided by any recognized
dealer in such Swap Contracts (which may include a Lender or any Affiliate of a
Lender).

 

“Swing Line” means the revolving credit facility made available by the Swing
Line Lender pursuant to Section 2.04.

 

“Swing Line Borrowing” means a borrowing of a Swing Line Loan pursuant to
Section 2.04.

 

“Swing Line Lender” means Bank of America in its capacity as provider of Swing
Line Loans, or any successor swing line lender hereunder.

 

“Swing Line Loan” has the meaning specified in Section 2.04(a).

 

“Swing Line Loan Notice” means a notice of a Swing Line Borrowing pursuant to
Section 2.04(b), which, if in writing, shall be substantially in the form of
Exhibit B.

 

“Swing Line Sublimit” means an amount equal to the lesser of (a) $25,000,000,
and (b) the Aggregate Commitments. The Swing Line Sublimit is part of, and not
in addition to, the Aggregate Commitments.

 

“Synthetic Lease Obligation” means the monetary obligation of a Person under (a)
a so-called synthetic, off-balance sheet or tax retention lease, or (b) an
agreement for the use or possession of property creating obligations that do not
appear on the balance sheet of such Person but which, upon the insolvency or
bankruptcy of such Person, would be characterized as the indebtedness of such
Person (without regard to accounting treatment).

 

“Taxable REIT Subsidiary” means each corporation other than a REIT in which the
REIT Guarantor directly or indirectly holds stock, and that has made a joint
election with the REIT Guarantor to be treated as taxable REIT subsidiary of the
REIT Guarantor within the meaning of Section 856(l) of the Code.

 

“Tax Accommodator” has the meaning as defined in the definition of “Safe Harbor
Transaction.”

 

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“The Gap” means The Gap, Inc., a Delaware corporation.

 

“The Gap Lease” means that certain lease agreement entered into between the OP
Borrower and The Gap dated as of November 22, 2000, and recorded on April 20,
2001 in the real estate records of the City and County of San Francisco as
Instrument No. G933657.

 

“Threshold Amount” means $25,000,000.

 

“Total Outstandings” means the aggregate Outstanding Amount of all Loans and all
L/C Obligations.

 

“TRS Borrower” means Catellus Land and Development Corporation, a Delaware
corporation.

 

“Type” means, with respect to a Committed Loan, its character as a Base Rate
Loan or a Eurodollar Rate Loan.

 

“Unencumbered Pool Property” means any Unencumbered Real Property or
Unencumbered Unimproved Land included in the Borrowing Base.

 

“Unencumbered Property” means any Unencumbered Real Property or Unencumbered
Unimproved Land.

 

“Unencumbered Real Property” means any Real Property (including any Ground Lease
Property that is Real Property), as to which (a) neither such Real Property, nor
any interest in the Person owning such Real Property, is subject to any Lien
(other than Permitted Liens), and (b) the Person owning such Real Property is
not subject to any provision in its Organizational Documents or in any agreement
or instrument (other than this Agreement or any other Loan Document) that
prohibits or limits the Disposition of, or the creation of any Lien on, such
Real Property as security for Indebtedness of the owner of such Real Property.

 

“Unencumbered Unimproved Land” means any Unimproved Land, as to which (a)
neither such Unimproved Land, nor any interest in the Person owning such
Unimproved Land, is subject to any Lien (other than Permitted Liens), and (b)
the Person owning such Unimproved Land is not subject to any provision in its
Organizational Documents or in any agreement or instrument (other than this
Agreement or any other Loan Document) that prohibits or limits the Disposition
of, or the creation of any Lien on, such Unimproved Land as security for
Indebtedness of the owner of such Unimproved Land.

 

“Unfunded Pension Liability” means the excess of a Pension Plan’s benefit
liabilities under Section 4001(a)(16) of ERISA, over the current value of that
Pension Plan’s assets, based on the actuarial value of the assets and the
actuarial accrued liabilities that are used in conjunction with determining the
funding requirements for such Pension Plan reported in such Pension Plan’s
annual report for the applicable plan year.

 

“Unimproved Land” means any unimproved land not subject to a Ground Lease under
which the lessee has commenced paying rent, including future phases of a
partially completed project that is owned in fee simple title by a Person for
the purposes of future Development of

 

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Real Property improvements. For the purposes of the foregoing definition,
“unimproved” shall include land on which the construction of building
improvements has not commenced or has been discontinued for a period longer than
60 days prior to completion.

 

“United States” and “U.S.” mean the United States of America.

 

“Unreimbursed Amount” has the meaning set forth in Section 2.03(c)(i).

 

“Unused Fee” has the meaning set forth in Section 2.9(a).

 

“Usage Percentage” means, for any calendar quarter, a percentage derived from
the ratio of (a) the product of the weighted average of the daily Total
Outstandings during such calendar quarter, to (b) the Aggregate Commitments.

 

“Wholly-Owned Subsidiary” means a Subsidiary of any Loan Party, 100% of the
stock, partnership interests, membership interests or other equity or other
beneficial interests (in the case of Persons other than corporations) of which
is owned directly or indirectly by any Loan Party.

 

“WIP” means any Real Property project not subject to a Ground Lease under
Development by a Loan Party or a Subsidiary, until such Real Property has been
Completed.

 

1.02 Other Interpretive Provisions. With reference to this Agreement and each
other Loan Document, unless otherwise specified herein or in such other Loan
Document:

 

(a) The meanings of defined terms are equally applicable to the singular and
plural forms of the defined terms.

 

(b) (i) The words “herein,” “hereto,” “hereof” and “hereunder” and words of
similar import when used in any Loan Document shall refer to such Loan Document
as a whole and not to any particular provision thereof.

 

(ii) Article, Section, Exhibit and Schedule references are to the Loan Document
in which such reference appears.

 

(iii) The term “including” is by way of example and not limitation.

 

(iv) The term “documents” includes any and all instruments, documents,
agreements, certificates, notices, reports, financial statements and other
writings, however evidenced, whether in physical or electronic form.

 

(c) In the computation of periods of time from a specified date to a later
specified date, the word “from” means “from and including;” the words “to” and
“until” each mean “to but excluding;” and the word “through” means “to and
including.”

 

(d) Section headings herein and in the other Loan Documents are included for
convenience of reference only and shall not affect the interpretation of this
Agreement or any other Loan Document.

 

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1.03 Accounting Terms.

 

(a) All accounting terms not specifically or completely defined herein shall be
construed in conformity with, and all financial data (including financial ratios
and other financial calculations) required to be submitted pursuant to this
Agreement shall be prepared in conformity with, GAAP applied on a consistent
basis, as in effect from time to time, applied in a manner consistent with that
used in preparing the Audited Financial Statements, except as otherwise
specifically prescribed herein.

 

(b) If at any time any change in GAAP would affect the computation of any
financial ratio or requirement set forth in any Loan Document, and either the
Borrowers or the Required Lenders shall so request, the Administrative Agent,
the Lenders and the Borrowers shall negotiate in good faith to amend such ratio
or requirement to preserve the original intent thereof in light of such change
in GAAP (subject to the approval of the Required Lenders); provided that, until
so amended, (i) such ratio or requirement shall continue to be computed in
accordance with GAAP prior to such change therein and (ii) the Borrowers shall
provide to the Administrative Agent and the Lenders financial statements and
other documents required under this Agreement or as reasonably requested
hereunder setting forth a reconciliation between calculations of such ratio or
requirement made before and after giving effect to such change in GAAP.

 

1.04 Rounding. Any financial ratios required to be maintained by the Borrowers
pursuant to this Agreement shall be calculated by dividing the appropriate
component by the other component, carrying the result to one place more than the
number of places by which such ratio is expressed herein and rounding the result
up or down to the nearest number (with a rounding-up if there is no nearest
number).

 

1.05 References to Agreements and Laws. Unless otherwise expressly provided
herein, (a) references to Organization Documents, agreements (including the Loan
Documents) and other contractual instruments shall be deemed to include all
subsequent amendments, restatements, extensions, supplements and other
modifications thereto, but only to the extent that such amendments,
restatements, extensions, supplements and other modifications are not prohibited
by any Loan Document; and (b) references to any Law shall include all statutory
and regulatory provisions consolidating, amending, replacing, supplementing or
interpreting such Law.

 

1.06 Times of Day. Unless otherwise specified, all references herein to times of
day shall be references to Pacific time (daylight or standard, as applicable).

 

1.07 Letter of Credit Amounts. Unless otherwise specified, all references herein
to the amount of a Letter of Credit at any time shall be deemed to mean the
maximum face amount of such Letter of Credit after giving effect to all
increases thereof contemplated by such Letter of Credit or the Letter of Credit
Application therefor, whether or not such maximum face amount is in effect at
such time.

 

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ARTICLE II.

THE COMMITMENTS AND CREDIT EXTENSIONS

 

2.01 Committed Loans. Subject to the terms and conditions set forth herein, each
Lender severally agrees to make loans (each such loan, a “Committed Loan”) to
the Borrowers from time to time, on any Business Day during the Availability
Period, in an aggregate amount not to exceed at any time outstanding the amount
of such Lender’s Commitment; provided, however, that after giving effect to any
Committed Borrowing, (i) the Total Outstandings shall not exceed the Borrowing
Base Availability; and (ii) the aggregate Outstanding Amount of the Committed
Loans of any Lender, plus such Lender’s Pro Rata Share of the Outstanding Amount
of all L/C Obligations, plus such Lender’s Pro Rata Share of the Outstanding
Amount of all Swing Line Loans shall not exceed such Lender’s Commitment. Within
the limits of each Lender’s Commitment and the limits of the Borrowing Base, and
subject to the other terms and conditions hereof, the Borrowers may borrow under
this Section 2.01, prepay under Section 2.05, and reborrow under this Section
2.01. Committed Loans may be Base Rate Loans or Eurodollar Rate Loans, as
further provided herein.

 

2.02 Borrowings, Conversions and Continuations of Committed Loans.

 

(a) Each Committed Borrowing, each conversion of Committed Loans from one Type
to the other, and each continuation of Eurodollar Rate Loans shall be made upon
the Borrowers’ irrevocable notice to the Administrative Agent, which may be
given by telephone. Each such notice must be accompanied by a Borrowing Base
Certificate as of the most recently concluded fiscal quarter, adjusted as set
forth in Section 4.02(d) and received by the Administrative Agent not later than
10:00 a.m. (i) three Business Days prior to the requested date of any Borrowing
of, conversion to or continuation of Eurodollar Rate Loans or of any conversion
of Eurodollar Rate Loans to Base Rate Committed Loans, and (ii) one Business Day
prior to the requested date of any Borrowing of Base Rate Committed Loans. Each
telephonic notice by any Borrower pursuant to this Section 2.02(b) must be
confirmed promptly by delivery to the Administrative Agent of a written
Committed Loan Notice and Borrowing Base Certificate as of the most recently
concluded fiscal quarter, adjusted as set forth in Section 4.02(d), each
appropriately completed and signed by a Responsible Officer of each Borrower.
Each Borrowing of, conversion to or continuation of Eurodollar Rate Loans shall
be in a principal amount of $5,000,000 or a whole multiple of $1,000,000 in
excess thereof. Except as provided in Sections 2.03(c) and 2.04(c), each
Borrowing of or conversion to Base Rate Committed Loans shall be in a principal
amount of $500,000 or a whole multiple of $100,000 in excess thereof. Each
Committed Loan Notice (whether telephonic or written) shall specify (i) whether
the Borrowers are requesting a Committed Borrowing, a conversion of Committed
Loans from one Type to the other, or a continuation of Eurodollar Rate Loans,
(ii) the requested date of the Borrowing, conversion or continuation, as the
case may be (which shall be a Business Day), (iii) the principal amount of
Committed Loans to be borrowed, converted or continued, (iv) the Type of
Committed Loans to be borrowed or to which existing Committed Loans are to be
converted, and (v) if applicable, the duration of the Interest Period with
respect thereto. If the Borrowers fail to specify a Type of Committed Loan in a
Committed Loan Notice or if the Borrowers fail to give a timely notice
requesting a conversion or continuation, then the applicable Committed Loans
shall be made as, or converted to, Base Rate Loans. Any such automatic
conversion to Base Rate Loans shall be effective as of the last day of the
Interest Period then in effect with respect to the applicable Eurodollar Rate
Loans. If the Borrowers request a Borrowing of, conversion to, or continuation
of Eurodollar Rate Loans in any such Committed Loan Notice, but

 

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fails to specify an Interest Period, it will be deemed to have specified an
Interest Period of one month.

 

(b) Following receipt of a Committed Loan Notice and Borrowing Base Certificate,
the Administrative Agent shall promptly notify each Lender of the amount of its
Pro Rata Share of the applicable Committed Loans, and if no timely notice of a
conversion or continuation is provided by the Borrowers, the Administrative
Agent shall notify each Lender of the details of any automatic conversion to
Base Rate Loans described in the preceding subsection. In the case of a
Committed Borrowing, each Lender shall make the amount of its Committed Loan
available to the Administrative Agent in immediately available funds at the
Administrative Agent’s Office not later than 11:00 a.m. on the Business Day
specified in the applicable Committed Loan Notice. Upon satisfaction of the
applicable conditions set forth in Section 4.02 (and, if such Borrowing is the
initial Credit Extension, Section 4.01), the Administrative Agent shall make all
funds so received available to the OP Borrower or the TRS Borrower, as requested
in the Committed Loan Notice, in like funds as received by the Administrative
Agent either by (i) crediting the account of such Borrower on the books of Bank
of America with the amount of such funds or (ii) wire transfer of such funds, in
each case in accordance with instructions provided to (and reasonably acceptable
to) the Administrative Agent by the applicable Borrower; provided, however, that
if, on the date the Committed Loan Notice with respect to such Borrowing is
given by the Borrowers, there are Swing Line Loans or L/C Borrowings
outstanding, then the proceeds of such Borrowing shall be applied, first, to the
payment in full of any such L/C Borrowings, second, to the payment in full of
any such Swing Line Loans, and third, to the applicable Borrower specified in
the Committed Loan Notice, as provided above.

 

(c) Except as otherwise provided herein, a Eurodollar Rate Loan may be continued
or converted only on the last day of an Interest Period for such Eurodollar Rate
Loan. During the existence of a Default, no Loans may be requested as, converted
to or continued as Eurodollar Rate Loans without the consent of the Required
Lenders.

 

(d) The Administrative Agent shall promptly notify the Borrowers and the Lenders
of the interest rate applicable to any Interest Period for Eurodollar Rate Loans
upon determination of such interest rate. The determination of the Eurodollar
Rate by the Administrative Agent shall be conclusive in the absence of manifest
error. At any time that Base Rate Loans are outstanding, the Administrative
Agent shall notify the Borrowers and the Lenders of any change in Bank of
America’s prime rate used in determining the Base Rate promptly following the
public announcement of such change.

 

(e) After giving effect to all Committed Borrowings, all conversions of
Committed Loans from one Type to the other, and all continuations of Committed
Loans as the same Type, there shall not be more than seven Interest Periods in
effect with respect to Committed Eurodollar Rate Loans.

 

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2.03 Letters of Credit.

 

(a) The Letter of Credit Commitment.

 

(i) Subject to the terms and conditions set forth herein, (A) the L/C Issuer
agrees, in reliance upon the agreements of the other Lenders set forth in this
Section 2.03, (1) from time to time on any Business Day during the period from
the Closing Date until the Letter of Credit Expiration Date, to issue Letters of
Credit for the account of the OP Borrower or the TRS Borrower, as specified in
the Letter of Credit Application, and to amend or renew Letters of Credit
previously issued by it, in accordance with subsection (b) below, and (2) to
honor drafts under the Letters of Credit; and (B) the Lenders severally agree to
participate in Letters of Credit issued for the account of the OP Borrower or
the TRS Borrower, as applicable; provided that the L/C Issuer shall not be
obligated to make any L/C Credit Extension with respect to any Letter of Credit,
and no Lender shall be obligated to participate in any Letter of Credit if as of
the date of such L/C Credit Extension, (x) the Total Outstandings would exceed
the Borrowing Base Availability, (y) the aggregate Outstanding Amount of the
Committed Loans of any Lender, plus such Lender’s Pro Rata Share of the
Outstanding Amount of all L/C Obligations, plus such Lender’s Pro Rata Share of
the Outstanding Amount of all Swing Line Loans would exceed such Lender’s
Commitment, or (z) the Outstanding Amount of the L/C Obligations would exceed
the Letter of Credit Sublimit. Within the foregoing limits, and subject to the
terms and conditions hereof, each Borrower’s ability to obtain Letters of Credit
shall be fully revolving, and accordingly any Borrower may, during the foregoing
period, obtain Letters of Credit to replace Letters of Credit that have expired
or that have been drawn upon and reimbursed.

 

(ii) The L/C Issuer shall be under no obligation to issue any Letter of Credit
if:

 

(A) any order, judgment or decree of any Governmental Authority or arbitrator
shall by its terms purport to enjoin or restrain the L/C Issuer from issuing
such Letter of Credit, or any Law applicable to the L/C Issuer or any request or
directive (whether or not having the force of law) from any Governmental
Authority with jurisdiction over the L/C Issuer shall prohibit, or request that
the L/C Issuer refrain from, the issuance of letters of credit generally or such
Letter of Credit in particular or shall impose upon the L/C Issuer with respect
to such Letter of Credit any restriction, reserve or capital requirement (for
which the L/C Issuer is not otherwise compensated hereunder) not in effect on
the Closing Date, or shall impose upon the L/C Issuer any unreimbursed loss,
cost or expense which was not applicable on the Closing Date and which the L/C
Issuer in good faith deems material to it;

 

(B) subject to Section 2.03(b)(iii), the expiry date of such requested Letter of
Credit would occur more than 12 months after the date of issuance or last
renewal, unless the Required Lenders have approved such expiry date;

 

(C) the expiry date of such requested Letter of Credit would occur after the
Letter of Credit Expiration Date, unless all the Lenders have approved such
expiry date;

 

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(D) the issuance of such Letter of Credit would violate one or more policies of
the L/C Issuer; or

 

(E) such Letter of Credit is in an initial amount less than $10,000, in the case
of a standby Letter of Credit, or $5,000,000, in the case of a direct pay Letter
of Credit, or is to be denominated in a currency other than Dollars.

 

(iii) The L/C Issuer shall be under no obligation to amend any Letter of Credit
if (A) the L/C Issuer would have no obligation at such time to issue such Letter
of Credit in its amended form under the terms hereof, or (B) the beneficiary of
such Letter of Credit does not accept the proposed amendment to such Letter of
Credit.

 

(b) Procedures for Issuance and Amendment of Letters of Credit; Auto-Renewal
Letters of Credit.

 

(i) Each Letter of Credit shall be issued or amended, as the case may be, upon
the request of the applicable Borrower for whom the Letter of Credit is issued,
delivered to the L/C Issuer (with a copy to the Administrative Agent) in the
form of a Letter of Credit Application, appropriately completed and signed by a
Responsible Officer of the such Borrower, accompanied by a Borrowing Base
Certificate as of the most recently concluded fiscal quarter, adjusted as set
forth in Section 4.02(d), executed by each Borrower. Such Letter of Credit
Application and Borrowing Base Certificate must be received by the L/C Issuer
and the Administrative Agent not later than 10:00 a.m. at least three Business
Days (or such later date and time as the L/C Issuer may agree in a particular
instance in its sole discretion) prior to the proposed issuance date or date of
amendment, as the case may be. In the case of a request for an initial issuance
of a Letter of Credit, such Letter of Credit Application shall specify in form
and detail satisfactory to the L/C Issuer: (A) the proposed issuance date of the
requested Letter of Credit (which shall be a Business Day); (B) the amount
thereof; (C) the expiry date thereof; (D) the name and address of the
beneficiary thereof; (E) the documents to be presented by such beneficiary in
case of any drawing thereunder; (F) the full text of any certificate to be
presented by such beneficiary in case of any drawing thereunder; and (G) such
other matters as the L/C Issuer may require. In the case of a request for an
amendment of any outstanding Letter of Credit, such Letter of Credit Application
shall specify in form and detail satisfactory to the L/C Issuer (A) the Letter
of Credit to be amended; (B) the proposed date of amendment thereof (which shall
be a Business Day); (C) the nature of the proposed amendment; and (D) such other
matters as the L/C Issuer may require.

 

(ii) Promptly after receipt of any Letter of Credit Application, the L/C Issuer
will confirm with the Administrative Agent (by telephone or in writing) that the
Administrative Agent has received a copy of such Letter of Credit Application
from either Borrower and, if not, the L/C Issuer will provide the Administrative
Agent with a copy thereof. Upon receipt by the L/C Issuer of confirmation from
the Administrative Agent that the requested issuance or amendment is permitted
in accordance with the terms hereof, then, subject to the terms and conditions
hereof, the L/C Issuer shall, on the requested date, issue a Letter of Credit
for the account of the requesting Borrower or enter into the applicable
amendment, as the case may be, in each case in accordance with the L/C Issuer’s
usual and customary business practices. Immediately upon the issuance of each
Letter of Credit, each Lender shall be deemed to, and

 

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hereby irrevocably and unconditionally agrees to, purchase from the L/C Issuer a
risk participation in such Letter of Credit in an amount equal to the product of
such Lender’s Pro Rata Share times the amount of such Letter of Credit.

 

(iii) If either Borrower so requests in any applicable Letter of Credit
Application, the L/C Issuer may, in its sole and absolute discretion, agree to
issue a Letter of Credit that has automatic renewal provisions (each, an
“Auto-Renewal Letter of Credit”); provided that any such Auto-Renewal Letter of
Credit must permit the L/C Issuer to prevent any such renewal at least once in
each twelve-month period (commencing with the date of issuance of such Letter of
Credit) by giving prior notice to the beneficiary thereof not later than a day
(the “Nonrenewal Notice Date”) in each such twelve-month period to be agreed
upon at the time such Letter of Credit is issued. Unless otherwise directed by
the L/C Issuer, the applicable Borrower shall not be required to make a specific
request to the L/C Issuer for any such renewal. Once an Auto-Renewal Letter of
Credit has been issued, the Lenders shall be deemed to have authorized (but may
not require) the L/C Issuer to permit the renewal of such Letter of Credit at
any time to an expiry date not later than the Letter of Credit Expiration Date;
provided, however, that the L/C Issuer shall not permit any such renewal if (A)
the L/C Issuer has determined that it would have no obligation at such time to
issue such Letter of Credit in its renewed form under the terms hereof (by
reason of the provisions of Section 2.03(a)(ii) or otherwise), or (B) it has
received notice (which may be by telephone or in writing) on or before the day
that is five Business Days before the Nonrenewal Notice Date (1) from the
Administrative Agent that the Required Lenders have elected not to permit such
renewal or (2) from the Administrative Agent, any Lender or the applicable
Borrower that one or more of the applicable conditions specified in Section 4.02
is not then satisfied or waived in accordance with the terms hereof.

 

(iv) Promptly after its delivery of any Letter of Credit or any amendment to a
Letter of Credit to an advising bank with respect thereto or to the beneficiary
thereof, the L/C Issuer will also deliver to the applicable Borrower requesting
such Letter of Credit or amendment and the Administrative Agent a true and
complete copy of such Letter of Credit or amendment.

 

(c) Drawings and Reimbursements; Funding of Participations.

 

(i) Upon receipt from the beneficiary of any Letter of Credit of any notice of a
drawing under such Letter of Credit, the L/C Issuer shall notify the applicable
Borrower and the Administrative Agent thereof. On the later of (A) 11:00 a.m. on
the date of any payment by the L/C Issuer under a Letter of Credit or (B) one
hour after any payment by the L/C Issuer under a Letter of Credit on the date of
any payment (each such date, an “Honor Date”), the applicable Borrower that
requested such Letter of Credit shall reimburse the L/C Issuer through the
Administrative Agent in an amount equal to the amount of such drawing. If such
Borrower fails to so reimburse the L/C Issuer by such time, the Administrative
Agent shall promptly notify each Lender of the Honor Date, the amount of the
unreimbursed drawing (the “Unreimbursed Amount”), and the amount of such
Lender’s Pro Rata Share thereof. In such event, the applicable Borrower shall be
deemed to have requested a Committed Borrowing of Base Rate Loans to be
disbursed on the Honor Date in an amount equal to the Unreimbursed Amount,
without regard to the minimum and multiples specified in Section 2.02 for the
principal amount of Base Rate Loans, but subject to the amount of the unutilized
portion of the Aggregate

 

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Commitments and the conditions set forth in Section 4.02 (other than the
delivery of a Committed Loan Notice). Any notice given by the L/C Issuer or the
Administrative Agent pursuant to this Section 2.03(c)(i) may be given by
telephone if immediately confirmed in writing; provided that the lack of such an
immediate confirmation shall not affect the conclusiveness or binding effect of
such notice.

 

(ii) Each Lender (including the Lender acting as L/C Issuer) shall upon any
notice pursuant to Section 2.03(c)(i) make funds available to the Administrative
Agent for the account of the L/C Issuer at the Administrative Agent’s Office in
an amount equal to its Pro Rata Share of the Unreimbursed Amount not later than
10:00 a.m. on the next Business Day succeeding the date of such notice,
whereupon, subject to the provisions of Section 2.03(c)(iii), each Lender that
so makes funds available shall be deemed to have made a Base Rate Committed Loan
to the Borrowers in such amount. The Administrative Agent shall remit the funds
so received to the L/C Issuer.

 

(iii) With respect to any Unreimbursed Amount that is not fully refinanced by a
Committed Borrowing of Base Rate Loans because the conditions set forth in
Section 4.02 cannot be satisfied or for any other reason, the applicable
Borrower shall be deemed to have incurred from the L/C Issuer an L/C Borrowing
in the amount of the Unreimbursed Amount that is not so refinanced, which L/C
Borrowing shall be due and payable on demand (together with interest) and shall
bear interest at the Default Rate. In such event, each Lender’s payment to the
Administrative Agent for the account of the L/C Issuer pursuant to Section
2.03(c)(ii) shall be deemed payment in respect of its participation in such L/C
Borrowing and shall constitute an L/C Advance from such Lender in satisfaction
of its participation obligation under this Section 2.03.

 

(iv) Until each Lender funds its Committed Loan or L/C Advance pursuant to this
Section 2.03(c) to reimburse the L/C Issuer for any amount drawn under any
Letter of Credit, interest in respect of such Lender’s Pro Rata Share of such
amount shall be solely for the account of the L/C Issuer.

 

(v) Each Lender’s obligation to make Committed Loans or L/C Advances to
reimburse the L/C Issuer for amounts drawn under Letters of Credit, as
contemplated by this Section 2.03(c), shall be absolute and unconditional and
shall not be affected by any circumstance, including (A) any set-off,
counterclaim, recoupment, defense or other right which such Lender may have
against the L/C Issuer, any Borrower or any other Person for any reason
whatsoever; (B) the occurrence or continuance of a Default, or (C) any other
occurrence, event or condition, whether or not similar to any of the foregoing;
provided, however, that each Lender’s obligation to make Committed Loans
pursuant to this Section 2.03(c) is subject to the conditions set forth in
Section 4.02 (other than delivery by the OP Borrower of a Committed Loan
Notice). No such making of an L/C Advance shall relieve or otherwise impair the
obligation of the Borrower requesting the applicable Letter of Credit to
reimburse the L/C Issuer for the amount of any payment made by the L/C Issuer
under such Letter of Credit, together with interest as provided herein.

 

(vi) If any Lender fails to make available to the Administrative Agent for the
account of the L/C Issuer any amount required to be paid by such Lender pursuant
to the

 

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foregoing provisions of this Section 2.03(c) by the time specified in Section
2.03(c)(ii), the L/C Issuer shall be entitled to recover from such Lender
(acting through the Administrative Agent), on demand, such amount with interest
thereon for the period from the date such payment is required to the date on
which such payment is immediately available to the L/C Issuer at a rate per
annum equal to the Federal Funds Rate from time to time in effect. A certificate
of the L/C Issuer submitted to any Lender (through the Administrative Agent)
with respect to any amounts owing under this clause (vi) shall be conclusive
absent manifest error.

 

(d) Repayment of Participations.

 

(i) At any time after the L/C Issuer has made a payment under any Letter of
Credit and has received from any Lender such Lender’s L/C Advance in respect of
such payment in accordance with Section 2.03(c), if the Administrative Agent
receives for the account of the L/C Issuer any payment in respect of the related
Unreimbursed Amount or interest thereon (whether directly from any Borrower or
otherwise, including proceeds of Cash Collateral applied thereto by the
Administrative Agent), the Administrative Agent will distribute to such Lender
its Pro Rata Share thereof (appropriately adjusted, in the case of interest
payments, to reflect the period of time during which such Lender’s L/C Advance
was outstanding) in the same funds as those received by the Administrative
Agent.

 

(ii) If any payment received by the Administrative Agent for the account of the
L/C Issuer pursuant to Section 2.03(c)(i) is required to be returned under any
of the circumstances described in Section 10.06 (including pursuant to any
settlement entered into by the L/C Issuer in its discretion), each Lender shall
pay to the Administrative Agent for the account of the L/C Issuer its Pro Rata
Share thereof on demand of the Administrative Agent, plus interest thereon from
the date of such demand to the date such amount is returned by such Lender, at a
rate per annum equal to the Federal Funds Rate from time to time in effect.

 

(e) Obligations Absolute. The obligation of the Borrower that requested a Letter
of Credit to reimburse the L/C Issuer for each drawing under such Letter of
Credit and to repay each L/C Borrowing under such Letter of Credit shall be
absolute, unconditional and irrevocable, and shall be paid strictly in
accordance with the terms of this Agreement under all circumstances, including
the following:

 

(i) any lack of validity or enforceability of such Letter of Credit, this
Agreement, or any other agreement or instrument relating thereto;

 

(ii) the existence of any claim, counterclaim, set-off, defense or other right
that such Borrower, any other Loan Party or any Subsidiary may have at any time
against any beneficiary or any transferee of such Letter of Credit (or any
Person for whom any such beneficiary or any such transferee may be acting), the
L/C Issuer or any other Person, whether in connection with this Agreement, the
transactions contemplated hereby or by such Letter of Credit or any agreement or
instrument relating thereto, or any unrelated transaction;

 

(iii) any draft, demand, certificate or other document presented under such
Letter of Credit proving to be forged, fraudulent, invalid or insufficient in
any respect or any statement therein being untrue or inaccurate in any respect;
or any loss or delay in the transmission or otherwise of any document required
in order to make a drawing under such Letter of Credit;

 

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(iv) any payment by the L/C Issuer under such Letter of Credit against
presentation of a draft or certificate that does not strictly comply with the
terms of such Letter of Credit; or any payment made by the L/C Issuer under such
Letter of Credit to any Person purporting to be a trustee in bankruptcy,
debtor-in-possession, assignee for the benefit of creditors, liquidator,
receiver or other representative of or successor to any beneficiary or any
transferee of such Letter of Credit, including any arising in connection with
any proceeding under any Debtor Relief Law; or

 

(v) any other circumstance or happening whatsoever, whether or not similar to
any of the foregoing, including any other circumstance that might otherwise
constitute a defense available to, or a discharge of, such Borrower, any other
Loan Party or any Subsidiary.

 

The Borrower requesting a Letter of Credit shall promptly examine a copy of such
Letter of Credit and each amendment thereto that is delivered to it and, in the
event of any claim of noncompliance with such Borrower’s instructions or other
irregularity, such Borrower will immediately notify the L/C Issuer. The Borrower
requesting a Letter of Credit shall be conclusively deemed to have waived any
such claim against the L/C Issuer and its correspondents unless such notice is
given as aforesaid.

 

(f) Role of L/C Issuer. Each Lender and each Borrower agrees that, in paying any
drawing under a Letter of Credit, the L/C Issuer shall not have any
responsibility to obtain any document (other than any sight draft, certificates
and documents expressly required by the Letter of Credit) or to ascertain or
inquire as to the validity or accuracy of any such document or the authority of
the Person executing or delivering any such document. None of the L/C Issuer,
any Agent-Related Person nor any of the respective correspondents, participants
or assignees of the L/C Issuer shall be liable to any Lender for (i) any action
taken or omitted in connection herewith at the request or with the approval of
the Lenders or the Required Lenders, as applicable; (ii) any action taken or
omitted in the absence of gross negligence or willful misconduct; or (iii) the
due execution, effectiveness, validity or enforceability of any document or
instrument related to any Letter of Credit or Letter of Credit Application. Each
Borrower hereby assume all risks of the acts or omissions of any beneficiary or
transferee with respect to its use of any Letter of Credit; provided, however,
that this assumption is not intended to, and shall not, preclude such Borrower’s
pursuing such rights and remedies as it may have against the beneficiary or
transferee at law or under any other agreement. None of the L/C Issuer, any
Agent-Related Person, nor any of the respective correspondents, participants or
assignees of the L/C Issuer, shall be liable or responsible for any of the
matters described in clauses (i) through (v) of Section 2.03(e); provided,
however, that anything in such clauses to the contrary notwithstanding, the
Borrower requesting a Letter of Credit may have a claim against the L/C Issuer,
and the L/C Issuer may be liable to such Borrower, to the extent, but only to
the extent, of any direct, as opposed to consequential or exemplary, damages
suffered by such Borrower which such Borrower proves were caused by the L/C
Issuer’s willful misconduct or gross negligence or the L/C Issuer’s willful
failure to pay under any Letter of Credit requested by such Borrower after the
presentation to it by the beneficiary of a sight draft and certificate(s)
strictly complying with the terms and conditions of a Letter of Credit. In
furtherance and not in limitation of the

 

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foregoing, the L/C Issuer may accept documents that appear on their face to be
in order, without responsibility for further investigation, regardless of any
notice or information to the contrary, and the L/C Issuer shall not be
responsible for the validity or sufficiency of any instrument transferring or
assigning or purporting to transfer or assign a Letter of Credit or the rights
or benefits thereunder or proceeds thereof, in whole or in part, which may prove
to be invalid or ineffective for any reason.

 

(g) Cash Collateral. Upon the request of the Administrative Agent, (i) if the
L/C Issuer has honored any full or partial drawing request under any Letter of
Credit and such drawing has resulted in an L/C Borrowing which the applicable
Borrower has not repaid to the L/C Issuer in accordance with the provisions
under Section 2.03(c)(iii) following demand therefor, or (ii) if, as of the
Letter of Credit Expiration Date, any Letter of Credit may for any reason remain
outstanding and partially or wholly undrawn, the applicable Borrower shall
immediately Cash Collateralize the then Outstanding Amount of all L/C
Obligations (in an amount equal to such Outstanding Amount determined as of the
date of such L/C Borrowing or the Letter of Credit Expiration Date, as the case
may be). For purposes hereof, “Cash Collateralize” means to pledge and deposit
with or deliver to the Administrative Agent, for the benefit of the L/C Issuer
and the Lenders, as collateral for the L/C Obligations, cash or deposit account
balances pursuant to documentation in form and substance satisfactory to the
Administrative Agent and the L/C Issuer (which documents are hereby consented to
by the Lenders). Derivatives of such term have corresponding meanings. Each
Borrower hereby grants to the Administrative Agent, for the benefit of the L/C
Issuer and the Lenders, a security interest in all such cash, deposit accounts
and all balances therein and all proceeds of the foregoing. Cash collateral
shall be maintained in blocked, non-interest bearing deposit accounts at the
Administrative Agent.

 

(h) Applicability of ISP98. Unless otherwise expressly agreed by the L/C Issuer
and the applicable Borrower when a Letter of Credit is issued, the rules of the
“International Standby Practices 1998” published by the Institute of
International Banking Law & Practice (or such later version thereof as may be in
effect at the time of issuance) shall apply to each Letter of Credit.

 

(i) Letter of Credit Fees. The Borrower requesting a Letter of Credit shall pay
to the Administrative Agent for the account of each Lender in accordance with
its Pro Rata Share a Letter of Credit fee for each Letter of Credit so
requested, equal to the Applicable Rate times the daily maximum amount available
to be drawn under such Letter of Credit (whether or not such maximum amount is
then in effect under such Letter of Credit). Such letter of credit fees shall be
computed on a quarterly basis in arrears. Such letter of credit fees shall be
due and payable on the first Business Day after the end of each March, June,
September and December, commencing with the first such date to occur after the
issuance of such Letter of Credit, on the Letter of Credit Expiration Date and
thereafter on demand. If there is any change in the Applicable Rate during any
quarter, the daily maximum amount of each Letter of Credit shall be computed and
multiplied by the Applicable Rate separately for each period during such quarter
that such Applicable Rate was in effect.

 

(j) Fronting Fee and Documentary and Processing Charges Payable to L/C Issuer.
Each Borrower requesting a Letter of Credit shall pay directly to the L/C Issuer
for its

 

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own account a fronting fee with respect to each Letter of Credit so requested in
the amount of $1,000 per annum, payable annually in advance. In addition, each
Borrower shall pay for each draw permissible under a direct pay Letter of
Credit, a drawing fee in the amount of $250.

 

(k) Conflict with Letter of Credit Application. In the event of any conflict
between the terms hereof and the terms of any Letter of Credit Application, the
terms hereof shall control.

 

2.04 Swing Line Loans.

 

(a) The Swing Line. Subject to the terms and conditions set forth herein, the
Swing Line Lender agrees to make loans (each such loan, a “Swing Line Loan”) to
the OP Borrower from time to time on any Business Day during the Availability
Period in an aggregate amount not to exceed at any time outstanding the amount
of the Swing Line Sublimit, notwithstanding the fact that such Swing Line Loans,
when aggregated with the Pro Rata Share of the Outstanding Amount of Committed
Loans and L/C Obligations of the Lender acting as Swing Line Lender, may exceed
the amount of such Lender’s Commitment; provided, however, that after giving
effect to any Swing Line Loan, (i) the Total Outstandings shall not exceed the
Borrowing Base Availability, and (ii) the aggregate Outstanding Amount of the
Committed Loans of any Lender, plus such Lender’s Pro Rata Share of the
Outstanding Amount of all L/C Obligations, plus such Lender’s Pro Rata Share of
the Outstanding Amount of all Swing Line Loans shall not exceed such Lender’s
Commitment, and provided, further, that the OP Borrower shall not use the
proceeds of any Swing Line Loan to refinance any outstanding Swing Line Loan.
Within the foregoing limits, and subject to the other terms and conditions
hereof, the OP Borrower may borrow under this Section 2.04, prepay under Section
2.05, and reborrow under this Section 2.04. Each Swing Line Loan shall be a Base
Rate Loan. Immediately upon the making of a Swing Line Loan, each Lender shall
be deemed to, and hereby irrevocably and unconditionally agrees to, purchase
from the Swing Line Lender a risk participation in such Swing Line Loan in an
amount equal to the product of such Lender’s Pro Rata Share times the amount of
such Swing Line Loan.

 

(b) Borrowing Procedures. Each Swing Line Borrowing shall be made upon the OP
Borrower’s irrevocable notice to the Swing Line Lender and the Administrative
Agent, which may be given by telephone by the OP Borrower. Each such notice must
be accompanied by a Borrowing Base Certificate as of the most recently concluded
fiscal quarter, adjusted as set forth in Section 4.02(d) and received by the
Swing Line Lender and the Administrative Agent not later than 10:00 a.m. on the
requested borrowing date, and shall specify (i) the amount to be borrowed, which
shall be a minimum of $500,000, and (ii) the requested borrowing date, which
shall be a Business Day. Each such telephonic notice must be confirmed promptly
by delivery to the Swing Line Lender and the Administrative Agent of a written
Swing Line Loan Notice, appropriately completed and signed by a Responsible
Officer of the Borrowers. Promptly after receipt by the Swing Line Lender of any
telephonic Swing Line Loan Notice and Borrowing Base Certificate, the Swing Line
Lender will confirm with the Administrative Agent (by telephone or in writing)
that the Administrative Agent has also received such Swing Line Loan Notice and,
if not, the Swing Line Lender will notify the Administrative Agent (by telephone
or in writing) of the contents thereof. Unless the Swing Line Lender has
received notice (by telephone or in writing) from the Administrative Agent
(including at the request of any Lender)

 

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prior to 11:00 a.m. on the date of the proposed Swing Line Borrowing (A)
directing the Swing Line Lender not to make such Swing Line Loan as a result of
the limitations set forth in the proviso to the first sentence of Section
2.04(a), or (B) that one or more of the applicable conditions specified in
Article IV is not then satisfied or waived in accordance with the terms hereof,
then, subject to the terms and conditions hereof, the Swing Line Lender will,
not later than 12:00 noon on the borrowing date specified in such Swing Line
Loan Notice, make the amount of its Swing Line Loan available to the OP Borrower
at the office of the OP Borrower by crediting the account of the OP Borrower on
the books of the Swing Line Lender in immediately available funds.

 

(c) Refinancing of Swing Line Loans.

 

(i) The Swing Line Lender at any time in its sole and absolute discretion may
request, on behalf of the OP Borrower (which hereby irrevocably authorizes the
Swing Line Lender to so request on its behalf), that each Lender make a Base
Rate Committed Loan in an amount equal to such Lender’s Pro Rata Share of the
amount of Swing Line Loans then outstanding. Such request shall be made in
writing (which written request shall be deemed to be a Committed Loan Notice for
purposes hereof) and in accordance with the requirements of Section 2.02,
without regard to the minimum and multiples specified therein for the principal
amount of Base Rate Loans, but subject to the unutilized portion of the
Aggregate Commitments and the conditions set forth in Section 4.02. The Swing
Line Lender shall furnish the OP Borrower with a copy of the applicable
Committed Loan Notice promptly after delivering such notice to the
Administrative Agent. Each Lender shall make an amount equal to its Pro Rata
Share of the amount specified in such Committed Loan Notice available to the
Administrative Agent in immediately available funds for the account of the Swing
Line Lender at the Administrative Agent’s Office not later than 10:00 a.m. on
the next Business Day after the delivery of the Committed Loan Notice hereunder,
whereupon, subject to Section 2.04(c)(ii), each Lender that so makes funds
available shall be deemed to have made a Base Rate Committed Loan to the OP
Borrower in such amount. The Administrative Agent shall remit the funds so
received to the Swing Line Lender.

 

(ii) If for any reason any Swing Line Loan cannot be refinanced by such a
Committed Borrowing in accordance with Section 2.04(c)(i), the request for Base
Rate Committed Loans submitted by the Swing Line Lender as set forth herein
shall be deemed to be a request by the Swing Line Lender that each of the
Lenders fund its risk participation in the relevant Swing Line Loan and each
Lender’s payment to the Administrative Agent for the account of the Swing Line
Lender pursuant to Section 2.04(c)(i) shall be deemed payment in respect of such
participation.

 

(iii) If any Lender fails to make available to the Administrative Agent for the
account of the Swing Line Lender any amount required to be paid by such Lender
pursuant to the foregoing provisions of this Section 2.04(c) by the time
specified in Section 2.04(c)(i), the Swing Line Lender shall be entitled to
recover from such Lender (acting through the Administrative Agent), on demand,
such amount with interest thereon for the period from the date such payment is
required to the date on which such payment is immediately available to the Swing
Line Lender at a rate per annum equal to the Federal Funds Rate from time to
time in effect. A certificate of the Swing Line Lender submitted to any Lender
(through

 

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the Administrative Agent) with respect to any amounts owing under this clause
(iii) shall be conclusive absent manifest error.

 

(iv) Each Lender’s obligation to make Committed Loans or to purchase and fund
risk participations in Swing Line Loans pursuant to this Section 2.04(c) shall
be absolute and unconditional and shall not be affected by any circumstance,
including (A) any set-off, counterclaim, recoupment, defense or other right
which such Lender may have against the Swing Line Lender, the OP Borrower or any
other Person for any reason whatsoever, (B) the occurrence or continuance of a
Default, or (C) any other occurrence, event or condition, whether or not similar
to any of the foregoing; provided, however, that each Lender’s obligation to
make Committed Loans pursuant to this Section 2.04(c) is subject to the
conditions set forth in Section 4.02. No such funding of risk participations
shall relieve or otherwise impair the obligation of the OP Borrower to repay
Swing Line Loans, together with interest as provided herein.

 

(d) Repayment of Participations.

 

(i) At any time after any Lender has purchased and funded a risk participation
in a Swing Line Loan, if the Swing Line Lender receives any payment on account
of such Swing Line Loan, the Swing Line Lender will distribute to such Lender
its Pro Rata Share of such payment (appropriately adjusted, in the case of
interest payments, to reflect the period of time during which such Lender’s risk
participation was funded) in the same funds as those received by the Swing Line
Lender.

 

(ii) If any payment received by the Swing Line Lender in respect of principal or
interest on any Swing Line Loan is required to be returned by the Swing Line
Lender under any of the circumstances described in Section 10.06 (including
pursuant to any settlement entered into by the Swing Line Lender in its
discretion), each Lender shall pay to the Swing Line Lender its Pro Rata Share
thereof on demand of the Administrative Agent, plus interest thereon from the
date of such demand to the date such amount is returned, at a rate per annum
equal to the Federal Funds Rate. The Administrative Agent will make such demand
upon the request of the Swing Line Lender.

 

(e) Interest for Account of Swing Line Lender. The Swing Line Lender shall be
responsible for invoicing the OP Borrower for interest on the Swing Line Loans.
Until each Lender funds its Base Rate Committed Loan or risk participation
pursuant to this Section 2.04 to refinance such Lender’s Pro Rata Share of any
Swing Line Loan, interest in respect of such Pro Rata Share shall be solely for
the account of the Swing Line Lender.

 

(f) Payments Directly to Swing Line Lender. The OP Borrower shall make all
payments of principal and interest in respect of the Swing Line Loans directly
to the Swing Line Lender.

 

2.05 Prepayments.

 

(a) Each Borrower may, upon notice to the Administrative Agent, at any time or
from time to time voluntarily prepay Committed Loans in whole or in part without
premium or penalty; provided that (i) such notice must be received by the
Administrative Agent not later

 

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than 10:00 a.m. (A) three Business Days prior to any date of prepayment of
Eurodollar Rate Loans and (B) on the date of prepayment of Base Rate Committed
Loans; (ii) any prepayment of Eurodollar Rate Loans shall be in a principal
amount of $5,000,000 or a whole multiple of $1,000,000 in excess thereof; and
(iii) any prepayment of Base Rate Committed Loans shall be in a principal amount
of $500,000 or a whole multiple of $100,000 in excess thereof or, in each case,
if less, the entire principal amount thereof then outstanding. Each such notice
shall specify the date and amount of such prepayment and the Type(s) of
Committed Loans to be prepaid. The Administrative Agent will promptly notify
each Lender of its receipt of each such notice, and of the amount of such
Lender’s Pro Rata Share of such prepayment. If such notice is given by any
Borrower, the applicable Borrower shall make such prepayment and the payment
amount specified in such notice shall be due and payable on the date specified
therein. Any prepayment of a Eurodollar Rate Loan shall be accompanied by all
accrued interest thereon, together with any additional amounts required pursuant
to Section 3.05. Each such prepayment shall be applied to the Committed Loans of
the Lenders in accordance with their respective Pro Rata Shares.

 

(b) The OP Borrower may, upon notice to the Swing Line Lender (with a copy to
the Administrative Agent), at any time or from time to time, voluntarily prepay
Swing Line Loans in whole or in part without premium or penalty; provided that
(i) such notice must be received by the Swing Line Lender and the Administrative
Agent not later than 10:00 a.m. on the date of the prepayment, and (ii) any such
prepayment shall be in a minimum principal amount of $100,000 or, if less, the
entire principal amount of such outstanding Swing Line Loans. Each such notice
shall specify the date and amount of such prepayment. If such notice is given by
the OP Borrower, the OP Borrower shall make such prepayment and the payment
amount specified in such notice shall be due and payable on the date specified
therein.

 

(c) If for any reason the Total Outstandings at any time exceed the Borrowing
Base Availability then in effect, the Borrowers shall immediately prepay Loans
and Cash Collateralize the L/C Obligations in an aggregate amount equal to such
excess; provided, however, that the Borrowers shall not be required to Cash
Collateralize the L/C Obligations pursuant to this Section 2.05(c) unless, after
the prepayment in full of the Committed Loans and Swing Line Loans, the Total
Outstandings exceed the Borrowing Base Availability then in effect.

 

(d) If the Borrowers (i) fail to satisfy each of the conditions precedent set
forth in Section 4.03 on or before the REIT Conversion Date, or (ii) fail to
satisfy each of the conditions precedent set forth in Section 4.04 on or before
the REIT Election Date, which conditions have not been waived by the
Administration Agent and the Required Lenders, (A) the Administrative Agent may,
or shall upon the request of the Requisite Lenders, declare the commitment of
each Lender to make Loans and any obligation of the L/C Issuer to make L/C
Credit Extensions to be terminated, whereupon such commitments and obligations
shall be terminated; and (B) upon the occurrence of the events described in the
foregoing clause (A), the Borrowers shall immediately prepay all Loans and Cash
Collateralize all L/C Obligations (in an amount equal to the then Outstanding
Amount thereof).

 

2.06 Termination or Reduction of Commitments. The OP Borrower may, upon notice
to the Administrative Agent, terminate the Aggregate Commitments, or from time
to time

 

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permanently reduce the Aggregate Commitments; provided that (i) any such notice
shall be received by the Administrative Agent not later than 10:00 a.m. three
Business Days prior to the date of termination or reduction, (ii) any such
partial reduction shall be in an aggregate amount of $10,000,000 or any whole
multiple of $1,000,000 in excess thereof, (iii) the OP Borrower shall not
terminate or reduce the Aggregate Commitments if, after giving effect thereto
and to any concurrent prepayments hereunder, the Total Outstandings would exceed
the Borrowing Base Availability, and (iv) if, after giving effect to any
reduction of the Aggregate Commitments, the Letter of Credit Sublimit or the
Swing Line Sublimit exceeds the amount of the Aggregate Commitments, such
Sublimit shall be automatically reduced by the amount of such excess. The
Administrative Agent will promptly notify the Lenders of any such notice of
termination or reduction of the Aggregate Commitments. Any reduction of the
Aggregate Commitments shall be applied to the Commitment of each Lender
according to its Pro Rata Share. All Unused Fees accrued until the effective
date of any termination of the Aggregate Commitments shall be paid on the
effective date of such termination.

 

2.07 Repayment of Loans.

 

(a) The Borrowers shall repay to the Lenders on the Maturity Date the aggregate
principal amount of Committed Loans outstanding on such date.

 

(b) The OP Borrower shall repay each Swing Line Loan on the earlier to occur of
(i) the date three Business Days after such Loan is made and (ii) the Maturity
Date.

 

2.08 Interest.

 

(a) Subject to the provisions of subsection (b) below, (i) each Eurodollar Rate
Loan shall bear interest on the outstanding principal amount thereof for each
Interest Period at a rate per annum equal to the Eurodollar Rate for such
Interest Period plus the Applicable Rate; (ii) each Base Rate Committed Loan
shall bear interest on the outstanding principal amount thereof from the
applicable borrowing date at a rate per annum equal to the Base Rate plus the
Applicable Rate; and (iii) each Swing Line Loan shall bear interest on the
outstanding principal amount thereof from the applicable borrowing date at a
rate per annum equal to the Base Rate plus the Applicable Rate.

 

(b) If any amount payable by any of the Borrowers under any Loan Document is not
paid when due (without regard to any applicable grace periods), whether at
stated maturity, by acceleration or otherwise, such amount shall thereafter bear
interest at a fluctuating interest rate per annum at all times equal to the
Default Rate to the fullest extent permitted by applicable Laws. Furthermore,
while any Event of Default exists, each Borrower shall pay interest on the
principal amount of all outstanding Obligations hereunder at a fluctuating
interest rate per annum at all times equal to the Default Rate to the fullest
extent permitted by applicable Laws. Accrued and unpaid interest on past due
amounts (including interest on past due interest) shall be due and payable upon
demand.

 

(c) Interest on each Loan shall be due and payable in arrears on each Interest
Payment Date applicable thereto and at such other times as may be specified
herein. Interest hereunder shall be due and payable in accordance with the terms
hereof before and after judgment, and before and after the commencement of any
proceeding under any Debtor Relief Law.

 

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2.09 Fees. In addition to certain fees described in clauses (i) and (j) of
Section 2.03:

 

(a) Unused Fee. The Borrowers shall pay to the Administrative Agent for the
account of each Lender in accordance with its Pro Rata Share, an unused fee (the
“Unused Fee”) equal to the Applicable Unused Fee Rate times the actual daily
amount by which the Aggregate Commitments exceed the sum of (i) the Outstanding
Amount of Committed Loans and (ii) the Outstanding Amount of L/C Obligations.
The Unused Fee shall accrue at all times during the Availability Period,
including at any time during which one or more of the conditions in Article IV
is not met or waived in accordance with the terms hereof, and shall be due and
payable quarterly in arrears on the first Business Day of each April, July,
October and January (with respect to such Unused Fee accruing during for the
immediately preceding quarter), commencing with the first such date to occur
after the Closing Date, and on the Maturity Date. The Unused Fee shall be
calculated quarterly in arrears, and if there is any change in the Applicable
Unused Fee Rate during any quarter, the actual daily amount shall be computed
and multiplied by the Applicable Unused Fee Rate separately for each period
during such quarter that such Applicable Unused Fee Rate was in effect.

 

(b) Other Fees. (i) The Borrowers shall pay to the Arranger and the
Administrative Agent for their own respective accounts fees in the amounts and
at the times specified in the Fee Letter. Such fees shall be fully earned when
paid and shall not be refundable for any reason whatsoever.

 

(ii) The Borrowers shall pay to the Lenders such fees as shall have been
separately agreed upon in writing in the amounts and at the times so specified.
Such fees shall be fully earned when paid and shall not be refundable for any
reason whatsoever.

 

2.10 Computation of Interest and Fees. All computations of interest for Base
Rate Loans when the Base Rate is determined by Bank of America’s “prime rate”
shall be made on the basis of a year of 365 or 366 days, as the case may be, and
actual days elapsed. All other computations of fees and interest shall be made
on the basis of a 360-day year and actual days elapsed (which results in more
fees or interest, as applicable, being paid than if computed on the basis of a
365-day year). Interest shall accrue on each Loan for the day on which the Loan
is made, and shall not accrue on a Loan, or any portion thereof, for the day on
which the Loan or such portion is paid, provided that any Loan that is repaid on
the same day on which it is made shall, subject to Section 2.12(a), bear
interest for one day.

 

2.11 Evidence of Debt.

 

(a) The Credit Extensions made by each Lender shall be evidenced by one or more
accounts or records maintained by such Lender and by the Administrative Agent in
the ordinary course of business. The accounts or records maintained by the
Administrative Agent and each Lender shall be conclusive absent manifest error
of the amount of the Credit Extensions made by the Lenders to the Borrowers and
the interest and payments thereon. Any failure to so record or any error in
doing so shall not, however, limit or otherwise affect the obligation of the

 

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Borrowers hereunder to pay any amount owing with respect to the Obligations. In
the event of any conflict between the accounts and records maintained by any
Lender and the accounts and records of the Administrative Agent in respect of
such matters, the accounts and records of the Administrative Agent shall control
in the absence of manifest error. Upon the request of any Lender to the
Borrowers made through the Administrative Agent, the Borrowers shall execute and
deliver to such Lender (through the Administrative Agent) a Note, which shall
evidence such Lender’s Loans to the Borrowers in addition to such accounts or
records. Each Lender may attach schedules to its Note and endorse thereon the
date, Type (if applicable), amount and maturity of its Loans and payments with
respect thereto.

 

(b) In addition to the accounts and records referred to in subsection (a), each
Lender and the Administrative Agent shall maintain in accordance with its usual
practice accounts or records evidencing the purchases and sales by such Lender
of participations in Letters of Credit and Swing Line Loans. In the event of any
conflict between the accounts and records maintained by the Administrative Agent
and the accounts and records of any Lender in respect of such matters, the
accounts and records of the Administrative Agent shall control in the absence of
manifest error.

 

2.12 Payments Generally.

 

(a) All payments to be made by the Borrowers shall be made without condition or
deduction for any counterclaim, defense, recoupment or setoff. Except as
otherwise expressly provided herein, all payments by the Borrowers hereunder
shall be made to the Administrative Agent, for the account of the respective
Lenders to which such payment is owed, at the Administrative Agent’s Office in
Dollars and in immediately available funds not later than 11:00 a.m. on the date
specified herein. If received before 11 a.m. on a Business Day, the
Administrative Agent will distribute to each Lender its Pro Rata Share (or other
applicable share as provided herein) of such payment in like funds as received
by wire transfer to such Lender’s Lending Office on the same Business Day,
otherwise the Administrative Agent will distribute such funds on the next
Business Day. All payments received by the Administrative Agent after 11:00 a.m.
shall be deemed received on the next succeeding Business Day and any applicable
interest or fee shall continue to accrue.

 

(b) If any payment to be made by any Borrower shall come due on a day other than
a Business Day, payment shall be made on the next following Business Day, and
such extension of time shall be reflected in computing interest or fees, as the
case may be.

 

(c) Unless any Borrower or any Lender has notified the Administrative Agent,
prior to the date any payment is required to be made by it to the Administrative
Agent hereunder, that such Borrower or such Lender, as the case may be, will not
make such payment, the Administrative Agent may assume that such Borrower or
such Lender, as the case may be, has timely made such payment and may (but shall
not be so required to), in reliance thereon, make available a corresponding
amount to the Person entitled thereto. If and to the extent that such payment
was not in fact made to the Administrative Agent in immediately available funds,
then:

 

(i) if any Borrower failed to make such payment, each Lender shall forthwith on
demand repay to the Administrative Agent the portion of such assumed

 

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payment that was made available to such Lender in immediately available funds,
together with interest thereon in respect of each day from and including the
date such amount was made available by the Administrative Agent to such Lender
to the date such amount is repaid to the Administrative Agent in immediately
available funds at the Federal Funds Rate from time to time in effect; and

 

(ii) if any Lender failed to make such payment, such Lender shall forthwith on
demand pay to the Administrative Agent the amount thereof in immediately
available funds, together with interest thereon for the period from the date
such amount was made available by the Administrative Agent to any Borrower to
the date such amount is recovered by the Administrative Agent (the “Compensation
Period”) at a rate per annum equal to the Federal Funds Rate from time to time
in effect. If such Lender pays such amount to the Administrative Agent, then
such amount shall constitute such Lender’s Committed Loan included in the
applicable Borrowing. If such Lender does not pay such amount forthwith upon the
Administrative Agent’s demand therefor, the Administrative Agent may make a
demand therefor upon the Borrowers, and the Borrowers shall pay such amount to
the Administrative Agent, together with interest thereon for the Compensation
Period at a rate per annum equal to the rate of interest applicable to the
applicable Borrowing. Nothing herein shall be deemed to relieve any Lender from
its obligation to fulfill its Commitment or to prejudice any rights which the
Administrative Agent or any Borrower may have against any Lender as a result of
any default by such Lender hereunder.

 

A notice of the Administrative Agent to any Lender or Borrower with respect to
any amount owing under this subsection (c) shall be conclusive, absent manifest
error.

 

(d) If any Lender makes available to the Administrative Agent funds for any Loan
to be made by such Lender to any Borrower as provided in the foregoing
provisions of this Article II, and such funds are not made available to such
Borrower by the Administrative Agent because the conditions to the applicable
Credit Extension set forth in Article IV are not satisfied or waived in
accordance with the terms hereof, the Administrative Agent shall return such
funds (in like funds as received from such Lender) to such Lender, without
interest, subject, however, to the Borrowers’ obligations under Section 3.05
hereof.

 

(e) The obligations of the Lenders hereunder to make Committed Loans and to fund
participations in Letters of Credit and Swing Line Loans are several and not
joint. The failure of any Lender to make any Committed Loan or to fund any such
participation on any date required hereunder shall not relieve any other Lender
of its corresponding obligation to do so on such date, and no Lender shall be
responsible for the failure of any other Lender to so make its Committed Loan or
purchase its participation.

 

(f) Nothing herein shall be deemed to obligate any Lender to obtain the funds
for any Loan in any particular place or manner or to constitute a representation
by any Lender that it has obtained or will obtain the funds for any Loan in any
particular place or manner.

 

2.13 Sharing of Payments. If, other than as expressly provided elsewhere herein,
any Lender shall obtain on account of the Committed Loans made by it, or the
participations in L/C

 

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Obligations or in Swing Line Loans held by it, any payment (whether voluntary,
involuntary, through the exercise of any right of set-off, or otherwise) in
excess of its ratable share (or other share contemplated hereunder) thereof,
such Lender shall immediately (a) notify the Administrative Agent of such fact,
and (b) purchase from the other Lenders such participations in the Committed
Loans made by them and/or such subparticipations in the participations in L/C
Obligations or Swing Line Loans held by them, as the case may be, as shall be
necessary to cause such purchasing Lender to share the excess payment in respect
of such Committed Loans or such participations, as the case may be, pro rata
with each of them; provided, however, that if all or any portion of such excess
payment is thereafter recovered from the purchasing Lender under any of the
circumstances described in Section 10.06 (including pursuant to any settlement
entered into by the purchasing Lender in its discretion), such purchase shall to
that extent be rescinded and each other Lender shall repay to the purchasing
Lender the purchase price paid therefor, together with an amount equal to such
paying Lender’s ratable share (according to the proportion of (i) the amount of
such paying Lender’s required repayment to (ii) the total amount so recovered
from the purchasing Lender) of any interest or other amount paid or payable by
the purchasing Lender in respect of the total amount so recovered, without
further interest thereon. Each Borrower agrees that any Lender so purchasing a
participation from another Lender may, to the fullest extent permitted by law,
exercise all its rights of payment (including the right of set-off, but subject
to Section 10.09) with respect to such participation as fully as if such Lender
were the direct creditor of such Borrower in the amount of such participation.
The Administrative Agent will keep records (which shall be conclusive and
binding in the absence of manifest error) of participations purchased under this
Section and will in each case notify the Lenders following any such purchases or
repayments. Each Lender that purchases a participation pursuant to this Section
shall from and after such purchase have the right to give all notices, requests,
demands, directions and other communications under this Agreement with respect
to the portion of the Obligations purchased to the same extent as though the
purchasing Lender were the original owner of the Obligations purchased.

 

2.14 Extension of Maturity Date.

 

The OP Borrower shall have the right to exercise one option to extend the
Maturity Date then in effect (such existing Maturity Date being the “Extension
Effective Date”), for an additional term of twelve months, provided that each of
the following conditions precedent are met:

 

(a) the OP Borrower delivers to the Administrative Agent (which shall promptly
notify the Lenders) a request for such extension (an “Extension Request”) not
earlier than 90 days and not later than 60 days prior to the Extension Effective
Date;

 

(b) at the time that the OP Borrower delivers the Extension Request to the
Administrative Agent and as of the Extension Effective Date, no Default has
occurred and is continuing;

 

(c) on the Extension Effective Date, the Borrowers pay to the Administrative
Agent, for the account of each Lender in accordance with its Pro Rata Share, an
extension fee (the “Extension Fee”) in an amount equal to 0.25% times the
Aggregate Commitment outstanding as of the date of the Extension Request;

 

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(d) the Borrowers deliver to the Administrative Agent a certificate of the
Borrowers, dated as of the Extension Effective Date (in sufficient copies for
each Lender), signed by a Responsible Officer of each Borrower, certifying that,
before and after giving effect to such extension, (i) the representations and
warranties contained in Article V and the other Loan Documents are true and
correct on and as of the Extension Effective Date, except to the extent that
such representations and warranties specifically refer to an earlier date, in
which case they are true and correct as of such earlier date, and except that
for purposes of this Section 2.14, the representations and warranties contained
in subsections (a) and (b) of Section 5.05 shall be deemed to refer to the most
recent statements furnished pursuant to subsections (a) and (b), respectively,
of Section 6.01, and (ii) no Default exists.

 

This Section shall supersede any provisions in Section 2.13 or 10.01 to the
contrary.

 

2.15 Increase in Commitments.

 

(a) Provided no Default exists, upon notice to the Administrative Agent (which
shall promptly notify the Lenders), the OP Borrower may no more than three times
during the Initial Term, request an increase in the Aggregate Commitments by an
amount not less than $10,000,000 for any individual request, and not exceeding
$100,000,000 in the aggregate for all such requests, provided that, in any
event, the Aggregate Commitments shall not exceed $300,000,000 at any time. At
the time of sending such notice, the OP Borrower (in consultation with the
Administrative Agent) shall specify the time period within which each Lender is
requested to respond (which shall in no event be less than ten Business Days
from the date of delivery of such notice to the Lenders). Each Lender shall
notify the Administrative Agent within such time period whether or not it agrees
to increase its Commitment and, if so, whether by an amount equal to, greater
than, or less than its Pro Rata Share of such requested increase. Any Lender not
responding within such time period shall be deemed to have declined to increase
its Commitment. The Administrative Agent shall notify the OP Borrower and each
Lender of the Lenders’ responses to each request made hereunder. To achieve the
full amount of a requested increase, the OP Borrower may also invite additional
Eligible Assignees to become Lenders upon execution of a supplemental signature
page to this Agreement substantially in the form of Exhibit L. Each Borrower
shall execute and deliver such amendments to the Loan Documents and other
documents and certificates, including a new Note in favor of any additional
Eligible Assignee, and the Borrowers shall pay such additional upfront fees,
arrangement fees and other fees, as may be mutually agreed between the
Borrowers, the Administrative Agent and such additional Eligible Assignees (it
being understood that any such fees shall not be required to be ratable).

 

(b) If the Aggregate Commitments are increased in accordance with this Section,
the Administrative Agent and the OP Borrower shall determine the effective date
(the “Increase Effective Date”) and the final allocation of such increase. The
Administrative Agent shall promptly notify the OP Borrower and the Lenders of
the final allocation of such increase and the Increase Effective Date. As a
condition precedent to such increase, the OP Borrower shall deliver to the
Administrative Agent a certificate of each Loan Party dated as of the Increase
Effective Date (in sufficient copies for each Lender) signed by a Responsible
Officer of such Loan Party (i) certifying and attaching the resolutions adopted
by such Loan Party approving or consenting to such increase, and (ii) in the
case of the Borrowers, certifying that, before and after

 

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giving effect to such increase, (A) the representations and warranties contained
in Article V and the other Loan Documents are true and correct on and as of the
Extension Effective Date, except to the extent that such representations and
warranties specifically refer to an earlier date, in which case they are true
and correct as of such earlier date, and except that for purposes of this
Section 2.15, the representations and warranties contained in subsections (a)
and (b) of Section 5.05 shall be deemed to refer to the most recent statements
furnished pursuant to subsections (a) and (b), respectively, of Section 6.01,
and (B) no Default exists. The Borrowers shall prepay any Committed Loans
outstanding on the Increase Effective Date (and pay any additional amounts
required pursuant to Section 3.05) to the extent necessary to keep the
outstanding Committed Loans ratable with any revised Pro Rata Shares arising
from any nonratable increase in the Commitments under this Section.

 

(c) This Section shall supersede any provisions in Sections 2.13 or 10.01 to the
contrary.

 

2.16 Replacement Documentation. Upon receipt of an affidavit of an officer of
the Administrative Agent or any of the Lenders as to the loss, theft,
destruction or mutilation of any Note or any other security document which is
not of public record, and, in the case of any such loss, theft, destruction or
mutilation, upon surrender and cancellation of such Note or other security
document, the Borrowers will issue, in lieu thereof, a replacement Note or other
security document in the same principal amount thereof and otherwise of like
tenor.

 

ARTICLE III.

TAXES, YIELD PROTECTION AND ILLEGALITY

 

3.01 Taxes.

 

(a) Any and all payments by the Borrowers to or for the account of the
Administrative Agent or any Lender under any Loan Document shall be made free
and clear of and without deduction for any and all present or future taxes,
duties, levies, imposts, deductions, assessments, fees, withholdings or similar
charges, and all liabilities with respect thereto, excluding, in the case of the
Administrative Agent and each Lender, taxes imposed on or measured by its
overall net income, and franchise taxes imposed on it (in lieu of net income
taxes), by the jurisdiction (or any political subdivision thereof) under the
Laws of which the Administrative Agent or such Lender, as the case may be, is
organized or maintains a lending office (all such non-excluded taxes, duties,
levies, imposts, deductions, assessments, fees, withholdings or similar charges,
and liabilities being hereinafter referred to as “Taxes”). If any Borrower shall
be required by any Laws to deduct any Taxes from or in respect of any sum
payable under any Loan Document to the Administrative Agent or any Lender, (i)
the sum payable shall be increased as necessary so that after making all
required deductions (including deductions applicable to additional sums payable
under this Section), each of the Administrative Agent and such Lender receives
an amount equal to the sum it would have received had no such deductions been
made, (ii) such Borrower shall make such deductions, (iii) such Borrower shall
pay the full amount deducted to the relevant taxation authority or other
authority in accordance with applicable Laws, and (iv) within 30 days after the
date of such payment, such Borrower shall furnish to the Administrative Agent
(which shall forward the same to such Lender) the original or a certified copy
of a receipt evidencing payment thereof or, if such receipts are not

 

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obtainable, other evidence of such payments by such Borrower reasonably
satisfactory to the applicable Lender or the Administrative Agent, as
applicable.

 

(b) In addition, each Borrower agrees to pay any and all present or future
stamp, court or documentary taxes and any other excise or property taxes or
charges or similar levies which arise from any payment made by such Borrower
under any Loan Document or from the execution, delivery, performance,
enforcement or registration of, or otherwise with respect to, any Loan Document
(hereinafter referred to as “Other Taxes”).

 

(c) Each Borrower agrees to indemnify the Administrative Agent and each Lender
for (i) the full amount of Taxes and Other Taxes (including any Taxes or Other
Taxes imposed or asserted by any jurisdiction on amounts payable under this
Section) paid by the Administrative Agent and such Lender, and (ii) any
liability (including additions to tax, penalties, interest and expenses) arising
therefrom or with respect thereto (other than such liability directly arising
from the gross negligence or willful misconduct of the Administrative Agent or
the Lenders), in each case whether or not such Taxes or Other Taxes were
correctly or legally imposed or asserted by the relevant Governmental Authority.
Payment under this subsection (c) shall be made within 30 days after the date
the Lender or the Administrative Agent makes a demand therefor.

 

(d) The Borrowers will not be required to pay any additional amounts in respect
of United States federal income tax pursuant to Section 3.01(a) to any Lender
(i) if the obligation to pay such additional amounts arose solely as a result of
such Lender’s failure to comply with its obligation under Section 10.15; or (ii)
if, but only to the extent that, at the time such Lender becomes a party to the
Agreement such Lender was subject to United States federal withholding taxes on
amounts payable pursuant to the terms of this Agreement (except to the extent
that such Lender’s assignor (if any) was entitled, at the time of the
assignment, to receive additional amounts from any Borrower with respect to
Taxes).

 

(e) If the Borrowers are required to pay additional amounts to the account of
any Lender pursuant to this Section 3.01 as a result of a change in law or
treaty occurring after such Lender first became a party to this Agreement, then
such Lender shall designate a different Lending Office (i) if such designation
will avoid the need for the Borrower to pay such additional amounts which will
thereafter accrue, and (ii) will not, in the sole, good faith judgment of such
Lender, otherwise be materially disadvantageous or cause unreasonable hardship
to such Lender; provided, however, that the fees, charges, costs and expenses
relating to such change shall be paid by the Borrowers, and the mere existence
of such expenses, fees or costs shall not be deemed to be materially
disadvantageous or cause unreasonable hardship to such Lender.

 

3.02 Illegality. If any Lender determines, as to itself, that any Law has made
it unlawful, or that any Governmental Authority has asserted that it is
unlawful, for such Lender or its applicable Lending Office to make, maintain or
fund Eurodollar Rate Loans, or to determine or charge interest rates based upon
the Eurodollar Rate, then, on notice thereof by such Lender to the OP Borrower
through the Administrative Agent, any obligation of such Lender to make or
continue Eurodollar Rate Loans or to convert Base Rate Committed Loans to
Eurodollar Rate Loans shall be suspended until such Lender notifies the
Administrative Agent and the OP Borrower that the circumstances giving rise to
such determination no longer exist. Upon receipt

 

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of such notice to the OP Borrower, the Borrowers shall, upon demand from such
Lender (with a copy to the Administrative Agent), prepay or, if applicable,
convert all Eurodollar Rate Loans of such Lender to Base Rate Loans, either on
the last day of the Interest Period therefor, if such Lender may lawfully
continue to maintain such Eurodollar Rate Loans to such day, or immediately, if
such Lender may not lawfully continue to maintain such Eurodollar Rate Loans.
Upon any such prepayment or conversion, the Borrowers shall also pay accrued
interest on the amount so prepaid or converted. Each Lender agrees to designate
a different Lending Office if such designation will avoid the need for such
notice and will not, in the good faith judgment of such Lender, otherwise be
materially disadvantageous or cause unreasonable hardship to such Lender in the
sole, good faith judgment of such Lender; provided, however, that the fees,
charges, costs and expenses relating to such change shall be paid by the
Borrowers and the mere existence of such expenses, fees or costs shall not be
deemed to be materially disadvantageous or cause unreasonable hardship to such
Lender. Upon any Lender’s making a determination under this Section 3.02 that
causes the Borrowers to convert the Eurodollar Rate Loans of such Lender to Base
Rate Loans, the OP Borrower may replace such Lender in accordance with Section
10.16.

 

3.03 Inability to Determine Rates. If the Required Lenders determine that for
any reason adequate and reasonable means do not exist for determining the
Eurodollar Rate for any requested Interest Period with respect to a proposed
Eurodollar Rate Loan, or that the Eurodollar Rate for any requested Interest
Period with respect to a proposed Eurodollar Rate Loan does not adequately and
fairly reflect the cost to such Lenders of funding such Loan, the Administrative
Agent will promptly so notify the OP Borrower and each Lender. Thereafter, the
obligation of the Lenders to make or maintain Eurodollar Rate Loans shall be
suspended until the Administrative Agent (upon the instruction of the Required
Lenders) revokes such notice. Upon receipt of such notice, the OP Borrower may
revoke any pending request for a Borrowing of, conversion to or continuation of
Eurodollar Rate Loans or, failing that, will be deemed to have converted such
request into a request for a Committed Borrowing of Base Rate Loans in the
amount specified therein.

 

3.04 Increased Cost and Reduced Return; Capital Adequacy Reserves on Eurodollar
Rate Loans.

 

(a) If any Lender determines that as a result of the introduction of or any
change in or in the interpretation of any Law after the date hereof, or such
Lender’s compliance therewith, there shall be any increase in the cost to such
Lender of agreeing to make or making, funding or maintaining Eurodollar Rate
Loans or (as the case may be) issuing or participating in Letters of Credit, or
a reduction in the amount received or receivable by such Lender in connection
with any of the foregoing (excluding for purposes of this subsection (a) any
such increased costs or reduction in amount resulting from (i) Taxes or Other
Taxes (as to which Section 3.01 shall govern), (ii) changes in the basis of
taxation of overall net income or overall gross income by the United States or
any foreign jurisdiction or any political subdivision of either thereof under
the Laws of which such Lender is organized or has its Lending Office, and (iii)
reserve requirements contemplated by Section 3.04(c)), then from time to time
upon demand of such Lender (with a copy of such demand to the Administrative
Agent), the Borrowers shall pay to such Lender such additional amounts as will
compensate such Lender for such increased cost or reduction.

 

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(b) If any Lender determines that the introduction after the date hereof of any
Law regarding capital adequacy or any change therein or in the interpretation
thereof, or compliance by such Lender (or its Lending Office) therewith, has the
effect of reducing the rate of return on the capital of such Lender or any
corporation controlling such Lender as a consequence of such Lender’s
obligations hereunder (taking into consideration its policies with respect to
capital adequacy and such Lender’s desired return on capital), then from time to
time upon demand of such Lender (with a copy of such demand to the
Administrative Agent), the Borrowers will pay to such Lender such additional
amounts as will compensate such Lender for such reduction.

 

(c) The Borrowers will pay to each Lender, as long as such Lender shall be
required to maintain reserves with respect to liabilities or assets consisting
of or including Eurocurrency funds or deposits (currently known as “Eurocurrency
liabilities”), additional interest on the unpaid principal amount of each
Eurodollar Rate Loan equal to the actual costs of such reserves allocated to
such Loan by such Lender (as determined by such Lender in good faith, which
determination shall be conclusive), which shall be due and payable on each date
on which interest is payable on such Loan, provided the Borrowers shall have
received at least 15 days’ prior notice (with a copy to the Administrative
Agent) of such additional interest from such Lender. If a Lender fails to give
notice 15 days prior to the relevant Interest Payment Date, such additional
interest shall be due and payable 15 days from receipt of such notice.

 

(d) Each Lender will notify the Borrowers and the Administrative Agent of any
event of which it has knowledge which will entitle such Lender to compensation
pursuant to this Section 3.04 and, if requested by the OP Borrower, will
designate a different Lending Office (i) if such designation will avoid the need
for, or reduce the amount of, such compensation, and (ii) will not otherwise be
materially disadvantageous or cause unreasonable hardship to such Lender in the
sole, good faith judgment of such Lender; provided, however, that the fees,
charges, costs and expenses relating to such change shall be paid by the
Borrowers and the mere existence of such expenses, fees or costs shall not be
deemed to be materially disadvantageous or cause unreasonable hardship to such
Lender.

 

3.05 Funding Losses. Upon demand of any Lender (with a copy to the
Administrative Agent) from time to time, the Borrowers shall promptly compensate
such Lender for and hold such Lender harmless from any loss, cost or expense
incurred by it as a result of:

 

(a) any continuation, conversion, payment or prepayment of any Loan other than a
Base Rate Loan on a day other than the last day of the Interest Period for such
Loan (whether voluntary, mandatory, automatic, by reason of acceleration, or
otherwise); or

 

(b) any failure by any Borrower (for a reason other than the failure of such
Lender to make a Loan) to prepay, borrow, continue or convert any Loan on the
date or in the amount notified by any Borrower;

 

including any loss or expense arising from the liquidation or reemployment of
funds obtained by it to maintain such Loan or from fees payable to terminate the
deposits from which such funds were obtained. In addition to the foregoing, in
the event that any Lender makes Loan funds available to the Administrative Agent
as provided under Article II, and such funds are not made

 

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available to such Borrower by the Administrative Agent under the circumstances
described in Section 2.12(d), and if the Administrative Agent is unable to
return such funds to the applicable Lender by 11:00 a.m. on the same day that
such funds were made available by such Lender, then the Borrowers shall pay to
such Lender interest on such funds, at the Applicable Rate, from the date that
such Lender made such funds available to the Administrative Agent, to the date
that the Administrative Agent returns such funds to the Lender. The Borrowers
shall also pay any customary administrative fees charged by such Lender in
connection with the foregoing.

 

For purposes of calculating amounts payable by the Borrowers to the Lenders
under this Section 3.05, each Lender shall be deemed to have funded each
Eurodollar Rate Loan made by it at the Eurodollar Rate for such Loan by a
matching deposit or other borrowing in the London interbank eurodollar market
for a comparable amount and for a comparable period, whether or not such
Eurodollar Rate Loan was in fact so funded.

 

3.06 Matters Applicable to all Requests for Compensation.

 

(a) Any certificate of the Administrative Agent or any Lender claiming
compensation under this Article III, setting forth the additional amount or
amounts to be paid to it hereunder and the bases for calculating the same, in
reasonable detail, shall be conclusive in the absence of manifest error. In
determining such amount, the Administrative Agent or such Lender may use any
reasonable averaging and attribution methods.

 

(b) Upon any Lender’s making a claim for compensation under Section 3.01 or
3.04, the OP Borrower may replace such Lender in accordance with Section 10.16,
provided that no Default has occurred and is continuing.

 

3.07 Survival. All of the Borrowers’ obligations under this Article III shall
survive termination of the Aggregate Commitments and repayment of all other
Obligations hereunder.

 

ARTICLE IV.

CONDITIONS PRECEDENT TO CREDIT

EXTENSIONS AND REIT CONVERSION

 

4.01 Conditions of Initial Credit Extension. The obligation of each Lender to
make its initial Credit Extension hereunder is subject to satisfaction of the
following conditions precedent:

 

(a) The Administrative Agent’s receipt of the following, each of which shall be
originals or facsimiles (followed promptly by originals) unless otherwise
specified, each properly executed by a Responsible Officer of the signing Loan
Document Party, each dated the Closing Date (or, in the case of certificates of
governmental officials, a recent date before the Closing Date) and each in form
and substance satisfactory to the Administrative Agent and its legal counsel:

 

(i) counterparts of this Agreement, executed by each party hereto, sufficient in
number for distribution to the Administrative Agent, each Lender and each
Borrower;

 

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(ii) Notes executed by the Borrowers in favor of each Lender requesting Notes;

 

(iii) counterparts of the Guaranty, executed by each Borrower and each
Subsidiary disclosed in Part (d) and (e) of Schedule 5.13 (other than the
Subsidiaries described in Part (g) of Schedule 5.13), sufficient in number for
distribution to the Administrative Agent, each Lender and each Borrower;

 

(iv) the following: (A) counterparts of the Pledge Agreement substantially in
the form of Exhibit I(2) attached hereto, executed by the OP Borrower with
respect to the Intercompany Notes Receivable owned by the OP Borrower,
regardless of the amount thereof (except for those Intercompany Notes Receivable
listed on Schedule 5.22(b) hereof); and (B) counterparts of the Pledge Agreement
substantially in the form of Exhibit I(1) attached hereto, executed by the OP
Borrower with respect to (x) the other Notes Receivable owned by the OP Borrower
in an outstanding principal amount of more than $1,000,000 (except for those
Notes Receivable listed on Schedule 5.22(c) hereof, and otherwise subject to the
limitations set forth in the last sentence of Section 6.13(b)); (y) the stock of
each Material Subsidiary and each owner of Unencumbered Pool Property (subject
to the limitations set forth in clause (ii) of Section 6.12(c)); and (z) the
stock of the TRS Borrower, sufficient in number for distribution to the
Administrative Agent, each Lender and each Borrower;

 

(v) the following (A) counterparts of the Pledge Agreement or accession
agreements substantially in the form of Exhibit I(2) attached hereto, executed
by the TRS Borrower and each Subsidiary, sufficient in number for distribution
to the Administrative Agent, each Lender and each Borrower, if such Person owns
any Intercompany Notes Receivable, regardless of the amount thereof (except for
those Intercompany Notes Receivable listed on Schedule 5.22(b) hereof); and (B)
counterparts of the Pledge Agreement or accession agreements substantially in
the form of Exhibit I(1) attached hereto, executed by the TRS Borrower and each
Subsidiary, sufficient in number for distribution to the Administrative Agent,
each Lender and each Borrower, if such Person owns (y) any other Notes
Receivable in an outstanding principal amount of more than $1,000,000 (except
for those Notes Receivable listed on Schedule 5.22(c) hereof, and otherwise
subject to the limitations set forth in the last sentence of Section 6.13(b));
or (z) the stock of a Material Subsidiary or an owner of Unencumbered Pool
Property (subject to the limitations set forth in clause (ii) of Section
6.12(c));

 

(vi) original certificates for the Capital Stock pledged under each Pledge
Agreement described in clauses (iv) and (v) above (in each case to the extent
that such interests are certificated), accompanied by undated stock powers
executed in blank or the equivalent under applicable law, plus Administrative
Agent prepared and filed Uniform Commercial Code financing statements naming
each entity executing a Pledge Agreement or a Pledge Agreement accession
agreement as debtor thereunder and describing the Capital Stock pledged under
each Pledge Agreement described in clauses (iv) and (v) above;

 

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(vii) any original Intercompany Notes Receivable (regardless of the amount) and
any other Notes Receivable in an outstanding principal amount of more than
$1,000,000 and pledged under each Pledge Agreement described in clauses (iv) and
(v) above, accompanied by allonges or endorsements in favor of the
Administrative Agent, for the benefit of the Lenders, or the equivalent under
applicable law;

 

(viii) such certificates of resolutions or other action, incumbency certificates
and/or other certificates of Responsible Officers of each Loan Document Party
(other than such Loan Document Party pledging only Intercompany Notes
Receivable) as the Administrative Agent may require evidencing the identity,
authority and capacity of each Responsible Officer thereof authorized to act as
a Responsible Officer in connection with this Agreement and the other Loan
Documents to which such Loan Document Party is a party;

 

(ix) such documents and certifications as the Administrative Agent may
reasonably require to evidence that each Loan Document Party (other than such
Loan Document Party pledging only Intercompany Notes Receivable) is duly
organized or formed, and that each Loan Document Party is validly existing, in
good standing and qualified to engage in business in each jurisdiction where its
ownership, lease or operation of properties or the conduct of its business
requires such qualification, except to the extent that failure to do so is not
reasonably expected to have a Material Adverse Effect;

 

(x) a favorable opinion of Latham & Watkins LLP, counsel to the Loan Document
Parties (other than such Loan Document Party pledging only Intercompany Notes
Receivable), that is reasonably acceptable to the Administrative Agent,
addressed to the Administrative Agent and each Lender, as to such matters
concerning the Loan Document Parties and the Loan Documents as the
Administrative Agent may reasonably request, plus a favorable written opinion of
Goodwin Procter LLP that is reasonably acceptable to the Administrative Agent,
addressed to the Administrative Agent and each Lender, with respect to certain
REIT matters;

 

(xi) a certificate of a Responsible Officer of each Loan Document Party (other
than such Loan Document Party pledging only Intercompany Notes Receivable)
either (A) attaching copies of all consents, licenses and approvals required in
connection with the execution, delivery and performance by such Loan Document
Party and the validity against such Loan Document Party of the Loan Documents to
which it is a party, and such consents, licenses and approvals shall be in full
force and effect, or (B) stating that no such consents, licenses or approvals
are so required;

 

(xii) a certificate signed by a Responsible Officer of each Borrower certifying
(A) that the conditions specified in Sections 4.02(a) and (b) have been
satisfied; (B) that there has been no event or circumstance since the date of
the Audited Financial Statements that has had or is reasonably expected to have,
either individually or in the aggregate, a Material Adverse Effect; (C) that
there is no litigation other than as described in Section 5.06 and the Schedule
thereto; and (D) that each representation and

 

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warranty set forth in Sections 5.01 through 5.25 is true and correct as of the
Closing Date; and;

 

(xiii) a Compliance Certificate as of the OP Borrower’s most recently concluded
fiscal quarter prior to the Closing Date, signed by a Responsible Officer of the
OP Borrower;

 

(xiv) proforma financial statements (including balance sheets, income statements
and cash flow statements) and covenant compliance projections covering a
three-year period from the date of the Closing Date, shown on an annual basis;

 

(xv) a Borrowing Base Certificate as of the most recently concluded fiscal
quarter, adjusted as set forth in Section 4.02(d);

 

(xvi) copies of all Organizational Documents for each Loan Party;

 

(xvii) evidence that all insurance required to be maintained pursuant to the
Loan Documents has been obtained and is in effect; and

 

(xviii) such other assurances, certificates, documents, consents or opinions as
the Administrative Agent, the L/C Issuer, the Swing Line Lender or the Required
Lenders reasonably may require.

 

(b) Any fees required to be paid on or before the Closing Date shall have been
paid.

 

(c) Unless waived by the Administrative Agent, the OP Borrower shall have paid
all reasonable Attorney Costs of the Administrative Agent to the extent invoiced
prior to or on the Closing Date, plus such additional amounts of reasonable
Attorney Costs as shall constitute its reasonable estimate of such Attorney
Costs incurred or to be incurred by it through the closing proceedings (provided
that such estimate shall not thereafter preclude a final settling of accounts
between the OP Borrower and the Administrative Agent).

 

(d) The Arranger shall have received Commitments from Lenders of at least
$200,000,000, including the Commitment of Bank of America.

 

(e) The Administrative Agent shall have received satisfactory evidence of the
repayment in full of the OP Borrower’s $173,355,000 secured term loan facility
dated on or about October 6, 2000, including the release of all liens on the OP
Borrower’s property securing such term loan facility.

 

4.02 Conditions to all Credit Extensions. The obligation of each Lender to honor
any Request for Credit Extension (other than a Loan Notice requesting only a
conversion of Loans to the other Type, or a continuation of Eurodollar Rate
Loans) is subject to the following additional conditions precedent:

 

(a) The representations and warranties of each Loan Party contained in Article V
or any other Loan Document, or which are contained in any document furnished at
any

 

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time under or in connection herewith or therewith, shall be true and correct on
and as of the date of such Credit Extension, except to the extent that such
representations and warranties specifically refer to an earlier date, in which
case they shall be true and correct as of such earlier date, and except that for
purposes of this Section 4.02, the representations and warranties contained in
subsections (a) and (b) of Section 5.05 shall be deemed to refer to the most
recent statements furnished pursuant to subsections (a) and (b), respectively,
of Section 6.01.

 

(b) No Default shall exist, or would result from such proposed Credit Extension.

 

(c) The Administrative Agent and, if applicable, the L/C Issuer or the Swing
Line Lender, shall have received a Request for Credit Extension in accordance
with the requirements hereof.

 

(d) The Borrowers shall have delivered to the Administrative Agent the completed
Borrowing Base Certificate required under Section 6.14 as of the most recently
concluded fiscal quarter of the OP Borrower, adjusted to reflect (i) the removal
or addition from the Borrowing Base of any Eligible Stabilized Operating
Property, Eligible Ground Lease Property, Eligible Lease-up Property, Eligible
Mission Bay Block 28 or Eligible WIP; or (ii) the removal from the Borrowing
Base of any Eligible Unimproved Land with an aggregate book value (in accordance
with GAAP) in any fiscal quarter of over $10,000,000, if the remaining Eligible
Unimproved Land included in the Borrowing Base (valued at the book value of such
Eligible Unimproved Land, in accordance with GAAP), has fallen or will fall
below $200,000,000. The giving of any Request for Credit Extension and the
acceptance by any Borrower of the proceeds of a Credit Extension shall each be
deemed a certification to the Administrative Agent and the Lenders that on and
as of the date of such Credit Extension, the statements in the Request for
Credit Extension and the Borrowing Base Certificate are true, correct and
complete.

 

(e) The Administrative Agent shall have received, in form and substance
reasonably satisfactory to it, such other customary documents related to the
foregoing as the Administrative Agent reasonably may require.

 

Each Request for Credit Extension (other than a Loan Notice requesting only a
conversion of Loans to the other Type or a continuation of Eurodollar Rate
Loans) submitted by the OP Borrower shall be deemed to be a representation and
warranty that the conditions specified in Sections 4.02(a) and (b) have been
satisfied on and as of the date of the applicable Credit Extension.

 

4.03 Conditions of Maintenance of Commitments and Extensions of Credit After the
REIT Conversion Date. The obligation of each Lender to maintain its Commitment
hereunder and to honor any Request for Credit Extension from or after the REIT
Conversion Date is subject to satisfaction of the following additional
conditions precedent on or before the REIT Conversion Date:

 

(a) The Administrative Agent’s receipt of the following, each of which shall be
originals or facsimiles (followed promptly by originals) unless otherwise
specified, each

 

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properly executed by a Responsible Officer of the signing Loan Document Party,
each dated the REIT Conversion Date (or, in the case of certificates of
governmental officials, a recent date before the REIT Conversion Date) and each
in form and substance satisfactory to the Administrative Agent and its legal
counsel:

 

(i) counterparts of a Loan Document Assumption and Affirmation, executed by each
Borrower, the REIT Guarantor and each other Loan Document Party, sufficient in
number for distribution to the Administrative Agent, each Lender and the
Post-REIT Conversion Borrower;

 

(ii) counterparts of the REIT Conversion Compliance Certificate, executed by the
Post-REIT Conversion Borrower;

 

(iii) counterparts of the Guaranty of the REIT Guarantor and of each Subsidiary
disclosed in Schedules 2 and 3 attached to the REIT Conversion Compliance
Certificate (if such Subsidiary has not executed a Guaranty prior to the REIT
Conversion Date), sufficient in number for distribution to the Administrative
Agent, each Lender and each Borrower;

 

(iv) counterparts of the accession agreements to the Pledge Agreement
substantially in the form of Exhibit I(1) or Exhibit I(2) attached hereto (as
applicable), executed by each Borrower and each other Loan Party or Subsidiary
owning Intercompany Notes Receivable and other Notes Receivable required to be
pledged hereunder and listed on Schedule 4 to the REIT Conversion Compliance
Certificate and each Loan Party or Subsidiary owning any Capital Stock of a
Material Subsidiary or owner of Unencumbered Pool Property listed on Schedules 2
and 3 of the Compliance Certificate (subject to the limitations set forth in
clause (ii) of Section 6.12(c) and the last sentence of Section 6.13(b)), but
not any such Loan Party or Subsidiary that has previously executed a Pledge
Agreement and that has executed the Loan Document Assumption and Affirmation),
sufficient in number for distribution to the Administrative Agent, each Lender
and each Borrower;

 

(v) original certificates for the Capital Stock pledged under each Pledge
Agreement described in clause (iv) above (to the extent certificated),
accompanied by undated stock powers executed in blank or the equivalent under
applicable law (with the exception of any such original Capital Stock
certificates delivered to the Administrative Agent prior to the REIT Conversion
Date);

 

(vi) any original Intercompany Notes Receivable (regardless of the amount, but
excluding the Intercompany Notes Receivable listed on Schedule 5.22(b)), and any
other original Notes Receivable that is in an outstanding principal amount of
more than $1,000,000 (other than the Notes Receivable listed on Schedule
5.22(c)) and pledged under each Pledge Agreement described in clause (iv) above,
accompanied by allonges or endorsements in favor of the Administrative Agent, or
the equivalent under applicable law (with the exception of any such original
Notes Receivable delivered to the Administrative Agent prior to the REIT
Conversion Date);

 

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(vii) such certificates of resolutions or other action, incumbency certificates
and/or other certificates of Responsible Officers of each Person that became a
Loan Document Party after the Closing Date (other than such Loan Document Party
pledging only Intercompany Notes Receivable) as the Administrative Agent may
require evidencing the identity, authority and capacity of each Responsible
Officer thereof authorized to act as a Responsible Officer in connection with
the documents described in clauses (i) through (vi) above;

 

(viii) such documents and certifications as the Administrative Agent may
reasonably require to evidence that the REIT Guarantor, the Post-REIT Conversion
Borrower, and each other new Loan Document Party (other than such Loan Document
Party pledging only Intercompany Notes Receivable) is duly organized or formed,
and that each such Loan Document Party is validly existing, in good standing and
qualified to engage in business in each jurisdiction where its ownership, lease
or operation of properties or the conduct of its business requires such
qualification, except to the extent that failure to do so is not reasonably
expected to have a Material Adverse Effect;

 

(ix) a favorable opinion of counsel to the REIT Guarantor, the Post-REIT
Conversion Borrower and any Person that became a Loan Document Party after the
Closing Date (other than such Loan Document Party pledging only Intercompany
Notes Receivable) that is acceptable to the Administrative Agent and
substantially in the form of the opinion delivered on the Closing Date (with
respect to such parties), addressed to the Administrative Agent and each Lender,
as to such matters concerning the REIT Guarantor, the Post-REIT Conversion
Borrower and the other Loan Document Parties (other than such Loan Document
Party pledging only Intercompany Notes Receivable) as the Administrative Agent
may reasonably request;

 

(x) a certificate of a Responsible Officer of the REIT Guarantor, the Post-REIT
Conversion Borrower and the other new Loan Document Parties (other than such
Loan Document Party pledging only Intercompany Notes Receivable) either (A)
attaching copies of all consents, licenses and approvals required in connection
with the REIT Conversion and the execution, delivery and performance by such
Person and the validity against such Person of the Loan Documents to which it is
a party, and such consents, licenses and approvals shall be in full force and
effect, or (B) stating that no such consents, licenses or approvals are so
required;

 

(xi) a certificate signed by a Responsible Officer of the Post-REIT Conversion
Borrower certifying (A) that no Default has occurred and is continuing, or will
result from, or exist on the date of, the REIT Conversion; (B) that the
conditions specified in Sections 4.02(c) have been satisfied; (C) that there has
been no event or circumstance since the Closing Date that has had or is
reasonably expected to have, either individually or in the aggregate, a Material
Adverse Effect; (D) that there is no litigation other than as described in
Section 5.06, and there has been no material and adverse development with
respect to any litigation described in Section 5.06 or any Schedule thereto,
after giving effect to applicable reserves therefore (other than such litigation
or adverse development that has not, nor is reasonably expected to, result in a
Material Adverse Effect); and

 

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(E) that each representation and warranty set forth in Section 5.24 is true and
correct as of the REIT Conversion Date;

 

(xii) copies of all Organizational Documents for the Post-REIT Conversion
Borrower, the REIT Guarantor and each new Loan Document Party (other than such
Loan Document Party pledging only Intercompany Notes Receivable);

 

(xiii) evidence of the approval of the REIT Conversion by the holders of the
Capital Stock of the OP Borrower;

 

(xiv) evidence of the REIT Conversion, including, without limitation, evidence
of necessary shareholder and board approval; and

 

(xv) such other assurances, certificates, documents, consents or opinions as the
Administrative Agent, Banc of America Securities LLC, the L/C Issuer, the Swing
Line Lender or the Required Lenders reasonably may require.

 

(b) No Default shall exist, or would result from the REIT Conversion.

 

(c) Unless waived by the Administrative Agent, the OP Borrower shall have paid
all reasonable Attorney Costs of the Administrative Agent to the extent invoiced
prior to or on the REIT Conversion Date, plus such additional amounts of
reasonable Attorney Costs as shall constitute its reasonable estimate of such
Attorney Costs incurred or to be incurred by it in connection with the REIT
Conversion and the transactions contemplated hereby (provided that such estimate
shall not thereafter preclude a final settling of accounts between the Borrowers
and the Administrative Agent).

 

4.04 Conditions of Maintenance of Commitments and Extensions of Credit After the
REIT Election Date. The obligation of each Lender to maintain its Commitment
hereunder and to honor any Request for Credit Extension from or after the REIT
Election Date is subject to satisfaction of the following additional conditions
precedent on or before the REIT Election Date:

 

(a) The Administrative Agent’s receipt of the following, each of which shall be
originals or facsimiles (followed promptly by originals) unless otherwise
specified, each properly executed by a Responsible Officer of the signing Loan
Document Party, each dated the REIT Election Date (or, in the case of
certificates of governmental officials, a recent date before the REIT Election
Date) and each in form and substance satisfactory to the Administrative Agent
and its legal counsel:

 

(i) such documents and certifications as the Administrative Agent may reasonably
require to evidence that the REIT Guarantor has made the REIT Election;

 

(ii) a certificate of a Responsible Officer of the REIT Guarantor either (A)
attaching copies of all consents, licenses and approvals required in connection
with the REIT Election and the execution, delivery and performance by the REIT
Guarantor and the validity against the REIT Guarantor of the Loan Documents to
which it is a party,

 

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and such consents, licenses and approvals shall be in full force and effect, or
(B) stating that no such consents, licenses or approvals are so required;

 

(iii) a certificate signed by a Responsible Officer of the REIT Guarantor and
each Borrower certifying (A) that no Default has occurred and is continuing, or
will result from the REIT Election or exist on the REIT Election Date; (B) that
the conditions specified in Section 4.04 have been satisfied; (C) that there has
been no event or circumstance since the REIT Conversion that has had or is
reasonably expected to have, either individually or in the aggregate, a Material
Adverse Effect; (D) that there is no litigation other than as described in
Section 5.06, and there has been no material and adverse development with
respect to any litigation described in Section 5.06 or any Schedule thereto,
after giving effect to applicable reserves therefore (other than such litigation
or adverse development that has not, nor is reasonably expected to, result in a
Material Adverse Effect); and (E) that each representation and warranty set
forth in Section 5.24 is true and correct as of the REIT Election Date; and

 

(iv) such other assurances, certificates, documents, consents or opinions as the
Administrative Agent, Banc of America Securities LLC, the L/C Issuer, the Swing
Line Lender or the Required Lenders reasonably may require.

 

(b) No Default shall exist, or would result from the REIT Election.

 

(c) Unless waived by the Administrative Agent, the OP Borrower shall have paid
all reasonable Attorney Costs of the Administrative Agent to the extent invoiced
prior to or on the REIT Election Date, plus such additional amounts of
reasonable Attorney Costs as shall constitute its reasonable estimate of such
Attorney Costs incurred or to be incurred by it in connection with the REIT
Election and the transactions contemplated hereby (provided that such estimate
shall not thereafter preclude a final settling of accounts between the Borrowers
and the Administrative Agent).

 

ARTICLE V.

REPRESENTATIONS AND WARRANTIES

 

Each Borrower represents and warrants to the Administrative Agent and the
Lenders as of the Closing Date that:

 

5.01 Existence, Qualification and Power; Compliance with Laws. Each Loan
Document Party and each Controlled Investment Affiliate (a) is a corporation,
partnership or limited liability company duly organized or formed, validly
existing and in good standing under the Laws of the jurisdiction of its
incorporation or organization, (b) has all requisite power and authority and all
requisite governmental licenses, authorizations, consents and approvals to (i)
own its assets and carry on its business, and (ii) execute, deliver and perform
its obligations under the Loan Documents to which it is a party, (c) is duly
qualified and is licensed and in good standing under the Laws of each
jurisdiction where its ownership, lease or operation of properties or the
conduct of its business requires such qualification or license, and (d) is in
compliance in all material respects with all Laws; except in each case referred
to in clause (b)(i), (c) or (d), to the extent that failure to do so is not
reasonably expected to have a Material Adverse

 

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Effect. Schedule 5.01 is a complete and accurate list of the jurisdiction of
organization or formation where the ownership, lease or operation of properties
or the conduct of business of each Loan Document Party requires such
qualification, except to the extent that failure to do so is not reasonably
expected to have a Material Adverse Effect.

 

5.02 Authorization; No Contravention. The execution, delivery and performance by
each Loan Document Party of each Loan Document to which such Person is party,
have been duly authorized by all necessary corporate or other organizational
action, and do not and will not (a) contravene the terms of any of such Person’s
Organization Documents; (b) conflict with or result in any breach or
contravention of, or the creation of any Lien under, (i) any Contractual
Obligation to which such Person is a party, or (ii) any order, injunction, writ
or decree of any Governmental Authority or any arbitral award to which such
Person or its property is subject; or (c) violate any Law, except in clauses (b)
and (c) above where such conflict or contravention is not reasonably expected to
have a Material Adverse Effect.

 

5.03 Governmental Authorization; Other Consents. No approval, consent,
exemption, authorization, or other action by, or notice to, or filing with, any
Governmental Authority or any other Person is necessary or required in
connection with the execution, delivery or performance by, or enforcement
against, any Loan Document Party of this Agreement or any other Loan Document,
other than such filings or actions contemplated under the Loan Documents in
connection with the pledging of security interests.

 

5.04 Binding Effect. This Agreement has been, and each other Loan Document, when
delivered hereunder, will have been, duly executed and delivered by each Loan
Document Party that is party thereto. This Agreement constitutes, and each other
Loan Document when so delivered will constitute, a legal, valid and binding
obligation of such Loan Document Party, enforceable against each Loan Document
Party that is party thereto in accordance with its terms, except as
enforceability may be limited by applicable bankruptcy, insolvency or similar
laws affecting the enforcement of creditors’ rights generally, or by equitable
principles relating to enforceability.

 

5.05 Financial Statements; No Material Adverse Effect.

 

(a) The most recently delivered Audited Financial Statements (i) were prepared
in accordance with GAAP consistently applied throughout the period covered
thereby, except as otherwise expressly noted therein and, to the extent
applicable, for financial performance measured by Funds From Operations, as
described in the REIT Guarantor’s reports and statements filed with the SEC;
(ii) fairly present in all material respects the financial condition of the
Consolidated Group as of the date thereof and their results of operations for
the period covered thereby in accordance with GAAP consistently applied
throughout the period covered thereby, except as otherwise expressly noted
therein; and (iii) show all material indebtedness and other material
liabilities, direct or contingent, of the Consolidated Group as of the date
thereof, including liabilities for taxes, material commitments and Indebtedness.

 

(b) The unaudited consolidated financial statements of the Consolidated Group
dated March 31, 2003, and the related consolidated statements of income or
operations, shareholders’ equity and cash flows for the fiscal quarter ended on
that date (i) were prepared in

 

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accordance with GAAP consistently applied throughout the period covered thereby,
except as otherwise expressly noted therein and, to the extent applicable,
except for financial performance measured by Funds From Operations, as described
in the REIT Guarantor’s reports and statements filed with the SEC, and (ii)
fairly present in all material respects the financial condition of the
Consolidated Group as of the date thereof and their results of operations for
the period covered thereby, subject, in the case of clauses (i) and (ii), to the
absence of footnotes and to normal year-end audit adjustments. Such financial
statements reflect all material indebtedness and other material liabilities,
direct or contingent, of the Consolidated Group as of the date of such financial
statements, including liabilities for taxes, material commitments and
Indebtedness.

 

(c) Since the date of the most recently delivered Audited Financial Statements,
there has been no event or circumstance, either individually or in the
aggregate, that has had or is reasonably expected to have a Material Adverse
Effect.

 

5.06 Litigation. Except as specifically disclosed in Schedule 5.06, there are no
actions, suits, proceedings, claims or disputes pending or, to the knowledge of
the Borrowers after due and diligent investigation, threatened, at law, in
equity, in arbitration or before any Governmental Authority, by or against any
Loan Document Party, any Subsidiary or any Controlled Investment Affiliate or
against any of their respective properties or revenues that (a) purport to
affect or pertain to this Agreement or any other Loan Document, or any of the
transactions contemplated hereby, or (b) either individually or in the
aggregate, if determined adversely, and after giving effect to applicable
reserves therefor, is reasonably expected to have a Material Adverse Effect.

 

5.07 No Default. None of the Loan Document Parties, nor any Subsidiary or
Controlled Investment Affiliate, is in default under or with respect to any
Contractual Obligation which, either individually or in the aggregate, is
reasonably expected to have a Material Adverse Effect. No Default has occurred
and is continuing or would result from the consummation of the transactions
contemplated by this Agreement or any other Loan Document.

 

5.08 Ownership of Property; Liens. Each of the Loan Document Parties and each
Subsidiary has good record and valid title in fee simple to, or valid leasehold
interests in, all real property necessary or used in the ordinary conduct of its
business, except for such defects in title as are not, individually or in the
aggregate, reasonably expected to have a Material Adverse Effect. The properties
owned by each of the Loan Document Parties and each Subsidiary are subject to no
Liens, other than (a) Permitted Liens, (b) Liens in connection with any
Indebtedness listed on Schedule 7.03; and (c) such other Liens after the Closing
Date that are not prohibited under the Loan Documents.

 

5.09 Environmental Compliance. Each Loan Document Party and each Subsidiary and
each Controlled Investment Affiliate conducts in the Ordinary Course of Business
a review of the effect of existing Environmental Laws and claims alleging
potential liability or responsibility for violation of any Environmental Law on
their respective businesses, operations and properties, and as a result thereof
the OP Borrower has reasonably concluded that such Environmental Laws and claims
are not, individually or in the aggregate, reasonably expected to have a
Material Adverse Effect, after giving effect to applicable reserves therefor.

 

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5.10 Insurance. The properties of each Loan Party and each Subsidiary and each
Controlled Investment Affiliate are insured with financially sound and reputable
insurance companies not Affiliates of any Loan Party (or otherwise as reasonably
acceptable to the Administrative Agent), in such amounts (after giving effect to
any self-insurance compatible with the following standards), with such
deductibles and covering such risks as are customarily carried by companies
engaged in similar businesses and owning similar properties in localities where
the applicable Loan Party, Subsidiary or Controlled Investment Affiliate (as
applicable) operates.

 

5.11 Taxes. Each Loan Party, each Subsidiary and each Controlled Investment
Affiliate has filed all Federal, state and other material tax returns and
reports required to be filed, and has paid prior to delinquency all Federal,
state and other material taxes, assessments, fees and other governmental charges
levied or imposed upon them or their properties, income or assets, except those
which are being contested in good faith by appropriate proceedings diligently
conducted and for which adequate reserves have been provided in accordance with
GAAP. To the Borrowers’ knowledge, there is no proposed tax assessment against
any Loan Party, any Subsidiary or any Controlled Investment Affiliate that
would, if made, have a Material Adverse Effect.

 

5.12 ERISA Compliance.

 

(a) Each Plan is in compliance in all material respects with the applicable
provisions of ERISA, the Code and other Federal or state Laws, except where
non-compliance is not reasonably expected to result in a Material Adverse Effect
or in liability to the Borrowers in excess of $5,000,000. Except as set forth on
Schedule 5.12, Each Plan that is intended to qualify under Section 401(a) of the
Code has received a favorable determination letter or opinion from the IRS or an
application for such a letter is currently being processed by the IRS with
respect thereto and, to the best knowledge of the Borrowers, nothing has
occurred which would prevent, or cause the loss of, such qualification. Except
as are not, in the aggregate, reasonably expected to result in a Material
Adverse Effect or in liability to the Borrowers in excess of $5,000,000, the
Borrowers and each ERISA Affiliate have made all required contributions to each
Plan subject to Section 412 of the Code, and no application for a funding waiver
or an extension of any amortization period pursuant to Section 412 of the Code
has been made with respect to any such Plan.

 

(b) There are no pending or, to the best knowledge of the Borrowers, threatened
claims, actions or lawsuits, or action by any Governmental Authority, with
respect to any Plan that is reasonably expected to have a Material Adverse
Effect. There has been no prohibited transaction or violation of the fiduciary
responsibility rules with respect to any Plan that has resulted or could
reasonably be expected to result in a Material Adverse Effect.

 

(c) (i) No ERISA Event has occurred or is reasonably expected to occur which has
resulted or is reasonably expected to result in a Material Adverse Effect or in
liability to the Borrowers in excess of $5,000,000; (ii) no Pension Plan has any
Unfunded Pension Liability which has resulted or is reasonably expected to
result in a Material Adverse Effect or in liability to the Borrowers in excess
of $5,000,000; (iii) neither the Borrowers nor any ERISA Affiliate has incurred,
or reasonably expects to incur, any liability under Title IV of ERISA with

 

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respect to any Pension Plan (other than premiums due and not delinquent under
Section 4007 of ERISA) which has resulted or is reasonably expected to result in
a Material Adverse Effect or in liability to the Borrowers in excess of
$5,000,000; (iv) none of the Borrowers nor any ERISA Affiliate has incurred, or
reasonably expects to incur, any liability (and no event has occurred which,
with the giving of notice under Section 4219 of ERISA, would result in such
liability) under Sections 4201 or 4243 of ERISA with respect to a Multiemployer
Plan which has resulted or is reasonably expected to result in a Material
Adverse Effect or in liability to the Borrowers in excess of $5,000,000; and (v)
neither the Borrowers nor, to the Borrowers’ knowledge, any ERISA Affiliate, has
engaged in a transaction that could be subject to Sections 4069 or 4212(c) of
ERISA.

 

5.13 Subsidiaries; Pledge of Capital Stock.

 

(a) As of the Closing Date, (i) each Subsidiary is listed in Part (a) of
Schedule 5.13; (ii) each Investment Affiliate that is not a Subsidiary is
disclosed in Part (b) of Schedule 5.13, which Schedule includes a description of
the ownership of the Capital Stock of such Investment Affiliate; (iii) no Loan
Party has any other direct or indirect Investments in any other Person, other
than those specifically disclosed in Part (c) of Schedule 5.13; (iv) each Loan
Party and Subsidiary that owns any Unencumbered Pool Property is disclosed in
Part (d) of Schedule 5.13; (v) each of the Material Subsidiaries is disclosed in
Part (e) of Schedule 5.13; (vi) each member of the Consolidated Group that has
executed a Pledge Agreement in favor of the Administrative Agent is disclosed in
Part (f) of Schedule 5.13; (vii) any Subsidiary that is a party to a financing
arrangement as of the Closing Date that prohibits, or such Subsidiary’s
Organization Documents prohibit, such Subsidiary from executing a Guaranty
hereunder is disclosed in Part (g) of Schedule 5.13; and (viii) any Subsidiary
that is a party to a financing arrangement as of the Closing Date that
prohibits, or such Subsidiary’s Organization Documents prohibit, the pledge of
the Capital Stock of such Subsidiary is disclosed in Part (h) of Schedule 5.13.

 

(b) Each Pledge Agreement creates in favor of the Administrative Agent for the
benefit of the Lenders a valid and perfected security interest in the Pledged
Collateral described therein (after giving effect to the deliveries and filings
required under such Pledge Agreement and applicable law), subject to no other
Liens (other than as expressly permitted therein), securing in each case the
payment of the Obligations, and all deliveries of original stock certificates
(if certificated), membership and partnership certificates (if certificated) and
endorsements and assignments, and other filings and actions necessary or
appropriate to perfect or protect such security interests, have been duly taken
or arrangements therefor reasonably satisfactory to the Administrative Agent
have been made.

 

5.14 Margin Regulations; Investment Company Act; Public Utility Holding Company
Act.

 

(a) None of the Loan Parties has engaged or will engage, principally or as one
of its important activities, in the business of purchasing or carrying margin
stock (within the meaning of Regulation U issued by the FRB), or extending
credit for the purpose of purchasing or carrying margin stock.

 

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(b) None of the Loan Parties, any Person controlling any Loan Party, or any
Subsidiary (i) is a “holding company,” or a “subsidiary company” of a “holding
company,” or an “affiliate” of a “holding company” or of a “subsidiary company”
of a “holding company,” within the meaning of the Public Utility Holding Company
Act of 1935, or (ii) is or is required to be registered as an “investment
company” under the Investment Company Act of 1940.

 

5.15 Disclosure. The Borrowers have disclosed to the Administrative Agent and
the Lenders the existence of all agreements, instruments and corporate or other
restrictions to which any Loan Document Party, any Subsidiary or any Controlled
Investment Affiliate is subject, and all other matters known to it, that,
individually or in the aggregate, is reasonably expected to result in a Material
Adverse Effect. No written report, financial statement, certificate or other
information furnished by or on behalf of any Loan Document Party to the
Administrative Agent or any Lender in connection with the transactions
contemplated hereby and the negotiation of this Agreement or delivered hereunder
(as modified or supplemented by other information so furnished) contains any
material misstatement of fact or omits to state any material fact necessary to
make the statements therein, in the light of the circumstances under which they
were made, not misleading; provided that, with respect to projected financial
information, the Borrowers represents only that such information was prepared in
good faith based upon assumptions believed to be reasonable at the time.

 

5.16 Compliance with Laws. Each Loan Party, each Subsidiary and each Controlled
Investment Affiliate is in compliance in all material respects with the
requirements of all Laws and all orders, writs, injunctions and decrees
applicable to it or to its properties, except in such instances in which (a)
such requirement of Law or order, writ, injunction or decree is being contested
in good faith by appropriate proceedings diligently conducted, or (b) the
failure to comply therewith, either individually or in the aggregate, is not
reasonably expected to have a Material Adverse Effect.

 

5.17 Tax Shelter Regulations. The Borrowers do not intend to treat the Loans
and/or Letters of Credit and related transactions as being a “reportable
transaction” (within the meaning of Treasury Regulation Section 1.6011-4). In
the event any Borrower determines to take any action inconsistent with such
intention, it will promptly notify the Administrative Agent thereof. If any
Borrower so notifies the Administrative Agent, the Borrowers acknowledge that
one or more of the Lenders may treat its Committed Loans and/or its interest in
Swing Line Loans and/or Letters of Credit as part of a transaction that is
subject to Treasury Regulation Section 301.6112-1, and such Lender or Lenders,
as applicable, will maintain the lists and other records required by such
Treasury Regulation.

 

5.18 Intellectual Property; Licenses, Etc. Except as is not reasonably expected
to have a Material Adverse Effect, each Loan Party, each Subsidiary and each
Controlled Investment Affiliate owns, or possesses the right to use, all of the
trademarks, service marks, trade names, copyrights, patents, patent rights,
franchises, licenses and other intellectual property rights (collectively, “IP
Rights”) that are reasonably necessary for the operation of their respective
businesses, without conflict with the rights of any other Person. To the
knowledge of the Borrowers, no slogan or other advertising device, product,
process, method, substance, part or other material now employed, or now
contemplated to be employed, by any Loan Party, Subsidiary or Controlled
Investment Affiliate infringes upon any rights held by any other Person.

 

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No claim or litigation regarding any of the foregoing is pending or, to the
knowledge of the Borrowers, threatened, which, either individually or in the
aggregate, is reasonably expected to have a Material Adverse Effect.

 

5.19 Violation of Laws; Permits. No Unencumbered Pool Property is being operated
in violation of (a) any Law or (b) any building permits, restrictions of record,
or any agreement affecting any such property, or (c) any judgment, decree or
order applicable to such property, except where such violation is not reasonably
expected to result in a Material Adverse Effect. All governmental permits
(including, without limitation, building permits and certificates of occupancy)
necessary under applicable Law to lawfully construct, own, lease, occupy, use
and operate each Unencumbered Pool Property and the improvements thereon,
including, but not limited to, all applicable environmental and zoning laws,
ordinances and regulations, have been obtained.

 

5.20 Borrowing Base Assets.

 

All of the assets included in the Borrowing Base qualify as Eligible Stabilized
Operating Property, Eligible Ground Lease Property, Eligible Lease-Up Property,
Eligible WIP, Eligible Unimproved Land, Eligible Cash, Eligible Notes Receivable
and/or Eligible Mission Bay Block 28.

 

5.21 Leases and Ground Leases.

 

(a) As of the Closing Date, Schedule 5.21 contains a list of all Ground Lease
Property owned by any Loan Party or Subsidiary. Other than as set forth in
Schedule 5.21, as of the Closing Date neither any Borrower nor any other Loan
Party or Subsidiary has leased any Real Property or Unimproved Land under a
Ground Lease.

 

(b) The OP Borrower has delivered to the Administrative Agent copies of all
Eligible Ground Leases. No lease or Ground Lease of any Unencumbered Pool
Property or any interest therein of the lessor thereunder is subject to any
present assignment or pledge or Lien (other than Permitted Liens). All rent due
to date under each lease and Ground Lease of Unencumbered Pool Property has been
collected in the Ordinary Course of Business and no concession has been granted
to any lessee in the form of a waiver, release, reduction, discount or other
alteration of rent due or to become due, other than in the Ordinary Course of
Business. Except as disclosed in such lease or Ground Lease of Unencumbered Pool
Property, the interest of the lessee under each such lease and Ground Lease is
as lessee only, with no options to purchase or rights of first refusal.

 

5.22 Notes Receivable.

 

(a) As of the Closing Date, Schedule 5.22(a) contains a list of each
Intercompany Notes Receivable (except for the Intercompany Notes Receivable that
are not required to be pledged and are listed on Schedule 5.22(b)) and each
other Notes Receivable in an outstanding principal amount of more than
$1,000,000 (except for such other Notes Receivable that are not required to be
pledged and are listed on Schedule 5.22(c)) that is owned by any Loan Party or
any Subsidiary. As of the Closing Date, other than as set forth in Schedules
5.22(a), (b)

 

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and (c), no Loan Party or Subsidiary owns any Intercompany Notes Receivable or
any other Notes Receivable with an outstanding principal amount of more than
$1,000,000.

 

(b) Subject to the limitations set forth in the last sentence of Section
6.13(b), the Borrowers have delivered, or have caused any Loan Party or
Subsidiary owning any Intercompany Notes Receivable (except for those
Intercompany Notes Receivable listed on Schedule 5.22(b)) or owning any other
Notes Receivable with an outstanding principal amount of more than $1,000,000
(except for such other Notes Receivable listed on Schedule 5.22(c)) to deliver,
to the Administrative Agent an executed Pledge Agreement pledging and assigning
such Notes Receivable to the Administrative Agent for the benefit of the
Lenders, to secure the Obligations, plus the original Notes Receivable and an
endorsement and assignment of such Notes Receivable, in form and substance
satisfactory to the Administrative Agent.

 

(c) As of the date of the delivery of each Pledge Agreement, original Notes
Receivable and endorsement and assignment, such Pledge Agreement creates in
favor of the Administrative Agent for the benefit of the Lenders a valid and
perfected security interest in such Collateral (after giving effect to the
deliveries and filings required under the applicable Pledge Agreement and
applicable law), subject to no other Liens (other than as expressly permitted in
such Pledge Agreement), securing in each case the payment of the Obligations,
and all deliveries of original Notes Receivable, endorsements and assignments,
and other filings and actions necessary or appropriate to perfect or protect
such security interests have been duly taken or arrangements therefor reasonably
satisfactory to the Administrative Agent have been made.

 

5.23 Solvency. Each Loan Document Party is, and upon the incurrence of any
Obligation by such Loan Document Party on any date on which this representation
and warranty is made, will be, Solvent.

 

5.24 Additional Representations and Warranties as of the REIT Conversion Date.
In order to induce the Lenders to maintain their Loan Commitments and to
continue making Loans after the REIT Conversion Date, each Borrower makes the
following representations and warranties to the Administrative Agent and the
Lenders as of the REIT Conversion Date:

 

(a) Each of the representations and warranties set forth in Sections 5.01
through Section 5.12, Section 5.14 through Section 5.20, Section 5.21(b),
Section 5.22(b) and Section 5.22(c) are true and correct as of the REIT
Conversion Date as if made on the REIT Conversion Date.

 

(b) The shares of common stock of the REIT Guarantor are listed on the New York
Stock Exchange.

 

(c) As of the REIT Conversion Date, (a) each of the Subsidiaries of the OP
Borrower and of the REIT Guarantor is listed in the corporate organizational
chart attached as Schedule 1 to the REIT Conversion Compliance Certificate; (b)
neither the OP Borrower nor the REIT Guarantor has any direct or indirect
Investments in any other Person, other than the Subsidiaries and those
specifically disclosed in Schedule 7 attached to the REIT Compliance Conversion
Certificate; (c) each of the Investment Affiliates that are not Subsidiaries are
disclosed in Schedule 7 attached to the REIT Conversion Compliance Certificate;
(d) each of the

 

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Subsidiaries of the Borrowers or the REIT Guarantor that owns any Unencumbered
Pool Property is disclosed in Schedule 3 attached to the REIT Conversion
Compliance Certificate; (e) each of the Material Subsidiaries is disclosed in
Schedule 2 attached to the REIT Conversion Compliance Certificate; and (f) each
member of the Consolidated Group that has executed a Pledge Agreement in favor
of the Administrative Agent as of the REIT Conversion Date is disclosed in
Schedules 2, 3 and 4 attached to the REIT Conversion Compliance Certificate. As
of the REIT Conversion Date, the Administrative Agent has, for the benefit of
the Lenders, a first priority, perfected Lien in and to the Collateral described
in each Pledge Agreement (after giving effect to the deliveries and filings
required under such Pledge Agreement and applicable law), subject to no other
Lien.

 

(d) As of the REIT Conversion Date, Schedule 4 attached to the REIT Conversion
Compliance Certificate includes a list of all Intercompany Notes Receivable
(except for those Intercompany Notes Receivable listed on Schedule 5.22(b)) and
all other Notes Receivable in an outstanding principal amount of more than
$1,000,000 (except for those Intercompany Notes Receivable listed on Schedule
5.22(c)) that are owned by any Loan Party or any Subsidiary. Other than as set
forth in Schedule 4 attached to the REIT Conversion Compliance Certificate or in
Schedules 5.22(a), (b) and (c) hereof, no Loan Party or Subsidiary owns any
Intercompany Notes Receivable or any other Notes Receivable in an outstanding
principal amount of more than $1,000,000.

 

(e) As of the REIT Conversion Date, no Default has occurred and is continuing as
of the REIT Conversion Date, and no Default will result from REIT Conversion.

 

5.25 Additional Representations and Warranties as of the REIT Election Date. In
order to induce the Lenders to maintain their Loan Commitments and to continue
making Loans after the REIT Election Date, each Borrower makes the following
representations and warranties to the Administrative Agent and the Lenders as of
the REIT Election Date:

 

(a) Each of the representations and warranties set forth in Section 5.24 are
true and correct as of the REIT Election Date as if made on the REIT Election
Date.

 

(b) The REIT Guarantor has been organized in conformity with the requirements
for qualification as a REIT under the Code. The REIT Guarantor has elected to be
taxed as a REIT under the Code beginning with its taxable year ending December
31 of the taxable year for which it has filed the REIT Election and for each tax
year thereafter, and such election has not been and will not be revoked or
terminated. The REIT Guarantor’s method of operation has enabled it, and its
proposed method of operation will continue to enable it since the year to which
the REIT Election applies, on a continuous basis, to meet the requirements for
qualification and taxation as a REIT under the Code. The REIT Guarantor is
entitled to a dividends paid deduction for the tax year of the REIT Election and
each tax year thereafter that meets the requirements of Section 857 of the
Internal Revenue Code.

 

(c) As of the REIT Election Date, no Default has occurred and is continuing as
of the REIT Election Date, and no Default will result from REIT Election.

 

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ARTICLE VI.

AFFIRMATIVE COVENANTS

 

So long as any Lender shall have any Commitment hereunder, any Loan or other
Obligation hereunder shall remain unpaid or unsatisfied, or any Letter of Credit
shall remain outstanding:

 

6.01 Financial Statements. The OP Borrower shall deliver to the Administrative
Agent, in form and detail satisfactory to the Administrative Agent, and the
Administrative Agent shall thereafter make available to each Lender:

 

(a) as soon as available, but in any event within 120 days after the end of each
fiscal year of the OP Borrower, a consolidated balance sheet of the Consolidated
Group as at the end of such fiscal year, and the related consolidated statements
of income or operations, shareholders’ equity and cash flows for such fiscal
year, setting forth in each case in comparative form the figures for the
previous fiscal year, all in reasonable detail and prepared in accordance with
GAAP (except, to the extent applicable, for financial performance measured by
Funds From Operations, as described in the REIT Guarantor’s reports and
statements filed with the SEC), audited and accompanied by a report and opinion
of an independent certified public accountant of nationally recognized standing
reasonably acceptable to the Administrative Agent, which report and opinion
shall be prepared in accordance with generally accepted auditing standards and
shall not be subject to any “going concern” or like qualification or exception
or any qualification or exception as to the scope of such audit; and

 

(b) as soon as available, but in any event within 55 days after the end of each
of the first three fiscal quarters of each fiscal year of the OP Borrower, a
consolidated balance sheet of the Consolidated Group as at the end of such
fiscal quarter, and the related consolidated statements of income or operations,
shareholders’ equity and cash flows for such fiscal quarter and for the portion
of the OP Borrower’s fiscal year then ended, setting forth in each case in
comparative form the figures for the corresponding fiscal quarter of the
previous fiscal year and the corresponding portion of the previous fiscal year,
all on an unaudited basis and in reasonable detail and certified by a
Responsible Officer of the OP Borrower as fairly presenting the financial
condition, results of operations, shareholders’ equity and cash flows of the
Consolidated Group in accordance with GAAP (except, to the extent applicable,
for financial performance measured by Funds From Operations, as described in the
REIT Guarantor’s reports and statements filed with the SEC), subject only to
normal year-end audit adjustments and the absence of footnotes.

 

As to any information contained in materials furnished pursuant to Section
6.02(d), the OP Borrower shall not be separately required to furnish such
information under clause (a) or (b) above, but the foregoing shall not be in
derogation of the obligation of the OP Borrower to furnish the information and
materials described in subsections (a) and (b) above at the times specified
therein.

 

6.02 Certificates; Other Information. The OP Borrower shall deliver to the
Administrative Agent the items described in clauses (a) through (f) below, and
the TRS Borrower shall deliver to the Administrative Agent the items described
in clauses (b), (e) and (f)

 

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below, in form and detail satisfactory to the Administrative Agent, and the
Administrative Agent shall thereafter make available to each Lender:

 

(a) concurrently with the delivery of the financial statements referred to in
Sections 6.01(a) and (b), a duly completed Compliance Certificate signed by a
Responsible Officer of the OP Borrower;

 

(b) promptly after any request by the Administrative Agent or any Lender, copies
of any detailed audit reports submitted to the board of directors (or the audit
committee of the board of directors) of any Loan Party by independent
accountants in connection with the accounts or books of any Loan Party or any
Subsidiary, or any audit of any of them;

 

(c) promptly after the same are available, copies of each annual report, proxy
or financial statement or other report or communication sent to the stockholders
of the OP Borrower or the REIT Guarantor, and copies of all annual, regular,
periodic and special reports and registration statements which any Loan Party
may file or be required to file with the SEC under Section 13 or 15(d) of the
Securities Exchange Act of 1934, and not otherwise required to be delivered to
the Administrative Agent pursuant hereto;

 

(d) when the same is complete, but in any event no later than the delivery of
the financial statements under Section 6.01(a), the OP Borrower’s business plan
for the next fiscal year, in a format and with such detail as the Administrative
Agent may reasonably require and certified by a Responsible Officer of the OP
Borrower;

 

(e) promptly after any Borrower has notified the Administrative Agent of any
intention by such Borrower to treat the Loans and/or Letters of Credit and
related transactions as being a “reportable transaction” (within the meaning of
Treasury Regulation Section 1.6011-4), a duly completed copy of IRS Form 8886 or
any successor form; and

 

(f) promptly, such additional information regarding the business, financial or
corporate affairs of any Loan Party, any Subsidiary or any Controlled Investment
Affiliate, or compliance with the terms of the Loan Documents by any Loan
Document Party, as the Administrative Agent or any Lender may from time to time
reasonably request.

 

Documents required to be delivered pursuant to Section 6.01(a) or (b) or Section
6.02(c) (to the extent any such documents are included in materials otherwise
filed with the SEC) may be delivered electronically and if so delivered, shall
be deemed to have been delivered on the date (i) on which the OP Borrower or the
REIT Guarantor (as applicable) posts such documents, or provides a link thereto
on the OP Borrower’s or REIT Guarantor’s website on the Internet at the website
address listed on Schedule 10.02; or (ii) on which such documents are posted on
the OP Borrower’s or REIT Guarantor’s behalf on IntraLinks/IntraAgency or
another relevant website, if any, to which each Lender and the Administrative
Agent have access (whether a commercial, third-party website or whether
sponsored by the Administrative Agent); provided that: (i) the OP Borrower shall
deliver paper copies of such documents to the Administrative Agent that requests
the OP Borrower to deliver such paper copies until a written request to cease
delivering paper copies is given by the Administrative Agent, and (ii) the OP
Borrower shall notify (which may be by facsimile or electronic mail) the
Administrative Agent of the posting of

 

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any such documents and provide to the Administrative Agent by electronic mail
electronic versions (i.e., soft copies) of such documents. Notwithstanding
anything contained herein, in every instance the OP Borrower shall be required
to provide paper copies of the Compliance Certificates required by Section
6.02(a) to the Administrative Agent. Except for such Compliance Certificates,
the Administrative Agent shall have no obligation to request the delivery or to
maintain copies of the documents referred to above, and in any event shall have
no responsibility to monitor compliance by any Borrower with any such request
for delivery.

 

6.03 Notices. Each Borrower shall promptly notify the Administrative Agent and
each Lender, in each case as soon as any Responsible Officer of such Borrower
become aware thereof:

 

(a) of the occurrence of any Default;

 

(b) of any matter that has resulted or is reasonably expected to result in a
Material Adverse Effect, including, to the extent applicable, (i) breach or
non-performance of, or any default under, a Contractual Obligation of any Loan
Party, Subsidiary or Controlled Investment Affiliate; (ii) any dispute,
litigation, investigation, proceeding or suspension between any Loan Party,
Subsidiary or Controlled Investment Affiliate and any Governmental Authority; or
(iii) the commencement of, or any material development in, any litigation or
proceeding affecting any Loan Party, Subsidiary or Controlled Investment
Affiliate, including pursuant to any applicable Environmental Laws;

 

(c) of the occurrence of any ERISA Event;

 

(d) of any material change in accounting policies or financial reporting
practices by any Loan Party or any Subsidiary;

 

(e) of any announcement by Moody’s or S&P of any change or possible change in a
Debt Rating of The Gap as long as Mission Bay Block 28 is a property that is
included in the Borrowing Base;

 

(f) of any event or occurrence whereby (i) the Total Outstandings exceed the
Borrowing Base Availability and the same is not prepaid in accordance with
Section 2.05(c) hereof, or (ii) any asset that was Eligible Stabilized Operating
Property, Eligible Ground Lease Property, Eligible Lease-up Property, Eligible
Mission Bay Block 28 or Eligible WIP is removed from, or ceases to be eligible
for, the Borrowing Base; or (iii) any asset that was Eligible Unimproved Land
with an aggregate book value (in accordance with GAAP) in any fiscal quarter of
over $10,000,000 is removed from, or ceases to be eligible for, the Borrowing
Base and the remaining Eligible Unimproved Land included in the Borrowing Base
(valued at the book value of such Eligible Unimproved Land, in accordance with
GAAP), has fallen or will fall below $200,000,000; and

 

(g) from and after the REIT Election Date, of the failure of the REIT Guarantor
to maintain its status as a REIT.

 

Each notice pursuant to this Section shall be accompanied by a statement of a
Responsible Officer of the notifying Borrower setting forth details of the
occurrence referred to

 

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therein and stating what action, if any, such Borrower has taken or proposes to
take with respect thereto. Each notice pursuant to Section 6.03(a) shall
describe with particularity any and all provisions of this Agreement and any
other Loan Documents that have been breached. Each notice pursuant to Section
6.03(f)must be accompanied by a Borrowing Base Certificate as of the most
recently concluded fiscal quarter, adjusted as set forth in Section 4.02(d), and
a certificate of a Responsible Officer of each Borrower stating that, as of the
date of such certificate, (i) no Default exists (or if a Default exists, stating
what action, if any, such Borrower has taken or proposes to take with respect
thereto); and (ii) the Borrowers are in compliance on a pro forma basis with the
investment and financial covenants set forth in Sections 7.02(b) and 7.11 hereof
(or the Borrowers are not so in compliance, stating what action, if any, such
Borrower has taken or proposes to take with respect thereto).

 

6.04 Payment of Obligations. Each Borrower shall, and shall cause each other
Loan Party, each Subsidiary and each Controlled Investment Affiliate to, pay and
discharge, prior to delinquency, all its obligations and liabilities, including
(a) all tax liabilities, assessments and governmental charges or levies upon it
or its properties or assets, unless the same are being contested in good faith
by a Permitted Contest; (b) all lawful claims which, if unpaid and not bonded,
would by law become a Lien upon its property (other than Permitted Liens);
provided, however, that notwithstanding the foregoing, any Borrower, Loan Party
or Subsidiary may contest under a Permitted Contest such Lien resulting from
such lawful claim on any property that is not Collateral or an Eligible
Borrowing Base Asset, as long as such Lien (or the underlying claim) is not
expected to, and does not, cause a Material Adverse Effect or an Event of
Default under Sections 8.01(e), 8.01(f), 8.01(g), or 8.01(h); and (c) any
Indebtedness, prior to delinquency, if the failure to make such payment would
result in an Event of Default under Section 8.01(e) hereof, but subject to any
subordination provisions contained in any instrument or agreement evidencing
such Indebtedness.

 

6.05 Preservation of Existence, Etc. Each Borrower shall, and shall cause each
other Loan Document Party, each Subsidiary and each Controlled Investment
Affiliate to (a) preserve, renew and maintain in full force and effect its legal
existence and good standing under the Laws of the jurisdiction of its
organization except in a transaction permitted by Section 7.04 or as otherwise
permitted under this Agreement; (b) take all reasonable action to maintain all
rights, privileges, permits, licenses and franchises necessary or advisable in
the normal conduct of its business, except to the extent that failure to do so
is not reasonably expected to have a Material Adverse Effect; and (c) preserve
or renew all of its registered patents, trademarks, trade names and service
marks, the non-preservation of which is reasonably expected to have a Material
Adverse Effect.

 

6.06 Maintenance of Properties. Each Borrower shall, and shall cause each other
Loan Party, each Subsidiary and each Controlled Investment Affiliate to (a)
maintain, preserve and protect all of its material properties and equipment
necessary in the operation of its business in good working order and condition,
ordinary wear and tear excepted, except where the failure to do so is not
reasonably expected to have a Material Adverse Effect; (b) make all necessary
repairs thereto and renewals and replacements thereof, except where the failure
to do so is not reasonably expected to have a Material Adverse Effect; and (c)
use the standard of care typical in the industry in similar localities in the
operation and maintenance of its facilities.

 

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6.07 Maintenance of Insurance. Each Borrower shall, and shall cause each other
Loan Party, each Subsidiary and each Controlled Investment Affiliate to,
maintain with financially sound and reputable insurance companies not Affiliates
of the Borrowers (or as is otherwise acceptable to the Administrative Agent),
insurance with respect to its properties and business against loss or damage of
the kinds customarily insured against by Persons engaged in the same or similar
business, of such types and in such amounts as are customarily carried under
similar circumstances by such other Persons. At the request of the
Administrative Agent (but no more often than once in any 12 month period, unless
an Event of Default exists or any insurance required hereunder is due to expire
or has expired), each Borrower shall, and shall cause each other Loan Party,
each Subsidiary and each Controlled Investment Affiliate to, deliver to the
Administrative Agent a certificate of all insurance required hereunder then in
force.

 

6.08 Compliance with Laws. Each Borrower shall, and shall cause each other Loan
Party, each Subsidiary and each Controlled Investment Affiliate to, comply in
all material respects with the requirements of all Laws and all orders, writs,
injunctions and decrees applicable to it or to its business or property, except
in such instances in which (a) such requirement of Law or order, writ,
injunction or decree is being contested in good faith by appropriate proceedings
diligently conducted; or (b) the failure to comply therewith is not reasonably
expected to have a Material Adverse Effect.

 

6.09 Books and Records. Each Borrower shall, and shall cause each other Loan
Party, each Subsidiary and each Controlled Investment Affiliate to, (a) maintain
proper books of record and account, in which full, true and correct entries in
conformity with GAAP consistently applied (except, to the extent applicable, for
financial performance measured by Funds From Operations, as described in the
REIT Guarantor’s reports and statements filed with the SEC) shall be made of all
financial transactions and matters involving the assets and business of such
Person; and (b) maintain such books of record and account in material conformity
with all applicable requirements of any Governmental Authority having regulatory
jurisdiction over such Person.

 

6.10 Inspection Rights. Each Borrower shall, and shall cause each other Loan
Party, each Subsidiary and each Controlled Investment Affiliate to, permit
representatives and independent contractors of the Administrative Agent and each
Lender to visit and inspect any of its properties, to examine its corporate,
financial and operating records, and make copies thereof or abstracts therefrom,
and to discuss its affairs, finances and accounts with its directors, officers,
and independent public accountants, at such reasonable times during normal
business hours and as often as may be reasonably desired, upon reasonable
advance notice; provided, however, that if no Event of Default exists, the
Administrative Agent may conduct no more than one inspection of such properties
in any fiscal year and be reimbursed for the Administrative Agent’s reasonable
and out-of-pocket expenses incurred for such inspection, each Lender may conduct
no more than one inspection of such properties in any fiscal year; and provided
further, however, that when an Event of Default exists the Administrative Agent
or any Lender (or any of their respective representatives or independent
contractors) may do any of the foregoing any number of times at the expense of
the Borrowers at any time during normal business hours and without advance
notice. The Administrative Agent and each Lender shall make reasonable efforts
to minimize disruption to the business and tenants at the properties so visited
and inspected.

 

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6.11 Use of Proceeds. The Borrowers shall use the proceeds of the Credit
Extensions for general corporate purposes (including, without limitation,
acquisitions, development, repayment of Indebtedness and general working capital
purposes, but not for repurchases of Capital Stock by any Loan Party) not in
contravention of any Law or of any Loan Document.

 

6.12 Additional Guarantors and Pledge of Capital Stock; Release of Guarantors
and Pledges of Guarantor Capital Stock.

 

(a) (i) On the REIT Conversion Date, the REIT Guarantor must (A) become a
Guarantor by executing and delivering to the Administrative Agent a Guaranty
substantially in the form of Exhibit F(1) attached hereto and such other
document as the Administrative Agent shall deem appropriate for such purpose,
and (B) deliver to the Administrative Agent all of the documents described in
Section 4.03 relating to the REIT Guarantor, all in form, content and scope
reasonably satisfactory to the Administrative Agent; and (ii) on the REIT
Election Date, the REIT Guarantor must deliver to the Administrative Agent all
of the documents described in Section 4.04 relating to the REIT Guarantor, all
in form, content and scope reasonably satisfactory to the Administrative Agent.
If the Guaranty of the REIT Guarantor and all items described in this Section
6.12(a) are not delivered to the Administrative Agent on or before the REIT
Conversion Date or the REIT Election Date, as applicable, an Event of Default
shall occur and the Administrative Agent and the Lenders shall have the right to
take any and all of the remedies described in Section 8.02.

 

(b) The Borrowers shall notify the Administrative Agent at the time that any
Subsidiary becomes a Material Subsidiary or an owner of Unencumbered Pool
Property and promptly thereafter (and in any event within 15 days):

 

(i) subject to clause (c) below, the Borrowers shall cause such Subsidiary (if
not already a Guarantor) to become a Guarantor by executing and delivering to
the Administrative Agent a counterpart of the Guaranty or such other document as
the Administrative Agent shall deem appropriate for such purpose, and deliver to
the Administrative Agent documents of the types referred to in clauses (viii),
(ix) and (xvi) of Section 4.01(a) and, if requested by the Administrative Agent,
favorable opinions of counsel to such Subsidiary (which may be an opinion of its
in-house counsel) and shall cover the matters covered in the opinion delivered
on the Closing Date (as applicable to such Subsidiary) and such other matters as
may be reasonably required by the Administrative Agent), all in form, content
and scope satisfactory to the Administrative Agent; and

 

(ii) subject to clause (c) below, the Borrowers shall execute, or cause any Loan
Party or Subsidiary that is an owner of the Capital Stock of the Subsidiary
identified in clause (i) above (if not already delivered), to duly execute and
deliver to the Administrative Agent (A) an accession agreement to the Pledge
Agreement substantially in the form of Exhibit I(1), and (B) to the extent
certificated, certificates evidencing all of the issued and outstanding Capital
Stock of such Subsidiary owned by such Loan Party or Subsidiary, which
certificates shall be accompanied by undated stock powers executed in blank or
the equivalent under applicable law; and

 

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(iii) the Borrowers shall deliver or cause to be delivered evidence satisfactory
to the Administrative Agent that the Lien granted to the Administrative Agent
for the benefit of the Lenders in the Collateral described in clause (ii) above
is a perfected security interest (after giving effect to the deliveries and
filings required under the applicable Pledge Agreement and applicable law), and
no other Lien exists on any such Collateral; and

 

(iv) at any time and from time to time, the Borrowers shall promptly execute and
deliver, or cause any Loan Party or Subsidiary to execute and deliver, any and
all further instruments and documents and take all such other action as the
Administrative Agent may deem necessary or appropriate in obtaining the full
benefits of, or in perfecting and preserving the Liens of, the pledges and
guaranties contemplated by, this Section 6.12(b).

 

(c) Until the Guaranty, each Pledge Agreement or Pledge Agreement accession
agreements, and all items described in the foregoing Section 6.12(b) are
delivered to the Administrative Agent, the Unencumbered Property owned in fee
simple title by such Person shall not be included in the Borrowing Base.
Notwithstanding the foregoing, (i) if the execution of the Guaranty by such
Material Subsidiary or owner of Unencumbered Pool Property is prohibited under
the then-current financing arrangements of such Person, then such Guaranty will
not be required hereunder, provided, however, that in such event, the
Unencumbered Property owned by such Material Subsidiary or owner of Unencumbered
Pool Property shall not be included in the Borrowing Base; and (ii) if the
execution of a Pledge Agreement or accession agreement to such Pledge Agreement
by the owner of the Capital Stock of such Material Subsidiary or owner of
Unencumbered Pool Property is prohibited under the then-current financing
arrangements of such Person, then such Pledge Agreement will not be required
hereunder.

 

(d) Provided that the Borrowers provide to the Administrative Agent no less than
five Business Days advance written notice that the following events will occur,
and provided that the Borrowers and applicable Guarantor complies with this
Section 6.12(d), the Administrative Agent, for itself and on behalf of the
Lenders, shall release any Guarantor (other than the REIT Guarantor or a
Borrower) from its obligations under such Guarantor’s Guaranty if (i) such
Guarantor is not, or no longer qualifies as, a Material Subsidiary, and (ii) any
Real Property or Unimproved Land owned by such Guarantor no longer qualifies as,
or is removed as, Unencumbered Pool Property in a transaction permitted under
this Agreement and as a consequence thereof such Guarantor no longer owns any
Unencumbered Pool Property; provided that in the case of the foregoing, the
Administrative Agent shall release such Guarantor from its obligations under
such Guarantor’s Guaranty only if the Administrative Agent is satisfied that:
(i) no Default exists; (ii) the Borrowers are in compliance on a pro forma basis
with the investment and financial covenants set forth in Sections 7.02(b) and
7.11 hereof; (iii) the Total Outstandings are not and will not be in excess of
the Borrowing Base Availability; and (iv) the Borrowers have delivered to the
Administrative Agent a Borrowing Base Certificate as of the most recently
concluded fiscal quarter, adjusted as set forth in Section 4.02(d) (with such
adjustment reflecting the removal from the Borrowing Base of any Unencumbered
Pool Property owned by the Guarantor that will be released from its Guaranty
hereunder), and a certificate of a Responsible Officer of each Borrower,
certifying as to the matters set forth in the foregoing clauses (i), (ii) and
(iii). Upon the release of the Guaranty as provided in this Section 6.12(d), any
Unencumbered Property owned by such Guarantor or former Guarantor shall not be
included in the Borrowing Base.

 

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(e) Upon the release of the Guaranty of any Guarantor as provided in Section
6.12(d), and provided that the Borrowers and applicable Guarantor complies with
Section 6.12(d), the Administrative Agent shall release from the Lien of the
applicable Pledge Agreement the Capital Stock of the Guarantor so released under
Section 6.12(d).

 

6.13 Pledge by REIT Guarantor; Pledge and Delivery of Notes Receivable.

 

(a) On the REIT Conversion Date, the REIT Guarantor must (i) execute an
accession agreement to the Pledge Agreement substantially in the form of Exhibit
I(2) attached hereto and deliver to the Administrative Agent any original
Intercompany Notes Receivable of any amount (except for such Intercompany Notes
Receivable listed on Schedule 5.22(b)), plus an endorsement and assignment of
each such Notes Receivable in form and substance satisfactory to the
Administrative Agent; (ii) execute an accession agreement to the Pledge
Agreement substantially in the form of Exhibit I(1) attached hereto and deliver
to the Administrative Agent (y) any other original Notes Receivable in an
outstanding principal amount of more than $1,000,000 (except for such Notes
Receivable listed on Schedule 5.22(c)) owned or possessed by the REIT Guarantor,
plus an endorsement and assignment of each such Notes Receivable in form and
substance satisfactory to the Administrative Agent; and (z) to the extent
certificated and not previously delivered to the Administrative Agent, the
shares of Capital Stock of each Material Subsidiary and each owner of
Unencumbered Pool Property owned by the REIT Guarantor (other than the Post-REIT
Conversion Borrower), accompanied by undated stock powers executed in blank or
the equivalent under applicable law. Notwithstanding the foregoing,

 

(A) the REIT Guarantor will not be required to pledge any Notes Receivable
hereunder if such Notes Receivable are not included in the Borrowing Base and if
the Administrative Agent determines in its sole and reasonable discretion that
(w) such Notes Receivable mature within six months or less, (x) such Notes
Receivables are not capable of being pledged by the REIT Guarantor, (y) the
pledge of such Notes Receivable would cause an unreasonable hardship to the REIT
Guarantor, or (z) the pledge of such Notes Receivable would not add any
significant value to the Collateral granted to the Administrative Agent, for the
benefit of the Lenders; and

 

(B) if the pledge by the REIT Guarantor of the Capital Stock of any Material
Subsidiary or owner of Unencumbered Pool Property is prohibited under the
then-current financing arrangements of such Person, then the REIT Guarantor will
not be required to pledge the Capital Stock of such Person hereunder.

 

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(b) The Borrowers shall notify the Administrative Agent at any time that the
Borrowers or any Loan Party or any Subsidiary owns or gains possession of (y)
any Intercompany Notes Receivable (of any amount), or (z) any other Notes
Receivable in an outstanding principal amount of more than $1,000,000, and
promptly thereafter (and in any event within 15 days):

 

(i) if the Loan Party or Subsidiary owning such Notes Receivable is not already
a party to a Pledge Agreement, the Borrowers shall cause such Loan Party or
Subsidiary owning such Notes Receivable to duly execute and deliver to the
Administrative Agent (A) an accession agreement to the Pledge Agreement
substantially in the form of Exhibit I(2) (with respect to Intercompany Notes
Receivable) or Exhibit I(1) (with respect to other Notes Receivable in an
outstanding principal amount of more than $1,000,000), and (B) any original
Intercompany Notes Receivable (of any amount), and any other original Notes
Receivables in an outstanding principal amount of more than $1,000,000, owned by
such Loan Party or Subsidiary, accompanied by allonges or endorsements in favor
of the Administrative Agent, or the equivalent under applicable law;

 

(ii) if such Notes Receivable are owned by any Borrower, such Borrower shall
deliver to the Administrative Agent any original Intercompany Notes Receivable
(of any amount), and any other original Notes Receivable that is in an
outstanding principal amount of more than $1,000,000, owned by such Borrower,
accompanied by allonges or endorsements in favor of the Administrative Agent, or
the equivalent under applicable law; and

 

(iii) the Borrowers shall deliver or caused to be delivered evidence
satisfactory to the Administrative Agent that the Lien granted to the
Administrative Agent for the benefit of the Lenders in the Notes Receivable is a
perfected security interest (after giving effect to the deliveries and filings
required under the Pledge Agreement and applicable law), and no other Lien
exists on any such Notes Receivable.

 

Notwithstanding the foregoing, the applicable Borrower, other Loan Party or
Subsidiary will not be required to pledge such Notes Receivable hereunder if
such Notes Receivable are not included in the Borrowing Base and if the
Administrative Agent determines in its sole and reasonable discretion that (w)
such Notes Receivable mature within six months or less, (x) such Notes
Receivable are not capable of being pledged by such Borrower, other Loan Party
or Subsidiary, (y) the pledge of such Notes Receivable would cause an
unreasonable hardship to such Borrower, other Loan Party or Subsidiary, or (z)
the pledge of such Notes Receivable would not add any significant value to the
Collateral granted to the Administrative Agent, for the benefit of the Lenders.

 

(c) At any time and from time to time, the Borrowers shall promptly execute and
deliver, or cause any Loan Party or Subsidiary to execute and deliver, any and
all further instruments and documents and take all such other action as the
Administrative Agent may deem necessary or advisable in obtaining the full
benefits of, or in perfecting and preserving the pledge and Liens contemplated
by, this Section 6.13.

 

(d) Provided that the Borrowers provide to the Administrative Agent no less than
five Business Days advance written notice that the following events will occur,
and provided that the Borrowers and applicable Pledgor comply with this Section
6.13(d), the Administrative Agent, for itself and on behalf of the Lenders,
shall release from the Lien of any Pledge Agreement any Notes Receivable if the
owner of such Notes Receivable has notified the Administrative Agent that such
Notes Receivable has or is about to be repaid in full.

 

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6.14 Borrowing Base Certificate. The Borrowers shall deliver to the
Administrative Agent, as soon as available but in any event by no later than 55
days after the end of each fiscal quarter, a completed Borrowing Base
Certificate and the Administrative Agent shall thereafter make available to each
Lender such completed Borrowing Base Certificate.

 

ARTICLE VII.

NEGATIVE COVENANTS

 

So long as any Lender shall have any Commitment hereunder, any Loan or other
Obligation hereunder shall remain unpaid or unsatisfied, or any Letter of Credit
shall remain outstanding:

 

7.01 Liens.

 

(a) Each Borrower shall not, and shall not permit any Loan Document Party or
Subsidiary to, create, incur, assume or suffer to exist any Lien upon its
interest in any Guarantor or in any Subsidiary that owns Unencumbered Property,
other than Liens in favor of the Administrative Agent.

 

(b) Each Borrower shall not, and shall not permit any Loan Document Party or
Subsidiary to, create, incur, assume or suffer to exist any Lien upon any
Collateral pledged under any Pledge Agreement, other than Liens in favor of the
Administrative Agent.

 

(c) Each Borrower shall not, and shall not permit any Loan Document Party or
Subsidiary to, create, incur, assume or suffer to exist any Lien upon any
Unencumbered Property or upon any lease or Ground Lease of any Unencumbered
Property, other than Permitted Liens, except if, both before and after giving
effect thereto: (i) no Default exists; (ii) the Borrowers are in compliance on a
pro forma basis with the investment and financial covenants set forth in
Sections 7.02(b) and 7.11 hereof; and (iii) the Total Outstandings are not and
will not be in excess of the Borrowing Base Availability.

 

(d) The Borrowers shall deliver to the Administrative Agent:

 

(i) a certificate of a Responsible Officer, certifying as to the matters set
forth in the foregoing Section 7.01(c) prior to the creation, assumption or
existence of any Lien upon (A) any Unencumbered Property consisting of
Stabilized Operating Property, Ground Lease Property, Lease-up Property, Mission
Bay Block 28 or WIP; or (B) any Unencumbered Pool Property consisting of
Eligible Unimproved Land with an aggregate book value (in accordance with GAAP)
in any fiscal quarter of over $10,000,000, if the remaining Eligible Unimproved
Land included in the Borrowing Base (valued at the book value of such Eligible
Unimproved Land, in accordance with GAAP), has fallen or will fall below
$200,000,000; and

 

(ii) a Borrowing Base Certificate as of the most recently concluded fiscal
quarter, adjusted as set forth in Section 4.02(d) (with such adjustment
reflecting the removal from the Borrowing Base of any Unencumbered Pool Property
that will be the subject of a Lien as contemplated hereunder), (A) prior to the
creation, assumption or existence of a Lien upon any Unencumbered Pool Property
consisting of Eligible Stabilized Operating Property, Eligible Ground Lease
Property, Eligible Lease-up Property, Eligible Mission Bay Block 28 or

 

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Eligible WIP; or (B) prior to the creation, assumption or existence of a Lien
upon any Unencumbered Pool Property consisting of Eligible Unimproved Land with
an aggregate book value (in accordance with GAAP) in any fiscal quarter of over
$10,000,000, if the remaining Eligible Unimproved Land included in the Borrowing
Base (valued at the book value of such Eligible Unimproved Land, in accordance
with GAAP), has fallen or will fall below $200,000,000.

 

7.02 Investments and Development Costs.

 

(a) Each Borrower shall not, and shall not permit any Loan Party or Subsidiary
to, make any Investments, except:

 

(i) Investments held by a Borrower or such Loan Party or Subsidiary in the form
of Cash Equivalents;

 

(ii) advances to officers, directors and employees of any Loan Party or
Subsidiary in the Ordinary Course of Business, for travel, entertainment,
relocation and analogous ordinary business purposes;

 

(iii) subject to the limitations set forth in Section 7.02(b), Investments in
any Subsidiary, Investment Affiliate or other Person that is engaged in any of
the lines of business described in Section 7.07 hereof; provided, however, the
foregoing provision shall not permit any Borrower, Loan Party or Subsidiary to
make any Investments in the form of a Guarantee of Unsecured Indebtedness, other
than a Guaranty of such Unsecured Indebtedness (as defined in Schedule 7.11) of
any Loan Party or Subsidiary that is specifically permitted under Section
7.03(a);

 

(iv) Investments consisting of extensions of credit in the nature of accounts
receivable or notes receivable arising from the grant of trade credit in the
ordinary course of business, and Investments received in satisfaction or partial
satisfaction thereof from financially troubled account debtors to the extent
reasonably necessary in order to prevent or limit loss;

 

(v) without limiting clause (iii) above, Guarantees permitted under Section
7.03;

 

(vi) Investments in the form of seller financing of dispositions of Real
Property or Unimproved Land in transactions permitted under Section 7.05,
provided that such financing is documented by Notes Receivable and such Notes
Receivable, if representing an outstanding payment obligation of more than
$1,000,000, is pledged to the Administrative Agent pursuant to Section 6.13(b)
(subject to the limitations set forth in the last sentence of Section 6.13(b));

 

(vii) Investments of a Borrower, Loan Party or Subsidiary in revenue bonds
issued pursuant to an Eligible Bond Transaction or a Permitted Bond Transaction;

 

(viii) Investments of a Borrower, Loan Party or Subsidiary in loans advanced
pursuant to Safe Harbor Transactions; and

 

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(ix) intercompany Indebtedness to any Loan Party or Subsidiary of a Loan Party
permitted under Section 7.03(a)(vi), provided that the Intercompany Notes
Receivable of the obligor thereunder (regardless of the amount thereof) is
pledged as contemplated by such section.

 

(b) The Borrowers shall not permit:

 

(i) the total cost (in accordance with GAAP) to the date of measurement of all
Unimproved Land owned by the Loan Parties and the Subsidiaries to exceed 25% of
Total Asset Value (as defined in Schedule 7.11), as calculated as of the end of
the most recent fiscal quarter and shown on the consolidated balance sheet of
the Consolidated Group;

 

(ii) the Investment of the Loan Parties and the Subsidiaries in any Person that
is not a Super Majority-Owned Subsidiary to exceed, in the aggregate, 15% of
Total Asset Value (as defined in Schedule 7.11), as calculated as of the end of
the most recent fiscal quarter, excluding, for the purposes of the above
calculation, the REIT Guarantor’s interest in the OP Borrower;

 

(iii) the total Development Cost of the Loan Parties and the Subsidiaries, as
set forth in the consolidated balance sheet of the Consolidated Group as of the
end of the most recent fiscal quarter, to exceed 15% of Total Asset Value (as
defined in Schedule 7.11), as calculated as of the end of the most recent fiscal
quarter; and

 

(iv) the sum of the above clauses (i), (ii) and (iii) to exceed 40% of Total
Asset Value (as defined in Schedule 7.11), as calculated as of the end of the
most recent fiscal quarter.

 

7.03 Indebtedness.

 

(a) The Borrowers shall not, and shall not permit any Loan Party or Subsidiary
to, create, incur, assume or suffer to exist any Indebtedness, except:

 

(i) Indebtedness under the Loan Documents;

 

(ii) Indebtedness outstanding or anticipated on the Closing Date and listed on
Schedule 7.03 and refinancings of such Indebtedness, provided that the principal
amount of such Indebtedness so refinanced does not increase, and provided
further that the terms of such refinancing are not substantially more onerous to
the Borrower, Loan Party or Subsidiary (as applicable) than the terms of the
original financing;

 

(iii) Guarantees of any Loan Party or any Subsidiary in respect of (A)
Indebtedness otherwise permitted hereunder of any Loan Party or Subsidiary; (B)
Investments permitted under Section 7.02(a)(iii); and (C) Unsecured Indebtedness
to providers of credit support or credit enhancement supporting obligations to
Community Facility Districts or other Mello Roos type assessment and/or tax
districts, in an amount not to exceed $250,000,000 at any time outstanding;

 

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(iv) obligations (contingent or otherwise) of any Loan Party or any Subsidiary
existing or arising under any Swap Contract, provided that (A) such obligations
are (or were) entered into by such Person in the Ordinary Course of Business for
the purpose of directly mitigating risks associated with liabilities,
commitments, investments, assets, or property held or reasonably anticipated by
such Person, or changes in the value of securities issued by such Person, and
not for purposes of speculation or taking a “market view;” and (B) such Swap
Contract does not contain any provision exonerating the non-defaulting party
from its obligation to make payments on outstanding transactions to the
defaulting party;

 

(v) accounts payable to trade creditors for goods and services and current
operating liabilities (not the result of the borrowing of money) incurred in the
Ordinary Course of Business in accordance with customary terms and paid within
the specified time, unless contested under a Permitted Contest;

 

(vi) intercompany Indebtedness to any Loan Party or any Subsidiary of a Loan
Party, provided that the obligor thereunder has issued Intercompany Notes
Receivable in favor of the lender thereunder, which Intercompany Notes
Receivable are in form and substance satisfactory to the Administrative Agent,
and such Intercompany Notes Receivable has been pledged to the Administrative
Agent pursuant to Section 6.13, without regards to the dollar amount of such
Notes Receivable;

 

(vii) to the extent constituting Indebtedness, (A) capital leases of assets;
provided that the assets leased are owned by the lessor or are collateral for
the lease obligations; and (B) tax obligations of any Loan Party or Subsidiary
owing to Community Facility Districts or other Mello Roos type assessment and/or
tax districts, which tax obligations support bonds issued by such districts;

 

(viii) Secured Indebtedness (as defined in Schedule 7.11), provided that the
Lien securing such Indebtedness is not prohibited under Section 7.01 and subject
to the limitations set forth in clauses (c) and (f) of Schedule 7.11; and

 

(ix) other Indebtedness in an amount not to exceed $2,000,000 at any time
outstanding.

 

(b) The Borrowers shall not permit the Floating Rate Debt of the Loan Parties
and the Subsidiaries (including the Indebtedness under this Agreement, but not
including any such Floating Rate Debt that is subject to a Swap Contract ) to
exceed 40% of the Indebtedness listed in paragraph (a) of the definition
thereof, of the Loan Parties and the Subsidiaries.

 

7.04 Fundamental Changes. The Borrowers shall not, and shall not permit any
other Loan Document Party or any Subsidiary to, merge, dissolve, liquidate,
consolidate with or into another Person, or Dispose of (whether in one
transaction or in a series of transactions) all or substantially all of its
assets (whether now owned or hereafter acquired) to or in favor of any Person,
except that:

 

(a) (i) in connection with the REIT Conversion, the Pre-REIT Conversion Borrower
may merge with the Post-REIT Conversion Borrower, provided that each of the
conditions set forth in Section 4.03 are met to the satisfaction of the
Administrative Agent and

 

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the Lenders; (ii) any Guarantor, Subsidiary or other Person may merge with the
OP Borrower or the TRS Borrower, provided that the OP Borrower or the TRS
Borrower, as applicable, shall be the continuing or surviving Person and
provided further, however, that the OP Borrower may not merge with the TRS
Borrower; (iii) any Guarantor, Subsidiary or other Person may merge with a
Guarantor, provided that a Guarantor is the continuing or surviving Person or
the surviving Person becomes a Guarantor hereunder; provided, however, that
Catellus Westminster Company, LLC, may merge into Catellus Commercial Group, LLC
(“CCG”) and CCG will not be required to become a Guarantor hereunder unless
after giving effect to such merger, CCG constitutes a Material Subsidiary or an
owner of Unencumbered Pool Property, provided further, however, that the OP
Borrower may not merge with the TRS Borrower after the REIT Election; or (iv)
any Subsidiary that is not a Guarantor may merge with any other Person,
provided, in the case of any of the foregoing clauses (i), (ii), (iii) or (iv):
(A) no Default exists or will exist after the merger; (B) the Total Outstandings
are not and will not be in excess of the Borrowing Base Availability; (C) the
Borrowers are and will be after the merger in compliance on a pro forma basis
with the investment and financial covenants set forth in Sections 7.02(b) and
7.11 hereof and have provided evidence of such compliance prior to the merger;
and (D) such merger will not cause a Material Adverse Effect;

 

(b) any Subsidiary or the TRS Borrower may Dispose of all or substantially all
of its assets to any Loan Party; and

 

(c) subject to compliance with Section 7.05 (including the delivery of any
notice and Borrowing Base Certificate required thereunder), any Subsidiary that
is not a Loan Party may Dispose of all or substantially all of its assets (upon
voluntary liquidation or otherwise) to any Person if, both before and after
giving effect thereto, (A) no Default exists or will exist after the
Disposition; (B) the Total Outstandings are not and will not be in excess of the
Borrowing Base Availability; (C) the Borrowers are in compliance on a pro forma
basis with the investment and financial covenants set forth in Sections 7.02(b)
and 7.11 hereof and have provided evidence of such compliance prior to the
Disposition; and (D) such Disposition will not cause a Material Adverse Effect.

 

7.05 Dispositions.

 

(a) Except as permitted under Sections 7.04(a) and 7.04(b), the Borrowers shall
not, and shall not permit any Loan Document Party or Subsidiary to, Dispose of
any Unencumbered Property (other than such a Disposition by (y) any Loan
Document Party or Subsidiary to a Borrower, or (z) by any Loan Document Party
that is not a Borrower, or any Subsidiary, to a Loan Party), except if, both
before and after giving effect thereto: (i) no Default exists; (ii) the
Borrowers are in compliance on a pro forma basis with the investment and
financial covenants set forth in Sections 7.02(b) and 7.11 hereof; and (iii) the
Total Outstandings are not and will not be in excess of the Borrowing Base
Availability.

 

(b) The Borrowers shall deliver to the Administrative Agent:

 

(i) a certificate of a Responsible Officer, certifying as to the matters set
forth in the foregoing Section 7.05(a) prior to the Disposition of (A) any
Unencumbered Property consisting of Stabilized Operating Property, Ground Lease
Property, Lease-up Property,

 

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Mission Bay Block 28 or WIP; or (B) any Unencumbered Pool Property consisting of
Eligible Unimproved Land with an aggregate book value (in accordance with GAAP)
in any fiscal quarter of over $10,000,000, if the remaining Eligible Unimproved
Land included in the Borrowing Base (valued at the book value of such Eligible
Unimproved Land, in accordance with GAAP), has fallen or will fall below
$200,000,000; and

 

(ii) a Borrowing Base Certificate as of the most recently concluded fiscal
quarter, adjusted as set forth in Section 4.02(d) (with such adjustment
reflecting the removal from the Borrowing Base of any Unencumbered Pool Property
that will be Disposed of as contemplated hereunder), (A) prior to the
Disposition of any Unencumbered Pool Property consisting of Eligible Stabilized
Operating Property, Eligible Ground Lease Property, Eligible Lease-up Property,
Eligible Mission Bay Block 28 or Eligible WIP; or (B) prior to the Disposition
of any Unencumbered Pool Property consisting of Eligible Unimproved Land with an
aggregate book value (in accordance with GAAP) in any fiscal quarter of over
$10,000,000, if the remaining Eligible Unimproved Land included in the Borrowing
Base (valued at the book value of such Eligible Unimproved Land, in accordance
with GAAP), has fallen or will fall below $200,000,000.

 

7.06 Restricted Payments. After the REIT Conversion Date, the Borrowers shall
not declare or make, or permit the REIT Guarantor or any Subsidiary to declare
or make, any Distributions, except for:

 

(a) the exchange of membership or partnership interests of the OP Borrower for
common stock of the REIT Guarantor; and

 

(b) if no monetary Default or other Event of Default exists, the REIT Guarantor,
the Borrowers and the Subsidiaries may make Distributions with respect to each
fiscal year beginning after December 31, 2003, in an amount in the aggregate
which does not exceed the greater of (i) 95% of Funds From Operations for such
period, or (ii) such amount as may be necessary for the REIT Guarantor to
qualify as a REIT under the Code; and

 

(c) the one-time E&P Distribution;

 

(d) Distributions to the shareholders of the Pre-REIT Conversion Borrower or,
after the REIT Conversion Date, the REIT Guarantor (as applicable), with respect
to the third and fourth quarters of the fiscal year ending on December 31, 2003;

 

(e) payments to employees, or issuance and awards to employees, of restricted
stock under an employee stock option or grant program; and

 

(f) Distributions of Real Property or Unimproved Land made to the REIT Guarantor
as contemplated by the REIT Conversion; provided that all such Distributions are
made on or before June 30, 2004 and, at the time of such Distribution, (i) no
Default exists; (ii) the Borrowers are in compliance on a pro forma basis with
the investment and financial covenants set forth in

 

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Sections 7.02(b) and 7.11 hereof; and (iii) the Total Outstandings are not and
will not be in excess of the Borrowing Base Availability; provided, however,
that during the continuance of any monetary Default or any other Event of
Default:

 

(A) aggregate Distributions under Section 7.06(b) shall not exceed the lesser of
(x) the aggregate amount permitted to be made during the continuance thereof
under clause (b) above, and (y) the minimum amount that the REIT Guarantor must
distribute to its shareholders in order to qualify as a REIT under the Code; and

 

(B) the Borrowers shall not permit the REIT Guarantor to effect any repurchases
of its common or preferred stock.

 

7.07 Change in Nature of Business. The Borrowers shall not, and shall not permit
any Loan Party or Subsidiary to, engage in any material new line of business
substantially different from those lines of business conducted by any Borrower
or any of its Subsidiaries on the Closing Date or the REIT Conversion Date,
including the ownership, acquisition, development, construction, management and
rental of Real Property and Unimproved Land and, in each case, any business
substantially related, necessary or incidental thereto.

 

7.08 Transactions with Affiliates. Except as otherwise expressly permitted
hereunder, the Borrowers shall not, and shall not permit any Loan Party or
Subsidiary to, enter into any transaction of any kind with any Affiliate of any
Loan Party, whether or not in the ordinary course of business, other than on
fair and reasonable terms substantially as favorable to the Loan Party or such
Subsidiary as would be obtainable by such Loan Party or such Subsidiary at the
time in a comparable arm’s length transaction with a Person other than an
Affiliate.

 

7.09 Burdensome Agreements. The Borrowers shall not, and shall not permit any
other Loan Document Party or Subsidiary to, enter into any Contractual
Obligation (other than this Agreement or any other Loan Document) that limits
the ability of any Loan Document Party or Subsidiary (a) to pay dividends and
distributions to any Borrower or any other Loan Party, other than during a
default or an event of default under and as defined in any document evidencing
Indebtedness of such Loan Document Party; (b) to transfer property to any
Borrower or any other Loan Party (other than property that is subject to a Lien
securing Indebtedness of such Loan Party or Subsidiary that is permitted under
Section 7.03(a)(ii) or Section 7.03(a)(viii)); (c) that is a Material Subsidiary
or an owner of Unencumbered Pool Property, to Guarantee the Indebtedness of the
Borrowers; or (d) to grant and perfect, in favor of the Administrative Agent, a
Lien in and to the Notes Receivable owned by such Loan Document Party or
Subsidiary and required to be pledged hereunder.

 

7.10 Use of Proceeds. The Borrowers shall not use the proceeds of any Credit
Extension, whether directly or indirectly, and whether immediately, incidentally
or ultimately, to (a) purchase, redeem or otherwise acquire for value any
Capital Stock of any Borrower or the REIT Guarantor; or (b) purchase or carry
margin stock (within the meaning of Regulation U of the FRB) or to extend credit
to others for the purpose of purchasing or carrying margin stock or to refund
indebtedness originally incurred for such purpose.

 

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7.11 Financial Covenants. The Borrowers shall comply with each of the financial
covenants set forth in Schedule 7.11, which financial covenants shall be
calculated as of the last day of each fiscal quarter, but shall be satisfied at
all times.

 

7.12 Fundamental Changes and REIT Covenants.

 

(a) Except for any such amendment (i) that is required under any requirement of
Law imposed by any Governmental Authority or in order for the REIT Guarantor to
qualify as a REIT under the Code, (ii) that is necessary to enable any Loan
Document Party or Subsidiary to execute a Guaranty or Pledge Agreement as
contemplated under Section 6.12 or Section 6.13; (iii) that is necessary to
effectuate the REIT Conversion or any transaction permitted under Section 7.04
or Section 7.05 (as long as such amendments do not have an adverse effect on the
Lenders or their rights hereunder); or (iv) that are described in Schedule 7.12
(as long as such amendments do not have an adverse effect on the Lenders or
their rights hereunder), the Borrowers shall not, and shall not permit any other
Loan Document Party or any Subsidiary, to amend its Organizational Documents
(except for non-substantive amendments or technical amendments that do not have
an adverse effect on the Lenders or their rights hereunder), except in each case
(A) upon at least ten Business Days’ prior written notice to the Administrative
Agent, and (B) if the Administrative Agent notifies the OP Borrower within such
ten-Business Day period that such amendment is, in Administrative Agent’s
reasonable judgment, a material amendment, with the prior written consent of the
Required Lenders which consent will not be unreasonably withheld or delayed.

 

(b) Before the REIT Conversion Date, the OP Borrower shall not fail to comply in
all material respects with all rules and regulations of the Securities Exchange
Commission and shall not fail to file all reports required by the Securities
Exchange Commission relating to the Borrower’s publicly-held securities. After
the REIT Conversion Date, the Borrowers shall cause the REIT Guarantor to comply
in all material respects with all rules and regulations of the Securities
Exchange Commission and shall cause the REIT Guarantor to file all reports
required by the Securities Exchange Commission relating to the REIT Guarantor’s
publicly-held securities.

 

(c) Before the REIT Conversion Date, the OP Borrower shall not cease to have its
common stock listed on the New York Stock Exchange, the American Stock Exchange,
or the Nasdaq Stock Exchange. After the REIT Conversion Date, the Borrowers
shall cause the REIT Guarantor to, at all times, have its common stock listed on
the New York Stock Exchange, the American Stock Exchange, or the Nasdaq Stock
Exchange.

 

(d) After the REIT Election Date, the REIT Guarantor shall not cease to qualify
as a REIT under the Code.

 

(e) After the REIT Election Date, at no time shall the OP Borrower be taxed as a
corporation under the Code.

 

(f) After the REIT Conversion Date, the REIT Guarantor shall not cease to own
the majority of the outstanding Capital Stock in, and serve as the sole general
partner of, the OP Borrower.

 

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(g) After the REIT Conversion Date, the OP Borrower shall not cease to own,
directly or indirectly, 100% of the outstanding Capital Stock of the TRS
Borrower.

 

(h) Except as permitted under Section 7.04, the Loan Parties shall not cease to
own the majority of the outstanding stock, membership interests or other entity
interests in, each Guarantor and each Subsidiary (other than Guarantors and
Subsidiaries (but excluding the TRS Borrower) that are Taxable REIT
Subsidiaries) and, with respect to any Guarantor or Subsidiary that is not a
corporation, a Loan Party shall not cease to serve as the managing member or
general partner of, each such Guarantor and Subsidiary.

 

ARTICLE VIII.

EVENTS OF DEFAULT AND REMEDIES

 

8.01 Events of Default. Any of the following shall constitute an Event of
Default:

 

(a) Non-Payment. Any Borrower or any other Loan Party fails to pay (i) when and
as required to be paid herein, any amount of principal of any Loan or any L/C
Obligation, or (ii) within three days after the same becomes due, any interest
on any Loan or on any L/C Obligation, or any Unused Fee or other fee due
hereunder, or (iii) within five days after the same becomes due, any other
amount payable hereunder or under any other Loan Document; or

 

(b) Specific Covenants. Any Borrower fails to perform or observe any term,
covenant or agreement contained in any of Section 6.01, 6.02, 6.03, 6.05, 6.10,
6.11, 6.12(a), 6.13(a) or 6.14 or Article VII or, after the REIT Conversion
Date, the REIT Guarantor fails to perform or observe any term, covenant or
agreement contained in any of Section 11(a), 11(b), 11(d) or 11(i) or Section 12
of the Guaranty executed by the REIT Guarantor; or

 

(c) Other Defaults. Any Loan Party fails to perform or observe any other
covenant or agreement (not specified in subsection (a) or (b) above) contained
in any Loan Document on its part to be performed or observed and such failure
continues for 30 days after a Responsible Officer of any Loan Party has
knowledge thereof; or

 

(d) Representations and Warranties. Any representation, warranty, certification
or statement of fact made or deemed made by or on behalf of any Borrower or any
other Loan Document Party herein, in any other Loan Document, or in any document
delivered in connection herewith or therewith shall be incorrect when made or
deemed made or shall be misleading in any material respect when made or deemed
made; or

 

(e) Cross-Default and Cross-Acceleration. (i) Any Loan Party or any Subsidiary
(A) fails to make any payment when due (whether by scheduled maturity, required
prepayment, acceleration, demand, or otherwise) in respect of any Indebtedness
or Guarantee (other than Indebtedness hereunder and Indebtedness under Swap
Contracts) having an aggregate principal amount (including undrawn committed or
available amounts and including amounts owing to all creditors under any
combined or syndicated credit arrangement) of more than the Threshold Amount, or
(B) fails to observe or perform any other agreement or condition relating to any
such Indebtedness or Guarantee or contained in any instrument or agreement
evidencing, securing or relating thereto, or any other event occurs, the effect
of which default or other event

 

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under clause (A) or (B) above is (y) in the case of Recourse Indebtedness, to
cause, or to permit the holder or holders of any such Recourse Indebtedness or
the beneficiary or beneficiaries of such Guarantee (or a trustee or agent on
behalf of such holder or holders or beneficiary or beneficiaries) to cause, with
the giving of notice if required, such Recourse Indebtedness to be demanded or
to become due or to be repurchased, prepaid, defeased or redeemed (automatically
or otherwise), or an offer to repurchase, prepay, defease or redeem such
Recourse Indebtedness to be made, prior to its stated maturity, or such
Guarantee to become payable or cash collateral in respect thereof to be
demanded; or (z) in the case of Non-Recourse Indebtedness, that the holder or
holders of any such Non-Recourse Indebtedness demands such Non-Recourse
Indebtedness to become due or be repurchased, prepaid, defeased or redeemed, or
such holder or holders cause an offer to repurchase, prepay, defease or redeem
such Non-Recourse Indebtedness to be made, prior to its stated maturity; (ii)
there occurs under any Swap Contract an Early Termination Date (as defined in
such Swap Contract) resulting from (A) any event of default under such Swap
Contract as to which any Borrower or any Subsidiary is the Defaulting Party (as
defined in such Swap Contract) or (B) any Termination Event (as so defined)
under such Swap Contract as to which any Borrower or any Subsidiary is an
Affected Party (as so defined) and, in either event, the Swap Termination Value
owed by such Borrower or such Subsidiary as a result thereof is greater than the
Threshold Amount; or

 

(f) Insolvency Proceedings, Etc. Any Loan Party or any Subsidiary institutes or
consents to the institution of any proceeding under any Debtor Relief Law, or
makes an assignment for the benefit of creditors; or applies for or consents to
the appointment of any receiver, trustee, custodian, conservator, liquidator,
rehabilitator or similar officer for it or for all or any material part of its
property; or any receiver, trustee, custodian, conservator, liquidator,
rehabilitator or similar officer is appointed without the application or consent
of such Person and the appointment continues undischarged or unstayed for 60
calendar days; or any proceeding under any Debtor Relief Law relating to any
such Person or to all or any material part of its property is instituted without
the consent of such Person and continues undismissed or unstayed for 60 calendar
days, or an order for relief is entered in any such proceeding; or

 

(g) Inability to Pay Debts; Attachment. (i) Any Loan Party or any Subsidiary
becomes unable or admits in writing its inability or fails generally to pay its
debts as they become due, or (ii) any writ or warrant of attachment or execution
or similar process is issued or levied against all or any material part of the
property of any such Person and is not released, vacated or fully bonded within
60 days after its issue or levy; or

 

(h) Judgments. There is entered against any Loan Party or any Subsidiary (i) a
final judgment or order for the payment of money in an aggregate amount
exceeding the Threshold Amount (to the extent not covered by independent
third-party insurance as to which the insurer does not dispute coverage and
after giving effect to reserves therefor), or (ii) any one or more non-monetary
final judgments that have, or are reasonably expected to have, individually or
in the aggregate, a Material Adverse Effect and, in either case, (A) enforcement
proceedings are commenced by any creditor upon such judgment or order, unless
such enforcement proceedings are stayed, or (B) there is a period of 30
consecutive days during which a stay of enforcement of such judgment, by reason
of a pending appeal or otherwise, is not in effect; or

 

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(i) ERISA. (i) An ERISA Event occurs with respect to a Pension Plan or
Multiemployer Plan which has resulted or could reasonably be expected to result
in liability of any Borrower under Title IV of ERISA to the Pension Plan,
Multiemployer Plan or the PBGC in an aggregate amount in excess of $5,000,000,
or (ii) any Borrower or any ERISA Affiliate fails to pay when due, after the
expiration of any applicable grace period, any installment payment with respect
to its withdrawal liability under Section 4201 of ERISA under a Multiemployer
Plan in an aggregate amount in excess of $5,000,000; or

 

(j) Invalidity of Loan Documents. Any Loan Document, at any time after its
execution and delivery and for any reason other than as expressly permitted
hereunder or satisfaction in full of all the Obligations, ceases to be in full
force and effect in accordance with its respective terms; or any Loan Document
Party contests in any manner the validity or enforceability of any Loan
Document; or any Loan Document Party denies in writing that it has any or
further liability or obligation under any Loan Document, or purports to revoke,
terminate or rescind any Loan Document;

 

(k) Failure by any Guarantor to Perform Covenants; Invalidity of Guaranty. Any
Guarantor shall fail to perform or observe any term, covenant or agreement
contained in a Guaranty on its part to be performed or observed, or any default
shall occur under a Guaranty, and any such failure or default shall continue
after the applicable grace period, if any, specified in a Guaranty as of the
date of such failure, or any defined “Event of Default” as defined in such
Guaranty shall have occurred and is continuing; or such Guaranty shall for any
reason be revoked or invalidated, or otherwise cease to be in full force and
effect in accordance with its terms (except as expressly permitted hereunder),
or any Guarantor shall contest in any manner the validity or enforceability
thereof or deny in writing that it has any further liability or obligation
thereunder;

 

(l) Collateral Documents.

 

(i) Any Pledge Agreement shall for any reason (other than pursuant to the terms
thereof) cease to create a valid security interest in the Collateral purported
to be covered thereby, or such security interest shall for any reason cease to
be a perfected and first-priority security interest, other than as a result of
any action or inaction by the Administrative Agent or any Lender not caused by
the Default of any Borrower; or

 

(ii) Any party to a Pledge Agreement shall fail to perform or observe any term
or covenant contained therein, and such failure shall continue unremedied for a
period of 30 days after a Responsible Officer of any Loan Party or such party to
a Pledge Agreement has notice thereof; or

 

(m) Change of Control. There occurs any Change of Control.

 

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8.02 Remedies Upon Event of Default. If any Event of Default occurs and is
continuing, the Administrative Agent shall, at the request of, or may, with the
consent of, the Required Lenders, take any or all of the following actions:

 

(a) declare the commitment of each Lender to make Loans and any obligation of
the L/C Issuer to make L/C Credit Extensions to be terminated, whereupon such
commitments and obligation shall be terminated;

 

(b) declare the unpaid principal amount of all outstanding Loans, all interest
accrued and unpaid thereon, and all other amounts owing or payable hereunder or
under any other Loan Document to be immediately due and payable, without
presentment, demand, protest or other notice of any kind, all of which are
hereby expressly waived by the Borrowers;

 

(c) require that the Borrowers Cash Collateralize the L/C Obligations (in an
amount equal to the then Outstanding Amount thereof); and

 

(d) exercise on behalf of itself and the Lenders all rights and remedies
available to it and the Lenders under the Loan Documents or applicable law;

 

provided, however, that upon the occurrence of an actual or deemed entry of an
order for relief with respect to any Borrower under the Bankruptcy Code of the
United States, the obligation of each Lender to make Loans and any obligation of
the L/C Issuer to make L/C Credit Extensions shall automatically terminate, the
unpaid principal amount of all outstanding Loans and all interest and other
amounts as aforesaid shall automatically become due and payable, and the
obligation of the Borrowers to Cash Collateralize the L/C Obligations as
aforesaid shall automatically become effective, in each case without further act
of the Administrative Agent or any Lender.

 

8.03 Application of Funds. After the exercise of remedies provided for in
Section 8.02 (or after the Loans have automatically become immediately due and
payable and the L/C Obligations have automatically been required to be Cash
Collateralized as set forth in the proviso to Section 8.02), any amounts
received on account of the Obligations shall be applied by the Administrative
Agent in the following order:

 

First, to payment of that portion of the Obligations constituting fees,
indemnities, expenses and other amounts (including Attorney Costs and amounts
payable under Article III) payable to the Administrative Agent in its capacity
as such;

 

Second, to payment of that portion of the Obligations constituting fees,
indemnities and other amounts (other than principal and interest) payable to the
Lenders (including Attorney Costs and amounts payable under Article III),
ratably among them in proportion to the amounts described in this clause Second
payable to them;

 

Third, to payment of that portion of the Obligations constituting accrued and
unpaid interest on the Loans and L/C Borrowings, ratably among the Lenders in
proportion to the respective amounts described in this clause Third payable to
them;

 

Fourth, to payment of that portion of the Obligations constituting unpaid
principal of the Loans and L/C Borrowings, ratably among the Lenders in
proportion to the respective amounts described in this clause Fourth held by
them;

 

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Fifth, to the Administrative Agent for the account of the L/C Issuer, to Cash
Collateralize that portion of L/C Obligations comprised of the aggregate undrawn
amount of Letters of Credit; and

 

Last, the balance, if any, after all of the Obligations have been indefeasibly
paid in full, to the OP Borrower or as otherwise required by Law.

 

Subject to Section 2.03(c), amounts used to Cash Collateralize the aggregate
undrawn amount of Letters of Credit pursuant to clause Fifth above shall be
applied to satisfy drawings under such Letters of Credit as they occur. If any
amount remains on deposit as Cash Collateral after all Letters of Credit have
either been fully drawn or expired, such remaining amount shall be applied to
the other Obligations, if any, in the order set forth above.

 

ARTICLE IX.

ADMINISTRATIVE AGENT

 

9.01 Appointment and Authorization of Administrative Agent.

 

(a) Each Lender hereby irrevocably appoints, designates and authorizes the
Administrative Agent to take such action on its behalf under the provisions of
this Agreement and each other Loan Document and to exercise such powers and
perform such duties as are expressly delegated to it by the terms of this
Agreement or any other Loan Document, together with such powers as are
reasonably incidental thereto. Notwithstanding any provision to the contrary
contained elsewhere herein or in any other Loan Document, the Administrative
Agent shall not have any duties or responsibilities, except those expressly set
forth herein, nor shall the Administrative Agent have or be deemed to have any
fiduciary relationship with any Lender or participant, and no implied covenants,
functions, responsibilities, duties, obligations or liabilities shall be read
into this Agreement or any other Loan Document or otherwise exist against the
Administrative Agent. Without limiting the generality of the foregoing sentence,
the use of the term “agent” herein and in the other Loan Documents with
reference to the Administrative Agent is not intended to connote any fiduciary
or other implied (or express) obligations arising under agency doctrine of any
applicable Law. Instead, such term is used merely as a matter of market custom,
and is intended to create or reflect only an administrative relationship between
independent contracting parties.

 

(b) The L/C Issuer shall act on behalf of the Lenders with respect to any
Letters of Credit issued by it and the documents associated therewith, and the
L/C Issuer shall have all of the benefits and immunities (i) provided to the
Administrative Agent in this Article IX with respect to any acts taken or
omissions suffered by the L/C Issuer in connection with Letters of Credit issued
by it or proposed to be issued by it and the applications and agreements for
letters of credit pertaining to such Letters of Credit as fully as if the term
“Administrative Agent” as used in this Article IX and in the definition of
“Agent-Related Person” included the L/C Issuer with respect to such acts or
omissions, and (ii) as additionally provided herein with respect to the L/C
Issuer.

 

9.02 Delegation of Duties. The Administrative Agent may execute any of its
duties under this Agreement or any other Loan Document by or through agents,
employees or

 

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attorneys-in-fact and shall be entitled to advice of counsel and other
consultants or experts concerning all matters pertaining to such duties. The
Administrative Agent shall not be responsible for the negligence or misconduct
of any agent or attorney-in-fact that it selects in the absence of gross
negligence or willful misconduct.

 

9.03 Liability of Administrative Agent. No Agent-Related Person shall (a) be
liable for any action taken or omitted to be taken by any of them under or in
connection with this Agreement or any other Loan Document or the transactions
contemplated hereby (except for its own gross negligence or willful misconduct
in connection with its duties expressly set forth herein), or (b) be responsible
in any manner to any Lender or Participant for any recital, statement,
representation or warranty made by any Loan Party or any officer thereof,
contained herein or in any other Loan Document, or in any certificate, report,
statement or other document referred to or provided for in, or received by the
Administrative Agent under or in connection with, this Agreement or any other
Loan Document, or the validity, effectiveness, genuineness, enforceability or
sufficiency of this Agreement or any other Loan Document, or for any failure of
any Loan Party or any other party to any Loan Document to perform its
obligations hereunder or thereunder. No Agent-Related Person shall be under any
obligation to any Lender or Participant to ascertain or to inquire as to the
observance or performance of any of the agreements contained in, or conditions
of, this Agreement or any other Loan Document, or to inspect the properties,
books or records of any Loan Party or any Affiliate thereof.

 

9.04 Reliance by Administrative Agent.

 

(a) The Administrative Agent shall be entitled to rely, and shall be fully
protected in relying, upon any writing, communication, signature, resolution,
representation, notice, consent, certificate, affidavit, letter, telegram,
facsimile, telex or telephone message, electronic mail message, statement or
other document or conversation believed by it to be genuine and correct and to
have been signed, sent or made by the proper Person or Persons, and upon advice
and statements of legal counsel (including counsel to any Loan Party),
independent accountants and other experts selected by the Administrative Agent.
The Administrative Agent shall be fully justified in failing or refusing to take
any action under any Loan Document unless it shall first receive such advice or
concurrence of the Required Lenders as it deems appropriate and, if it so
requests, it shall first be indemnified to its satisfaction by the Lenders
against any and all liability and expense which may be incurred by it by reason
of taking or continuing to take any such action. The Administrative Agent shall
in all cases be fully protected in acting, or in refraining from acting, under
this Agreement or any other Loan Document in accordance with a request or
consent of the Required Lenders (or such greater number of Lenders as may be
expressly required hereby in any instance) and such request and any action taken
or failure to act pursuant thereto shall be binding upon all the Lenders.

 

(b) For purposes of determining compliance with the conditions specified in
Section 4.01, each Lender that has signed this Agreement shall be deemed to have
consented to, approved or accepted or to be satisfied with, each document or
other matter required thereunder to be consented to or approved by or acceptable
or satisfactory to a Lender unless the Administrative Agent shall have received
notice from such Lender prior to the proposed Closing Date specifying its
objection thereto.

 

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9.05 Notice of Default. The Administrative Agent shall not be deemed to have
knowledge or notice of the occurrence of any Default, except with respect to
defaults in the payment of principal, interest and fees required to be paid to
the Administrative Agent for the account of the Lenders, unless the
Administrative Agent shall have received written notice from a Lender or any
Borrower referring to this Agreement, describing such Default and stating that
such notice is a “notice of default.” The Administrative Agent will notify the
Lenders of its receipt of any such notice. The Administrative Agent shall take
such action with respect to such Default as may be directed by the Required
Lenders in accordance with Article VIII; provided, however, that unless and
until the Administrative Agent has received any such direction, the
Administrative Agent may (but shall not be obligated to) take such action, or
refrain from taking such action, with respect to such Default as it shall deem
advisable or in the best interest of the Lenders.

 

9.06 Credit Decision; Disclosure of Information by Administrative Agent. Each
Lender acknowledges that no Agent-Related Person has made any representation or
warranty to it, and that no act by the Administrative Agent hereafter taken,
including any consent to and acceptance of any assignment or review of the
affairs of any Loan Party or any Affiliate thereof, shall be deemed to
constitute any representation or warranty by any Agent-Related Person to any
Lender as to any matter, including whether Agent-Related Persons have disclosed
material information in their possession. Each Lender represents to the
Administrative Agent that it has, independently and without reliance upon any
Agent-Related Person and based on such documents and information as it has
deemed appropriate, made its own appraisal of and investigation into the
business, prospects, operations, property, financial and other condition and
creditworthiness of the Loan Parties and their respective Subsidiaries, and all
applicable bank or other regulatory Laws relating to the transactions
contemplated hereby, and made its own decision to enter into this Agreement and
to extend credit to the Borrowers hereunder. Each Lender also represents that it
will, independently and without reliance upon any Agent-Related Person and based
on such documents and information as it shall deem appropriate at the time,
continue to make its own credit analysis, appraisals and decisions in taking or
not taking action under this Agreement and the other Loan Documents, and to make
such investigations as it deems necessary to inform itself as to the business,
prospects, operations, property, financial and other condition and
creditworthiness of each Borrower and the other Loan Parties. Except for
notices, reports and other documents expressly required to be furnished to the
Lenders by the Administrative Agent herein, the Administrative Agent shall not
have any duty or responsibility to provide any Lender with any credit or other
information concerning the business, prospects, operations, property, financial
and other condition or creditworthiness of any of the Loan Parties or any of
their respective Affiliates which may come into the possession of any
Agent-Related Person; provided, however, that at the request of any Lender, the
Administrative Agent shall provide to such Lender any information, document or
other item in the Administrative Agent’s possession concerning any Loan Document
Party, if such information, document or item relates to any of the Loan
Documents, the obligations of any Loan Document Party under any Loan Document or
the rights of the Administrative Agent or any Lender under any Loan Document.

 

9.07 Indemnification of Administrative Agent. Whether or not the transactions
contemplated hereby are consummated, the Lenders shall indemnify upon demand
each Agent-Related Person (to the extent not reimbursed by or on behalf of any
Loan Party and without limiting the obligation of any Loan Party to do so), pro
rata, and hold harmless each Agent-

 

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Related Person from and against any and all Indemnified Liabilities incurred by
it; provided, however, that no Lender shall be liable for the payment to any
Agent-Related Person of any portion of such Indemnified Liabilities to the
extent resulting from such Agent-Related Person’s own gross negligence or
willful misconduct; provided, however, that no action taken in accordance with
the directions of the Required Lenders shall be deemed to constitute gross
negligence or willful misconduct for purposes of this Section. Without
limitation of the foregoing, each Lender shall reimburse the Administrative
Agent upon demand for its ratable share of any reasonable costs or out-of-pocket
expenses (including Attorney Costs) incurred by the Administrative Agent in
connection with the preparation, execution, delivery, administration,
modification, amendment or enforcement (whether through negotiations, legal
proceedings or otherwise) of, or legal advice in respect of rights or
responsibilities under, this Agreement, any other Loan Document, or any document
contemplated by or referred to herein, to the extent that the Administrative
Agent is not reimbursed for such expenses by or on behalf of the Borrowers. The
undertaking in this Section shall survive termination of the Aggregate
Commitments, the payment of all other Obligations and the resignation of the
Administrative Agent.

 

9.08 Administrative Agent in its Individual Capacity. Bank of America and its
Affiliates may make loans to, issue letters of credit for the account of, accept
deposits from, acquire equity interests in and generally engage in any kind of
banking, trust, financial advisory, underwriting or other business with each of
the Loan Parties and their respective Affiliates as though Bank of America were
not the Administrative Agent or the L/C Issuer hereunder and without notice to
or consent of the Lenders. The Lenders acknowledge that, pursuant to such
activities, Bank of America or its Affiliates may receive information regarding
any Loan Party or its Affiliates (including information that may be subject to
confidentiality obligations in favor of such Loan Party or such Affiliate) and
acknowledge that the Administrative Agent shall be under no obligation to
provide such information to them. With respect to its Loans, Bank of America
shall have the same rights and powers under this Agreement as any other Lender
and may exercise such rights and powers as though it were not the Administrative
Agent or the L/C Issuer, and the terms “Lender” and “Lenders” include Bank of
America in its individual capacity.

 

9.09 Successor Administrative Agent. The Administrative Agent may resign as
Administrative Agent upon 30 days’ notice to the Lenders, and shall resign upon
the request of the Required Lenders if the Required Lenders reasonably determine
that any action taken by the Administrative Agent hereunder constitutes gross
negligence or willful misconduct; provided that any such resignation by Bank of
America shall also constitute its resignation as L/C Issuer and Swing Line
Lender. If the Administrative Agent resigns under this Agreement, the Required
Lenders shall appoint from among the Lenders a successor administrative agent
for the Lenders, which successor administrative agent shall be consented to by
the Borrowers at all times other than during the existence of an Event of
Default (which consent of the Borrowers shall not be unreasonably withheld or
delayed). If no successor administrative agent is appointed prior to the
effective date of the resignation of the Administrative Agent, the
Administrative Agent may appoint, after consulting with the Lenders and the
Borrowers, a successor administrative agent from among the Lenders. Upon the
acceptance of its appointment as successor administrative agent hereunder, the
Person acting as such successor administrative agent shall succeed to all the
rights, powers and duties of the retiring Administrative Agent, L/C Issuer and
Swing Line Lender and the respective terms “Administrative Agent,” “L/C Issuer”
and “Swing Line Lender” shall mean such successor administrative agent, Letter
of Credit issuer and swing line lender, and

 

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the retiring Administrative Agent’s appointment, powers and duties as
Administrative Agent shall be terminated and the retiring L/C Issuer’s and Swing
Line Lender’s rights, powers and duties as such shall be terminated, without any
other or further act or deed on the part of such retiring L/C Issuer or Swing
Line Lender or any other Lender, other than the obligation of the successor L/C
Issuer to issue letters of credit in substitution for the Letters of Credit, if
any, outstanding at the time of such succession or to make other arrangements
satisfactory to the retiring L/C Issuer to effectively assume the obligations of
the retiring L/C Issuer with respect to such Letters of Credit. After any
retiring Administrative Agent’s resignation hereunder as Administrative Agent,
the provisions of this Article IX and Sections 10.04 and 10.05 shall inure to
its benefit as to any actions taken or omitted to be taken by it while it was
Administrative Agent under this Agreement. If no successor administrative agent
has accepted appointment as Administrative Agent by the date which is 30 days
following a retiring Administrative Agent’s notice of resignation, the retiring
Administrative Agent’s resignation shall nevertheless thereupon become effective
and the Lenders shall perform all of the duties of the Administrative Agent
hereunder until such time, if any, as the Required Lenders appoint a successor
agent as provided for above.

 

9.10 Administrative Agent May File Proofs of Claim. In case of the pendency of
any receivership, insolvency, liquidation, bankruptcy, reorganization,
arrangement, adjustment, composition or other judicial proceeding relative to
any Loan Party, the Administrative Agent (irrespective of whether the principal
of any Loan or L/C Obligation shall then be due and payable as herein expressed
or by declaration or otherwise and irrespective of whether the Administrative
Agent shall have made any demand on any Borrower) shall be entitled and
empowered, by intervention in such proceeding or otherwise.

 

(a) to file and prove a claim for the whole amount of the principal and interest
owing and unpaid in respect of the Loans, L/C Obligations and all other
Obligations that are owing and unpaid and to file such other documents as may be
necessary or advisable in order to have the claims of the Lenders and the
Administrative Agent (including any claim for the reasonable compensation,
expenses, disbursements and advances of the Lenders and the Administrative Agent
and their respective agents and counsel and all other amounts due the Lenders
and the Administrative Agent under Sections 2.03(i) and (j), 2.09 and 10.04)
allowed in such judicial proceeding; and

 

(b) to collect and receive any monies or other property payable or deliverable
on any such claims and to distribute the same;

 

and any custodian, receiver, assignee, trustee, liquidator, sequestrator or
other similar official in any such judicial proceeding is hereby authorized by
each Lender to make such payments to the Administrative Agent and, in the event
that the Administrative Agent shall consent to the making of such payments
directly to the Lenders, to pay to the Administrative Agent any amount due for
the reasonable compensation, expenses, disbursements and advances of the
Administrative Agent and its agents and counsel, and any other amounts due the
Administrative Agent under Sections 2.09 and 10.04.

 

Nothing contained herein shall be deemed to authorize the Administrative Agent
to authorize or consent to or accept or adopt on behalf of any Lender any plan
of reorganization,

 

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arrangement, adjustment or composition affecting the Obligations or the rights
of any Lender or to authorize the Administrative Agent to vote in respect of the
claim of any Lender in any such proceeding.

 

9.11 Agent Under Other Loan Documents, Collateral, Release of Collateral and
Release of Guaranty Matters.

 

(a) Each Lender irrevocably authorizes the Administrative Agent, at its option
and in its discretion, on behalf of and for the benefit of the Lenders, to be
the agent for and representative of the Lenders with respect to, and to enter
into all other Loan Documents, as applicable, including the Guaranty and each
Pledge Agreement.

 

(b) The Lenders hereby irrevocably authorize the Administrative Agent, at its
option and its discretion, without the necessity of any notice to or further
consent from the Lenders, from time to time to (i) take any action, with respect
to any Collateral or the Collateral Documents which may be necessary to perfect
and maintain perfected the security interest in and Liens upon any Collateral
granted pursuant to any Loan Document; (ii) release any Guarantor (other than
the REIT Guarantor or any Borrower) from its obligations under its Guaranty upon
the occurrence of the events described in Section 6.12(d); (iii) release the
Administrative Agent’s Lien on any Capital Stock of a Guarantor pledged under a
Pledge Agreement upon the occurrence of the events described in Section 6.12(e);
(iv) release the Administrative Agent’s Lien on any Notes Receivable pledged
under a Pledge Agreement upon the occurrence of the events described in Section
6.13(d); and (v) release any Guarantor and the Administrative Agent’s Lien on
any Collateral pledged under a Pledge Agreement upon termination of the
Aggregate Commitments and payment in full of all Obligations (other than
contingent indemnification obligations) and the expiration or termination of all
Letters of Credit. Upon request by the Administrative Agent at any time, the
Required Lenders will confirm in writing the Administrative Agent’s authority to
release the Lien on any Collateral pledged under a Pledge Agreement and to
release any Guarantor from its obligations under its Guaranty pursuant to this
Section 9.11(b).

 

(c) Anything contained in any of the Loan Documents to the contrary
notwithstanding, the Borrowers, the Administrative Agent and each Lender hereby
agree that, other than the right of set-off under Section 10.09, no Lender shall
have any right individually to exercise remedies against the Borrowers under
Section 8.02 hereof, realize upon any of the Collateral under a Pledge Agreement
or any annex or accession agreement thereto or to enforce any Guaranty or Pledge
Agreement, as applicable, it being understood and agreed that all powers, rights
and remedies hereunder may be exercised solely by the Administrative Agent, on
behalf of Lenders in accordance with the terms hereof and all powers, rights and
remedies under the Loan Documents may be exercised solely by the Administrative
Agent.

 

9.12 Other Agents; Arrangers and Managers. None of the Lenders or other Persons
identified on the facing page or signature pages of this Agreement as a
“syndication agent,” “documentation agent,” “managing agent,” “book manager,”
“lead manager,” “arranger,” “lead arranger” or “co-arranger” shall have any
right, power, obligation, liability, responsibility or duty under this Agreement
other than, in the case of such Lenders, those applicable to all Lenders as
such. Without limiting the foregoing, none of the Lenders or other Persons so
identified shall

 

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have or be deemed to have any fiduciary relationship with any Lender. Each
Lender acknowledges that it has not relied, and will not rely, on any of the
Lenders or other Persons so identified in deciding to enter into this Agreement
or in taking or not taking action hereunder.

 

ARTICLE X.

MISCELLANEOUS

 

10.01 Amendments, Etc. No amendment or waiver of any provision of this Agreement
or any other Loan Document, and no consent to any departure by any Borrower or
any other Loan Party therefrom, shall be effective unless in writing signed by
the Required Lenders and the Borrowers or the applicable Loan Party, as the case
may be, and acknowledged by the Administrative Agent, and each such waiver or
consent shall be effective only in the specific instance and for the specific
purpose for which given; provided, however, that no such amendment, waiver or
consent shall:

 

(a) waive any condition set forth in Section 4.01(a) without the written consent
of each Lender;

 

(b) extend or increase the Commitment of any Lender (or reinstate any Commitment
terminated pursuant to Section 8.02) without the written consent of such Lender,
other than the extension contemplated under Section 2.14;

 

(c) other than the extension contemplated under Section 2.14, postpone any date
fixed by this Agreement or any other Loan Document for any payment of principal,
interest, fees or other amounts due to the Lenders (or any of them) hereunder or
under any other Loan Document without the written consent of each Lender
directly affected thereby;

 

(d) reduce the principal of, or the rate of interest specified herein on, any
Loan or L/C Borrowing, or (subject to clause (iv) of the final proviso to this
Section 10.01) any fees or other amounts payable hereunder or under any other
Loan Document, or change the manner of computation of any financial ratio
(including any change in any applicable defined term) used in determining the
Applicable Rate that would result in a reduction of any interest rate on any
Loan or any fee payable hereunder without the written consent of each Lender
directly affected thereby;

 

(e) change Section 2.13 or Section 8.03 in a manner that would alter the pro
rata sharing of payments required thereby without the written consent of each
Lender;

 

(f) change any provision of this Section 10.01 or the definition of “Required
Lenders” or any other provision hereof specifying the number or percentage of
Lenders required to amend, waive or otherwise modify any rights hereunder or
make any determination or grant any consent hereunder, without the written
consent of each Lender; or

 

(g) other than as provided in Section 9.11(b), release any Guarantor from the
Guaranty without the written consent of each Lender; or

 

(h) other than as provided in Section 9.11(b), release all or substantially all
of the Collateral without the written consent of each Lender;

 

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and, provided further, that (i) no amendment, waiver or consent shall, unless in
writing and signed by the L/C Issuer in addition to the Lenders required above,
affect the rights or duties of the L/C Issuer under this Agreement or any Letter
of Credit Application relating to any Letter of Credit issued or to be issued by
it; (ii) no amendment, waiver or consent shall, unless in writing and signed by
the Swing Line Lender in addition to the Lenders required above, affect the
rights or duties of the Swing Line Lender under this Agreement; (iii) no
amendment, waiver or consent shall, unless in writing and signed by the
Administrative Agent in addition to the Lenders required above, affect the
rights or duties of the Administrative Agent under this Agreement or any other
Loan Document; and (iv) the Fee Letter may be amended, or rights or privileges
thereunder waived, in a writing executed only by the parties thereto.
Notwithstanding anything to the contrary herein, (A) no Defaulting Lender shall
have any right to approve or disapprove any amendment, waiver or consent
hereunder, except that the Commitment of such Lender may not be increased or
extended without the consent of such Lender; and (B) the Borrowers may replace
any such Defaulting Lender in accordance with Section 10.16.

 

10.02 Notices and Other Communications; Facsimile Copies.

 

(a) General. Unless otherwise expressly provided herein, all notices and other
communications provided for hereunder shall be in writing (including by
facsimile transmission). All such written notices shall be mailed, faxed or
delivered to the applicable address, facsimile number or (subject to subsection
(c) below) electronic mail address, and all notices and other communications
expressly permitted hereunder to be given by telephone shall be made to the
applicable telephone number, as follows:

 

(i) if to the Borrowers, the Administrative Agent, the L/C Issuer or the Swing
Line Lender, to the address, facsimile number, electronic mail address or
telephone number specified for such Person on Schedule 10.02 or to such other
address, facsimile number, electronic mail address or telephone number as shall
be designated by such party in a notice to the other parties; provided, however,
that any such notice delivered to the OP Borrower shall be deemed to be
delivered to each Borrower hereunder; and

 

(ii) if to any other Lender, to the address, facsimile number, electronic mail
address or telephone number specified in its Administrative Questionnaire or to
such other address, facsimile number, electronic mail address or telephone
number as shall be designated by such party in a notice to the OP Borrower, the
Administrative Agent, the L/C Issuer and the Swing Line Lender.

 

All such notices and other communications shall be deemed to be given or made
upon the earlier to occur of (i) actual receipt by the relevant party hereto and
(ii) (A) if delivered by hand or by courier, when signed for by or on behalf of
the relevant party hereto; (B) if delivered by mail, four Business Days after
deposit in the mails, postage prepaid; (C) if delivered by facsimile, when sent
and receipt has been confirmed by telephone; and (D) if delivered by electronic
mail (which form of delivery is subject to the provisions of subsection (c)
below), when delivered; provided, however, that notices and other communications
to the Administrative Agent, the L/C Issuer and the Swing Line Lender pursuant
to Article II shall not be effective until actually received by such Person. In
no event shall a voicemail message be effective as a notice, communication or
confirmation hereunder.

 

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(b) Effectiveness of Facsimile Documents and Signatures. The Loan Documents may
be transmitted and/or signed by facsimile. The effectiveness of any such
documents and signatures shall, subject to applicable Law, have the same force
and effect as manually-signed originals and shall be binding on all Loan
Parties, the Administrative Agent and the Lenders. The Administrative Agent may
also require that any such documents and signatures be confirmed by a
manually-signed original thereof; provided, however, that the failure to request
or deliver the same shall not limit the effectiveness of any facsimile document
or signature.

 

(c) Limited Use of Electronic Mail. Electronic mail and Internet and intranet
websites may be used only to distribute routine communications, such as
financial statements and other information as provided in Section 6.02, and to
distribute Loan Documents for execution by the parties thereto, and may not be
used for any other purpose.

 

(d) Reliance by Administrative Agent and Lenders. The Administrative Agent and
the Lenders shall be entitled to rely and act upon any notices (including
telephonic Committed Loan Notices and Swing Line Loan Notices) purportedly given
by or on behalf of any Borrower even if (i) such notices were not made in a
manner specified herein, were incomplete or were not preceded or followed by any
other form of notice specified herein, or (ii) the terms thereof, as understood
by the recipient, varied from any confirmation thereof. The OP Borrower shall
indemnify each Agent-Related Person and each Lender from all losses, costs,
expenses and liabilities resulting from the reliance by such Person on each
notice purportedly given by or on behalf of any Borrower. All telephonic notices
to and other communications with the Administrative Agent may be recorded by the
Administrative Agent, and each of the parties hereto hereby consents to such
recording.

 

10.03 No Waiver; Cumulative Remedies. No failure by any Lender or the
Administrative Agent to exercise, and no delay by any such Person in exercising,
any right, remedy, power or privilege hereunder shall operate as a waiver
thereof; nor shall any single or partial exercise of any right, remedy, power or
privilege hereunder preclude any other or further exercise thereof or the
exercise of any other right, remedy, power or privilege. The rights, remedies,
powers and privileges herein provided are cumulative and not exclusive of any
rights, remedies, powers and privileges provided by law.

 

10.04 Attorney Costs, Expenses and Taxes. The Borrowers agree (a) to pay or
reimburse the Administrative Agent for all reasonable, out-of-pocket costs and
expenses incurred in connection with the development, preparation, negotiation
and execution of this Agreement and the other Loan Documents and any amendment,
waiver, consent or other modification of the provisions hereof and thereof
(whether or not the transactions contemplated hereby or thereby are
consummated), and the consummation and administration of the transactions
contemplated hereby and thereby, including all reasonable Attorney Costs, and
(b) to pay or reimburse the Administrative Agent and each Lender for all costs
and expenses incurred in connection with the enforcement, attempted enforcement,
or preservation of any rights or remedies under this Agreement or the other Loan
Documents (including all such costs and expenses incurred during any “workout”
or restructuring in respect of the Obligations and during any legal proceeding,
including any proceeding under any Debtor Relief Law), including all Attorney
Costs. The foregoing costs and expenses shall include all search, filing and
recording fees and taxes related

 

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thereto, and other out-of-pocket expenses incurred by the Administrative Agent
and the cost of independent public accountants and other outside experts
retained by the Administrative Agent or, during the existence of an Event of
Default, any Lender. All amounts due under this Section 10.04 shall be payable
within ten Business Days after demand therefor. The agreements in this Section
shall survive the termination of the Aggregate Commitments and repayment of all
other Obligations.

 

10.05 Indemnification by Loan Parties. Whether or not the transactions
contemplated hereby are consummated, the Loan Parties shall indemnify and hold
harmless each Agent-Related Person, each Lender and their respective Affiliates,
directors, officers, employees, counsel, agents and attorneys-in-fact
(collectively the “Indemnitees”) from and against any and all liabilities,
obligations, losses, damages, penalties, claims, demands, actions, judgments,
suits, costs, expenses and disbursements (including reasonable Attorney Costs)
of any kind or nature whatsoever which may at any time be imposed on, incurred
by or asserted against any such Indemnitee in any way relating to or arising out
of or in connection with (a) the execution, delivery, enforcement, performance
or administration of any Loan Document or any other agreement, letter or
instrument delivered in connection with the transactions contemplated thereby or
the consummation of the transactions contemplated thereby, (b) any Commitment,
Loan or Letter of Credit or the use or proposed use of the proceeds therefrom
(including any refusal by the L/C Issuer to honor a demand for payment under a
Letter of Credit if the documents presented in connection with such demand do
not strictly comply with the terms of such Letter of Credit), (c) any actual or
alleged presence or release of Hazardous Materials on or from any property
currently or formerly owned or operated by any Borrower, any Subsidiary or any
other Loan Document Party, or any Environmental Liability related in any way to
any Borrower, any Subsidiary or any other Loan Document Party (provided,
however, that no Borrower shall have any indemnification obligation to an
Indemnitee under this clause (c) with respect to any property currently or
formerly owned or operated by any Loan Party or any Environmental Liability
related to any Loan Party if such Indemnitee has any Indebtedness outstanding to
such Loan Party outside of this Agreement and the other Loan Documents and if
such Indemnitee’s claim for indemnification arises in connection with such other
Indebtedness and not the Indebtedness arising under this Agreement and the other
Loan Documents ), or (d) any actual or prospective claim, litigation,
investigation or proceeding relating to any of the foregoing, whether based on
contract, tort or any other theory (including any investigation of, preparation
for, or defense of any pending or threatened claim, investigation, litigation or
proceeding) and regardless of whether any Indemnitee is a party thereto (all the
foregoing, collectively, the “Indemnified Liabilities”); provided that such
indemnity shall not, as to any Indemnitee, be available to the extent that such
liabilities, obligations, losses, damages, penalties, claims, demands, actions,
judgments, suits, costs, expenses or disbursements are determined by a court of
competent jurisdiction by final and nonappealable judgment to have resulted from
the gross negligence or willful misconduct of such Indemnitee. No Indemnitee
shall be liable for any damages arising from the use by others of any
information or other materials obtained through IntraLinks or other similar
information transmission systems in connection with this Agreement, nor shall
any Indemnitee have any liability for any indirect or consequential damages
relating to this Agreement or any other Loan Document or arising out of its
activities in connection herewith or therewith (whether before or after the
Closing Date). All amounts due under this Section 10.05 shall be payable within
ten Business Days after demand therefor. The agreements in this Section shall
survive the resignation of the Administrative Agent, the

 

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replacement of any Lender, the termination of the Aggregate Commitments and the
repayment, satisfaction or discharge of all the other Obligations.

 

10.06 Payments Set Aside. To the extent that any payment by or on behalf of any
Borrower is made to the Administrative Agent or any Lender, or the
Administrative Agent or any Lender exercises its right of set-off, and such
payment or the proceeds of such set-off or any part thereof is subsequently
invalidated, declared to be fraudulent or preferential, set aside or required
(including pursuant to any settlement entered into by the Administrative Agent
or such Lender in its discretion) to be repaid to a trustee, receiver or any
other party, in connection with any proceeding under any Debtor Relief Law or
otherwise, then (a) to the extent of such recovery, the obligation or part
thereof originally intended to be satisfied shall be revived and continued in
full force and effect as if such payment had not been made or such set-off had
not occurred, and (b) each Lender severally agrees to pay to the Administrative
Agent upon demand its applicable share of any amount so recovered from or repaid
by the Administrative Agent, plus interest thereon from the date of such demand
to the date such payment is made at a rate per annum equal to the Federal Funds
Rate from time to time in effect.

 

10.07 Successors and Assigns.

 

(a) The provisions of this Agreement shall be binding upon and inure to the
benefit of the parties hereto and their respective successors and assigns
permitted hereby, except that none of the Borrowers may assign or otherwise
transfer any of its rights or obligations hereunder without the prior written
consent of each Lender, other than as permitted under Section 7.04(a) hereof,
and no Lender may assign or otherwise transfer any of its rights or obligations
hereunder except (i) to an Eligible Assignee in accordance with the provisions
of subsection (b) of this Section, (ii) by way of participation in accordance
with the provisions of subsection (d) of this Section, or (iii) by way of pledge
or assignment of a security interest subject to the restrictions of subsection
(f) of this Section 10.07 (and any other attempted assignment or transfer by any
party hereto shall be null and void). Nothing in this Agreement, expressed or
implied, shall be construed to confer upon any Person (other than the parties
hereto, their respective successors and assigns permitted hereby, Participants
to the extent provided in subsection (d) of this Section and, to the extent
expressly contemplated hereby, the Indemnitees) any legal or equitable right,
remedy or claim under or by reason of this Agreement.

 

(b) Any Lender may at any time assign to one or more Eligible Assignees all or a
portion of its rights and obligations under this Agreement (including all or a
portion of its Commitment and the Loans (including for purposes of this
subsection (b), participations in L/C Obligations and in Swing Line Loans) at
the time owing to it); provided that (i) except in the case of an assignment of
the entire remaining amount of the assigning Lender’s Commitment and the Loans
at the time owing to it or in the case of an assignment to a Lender or an
Affiliate of a Lender or an Approved Fund (as defined in subsection (g) of this
Section) with respect to a Lender, the aggregate amount of the Commitment (which
for this purpose includes Loans outstanding thereunder) subject to each such
assignment, determined as of the date the Assignment and Assumption with respect
to such assignment is delivered to the Administrative Agent or, if “Trade Date”
is specified in the Assignment and Assumption, as of the Trade Date, shall not
be less than $5,000,000 unless each of the Administrative Agent and, so long as
no Event of Default has occurred and is continuing, the Borrowers otherwise
consent (each such

 

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consent of the Administrative Agent and the Borrowers not to be unreasonably
withheld, conditioned or delayed); (ii) each partial assignment shall be made as
an assignment of a proportionate part of all the assigning Lender’s rights and
obligations under this Agreement with respect to the Loans or the Commitment
assigned, except that this clause (ii) shall not apply to rights in respect of
Swing Line Loans; (iii) any assignment of a Commitment must be approved by the
Administrative Agent, the L/C Issuer and the Swing Line Lender (which approval
shall not be unreasonably withheld, conditioned or delayed) unless the Person
that is the proposed assignee is itself a Lender (whether or not the proposed
assignee would otherwise qualify as an Eligible Assignee); and (iv) the parties
to each assignment shall execute and deliver to the Administrative Agent an
Assignment and Assumption, together with a processing and recordation fee of
$3,500. Notwithstanding the foregoing, as long as no Event of Default has
occurred and is continuing, unless such requirement is waived by the Required
Lenders, no assignment of the Commitment of Bank of America shall be permitted
as long as Bank of America remains the Administrative Agent, if the effect of
such assignment is to cause the remaining Commitment of Bank of America to be
less than $5,000,000. Subject to acceptance and recording thereof by the
Administrative Agent pursuant to subsection (c) of this Section, from and after
the effective date specified in each Assignment and Assumption, the Eligible
Assignee thereunder shall be a party to this Agreement and, to the extent of the
interest assigned by such Assignment and Assumption, have the rights and
obligations of a Lender under this Agreement, and the assigning Lender
thereunder shall, to the extent of the interest assigned by such Assignment and
Assumption, be released from its obligations under this Agreement (and, in the
case of an Assignment and Assumption covering all of the assigning Lender’s
rights and obligations under this Agreement, such Lender shall cease to be a
party hereto but shall continue to be entitled to the benefits of Sections 3.01,
3.04, 3.05, 10.04 and 10.05 with respect to facts and circumstances occurring
prior to the effective date of such assignment). Upon request, each Borrower (at
its respective expense) shall execute and deliver a Note to the assignee Lender.
Any assignment or transfer by a Lender of rights or obligations under this
Agreement that does not comply with this subsection shall be treated for
purposes of this Agreement as a sale by such Lender of a participation in such
rights and obligations in accordance with subsection (d) of this Section.

 

(c) The Administrative Agent, acting solely for this purpose as an agent of the
Borrowers, shall maintain at the Administrative Agent’s Office a copy of each
Assignment and Assumption delivered to it and a register for the recordation of
the names and addresses of the Lenders, and the Commitments of, and principal
amounts of the Loans and L/C Obligations owing to, each Lender pursuant to the
terms hereof from time to time (the “Register”). The entries in the Register
shall be conclusive, and the Borrowers, the Administrative Agent and the Lenders
may treat each Person whose name is recorded in the Register pursuant to the
terms hereof as a Lender hereunder for all purposes of this Agreement,
notwithstanding notice to the contrary. The Register shall be available for
inspection by the Borrowers and any Lender, at any reasonable time and from time
to time upon reasonable prior notice.

 

(d) Any Lender may at any time, without the consent of, or notice to, any of the
Borrowers or the Administrative Agent, sell participations to any Person (other
than a natural person or any Borrower or any Borrower’s Affiliates or
Subsidiaries) (each, a “Participant”) in all or a portion of such Lender’s
rights and/or obligations under this Agreement (including all or a portion of
its Commitment and/or the Loans (including such Lender’s participations in L/C

 

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Obligations and/or Swing Line Loans) owing to it); provided that (i) such
Lender’s obligations under this Agreement shall remain unchanged, (ii) such
Lender shall remain solely responsible to the other parties hereto for the
performance of such obligations and (iii) the Borrowers, the Administrative
Agent and the other Lenders shall continue to deal solely and directly with such
Lender in connection with such Lender’s rights and obligations under this
Agreement. Any agreement or instrument pursuant to which a Lender sells such a
participation shall provide that such Lender shall retain the sole right to
enforce this Agreement and to approve any amendment, modification or waiver of
any provision of this Agreement; provided that such agreement or instrument may
provide that such Lender will not, without the consent of the Participant, agree
to any amendment, waiver or other modification described in the first proviso to
Section 10.01 that directly affects such Participant. Subject to subsection (e)
of this Section, each Borrower agrees that each Participant shall be entitled to
the benefits of Sections 3.01, 3.04 and 3.05 to the same extent as if it were a
Lender and had acquired its interest by assignment pursuant to subsection (b) of
this Section. To the extent permitted by law, each Participant that has been
disclosed to the Borrowers also shall be entitled to the benefits of Section
10.09 as though it were a Lender, provided such Participant agrees to be subject
to Section 2.13 as though it were a Lender.

 

(e) A Participant shall not be entitled to receive any greater payment under
Section 3.01 or 3.04 than the applicable Lender would have been entitled to
receive with respect to the participation sold to such Participant, unless the
sale of the participation to such Participant is made with the OP Borrower’s
prior written consent. A Participant that would be a Foreign Lender if it were a
Lender shall not be entitled to the benefits of Section 3.01 unless the OP
Borrower is notified of the participation sold to such Participant and such
Participant complies, for the benefit of the Borrowers, with Section 10.15 as
though it were a Lender.

 

(f) Any Lender may at any time pledge or assign a security interest in all or
any portion of its rights under this Agreement (including under its Note, if
any) to secure obligations of such Lender, including any pledge or assignment to
secure obligations to a Federal Reserve Bank; provided that no such pledge or
assignment shall release such Lender from any of its obligations hereunder or
substitute any such pledgee or assignee for such Lender as a party hereto.

 

(g) As used herein, the following terms have the following meanings:

 

“Eligible Assignee” means (a) a Lender; (b) an Affiliate of a Lender; (c) an
Approved Fund; and (d) any other Person (other than a natural person) approved
by (i) the Administrative Agent, the L/C Issuer and the Swing Line Lender (which
approval shall not be unreasonably withheld, conditioned or delayed, and (ii)
unless an Event of Default has occurred and is continuing, the Borrowers (such
approval not to be unreasonably withheld, conditioned or delayed); provided that
notwithstanding the foregoing, “Eligible Assignee” shall not include any
Borrower or any Borrower’s Affiliates or Subsidiaries.

 

“Fund” means any Person (other than a natural person) that is engaged in making,
purchasing, holding or otherwise investing in commercial loans and similar
extensions of credit in the ordinary course of its business.

 

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“Approved Fund” means any Fund that is administered or managed by (a) a Lender,
(b) an Affiliate of a Lender or (c) an entity or an Affiliate of an entity that
administers or manages a Lender.

 

(h) Notwithstanding anything to the contrary contained herein, if at any time
Bank of America assigns all of its Commitment and Loans pursuant to subsection
(b) above, Bank of America may, (i) upon 30 days’ notice to the Borrowers and
the Lenders, resign as L/C Issuer and/or (ii) upon 30 days’ notice to the
Borrowers, resign as Swing Line Lender. In the event of any such resignation as
L/C Issuer or Swing Line Lender, the Borrowers shall be entitled to appoint from
among the Lenders a successor L/C Issuer or Swing Line Lender hereunder;
provided, however, that no failure by the Borrowers to appoint any such
successor shall affect the resignation of Bank of America as L/C Issuer or Swing
Line Lender, as the case may be. If Bank of America resigns as L/C Issuer, it
shall retain all the rights and obligations of the L/C Issuer hereunder with
respect to all Letters of Credit outstanding as of the effective date of its
resignation as L/C Issuer and all L/C Obligations with respect thereto
(including the right to require the Lenders to make Base Rate Committed Loans or
fund risk participations in Unreimbursed Amounts pursuant to Section 2.03(c)).
If Bank of America resigns as Swing Line Lender, it shall retain all the rights
of the Swing Line Lender provided for hereunder with respect to Swing Line Loans
made by it and outstanding as of the effective date of such resignation,
including the right to require the Lenders to make Base Rate Committed Loans or
fund risk participations in outstanding Swing Line Loans pursuant to Section
2.04(c).

 

10.08 Confidentiality. Each of the Administrative Agent and the Lenders agrees
to maintain the confidentiality of the Information (as defined below), except
that Information may be disclosed (a) to its and its Affiliates’ directors,
officers, employees and agents, including accountants, legal counsel and other
advisors (it being understood that the Persons to whom such disclosure is made
will be informed of the confidential nature of such Information and instructed
to keep such Information confidential), (b) to the extent requested by any
regulatory authority (including any self-regulatory authority, such as the
National Association of Insurance Commissioners), (c) to the extent required by
applicable laws or regulations or by any subpoena or similar legal process, (d)
to any other party hereto, (e) in connection with the exercise of any remedies
hereunder or under any other Loan Document or any action or proceeding relating
to this Agreement or any other Loan Document or the enforcement of rights
hereunder or thereunder, (f) subject to an agreement containing provisions
substantially the same as those of this Section, to (i) any assignee of or
Participant in, or any prospective assignee of or Participant in, any of its
rights or obligations under this Agreement or (ii) any actual or prospective
counterparty (or its advisors) to any swap or derivative transaction relating to
a Borrower and its obligations, (g) with the consent of any Borrower or (h) to
the extent such Information (x) becomes publicly available other than as a
result of a breach of this Section or (y) becomes available to the
Administrative Agent or any Lender on a nonconfidential basis from a source
other than any Borrower; provided that such source is not bound by a
confidentiality agreement with any Loan Party. For purposes of this Section,
“Information” means all information received from any Loan Document Party
relating to any Loan Document Party or any of their respective businesses, other
than any such information that is available to the Administrative Agent or any
Lender on a nonconfidential basis prior to disclosure by any Loan Document
Party, provided that, in the case of information received from a Loan Document
Party after the date hereof, such information is clearly identified at the time
of delivery as confidential. Any Person required to

 

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maintain the confidentiality of Information as provided in this Section shall be
considered to have complied with its obligation to do so if such Person has
exercised the same degree of care to maintain the confidentiality of such
Information as such Person would accord to its own confidential information.
Notwithstanding anything set forth herein or in any other written or oral
understanding or agreement to which the parties hereto are parties or by which
they are bound, the parties acknowledge and agree that (i) any obligations of
confidentiality contained herein and therein do not apply and have not applied
from the commencement of discussions between the parties to the “tax treatment”
and “tax structure” of the transactions contemplated by this Agreement and (ii)
each party (and each of its employees, representatives, or other agents) may
disclose without limitation of any kind, any information with respect to the tax
treatment and tax structure of the transactions contemplated hereby and all
materials of any kind (including opinions or other tax analyses) that are
provided to any such party relating to such tax treatment and tax structure, all
within the meaning of Treasury Regulation Section 1.6011-4; provided that with
respect to any document or similar item that in either case contains information
concerning the tax treatment or tax structure of the transaction as well as
other information, this sentence shall only apply to such portions of the
document or similar item that relate to the tax treatment or tax structure of
the Loans, Letters of Credit and transactions contemplated hereby, and provided
further, that each party recognizes that the privilege each has to maintain, in
its sole discretion, the confidentiality of a communication relating to the
transactions contemplated hereby, including a confidential communication with
its attorney or a confidential communication with a federally authorized
practitioner under Section 7525 of the Code, is not intended to be affected by
the foregoing. In addition, the Administrative Agent may disclose to any agency
or organization that assigns standard identification numbers to loan facilities
such basic information describing the facilities provided hereunder as is
necessary to assign unique identifiers (and, if requested, supply a copy of this
Agreement), it being understood that the Person to whom such disclosure is made
will be informed of the confidential nature of such Information and, subject to
this Section 10.08, instructed to make available to the public only such
Information as such person normally makes available in the course of its
business of assigning identification numbers.

 

10.09 Set-off. In addition to any rights and remedies of the Lenders provided by
law, during the existence of any Event of Default, each Lender is authorized at
any time and from time to time, without prior notice to the Borrowers or any
other Loan Document Party, any such notice being waived by the Borrowers (each
on its own behalf and on behalf of each Loan Document Party) 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 by, and other
indebtedness at any time owing by, such Lender to or for the credit or the
account of the respective Loan Parties against any and all Obligations owing to
such Lender hereunder or under any other Loan Document, now or hereafter
existing, irrespective of whether or not the Administrative Agent or such Lender
shall have made demand under this Agreement or any other Loan Document and
although such Obligations may be contingent or unmatured or denominated in a
currency different from that of the applicable deposit or indebtedness. Each
Lender agrees promptly to notify the Borrowers and the Administrative Agent
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.

 

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10.10 Interest Rate Limitation. Notwithstanding anything to the contrary
contained in any Loan Document, the interest paid or agreed to be paid under the
Loan Documents shall not exceed the maximum rate of non-usurious interest
permitted by applicable Law (the “Maximum Rate”). If the Administrative Agent or
any Lender shall receive interest in an amount that exceeds the Maximum Rate,
the excess interest shall be applied to the principal of the Loans or, if it
exceeds such unpaid principal, refunded to the appropriate Borrower. In
determining whether the interest contracted for, charged, or received by the
Administrative Agent or a Lender exceeds the Maximum Rate, such Person may, to
the extent permitted by applicable Law, (a) characterize any payment that is not
principal as an expense, fee, or premium rather than interest, (b) exclude
voluntary prepayments and the effects thereof, and (c) amortize, prorate,
allocate, and spread in equal or unequal parts the total amount of interest
throughout the contemplated term of the Obligations hereunder.

 

10.11 Counterparts. This Agreement may be executed in one or more counterparts,
each of which shall be deemed an original, but all of which together shall
constitute one and the same instrument.

 

10.12 Integration. This Agreement, together with the other Loan Documents,
comprises the complete and integrated agreement of the parties on the subject
matter hereof and thereof and supersedes all prior agreements, written or oral,
on such subject matter. In the event of any conflict between the provisions of
this Agreement and those of any other Loan Document, the provisions of this
Agreement shall control; provided that the inclusion of supplemental rights or
remedies in favor of the Administrative Agent or the Lenders in any other Loan
Document shall not be deemed a conflict with this Agreement. Each Loan Document
was drafted with the joint participation of the respective parties thereto and
shall be construed neither against nor in favor of any party, but rather in
accordance with the fair meaning thereof.

 

10.13 Survival of Representations and Warranties. All representations and
warranties made hereunder and in any other Loan Document or other document
delivered pursuant hereto or thereto or in connection herewith or therewith
shall survive the execution and delivery hereof and thereof. Such
representations and warranties have been or will be relied upon by the
Administrative Agent and each Lender, regardless of any investigation made by
the Administrative Agent or any Lender or on their behalf and notwithstanding
that the Administrative Agent or any Lender may have had notice or knowledge of
any Default at the time of any Credit Extension, and shall continue in full
force and effect as of each date made as long as any Loan or any other
Obligation hereunder shall remain unpaid or unsatisfied or any Letter of Credit
shall remain outstanding.

 

10.14 Severability. If any provision of this Agreement or the other Loan
Documents is held to be illegal, invalid or unenforceable, (a) the legality,
validity and enforceability of the remaining provisions of this Agreement and
the other Loan Documents shall not be affected or impaired thereby and (b) the
parties shall endeavor in good faith negotiations to replace the illegal,
invalid or unenforceable provisions with valid provisions the economic effect of
which comes as close as possible to that of the illegal, invalid or
unenforceable provisions. The invalidity of a provision in a particular
jurisdiction shall not invalidate or render unenforceable such provision in any
other jurisdiction.

 

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10.15 Tax Forms.

 

(a) (i) Each Lender that is not a “United States person” within the meaning of
Section 7701(a)(30) of the Code (a “Foreign Lender”) shall deliver to the
Administrative Agent (who will deliver a copy of the same to the OP Borrower),
prior to receipt of any payment subject to withholding under the Code (or upon
accepting an assignment of an interest herein), two duly signed completed copies
of either IRS Form W-8BEN or any successor thereto (relating to such Foreign
Lender and entitling it to an exemption from, or reduction of, withholding tax
on all payments to be made to such Foreign Lender by the Borrowers pursuant to
this Agreement) or IRS Form W-8ECI or any successor thereto (relating to all
payments to be made to such Foreign Lender by the Borrowers pursuant to this
Agreement) or such other evidence satisfactory to the OP Borrower and the
Administrative Agent that such Foreign Lender is entitled to an exemption from,
or reduction of, U.S. withholding tax, including any exemption pursuant to
Section 881(c) of the Code. In addition, a Foreign Lender claiming the exemption
under the so-called “portfolio interest exemption” shall also provide a
statement that such Foreign Lender is eligible for a complete exemption under
Section 871(h) or 881(c) of the Code (including a certificate that it is not a
“bank”). Thereafter and from time to time, each such Foreign Lender shall (A)
promptly submit to the Administrative Agent such additional duly completed and
signed copies of one of such forms (or such successor forms as shall be adopted
from time to time by the relevant United States taxing authorities) as may then
be available under then current United States laws and regulations to avoid, or
such evidence as is satisfactory to the OP Borrower and the Administrative Agent
of any available exemption from or reduction of, United States withholding taxes
in respect of all payments to be made to such Foreign Lender by the Borrowers
pursuant to this Agreement, (B) promptly notify the Administrative Agent of any
change in circumstances which would modify or render invalid any claimed
exemption or reduction, and (C) take such steps as shall not be materially
disadvantageous to it, in the reasonable judgment of such Lender, and as may be
reasonably necessary (including the re-designation of its Lending Office) to
avoid any requirement of applicable Laws that any Borrower make any deduction or
withholding for taxes from amounts payable to such Foreign Lender.

 

(ii) Each Foreign Lender, to the extent it does not act or ceases to act for its
own account with respect to any portion of any sums paid or payable to such
Lender under any of the Loan Documents (for example, in the case of a typical
participation by such Lender), shall deliver to the Administrative Agent on the
date when such Foreign Lender ceases to act for its own account with respect to
any portion of any such sums paid or payable, and at such other times as may be
necessary in the determination of the Administrative Agent (in the reasonable
exercise of its discretion), (A) two duly signed completed copies of the forms
or statements required to be provided by such Lender as set forth above, to
establish the portion of any such sums paid or payable with respect to which
such Lender acts for its own account that is not subject to U.S. withholding
tax, and (B) two duly signed completed copies of IRS Form W-8IMY (or any
successor thereto), together with any information such Lender chooses to
transmit with such form, and any other certificate or statement of exemption
required under the Code, to establish that such Lender is not acting for its own
account with respect to a portion of any such sums payable to such Lender.

 

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(iii) None of the Borrowers shall be required to pay any additional amount to
any Foreign Lender under Section 3.01 (A) with respect to any Taxes required to
be deducted or withheld on the basis of the information, certificates or
statements of exemption such Lender transmits with an IRS Form W-8IMY pursuant
to this Section 10.15(a) or (B) if such Lender shall have failed to satisfy the
foregoing provisions of this Section 10.15(a); provided that if such Lender
shall have satisfied the requirement of this Section 10.15(a) on the date such
Lender became a Lender or ceased to act for its own account with respect to any
payment under any of the Loan Documents, nothing in this Section 10.15(a) shall
relieve any Borrower of its respective obligation to pay any amounts pursuant to
Section 3.01 in the event that, as a result of any change in any applicable law,
treaty or governmental rule, regulation or order, or any change in the
interpretation, administration or application thereof, such Lender is no longer
properly entitled to deliver forms, certificates or other evidence at a
subsequent date establishing the fact that such Lender or other Person for the
account of which such Lender receives any sums payable under any of the Loan
Documents is not subject to withholding or is subject to withholding at a
reduced rate.

 

(iv) The Administrative Agent may, without reduction, withhold any Taxes
required to be deducted and withheld from any payment under any of the Loan
Documents with respect to which any Borrower is not required to pay additional
amounts under this Section 10.15(a).

 

(b) Upon the request of the Administrative Agent, each Lender that is a “United
States person” within the meaning of Section 7701(a)(30) of the Code shall
deliver to the Administrative Agent two duly signed completed copies of IRS Form
W-9. If such Lender fails to deliver such forms, then the Administrative Agent
may withhold from any interest payment to such Lender an amount equivalent to
the applicable back-up withholding tax imposed by the Code, without reduction.

 

(c) If any Governmental Authority asserts that the Administrative Agent did not
properly withhold or backup withhold, as the case may be, any tax or other
amount from payments made to or for the account of any Lender, such Lender shall
indemnify the Administrative Agent therefor, including all penalties and
interest, any taxes imposed by any jurisdiction on the amounts payable to the
Administrative Agent under this Section, and costs and expenses (including
Attorney Costs) of the Administrative Agent. The obligation of the Lenders under
this Section shall survive the termination of the Aggregate Commitments,
repayment of all other Obligations hereunder and the resignation of the
Administrative Agent.

 

10.16 Replacement of Lenders. Under any circumstances set forth in Section 3.02,
Section 3.06(b) or clause “(B)” of the last sentence of Section 10.01 providing
that the Borrowers shall have the right to replace a Lender as a party to this
Agreement, the Borrowers may, upon notice to such Lender and the Administrative
Agent, replace such Lender by causing such Lender to assign its Commitment (with
the assignment fee to be paid by the Borrowers in such instance) pursuant to
Section 10.07(b) to one or more other Lenders or Eligible Assignees procured by
the Borrowers; provided, however, that if the Borrowers elect to exercise such
right with respect to any Lender pursuant to Section 3.02 or Section 3.06(b), it
shall be obligated to replace all Lenders that have made similar determinations
of unlawfulness to maintain or fund Eurodollar Rate Loans under Section 3.02 or
have made similar requests for compensation

 

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pursuant to Section 3.01 or 3.04, as applicable. The Borrowers shall (a) pay in
full all principal, interest, fees and other amounts owing to such Lender
through the date of replacement (including any amounts payable pursuant to
Section 3.05), (b) provide appropriate assurances and indemnities (which may
include letters of credit) to the L/C Issuer and the Swing Line Lender as each
may reasonably require with respect to any continuing obligation to fund
participation interests in any L/C Obligations or any Swing Line Loans then
outstanding, and (c) release such Lender from its obligations under the Loan
Documents. Any Lender being replaced shall execute and deliver an Assignment and
Assumption with respect to such Lender’s Commitment and outstanding Loans and
participations in L/C Obligations and Swing Line Loans.

 

10.17 Governing Law.

 

(a) THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE
LAW OF THE STATE OF CALIFORNIA APPLICABLE TO AGREEMENTS MADE AND TO BE PERFORMED
ENTIRELY WITHIN SUCH STATE; PROVIDED THAT THE ADMINISTRATIVE AGENT AND EACH
LENDER SHALL RETAIN ALL RIGHTS ARISING UNDER FEDERAL LAW.

 

(b) ANY LEGAL ACTION OR PROCEEDING WITH RESPECT TO THIS AGREEMENT OR ANY OTHER
LOAN DOCUMENT MAY BE BROUGHT IN THE COURTS OF THE STATE OF CALIFORNIA SITTING IN
SAN FRANCISCO COUNTY OR OF THE UNITED STATES FOR THE NORTHERN DISTRICT OF SUCH
STATE, AND BY EXECUTION AND DELIVERY OF THIS AGREEMENT, EACH BORROWER, THE
ADMINISTRATIVE AGENT AND EACH LENDER CONSENTS, FOR ITSELF AND IN RESPECT OF ITS
PROPERTY, TO THE NON-EXCLUSIVE JURISDICTION OF THOSE COURTS. EACH BORROWER, THE
ADMINISTRATIVE AGENT AND EACH LENDER IRREVOCABLY WAIVES ANY OBJECTION, INCLUDING
ANY OBJECTION TO THE LAYING OF VENUE OR BASED ON THE GROUNDS OF FORUM NON
CONVENIENS, WHICH IT MAY NOW OR HEREAFTER HAVE TO THE BRINGING OF ANY ACTION OR
PROCEEDING IN SUCH JURISDICTION IN RESPECT OF ANY LOAN DOCUMENT OR OTHER
DOCUMENT RELATED THERETO. EACH BORROWER, THE ADMINISTRATIVE AGENT AND EACH
LENDER WAIVES PERSONAL SERVICE OF ANY SUMMONS, COMPLAINT OR OTHER PROCESS, WHICH
MAY BE MADE BY ANY OTHER MEANS PERMITTED BY THE LAW OF SUCH STATE.

 

10.18 Waiver of Right to Trial by Jury. EACH PARTY TO THIS AGREEMENT HEREBY
EXPRESSLY WAIVES ANY RIGHT TO TRIAL BY JURY OF ANY CLAIM, DEMAND, ACTION OR
CAUSE OF ACTION ARISING UNDER ANY LOAN DOCUMENT OR IN ANY WAY CONNECTED WITH OR
RELATED OR INCIDENTAL TO THE DEALINGS OF THE PARTIES HERETO OR ANY OF THEM WITH
RESPECT TO ANY LOAN DOCUMENT, OR THE TRANSACTIONS RELATED THERETO, IN EACH CASE
WHETHER NOW EXISTING OR HEREAFTER ARISING, AND WHETHER FOUNDED IN CONTRACT OR
TORT OR OTHERWISE; AND EACH PARTY HEREBY AGREES AND CONSENTS THAT ANY SUCH
CLAIM, DEMAND, ACTION OR CAUSE OF ACTION SHALL BE DECIDED BY COURT TRIAL WITHOUT
A JURY, AND THAT ANY PARTY TO THIS AGREEMENT MAY FILE AN ORIGINAL COUNTERPART OR
A COPY OF THIS

 

112

--------------------------------------------------------------------------------

SECTION WITH ANY COURT AS WRITTEN EVIDENCE OF THE CONSENT OF THE SIGNATORIES
HERETO TO THE WAIVER OF THEIR RIGHT TO TRIAL BY JURY.

 

10.19 Time of the Essence. Time is of the essence of the Loan Documents.

 

[Remainder Of This Page Intentionally Left Blank]

 

113

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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly
executed as of the date first above written.

 

CATELLUS DEVELOPMENT CORPORATION By:  

/s/ William M. Lau

--------------------------------------------------------------------------------

Name:

 

William M. Lau

Title:

 

Vice President, Finance & Treasurer

 

1

--------------------------------------------------------------------------------

CATELLUS LAND AND DEVELOPMENT CORPORATION By:  

/s/ William M. Lau

--------------------------------------------------------------------------------

Name:

 

William M. Lau

Title:

 

Vice President, Finance and Treasurer

 

2

--------------------------------------------------------------------------------

BANK OF AMERICA, N.A., as

Administrative Agent

By:  

/s/ Frank H. Stumpf

--------------------------------------------------------------------------------

Name:

 

Frank H. Stumpf

Title:

 

Principal

 

3

--------------------------------------------------------------------------------

BANK OF AMERICA, N.A., as a Lender,

L/C Issuer and Swing Line Lender

By:  

/s/ Frank H. Stumpf

--------------------------------------------------------------------------------

Name:

 

Frank H. Stumpf

Title:

 

Principal

 

4

--------------------------------------------------------------------------------

FLEET NATIONAL BANK, as

Syndication Agent and as a Lender

By:  

/s/ Kathleen M. Ahern

--------------------------------------------------------------------------------

Name:

 

Kathleen M. Ahern

Title:

 

Director

 

5

--------------------------------------------------------------------------------

BANK ONE, NA, as

Documentation Agent and as a Lender

By:  

/s/ Timothy J. Carey

--------------------------------------------------------------------------------

Name:

 

Timothy J. Carey

Title:

 

Director, Capital Markets

 

6

--------------------------------------------------------------------------------

WELLS FARGO BANK, NATIONAL

ASSOCIATION, as Managing Agent and

as a Lender

By:  

/s/ Todd T. Popovich

--------------------------------------------------------------------------------

Name:

 

Todd T. Popovich

Title:

 

Vice President

 

7

--------------------------------------------------------------------------------

UNION BANK OF CALIFORNIA, N.A., as

Managing Agent and as a Lender

By:  

/s/ David D. Murphy

--------------------------------------------------------------------------------

Name:

 

David D. Murphy

Title:

 

Senior Vice President

 

8

--------------------------------------------------------------------------------

COMMERZBANK AG, NEW YORK AND

GRAND CAYMAN BRANCHES, as a Lender

By:  

/s/ R. William Knickerbocker

--------------------------------------------------------------------------------

Name:

 

R. William Knickerbocker

Title:

 

Vice President

By:  

/s/ David M. Schwarz

--------------------------------------------------------------------------------

Name:

 

David M. Schwarz

Title:

 

Senior Vice President

 

9

--------------------------------------------------------------------------------

KEYBANK NATIONAL ASSOCIATION, as

a Lender

By:  

/s/ Cheryl VanKampenberg

--------------------------------------------------------------------------------

Name:

 

Cheryl VanKampenberg

Title:

 

Assistant Vice President

 

10

--------------------------------------------------------------------------------

PNC BANK, NATIONAL ASSOCIATION, as

a Lender

By:  

/s/ Paul Jamiolkowski

--------------------------------------------------------------------------------

Name:

 

Paul Jamiolkowski

Title:

 

Vice President

 

11

--------------------------------------------------------------------------------

BANK OF THE WEST, A CALIFORNIA

BANKING CORPORATION, as a Lender

By:  

/s/ Lynn D. Poster

--------------------------------------------------------------------------------

Name:

 

Lynn D. Poster

Title:

 

Senior Vice President, Manager

 

12

--------------------------------------------------------------------------------

WASHINGTON MUTUAL BANK, FA, as

a Lender

By:  

/s/ Sudeep S. Dhillon

--------------------------------------------------------------------------------

Name:

 

Sudeep S. Dhillon

Title:

 

Credit Manager

 

13

--------------------------------------------------------------------------------

COMERICA BANK, as a Lender

By:  

/s/ Paul Hayashi

--------------------------------------------------------------------------------

Name:

 

Paul Hayashi

Title:

 

First Vice President-Western Division

 

14

--------------------------------------------------------------------------------

SCHEDULE 7.11

FINANCIAL COVENANT REQUIREMENTS

 

Each of the following financial requirements shall be calculated as of the last
day of each fiscal quarter on a consolidated basis for the Consolidated Group,
but shall be satisfied at all times:

 

(a) Minimum Consolidated Tangible Net Worth.

 

(i) For each fiscal quarter up to and including the fiscal quarter that ends on
or after the date of the E&P Distribution, the Borrowers shall not permit
Consolidated Tangible Net Worth at any time to be less than $452,750,000; plus
(A) the sum of (y) 75% of positive Consolidated Net Income for each fiscal
quarter beginning with the second fiscal quarter of 2003 (with no deductions for
any net losses in any fiscal quarter); and (z) 85% of Pre-REIT Conversion Net
Offering Proceeds; minus (B) the sum of (1) repurchases and redemptions of the
OP Borrower’s Capital Stock (either by the retiring of such Capital Stock or by
the booking of such interests as treasury stock, as long as such interests are
not included in Shareholders’ Equity for the purposes of determining
Consolidated Tangible Net Worth); and (2) cash distributions made from and after
April 1, 2002, on account of any Capital Stock of the OP Borrower, in an amount
not to exceed 50% of aggregate positive Consolidated Net Income from and after
April 1, 2002.

 

(ii) From and after the first full fiscal quarter that begins after the date of
the E&P Distribution, the Borrowers shall not permit Consolidated Tangible Net
Worth at any time to be less than the sum of (A) the lesser of (y) the amount
that is equal to 85% of Consolidated Tangible Net Worth as of the end of the
fiscal quarter in which the E&P Distribution is made or (z) $452,750,000; plus
(B) 85% of Post-REIT Conversion Net Offering Proceeds.

 

(b) Maximum Leverage. The Borrowers shall not permit the ratio of Consolidated
Total Liabilities to Total Asset Value as of the end of any fiscal quarter of
the OP Borrower to exceed 0.65:1.

 

(c) Maximum Secured Indebtedness. The Borrowers shall not permit the ratio of
(i) Total Secured Indebtedness to (ii) Total Asset Value as of the end of any
fiscal quarter of the OP Borrower to exceed 0.50:1.

 

(d) Minimum Unencumbered Interest Coverage. The Borrowers shall not permit the
ratio of (i) Unencumbered Property Adjusted Aggregate NOI, to (ii) Consolidated
Interest Expense on Unsecured Indebtedness for the four fiscal quarters ending
on the date of measurement, to be less than the following:

 

Closing Date through September 30, 2004:

   1.40:1

October 1, 2004 through September 30, 2005

   1.45:1

October 1, 2005 through the Maturity Date:

   1.50:1

 

i

--------------------------------------------------------------------------------

(e) Minimum Fixed Charge Coverage. The Borrowers shall not permit the ratio of
Consolidated Adjusted EBITDA to Consolidated Fixed Charges for the four fiscal
quarters ending on the date of measurement, to be less than 1.30:1.

 

(f) Maximum Secured Recourse Indebtedness. The Borrowers shall not permit the
Secured Recourse Indebtedness of the Consolidated Group to exceed 15% of Total
Asset Value.

 

For the purposes of the financial covenants set forth above, the following
defined terms shall have the following meanings:

 

“Consolidated Adjusted EBITDA” means, for any fiscal quarter and without double
counting any item, Consolidated Net Income for such fiscal quarter; plus the
following for (y) the Consolidated Group (excluding minority interests of
Subsidiaries that are not Wholly-Owned Subsidiaries), and (z) the Loan Parties’
Allocable Share of Investment Affiliates: (a) the following to the extent
deducted in calculating such Consolidated Net Income: (i) interest expense (as
it appears on the income statement of the Consolidated Group in accordance with
GAAP) for such fiscal quarter, (ii) the provision for federal, state, local and
foreign income taxes payable by the Consolidated Group for such fiscal quarter,
(iii) the amount of depreciation and amortization expense deducted in
determining such Consolidated Net Income, and (iv) the non-cash component of any
extraordinary or non-recurring items which was deducted in determining such
Consolidated Net Income, including non-cash expenses attributable to the
awarding or conversion of employee stock option or grants; and (v) REIT
Transition Expenses; and minus the following for (y) the Consolidated Group
(excluding minority interests of Subsidiaries that are not Wholly-Owned
Subsidiaries), and (z) the Loan Parties’ Allocable Share of Investment
Affiliates: (b) the sum of (i) all non-cash items increasing Consolidated Net
Income for such fiscal quarter, (ii) the Adjusted CAPEX for such fiscal quarter,
and (iii) gains from extraordinary items or assets sales which are included in
determining Consolidated Net Income, including gains from sales of Real Property
and Unimproved Land.

 

“Consolidated Fixed Charges” means, as of the end of any fiscal quarter (a) the
sum of (i) Consolidated Interest Expense for the fiscal quarter, plus (ii)
scheduled or otherwise required principal amortization for the fiscal quarter on
all Indebtedness of the Consolidated Group, but excluding any balloon payment
due at maturity, plus (iii) all dividends accrued during the fiscal quarter in
respect of any and all outstanding preferred shares of Capital Stock of the
Consolidated Group, whether or not declared or paid; minus (b) the portion of
all items referred to in the foregoing clause (a) for each Subsidiary that is
not a Wholly-Owned Subsidiary, attributable to the minority interests in such
Subsidiary; plus (c) the portion of all items referred to in the foregoing
clause (a) owned by each Investment Affiliate that is not a member of the
Consolidated Group, equal to the Borrowers’ and Guarantors’ Allocable Share of
such Investment Affiliate.

 

ii

--------------------------------------------------------------------------------

“Consolidated Interest Expense” means, for any fiscal quarter, (a) the sum of
(i) all interest, premium payments, debt discount, fees, charges and related
expenses of the Consolidated Group in connection with borrowed money or
reimbursement obligations with respect to letters of credit (including accrued
or capitalized interest) or in connection with the deferred purchase price of
assets, in each case to the extent treated as interest in accordance with GAAP,
but excluding interest paid from construction loan interest reserves; plus (ii)
the portion of rent expense of the Consolidated Group with respect to such
fiscal quarter under capital leases that is treated as interest in accordance
with GAAP; minus (b) the portion of all items referred to in the foregoing
clause (a) for each Subsidiary that is not a Wholly-Owned Subsidiary,
attributable to the minority interests in such Subsidiary; plus (c) the portion
of all items referred to in the foregoing clause (a) owned by each Investment
Affiliate that is not a member of the Consolidated Group, equal to the
Borrowers’ and Guarantors’ Allocable Share of such Investment Affiliate.

 

“Consolidated Net Income” means, for any fiscal quarter, for the Consolidated
Group, (a) the net income of the Consolidated Group for that fiscal quarter,
minus (b) the portion of all such net income for each Subsidiary that is not a
Wholly-Owned Subsidiary, attributable to the minority interests in such
Subsidiary; plus (c) the portion of net income of each Investment Affiliate that
is not a member of the Consolidated Group, equal to the Borrowers’ and
Guarantors’ Allocable Share of such Investment Affiliate, all as determined in
accordance with GAAP, provided, however, that rentals included in net income
shall (i) be based upon the actual cash rentals payable to the Consolidated
Group or such Investment Affiliate (as applicable) during such fiscal quarter,
without giving effect to straight-line rental accounting under GAAP, and (ii)
exclude all deferred rentals for such fiscal quarter.

 

“Consolidated Tangible Net Worth” means, as of any date of determination, for
the Consolidated Group, (a) the Shareholders’ Equity of the Consolidated Group
on that date, exclusive of minority interests, minus (b) the Intangible Assets
of the Consolidated Group on that date, all as determined in accordance with
GAAP.

 

“Consolidated Total Liabilities” means as of any date, and without double
counting any item, the sum of (a) the Total Liabilities of the Consolidated
Group as of such date, plus (b) the Recourse Indebtedness of any Investment
Affiliate that is not a member of the Consolidated Group and that is Guaranteed
by any Loan Party or that is otherwise recourse to any Loan Party (in each case,
to the extent of such Guarantee or recourse), plus (c) to the extent not
included in (b), the portion of the Total Liabilities of each Investment
Affiliate that is not a member of the Consolidated Group, equal to the
Borrowers’ and Guarantors’ Allocable Share of such Investment Affiliate; minus
(d) 50% of the deferred income tax liabilities of the Consolidated Group as of
such date; minus (e) the amount by which the unrestricted cash and Cash
Equivalents of the Consolidated Group exceeds $100,000,000 as of such date;
minus (f) the portion of the Total Liabilities of each Subsidiary that is not a
Wholly-Owned Subsidiary attributable to the minority interests in such
Subsidiary, as long as such Total Liabilities are not Guaranteed by any Loan
Party and are not otherwise recourse to any Loan Party (in each case to the
extent of such Guarantee or recourse).

 

iii

--------------------------------------------------------------------------------

“Contingent Obligation” means, as to any Person, without duplication, (a) 10% of
the sum of: (i) standby letters of credit, performance bonds and surety bonds
under which such Person is an account party or obligor, which standby letters of
credit, performance bonds or surety bonds secure obligations to develop Real
Property or Unimproved Land; plus (ii) any completion guaranty of such Person,
guaranteeing obligations to develop Real Property or Unimproved Land, valued at
the cost of the remaining work to be completed and guaranteed thereby; plus
(iii) obligations of such Person supporting the payment to bondholders under any
tax increment bonds or community facility district bonds; plus (b) all stand-by
letters of credit not described in clause (a) under which such Person is the
account party; plus (c) all obligations of such Person to purchase or acquire
any asset or to make any investment, including all such obligations that shall
become binding or enforceable only upon the fulfillment of certain conditions
precedent, the passage of time, or both; plus (d) all other contingent
liabilities of every nature and kind of such Person that should be disclosed as
contingent liabilities on the balance sheet of such Person in accordance with
GAAP.

 

“Intangible Assets” means assets that are considered to be intangible assets
under GAAP, including customer lists, goodwill, computer software, copyrights,
trade names, trademarks, patents, franchises, licenses, unamortized deferred
charges, unamortized debt discount and capitalized research and development
costs.

 

“REIT Transition Expenses” means the one-time expenses related to the REIT
Conversion, including employee severance costs and fees for legal, accounting,
advisory and other professional services, not to exceed $15,000,000 in the
aggregate.

 

“Secured Indebtedness” means all Indebtedness of a Person that is secured by a
Lien on any asset of such Person, provided that, at the time that such
Indebtedness is incurred, the value of the collateral provided by such Person to
secure such Indebtedness is approximately equal to, or more than, the maximum
principal amount available to such Person under the documents evidencing such
Indebtedness.

 

“Secured Recourse Indebtedness” means all Secured Indebtedness of a Person that
is also the Recourse Indebtedness of such Person. The amount of any Secured
Recourse Indebtedness shall be deemed to be an amount equal to the stated or
determinable amount of Secured Indebtedness that is recourse to such Person and
for which such Person is liable or obligated.

 

“Shareholders’ Equity” means, as of any date of determination, consolidated
shareholders’ equity, determined in accordance with GAAP.

 

“Total Asset Value” means, without double counting any item, the sum of:

 

(a) cash and the book value of all Cash Equivalents owned by the Borrowers, the
Guarantors and each Wholly-Owned Subsidiary as of the most recently ended fiscal
quarter (excluding cash or Cash Equivalents that are reserved or subject to
restrictions, including, without limitation, tenant deposits) in excess of an
aggregate working capital reserve of $20,000,000, and up to an aggregate maximum
of $80,000,000; plus

 

iv

--------------------------------------------------------------------------------

(b) the value of any Unimproved Land owned in fee simple title by the Borrowers,
the Guarantors and each Wholly-Owned Subsidiary, determined to be the cost of
such Unimproved Land in accordance with GAAP; plus

 

(c) the value of any Real Property (other than Development Property) owned in
fee simple title by the Borrowers, the Guarantors and each Wholly-Owned
Subsidiary (or (i) if subject to a Permitted Bond Transaction, leased by such
Borrower, Guarantor or Wholly-Owned Subsidiary, or (ii) if subject to a Safe
Harbor Transaction, owned by the applicable Tax Accommodator ) for less than one
fiscal quarter, determined to be the book value of such Real Property in
accordance with GAAP; plus

 

(d) the value of any Real Property (other than Development Property) owned in
fee simple title by the Borrowers, the Guarantors and each Wholly-Owned
Subsidiary (or (i) if subject to a Permitted Bond Transaction, leased by such
Borrower, Guarantor or Wholly-Owned Subsidiary, or (ii) if subject to a Safe
Harbor Transaction, owned by the applicable Tax Accommodator ) for at least one
and less than four fiscal quarters, determined by calculating the annualized
Adjusted Aggregate NOI for such Real Property based upon the most recent fiscal
quarter, capitalized at the Applicable Capitalization Rate; plus

 

(e) the value of any Real Property (other than Development Property) owned in
fee simple title by the Borrowers, the Guarantors and each Wholly-Owned
Subsidiary (or (i) if subject to a Permitted Bond Transaction, leased by such
Borrower, Guarantor or Wholly-Owned Subsidiary, or (ii) if subject to a Safe
Harbor Transaction, owned by the applicable Tax Accommodator ) for four or more
fiscal quarters, determined by calculating the Adjusted Aggregate NOI for such
Real Property for the four most recent fiscal quarters, capitalized at the
Applicable Capitalization Rate; plus

 

(f) the value of any Development Property owned in fee simple title by the
Borrowers, the Guarantors and each Wholly-Owned Subsidiary (or (i) if subject to
a Permitted Bond Transaction, leased by such Borrower, Guarantor or Wholly-Owned
Subsidiary, or (ii) if subject to a Safe Harbor Transaction, owned by the
applicable Tax Accommodator ) that is not otherwise included in Adjusted
Aggregate NOI, determined by the cost of such Development Property in accordance
with GAAP; plus

 

(g) the book value (net of any applicable reserves) of all other tangible assets
of the Borrowers, the Guarantors and each Wholly-Owned Subsidiary as shown on
its most recent quarterly financial statements prepared on a consolidated basis
in accordance with GAAP; plus

 

(h) the portion of all items referred to in the foregoing clauses (a)-(g) owned
by each Subsidiary that is not a Wholly-Owned Subsidiary (or (i) if subject to a
Permitted Bond Transaction, leased by such Subsidiary, or (ii) if subject to a
Safe Harbor Transaction, owned by the applicable Tax Accommodator), equal to the
Borrowers’ and Guarantors’ Allocable Share of such Subsidiary; plus

 

v

--------------------------------------------------------------------------------

(i) the portion of all items referred to in the foregoing clauses (a)-(g) owned
by each Investment Affiliate that is not a Subsidiary (or (i) if subject to a
Permitted Bond Transaction, leased by such Investment Affiliate, or (ii) if
subject to a Safe Harbor Transaction, owned by the applicable Tax Accommodator),
equal to the Borrowers’ and Guarantors’ Allocable Share of such Investment
Affiliate.

 

“Total Liabilities” of a Person means the sum of, without duplication: (a) all
Indebtedness of such Person, plus (b) all other liabilities of every nature and
kind of such Person that should be included as liabilities on the balance sheet
of such Person in accordance with GAAP, plus (c) all other Contingent
Obligations of such Person.

 

“Total Secured Indebtedness” means (a) all Secured Indebtedness of the
Consolidated Group, plus (b) the portion of the Secured Indebtedness of each
Investment Affiliate that is not a member of the Consolidated Group, equal to
the Borrowers’ and Guarantors’ Allocable Share of such Investment Affiliate;
minus (c) the portion of all Secured Indebtedness of each Subsidiary that is not
a Wholly-Owned Subsidiary, attributable to the minority interests in such
Subsidiary.

 

“Unencumbered Property Adjusted Aggregate NOI” means the Adjusted Aggregate NOI
for all Unencumbered Property owned in fee simple title by the Consolidated
Group, excluding the portion of the Adjusted Aggregate NOI for all Unencumbered
Property owned in fee simple title by each Subsidiary that is not a Wholly-Owned
Subsidiary, attributable to the minority interests in such Subsidiary, plus the
portion of the Adjusted Aggregate NOI for all Unencumbered Property owned in fee
simple title by each Investment Affiliate that is not a member of the
Consolidated Group, equal to the Borrowers’ and Guarantors’ Allocable Share of
such Investment Affiliate.

 

“Unsecured Indebtedness” means any Indebtedness that is not Secured
Indebtedness.

 

vi

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EXHIBIT F(1)

 

FORM OF GUARANTY

(REIT GUARANTOR)

 

THIS GUARANTY (this “Guaranty”), dated as of                     , 20        ,
is made by Catellus SubCo, Inc., a Delaware corporation (the “Guarantor”), in
favor of the Lenders party to the Credit Agreement referred to below, Fleet
National Bank, as Syndication Agent, Bank One, NA, as Documentation Agent, Wells
Fargo Bank, National Association, as Managing Agent, Union Bank of California,
N.A., as Managing Agent (Syndication Agent, Documentation Agent, and Managing
Agents, collectively, the “Other Agents”), and Bank of America, N.A., as
Administrative Agent (in such capacity, the “Administrative Agent”), the letter
of credit issuer (in such capacity, the “the L/C Issuer”), and the swing line
lender (in such capacity, the “Swing Line Lender”).

 

A. Catellus Development Corporation, a Delaware corporation, as a borrower (the
“Pre-REIT Conversion Borrower” or “OP Borrower”), Catellus Land and Development
Corporation, a Delaware corporation, as a borrower (the “TRS Borrower,” and
together with the OP Borrower, each a “Borrower” and together, the “Borrowers”),
the Lenders from time to time party to the Credit Agreement, as defined below
(each a “Lender” and, collectively, the “Lenders”), the Other Agents, and Bank
of America, N.A., as Administrative Agent, the L/C Issuer, and the Swing Line
Lender, are parties to a Credit Agreement dated as of September 15, 2003 (as
amended, modified, renewed or extended from time to time, the “Credit
Agreement”).

 

B. As anticipated under the Credit Agreement, the Pre-REIT Conversion Borrower
merged with and into Catellus Operating Limited Partnership, a Delaware limited
partnership (the “Post-REIT Conversion Borrower” or the “OP Borrower”), with the
Post-REIT Conversion Borrower being the surviving entity of such merger. The
Post-REIT Conversion Borrower has assumed all of the obligations and liabilities
of the Pre-REIT Conversion Borrower under the Credit Agreement and the other
Loan Documents, and is and shall be the “OP Borrower” for all purposes under the
Credit Agreement and the other Loan Documents. As of the date of the execution
of this Guaranty, the Guarantor hereunder owns 100% of the outstanding
membership interests in the Post-REIT Conversion Borrower.

 

C. It is a condition precedent to the obligation of the Swing Line Lender, the
L/C Issuer and each Lender to maintain its Commitment under the Credit Agreement
and to continue to honor requests for Borrowings and issuances of Letters of
Credit under the Credit Agreement that the Guarantor guarantee the indebtedness
and other obligations of the Borrowers to the Guaranteed Parties under or in
connection with the Credit Agreement, as set forth herein. The Guarantor will
derive substantial direct and indirect benefits from the making of the Loans to,
and issuances of Letters of Credit for the account of, the Borrowers pursuant to
the Credit Agreement (which benefits are hereby acknowledged by the Guarantor).

 

NOW THEREFORE, to induce the Administrative Agent, the L/C Issuer, the Swing
Line Lender, the Other Agents, and the Lenders to maintain its Commitment under
the Credit Agreement and to continue to honor requests for Borrowings and
issuances of Letters of Credit

 

F(1)- 1

 

Form of Guaranty (REIT Guarantor)

--------------------------------------------------------------------------------

under the Credit Agreement, and in consideration thereof, the Guarantor hereby
agrees as follows:

 

SECTION 1 Definitions; Interpretation.

 

(a) Terms Defined in Credit Agreement. All capitalized terms used in this
Guaranty (including in the recitals hereof) and not otherwise defined herein
shall have the meanings assigned to them in the Credit Agreement.

 

(b) Certain Defined Terms. As used in this Guaranty (including in the recitals
hereof), the following terms shall have the following meanings:

 

“Bankruptcy Code” means the Federal Bankruptcy Reform Act of 1978 (11 U.S.C.
§101, et seq.).

 

“Guaranteed Obligations” has the meaning set forth in Section 2.

 

“Guaranteed Parties” means the Administrative Agent, the L/C Issuer, the Swing
Line Lender, the Syndication Agent, the Documentation Agent, the Managing
Agents, and the Lenders, and their successors and assigns.

 

“Guarantor Documents” means this Guaranty and all other certificates, documents,
agreements and instruments delivered by or on behalf of the Guarantor to any
Guaranteed Party under or in connection with this Guaranty and the Loan
Documents.

 

“Insolvency Proceeding” means, with respect to any Person, (a) any case, action
or proceeding with respect to such Person before any court or other Governmental
Authority relating to bankruptcy, reorganization, insolvency, liquidation,
receivership, dissolution, winding-up or relief of debtors, or (b) any general
assignment for the benefit of creditors, composition, marshalling of assets for
creditors, or other, similar arrangement in respect of its creditors generally
or any substantial portion of its creditors; in either case undertaken under
Debtor Relief Laws.

 

“Solvent” means, with respect to any Person, that as of the date of
determination: (a) the fair valuation of the sum of such Person’s debt
(including contingent liabilities) does not exceed all of its property, at a
fair valuation on a going-concern basis; (b) the Person reasonably expects to be
able to pay the liabilities on such Person’s then existing debts as they become
absolute and matured; (c) such Person’s capital is not unreasonably small in
relation to its business or any contemplated or undertaken transaction; and (d)
such Person does not intend to incur, or believe (nor should it reasonably
believe) that it will incur, debts beyond its ability to pay such debts as they
become due. For purposes of this definition, the amount of any contingent
liability at any time shall be computed as the amount that, in light of all of
the facts and circumstances existing at such time, represents the amount that
can reasonably be expected to become an actual or matured liability
(irrespective of whether such contingent liabilities meet the criteria for
accrual under Statement of Financial Accounting Standards No. 5).

 

“Subordinated Debt” has the meaning set forth in Section 7(a).

 

“Subordinated Debt Payment” has the meaning set forth in Section 7(b).

 

F(1)- 2

 

Form of Guaranty (REIT Guarantor)

--------------------------------------------------------------------------------

(c) Interpretation. The rules of interpretation set forth in Sections 1.02 to
1.05 of the Credit Agreement shall be applicable to this Guaranty and are
incorporated herein by this reference.

 

SECTION 2 Guaranty. The Guarantor hereby unconditionally and irrevocably
guarantees to the Guaranteed Parties, and their respective successors,
endorsees, transferees and assigns, the full and prompt payment when due
(whether at stated maturity, by required prepayment, declaration, acceleration,
demand or otherwise) and performance of the indebtedness, liabilities and other
obligations of the Borrowers to the Guaranteed Parties under or in connection
with the Credit Agreement, the Notes and the other Loan Documents, including all
unpaid principal of the Loans, all amounts owing in respect of the L/C
Obligations, all interest accrued thereon, all fees due under the Credit
Agreement, all indemnification obligations of the Borrowers under or in
connection with the Credit Agreement, the Notes and the other Loan Documents,
and all other amounts payable by the Borrowers to the Guaranteed Parties
thereunder or in connection therewith. The terms “indebtedness,” “liabilities”
and “obligations” are used herein in their most comprehensive sense and include
any and all advances, debts, obligations and liabilities, now existing or
hereafter arising, whether voluntary or involuntary and whether due or not due,
absolute or contingent, liquidated or unliquidated, determined or undetermined,
and whether recovery upon such indebtedness, liabilities and obligations may be
or hereafter become unenforceable or shall be an allowed or disallowed claim
under any Debtor Relief Law, and including interest that accrues after the
commencement by or against any Borrower or any Loan Document Party thereof of
any proceeding under any Debtor Relief Laws naming such Person as the debtor in
such proceeding. The foregoing indebtedness, liabilities and other obligations
of the Borrowers, and all other indebtedness, liabilities and obligations to be
paid or performed by the Guarantor in connection with this Guaranty (including
any and all amounts due under Section 15), shall hereinafter be collectively
referred to as the “Guaranteed Obligations.”

 

SECTION 3 Liability of Guarantor. The liability of the Guarantor under this
Guaranty shall be irrevocable, absolute, independent and unconditional, and
shall not be affected by any circumstance which might constitute a discharge of
a surety or guarantor other than the indefeasible payment and performance in
full of all Guaranteed Obligations. In furtherance of the foregoing and without
limiting the generality thereof, the Guarantor agrees as follows:

 

(i) the Guarantor’s liability hereunder shall be the immediate, direct, and
primary obligation of the Guarantor and shall not be contingent upon any
Guaranteed Party’s exercise or enforcement of any remedy it may have against any
Borrower or any other Person, or against any Collateral or any other collateral
securing the Guaranteed Obligations;

 

(ii) this Guaranty is a guaranty of payment when due and not merely of
collectibility;

 

(iii) the Guaranteed Parties may enforce this Guaranty upon the occurrence and
during the continuance of an Event of Default notwithstanding the existence of
any dispute between any of the Guaranteed Parties and any Borrower with respect
to the existence of such Event of Default; provided that no Guarantor shall be
deemed to have waived any defenses based on the defense that the Guaranteed
Obligations have been paid in full;

 

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(iv) the Guarantor’s payment of a portion, but not all, of the Guaranteed
Obligations shall in no way limit, affect, modify or abridge the Guarantor’s
liability for any portion of the Guaranteed Obligations remaining unsatisfied;
and

 

(v) the Guarantor’s liability with respect to the Guaranteed Obligations shall
remain in full force and effect without regard to, and shall not be impaired or
affected by, nor shall the Guarantor be exonerated or discharged by, any of the
following events:

 

(A) any Insolvency Proceeding with respect to any Borrower, the Guarantor, any
other Loan Document Party or any other Person;

 

(B) any limitation, discharge, or cessation of the liability of any Borrower,
the Guarantor, any other Loan Document Party or any other Person for any
Guaranteed Obligations due to any statute, regulation or rule of law, or any
invalidity or unenforceability in whole or in part of any of the Guaranteed
Obligations or the Loan Documents;

 

(C) any merger, acquisition, consolidation or change in structure of any
Borrower, the Guarantor or any other Loan Document Party or Person, or any sale,
lease, transfer or other disposition of any or all of the assets or shares of
any Borrower, the Guarantor, any other Loan Document Party or other Person,
including, without limitation, the transactions occurring upon the REIT
Conversion, including the assumption by the Post-REIT Conversion Borrower of the
obligations of the Pre-REIT Conversion Borrower under the Loan Documents;

 

(D) any assignment or other transfer, in whole or in part, of any Guaranteed
Party’s interests in and rights under this Guaranty or the other Loan Documents,
including any Guaranteed Party’s right to receive payment of the Guaranteed
Obligations, or any assignment or other transfer, in whole or in part, of any
Guaranteed Party’s interests in and to any of the Collateral or any other
collateral securing the Guaranteed Obligations;

 

(E) any claim, defense, counterclaim or setoff, other than that of prior
performance, that any Borrower, the Guarantor, any other Loan Document Party or
other Person may have or assert, including any defense of incapacity or lack of
corporate or other authority to execute any of the Loan Documents;

 

(F) any Guaranteed Party’s amendment, modification, renewal, extension,
cancellation or surrender of any Loan Document, any Guaranteed Obligations, or
any Collateral or any other collateral securing the Guaranteed Obligations, or
any Guaranteed Party’s exchange, release, or waiver of any Collateral or any
other collateral securing the Guaranteed Obligations;

 

(G) any Guaranteed Party’s exercise or nonexercise of any power, right or remedy
with respect to any of the Collateral or any other collateral securing the
Guaranteed Obligations, including any Guaranteed Party’s compromise, release,
settlement or waiver with or of any Borrower, any other Loan Document Party or
any other Person;

 

(H) any Guaranteed Party’s vote, claim, distribution, election, acceptance,
action or inaction in any Insolvency Proceeding related to the Guaranteed
Obligations;

 

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(I) any impairment or invalidity of any of the Collateral or any other
collateral securing any of the Guaranteed Obligations or any failure to perfect
any of the Liens of the Guaranteed Parties thereon or therein; and

 

(J) any other guaranty, whether by the Guarantor or any other Person, of all or
any part of the Guaranteed Obligations or any other indebtedness, obligations or
liabilities of any Borrower to any Guaranteed Party.

 

SECTION 4 Consents of the Guarantor. The Guarantor hereby unconditionally
consents and agrees that, without notice to or further assent from the
Guarantor:

 

(i) the principal amount of the Guaranteed Obligations may be increased or
decreased and additional Obligations of the Loan Parties under the Loan
Documents may be incurred, by one or more amendments, modifications, renewals or
extensions of any Loan Document or otherwise;

 

(ii) the time, manner, place or terms of any payment under any Loan Document may
be extended or changed, including by an increase or decrease in the interest
rate on any Guaranteed Obligation or any fee or other amount payable under such
Loan Document, by an amendment, modification or renewal of any Loan Document or
otherwise;

 

(iii) the time for any Borrower’s (or any other Person’s) performance of or
compliance with any term, covenant or agreement on its part to be performed or
observed under any Loan Document may be extended, or such performance or
compliance waived, or failure in or departure from such performance or
compliance consented to, all in such manner and upon such terms as the
Guaranteed Parties may deem proper;

 

(iv) any Guaranteed Party may discharge or release, in whole or in part, any
other Loan Document Party or any other Person liable for the payment and
performance of all or any part of the Guaranteed Obligations, and may permit or
consent to any such action or any result of such action, and shall not be
obligated to demand or enforce payment upon any of the Collateral or any other
collateral, nor shall any Guaranteed Party be liable to the Guarantor for any
failure to collect or enforce payment or performance of the Guaranteed
Obligations from any Person or to realize on the Collateral or other collateral
therefor;

 

(v) in addition to the Collateral, the Guaranteed Parties may take and hold
other security (legal or equitable) of any kind, at any time, as collateral for
the Guaranteed Obligations, and may, from time to time, in whole or in part,
exchange, sell, surrender, release, subordinate, modify, waive, rescind,
compromise or extend such security and may permit or consent to any such action
or the result of any such action, and may apply such security and direct the
order or manner of sale thereof;

 

(vi) the Guaranteed Parties may request and accept other guaranties of the
Guaranteed Obligations and any other indebtedness, obligations or liabilities of
the Borrowers to any Guaranteed Party and may, from time to time, in whole or in
part, surrender, release, subordinate, modify, waive, rescind, compromise or
extend any such guaranty and may permit or consent to any such action or the
result of any such action; and

 

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(vii) the Guaranteed Parties may exercise, or waive or otherwise refrain from
exercising, any other right, remedy, power or privilege (including the right to
accelerate the maturity of any Loan and any power of sale) granted by any Loan
Document or other security document or agreement, or otherwise available to any
Guaranteed Party, with respect to the Guaranteed Obligations or any of the
Collateral or any other collateral securing the Guaranteed Obligations, even if
the exercise of such right, remedy, power or privilege affects or eliminates any
right of subrogation or any other right of the Guarantor against any Borrower;

 

all as the Guaranteed Parties may deem advisable, and all without impairing,
abridging, releasing or affecting this Guaranty.

 

SECTION 5 Guarantor Waivers.

 

(a) Certain Waivers. The Guarantor waives and agrees not to assert:

 

(i) any right to require any Guaranteed Party to marshal assets in favor of the
Borrowers, the Guarantor, any other Loan Document Party or any other Person, to
proceed against any Borrower, any other Loan Document Party or any other Person,
to proceed against or exhaust any of the Collateral or any other collateral
securing the Guaranteed Obligations, to give notice of the terms, time and place
of any public or private sale of personal property security constituting the
Collateral or other collateral for the Guaranteed Obligations or comply with any
other provisions of §9611 of the California UCC (or any equivalent provision of
any other applicable law) or to pursue any other right, remedy, power or
privilege of any Guaranteed Party whatsoever;

 

(ii) the defense of the statute of limitations in any action hereunder or for
the collection or performance of the Guaranteed Obligations;

 

(iii) any defense arising by reason of any lack of corporate or other authority
or any other defense of any Borrower, the Guarantor, any other Loan Document
Party or any other Person;

 

(iv) any defense based upon any Guaranteed Party’s errors or omissions in the
administration of the Guaranteed Obligations;

 

(v) any rights to set-offs and counterclaims;

 

(vi) any defense based upon an election of remedies (including, if available, an
election to proceed by nonjudicial foreclosure) which destroys or impairs the
subrogation rights of the Guarantor or the right of the Guarantor to proceed
against any Borrower, any other Loan Document Party or any other obligor of the
Guaranteed Obligations for reimbursement; and

 

(vii) without limiting the generality of the foregoing, to the fullest extent
permitted by law, any defenses or benefits that may be derived from or afforded
by applicable law limiting the liability of or exonerating guarantors or
sureties, or which may conflict with the terms of this Guaranty, including any
rights and defenses available to the Guarantor by reason of Sections 2787 to
2855, inclusive, of the California Civil Code and any and all benefits that
otherwise might be available to the Guarantor under California Civil Code

 

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§§1432, 2809, 2810, 2815, 2819, 2839, 2845, 2848, 2849, 2850, 2899 and 3433 and
California Code of Civil Procedure §§580a, 580b, 580d and 726. Accordingly, the
Guarantor waives all rights and defenses that the Guarantor may have because any
Borrower’s debt is or may be secured by real property. This means, among other
things: (A) the Guaranteed Parties may collect from the Guarantor without first
foreclosing on any real or personal property collateral pledged by the
Borrowers; and (B) if the Administrative Agent forecloses on any real property
collateral pledged by the Borrowers: (1) the amount of the debt may be reduced
only by the price for which that collateral is sold at the foreclosure sale,
even if the collateral is worth more than the sale price, and (2) the Guaranteed
Parties may collect from the Guarantor even if the Administrative Agent, by
foreclosing on the real property collateral, has destroyed any right the
Guarantor may have to collect from any Borrower. This is an unconditional and
irrevocable waiver of any rights and defenses the Guarantor may have because any
Borrower’s debt is or may be secured by real property. These rights and defenses
include, but are not limited to, any rights of defenses based upon Section 580a,
580b, 580d or 726 of the California Code of Civil Procedure.

 

(b) Additional Waivers. The Guarantor waives any and all notice of the
acceptance of this Guaranty, and any and all notice of the creation, renewal,
modification, extension or accrual of the Guaranteed Obligations, or the
reliance by the Guaranteed Parties upon this Guaranty, or the exercise of any
right, power or privilege hereunder. The Guaranteed Obligations shall
conclusively be deemed to have been created, contracted, incurred and permitted
to exist in reliance upon this Guaranty. The Guarantor waives promptness,
diligence, presentment, protest, demand for payment, notice of default, dishonor
or nonpayment and all other notices to or upon the Borrowers, the Guarantor, any
other Loan Document Party or any other Person with respect to the Guaranteed
Obligations.

 

(c) Independent Obligations. The obligations of the Guarantor hereunder are
independent of and separate from the obligations of the Borrowers and any other
Loan Document Party and upon the occurrence and during the continuance of any
Event of Default, a separate action or actions may be brought against the
Guarantor, whether or not any Borrower or any such other Loan Document Party is
joined therein or a separate action or actions are brought against any Borrower
or any such other Loan Document Party.

 

(d) Financial Condition of the Borrowers. The Guarantor shall not have any right
to require any Guaranteed Party to obtain or disclose any information with
respect to: (i) the financial condition or character of any Borrower or any
other Loan Document Party or the ability of any Borrower or any other Loan
Document Party to pay and perform the Guaranteed Obligations; (ii) the
Guaranteed Obligations; (iii) the Collateral or any other collateral securing
the Guaranteed Obligations; (iv) the existence or nonexistence of any other
guarantees of all or any part of the Guaranteed Obligations; (v) any action or
inaction on the part of any Guaranteed Party or any other Person; or (vi) any
other matter, fact or occurrence whatsoever.

 

SECTION 6 Subrogation. Until the Guaranteed Obligations shall be satisfied in
full and the Commitments shall be terminated, the Guarantor shall not directly
or indirectly exercise, (i) any rights that it may acquire by way of subrogation
under this Guaranty, by any payment hereunder or otherwise, (ii) any rights of
contribution, indemnification, reimbursement or similar suretyship claims
arising out of this Guaranty or (iii) any other right which it might otherwise
have or acquire (in any way whatsoever) which could entitle it at any time to
share or participate

 

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in any right, remedy or security of any Guaranteed Party as against any Borrower
or other Loan Parties, whether in connection with this Guaranty, any of the
other Loan Documents or otherwise. If any amount shall be paid to the Guarantor
on account of the foregoing rights at any time when all the Guaranteed
Obligations shall not have been paid in full, such amount shall be held in trust
for the benefit of the Guaranteed Parties and shall forthwith be paid to the
Administrative Agent to be credited and applied to the Guaranteed Obligations,
whether matured or unmatured, in accordance with the terms of the Loan
Documents.

 

SECTION 7 Subordination.

 

(a) Subordination to Payment of Guaranteed Obligations. All payments on account
of all indebtedness, liabilities and other payment obligations of the Borrowers
to the Guarantor, whether created under, arising out of or in connection with
any documents or instruments evidencing any credit extensions to the Borrowers
or otherwise, including all principal on any such credit extensions, all
interest accrued thereon, all fees and all other amounts payable by the
Borrowers to the Guarantor in connection therewith, whether now existing or
hereafter arising, and whether due or to become due, absolute or contingent,
liquidated or unliquidated, determined or undetermined (the “Subordinated Debt”)
shall be subject, subordinate and junior in right of payment and exercise of
remedies, to the extent and in the manner set forth herein, to the prior payment
in full in cash or cash equivalents of the Guaranteed Obligations.

 

(b) No Payments. Except as otherwise permitted under the Credit Agreement, as
long as any of the Guaranteed Obligations shall remain outstanding and unpaid,
the Guarantor shall not accept or receive any payment or distribution by or on
behalf of any Borrower, directly or indirectly, of assets of any Borrower of any
kind or character, whether in cash, property or securities, including on account
of the purchase, redemption or other acquisition of Subordinated Debt, as a
result of any collection, sale or other disposition of collateral, or by setoff,
exchange or in any other manner, for or on account of the Subordinated Debt
(“Subordinated Debt Payments”), except that if no Event of Default exists, the
Guarantor shall be entitled to accept and receive regularly scheduled payments
and other payments in the ordinary course on the Subordinated Debt, in
accordance with the terms of the documents and instruments governing the
Subordinated Debt and other Subordinated Debt Payments in respect of
Subordinated Debt not evidenced by documents or instruments, in each case to the
extent permitted under Article VII of the Credit Agreement. During the existence
of an Event of Default (or if any Event of Default would exist immediately after
the making of a Subordinated Debt Payment), and until such Event of Default is
cured or waived, the Guarantor shall not make, accept or receive any
Subordinated Debt Payment. In the event that, notwithstanding the provisions of
this Section 7, any Subordinated Debt Payments shall be received in
contravention of this Section 7 by the Guarantor before all Guaranteed
Obligations are paid in full in cash or cash equivalents, such Subordinated Debt
Payments shall be held in trust for the benefit of the Guaranteed Parties and
shall be paid over or delivered to the Administrative Agent for application to
the payment in full in cash or cash equivalents of all Guaranteed Obligations
remaining unpaid to the extent necessary to give effect to this Section 7, after
giving effect to any concurrent payments or distributions to any Guaranteed
Party in respect of the Guaranteed Obligations.

 

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(c) Subordination of Remedies. As long as any Guaranteed Obligations shall
remain outstanding and unpaid, the Guarantor shall not, without the prior
written consent of the Administrative Agent:

 

(i) accelerate, make demand or otherwise make due and payable prior to the
original stated maturity thereof any Subordinated Debt or bring suit or
institute any other actions or proceedings to enforce its rights or interests
under or in respect of the Subordinated Debt;

 

(ii) exercise any rights under or with respect to (A) any guaranties of the
Subordinated Debt, or (B) any collateral held by it, including causing or
compelling the pledge or delivery of any collateral, any attachment of, levy
upon, execution against, foreclosure upon or the taking of other action against
or institution of other proceedings with respect to any collateral held by it,
notifying any account debtors of the Borrowers or asserting any claim or
interest in any insurance with respect to any collateral, or attempt to do any
of the foregoing;

 

(iii) exercise any rights to set-offs and counterclaims in respect of any
indebtedness, liabilities or obligations of the Guarantor to any Borrower
against any of the Subordinated Debt; or

 

(iv) commence, or cause to be commenced, or join with any creditor other than
any Guaranteed Party in commencing, any Insolvency Proceeding.

 

(d) Subordination Upon Any Distribution of Assets of any Borrower. In the event
of any payment or distribution of assets of any Borrower of any kind or
character, whether in cash, property or securities, upon any Insolvency
Proceeding with respect to or involving any Borrower, (i) all amounts owing on
account of the Guaranteed Obligations, including all interest accrued thereon at
the rate set forth in the Credit Agreement both before and after the initiation
of any such proceeding, whether or not an allowed claim in any such proceeding,
shall first be paid in full in cash, or payment provided for in cash or in cash
equivalents, before any Subordinated Debt Payment is made; and (ii) to the
extent permitted by applicable law, any Subordinated Debt Payment to which the
Guarantor would be entitled except for the provisions hereof, shall be paid or
delivered by the trustee in bankruptcy, receiver, assignee for the benefit of
creditors or other liquidating agent making such payment or distribution
directly to the Administrative Agent (on behalf of the other Guaranteed Parties)
for application to the payment of the Guaranteed Obligations in accordance with
clause (i), after giving effect to any concurrent payment or distribution or
provision therefor to any Guaranteed Party in respect of such Guaranteed
Obligations.

 

(e) Authorization to Administrative Agent. If, while any Subordinated Debt is
outstanding, any Insolvency Proceeding is commenced by or against any Borrower
or its respective property constituting an Event of Default:

 

(i) the Administrative Agent, when so instructed by the Required Lenders, is
hereby irrevocably authorized and empowered (in the name of the Guaranteed
Parties or in the name of the Guarantor or otherwise), but shall have no
obligation, to demand, sue for, collect and receive every payment or
distribution in respect of the Subordinated Debt and give acquittance therefor
and to file claims and proofs of claim and take such other action (including

 

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voting the Subordinated Debt) as it may deem necessary or advisable for the
exercise or enforcement of any of the rights or interests of the Guaranteed
Parties; and

 

(ii) the Guarantor shall promptly take such action as the Administrative Agent
(on instruction from the Required Lenders) may reasonably request (A) to collect
the Subordinated Debt for the account of the Guaranteed Parties and to file
appropriate claims or proofs of claim in respect of the Subordinated Debt, (B)
to execute and deliver to the Administrative Agent, such powers of attorney,
assignments and other instruments as it may request to enable it to enforce any
and all claims with respect to the Subordinated Debt, and (C) to collect and
receive any and all Subordinated Debt Payments.

 

SECTION 8 Continuing Guaranty. This Guaranty is a continuing guaranty and
agreement of subordination relating to any Guaranteed Obligations, including
Guaranteed Obligations which may exist continuously or which may arise from time
to time under successive transactions, and the Guarantor expressly acknowledges
that this Guaranty shall remain in full force and effect notwithstanding that
there may be periods in which no Guaranteed Obligations exist. This Guaranty
shall continue in effect and be binding upon the Guarantor until termination of
the Commitments and payment and performance in full of the Guaranteed
Obligations.

 

SECTION 9 Payments.

 

(a) Payment Obligation. The Guarantor hereby agrees, in furtherance of the
foregoing provisions of this Guaranty and not in limitation of any other right
which any Guaranteed Party or any other Person may have against the Guarantor by
virtue hereof, upon the failure of the Borrowers to pay any of the Guaranteed
Obligations when and as the same shall become due, whether at stated maturity,
by required prepayment, declaration, acceleration, demand or otherwise
(including amounts that would become due but for the operation of the automatic
stay under §362(a) of the Bankruptcy Code), the Guarantor shall forthwith pay,
or cause to be paid, in cash, to the Administrative Agent an amount equal to the
amount of the Guaranteed Obligations then due as aforesaid (including interest
which, but for the filing of a petition in any Insolvency Proceeding with
respect to any Borrower, would have accrued on such Guaranteed Obligations,
whether or not a claim is allowed against such Borrower for such interest in any
such Insolvency Proceeding). The Guarantor shall make each payment hereunder,
unconditionally in full without set-off, counterclaim or other defense, on the
day when due in Dollars, in immediately available funds, to the Administrative
Agent at such office of the Administrative Agent and to such account as the
Administrative Agent shall specify in writing to the Guarantor.

 

(b) Free and Clear Payments. Any and all payments by the Guarantor to or for the
account of any Guaranteed Party under the Guarantor Document shall be made free
and clear of and without deduction for any and all present or future taxes,
duties, levies, imposts, deductions, assessments, fees, withholdings or similar
charges, and all liabilities with respect thereto, now or hereafter imposed,
levied, collected, withheld or assessed by any Governmental Authority,
excluding, in the case of any Guaranteed Party, taxes imposed on or measured by
its overall net income, and franchise taxes imposed on it (in lieu of net income
taxes), by the jurisdiction (or any political subdivision thereof) under the
Laws of which such Guaranteed Party is organized or maintains a lending office
(all such non-excluded taxes, duties, levies, imposts,

 

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deductions, assessments, fees, withholdings or similar charges, and liabilities
being hereinafter referred to as “Taxes”). If the Guarantor shall be required by
any Laws to deduct any Taxes from or in respect of any sum payable under the
Guarantor Document to any Guaranteed Party then (i) the sum payable shall be
increased as necessary so that after making all required deductions (including
deductions applicable to additional sums payable under this Section), each of
the Administrative Agent and such other Guaranteed Party receives an amount
equal to the sum it would have received had no such deductions been made, (ii)
the Guarantor shall make such deductions, (iii) the Guarantor shall pay the full
amount deducted to the relevant taxation authority or other authority in
accordance with applicable Laws, and (iv) within 30 days after the date of such
payment, the Guarantor shall furnish to the Administrative Agent (which shall
forward the same to such Guaranteed Party) the original or a certified copy of a
receipt evidencing payment thereof or, if such receipts are not obtainable,
other evidence of such payments by the Guarantor reasonably satisfactory to the
applicable Guaranteed Party or the Administrative Agent, as applicable.

 

(c) Other Taxes. In addition, the Guarantor agrees to pay any and all present or
future stamp, court or documentary taxes and any other excise or property taxes
or charges or similar levies which arise from any payment made under the
Guarantor Document or from the execution, delivery, performance, enforcement or
registration of, or otherwise with respect to, the Guarantor Document
(hereinafter referred to as “Other Taxes”).

 

(d) Indemnification. The Guarantor agrees to indemnify the Administrative Agent
and each other Guaranteed Party for (i) the full amount of Taxes and Other Taxes
(including any Taxes or Other Taxes imposed or asserted by any jurisdiction on
amounts payable under this Section) paid by the Administrative Agent and such
Guaranteed Party, and (ii) any liability (including additions to tax, penalties,
interest and expenses) arising therefrom or with respect thereto (other than
such liability directly arising from the gross negligence or willful misconduct
of the Administrative Agent or such Guaranteed Party), in each case whether or
not such Taxes or Other Taxes were correctly or legally imposed or asserted by
the relevant Governmental Authority. Payment under this subsection (d) shall be
made within 30 days after the date the Guaranteed Party or the Administrative
Agent makes a demand therefor. Notwithstanding the foregoing, the Guarantor will
not be required to pay any additional amounts in respect of United States
federal income tax pursuant to Section 9(b) above to any Guaranteed Party (i) if
the obligation to pay such additional amounts arose solely as a result of such
Guaranteed Party’s failure to comply with its obligation under Section 10.15 of
the Credit Agreement; or (ii) if, but only to the extent that, at the time such
Guaranteed Party becomes a party to the Credit Agreement such Guaranteed Party
was subject to United States federal withholding taxes on amounts payable
pursuant to the terms of the Credit Agreement (except to the extent that such
Guaranteed Party’s assignor (if any) was entitled, at the time of the
assignment, to receive additional amounts from the Guarantor with respect to
Taxes).

 

(e) Order of Payment. Any payments by the Guarantor hereunder the application of
which is not otherwise provided for herein, shall be applied in the order
specified in Section 8.03 of the Credit Agreement.

 

(f) Survival. The agreements in this Section 9 shall survive the payment of all
Guaranteed Obligations.

 

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SECTION 10 Representations and Warranties. The Guarantor represents and warrants
to each Guaranteed Party that:

 

(a) Organization and Powers. The Guarantor and each of its Subsidiaries and each
Controlled Investment Affiliate (i) is a corporation, partnership or limited
liability company duly organized or formed, validly existing and in good
standing under the Laws of the jurisdiction of its incorporation or
organization, (ii) has all requisite power and authority and all requisite
governmental licenses, authorizations, consents and approvals to (A) own its
assets and carry on its business and (B) to execute, deliver, and perform its
obligations under this Guaranty and the other Guarantor Documents to which it is
a party, (iii) is duly qualified and is licensed and in good standing under the
Laws of each jurisdiction where its ownership, lease or operation of properties
or the conduct of its business requires such qualification or license, and (iv)
is in compliance in all material respects with all Laws, except in each case
referred to in clause (ii)(A), clause (iii) or clause (iv), to the extent that
failure to do so individually or in the aggregate is not reasonably expected to
have a Material Adverse Effect.

 

(b) Authorization; No Contravention. The execution, delivery and performance by
the Guarantor of this Guaranty and any other Guarantor Documents, and the
execution, delivery and performance by any of its Subsidiaries of any Loan
Document to which such Subsidiary is a party, have been duly authorized by all
necessary corporate or other organizational action, and do not and will not (i)
contravene the terms of any of such Person’s Organization Documents; (ii)
conflict with or result in any breach or contravention of, or the creation of
any Lien under, any Contractual Obligation to which such Person is a party or
any order, injunction, writ or decree of any Governmental Authority or arbitral
award to which such Person or its property is subject; or (iii) violate any Law
applicable to such Person, except in subclauses (ii) and (iii) above where such
conflict or contravention is not reasonably expected to have a Material Adverse
Effect.

 

(c) Governmental Authorization; Other Consents. No approval, consent, exemption,
authorization, or other action by, or notice to, or filing with, any
Governmental Authority or any other Person is necessary or required in
connection with the execution, delivery or performance by, or enforcement
against, the Guarantor of this Guaranty or any other Guarantor Document, or any
of its Subsidiaries of any Loan Document to which such Subsidiary is a party,
other than such filings or actions contemplated under the Loan Documents in
connection with the pledging of security interests.

 

(d) Binding Obligation. This Guaranty has been, and the other Guarantor
Documents, when executed and delivered by the Guarantor, will have been, duly
executed and delivered by the Guarantor. This Guaranty constitutes, and each
other Guarantor Document when so executed and delivered will constitute, a
legal, valid and binding obligation of the Guarantor, enforceable against the
Guarantor in accordance with its terms, except as enforceability may be limited
by applicable bankruptcy, insolvency or similar laws affecting the enforcement
of creditors’ rights generally, or by equitable principles relating to
enforceability. When executed and delivered by any of the Guarantor’s
Subsidiaries, the Loan Documents to which such Subsidiary is a party will be
duly executed and delivered by such Subsidiary. When so executed and delivered,
such Loan Documents will constitute, a legal, valid and binding obligation of
such Subsidiary, enforceable against such Subsidiary in accordance with its
terms, except as enforceability may be limited by applicable bankruptcy,
insolvency or similar laws

 

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affecting the enforcement of creditors’ rights generally, or by equitable
principles relating to enforceability.

 

(e) Governmental Consents. No approval, consent, exemption, authorization, or
other action by, or notice to, or filing with, any Governmental Authority or any
other Person is necessary or required in connection with the execution, delivery
or performance by, or enforcement against, the Guarantor of this Guaranty or any
other Guarantor Documents, other than such filings or actions contemplated under
the Guarantor Documents in connection with the pledging of security interests.

 

(f) Litigation. Except as specifically disclosed to the Administrative Agent on
or before the date hereof, there are no actions, suits, proceedings, claims or
disputes pending or, to the knowledge of the Guarantor after due and diligent
investigation, threatened, at law, in equity, in arbitration or before any
Governmental Authority, by or against the Guarantor, and after giving effect to
applicable reserves therefor, any of its Subsidiaries or any Controlled
Investment Affiliate or against any of their respective properties or revenues
that (i) purport to affect or pertain to this Guaranty or any Guarantor Document
or any other Loan Document to which the Guarantor or such Subsidiary is a party,
or any of the transactions contemplated hereby, or (ii) either individually or
in the aggregate, if determined adversely, and after giving effect to applicable
reserves therefor, is reasonably expected to have a Material Adverse Effect.

 

(g) No Default. None of the Guarantor, nor any of its Subsidiaries or Controlled
Investment Affiliates, is in default under or with respect to any Contractual
Obligation which, either individually or in the aggregate, is reasonably
expected to have a Material Adverse Effect. No Default has occurred and is
continuing or would result from the consummation of the transactions
contemplated by this Guaranty or any Guarantor Document or any other Loan
Document to which the Guarantor or any of its Subsidiaries is a party.

 

(h) Ownership of Property; Liens. The Guarantor and each of its Subsidiaries has
good record and valid title in fee simple to, or valid leasehold interests in,
all real property necessary or used in the ordinary conduct of its business,
except for such defects in title as are not, individually or in the aggregate,
reasonably be expected to have a Material Adverse Effect. The properties owned
by the Guarantor and each of its Subsidiaries are subject to no Liens, other
than (a) Permitted Liens, (b) Liens in connection with any Indebtedness listed
on Schedule 7.03 of the Credit Agreement, and (c) such other Liens after the
Closing Date that are not prohibited under the Loan Documents.

 

(i) Environmental Compliance. The Guarantor and each of its Subsidiaries and
each Controlled Investment Affiliate conducts in the Ordinary Course of Business
a review of the effect of existing Environmental Laws and claims alleging
potential liability or responsibility for violation of any Environmental Law on
their respective businesses, operations and properties, and as a result thereof
the Guarantor has reasonably concluded that such Environmental Laws and claims
are not, individually or in the aggregate, reasonably expected to have a
Material Adverse Effect, after giving effect to applicable reserves therefor.

 

(j) Insurance. The properties of the Guarantor and each of its Subsidiaries and
each Controlled Investment Affiliate are insured with financially sound and
reputable insurance companies not Affiliates of any Loan Party (or otherwise as
reasonably acceptable to

 

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the Administrative Agent), in such amounts (after giving effect to any
self-insurance compatible with the following standards), with such deductibles
and covering such risks as are customarily carried by companies engaged in
similar businesses and owning similar properties in localities where the
applicable Guarantor, Subsidiary or Controlled Investment Affiliate (as
applicable) operates.

 

(k) Taxes. The Guarantor and each of its Subsidiaries and each Controlled
Investment Affiliate has filed all Federal, state and other material tax returns
and reports required to be filed, and have paid prior to delinquency all
Federal, state and other material taxes, assessments, fees and other
governmental charges levied or imposed upon them or their properties, income or
assets, except those which are being contested in good faith by appropriate
proceedings diligently conducted and for which adequate reserves have been
provided in accordance with GAAP. To the Guarantor’s knowledge, there is no
proposed tax assessment against any of the Guarantor or any Subsidiary or any
Controlled Investment Affiliate that would, if made, have a Material Adverse
Effect.

 

(l) ERISA Compliance. The representations and warranties set forth in Section
5.12 of the Credit Agreement are true and correct with respect to each such
matter concerning the Guarantor and each of its Subsidiaries.

 

(m) Margin Regulations; Investment Company Act; Public Utility Holding Company
Act.

 

(i) The Guarantor has not, nor has any Subsidiary of the Guarantor that is also
a guarantor of the Guaranteed Obligations, engaged or will engage, principally
or as one of its important activities, in the business of purchasing or carrying
margin stock (within the meaning of Regulation U issued by the FRB), or
extending credit for the purpose of purchasing or carrying margin stock.

 

(ii) None of the Guarantor, any Person controlling Guarantor, or any Subsidiary
of the Guarantor (A) is a “holding company,” or a “subsidiary company” of a
“holding company,” or an “affiliate” of a “holding company” or of a “subsidiary
company” of a “holding company,” within the meaning of the Public Utility
Holding Company Act of 1935, or (B) is or is required to be registered as an
“investment company” under the Investment Company Act of 1940.

 

(n) Disclosure. The Guarantor has disclosed or caused to be disclosed to the
Administrative Agent and the Lenders, all agreements, instruments and corporate
or other restrictions to which any the Guarantor or any of its Subsidiaries or
Controlled Investment Affiliates is subject, and all other matters known to it,
that, individually or in the aggregate, is reasonably expected to result in a
Material Adverse Effect. No written report, financial statement, certificate or
other information furnished by or on behalf of the Guarantor or any of its
Subsidiaries or Controlled Investment Affiliates to the Administrative Agent or
any Lender in connection with the transactions contemplated hereby and the
negotiation of this Guaranty, any other Guarantor Document or any other Loan
Document and delivered pursuant to the Loan Documents (as modified or
supplemented by other information so furnished) contains any material
misstatement of fact or omits to state any material fact necessary to make the
statements therein, in the light of the circumstances under which they were
made, not misleading; provided

 

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that, with respect to projected financial information, the Guarantor represents
only that such information was prepared in good faith based upon assumptions
believed to be reasonable at the time.

 

(o) Compliance with Laws. Each of the Guarantor and its Subsidiaries and
Controlled Investment Affiliate is in compliance in all material respects with
the requirements of all Laws and all orders, writs, injunctions and decrees
applicable to it or to its properties, except in such instances in which (i)
such requirement of Law or order, writ, injunction or decree is being contested
in good faith by appropriate proceedings diligently conducted, or (ii) the
failure to comply therewith, either individually or in the aggregate, is not
reasonably expected to have a Material Adverse Effect.

 

(p) Intellectual Property; Licenses, Etc. Except as is not reasonably expected
to have a Material Adverse Effect, each of the Guarantor and its Subsidiaries
and each Controlled Investment Affiliate owns, or possesses the right to use,
all of the trademarks, service marks, trade names, copyrights, patents, patent
rights, franchises, licenses and other intellectual property rights
(collectively, “IP Rights”) that are reasonably necessary for the operation of
their respective businesses, without conflict with the rights of any other
Person. To the knowledge of the Guarantor, no slogan or other advertising
device, product, process, method, substance, part or other material now
employed, or now contemplated to be employed, by the Guarantor or any of its
Subsidiaries or Controlled Investment Affiliates infringes upon any rights held
by any other Person. No claim or litigation regarding any of the foregoing is
pending or, to the knowledge of the Guarantor, threatened, which, either
individually or in the aggregate, is reasonably expected to have a Material
Adverse Effect.

 

(q) Violation of Laws; Permits. No Unencumbered Pool Property owned by the
Guarantor or any of its Subsidiaries is being operated in violation of (i) any
Law or (ii) any building permits, restrictions of record, or any agreement
affecting any such property, or (iii) any judgment, decree or order applicable
to such property, except where such violation is not to reasonably expected to
result in a Material Adverse Effect. All governmental permits (including,
without limitation, building permits and certificates of occupancy) necessary
under applicable Law to lawfully construct, own, lease, occupy, use and operate
each Unencumbered Pool Property owned by the Guarantor or any of its
Subsidiaries and the improvements thereon, including, but not limited to, all
applicable environmental and zoning laws, ordinances and regulations, have been
obtained.

 

(r) No Prior Assignment. The Guarantor has not previously assigned any interest
in the Subordinated Debt or any collateral relating thereto, no Person other
than the Guarantor owns an interest in any of the Subordinated Debt or any such
collateral (whether as joint holders of the Subordinated Debt, participants or
otherwise), and the entire Subordinated Debt is owing only to the Guarantor.

 

(s) Solvency. Immediately prior to and after and giving effect to the incurrence
of the Guarantor’s obligations under this Guaranty, the Guarantor is and will be
Solvent.

 

(t) Consideration. The Guarantor has received at least “reasonably equivalent
value” (as such phrase is used in §548 of the Bankruptcy Code, in §3439.04 of
the California

 

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Uniform Fraudulent Transfer Act and in comparable provisions of other applicable
law) and more than sufficient consideration to support its obligations hereunder
in respect of the Guaranteed Obligations and under any of the Collateral
Documents to which it is a party.

 

(u) Independent Investigation. The Guarantor hereby acknowledges that it has
undertaken its own independent investigation of the financial condition of each
Borrower and each other Loan Document Party and all other matters pertaining to
this Guaranty and further acknowledges that it is not relying in any manner upon
any representation or statement of any Guaranteed Party with respect thereto.
The Guarantor represents and warrants that it has received and reviewed copies
of the Loan Documents and that it is in a position to obtain, and it hereby
assumes full responsibility for obtaining, any additional information concerning
the financial condition of each Borrower and any other Loan Document Party and
any other matters pertinent hereto that the Guarantor may desire. The Guarantor
is not relying upon or expecting any Guaranteed Party to furnish to the
Guarantor any information now or hereafter in any Guaranteed Party’s possession
concerning the financial condition of each Borrower or any other Loan Document
Party or any other matter.

 

(v) Additional Representations and Warranties. In order to induce the Lenders to
maintain their Loan Commitments and to continuing making Loans to the Borrowers
after the REIT Conversion Date, the Guarantor makes the following additional
representations and warranties to the Administrative Agent and the other
Guaranteed Parties as of the REIT Conversion Date:

 

(i) The shares of common stock of the Guarantor are listed on the New York Stock
Exchange.

 

(ii) (A) Each of the Subsidiaries of the OP Borrower and of the Guarantor is
listed in the corporate organizational chart attached as Schedule 1 to the REIT
Conversion Compliance Certificate; (B) neither the OP Borrower nor the Guarantor
has any direct or indirect Investments in any other Person, other than the
Subsidiaries and those specifically disclosed in Schedule 9 attached to the REIT
Compliance Conversion Certificate; (C) each of the Investment Affiliates that
are not Subsidiaries are disclosed in Schedule 9 attached to the REIT Conversion
Compliance Certificate; (D) each of the Subsidiaries of the Borrowers or the
Guarantor that owns any Unencumbered Pool Property is disclosed in Schedule 3
attached to the REIT Conversion Compliance Certificate; (E) each of the Material
Subsidiaries is disclosed in Schedule 2 attached to the REIT Conversion
Compliance Certificate; and (F) each member of the Consolidated Group that has
executed a Pledge Agreement in favor of the Administrative Agent as of the REIT
Conversion Date is disclosed in Schedule 4 attached to the REIT Conversion
Compliance Certificate. The Administrative Agent has, for the benefit of the
Guaranteed Parties, a first priority, perfected Lien in and to the Collateral
described in each Pledge Agreement (after giving effect to the deliveries and
filings required under the Pledge Agreement and applicable law), subject to no
other Lien.

 

(iii) Schedule 5 attached to the REIT Conversion Compliance Certificate contains
a list of each Note Receivable in an outstanding principal amount of more than
$1,000,000 that is owned by any Loan Party or any Subsidiary. Other than as set
forth in Schedule 5 attached to the REIT Conversion Compliance Certificate, no
Loan Party or

 

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Subsidiary owns any Note Receivable in an outstanding principal amount of more
than $1,000,000.

 

(iv) No Default or Event of Default has occurred and is continuing as of the
REIT Conversion Date, and no Default or Event of Default will result from REIT
Conversion.

 

(w) Additional Representations and Warranties as of the REIT Election Date. In
order to induce the Lenders to maintain their Loan Commitments and to continuing
making Loans to the Borrowers after the REIT Election Date, the Guarantor makes
the following representations and warranties to the Administrative Agent and the
other Guaranteed Parties as of the REIT Election Date:

 

(i) Each of the representations and warranties set forth in Section 10(v) are
true and correct as of the REIT Election Date as if made on the REIT Election
Date.

 

(ii) The Guarantor has been organized in conformity with the requirements for
qualification as a REIT under the Code. The Guarantor has elected to be taxed as
a REIT under the Code beginning with its taxable year ending December 31 of the
taxable year for which it has filed the REIT Election and for each tax year
thereafter, and such election has not been and will not be revoked or
terminated. The Guarantor’s method of operation has enabled it, and its proposed
method of operation will continue to enable it since the year to which the REIT
Election applies, on a continuous basis, to meet the requirements for
qualification and taxation as a REIT under the Code. The Guarantor is entitled
to a dividends paid deduction for the tax year of the REIT Election and each tax
year thereafter that meets the requirements of Section 857 of the Internal
Revenue Code.

 

(iii) As of the REIT Election Date, no Default or Event of Default has occurred
and is continuing as of the REIT Election Date, and no Default or Event of
Default will result from REIT Election.

 

SECTION 11 Affirmative Covenants. So long as any Lender shall have any
Commitment under the Credit Agreement, any Loan or other Obligation under the
Credit Agreement shall remain unpaid or unsatisfied, or any Letter of Credit
shall remain outstanding:

 

(a) Financial Statements. The Guarantor shall deliver or cause the OP Borrower
to deliver to the Administrative Agent, in form and detail satisfactory to the
Administrative Agent, the financial statements described in Section 6.01 of the
Credit Agreement, together with the certificates and other information described
in Section 6.02 of the Credit Agreement.

 

(b) Notices. The Guarantor shall furnish to the Administrative Agent prompt
written notice, in each case as soon as any Responsible Officer of the Guarantor
becomes aware thereof (i) of any condition or event which has resulted, or that
is reasonably expected to result, in a Material Adverse Effect including, to the
extent applicable, (A) breach or non-performance of, or any default under, a
Contractual Obligation of the Guarantor or any of its Subsidiaries or Controlled
Investment Affiliates; (B) any dispute, litigation, investigation, proceeding or
suspension between the Guarantor or any of its Subsidiaries or Controlled
Investment Affiliates

 

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and any Governmental Authority; or (C) the commencement of, or any material
development in, any litigation or proceeding affecting the Guarantor or any of
its Subsidiaries or Controlled Investment Affiliates, including pursuant to any
applicable Environmental Laws; (ii) of the occurrence of any Default relating to
the Guarantor’s obligations hereunder or under any Guarantor Document or the
covenants relating to the Guarantor or any of its Subsidiaries or Controlled
Investment Affiliates hereunder or under the Credit Agreement; (iii) of the
occurrence of any ERISA Event; (iv) of any material change in accounting
policies or financial reporting practices by the Guarantor or any of its
Subsidiaries; (v) of from and after the REIT Election Date, of the failure of
the Guarantor to maintain its status as a REIT; and (vi) of such other
information respecting the business, financial or corporate affairs of the
Guarantor or any of its Subsidiaries or any of its Controlled Investment
Affiliates as the Administrative Agent, at the request of any Guaranteed Party,
may from time to time reasonably request.

 

(c) Payment of Obligations. The Guarantor shall, and shall cause each of its
Subsidiaries and Controlled Investment Affiliates to, pay and discharge, prior
to delinquency, all its obligations and liabilities, including (i) all tax
liabilities, assessments and governmental charges or levies upon it or its
properties or assets, unless the same are being contested in good faith
Permitted Contests; (ii) all lawful claims which, if unpaid and not bonded,
would by law become a Lien upon its property (other than Permitted Liens);
provided, however, that notwithstanding the foregoing, the Guarantor or any
Subsidiary may contest under a Permitted Contest such Lien resulting from such
lawful claim on any property that is not Collateral or an Eligible Borrowing
Base Asset, as long as such Lien (or the underlying claim) is not expected to,
and does not, cause a Material Adverse Effect or an Event of Default under
Sections 8.01(e), 8.01(f), 8.01(g), or 8.01(h) of the Credit Agreement; and
(iii) any Indebtedness, prior to delinquency, if the failure to make such
payment would result in an Event of Default under Section 8.01(e) of the Credit
Agreement, but subject to any subordination provisions contained in any
instrument or agreement evidencing such Indebtedness.

 

(d) Preservation of Existence, Etc. The Guarantor shall, and shall cause each of
its Subsidiaries and Controlled Investment Affiliates to (i) preserve, renew and
maintain in full force and effect its legal existence and good standing under
the Laws of the jurisdiction of its organization except in a transaction
otherwise permitted under the Credit Agreement; (ii) take all reasonable action
to maintain all rights, privileges, permits, licenses and franchises necessary
or advisable in the normal conduct of its business, except to the extent that
failure to do so is not reasonably expected to have a Material Adverse Effect;
and (iii) preserve or renew all of its registered patents, trademarks, trade
names and service marks, the non-preservation of which is reasonably expected to
have a Material Adverse Effect.

 

(e) Maintenance of Properties. The Guarantor shall, and shall cause each other
Loan Party, each Subsidiary and each Controlled Investment Affiliate to (i)
maintain, preserve and protect all of its material properties and equipment
necessary in the operation of its business in good working order and condition,
ordinary wear and tear excepted, except where the failure to do so is not
reasonably expected to have a Material Adverse Effect; (ii) make all necessary
repairs thereto and renewals and replacements thereof, except where the failure
to do so is not reasonably expected to have a Material Adverse Effect; and (iii)
use the standard of care typical in the industry in similar localities in the
operation and maintenance of its facilities.

 

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(f) Maintenance of Insurance. The Guarantor shall, and shall cause each of its
Subsidiaries and Controlled Investment Affiliates to, maintain with financially
sound and reputable insurance companies not Affiliates of the Guarantor (or as
is otherwise acceptable to the Administrative Agent), insurance with respect to
its properties and business against loss or damage of the kinds customarily
insured against by Persons engaged in the same or similar business, of such
types and in such amounts as are customarily carried under similar circumstances
by such other Persons. At the request of the Administrative Agent (but no more
often than once in any 12 month period, unless an Event of Default exists or any
insurance required hereunder is due to expire or has expired), the Guarantor
shall, and shall cause and shall cause each of its Subsidiaries and Controlled
Investment Affiliates to, deliver to the Administrative Agent a certificate of
all insurance required hereunder then in force.

 

(g) Compliance with Laws. The Guarantor shall, and shall cause each of its
Subsidiaries and each Controlled Investment Affiliates to, comply in all
material respects with the requirements of all Laws and all orders, writs,
injunctions and decrees applicable to it or to its business or property, except
in such instances in which (i) such requirement of Law or order, write,
injunction or decree is being contested in good faith by appropriate proceedings
diligently conducted; or (ii) the failure to comply therewith is not reasonably
expected to have a Material Adverse Effect.

 

(h) Books and Records. The Guarantor shall, and shall cause each of its
Subsidiaries and Controlled Investment Affiliates to, (i) maintain proper books
of record and account, in which full, true and correct entries in conformity
with GAAP consistently applied (except , to the extent applicable, for financial
performances measured by Funds From Operations, as described in the Guarantor’s
reports and statements filed with the SEC) shall be made of all financial
transactions and matters involving the assets and business of such Person; and
(ii) maintain such books of record and account in material conformity with all
applicable requirements of any Governmental Authority having regulatory
jurisdiction over such Person.

 

(i) Inspection Rights. The Guarantor shall, and shall cause each of its
Subsidiaries and Controlled Investment Affiliates to, permit representatives and
independent contractors of the Administrative Agent and each Lender to visit and
inspect any of its properties, to examine its corporate, financial and operating
records, and make copies thereof or abstracts therefrom, and to discuss its
affairs, finances and accounts with its directors, officers, and independent
public accountants, at such reasonable times during normal business hours and as
often as may be reasonably desired, upon reasonable advance notice; provided,
however, that if no Event of Default exists, the Administrative Agent may
conduct no more than one inspection of such properties in any fiscal year and be
reimbursed for the Administrative Agent’s reasonable and out-of-pocket expenses
incurred for such inspection, each Guaranteed Party may conduct no more than one
inspection of such properties in any fiscal year; and provided further, however,
that when an Event of Default exists the Administrative Agent or any Guaranteed
Party (or any of their respective representatives or independent contractors)
may do any of the foregoing any number of times at the expense of the Guarantor
at any time during normal business hours and without advance notice. The
Administrative Agent and each Guaranteed Party shall make reasonable efforts to
minimize disruption to the business and tenants at the properties so visited and
inspected.

 

F(1)- 19

 

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(j) Additional Guarantors and Pledge of Capital Stock. The Guarantor shall
notify or cause the OP Borrower to notify the Administrative Agent at the time
that any of its Subsidiaries becomes a Material Subsidiary or an owner of
Unencumbered Pool Property and promptly thereafter (and in any event within 15
days):

 

(i) subject to subclause (v) below, the Guarantor shall cause such Subsidiary
(if not already a Guarantor) to become a Guarantor by executing and delivering
to the Administrative Agent a counterpart of the Guaranty in the form attached
to the Credit Agreement as Exhibit F(2) or such other document as the
Administrative Agent shall deem appropriate for such purpose, and deliver to the
Administrative Agent documents of the types referred to in clauses (viii), (ix),
and (xvi) of Section 4.01(a) of the Credit Agreement and, if requested by the
Administrative Agent, favorable opinions of counsel to such Subsidiary (which
may be an opinion of its in-house counsel) and shall cover the matters covered
in the opinion delivered on the Credit Agreement Closing Date as applicable to
such Subsidiary and such other matters as may be reasonably required by the
Administrative Agent, all in form, content and scope satisfactory to the
Administrative Agent; and

 

(ii) subject to subclause (v) below, the Guarantor shall execute, or cause any
of its Subsidiaries that is an owner of the Capital Stock of the Subsidiary
identified in clause (i) above (if not already delivered), to duly execute and
deliver to the Administrative Agent (A) an accession agreement to the Pledge
Agreement substantially in the form of Exhibit I to the Credit Agreement, and
(B) to the extent certificated, certificates evidencing all of the issued and
outstanding Capital Stock of such Subsidiary owned by the Guarantor or such
Subsidiary, which certificates shall be accompanied by undated stock powers
executed in blank or the equivalent under applicable law; and

 

(iii) subject to subclause (v) below, the Guarantor shall deliver or caused to
be delivered evidence satisfactory to the Administrative Agent that the Lien
granted to the Administrative Agent for the benefit of the Lenders in the
Collateral described in subclause (ii) above is a perfected security interest
(after giving effect to the deliveries and filings required under the Pledge
Agreement and applicable law), and no other Lien exists on any such Collateral;
and

 

(iv) at any time and from time to time, the Guarantor shall promptly execute and
deliver, or cause any of its Subsidiaries to execute and deliver, any and all
further instruments and documents and take all such other action as the
Administrative Agent may deem necessary or appropriate in obtaining the full
benefits of, or in perfecting and preserving the Liens of, the pledges and
guaranties contemplated by, this Section 11(j).

 

(v) Until the Guaranty, the Pledge Agreement or Pledge Agreement accession
agreements, and all items described in the foregoing Section 11(j) are delivered
to the Administrative Agent, the Unencumbered Property owned in fee simple title
by such Person shall not be included in the Borrowing Base. Notwithstanding the
foregoing, (A) if the execution of the Guaranty by any of the Guarantor’s
Subsidiaries is prohibited under the then-current financing arrangements of such
Person, then such Guaranty will not be required hereunder, provided, however,
that in such event, the Unencumbered Property owned by such Subsidiary shall not
be included in the Borrowing Base; and (B) if the execution of the Pledge
Agreement or accession agreement to the Pledge Agreement by the owner of the
Capital Stock of such

 

F(1)- 20

 

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Subsidiary is prohibited under the then-current financing arrangements of such
Person, then such Pledge Agreement will not be required hereunder.

 

(k) Delivery of Notes Receivable. The Guarantor shall notify or cause the
Borrowers to notify the Administrative Agent at the time that any of its
Subsidiaries owns or gains possession of (y) any Intercompany Notes Receivable
(of any amount) or (z) any other Note Receivable in an outstanding principal
amount of more than $1,000,000, and promptly thereafter (and in any event within
15 days):

 

(i) if such Subsidiary owning such Note Receivable is not already a party to a
Pledge Agreement, the Guarantor shall cause such Subsidiary owning such Note
Receivable to duly execute and deliver to the Administrative Agent (A) an
accession agreement to the Pledge Agreement substantially in the form of Exhibit
I(2) to the Credit Agreement (with respect to Intercompany Notes Receivable) or
Exhibit I(1) (with respect to other Notes Receivable in an outstanding principal
amount of more than $1,000,000, and (B) each original Intercompany Notes
Receivable (of any amount) and any other original Notes Receivable in an
outstanding amount of more than $1,000,000 owned by such Subsidiary, accompanied
by allonges or endorsements in favor of the Administrative Agent, or the
equivalent under applicable law;

 

(ii) if such Note Receivable is owned by the Guarantor, the Guarantor shall
deliver to the Administrative Agent any original Intercompany Notes Receivable
(of any amount), and any other original Notes Receivable that is in an
outstanding amount of more than $1,000,000 owned by the Guarantor, accompanied
by allonges or endorsements in favor of the Administrative Agent, or the
equivalent under applicable law; and

 

(iii) the Guarantor shall deliver or caused to be delivered evidence
satisfactory to the Administrative Agent that the Lien granted to the
Administrative Agent for the benefit of the Lenders in the Notes Receivable is a
perfected security interest (after giving effect to the deliveries and filings
required under the Pledge Agreement and applicable law), and no other Lien
exists on any such Notes Receivable.

 

Notwithstanding anything herein to the contrary, neither the Guarantor nor any
of its applicable Subsidiaries will be required to pledge such Note Receivable
hereunder if such Note Receivable is not included in the Borrowing Base and if
the Administrative Agent determines in its sole and reasonable discretion that
(A) such Note Receivable matures within six months or less, (B) such Note
Receivable is not capable of being pledged by the Guarantor or such Subsidiary,
(C) the pledge of such Note Receivable would cause an unreasonable hardship to
the Guarantor or such Subsidiary, or (D) the pledge of such Note Receivable
would not add any significant value to the Collateral granted to the
Administrative Agent, for the benefit of the Lenders.

 

(iv) At any time and from time to time, the Guarantor shall promptly execute and
deliver, or cause any of its Subsidiaries to execute and deliver, any and all
further instruments and documents and take all such other action as the
Administrative Agent may deem necessary or advisable in obtaining the full
benefits of, or in perfecting and preserving the pledge and Liens contemplated
by, this Section 11(k).

 

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SECTION 12 Negative Covenants. So long as any Lender shall have any Commitment
under the Credit Agreement, any Loan or other Obligation under the Credit
Agreement shall remain unpaid or unsatisfied, or any Letter of Credit shall
remain outstanding:

 

(a) Liens.

 

(i) The Guarantor shall not, and shall not permit any of its Subsidiaries to,
create, incur, assume or suffer to exist, any Lien upon its interest in any of
its Subsidiaries that owns Unencumbered Pool Property, other than Liens in favor
of the Administrative Agent.

 

(ii) The Guarantor shall not, and shall not permit any of its Subsidiaries to,
create, incur, assume or suffer to exist any Lien upon any Collateral pledged
under any Pledge Agreement, other than Liens in favor of the Administrative
Agent.

 

(iii) The Guarantor shall not, and shall not permit any of its Subsidiaries to,
create, incur, assume or suffer to exist any Lien upon any Unencumbered Property
owned by it or upon any lease or Ground Lease of any Unencumbered Property,
other than Permitted Liens, except as specifically permitted under Section
7.01(c) of the Credit Agreement.

 

(b) Investments and Development Costs.

 

(i) The Guarantor shall not, and shall not permit any of its Subsidiaries to,
make any Investments, except:

 

(A) Investments held by the Guarantor or such Subsidiary in the form of Cash
Equivalents;

 

(B) advances to officers, directors and employees of the Guarantor and its
Subsidiaries in the Ordinary Course of Business, for travel, entertainment,
relocation and analogous ordinary business purposes;

 

(C) subject to the limitations set forth in Section 12(b)(ii), Investments of
the Guarantor in any Subsidiary or Investment Affiliate or other Person that is
engaged in any of the lines of business described in Section 7.07 of the Credit
Agreement; provided, however, the foregoing provision shall not permit the
Guarantor or any of its Subsidiaries to make any Investments in the form of a
Guarantee of Unsecured Indebtedness, other than a Guaranty of such Unsecured
Indebtedness (as defined in Schedule 7.11 of the Credit Agreement) of the
Guarantor and any of its Subsidiaries that is specifically permitted under
Section 7.03(a) of the Credit Agreement;

 

(D) Investments consisting of extensions of credit in the nature of accounts
receivable or notes receivable arising from the grant of trade credit in the
ordinary course of business, and Investments received in satisfaction or partial
satisfaction thereof from financially troubled account debtors to the extent
reasonably necessary in order to prevent or limit loss;

 

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(E) without limiting clause (C) above, Guarantees permitted under Section 12(c);

 

(F) Investments in the form of seller financing of dispositions of Real Property
or Unimproved Land in transactions permitted under Section 7.05 of the Credit
Agreement, provided that such financing is documented by a Note Receivable and
such Note Receivable, if representing an outstanding payment obligation of more
than $1,000,000, is pledged to the Administrative Agent pursuant to Section
6.13(b) of the Credit Agreement (subject to the limitations set forth in the
last sentence of Section 6.13(b) of the Credit Agreement);

 

(G) Investments of the Guarantor or any of its Subsidiaries in revenue bonds
issued pursuant to an Eligible Bond Transaction or a Permitted Bond Transaction;

 

(H) Investments of the Guarantor or any of its Subsidiaries in loans advanced
pursuant to Safe Harbor Transactions; and

 

(I) intercompany Indebtedness to the Guarantor or any of its Subsidiaries
permitted under Section 12(c)(i)(F), provided that the Note Receivable of the
obligor thereunder is pledged as contemplated by such section.

 

(ii) The Guarantor shall, and shall cause each of its Subsidiaries to, observe,
perform and comply with the covenant set forth in Section 7.02(b) of the Credit
Agreement.

 

(c) Indebtedness.

 

(i) The Guarantor shall not, and shall not permit any of its Subsidiaries to,
create, incur, assume or suffer to exist any Indebtedness, except:

 

(A) Indebtedness under the Loan Documents;

 

(B) Indebtedness outstanding on the Closing Date and listed on Schedule 7.03 to
the Credit Agreement and refinancings of such Indebtedness, provided that the
principal amount of such Indebtedness so refinanced does not increase, and
provided further that the terms of such refinancing are not substantially more
onerous to the Guarantor or any of its Subsidiaries (as applicable) than the
terms of the original financing;

 

(C) Guarantees of the Guarantor or any of its Subsidiaries in respect of (1)
Indebtedness otherwise permitted hereunder of the Guarantor or any of its
Subsidiaries; (2) Investments permitted under Section 12(b)(i)(C); and (3)
Unsecured Indebtedness to providers of credit support or credit enhancement
supporting obligations to Community Facility Districts or other Mello Roos type
assessment and/or tax districts, in an amount not to exceed $250,000,000 at any
time outstanding;

 

(D) obligations (contingent or otherwise) of the Guarantor or any of its
Subsidiaries existing or arising under any Swap Contract, provided that (y) such
obligations are (or were) entered into by such Person in the Ordinary Course of
Business for the purpose of directly mitigating risks associated with
liabilities, commitments, investments, assets,

 

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or property held or reasonably anticipated by such Person, or changes in the
value of securities issued by such Person, and not for purposes of speculation
or taking a “market view;” and (z) such Swap Contract does not contain any
provision exonerating the non-defaulting party from its obligation to make
payments on outstanding transactions to the defaulting party;

 

(E) accounts payable to trade creditors for goods and services and current
operating liabilities (not the result of the borrowing of money) incurred in the
Ordinary Course of Business in accordance with customary terms and paid within
the specified time, unless contested under a Permitted Contest; and

 

(F) intercompany Indebtedness to the Guarantor or any Subsidiary of the
Guarantor, provided that the obligor thereunder has issued a Note Receivable in
favor of the lender thereunder, which Note Receivable is in form and substance
satisfactory to the Administrative Agent, and such Note Receivable has been
pledged to the Administrative Agent pursuant to Section 11(k), without regards
to the dollar amount of such Note Receivable;

 

(G) to the extent constituting Indebtedness, (1) capital leases of assets;
provided that the assets leased are owned by the lessor or are collateral for
the lease obligations; and (2) tax obligations of the Guarantor or any
Subsidiary of the Guarantor owing to Community Facility Districts or other Mello
Roos type assessment and/or tax districts, which tax obligations support bonds
issued by such districts;

 

(H) Secured Indebtedness (as defined in Schedule 7.11 to the Credit Agreement),
provided that the Lien securing such Indebtedness is not prohibited under
Section 12(a) hereof, Section 7.01 of the Credit Agreement, and subject to the
limitations set forth in clauses (c) and (f) of Schedule 7.11 to the Credit
Agreement; and

 

(I) other Indebtedness in an amount not to exceed $2,000,000 at any time
outstanding.

 

(ii) The Guarantor shall, and shall cause each of its Subsidiaries to, observe,
perform and comply with the covenant set forth in Section 7.03(b) of the Credit
Agreement.

 

(d) Fundamental Changes. The Guarantor shall not, and shall not permit any of
its Subsidiaries to, merge, dissolve, liquidate, consolidate with or into
another Person, or Dispose of (whether in one transaction or in a series of
transactions) all or substantially all of its assets (whether now owned or
hereafter acquired) to or in favor of any Person, except as specifically
permitted under Section 7.04 of the Credit Agreement.

 

(e) Dispositions. The Guarantor shall not, and shall not permit any of its
Subsidiaries to, sell, transfer or otherwise Dispose of any Unencumbered Pool
Property, except as specifically permitted under Section 7.05 of the Credit
Agreement.

 

(f) Restricted Payments. The Guarantor shall not declare or make, or permit any
of its Subsidiaries to declare or make, any Distributions, except as
specifically permitted under Section 7.06 of the Credit Agreement.

 

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(g) Change in Nature of Business. The Guarantor shall not, and shall not permit
any of its Subsidiaries to, engage in any material new line of business
substantially different from those lines of business conducted by the Guarantor
and any of its Subsidiaries on the date hereof, including the ownership,
acquisition, development, construction, management and rental of Real Property
and Unimproved Land and, in each case, any business substantially related,
necessary or incidental thereto.

 

(h) Transactions with Affiliates. Except as otherwise expressly permitted under
the Credit Agreement, the Guarantor shall not, and shall not permit any of its
Subsidiaries to, enter into any transaction of any kind with any Affiliate of
any Loan Party, whether or not in the ordinary course of business, other than on
fair and reasonable terms substantially as favorable to the Loan Party or such
Subsidiary as would be obtainable by such Loan Party or such Subsidiary at the
time in a comparable arm’s length transaction with a Person other than an
Affiliate.

 

(i) Burdensome Agreements. The Guarantor shall not, and shall not permit any of
its Subsidiaries to, enter into any Contractual Obligation (other than any Loan
Document) that limits the ability of the Guarantor or such Subsidiary (i) to pay
dividends and distributions to the Guarantor, any Borrower or any other Loan
Party, other than during a default or an event of default under and as defined
in any document evidencing Indebtedness of such Loan Document Party; (ii) to
transfer property to the Guarantor any Borrower or any other Loan Party (other
than property that is subject to a Lien securing Indebtedness of such Subsidiary
that is permitted under Section 12(a) hereof, Section 7.03(a)(ii) or Section
7.03(a)(viii) of the Credit Agreement); (iii) that is a Material Subsidiary or
an owner of Unencumbered Pool Property, to Guarantee the Indebtedness of any
Borrower; or (iv) to grant and perfect, in favor of the Administrative Agent, a
Lien in and to the Notes Receivable owned by such Loan Document Party or
Subsidiary and required to be pledged hereunder or under the Credit Agreement.

 

(j) Financial Covenants. The Guarantor shall observe, perform and comply with
the covenants set forth in Section 7.11 of the Credit Agreement.

 

(k) Fundamental Changes and REIT Covenants.

 

(i) Except for any such amendment (A) that is required under any requirement of
Law imposed by any Governmental Authority or in order for the Guarantor to
qualify as a REIT under the Code, (B) that is necessary to enable any Loan
Document Party or Subsidiary to execute a Guaranty or Pledge Agreement as
contemplated under Section 11(j) or Section 11(k) hereof, Section 6.12 or
Section 6.13 of the Credit Agreement; (C) that is necessary to effectuate the
REIT Conversion or any transaction permitted under Section 7.04 or Section 7.05
of the Credit Agreement (as long as such amendments do not have an adverse
effect on the Guaranteed Parties or their rights hereunder); or (D) that are
described in Schedule 7.12 to the Credit Agreement (as long as such amendments
do not have an adverse effect on the Guaranteed Parties or their rights
hereunder), the Guarantor shall not, and shall not permit any Subsidiary of the
Guarantor, to amend its Organizational Documents (except for non-substantive
amendments or technical amendments that do not have an adverse effect on the
Guaranteed Parties or their rights hereunder), except in each case (Y) upon at
least ten Business Days’ prior written notice to the Administrative Agent, and
(Z) if the Administrative Agent notifies the Guarantor within such ten-Business
Day period that such amendment is, in Administrative

 

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Agent’s reasonable judgment, a material amendment, with the prior written
consent of the Required Lenders which consent will not be unreasonably withheld
or delayed.

 

(ii) The Guarantor shall not fail to comply in all material respects with all
rules and regulations of the Securities Exchange Commission and shall file all
reports required by the Securities Exchange Commission relating to the
Guarantor’s publicly-held securities.

 

(iii) The Guarantor shall, at all times, not cease to have its common stock
listed on the New York Stock Exchange, the American Stock Exchange, or the
Nasdaq Stock Exchange.

 

(iv) After the REIT Election Date, the Guarantor shall not cease to qualify as a
REIT under the Code.

 

(v) The Guarantor shall not cease to own the majority of the outstanding Capital
Stock in, and serve as the general partner of, the OP Borrower.

 

(vi) Except as permitted under Section 7.04 of the Credit Agreement, the
Guarantor shall not cease to own the majority of the outstanding stock,
membership interests or other entity interests in, any of its Subsidiaries that
is a Guarantor (other than such Guarantors or such Subsidiaries (but not
including the TRS Borrower) that are Taxable REIT Subsidiaries) and, with
respect to any such Guarantor that is not a corporation, a Loan Party shall not
cease to serve as the managing member or general partner of, each such
Guarantor.

 

SECTION 13 Notices. Unless otherwise expressly provided herein, all notices and
other communications provided for hereunder shall be in writing (including by
facsimile transmission) and mailed, faxed, emailed (subject to the provisions of
the final sentence of this Section 13) or delivered, in the case of the
Guarantor, to the address or facsimile number or email address specified on the
signature page hereof, and in the case of any Guaranteed Party, to the address
or facsimile number or email address specified in the Credit Agreement, or to
such other address, facsimile number or email address as shall be designated by
such party in a notice to the other parties. All such notices and other
communications shall be deemed to be given or made upon the earlier to occur of
(i) actual receipt by the intended recipient and (ii) (A) if delivered by hand
or by courier, when signed for by the intended recipient; (B) if delivered by
mail, four Business Days after deposit in the mails, postage prepaid; (C) if
delivered by facsimile, when sent and receipt has been confirmed by telephone,
when delivered; and (D) if delivered by electronic mail (which form of delivery
is subject to the provisions of the final sentence of this Section 13), when
delivered. In no event shall a voicemail message be effective as a notice,
communication or confirmation hereunder. Electronic mail and Internet and
intranet websites may be used only to distribute routine communications, and to
distribute documents for execution by the parties thereto, and may not be used
for any other purpose.

 

SECTION 14 No Waiver; Cumulative Remedies. No failure by any Guaranteed Party to
exercise, and no delay by any such Person in exercising, any right, remedy,
power or privilege hereunder or under any other Guarantor Document shall operate
as a waiver thereof; nor shall any single or partial exercise of any right,
remedy, power or privilege hereunder preclude any other or further exercise
thereof or the exercise of any other right, remedy, power or privilege.

 

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The rights, remedies, powers and privileges herein or therein provided are
cumulative and not exclusive of any rights, remedies, powers and privileges
provided by law.

 

SECTION 15 Costs and Expenses; Indemnification.

 

(a) Costs and Expenses. The Guarantor shall: (i) pay or reimburse the
Administrative Agent for all reasonable, out-of-pocket costs and expenses
incurred in connection with the development, preparation, negotiation and
execution of this Guaranty and the other Guarantor Documents and any other
certificates executed by the Guarantor in connection herewith, and any
amendment, waiver, consent or other modification of the provisions hereof and
thereof (whether or not the transactions contemplated hereby or thereby are
consummated), and the consummation and administration of the transactions
contemplated hereby and thereby, including all reasonable Attorney Costs; and
(ii) pay or reimburse the Administrative Agent and each other Guaranteed Party
for all costs and expenses incurred in connection with the enforcement,
attempted enforcement, or preservation of any rights or remedies under this
Guaranty or the other Guarantor Documents (including all such costs and expenses
incurred during any “workout” or restructuring in respect of the Guaranteed
Obligations and during any legal proceeding, including any proceeding under any
Debtor Relief Law), including all Attorney Costs. The foregoing costs and
expenses shall include all search, filing and recording fees and taxes related
thereto, and other out-of-pocket expenses incurred by the Administrative Agent
and the cost of independent public accountants and other outside experts
retained by the Administrative Agent or, during the existence of an Event if
Default, any Guaranteed Party.

 

(b) Indemnification. Whether or not the transactions contemplated hereby are
consummated, the Guarantor agrees to indemnify, save and hold harmless each
Agent-Related Person, each other Guaranteed Party and their respective
Affiliates, directors, officers, employees, counsel, agents and
attorneys-in-fact (collectively the “Indemnitees”) from and against any and all
liabilities, obligations, losses, damages, penalties, claims, demands, actions,
judgments, suits, costs, expenses and disbursements (including reasonable
Attorney Costs) of any kind or nature whatsoever which may at any time be
imposed on, incurred by or asserted against any such Indemnitee in any way
relating to or arising out of or in connection with (i) the execution, delivery,
enforcement, performance or administration of any Guarantor Document or other
Loan Document or any other agreement, letter or instrument delivered in
connection with the transactions contemplated thereby or the consummation of the
transactions contemplated thereby, (ii) any Commitment, Loan or Letter of Credit
or the use or proposed use of the proceeds therefrom (including any refusal by
the L/C Issuer to honor a demand for payment under a Letter of Credit if the
documents presented in connection with such demand do not strictly comply with
the terms of such Letter of Credit), or (iii) any actual or alleged presence or
release of Hazardous Materials on or from any property currently or formerly
owned or operated by any Borrower, any Subsidiary, any other owner of
Unencumbered Pool Property, or any other Loan Document Party, or any
Environmental Liability related in any way to any Borrower, any Subsidiary, any
other owner of Unencumbered Pool Property, or any other Loan Document Party
(provided, however, that the Guarantor shall not have any indemnification
obligation to an Indemnitee under this subclause (iii) with respect to any
property currently or formerly owned or operated by any Loan Party or any
Environmental Liability related to any Loan Party if such Indemnitee has any
Indebtedness outstanding to such Loan Party outside of any Guarantor Document or
other Loan Document and if such Indemnitee’s claim for indemnification arises in
connection with such other Indebtedness and not the Indebtedness arising under
any Guarantor

 

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Document or other Loan Document), or (iv) any actual or prospective claim,
litigation, investigation or proceeding relating to any of the foregoing,
whether based on contract, tort or any other theory (including any investigation
of, preparation for, or defense of any pending or threatened claim,
investigation, litigation or proceeding) and regardless of whether any
Indemnitee is a party thereto (all the foregoing, collectively, the “Indemnified
Liabilities”); provided that such indemnity shall not, as to any Indemnitee, be
available to the extent that such liabilities, obligations, losses, damages,
penalties, claims, demands, actions, judgments, suits, costs, expenses or
disbursements are determined by a court of competent jurisdiction by final and
nonappealable judgment to have resulted from the gross negligence or willful
misconduct of such Indemnitee. No Indemnitee shall be liable for any damages
arising from the use by others of any information or other materials obtained
through IntraLinks or other similar information transmission systems in
connection with this Guaranty or the Credit Agreement, nor shall any Indemnitee
have any liability for any indirect or consequential damages relating to this
Guaranty, the Credit Agreement or any other Guaranty Document or Loan Document
or arising out of its activities in connection herewith or therewith (whether
before or after the Closing Date).

 

(c) Interest. Any amounts payable to by the Guarantor under this Section 15 or
otherwise under this Guaranty if not paid upon demand shall bear interest from
the date of such demand until paid in full, at a fluctuating interest rate per
annum at all times equal to the Default Rate applicable to Base Rate Loans to
the fullest extent permitted by applicable Law. Any such interest shall be due
and payable upon demand and shall be calculated on the basis of a year of 365 or
366 days, as the case may be, and the actual number of days elapsed.

 

(d) Payment. All amounts due under this Section 15 shall be payable within ten
Business Days after demand therefor.

 

(e) Survival. The agreements in this Section 15 shall survive the termination of
the Commitments and repayment of all Guaranteed Obligations.

 

SECTION 16 Right of Set-Off. In addition to any rights and remedies of the
Administrative Agent, the Swing Line Lender, the L/C Issuer, the Other Agents
and the Lenders provided by law, during the existence of any Event of Default,
each of the Lenders is authorized at any time and from time to time, without
prior notice to the Guarantor, any such notice being waived by the Guarantor 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 by,
and other indebtedness at any time owing by, such Lender to or for the credit or
the account of the Guarantor against any and all Obligations owing to such
Lender, now or hereafter existing, irrespective of whether or not the
Administrative Agent or such Lender shall have made demand under this Guaranty
or any other Guarantor Document and although such Obligations may be contingent
or unmatured or denominated in a currency different from that of the applicable
deposit or indebtedness. Each of the Lenders agrees (by its acceptance hereof)
promptly to notify the Guarantor and the Administrative Agent 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.

 

SECTION 17 Marshalling; Payments Set Aside. Neither the Administrative Agent nor
any Guaranteed Party shall be under any obligation to marshal any assets in
favor of the Guarantor or any other Person or against or in payment of any or
all of the Guaranteed

 

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Obligations. To the extent that the Guarantor makes a payment to any Guaranteed
Party, or any Guaranteed Party exercises its right of set-off, and such payment
or the proceeds of such set-off or any part thereof are subsequently
invalidated, declared to be fraudulent or preferential, set aside or required
(including pursuant to any settlement entered into by any Guaranteed Party in
its discretion) to be repaid to a trustee, receiver or any other party, in
connection with any Insolvency Proceeding or otherwise, then (a) to the extent
of such recovery the obligation or part thereof originally intended to be
satisfied shall be revived and continued in full force and effect as if such
payment had not been made or such set-off had not occurred, and (b) each of the
Lenders severally agrees (by its acceptance hereof) to pay to the Administrative
Agent upon demand its pro rata share of any amount so recovered from or repaid
by the Administrative Agent, plus interest thereon from the date of such demand
to the date such payment is made at a rate per annum equal to the Federal Funds
Rate from time to time in effect.

 

SECTION 18 Benefits of Guaranty. This Guaranty is entered into for the sole
protection and benefit of the Administrative Agent and each other Guaranteed
Party and their respective successors and assigns, and no other Person (other
than any Indemnitee specified herein) shall be a direct or indirect beneficiary
of, or shall have any direct or indirect cause of action or claim in connection
with, this Guaranty. The Guaranteed Parties, by their acceptance of this
Guaranty, shall not have any obligations under this Guaranty to any Person other
than the Guarantor, and such obligations shall be limited to those expressly
stated herein.

 

SECTION 19 Binding Effect; Assignment.

 

(a) Binding Effect. This Guaranty shall be binding upon the Guarantor and its
successors and assigns, and inure to the benefit of and be enforceable by the
Administrative Agent and each other Guaranteed Party and their respective
successors, endorsees, transferees and assigns.

 

(b) Assignment. Except to the extent otherwise provided in the Credit Agreement,
the Guarantor shall not have the right to assign or transfer its rights and
obligations hereunder or under any other Guarantor Documents without the prior
written consent of the Required Lenders. Each Lender may, without notice to or
consent by the Guarantor, sell, assign, transfer or grant participations in all
or any portion of such Lender’s rights and obligations hereunder and under the
other Guarantor Documents in connection with any sale, assignment, transfer or
grant of a participation by such Lender in accordance with Section 10.07 of the
Credit Agreement of or in its rights and obligations thereunder and under the
other Loan Documents. In the event of any grant of a participation, the
participant, to the extent such participant has been disclosed to the Borrowers
in accordance with Section 10.07(d) of the Credit Agreement, shall be deemed to
have a right of setoff under Section 16 in respect of its participation to the
same extent as if it were such “Guaranteed Party.”

 

SECTION 20 Governing Law and Jurisdiction.

 

(a) THIS GUARANTY SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE
LAW OF THE STATE OF CALIFORNIA APPLICABLE TO AGREEMENTS MADE AND TO BE PERFORMED
ENTIRELY WITHIN SUCH STATE; PROVIDED THAT THE ADMINISTRATIVE AGENT AND EACH
OTHER GUARANTEED PARTY SHALL RETAIN ALL RIGHTS ARISING UNDER FEDERAL LAW.

 

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(b) ANY LEGAL ACTION OR PROCEEDING WITH RESPECT TO THIS GUARANTY OR ANY OTHER
GUARANTOR DOCUMENT MAY BE BROUGHT IN THE COURTS OF THE STATE OF CALIFORNIA
SITTING IN SAN FRANCISCO COUNTY OR OF THE UNITED STATES FOR THE NORTHERN
DISTRICT OF SUCH STATE, AND BY EXECUTION AND DELIVERY OF THIS GUARANTY, THE
GUARANTOR CONSENTS, FOR ITSELF AND IN RESPECT OF ITS PROPERTY, TO THE
NON-EXCLUSIVE JURISDICTION OF THOSE COURTS. THE GUARANTOR IRREVOCABLY WAIVES ANY
OBJECTION, INCLUDING ANY OBJECTION TO THE LAYING OF VENUE OR BASED ON THE
GROUNDS OF FORUM NON CONVENIENS, WHICH IT MAY NOW OR HEREAFTER HAVE TO THE
BRINGING OF ANY ACTION OR PROCEEDING IN SUCH JURISDICTION IN RESPECT OF THIS
GUARANTY OR ANY OTHER GUARANTOR DOCUMENT. THE GUARANTOR WAIVES PERSONAL SERVICE
OF ANY SUMMONS, COMPLAINT OR OTHER PROCESS, WHICH MAY BE MADE BY ANY OTHER MEANS
PERMITTED BY THE LAW OF SUCH STATE.

 

(c) The Guarantor hereby irrevocably appoints the OP Borrower, with an office as
listed in Schedule 10.02 of the Credit Agreement, as its authorized agent (in
such capacity, the “Process Agent”) with all powers necessary to receive on its
behalf service of copies of the summons and complaint and any other process
which may be served in any action or proceeding arising out of or relating to
this Guaranty and the other Guarantor Documents in any of the courts in and of
the State of California. Such service may be made by mailing or delivering a
copy of such process to the Guarantor in care of the Process Agent at the
Process Agent’s address and the Guarantor hereby irrevocably authorizes and
directs the Process Agent to accept such service on its behalf and agrees that
the failure of the Process Agent to give any notice of any such service to the
Guarantor shall not impair or affect the validity of such service or of any
judgment rendered in any action or proceeding based thereon. As an alternative
method of service, the Guarantor also irrevocably consents to the service of any
and all process in any such action or proceeding by the mailing of copies of
such process to the Guarantor at its address specified on the signature page
hereof. If for any reason the OP Borrower shall cease to act as Process Agent,
the Guarantor shall appoint forthwith, in the manner provided for herein, a
successor Process Agent qualified to act as an agent for service of process with
respect to all courts in and of the State of California and acceptable to the
Administrative Agent.

 

(d) Nothing in this Section 20 shall affect the right of the Guaranteed Parties
to serve legal process in any other manner permitted by law or limit the right
of the Guaranteed Parties to bring any action or proceeding against the
Guarantor or its property in the courts of other jurisdictions.

 

SECTION 21 Waiver of Jury Trial. THE GUARANTOR AND EACH GUARANTEED PARTY (BY ITS
ACCEPTANCE HEREOF) HEREBY EXPRESSLY WAIVES ANY RIGHT TO TRIAL BY JURY OF ANY
CLAIM, DEMAND, ACTION OR CAUSE OF ACTION ARISING UNDER THE GUARANTOR DOCUMENTS
OR IN ANY WAY CONNECTED WITH OR RELATED OR INCIDENTAL TO THE DEALINGS OF THE
PARTIES OR ANY OF THEM WITH RESPECT TO THE GUARANTOR DOCUMENTS, OR THE
TRANSACTIONS RELATED THERETO, IN EACH CASE WHETHER NOW EXISTING OR HEREAFTER
ARISING, AND WHETHER FOUNDED IN CONTRACT OR TORT OR OTHERWISE; AND THE GUARANTOR
AND EACH GUARANTEED PARTY (BY ITS ACCEPTANCE HEREOF) HEREBY AGREES AND CONSENTS
THAT ANY SUCH

 

F(1)- 30

 

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CLAIM, DEMAND, ACTION OR CAUSE OF ACTION SHALL BE DECIDED BY COURT TRIAL WITHOUT
A JURY, AND THAT ANY PARTY MAY FILE AN ORIGINAL COUNTERPART OR A COPY OF THIS
SECTION WITH ANY COURT AS WRITTEN EVIDENCE OF THE CONSENT OF THE PARTIES TO THE
WAIVER OF THEIR RIGHT TO TRIAL BY JURY.

 

SECTION 22 Entire Agreement; Amendments and Waivers. This Guaranty together with
the other Guarantor Documents embodies the entire agreement of the Guarantor
with respect to the matters set forth herein and supersedes all prior or
contemporaneous agreements and understandings of the Guarantor, verbal or
written, relating to the subject matter hereof and thereof and, unless otherwise
provided in the Credit Agreement, shall not be amended except by written
agreement of the Guarantor, the Administrative Agent and the Required Lenders.
No waiver of any rights of the Guaranteed Parties under any provision of this
Guaranty or consent to any departure by the Guarantor therefrom shall be
effective unless in writing and signed by the Administrative Agent and the
Required Lenders, or the Administrative Agent (with the written consent of the
Required Lenders). Any such amendment, waiver or consent shall be effective only
in the specific instance and for the specific purpose for which given.

 

SECTION 23 Severability. If any provision of this Guaranty or the other
Guarantor Documents is held to be illegal, invalid or unenforceable, (a) the
legality, validity and enforceability of the remaining provisions of this
Guaranty and the other Guarantor Documents shall not be affected or impaired
thereby and (b) the parties shall endeavor in good faith negotiations to replace
the illegal, invalid or unenforceable provisions with valid provisions the
economic effect of which comes as close as possible to that of the illegal,
invalid or unenforceable provisions. The invalidity of a provision in a
particular jurisdiction shall not invalidate or render unenforceable such
provision in any other jurisdiction.

 

SECTION 24 Confidentiality. By its acceptance hereof, each Guaranteed Party
agrees to maintain the confidentiality of the Information (as defined below),
except that Information may be disclosed (a) to its and its Affiliates’
directors, officers, employees and agents, including accountants, legal counsel
and other advisors (it being understood that the Persons to whom such disclosure
is made will be informed of the confidential nature of such Information and
instructed to keep such Information confidential), (b) to the extent requested
by any regulatory authority (including any self-regulatory authority, such as
the National Association of Insurance Commissioners), (c) to the extent required
by applicable laws or regulations or by any subpoena or similar legal process,
(d) to any other party to the Credit Agreement, (e) in connection with the
exercise of any remedies hereunder or under any other Loan Document or any
action or proceeding relating to this Guaranty or any other Loan Document or the
enforcement of rights hereunder or thereunder, (f) subject to an agreement
containing provisions substantially the same as those of this Section, to (i)
any assignee of or Participant in, or any prospective assignee of or Participant
in, any of its rights or obligations under the Loan Documents or (ii) any actual
or prospective counterparty (or its advisors) to any swap or derivative
transaction relating to any Borrower, the Guarantor and their respective
obligations, (g) with the consent of the Guarantor or (h) to the extent such
Information (x) becomes publicly available other than as a result of a breach of
this Section or (y) becomes available to a Guaranteed Party on a nonconfidential
basis from a source other than any Borrower or the Guarantor; provided that such
source is not bound by a confidentiality agreement with any Loan Party. For
purposes of this Section, “Information” means all information received from the
Guarantor relating to the Guarantor, any of its

 

F(1)- 31

 

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Subsidiaries or Affiliates or any of their respective businesses, other than any
such information that is available to a Guaranteed Party on a nonconfidential
basis prior to disclosure by the Guarantor or any other Loan Document Party,
provided that, in the case of information received from the Guarantor or any
other Loan Document Party after the date hereof, such information is clearly
identified at the time of delivery as confidential. Any Person required to
maintain the confidentiality of Information as provided in this Section shall be
considered to have complied with its obligation to do so if such Person has
exercised the same degree of care to maintain the confidentiality of such
Information as such Person would accord to its own confidential information.
Notwithstanding anything set forth herein or in any other written or oral
understanding or agreement to which the parties hereto are parties or by which
they are bound, the parties acknowledge and agree that (i) any obligations of
confidentiality contained herein and therein do not apply and have not applied
from the commencement of discussions between the parties to the “tax treatment”
and “tax structure” of the transactions contemplated by this Guaranty and (ii)
each Guaranteed Party (and each of its employees, representatives, or other
agents) may disclose without limitation of any kind, any information with
respect to the tax treatment and tax structure of the transactions contemplated
hereby and all materials of any kind (including opinions or other tax analyses)
that are provided to any such Guaranteed Party relating to such tax treatment
and tax structure, all within the meaning of Treasury Regulation Section
1.6011-4; provided that with respect to any document or similar item that in
either case contains information concerning the tax treatment or tax structure
of the transaction as well as other information, this sentence shall only apply
to such portions of the document or similar item that relate to the tax
treatment or tax structure of the Guaranteed Obligations and transactions
contemplated hereby, and provided further, that each party recognizes that the
privilege each has to maintain, in its sole discretion, the confidentiality of a
communication relating to the transactions contemplated hereby, including a
confidential communication with its attorney or a confidential communication
with a federally authorized practitioner under Section 7525 of the Code, is not
intended to be affected by the foregoing.

 

[Remainder of Page Intentionally Left Blank]

 

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IN WITNESS WHEREOF, the Guarantor has executed this Guaranty, as of the date
first above written.

 

CATELLUS SUBCO, INC. By      

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Name:

Title:

Address:

     

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Attn.:

     

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Fax No.

     

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Email:

     

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S-1

 

Form of Guaranty (REIT Guarantor)

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GUARANTY

(SUBSIDIARY GUARANTOR)

 

THIS GUARANTY (this “Guaranty”), dated as of September 15, 2003, is made by each
Guarantor named in the signature pages hereof (each a “Guarantor” and,
collectively, the “Guarantors”), in favor of the Lenders party to the Credit
Agreement referred to below, Fleet National Bank, as Syndication Agent, Bank
One, NA, as Documentation Agent, Wells Fargo Bank, National Association, as
Managing Agent, Union Bank of California, N.A., as Managing Agent (Syndication
Agent, Documentation Agent, and Managing Agents, collectively, the “Other
Agents”), and Bank of America, N.A., as Administrative Agent (in such capacity,
the “Administrative Agent”), the letter of credit issuer (in such capacity, the
“the L/C Issuer”), and the swing line lender (in such capacity, the “Swing Line
Lender”).

 

A. Catellus Development Corporation, a Delaware corporation, and its permitted
successors and assigns, as a borrower (the “OP Borrower” or “Pre-REIT Conversion
Borrower”), Catellus Land and Development Corporation, a Delaware corporation,
as a borrower (the “TRS Borrower,” and together with the OP Borrower, each a
“Borrower” and together, the “Borrowers”), the Lenders from time to time party
to the Credit Agreement, as defined below (each a “Lender” and, collectively,
the “Lenders”), the Other Agents, and Bank of America, N.A., as Administrative
Agent, the L/C Issuer, and the Swing Line Lender, are parties to a Credit
Agreement dated as of September 15, 2003 (as amended, modified, renewed or
extended from time to time, the “Credit Agreement”).

 

B. It is a condition precedent to the Borrowings and issuances of Letters of
Credit under the Credit Agreement that each Guarantor guarantee the indebtedness
and other obligations of the Borrowers to the Guaranteed Parties under or in
connection with the Credit Agreement as set forth herein. Each Guarantor, as a
Material Subsidiary of any Borrower or of the REIT Guarantor or an owner of
Unencumbered Pool Property, will derive substantial direct and indirect benefits
from the making of the Loans to, and issuances of Letters of Credit for the
account of, the Borrowers pursuant to the Credit Agreement (which benefits are
hereby acknowledged by each Guarantor).

 

NOW THEREFORE, to induce the Administrative Agent, the L/C Issuer, the Swing
Line Lender, the Other Agents, and the Lenders to enter into the Credit
Agreement, and in consideration thereof, each Guarantor hereby agrees as
follows:

 

SECTION 1 Definitions; Interpretation.

 

(a) Terms Defined in Credit Agreement . All capitalized terms used in this
Guaranty (including in the recitals hereof) and not otherwise defined herein
shall have the meanings assigned to them in the Credit Agreement.

 

1

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(b) Certain Defined Terms. As used in this Guaranty (including in the recitals
hereof), the following terms shall have the following meanings:

 

“Bankruptcy Code” means the Federal Bankruptcy Reform Act of 1978 (11 U.S.C.
§101, et seq.).

 

“Guaranteed Obligations” has the meaning set forth in Section 2.

 

“Guaranteed Parties” means the Administrative Agent, the L/C Issuer, the Swing
Line Lender, the Syndication Agent, the Documentation Agent, the Managing
Agents, and the Lenders, and their successors and assigns.

 

“Guarantor Documents” means this Guaranty and all other certificates, documents,
agreements and instruments delivered by or on behalf of any Guarantor to any
Guaranteed Party under or in connection with this Guaranty and the Loan
Documents.

 

“Insolvency Proceeding” means, with respect to any Person, (a) any case, action
or proceeding with respect to such Person before any court or other Governmental
Authority relating to bankruptcy, reorganization, insolvency, liquidation,
receivership, dissolution, winding-up or relief of debtors, or (b) any general
assignment for the benefit of creditors, composition, marshalling of assets for
creditors, or other, similar arrangement in respect of its creditors generally
or any substantial portion of its creditors; in either case undertaken under
Debtor Relief Laws.

 

“Solvent” means, with respect to any Person, that as of the date of
determination: (a) the fair valuation of the sum of such Person’s debt
(including contingent liabilities) does not exceed all of its property, at a
fair valuation on a going-concern basis; (b) the Person reasonably expects to be
able to pay the liabilities on such Person’s then existing debts as they become
absolute and matured; (c) such Person’s capital is not unreasonably small in
relation to its business or any contemplated or undertaken transaction; and (d)
such Person does not intend to incur, or believe (nor should it reasonably
believe) that it will incur, debts beyond its ability to pay such debts as they
become due. For purposes of this definition, the amount of any contingent
liability at any time shall be computed as the amount that, in light of all of
the facts and circumstances existing at such time, represents the amount that
can reasonably be expected to become an actual or matured liability
(irrespective of whether such contingent liabilities meet the criteria for
accrual under Statement of Financial Accounting Standards No. 5).

 

“Subordinated Debt” has the meaning set forth in Section 7(a).

 

“Subordinated Debt Payment” has the meaning set forth in Section 7(b).

 

(c) Interpretation. The rules of interpretation set forth in Sections 1.02 to
1.05 of the Credit Agreement shall be applicable to this Guaranty and are
incorporated herein by this reference.

 

SECTION 2 Guaranty.

 

(a) Guaranty. Each Guarantor hereby unconditionally and irrevocably guarantees
to the Guaranteed Parties, and their respective successors, endorsees,
transferees and assigns, the full and prompt payment when due (whether at stated
maturity, by required prepayment, declaration, acceleration, demand or
otherwise) and performance of the

 

2

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indebtedness, liabilities and other obligations of the Borrowers to the
Guaranteed Parties under or in connection with the Credit Agreement, the Notes
and the other Loan Documents, including all unpaid principal of the Loans, all
amounts owing in respect of the L/C Obligations, all interest accrued thereon,
all fees due under the Credit Agreement, all indemnification obligations of the
Borrowers under or in connection with the Credit Agreement, the Notes and the
other Loan Documents, and all other amounts payable by the Borrowers to the
Guaranteed Parties thereunder or in connection therewith. The terms
“indebtedness,” “liabilities” and “obligations” are used herein in their most
comprehensive sense and include any and all advances, debts, obligations and
liabilities, now existing or hereafter arising, whether voluntary or involuntary
and whether due or not due, absolute or contingent, liquidated or unliquidated,
determined or undetermined, and whether recovery upon such indebtedness,
liabilities and obligations may be or hereafter become unenforceable or shall be
an allowed or disallowed claim under any Debtor Relief Law, and including
interest that accrues after the commencement by or against any Borrower or any
Loan Document Party thereof of any proceeding under any Debtor Relief Laws
naming such Person as the debtor in such proceeding. The foregoing indebtedness,
liabilities and other obligations of the Borrowers, and all other indebtedness,
liabilities and obligations to be paid or performed by the Guarantors in
connection with this Guaranty (including any and all amounts due under Section
15), shall hereinafter be collectively referred to as the “Guaranteed
Obligations.”

 

(b) Limitation of Guaranty. Notwithstanding anything to the contrary contained
herein, to the extent that any Guarantor shall, under this Guaranty, repay any
of the Guaranteed Obligations, the liability of such Guarantor hereunder shall
be limited to an amount equal to the maximum amount of liability for payments on
the Guaranteed Obligations which could be asserted against such Guarantor
hereunder without (i) rendering such Guarantor “insolvent” within the meaning of
Section 101(31) of the Bankruptcy Code, Section 2 of the Uniform Fraudulent
Transfer Act (“UFTA”) or Section 2 of the Uniform Fraudulent Conveyance Act
(“UFCA”), (ii) rendering such Guarantor no longer Solvent, or (iii) rendering
such Guarantor’s obligations hereunder unlawful or subject to avoidance as a
fraudulent transfer or conveyance under Section 548 of the Bankruptcy Code or
any comparable provisions of applicable state law (collectively, the “Fraudulent
Transfer Laws”), in each case after giving effect to all other liabilities of
Guarantor, contingent or otherwise, that are relevant under the Fraudulent
Transfer Laws (the greatest amount payable by such Guarantor without rendering
such Guarantor’s obligations hereunder unlawful or being subject to avoidance
under the Fraudulent Transfer Laws being at any time, the “Maximum Liability”).
To the extent that any Guarantor shall, under this Guaranty, repay any of the
Guaranteed Obligations, then such Guarantor shall, subject to the provisions of
Section 6 below, be entitled to contribution and indemnification from, and be
reimbursed by, each of the other Guarantors with respect thereto in an amount,
for each other Guarantor, equal to a fraction of such payment, the numerator of
which fraction is such other Guarantor’s Maximum Liability as of the date of
determination and the denominator of which is the sum of the Maximum Liability
of such Guarantor and all of the other Guarantors as of the date of
determination.

 

SECTION 3 Liability of Guarantors. The liability of the Guarantors under this
Guaranty and each other Guarantor Document shall be irrevocable, absolute,
independent and unconditional, and shall not be affected by any circumstance
which might constitute a

 

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discharge of a surety or guarantor other than the indefeasible payment and
performance in full of all Guaranteed Obligations. In furtherance of the
foregoing and without limiting the generality thereof, each Guarantor agrees as
follows:

 

(i) such Guarantor’s liability hereunder shall be the immediate, direct, and
primary obligation of such Guarantor and shall not be contingent upon any
Guaranteed Party’s exercise or enforcement of any remedy it may have against any
Borrower or any other Person, or against any Collateral or any other collateral
securing the Guaranteed Obligations;

 

(ii) this Guaranty is a guaranty of payment when due and not merely of
collectibility;

 

(iii) the Guaranteed Parties may enforce this Guaranty upon the occurrence and
during the continuance of an Event of Default notwithstanding the existence of
any dispute between any of the Guaranteed Parties and any Borrower with respect
to the existence of such Event of Default; provided that no Guarantor shall be
deemed to have waived any defense based on the defense that the Guaranteed
Obligations have been paid in full;

 

(iv) such Guarantor’s payment of a portion, but not all, of the Guaranteed
Obligations shall in no way limit, affect, modify or abridge such Guarantor’s
liability for any portion of the Guaranteed Obligations remaining unsatisfied;
and

 

(v) such Guarantor’s liability with respect to the Guaranteed Obligations shall
remain in full force and effect without regard to, and shall not be impaired or
affected by, nor shall such Guarantor be exonerated or discharged by, any of the
following events:

 

(A) any Insolvency Proceeding with respect to any Borrower, such Guarantor, any
other Loan Document Party or any other Person;

 

(B) any limitation, discharge, or cessation of the liability of any Borrower,
such Guarantor, any other Loan Document Party or any other Person for any
Guaranteed Obligations due to any statute, regulation or rule of law, or any
invalidity or unenforceability in whole or in part of any of the Guaranteed
Obligations or the Loan Documents;

 

(C) any merger, acquisition, consolidation or change in structure of any
Borrower, such Guarantor or any other Loan Document Party or Person, or any
sale, lease, transfer or other disposition of any or all of the assets or shares
of any Borrower, such Guarantor, any other Loan Document Party or other Person,
including, without limitation, the transactions contemplated to occur upon the
REIT Conversion, including the assumption by the Post-REIT Conversion Borrower
of the obligations of the Pre-REIT Conversion Borrower under the Loan Documents;

 

(D) any assignment or other transfer, in whole or in part, of any Guaranteed
Party’s interests in and rights under this Guaranty or the other Loan Documents,
including any Guaranteed Party’s right to receive payment of the Guaranteed
Obligations, or any assignment or other transfer, in whole or in part, of any
Guaranteed Party’s interests in and to any of the Collateral or any other
collateral securing the Guaranteed Obligations;

 

4

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(E) any claim, defense, counterclaim or setoff, other than that of prior
performance, that any Borrower, such Guarantor, any other Loan Document Party or
other Person may have or assert, including any defense of incapacity or lack of
corporate or other authority to execute any of the Loan Documents;

 

(F) any Guaranteed Party’s amendment, modification, renewal, extension,
cancellation or surrender of any Loan Document, any Guaranteed Obligations, or
any Collateral or any other collateral securing the Guaranteed Obligations, or
any Guaranteed Party’s exchange, release, or waiver of any Collateral or any
other collateral securing the Guaranteed Obligations;

 

(G) any Guaranteed Party’s exercise or nonexercise of any power, right or remedy
with respect to any of the Collateral or any other collateral securing the
Guaranteed Obligations, including any Guaranteed Party’s compromise, release,
settlement or waiver with or of any Borrower, any other Loan Document Party or
any other Person;

 

(H) any Guaranteed Party’s vote, claim, distribution, election, acceptance,
action or inaction in any Insolvency Proceeding related to the Guaranteed
Obligations;

 

(I) any impairment or invalidity of any of the Collateral or any other
collateral securing any of the Guaranteed Obligations or any failure to perfect
any of the Liens of the Guaranteed Parties thereon or therein; and

 

(J) any other guaranty, whether by such Guarantor or any other Person, of all or
any part of the Guaranteed Obligations or any other indebtedness, obligations or
liabilities of any Borrower to any Guaranteed Party.

 

SECTION 4 Consents of Guarantors. Each Guarantor hereby unconditionally consents
and agrees that, without notice to or further assent from such Guarantor:

 

(i) the principal amount of the Guaranteed Obligations may be increased or
decreased and additional Obligations of the Loan Parties under the Loan
Documents may be incurred, by one or more amendments, modifications, renewals or
extensions of any Loan Document or otherwise;

 

(ii) the time, manner, place or terms of any payment under any Loan Document may
be extended or changed, including by an increase or decrease in the interest
rate on any Guaranteed Obligation or any fee or other amount payable under such
Loan Document, by an amendment, modification or renewal of any Loan Document or
otherwise;

 

(iii) the time for any Borrower’s (or any other Person’s) performance of or
compliance with any term, covenant or agreement on its part to be performed or
observed under any Loan Document may be extended, or such performance or
compliance waived, or failure in or departure from such performance or
compliance consented to, all in such manner and upon such terms as the
Guaranteed Parties may deem proper;

 

5

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(iv) any Guaranteed Party may discharge or release, in whole or in part, any
other Loan Document Party or any other Person liable for the payment and
performance of all or any part of the Guaranteed Obligations, and may permit or
consent to any such action or any result of such action, and shall not be
obligated to demand or enforce payment upon any of the Collateral or any other
collateral, nor shall any Guaranteed Party be liable to the Guarantors for any
failure to collect or enforce payment or performance of the Guaranteed
Obligations from any Person or to realize on the Collateral or other collateral
therefor;

 

(v) in addition to the Collateral, the Guaranteed Parties may take and hold
other security (legal or equitable) of any kind, at any time, as collateral for
the Guaranteed Obligations, and may, from time to time, in whole or in part,
exchange, sell, surrender, release, subordinate, modify, waive, rescind,
compromise or extend such security and may permit or consent to any such action
or the result of any such action, and may apply such security and direct the
order or manner of sale thereof;

 

(vi) the Guaranteed Parties may request and accept other guaranties of the
Guaranteed Obligations and any other indebtedness, obligations or liabilities of
the Borrowers to any Guaranteed Party and may, from time to time, in whole or in
part, surrender, release, subordinate, modify, waive, rescind, compromise or
extend any such guaranty and may permit or consent to any such action or the
result of any such action; and

 

(vii) the Guaranteed Parties may exercise, or waive or otherwise refrain from
exercising, any other right, remedy, power or privilege (including the right to
accelerate the maturity of any Loan and any power of sale) granted by any Loan
Document or other security document or agreement, or otherwise available to any
Guaranteed Party, with respect to the Guaranteed Obligations or any of the
Collateral or any other collateral securing the Guaranteed Obligations, even if
the exercise of such right, remedy, power or privilege affects or eliminates any
right of subrogation or any other right of the Guarantors against any Borrower;

 

all as the Guaranteed Parties may deem advisable, and all without impairing,
abridging, releasing or affecting this Guaranty.

 

SECTION 5 Guarantor Waivers.

 

(a) Certain Waivers. Each Guarantor waives and agrees not to assert:

 

(i) any right to require any Guaranteed Party to marshal assets in favor of the
Borrowers, such Guarantor, any other Loan Document Party or any other Person, to
proceed against any Borrower, any other Loan Document Party or any other Person,
to proceed against or exhaust any of the Collateral or any other collateral
securing the Guaranteed Obligations, to give notice of the terms, time and place
of any public or private sale of personal property security constituting the
Collateral or other collateral for the Guaranteed Obligations or comply with any
other provisions of §9611 of the California UCC (or any equivalent provision of
any other applicable law) or to pursue any other right, remedy, power or
privilege of any Guaranteed Party whatsoever;

 

(ii) the defense of the statute of limitations in any action hereunder or for
the collection or performance of the Guaranteed Obligations;

 

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(iii) any defense arising by reason of any lack of corporate or other authority
or any other defense of any Borrower, such Guarantor, any other Loan Document
Party or any other Person;

 

(iv) any defense based upon any Guaranteed Party’s errors or omissions in the
administration of the Guaranteed Obligations;

 

(v) any rights to set-offs and counterclaims;

 

(vi) any defense based upon an election of remedies (including, if available, an
election to proceed by nonjudicial foreclosure) which destroys or impairs the
subrogation rights of such Guarantor or the right of such Guarantor to proceed
against any Borrower, any other Loan Document Party or any other obligor of the
Guaranteed Obligations for reimbursement; and

 

(vii) without limiting the generality of the foregoing, to the fullest extent
permitted by law, any defenses or benefits that may be derived from or afforded
by applicable law limiting the liability of or exonerating guarantors or
sureties, or which may conflict with the terms of this Guaranty, including any
rights and defenses available to the Guarantor by reason of Sections 2787 to
2855, inclusive, of the California Civil Code and any and all benefits that
otherwise might be available to such Guarantor under California Civil Code
§§1432, 2809, 2810, 2815, 2819, 2839, 2845, 2848, 2849, 2850, 2899 and 3433 and
California Code of Civil Procedure §§580a, 580b, 580d and 726. Accordingly, each
Guarantor waives all rights and defenses that such Guarantor may have because
any Borrower’s debt may be secured by real property. This means, among other
things: (A) the Guaranteed Parties may collect from such Guarantor without first
foreclosing on any real or personal property collateral pledged by the
Borrowers; and (B) if the Administrative Agent forecloses on any real property
collateral pledged by the Borrowers: (1) the amount of the debt may be reduced
only by the price for which that collateral is sold at the foreclosure sale,
even if such collateral is worth more than the sale price, and (2) the
Guaranteed Parties may collect from such Guarantor even if the Administrative
Agent, by foreclosing on the real property collateral, has destroyed any right
such Guarantor may have to collect from any Borrower. This is an unconditional
and irrevocable waiver of any rights and defenses any Guarantor may have because
any Borrower’s debt is or may be secured by real property. These rights and
defenses include, but are not limited to, any rights of defenses based upon
Section 580a, 580b, 580d or 726 of the California Code of Civil Procedure.

 

(b) Additional Waivers. Each Guarantor waives any and all notice of the
acceptance of this Guaranty, and any and all notice of the creation, renewal,
modification, extension or accrual of the Guaranteed Obligations, or the
reliance by the Guaranteed Parties upon this Guaranty, or the exercise of any
right, power or privilege hereunder. The Guaranteed Obligations shall
conclusively be deemed to have been created, contracted, incurred and permitted
to exist in reliance upon this Guaranty. Each Guarantor waives promptness,
diligence, presentment, protest, demand for payment, notice of default, dishonor
or nonpayment and all other notices to or upon the Borrowers, such Guarantor,
any other Loan Document Party or any other Person with respect to the Guaranteed
Obligations.

 

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(c) Independent Obligations. The obligations of each Guarantor hereunder are
independent of and separate from the obligations of the Borrowers and any other
Loan Document Party and upon the occurrence and during the continuance of any
Event of Default, a separate action or actions may be brought against such
Guarantor, whether or not any Borrower or any such other Loan Document Party is
joined therein or a separate action or actions are brought against any Borrower
or any such other Loan Document Party.

 

(d) Financial Condition. No Guarantor shall have any right to require any
Guaranteed Party to obtain or disclose any information with respect to: (i) the
financial condition or character of any Borrower or any other Loan Document
Party or the ability of any Borrower or any other Loan Document Party to pay and
perform the Guaranteed Obligations; (ii) the Guaranteed Obligations; (iii) the
Collateral or any other collateral securing the Guaranteed Obligations; (iv) the
existence or nonexistence of any other guarantees of all or any part of the
Guaranteed Obligations; (v) any action or inaction on the part of any Guaranteed
Party or any other Person; or (vi) any other matter, fact or occurrence
whatsoever.

 

SECTION 6 Subrogation. Until the Guaranteed Obligations shall be satisfied in
full and the Commitments shall be terminated, no Guarantor shall directly or
indirectly exercise, (i) any rights that it may acquire by way of subrogation
under this Guaranty, by any payment hereunder or otherwise, (ii) any rights of
contribution, indemnification, reimbursement or similar suretyship claims
arising out of this Guaranty or (iii) any other right which it might otherwise
have or acquire (in any way whatsoever) which could entitle it at any time to
share or participate in any right, remedy or security of any Guaranteed Party as
against any Borrower or other Loan Parties, whether in connection with this
Guaranty, any of the other Loan Documents or otherwise. If any amount shall be
paid to any Guarantor on account of the foregoing rights at any time when all
the Guaranteed Obligations shall not have been paid in full, such amount shall
be held in trust for the benefit of the Guaranteed Parties and shall forthwith
be paid to the Administrative Agent to be credited and applied to the Guaranteed
Obligations, whether matured or unmatured, in accordance with the terms of the
Loan Documents.

 

SECTION 7 Subordination.

 

(a) Subordination to Payment of Guaranteed Obligations. All payments on account
of all indebtedness, liabilities and other payment obligations of the Borrowers
to each Guarantor, whether created under, arising out of or in connection with
any documents or instruments evidencing any credit extensions to the Borrowers
or otherwise, including all principal on any such credit extensions, all
interest accrued thereon, all fees and all other amounts payable by the
Borrowers to such Guarantor in connection therewith, whether now existing or
hereafter arising, and whether due or to become due, absolute or contingent,
liquidated or unliquidated, determined or undetermined (the “Subordinated Debt”)
shall be subject, subordinate and junior in right of payment and exercise of
remedies, to the extent and in the manner set forth herein, to the prior payment
in full in cash or cash equivalents of the Guaranteed Obligations.

 

(b) No Payments. Except as otherwise permitted under the Credit Agreement, as
long as any of the Guaranteed Obligations shall remain outstanding and unpaid,
no Guarantor shall accept or receive any payment or distribution by or on behalf
of any Borrower, directly or

 

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indirectly, of assets of any Borrower of any kind or character, whether in cash,
property or securities, including on account of the purchase, redemption or
other acquisition of Subordinated Debt, as a result of any collection, sale or
other disposition of collateral, or by setoff, exchange or in any other manner,
for or on account of the Subordinated Debt (“Subordinated Debt Payments”),
except that if no Event of Default exists, a Guarantor shall be entitled to
accept and receive regularly scheduled payments and other payments in the
ordinary course on the Subordinated Debt, in accordance with the terms of the
documents and instruments governing the Subordinated Debt and other Subordinated
Debt Payments in respect of Subordinated Debt not evidenced by documents or
instruments, in each case to the extent permitted under Article VII of the
Credit Agreement. During the existence of an Event of Default (or if any Event
of Default would exist immediately after the making of a Subordinated Debt
Payment), and until such Event of Default is cured or waived, such Guarantor
shall not make, accept or receive any Subordinated Debt Payment. In the event
that, notwithstanding the provisions of this Section 7, any Subordinated Debt
Payments shall be received in contravention of this Section 7 by any Guarantor
before all Guaranteed Obligations are paid in full in cash or cash equivalents,
such Subordinated Debt Payments shall be held in trust for the benefit of the
Guaranteed Parties and shall be paid over or delivered to the Administrative
Agent for application to the payment in full in cash or cash equivalents of all
Guaranteed Obligations remaining unpaid to the extent necessary to give effect
to this Section 7, after giving effect to any concurrent payments or
distributions to any Guaranteed Party in respect of the Guaranteed Obligations.

 

(c) Subordination of Remedies. As long as any Guaranteed Obligations shall
remain outstanding and unpaid, no Guarantor shall, without the prior written
consent of the Administrative Agent:

 

(i) accelerate, make demand or otherwise make due and payable prior to the
original stated maturity thereof any Subordinated Debt or bring suit or
institute any other actions or proceedings to enforce its rights or interests
under or in respect of the Subordinated Debt;

 

(ii) exercise any rights under or with respect to (A) any guaranties of the
Subordinated Debt, or (B) any collateral held by it, including causing or
compelling the pledge or delivery of any collateral, any attachment of, levy
upon, execution against, foreclosure upon or the taking of other action against
or institution of other proceedings with respect to any collateral held by it,
notifying any account debtors of the Borrowers or asserting any claim or
interest in any insurance with respect to any collateral, or attempt to do any
of the foregoing;

 

(iii) exercise any rights to set-offs and counterclaims in respect of any
indebtedness, liabilities or obligations of such Guarantor to any Borrower
against any of the Subordinated Debt; or

 

(iv) commence, or cause to be commenced, or join with any creditor other than
any Guaranteed Party in commencing, any Insolvency Proceeding.

 

(d) Subordination Upon Any Distribution of Assets of any Borrower. In the event
of any payment or distribution of assets of any Borrower of any kind or
character, whether in cash, property or securities, upon any Insolvency
Proceeding with respect to or involving any

 

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Borrower, (i) all amounts owing on account of the Guaranteed Obligations,
including all interest accrued thereon at the rate set forth in the Credit
Agreement both before and after the initiation of any such proceeding, whether
or not an allowed claim in any such proceeding, shall first be paid in full in
cash, or payment provided for in cash or in cash equivalents, before any
Subordinated Debt Payment is made; and (ii) to the extent permitted by
applicable law, any Subordinated Debt Payment to which such Guarantor would be
entitled except for the provisions hereof, shall be paid or delivered by the
trustee in bankruptcy, receiver, assignee for the benefit of creditors or other
liquidating agent making such payment or distribution directly to the
Administrative Agent (on behalf of the other Guaranteed Parties) for application
to the payment of the Guaranteed Obligations in accordance with clause (i),
after giving effect to any concurrent payment or distribution or provision
therefor to any Guaranteed Party in respect of such Guaranteed Obligations.

 

(e) Authorization to Administrative Agent. If, while any Subordinated Debt is
outstanding, any Insolvency Proceeding is commenced by or against any Borrower
or its respective property constituting an Event of Default:

 

(i) the Administrative Agent, when so instructed by the Required Lenders, is
hereby irrevocably authorized and empowered (in the name of the Guaranteed
Parties or in the name of any Guarantor or otherwise), but shall have no
obligation, to demand, sue for, collect and receive every payment or
distribution in respect of the Subordinated Debt and give acquittance therefor
and to file claims and proofs of claim and take such other action (including
voting the Subordinated Debt) as it may deem necessary or advisable for the
exercise or enforcement of any of the rights or interests of the Guaranteed
Parties; and

 

(ii) each Guarantor shall promptly take such action as the Administrative Agent
(on instruction from the Required Lenders) may reasonably request (A) to collect
the Subordinated Debt for the account of the Guaranteed Parties and to file
appropriate claims or proofs of claim in respect of the Subordinated Debt, (B)
to execute and deliver to the Administrative Agent, such powers of attorney,
assignments and other instruments as it may request to enable it to enforce any
and all claims with respect to the Subordinated Debt, and (C) to collect and
receive any and all Subordinated Debt Payments.

 

SECTION 8 Continuing Guaranty. This Guaranty is a continuing guaranty and
agreement of subordination relating to any Guaranteed Obligations, including
Guaranteed Obligations which may exist continuously or which may arise from time
to time under successive transactions, and the Guarantors expressly acknowledge
that this Guaranty shall remain in full force and effect notwithstanding that
there may be periods in which no Guaranteed Obligations exist. This Guaranty
shall continue in effect and be binding upon the Guarantors until termination of
the Commitments and payment and performance in full of the Guaranteed
Obligations.

 

SECTION 9 Payments.

 

(a) Payment Obligation. Each Guarantor hereby agrees, in furtherance of the
foregoing provisions of this Guaranty and not in limitation of any other right
which any Guaranteed Party or any other Person may have against such Guarantor
by virtue hereof, upon

 

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the failure of the Borrowers to pay any of the Guaranteed Obligations when and
as the same shall become due, whether at stated maturity, by required
prepayment, declaration, acceleration, demand or otherwise (including amounts
that would become due but for the operation of the automatic stay under §362(a)
of the Bankruptcy Code), such Guarantor shall forthwith pay, or cause to be
paid, in cash, to the Administrative Agent an amount equal to the amount of the
Guaranteed Obligations then due as aforesaid (including interest which, but for
the filing of a petition in any Insolvency Proceeding with respect to any
Borrower, would have accrued on such Guaranteed Obligations, whether or not a
claim is allowed against such Borrower for such interest in any such Insolvency
Proceeding). Each Guarantor shall make each payment hereunder, unconditionally
in full without set-off, counterclaim or other defense, on the day when due in
Dollars in immediately available funds, to the Administrative Agent at such
office of the Administrative Agent and to such account as the Administrative
Agent shall specify in writing to such Guarantor.

 

(b) Free and Clear Payments. Any and all payments by any Guarantor to or for the
account of any Guaranteed Party under any Guarantor Document shall be made free
and clear of and without deduction for any and all present or future taxes,
duties, levies, imposts, deductions, assessments, fees, withholdings or similar
charges, and all liabilities with respect thereto, now or hereafter imposed,
levied, collected, withheld or assessed by any Governmental Authority,
excluding, in the case of any Guaranteed Party, taxes imposed on or measured by
its overall net income, and franchise taxes imposed on it (in lieu of net income
taxes), by the jurisdiction (or any political subdivision thereof) under the
Laws of which such Guaranteed Party is organized or maintains a lending office
(all such non-excluded taxes, duties, levies, imposts, deductions, assessments,
fees, withholdings or similar charges, and liabilities being hereinafter
referred to as “Taxes”). If any Guarantor shall be required by any Laws to
deduct any Taxes from or in respect of any sum payable under any Guarantor
Document to any Guaranteed Party then (i) the sum payable shall be increased as
necessary so that after making all required deductions (including deductions
applicable to additional sums payable under this Section), each of the
Administrative Agent and such other Guaranteed Party receives an amount equal to
the sum it would have received had no such deductions been made, (ii) such
Guarantor shall make such deductions, (iii) such Guarantor shall pay the full
amount deducted to the relevant taxation authority or other authority in
accordance with applicable Laws, and (iv) within 30 days after the date of such
payment, such Guarantor shall furnish to the Administrative Agent (which shall
forward the same to such Guaranteed Party) the original or a certified copy of a
receipt evidencing payment thereof or, if such receipts are not obtainable,
other evidence of such payments by such Guarantor reasonably satisfactory to the
applicable Guaranteed Party or the Administrative Agent, as applicable.

 

(c) Other Taxes. In addition, each Guarantor agrees to pay any and all present
or future stamp, court or documentary taxes and any other excise or property
taxes or charges or similar levies which arise from any payment made by such
Guarantor under any Guarantor Document or from the execution, delivery,
performance, enforcement or registration of, or otherwise with respect to, any
Guarantor Document (hereinafter referred to as “Other Taxes”).

 

(d) Indemnification. Each Guarantor agrees to indemnify the Administrative Agent
and each other Guaranteed Party for (i) the full amount of Taxes and Other Taxes
(including any Taxes or Other Taxes imposed or asserted by any jurisdiction on
amounts payable

 

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under this Section) paid by the Administrative Agent and such Guaranteed Party,
and (ii) any liability (including additions to tax, penalties, interest and
expenses) arising therefrom or with respect thereto (other than such liability
directly arising from the gross negligence or willful misconduct of the
Administrative Agent or such Guaranteed Party), in each case whether or not such
Taxes or Other Taxes were correctly or legally imposed or asserted by the
relevant Governmental Authority. Payment under this subsection (d) shall be made
within 30 days after the date the Guaranteed Party or the Administrative Agent
makes a demand therefor. Notwithstanding the foregoing, the Guarantors will not
be required to pay any additional amounts in respect of United States federal
income tax pursuant to Section 9(b) above to any Guaranteed Party (i) if the
obligation to pay such additional amounts arose solely as a result of such
Guaranteed Party’s failure to comply with its obligation under Section 10.15 of
the Credit Agreement; or (ii) if, but only to the extent that, at the time such
Guaranteed Party becomes a party to the Credit Agreement such Guaranteed Party
was subject to United States federal withholding taxes on amounts payable
pursuant to the terms of the Credit Agreement (except to the extent that such
Guaranteed Party’s assignor (if any) was entitled, at the time of the
assignment, to receive additional amounts from the Guarantor with respect to
Taxes).

 

(e) Order of Payment. Any payments by any Guarantor hereunder the application of
which is not otherwise provided for herein, shall be applied in the order
specified in Section 8.03 of the Credit Agreement.

 

(f) Survival. The agreements in this Section 9 shall survive the payment of all
Guaranteed Obligations.

 

SECTION 10 Representations and Warranties. Each Guarantor represents and
warrants to each Guaranteed Party that:

 

(a) Organization and Powers. Each Guarantor (i) is a corporation, partnership or
limited liability company duly organized or formed, validly existing and in good
standing under the Laws of the jurisdiction of its incorporation or
organization, (ii) has all requisite power and authority and all requisite
governmental licenses, authorizations, consents and approvals to (A) own its
assets and carry on its business and (B) to execute, deliver, and perform its
obligations under this Guaranty and the other Guarantor Documents to which it is
a party, (iii) is duly qualified and is licensed and in good standing under the
Laws of each jurisdiction where its ownership, lease or operation of properties
or the conduct of its business requires such qualification or license, and (iv)
is in compliance in all material respects with all Laws, except in each case
referred to in clause (ii)(A), clause (iii) or clause (iv), to the extent that
failure to do so individually or in the aggregate is not reasonably expected to
have a Material Adverse Effect.

 

(b) Authorization; No Conflict. The execution, delivery and performance by each
Guarantor of this Guaranty and any other Guarantor Documents have been duly
authorized by all necessary corporate or other organizational action, and do not
and will not (i) contravene the terms of any of such Guarantor’s Organization
Documents; (ii) conflict with or result in any breach or contravention of, or
the creation of any Lien under, any Contractual Obligation to which such
Guarantor is a party or any order, injunction, writ or decree of any
Governmental Authority or arbitral award to which such Guarantor or its property
is subject; or (iii) violate any

 

12

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Law applicable to such Guarantor, except in subclauses (ii) and (iii) above
where such conflict or contravention is not reasonably expected to have a
Material Adverse Effect.

 

(c) Binding Obligation. This Guaranty has been, and the other Guarantor
Documents, when executed and delivered by each Guarantor that is party thereto,
will have been, duly executed and delivered by each such Guarantor that is party
thereto. This Guaranty constitutes, and each other Guarantor Document when so
executed and delivered will constitute, a legal, valid and binding obligation of
such Guarantor, enforceable against each Guarantor that is party thereto in
accordance with its terms, except as enforceability may be limited by applicable
bankruptcy, insolvency or similar laws affecting the enforcement of creditors’
rights generally, or by equitable principles relating to enforceability.

 

(d) Governmental Consents. No approval, consent, exemption, authorization, or
other action by, or notice to, or filing with, any Governmental Authority or any
other Person is necessary or required in connection with the execution, delivery
or performance by, or enforcement against, any Guarantor of this Guaranty or any
other Guarantor Documents, other than such filings or actions contemplated under
the Guarantor Documents in connection with the pledging of security interests.

 

(e) No Prior Assignment. No Guarantor has previously assigned any interest in
the Subordinated Debt or any collateral relating thereto, no Person other than a
Guarantor owns an interest in any of the Subordinated Debt or any such
collateral (whether as joint holders of the Subordinated Debt, participants or
otherwise), and the entire Subordinated Debt is owing only to the Guarantors.

 

(f) Solvency. Immediately prior to and after and giving effect to the incurrence
of each Guarantor’s obligations under this Guaranty such Guarantor is and will
be Solvent.

 

(g) Consideration. Each Guarantor has received at least “reasonably equivalent
value” (as such phrase is used in §548 of the Bankruptcy Code, in §3439.04 of
the California Uniform Fraudulent Transfer Act and in comparable provisions of
other applicable law) and more than sufficient consideration to support its
obligations hereunder in respect of the Guaranteed Obligations and under any of
the Collateral Documents to which it is a party.

 

(h) Independent Investigation. Each Guarantor hereby acknowledges that it has
undertaken its own independent investigation of the financial condition of each
Borrower, each other Guarantor and each other Loan Document Party and all other
matters pertaining to this Guaranty and further acknowledges that it is not
relying in any manner upon any representation or statement of any Guaranteed
Party with respect thereto. Each Guarantor represents and warrants that it has
received and reviewed copies of the Loan Documents and that it is in a position
to obtain, and it hereby assumes full responsibility for obtaining, any
additional information concerning the financial condition of each Borrower, each
other Guarantor and each other Loan Document Party and any other matters
pertinent hereto that any Guarantor may desire. No Guarantor is relying upon or
expecting any Guaranteed Party to furnish to such Guarantor any information now
or hereafter in any Guaranteed Party’s possession concerning the financial
condition of each Borrower, any other Guarantor or any other Loan Document
Party, or any other matter.

 

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SECTION 11 Reporting Covenant. So long as any Guaranteed Obligations shall
remain unsatisfied or any Guaranteed Party shall have any Commitment, each
Guarantor agrees that it shall furnish to the Administrative Agent prompt
written notice, in each case as soon as a Responsible Officer of such Guarantor
becomes aware, of (a) any condition or event which has resulted, or that is
reasonably expected to result, in a Material Adverse Effect; (b) the occurrence
of any Default relating to such Guarantor’s obligations hereunder or the
covenants relating to such Guarantor under the Credit Agreement; (c) the
occurrence of any ERISA Event; (d) any material change in accounting policies or
financial reporting practices by such Guarantor or any of its Subsidiaries; and
(e) such other information respecting the business, financial or corporate
affairs of such Guarantor or its Subsidiaries or its Controlled Investment
Affiliates, or compliance with the terms of the Guaranty Documents or any other
Loan Document by any Guarantor or its respective Subsidiaries or Controlled
Investment Affiliates, as the Administrative Agent or any Guaranteed Party may
from time to time reasonably request.

 

SECTION 12 Additional Affirmative Covenants. So long as any Guaranteed
Obligations shall remain unsatisfied or any Guaranteed Party shall have any
Commitment, each Guarantor agrees that:

 

(a) Preservation of Existence, Etc. Each Guarantor shall (i) preserve, renew and
maintain in full force and effect its legal existence and good standing under
the Laws of the jurisdiction of its organization, except in a transaction
otherwise permitted under the Credit Agreement; (ii) take all reasonable action
to maintain all rights, privileges, permits, licenses and franchises necessary
or advisable in the normal conduct of its business, except to the extent that
failure to do so is not reasonably expected to have a Material Adverse Effect;
and (iii) preserve or renew all of its registered patents, trademarks,
tradenames and service marks, the non-preservation of which is reasonably
expected to have a Material Adverse Effect.

 

(b) Further Assurances and Additional Acts. Each Guarantor shall execute,
acknowledge, deliver, file, notarize and register at its own expense all such
further agreements, instruments, certificates, documents and assurances and
perform such acts as the Administrative Agent or the Required Lenders shall deem
necessary or appropriate to effectuate the purposes of this Guaranty and the
other Guarantor Documents, and promptly provide the Administrative Agent with
evidence of the foregoing satisfactory in form and substance to the
Administrative Agent and the Required Lenders.

 

(c) Credit Agreement Covenants. Each Guarantor shall observe, perform and comply
with all covenants applicable to such Guarantor set forth in Articles VI and VII
of the Credit Agreement, which by their terms each Borrower is required to cause
such Guarantor to observe, perform and comply with, as if such covenants were
set forth in full herein.

 

(d) Governmental Consents. Each Guarantor shall maintain all authorizations,
consents, approvals, licenses, exemptions of, or filings or registrations with,
any Governmental Authority, or approvals or consents of any other Person,
required in connection with this Guaranty or any other Guarantor Documents.

 

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SECTION 13 Notices. Unless otherwise expressly provided herein, all notices and
other communications provided for hereunder shall be in writing (including by
facsimile transmission) and mailed, faxed, emailed (subject to the provisions of
the final sentence of this Section 13) or delivered, in the case of any
Guarantor, to the address or facsimile number or email address specified on the
signature page hereof, and in the case of any Guaranteed Party, to the address
or facsimile number or email address specified in the Credit Agreement, or to
such other address, facsimile number or email address as shall be designated by
such party in a notice to the other parties. All such notices and other
communications shall be deemed to be given or made upon the earlier to occur of
(i) actual receipt by the intended recipient and (ii) (A) if delivered by hand
or by courier, when signed for by the intended recipient; (B) if delivered by
mail, four Business Days after deposit in the mails, postage prepaid; (C) if
delivered by facsimile, when sent and receipt has been confirmed by telephone,
when delivered; and (D) if delivered by electronic mail (which form of delivery
is subject to the provisions of the final sentence of this Section 13), when
delivered. In no event shall a voicemail message be effective as a notice,
communication or confirmation hereunder. Electronic mail and Internet and
intranet websites may be used only to distribute routine communications, and to
distribute documents for execution by the parties thereto, and may not be used
for any other purpose.

 

SECTION 14 No Waiver; Cumulative Remedies. No failure by any Guaranteed Party to
exercise, and no delay by any such Person in exercising, any right, remedy,
power or privilege hereunder or under any other Guarantor Document shall operate
as a waiver thereof; nor shall any single or partial exercise of any right,
remedy, power or privilege hereunder preclude any other or further exercise
thereof or the exercise of any other right, remedy, power or privilege. The
rights, remedies, powers and privileges herein or therein provided are
cumulative and not exclusive of any rights, remedies, powers and privileges
provided by law.

 

SECTION 15 Costs and Expenses; Indemnification.

 

(a) Costs and Expenses. Each Guarantor shall: (i) pay or reimburse the
Administrative Agent for all reasonable, out-of-pocket costs and expenses
incurred in connection with the development, preparation, negotiation and
execution of this Guaranty and the other Guarantor Documents and any amendment,
waiver, consent or other modification of the provisions hereof and thereof
(whether or not the transactions contemplated hereby or thereby are
consummated), and the consummation and administration of the transactions
contemplated hereby and thereby, including all reasonable Attorney Costs; and
(ii) pay or reimburse the Administrative Agent and each other Guaranteed Party
for all costs and expenses incurred in connection with the enforcement,
attempted enforcement, or preservation of any rights or remedies under this
Guaranty or the other Guarantor Documents (including all such costs and expenses
incurred during any “workout” or restructuring in respect of the Guaranteed
Obligations and during any legal proceeding, including any proceeding under any
Debtor Relief Law), including all Attorney Costs. The foregoing costs and
expenses shall include all search, filing and recording fees and taxes related
thereto, and other out-of-pocket expenses incurred by the Administrative Agent
and the cost of independent public accountants and other outside experts
retained by the Administration Agent or, during the existence of an Event of
Default, any Guaranteed Party.

 

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(b) Indemnification. Whether or not the transactions contemplated hereby are
consummated, each Guarantor shall indemnify, save and hold harmless each
Agent-Related Person, each other Guaranteed Party and their respective
Affiliates, directors, officers, employees, counsel, agents and
attorneys-in-fact (collectively the “Indemnitees”) from and against any and all
liabilities, obligations, losses, damages, penalties, claims, demands, actions,
judgments, suits, costs, expenses and disbursements (including reasonable
Attorney Costs) of any kind or nature whatsoever which may at any time be
imposed on, incurred by or asserted against any such Indemnitee in any way
relating to or arising out of or in connection with (i) the execution, delivery,
enforcement, performance or administration of any Guarantor Document or other
Loan Document or any other agreement, letter or instrument delivered in
connection with the transactions contemplated thereby or the consummation of the
transactions contemplated thereby, (ii) any Commitment, Loan or Letter of Credit
or the use or proposed use of the proceeds therefrom (including any refusal by
the L/C Issuer to honor a demand for payment under a Letter of Credit if the
documents presented in connection with such demand do not strictly comply with
the terms of such Letter of Credit), or (iii) any actual or alleged presence or
release of Hazardous Materials on or from any property currently or formerly
owned or operated by any Borrower, any Subsidiary, any owner of Unencumbered
Pool Property, or any other Loan Document Party, or any Environmental Liability
related in any way to any Borrower, any Subsidiary, any other owner of
Unencumbered Pool Property or any other Loan Document Party (provided, however,
that no Guarantor shall have any indemnification obligation to an Indemnitee
under this subclause (iii) with respect to any property currently or formerly
owned or operated by any Loan Party or any Environmental Liability related to
any Loan Party if such Indemnitee has any Indebtedness outstanding to such Loan
Party outside of any Guarantor Document or other Loan Document and if such
Indemnitee’s claim for indemnification arises in connection with such other
Indebtedness and not the Indebtedness arising under any Guarantor Document or
other Loan Document), or (iv) any actual or prospective claim, litigation,
investigation or proceeding relating to any of the foregoing, whether based on
contract, tort or any other theory (including any investigation of, preparation
for, or defense of any pending or threatened claim, investigation, litigation or
proceeding) and regardless of whether any Indemnitee is a party thereto (all the
foregoing, collectively, the “Indemnified Liabilities”); provided that such
indemnity shall not, as to any Indemnitee, be available to the extent that such
liabilities, obligations, losses, damages, penalties, claims, demands, actions,
judgments, suits, costs, expenses or disbursements are determined by a court of
competent jurisdiction by final and nonappealable judgment to have resulted from
the gross negligence or willful misconduct of such Indemnitee. No Indemnitee
shall be liable for any damages arising from the use by others of any
information or other materials obtained through IntraLinks or other similar
information transmission systems in connection with this Guaranty or the Credit
Agreement, nor shall any Indemnitee have any liability for any indirect or
consequential damages relating to this Guaranty, the Credit Agreement or any
other Guaranty Document or Loan Document or arising out of its activities in
connection herewith or therewith (whether before or after the Closing Date).

 

(c) Interest. Any amounts payable to by any Guarantor under this Section 15 or
otherwise under this Guaranty if not paid upon demand shall bear interest from
the date of such demand until paid in full, at a fluctuating interest rate per
annum at all times equal to the Default Rate applicable to Base Rate Loans to
the fullest extent permitted by applicable Law. Any such interest shall be due
and payable upon demand and shall be calculated on the basis of a year of 365 or
366 days, as the case may be, and the actual number of days elapsed.

 

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(d) Payment. All amounts due under this Section 15 shall be payable within ten
Business Days after demand therefor.

 

(e) Survival. The agreements in this Section 15 shall survive the termination of
the Commitments and repayment of all Guaranteed Obligations.

 

SECTION 16 Right of Set-Off. In addition to any rights and remedies of the
Administrative Agent, the Swing Line Lender, the L/C Issuer, the Other Agents
and the Lenders provided by law, during the existence of any Event of Default,
each of the Lenders is authorized at any time and from time to time, without
prior notice to any Guarantor, any such notice being waived by such Guarantor 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 by,
and other indebtedness at any time owing by, such Lender to or for the credit or
the account of such Guarantor against any and all Obligations owing to such
Lender, now or hereafter existing, irrespective of whether or not the
Administrative Agent or such Lender shall have made demand under this Guaranty
or any other Guarantor Document and although such Obligations may be contingent
or unmatured or denominated in a currency different from that of the applicable
deposit or indebtedness. Each of the Lenders agrees (by its acceptance hereof)
promptly to notify such Guarantor and the Administrative Agent 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.

 

SECTION 17 Marshalling; Payments Set Aside. Neither the Administrative Agent nor
any Guaranteed Party shall be under any obligation to marshal any assets in
favor of any Guarantor or any other Person or against or in payment of any or
all of the Guaranteed Obligations. To the extent that any Guarantor makes a
payment to any Guaranteed Party, or any Guaranteed Party exercises its right of
set-off, and such payment or the proceeds of such set-off or any part thereof
are subsequently invalidated, declared to be fraudulent or preferential, set
aside or required (including pursuant to any settlement entered into by any
Guaranteed Party in its discretion) to be repaid to a trustee, receiver or any
other party, in connection with any Insolvency Proceeding or otherwise, then (a)
to the extent of such recovery the obligation or part thereof originally
intended to be satisfied shall be revived and continued in full force and effect
as if such payment had not been made or such set-off had not occurred, and (b)
each of the Lenders severally agrees (by its acceptance hereof) to pay to the
Administrative Agent upon demand its pro rata share of any amount so recovered
from or repaid by the Administrative Agent, plus interest thereon from the date
of such demand to the date such payment is made at a rate per annum equal to the
Federal Funds Rate from time to time in effect.

 

SECTION 18 Benefits of Guaranty. This Guaranty is entered into for the sole
protection and benefit of the Administrative Agent and each other Guaranteed
Party and their respective successors and assigns, and no other Person (other
than any Indemnitee specified herein) shall be a direct or indirect beneficiary
of, or shall have any direct or indirect cause of action or claim in connection
with, this Guaranty. The Guaranteed Parties, by their acceptance of this
Guaranty, shall not have any obligations under this Guaranty to any Person other
than the Guarantors, and such obligations shall be limited to those expressly
stated herein.

 

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SECTION 19 Binding Effect; Assignment.

 

(a) Binding Effect. This Guaranty shall be binding upon each Guarantor and its
successors and assigns, and inure to the benefit of and be enforceable by the
Administrative Agent and each other Guaranteed Party and their respective
successors, endorsees, transferees and assigns.

 

(b) Assignment. Except to the extent otherwise provided in the Credit Agreement,
no Guarantor shall have the right to assign or transfer its rights and
obligations hereunder or under any other Guarantor Documents without the prior
written consent of the Required Lenders. Each Lender may, without notice to or
consent by any Guarantor, sell, assign, transfer or grant participations in all
or any portion of such Lender’s rights and obligations hereunder and under the
other Guarantor Documents in connection with any sale, assignment, transfer or
grant of a participation by such Lender in accordance with Section 10.07 of the
Credit Agreement of or in its rights and obligations thereunder and under the
other Loan Documents. In the event of any grant of a participation, the
participant, to the extent such participant has been disclosed to the Borrowers
in accordance with Section 10.07(d) of the Credit Agreement, shall be deemed to
have a right of setoff under Section 16 in respect of its participation to the
same extent as if it were such “Guaranteed Party.”

 

SECTION 20 Governing Law and Jurisdiction.

 

(a) THIS GUARANTY SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE
LAW OF THE STATE OF CALIFORNIA APPLICABLE TO AGREEMENTS MADE AND TO BE PERFORMED
ENTIRELY WITHIN SUCH STATE; PROVIDED THAT THE ADMINISTRATIVE AGENT AND EACH
OTHER GUARANTEED PARTY SHALL RETAIN ALL RIGHTS ARISING UNDER FEDERAL LAW.

 

(b) ANY LEGAL ACTION OR PROCEEDING WITH RESPECT TO THIS GUARANTY OR ANY OTHER
GUARANTOR DOCUMENT MAY BE BROUGHT IN THE COURTS OF THE STATE OF CALIFORNIA
SITTING IN SAN FRANCISCO COUNTY OR OF THE UNITED STATES FOR THE NORTHERN
DISTRICT OF SUCH STATE, AND BY EXECUTION AND DELIVERY OF THIS GUARANTY, EACH
GUARANTOR CONSENTS, FOR ITSELF AND IN RESPECT OF ITS PROPERTY, TO THE
NON-EXCLUSIVE JURISDICTION OF THOSE COURTS. EACH GUARANTOR IRREVOCABLY WAIVES
ANY OBJECTION, INCLUDING ANY OBJECTION TO THE LAYING OF VENUE OR BASED ON THE
GROUNDS OF FORUM NON CONVENIENS, WHICH IT MAY NOW OR HEREAFTER HAVE TO THE
BRINGING OF ANY ACTION OR PROCEEDING IN SUCH JURISDICTION IN RESPECT OF THIS
GUARANTY OR ANY OTHER GUARANTOR DOCUMENT. EACH GUARANTOR WAIVES PERSONAL SERVICE
OF ANY SUMMONS, COMPLAINT OR OTHER PROCESS, WHICH MAY BE MADE BY ANY OTHER MEANS
PERMITTED BY THE LAW OF SUCH STATE.

 

(c) Each Guarantor hereby irrevocably appoints the OP Borrower, with an office
as listed in Schedule 10.02 of the Credit Agreement, as its authorized agent (in
such capacity, the “Process Agent”) with all powers necessary to receive on its
behalf service of copies of the summons and complaint and any other process
which may be served in any action

 

18

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or proceeding arising out of or relating to this Guaranty and the other
Guarantor Documents in any of the courts in and of the State of California. Such
service may be made by mailing or delivering a copy of such process to each
Guarantor in care of the Process Agent at the Process Agent’s address and such
Guarantor hereby irrevocably authorizes and directs the Process Agent to accept
such service on its behalf and agrees that the failure of the Process Agent to
give any notice of any such service to such Guarantor shall not impair or affect
the validity of such service or of any judgment rendered in any action or
proceeding based thereon. As an alternative method of service, such Guarantor
also irrevocably consents to the service of any and all process in any such
action or proceeding by the mailing of copies of such process to such Guarantor
at its address specified on the signature page hereof. If for any reason the OP
Borrower shall cease to act as Process Agent, such Guarantor shall appoint
forthwith, in the manner provided for herein, a successor Process Agent
qualified to act as an agent for service of process with respect to all courts
in and of the State of California and acceptable to the Administrative Agent.

 

(d) Nothing in this Section 20 shall affect the right of the Guaranteed Parties
to serve legal process in any other manner permitted by law or limit the right
of the Guaranteed Parties to bring any action or proceeding against any
Guarantor or its property in the courts of other jurisdictions.

 

SECTION 21 Waiver of Jury Trial. EACH GUARANTOR AND EACH GUARANTEED PARTY (BY
ITS ACCEPTANCE HEREOF) HEREBY EXPRESSLY WAIVES ANY RIGHT TO TRIAL BY JURY OF ANY
CLAIM, DEMAND, ACTION OR CAUSE OF ACTION ARISING UNDER THE GUARANTOR DOCUMENTS
OR IN ANY WAY CONNECTED WITH OR RELATED OR INCIDENTAL TO THE DEALINGS OF THE
PARTIES OR ANY OF THEM WITH RESPECT TO THE GUARANTOR DOCUMENTS, OR THE
TRANSACTIONS RELATED THERETO, IN EACH CASE WHETHER NOW EXISTING OR HEREAFTER
ARISING, AND WHETHER FOUNDED IN CONTRACT OR TORT OR OTHERWISE; AND EACH
GUARANTOR AND EACH GUARANTEED PARTY (BY ITS ACCEPTANCE HEREOF) HEREBY AGREES AND
CONSENTS THAT ANY SUCH CLAIM, DEMAND, ACTION OR CAUSE OF ACTION SHALL BE DECIDED
BY COURT TRIAL WITHOUT A JURY, AND THAT ANY PARTY MAY FILE AN ORIGINAL
COUNTERPART OR A COPY OF THIS SECTION WITH ANY COURT AS WRITTEN EVIDENCE OF THE
CONSENT OF THE PARTIES TO THE WAIVER OF THEIR RIGHT TO TRIAL BY JURY.

 

SECTION 22 Entire Agreement; Amendments and Waivers. This Guaranty together with
the other Guarantor Documents embodies the entire agreement of the Guarantors
with respect to the matters set forth herein and supersedes all prior or
contemporaneous agreements and understandings of such Persons, verbal or
written, relating to the subject matter hereof and thereof and, unless otherwise
provided in the Credit Agreement, shall not be amended except by written
agreement of the Guarantors, the Administrative Agent and the Required Lenders.
No waiver of any rights of the Guaranteed Parties under any provision of this
Guaranty or consent to any departure by any Guarantor therefrom shall be
effective unless in writing and signed by the Administrative Agent and the
Required Lenders, or the Administrative Agent (with the written consent of the
Required Lenders). Any such amendment, waiver or consent shall be effective only
in the specific instance and for the specific purpose for which given.

 

19

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SECTION 23 Severability. If any provision of this Guaranty or the other
Guarantor Documents is held to be illegal, invalid or unenforceable, (a) the
legality, validity and enforceability of the remaining provisions of this
Guaranty and the other Guarantor Documents shall not be affected or impaired
thereby and (b) the parties shall endeavor in good faith negotiations to replace
the illegal, invalid or unenforceable provisions with valid provisions the
economic effect of which comes as close as possible to that of the illegal,
invalid or unenforceable provisions. The invalidity of a provision in a
particular jurisdiction shall not invalidate or render unenforceable such
provision in any other jurisdiction.

 

SECTION 24 Confidentiality. By its acceptance hereof, each Guaranteed Party
agrees to maintain the confidentiality of the Information (as defined below),
except that Information may be disclosed (a) to its and its Affiliates’
directors, officers, employees and agents, including accountants, legal counsel
and other advisors (it being understood that the Persons to whom such disclosure
is made will be informed of the confidential nature of such Information and
instructed to keep such Information confidential); (b) to the extent requested
by any regulatory authority (including any self-regulatory authority, such as
the National Association of Insurance Commissioners); (c) to the extent required
by applicable laws or regulations or by any subpoena or similar legal process,
(d) to any other party to the Credit Agreement; (e) in connection with the
exercise of any remedies hereunder or under any other Loan Document or any
action or proceeding relating to this Guaranty or any other Loan Document or the
enforcement of rights hereunder or thereunder; (f) subject to an agreement
containing provisions substantially the same as those of this Section, to (i)
any assignee of or Participant in, or any prospective assignee of or Participant
in, any of its rights or obligations under the Loan Documents or (ii) any actual
or prospective counterparty (or its advisors) to any swap or derivative
transaction relating to any Borrower, any Guarantor and their respective
obligations; (g) with the consent of the applicable Guarantor; or (h) to the
extent such Information (x) becomes publicly available other than as a result of
a breach of this Section or (y) becomes available to a Guaranteed Party on a
nonconfidential basis from a source other than any Borrower or any Guarantor;
provided that such source is not bound by a confidentiality agreement with any
Loan Party. For purposes of this Section, “Information” means all information
received from any Guarantor relating to such Guarantor, any of its Subsidiaries
or Affiliates or any of their respective businesses, other than any such
information that is available to a Guaranteed Party on a nonconfidential basis
prior to disclosure by such Guarantor or any other Loan Document Party, provided
that, in the case of information received from such Guarantor or any other Loan
Document Party after the date hereof, such information is clearly identified at
the time of delivery as confidential. Any Person required to maintain the
confidentiality of Information as provided in this Section shall be considered
to have complied with its obligation to do so if such Person has exercised the
same degree of care to maintain the confidentiality of such Information as such
Person would accord to its own confidential information. Notwithstanding
anything set forth herein or in any other written or oral understanding or
agreement to which the parties hereto are parties or by which they are bound,
the parties acknowledge and agree that (i) any obligations of confidentiality
contained herein and therein do not apply and have not applied from the
commencement of discussions between the parties to the “tax treatment” and “tax
structure” of the transactions contemplated by this Guaranty and (ii) each
Guaranteed Party (and each of its employees, representatives, or other agents)
may disclose without limitation of any kind, any information with respect to the
tax treatment and tax structure of the transactions contemplated hereby and all
materials of any kind (including opinions or other tax analyses) that are
provided to any such

 

20

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Guaranteed Party relating to such tax treatment and tax structure, all within
the meaning of Treasury Regulation Section 1.6011-4; provided that with respect
to any document or similar item that in either case contains information
concerning the tax treatment or tax structure of the transaction as well as
other information, this sentence shall only apply to such portions of the
document or similar item that relate to the tax treatment or tax structure of
the Guaranteed Obligations and transactions contemplated hereby, and provided
further, that each party recognizes that the privilege each has to maintain, in
its sole discretion, the confidentiality of a communication relating to the
transactions contemplated hereby, including a confidential communication with
its attorney or a confidential communication with a federally authorized
practitioner under Section 7525 of the Code, is not intended to be affected by
the foregoing.

 

SECTION 25 Future Guarantors. At such time following the date hereof as any
Material Subsidiary or any owner of Unencumbered Pool Property (an “Acceding
Subsidiary”) is required to accede hereto pursuant to the terms of Section 6.12
of the Credit Agreement, such Acceding Subsidiary shall execute and deliver to
the Administrative Agent an accession agreement substantially in the form of
Annex 1 (the “Accession Agreement”), signifying its agreement to be bound by the
provisions of this Guaranty as a Guarantor to the same extent as if such
Acceding Subsidiary had originally executed this Guaranty as of the date hereof.

 

SECTION 26 Counterparts. This Guaranty may be executed in one or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.

 

[Remainder of Page Intentionally Left Blank]

 

21

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IN WITNESS WHEREOF, each Guarantor has executed this Guaranty, as of the date
first above written.

 

SF PACIFIC PROPERTIES INC.

By:

 

 

--------------------------------------------------------------------------------

   

Name:

 

William M. Lau

   

Title:

 

Vice President, Finance and Treasurer

Address:

c/o Catellus Development Corporation

201 Mission Street, 2nd Floor

San Francisco, CA 94105

Attn.: William M. Lau, Vice President Finance

and Treasurer

Phone No. 415.974-3809

Fax No. 415.974-4502

Email: William_lau@catellus.com

 

CCG ONTARIO, LLC

By:

 

 

--------------------------------------------------------------------------------

   

Name:

 

William M. Lau

   

Title:

 

Vice President, Finance and Treasurer

Address:

c/o Catellus Development Corporation

201 Mission Street, 2nd Floor

San Francisco, CA 94105

Attn.: William M. Lau, Vice President Finance

and Treasurer

Phone No. 415.974-3809

Fax No. 415.974-4502

Email: William_lau@catellus.com

 

S-1

--------------------------------------------------------------------------------

CATELLUS RESIDENTIAL GROUP, INC.

By:

 

 

--------------------------------------------------------------------------------

   

Name:

 

William M. Lau

   

Title:

 

Vice President, Finance and Treasurer

Address:

c/o Catellus Development Corporation

201 Mission Street, 2nd Floor

San Francisco, CA 94105

Attn.: William M. Lau, Vice President Finance

and Treasurer

Phone No. 415.974-3809

Fax No. 415.974-4502

Email: William_lau@catellus.com

 

SANTA FE BAYFRONT VENTURE

 

By its general partner,

Catellus Development Corporation

    By:  

 

--------------------------------------------------------------------------------

        Name:   William M. Lau         Title:   Vice President, Finance and
Treasurer

 

By its general partner,

Cato REIT, Co.

    By:  

 

--------------------------------------------------------------------------------

        Name:   William M. Lau         Title:  

Chief Financial Officer and

Treasurer

Address:

c/o Catellus Development Corporation

201 Mission Street, 2nd Floor

San Francisco, CA 94105

Attn.: William M. Lau, Vice President Finance

and Treasurer

Phone No. 415.974-3809

Fax No. 415.974-4502

Email: William_lau@catellus.com

 

S-2

--------------------------------------------------------------------------------

CATELLUS WESTMINSTER COMPANY,

LLC

By:

 

 

--------------------------------------------------------------------------------

   

Name:

 

William M. Lau

   

Title:

 

Vice President, Finance and Treasurer

Address:

c/o Catellus Development Corporation

201 Mission Street, 2nd Floor

San Francisco, CA 94105

Attn.: William M. Lau, Vice President Finance

and Treasurer

Phone No. 415.974-3809

Fax No. 415.974-4502

Email: William_lau@catellus.com

 

PLATO REIT, LLC

By:

 

 

--------------------------------------------------------------------------------

   

Name:

 

William M. Lau

   

Title:

 

Chief Financial Officer and Treasurer

Address:

c/o Catellus Development Corporation

201 Mission Street, 2nd Floor

San Francisco, CA 94105

Attn.: William M. Lau, Vice President Finance

and Treasurer

Phone No. 415.974-3809

Fax No. 415.974-4502

Email: William_lau@catellus.com

 

S-3

--------------------------------------------------------------------------------

Annex 1

to the Guaranty

 

FORM OF ACCESSION AGREEMENT

 

To: Bank of America, N.A. as Administrative Agent

 

Re:                             

 

Ladies and Gentlemen:

 

This Accession Agreement is made and delivered pursuant to Section 25 of that
certain Guaranty dated as of September 15, 2003 (as amended, modified, renewed
or extended from time to time, the “Guaranty”), made by each Guarantor named in
the signature pages thereof (each a “Guarantor”), in favor of the Lenders party
to the Credit Agreement referred to below, and Fleet National Bank, as
Syndication Agent, Bank One, NA, as Documentation Agent, Wells Fargo Bank,
National Association, as Managing Agent, and Union Bank of California, N.A., as
Managing Agent, the L/C Issuer, the Swing Line Lender and Bank of America, N.A.,
as Administrative Agent (in such capacity, the “Administrative Agent”). All
capitalized terms used in this Accession Agreement and not otherwise defined
herein shall have the meanings assigned to them in either the Guaranty or the
Credit Agreement.

 

Catellus Development Corporation, a Delaware corporation, and its permitted
successors and assigns, as borrower (the “OP Borrower”) and Catellus Land and
Development Corporation, a Delaware corporation, as a borrower (the “TRS
Borrower,” and together with the OP Borrower, each a “Borrower” and together,
the “Borrowers”), is party to that certain Credit Agreement dated as of
September 15, 2003 (the “Credit Agreement”) by and among the Borrower, the
Lenders from time to time party thereto (the “Lenders”), the Syndication Agent,
the Documentation Agent, the Managing Agents, the L/C Issuer, the Swing Line
Lender and the Administrative Agent.

 

The undersigned,                                                   [insert name
of acceding Guarantor], a                                          [corporation,
partnership, limited liability company, etc.], is a Material Subsidiary of any
Borrower or of the REIT Guarantor or an owner of Unencumbered Pool Property and
hereby acknowledges for the benefit of the Guaranteed Parties that it shall be a
“Guarantor” for all purposes of the Guaranty effective from the date hereof. The
undersigned confirms that the representations and warranties set forth in
Section 10 of the Guaranty are true and correct as to the undersigned as of the
date hereof.

 

Without limiting the foregoing, the undersigned hereby agrees to perform all of
the obligations of a Guarantor under, and to be bound in all respects by the
terms of, the Guaranty, including Section 11 and Section 12 thereof, to the same
extent and with the same force and effect as if the undersigned were an original
signatory thereto.

 

A-1

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This Accession Agreement shall constitute a Loan Document under the Credit
Agreement.

 

THIS ACCESSION AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH,
THE LAW OF THE STATE OF CALIFORNIA APPLICABLE TO AGREEMENTS MADE AND TO BE
PERFORMED ENTIRELY WITHIN SUCH STATE; PROVIDED THAT THE ADMINISTRATIVE AGENT AND
EACH OTHER GUARANTEED PARTY SHALL RETAIN ALL RIGHTS ARISING UNDER FEDERAL LAW.

 

IN WITNESS WHEREOF, the undersigned has executed this Accession Agreement, as of
the date first above written.

 

[GUARANTOR]

By

 

 

--------------------------------------------------------------------------------

Title

 

 

--------------------------------------------------------------------------------

 

Address for Notices:

c/o

 

 

--------------------------------------------------------------------------------

 

--------------------------------------------------------------------------------

 

--------------------------------------------------------------------------------

Attn.:

 

 

--------------------------------------------------------------------------------

Fax No.:

 

 

--------------------------------------------------------------------------------

Email:

 

 

--------------------------------------------------------------------------------

 

A-2

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GUARANTY

(BORROWER GUARANTOR)

 

THIS GUARANTY (this “Guaranty”), dated as of September 15, 2003, is made by
Catellus Development Corporation, a Delaware corporation (the “OP Guarantor”),
Catellus Land and Development Corporation, a Delaware corporation (the “TRS
Guarantor,” and together with the OP Guarantor, each, a “Guarantor” and
together, the “Guarantors”), in favor of the Lenders party to the Credit
Agreement referred to below, Fleet National Bank, as Syndication Agent, Bank
One, NA, as Documentation Agent, Wells Fargo Bank, National Association, as
Managing Agent, Union Bank of California, N.A., as Managing Agent (Syndication
Agent, Documentation Agent, and Managing Agents, collectively, the “Other
Agents”), and Bank of America, N.A., as Administrative Agent (in such capacity,
the “Administrative Agent”), the letter of credit issuer (in such capacity, the
“the L/C Issuer”), and the swing line lender (in such capacity, the “Swing Line
Lender”).

 

A. Catellus Development Corporation, a Delaware corporation, and its permitted
successors and assigns, as a borrower (the “OP Borrower” or “Pre-REIT Conversion
Borrower”), Catellus Land and Development Corporation, a Delaware corporation,
as a borrower (the “TRS Borrower,” and together with the OP Borrower, each a
“Borrower” and together, the “Borrowers”), the Lenders from time to time party
to the Credit Agreement, as defined below (each a “Lender” and, collectively,
the “Lenders”), the Other Agents, and Bank of America, N.A., as Administrative
Agent, the L/C Issuer, and the Swing Line Lender, are parties to a Credit
Agreement dated as of September 15, 2003 (as amended, modified, renewed or
extended from time to time, the “Credit Agreement”).

 

B. It is a condition precedent to the Borrowings and issuances of Letters of
Credit under the Credit Agreement that each Guarantor guarantee the indebtedness
and other obligations of each Borrower to the Guaranteed Parties under or in
connection with the Credit Agreement as set forth herein. Each Guarantor, will
derive substantial direct and indirect benefits from the making of the Loans to,
and issuances of Letters of Credit for the account of, the Borrowers pursuant to
the Credit Agreement (which benefits are hereby acknowledged by each Guarantor).

 

NOW THEREFORE, to induce the Administrative Agent, the L/C Issuer, the Swing
Line Lender, the Other Agents, and the Lenders to enter into the Credit
Agreement, and in consideration thereof, each Guarantor hereby agrees as
follows:

 

SECTION 1 Definitions; Interpretation.

 

(a) Terms Defined in Credit Agreement. All capitalized terms used in this
Guaranty (including in the recitals hereof) and not otherwise defined herein
shall have the meanings assigned to them in the Credit Agreement.

 

(b) Certain Defined Terms. As used in this Guaranty (including in the recitals
hereof), the following terms shall have the following meanings:

 

“Bankruptcy Code” means the Federal Bankruptcy Reform Act of 1978 (11 U.S.C.
§101, et seq.).

 

1

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“Guaranteed Obligations” has the meaning set forth in Section 2.

 

“Guaranteed Parties” means the Administrative Agent, the L/C Issuer, the Swing
Line Lender, the Syndication Agent, the Documentation Agent, the Managing
Agents, and the Lenders, and their successors and assigns.

 

“Guarantor Documents” means this Guaranty and all other certificates, documents,
agreements and instruments delivered by or on behalf of any Guarantor to any
Guaranteed Party under or in connection with this Guaranty and the Loan
Documents.

 

“Insolvency Proceeding” means, with respect to any Person, (a) any case, action
or proceeding with respect to such Person before any court or other Governmental
Authority relating to bankruptcy, reorganization, insolvency, liquidation,
receivership, dissolution, winding-up or relief of debtors, or (b) any general
assignment for the benefit of creditors, composition, marshalling of assets for
creditors, or other, similar arrangement in respect of its creditors generally
or any substantial portion of its creditors; in either case undertaken under
Debtor Relief Laws.

 

“Solvent” means, with respect to any Person, that as of the date of
determination: (a) the fair valuation of the sum of such Person’s debt
(including contingent liabilities) does not exceed all of its property, at a
fair valuation on a going-concern basis; (b) the Person reasonably expects to be
able to pay the liabilities on such Person’s then existing debts as they become
absolute and matured; (c) such Person’s capital is not unreasonably small in
relation to its business or any contemplated or undertaken transaction; and (d)
such Person does not intend to incur, or believe (nor should it reasonably
believe) that it will incur, debts beyond its ability to pay such debts as they
become due. For purposes of this definition, the amount of any contingent
liability at any time shall be computed as the amount that, in light of all of
the facts and circumstances existing at such time, represents the amount that
can reasonably be expected to become an actual or matured liability
(irrespective of whether such contingent liabilities meet the criteria for
accrual under Statement of Financial Accounting Standards No. 5).

 

“Subordinated Debt” has the meaning set forth in Section 7(a).

 

“Subordinated Debt Payment” has the meaning set forth in Section 7(b).

 

(c) Interpretation. The rules of interpretation set forth in Sections 1.02 to
1.05 of the Credit Agreement shall be applicable to this Guaranty and are
incorporated herein by this reference.

 

SECTION 2 Guaranty.

 

(a) Guaranty. Each Guarantor hereby unconditionally and irrevocably guarantees
to the Guaranteed Parties, and their respective successors, endorsees,
transferees and assigns, the full and prompt payment when due (whether at stated
maturity, by required prepayment, declaration, acceleration, demand or
otherwise) and performance of the

 

2

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indebtedness, liabilities and other obligations of each Borrower to the
Guaranteed Parties under or in connection with the Credit Agreement, the Notes
and the other Loan Documents, including all unpaid principal of the Loans, all
amounts owing in respect of the L/C Obligations, all interest accrued thereon,
all fees due under the Credit Agreement, all indemnification obligations of the
Borrowers under or in connection with the Credit Agreement, the Notes and the
other Loan Documents, and all other amounts payable by the Borrowers to the
Guaranteed Parties thereunder or in connection therewith. The terms
“indebtedness,” “liabilities” and “obligations” are used herein in their most
comprehensive sense and include any and all advances, debts, obligations and
liabilities, now existing or hereafter arising, whether voluntary or involuntary
and whether due or not due, absolute or contingent, liquidated or unliquidated,
determined or undetermined, and whether recovery upon such indebtedness,
liabilities and obligations may be or hereafter become unenforceable or shall be
an allowed or disallowed claim under any Debtor Relief Law, and including
interest that accrues after the commencement by or against any Borrower or any
Loan Document Party thereof of any proceeding under any Debtor Relief Laws
naming such Person as the debtor in such proceeding. The foregoing indebtedness,
liabilities and other obligations of each Borrower, and all other indebtedness,
liabilities and obligations to be paid or performed by the Guarantors in
connection with this Guaranty (including any and all amounts due under Section
14), shall hereinafter be collectively referred to as the “Guaranteed
Obligations.”

 

(b) Limitation of TRS Guarantor’s Guaranty. Notwithstanding anything to the
contrary contained herein, to the extent that the TRS Guarantor shall, under
this Guaranty, repay any of the Guaranteed Obligations, the liability of the TRS
Guarantor hereunder shall be limited to an amount equal to the maximum amount of
liability for payments on the Guaranteed Obligations which could be asserted
against the TRS Guarantor hereunder without (i) rendering the TRS Guarantor
“insolvent” within the meaning of Section 101(31) of the Bankruptcy Code,
Section 2 of the Uniform Fraudulent Transfer Act (“UFTA”) or Section 2 of the
Uniform Fraudulent Conveyance Act (“UFCA”), or (ii) rendering such Guarantor no
longer Solvent, or (iii) rendering the TRS Guarantor’s obligations hereunder
unlawful or subject to avoidance as a fraudulent transfer or conveyance under
Section 548 of the Bankruptcy Code or any comparable provisions of applicable
state law (collectively, the “Fraudulent Transfer Laws”), in each case after
giving effect to all other liabilities of the TRS Guarantor, contingent or
otherwise, that are relevant under the Fraudulent Transfer Laws (the greatest
amount payable by the TRS Guarantor without rendering the TRS Guarantor’s
obligations hereunder unlawful or being subject to avoidance under the
Fraudulent Transfer Laws being at any time, the “Maximum Liability”). To the
extent that any Guarantor shall, under this Guaranty, repay any of the
Guaranteed Obligations on behalf of, or otherwise due and owing as a direct
obligation of, the other Guarantor, then such paying Guarantor shall, subject to
the provisions of Section 6 below, be entitled to contribution and
indemnification from, and be reimbursed by, such other Guarantor with respect
thereto in an amount equal to such payment.

 

SECTION 3 Liability of Guarantors. The liability of the Guarantors under this
Guaranty and each other Guarantor Document shall be irrevocable, absolute,
independent and unconditional, and shall not be affected by any circumstance
which might constitute a discharge of a surety or guarantor other than the
indefeasible payment and performance in full of all Guaranteed Obligations. In
furtherance of the foregoing and without limiting the generality thereof, each
Guarantor agrees as follows:

 

(i) such Guarantor’s liability hereunder shall be the immediate, direct, and
primary obligation of such Guarantor and shall not be contingent upon any
Guaranteed Party’s exercise or enforcement of any remedy it may have against any
Borrower or any other Person, or against any Collateral or any other collateral
securing the Guaranteed Obligations;

 

3

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(ii) this Guaranty is a guaranty of payment when due and not merely of
collectibility;

 

(iii) the Guaranteed Parties may enforce this Guaranty upon the occurrence and
during the continuance of an Event of Default notwithstanding the existence of
any dispute between any of the Guaranteed Parties and any Borrower with respect
to the existence of such Event of Default; provided that no Guarantor shall be
deemed to have waived any defense based on the defense that the Guaranteed
Obligations have been paid in full;

 

(iv) such Guarantor’s payment of a portion, but not all, of the Guaranteed
Obligations shall in no way limit, affect, modify or abridge such Guarantor’s
liability for any portion of the Guaranteed Obligations remaining unsatisfied;
and

 

(v) such Guarantor’s liability with respect to the Guaranteed Obligations shall
remain in full force and effect without regard to, and shall not be impaired or
affected by, nor shall such Guarantor be exonerated or discharged by, any of the
following events:

 

(A) any Insolvency Proceeding with respect to any Borrower, such Guarantor, any
other Loan Document Party or any other Person;

 

(B) any limitation, discharge, or cessation of the liability of any Borrower,
such Guarantor, any other Loan Document Party or any other Person for any
Guaranteed Obligations due to any statute, regulation or rule of law, or any
invalidity or unenforceability in whole or in part of any of the Guaranteed
Obligations or the Loan Documents;

 

(C) any merger, acquisition, consolidation or change in structure of any
Borrower, such Guarantor or any other Loan Document Party or Person, or any
sale, lease, transfer or other disposition of any or all of the assets or shares
of any Borrower, such Guarantor, any other Loan Document Party or other Person,
including, without limitation, the transactions contemplated to occur upon the
REIT Conversion, including the assumption by the Post-REIT Conversion Borrower
of the obligations of the Pre-REIT Conversion Borrower under the Loan Documents;

 

(D) any assignment or other transfer, in whole or in part, of any Guaranteed
Party’s interests in and rights under this Guaranty or the other Loan Documents,
including any Guaranteed Party’s right to receive payment of the Guaranteed
Obligations, or any assignment or other transfer, in whole or in part, of any
Guaranteed Party’s interests in and to any of the Collateral or any other
collateral securing the Guaranteed Obligations;

 

(E) any claim, defense, counterclaim or setoff, other than that of prior
performance, that any Borrower, such Guarantor, any other Loan Document Party or
other

 

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Person may have or assert, including any defense of incapacity or lack of
corporate or other authority to execute any of the Loan Documents;

 

(F) any Guaranteed Party’s amendment, modification, renewal, extension,
cancellation or surrender of any Loan Document, any Guaranteed Obligations, or
any Collateral or any other collateral securing the Guaranteed Obligations, or
any Guaranteed Party’s exchange, release, or waiver of any Collateral or any
other collateral securing the Guaranteed Obligations;

 

(G) any Guaranteed Party’s exercise or nonexercise of any power, right or remedy
with respect to any of the Collateral or any other collateral securing the
Guaranteed Obligations, including any Guaranteed Party’s compromise, release,
settlement or waiver with or of any Borrower, any other Loan Document Party or
any other Person;

 

(H) any Guaranteed Party’s vote, claim, distribution, election, acceptance,
action or inaction in any Insolvency Proceeding related to the Guaranteed
Obligations;

 

(I) any impairment or invalidity of any of the Collateral or any other
collateral securing any of the Guaranteed Obligations or any failure to perfect
any of the Liens of the Guaranteed Parties thereon or therein; and

 

(J) any other guaranty, whether by such Guarantor or any other Person, of all or
any part of the Guaranteed Obligations or any other indebtedness, obligations or
liabilities of any Borrower to any Guaranteed Party.

 

SECTION 4 Consents of Guarantors. Each Guarantor hereby unconditionally consents
and agrees that, without notice to or further assent from such Guarantor:

 

(i) the principal amount of the Guaranteed Obligations may be increased or
decreased and additional Obligations of the Loan Parties under the Loan
Documents may be incurred, by one or more amendments, modifications, renewals or
extensions of any Loan Document or otherwise;

 

(ii) the time, manner, place or terms of any payment under any Loan Document may
be extended or changed, including by an increase or decrease in the interest
rate on any Guaranteed Obligation or any fee or other amount payable under such
Loan Document, by an amendment, modification or renewal of any Loan Document or
otherwise;

 

(iii) the time for any Borrower’s (or any other Person’s) performance of or
compliance with any term, covenant or agreement on its part to be performed or
observed under any Loan Document may be extended, or such performance or
compliance waived, or failure in or departure from such performance or
compliance consented to, all in such manner and upon such terms as the
Guaranteed Parties may deem proper;

 

(iv) any Guaranteed Party may discharge or release, in whole or in part, any
other Loan Document Party or any other Person liable for the payment and
performance of all or any part of the Guaranteed Obligations, and may permit or
consent to any such action or any

 

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result of such action, and shall not be obligated to demand or enforce payment
upon any of the Collateral or any other collateral, nor shall any Guaranteed
Party be liable to the Guarantors for any failure to collect or enforce payment
or performance of the Guaranteed Obligations from any Person or to realize on
the Collateral or other collateral therefor;

 

(v) in addition to the Collateral, the Guaranteed Parties may take and hold
other security (legal or equitable) of any kind, at any time, as collateral for
the Guaranteed Obligations, and may, from time to time, in whole or in part,
exchange, sell, surrender, release, subordinate, modify, waive, rescind,
compromise or extend such security and may permit or consent to any such action
or the result of any such action, and may apply such security and direct the
order or manner of sale thereof;

 

(vi) the Guaranteed Parties may request and accept other guaranties of the
Guaranteed Obligations and any other indebtedness, obligations or liabilities of
the Borrowers to any Guaranteed Party and may, from time to time, in whole or in
part, surrender, release, subordinate, modify, waive, rescind, compromise or
extend any such guaranty and may permit or consent to any such action or the
result of any such action; and

 

(vii) the Guaranteed Parties may exercise, or waive or otherwise refrain from
exercising, any other right, remedy, power or privilege (including the right to
accelerate the maturity of any Loan and any power of sale) granted by any Loan
Document or other security document or agreement, or otherwise available to any
Guaranteed Party, with respect to the Guaranteed Obligations or any of the
Collateral or any other collateral securing the Guaranteed Obligations, even if
the exercise of such right, remedy, power or privilege affects or eliminates any
right of subrogation or any other right of any Guarantor against any Borrower;

 

all as the Guaranteed Parties may deem advisable, and all without impairing,
abridging, releasing or affecting this Guaranty.

 

SECTION 5 Guarantor Waivers.

 

(a) Certain Waivers. Each Guarantor waives and agrees not to assert:

 

(i) any right to require any Guaranteed Party to marshal assets in favor of any
Borrower, such Guarantor, any other Loan Document Party or any other Person, to
proceed against any Borrower, any other Loan Document Party or any other Person,
to proceed against or exhaust any of the Collateral or any other collateral
securing the Guaranteed Obligations, to give notice of the terms, time and place
of any public or private sale of personal property security constituting the
Collateral or other collateral for the Guaranteed Obligations or comply with any
other provisions of §9611 of the California UCC (or any equivalent provision of
any other applicable law) or to pursue any other right, remedy, power or
privilege of any Guaranteed Party whatsoever;

 

(ii) the defense of the statute of limitations in any action hereunder or for
the collection or performance of the Guaranteed Obligations;

 

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(iii) any defense arising by reason of any lack of corporate or other authority
or any other defense of any Borrower, such Guarantor, any other Loan Document
Party or any other Person;

 

(iv) any defense based upon any Guaranteed Party’s errors or omissions in the
administration of the Guaranteed Obligations;

 

(v) any rights to set-offs and counterclaims;

 

(vi) any defense based upon an election of remedies (including, if available, an
election to proceed by nonjudicial foreclosure) which destroys or impairs the
subrogation rights of such Guarantor or the right of such Guarantor to proceed
against any Borrower, any other Loan Document Party or any other obligor of the
Guaranteed Obligations for reimbursement; and

 

(vii) without limiting the generality of the foregoing, to the fullest extent
permitted by law, any defenses or benefits that may be derived from or afforded
by applicable law limiting the liability of or exonerating guarantors or
sureties, or which may conflict with the terms of this Guaranty, including any
rights and defenses available to the Guarantor by reason of Sections 2787 to
2855, inclusive, of the California Civil Code and any and all benefits that
otherwise might be available to such Guarantor under California Civil Code
§§1432, 2809, 2810, 2815, 2819, 2839, 2845, 2848, 2849, 2850, 2899 and 3433 and
California Code of Civil Procedure §§580a, 580b, 580d and 726. Accordingly, each
Guarantor waives all rights and defenses that such Guarantor may have because
any Borrower’s debt may be secured by real property. This means, among other
things: (A) the Guaranteed Parties may collect from such Guarantor without first
foreclosing on any real or personal property collateral pledged by the
Borrowers; and (B) if the Administrative Agent forecloses on any real property
collateral pledged by the Borrowers: (1) the amount of the debt may be reduced
only by the price for which that collateral is sold at the foreclosure sale,
even if such collateral is worth more than the sale price, and (2) the
Guaranteed Parties may collect from such Guarantor even if the Administrative
Agent, by foreclosing on the real property collateral, has destroyed any right
such Guarantor may have to collect from any Borrower. This is an unconditional
and irrevocable waiver of any rights and defenses any Guarantor may have because
any Borrower’s debt is or may be secured by real property. These rights and
defenses include, but are not limited to, any rights of defenses based upon
Section 580a, 580b, 580d or 726 of the California Code of Civil Procedure.

 

(b) Additional Waivers. Except for such notice as expressly required under the
Credit Agreement to be delivered to any Guarantor in its capacity as a Borrower,
each Guarantor waives any and all notice of the acceptance of this Guaranty, and
any and all notice of the creation, renewal, modification, extension or accrual
of the Guaranteed Obligations, or the reliance by the Guaranteed Parties upon
this Guaranty, or the exercise of any right, power or privilege hereunder. The
Guaranteed Obligations shall conclusively be deemed to have been created,
contracted, incurred and permitted to exist in reliance upon this Guaranty.
Except for such notice as expressly required under the Credit Agreement to be
delivered to any Guarantor in its capacity as a Borrower, each Guarantor waives
promptness, diligence, presentment, protest, demand for payment, notice of
default, dishonor or nonpayment and all other notices to or upon the Borrowers,
such Guarantor, any other Loan Document Party or any other Person with respect
to the Guaranteed Obligations.

 

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(c) Independent Obligations. The obligations of each Guarantor hereunder are
independent of and separate from the obligations of the Borrowers and any other
Loan Document Party and upon the occurrence and during the continuance of any
Event of Default, a separate action or actions may be brought against such
Guarantor, whether or not any Borrower or any such other Loan Document Party is
joined therein or a separate action or actions are brought against any Borrower
or any such other Loan Document Party.

 

(d) Financial Condition. No Guarantor shall have any right to require any
Guaranteed Party to obtain or disclose any information with respect to: (i) the
financial condition or character of any Borrower or any other Loan Document
Party or the ability of any Borrower or any other Loan Document Party to pay and
perform the Guaranteed Obligations; (ii) the Guaranteed Obligations; (iii) the
Collateral or any other collateral securing the Guaranteed Obligations; (iv) the
existence or nonexistence of any other guarantees of all or any part of the
Guaranteed Obligations; (v) any action or inaction on the part of any Guaranteed
Party or any other Person; or (vi) any other matter, fact or occurrence
whatsoever.

 

SECTION 6 Subrogation. Until the Guaranteed Obligations shall be satisfied in
full and the Commitments shall be terminated, no Guarantor shall directly or
indirectly exercise, (i) any rights that it may acquire by way of subrogation
under this Guaranty, by any payment hereunder or otherwise, (ii) any rights of
contribution, indemnification, reimbursement or similar suretyship claims
arising out of this Guaranty or (iii) any other right which it might otherwise
have or acquire (in any way whatsoever) which could entitle it at any time to
share or participate in any right, remedy or security of any Guaranteed Party as
against any Borrower or other Loan Parties, whether in connection with this
Guaranty, any of the other Loan Documents or otherwise. If any amount shall be
paid to any Guarantor on account of the foregoing rights at any time when all
the Guaranteed Obligations shall not have been paid in full, such amount shall
be held in trust for the benefit of the Guaranteed Parties and shall forthwith
be paid to the Administrative Agent to be credited and applied to the Guaranteed
Obligations, whether matured or unmatured, in accordance with the terms of the
Loan Documents.

 

SECTION 7 Subordination.

 

(a) Subordination to Payment of Guaranteed Obligations. All payments on account
of all indebtedness, liabilities and other payment obligations of any Borrower
to each Guarantor, whether created under, arising out of or in connection with
any documents or instruments evidencing any credit extensions to the Borrowers
or otherwise, including all principal on any such credit extensions, all
interest accrued thereon, all fees and all other amounts payable by any Borrower
to such Guarantor in connection therewith, whether now existing or hereafter
arising, and whether due or to become due, absolute or contingent, liquidated or
unliquidated, determined or undetermined (the “Subordinated Debt”) shall be
subject, subordinate and junior in right of payment and exercise of remedies, to
the extent and in the manner set forth herein, to the prior payment in full in
cash or cash equivalents of the Guaranteed Obligations.

 

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(b) No Payments. Except as otherwise permitted under the Credit Agreement, as
long as any of the Guaranteed Obligations shall remain outstanding and unpaid,
no Guarantor shall accept or receive any payment or distribution by or on behalf
of any Borrower, directly or indirectly, of assets of any Borrower of any kind
or character, whether in cash, property or securities, including on account of
the purchase, redemption or other acquisition of Subordinated Debt, as a result
of any collection, sale or other disposition of collateral, or by setoff,
exchange or in any other manner, for or on account of the Subordinated Debt
(“Subordinated Debt Payments”), except that if no Event of Default exists, a
Guarantor shall be entitled to accept and receive regularly scheduled payments
and other payments in the ordinary course on the Subordinated Debt, in
accordance with the terms of the documents and instruments governing the
Subordinated Debt and other Subordinated Debt Payments in respect of
Subordinated Debt not evidenced by documents or instruments, in each case to the
extent permitted under Article VII of the Credit Agreement. During the existence
of an Event of Default (or if any Event of Default would exist immediately after
the making of a Subordinated Debt Payment), and until such Event of Default is
cured or waived, such Guarantor shall not make, accept or receive any
Subordinated Debt Payment. In the event that, notwithstanding the provisions of
this Section 7, any Subordinated Debt Payments shall be received in
contravention of this Section 7 by any Guarantor before all Guaranteed
Obligations are paid in full in cash or cash equivalents, such Subordinated Debt
Payments shall be held in trust for the benefit of the Guaranteed Parties and
shall be paid over or delivered to the Administrative Agent for application to
the payment in full in cash or cash equivalents of all Guaranteed Obligations
remaining unpaid to the extent necessary to give effect to this Section 7, after
giving effect to any concurrent payments or distributions to any Guaranteed
Party in respect of the Guaranteed Obligations.

 

(c) Subordination of Remedies. As long as any Guaranteed Obligations shall
remain outstanding and unpaid, no Guarantor shall, without the prior written
consent of the Administrative Agent:

 

(i) accelerate, make demand or otherwise make due and payable prior to the
original stated maturity thereof any Subordinated Debt or bring suit or
institute any other actions or proceedings to enforce its rights or interests
under or in respect of the Subordinated Debt;

 

(ii) exercise any rights under or with respect to (A) any guaranties of the
Subordinated Debt, or (B) any collateral held by it, including causing or
compelling the pledge or delivery of any collateral, any attachment of, levy
upon, execution against, foreclosure upon or the taking of other action against
or institution of other proceedings with respect to any collateral held by it,
notifying any account debtors of the Borrowers or asserting any claim or
interest in any insurance with respect to any collateral, or attempt to do any
of the foregoing;

 

(iii) exercise any rights to set-offs and counterclaims in respect of any
indebtedness, liabilities or obligations of such Guarantor to any Borrower
against any of the Subordinated Debt; or

 

(iv) commence, or cause to be commenced, or join with any creditor other than
any Guaranteed Party in commencing, any Insolvency Proceeding.

 

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(d) Subordination Upon Any Distribution of Assets of any Borrower. In the event
of any payment or distribution of assets of any Borrower of any kind or
character, whether in cash, property or securities, upon any Insolvency
Proceeding with respect to or involving any Borrower, (i) all amounts owing on
account of the Guaranteed Obligations, including all interest accrued thereon at
the rate set forth in the Credit Agreement both before and after the initiation
of any such proceeding, whether or not an allowed claim in any such proceeding,
shall first be paid in full in cash, or payment provided for in cash or in cash
equivalents, before any Subordinated Debt Payment is made; and (ii) to the
extent permitted by applicable law, any Subordinated Debt Payment to which such
Guarantor would be entitled except for the provisions hereof, shall be paid or
delivered by the trustee in bankruptcy, receiver, assignee for the benefit of
creditors or other liquidating agent making such payment or distribution
directly to the Administrative Agent (on behalf of the other Guaranteed Parties)
for application to the payment of the Guaranteed Obligations in accordance with
clause (i), after giving effect to any concurrent payment or distribution or
provision therefor to any Guaranteed Party in respect of such Guaranteed
Obligations.

 

(e) Authorization to Administrative Agent. If, while any Subordinated Debt is
outstanding, any Insolvency Proceeding is commenced by or against any Borrower
or its respective property constituting an Event of Default:

 

(i) the Administrative Agent, when so instructed by the Required Lenders, is
hereby irrevocably authorized and empowered (in the name of the Guaranteed
Parties or in the name of any Guarantor or otherwise), but shall have no
obligation, to demand, sue for, collect and receive every payment or
distribution in respect of the Subordinated Debt and give acquittance therefor
and to file claims and proofs of claim and take such other action (including
voting the Subordinated Debt) as it may deem necessary or advisable for the
exercise or enforcement of any of the rights or interests of the Guaranteed
Parties; and

 

(ii) each Guarantor shall promptly take such action as the Administrative Agent
(on instruction from the Required Lenders) may reasonably request (A) to collect
the Subordinated Debt for the account of the Guaranteed Parties and to file
appropriate claims or proofs of claim in respect of the Subordinated Debt, (B)
to execute and deliver to the Administrative Agent, such powers of attorney,
assignments and other instruments as it may request to enable it to enforce any
and all claims with respect to the Subordinated Debt, and (C) to collect and
receive any and all Subordinated Debt Payments.

 

SECTION 8 Continuing Guaranty. This Guaranty is a continuing guaranty and
agreement of subordination relating to any Guaranteed Obligations, including
Guaranteed Obligations which may exist continuously or which may arise from time
to time under successive transactions, and the Guarantors expressly acknowledge
that this Guaranty shall remain in full force and effect notwithstanding that
there may be periods in which no Guaranteed Obligations exist. This Guaranty
shall continue in effect and be binding upon the Guarantors until termination of
the Commitments and payment and performance in full of the Guaranteed
Obligations.

 

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SECTION 9 Payments.

 

(a) Payment Obligation. Each Guarantor hereby agrees, in furtherance of the
foregoing provisions of this Guaranty and not in limitation of any other right
which any Guaranteed Party or any other Person may have against such Guarantor
by virtue hereof, upon the failure of the Borrowers to pay any of the Guaranteed
Obligations when and as the same shall become due, whether at stated maturity,
by required prepayment, declaration, acceleration, demand or otherwise
(including amounts that would become due but for the operation of the automatic
stay under §362(a) of the Bankruptcy Code), such Guarantor shall forthwith pay,
or cause to be paid, in cash, to the Administrative Agent an amount equal to the
amount of the Guaranteed Obligations then due as aforesaid (including interest
which, but for the filing of a petition in any Insolvency Proceeding with
respect to any Borrower, would have accrued on such Guaranteed Obligations,
whether or not a claim is allowed against such Borrower for such interest in any
such Insolvency Proceeding). Each Guarantor shall make each payment hereunder,
unconditionally in full without set-off, counterclaim or other defense, on the
day when due in Dollars in immediately available funds, to the Administrative
Agent at such office of the Administrative Agent and to such account as the
Administrative Agent shall specify in writing to such Guarantor.

 

(b) Free and Clear Payments. Any and all payments by any Guarantor to or for the
account of any Guaranteed Party under any Guarantor Document shall be made free
and clear of and without deduction for any and all present or future taxes,
duties, levies, imposts, deductions, assessments, fees, withholdings or similar
charges, and all liabilities with respect thereto, now or hereafter imposed,
levied, collected, withheld or assessed by any Governmental Authority,
excluding, in the case of any Guaranteed Party, taxes imposed on or measured by
its overall net income, and franchise taxes imposed on it (in lieu of net income
taxes), by the jurisdiction (or any political subdivision thereof) under the
Laws of which such Guaranteed Party is organized or maintains a lending office
(all such non-excluded taxes, duties, levies, imposts, deductions, assessments,
fees, withholdings or similar charges, and liabilities being hereinafter
referred to as “Taxes”). If any Guarantor shall be required by any Laws to
deduct any Taxes from or in respect of any sum payable under any Guarantor
Document to any Guaranteed Party then (i) the sum payable shall be increased as
necessary so that after making all required deductions (including deductions
applicable to additional sums payable under this Section), each of the
Administrative Agent and such other Guaranteed Party receives an amount equal to
the sum it would have received had no such deductions been made, (ii) such
Guarantor shall make such deductions, (iii) such Guarantor shall pay the full
amount deducted to the relevant taxation authority or other authority in
accordance with applicable Laws, and (iv) within 30 days after the date of such
payment, such Guarantor shall furnish to the Administrative Agent (which shall
forward the same to such Guaranteed Party) the original or a certified copy of a
receipt evidencing payment thereof or, if such receipts are not obtainable,
other evidence of such payments by such Guarantor reasonably satisfactory to the
applicable Guaranteed Party or the Administrative Agent, as applicable.

 

(c) Other Taxes. In addition, each Guarantor agrees to pay any and all present
or future stamp, court or documentary taxes and any other excise or property
taxes or charges or similar levies which arise from any payment made by such
Guarantor under any Guarantor

 

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Document or from the execution, delivery, performance, enforcement or
registration of, or otherwise with respect to, any Guarantor Document
(hereinafter referred to as “Other Taxes”).

 

(d) Indemnification. Each Guarantor agrees to indemnify the Administrative Agent
and each other Guaranteed Party for (i) the full amount of Taxes and Other Taxes
(including any Taxes or Other Taxes imposed or asserted by any jurisdiction on
amounts payable under this Section) paid by the Administrative Agent and such
Guaranteed Party, and (ii) any liability (including additions to tax, penalties,
interest and expenses) arising therefrom or with respect thereto (other than
such liability directly arising from the gross negligence or willful misconduct
of the Administrative Agent or such Guaranteed Party), in each case whether or
not such Taxes or Other Taxes were correctly or legally imposed or asserted by
the relevant Governmental Authority. Payment under this subsection (d) shall be
made within 30 days after the date the Guaranteed Party or the Administrative
Agent makes a demand therefor. Notwithstanding the foregoing, the Guarantors
will not be required to pay any additional amounts in respect of United States
federal income tax pursuant to Section 9(b) above to any Guaranteed Party (i) if
the obligation to pay such additional amounts arose solely as a result of such
Guaranteed Party’s failure to comply with its obligation under Section 10.15 of
the Credit Agreement; or (ii) if, but only to the extent that, at the time such
Guaranteed Party becomes a party to the Credit Agreement such Guaranteed Party
was subject to United States federal withholding taxes on amounts payable
pursuant to the terms of the Credit Agreement (except to the extent that such
Guaranteed Party’s assignor (if any) was entitled, at the time of the
assignment, to receive additional amounts from the Guarantor with respect to
Taxes).

 

(e) Order of Payment. Any payments by any Guarantor hereunder the application of
which is not otherwise provided for herein, shall be applied in the order
specified in Section 8.03 of the Credit Agreement.

 

(f) Survival. The agreements in this Section 9 shall survive the payment of all
Guaranteed Obligations.

 

SECTION 10 Representations and Warranties. Each Guarantor represents and
warrants to each Guaranteed Party that:

 

(a) Organization and Powers. Each Guarantor (i) is validly existing and in good
standing under the Laws of the jurisdiction of its incorporation and (ii) has
all requisite power and authority and all requisite governmental licenses,
authorizations, consents and approvals to execute, deliver, and perform its
obligations under this Guaranty and the other Guarantor Documents to which it is
a party.

 

(b) Authorization; No Conflict. The execution, delivery and performance by each
Guarantor of this Guaranty and any other Guarantor Documents have been duly
authorized by all necessary corporate or other organizational action, and do not
and will not (i) contravene the terms of any of such Guarantor’s Organization
Documents; (ii) conflict with or result in any breach or contravention of, or
the creation of any Lien under, any Contractual Obligation to which such
Guarantor is a party or any order, injunction, writ or decree of any
Governmental Authority or arbitral award to which such Guarantor or its property
is subject; or (iii) violate any

 

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Law applicable to such Guarantor, except in subclauses (ii) and (iii) above
where such conflict or contravention is not reasonably expected to have a
Material Adverse Effect.

 

(c) Binding Obligation. This Guaranty has been, and the other Guarantor
Documents, when executed and delivered by each Guarantor that is party thereto,
will have been, duly executed and delivered by each such Guarantor that is party
thereto. This Guaranty constitutes, and each other Guarantor Document when so
executed and delivered will constitute, a legal, valid and binding obligation of
such Guarantor, enforceable against each Guarantor that is party thereto in
accordance with its terms, except as enforceability may be limited by applicable
bankruptcy, insolvency or similar laws affecting the enforcement of creditors’
rights generally, or by equitable principles relating to enforceability.

 

(d) Governmental Consents. No approval, consent, exemption, authorization, or
other action by, or notice to, or filing with, any Governmental Authority or any
other Person is necessary or required in connection with the execution, delivery
or performance by, or enforcement against, any Guarantor of this Guaranty or any
other Guarantor Documents, other than such filings or actions contemplated under
the Guarantor Documents in connection with the pledging of security interests.

 

(e) No Prior Assignment. No Guarantor has previously assigned any interest in
the Subordinated Debt or any collateral relating thereto, no Person other than a
Guarantor owns an interest in any of the Subordinated Debt or any such
collateral (whether as joint holders of the Subordinated Debt, participants or
otherwise), and the entire Subordinated Debt is owing only to the Guarantors.

 

(f) Solvency. Immediately prior to and after and giving effect to the incurrence
of each Guarantor’s obligations under this Guaranty such Guarantor is and will
be Solvent.

 

(g) Consideration. Each Guarantor has received at least “reasonably equivalent
value” (as such phrase is used in §548 of the Bankruptcy Code, in §3439.04 of
the California Uniform Fraudulent Transfer Act and in comparable provisions of
other applicable law) and more than sufficient consideration to support its
obligations hereunder in respect of the Guaranteed Obligations and under any of
the Collateral Documents to which it is a party.

 

(h) Independent Investigation. Each Guarantor hereby acknowledges that it has
undertaken its own independent investigation of the financial condition of each
Borrower, each other Guarantor and each other Loan Document Party and all other
matters pertaining to this Guaranty and further acknowledges that it is not
relying in any manner upon any representation or statement of any Guaranteed
Party with respect thereto. Each Guarantor represents and warrants that it has
received and reviewed copies of the Loan Documents and that it is in a position
to obtain, and it hereby assumes full responsibility for obtaining, any
additional information concerning the financial condition of each Borrower, each
other Guarantor and each other Loan Document Party and any other matters
pertinent hereto that any Guarantor may desire. No Guarantor is relying upon or
expecting any Guaranteed Party to furnish to such Guarantor any information now
or hereafter in any Guaranteed Party’s possession concerning the financial
condition of each Borrower, any other Guarantor or any other Loan Document
Party, or any other matter.

 

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SECTION 11 Additional Affirmative Covenants. So long as any Guaranteed
Obligations shall remain unsatisfied or any Guaranteed Party shall have any
Commitment, each Guarantor agrees that it shall comply with all of its
obligations under the Credit Agreement and that:

 

(a) Preservation of Existence, Etc. Each Guarantor shall (i) preserve, renew and
maintain in full force and effect its legal existence and good standing under
the Laws of the jurisdiction of its organization, except in a transaction
otherwise permitted under the Credit Agreement; (ii) take all reasonable action
to maintain all rights, privileges, permits, licenses and franchises necessary
or advisable in the normal conduct of its business, except to the extent that
failure to do so is not reasonably expected to have a Material Adverse Effect;
and (iii) preserve or renew all of its registered patents, trademarks,
tradenames and service marks, the non-preservation of which is reasonably
expected to have a Material Adverse Effect.

 

(b) Further Assurances and Additional Acts. Each Guarantor shall execute,
acknowledge, deliver, file, notarize and register at its own expense all such
further agreements, instruments, certificates, documents and assurances and
perform such acts as the Administrative Agent or the Required Lenders shall deem
necessary or appropriate to effectuate the purposes of this Guaranty and the
other Guarantor Documents, and promptly provide the Administrative Agent with
evidence of the foregoing satisfactory in form and substance to the
Administrative Agent and the Required Lenders.

 

(c) Credit Agreement Covenants. Each Guarantor shall observe, perform and comply
with all covenants applicable to such Guarantor set forth in Articles VI and VII
of the Credit Agreement, which by their terms each Borrower is required to cause
such Guarantor to observe, perform and comply with, as if such covenants were
set forth in full herein.

 

(d) Governmental Consents. Each Guarantor shall maintain all authorizations,
consents, approvals, licenses, exemptions of, or filings or registrations with,
any Governmental Authority, or approvals or consents of any other Person,
required in connection with this Guaranty or any other Guarantor Documents.

 

SECTION 12 Notices. Unless otherwise expressly provided herein, all notices and
other communications provided for hereunder shall be in writing (including by
facsimile transmission) and mailed, faxed, emailed (subject to the provisions of
the final sentence of this Section 12) or delivered, in the case of any
Guarantor, to the address or facsimile number or email address specified on the
signature page hereof, and in the case of any Guaranteed Party, to the address
or facsimile number or email address specified in the Credit Agreement, or to
such other address, facsimile number or email address as shall be designated by
such party in a notice to the other parties. All such notices and other
communications shall be deemed to be given or made upon the earlier to occur of
(i) actual receipt by the intended recipient and (ii) (A) if delivered by hand
or by courier, when signed for by the intended recipient; (B) if delivered by
mail, four Business Days after deposit in the mails, postage prepaid; (C) if
delivered by facsimile, when sent and receipt has been confirmed by telephone,
when delivered; and (D) if delivered by electronic mail

 

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(which form of delivery is subject to the provisions of the final sentence of
this Section 12), when delivered. In no event shall a voicemail message be
effective as a notice, communication or confirmation hereunder. Electronic mail
and Internet and intranet websites may be used only to distribute routine
communications, and to distribute documents for execution by the parties
thereto, and may not be used for any other purpose.

 

SECTION 13 No Waiver; Cumulative Remedies. No failure by any Guaranteed Party to
exercise, and no delay by any such Person in exercising, any right, remedy,
power or privilege hereunder or under any other Guarantor Document shall operate
as a waiver thereof; nor shall any single or partial exercise of any right,
remedy, power or privilege hereunder preclude any other or further exercise
thereof or the exercise of any other right, remedy, power or privilege. The
rights, remedies, powers and privileges herein or therein provided are
cumulative and not exclusive of any rights, remedies, powers and privileges
provided by law.

 

SECTION 14 Costs and Expenses; Indemnification.

 

(a) Costs and Expenses. Each Guarantor shall: (i) pay or reimburse the
Administrative Agent for all reasonable, out-of-pocket costs and expenses
incurred in connection with the development, preparation, negotiation and
execution of this Guaranty and the other Guarantor Documents and any amendment,
waiver, consent or other modification of the provisions hereof and thereof
(whether or not the transactions contemplated hereby or thereby are
consummated), and the consummation and administration of the transactions
contemplated hereby and thereby, including all reasonable Attorney Costs; and
(ii) pay or reimburse the Administrative Agent and each other Guaranteed Party
for all costs and expenses incurred in connection with the enforcement,
attempted enforcement, or preservation of any rights or remedies under this
Guaranty or the other Guarantor Documents (including all such costs and expenses
incurred during any “workout” or restructuring in respect of the Guaranteed
Obligations and during any legal proceeding, including any proceeding under any
Debtor Relief Law), including all Attorney Costs. The foregoing costs and
expenses shall include all search, filing and recording fees and taxes related
thereto, and other out-of-pocket expenses incurred by the Administrative Agent
and the cost of independent public accountants and other outside experts
retained by the Administration Agent or, during the existence of an Event of
Default, any Guaranteed Party.

 

(b) Indemnification. Whether or not the transactions contemplated hereby are
consummated, each Guarantor shall indemnify, save and hold harmless each
Agent-Related Person, each other Guaranteed Party and their respective
Affiliates, directors, officers, employees, counsel, agents and
attorneys-in-fact (collectively the “Indemnitees”) from and against any and all
liabilities, obligations, losses, damages, penalties, claims, demands, actions,
judgments, suits, costs, expenses and disbursements (including reasonable
Attorney Costs) of any kind or nature whatsoever which may at any time be
imposed on, incurred by or asserted against any such Indemnitee in any way
relating to or arising out of or in connection with (i) the execution, delivery,
enforcement, performance or administration of any Guarantor Document or other
Loan Document or any other agreement, letter or instrument delivered in
connection with the transactions contemplated thereby or the consummation of the
transactions contemplated thereby, (ii) any Commitment, Loan or Letter of Credit
or the use or proposed use of the proceeds therefrom (including any refusal by
the L/C Issuer to honor a demand for payment

 

15

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under a Letter of Credit if the documents presented in connection with such
demand do not strictly comply with the terms of such Letter of Credit), or (iii)
any actual or alleged presence or release of Hazardous Materials on or from any
property currently or formerly owned or operated by any Borrower, any
Subsidiary, any owner of Unencumbered Pool Property, or any other Loan Document
Party, or any Environmental Liability related in any way to any Borrower, any
Subsidiary, any other owner of Unencumbered Pool Property or any other Loan
Document Party (provided, however, that no Guarantor shall have any
indemnification obligation to an Indemnitee under this subclause (iii) with
respect to any property currently or formerly owned or operated by any Loan
Party or any Environmental Liability related to any Loan Party if such
Indemnitee has any Indebtedness outstanding to such Loan Party outside of any
Guarantor Document or other Loan Document and if such Indemnitee’s claim for
indemnification arises in connection with such other Indebtedness and not the
Indebtedness arising under any Guarantor Document or other Loan Document), or
(iv) any actual or prospective claim, litigation, investigation or proceeding
relating to any of the foregoing, whether based on contract, tort or any other
theory (including any investigation of, preparation for, or defense of any
pending or threatened claim, investigation, litigation or proceeding) and
regardless of whether any Indemnitee is a party thereto (all the foregoing,
collectively, the “Indemnified Liabilities”); provided that such indemnity shall
not, as to any Indemnitee, be available to the extent that such liabilities,
obligations, losses, damages, penalties, claims, demands, actions, judgments,
suits, costs, expenses or disbursements are determined by a court of competent
jurisdiction by final and nonappealable judgment to have resulted from the gross
negligence or willful misconduct of such Indemnitee. No Indemnitee shall be
liable for any damages arising from the use by others of any information or
other materials obtained through IntraLinks or other similar information
transmission systems in connection with this Guaranty or the Credit Agreement,
nor shall any Indemnitee have any liability for any indirect or consequential
damages relating to this Guaranty, the Credit Agreement or any other Guaranty
Document or Loan Document or arising out of its activities in connection
herewith or therewith (whether before or after the Closing Date).

 

(c) Interest. Any amounts payable to by any Guarantor under this Section 14 or
otherwise under this Guaranty if not paid upon demand shall bear interest from
the date of such demand until paid in full, at a fluctuating interest rate per
annum at all times equal to the Default Rate applicable to Base Rate Loans to
the fullest extent permitted by applicable Law. Any such interest shall be due
and payable upon demand and shall be calculated on the basis of a year of 365 or
366 days, as the case may be, and the actual number of days elapsed.

 

(d) Payment. All amounts due under this Section 14 shall be payable within ten
Business Days after demand therefor.

 

(e) Survival. The agreements in this Section 14 shall survive the termination of
the Commitments and repayment of all Guaranteed Obligations.

 

SECTION 15 Right of Set-Off. In addition to any rights and remedies of the
Administrative Agent, the Swing Line Lender, the L/C Issuer, the Other Agents
and the Lenders provided by law, during the existence of any Event of Default,
each of the Lenders is authorized at any time and from time to time, without
prior notice to any Guarantor, any such notice being waived by such Guarantor 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 by,
and other

 

16

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indebtedness at any time owing by, such Lender to or for the credit or the
account of such Guarantor against any and all Obligations owing to such Lender,
now or hereafter existing, irrespective of whether or not the Administrative
Agent or such Lender shall have made demand under this Guaranty or any other
Guarantor Document and although such Obligations may be contingent or unmatured
or denominated in a currency different from that of the applicable deposit or
indebtedness. Each of the Lenders agrees (by its acceptance hereof) promptly to
notify such Guarantor and the Administrative Agent 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.

 

SECTION 16 Marshalling; Payments Set Aside. Neither the Administrative Agent nor
any Guaranteed Party shall be under any obligation to marshal any assets in
favor of any Guarantor or any other Person or against or in payment of any or
all of the Guaranteed Obligations. To the extent that any Guarantor makes a
payment to any Guaranteed Party, or any Guaranteed Party exercises its right of
set-off, and such payment or the proceeds of such set-off or any part thereof
are subsequently invalidated, declared to be fraudulent or preferential, set
aside or required (including pursuant to any settlement entered into by any
Guaranteed Party in its discretion) to be repaid to a trustee, receiver or any
other party, in connection with any Insolvency Proceeding or otherwise, then (a)
to the extent of such recovery the obligation or part thereof originally
intended to be satisfied shall be revived and continued in full force and effect
as if such payment had not been made or such set-off had not occurred, and (b)
each of the Lenders severally agrees (by its acceptance hereof) to pay to the
Administrative Agent upon demand its pro rata share of any amount so recovered
from or repaid by the Administrative Agent, plus interest thereon from the date
of such demand to the date such payment is made at a rate per annum equal to the
Federal Funds Rate from time to time in effect.

 

SECTION 17 Benefits of Guaranty. This Guaranty is entered into for the sole
protection and benefit of the Administrative Agent and each other Guaranteed
Party and their respective successors and assigns, and no other Person (other
than any Indemnitee specified herein) shall be a direct or indirect beneficiary
of, or shall have any direct or indirect cause of action or claim in connection
with, this Guaranty. The Guaranteed Parties, by their acceptance of this
Guaranty, shall not have any obligations under this Guaranty to any Person other
than the Guarantors, and such obligations shall be limited to those expressly
stated herein.

 

SECTION 18 Binding Effect; Assignment.

 

(a) Binding Effect. This Guaranty shall be binding upon each Guarantor and its
successors and assigns, and inure to the benefit of and be enforceable by the
Administrative Agent and each other Guaranteed Party and their respective
successors, endorsees, transferees and assigns.

 

(b) Assignment. Except to the extent otherwise provided in the Credit Agreement,
no Guarantor shall have the right to assign or transfer its rights and
obligations hereunder or under any other Guarantor Documents without the prior
written consent of the Required Lenders. Each Lender may, without notice to or
consent by any Guarantor, sell, assign, transfer or grant participations in all
or any portion of such Lender’s rights and obligations hereunder and under the
other Guarantor Documents in connection with any sale, assignment,

 

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transfer or grant of a participation by such Lender in accordance with Section
10.07 of the Credit Agreement of or in its rights and obligations thereunder and
under the other Loan Documents. In the event of any grant of a participation,
the participant, to the extent such participant has been disclosed to the
Borrowers in accordance with Section 10.07(d) of the Credit Agreement, shall be
deemed to have a right of setoff under Section 15 in respect of its
participation to the same extent as if it were such “Guaranteed Party.”

 

SECTION 19 Governing Law and Jurisdiction.

 

(a) THIS GUARANTY SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE
LAW OF THE STATE OF CALIFORNIA APPLICABLE TO AGREEMENTS MADE AND TO BE PERFORMED
ENTIRELY WITHIN SUCH STATE; PROVIDED THAT THE ADMINISTRATIVE AGENT AND EACH
OTHER GUARANTEED PARTY SHALL RETAIN ALL RIGHTS ARISING UNDER FEDERAL LAW.

 

(b) ANY LEGAL ACTION OR PROCEEDING WITH RESPECT TO THIS GUARANTY OR ANY OTHER
GUARANTOR DOCUMENT MAY BE BROUGHT IN THE COURTS OF THE STATE OF CALIFORNIA
SITTING IN SAN FRANCISCO COUNTY OR OF THE UNITED STATES FOR THE NORTHERN
DISTRICT OF SUCH STATE, AND BY EXECUTION AND DELIVERY OF THIS GUARANTY, EACH
GUARANTOR CONSENTS, FOR ITSELF AND IN RESPECT OF ITS PROPERTY, TO THE
NON-EXCLUSIVE JURISDICTION OF THOSE COURTS. EACH GUARANTOR IRREVOCABLY WAIVES
ANY OBJECTION, INCLUDING ANY OBJECTION TO THE LAYING OF VENUE OR BASED ON THE
GROUNDS OF FORUM NON CONVENIENS, WHICH IT MAY NOW OR HEREAFTER HAVE TO THE
BRINGING OF ANY ACTION OR PROCEEDING IN SUCH JURISDICTION IN RESPECT OF THIS
GUARANTY OR ANY OTHER GUARANTOR DOCUMENT. EACH GUARANTOR WAIVES PERSONAL SERVICE
OF ANY SUMMONS, COMPLAINT OR OTHER PROCESS, WHICH MAY BE MADE BY ANY OTHER MEANS
PERMITTED BY THE LAW OF SUCH STATE.

 

(c) Each Guarantor hereby irrevocably appoints the OP Borrower, with an office
as listed in Schedule 10.02 of the Credit Agreement, as its authorized agent (in
such capacity, the “Process Agent”) with all powers necessary to receive on its
behalf service of copies of the summons and complaint and any other process
which may be served in any action or proceeding arising out of or relating to
this Guaranty and the other Guarantor Documents in any of the courts in and of
the State of California. Such service may be made by mailing or delivering a
copy of such process to each Guarantor in care of the Process Agent at the
Process Agent’s address and such Guarantor hereby irrevocably authorizes and
directs the Process Agent to accept such service on its behalf and agrees that
the failure of the Process Agent to give any notice of any such service to such
Guarantor shall not impair or affect the validity of such service or of any
judgment rendered in any action or proceeding based thereon. As an alternative
method of service, such Guarantor also irrevocably consents to the service of
any and all process in any such action or proceeding by the mailing of copies of
such process to such Guarantor at its address specified on the signature page
hereof. If for any reason the OP Borrower shall cease to act as Process Agent,
such Guarantor shall appoint forthwith, in the manner provided for herein, a
successor Process Agent qualified to act as an agent for service of process with
respect to all courts in and of the State of California and acceptable to the
Administrative Agent.

 

18

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(d) Nothing in this Section 19 shall affect the right of the Guaranteed Parties
to serve legal process in any other manner permitted by law or limit the right
of the Guaranteed Parties to bring any action or proceeding against any
Guarantor or its property in the courts of other jurisdictions.

 

SECTION 20 Waiver of Jury Trial. EACH GUARANTOR AND EACH GUARANTEED PARTY (BY
ITS ACCEPTANCE HEREOF) HEREBY EXPRESSLY WAIVES ANY RIGHT TO TRIAL BY JURY OF ANY
CLAIM, DEMAND, ACTION OR CAUSE OF ACTION ARISING UNDER THE GUARANTOR DOCUMENTS
OR IN ANY WAY CONNECTED WITH OR RELATED OR INCIDENTAL TO THE DEALINGS OF THE
PARTIES OR ANY OF THEM WITH RESPECT TO THE GUARANTOR DOCUMENTS, OR THE
TRANSACTIONS RELATED THERETO, IN EACH CASE WHETHER NOW EXISTING OR HEREAFTER
ARISING, AND WHETHER FOUNDED IN CONTRACT OR TORT OR OTHERWISE; AND EACH
GUARANTOR AND EACH GUARANTEED PARTY (BY ITS ACCEPTANCE HEREOF) HEREBY AGREES AND
CONSENTS THAT ANY SUCH CLAIM, DEMAND, ACTION OR CAUSE OF ACTION SHALL BE DECIDED
BY COURT TRIAL WITHOUT A JURY, AND THAT ANY PARTY MAY FILE AN ORIGINAL
COUNTERPART OR A COPY OF THIS SECTION WITH ANY COURT AS WRITTEN EVIDENCE OF THE
CONSENT OF THE PARTIES TO THE WAIVER OF THEIR RIGHT TO TRIAL BY JURY.

 

SECTION 21 Entire Agreement; Amendments and Waivers. This Guaranty together with
the other Guarantor Documents embodies the entire agreement of the Guarantors
with respect to the matters set forth herein and supersedes all prior or
contemporaneous agreements and understandings of such Persons, verbal or
written, relating to the subject matter hereof and thereof and, unless otherwise
provided in the Credit Agreement, shall not be amended except by written
agreement of the Guarantors, the Administrative Agent and the Required Lenders.
No waiver of any rights of the Guaranteed Parties under any provision of this
Guaranty or consent to any departure by any Guarantor therefrom shall be
effective unless in writing and signed by the Administrative Agent and the
Required Lenders, or the Administrative Agent (with the written consent of the
Required Lenders). Any such amendment, waiver or consent shall be effective only
in the specific instance and for the specific purpose for which given.

 

SECTION 22 Severability. If any provision of this Guaranty or the other
Guarantor Documents is held to be illegal, invalid or unenforceable, (a) the
legality, validity and enforceability of the remaining provisions of this
Guaranty and the other Guarantor Documents shall not be affected or impaired
thereby and (b) the parties shall endeavor in good faith negotiations to replace
the illegal, invalid or unenforceable provisions with valid provisions the
economic effect of which comes as close as possible to that of the illegal,
invalid or unenforceable provisions. The invalidity of a provision in a
particular jurisdiction shall not invalidate or render unenforceable such
provision in any other jurisdiction.

 

SECTION 23 Confidentiality. By its acceptance hereof, each Guaranteed Party
agrees to maintain the confidentiality of the Information (as defined below),
except that Information may be disclosed (a) to its and its Affiliates’
directors, officers, employees and agents, including accountants, legal counsel
and other advisors (it being understood that the Persons to whom such disclosure
is made will be informed of the confidential nature of such Information and
instructed

 

19

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to keep such Information confidential); (b) to the extent requested by any
regulatory authority (including any self-regulatory authority, such as the
National Association of Insurance Commissioners); (c) to the extent required by
applicable laws or regulations or by any subpoena or similar legal process, (d)
to any other party to the Credit Agreement; (e) in connection with the exercise
of any remedies hereunder or under any other Loan Document or any action or
proceeding relating to this Guaranty or any other Loan Document or the
enforcement of rights hereunder or thereunder; (f) subject to an agreement
containing provisions substantially the same as those of this Section, to (i)
any assignee of or Participant in, or any prospective assignee of or Participant
in, any of its rights or obligations under the Loan Documents or (ii) any actual
or prospective counterparty (or its advisors) to any swap or derivative
transaction relating to any Borrower, any Guarantor and their respective
obligations; (g) with the consent of the applicable Guarantor; or (h) to the
extent such Information (x) becomes publicly available other than as a result of
a breach of this Section or (y) becomes available to a Guaranteed Party on a
nonconfidential basis from a source other than any Borrower or any Guarantor;
provided that such source is not bound by a confidentiality agreement with any
Loan Party. For purposes of this Section, “Information” means all information
received from any Guarantor relating to such Guarantor, any of its Subsidiaries
or Affiliates or any of their respective businesses, other than any such
information that is available to a Guaranteed Party on a nonconfidential basis
prior to disclosure by such Guarantor or any other Loan Document Party, provided
that, in the case of information received from such Guarantor or any other Loan
Document Party after the date hereof, such information is clearly identified at
the time of delivery as confidential. Any Person required to maintain the
confidentiality of Information as provided in this Section shall be considered
to have complied with its obligation to do so if such Person has exercised the
same degree of care to maintain the confidentiality of such Information as such
Person would accord to its own confidential information. Notwithstanding
anything set forth herein or in any other written or oral understanding or
agreement to which the parties hereto are parties or by which they are bound,
the parties acknowledge and agree that (i) any obligations of confidentiality
contained herein and therein do not apply and have not applied from the
commencement of discussions between the parties to the “tax treatment” and “tax
structure” of the transactions contemplated by this Guaranty and (ii) each
Guaranteed Party (and each of its employees, representatives, or other agents)
may disclose without limitation of any kind, any information with respect to the
tax treatment and tax structure of the transactions contemplated hereby and all
materials of any kind (including opinions or other tax analyses) that are
provided to any such Guaranteed Party relating to such tax treatment and tax
structure, all within the meaning of Treasury Regulation Section 1.6011-4;
provided that with respect to any document or similar item that in either case
contains information concerning the tax treatment or tax structure of the
transaction as well as other information, this sentence shall only apply to such
portions of the document or similar item that relate to the tax treatment or tax
structure of the Guaranteed Obligations and transactions contemplated hereby,
and provided further, that each party recognizes that the privilege each has to
maintain, in its sole discretion, the confidentiality of a communication
relating to the transactions contemplated hereby, including a confidential
communication with its attorney or a confidential communication with a federally
authorized practitioner under Section 7525 of the Code, is not intended to be
affected by the foregoing.

 

SECTION 24 Counterparts. This Guaranty may be executed in one or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.

 

20

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IN WITNESS WHEREOF, each Guarantor has executed this Guaranty, as of the date
first above written.

 

CATELLUS DEVELOPMENT

CORPORATION

By:

 

 

--------------------------------------------------------------------------------

   

Name:

 

William M. Lau

   

Title:

 

Vice President, Finance and Treasurer

Address:

201 Mission Street, 2nd Floor

San Francisco, CA 94105

Attn.: William M. Lau, Vice President Finance

and Treasurer

Phone No. 415.974-3809

Fax No. 415.974-4502

Email: William_lau@catellus.com

 

CATELLUS LAND AND DEVELOPMENT

CORPORATION

By:

 

 

--------------------------------------------------------------------------------

   

Name:

 

William M. Lau

   

Title:

 

Vice President, Finance and Treasurer

Address:

c/o Catellus Development Corporation

201 Mission Street, 2nd Floor

San Francisco, CA 94105

Attn.: William M. Lau, Vice President Finance

and Treasurer

Phone No. 415.974-3809

Fax No. 415.974-4502

Email: William_lau@catellus.com

 

S-1

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PLEDGE AGREEMENT

 

THIS PLEDGE AGREEMENT (this “Pledge Agreement”), dated as of September 15, 2003,
is made between each Pledgor named in the signature pages hereof (each a
“Pledgor” and, collectively, the “Pledgors”), and Bank of America, N.A., a
national banking association, as administrative agent for the Lenders, L/C
Issuer and Swing Line Lender referred to below (in such capacity, the
“Administrative Agent”) for the benefit of itself and for the ratable benefit of
the L/C Issuer, the Swing Line Lender, Fleet National Bank, as Syndication
Agent, Bank One, NA, as Documentation Agent, Wells Fargo Bank, National
Association, as Managing Agent, Union Bank of California, N.A., as Managing
Agent (Syndication Agent, Documentation Agent and Managing Agents, collectively,
the “Other Agents”), and the Lenders.

 

Catellus Development Corporation, a Delaware corporation, and its permitted
successors and assigns, as a borrower (the “OP Borrower or “Pre-REIT Conversion
Borrower”), Catellus Land and Development Corporation, a Delaware corporation,
as a borrower (the “TRS Borrower,” and together with the OP Borrower, each a
“Borrower” and together, the “Borrowers”) certain financial institutions as
lenders (the “Lenders”), the Other Agents, Bank of America, N.A., as issuer of
letters of credit for the account of the Borrowers (in such capacity, the “L/C
Issuer”), Bank of America, N.A., as swing line lender (in such capacity, the
“Swing Line Lender”) and the Administrative Agent, are parties to a Credit
Agreement dated as of September 15, 2003 (as amended, modified, renewed or
extended from time to time, the “Credit Agreement”). It is a condition precedent
to the honor of any Request for Credit Extension under the Credit Agreement that
each Pledgor enter into this Pledge Agreement and grant to the Administrative
Agent, for itself and for the ratable benefit of the L/C Issuer, the Swing Line
Lender, the Other Agents and the Lenders, the security interests hereinafter
provided to secure the Secured Obligations (as defined below).

 

NOW THEREFORE, to induce the Administrative Agent, the L/C Issuer, the Swing
Line Lender, the Other Agents and the Lenders to enter into the Credit
Agreement, and in consideration thereof, each Pledgor hereby agrees as follows:

 

SECTION 1 Definitions; Interpretation.

 

(a) Terms Defined in Credit Agreement. All capitalized terms used in this Pledge
Agreement (including in the recitals hereof) and not otherwise defined herein
shall have the meanings assigned to them in the Credit Agreement.

 

(b) Certain Defined Terms. As used in this Pledge Agreement (including in the
recitals hereof), the following terms shall have the following meanings:

 

“Additional Pledged Collateral” means the Additional Pledged Debt Collateral,
the Additional Pledged LLC Collateral, the Additional Pledged Partnership
Collateral and the Additional Pledged Stock Collateral.

 

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Pledge Agreement

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“Additional Pledged Debt Collateral” means any and all (i) additional Notes
Receivable required to be pledged to the Administrative Agent pursuant to the
Credit Agreement, (ii) securities, property, interest and other payments and
distributions issued as an addition to, in redemption of, in renewal or exchange
for, in substitution or upon conversion of, or otherwise on account of, the
Pledged Debt, and (iii) cash and non-cash proceeds and supporting obligations of
or with respect to the Pledged Debt, in each case from time to time received or
receivable by, or otherwise paid or distributed to or acquired by, any Pledgor.

 

“Additional Pledged LLC Collateral” means any and all interest in (a) any and
all additional interests in any limited liability company owned by any Pledgor
that is a Pledged Subsidiary hereafter acquired by such Pledgor, including any
additional membership interests in any such Pledged Subsidiary, any and all of
such Pledgor’s other additional rights and interests in and to such Pledged
Subsidiary and any and all of such Pledgor’s rights to and interests in any
proceeds and distributions under or pursuant to any Operating Agreements of or
with respect to such Pledged Subsidiary or otherwise, including (i) all rights
of such Pledgor to receive moneys in repayment of loans made to such Pledged
Subsidiary pursuant to any Operating Agreements or otherwise, (ii) all rights of
such Pledgor to receive proceeds of any insurance, indemnity, warranty or
guaranty with respect to the Pledged LLC Interests in such Pledged Subsidiary,
(iii) all claims of such Pledgor for damages arising out of or for breach of or
default or misrepresentation under any Operating Agreements or any documents,
instruments or opinions delivered pursuant thereto, (iv) any right of such
Pledgor to terminate any Operating Agreements, to perform thereunder and to
compel performance and otherwise exercise all remedies thereunder, and (v) all
rights of such Pledgor to vote and give appraisals, consents, decisions and
directions and exercise any other similar rights with respect to any lawful
action of such Pledged Subsidiary; and (b) to the extent not included in the
foregoing, all cash and non-cash proceeds and supporting obligations of or with
respect to the Pledged LLC Interests in such Pledged Subsidiary and any such
Additional Pledged LLC Collateral, in each case from time to time received or
receivable by, or otherwise paid or distributed to or acquired by, such Pledgor.

 

“Additional Pledged Partnership Collateral” means any and all interests in (a)
any and all additional interests in any general partnership, limited
partnership, limited liability partnership or other partnership owned by any
Pledgor that is a Pledged Subsidiary hereafter acquired by such Pledgor, any and
all of such Pledgor’s other additional rights and interests in and to such
Pledged Subsidiary and any and all of such Pledgor’s rights to and interests in
any proceeds and distributions under or pursuant to the Partnership Agreement
relating to the Pledged Partnership Interests in such Pledged Subsidiary or
otherwise, including (i) all rights of such Pledgor to receive moneys in
repayment of loans made to such Pledged Subsidiary pursuant to such Partnership
Agreement or otherwise, (ii) all rights of such Pledgor to receive proceeds of
any insurance, indemnity, warranty or guaranty with respect to the Pledged
Partnership Interests in such Pledged Subsidiary, (iii) all claims of such
Pledgor for damages arising out of or for breach of or default or
misrepresentation under such Partnership Agreement or any documents, instruments
or opinions delivered pursuant thereto, (iv) any right of such Pledgor to
terminate such Partnership Agreement, to perform thereunder and to compel
performance and otherwise exercise all remedies thereunder, and (v) all rights
of such Pledgor to vote and give appraisals, consents, decisions and directions
and exercise any other similar rights with respect to any lawful

 

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Pledge Agreement

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action of such Pledged Subsidiary; and (b) to the extent not included in the
foregoing, all cash and non-cash proceeds and supporting obligations of or with
respect to the Pledged Partnership Interests in such Pledged Subsidiary and any
such Additional Pledged Partnership Collateral, in each case from time to time
received or receivable by, or otherwise paid or distributed to or acquired by,
such Pledgor.

 

“Additional Pledged Stock Collateral” means any and all (i) additional capital
stock or other equity securities issued by, or interests in, any Pledged
Subsidiary hereafter acquired by any Pledgor, (ii) warrants, options or other
rights entitling such Pledgor to acquire any interest in capital stock or other
equity securities of or other equity interests in such Pledged Subsidiary, (iii)
securities, property, interest, dividends and other payments and distributions
issued as an addition to, in redemption of, in renewal or exchange for, in
substitution or upon conversion of, or otherwise on account of, the Pledged
Shares of such Pledged Subsidiary or such additional capital stock or other
equity securities or other interests in such Pledged Subsidiary, and (iv) cash
and non-cash proceeds and supporting obligations of or with respect to the
Pledged Shares of such Pledged Subsidiary and any such Additional Pledged Stock
Collateral, in each case from time to time received or receivable by, or
otherwise paid or distributed to or acquired by, such Pledgor.

 

“Exchange Act” means the Securities Exchange Act of 1934 (as amended).

 

“Notes Receivable” means any negotiable instrument or other writing that
evidences a right to the payment of a monetary obligation and that is not itself
a security agreement or a lease and that is of a type that, in the ordinary
course of business, is transferred by delivery by an endorsement or assignment.

 

“Operating Agreement” means each operating or similar agreement to which any
Pledgor is a party with respect to any Pledged LLC Interests.

 

“Partnership Agreement” means each limited partnership agreement, general
partnership agreement or other partnership agreement to which any Pledgor is a
party with respect to any Pledged Partnership Interests.

 

“Pledged Collateral” has the meaning set forth in Section 2(a).

 

“Pledged Debt” means all Notes Receivable pledged by any Pledgor hereunder
required to be pledged to the Administrative Agent under the Credit Agreement,
including the Notes Receivable identified on Schedule 1 (as amended or
supplemented from time to time).

 

“Pledged Equity Interests” means the Pledged LLC Interests, the Pledged
Partnership Interests and the Pledged Shares.

 

“Pledged LLC Interests” means all interests in any limited liability company
owned by any Pledgor that is a Pledged Subsidiary, including the interests in
each limited liability company identified on Schedule 1 (as amended or
supplemented from time to time).

 

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“Pledged Partnership Interests” means all interests in any general partnership,
limited partnership, limited liability partnership or other partnership owned by
any Pledgor that is a Pledged Subsidiary, including the interests in each
general partnership, limited partnership, limited liability partnership and
other partnership identified on Schedule 1 (as amended or supplemented from time
to time).

 

“Pledged Shares” means all of the issued and outstanding shares of the capital
stock, whether certificated or uncertificated, of any Pledged Subsidiary owned
by any Pledgor, including all shares of capital stock identified on Schedule 1
(as amended or supplemented from time to time).

 

“Pledged Subsidiary” means each Material Subsidiary and each Subsidiary that is
the owner of Unencumbered Pool Property, subject to the limitations contained in
Section 6.12(c) of the Credit Agreement), including each such Subsidiary
identified on Schedule 1 (as amended or supplemented from time to time).

 

“Secured Obligations” means the indebtedness, liabilities and other obligations
of the Borrowers, the Guarantors, the other Pledgors and each other Loan
Document Party to the Administrative Agent, the L/C Issuer, the Swing Line
Lender, the Other Agents and the Lenders under or in connection with the Credit
Agreement, the Notes, the Letters of Credit, each Guaranty, each Pledge
Agreement and the other Loan Documents, including all unpaid principal of the
Loans, all amounts owing in respect of the L/C Obligations, all interest accrued
thereon, all fees due under the Credit Agreement, all amounts due under each
Guaranty, Pledge Agreement and other Loan Document, and all other amounts
payable by each Borrower, each Guarantor and each other Pledgor to the
Administrative Agent, the L/C Issuer, the Swing Line Lender, the Other Agents
and the Lenders thereunder or in connection therewith, whether now existing or
hereafter arising, and whether due or to become due, absolute or contingent,
liquidated or unliquidated, determined or undetermined, and including interest
that accrues after the commencement by or against any Borrower, any Guarantor or
any other Pledgor of any proceeding under any Debtor Relief Laws naming any such
Person as the debtor in such proceeding.

 

“Securities Act” means the Securities Act of 1933 (as amended).

 

“UCC” means the Uniform Commercial Code as the same may, from time to time, be
in effect in the State of California.

 

(c) Terms Defined in UCC. Where applicable and except as otherwise defined
herein, terms used in this Pledge Agreement shall have the meanings assigned to
them in the UCC.

 

(d) Interpretation. The rules of interpretation set forth in Sections 1.02 to
1.07 of the Credit Agreement shall be applicable to this Pledge Agreement and
are incorporated herein by this reference.

 

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SECTION 2 Security Interest.

 

(a) Grant of Security Interest. As security for the payment and performance of
the Secured Obligations, each Pledgor hereby pledges to the Administrative
Agent, for itself and on behalf of and for the ratable benefit of the Other
Agents, the L/C Issuer, the Swing Line Lender and the Lenders, and hereby grants
to the Administrative Agent, for itself and on behalf of and for the ratable
benefit of the Other Agents, L/C Issuer, the Swing Line Lender and the Lenders,
a security interest in, all of such Pledgor’s right, title and interest in, to
and under (i) the Pledged Debt, the Pledged Equity Interests and the Additional
Pledged Collateral and any certificates and instruments now or hereafter
representing the Pledged Debt, the Pledged Equity Interests and the Additional
Pledged Collateral, (ii) all rights, interests and claims with respect to the
Pledged Debt, the Pledged Equity Interests and Additional Pledged Collateral,
including under any and all Partnership Agreements, Operating Agreements and
other related agreements, instruments and other documents, and (iii) all books,
records and other documentation of such Pledgor related to the Pledged Debt, the
Pledged Equity Interests and Additional Pledged Collateral, in each case whether
presently existing or owned or hereafter arising or acquired and wherever
located (collectively, the “Pledged Collateral”).

 

(b) Delivery of Pledged Debt and Pledged Equity Interests; Certificates. Each
Pledgor hereby agrees to deliver to or for the account of the Administrative
Agent, at the address and to the Person to be designated by the Administrative
Agent, all instruments evidencing the Pledged Debt and any certificates
representing the Pledged Equity Interests (to the extent certificated), which
shall be in suitable form for transfer by delivery, or shall be accompanied by
duly executed instruments of transfer or assignment in blank, all in form and
substance satisfactory to the Administrative Agent. Each Pledgor shall (i)(A)
deliver to or for the account of the Administrative Agent, at the address and to
the Person to be designated by the Administrative Agent, a consent from each
member, manager or partner or other Person where such consent is required as a
condition for the admission of any transferee (including the Administrative
Agent) as member or partner to an applicable Pledged Subsidiary as a result of
the exercise by the Administrative Agent of any remedy hereunder or under
applicable law, and (B) covenant that any new member, manager or partner or
other Person of an applicable Pledged Subsidiary shall deliver to or for the
account of the Administrative Agent, at the address and to the Person to be
designated by the Administrative Agent, its respective consent allowing the
admission of any transferee (including the Administrative Agent) as member or
partner to such Pledged Subsidiary as a result of the exercise by the
Administrative Agent of any remedy hereunder or under applicable law, or (ii)
take all actions necessary to cause each Operating Agreement relating to Pledged
LLC Interests, and each Partnership Agreement relating to any Pledged
Partnership Interests, to provide specifically at all times that no consent of
any member, manager, partner or other Person shall be a condition to the
admission as a member or partner of the applicable Pledged Subsidiary of any
transferee (including the Administrative Agent) that acquires ownership of the
Pledged LLC Interests or Pledged Partnership Interest as a result of the
exercise by the Administrative Agent of any remedy hereunder or under applicable
law.

 

(c) Additional Pledged Subsidiaries and Pledged Debt. In the event that any
Pledgor acquires rights in any Pledged Subsidiary or any interest in any Pledged
Debt after the date hereof, it shall deliver to the Administrative Agent a
completed pledge supplement, substantially in the form of Annex 1 (the “Pledge
Supplement”), together with all schedules

 

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thereto, reflecting such new Pledged Subsidiary or Pledged Debt, as the case may
be. Notwithstanding the foregoing, it is understood and agreed that the security
interest of the Administrative Agent shall attach to any such Pledged Subsidiary
or Pledged Debt, as the case may be, immediately upon any Pledgor’s acquisition
of rights or interest therein and shall not be affected by the failure of any
Pledgor to deliver a Pledge Supplement.

 

(d) Delivery of Additional Pledged Collateral. If any Pledgor shall become
entitled to receive or shall receive any Additional Pledged Collateral, such
Pledgor shall accept any such Additional Pledged Collateral as the agent for the
Administrative Agent, shall hold it in trust for the Administrative Agent, shall
segregate it from other property or funds of such Pledgor, and shall deliver all
Additional Pledged Collateral and all certificates (to the extent certificated),
instruments and other writings representing such Additional Pledged Collateral
forthwith to or for the account of the Administrative Agent, at the address and
to the Person to be designated by the Administrative Agent, which shall be in
suitable form for transfer by delivery, or shall be accompanied by duly executed
instruments of transfer or assignment in blank, all in form and substance
satisfactory to the Administrative Agent, as the Administrative Agent shall
request, to be held by the Administrative Agent subject to the terms hereof, as
part of the Pledged Collateral.

 

(e) Transfer of Security Interest Other Than by Delivery. If for any reason
Pledged Collateral of any Pledgor cannot be delivered to or for the account of
the Administrative Agent as provided in subsections (b) and (d), such Pledgor
shall promptly take such other steps as shall be requested from time to time by
the Administrative Agent to effect a transfer of a perfected first priority
security interest in and pledge of the Pledged Collateral to the Administrative
Agent for itself and on behalf of and for the ratable benefit of the Other
Agents, the L/C Issuer, the Swing Line Lender and the Lenders pursuant to the
UCC (provided, however, subject to Section 5(d) hereof, no Pledgor shall be
required to issue certificated Pledged Equity Interests in exchange for
uncertificated Pledged Equity Interests as long as the Administrative Agent can
perfect its security interest by the filing of a financing statement under the
UCC). To the extent practicable, such Pledgor shall thereafter deliver the
Pledged Collateral to or for the account of the Administrative Agent as provided
in subsections (b) and (d) other than uncertificated Pledged Equity Interests.

 

(f) Financing Statements and Other Action. Each Pledgor shall execute and
deliver to the Administrative Agent concurrently with the execution of this
Pledge Agreement, and each Pledgor hereby authorizes the Administrative Agent to
file (with or without such Pledgor’s signature), at any time and from time to
time thereafter, all financing statements, assignments, continuation financing
statements, termination statements, and other documents and instruments, in form
reasonably satisfactory to the Administrative Agent, and take all other action,
as the Administrative Agent may reasonably request, to effect a transfer of a
perfected first priority security interest in and pledge of the Pledged
Collateral to the Administrative Agent pursuant to the UCC and to continue
perfected, maintain the priority of or provide notice of the security interest
of the Administrative Agent in the Pledged Collateral and to accomplish the
purposes of this Pledge Agreement; provided that no financing statements shall
be required to be filed with respect to any Pledged Collateral constituting
Notes Receivable as long as the original

 

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instruments evidencing such Pledged Collateral, accompanied by duly executed
instruments of transfer, are delivered to the Administrative Agent. Without
limiting the generality of the foregoing, each Pledgor ratifies and authorizes
the filing by the Administrative Agent of any financing statements covering the
Pledged Collateral filed prior to the date hereof. Each Pledgor shall cooperate
with the Administrative Agent in obtaining control (as defined in the UCC) of
Pledged Collateral consisting of investment property. Each Pledgor shall join
with the Administrative Agent in notifying any third party who has possession of
any Pledged Collateral of the Administrative Agent’s security interest therein
and obtaining an acknowledgment from the third party that it is holding the
Pledged Collateral for the benefit of the Administrative Agent.

 

(g) Continuing Security Interest. Each Pledgor agrees that this Pledge Agreement
shall create a continuing security interest in and pledge of the Pledged
Collateral which shall remain in effect until terminated in accordance with
Section 24.

 

(h) Limited Recourse to Pledgors. Except as may be otherwise provided in any
separate Loan Document or other agreement executed by any Pledgor, the liability
of any Pledgor hereunder with respect to the Secured Obligations (but not under
any other Loan Document to which such Pledgor may be a party) shall be limited
to the Pledged Collateral. The recourse of the Administrative Agent, the Other
Agents and the Lenders against any Pledgor hereunder with respect to the Secured
Obligations (but not under any other Loan Document to which such Pledgor may be
a party) shall be limited to the Pledged Collateral, and such Pledgor shall have
no personal liability hereunder with respect to the Secured Obligations;
provided, however, that such Pledgor shall have personal liability to the
Administrative Agent, the Other Agents and the Lenders for (i) any damages,
costs or other expense suffered by the Administrative Agent, the Other Agents,
the L/C Issuer or the Lenders as a result of the lack of authenticity or
genuineness of the Pledged Collateral delivered to the Administrative Agent
hereunder or the failure of such Pledgor to deliver Pledged Collateral
hereunder; (ii) the payment of expenses under Section 13(a) or under any other
Loan Documents to which it is a party; (iii) the breach of any representation,
warranty or other covenant contained herein or made in connection herewith or
failure otherwise to perform its obligations hereunder or under any other Loan
Documents to which it is a party (including any indemnity obligations); or (iv)
any obligations under any other Loan Document to which such Pledgor is a party.

 

SECTION 3 Representations and Warranties. Each Pledgor represents and warrants
to the Other Agents, L/C Issuer, the Swing Line Lender, each Lender and the
Administrative Agent as follows:

 

(a) Existence, Power and Authority. Each Pledgor is duly organized, validly
existing and in good standing under the law of the jurisdiction of its
organization and has all requisite power and authority to execute, deliver and
perform its obligations under this Pledge Agreement.

 

(b) Authorization. The execution, delivery and performance by each Pledgor of
this Pledge Agreement have been duly authorized by all necessary action of such
Pledgor, and this Pledge Agreement constitutes the legal, valid and binding
obligation of such Pledgor,

 

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enforceable against such Pledgor in accordance with its terms, except as
enforceability may be limited by applicable bankruptcy, insolvency or similar
laws affecting the enforcement of creditors’ rights generally, or by equitable
principles relating to enforceability.

 

(c) Filings and Consents. No authorization, consent, approval, license,
exemption of, or filing or registration with, any Governmental Authority, or
approval or consent of any other Person (including any party to any shareholders
agreement, Partnership Agreement or Operating Agreement), is required for the
due execution, delivery or performance by any Pledgor of this Pledge Agreement,
other than such filings or actions contemplated under the Loan Documents in
connection with the pledging of the security interests.

 

(d) Valid Issuance of Pledged Collateral. All the Pledged Equity Interests have
been, and upon issuance any Additional Pledged Collateral will be, duly and
validly issued, and are and will be fully paid and non-assessable.

 

(e) Ownership of Pledged Collateral. With respect to the Pledged Debt and the
Pledged Equity Interests of any Pledgor such Pledgor is, and with respect to any
Additional Pledged Collateral such Pledgor will be, the legal record and
beneficial owner thereof, and has and will have good and marketable title
thereto, subject to no Lien except for the pledge and security interest created
by this Pledge Agreement.

 

(f) Capitalization of the Pledged Subsidiaries. The Pledged Equity Interests
constitute the percentage of the issued and outstanding shares of capital stock
and other ownership interests of each Pledged Subsidiary as is disclosed on
Schedule 1 (as amended or supplemented from time to time).

 

(g) Options, Warrants, Etc. No securities convertible into or exchangeable for
any shares of capital stock or other ownership interests of the Pledged
Subsidiaries, or any options, warrants or other commitments entitling any Person
to purchase or otherwise acquire any shares of capital stock or other ownership
interests of the Pledged Subsidiaries, are issued and outstanding, other than as
disclosed on Schedule 1 (as amended or supplemented from time to time).

 

(h) Transfer Restrictions. There are no restrictions on the transferability of
the Pledged Collateral to the Administrative Agent or with respect to the
foreclosure, transfer or disposition thereof by the Administrative Agent, other
than as disclosed on Schedule 1 (as amended or supplemented from time to time).

 

(i) Shareholders Agreements. There are no shareholders, partners or members
agreements, voting trusts, proxy agreements or other agreements or
understandings which affect or relate to the voting or giving of written
consents with respect to any of the Pledged Collateral, other than as disclosed
on Schedule 1 (as amended or supplemented from time to time).

 

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(j) No Violation of Securities Laws. None of the Pledged Equity Interests has
been transferred in violation of the securities registration, securities
disclosure or similar laws of any jurisdiction to which such transfer may be
subject.

 

(k) Location of Chief Executive Office. Each Pledgor’s chief executive office
and principal place of business, and all books and records of such Pledgor
concerning the Pledged Collateral, are located at its address set forth in this
Pledge Agreement; such Pledgor’s jurisdiction of organization is as set forth in
Schedule 1 (as amended or supplemented from time to time); and such Pledgor’s
exact legal name as of the date hereof is as set forth on the signature pages of
this Pledge Agreement.

 

(l) Other Financing Statements. Other than (i) financing statements disclosed to
the Administrative Agent and (ii) financing statements in favor of the
Administrative Agent on behalf of the Other Agents, the L/C Issuer, the Swing
Line Lender and the Lenders, no effective financing statement naming any Pledgor
as debtor, assignor, grantor, mortgagor, pledgor or the like and covering all or
any part of the Pledged Collateral is on file in any filing or recording office
in any jurisdiction.

 

(m) Enforceability; Priority of Security Interest. This Pledge Agreement (i)
creates an enforceable perfected and first priority security interest in and
pledge of the Pledged Collateral upon delivery thereof pursuant to Section 2(b),
and (ii) will create an enforceable perfected and first priority security
interest in and pledge of the Additional Pledged Collateral upon delivery
thereof pursuant to Section 2(d) (or upon the taking of such other action with
respect thereto as may be requested by the Administrative Agent pursuant to
Section 2(e) or the making of the filings contemplated under Section 2(f)), in
each case securing the payment and performance of the Secured Obligations.

 

(n) Control Agreements. No control agreements exist with respect to any Pledged
Collateral other than control agreements in favor of the Administrative Agent.

 

(o) Partnership Agreements and Operating Agreements. Each Partnership Agreement
and each Operating Agreement contains the entire agreement between the parties
thereto with respect to the subject matter thereof, has not been amended or
modified (except as so disclosed to the Administrative Agent), and is in full
force and effect in accordance with its terms. To the best knowledge of each
Pledgor, there exists no material violation or material default under any
Partnership Agreement or Operating Agreement by such Pledgor or the other
parties thereto.

 

(p) Pledged Debt. To each Pledgor’s knowledge, (i) all of the respective Pledged
Debt is the legal, valid and binding obligation of the obligors thereof and
(ii), except as otherwise disclosed to the Administrative Agent in writing, is
not in default or subject to any adverse claims, counterclaims, setoffs,
disputes, defenses, discounts, retainages or holdbacks, and no Pledgor has
assigned any of its rights in respect of the Pledged Debt except as provided in
this Pledge Agreement.

 

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Each Pledgor agrees that the foregoing representations and warranties shall be
deemed to have been made by it on the date of each delivery of Pledged
Collateral by it hereunder.

 

SECTION 4 Covenants. So long as any of the Secured Obligations remain
unsatisfied or any Lender shall have any Commitment, each Pledgor agrees that:

 

(a) Defense of Pledged Collateral. Each Pledgor shall, at its own expense,
appear in and defend any action, suit or proceeding which purports to affect its
title to, or right or interest in, the Pledged Collateral or the security
interest of the Administrative Agent therein and the pledge to the
Administrative Agent thereof.

 

(b) Preservation of Collateral. Each Pledgor shall do and perform all reasonable
acts that may be necessary and appropriate to maintain, preserve and protect the
Pledged Collateral.

 

(c) Compliance with Laws, Etc. Each Pledgor shall comply with all laws,
regulations and ordinances relating in a material way to the possession,
maintenance and control of the Pledged Collateral other than as is not
reasonably expected to have a Material Adverse Effect.

 

(d) Location of Books and Chief Executive Office. Each Pledgor shall: (i) keep
all books and records pertaining to the Pledged Collateral at the respective
location for such Pledgor set forth in Section 3(k); and (ii) give at least 30
days’ prior written notice to the Administrative Agent of (A) any changes in any
such location where such Pledgor’s books and records pertaining to the Pledged
Collateral are kept, or (B) any change in the location of such Pledgor’s chief
executive office or principal place of business.

 

(e) Change in Name, Identity or Structure. Each Pledgor shall give at least 30
days’ prior written notice to the Administrative Agent of: (i) any change in its
name; (ii) any changes in its identity or structure in any manner which might
make any financing statement filed hereunder incorrect or misleading; (iii) any
change in its registration as an organization (or any new such registration);
and (iv) any change in its jurisdiction of organization. No Pledgor shall change
its jurisdiction of organization to a jurisdiction outside of the United States.

 

(f) Disposition of Pledged Collateral. No Pledgor shall surrender or lose
possession of (other than to the Administrative Agent or, with the prior consent
of the Administrative Agent, to a depositary or financial intermediary),
exchange, sell, convey, assign or otherwise dispose of or transfer the Pledged
Collateral or any right, title or interest therein, other than as permitted
under the Credit Agreement.

 

(g) Liens. No Pledgor shall create, incur or permit to exist any Liens upon or
with respect to the Pledged Collateral, other than the security interest of and
pledge to the Administrative Agent created by this Pledge Agreement.

 

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(h) Shareholders Agreements. No Pledgor shall enter into any shareholders,
partners or members agreement, voting trust, proxy agreement or other agreement
or understanding after the date hereof which affects or relates to the voting or
giving of written consents with respect to any of the Pledged Collateral.

 

(i) Issuance of Additional Shares. No Pledgor shall consent to or approve, or
allow any Pledged Subsidiary to consent to or approve, the issuance to any
Person of any additional shares of any class of capital stock or other ownership
interests of such Pledged Subsidiary, or of any securities convertible into or
exchangeable for any such shares or other ownership interests, or any warrants,
options or other rights to purchase or otherwise acquire any such shares or
other ownership interests, except as permitted under the Credit Agreement.

 

(j) Notices. Each Pledgor shall deliver promptly to the Administrative Agent all
reports and notices received by such Pledgor from the Pledged Subsidiaries in
respect of any Material Adverse Effect relating to the Pledged Collateral.

 

(k) Securities Accounts. Each Pledgor shall give the Administrative Agent
immediate notice of the establishment of (or any change in or to) any securities
account pertaining to any Pledged Collateral.

 

(l) Compliance With Partnership Agreements, Operating Agreements and
Shareholders Agreements; Enforcement. Each Pledgor shall comply with all of its
obligations under any Partnership Agreement, Operating Agreement or shareholders
agreement relating to any Pledged Equity Interests and shall enforce all of its
rights with respect to any Pledged Equity Interests. Each Pledgor shall enforce
all of its rights with respect to any Pledged Debt in accordance with such
Pledgor’s Ordinary Course of Business.

 

(m) Amendments to Partnership Agreements, Operating Agreements or Organization
Documents. No Pledgor shall vote to enable or take any other action to amend or
terminate, or waive compliance with any of the terms of, any Partnership
Agreement, Operating Agreement or Organization Documents in any way that
materially changes the rights of such Pledgor with respect to any Pledged Equity
Interests in a manner adverse to the Administrative Agent or the Lenders or that
adversely affects the validity, perfection or priority of the Administrative
Agent’s security interest therein.

 

(n) Pledged Debt. Each Pledgor (i) shall with such frequency as the
Administrative Agent may reasonably require, furnish to the Administrative Agent
full and complete reports, in form and substance reasonably satisfactory to the
Administrative Agent, with respect to the outstanding balances of the Pledged
Debt; (ii) shall promptly notify the Administrative Agent of any defaults in
respect of the Pledged Debt following a Responsible Officer’s knowledge thereof;
(iii) upon the request of the Administrative Agent (A) at any time, shall notify
all or any designated portion of the obligors on the Pledged Debt of the
security interest hereunder, and (B) upon the occurrence and during the
continuance of an Event of Default, shall notify the obligors on the Pledged
Debt or any designated portion thereof that payment shall be made directly to
the Administrative Agent or to such other Person or location as the
Administrative Agent shall specify; (iv) subject to the following clauses, shall
diligently

 

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collect all amounts due or to become due on or with respect to the Pledged Debt;
(v) with respect to any of the Intercompany Notes Receivable, shall not forgive,
waive any default under, grant any extension of the time for payment or enter
into any agreement to reduce the amount owing on or with respect to, or
compromise or settle for less than the full amount of, any of such Intercompany
Notes Receivable; and (vi) with respect to any of the Pledged Debt (other than
the Intercompany Notes Receivable), during the continuance of an Event of
Default, shall not forgive, waive any default under, grant any extension of the
time for payment or enter into any agreement to reduce the amount owing on or
with respect to, or compromise or settle for less than the full amount of, any
of such Pledged Debt.

 

(o) Further Assurances. Each Pledgor shall promptly, upon the written request
from time to time of the Administrative Agent, execute, acknowledge and deliver,
and file and record, all such financing statements and other documents and
instruments, and take all such action, as shall be reasonably necessary to carry
out the purposes of this Pledge Agreement.

 

SECTION 5 Administration of the Pledged Collateral.

 

(a) Distributions and Voting Prior to an Event of Default. Unless an Event of
Default shall exist: (i) each Pledgor shall be entitled to receive and retain
for its own account any interest, cash dividend on or other cash or asset
distribution, if any, in respect of the Pledged Collateral, to the extent
consistent with the Loan Documents; and (ii) each Pledgor shall have the right
to vote the Pledged Collateral and to retain the power to control the direction,
management and policies of the Pledged Subsidiaries to the same extent as such
Pledgor would if the Pledged Collateral were not pledged to the Administrative
Agent pursuant to this Pledge Agreement; provided, however, that no Pledgor
shall be entitled to receive (A) cash paid, payable or otherwise distributed in
redemption of, or in exchange for or in substitution of, any Pledged Collateral,
or (B) dividends and other distributions paid or payable in cash in respect of
any Pledged Collateral in connection with a partial or total liquidation or
dissolution of the Pledged Subsidiaries or in connection with a reduction of
capital, capital surplus or paid-in-surplus or any other type of
recapitalization involving the Pledged Subsidiaries except, in each case, to the
extent otherwise permitted under the Credit Agreement; and provided further,
however, that no vote shall be cast or consent, waiver or ratification given or
action taken which would have the effect of impairing the position or interest
of the Administrative Agent in respect of the Pledged Collateral or which would
adversely alter such Pledgor’s voting rights with respect to the stock of or
other ownership interests in the Pledged Subsidiaries or any Pledgor’s rights to
control or otherwise direct the affairs of the Pledged Subsidiaries or be
inconsistent with or violate any provision of this Pledge Agreement, the Credit
Agreement, any Guaranty or any other Loan Document. If applicable, a Pledgor
shall be deemed the beneficial owner of all Pledged Collateral of such Pledgor
for purposes of Sections 13 and 16 of the Exchange Act and agrees to file all
reports required to be filed by beneficial owners of securities thereunder. The
Administrative Agent shall execute and deliver (or cause to be executed and
delivered) to the applicable Pledgor all such proxies and other instruments as
the Pledgor may reasonably request for the purpose of enabling such Pledgor to
exercise the voting and other rights which it is entitled to exercise pursuant
to this subsection (a) and to receive the distributions which it is authorized
to receive and retain pursuant to this subsection (a).

 

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(b) General Authority upon an Event of Default. Upon and after the occurrence
and during the continuance of any Event of Default:

 

(i) the Administrative Agent shall be entitled to receive all interest,
distributions and payments of any nature with respect to the Pledged Collateral,
to be held by the Administrative Agent as part of the Pledged Collateral;

 

(ii) the Administrative Agent shall have the right following prior written
notice to any Pledgor to vote or consent to take any action with respect to the
Pledged Collateral of such Pledgor and exercise all rights of conversion,
exchange, subscription or any other rights, privileges or options pertaining to
such Pledged Collateral as if the Administrative Agent were the absolute owner
thereof; and

 

(iii) the Administrative Agent shall have the right, for and in the name, place
and stead of any Pledgor, to execute endorsements, assignments or other
instruments of conveyance or transfer with respect to all or any of the Pledged
Collateral of such Pledgor, to endorse any checks, drafts, money orders and
other instruments relating thereto, to sue for, collect, receive and give
acquittance for all moneys due or to become due in connection with the Pledged
Collateral and otherwise to file any claims, take any action or institute,
defend, settle or adjust any actions, suits or proceedings with respect to any
Pledged Collateral, execute any and all such other documents and instruments,
and do any and all such acts and things, as the Administrative Agent may deem
necessary or desirable to protect, collect, realize upon and preserve any
Pledged Collateral, to enforce the Administrative Agent’s rights with respect to
any Pledged Collateral and to accomplish the purposes of this Pledge Agreement.

 

(c) Distributions to Be Held for Administrative Agent. Interest, distributions
and other payments which are received by any Pledgor but which it is not
entitled to retain as a result of the operation of subsection (a) or (b) shall
be held in trust for the benefit of the Administrative Agent, be segregated from
the other property or funds of such Pledgor, and be forthwith paid over or
delivered to the Administrative Agent in the same form as so received.

 

(d) Certain Other Administrative Matters. During the continuance of an Event of
Default, the Administrative Agent may cause any of the Pledged Collateral to be
transferred into its name or into the name of its nominee or nominees (subject
to the revocable rights specified in subsection (a)). During the continuance of
an Event of Default, the Administrative Agent shall have the right to exchange
uncertificated Pledged Collateral for certificated Pledged Collateral, and to
exchange certificated Pledged Collateral for certificates of larger or smaller
denominations, for any purpose consistent with this Pledge Agreement.

 

(e) Appointment of Administrative Agent as Attorney-in-Fact. For the purpose of
enabling the Administrative Agent to exercise its rights under this Section 5 or
otherwise in connection with this Pledge Agreement, each Pledgor hereby (i)
constitutes and appoints the Administrative Agent (and any of the Administrative
Agent’s officers, employees or agents designated by the Administrative Agent)
its true and lawful attorney-in-fact, with full power and authority during the
continuance of an Event of Default to execute any notice, assignment,
endorsement or other instrument or document, and to do any and all acts and
things

 

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for and on behalf of such Pledgor, which the Administrative Agent may deem
necessary or desirable to protect, collect, realize upon and preserve the
Pledged Collateral, to enforce the Administrative Agent’s rights with respect to
the Pledged Collateral and to accomplish the purposes hereof, (ii) revokes all
previous proxies with regard to the Pledged Collateral, and (iii) appoints the
Administrative Agent as its proxyholder, to be exercised during the existence of
an Event of Default with respect to the Pledged Collateral to attend and vote at
any and all meetings of the shareholders, partners or members of the Pledged
Subsidiaries held on or after the date of this proxy and prior to the
termination hereof, with full power of substitution to do so and agrees, if so
requested, to execute or cause to be executed appropriate proxies therefor. Each
such appointment is coupled with an interest and irrevocable so long as the
Lenders have any Commitments or the Secured Obligations have not been paid and
performed in full. Such Pledgor hereby ratifies, to the extent permitted by law,
all that the Administrative Agent shall lawfully and in good faith do or cause
to be done by virtue of and in compliance with this Section 5.

 

(f) Partnership Agreements and Operating Agreements. Anything herein to the
contrary notwithstanding, (i) each Pledgor shall remain liable under all
Partnership Agreements and Operating Agreements to which it is a party to the
extent set forth therein to perform all of its duties and obligations thereunder
to the same extent as if this Pledge Agreement had not been executed, (ii) the
exercise by the Administrative Agent of any of the rights hereunder shall not
release such Pledgor from any of its duties and obligations under all
Partnership Agreements and Operating Agreements, and (iii) the Administrative
Agent shall not have any obligation or liability under any Partnership Agreement
or Operating Agreement by reason of this Pledge Agreement, nor shall the
Administrative Agent be obligated to perform any of the obligations or duties of
such Pledgor thereunder or to take any action to collect or enforce any claim
for payment assigned hereunder.

 

SECTION 6 Administrative Agent Performance of Pledgor Obligations. After demand,
the Administrative Agent may perform or pay any obligation which any Pledgor has
agreed to perform or pay under or in connection with this Pledge Agreement (but
has so failed to perform following the foregoing demand), and such Pledgor shall
reimburse the Administrative Agent within ten Business Days following demand for
any amounts paid by the Administrative Agent pursuant to this Section 6.

 

SECTION 7 Administrative Agent’s Duties. Notwithstanding any provision contained
in this Pledge Agreement, the Administrative Agent shall have no duty to
exercise any of the rights, privileges or powers afforded to it and shall not be
responsible to any Pledgor or any other Person for any failure to do so or delay
in doing so. Beyond the exercise of reasonable care to assure the safe custody
of the Pledged Collateral while held hereunder and the accounting for moneys
actually received by the Administrative Agent hereunder, the Administrative
Agent shall have no duty or liability to exercise or preserve any rights,
privileges or powers pertaining to the Pledged Collateral. Notwithstanding
anything herein to the contrary, the Administrative Agent agrees that it shall
upon request promptly deliver any Pledged Debt to the Pledgor thereof where any
instrument representing such Pledged Debt is required to be presented in
connection with the administration thereof (or any amendment or modification
thereof not prohibited hereunder), including without limitation in connection
with the making and receipt of payments under such Pledged Debt.

 

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SECTION 8 Remedies.

 

(a) Remedies. Upon the occurrence and during the continuance of any Event of
Default, the Administrative Agent shall have, in addition to all other rights
and remedies granted to it in this Pledge Agreement, the Credit Agreement, each
Guaranty or any other Loan Document, all rights and remedies of a secured party
under the UCC and other applicable laws. Without limiting the generality of the
foregoing, each Pledgor agrees that any item of the Pledged Collateral may be
sold for cash or on credit or for future delivery without assumption of any
credit risk, in any number of lots at the same or different times, at any
exchange, brokers’ board or elsewhere, by public or private sale, and at such
times and on such terms, as the Administrative Agent shall determine; provided,
however, that such Pledgor shall be credited with the net proceeds of sale only
when such proceeds are finally collected by the Administrative Agent. The
Administrative Agent shall give each Pledgor such notice of any private or
public sales as may be required by the UCC or other applicable law. Each Pledgor
recognizes that the Administrative Agent may be unable to make a public sale of
any or all of the Pledged Collateral, by reason of prohibitions contained in
applicable securities laws or otherwise, and expressly agrees that a private
sale to a restricted group of purchasers for investment and not with a view to
any distribution thereof shall be considered a commercially reasonable sale. The
Administrative Agent and each of the Lenders shall have the right upon any such
public sale, and, to the extent permitted by law, upon any such private sale, to
purchase the whole or any part of the Pledged Collateral so sold, free of any
right or equity of redemption, which right or equity of redemption each Pledgor
hereby releases to the extent permitted by law.

 

(b) Proceeds Account. To the extent that any of the Secured Obligations may be
contingent, unmatured or unliquidated (including with respect to undrawn amounts
under the Letters of Credit) at such time as there may exist an Event of
Default, the Administrative Agent may, at its election, (i) retain the proceeds
of any sale, collection, disposition or other realization upon the Pledged
Collateral (or any portion thereof) in a special purpose non-interest-bearing
restricted deposit account (the “Proceeds Account”) created and maintained by
the Administrative Agent for such purpose (as to which each Pledgor hereby
grants a security interest and which shall constitute part of the Pledged
Collateral hereunder) until such time as the Administrative Agent may elect to
apply such proceeds to the Secured Obligations, and each Pledgor agrees that
such retention of such proceeds by the Administrative Agent shall not be deemed
strict foreclosure with respect thereto; (ii) in any manner elected by the
Administrative Agent, estimate the liquidated amount of any such contingent,
unmatured or unliquidated claims and apply the proceeds of the Pledged
Collateral against such amount; or (iii) otherwise proceed in any manner
permitted by applicable law. Each Pledgor agrees that the Proceeds Account shall
be a blocked account and that upon the irrevocable deposit of funds into the
Proceeds Account, such Pledgor shall not have any right of withdrawal with
respect to such funds. Accordingly, such Pledgor irrevocably waives until the
termination of this Pledge Agreement in accordance with Section 24 the right to
make any withdrawal from the Proceeds Account and the right to instruct the
Administrative Agent to honor drafts against the Proceeds Account.

 

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(c) Application of Proceeds. Subject to subsection (b), the cash proceeds
actually received from the sale or other disposition or collection of Pledged
Collateral, and any other amounts of the Pledged Collateral (including any cash
contained in the Pledged Collateral) the application of which is not otherwise
provided for herein, shall be applied in the order specified in Section 8.03 of
the Credit Agreement. Any surplus thereof which exists after payment and
performance in full of the Secured Obligations shall be promptly paid over to
each Pledgor entitled thereto or otherwise disposed of in accordance with the
UCC or other applicable law. The Pledgors (to the extent of their liability as
obligors with respect to the Secured Obligations) shall remain liable to the
Administrative Agent , the Other Agents, the L/C Issuer, the Swing Line Lender
and the Lenders for any deficiency which exists after any sale or other
disposition or collection of Pledged Collateral.

 

SECTION 9 Registration Rights.

 

(a) Registration of Pledged Collateral. If the Administrative Agent shall
determine to exercise its right to sell any or all of the Pledged Collateral
pursuant to Section 8, and if the Administrative Agent shall determine that it
is necessary or advisable to have the Pledged Collateral consisting of Pledged
Equity Interests, or that portion thereof to be sold, registered under the
provisions of the Securities Act, each Pledgor shall execute and deliver, and
shall cause each Pledged Subsidiary and such Pledgor’s and such Pledged
Subsidiary’s respective directors and officers to execute and deliver, all such
instruments and documents, and to do or cause to be done all such other acts and
things as may, in the view of the Administrative Agent, be advisable to register
such Pledged Collateral under the provisions of the Securities Act and to cause
the registration statement relating thereto to become effective and to remain
effective for such period as prospectuses are required by law to be furnished,
and to make all amendments and supplements thereto and to the related prospectus
which, in the view of the Administrative Agent, are necessary or be necessary or
advisable, all in conformity with the requirements of the SEC applicable
thereto. Each Pledgor agrees to comply, and to cause each Pledged Subsidiary to
comply, with the provisions of the securities or “Blue Sky” laws of any
jurisdiction which the Administrative Agent shall designate, and to cause each
Pledged Subsidiary to make available to its security holders, as soon as
practicable, an earnings statement (which need not be audited) which shall
satisfy the provisions of Section 11(a) of the Securities Act. Each Pledgor
shall cause to be furnished to the Administrative Agent a copy of each
preliminary prospectus and prospectus, shall promptly notify the Administrative
Agent of the happening of any event (upon becoming aware thereof) as a result of
which any then effective prospectus includes an untrue statement of a material
fact or omits to state a material fact required to be stated therein or
necessary to make the statements therein not misleading in the light of then
existing circumstances and shall cause the Administrative Agent to be furnished
with a copy of such supplement to or amendment of such prospectus as is
necessary to eliminate such untrue statement or correct such omission.

 

(b) No Obligation to Delay Private Sale. The Administrative Agent and the
Lenders shall be under no obligation to delay a private sale of any of the
Pledged Collateral (as contemplated by subsection (a)) for the period of time
necessary to permit the issuer thereof to

 

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register such Pledged Collateral for public sale under the Securities Act, or
under applicable state securities laws, even if such issuer would agree to do
so.

 

(c) Further Acts. Each Pledgor further agrees to do or to use its reasonable
efforts to cause to be done all such other acts and things as may be necessary
to make any sales of all or any portion of the Pledged Collateral pursuant to
subsections (a) and (b) valid and binding and in compliance with any and all
applicable laws (including the Exchange Act), regulations, orders, writs,
injunctions, decrees or awards of any and all Governmental Authorities having
jurisdiction over any such sale or sales.

 

(d) Equitable Relief. Each Pledgor acknowledges that a breach of any of the
covenants contained in this Section 9 will cause irreparable injury to the
Administrative Agent and the Lenders, that the Administrative Agent and the
Lenders have no adequate remedy at law in respect of such breach and, as a
consequence, agrees that each and every covenant contained in this Section 9
shall be specifically enforceable against such Pledgor, and such Pledgor hereby
waives and agrees not to assert any defenses against an action for specific
performance of such covenants except for a defense that no Event of Default has
occurred under the provisions of the Credit Agreement.

 

(e) Costs and Expenses. Each Pledgor shall bear all costs and expenses of
carrying out its obligations under this Section 9.

 

SECTION 10 Certain Waivers.

 

(a) Each Pledgor waives, to the fullest extent permitted by law, (i) any right
of redemption with respect to the Pledged Collateral, whether before or after
sale hereunder, and all rights, if any, of marshalling of the Pledged Collateral
or other collateral or security for the Secured Obligations; (ii) any right to
require the Administrative Agent, the Other Agents, the L/C Issuer, the Swing
Line Lender or the Lenders (A) to proceed against any Person, (B) to exhaust any
other collateral or security for any of the Secured Obligations, (C) to pursue
any remedy in the Administrative Agent’s , the L/C Issuer’s, the Swing Line
Lender’s, any Other Agent’s or any of the Lenders’ power, or (D) except, with
respect to any Pledgor that is also a Borrower, such notice as is expressly
required to be given to such Borrower under the Loan Documents, to make or give
any presentments, demands for performance, notices of nonperformance, protests,
notices of protests or notices of dishonor in connection with any of the Pledged
Collateral; and (iii) all claims, damages, and demands against the
Administrative Agent, the Other Agents, the L/C Issuer, the Swing Line Lender or
the Lenders arising out of the repossession, retention, sale or application of
the proceeds of any sale of the Pledged Collateral (other than for gross
negligence or willful misconduct).

 

(b) The Administrative Agent may comply with any applicable state or federal law
requirements in connection with a disposition of the Pledged Collateral and
compliance will not be considered adversely to affect the commercial
reasonableness of any sale of the Pledged Collateral. The Administrative Agent
may sell the Pledged Collateral without giving any warranties as to the Pledged
Collateral. The Administrative Agent may specifically disclaim any warranties of
title or the like. This procedure will not be considered adversely to affect the

 

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commercial reasonableness of any sale of the Pledged Collateral. If the
Administrative Agent sells any of the Pledged Collateral upon credit, the
Pledgors shall be credited only with payments actually made by the purchaser,
received by Administrative Agent and applied to the indebtedness of the
purchaser. In the event the purchaser fails to pay for the Pledged Collateral,
the Administrative Agent may resell the Pledged Collateral and the Pledgors
shall be credited with the proceeds of the sale.

 

(c) Each Pledgor agrees that at any time and from time to time, without notice
to or the consent of such Pledgor, without incurring responsibility to such
Pledgor, and without impairing or releasing the security interests provided for
herein or otherwise impairing the rights of the Administrative Agent hereunder,
all as the Administrative Agent, the Other Agents, the L/C Issuer, the Swing
Line Lender or the Lenders may deem advisable: (i) the principal amount of the
Secured Obligations may be increased or decreased and additional indebtedness or
obligations of the Borrowers under the Loan Documents may be incurred, by one or
more amendments, modifications, renewals or extensions or otherwise; (ii) the
time, manner, place or terms of any payment under the Loan Documents may be
extended or changed, including by an increase or decrease in the interest rate
on the Loan Documents or any fee or other amount payable under the Loan
Documents, by an amendment, modification or renewal of the Loan Documents or
otherwise; (iii) the time for each Borrower’s performance of or compliance with
any term, covenant or agreement on its part to be performed or observed under
the Loan Documents may be extended, or such performance or compliance waived, or
failure in or departure from such performance or compliance consented to, all in
such manner and upon such terms as the Administrative Agent, the Other Agents,
the L/C Issuer, the Swing Line Lender or the Lenders may deem proper; (iv) the
Administrative Agent, the Other Agents, the L/C Issuer, the Swing Line Lender or
the Lenders may discharge or release, in whole or in part, any guarantor or any
other Person liable for the payment and performance of all or any part of the
Secured Obligations, and may permit or consent to any such action or any result
of such action, and shall not be obligated to demand or enforce payment upon any
of the Secured Obligations, nor shall the Administrative Agent, the Other
Agents, the L/C Issuer, the Swing Line Lender or any Lender be liable to any
Pledgor for any failure to collect or enforce payment of the Secured Obligations
or to realize on any other collateral therefor; (v) in addition to the Pledged
Collateral, the Administrative Agent, the Other Agents, the L/C Issuer, the
Swing Line Lender and the Lenders may take and hold other security (legal or
equitable) of any kind, at any time, as collateral for the Secured Obligations,
and may, from time to time, in whole or in part, exchange, sell, surrender,
release, subordinate, modify, waive, rescind, compromise or extend such security
and may permit or consent to any such action or the result of any such action,
and may apply such security and direct the order or manner of sale thereof; (vi)
the Administrative Agent, the Other Agents, the L/C Issuer, the Swing Line
Lender and the Lenders may request and accept any guaranties of the Secured
Obligations and may, from time to time, in whole or in part, surrender, release,
subordinate, modify, waive, rescind, compromise or extend any such guaranty and
may permit or consent to any such action or the result of any such action; and
(vii) the Administrative Agent, the Other Agents, the L/C Issuer, the Swing Line
Lender and the Lenders may exercise, or waive or otherwise refrain from
exercising, any other right, remedy, power or privilege (including the right to
accelerate the maturity of the Loan Documents and any power of sale) granted by
the Loan Documents or other security document or agreement, or otherwise

 

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available to the Administrative Agent, the Other Agents, the L/C Issuer, the
Swing Line Lender or the Lenders, with respect to the Secured Obligations, any
of the Pledged Collateral or other security for any or all of the Secured
Obligations, even if the exercise of such right, remedy, power or privilege
affects or eliminates any right of subrogation or any other right of any Pledgor
against any Borrower.

 

(d) Each Pledgor waives and agrees not to assert: (i) any right to require the
Administrative Agent, the Other Agents, the L/C Issuer, the Swing Line Lender or
the Lenders to proceed against any Borrower, any guarantor or any other Person,
to proceed against or exhaust any other security held for the Secured
Obligations or to pursue any other right, remedy, power or privilege of the
Administrative Agent, the Other Agents, the L/C Issuer, the Swing Line Lender or
the Lenders whatsoever; (ii) the defense of the statute of limitations in any
action hereunder or for the collection or performance of the Secured
Obligations; (iii) any defense arising by reason of any lack of corporate or
other authority or any other defense of any Borrower, such Pledgor or any other
Person; (iv) any defense based upon an election of remedies (including, if
available, an election to proceed by nonjudicial foreclosure) which destroys or
impairs the subrogation rights of such Pledgor or the right of such Pledgor to
proceed against any Borrower or any other obligor of the Secured Obligations for
reimbursement; and (v) without limiting the generality of the foregoing, to the
fullest extent permitted by law, any defenses or benefits that may be derived
from or afforded by applicable law limiting the liability of or exonerating
guarantors or sureties or which may conflict with the terms of this Agreement.

 

(e) Without limiting the generality of the foregoing, to the fullest extent
permitted by law, each Pledgor waives any defenses or benefits that may be
derived from or afforded by applicable law limiting the liability of or
exonerating guarantors or sureties, or which may conflict with the terms of this
Pledge Agreement, including any rights and defenses available to any Pledgor by
reason of Sections 2787 to 2855, inclusive, of the California Civil Code and any
and all benefits that otherwise might be available to such Pledgor under
California Civil Code §§1432, 2809, 2810, 2815, 2819, 2839, 2845, 2848, 2849,
2850, 2899 and 3433 and California Code of Civil Procedure §§580a, 580b, 580d
and 726. Accordingly, each Pledgor waives all rights and defenses that such
Pledgor may have because the Borrowers’ debt is or may be secured by real
property. This means, among other things: (A) the Administrative Agent, the
Other Agents, the L/C Issuer, the Swing Line Lender and the Lenders may collect
from the Pledged Collateral pledged by such Pledgor without first foreclosing on
any real or personal property collateral pledged by any Borrower; and (B) if the
Administrative Agent forecloses on any real property collateral pledged by any
Borrower: (1) the amount of the debt may be reduced only by the price for which
that collateral is sold at the foreclosure sale, even if that collateral is
worth more than the sale price, and (2) the Administrative Agent, the Other
Agents, the L/C Issuer, the Swing Line Lender and the Lenders may collect from
the Pledged Collateral pledged by such Pledgor even if the Administrative Agent,
by foreclosing on any Borrower’s real property collateral, has destroyed any
right such Pledgor may have to collect from the Borrowers. This is an
unconditional and irrevocable waiver of any rights and defenses any Pledgor may
have because the Borrowers’ debt is secured by real property. These rights and
defenses include, but are not limited to, any rights of defenses based upon
Section 580a, 580b, 580d or 726 of the California Code of Civil Procedure.

 

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(f) All rights of the Administrative Agent hereunder, and the obligations of
each Pledgor hereunder and the Lien created hereby, shall remain in full force
and effect without regard to, and shall not be impaired or affected by, (i) any
insolvency or bankruptcy, liquidation, winding up or dissolution of any
Borrower, such Pledgor or any other Person; (ii) any limitation, discharge, or
cessation of the liability of any Borrower, such Pledgor or any other Person for
any Secured Obligations due to any statute, regulation or rule of law, or any
invalidity or unenforceability in whole or in part of any of the Secured
Obligations or the Loan Documents; (iii) any assignment or other transfer, in
whole or in part, of the Administrative Agent’s, any Other Agent’s, the L/C
Issuer’s, the Swing Line Lender’s or any Lender’s interests in and rights
hereunder or in respect of the Loan Documents; (iv) any claim, defense,
counterclaim or setoff, other than that of prior performance, that any Borrower,
any Pledgor, or any other Person may have or assert; or (v) the Administrative
Agent’s, any Other Agent’s, the L/C Issuer’s, the Swing Line Lender’s or any
Lender’s vote, claim, distribution, election, acceptance, action or inaction in
any bankruptcy or insolvency case related to the Secured Obligations.

 

(g) Each Pledgor waives any and all notice of the creation, renewal,
modification, extension or accrual of the Secured Obligations. The Secured
Obligations shall conclusively be deemed to have been created, contracted,
incurred and permitted to exist in reliance upon this Pledge Agreement. Each
Pledgor waives promptness, diligence, presentment, protest, demand for payment,
notice of default, dishonor or nonpayment and all other notices to or upon any
Borrower, such Pledgor or any other Person with respect to the Secured
Obligations; provided that such waiver is limited to such Pledgor in its
capacity as a Pledgor hereunder and not in its capacity as a Borrower (if such
Pledgor is a Borrower).

 

(h) No Pledgor shall have any right to require the Administrative Agent, the
Other Agents, the L/C Issuer, the Swing Line Lender or any of the Lenders to
obtain or disclose any information with respect to: (i) the financial condition
or character of the Borrowers or the ability of the Borrowers to pay and perform
the Secured Obligations; (ii) the Secured Obligations; (iii) other security for
any or all of the Secured Obligations; (iv) the existence or nonexistence of any
other guarantees of all or any part of the Secured Obligations; (v) any action
or inaction on the part of the Administrative Agent, the Other Agents, the L/C
Issuer, the Swing Line Lender, any Lender or any other Person; or (vi) any other
matter, fact or occurrence whatsoever.

 

(i) Until the Secured Obligations shall be satisfied in full, no Pledgor shall
have, and no Pledgor shall directly or indirectly exercise, (A) any rights that
it may acquire by way of subrogation under or in respect of this Agreement or
otherwise, or (B) any rights of contribution, indemnification, reimbursement or
similar suretyship claims arising out of this Agreement.

 

SECTION 11 Notices. All notices or other communications hereunder shall be given
in the manner and to the addresses specified in the Credit Agreement, each
Guaranty, and/or the signature page hereof, as applicable. All such notices and
communications shall be deemed to be given or made upon the earlier to occur of
(i) actual receipt by the intended recipient and (ii) (A) if delivered by hand
or by courier, when signed for by the intended recipient; (B) if delivered by
mail, four Business Days after deposit in the mails, postage prepaid; (C) if
delivered

 

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by facsimile, when sent and receipt has been confirmed by telephone, when
delivered; and (D) if delivered by electronic mail (which form of delivery is
subject to the provisions of the final sentence of this Section 11), when
delivered. In no event shall a voicemail message be effective as a notice,
communication or confirmation hereunder. Electronic mail and Internet and
intranet websites may be used only to distribute routine communications, and to
distribute documents for execution by the parties thereto, and may not be used
for any other purpose.

 

SECTION 12 No Waiver; Cumulative Remedies. No failure on the part of the
Administrative Agent, the Other Agents, the L/C Issuer, the Swing Line Lender or
any Lender to exercise, and no delay in exercising, any right, remedy, power or
privilege hereunder shall operate as a waiver thereof, nor shall any single or
partial exercise of any such right, remedy, power or privilege preclude any
other or further exercise thereof or the exercise of any other right, remedy,
power or privilege. The rights and remedies under this Pledge Agreement are
cumulative and not exclusive of any rights, remedies, powers and privileges that
may otherwise be available to the Administrative Agent, the Other Agents, the
L/C Issuer, the Swing Line Lender or any Lender.

 

SECTION 13 Costs and Expenses; Indemnification; Other Charges.

 

(a) Costs and Expenses. Each Pledgor jointly and severally agrees to pay on
demand:

 

(i) the out-of-pocket costs and expenses of the Administrative Agent, and the
Administrative Agent’s reasonable Attorney Costs, in connection with the
negotiation, preparation, execution, delivery and administration of this Pledge
Agreement, and any amendments, modifications or waivers of the terms thereof,
and the custody of the Pledged Collateral;

 

(ii) all appraisal (including the allocated cost of internal appraisal
services), survey, audit, consulting, search, recording, filing and similar
costs, fees and expenses incurred or sustained by the Administrative Agent or,
during an Event of Default, any Lender, in connection with this Pledge Agreement
or the Pledged Collateral; and

 

(iii) all costs and expenses of the Administrative Agent, the Other Agents, the
L/C Issuer, the Swing Line Lender and the Lenders, including Attorney Costs, in
connection with the enforcement or attempted enforcement of, and preservation of
any rights or interest under, this Pledge Agreement, any out-of-court workout or
other refinancing or restructuring or in any bankruptcy case, and the
protection, sale or collection of, or other realization upon, any of the Pledged
Collateral, including any and all losses, costs and expenses sustained by the
Administrative Agent, the Other Agents, the L/C Issuer, the Swing Line Lender
and any Lender as a result of any failure by any Pledgor to perform or observe
its obligations contained herein.

 

(b) Indemnification. Each Pledgor shall jointly and severally indemnify, defend
and hold the Agent-Related Persons, and each Lender and their respective
Affiliates, directors, officers, employees, counsel, agents and
attorneys-in-fact (collectively the

 

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“Indemnitees”) from and against any and all liabilities, obligations, losses,
damages, penalties, claims, demands, actions, judgments, suits, costs, expenses
and disbursements (including Attorney Costs) of any kind or nature whatsoever
which may at any time be imposed on, incurred by or asserted against any such
Indemnitee in any way relating to or arising out of or in connection with (i)
the execution, delivery, enforcement, performance or administration of this
Pledge Agreement or other Loan Document to which such Pledgor is a party or any
other agreement, letter or instrument delivered by such Pledgor in connection
with the transactions contemplated thereby or the consummation of the
transactions contemplated thereby, or (ii) any actual or prospective claim,
litigation, investigation or proceeding relating to any of the foregoing,
whether based on contract, tort or any other theory (including any investigation
of, preparation for, or defense of any pending or threatened claim,
investigation, litigation or proceeding) and regardless of whether any
Indemnitee is a party thereto, including caused by, arising out of or by reason
of any alleged untrue statement of a material fact regarding such Pledgor
contained in any registration statement (or any amendment thereto) or in any
preliminary prospectus or prospectus (or any amendment or supplement thereto)
contemplated by Section 9(a), or any alleged omission by such Pledgor to state a
material fact required to be stated therein or necessary to make the statements
therein not misleading, except to the extent that any such liabilities,
obligations, losses, claims, damages, penalties, actions, judgments, suits,
costs, expenses or disbursements are caused by, arise solely out of or by reason
of any such alleged untrue statement made or such alleged omission to state a
material fact included or excluded on the written direction of the
Administrative Agent or any Lender (including information supplied by the
Administrative Agent or any Lender) (all the foregoing, collectively, the
“Indemnified Liabilities”); provided that such indemnity shall not, as to any
Indemnitee, be available to the extent that such liabilities, obligations,
losses, damages, penalties, claims, demands, actions, judgments, suits, costs,
expenses or disbursements are determined by a court of competent jurisdiction by
final and nonappealable judgment to have resulted from the gross negligence or
willful misconduct of such Indemnitee. If and to the extent that the foregoing
indemnification is for any reason held unenforceable as to any Pledgor, such
Pledgor agrees to make the maximum contribution to the payment and satisfaction
of each of the Indemnified Liabilities which is permissible under applicable
law. No Indemnitee shall be liable for any damages arising from the use by
others of any information or other materials obtained through IntraLinks or
other similar information transmission systems in connection with this Pledge
Agreement, nor shall any Indemnitee have any liability for any indirect or
consequential damages relating to this Pledge Agreement or any other Loan
Document or arising out of its activities in connection herewith or therewith
(whether before or after the Closing Date).

 

(c) Other Charges. Each Pledgor jointly and severally agrees to indemnify the
Administrative Agent, the Other Agents, the L/C Issuer, the Swing Line Lender
and each of the Lenders against and hold each of them harmless from any and all
present and future stamp, transfer, documentary and other such taxes, levies,
fees, assessments and other charges made by any jurisdiction by reason of the
execution, delivery, performance and enforcement of this Pledge Agreement.

 

(d) Interest. Any amounts payable to the Administrative Agent, the Other Agents,
the L/C Issuer, the Swing Line Lender or any Lender under this Section 13 or
otherwise

 

22

Pledge Agreement

--------------------------------------------------------------------------------

under this Pledge Agreement if not paid upon demand shall bear interest at a
fluctuating interest rate per annum at all times equal to the Default Rate
applicable to Base Rate Loans to the fullest extent permitted by applicable Law.
Any such interest shall be due and payable upon demand and shall be calculated
on the basis of a year of 365 or 366 days, as the case may be, and the actual
number of days elapsed.

 

(e) Payment. Any and all amounts due under this Section 13 shall be payable
within ten Business Days after demand therefor.

 

(f) Survival. The agreements in this Section 13 shall survive the termination of
the Commitments and repayment of all Secured Obligations.

 

SECTION 14 Binding Effect. This Pledge Agreement shall be binding upon, inure to
the benefit of and be enforceable by the Pledgors, the Administrative Agent, the
Other Agents, the L/C Issuer, the Swing Line Lender and each Lender and their
respective successors and assigns and shall bind any Person who becomes bound as
a debtor to this Pledge Agreement.

 

SECTION 15 Governing Law. THIS PLEDGE AGREEMENT SHALL BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE LAW OF THE STATE OF CALIFORNIA, EXCEPT AS
REQUIRED BY MANDATORY PROVISIONS OF LAW AND TO THE EXTENT THE VALIDITY OR
PERFECTION OF THE SECURITY INTERESTS HEREUNDER, OR THE REMEDIES HEREUNDER, IN
RESPECT OF ANY PLEDGED COLLATERAL ARE GOVERNED BY THE LAW OF A JURISDICTION
OTHER THAN CALIFORNIA, PROVIDED THAT THE ADMINISTRATIVE AGENT SHALL RETAIN ALL
RIGHTS ARISING UNDER FEDERAL LAW.

 

SECTION 16 Forum Selection and Consent to Jurisdiction.

 

(a) ANY LEGAL ACTION OR PROCEEDING WITH RESPECT TO THIS PLEDGE AGREEMENT MAY BE
BROUGHT IN THE COURTS OF THE STATE OF CALIFORNIA OR OF THE UNITED STATES FOR THE
NORTHERN DISTRICT OF CALIFORNIA, AND BY EXECUTION AND DELIVERY OF THIS PLEDGE
AGREEMENT, EACH OF THE PLEDGORS AND THE ADMINISTRATIVE AGENT CONSENTS, FOR
ITSELF AND IN RESPECT OF ITS PROPERTY, TO THE NON-EXCLUSIVE JURISDICTION OF
THOSE COURTS. EACH OF THE PLEDGORS AND THE ADMINISTRATIVE AGENT IRREVOCABLY
WAIVES ANY OBJECTION, INCLUDING ANY OBJECTION TO THE LAYING OF VENUE OR BASED ON
THE GROUNDS OF FORUM NON CONVENIENS, WHICH IT MAY NOW OR HEREAFTER HAVE TO THE
BRINGING OF ANY ACTION OR PROCEEDING IN SUCH JURISDICTION IN RESPECT OF THIS
PLEDGE AGREEMENT OR ANY DOCUMENT RELATED HERETO. EACH PLEDGOR AND THE
ADMINISTRATIVE AGENT EACH WAIVES PERSONAL SERVICE OF ANY SUMMONS, COMPLAINT OR
OTHER PROCESS, WHICH MAY BE MADE BY ANY OTHER MEANS PERMITTED BY CALIFORNIA LAW.

 

(b) Each Pledgor hereby irrevocably appoints the OP Borrower, with an office as
listed in Schedule 10.02 of the Credit Agreement, as its authorized agent (in
such capacity, the

 

23

Pledge Agreement

--------------------------------------------------------------------------------

“Process Agent”) with all powers necessary to receive on its behalf service of
copies of the summons and complaint and any other process which may be served in
any action or proceeding arising out of or relating to this Pledge Agreement in
any of the courts in and of the State of California. Such service may be made by
mailing or delivering a copy of such process to each Pledgor in care of the
Process Agent at the Process Agent’s address and such Pledgor hereby irrevocably
authorizes and directs the Process Agent to accept such service on its behalf
and agrees that the failure of the Process Agent to give any notice of any such
service to such Pledgor shall not impair or affect the validity of such service
or of any judgment rendered in any action or proceeding based thereon. As an
alternative method of service, such Pledgor also irrevocably consents to the
service of any and all process in any such action or proceeding by the mailing
of copies of such process to such Pledgor at its address specified on the
signature page hereof. If for any reason the OP Borrower shall cease to act as
Process Agent, such Pledgor shall appoint forthwith, in the manner provided for
herein, a successor Process Agent qualified to act as an agent for service of
process with respect to all courts in and of the State of California and
acceptable to the Administrative Agent.

 

(c) Nothing in this Section 16 shall affect the right of the Administrative
Agent, the Other Agents, the Swing Line Lender, the L/C Issuer and the Lenders
to serve legal process in any other manner permitted by law or limit the right
of the Administrative Agent, the Other Agents, the Swing Line Lender, the L/C
Issuer and the Lenders to bring any action or proceeding against any Pledgor or
its property in the courts of other jurisdictions.

 

SECTION 17 Waiver of Jury Trial. THE PLEDGORS, THE LENDERS (BY THEIR ACCEPTANCE
HEREOF) AND THE ADMINISTRATIVE AGENT EACH WAIVE THEIR RESPECTIVE RIGHTS TO A
TRIAL BY JURY OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF OR
RELATED TO THIS PLEDGE AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY OR
THEREBY, IN ANY ACTION, PROCEEDING OR OTHER LITIGATION OF ANY TYPE BROUGHT BY
ANY OF THE PARTIES AGAINST ANY OTHER PARTY OR ANY AGENT-RELATED PERSON,
PARTICIPANT OR ASSIGNEE, WHETHER WITH RESPECT TO CONTRACT CLAIMS, TORT CLAIMS,
OR OTHERWISE. THE PLEDGORS, THE LENDERS (BY THEIR ACCEPTANCE HEREOF) AND THE
ADMINISTRATIVE AGENT EACH AGREES THAT ANY SUCH CLAIM OR CAUSE OF ACTION SHALL BE
TRIED BY A COURT TRIAL WITHOUT A JURY. WITHOUT LIMITING THE FOREGOING, THE
PARTIES FURTHER AGREE THAT THEIR RESPECTIVE RIGHT TO A TRIAL BY JURY IS WAIVED
BY OPERATION OF THIS SECTION AS TO ANY ACTION, COUNTERCLAIM OR OTHER PROCEEDING
WHICH SEEKS, IN WHOLE OR IN PART, TO CHALLENGE THE VALIDITY OR ENFORCEABILITY OF
THIS PLEDGE AGREEMENT OR ANY PROVISION HEREOF. THIS WAIVER SHALL APPLY TO ANY
SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS OR MODIFICATIONS TO THIS PLEDGE
AGREEMENT.

 

SECTION 18 Entire Agreement; Amendment. This Pledge Agreement contains the
entire agreement of the parties with respect to the subject matter hereof and
shall not be amended except by the written agreement of the parties as provided
in the Credit Agreement.

 

24

Pledge Agreement

--------------------------------------------------------------------------------

SECTION 19 Severability. If any provision of this Pledge Agreement is held to be
illegal, invalid or unenforceable, (a) the legality, validity and enforceability
of the remaining provisions of this Pledge Agreement shall not be affected or
impaired thereby and (b) the parties shall endeavor in good faith negotiations
to replace the illegal, invalid or unenforceable provisions with valid
provisions the economic effect of which comes as close as possible to that of
the illegal, invalid or unenforceable provisions. The invalidity of a provision
in a particular jurisdiction shall not invalidate or render unenforceable such
provision in any other jurisdiction.

 

SECTION 20 Counterparts. This Pledge Agreement may be executed in one or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.

 

SECTION 21 Incorporation of Provisions of the Credit Agreement. To the extent
the Credit Agreement contains provisions of general applicability to the Loan
Documents, including any such provisions contained in Article X thereof, such
provisions are incorporated herein by this reference.

 

SECTION 22 No Inconsistent Requirements. Each Pledgor acknowledges that this
Pledge Agreement and the other Loan Documents may contain covenants and other
terms and provisions variously stated regarding the same or similar matters, and
agrees that all such covenants, terms and provisions are cumulative and all
shall be performed and satisfied in accordance with their respective terms.

 

SECTION 23 Future Pledgors. At such time following the date hereof as any Person
(an “Acceding Pledgor”) is required to accede hereto pursuant to the terms of
Section 6.12 or Section 6.13 of the Credit Agreement, such Acceding Subsidiary
shall execute and deliver to the Administrative Agent an accession agreement
substantially in the form of Annex 2 (the “Accession Agreement”), together with
all schedules thereto, signifying its agreement to be bound by the provisions of
this Pledge Agreement as a Pledgor to the same extent as if such Acceding
Pledgor had originally executed this Pledge Agreement as of the date hereof.

 

SECTION 24 Termination. Upon termination of the Commitments of the Lenders,
surrender of all Letters of Credit and payment and performance in full of all
Secured Obligations, the security interests created under this Pledge Agreement
shall terminate and the Administrative Agent shall promptly redeliver to each
Pledgor any of the Pledged Collateral in the Administrative Agent’s possession
and shall execute and deliver to such Pledgor such documents and instruments
reasonably requested by such Pledgor as shall be necessary to evidence
termination of all security interests given by such Pledgor to the
Administrative Agent hereunder.

 

[Remainder Of Page Intentionally Left Blank]

 

25

Pledge Agreement

--------------------------------------------------------------------------------

IN WITNESS WHEREOF, the parties hereto have duly executed this Pledge Agreement,
as of the date first above written.

 

THE PLEDGORS                  

CATELLUS DEVELOPMENT CORPORATION

     

PLATO REIT, LLC

By:           By:      

--------------------------------------------------------------------------------

       

--------------------------------------------------------------------------------

Name:

 

William M. Lau

     

Name:

 

William M. Lau

Title:

 

Vice President, Finance and Treasurer

     

Title:

 

Chief Financial Officer and Treasurer

 

CATO REIT, CO.

     

VISTA RANGE, LLC

            By:  

CATELLUS RESIDENTIAL GROUP, INC.,

Sole and Managing Member

By:                  

--------------------------------------------------------------------------------

           

Name:

 

William M. Lau

           

Title:

 

Chief Financial Officer and Treasurer

           

                    By:                          

--------------------------------------------------------------------------------

                   

Name:

 

William M. Lau

                   

Title:

 

Vice President, Finance and Treasurer

 

SF PACIFIC PROPERTIES INC.

     

CATELLUS RESIDENTIAL GROUP, INC.

By:           By:      

--------------------------------------------------------------------------------

       

--------------------------------------------------------------------------------

Name:

 

William M. Lau

     

Name:

 

William M. Lau

Title:

 

Vice President, Finance and Treasurer

     

Title:

 

Vice President, Finance and Treasurer

 

S - 1

Pledge Agreement Signature Page

--------------------------------------------------------------------------------

The address for notice for Catellus Development Corporation is:

 

201 Mission Street, 2nd Floor

San Francisco, CA 94105

Attn.: William M. Lau, Vice President Finance and Treasurer

Phone No. 415.974-3809

Fax No. 415.974-4502

Email: William_lau@catellus.com

 

The address for notice for all of the above Pledgors (except Catellus
Development Corporation) is:

 

c/o Catellus Development Corporation

201 Mission Street, 2nd Floor

San Francisco, CA 94105

Attn.: William M. Lau, Vice President Finance and Treasurer

Phone No. 415.974-3809

Fax No. 415.974-4502

Email: William_lau@catellus.com

 

S - 2

Pledge Agreement Signature Page

--------------------------------------------------------------------------------

THE ADMINISTRATIVE AGENT

                 

BANK OF AMERICA, N.A.

                   

Bank of America, N.A.

901 Main Street, 14th Floor

Mail Code: TX1-492-14-05

Dallas, TX 75202-3714

Attn: Donna Kimbrough

Tel: 214.209-1569

Fax: 214.290-9436

Email: donna.f.kimbrough@bankofamerica.com

            By:                

--------------------------------------------------------------------------------

             

Name: Frank H. Stumpf

             

Title: Principal

                         

 

S - 3

Pledge Agreement Signature Page

--------------------------------------------------------------------------------

SCHEDULE 1

to the Pledge Agreement

 

PLEDGED EQUITY INTERESTS AND PLEDGED DEBT

 

1. Pledged LLC Interests. Interests in each limited liability company that is a
Material Subsidiary or an owner of Unencumbered Pool Property and required to be
pledged under the Credit Agreement as follows:

 

Pledgor
(Jurisdiction of
Organization)

--------------------------------------------------------------------------------

 

Subsidiary

--------------------------------------------------------------------------------

 

Number of Units

--------------------------------------------------------------------------------

   Date of Issuance of
Units

--------------------------------------------------------------------------------

 

None.

 

2. Pledged Partnership Interests. Interests in each general partnership, limited
partnership, limited liability partnership or other partnership that is a
Material Subsidiary or an owner of Unencumbered Pool Property and required to be
pledged under the Credit Agreement as follows:

 

Pledgor
(Jurisdiction of
Organization)

--------------------------------------------------------------------------------

 

Subsidiary

--------------------------------------------------------------------------------

 

Type of
Partnership
Interest (e.g.
general, limited)

--------------------------------------------------------------------------------

 

Date of Issuance
or Formation

--------------------------------------------------------------------------------

 

Number of
Units or Other
Ownership
Interests

--------------------------------------------------------------------------------

Cato REIT, Co., a

Delaware corporation

 

Santa Fe Bayfront

Venture, a California

general partnership

  General   November 27, 1989   50.51%

Catellus Development

Corporation, a Delaware

corporation

 

Santa Fe Bayfront

Venture, a California

general partnership

  General   November 27, 1989   49.49%

 

Schedule 1-1.

--------------------------------------------------------------------------------

3. Pledged Shares. Capital stock of each Material Subsidiary or an owner of
Unencumbered Pool Property being represented by stock certificates and required
to be pledged under the Credit Agreement as follows:

 

Pledgor
(Jurisdiction of
Organization)

--------------------------------------------------------------------------------

 

Subsidiary

--------------------------------------------------------------------------------

 

Certificate No.

--------------------------------------------------------------------------------

 

Certificate Date

--------------------------------------------------------------------------------

 

Percentage
of Shares

--------------------------------------------------------------------------------

SF Pacific Properties

Inc. , a Delaware

corporation

 

Catellus Land and

Development

Corporation, a

Delaware corporation

  1   September 2, 2003   100%

 

Schedule 1-2.

--------------------------------------------------------------------------------

4. Pledged Debt. The following Pledged Debt:

 

Pledgor
(Jurisdiction of
Organization)

--------------------------------------------------------------------------------

 

Obligor

--------------------------------------------------------------------------------

 

Instrument
No. (if any)

--------------------------------------------------------------------------------

 

Instrument
Date

--------------------------------------------------------------------------------

 

Original
Principal
Amount

--------------------------------------------------------------------------------

Catellus Residential

Group, Inc., a

California corporation

 

Warmington

Alameda Assoc., L.P.

  N/A   05/08/03   $8,000,000

Plato REIT, LLC, a

Delaware limited

liability company

 

Bosa Development

California II, Inc.

  N/A   08/15/03   $12,375,000

Vista Range, LLC, a

Delaware limited

liability company

 

104th Avenue

Investment Partners

LLC

  N/A   06/30/03   $21,247,162

 

Schedule 1-3.

--------------------------------------------------------------------------------

ANNEX 1

to the Pledge Agreement

 

FORM OF PLEDGE SUPPLEMENT

 

To: BANK OF AMERICA, N.A., as Administrative Agent

 

Re:                                 

 

Ladies and Gentlemen:

 

This Pledge Supplement is made and delivered pursuant to Section 2 of that
certain Pledge Agreement dated as of September 15, 2003 (as amended, modified,
renewed or extended from time to time, the “Pledge Agreement”), made between
each Pledgor named in the signature pages thereof (each a “Pledgor” and
collectively, the “Pledgors”), and BANK OF AMERICA, N.A., a national banking
association (the “Administrative Agent”). All capitalized terms used in this
Pledge Supplement and not otherwise defined herein shall have the meanings
assigned to them in either the Pledge Agreement or the Credit Agreement.

 

The undersigned,                                      [insert name of Pledgor],
a                                  [corporation, partnership, limited liability
company, etc.], confirms and agrees that all Pledged Collateral of the
undersigned, including the property described on the supplemental schedule
attached hereto, shall be and become part of the Pledged Collateral and shall
secure all Secured Obligations.

 

Schedule 1 to the Pledge Agreement is hereby amended by adding Schedule 1
attached hereto to the Pledge Agreement.

 

This Pledge Supplement shall constitute a Loan Document under the Credit
Agreement.

 

THIS PLEDGE SUPPLEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH,
THE LAW OF THE STATE OF CALIFORNIA.

 

Annex A-1.

--------------------------------------------------------------------------------

IN WITNESS WHEREOF, the undersigned has executed this Pledge Supplement, as of
the date first above written.

 

[PLEDGOR]

                   

c/o

--------------------------------------------------------------------------------

           

 

--------------------------------------------------------------------------------

By:  

 

--------------------------------------------------------------------------------

     

 

--------------------------------------------------------------------------------

   

Title:

     

Attn.:

 

 

--------------------------------------------------------------------------------

           

Fax No.

 

 

--------------------------------------------------------------------------------

           

Email:

 

 

--------------------------------------------------------------------------------

 

Annex A-2.

--------------------------------------------------------------------------------

SUPPLEMENT TO SCHEDULE 1

to the Pledge Agreement

 

PLEDGED EQUITY INTERESTS AND PLEDGED DEBT

 

1. Pledged LLC Interests. Interests in each limited liability company that is a
Material Subsidiary or an owner of Unencumbered Pool Property and required to be
pledged under the Credit Agreement as follows:

 

Pledgor
(Jurisdiction of
Organization)

--------------------------------------------------------------------------------

 

Subsidiary

--------------------------------------------------------------------------------

 

Number of Units

--------------------------------------------------------------------------------

   Date of Issuance of
Units

--------------------------------------------------------------------------------

 

2. Pledged Partnership Interests. Interests in each general partnership, limited
partnership, limited liability partnership or other partnership that is a
Material Subsidiary or an owner of Unencumbered Pool Property and required to be
pledged under the Credit Agreement as follows:

 

Pledgor
(Jurisdiction of
Organization)

--------------------------------------------------------------------------------

 

Subsidiary

--------------------------------------------------------------------------------

 

Type of
Partnership
Interest (e.g.,
general, limited)

--------------------------------------------------------------------------------

   Date of
Issuance
or Formation

--------------------------------------------------------------------------------

   Number of
Units or Other
Ownership
Interests

--------------------------------------------------------------------------------

 

3. Pledged Shares. Capital stock of each Material Subsidiary or an owner of
Unencumbered Pool Property being represented by stock certificates and required
to be pledged under the Credit Agreement as follows:

 

Pledgor
(Jurisdiction of
Organization)

--------------------------------------------------------------------------------

 

Subsidiary

--------------------------------------------------------------------------------

 

Certificate No.

--------------------------------------------------------------------------------

   Certificate Date

--------------------------------------------------------------------------------

   No. and Class
of Shares

--------------------------------------------------------------------------------

 

Schedule 1 Supplement -1.

--------------------------------------------------------------------------------

4. Pledged Debt. The following Pledged Debt:

 

Pledgor
(Jurisdiction of
Organization)

--------------------------------------------------------------------------------

 

Obligor

--------------------------------------------------------------------------------

 

Instrument
No. (if any)

--------------------------------------------------------------------------------

   Instrument
Date

--------------------------------------------------------------------------------

   Principal
Amount

--------------------------------------------------------------------------------

 

Schedule 1 Supplement -2.

--------------------------------------------------------------------------------

ANNEX 2

to the Pledge Agreement

 

FORM OF ACCESSION AGREEMENT

 

To: BANK OF AMERICA, N.A., as Administrative Agent

 

Re:                             

 

Ladies and Gentlemen:

 

This Accession Agreement is made and delivered pursuant to Section 23 of that
certain Pledge Agreement dated as of September 15, 2003 (as amended, modified,
renewed or extended from time to time, the “Pledge Agreement”), made between
each Pledgor named in the signature pages thereof (each a “Pledgor” and
collectively, the “Pledgors”), Fleet National Bank, as Syndication Agent, Bank
One, N.A., as Documentation Agent, Wells Fargo Bank, N.A., as Managing Agent,
Union Bank of California, N.A., as Managing Agent (Syndication Agent,
Documentation Agent and Managing Agents, collectively, the “Other Agents”) and
Bank Of America, N.A., a national banking association (the “Administrative
Agent”). All capitalized terms used in this Accession Agreement and not
otherwise defined herein shall have the meanings assigned to them in either the
Pledge Agreement or the Credit Agreement.

 

The undersigned,                                  [insert name of acceding
Pledgor], a                              [corporation, partnership, limited
liability company, etc.], hereby acknowledges for the benefit of the
Administrative Agent, the Other Agents, the L/C Issuer, the Swing Line Lender
and the Lenders that it shall be a “Pledgor” for all purposes of the Pledge
Agreement effective from the date hereof. The undersigned confirms that the
representations and warranties set forth in Section 3 of the Pledge Agreement
are true and correct as to the undersigned as of the date hereof.

 

Without limiting the foregoing, the undersigned hereby agrees to perform all of
the obligations of a Pledgor under, and to be bound in all respects by the terms
of, the Pledge Agreement, to the same extent and with the same force and effect
as if the undersigned were an original signatory thereto. The undersigned (i)
hereby grants to the Administrative Agent, for itself and on behalf of and for
the ratable benefit of the Other Agents, the L/C Issuer, the Swing Line Lender
and the Lenders, a security interest in all of the undersigned’s right, title
and interest in and to all “Pledged Collateral” of the undersigned, in each case
whether presently existing or owned or hereafter arising or acquired and
wherever located; and (ii) agrees that all Pledged Collateral of the
undersigned, including the property described on the supplemental schedule
attached hereto, shall become part of the Pledged Collateral and shall secure
all Secured Obligations

 

Schedule 1 to the Pledge Agreement is hereby amended by adding Schedule 1
attached hereto to the Pledge Agreement.

 

Annex 2-1.

--------------------------------------------------------------------------------

This Accession Agreement shall constitute a Loan Document under the Credit
Agreement.

 

THIS ACCESSION AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH,
THE LAW OF THE STATE OF CALIFORNIA.

 

IN WITNESS WHEREOF, the undersigned has executed this Accession Agreement, as of
the date first above written.

 

[PLEDGOR]

                   

c/o

--------------------------------------------------------------------------------

           

 

--------------------------------------------------------------------------------

By:  

 

--------------------------------------------------------------------------------

     

 

--------------------------------------------------------------------------------

   

Title:

     

Attn.:

 

 

--------------------------------------------------------------------------------

           

Fax No.

 

 

--------------------------------------------------------------------------------

           

Email:

 

 

--------------------------------------------------------------------------------

 

Annex 2-2.

--------------------------------------------------------------------------------

SUPPLEMENT TO SCHEDULE 1

to the Pledge Agreement

 

PLEDGED EQUITY INTERESTS AND PLEDGED DEBT

 

1. Pledged LLC Interests. Interests in each limited liability company that is a
Material Subsidiary or an owner of Unencumbered Pool Property and required to be
pledged under the Credit Agreement as follows:

 

Pledgor
(Jurisdiction of
Organization)

--------------------------------------------------------------------------------

 

Subsidiary

--------------------------------------------------------------------------------

 

Number of Units

--------------------------------------------------------------------------------

   Date of Issuance of
Units

--------------------------------------------------------------------------------

 

2. Pledged Partnership Interests. Interests in each general partnership, limited
partnership, limited liability partnership or other partnership that is a
Material Subsidiary or an owner of Unencumbered Pool Property and required to be
pledged under the Credit Agreement as follows:

 

Pledgor
(Jurisdiction of
Organization)

--------------------------------------------------------------------------------

 

Subsidiary

--------------------------------------------------------------------------------

 

Type of
Partnership
Interest (e.g.,
general, limited)

--------------------------------------------------------------------------------

   Date of
Issuance
or Formation

--------------------------------------------------------------------------------

   Number of
Units or Other
Ownership
Interests

--------------------------------------------------------------------------------

 

3. Pledged Shares. Capital stock of each Material Subsidiary or owner of
Unencumbered Pool Property being represented by stock certificates and required
to be pledged under the Credit Agreement as follows:

 

Pledgor
(Jurisdiction of
Organization)

--------------------------------------------------------------------------------

 

Subsidiary

--------------------------------------------------------------------------------

 

Certificate No.

--------------------------------------------------------------------------------

   Certificate Date

--------------------------------------------------------------------------------

   No. and Class
of Shares

--------------------------------------------------------------------------------

 

Supplement to Schedule 1-1.

--------------------------------------------------------------------------------

4. Pledged Debt. The following Pledged Debt:

 

Pledgor
(Jurisdiction of
Organization)

--------------------------------------------------------------------------------

 

Obligor

--------------------------------------------------------------------------------

 

Instrument
No. (if any)

--------------------------------------------------------------------------------

   Instrument
Date

--------------------------------------------------------------------------------

   Principal
Amount

--------------------------------------------------------------------------------

 

Supplement to Schedule 1-2.

--------------------------------------------------------------------------------

EXHIBIT K

 

FORM OF LOAN DOCUMENT ASSUMPTION

AND

AFFIRMATION AGREEMENT

 

THIS LOAN DOCUMENT ASSUMPTION AND AFFIRMATION AGREEMENT (this “Assumption and
Affirmation Agreement”), is entered into as of [                    ,
200        ], by Catellus Operating Limited Partnership, a Delaware limited
partnership (the “Post-REIT Conversion Borrower”) and Catellus Land and
Development Corporation, a Delaware corporation (the “TRS Borrower”), in favor
of the Lenders party to the Credit Agreement referred to below, Bank of America,
N.A., as Administrative Agent (in such capacity, the “Administrative Agent”),
the letter of credit issuer (in such capacity, the “the L/C Issuer”), and the
swing line lender (in such capacity, the “Swing Line Lender”), and the other
agents under the Credit Agreement referred to below, and is acknowledged by (i)
each Guarantor that is a party to a Guaranty under the Credit Agreement (each a
“Guarantor” and collectively, the “Guarantors”); and (ii) each Pledgor that is a
party to the Pledge Agreement or a Pledge Agreement accession agreement (each a
“Pledgor” and collectively, the “Pledgors”).

 

R E C I T A L S

 

A. Catellus Development Corporation, a Delaware corporation, with corporation
identification number 2049941, as a borrower (the “Pre-REIT Conversion Borrower”
or “OP Borrower”), the TRS Borrower, with corporation identification number
3669767, as a borrower (the TRS Borrower together with the OP Borrower, each a
“Borrower” and together, the “Borrowers”), each lender from time to time party
thereto (collectively, the “Lenders,” and individually, a “Lender”), Fleet
National Bank, as Syndication Agent, Bank One, NA, as Documentation Agent, Wells
Fargo Bank, National Association, as Managing Agent, Union Bank of California,
N.A., as Managing Agent, and Bank of America, N.A., as Administrative Agent,
Swing Line Lender and L/C Issuer, are parties to a Credit Agreement dated as of
August             , 2003 (as amended, modified, renewed or extended from time
to time, the “Credit Agreement”).

 

B. It is a condition precedent to the restructuring of the Pre-REIT Conversion
Borrower, whereby the Pre-REIT Conversion Borrower will merge with and into the
Post-REIT Conversion Borrower, with the Post-REIT Conversion Borrower being the
surviving entity of such restructuring (the “REIT Conversion”), that the
Post-REIT Conversion Borrower and the TRS Borrower execute this Assumption and
Affirmation Agreement and an Allonge to each Note, substantially in the Form
attached hereto as Exhibit A, and that each other Loan Document Party execute an
Acknowledgement and Affirmation substantially in the form attached hereto as
Exhibit B or Exhibit C, as applicable.

 

C. The Post-REIT Conversion Borrower wishes to assume all of the Pre-REIT
Conversion Borrower’s Obligations under the Credit Agreement and each other Loan
Document to which the Pre-REIT Conversion Borrower is a party, and wishes to
become the “OP Borrower” under the Credit Agreement and each such other Loan
Document.

 

K-1

Form of Loan Document Assumption and Affirmation Agreement

--------------------------------------------------------------------------------

NOW, THEREFORE, in consideration of the foregoing premises, and for other good
and valuable consideration, the receipt and adequacy of which are hereby
acknowledged, the parties hereto agree as follows:

 

SECTION 1 Defined Terms; Interpretation.

 

(a) All capitalized terms used in this Assumption and Affirmation Agreement
(including in the recitals hereof) and not otherwise defined herein shall have
the meanings assigned to them in the Credit Agreement.

 

(b) The rules of interpretation set forth in Sections 1.02 to 1.05 of the Credit
Agreement shall be applicable to this Assumption and Affirmation Agreement and
are incorporated herein by this reference.

 

SECTION 2 Assumption; Reaffirmation.

 

(a) The Post-REIT Conversion Borrower hereby unconditionally and expressly
assumes and agrees to pay and perform each and every Obligation of the Pre-REIT
Conversion Borrower under the Credit Agreement, the Notes and each other Loan
Document, all as though the Credit Agreement, the Notes and each other Loan
Document had originally been made, executed and delivered by the Post-REIT
Conversion Borrower and it had been named as an original borrower therein.
Without limiting the foregoing, the Post-REIT Conversion Borrower acknowledges
and agrees that it assumes and agrees to pay to the Lenders (including the L/C
Issuer and Swing Line Lender), in accordance with the terms of the Credit
Agreement, the Notes and the other Loan Documents, along with the TRS Borrower,
the full principal amount and all other amounts owed to each Lender, the
Administrative Agent, the Swing Line Lender, the L/C Issuer and the other agents
under the Credit Agreement, the Notes and the other Loan Documents, plus
interest thereunder at the rate specified in the Credit Agreement and the Notes.

 

(b) From and after the Effective Date set forth in Section 4 below, the “OP
Borrower” under the Credit Agreement, each of the Notes and each of the other
Loan Documents shall mean and refer to Catellus Operating Limited Partnership, a
Delaware limited partnership.

 

(c) The TRS Borrower hereby unconditionally and expressly reaffirms and agrees
to pay and perform each and every Obligation of the TRS Borrower under the
Credit Agreement, the Notes and each other Loan Document, all as though the
Credit Agreement, the Notes and each other Loan Document had originally been
made, executed and delivered by both the Post-REIT Conversion Borrower and the
TRS Borrower, and that the Post-REIT Conversion Borrower had been named as an
original borrower therein. Without limiting the foregoing, the TRS Borrower (i)
acknowledges the execution, delivery and performance by the Post-REIT Conversion
Borrower of this Assumption and Affirmation Agreement, and (ii) reaffirms its
obligation to pay to the Lenders (including the L/C Issuer and Swing Line
Lender), in accordance with the terms of the Credit Agreement, the Notes and the
other Loan Documents, along with the Post-REIT Conversion Borrower, the full
principal amount and all other amounts and Obligations owed to each Lender, the
Administrative Agent, the Swing Line Lender, the L/C Issuer and the other agents
under the Credit Agreement, the Notes and the other Loan Documents, plus
interest thereunder at the rate specified in the Credit Agreement and the Notes.

 

K-2

Form of Loan Document Assumption and Affirmation Agreement

--------------------------------------------------------------------------------

SECTION 3 Representations and Warranties. Each of the undersigned Post-REIT
Conversion Borrower and the TRS Borrower hereby certify to the Administrative
Agent and each of the Lenders that the representations and warranties of each
Borrower contained in Section 5.24 of the Credit Agreement are true and correct
with respect to the Post-REIT Conversion Borrower and TRS Borrower as of the
Effective Date (except to the extent such representations and warranties
specifically refer to an earlier date in which case they shall be true and
correct as of such earlier date).

 

SECTION 4 Conditions to Effectiveness. The effective date for this Assumption
and Affirmation Agreement shall be [                    , 200        ] (the
“Effective Date”); provided, however, that the following conditions precedent
have been satisfied as of the Effective Date:

 

(a) this Assumption and Affirmation Agreement shall be executed and delivered to
the Administrative Agent by the Post-REIT Conversion Borrower and TRS Borrower;

 

(b) an Allonge to each Note, substantially in the form attached hereto as
Exhibit A, shall be executed by the Post-REIT Conversion Borrower and the TRS
Borrower and delivered to each Lender holding a Note;

 

(c) the Guarantor Acknowledgment and Reaffirmation, substantially in the form
attached hereto as Exhibit B, shall be executed and delivered to the
Administrative Agent by each Guarantor that is a party to a Guaranty as of the
Effective Date;

 

(d) the Pledgor Acknowledgment and Reaffirmation, substantially in the form
attached hereto as Exhibit C, shall be executed and delivered to the
Administrative Agent by each Pledgor that is a party to a Pledge Agreement or a
Pledge Agreement accession agreement as of the Effective Date;

 

(e) the representations and warranties of the Post-REIT Conversion Borrower
contained in Section 5.24 of the Credit Agreement shall be true and correct as
of the Effective Date; and

 

(f) the conditions precedent contained in Section 4.03 of the Credit Agreement
shall have been satisfied.

 

SECTION 5 Further Assurances. At any time and from time to time, upon the
Administrative Agent’s reasonable request and at the expense of the Post-REIT
Conversion Borrower and the TRS Borrower, each of the Post-REIT Conversion
Borrower and TRS Borrower will promptly and duly execute and deliver any and all
further instruments and documents, and will take such further action, as the
Administrative Agent or any Lender may deem reasonable to effect the purposes of
this Assumption and Affirmation Agreement including, without limitation, the
execution and delivery of a replacement Note for any Lender requesting such a
replacement Note, upon the cancellation of the original Note of such Lender that
had been executed by the Pre-REIT Conversion Borrower and the TRS Borrower in
connection with the closing of the Credit Agreement.

 

K-3

Form of Loan Document Assumption and Affirmation Agreement

--------------------------------------------------------------------------------

SECTION 6 Successors and Assigns. This Assumption and Affirmation Agreement
shall be binding upon each of the Post-REIT Conversion Borrower the TRS Borrower
and shall inure to the benefit of the Administrative Agent, the Swing Line
Lender, the L/C Issuer, each other agents and each of the Lenders and their
respective successors and assigns.

 

SECTION 7 Governing Law. This Assumption and Affirmation Agreement shall be
governed by, and shall be construed and interpreted in accordance with, the laws
of the State of California.

 

SECTION 8 Counterparts. This Assumption and Affirmation Agreement may be
executed in any number of separate counterparts, each of which, when so
executed, shall be deemed an original, and all of said counterparts taken
together shall be deemed to constitute but one and the same instrument.

 

[Remainder of page left blank intentionally]

 

K-4

Form of Loan Document Assumption and Affirmation Agreement

--------------------------------------------------------------------------------

IN WITNESS WHEREOF, the parties hereto have caused this Assumption and
Affirmation Agreement to be duly executed and delivered by their respective duly
authorized officers as of the day and year first above written.

 

CATELLUS OPERATING LIMITED
PARTNERSHIP By:  

 

--------------------------------------------------------------------------------

 

, its general

partner

   

 

By:      

--------------------------------------------------------------------------------

Name:      

--------------------------------------------------------------------------------

Title:      

--------------------------------------------------------------------------------

 

CATELLUS LAND AND DEVELOPMENT
CORPORATION     By:      

--------------------------------------------------------------------------------

Name:      

--------------------------------------------------------------------------------

Title:      

--------------------------------------------------------------------------------

 

ACKNOWLEDGED: BANK OF AMERICA, N.A.,
as Administrative Agent By:      

--------------------------------------------------------------------------------

   

Name

Title:

 

K-Execution 1

Form of Loan Document Assumption and Affirmation Agreement

--------------------------------------------------------------------------------

Exhibit A

To Loan Document Assumption and Affirmation

 

ALLONGE

 

This is an Allonge to that certain promissory note (the “Note”) dated as of
August         , 2003, in the original principal amount of
$                            , executed by Catellus Development Corporation, a
Delaware corporation, with a corporate identification number of 2049941 (the
“Pre-REIT Conversion Borrower”), and Catellus Land and Development Corporation,
a Delaware corporation with a corporate identification number of 3669767 (the
“TRS Borrower”) to the order of                              (the “Lender”).

 

Pursuant to that certain Loan Document Assumption and Affirmation Agreement,
dated as of [                , 200        ] (the “Loan Document Assumption and
Affirmation”), by each of the undersigned Catellus Operating Limited
Partnership, a Delaware limited partnership (the “Post-REIT Conversion Borrower”
or the “OP Borrower”), and the TRS Borrower, the Post-REIT Conversion Borrower
has assumed all of the obligations and liabilities of the Pre-REIT Conversion
Borrower under the Note, and the TRS Borrower has reaffirmed all of the TRS
Borrower’s obligations and liabilities under the Note. Each of the undersigned
confirms, acknowledges and agrees for the benefit of the Lender that each of the
undersigned is and shall be the obligor and a Borrower under the Note, with the
obligation to make all payments thereunder to the Lender.

 

IN WITNESS WHEREOF, the undersigned has executed this Allonge as of this
         day of                     , 200        .

 

CATELLUS OPERATING LIMITED
PARTNERSHIP By:  

 

--------------------------------------------------------------------------------

 

, its general

partner

   

 

By:      

--------------------------------------------------------------------------------

Name:      

--------------------------------------------------------------------------------

Title:      

--------------------------------------------------------------------------------

 

CATELLUS LAND AND DEVELOPMENT
CORPORATION     By:      

--------------------------------------------------------------------------------

Name:      

--------------------------------------------------------------------------------

Title:      

--------------------------------------------------------------------------------

 

Exhibit A-1

--------------------------------------------------------------------------------

Exhibit B

To Loan Document Assumption and Affirmation

 

GUARANTOR ACKNOWLEDGMENT AND REAFFIRMATION

 

Each of the undersigned, a Guarantor pursuant to a Guaranty, dated as of
                    , 200         (as amended, modified, renewed or extended
from time to time, the “Guaranty”), executed by each of the undersigned in favor
of the Lenders party to the Credit Agreement (as described in the Assumption and
Affirmation Agreement referred to below), Bank of America, N.A., as
Administrative Agent (in such capacity, the “Administrative Agent”), the letter
of credit issuer (in such capacity, the “the L/C Issuer”), and the swing line
lender (in such capacity, the “Swing Line Lender”), and the other agents under
such Credit Agreement, hereby executes this Acknowledgment and Reaffirmation in
favor of the Lenders, the Administrative Agent, the L/C Issuer, the Swing Line
Lender, and the other agents as of the date set forth below.

 

Capitalized terms used and not defined herein shall have the meanings as
utilized in the Assumption and Affirmation Agreement referred to below, or if
not defined therein, as defined in the Credit Agreement described in such
Assumption and Affirmation Agreement.

 

Each of the undersigned Guarantor hereby certifies and agrees as follows:

 

1. Such Guarantor acknowledges the execution, delivery and performance by
Catellus Operating Limited Partnership, a Delaware limited partnership (the
“Post -REIT Conversion Borrower”), in favor of the Agent, the other agents, the
L/C Issuer, the Swing Line Lender and the Lenders, of that certain Loan Document
Assumption and Affirmation Agreement, dated as of [                    ,
200        ] (the “Assumption and Affirmation Agreement”) and consents to all of
the terms therein, including, without limitation, the assumption by the
Post-REIT Conversion Borrower of each and every Obligation of the Pre-REIT
Conversion Borrower under the Credit Agreement, the Notes and each other Loan
Document.

 

2. Such Guarantor reaffirms and agrees that the Guaranty to which it is a party
and all other documents and agreements executed and delivered by such
undersigned to the Administrative Agent in connection with the Guaranty are and
continue in full force and effect, without defense, offset or counterclaim, and
that such Guaranty continues to guarantee the full amount of the Loans and other
Obligations assumed by the Post-REIT Conversion Borrower pursuant to the
Assumption and Affirmation Agreement.

 

Dated: [                , 200        ]

     

[GUARANTOR]

            By:  

--------------------------------------------------------------------------------

               

Name:

Title:

 

Exhibit B-1

--------------------------------------------------------------------------------

Exhibit C

To Loan Document Assumption and Affirmation

 

PLEDGOR ACKNOWLEDGMENT AND REAFFIRMATION

 

Each of the undersigned, a Pledgor pursuant to that certain Pledge Agreement,
dated as of                 , 200        , or a Pledge Agreement accession
agreement (collectively, as amended, modified, renewed or extended from time to
time, the “Pledge Agreement”), executed by each of the undersigned in favor of
the Lenders party to the Credit Agreement (as described in the Assumption and
Affirmation Agreement referred to below), Bank of America, N.A., as
Administrative Agent (in such capacity, the “Administrative Agent”), the letter
of credit issuer (in such capacity, the “the L/C Issuer”), and the swing line
lender (in such capacity, the “Swing Line Lender”), and the other agents under
such Credit Agreement, hereby executes this Acknowledgment and Reaffirmation in
favor of the Lenders, the Administrative Agent, the L/C Issuer, the Swing Line
Lender, and the other agents as of the date set forth below.

 

Capitalized terms used and not defined herein shall have the meanings as
utilized in the Assumption and Affirmation Agreement referred to below, or if
not defined therein, as defined in the Credit Agreement described in such
Assumption and Affirmation Agreement.

 

Each of the undersigned Pledgor hereby certifies and agrees as follows:

 

1. Such Pledgor acknowledges the execution, delivery and performance by Catellus
Operating Limited Partnership, a Delaware limited partnership (the “Post -REIT
Conversion Borrower”), in favor of the Agent, the L/C Issuer, the Swing Line
Lender and the Lenders, of that certain Loan Document Assumption and Affirmation
Agreement, dated as of [            , 200        ] (the “Assumption and
Affirmation Agreement”) and consents to all of the terms therein, including,
without limitation, the assumption by the Post-REIT Conversion Borrower of each
and every Obligation of the Pre-REIT Conversion Borrower under the Credit
Agreement, the Notes and each other Loan Document.

 

2. Such Pledgor reaffirms and agrees that the Pledge Agreement to which it is a
party and all other documents and agreements executed and delivered by such
undersigned to the Administrative Agent in connection with the Pledge Agreement
are and continue in full force and effect, without defense, offset or
counterclaim, and that the collateral pledged under such Pledge Agreement
continues to secure the full amount of the Loans and other Obligations assumed
by the Post-REIT Conversion Borrower pursuant to the Assumption and Affirmation
Agreement.

 

Dated: [                , 200        ]

     

[PLEDGOR]

            By:  

--------------------------------------------------------------------------------

               

Name:

Title:

 

Exhibit C-1