exv10w39



 






Exhibit 10.39




TERM LOAN AGREEMENT




Dated: As of June 28, 2005




between




HINES REIT PROPERTIES , L.P.




(the “Borrower”)




and




KEYBANK NATIONAL ASSOCIATION




(“Administrative Agent”)




and




and other Lenders, if any, which may become parties




to this Agreement (with KeyBank National Association, the “Lenders”)




$60,000,000.00 TERM LOAN




 









 








TABLE OF CONTENTS




	 	 	 	 	 	 	 
	 	 	 	 	Page	 
	1. BACKGROUND	 	 	2	 
	1.1
	 	Defined Terms	 	 	2	 
	1.2
	 	Borrower	 	 	2	 
	1.3
	 	Use of Loan Proceeds	 	 	2	 
	1.4
	 	Accounting Terms	 	 	2	 
	2. LOAN PROVISIONS	 	 	2	 
	2.1
	 	Amount of Facility	 	 	2	 
	2.2
	 	Term of Facility	 	 	3	 
	2.3
	 	Interest Rate and Payment Terms	 	 	3	 
	2.3.1
	 	Borrower’s Options	 	 	3	 
	2.3.2
	 	Selection To Be Made	 	 	3	 
	2.3.3
	 	Increased Costs	 	 	3	 
	2.3.4
	 	Illegality	 	 	4	 
	2.3.5
	 	Notice	 	 	7	 
	2.3.6
	 	If No Notice	 	 	8	 
	2.3.7
	 	Telephonic Notice	 	 	8	 
	2.3.8
	 	Limits On Options	 	 	8	 
	2.3.9
	 	Payment and Calculation of Interest	 	 	8	 
	2.3.10
	 	Voluntary and Mandatory Principal Payments	 	 	8	 
	2.3.11
	 	Maturity	 	 	9	 
	2.3.12
	 	Method of Payment; Date of Credit	 	 	9	 
	2.3.13
	 	Billings	 	 	9	 
	2.3.14
	 	Default Rate	 	 	9	 
	2.3.15
	 	Late Charges	 	 	10	 
	2.3.16
	 	Make Whole Provision	 	 	10	 
	2.4
	 	Fees	 	 	10	 
	3. SECURITY FOR THE LOAN; LOAN AND SECURITY DOCUMENTS	 	 	10	 
	3.1
	 	Credit Documents and Security Documents	 	 	10	 
	3.2
	 	Collateral	 	 	11	 
	3.3
	 	Borrower Escrow Account	 	 	13	 
	4. CONTINUING AUTHORITY OF AUTHORIZED REPRESENTATIVES	 	 	14	 
	5. CONDITIONS PRECEDENT	 	 	14	 
	5.1
	 	Satisfactory Credit Documents	 	 	14	 
	5.2
	 	No Material Change	 	 	14	 
	5.3
	 	Warranties and Representations Accurate	 	 	14	 
	5.4
	 	Financials and Appraisals	 	 	14	 
	5.5
	 	Environmental Compliance and Indemnification Agreements	 	 	14	 
	5.6
	 	Validity and Sufficiency of Security Documents	 	 	14	 
	5.7
	 	No Other Liens; Taxes and Municipal Charges Current	 	 	15	 
	5.8
	 	Organizational Documents and Entity Agreements	 	 	15	 
	5.9
	 	Votes, Consents and Authorizations	 	 	15	 
	5.10
	 	Legal and Other Opinions	 	 	15	 
	5.11
	 	Due Diligence	 	 	15	 
	5.12
	 	Fees and Expenses	 	 	15	 
	5.13
	 	Guaranty	 	 	15	 
	5.14
	 	No Default	 	 	15	 
	5.15
	 	No Litigation	 	 	15	 
	5.16
	 	Compliance with Covenants	 	 	15	 
	6. WARRANTIES AND REPRESENTATIONS	 	 	16	 
	6.1
	 	Financial Information	 	 	16	 
	6.2
	 	No Violations	 	 	16	 
	6.3
	 	No Litigation	 	 	16	 






 









 






	 	 	 	 	 	 	 
	 	 	 	 	Page	 
	6.4
	 	Compliance With Legal Requirements	 	 	17	 
	6.5
	 	Use of Proceeds	 	 	17	 
	6.6
	 	Entity Matters	 	 	17	 
	6.6.1
	 	Borrower	 	 	17	 
	6.6.2
	 	General Partner	 	 	17	 
	6.6.3
	 	Identity of General Partner	 	 	17	 
	6.7
	 	Valid and Binding	 	 	17	 
	6.8
	 	Deferred Compensation and ERISA	 	 	18	 
	6.9
	 	No Material Change; No Default	 	 	18	 
	6.10
	 	No Broker or Finder	 	 	18	 
	6.11
	 	Background Information and Certificates	 	 	18	 
	6.12
	 	Consents	 	 	18	 
	6.13
	 	Indebtedness	 	 	19	 
	6.14
	 	Government Regulation	 	 	19	 
	6.15
	 	Environmental Matters	 	 	19	 
	6.16
	 	Portfolio Assets	 	 	19	 
	6.17
	 	Full Disclosure	 	 	20	 
	6.18
	 	Subsidiaries	 	 	20	 
	6.19
	 	No Material Adverse Contracts, Etc.	 	 	20	 
	6.20
	 	Compliance With Other Instruments, Laws, Etc.	 	 	20	 
	6.21
	 	Solvency	 	 	20	 
	6.22
	 	REIT Status	 	 	20	 
	6.23
	 	Patriot Act	 	 	21	 
	7. COVENANTS	 	 	21	 
	7.1
	 	Notices	 	 	21	 
	7.2
	 	Financial Statements and Reports	 	 	21	 
	7.2.1
	 	Annual Statements	 	 	21	 
	7.2.2
	 	Periodic Statements	 	 	21	 
	7.2.3
	 	Data Requested	 	 	22	 
	7.2.4
	 	Tax Returns	 	 	22	 
	7.2.5
	 	Pro Forma	 	 	22	 
	7.2.6
	 	Officer’s Certificate	 	 	22	 
	7.2.7
	 	Information to Owners	 	 	23	 
	7.2.8
	 	Portfolio Investments	 	 	23	 
	7.2.9
	 	Auditor’s Reports	 	 	23	 
	7.2.10
	 	Environmental Reports	 	 	23	 
	7.2.11
	 	Notice of Default or Litigation	 	 	23	 
	7.2.12
	 	Reserved	 	 	24	 
	7.2.13
	 	Debt	 	 	24	 
	7.2.14
	 	Other Information	 	 	24	 
	7.3
	 	Financial Covenants	 	 	24	 
	7.4
	 	Indebtedness and Restrictions on Liens, Transfers and Additional Debt	 	 	25	 
	7.5
	 	Liens/Negative Pledges	 	 	26	 
	7.6
	 	Nature of Business	 	 	26	 
	7.7
	 	Limitations on Certain Transactions	 	 	26	 
	7.8
	 	Investments	 	 	27	 
	7.9
	 	Dividends and Distributions	 	 	27	 
	7.10
	 	Transactions with Portfolio Investments	 	 	27	 
	7.11
	 	Amendments	 	 	27	 
	7.12
	 	ERISA	 	 	27	 
	7.13
	 	Place for Records:  Inspection	 	 	27	 
	7.14
	 	Costs and Expenses	 	 	28	 
	7.15
	 	Compliance with Legal Requirements	 	 	28	 
	7.16
	 	MAI Appraisals	 	 	28	 
	7.17
	 	Title to Properties	 	 	28	 
	7.18
	 	Insurance	 	 	29	 






- 2 -









 






	 	 	 	 	 	 	 
	 	 	 	 	Page	 
	7.19
	 	Taxes	 	 	29	 
	7.20
	 	Compliance with Contracts, Licenses, and Permits	 	 	29	 
	7.21
	 	Replacement Documentation	 	 	29	 
	7.22
	 	Perfected LP Interest Covenants	 	 	29	 
	7.23
	 	Existence of the Borrower; Maintenance of REIT Status	 	 	29	 
	7.24
	 	Refinance of California Property	 	 	30	 
	8. SPECIAL PROVISIONS	 	 	30	 
	8.1
	 	Right to Contest	 	 	30	 
	8.1.1
	 	Taxes and Claims by Third Parties	 	 	30	 
	8.1.2
	 	Legal Requirements	 	 	30	 
	8.2
	 	Borrower Fully Liable	 	 	30	 
	9. EVENTS OF DEFAULT	 	 	30	 
	9.1
	 	Default and Events of Default	 	 	30	 
	9.1.1
	 	Generally	 	 	31	 
	9.1.2
	 	Note and Other Credit Documents	 	 	31	 
	9.1.3
	 	Financial Status and Insolvency	 	 	31	 
	9.1.4
	 	Breach of Representation or Warranty	 	 	31	 
	9.1.5
	 	Defaults under Other Agreements	 	 	32	 
	9.1.6
	 	Change of Control	 	 	32	 
	9.1.7
	 	Judgments	 	 	32	 
	9.2
	 	Grace Periods and Notice	 	 	32	 
	9.2.1
	 	No Notice or Grace Period	 	 	32	 
	9.2.2
	 	Nonpayment of Interest and Principal	 	 	33	 
	9.2.3
	 	Other Monetary Defaults	 	 	33	 
	9.2.4
	 	Nonmonetary Defaults Capable of Cure	 	 	33	 
	9.3
	 	Certain Remedies	 	 	33	 
	9.3.1
	 	Termination of Commitments	 	 	33	 
	9.3.2
	 	Accelerate Debt	 	 	33	 
	9.3.3
	 	Pursue Remedies	 	 	34	 
	9.3.4
	 	Written Waivers	 	 	34	 
	9.3.5
	 	Reserved	 	 	34	 
	9.3.6
	 	Enforcement of Rights	 	 	34	 
	10.
	 	SECURITY INTEREST AND SET-OFF	 	 	34	 
	10.1
	 	Security Interest	 	 	34	 
	10.2
	 	Set-Off and Debit	 	 	34	 
	10.3
	 	Right to Freeze	 	 	35	 
	10.4
	 	Additional Rights	 	 	35	 
	11.
	 	THE ADMINISTRATIVE AGENT AND THE LENDERS	 	 	35	 
	11.1
	 	Appointment of Administrative Agent	 	 	35	 
	11.2
	 	Administration of Facility by Administrative Agent	 	 	36	 
	11.3
	 	Delegation of Duties	 	 	36	 
	11.4
	 	Exculpatory Provisions	 	 	36	 
	11.5
	 	Reliance by Administrative Agent	 	 	37	 
	11.6
	 	Notice of Default	 	 	37	 
	11.7
	 	Lenders’ Credit Decisions	 	 	38	 
	11.8
	 	Administrative Agent’s Reimbursement and Indemnification	 	 	38	 
	11.9
	 	Administrative Agent in its Individual Capacity	 	 	38	 
	11.10
	 	Successor Administrative Agent	 	 	39	 
	11.11
	 	Duties in the Case of Enforcement	 	 	39	 
	11.12
	 	Respecting Loans and Payments	 	 	40	 
	11.12.1
	 	Procedures for Loans	 	 	40	 
	11.12.2
	 	Nature of Obligations of Lenders	 	 	40	 
	11.12.3
	 	Payments to Administrative Agent	 	 	40	 
	11.12.4
	 	Distribution of Liquidation Proceeds	 	 	41	 
	11.12.5
	 	Adjustments	 	 	42	 
	11.12.6
	 	Setoff	 	 	42	 






- 3 -









 






	 	 	 	 	 	 	 
	 	 	 	 	Page	 
	11.12.7
	 	Distribution by Administrative Agent	 	 	42	 
	11.12.8
	 	Actions by Administrative Agent	 	 	42	 
	11.13
	 	Delinquent Lender	 	 	43	 
	11.14
	 	Holders	 	 	43	 
	11.15
	 	Assignment and Participation	 	 	44	 
	11.15.1
	 	Conditions to Assignment by Lenders	 	 	44	 
	11.15.2
	 	Certain Representations and Warranties	 	 	44	 
	11.15.3
	 	Register	 	 	45	 
	11.15.4
	 	New Notes	 	 	46	 
	11.15.5
	 	Participations	 	 	46	 
	11.16
	 	Disclosure	 	 	47	 
	11.17
	 	Miscellaneous Assignment Provisions	 	 	47	 
	11.18
	 	Intentionally Deleted	 	 	47	 
	11.19
	 	Amendment, Waiver, Consent, Etc.	 	 	47	 
	11.20
	 	Deemed Consent or Approval	 	 	48	 
	11.21
	 	Borrower Indemnification of Lenders	 	 	49	 
	11.22
	 	Borrower’s Communication with Lenders	 	 	49	 
	12.
	 	GENERAL PROVISIONS	 	 	49	 
	12.1
	 	Notices	 	 	49	 
	12.2
	 	Limitations on Assignment	 	 	51	 
	12.3
	 	Further Assurance	 	 	51	 
	12.4
	 	Parties Bound	 	 	51	 
	12.5
	 	Waivers and Extensions	 	 	52	 
	12.6
	 	Governing Law; Consent to Jurisdiction; Mutual Waiver of Jury Trial	 	 	52	 
	12.6.1
	 	Substantial Relationship	 	 	52	 
	12.6.2
	 	Place of Delivery	 	 	52	 
	12.6.3
	 	Governing Law	 	 	52	 
	12.6.4
	 	Consent to Jurisdiction	 	 	52	 
	12.6.5
	 	JURY TRIAL WAIVER	 	 	52	 
	12.7
	 	Survival	 	 	53	 
	12.8
	 	Cumulative Rights	 	 	53	 
	12.9
	 	Claims Against Administrative Agent or the Lenders	 	 	53	 
	12.9.1
	 	Borrower Must Notify	 	 	53	 
	12.9.2
	 	Remedies	 	 	53	 
	12.9.3
	 	Limitations	 	 	54	 
	12.10
	 	Obligations Absolute, Joint and Several	 	 	54	 
	12.11
	 	Table of Contents, Title and Headings; Exhibits and Schedules	 	 	54	 
	12.12
	 	Counterparts	 	 	54	 
	12.13
	 	Integration	 	 	54	 
	12.14
	 	Time Of the Essence	 	 	54	 
	12.15
	 	No Oral Change	 	 	54	 
	12.16
	 	Monthly Statements	 	 	55	 
	12.17
	 	Indemnification	 	 	55	 






- 4 -









 






	 	 	 	 	 
	Exhibits to Agreement:	 	 	 	Section Reference Number
	Exhibit A
	 	Definitions	 	1.1
	 
	 	 	 	 
	Exhibit B
	 	Assets, Funded Debt; Subsidiaries	 	6.13, 6.16, 6.18, 7.2.13
	 
	 	 	 	and 7.5
	 
	 	 	 	 
	Exhibit C
	 	Authorized Representatives	 	4
	 
	 	 	 	 
	Exhibit D
	 	Form of Assignment and Acceptance	 	11.15.1
	 
	 	 	 	 
	Exhibit E
	 	Lenders’ Commitment	 	2.1(a)
	 
	 	 	 	 
	Exhibit F
	 	Form of Note	 	2.1(b)
	 
	 	 	 	 
	Exhibit G
	 	Form of Certificate	 	7.2.6
	 
	 	 	 	 
	Exhibit H
	 	Intentionally omitted	 	 
	 
	 	 	 	 
	Exhibit I
	 	Form of Notice of Borrowing	 	2.1(c)
	 
	 	 	 	 
	Exhibit J
	 	Environmental Notices	 	6.15
	 
	 	 	 	 
	Exhibit K
	 	Portfolio Investment Entities	 	3.2
	 
	 	 	 	 
	Exhibit L
	 	Pro Forma Paydown Calculation	 	3.2






 









 






TERM LOAN AGREEMENT




     This is a Term Loan Agreement (“Agreement”) made and entered into as of the 28th day of June
2005, by and between HINES REIT PROPERTIES, L.P, a Delaware limited partnership (the “Borrower”),
having an address at c/o Hines Interests Limited Partnership, 2800 Post Oak Blvd., Suite 5000,
Houston, Texas 77056, and KEYBANK NATIONAL ASSOCIATION, a national banking association having an
address at 127 Public Square, Cleveland, Ohio 44114, and the other lending institutions which may
become parties to this Agreement pursuant to Section 11.15 hereof (each, a “Lender” and
collectively the “Lenders”) and KeyBank National Association, as agent for itself and such other
lending institutions (the “Administrative Agent”).



WITNESSETH:




1. BACKGROUND.




     1.1 Defined Terms. Capitalized terms used in this Agreement are defined either
in Exhibit A, or in specific sections of this Agreement, or in another Credit Document, as
referenced in Exhibit A.



     1.2 Borrower. Borrower is a limited partnership organized under the laws of the State
of Delaware, of which the sole general partner is Hines Real Estate Investment Trust, Inc., a
Maryland corporation.



     1.3 Use of Loan Proceeds. Borrower has applied to Administrative Agent for a loan of
Sixty Million Dollars ($60,000,000) (the “Facility”) the proceeds of which are to be used solely
for the purposes of acquiring the California Property.



     1.4 Accounting Terms. Except as otherwise expressly provided herein, all accounting
terms used herein shall be interpreted, and all financial statements and certificates and reports
as to financial matters required to be delivered to the Lenders hereunder shall be prepared, in
accordance with GAAP applied on a consistent basis. All calculations made for the purposes of
determining compliance with this Agreement shall (except as otherwise expressly provided herein) be
made by application of GAAP applied on a basis consistent with the most recent annual or quarterly
financial statements and reports delivered pursuant to Section 7.2 (or, prior to the delivery of
the first financial statements pursuant to Section 7.2, consistent with the financial statements
dated March 31, 2005).



2. LOAN PROVISIONS.




     2.1 Amount of Facility.



     (a) Commitment. Subject to all of the terms, conditions and provisions of this
Agreement, each Lender agrees severally to make loans (each a “Loan” and, collectively, the
“Loans”) to the Borrower for the purposes herein set forth in an aggregate amount up to such
Lender’s Commitment Percentage of the Facility; provided, however: (i) with regard to each Lender
individually, such Lender’s outstanding Loans shall not exceed such Lender’s



- 2 -









 




Commitment Percentage
of the Committed Amount and (ii) with regard to the Lenders collectively, the aggregate principal
amount of outstanding Loans shall not exceed the Committed Amount.




     (b) Notes. The Loans shall be evidenced by duly executed promissory note(s) of the
Borrower to each Lender in the original principal amount of each Lender’s Commitment Percentage of
the Committed Amount; such notes shall be substantially in the form of Exhibit F.



     (c) Loans. In order to request that Lenders make a Loan hereunder, Borrower must
submit a Notice of Borrowing in the form attached hereto as Exhibit I to Administrative
Agent at least three (3) Business Days prior to the date on which the Loan is requested to be made
(which shall be a Business Day) and shall also submit to Administrative Agent a Notice of Rate
Selection in accordance with Section 2.3.5. Provided that all conditions precedent thereto are
satisfied, Lenders will use commercially reasonable efforts to fund the requested Loan on such
date.



     2.2 Term of Facility. The Facility shall be for a term (“Term”) commencing on the
date hereof and ending ninety (90) days from the date hereof on September ___, 2005 (“Maturity
Date”).



     2.3 Interest Rate and Payment Terms. Amounts outstanding under the Facility shall be
payable as to interest and principal in accordance with the provisions of this Agreement. This
Agreement also provides for interest at a Default Rate, Late Charges and prepayment rights and
fees. Any and all interest rate selection and conversion provisions in this Agreement are to be
administered by the Administrative Agent and are to be allocated on a pro rata basis to the Note(s)
held by each Lender based upon such Lender’s Commitment Percentage.




2.3.1 Borrower’s Options. Principal amounts outstanding under the
Facility shall bear interest at the following rates, at Borrower’s selection,
subject to the conditions and limitations provided for in this Agreement: (i)
Variable Rate or (ii) Adjusted LIBOR Rate.




2.3.2 Selection To Be Made. Borrower shall select, and thereafter may
change the selection of, the applicable interest rate, from the alternatives
otherwise provided for in this Agreement, by giving Administrative Agent a Notice of
Rate Selection as provided in Section 2.3.5 hereof: (i) at least three (3) Business
Days prior to a Loan, (ii) on any Business Day on which Borrower desires to convert
an outstanding LIBOR Rate Loan to a Variable Rate Loan, or (iii) at least three (3)
Business Days before the date on which Borrower desires to convert an outstanding
Variable Rate Loan to a LIBOR Rate Loan or make any change with respect to an
outstanding LIBOR Rate Loan.




2.3.3 Increased Costs. If due to any one or more of: (i) the
introduction of any applicable law or regulation or any change (other than any
change by way of imposition or increase of reserve requirements or imposition of a
Reserve Percentage already referred to in the definition of LIBOR Rate) in the
interpretation or application by any authority charged with the interpretation or



- 3 -









 






application of any law or regulation; or (ii) the compliance with any guideline or
request from any governmental central bank or other governmental authority, there
shall be an increase in the cost to Administrative Agent or any Lender of agreeing
to make or making, funding or maintaining LIBOR Loans, including without limitation
changes which affect or would affect the amount of capital or reserves required or
expected to be maintained by Administrative Agent or any Lender, with respect to all
or any portion of the Facility, or any corporation controlling (directly or
indirectly) Administrative Agent or any Lender, on account thereof, then, provided
that such increases in costs are not due to the fraud or gross negligence of
Administrative Agent or such Lender, Borrower from time to time shall, upon demand
by Administrative Agent, pay additional amounts sufficient to indemnify
Administrative Agent or such Lender against the increased cost; provided, however,
that such amounts shall be no greater than that which such Administrative Agent or
Lender is generally charging other borrowers similarly situated to the Borrower. If
at any time a Lender or Lenders other than the Administrative Agent shall make a
determination of increased cost, the Borrower may at any time during the period that
such increased cost is being charged to Borrower instruct such Lender or Lenders to
sell its or their commitments (with all Loans outstanding thereunder) to a bank to
be designated by the Borrower and approved by the Administrative Agent (such
approval not to be unreasonably withheld) at a price equal to all outstanding
principal and accrued and unpaid interest and fees thereunder and any other
outstanding obligations due to such Lender hereunder, provided, however, that such
purchasing bank shall comply with the provisions of Section 11 hereof. A
certificate as to the amount of the increased cost and the reason therefor submitted
to Borrower by Administrative Agent, in the absence of manifest error, shall be
conclusive and binding for all purposes.




2.3.4 Illegality. Notwithstanding any other provision of this
Agreement, if the introduction of, or a change in the interpretation of, any law,
treaty, statute, regulation or interpretation thereof shall make it unlawful, or any
central bank or government authority shall assert by directive, guideline or
otherwise, that it is unlawful for Administrative Agent or any Lender to make or
maintain LIBOR Loans or to continue to fund or maintain LIBOR Loans then, on written
notice thereof and demand by Administrative Agent to Borrower, (a) the obligation of
Administrative Agent and Lenders to make LIBOR Loans and to convert or continue any
Loan as a LIBOR Loan shall terminate and (b) Borrower shall convert all Loans
outstanding under the Facility into Variable Rate Loans until such time as such
Lender may again make, maintain, and fund LIBOR Loans.




          2.3.4.1 Treatment of Affected Loans. If the obligation of any Lender
to make LIBOR Loans shall be suspended pursuant to Section 2.3.4 hereof, such
Lender’s LIBOR Loans shall be automatically converted into Variable Rate Loans on
the last day(s) of the then current Interest Period(s) for such LIBOR Loans or prior
thereto if and to the extent LIBOR Loans may not be maintained as a result of any
condition or event specified in Section 2.3.4 hereof and, unless and until



- 4 -









 






such Lender gives notice as provided below that the circumstances specified in Section
2.3.4 hereof that gave rise to such conversion no longer exist:




     (a) to the extent that such Lender’s LIBOR Loans have been so converted, all
payments and prepayments of principal that would otherwise be applied to such
Lender’s LIBOR Loans shall be applied instead to its Variable Rate Loans; and




     (b) all Loans that would otherwise be made or continued by such Lender as LIBOR
Loans shall be made or continued instead as Variable Rate Loans, and all Variable
Rate Loans of such Lender that would otherwise be converted into LIBOR Loans shall
remain as Variable Rate Loans.




     If such Lender gives notice to the Borrower (with a copy to the Administrative
Agent) that the circumstances specified in Section 2.3.4 hereof that gave rise to
the conversion of such Lender’s LIBOR Loans to Variable Rate Loans pursuant to this
Section 2.3.4.1 no longer exist (which such Lender agrees to do promptly upon such
circumstances ceasing to exist) at a time when LIBOR Loans made by other Lenders are
outstanding, such Lender’s Variable Rate Loans shall be automatically converted, on
the first day(s) of the next succeeding Interest Period(s) for such outstanding
LIBOR Loans to the extent necessary so that, after giving effect thereto, all Loans
held by the Lenders holding LIBOR Loans and by such Lender are held pro rata (as to
principal amounts, interest rate basis, and Interest Periods) in accordance with
such Lenders’ respective Commitment Percentages.




2.3.4.2 Taxes.




     (a) Any and all payments by the Borrower to or for the account of any Lender or
the Administrative Agent hereunder or under any other Credit Document shall be made
free and clear of and without deduction for any and all taxes, duties, levies,
imposts, deductions, charges or withholdings, and all liabilities with respect
thereto, excluding, in the case of each Lender and the Administrative Agent, taxes
imposed on its income, and franchise taxes imposed on it, by the jurisdiction under
the laws of which such Lender (or its Applicable Lending Office) or the
Administrative Agent (as the case may be) is organized or by the jurisdiction where
such Lender (or its applicable Lending Office) or the Administrative Agent has a
permanent establishment or office, or is engaged in a trade or business, or any
political subdivision of such jurisdiction (all such non-excluded taxes, duties,
levies, imposts, deductions, charges, withholdings, and liabilities being
hereinafter referred to as “Taxes”). If the Borrower shall be required by law to
deduct any Taxes from or in respect of any sum payable under this Agreement or any
other Credit Document to any Lender or the Administrative Agent, (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
2.3.4.2) such Lender or the Administrative Agent receives an amount equal to the sum
it would have received had no such deductions been



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made, (ii) the Borrower shall
make such deductions, (iii) the Borrower shall pay the full amount deducted to the
relevant taxation authority or other authority in accordance with applicable law,
and (iv) the Borrower shall furnish to the Administrative Agent, at its address
referred to in Section 12.1, the original or a certified copy of a receipt
evidencing payment thereof.




     (b) In addition, the Borrower agrees to pay any and all present or future stamp
or documentary taxes and any other excise or property taxes or charges or similar
levies which arise from any payment made under this Agreement or any other Credit
Document (hereinafter referred to as “Other Taxes”).




     (c) The Borrower agrees to indemnify each Lender and the Administrative Agent
for the full amount of Taxes and Other Taxes (including, without limitation, any
Taxes or Other Taxes imposed or asserted by any jurisdiction on amounts payable
under this Section 2.3.4.2) paid by such Lender or the Administrative Agent (as the
case may be) and any liability (including penalties, interest, and expenses) arising
therefrom or with respect thereto; provided, however, that such amounts shall be no
greater than the amounts which such Administrative Agent or Lender is generally
charging other borrowers similarly situated to the Borrower.




     (d) Each Lender organized under the laws of a jurisdiction outside the United
States, on or prior to the date of its execution and delivery of this
Agreement in the case of each Lender listed on the signature pages hereof and
on or prior to the date on which it becomes a Lender in the case of each other
Lender, and from time to time thereafter if requested in writing by the Borrower or
the Administrative Agent (but only so long as such Lender remains lawfully able to
do so), shall provide the Borrower and the Administrative Agent with (i) Internal
Revenue Service Forms W-8ECI, W-8BEN, W-8IMY and W-9 (or their equivalent), as
appropriate, or any successor form prescribed by the Internal Revenue Service,
certifying if appropriate that such Lender is entitled to benefits under an income
tax treaty to which the United States is a party which reduces the rate of
withholding tax on payments of interest or certifying that the income receivable
pursuant to this Agreement is effectively connected with the conduct of a trade or
business in the United States, and (ii) any other form or certificate required by
any taxing authority (including any certificate required by Sections 871(h) and
881(c) of the Code), certifying that such Lender is entitled to an exemption from or
a reduced rate of tax on payments pursuant to this Agreement or any of the other
Credit Documents. If the form provided by a Lender at the time such Lender first
becomes a party to this Agreement indicates a United States withholding tax rate in
excess of zero, withholding tax at such rate shall be considered excluded from the
definition of Taxes set forth in Section 2.3.4.2(a).




     (e) For any period with respect to which a Lender has failed to provide the
Borrower and the Administrative Agent with the appropriate form pursuant to Section
2.3.4.2(d) (unless such failure is due to a change in treaty, law, or



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regulation occurring subsequent to the date on which a form originally was required to be
provided), such Lender shall not be entitled to indemnification under Section
2.3.4.2(a) or 2.3.4.2(b) with respect to Taxes imposed by the United States;
provided, however, that should a Lender, which is otherwise exempt from or subject
to a reduced rate of Taxes, become subject to Taxes because of its failure to
deliver a form required hereunder, the Borrower shall, at such Lender’s sole cost
and expense, take such steps as such Lender shall reasonably request to assist such
Lender to recover such Taxes.




     (f) If the Borrower is required to pay additional amounts to or for the account
of any Lender pursuant to this Section 2.3.4.2, then such Lender will agree to use
reasonable efforts to change the jurisdiction of its Applicable Lending Office so as
to eliminate or reduce any such additional payment which may thereafter accrue if
such change, in the judgment of such Lender, is not otherwise disadvantageous to
such Lender.




     (g) Without prejudice to the survival of any other agreement of the Borrower
hereunder, the agreements and obligations of the Borrower contained in this Section
2.3.4.2 shall survive the repayment of the Loans and the other obligations under the
Credit Documents and the termination of the Commitments hereunder.



                         2.3.4.3 Capital Adequacy. If any future law, governmental rule, regulation, policy,
guideline or directive or the
interpretation thereof by a court or governmental authority with appropriate jurisdiction affects
the amount of capital required or expected to be maintained by banks or bank holding companies and
any Lender or the Administrative Agent determines that the amount of capital required to be
maintained by it is increased by or based upon the existence of Loans made or deemed to be made
pursuant hereto, then such Lender or the Administrative Agent may notify the Borrower of such fact,
and the Borrower shall pay to such Lender or the Administrative Agent from time to time, upon
demand made by the Administrative Agent or such Lender, as an additional fee payable hereunder,
such amount as such Lender or the Administrative Agent shall determine reasonably and in good faith
and certify in a notice to the Borrower to be an amount that will adequately compensate such Lender
or Administrative Agent in light of these circumstances for its increased costs of maintaining such
capital. Each Lender and the Administrative Agent shall allocate such cost increases among its
customers in good faith and on an equitable basis, and will not charge the Borrower unless it is
generally imposing a similar charge on its other similarly situated borrowers.



                    2.3.5 Notice. A “Notice of Rate Selection” shall be a written notice, given by cable,
tested telex, facsimile transmission (with authorized signature), or by telephone if immediately
confirmed by such a written notice, from an Authorized Representative of Borrower which: (i) is
irrevocable; (ii) is received by Administrative Agent not later than 1:00 o’clock P.M. Eastern
Time: (a) at least three (3) Business Days prior to a Loan; or (b) if a Libor Rate is selected, at
least three (3) Business Days prior to the end of the current Interest Period to which such
selection is to apply; (c) if a Variable Rate is selected, on the first day of the Interest Period
to which it applies; and (iii) as to each selected interest rate option, sets forth the aggregate



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principal amount(s) to which such interest rate option(s) shall apply and the Interest Period(s)
applicable to each LIBOR Loan.




                    2.3.6 If No Notice. If Borrower fails to timely select an interest rate option in
accordance with the foregoing prior to a new Loan or as to an expiring Interest Period of an
outstanding LIBOR Loan, then such new Loan and/or such outstanding LIBOR Loan shall be deemed
converted to a LIBOR Loan with an Interest Period of one (1) month; provided, however, if a LIBOR
Loan is not then available, any such new Loan shall be deemed to be a Variable Rate Loan, and on
the last day of the applicable Interest Period of any such outstanding LIBOR Loan all outstanding
principal amounts thereon shall be deemed converted to a Variable Rate Loan.



                    2.3.7 Telephonic Notice. Without in any way limiting Borrower’s obligation to confirm
in writing any telephonic notice, Administrative Agent may act without liability upon the basis of
telephonic notice, concerning interest rate selection only, believed by Administrative Agent in
good faith to be from Borrower prior to receipt of written confirmation. In each case Borrower
hereby waives the right to dispute Administrative Agent’s record of the terms of such telephonic
Notice of Rate Selection in the absence of manifest error.



                    2.3.8 Limits On Options. Each LIBOR Loan or Variable Rate Loan shall be in a minimum
amount of $100,000. At no time shall there be outstanding a total of more than six (6) LIBOR Loans
at any time. If Borrower shall make more than one (1) interest rate selection in any thirty (30)
day period, excluding conversions of outstanding Loans made at the end of an applicable Interest
Period of any previously outstanding LIBOR Loan, Administrative Agent may impose and Borrower shall
pay a reasonable processing fee for each such additional selection.



                    2.3.9 Payment and Calculation of Interest. Subject to the provisions of Section
2.3.14, all interest shall be: (a) payable in arrears commencing on July 31, 2005 with payments to
be made on each Interest Payment Date thereafter; and (b) calculated on the basis of a 360 day year
and the actual number of days elapsed.




     (i) Variable Rate Loans. During such periods as the Loans shall be comprised
in whole or in part of Variable Rate Loans, such Variable Rate Loans shall bear
interest at a per annum rate equal to the Variable Rate. Each change in the Prime
Rate or Adjusted Federal Funds Rate shall, as applicable, simultaneously change the
Variable Rate payable under this Agreement; and




     (ii) LIBOR Loans. During such periods as the Loans shall be comprised in whole
or in part of LIBOR Loans, such LIBOR Loans shall bear interest at a per annum rate
equal to the Adjusted LIBOR Rate. Interest at the LIBOR Rate shall be computed from
and including the first day of the applicable Interest Period to, but excluding, the
last day thereof.



                    2.3.10 Voluntary and Mandatory Principal Payments.



     (a) Voluntary Prepayments. The Borrower shall have the right to prepay Loans in whole
or in part at any time upon three (3) Business Days prior notice to Administrative Agent



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without premium or penalty with respect to Variable Rate Loans and, with respect to LIBOR Loans, subject to
a Make-Whole Provision.




     (b) Mandatory Prepayments.




     (i) If at any time the aggregate principal amount of outstanding Loans shall
exceed the Committed Amount, the Borrower shall immediately prepay the outstanding
principal balance on the Loans in an amount sufficient to eliminate such excess
(such prepayments and any other payments designated as such herein, “Mandatory
Prepayments”).




     (ii) All amounts required to be paid pursuant to Section 2.3.10(b)(i) shall be
applied to the Loans. Within the parameters of the applications set forth above,
Mandatory Prepayments shall be applied first to Variable Rate Loans and
then to LIBOR Loans in direct order of Interest Period maturities. All
prepayments under this Section 2.3.10(b)(ii) applied to LIBOR Loans in accordance
with the foregoing shall be subject to a Make-Whole Provision.



                    2.3.11 Maturity. At Maturity all accrued interest, principal and other charges due
with respect to the Facility shall be due and payable in full and the principal balance and such
other charges, but not unpaid interest, shall continue to bear interest at the Default Rate until
so paid.



                    2.3.12 Method of Payment; Date of Credit. All payments of interest, principal and
fees shall be made in lawful money of the United States in immediately available funds: (a) by
direct charge to an account of Borrower maintained with Administrative Agent (or the then holder of
the Facility), or (b) by wire transfer to Administrative Agent, or (c) to such other bank or
address as the holder of the Facility may designate in a notice to Borrower. Payments shall be
credited on the Business Day on which immediately available funds are received prior to one o’clock
P.M. Eastern Time; payments received after one o’clock P.M. Eastern Time shall be credited on the
next Business Day, payments which are not in the form of immediately available funds shall not be
credited until such funds become immediately available to Administrative Agent.



                    2.3.13 Billings. Administrative Agent may submit monthly billings reflecting payments
due; however, any changes in the interest rate which occur between the date of billing and the due
date may be reflected in the billing for a subsequent month. Neither the failure of Administrative
Agent to submit a billing nor any error in any such billing shall excuse Borrower from the
obligation to make full payment of all Borrower’s payment obligations when due; provided, however,
that Borrower shall not be considered in breach of this Agreement to the extent that it makes
payments in accordance with such billings unless and until three (3) Business Days after Borrower’s
receipt of written notice from Administrative Agent of such error in billing.



                    2.3.14 Default Rate. Administrative Agent shall have the option of imposing, and
Borrower shall pay upon billing therefor, a default interest rate which is four percent (4%) per
annum above the Variable Rate (the “Default Rate”): (a) while any monetary Default exists



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and is continuing, during that period between the due date and the date of payment; (b) while any Event of
Default exists, unless and until the Event of Default is waived by Administrative Agent; and (c)
after Maturity. Borrower’s right to select pricing options shall cease upon the occurrence and
during the continuance of a monetary Default or any Event of Default.




                    2.3.15 Late Charges. Except with respect to payments due at Maturity (as to which the
Late Charge shall not be applicable), Borrower shall pay, upon billing therefor, a “Late Charge”
equal to five percent (5%) of the amount of any payment of principal, interest, or both, which is
not paid within ten (10) days of the due date thereof. Late Charges are: (a) payable in addition to, and not in
limitation of, the Default Rate, (b) intended to compensate Administrative Agent for administrative
and processing costs incident to late payments, (c) are not interest, and (d) shall not be subject
to refund or rebate or credited against any other amount due.



                    2.3.16 Make Whole Provision. Borrower shall pay to Administrative Agent, immediately
upon request and notwithstanding any contrary provisions contained in any of the Credit Documents,
such amounts as shall be necessary to compensate each Lender for the loss, cost or expense which it
actually reasonably incurs as a result of (i) any payment or prepayment, under any circumstances
whatsoever, whether voluntary or involuntary, of all or any portion of a LIBOR Loan on a date other
than the last day of the applicable Interest Period of such LIBOR Loan, (ii) the conversion, for
any reason whatsoever, whether voluntary or involuntary, of any LIBOR Loan on a date other than the
last day of the applicable Interest Period, (iii) the failure of all or a portion of a Loan which
was to have borne interest at the Adjusted LIBOR Rate pursuant to the request of Borrower to be
made under this Agreement (except as a result of a failure by Administrative Agent or any Lender to
fulfill Administrative Agent’s or such Lender’s obligations to fund), or (iv) the failure of
Borrower to borrow in accordance with any request submitted by it for a LIBOR Loan (except as a
result of a failure by Administrative Agent or any Lender to fulfill such Administrative Agent’s or
Lender’s obligations to fund). Such amounts payable by Borrower shall be equal to any
administrative costs actually incurred plus any amounts required to compensate for any loss, cost
or expense reasonably incurred by reason of the liquidation or re-employment of deposits or other
funds acquired by any Lender to fund or maintain a LIBOR Loan, including, without limitation, the
costs associated with the cancellation of any interest rate hedge agreement.



     2.4 Fees. The Borrower agrees to pay to the Administrative Agent for the benefit of the
Lenders in immediately available funds on or before the Closing Date a commitment fee (the
“Commitment Fee”) in the amount agreed to by Borrower and the Administrative Agent in the Fee
Letter.



3. SECURITY FOR THE LOAN; LOAN AND SECURITY DOCUMENTS.




     3.1 Credit Documents and Security Documents. The Facility shall be made,
evidenced, administered, secured and governed by all of the terms, conditions and provisions of the
“Credit Documents”, each as the same may be hereafter modified or amended, consisting of: (i) this
Agreement; (ii) separate Notes in the form of Exhibit F annexed hereto, with one Note being
payable to each Lender in the original principal amount equal to such Lender’s Commitment, such
promissory notes to be in the aggregate original principal amount of Sixty Million Dollars
($60,000,000.00); (iii) the Direction Letters, if any; (iv) the Fee Letter; (v) the Environmental



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Indemnity; (vi) the Security Documents; (vii) the Guaranty; and (viii) any and all other related
agreements and documents issued or delivered
hereunder or thereunder or pursuant hereto or thereto executed to further evidence or secure
the Facility.




     3.2 Collateral. (a) Administrative Agent and Lenders shall have a first priority,
perfected security interest in the Collateral at Closing and at all times prior to Maturity, except
as otherwise provided in this Agreement or the Pledge Agreement. With respect to each of the
Portfolio Investments in a Portfolio Investment Entity listed on Exhibit K, Borrower will
pledge to Administrative Agent and Lenders certain of Borrower’s right, title and interest in and
to each of the Portfolio Investments, as the same may be modified from time to time in accordance
with this Section 3.2. With respect to such pledges, Borrower will execute and deliver on the
Closing Date (i) the Pledge Agreement, (ii) UCC-1 financing statements with respect to such
pledges, and (iii) any additional documents or instruments reasonably requested by Administrative
Agent on behalf of Lenders in order to evidence or perfect such pledges, with all such documents to
be in form and substance acceptable to Administrative Agent on behalf of Lenders.



     (b) Borrower hereby authorizes Administrative Agent at any time and from time to time to file
UCC financing statements, continuation statements, and amendments thereto describing the Collateral
without the signature of Borrower. Administrative Agent shall give Borrower prompt written notice
of any such filing.



     (c) As provided in Section 7.2.8, Borrower shall give written notice to Administrative Agent
prior to the making of any Portfolio Disposition by Borrower or any of its Subsidiaries, which
notice shall be accompanied by a written certification by Borrower in the form of Exhibit L
attached hereto stating that Borrower will be in full compliance with all covenants contained
herein or in the other Credit Documents, including without limitation the covenants set forth in
Section 7.3, after giving effect to the proposed Portfolio Disposition, and which notice shall be
accompanied by evidence of such compliance satisfactory to Administrative Agent on behalf of
Lenders. Borrower shall give written notice to Administrative Agent upon its acquisition of any
new Portfolio Investment.



     (d) Administrative Agent shall be authorized and obligated to release, within three (3)
Business Days after receipt of a written request from Borrower, any of the Portfolio Investments
from any security interests, liens or other encumbrances under the Pledge Agreement or any other
Security Document that is the subject of a proposed Portfolio Disposition in compliance with the
conditions set forth in this Section 3.2 (each, a “Permitted Portfolio Disposition”). Within three
(3) Business Days after receipt of a written request from Borrower, Administrative Agent on behalf
of Lenders will execute and deliver such instruments as are reasonably required to confirm the
release of the security interest, lien and/or other encumbrance of Administrative Agent and Lenders
with respect to such Portfolio Investment (which release may be concurrent with and conditioned on
the consummation of such Permitted Portfolio Disposition) (i) that is the subject of a Permitted
Portfolio Disposition or (ii) with respect to which Administrative Agent on behalf of Lenders has
otherwise released its security interest, including UCC-3 partial releases.



     (e) Each new Portfolio Investment made by Borrower after the date hereof shall automatically
become a part of the Collateral, and, upon any such addition to the Collateral,



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Borrower shall execute and deliver such Security Documents as Administrative Agent may reasonably require to with
respect to the new Collateral; provided, however, that, if the terms of any third party
financing proposed to be obtained in connection with the acquisition of a Portfolio Asset relating
to a Portfolio Investment would prohibit the Borrower from pledging in favor of Administrative
Agent and the Lenders 100% of a Portfolio Investment, then Borrower shall be required to pledge
only that portion of such Portfolio Investment permitted to be pledged under such financing (and,
in each case, to the greatest extent so permitted); provided further however, that in no
event shall Borrower pledge less than 49% of any such Portfolio Investment without the consent of
Administrative Agent, such consent not to be unreasonably withheld or delayed.




     (f) Subject to Section 3.2(g) below, and provided that Borrower is in compliance with the
financial covenants contained in Section 7.3 of this Agreement and an Event of Default does not
exist, and provided that Borrower complies with the provisions of Section 7.2.6 of this Agreement
with respect to any proposed Portfolio Disposition, Borrower may make and may cause its
Subsidiaries to make Portfolio Dispositions.



     (g) If Borrower’s Consolidated Leverage Ratio exceeds seventy percent (70%) after giving
effect to such Portfolio Disposition, the outstanding aggregate principal amount of the Loans shall
be reduced by the amount necessary to maintain compliance with Borrower’s covenants contained
herein or in the other Credit Documents, including without limitation the covenants set forth in
Section 7.3. The foregoing reductions in the outstanding aggregate principal amount of the Loans
are collectively referred to herein as a “Required Reduction.” Any Required Reduction
shall not reduce the Maximum Loan Amount. Any Required Reduction shall be calculated based on the
Pro Forma Reduction Calculation attached hereto as Exhibit L. The Total Asset Value of any
Portfolio Investment used for the purpose of making the calculation of the Required Reduction under
this Section 3.2(g) shall be based on the most recent Appraised Asset Values of the Portfolio
Assets associated with such Portfolio Investment.



     (h) Notwithstanding the foregoing or anything contained herein to the contrary, (A) after an
Event of Default and while such Event of Default is continuing, (B) if an Event of Default is
created as a result of a Portfolio Disposition, or (C) if a Portfolio Disposition results in
Borrower not being in compliance with any of Borrower’s covenants set forth in Section 7.3 (other
than the Consolidated Leverage Ratio requirement set forth in Section 7.3(a)), then one hundred
percent (100%) of Net Sales Proceeds (or so much of such Net Sales Proceeds as is required to cure
such Event of Default or to bring Borrower into compliance with Borrower’s covenants set forth in
Section 7.3, as applicable) shall be applied to reduce the outstanding aggregate principal amount
of the Loans and there shall be a corresponding Required Reduction; provided, however, if the
Consolidated Leverage Ratio is greater than seventy percent (70%) and there is no Event of Default
(including as a result of a Portfolio Disposition) and Borrower is otherwise in compliance with
Borrower’s covenants set forth in Section 7.3, the provisions of Section 3.2(g) shall apply to
Portfolio Dispositions and Borrower shall not be required to apply Net Sales Proceeds to reduce the
outstanding aggregate principal amount of the Loans as provided in this Section 3.2(h).



     (i) All Required Reductions made by Borrower pursuant to Sections 3.2(g) and 3.2(h) shall
constitute “Mandatory Prepayments” subject to the provisions of Section 2.3.10(b).



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     3.3 Borrower Escrow Account(i) Borrower Escrow Account. Borrower shall place
funds in a Borrower Escrow Account as required by this Section 3.3. The Borrower Escrow Account
shall serve as additional collateral for the Facility and the Borrower Obligations.



     (ii) If an Event of Default occurs and is continuing, then, except as provided in Section 7.9,
Borrower shall deposit into the Borrower Escrow Account all Net Cash Flow for the immediately
preceding fiscal quarter that is Available for Distribution to Borrower derived from any Portfolio
Investment until such time that Borrower is in compliance with all covenants of Borrower hereunder,
including without limitation, the covenants under Section 7.3. Deposits into the Borrower Escrow
Account shall be made within fifteen (15) days after the end of the fiscal quarter for which such
deposit is due and, to the extent sufficient information is not available to Borrower to make a
final determination of the amounts due on or before such fifteenth (15th) day, a final
payment (if necessary) shall be made on or before the forty-fifth (45th) day following
the end of such quarter.



     (iii) If Borrower is required to deposit funds into the Borrower Escrow Account and thereafter
Borrower is able to provide written evidence reasonably satisfactory to Administrative Agent on
behalf of Lenders that no Event of Default currently exists, then (a) so long as no Default or
Event of Default shall have occurred and be continuing, the balance remaining in the Borrower
Escrow Account (including any income earned on amounts deposited in the Borrower Escrow Account),
if any, shall be disbursed to Borrower or as Borrower shall otherwise direct Administrative Agent
in writing. The written evidence of such compliance referred to in the preceding sentence will be
deemed satisfactory and approved by the Administrative Agent on behalf of Lenders unless written
notice outlining the reason for disapproval is received by Borrower from the Administrative Agent
within ten (10) Business Days of receipt by the Administrative Agent of first notice of such
compliance.



     (iv) Administrative Agent may, during the existence and continuation of an Event of Default
and on the Maturity Date, and, at the request of Borrower on any Interest Payment Date,
Administrative Agent will apply all amounts existing in the Borrower Escrow Account (including any
income earned on amounts deposited in the Borrower Escrow Account) as follows: (i) first, to
accrued but unpaid interest of the Loans outstanding, and (ii) second, to a reduction of the
principal amount on the Loans outstanding and all other amounts due and owing under this Agreement;
provided that, with respect to any amounts remaining in the Borrower Escrow Account subsequent to
any Interest Payment Date, such amounts may be applied by Administrative Agent only to the
principal balance of the Loans, and not to any future interest payments (until the next subsequent
Interest Payment Date). After the principal amount of the Loans, all accrued and unpaid interest
and all other amounts owing under the Credit Documents have been paid in full and all commitments
under the Credit Documents have been terminated, the Borrower Escrow Account shall be closed and
the balance remaining (including any income earned thereon), if any, shall be returned to Borrower.



     If Borrower is required to deposit funds into the Borrower Escrow Account for two consecutive
fiscal quarters, then Administrative Agent shall have the right on and after the date that the
second quarterly deposit is due to deliver the Direction Letters to the addressees named thereon.
Administrative Agent shall not deliver the Direction Letters prior to such date.



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4. CONTINUING AUTHORITY OF AUTHORIZED REPRESENTATIVES. The Borrower has the power and
authority to enter into this Agreement and the other Credit Documents and to perform its
obligations under and consummate the transactions contemplated by such Credit Documents and has by
proper action duly authorized the execution and delivery of the Credit Documents. Administrative
Agent and each of the Lenders is authorized to rely upon the continuing authority of the persons,
officers, signatories or agents hereafter designated (“Authorized Representatives”) to bind
Borrower with respect to all matters pertaining to the Facility and the Credit Documents including,
but not limited to, the selection of interest rates. Such authorization may be changed only upon
notice to Administrative Agent accompanied by evidence, reasonably satisfactory to Administrative
Agent, of the authority of the person giving such notice and such notice shall be effective not
sooner than five (5) Business Days following receipt thereof by Administrative Agent. The present
Authorized Representatives are listed on Exhibit C.



5. CONDITIONS PRECEDENT. The obligation of Administrative Agent and Lenders to enter into
this Agreement and to make the Loan on the Closing Date shall be subject to satisfaction of the
following conditions (in form and substance acceptable to the Lenders):




     5.1 Satisfactory Credit Documents. Each of the Credit Documents shall be satisfactory
in form, content and manner of execution and delivery to Administrative Agent and Administrative
Agent’s counsel.



     5.2 No Material Change. No change shall have occurred in the condition (financial or
otherwise), business, affairs, operations or control of Borrower or any other member of the
Combined Group, the General Partner, or any Portfolio Investment Entity, which would have a
Material Adverse Effect since the date of Borrower’s financial statements most recently delivered
to Administrative Agent.



     5.3 Warranties and Representations Accurate. All warranties and representations made
by or on behalf of Borrower and the General Partner to Administrative Agent or any Lender shall be
true, accurate and complete in all material respects.



     5.4 Financials and Appraisals. Administrative Agent on behalf of the Lenders
shall have received and approved: (i)
consolidated financial statements of General Partner complying with the standards set forth in
Section 7.2, and (ii) a statement of Appraised Asset Value dated as of a recent date for the
Portfolio Assets, which indicates Borrower’s Pro Rata Share of each Portfolio Asset.



     5.5 Environmental Compliance and Indemnification Agreements. The Borrower will execute
and deliver a compliance and indemnification agreement with respect to environmental matters in
favor of Administrative Agent and Lenders with respect to any assets owned directly or indirectly
by the Borrower (“Environmental Indemnity”).



     5.6 Validity and Sufficiency of Security Documents. Each of the Security Documents
and related UCC filings shall have been duly recorded and filed to the satisfaction of
Administrative Agent, and Administrative Agent’s counsel, and the Security Documents, upon



- 14 -









 




the filing and recordation of the UCC filing statements, shall create a perfected lien on the
Collateral.




     5.7 No Other Liens; Taxes and Municipal Charges Current. The Collateral shall not be
subject to any liens or encumbrances other than real estate taxes and personal property taxes not
yet due and payable and other Permitted Liens, unless such liens or encumbrances have been approved
by Administrative Agent and Lenders. All real estate taxes, personal property taxes and other
municipal charges relating to any of the Collateral shall be current.



     5.8 Organizational Documents and Entity Agreements. Administrative Agent shall have
received and approved the Partnership Agreement or other organizational documents of Borrower and
of the other members of the Combined Group and the General Partner, and certificates of good
standing and/or legal existence for such Persons issued as of a recent date by such entity’s state
of organization and each other state where such entity, by the nature of its business, is required
to qualify or register



     5.9 Votes, Consents and Authorizations. Administrative Agent shall have received and
approved certified copies of all partnership, entity and corporate votes, consents and
authorizations as may be reasonably required to evidence authority for: (i) closing the Facility
and the transactions contemplated hereby; (ii) providing continuing authorization to designated
persons to deal in all respects on behalf of Borrower; and (iii) the execution of all Credit
Documents.



     5.10 Legal and Other Opinions. Administrative Agent shall have received and approved
legal opinion letters from counsel representing Borrower and the General Partner which meet
Administrative Agent’s legal opinion requirements.



     5.11 Due Diligence. Completion and approval of all due diligence deemed necessary by
the Administrative Agent.



     5.12 Fees and Expenses. Payment of all fees and expenses owing to the Lenders and the
Administrative Agent in accordance with the Fee Letter.



     5.13 Guaranty. The Guarantor will execute and deliver to Administrative Agent, for
the benefit of the Lenders, the Guaranty.



     5.14 No Default. There shall not be any Default or Event of Default under any of the
Credit Documents.



     5.15 No Litigation. There shall not be any action, suit, investigation or proceeding,
pending or threatened, in any court or before any arbitrator or governmental authority, that has a
reasonable probability of materially adversely effecting the ability of the Borrower to perform its
obligations under this Agreement or the other Credit Documents.



     5.16 Compliance with Covenants. The Borrower shall be in compliance with all
covenants contained herein and in the other Credit Documents.



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6. WARRANTIES AND REPRESENTATIONSBorrower warrants and represents to Administrative Agent and
each of the Lenders for the express purpose of inducing the Lenders to enter into this Agreement,
to make the Facility available to the Borrower, to make the Loan, and to otherwise complete all of
the transactions contemplated hereby, that as of the date of this Agreement, upon the date any Loan
is funded and at all times thereafter until such Loan has been repaid and all obligations to each
of the Lenders have been satisfied as follows:




     6.1 Financial Information.Borrower has heretofore delivered to Administrative Agent on
behalf of the Lenders audited financial statements for General Partner for the period ended
December 31, 2004 and unaudited financial statements for General Partner for the three months
ending March 31, 2005. Such financial statements were true, accurate and complete in all material
respects, and fairly presented, in all material respects, the financial condition of General
Partner and the Borrower, as of the dates thereof and for the periods covered thereby, and the same
were prepared in
accordance with GAAP. Since the date of the most recent financial statements so delivered,
there have occurred no changes or circumstances which have had or will have a Material Adverse
Effect. All financial statements of General Partner hereafter delivered to Administrative Agent on
behalf of the Lenders shall be true, accurate and complete in all material respects, and such
financial statements shall fairly present in all material respects the financial condition of
General Partner and the Borrower as of the dates thereof and for the periods covered thereby.



     Borrower has heretofore delivered an operating report to Administrative Agent on behalf of the
Lenders for each Portfolio Asset. Each such operating report presents, in all material respects, a
true, accurate, and complete report of all material operating expenses and operating revenues of
the Portfolio Asset to which it relates for the period covered by such report. Each such operating
report hereafter delivered to the Administrative Agent on behalf of the Lenders in respect of any
Portfolio Asset shall present, in all material respects, a true, accurate, and complete report of
all material operating expenses and operating revenues of such Portfolio Asset for the period
covered by such report.



     6.2 No Violations. Neither the execution and delivery of the Credit Documents by the
Borrower, nor the consummation by the Borrower of the transactions contemplated therein, nor
performance of and compliance with the terms and provisions thereof by the Borrower will (i)
violate or conflict with any provision of the organizational documents or other governance
documents of the Borrower or any other member of the Combined Group, (ii) violate any law,
regulation (including without limitation Regulation U, Regulation X or Regulation T), order, writ,
judgment, injunction, decree or permit applicable to the Borrower (iii) violate or materially
conflict with contractual provisions of, or cause an event of default under, any indenture,
mortgage, deed of trust, contract or other agreement or instrument to which any member of the
Combined Group is a party or by which any such Person may be bound, or (iv) except for Liens
created by, under or in connection with this Agreement or the other Credit Documents, result in or
require the creation of any lien, security interest or other charge or encumbrance upon or with
respect to the Portfolio Investments of the Borrower or any interest in a Portfolio Asset held by a
member of the Combined Group.



     6.3 No Litigation. There is no litigation, action, proceeding, investigation or suit
now pending, or to the best of Borrower’s knowledge threatened, against Borrower, a Portfolio



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Investment Entity, or any other member of the Combined Group which, if adversely decided, would
have a Material Adverse Effect.




     6.4 Compliance With Legal Requirements. The Borrower, any Additional Pledgor and each
other member of the Combined Group is in compliance in all material respects with all laws, rules,
regulations, orders and decrees (including without limitation Environmental Laws) applicable to it,
or to its properties, unless such failure to comply would not have or would not be reasonably
expected to have a Material Adverse Effect.



     6.5 Use of Proceeds. The proceeds of any Loan shall be used solely for the purposes
described in Section 1.3 above.



     6.6 Entity Matters.




6.6.1 Borrower. Borrower: (a) is a limited partnership duly organized,
validly existing and in good standing under the laws of the State of Delaware, (b)
has all necessary power pursuant to proper authorization to enable it to enter into
the Credit Documents to which it is a party, (c) is duly qualified as a foreign
entity and in good standing under the laws of each jurisdiction where the failure to
do so could have a Material Adverse Effect and (d) has the limited partnership power
and authority, and the legal right to conduct the business in which it is currently
engaged.




6.6.2 General Partner. The General Partner (a) is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Maryland, (b) has all necessary power pursuant to proper authorization to enable it
to act as the general partner of Borrower and to execute and deliver the Credit
Documents to which Borrower is a party on Borrower’s behalf, (c) is duly qualified
to do business in and is in good standing under the laws of each jurisdiction where
the failure to do so could have a Material Adverse Effect, and (d) has the corporate
power and authority, and the legal right, to conduct the business in which it is
currently engaged.




6.6.3 Identity of General Partner. As of the date of this Agreement,
the sole General Partner of Borrower is Hines Real Estate Investment Trust, Inc., a
Maryland corporation.



     6.7 Valid and Binding. Each of the Credit Documents to which it is a party
constitutes the legal, valid and binding obligations of Borrower; and the Partnership Agreement
constitutes the legal, valid and binding obligations of the parties thereto, in each case
enforceable against the relevant Person in accordance with the respective terms thereof, subject to
bankruptcy, insolvency and similar laws of general application affecting the rights and remedies of
creditors and, with respect to the availability of the remedies of specific enforcement, subject to
the discretion of the court before which any proceeding therefor may be brought. All required
entity actions and proceedings have been duly taken with respect to Borrower and the General
Partner and each Portfolio Investment Entity, so as to authorize the execution, delivery and
performance by Borrower of the Credit
Documents to which it is a party. All consents and approvals that are



- 17 -









 




required in connection
with the execution and delivery of this Agreement and the other Credit Documents have been
obtained, including, without limitation, consents and approvals required under existing mortgage
and loan agreements, organizational agreements, and from governmental authorities.




     6.8 Deferred Compensation and ERISA. Borrower has not established and does not plan
to establish any pension, insurance or other arrangement or plan for employees covered by Title IV
of the Employee Retirement Income Security Act of 1974, as now or hereafter amended (“ERISA”), and
no “Reportable Event” as defined in ERISA has occurred and is now continuing with respect to any
Plan. The granting of the Facility, the performance by Borrower of its obligations under the
Credit Documents to which it is a party and Borrower’s conducting of its operations do not and will
not violate any provisions of ERISA.



     6.9 No Material Change; No Default. Neither Borrower, the General Partner, any other
member of the Combined Group, nor, to the best knowledge of Borrower, any Portfolio Investment
Entity, is in default in any respect under any contract, lease, agreement, indenture, mortgage,
security agreement or other agreement or obligation to which it is a party which default would have
or would be reasonably expected to have a Material Adverse Effect. No Default or Event of Default
presently exists hereunder or under any other Credit Document to which Borrower is a party.
Borrower, the General Partner, each other member of the Combined Group and, to the best knowledge
of Borrower, each Portfolio Investment Entity has filed all required federal, state and local tax
returns and has paid all taxes due pursuant to such returns or any assessments against any of them.
As of the Closing Date, no change has occurred with respect to Borrower, the General Partner, or
to the best knowledge of Borrower, any Portfolio Investment Entity, any Portfolio Asset or any
Portfolio Investment, that would reasonably be expected to have a Material Adverse Effect since
March 31, 2005. The Partnership Agreement, a true and correct copy of which has been provided to
the Administrative Agent, is in full force and effect.



     6.10 No Broker or Finder. Neither Borrower nor anyone on behalf thereof, has dealt
with any broker, finder or other person or entity who or which may be entitled to a broker’s or
finder’s fee, or other compensation, payable by Administrative Agent or any Lender in connection
with the Facility; it being understood however, that a broker has been engaged by Borrower in
connection with the Facility and other financings which will not result in a fee or compensation
payable by the Administrative Agent or any Lender.



     6.11 Background Information and Certificates. Borrower has delivered to
Administrative Agent accurate and complete copies of all the organizational documents of the
Borrower, the General Partner, any other member of the Combined Group and each Portfolio Investment
Entity. To the best knowledge of the Borrower, all of the factual information contained or
referred to in this Agreement and in the Exhibits and/or Schedules to this Agreement or the other
Credit Documents, and in the certificates and
opinions furnished to Administrative Agent or any Lender by or on behalf of Borrower in
connection with the Facility, is true and correct in all material respects.



     6.12 Consents. Except to the extent previously obtained, no consent, approval,
authorization or order of, or filing, registration or qualification with, any court or governmental



- 18 -









 




authority or other Person is required in connection with the execution, delivery or performance of
this Agreement or any of the other Credit Documents to which Borrower is a party, including without
limitation, consents and approvals required under existing mortgage and loan agreements,
organizational agreements, and from governmental authorities.




     6.13 Indebtedness. Except as permitted under Section 7.4, the Borrower does not have
any Indebtedness. All Funded Debt outstanding as of the Closing Date is accurately reflected on
Exhibit B.



     6.14 Government Regulation. The Borrower is not subject to regulation under the
Public Utility Holding Company Act of 1935 or the Federal Power Act, each as amended. In addition,
the Borrower is not (i) an “investment company” registered or required to be registered under the
Investment Company Act of 1940, as amended, and is not controlled by such a company, or (ii) a
“holding company,” or a “Subsidiary company” of a “holding company,” or an “affiliate” of a
“holding company” or of a “Subsidiary” or a “holding company,” within the meaning of the Public
Utility Holding Company Act of 1935, as amended.



     6.15 Environmental Matters.



     (a) Except as would not result or be reasonably expected to result in a Material Adverse
Effect:



     (i) Except as disclosed on Exhibit J attached hereto and made a part hereof, neither
the Borrower, the General Partner, any other member of the Combined Group nor, to the knowledge of
the Borrower any Portfolio Investment Entity, has received any written notice of, or inquiry from
any Governmental Authority regarding, any violation, alleged violation, non-compliance, liability
or potential liability regarding Hazardous Materials or compliance with Environmental Laws with
regard to any of the Portfolio Assets nor does the Borrower have knowledge that any such notice is
being threatened.



     (ii) No judicial proceeding or governmental or administrative action is pending or, to the
knowledge of the Borrower, threatened, under any Environmental Law to which the Borrower, the
General Partner, any other member of the Combined Group, or, to the knowledge of the Borrower, any
Portfolio Investment Entity is or will be named as a responsible party, nor are there any consent
or other decrees, remediation orders, administrative or other orders, or other similar
administrative or judicial requirements outstanding under any Environmental Law
with respect to the Borrower, the General Partner, any other member of the Combined Group, or,
to the knowledge of the Borrower, any Portfolio Investment Entity or any of the Portfolio Assets.



     (iii) Neither the Borrower, the General Partner, any other member of the Combined Group, nor,
to the knowledge of the Borrower, any Portfolio Investment Entity, has assumed any liability of any
Person under any Environmental Law.



     6.16 Portfolio Assets. Set forth on Exhibit B is a complete and accurate list
of all Portfolio Assets existing as of the Closing Date, together with the ownership interest (both
direct and indirect) of the Borrower therein, and together with a list of the existing documents
evidencing Funded Debt currently encumbering the same (which sets forth the names of the parties,
the dates of such documents, and the amount of Funded Debt relating to each such



- 19 -









 




document) (collectively, the “Funded Debt Documents”). Except for mandatory prepayments of Funded Debt upon
the sale of Portfolio Assets, upon the maturity (whether at the stated maturity date or upon
acceleration) of any Funded Debt or in connection with a default continuing beyond any applicable
notice and/or cure period under the Funded Debt Documents, there are no restrictions or limitations
(whether by contract or otherwise) on payments of dividends, returns of capital or any other forms
of distributions from any Portfolio Investment Entity or any member of the Combined Group to the
Borrower or any other member of the Combined Group.




     6.17 Full Disclosure. All information heretofore furnished by or on behalf of the
Borrower to the Administrative Agent or any Lender for purposes of or in connection with this
Agreement or any transaction contemplated hereby is, and all such information hereafter furnished
by or on behalf of the Borrower to the Administrative Agent or any Lender will be, true and
accurate in all material respects on the date as of which such information is stated (except to the
extent any such information is subsequently supplemented or corrected by information provided by or
on behalf of Borrower); provided, however, that where such information is the work product of a
third party that is unrelated to Borrower, such information is and will be, to the best of
Borrower’s knowledge, true and accurate in all material respects on the date as of which
information is stated. To the best of its knowledge, the Borrower has disclosed to the Lenders in
writing any and all facts which have had or might have in the future a Material Adverse Effect.



     6.18 Subsidiaries. Borrower has no Subsidiaries other than those listed on
Exhibit B and no Lien other than Permitted Liens exists on Borrower’s interests in its
Subsidiaries.



     6.19 No Material Adverse Contracts, Etc. Neither the Borrower, the General Partner,
any other member of the Combined Group nor, to the knowledge of the Borrower, any Portfolio
Investment Entity, is subject to any charter, corporate, partnership or other legal restriction, or
any judgment, decree, order, rule or regulation, or party to any contract or agreement that has had
or could reasonably be expected in the future to have a Material Adverse Effect.



     6.20 Compliance With Other Instruments, Laws, Etc.. Neither the Borrower, the General
Partner, any other member of the Combined Group nor, to the knowledge of the Borrower, any
Portfolio Investment Entity, is in violation of any provision of its partnership agreement, charter
or other organizational document, as the case may be, or any agreement or instrument to which it
may be subject or by which it or any of its properties may be bound or any decree, order, judgment,
statute, license, rule or regulation, in any of the foregoing cases in a manner that could
reasonably be expected to result, individually or in the aggregate, in a Material Adverse Effect.



     6.21 Solvency. Each member of the Combined Group, the General Partner, and to the
knowledge of the Borrower, each Portfolio Investment Entity, is Solvent.



     6.22 REIT Status. The General Partner was organized and has operated in conformity
with the requirements for qualification and taxation as a REIT for each of its taxable years
beginning with the year ended December 31, 2004, and its current or anticipated organization and
method of operation will enable it to continue to meet the requirements for qualification and
taxation as a REIT.



- 20 -









 





     6.23 Patriot Act. Neither Borrower, the General Partner, any other member of the
Combined Group nor, to the knowledge of the Borrower, any Portfolio Investment Entity, is or shall
become a person with whom Lender is restricted from doing business under regulations of the Office
of Foreign Asset Control (“OFAC”) of the Department of the Treasury of the United States of America
(including, without limitation, those Persons named on OFAC’s Specially Designated and Blocked
Persons list) or under Executive Order 13324 — Blocking Property and Prohibiting Transactions With
Persons Who Commit, Threaten to Commit, or Support Terrorism, or any similar Executive Order or
other similar Legal Requirement, and neither Borrower, the General Partner, any other member of the
Combined Group nor, to the knowledge of the Borrower, any Portfolio Investment Entity is knowingly
engaged or shall knowingly engage in any dealings or transactions or otherwise be associated with
such persons.



7. COVENANTS.




     Borrower covenants and agrees that from the date hereof and so long as any indebtedness
remains unpaid hereunder, or any of the Loans or other obligations remain outstanding, as follows:



     7.1 Notices. Borrower shall, with reasonable promptness, but in all events within ten (10) days after it
has actual knowledge thereof, notify Administrative Agent in writing of the occurrence of any act,
event or condition which Borrower, in its good faith determination, believes constitutes a Default
or Event of Default under any of the Credit Documents, specifying the nature and existence thereof.
Such notification shall include a written statement of any remedial or curative actions which
Borrower proposes to undertake to cure or remedy such Default or Event of Default.



     7.2 Financial Statements and Reports. Borrower shall furnish or cause to be furnished
to Administrative Agent from time to time, the following financial statements and reports and other
information, all in form, manner of presentation and substance reasonably acceptable to
Administrative Agent:




7.2.1 Annual Statements. Within ninety (90) days following the end of
each fiscal year, a consolidated balance sheet, an income statement, a statement of
changes in shareholders’ equity and a statement of cash flows of General Partner as
of the end of such fiscal year, setting forth in comparative form consolidated
figures for the preceding fiscal year, all such financial information described
above to be in reasonable form and detail and audited by one of the following
accounting firms: Deloitte & Touche LLP, Ernst & Young LLP, KPMG or
PricewaterhouseCoopers (or by another independent certified public accounting firm
of recognized national standing reasonably acceptable to the Administrative Agent),
and whose opinion shall be to the effect that such financial statements have been
prepared in accordance with GAAP and shall not be limited as to the scope of the
audit or qualified as to the status of General Partner or the Borrower as a going
concern or otherwise;




7.2.2 Periodic Statements. Within forty-five (45) days following the
end of each fiscal quarter of the Borrower (other than the fourth fiscal quarter, in
which



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case ninety (90) days after the end thereof) an unaudited consolidated balance
sheet, income statement and statement of changes in shareholders’ equity of the
General Partner as of the end of such fiscal quarter, in each case setting forth in
comparative form consolidated figures for the corresponding period of the preceding
fiscal year, all such financial information described above to be in reasonable form
and detail and reasonably acceptable to the Administrative Agent (provided, however,
Administrative Agent hereby confirms that the form and detail of such financial
information, as well as any financial information submitted by Borrower pursuant to
Section 7.2.1 above, shall be deemed to be acceptable if it is in substantially the
same form and detail as the financial information submitted by Borrower to
Administrative Agent prior to the date hereof), and accompanied by a certificate of
an authorized officer of Borrower to the effect that such quarterly financial
statements fairly present in all material respects the financial condition of the
General Partner and have been prepared in accordance with GAAP, subject to
changes resulting from audit and normal year-end adjustments.




7.2.3 Data Requested. Within a reasonable period of time after a
request from Administrative Agent, such other financial data or information as
Administrative Agent may reasonably request with respect to any of the Portfolio
Assets or members of the Combined Group including, without limitation, operating
statements, budgets, mortgage information, rent rolls, and lease status/expiration
reports.




7.2.4 Tax Returns. Within a reasonable period of time after a request
from Administrative Agent, complete copies of all federal and state tax returns and
supporting schedules of Borrower, and, to the extent applicable each other member of
the Combined Group.




7.2.5 Pro Forma. Calculation of Certain Financial Covenants. Within
forty-five (45) days after the end of each fiscal quarter Borrower shall deliver a
pro forma calculation of the financial covenants contained in Section 7.3.




7.2.6 Officer’s Certificate. (A) At the time of delivery of the
financial statements provided for in Sections 7.2.1 and 7.2.2 above, (B) at least
fourteen (14) days prior to any sale, disposition or other transfer of a Portfolio
Asset (or any material part thereof, other than the leasing of space in Portfolio
Assets to tenants in the ordinary course of business), and (C) at the time Borrower
requests a new Loan hereunder or repays any principal amount outstanding under the
Facility, Borrower shall deliver a certificate of an authorized officer of Borrower
substantially in the form of Exhibit G, (i) demonstrating compliance with
the financial covenants contained in Section 7.3 by calculation thereof as of the
end of each such fiscal period or after giving effect to such transfer, borrowing or
repayment (together with such supporting documentation as Administrative Agent may
reasonably require), (ii) calculating the Applicable Margin as of the end of each
such fiscal period or after giving effect to such transfer, borrowing or repayment,
and (iii) stating that no Default or Event of Default exists or will exist



- 22 -









 






as a result of such transfer, borrowing or repayment, or if any Default or Event of
Default does exist, specifying the nature and extent thereof and what action the
Borrower proposes to take with respect thereto. In the event that any such
certificate indicates a violation of any of the financial covenants in Section 7.3,
then Borrower shall, as applicable, contemporaneously with the delivery of any such
certificate make a principal payment by an amount necessary to achieve compliance
with such financial covenants or if caused by a transfer of a Portfolio Asset make
such a principal payment contemporaneously with the closing of such transfer.




7.2.7 Information to Owners. To the extent not otherwise provided
hereunder, promptly upon the mailing thereof to the owners in Borrower generally,
copies of all financial statements and reports so mailed.




7.2.8 Portfolio Investments. As soon as available, and in any event
within sixty (60) days after the close of each fiscal quarter of Borrower, a report
in a form reasonably satisfactory to Administrative Agent describing (i) each
Portfolio Investment made during such fiscal quarter and (ii) any transfer of any
Portfolio Investment during such fiscal quarter to another legal entity in which
Borrower has acquired a direct or indirect interest. Such report shall be
accompanied by a Direction Letter for each such Portfolio Investment made in a
Portfolio Investment Entity that is not controlled by Borrower or affiliates of
Borrower and shall include a description of any such Portfolio Investment, and such
other information as reasonably requested by Administrative Agent. Except as
provided in Section 3.2(e), each such Portfolio Investment shall, subject to any
Permitted Liens, automatically become a part of the Collateral hereunder and shall
be subject to the terms and provisions of this Agreement and any other applicable
Credit Document, including without limitation Section 3.2 of this Agreement.




7.2.9 Auditor’s Reports. Promptly upon receipt thereof, a copy of any
other report or “management letter” submitted by independent accountants to the
Borrower in connection with any annual, interim or special audit of the books of the
Borrower.




7.2.10 Environmental Reports. Promptly upon transmission thereof by
Borrower or any other member of the Combined Group, copies of any filings and
registrations with, and reports to, the United States Environmental Protection
Agency, or any state or local agency responsible for environmental matters, the
United States Occupational Health and Safety Administration, or any state or local
agency responsible for health and safety matters, or any successor agencies or
authorities concerning environmental, health or safety matters pertaining to any of
the Assets.




7.2.11 Notice of Default or Litigation. Upon the Borrower obtaining
knowledge thereof, it will give notice to the Administrative Agent promptly, but in
any event within five (5) Business Days of obtaining such knowledge, of the
occurrence of any of the following with respect to the Borrower, the General
Partner, any



- 23 -









 






Portfolio Investment Entity or any other member of the Combined Group:
(i) any development in the business or affairs of any such Person that has resulted
in, or that Borrower reasonably believes may result in, a Material Adverse Effect,
(ii) the pendency or
commencement of any litigation, arbitration or governmental proceeding against
any such Person in which damages are sought or environmental remediation demanded
which could reasonably be expected to be adversely determined and which, if
adversely determined, could be expected to have a Material Adverse Effect, (iii) any
levy of an attachment, execution or other process against its assets which could
reasonably be expected to have a Material Adverse Effect, (iv) the receipt of any
notice alleging the occurrence of an event or condition which shall constitute a
default or event of default under any other agreement for borrowed money, or (v) the
institution of any proceedings against, or the receipt of written notice of
potential liability or responsibility for any violation, or alleged violation which
could reasonably be expected to be adversely determined, of any federal, state or
local law, rule or regulation, including but not limited to, Environmental Laws, the
violation of which could reasonably be expected to have a Material Adverse Effect.




7.2.12 Reserved.7.2.13 Debt. (i) At least ten (10) Business
Days prior to the incurrence thereof, or (ii) in the case of any Portfolio Asset
held by a Person other than a member of the Combined Group, within five (5) Business
Days after obtaining knowledge of the incurrence thereof if not within the knowledge
of the Borrower prior to such incurrence, notice to Administrative Agent specifying
the amount and nature of any additional (i.e., other than the Funded Debt and the
Funded Debt Documents existing as of the date hereof and reflected on Exhibit
B hereto) Indebtedness, encumbrances, mortgages or other security interests
(other than Permitted Liens) affecting any of the Portfolio Assets or any material
property or Investment of Borrower or any other member of the Combined Group.




7.2.14 Other Information. With reasonable promptness upon any such
request, such other information regarding the business, properties or financial
condition of the Borrower or any other member of the Combined Group as the
Administrative Agent may reasonably request.



     7.3 Financial Covenants.



     (a) Consolidated Leverage Ratio. The Borrower will not permit Funded Debt (including,
without limitation, the outstanding balance under the subject Facility) to exceed seventy percent
(70%) of the Total Asset Value. This covenant shall be tested quarterly at the end of each
calendar quarter, at the time each new Loan is made, and in connection with the delivery of an
officer’s certificate pursuant to Section 7.2.6.



     (b) Minimum Interest Coverage Ratio. The ratio of the EBITDA to the Interest Expense
shall be greater than 1.65 to 1.00. This covenant shall be tested quarterly at the end of each
calendar quarter, at the time of each Loan, and in connection with the delivery of an officer’s
certificate pursuant to Section 7.2.6, in each case with respect to the prior two (2) fiscal



- 24 -









 




quarters most recently ended, annualized; provided that pro forma financial information shall be
provided for each fiscal quarter for which actual results are not then available.




     (c) Minimum Tangible Net Worth. Borrower shall maintain a Tangible Net Worth in
excess of Eighty Million Dollars ($80,000,000.00) plus seventy five percent (75%) of the proceeds
of any equity offerings, contributions or sales of treasury stock received by the Borrower after
the Closing Date. This covenant shall be tested quarterly at the end of each calendar quarter, at
the time of each Loan, and in connection with the delivery of an officer’s certificate pursuant to
Section 7.2.6.



     (d) Minimum Fixed Charge Covenant. The ratio of EBITDA to Fixed Charge shall be
greater than 1.50 to 1.0. This covenant shall be tested quarterly at the end of each calendar
quarter, at the time of each Loan, and in connection with the delivery of an officer’s certificate
pursuant to Section 7.2.6, in each case with respect to the prior two (2) fiscal quarters most
recently ended, annualized; provided that pro forma financial information shall be provided for
each fiscal quarter for which actual results are not then available.



     7.4 Indebtedness and Restrictions on Liens, Transfers and Additional Debt. The
Borrower shall not, without the prior written consent of the Administrative Agent and the Required
Lenders (which may be withheld in their sole discretion):




     (a) incur any Indebtedness (other than the Indebtedness arising under this
Agreement and the other Credit Documents) that is recourse to Borrower (excepting
customary environmental and other indemnification obligations in respect of
Indebtedness of Persons in which Borrower has an interest which is not otherwise
recourse to Borrower);




     (b) provide any completion or other guarantees either directly or indirectly
(including, without limitation, through a joint venture) in excess of $5,000,000.00
in the aggregate; and




     (c) [Reserved]




     (d) further encumber the Portfolio Investments; provided that the foregoing
shall not limit the right of Borrower to cause the refinancing of any Funded Debt on
such terms and conditions as Borrower may direct (including the granting of liens on
Portfolio Investments and the granting of direct and indirect interests therein, or
Borrower’s becoming subject to an agreement prohibiting or otherwise restricting the
creation of liens on Portfolio Investments) so long as such refinancing does not
cause the violation of any of the covenants set forth in Section 7.3 of this
Agreement. In connection with any such refinancing, Borrower covenants to use
commercially reasonable efforts to maintain in full force and effect all existing
pledges and assignments of economic interests
granted with respect to Borrower’s interests in Portfolio Investments by
Borrower pursuant to this Agreement and the other Credit Documents to which it is a
party. In the event such refinancing requires the release of Lenders’ security
interests in all or part of any Portfolio Investment that is the subject of the
refinancing



- 25 -









 






permitted by this Section 7.4(d), then Administrative Agent is
authorized and shall be obligated to release such Portfolio Investment from all
pledges thereof and security interests therein created by the Credit Documents;
provided however that the Administrative Agent may refuse to release any
more than 51% of any such Portfolio Investment from any such pledge or security
interest, unless Administrative Agent has given its consent to such refinancing,
such consent not to be unreasonably withheld or delayed. If such refinancing will
result in Borrower’s noncompliance with the covenants set forth in Section 7.3 of
this Agreement, the outstanding aggregate principal amount of the Loans shall be
reduced by the amount necessary to maintain compliance with Borrower’s covenants
contained in Section 7.3. Within three (3) Business Days after receipt of a written
request from Borrower and provided Borrower has satisfied the foregoing reduction
requirement, if applicable, Administrative Agent on behalf of Lenders shall execute
such releases of Lenders’ security interests in the Portfolio Investments that are
the subject of a refinancing permitted by this Section 7.4(d) as Borrower reasonably
requests in connection with such refinancing .




       (e) Except as specifically set forth in Section 7.4(d) and Section 7.5
which provide instances in which Administrative Agent’s consent is required, nothing
in this Agreement or any other Credit Document shall, and Borrower is hereby
specifically permitted to and to permit or cause any Subsidiary or Portfolio
Investment Entity to, mortgage, grant securities interests in, and otherwise
encumber any Portfolio Asset and the direct and indirect interests of any Portfolio
Entity in any Portfolio Asset.



     7.5 Liens/Negative Pledges. Except as permitted in Section 7.4(d) hereof, the
Borrower will not either (i) contract, create, incur, assume or permit to exist any additional Lien
(other than Permitted Liens) with respect to any of the Portfolio Investments, whether now owned or
hereafter acquired, or (ii) enter into, assume or become subject to any agreement (other than this
Agreement, the other Credit Documents and the Funded Debt Documents listed and described on
Exhibit B) (A) prohibiting or otherwise restricting the creation or assumption of any Lien
upon any of the Portfolio Investments or (B) requiring the Borrower to grant a Lien to a Person in
the event Borrower grants a Lien on a Portfolio Investment to another Person.



     7.6 Nature of Business. The Borrower will not alter in a material way the character
or conduct of its business from that conducted as of the Closing Date which is and shall be limited
to the business permitted by the Partnership Agreement as of the Closing Date; provided, however,
this Section 7.6 shall not be construed to prevent the Borrower from making procedural changes in
the manner in which Borrower conducts its ordinary business operations.



7.7 Limitations on Certain Transactions




     (a) Borrower shall not dissolve, terminate or liquidate, nor merge or consolidate with any
other Person; and



(b) [Reserved]





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     (c) Borrower will not become party to, nor will Borrower permit any other member of the
Combined Group to become a party to, any document, agreement, or instrument or subject to any other
obligation or any charter or corporate or partnership restriction, as the case may be, from and
after the date hereof, which individually or in the aggregate, would have a Material Adverse
Effect.



     7.8 Investments. Borrower shall not make any Investment which is not a Permitted
Investment.



     7.9 Dividends and Distributions. So long as no Event of Default has occurred and is
continuing or would be directly or indirectly caused as a result thereof, the Borrower may declare
and make any dividends or distributions as permitted under the Partnership Agreement; provided,
however, that the Borrower may while an Event of Default is continuing make distributions or
dividends but only to the extent (after taking into account all available funds of the Borrower
from all other sources) required in order to enable the General Partner to continue to qualify as a
REIT.



     7.10 Transactions with Portfolio Investments. Borrower will not, nor will it permit
any of its Subsidiaries to, enter into any transaction or series of transactions with any partner
or any employee of any member of the Combined Group or any Portfolio Investment Entity other than
on terms and conditions substantially as favorable to such Person as would be obtainable by it in a
comparable arm’s length transaction with a Person other than any partner, employee or Portfolio
Investment Entity, unless such transaction or series of transactions, would not or could not
reasonably be expected to have, in the aggregate, a Material Adverse Effect, or otherwise be
materially detrimental to the economic interests of the Combined Group taken as a whole.



     7.11 Amendments. To the extent that any amendment, modification, supplement, waiver
or termination of any provisions of the Partnership Agreement, or other governing or organizational
document of Borrower or any other member of the Combined Group would permit proceeds of the Loans
to be used in a manner inconsistent with such governing or organizational document in effect at the
Closing Date, the Borrower agrees that it shall not, and shall not permit any other member of the
Combined Group to, apply proceeds of the Loans in a manner inconsistent with what was permitted
under the governing or organizational documents in effect on the Closing Date.



     7.12 ERISA. The Borrower will not establish any Plan.



     7.13 Place for Records: Inspection. Borrower shall maintain all of its business
records at the address specified at the beginning of this Agreement. Upon reasonable prior notice
and at reasonable times during normal business hours, Administrative Agent shall have the right
(through such agents or consultants as Administrative Agent may designate) to make copies of and
abstracts from Borrower’s books of account, correspondence and other records and to discuss its
financial and other affairs with any of its investors and any accountants hired by Borrower as well
as to visit and inspect the Assets, it being agreed that Administrative Agent and each of the
Lenders shall use reasonable efforts to not divulge confidential information obtained from such
examination to others except in connection with Legal Requirements and in connection with
administering the Facility, enforcing its rights and remedies under the Credit



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Documents and in the
conduct, operation and regulation of its banking and lending business (which may include, without
limitation, the transfer of the Facility or of participation interests therein provided that any
such transferee or participant agrees to maintain the confidentiality thereof as required by this
Agreement). Any assignee or transferee of the Facility or any holder of a participation interest
in the Facility shall be entitled to deal with such information in the same manner and in
connection with any subsequent transfer of its interest in the Facility or of further participation
interests therein.




     7.14 Costs and Expenses. Borrower shall pay all costs and expenses (excluding
salaries or wages of officers, directors and employees of Administrative Agent or any Lender and
overhead expenses charged by or allocated to Administrative Agent or any Lender) reasonably
incurred by Administrative Agent in connection with the implementation of the Facility and the
enforcement of Administrative Agent’s and Lenders’ rights under the Credit Documents, including,
without limitation, reasonable third party costs and expenses, including reasonable legal fees and
disbursements, appraisal fees (in accordance with, and subject to the terms of, this Agreement),
inspection fees, plan review fees, travel costs, fees and out-of-pocket costs of independent
engineers and consultants. Borrower’s obligations to pay such costs and expenses shall include,
without limitation, all reasonable attorneys’ fees and other costs and expenses reasonably incurred
for preparing and conducting litigation or dispute resolution arising from any breach by Borrower
of any covenant, warranty, representation or agreement under any Credit Document to which a member
of the Combined Group is a party.



     7.15 Compliance with Legal Requirements. Borrower shall comply, and shall cause each
other member of the Combined Group to comply, in all material respects with all Legal Requirements.
In furtherance of the foregoing and not in limitation thereof, Borrower hereby agrees to provide
the Lender with any additional information that the Lender reasonably requests from time to time in
order to ensure compliance by Borrower with all applicable Anti-Money Laundering Laws. As used
herein, the term “Anti-Money Laundering Laws” shall mean the USA Patriot Act of 2001, the Bank
Secrecy Act, and
Executive Order 13324 – Blocking Property and Prohibiting Transactions With Persons Who
Commit, Threaten to Commit, or Support Terrorism, and any similar Legal Requirements..



     7.16 MAI Appraisals. Promptly upon receipt thereof, Borrower shall deliver to
Administrative Agent each appraisal of any of the Portfolio Assets available to Borrower. During
the existence and continuation of an Event of Default, if the most recent MAI Appraisal for any
Portfolio Asset is older than one (1) year, then Borrower shall upon Administrative Agent’s request
therefor promptly use its best efforts to obtain a current MAI Appraisal for such Portfolio Asset
at Borrower’s sole cost and expense. Administrative Agent may require Borrower to use its best
efforts to obtain updated MAI Appraisals for Portfolio Assets which Borrower has previously
delivered MAI Appraisals to Administrative Agent, at Borrower’s sole cost and expense , but if an
updated MAI Appraisal is requested for any Portfolio Asset for which an MAI Appraisal is available
that is less than one (1) year old, the Administrative Agent and the Lenders shall pay the costs of
such requested appraisal.



     7.17 Title to Properties. The Borrower and each other member of the Combined Group
has good title to all of its respective properties, assets and rights of every name and nature
purported to be owned by it.



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     7.18 Insurance. Borrower will, and will cause the other members of the Combined Group
to, maintain with respect to their respective properties, with financially sound and reputable
insurers, insurance with respect to such properties and its business against such casualties and
contingencies as shall be in accordance with the general practices of businesses engaged in similar
activities in similar geographic areas and in amounts, containing such terms, in such forms and for
such periods as may be reasonable and prudent.



     7.19 Taxes. The Borrower will, and will cause each of the other members of the
Combined Group to, pay or cause to be paid taxes, assessments and other governmental charges
payable by it or as to such Person’s property and file all returns and reports relating thereto
before the same become delinquent including, without limitation, upon the income or profits
therefrom of any such Person. Promptly upon request by the Administrative Agent, the Borrower will
provide evidence of the payment of such taxes, assessments and other governmental charges in the
form of receipted tax bills or other form reasonably acceptable to the Administrative Agent, or
evidence of the existence of applicable contests as permitted herein.



     7.20 Compliance with Contracts, Licenses, and Permits. The Borrower will comply with,
and will cause each other member of the Combined Group to comply with (a) the provisions of its
partnership agreement or corporate charter and other organizational documents, as applicable, (b)
all material agreements and instruments to which it is a party or by which it or any of its
properties may be bound, and (c) all applicable
decrees, orders, and judgments, if the failure to comply therewith will, either individually
or in the aggregate, result in a Material Adverse Effect.



     7.21 Replacement Documentation. Upon receipt of an affidavit of an officer of
Administrative Agent or any Lender as to the loss, theft, destruction or mutilation of a Note or
any other Credit Document, Borrower will issue, in lieu thereof, a replacement Note or other Credit
Document in the same principal amount thereof and otherwise of like tenor.



     7.22 Perfected LP Interest Covenants. Borrower shall at all times comply with the
following covenants with respect to each of the Perfected LP Interests: (i) Borrower shall have
full right, title and interest to each Perfected LP Interest, subject to Permitted Liens and such
other exceptions set forth herein or in the Pledge Agreement or other Credit Documents; (ii)
Borrower shall not encumber any Perfected LP Interest except as permitted hereunder (including as
permitted by Section 7.4(d)) or under any Security Document; (iii) Borrower shall comply with all
applicable Legal Requirements with respect to each Perfected LP Interest; (iv) Borrower shall
promptly deliver to Administrative Agent copies of all notices given or received with respect to
each Perfected LP Interest (other than routine correspondence); and (v) Borrower shall comply with
all covenants contained in the Security Documents that are in effect with respect to each Perfected
LP Interest.



     7.23 Existence of the Borrower; Maintenance of REIT Status. The Borrower will do or
cause to be done all things necessary to preserve and keep in full force and effect its existence
as a Delaware limited partnership. Borrower will do all things commercially reasonable and
consistent with the Partnership Agreement, to enable the General Partner to at all times maintain
the General Partner’s status as a REIT and not take any action which could lead to the General
Partner’s disqualification as a REIT.



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     7.24 Refinance of California Property. Borrower shall apply the proceeds received by
it from any mortgage or other financing of the California Property (other than Loans under the
Facility) to the reduction of the outstanding principal balance of the Loans.



8. SPECIAL PROVISIONS.




     8.1 Right to Contest.




8.1.1 Taxes and Claims by Third Parties. Notwithstanding anything in
this Agreement to the contrary, it is agreed
that any tax, assessment, charge, levy, claim or obligation to a third party
(expressly excluding an obligation to make payments to the Lenders created under the
Credit Documents) need not be paid while the validity or amount thereof shall be
contested currently, diligently and in good faith by appropriate proceedings and if
Borrower or the other relevant member of the Combined Group shall have adequate
unencumbered (except in favor of Administrative Agent, on behalf of the Lenders or
under the Funded Debt Documents, as applicable) cash reserves with respect thereto
and provided that Borrower or the other relevant member of the Combined Group shall
pay all taxes, assessments, charges, levies or obligations immediately upon the
commencement of proceedings to enforce any lien which may have attached as security
therefor, unless such proceeding is stayed by proper court order pending the outcome
of such contest.




8.1.2 Legal Requirements. Any member of the Combined Group may contest
any claim, demand, levy or assessment under any Legal Requirements by any person or
entity if: (i) the contest is based upon a material question of law or fact raised
by such Person in good faith; (ii) the contest is properly commenced and thereafter
diligently pursued; (iii) the contest will not materially impair the ability to
ultimately comply with the contested Legal Requirement should the contest not be
successful; (iv) Borrower demonstrates to Administrative Agent’s reasonable
satisfaction that such Person has the financial capability to undertake and pay for
such contest and any corrective or remedial action then or thereafter reasonably
likely to be necessary; (v) there is no reason to believe that the contest will not
be resolved prior to the Maturity Date; and (vi) no Default or Event of Default
exists.



     8.2 Borrower Fully Liable. Borrower shall be fully liable for the Facility, each of
the Loans and all other Borrower Obligations.



9. EVENTS OF DEFAULT.




     The following provisions deal with Default, Events of Default, notice, grace and cure
periods, and certain rights of Administrative Agent and the Lenders following an Event of Default.



     9.1 Default and Events of Default. The term “Default” as used herein or in any of the
other Credit Documents shall mean an Event of Default, or any fact or circumstance which
constitutes, or upon the lapse of time, or giving of notice, or both, could constitute, an Event of
Default. Each of the following events, unless cured within any applicable grace or notice period



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set forth or referred to below in this Section 9.1, or in Section 9.2, shall constitute an “Event
of Default”:





9.1.1 Generally. A default by Borrower in the performance of any term,
provision or condition of this Agreement to be performed by Borrower, or a breach,
or other failure to satisfy, any other term, provision, condition, covenant or
warranty under this Agreement and such default remains uncured beyond any applicable
specific grace or notice period provided for in this Agreement, or as set forth in
Section 9.2. below.




9.1.2 Note and Other Credit Documents. A default by Borrower in the
performance of or a breach, or other failure to satisfy, any term, provision,
condition, covenant, or warranty under any Note or any other Credit Document,
regardless of whether the then undisbursed portion of the Maximum Loan Amount is
sufficient to cover any payment of money required thereby, and the specific grace or
notice period, if any, allowed for the default in question shall have expired
without such default having been cured; or any Credit Document shall fail to be in
full force and effect or to give the Administrative Agent and Lenders the rights,
powers and privileges purported to be created thereby (except insofar as such
rights, powers and privileges are contrary to applicable public policy and except to
the extent such failure is due to the gross negligence or willful misconduct of
Administrative Agent or a Lender).




9.1.3 Financial Status and Insolvency. (A) Borrower shall: (i) admit
in writing its inability to pay its debts generally as they become due; (ii) file a
petition in bankruptcy or a petition to take advantage of any insolvency act; (iii)
make an assignment for the benefit of creditors; (iv) consent to, or acquiesce in,
the appointment of a receiver, liquidator or trustee of itself or of the whole or
any substantial part of its assets; (v) file a petition or answer seeking
reorganization, arrangement, composition, readjustment, liquidation, dissolution or
similar relief under the Federal Bankruptcy laws or any other applicable law; (vi)
have a court of competent jurisdiction enter an order, judgment or decree appointing
a receiver, liquidator or trustee of Borrower, or of the whole or any substantial
part of the assets of Borrower, and such order, judgment or decree shall remain
unvacated or not set aside or unstayed for one hundred twenty (120) days; (vii) have
a petition filed against it seeking reorganization, arrangement, composition,
readjustment, liquidation, dissolution or similar relief under the Federal
Bankruptcy laws or any other applicable law and such petition shall remain
undismissed for one hundred twenty (120) days; or (viii) have, under the provisions
of any other law for the relief or aid of debtors, any court of competent
jurisdiction assume custody or control of Borrower or of the whole or any
substantial part of its assets and such custody or control shall remain unterminated
or unstayed for one hundred twenty (120) days; or (B) any such event shall occur
with respect to the General Partner of Borrower.




9.1.4 Breach of Representation or Warranty. Any representation or
warranty made by Borrower herein or in any other certificate, instrument or document



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relating to the Facility required to be delivered pursuant to any Credit Document
shall at the time made or deemed to have been remade or renewed be false or
misleading in any material respect, or any warranty shall be materially breached.




9.1.5 Defaults under Other Agreements. With respect to any
Indebtedness (other than Indebtedness outstanding under this Agreement) of the
Borrower or any other member of the Combined Group or Portfolio Investment Entity,
(A) such Person shall (1) default in any payment (beyond the applicable grace period
with respect thereto, if any) with respect to any such Indebtedness and such
Indebtedness is accelerated, or (2) the occurrence and continuance of a default in
the observance or performance relating to such Indebtedness or contained in any
instrument or agreement evidencing, securing or relating thereto, or any other event
or condition shall occur or condition exist, the effect of which default or other
event or condition is to cause, or permit, the holder or holders of such
Indebtedness (or trustee or agent on behalf of such holders) to cause (determined
without regard to whether any notice or lapse of time is required), any such
Indebtedness to become due prior to its stated maturity; and (B) any such
Indebtedness shall be declared due and payable, or required to be prepaid other than
by a regularly scheduled required prepayment, prior to the stated maturity thereof;
provided, however, that such Indebtedness of Borrower and Borrower’s Pro Rata Share
of such Indebtedness of any other member of the Combined Group or another Portfolio
Investment Entity, collectively and without duplication (including instances where
more than one such Person is an obligor under such Indebtedness), then due and
payable or required to be prepaid prior to stated maturity is at least Ten Million
Dollars ($10,000,000.00).




9.1.6 Change of Control. The occurrence of a Change of Control.




9.1.7 Judgments. There shall remain in force, undischarged,
unsatisfied and unstayed, for more than thirty (30) days, whether or not
consecutive, any uninsured final judgment against any member of the Combined Group
such that together with Borrower’s Pro Rata Share of other outstanding uninsured
final judgments, undischarged, unsatisfied and unstayed, against any of such parties
equals or exceeds, collectively and without duplication, in the aggregate Ten
Million Dollars ($10,000,000.00).



     9.2 Grace Periods and Notice. As to each of the foregoing events the following provisions
relating to grace periods and notice shall apply:




9.2.1 No Notice or Grace Period. There shall be no grace period and no
requirement of notice with respect to the payment of principal at Maturity and no
grace period and no requirement of notice with respect to defaults related to the
voluntary filing of bankruptcy or reorganization proceedings or a general assignment
for the benefit of creditors, with respect to non-monetary defaults which are not
reasonably capable of being cured or with respect to a breach of warranty or
representation under Section 6.1.(Financial Information), or with respect to
breaches under Section 7.3 (Financial Covenants), Section 7.4



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(Indebtedness and
Restrictions on Liens, Transfers and Additional Debt), Section 7.7 (Limitations on
Certain Transactions), Section 9.1.6 (Change of Control) or Section 9.1.7
(Judgments).




9.2.2 Nonpayment of Interest and Principal. As to the nonpayment of a
scheduled interest payment or a scheduled installment of principal prior to
Maturity, there shall be a ten (10) day grace period without any requirement of
notice from Administrative Agent, subject, however, to Section 2.3.13 above;
provided, however, Borrower shall only be entitled to such 10-day grace period once
in any calendar year with no grace or notice period as to any subsequent nonpayment
within the relevant calendar year.




9.2.3 Other Monetary Defaults. All other monetary defaults shall have
a five (5) day grace period following notice from Administrative Agent (unless
otherwise specifically provided for herein), or, if shorter, a grace period without
notice until five (5) Business Days before the last day on which payment is required
to be made in order to avoid: (i) the cancellation or lapse of required insurance,
or (ii) a tax sale or the imposition of late charges or penalties in respect of
taxes or other municipal charges;




9.2.4 Nonmonetary Defaults Capable of Cure. As to nonmonetary defaults
which are reasonably capable of being cured or remedied, unless there is a specific
shorter or longer grace period provided for in this Agreement or in another Credit
Document, there shall be a thirty (30) day grace period following notice from
Administrative Agent or, if such default would reasonably require more than thirty
(30) days to cure or remedy, such longer period of time not to exceed a total of one
hundred eighty (180) days from Administrative Agent’s notice as may be reasonably
required so long as Borrower shall commence reasonable actions to remedy or cure the
default within thirty (30) days following such notice and shall diligently prosecute
such curative action to completion within such one hundred eighty (180) day period.
As to breaches of warranties and representations (other than those set forth in
Section 6.1 above)
there shall be a thirty (30) day grace period following notice from
Administrative Agent.



     9.3 Certain Remedies. If an Event of Default shall occur and be continuing:




9.3.1 Termination of Commitments. Administrative Agent may declare the
Commitments terminated whereupon the Commitments shall be immediately terminated.




9.3.2 Accelerate Debt. Administrative Agent may, and upon the
direction of the Required Lenders shall, declare the Indebtedness immediately due
and payable, provided that in the case of a voluntary petition in bankruptcy filed
by Borrower or (after the expiration of the grace period if any set forth in Section
9.1.3 above) an involuntary petition in bankruptcy filed against Borrower, such
acceleration shall be automatic.



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9.3.3 Pursue Remedies. Administrative Agent may pursue any and all
remedies provided for hereunder, or under any one or more of the other Credit
Documents.




9.3.4 Written Waivers. Notwithstanding anything to the contrary
contained herein, if a Default or an Event of Default is waived by the Required
Lenders or the Administrative Agent, in their sole discretion, pursuant to a
specific written instrument executed by an authorized officer of Administrative
Agent, or if a Default or an Event of Default is timely cured by Borrower, the
Default or Event of Default so waived or Default so cured shall be deemed to have
never occurred.




9.3.5 Reserved.




9.3.6 Enforcement of Rights. Administrative Agent may enforce any and
all rights and interests created and existing under the Credit Documents and all
rights of set off.



     Notwithstanding the foregoing, if an Event of Default specified in Section 9.1.3 shall occur
as to Borrower, then the Commitments shall automatically terminate and all Loans, all accrued
interest in respect thereof, all accrued and unpaid Fees and other indebtedness or obligations
owing to the Administrative Agent and/or any of the Lenders hereunder or under the
other Credit Documents automatically shall immediately become due and payable without the
giving of any notice or other action by the Administrative Agent or the Lenders.



     Notwithstanding the fact that enforcement powers reside primarily with Administrative Agent,
subject to the provisions of Section 11, each Lender has, to the extent permitted by law, a
separate right of payment and shall be considered a separate “creditor” holding a separate “claim”
within the meaning of Section 101(5) of the Bankruptcy Code or any other insolvency statute;
provided however, no Lender shall take any action with respect to its claim without first obtaining
the consent of the Required Lenders and Administrative Agent (other than filing a proof of claim)
or vote its claim in a manner inconsistent with the vote of the Required Lenders and Administrative
Agent.



10. SECURITY INTEREST AND SET-OFF.




     10.1 Security Interest. Borrower hereby grants to Administrative Agent, on
behalf of the Lenders a lien, security interest and right of setoff as security for all liabilities
and obligations to Administrative Agent and the Lenders, whether now existing or hereafter arising,
upon and against all deposits, credits, collateral and property, now or hereafter in the
possession, custody, safekeeping or control of Administrative Agent or any Lender or any entity
under the control of Key Corp. or in transit to any of them.



     10.2 Set-Off and Debit. If an Event of Default occurs and is continuing, any
deposits, balances or other sums credited by or due from Administrative Agent or any Lender, or
from any affiliate of Administrative Agent or any Lender, to Borrower may to the fullest extent not
prohibited by applicable law at any time or from time to time, without regard to the existence,
sufficiency or adequacy of any other collateral, and without notice or compliance with any other
condition precedent now or hereafter imposed by statute, rule of law or otherwise, all of which are
hereby waived, be set off, debited and appropriated, and applied by Administrative Agent or



- 34 -









 




any Lender against any or all of the Borrower Obligations irrespective of whether demand shall have
been made and although such obligations may be unmatured, in such manner as Administrative Agent or
any Lender in its sole and absolute discretion may determine. Within five (5) Business Days of
making any such set off, debit or appropriation and application, Administrative Agent or the
applicable Lender agrees to notify Borrower thereof, provided the failure to give such notice shall
not affect the validity of such set off, debit or appropriation and application. ANY AND ALL
RIGHTS TO REQUIRE ADMINISTRATIVE AGENT OR ANY LENDER TO EXERCISE ITS RIGHTS OR REMEDIES WITH
RESPECT TO ANY OTHER COLLATERAL WHICH SECURES THE LOAN, PRIOR TO EXERCISING ITS RIGHT OF SETOFF
WITH RESPECT TO SUCH DEPOSITS, CREDITS OR OTHER PROPERTY OF THE BORROWER, ARE HEREBY KNOWINGLY,
VOLUNTARILY AND IRREVOCABLY WAIVED. Each of the Lenders agrees with each other Lender that (a) if
an amount to be set off is to be applied to indebtedness of the Borrower to such Lender, other than
the obligations evidenced by the Note held by such Lender, such amount shall be applied ratably to
such other indebtedness and to the obligations evidenced by all of the Notes held by such Lender, and (b)
if such Lender shall receive from the Borrower, whether by voluntary payment, exercise of the right
of setoff, counterclaim, cross action, enforcement of the claim evidenced by the Note held by such
Lender by proceedings against the Borrower at law or in equity or by proof thereof in bankruptcy,
reorganization liquidation, receivership or similar proceedings, or otherwise, and shall retain and
apply to the payment of the Note held by such Lender any amount in excess of its ratable portion of
the payments received by all of the Lenders with respect to the Notes held by all of the Lenders,
such Lender will make such disposition and arrangements with the other Lenders with respect to such
excess, either by way of distribution, pro tanto assignment of claims, subrogation or otherwise as
shall result in each Lender receiving in respect of the Note held by it its proportionate payment
as contemplated by this Agreement; provided that if all or any part of such excess payment is
thereafter recovered from such Lender, such disposition and arrangements shall be rescinded and the
amount restored to the extent of such recovery, but without interest.




     10.3 Right to Freeze. Administrative Agent and each of the Lenders shall also have
the right, at its option, upon the occurrence of any event which would entitle Administrative Agent
or any Lender to set off or debit as set forth in Section 10.2, to freeze, block or segregate any
such deposits, balances and other sums so that Borrower may not access, control or draw upon the
same.



     10.4 Additional Rights. The rights of Administrative Agent, the Lenders and each
affiliate of Administrative Agent and each of the Lenders under this Section 10 are in addition to,
and not in limitation of, other rights and remedies, including other rights of set off, which
Administrative Agent, or any Lender may have.



11. THE ADMINISTRATIVE AGENT AND THE LENDERS




     11.1 Appointment of Administrative Agent. Each Lender hereby irrevocably designates
and appoints KeyBank National Association as Administrative Agent of such Lender to act as
specified herein and in the other Credit Documents, and each such Lender hereby irrevocably
authorizes the Administrative Agent to take such actions, exercise such powers and perform such
duties as are expressly delegated to or conferred upon the Administrative Agent by the terms of



- 35 -









 




this Agreement and the other Credit Documents, together with such other powers as are reasonably
incidental thereto. The Administrative Agent agrees to act as such upon the express conditions
contained in this Section 11. The Administrative Agent shall not have any duties or
responsibilities except those expressly set forth herein or in the other Credit Documents, nor
shall it have any fiduciary relationship with any Lender, and no implied covenants,
responsibilities, duties, obligations or liabilities shall be read into this Agreement or otherwise
exist against the Administrative Agent. The provisions of this Section 11 (except for Sections
11.10, 11.12, 11.15.1, 11.15.2 (v) — (viii), 11.15.3, 11.15.4, 11.15.5, 11.16, 11.20 and 11.22) are
solely for the benefit of the Administrative
Agent and the Lenders, and the Borrower shall not have any rights as a third party beneficiary
of any of the provisions hereof.




     11.2 Administration of Facility by Administrative Agent. The Administrative Agent
shall be responsible for administering the Facility on a day-to-day basis. In the exercise of such
administrative duties, the Administrative Agent shall use the same diligence and standard of care
that is customarily used by the Administrative Agent with respect to similar loans held by the
Administrative Agent solely for its own account.



     Each Lender delegates to the Administrative Agent the full right and authority on its behalf
to take the following specific actions in connection with its administration of the Facility:



     (i) to fund the Loans in accordance with the provisions of the Credit Documents, but only to
the extent of immediately available funds provided to the Administrative Agent by the respective
Lenders for such purpose;



     (ii) to receive all payments of principal, interest, fees and other charges paid by, or on
behalf of, the Borrower and, except for fees to which the Administrative Agent is entitled pursuant
to the Credit Documents or otherwise, to distribute all such funds to the respective Lenders as
provided for hereunder;



     (iii) to keep and maintain complete and accurate files and records of all material matters
pertaining to the Facility, and make such files and records available for inspection and copying by
each Lender and its respective employees and agents during normal business hours upon reasonable
prior notice to the Administrative Agent; and



     (iv) to do or omit doing all such other actions as may be reasonably necessary or incident to
the implementation, administration and servicing of the Facility and the rights and duties
delegated hereinabove.



     11.3 Delegation of Duties. The Administrative Agent may execute any of its duties
under this Agreement or any other Credit Document by or through its agents or attorneys-in-fact,
and shall be entitled to the advice of counsel concerning all matters pertaining to its rights and
duties hereunder or under the other Credit Documents. The Administrative Agent shall not be
responsible for the negligence or misconduct of any agents or attorneys-in-fact selected by it with
reasonable care.



     11.4 Exculpatory Provisions. Neither the Administrative Agent nor any of its
officers, directors, employees, agents, attorneys-in-fact or affiliates shall be liable for any
action lawfully taken or omitted to be taken by it or them under or in connection with this
Agreement or the



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other Credit Documents, except for its or their gross negligence or willful
misconduct. Neither the Administrative Agent nor any of its officers, directors, employees,
agents, attorneys-in-fact or affiliates shall be responsible for or have any duty to ascertain,
inquire into, or verify (i) any recital, statement, representation or warranty made by the Borrower
or any of its officers or agents contained in this Agreement or
the other Credit Documents or in any certificate or other document delivered in connection
therewith; (ii) the performance or observance of any of the covenants or agreements contained in,
or the conditions of, this Agreement or the other Credit Documents; (iii) the state or condition of
any properties of the Borrower or the Assets, or any information contained in the books or records
of the Borrower; (iv) the validity, enforceability, collectibility, effectiveness or genuineness of
this Agreement or any other Credit Document or any other certificate, document or instrument
furnished in connection therewith; or (v) the validity, priority or perfection of any lien securing
or purporting to secure the Borrower Obligations.




     11.5 Reliance by Administrative Agent. The Administrative Agent shall be entitled to
rely, and shall be fully protected in relying, upon any notice, consent, certificate, affidavit, or
other document or writing believed by it to be genuine and correct and to have been signed, sent or
made by the proper person or persons, and upon the advice and statements of legal counsel
(including, without limitation, counsel to the Borrower), 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 this Agreement or any other Credit Document unless it shall
first receive such advice or concurrence of the Required Lenders as it deems appropriate or 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 the taking or failing 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 and the other Credit Documents in accordance with any written request
of the Required Lenders, and each such request of the Required Lenders, and any action taken or
failure to act by the Administrative Agent pursuant thereto, shall be binding upon all of the
Lenders; provided, however, that the Administrative Agent shall not be required in any event to
act, or to refrain from acting, in any manner which is contrary to the Credit Documents or to
applicable law or in any manner reasonably believed by Administrative Agent to be commercially
unreasonable in the applicable jurisdiction.



     11.6 Notice of Default. The Administrative Agent shall not be deemed to have
knowledge or notice of the occurrence of any Event of Default unless the Administrative Agent has
actual knowledge of the same or has received notice from a Lender or the Borrower referring to this
Agreement, describing such Event of Default and stating that such notice is a “notice of default.”
In the event that the Administrative Agent obtains such actual knowledge or receives such a notice,
the Administrative Agent shall give prompt notice thereof to each of the Lenders. The
Administrative Agent shall take such action with respect to such Event of Default as shall be
reasonably directed by the Required Lenders. Unless and until the Administrative Agent shall have
received such direction, the Administrative Agent may (but shall not be obligated to) take such
action, or refrain from taking such action, with respect to any such Event of Default as it shall
deem advisable in the best interest of the Lenders, provided, however, that the Administrative
Agent shall not accelerate the indebtedness under this Agreement without the prior written consent
of the Required Lenders.



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     11.7 Lenders’ Credit Decisions. Each Lender acknowledges that it has,
independently and without reliance upon the
Administrative Agent or any other Lender, and based on the financial statements prepared by the
Borrower and such other documents and information as it has deemed appropriate, made its own credit
analysis and investigation into the business, assets, operations, property, and financial and other
condition of the Borrower and has made its own decision to enter into this Agreement and the other
Credit Documents. Each Lender also acknowledges that it will, independently and without reliance
upon the Administrative Agent or any other Lender, and based on such documents and information as
it shall deem appropriate at the time, continue to make its own credit decisions in determining
whether or not conditions precedent to closing any Loan hereunder have been satisfied and in taking
or not taking any action under this Agreement and the other Credit Documents. Each Lender
expressly acknowledges that is has relied upon its own legal counsel in its consideration of its
decision to enter into this Agreement and the other Credit Documents and will so rely in regard to
the implementation of the transaction contemplated hereby and thereby and that it does not have any
lawyer-client relationship with Administrative Agent’s counsel or counsels or any other Lenders
with respect thereto.



     11.8 Administrative Agent’s Reimbursement and Indemnification. The Lenders agree to
reimburse and indemnify the Administrative Agent, ratably in proportion to their respective
Commitments, for (i) any amounts not reimbursed by the Borrower for which the Administrative Agent
is entitled to reimbursement by the Borrower under this Agreement or the other Credit Documents,
(ii) any other expenses incurred by the Administrative Agent on behalf of the Lenders in connection
with the preparation, execution, delivery, administration, amendment, waiver and/or enforcement of
this Agreement and the other Credit Documents, and (iii) any liabilities, obligations, losses,
damages, penalties, action, judgments, suits, costs, expenses or disbursements of any kind and
nature whatsoever which may be imposed on, incurred by or asserted against the Administrative Agent
in any way relating to or arising out of this Agreement or the other Credit Documents or any other
document delivered in connection therewith or any transaction contemplated thereby, or the
enforcement of any of the terms hereof or thereof, provided that no Lender shall be liable for any
of the foregoing to the extent that they arise from the gross negligence or willful misconduct of
the Administrative Agent. If any indemnity furnished to the Administrative Agent for any purpose
shall, in the opinion of the Administrative Agent, be insufficient or become impaired, the
Administrative Agent may call for an additional indemnity and cease, or not commence, to do the
action indemnified against until such additional indemnity is furnished.



     11.9 Administrative Agent in its Individual Capacity. With respect to its Commitment
as a Lender, and the Loans made by it and the Note issued to it, the Administrative Agent shall
have the same rights and powers hereunder and under any other Credit Document as any Lender and may
exercise the same as though it were not the Administrative Agent, and the term “Lender” or
“Lenders” shall, unless the context otherwise indicates, include the Administrative Agent in its
individual capacity. The Administrative Agent and its subsidiaries and affiliates may accept
deposits from, lend money to, and generally engage in any kind of commercial or investment banking,
trust, advisory or other business with the Borrower or any Subsidiary or affiliate of the Borrower
as if it were not the Administrative Agent hereunder.



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     11.10 Successor Administrative Agent. The Administrative Agent may resign at any time
by giving thirty (30) days’ prior notice to the Lenders and Borrower (provided, however, such
resignation shall be effective only upon the appointment of a successor Administrative Agent in
accordance with the provisions of this Section 11.10). The Required Lenders, for good cause, may
remove Administrative Agent at any time by giving thirty (30) days’ prior notice to the
Administrative Agent, the Borrower and the other Lenders. Upon any such resignation or removal,
the Required Lenders shall have the right to appoint a successor Administrative Agent. If no
successor Administrative Agent shall have been so appointed by the Required Lenders and accepted
such appointment within thirty (30) days after the retiring Administrative Agent’s giving notice of
resignation or the Required Lenders’ giving notice of removal, as the case may be, then the
retiring Administrative Agent may appoint, on behalf of the Borrower and the Lenders, a successor
Administrative Agent. Each such successor Administrative Agent shall be a financial institution
which meets the requirements of an Eligible Assignee. Unless an Event of Default shall have
occurred and be continuing, any successor Administrative Agent shall be subject to the prior
written approval of the Borrower (which approval will not be unreasonably withheld, conditioned or
delayed). Upon the acceptance of any appointment as Administrative Agent hereunder by a successor
Administrative Agent, such successor Administrative Agent shall thereupon succeed to and become
vested with all the rights, powers, privileges and duties of the retiring Administrative Agent, and
the retiring Administrative Agent shall be discharged from its duties and obligations hereunder and
under the other Credit Documents. After any retiring Administrative Agent’s resignation hereunder,
the provisions of this Section 11 shall continue in effect for its benefit in respect of any
actions taken or omitted to be taken by it while it was acting as the Administrative Agent
hereunder.



     11.11 Duties in the Case of Enforcement. In the case one or more Events of Default
have occurred and shall be continuing, and whether or not acceleration of the Borrower Obligations
shall have occurred, the Administrative Agent shall, at the request, or may, upon the consent, of
the Required Lenders, and provided that the Lenders have given to the Administrative Agent such
additional indemnities and assurances against expenses and liabilities as the Administrative Agent
may reasonably request, proceed to enforce the provisions of this Agreement and the other Credit
Documents and the exercise of any other legal or equitable rights or remedies as it may have
hereunder or under any other Credit Document or otherwise by virtue of applicable law, or to
refrain from so acting if similarly requested by the Required Lenders. The Administrative Agent
shall be fully protected in so acting or refraining from acting upon the instruction of the
Required Lenders, and such instruction shall be binding upon all the Lenders. The Required Lenders
may direct the Administrative Agent in writing as to the method and the extent of any such
foreclosure, sale or other disposition or the exercise of any other right or remedy, the Lenders
hereby agreeing to indemnify and hold the Administrative Agent harmless from all costs and
liabilities incurred in respect of all actions taken or omitted in accordance with such direction,
provided that the Administrative Agent need not comply with any such direction to the extent that
the Administrative Agent reasonably believes the Administrative Agent’s compliance with such
direction to be unlawful or commercially unreasonable in any applicable jurisdiction. The
Administrative Agent may, in its discretion but without obligation, in the absence of direction
from the Required Lenders, take such interim actions as it believes necessary to preserve the
rights of the Lenders hereunder, including but not limited to petitioning a court for injunctive
relief or appointment of a receiver. Each of the Lenders acknowledges and agrees that no
individual Lender may separately enforce or exercise any of the provisions of any of the



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Credit Documents, including without limitation the Notes, other than through the Administrative Agent.




     11.12 Respecting Loans and Payments.




11.12.1 Procedures for Loans. Administrative Agent shall give written
notice to each Lender of each request from Borrower for a Loan by facsimile
transmission, hand delivery or overnight courier, not later than 11:00 a.m. (Boston
time) two (2) Business Days prior to any Loan. Each such notice shall be
accompanied by a written summary of the request for a Loan and shall specify a) the
date of the requested Loan, (b) the aggregate amount of the requested Loan, (c) each
Lender’s pro rata share of the requested Loan, and (d) the applicable interest rate
selected by Borrower with respect to such Loan, or any portion thereof, together
with the applicable Interest Period, if any, selected, or deemed selected, by
Borrower. Each Lender shall, before 11:00 a.m. (Boston time) on the date set forth
in any such request for a Loan, make available to Administrative Agent, at an
account to be designated by Administrative Agent at KeyBank National Association in
same day funds, each Lender’s ratable portion of the requested Loan. After
Administrative Agent’s receipt of such funds and upon Administrative Agent’s
determination that the applicable conditions to making the requested Loan have been
fulfilled, Administrative Agent shall make such funds available to Borrower as
provided for in this Agreement. Within a reasonable period of time following the
making of each Loan, but in no event later than ten (10) Business Days following
such Loan, Administrative Agent shall deliver to each Lender a copy of Borrower’s
request for such Loan. Promptly after receipt by Administrative Agent of written
request from any Lender, Administrative Agent shall deliver to the requesting Lender
the accompanying certifications and such other instruments, documents,
certifications and approvals delivered by or on behalf of Borrower to Administrative
Agent in support of the requested Loan.




11.12.2 Nature of Obligations of Lenders. The obligations of the
Lenders hereunder are several and not joint. Failure of any Lender to fulfill its
obligations hereunder shall not result in any other Lender becoming obligated to
advance more than its Commitment Percentage of the Loan, nor shall such failure
release or diminish the obligations of any other Lender to fund its Commitment
Percentage provided herein.




11.12.3 Payments to Administrative Agent. All payments of
principal or and interest on the Loans or the Notes shall be
made to the Administrative Agent by the Borrower or any other obligor or guarantor
for the account of the Lenders in immediately available funds as provided in the
Notes and this Agreement. The Administrative Agent agrees promptly to distribute to
each Lender, on the same Business Day upon which each such payment is made if
possible, such Lender’s proportionate share of each such payment in immediately
available funds, except as otherwise expressly provided herein. The Administrative
Agent shall upon each distribution promptly notify Borrower of such distribution and
each Lender of the amounts distributed to it applicable to principal of, and
interest on, the



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proportionate share held by the applicable Lender. Each payment to
the Administrative Agent under the first sentence of this Section 11.12.3 shall
constitute a payment by the Borrower to each Lender in the amount of such Lender’s
proportionate share of such payment, and any such payment to the Administrative
Agent shall not be considered outstanding for any purpose after the date of such
payment by the Borrower to the Administrative Agent without regard to whether or
when the Administrative Agent makes distribution thereof as provided above. If any
payment received by the Administrative Agent from the Borrower is insufficient to
pay both all accrued interest and all principal then due and owing, the
Administrative Agent shall first apply such payment to all outstanding interest
until paid in full and shall then apply the remainder of such payment to all
principal then due and owing, and shall distribute the payment to each Lender
accordingly.



     11.12.4 Distribution of Liquidation Proceeds. Subject to the terms and
conditions hereof, the Administrative Agent shall distribute all Liquidation
Proceeds in the order and manner set forth below:




First: To the Administrative Agent, towards any fees and any expenses for
which the Administrative Agent is entitled to reimbursement under this
Agreement or the other Credit Documents not theretofore paid to the
Administrative Agent.




Second: To all applicable Lenders in accordance with their proportional
share based upon their respective Commitment Percentages until all Lenders
have been reimbursed for all expenses which such Lenders have previously
paid to the Administrative Agent and not theretofore paid to such Lenders.




Third: To all applicable Lenders based upon their respective Commitment
Percentages until all Lenders have been paid in full for any Individual
Lender Litigation Expenses.




Fourth: To all Lenders in accordance with their proportional share based
upon their respective Commitment Percentages until all Lenders have been
paid in full all principal and interest due to such Lenders under the
Facility, with each Lender applying such proceeds for purposes of this
Agreement first against the outstanding principal balance due to such Lender
under the Facility and then to accrued and unpaid interest due under the
Facility.




Fifth: To all applicable Lenders in accordance with their proportional share
based upon their respective Commitment Percentages until all Lenders have
been paid in full all other amounts due to such Lenders under the Facility
including, without limitation, any costs and expenses incurred directly by
such Lenders to the extent such costs and expenses are



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reimbursable to such Lenders by the Borrower under the Credit Documents.




Sixth: To the Borrower or such third parties as may be entitled to claim
Liquidation Proceeds.




11.12.5 Adjustments. If, after Administrative Agent has paid each
Lender’s proportionate share of any payment received or applied by Administrative
Agent in respect of the Facility, that payment is rescinded or must otherwise be
returned or paid over by Administrative Agent, whether pursuant to any bankruptcy or
insolvency law, sharing of payments clause of any agreement or otherwise, such
Lender shall, at Administrative Agent’s request, promptly return its proportionate
share of such payment or application to Administrative Agent, together with the
Lender’s proportionate share of any interest or other amount required to be paid by
Administrative Agent with respect to such payment or application.




11.12.6 Setoff. If any Lender (including the Administrative Agent),
acting in its individual capacity, shall exercise any right of setoff against a
deposit balance or other account of the Borrower held by such Lender on account of
the Borrower Obligations, such Lender shall remit to the Administrative Agent all
such sums received pursuant to the exercise of such right of setoff, and the
Administrative Agent shall apply all such sums for the benefit of all of the Lenders
hereunder in accordance with the terms of this Agreement.




11.12.7 Distribution by Administrative Agent. If in the opinion of the
Administrative Agent, distribution of any amount received by it in such capacity
hereunder or under the Notes or under any of the other Credit Documents might
involve any liability, it may refrain from making distribution until its right to
make distribution shall have been finally adjudicated by a court of competent
jurisdiction or has been resolved by the mutual consent of all Lenders. In
addition, the Administrative Agent may request full and complete indemnity, in form
and substance satisfactory to it, prior to making any such distribution. If a court
of competent jurisdiction shall adjudge that any amount received and distributed by
the Administrative Agent is to be repaid, each person
to whom any such distribution shall have been made shall either repay to the
Administrative Agent its proportionate share of the amount so adjudged to be repaid
or shall pay over the same in such manner and to such persons as shall be determined
by such court.




11.12.8 Actions by Administrative Agent. The Required Lenders may
direct the Administrative Agent in writing as to the method and the extent of any
sale or other disposition of any collateral or other property of Borrower and shall
indemnify and hold the Administrative Agent harmless from all liabilities incurred
in respect to all actions taken or omitted in accordance with such directions
provided that Administrative Agent need not comply with any such directions to the
extent Administrative Agent reasonably believes the



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Administrative Agent’s compliance with such directions would constitute a violation of the obligations
undertaken by the Administrative Agent and/or Lenders under the Credit Documents, or
will constitute a violation of any statute, ordinance or regulation applicable to
the Administrative Agent or be commercially unreasonable in any applicable
jurisdiction.



     11.13 Delinquent Lender. If for any reason any Lender shall fail or refuse to abide
by its obligations under this Agreement, including without limitation its obligation to make
available to Administrative Agent its pro rata share of any Loan, expenses or setoff (a “Delinquent
Lender”) and such failure is not cured within ten (10) days of receipt from the Administrative
Agent of written notice thereof, then, in addition to the rights and remedies that may be available
to Administrative Agent, other Lenders, the Borrower or any other party at law or in equity, and
not at limitation thereof, (i) such Delinquent Lender’s right to participate in the administration
of, or decision-making rights related to, the Loans, this Agreement or the other Credit Documents
shall be suspended during the pendency of such failure or refusal, and (ii) a Delinquent Lender
shall be deemed to have assigned any and all payments due to it from the Borrower, whether on
account of the outstanding Loans, interest, fees or otherwise, to the remaining non-delinquent
Lenders for application to, and reduction of, their proportionate shares of the outstanding Loans
until, as a result of application of such assigned payments the Lenders’ respective pro rata shares
of all the outstanding Loans shall have returned to those in effect immediately prior to such
delinquency and without giving effect to the nonpayment causing such delinquency. The Delinquent
Lender’s decision-making and participation rights to payments as set forth in clauses (i) and (ii)
hereinabove shall be restored only upon the payment by the Delinquent Lender of its pro rata share
of any Loans or expenses as to which it is delinquent, together with interest thereon at the
Default Rate from the date when originally due until the date upon which any such amounts are
actually paid.



     The non-delinquent Lenders shall also have the right, but not the obligation, in their
respective, sole and absolute discretion, to acquire for no cash consideration, (pro rata, based on
the respective Commitments of those Lenders electing to exercise such right) the Delinquent
Lender’s Commitment to fund future Loans (the “Future Commitment”). Upon any such purchase of the
pro rata share of any Delinquent Lender’s Future Commitment, the Delinquent
Lender’s share in future Loans and its rights under the Credit Documents with respect thereto
shall terminate on the date of purchase, and the Delinquent Lender shall promptly execute all
documents reasonably requested to surrender and transfer such interest, including, if so requested,
an Assignment and Acceptance. Each Delinquent Lender shall indemnify Administrative Agent and each
non-delinquent Lender from and against any and all loss, damage or expenses, including but not
limited to reasonable attorneys’ fees and costs and funds advanced by Administrative Agent or by
any non-delinquent Lender, on account of any Delinquent Lender’s failure to timely fund its pro
rata share of a Loan or to otherwise perform its obligations under the Credit Documents.



     11.14 Holders. The Administrative Agent may deem and treat the payee of any Note as
the owner thereof for all purposes hereof unless and until a written notice of the assignment,
transfer or endorsement thereof, as the case may be, shall have been filed with the Administrative
Agent. Any request, authority or consent of any person or entity who, at the time of making such
request or giving such authority or consent, is the holder of any Note shall be



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conclusive and binding on any subsequent holder, transferee or endorsee, as the case may be, of such Note or of
any Note or Notes issued in exchange therefor.




     11.15 Assignment and Participation.




11.15.1 Conditions to Assignment by Lenders. Except as provided
herein, each Lender may assign to one or more Eligible Assignees all or a portion of
its interests, rights and obligations under this Agreement (including all or a
portion of its Commitment Percentage and Commitment and the same portion of the
Loans at the time owing to it and the Notes held by it), upon satisfaction of the
following conditions: (a) each of the Administrative Agent and the Borrower shall
have given its prior written consent to such assignment (provided that, in the case
of the Borrower, such consent will not be unreasonably withheld and shall not be
required if a Default or Event of Default shall have occurred and be continuing),
(b) each such assignment shall be of a constant, and not a varying, percentage of
all the assigning Lender’s rights and obligations under this Agreement, (c) other
than when an Event of Default shall exist, each assignment shall be in an amount
that is at least Ten Million and 00/100 Dollars ($10,000,000.00), (d) other than
when an Event of Default shall exist, Administrative Agent shall retain, free of any
such assignment, an amount of its Commitment of not less than Thirty Million and
00/100 Dollars ($30,000,000.00), and (e) the parties to such assignment shall
execute and deliver to the Administrative Agent, for recording in the Register (as
hereinafter defined), an Assignment and Acceptance, substantially in the form of
Exhibit D hereto (an “Assignment and Acceptance”), together with delivery of
any Notes subject to such assignment. Upon such execution, delivery, acceptance and
recording, from and after the effective date specified in each Assignment and
Acceptance, which
effective date shall be at least five (5) Business Days after the execution
thereof, (x) the assignee thereunder shall be a party hereto and, to the extent
provided in such Assignment and Acceptance, have the rights and obligations of a
Lender hereunder, and (y) the assigning Lender shall, to the extent provided in such
Assignment and Acceptance and upon payment to the Administrative Agent of the
registration fee referred to in Section 11.15.3, be released from its obligations
under this Agreement.




11.15.2 Certain Representations and Warranties. By executing and
delivering an Assignment and Acceptance, the parties thereunder confirm to and agree
with each other and the other parties hereto as follows:




     (i) other than the representation and warranty that it is the legal and
beneficial owner of the interest being assigned thereby free and clear of any
adverse claim, the assigning Lender makes no representation or warranty, express or
implied, and assumes no responsibility with respect to any statements, warranties or
representations made in or in connection with this Agreement or the execution,
legality, validity, enforceability, genuineness, sufficiency or value of this
Agreement, the other Credit Documents or any other instrument or document



- 44 -









 






furnished pursuant hereto or the attachment, perfection or priority of any security interest;




     (ii) the assigning Lender makes no representation or warranty and assumes no
responsibility with respect to the financial condition of the Borrower and its
affiliates, related entities or Subsidiaries or any other person primarily or
secondarily liable in respect of any of the Borrower Obligations, or the performance
or observance by the Borrower or any other person primarily or secondarily liable in
respect of any of the Borrower Obligations or any of their obligations under this
Agreement or any of the other Credit Documents or any other instrument or document
furnished pursuant hereto or thereto;




     (iii) such assignee confirms that it has received a copy of this Agreement and
the other Credit Documents, together with copies of the most recent financial
statements provided by the Borrower as required by the terms of this Agreement,
together with such other documents and information as it has deemed appropriate to
make its own credit analysis and decision to enter into such Assignment and
Acceptance;




     (iv) such assignee will, independently and without reliance upon the assigning
Lender, the Administrative Agent or any other Lender and based on such documents and
information as it shall deem appropriate at the time, continue to make its own
credit decisions in taking or not taking action under this Agreement;




     (v) such assignee represents and warrants that it is an Eligible Assignee if
required hereunder;




     (vi) such assignee appoints and authorizes the Administrative Agent to take
such action as agent on its behalf and to exercise such powers under this Agreement
and the other Credit Documents as are delegated to the Administrative Agent by the
terms hereof or thereof, together with such powers as are reasonably incidental
thereto;




     (vii) such assignee agrees that it will perform in accordance with their terms
all of the obligations that by the terms of this Agreement are required to be
performed by it as a Lender; and




     (viii) such assignee represents and warrants that it is legally authorized to
enter into such Assignment and Acceptance.




11.15.3 Register. The Administrative Agent shall maintain a copy of
each Assignment and Acceptance delivered to it and a register or similar list (the
“Register”) for the recordation of the names and addresses of the Lenders and the
Commitment Percentages of, and principal amount of the Loans owing to, the Lenders
from time to time. The entries in the Register shall be conclusive, in the absence
of manifest error, and the Borrower, the Administrative Agent and the Lenders may
treat each Person whose name is recorded in the Register as a



- 45 -









 






Lender hereunder. Administrative Agent shall make available the Register for inspection by the
Borrower and the Lenders at any reasonable time and from time to time upon
reasonable prior notice. Upon each such recordation, the assigning Lender agrees to
pay to the Administrative Agent a registration fee in the sum of Three Thousand Five
Hundred Dollars ($3,500.00).




11.15.4 New Notes. Upon its receipt of an Assignment and Acceptance
executed by the parties to such assignment, together with each Note subject to such
assignment, the Administrative Agent shall (a) record the information contained
therein in the Register, and (b) give prompt notice thereof to the Borrower and the
Lenders (other than the assigning Lender). Within five (5) Business Days after
receipt of such notice, the Borrower, at its own expense, shall execute and deliver
to the Administrative Agent, in exchange for each surrendered Note, a new Note to
the order of such Eligible Assignee pursuant to such Assignment and Acceptance and,
if the assigning Lender has retained some portion of its obligations hereunder, a
new Note to the order of the assigning Lender in an amount equal to the amount
retained by it hereunder. Such new Notes shall provide that they are replacements
for the surrendered Notes, shall be in an aggregate principal amount equal to the
aggregate principal amount of the surrendered Notes, shall be dated the effective
date of such Assignment and Acceptance and shall otherwise be substantially in
the form of the assigned Notes. Within thirty (30) days of issuance of any new
Notes pursuant to this Section 10.15.4, the Borrower, at the expense of the assignee
Lender (which expense shall not be reimbursed by Borrower), shall deliver an opinion
of counsel, addressed to the Lenders and the Administrative Agent, relating to the
due authorization, execution and delivery of such new Notes and the legality,
validity and binding effect thereof, in form and substance satisfactory to the
Lenders. The surrendered Notes shall be canceled and returned to the Borrower.




11.15.5 Participations. Each Lender may sell participations to one or
more banks or other financial institutions in all or any portion of such Lender’s
rights and obligations under this Agreement and the other Credit Documents; provided
that (a) each such participation shall be in a minimum amount of Five Million and
00/100 Dollars ($5,000,000.00), (b) each participant shall meet the requirements of
an Eligible Assignee, (c) any such sale or participation shall not affect the rights
and duties of the selling Lender hereunder to the Borrower, and (d) the only rights
granted to the participant pursuant to such participation arrangements with respect
to waivers, amendments or modifications of the Credit Documents shall be the rights
to approve waivers, amendments or modifications that would reduce the principal of
or the interest rate on any Loans, extend the term or increase the amount of the
Commitment of such Lender as it relates to such participant, reduce the amount of
any commitment fees to which such participant is entitled or extend any regularly
scheduled payment date for principal or interest.



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     11.16 Disclosure. The Borrower agrees that in addition to disclosures made in
accordance with standard and customary banking practices any Lender may disclose information
obtained by such Lender pursuant to this Agreement to assignees or participants and potential
assignees or participants hereunder; provided that such assignees or participants or potential
assignees or participants shall agree (a) to treat in confidence such information unless such
information otherwise becomes public knowledge, (b) not to disclose such information to a third
party (other than its advisors) except as required by law or legal process or to enforce the Credit
Documents and (c) not to make use of such information for purposes of transactions unrelated to
such contemplated assignment or participation.



     11.17 Miscellaneous Assignment Provisions. Anything contained in this Section 11 to
the contrary notwithstanding, any Lender may at any time pledge all or any portion of its interest
and rights under this Agreement (including all or any portion of its Notes) to any of the twelve
Federal Reserve Banks organized under §4 of the Federal Reserve Act, 12 U.S.C. §341. No such
pledge or the enforcement thereof shall
release the pledgor Lender from its obligations hereunder or under any of the other Credit
Documents.



     11.18 Intentionally Deleted.



     11.19 Amendment, Waiver, Consent, Etc. Except as otherwise expressly provided in
this Agreement or any other Credit Document, no term or provision of this Agreement or any other
Credit Document may be changed, waived, discharged or terminated, nor may any consent required or
permitted by this Agreement or any other Credit Document be given, unless such change, waiver,
discharge, termination or consent receives the written approval of the Required Lenders.




     Notwithstanding the foregoing, the unanimous written approval of all the
Lenders (other than a Defaulting Lender) shall be required with respect to any
proposed amendment, waiver, discharge, termination, or consent which:




(i) has the effect of (a) extending the final scheduled maturity or the date
of any amortization payment of any Loan or Note, (b) reducing the rate or
extending the time of payment of interest or fees thereon, (c) increasing or
reducing the principal amount thereof, or (d) otherwise postponing or
forgiving any indebtedness thereunder,




(ii) releases or discharges any material portion of any collateral other
than in accordance with the express provisions of the Credit Documents.




(iii) amends, modifies or waives any provisions of this paragraph.




(iv) amends any of the financial covenants set forth in Section 6.3 of this
Agreement.




(v) reduces the percentage specified in the definition of Required Lenders,



- 47 -









 






(vi) except as otherwise provided in this Agreement, changes the amount of
any Lender’s Commitment or Commitment Percentage, or




(vii) releases or waives any guaranty of the Borrower Obligations or
indemnifications provided in the Credit Documents;




     and provided, further, that without the consent of the Administrative Agent, no
such action shall amend, modify or waive any provision of this Section 11 or any
other provisions of any Credit Document which relates to the rights or obligations
of the Administrative Agent.




     Notwithstanding the foregoing, in the event that the Borrower or Administrative
Agent requests any consent, waiver or approval under this Agreement or any other
Credit Document, or an amendment or modification hereof or thereof, and one or more
Lenders determine not to consent or agree to such consent, waiver, approval,
amendment or modification, then the Lender then acting as Administrative Agent
hereunder shall have the right to purchase the Commitment of such non-consenting
Lender(s) at a purchase price equal to the then outstanding amount of principal,
interest and fees then owing to such Lender(s) by the Borrower hereunder, and such
non-consenting Lender(s) shall immediately upon request, sell and assign its
Commitment and all of its other right, title and interest in the Loans and other
Borrower Obligations to the Lender then acting as Administrative Agent pursuant to
an Assignment and Assumption (provided that the selling Lender(s) shall not be
responsible to pay any assignment fee in connection therewith).



     11.20 Deemed Consent or Approval. With respect to any requested amendment, waiver,
consent or other action which requires the approval of the Required Lenders or all of the Lenders,
as the case may be in accordance with the terms of this Agreement, or if the Administrative Agent
is required hereunder to seek or desires to seek, the approval of the Required Lenders or all of
the Lenders, as the case may be, prior to undertaking a particular action or course of conduct, the
Administrative Agent in each such case shall provide each Lender with written notice of any such
request for amendment, waiver or consent or any other requested or proposed action or course of
conduct, accompanied by such detailed background information and explanations as may be reasonably
necessary to determine whether to approve or disapprove such amendment, waiver, consent or other
action or course of conduct, the Administrative Agent may (but shall not be required to) include in
any such notice, printed in capital letters or boldface type a legend substantially to the
following effect:




“THIS COMMUNICATION REQUIRES IMMEDIATE RESPONSE, FAILURE TO RESPOND WITHIN TEN (10)
CALENDAR DAYS FROM THE RECEIPT OF THIS COMMUNICATION SHALL CONSTITUTE A DEEMED
APPROVAL BY THE ADDRESSEE OF THE ACTION REQUESTED BY THE BORROWER OR THE COURSE OF
CONDUCT PROPOSED BY THE ADMINISTRATIVE AGENT AND RECITED ABOVE.”



- 48 -









 




If the foregoing legend is included by the Administrative Agent in its communication, a Lender
shall be deemed to have approved or consented to such action or course of conduct for all purposes
hereunder if such Lender fails to object to such action or course of conduct by written notice to
the Administrative Agent within ten (10) calendar days of such Lender’s receipt of such notice.




     11.21 Borrower Indemnification of Lenders. In addition to the indemnifications
provided by Borrower to the Lenders otherwise provided herein or in any other Credit Document,
Borrower shall also indemnify Administrative
Agent and Lenders against any liability, cost or expense (including, without limitation,
reasonable attorneys’ fees and costs) incurred by the Administrative Agent and Lenders as a result
of any Environmental Claim related to any real estate or other assets held by the Borrower or any
other member of the Combined Group, provided that the same are not due to the fraud or gross
negligence of Administrative Agent or any Lender. The Borrower will indemnify the Administrative
Agent and Lenders against any liability, cost or expense (including, without limitation, reasonable
attorneys’ fees and costs) incurred by the Administrative Agent and Lenders as a result of lawsuits
and litigation that may arise in connection with the activities of Borrower or any other member of
the Combined Group, provided that the same are not due to the fraud or gross negligence of
Administrative Agent or any Lender.



     All indemnification provided by Borrower to Administrative Agent and Lenders, including
without limitation the aforementioned indemnifications, shall survive and continue for the benefit
of the indemnities thereunder, notwithstanding any termination of the Facility or payment in full
of the obligations thereunder and hereunder.



     11.22 Borrower’s Communication with Lenders. Notwithstanding anything to the contrary
contained in this Agreement, prior to the occurrence of an Event of Default, Borrower shall be
entitled to rely on its communications with the Administrative Agent as the agent of the Lenders,
and may, but shall not be required to, communicate separately with any Lender with respect to the
Facility.



12. GENERAL PROVISIONS.




     12.1 Notices. Any notice or other communication in connection with this
Agreement, the Notes, or any of the other Credit Documents, shall be in writing, and (i) deposited
in the United States Mail, postage prepaid, by registered or certified mail, (ii) hand delivered by
any commercially recognized courier service or overnight delivery service such as Federal Express,
or (iii) sent by facsimile transmission, if a FAX Number is designated below, provided a copy is
also contemporaneously sent by any commercially recognized courier service or overnight delivery
service such as Federal Express addressed:



	 	 	 	 	 
	 

	 	 	 	If to Borrower:
	 
	 	 	 	 
	 

	 	 	 	Hines REIT Properties, L.P.
	 

	 	 	 	c/o Hines Interests Limited Partnership
	 

	 	 	 	2800 Post Oak Boulevard, Suite 5000
	 

	 	 	 	Houston, Texas 77056-6118






- 49 -









 






	 	 	 	 	 
	 

	 	 	 	FAX Number: (713) 966-2636
	 

	 	 	 	Attention: Charles M. Baughn
	 
	 	 	 	 
	 	 	with copies by regular mail or such hand delivery or facsimile transmission to:
	 
	 	 	 	 
	 

	 	 	 	Hines REIT Properties, L.P.
	 

	 	 	 	c/o Hines Interests Limited Partnership
	 

	 	 	 	2800 Post Oak Boulevard, Suite 5000
	 

	 	 	 	Houston, Texas 77056-6118
	 

	 	 	 	FAX Number: (713) 966-7851
	 

	 	 	 	Attention: Charles N. Hazen
	 
	 	 	 	 
	 

	 	 	 	and
	 
	 	 	 	 
	 

	 	 	 	Baker Botts L.L.P.
	 

	 	 	 	2001 Ross Avenue
	 

	 	 	 	Dallas, Texas 75201-2980
	 

	 	 	 	FAX Number: (214) 953-6503
	 

	 	 	 	Attention: Curt Anderson, Esquire
	 
	 	 	 	 
	 

	 	 	 	If to Administrative Agent:
	 
	 	 	 	 
	 

	 	 	 	KeyBank National Association
	 

	 	 	 	101 Federal Street
	 

	 	 	 	Boston, Massachusetts 02110
	 

	 	 	 	FAX Number: (617) 204-5769
	 

	 	 	 	Attention: Mr. John J. Murphy, Vice President
	 
	 	 	 	 
	 

	 	 	 	and
	 
	 	 	 	 
	 

	 	 	 	KeyBank National Association
	 

	 	 	 	127 Public Square, 2nd Floor
	 

	 	 	 	Cleveland, Ohio 44114-1306
	 

	 	 	 	FAX Number: (216) 689-5681
	 

	 	 	 	Attention: Robert C. Bowes, Esquire
	 

	 	 	 	     General Counsel
	 
	 	 	 	 
	 	 	with copies by regular mail or such hand delivery or facsimile transmission to:
	 
	 	 	 	 
	 

	 	 	 	Goulston & Storrs, P.C.
	 

	 	 	 	400 Atlantic Avenue
	 

	 	 	 	Boston, Massachusetts 02110
	 

	 	 	 	FAX Number: (617) 574-7607
	 

	 	 	 	Attention: James H. Lerner, Esquire
	 
	 	 	 	 
	 

	 	 	 	If to Lenders:






- 50 -









 






	 	 	 	 	 
	 

	 	 	 	KeyBank National Association
	 

	 	 	 	101 Federal Street
	 

	 	 	 	Boston, Massachusetts 02110
	 

	 	 	 	FAX Number: (617) 204-5769
	 

	 	 	 	Attention: Mr. John J. Murphy, Vice President
	 
	 	 	 	 
	 	 	with a copy by regular mail or such hand delivery to:
	 
	 	 	 	 
	 

	 	 	 	Goulston & Storrs, P.C.
	 

	 	 	 	400 Atlantic Avenue
	 

	 	 	 	Boston, Massachusetts 02110
	 

	 	 	 	FAX Number: (617) 574-7607
	 

	 	 	 	Attention: James H. Lerner, Esquire






     and to such addresses as are set forth in any Assignment and Acceptance.



     Any such addressee may change its address for such notices to such other address in the United
States as such addressee shall have specified by written notice given as set forth above. All
periods of notice shall be measured from the deemed date of delivery as set forth in the next
succeeding paragraph.



     A notice shall be deemed to have been given, delivered and received for the purposes of all
Credit Documents upon the earliest of: (i) if sent by such certified or registered mail, on the
third Business Day following the date of postmark, or (ii) if hand delivered at the specified
address by such courier or overnight delivery service, when so delivered or tendered for delivery
during customary business hours on a Business Day, or (iii) if so mailed, on the date of actual
receipt as evidenced by the return receipt, or (iv) if so delivered, upon actual receipt, or (v) if
facsimile transmission is a permitted means of giving notice, upon receipt as evidenced by
electronic confirmation from the sender’s fax machine of successful transmission if received during
normal business hours during a Business Day and otherwise on the next Business Day.



     12.2 Limitations on Assignment. Borrower may not assign this Agreement or the monies
due thereunder without the prior written consent of Administrative Agent and the Required Lenders
in each instance.



     12.3 Further Assurance. Borrower shall upon request from Administrative Agent or any
Lender from time to time execute, seal, acknowledge and deliver such further instruments or
documents which Administrative Agent or any Lender may reasonably require to better perfect and
confirm its rights and remedies hereunder, under the Notes, and under each of the other Credit
Documents,



     12.4 Parties Bound. The provisions of this Agreement and of each of the other Credit
Documents shall be binding upon and inure to the benefit of Borrower, Administrative Agent and each
of the Lenders and their respective successors and assigns, except as otherwise prohibited by this
Agreement or any of the other Credit Documents.



- 51 -









 





     This Agreement is a contract by and among Borrower, Administrative Agent and each of the
Lenders for their mutual benefit, and no third person shall have any right, claim or interest
against either Administrative Agent, or any Lender or Borrower by virtue of any provision
hereof.



     12.5 Waivers and Extensions. Notwithstanding any contrary provision herein or in any
other Credit Document, Administrative Agent may, unless otherwise directed by the Required Lenders
or the same requires unanimous consent of the Lenders pursuant to Section 11.19 hereof, at any time
and from time to time waive any one or more of the conditions contained herein or in any of the
other Credit Documents, or extend the time of payment of any Loan, but any such waiver or extension
shall be deemed to be made in pursuance and not in modification hereof, and any such waiver in any
instance, or under any particular circumstance, shall not be considered a waiver of such condition
in any other instance or any other circumstance.



     12.6 Governing Law; Consent to Jurisdiction; Mutual Waiver of Jury Trial.




12.6.1 Substantial Relationship. It is understood and agreed that all
of the Credit Documents were negotiated, executed and delivered in the Commonwealth
of Massachusetts, which Commonwealth the parties agree has a substantial
relationship to the parties and to the underlying transactions embodied by the
Credit Documents.




12.6.2 Place of Delivery. Borrower agrees to furnish to Administrative
Agent at the Administrative Agent’s office in Boston, Massachusetts all further
instruments, certifications and documents to be furnished hereunder.




12.6.3 Governing Law. This Agreement and each of the other Credit
Documents shall in all respects be governed, construed, applied and enforced in
accordance with the internal laws of the Commonwealth of Massachusetts without
regard to principles of conflicts of law.




12.6.4 Consent to Jurisdiction. Borrower hereby consents to personal
jurisdiction in any state or Federal court located within the Commonwealth of
Massachusetts.




12.6.5 JURY TRIAL WAIVER. BORROWER, ADMINISTRATIVE AGENT, AND EACH OF
THE LENDERS MUTUALLY HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVE THE RIGHT
TO A TRIAL BY JURY IN
RESPECT OF ANY LITIGATION BASED ON THIS AGREEMENT, ARISING OUT OF, UNDER OR IN
CONNECTION WITH THIS AGREEMENT OR ANY OTHER CREDIT DOCUMENTS CONTEMPLATED TO BE
EXECUTED IN CONNECTION HEREWITH, OR ANY COURSE OF CONDUCT, COURSE OF DEALINGS,
STATEMENTS (WHETHER VERBAL OR WRITTEN) OR ACTIONS OF ANY PARTY. THIS WAIVER
CONSTITUTES A MATERIAL INDUCEMENT FOR BORROWER, ADMINISTRATIVE AGENT AND EACH OF THE
LENDERS TO ENTER INTO THE TRANSACTIONS CONTEMPLATED HEREBY.



- 52 -









 





     12.7 Survival. All representations, warranties, covenants and agreements of Borrower
provided herein or in any other Credit Document, or in any notice, certificate, or other paper
delivered by or on behalf of Borrower pursuant hereto are significant and shall be deemed to have
been relied upon by Administrative Agent and each of the Lenders notwithstanding any investigation
made by Administrative Agent or any Lender or on its behalf and shall survive the delivery of the
Credit Documents and the making of the Facility and each advance pursuant thereto. No review or
approval by Administrative Agent, or any Lender, or by Lenders’ consultants or any representatives,
of any plans and specifications, opinion letters, certificates by professionals or other item of
any nature shall relieve Borrower or anyone else of any of the obligations, warranties or
representations made by or on behalf of Borrower under any one or more of the Credit Documents.



     12.8 Cumulative Rights. All of the rights of Administrative Agent and the Lenders
hereunder and under each of the other Credit Documents and any other agreement now or hereafter
executed in connection herewith or therewith, shall be cumulative and may be exercised singly,
together, or in such combination as Administrative Agent may determine in its sole judgment.



     12.9 Claims Against Administrative Agent or the Lenders.




12.9.1 Borrower Must Notify. Administrative Agent and each of the
Lenders shall not be in default under this Agreement, or under any other Credit
Document, unless a notice specifically setting forth the claim of Borrower shall
have been given to Administrative Agent and each of the Lenders within thirty (30)
days after Borrower first had actual knowledge or actual notice of the occurrence of
the event which Borrower alleges gave rise to such claim and Administrative Agent
and each of the Lenders do not remedy or cure the default, if any there be, with
reasonable promptness thereafter.




12.9.2 Remedies. If it is determined by the
final order of a court of competent jurisdiction,
which is not subject to further appeal, that Administrative Agent or any Lender has
breached any of their obligations under the Credit Documents and has not remedied or
cured the same with reasonable promptness following notice thereof as required
above, and the Administrative Agent’s and the Lenders’ responsibilities shall be
limited to: (i) where the breach consists of the failure to grant consent or give
approval in violation of the terms and requirements of a Credit Document, the
obligation to grant such consent or give such approval and to pay Borrower’s
reasonable costs and expenses including, without limitation, reasonable attorneys’
fees and disbursements in connection with such court proceedings; (ii) where the
breach consists of the failure to make a Loan, the obligation to make such Loan and
to pay Borrower’s reasonable costs and expenses including, without limitation,
reasonable attorneys’ fees and disbursements in connection with such court
proceedings; and (iii) in the case of any default by Administrative Agent or any
Lender, where it is also so determined that Administrative Agent or any Lender acted
in bad faith, or that Administrative Agent’s or any Lenders’ default constituted
gross negligence or willful misconduct, the payment of any actual, direct,
compensatory damages sustained



- 53 -









 






by Borrower as a result thereof plus Borrower’s
reasonable costs and expenses, including, without limitation, reasonable attorneys’
fees and disbursements in connection with such court proceedings.




12.9.3 Limitations. In no event, however, shall Administrative Agent
or the Lenders be liable to Borrower or to anyone else for other damages such as,
but not limited to, indirect, speculative or punitive damages whatever the nature of
the breach by Administrative Agent or any Lender of its obligations under this
Agreement or under any of the other Credit Documents. In no event shall
Administrative Agent or any Lender be liable to Borrower or to anyone else unless a
notice specifically setting forth the claim of Borrower shall have been given to
Administrative Agent and each of the Lenders within the time period specified above.



     12.10 Obligations Absolute, Joint and Several. Except to the extent prohibited by
applicable law which cannot be waived, the Borrower Obligations shall be absolute, unconditional
and irrevocable and shall be paid and/or performed strictly in accordance with the terms of the
Credit Documents under all circumstances whatsoever, including, without limitation, the existence
of any claim, set off, defense or other right which Borrower may have at any time against
Administrative Agent or any Lender whether in connection with the Facility or any unrelated
transaction.



     12.11 Table of Contents, Title and Headings; Exhibits and Schedules. Any table of
contents and the titles and the headings of sections are not parts of this Agreement or any other
Credit Document and shall not be deemed to affect the meaning or
construction of any of their provisions. All exhibits and schedules attached hereto or made a
part hereof are incorporated by reference and constitute a part of this Agreement.



     12.12 Counterparts. This Agreement may be executed in several counterparts, each of
which when executed and delivered is an original, but all of which together shall constitute one
instrument. In making proof of this Agreement, it shall not be necessary to produce or account for
more than one such counterpart which is executed by the party against whom enforcement of this
Agreement is sought.



     12.13 Integration. This Agreement, together with the other Credit Documents,
comprises the complete and integrated agreement of the parties to the Credit Documents on the
subject matter hereof and supersedes all prior agreements, written or oral, on the subject matter
hereof. Notwithstanding the foregoing, this Section 12.13 shall not be interpreted as integrating
or superseding any agreements or understandings relating to the refinancing of the Facility or any
portion of the Borrower’s Obligations hereunder pursuant to a separate agreement by one or more of
the parties hereto.



     12.14 Time Of the Essence. Time is of the essence of each provision of this Agreement
and each other Credit Document.



     12.15 No Oral Change. This Agreement and each of the other Credit Documents may only
be amended, terminated, extended or otherwise modified by a writing signed by the party




- 54 -










 





against which enforcement is sought (except no such writing shall be required for any party which, pursuant
to a specific provision of any Credit Document, is required to be bound by changes without such
party’s assent). In no event shall any oral agreements, promises, actions, inactions, knowledge,
course of conduct, course of dealings or the like be effective to amend, terminate, extend or
otherwise modify this Agreement or any of the other Credit Documents.




     12.16 Monthly Statements. While Administrative Agent may issue invoices or other
statements on a monthly or periodic basis (a “Statement”), it is expressly acknowledged and agreed
that, subject to the terms of Section 2.3.13 above: (i) the failure of Administrative Agent to
issue any Statement on one or more occasions shall not affect Borrower’s obligations to make
payments under the Credit Documents as and when due; (ii) the inaccuracy of any Statement shall not
be binding upon Administrative Agent and so Borrower shall always remain obligated to pay the full
amount(s) required under the Credit Documents as and when due notwithstanding any provision to the
contrary contained in any Statement; (iii) all Statements are issued for informational purposes
only and shall never constitute any type of offer, acceptance, modification, or waiver of the
Credit Documents or any of Administrative Agent’s or any Lender’s rights or remedies
thereunder; and (iv) in no event shall any Statement serve as the basis for, or a component
of, any course of dealing, course of conduct, or trade practice which would modify, alter, or
otherwise affect the express written terms of the Credit Documents.



     12.17 Indemnification. The Borrower agrees to indemnify and hold harmless the
Administrative Agent and each of the Lenders and the shareholders, directors, agents, officers,
subsidiaries and affiliates of the Administrative Agent and each of the Lenders from and against
any and all claims, actions and suits, whether groundless or otherwise, and from and against any
and all liabilities, losses, settlement payments, obligations, damages and expenses of every nature
and character in connection therewith, arising out of this Agreement or any of the other Credit
Documents or the transactions contemplated hereby or thereby or which otherwise arise in connection
with the financing, including, without limitation, the reasonable fees and disbursements of counsel
and allocated costs of internal counsel incurred in connection with any such investigation,
litigation or other proceeding, provided, however, that the Borrower shall not be obligated under
this Section 12.17 to indemnify any Person for (x) liabilities arising from such Person’s own gross
negligence, willful misconduct or breach of this Agreement, as finally determined by a court of
competent jurisdiction (v) as to any dispute to the extent the same is exclusively among the
Lenders, or (z) any insolvency of a Lender if the same is caused by such Lender being a party to
the Credit Documents. If and to the extent that the obligations of the Borrower under this Section
12.17 are unenforceable for any reason, the Borrower hereby agrees to make the maximum contribution
to the payment in satisfaction of such obligations which is permissible under applicable law. The
provisions of this Section 12.17 shall survive the repayment of the amounts owing under the Notes
and this Agreement and the termination of this Agreement and the obligations of the Lenders
hereunder and shall continue in full force and effect as long as the possibility of any such claim,
action, cause of action or suit exists.



[Signature page attached]




-55-









 





     IN WITNESS WHEREOF, each of the parties hereto has caused a counterpart of this Agreement to
be duly executed and delivered as an instrument under seal as of the date first above written.



	 	 	 	 	 	 	 
	 	 	BORROWER:	 	 
	 
	 	 	 	 	 	 
	 	 	HINES REIT PROPERTIES, L.P., a Delaware limited
partnership	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	Hines Real Estate Investment Trust, Inc., a	 	 
	 

	 	 	 	Maryland corporation, its general partner	 	 
	 
	 	 	 	 	 	 
	 

	 	 	 	By: /s/ Frank Apollo	 	 
	 

	 	 	 	 	 	 
	 

	 	 	 	Name: Frank Apollo	 	 
	 

	 	 	 	Title: Chief Accounting Officer	 	 
	 
	 	 	 	 	 	 
	 	 	AGENT AND LENDER:	 	 
	 
	 	 	 	 	 	 
	 	 	KEYBANK NATIONAL ASSOCIATION

as Administrative Agent and as a Lender	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	/s/ John J. Murphy	 	 
	 

	 	 	 	 	 	 
	 

	 	 	 	Name: John J. Murphy	 	 
	 

	 	 	 	Title: Vice President	 	 






 









 





EXHIBITS:




	 	 	 	 	 
	 	 	 	 	Section Reference Number
	Exhibit A
	 	Definitions	 	1.1
	 
	 	 	 	 
	Exhibit B
	 	Assets, Funded Debt; Subsidiaries	 	6.13, 6.16, 6.18,
	 
	 	 	 	7.2.13 and 7.5
	 
	 	 	 	 
	Exhibit C
	 	Authorized Representatives	 	4
	 
	 	 	 	 
	Exhibit D
	 	Form of Assignment and Acceptance	 	11.15.1
	 
	 	 	 	 
	Exhibit E
	 	Lenders’ Commitment	 	2.1(a)
	 
	 	 	 	 
	Exhibit F
	 	Form of Note	 	2.1(B)
	 
	 	 	 	 
	Exhibit G
	 	Form of Certificate	 	7.2.6
	 
	 	 	 	 
	Exhibit H
	 	Form of Direction Letter	 	 
	 
	 	 	 	 
	Exhibit I
	 	Form of Notice of Borrowing	 	2.1(c)
	 
	 	 	 	 
	Exhibit J
	 	Environmental Notices	 	6.15
	 
	 	 	 	 
	Exhibit K
	 	Portfolio Investments	 	3.2
	 
	 	 	 	 
	Exhibit L
	 	Pro Forma Reduction Calculation	 	3.2 (g)






-2-









 






EXHIBIT A TO AGREEMENT




DEFINITIONS




     Adjusted Federal Funds Rate means the Federal Funds Rate plus fifty (50) basis points.



     Adjusted LIBOR Rate means the LIBOR Rate plus the Applicable Margin.



     Administrative Agent means KeyBank National Association acting as agent for the
Lenders.



     Agreement as defined in the Preamble.



     Applicable Lending Office means, for each Lender, the office of such Lender (or of an
affiliate of such Lender) as such Lender may from time to time specify to the Administrative Agent
and the Borrower by written notice as the office by which its LIBOR Loans are made and maintained.



     Applicable Margin means (a) 150 basis points if the ratio of Funded Debt to Total
Asset Value is equal to or less than fifty percent (50%), (b) 175 basis points if the ratio of
Funded Debt to Total Asset Value is equal to or less than fifty-five percent (55%), (c) 200 basis
points if the ratio of Funded Debt to Total Asset Value is equal to or less than sixty percent
(60%), (d) 225 basis points if the ratio of Funded Debt to Total Asset Value is equal to or less
than sixty-five percent (65%) and (e) 250 basis points if the ratio of Funded Debt to Total Asset
Value is equal to or less than seventy percent (70%). The Applicable Margin shall be calculated in
connection with the delivery of and included in the certificate delivered pursuant to Section 7.2.6
hereof, with any change in the Applicable Margin taking effect on the first day of the first month
immediately following the date of delivery to Administrative Agent of such certificate.



     Appraised Asset Value means the aggregate fair market value of the Portfolio Assets as
reflected in the most recent MAI Appraisals for each Portfolio Asset; provided that in the event an
MAI Appraisal is not available for a Portfolio Asset at the time of the calculation of the
aggregate fair market value of the Portfolio Assets, the fair market value of such Portfolio Asset
shall be equal to the value based upon (i) the cost of acquiring the Asset, which costs shall
include the purchase price, financing costs, and fees, expenses and costs relating thereto,
including fees and expenses of counsel; or (ii) to the extent available, the annualized amount of a
Portfolio Asset’s net operating income based on the two (2) most recently completed full fiscal
quarters, less $0.50 per square foot of such Portfolio Asset’s leaseable space, and divided by a
capitalization rate of (x) 8.50% for “non-core” Portfolio Assets, or (y) 7.50% for “core” Portfolio
Assets (including Portfolio Assets in which the Core Fund invests).



     Assets means the real property owned in fee by Borrower or any other member of the
Combined Group.



     Assignment and Acceptance as defined in Section 11.15.1.



-3-









 





     Authorized Representatives as defined in Section 4 and listed on Exhibit C.



     Available For Distribution means that the amount in question (i) has been or is being
distributed to Borrower or (ii) upon the request of Borrower will be distributed to Borrower
without restriction, deduction or offset.



     Banking Day means a day on which banks are not required or authorized by law to close
in the city in which Administrative Agent’s principal office is situated.



     Bankruptcy Code means the Bankruptcy Code in Title 11 of the United States Code, as
amended, modified, succeeded or replaced from time to time.



     Borrower as defined in the Preamble.



     Borrower Escrow Account means that certain interest-bearing account established with
KeyBank National Association in the name of KeyBank National Association, as escrow agent for
Borrower, or such other escrow account as might be approved by Administrative Agent in its sole
discretion, as more particularly described in Section 3.3.



     Borrower Obligations means, without duplication, all of the obligations of the
Borrower to the Lenders and the Administrative Agent, whenever arising, under this Agreement, the
Notes, or any of the other Credit Documents to which the Borrower is a party.



     Borrower’s Ownership Interests as defined in Section 3.2(e).



     Borrower’s Pro Rata Share means, as to any referenced Subsidiary or other Portfolio
Investment Entity, or any Portfolio Assets, Indebtedness or other assets, liabilities, revenues,
earnings, costs and/or other interests, the greater of (1) Borrower’s direct or indirect percentage
ownership interest therein, or (2) in the case of Indebtedness, the amount thereof that is recourse
to the Borrower.



     Business Day means any day of the year on which offices of KeyBank National
Association are not required or authorized by law to be closed for business in Boston,
Massachusetts. If any day on which a payment is due is not a Business Day, then the payment shall
be due on the next day following which is a Business Day. Further, if there is no corresponding
day for a payment in the given calendar month (i.e., there is no “February 30th”), the payment
shall be due on the last Business Day of the calendar month.



     California Property means the property known as the California Casualty Plaza
consisting of approximately 10.58 acres of land located at 1900 & 2000 Alameda de las Pulgas, San
Mateo, California.



     Change of Control means (i) any failure by the investment advisor for the General
Partner to be a Controlled Subsidiary of Hines Interests Limited Partnership (“HILP”); (ii) any
failure by HILP to be Controlled, directly or indirectly, and majority-owned, directly or
indirectly by Jeffrey C. Hines, Gerald D. Hines, their parents, brothers and sisters, and the
spouses, children, grandchildren (natural or adopted) of any of the foregoing, the estate of
Jeffrey C. Hines and/or Gerald D. Hines, any trust for any of the foregoing, and/or any entity
owned by any combination



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of the foregoing; or (iii) any failure by the Borrower to be Controlled by the General
Partner. For purposes of this definition, the terms “Control” and “Controlled” (and grammatical
variations thereof) mean the possession, directly or indirectly, of the power to direct or cause
the direction of the management and policies of a referenced Person and direct the day-to-day
operations of such Person, whether through the ownership of voting interests of such Person, by
contract or otherwise.




     Closing Date means the date hereof.



     Code means the Internal Revenue Code of 1986 and the rules and regulations issued or
promulgated thereunder, as amended, modified, succeeded or replaced from time to time. References
to specific sections of the Code shall be construed also to refer to any successor sections.



     Collateral. The term “Collateral” shall mean and include the following
property, wherever located, and, to the extent provided in Section 3.2(a), any such property as the
Borrower may hereafter acquire or which may hereafter arise:




	 	(a)	 	all of Pledgor’s right, title and interest in any interest in each Portfolio
Investment (any such Portfolio Investment, a “Pledged Interest”) (as of the
Closing Date, the Pledged Interests consist solely of the Portfolio Investments listed
on Exhibit K);
	 
	 	(b)	 	all certificates or other instruments, if any, representing a Pledged Interest;
	 
	 	(c)	 	all Borrower’s income, cash flow, rights of distribution, dividends, interest,
proceeds, accounts, fees, profits, or other rights to payment which in any way relate to
or arise out of the Pledged Interests;
	 
	 	(d)	 	all rights of access arising from the Pledge Interests to books, records,
information and electronically stored data relating to any of the foregoing;
	 
	 	(e)	 	the Borrower Escrow Account, including all funds deposited therein pursuant to
Section 3.3 of the Term Loan Agreement and any income earned on such funds.





     Combined Group means the Borrower, the Core Fund and each Subsidiary of Borrower from
time to time.



     Commitment means, with respect to each Lender, the commitment of such Lender in an
aggregate principal amount of up to such Lender’s Commitment Percentage of the Committed Amount to
make Loans in accordance with the provisions of Section 2.1(a).



     Commitment Fee as defined in Section 2.4.



     Commitment Percentage means, for each Lender, the percentage identified as its
Commitment Percentage on Exhibit E as such percentage may be modified by assignment in
accordance with the terms of this Agreement.



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     Committed Amount means the Maximum Loan Amount.



     Consolidated Leverage Ratio means the ratio, expressed as a percentage, of Funded Debt
(including, without limitation, the outstanding balance under the Facility) over Total Asset Value.



     Core Fund means Hines-Sumisei U.S. Core Office Fund, L.P., a Delaware limited
partnership



     Credit Documents as defined in Section 3.1.



     Default means any event, act or condition which with notice or lapse of time, or both,
would constitute an Event of Default, as more particularly defined in Section 9.



     Default Rate means the Variable Rate plus 4% per annum.



     Delinquent Lender as defined in Section 11.13.



     Direction Letters means the letters delivered by Borrower to Administrative Agent
pursuant to which Portfolio Investment Entities that are not controlled by affiliates of Borrower
are directed to make distributions with respect to Portfolio Investments substantially in the form
of Exhibit H.



     Dollars means lawful money of the United States.



     EBITDA means Net Operating Income less the sum of (x) all general and administrative
fees and expenses actually paid and asset management fees paid in cash by Borrower plus (y)
Borrower’s Pro Rata Share of (A) all administrative fees and expenses actually paid by any
Portfolio Investment Entity or any Person in which any Portfolio Investment Entity has a direct or
indirect interest, and (B) asset management fees paid in cash by any Portfolio Investment Entity or
any Person in which any Portfolio Investment Entity has a direct or indirect interest, in each case
to the extent Borrower is directly or indirectly subject thereto. (For example, asset management
fees paid by the Core Fund are not included in this calculation, because the Borrower does not bear
any of the cost of any such asset management fees in respect of its interest in the Core Fund.)
For the avoidance of doubt, the calculation of EBITDA provided for in this definition shall not
duplicate the deduction of any expenses accounted for in the definition of Net Operating Income and
shall not include any organizational or offering expenses paid from offering proceeds.



     Eligible Assignee means any of (a) a commercial bank organized under the laws of the
United States, or any State thereof or the District of Columbia and having total assets in excess
of $1,000,000,000; and (b) a savings and loan association or savings bank organized under the laws
of the United States, or any State thereof or the District of Columbia, and having a net worth of
at least $100,000,000 calculated in accordance with generally accepted accounting principles.



     Environmental Claim means any investigation, written notice, violation, written
demand, action, suit, injunction, judgment, order, consent decree, penalty, fine, lien, proceeding,
or



-6-









 




written claim whether administrative, judicial, or private in nature arising (a) pursuant to,
or in connection with, an actual or alleged violation of, any Environmental Law, (b) in connection
with any Hazardous Material, (c) from any assessment, abatement, removal, remedial, corrective, or
other response action in connection with an Environmental Law or other order of a Governmental
Authority or (d) from any actual or alleged environmental damage, injury, threat, or harm to
health, safety, natural resources, or the environment.




     Environmental Indemnity has the meaning assigned in Section 5.5.



     Environmental Law(s) means any current or future requirement of any Governmental
Authority pertaining to (a) in connection with Hazardous Materials or environmental matters, the
protection of health, safety, and the indoor or outdoor environment, (b) in connection with
Hazardous Materials or environmental matters, the conservation, management, or use of natural
resources and wildlife, (c) in connection with Hazardous Materials or environmental matters, the
protection or use of surface water and groundwater, (d) the management, manufacture, possession,
presence, use, generation, transportation, treatment, storage, disposal, release, threatened
release, abatement, removal, remediation or handling of, or exposure to, any Hazardous Material or
(e) pollution (including, without limitation, any release to land surface water and groundwater)
and includes, without limitation, the Comprehensive Environmental Response, Compensation, and
Liability Act of 1980, as amended by the Superfund Amendments and Reauthorization Act of 1986, 42
USC 9601 et seq., Solid Waste Disposal Act, as amended by the Resource Conservation and Recovery
Act of 1976 and Hazardous and Solid Waste Amendment of 1984, 42 USC 6901 et seq., Federal Water
Pollution Control Act, as amended by the Clean Water Act of 1977, 33 USC 1251 et seq., Clean Air
Act of 1966, as amended, 42 USC 7401 et seq., Toxic Substances Control Act of 1976, 15 USC 2601 et
seq., Hazardous Materials Transportation Act, 49 USC App. 1801 et seq., Occupational Safety and
Health Act of 1970, as amended, 29 USC 651 et seq. (to the extent only that the same relates to
environmental matters), Oil Pollution Act of 1990, 33 USC 2701 et seq., Emergency Planning and
Community Right-to-Know Act of 1986, 42 USC 111001 et seq. (to the extent only that the same
relates to environmental matters), National Environmental Policy Act of 1969, 42 USC 4321 et seq.,
Safe Drinking Water Act of 1974, as amended, 42 USC 300(f) et seq., any analogous implementing or
successor law, and any amendment, rule, regulation, order, or binding directive issued thereunder.



     ERISA as defined in Section 6.8.



     Event of Default as defined in Section 9.1.



     Facility as defined in Section 1.3.



     Federal Funds Rate means, for any day, the rate per annum (rounded upwards, if
necessary, to the nearest 1/100 of 1%) 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 of New York 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



-7-









 




published on such next succeeding Business Day, the Federal Funds Rate for such day shall be
the average rate charged to the Administrative Agent (in its individual capacity) on such day on
such transactions as determined by the Administrative Agent.




     Fee Letter means the fee and expense letter of even date between the Administrative
Agent and the Borrower.



     Fees means all fees payable pursuant to Section 2.4.



     Fixed Charges means, for any period, the sum of (i) Interest Expense, plus (ii)
principal amortization of any Indebtedness of Borrower and Borrower’s Pro Rate Share of any
principal amortization of any Indebtedness of any Portfolio Entity or any Person in which any
Portfolio Entity has a direct or indirect interest, plus (iii) dividends on preferred stock issued
by Borrower and Borrower’s Pro Rata Share of dividends on preferred stock issued by any Portfolio
Entity or any Person in which any Portfolio Entity has a direct or indirect interest, in each case
during such period.



     Funded Debt means, as of any date, all Indebtedness and Guaranty Obligations of
Borrower and Borrower’s Pro Rata Share of all Indebtedness and Guaranty Obligations of the
Portfolio Investment Entities and of all Persons in which any Portfolio Investment Entity has a
direct or indirect interest as of such date; provided, that Funded Debt shall not include
any liabilities shown on the Borrower’s balance sheet as “due to affiliates” that are subordinate
to the Facility.



     Funded Debt Documents as defined in Section 6.16.



     Future Commitment as defined in Section 11.13.



     GAAP means generally accepted accounting principles in the United States applied on a
consistent basis and subject to Section 1.4, and, with respect to assets located outside the United
States, subject to generally accepted accounting principles as applied in the jurisdiction where
such foreign assets are located.



     General Partner means the general partner of the Borrower, as such general partner is
identified in Section 6.6.3.



     Governmental Authority means any federal, state, local, provincial or foreign court or
governmental agency, authority, instrumentality or regulatory body.



     Guarantor means Hines Real Estate Investment Trust, Inc., a Maryland corporation.



     Guaranty means that certain Unconditional Guaranty of Payment and Performance dated of
even date herewith and executed by Guarantor in favor of Administrative Agent and the Lenders.



     Guaranty Obligations means any obligations (other than endorsements in the ordinary
course of business of negotiable instruments for deposit or collection) guaranteeing any
Indebtedness, leases, dividends or other obligations of any other Person in any manner, whether



-8-









 




direct or indirect, and including, without limitation, any obligation, whether or not
contingent, (a) to purchase any such Indebtedness or other obligation or any property constituting
security therefor; (b) to advance or provide funds or other support for the payment or purchase of
such Indebtedness or obligation or to maintain working capital, solvency or other balance sheet
condition of such other Person (including without limitation keep well agreements, maintenance
agreements, comfort letters or similar agreements or arrangements), (c) to lease or purchase
property, securities or services primarily for the purpose of assuring the owner of such
Indebtedness or obligation, or (d) to otherwise assure or hold harmless the owner of such
Indebtedness or obligation against loss in respect thereof.




     Hazardous Materials means and includes asbestos, flammable materials, explosives,
radioactive substances, polychlorinated biphenyls, radioactive substances, other carcinogens, oil
and other petroleum products, pollutants or contaminants that could be a detriment to the
environment, and any other hazardous or toxic materials, wastes, or substances which are defined,
determined or identified as such in any past, present or future Environmental Laws.



     Indebtedness means, with respect to any Person at any time, without duplication, (a)
all indebtedness for borrowed money outstanding at such time, (b) the deferred purchase price of
assets or services which in accordance with GAAP would be shown to be a liability (or on the
liability side of a balance sheet) at such time, (c) all Guaranty Obligations of such Person
outstanding at such time, (d) the maximum amount of all letters of credit issued for the account of
such Person and, without duplication, all drafts drawn thereunder and not reimbursed at such time,
(e) all capitalized lease obligations outstanding at such time, (f) all Indebtedness of another
Person outstanding at such time secured by any Lien on any property of such Person, whether or not
such Indebtedness has been assumed (limited to the greater of (i) the amount of such Indebtedness
as to which there is recourse to such Person at such time and (ii) the fair market value of the
property which is subject to the Lien), (g) all obligations existing at such time under take-or-pay
or similar arrangements or under interest rate, currency, or commodities agreements, (h)
indebtedness outstanding at such time created or arising under any conditional sale or title
retention agreement, (i) obligations of such Person outstanding at such time with respect to
withdrawal liability or insufficiency under ERISA or under any Plan and (j) the principal portion
of all obligations of such Person outstanding at such time under any synthetic lease, tax retention
operating lease, off balance sheet loan or similar off balance sheet financing product of such
Person where such transaction is considered borrowed money indebtedness for tax purposes but is
classified as an operating lease in accordance with GAAP; provided, however, that Indebtedness
shall not include trade payables and accrued expenses arising or incurred in the ordinary course of
business. The Indebtedness of any Person shall include the Indebtedness of any partnership or
unincorporated joint venture in which such Person is legally obligated with respect thereto (to the
extent of such obligation) and shall include all Indebtedness of such Person under this Agreement.



     Individual Lender Litigation Expenses means all costs and expenses (including, without
limitation, reasonable attorneys’ fees and costs) incurred by any individual Lender in any
litigation concerning the Facility in which such Lender has been named as a party defendant, but
only to the extent such costs and expenses are reimbursable to such Lender by the Borrower under
the Credit Documents.



-9-









 





     Interest Expense means, for any period, the aggregate amount of interest paid by
Borrower during such period on any Indebtedness of Borrower (including the Facility) plus
Borrower’s Pro Rata Share of all interest paid during such period on any Indebtedness of any
Portfolio Investment Entity or of any Person in which a Portfolio Investment Entity has a direct or
indirect interest.



     Interest Payment Date means (a) as to Variable Rate Loans, the last day of each
calendar month and the Maturity Date, and (b) as to LIBOR Loans, the last day of each calendar
month, the last day of each applicable Interest Period and the Maturity Date; provided, however, if
such day is not a Business Day, then the Interest Payment Date shall be (x) as to the Variable Rate
Loans, the next day following that is a Business Day and (y) as to LIBOR Loans, the next day
following that is a Business Day unless such Business Day is in the next calendar month in which
case the Interest Payment Date shall be the immediately preceding Business Day.



     Interest Period.



     (A) The term “Interest Period” means with respect to each LIBOR Loan: a period of one (1), two
(2), or three (3) consecutive months, subject to availability, as selected, or deemed selected, by
Borrower at least three (3) Business Days prior to the Loan, or if a Loan is already outstanding,
at least three (3) Business Days prior to the end of the current Interest Period with respect to
that Loan. Each such Interest Period shall commence on the Business Day so selected, or deemed
selected, by Borrower and shall end on the numerically corresponding day in the first, second, or
third month thereafter, as applicable. Provided, however: (i) if there is no such numerically
corresponding day, such Interest Period shall end on the last Business Day of the applicable month,
(ii) if the last day of such an Interest Period would otherwise occur on a day which is not a
Business Day, such Interest Period shall be extended to the next succeeding Business Day; but (iii)
if such extension would otherwise cause such last day to occur in a new calendar month, then such
last day shall occur on the next preceding Business Day.



     (B) The term “Interest Period” shall mean with respect to each Variable Rate Loan consecutive
periods of one (1) day each.



     (C) No Interest Period may be selected which would extend beyond the then current Maturity
Date of the Facility (as actually extended).



     Investment shall mean the acquisition of any real or tangible personal property, stock
or other interest (whether economic, legal or beneficial and whether direct or indirect), security,
loan, advance, bank deposit, money market fund, contribution to capital, extension of credit
(except for accounts receivable arising in the ordinary course of business and payable in
accordance with customary terms), or purchase or commitment or option to purchase or otherwise
acquire real estate or tangible personal property or stock or other interests or securities of any
party or any part of the business or assets comprising such business, or any part thereof.



     Late Charges as defined in Section 2.3.15.



     Legal Requirements means all applicable federal, state, county and local laws,
by-laws, rules, regulations, codes and ordinances, and the requirements of any governmental agency
or authority having or claiming jurisdiction with respect thereto, including, but not limited to,
those



-10-









 




applicable to zoning, subdivision, building, health, fire, safety, sanitation, the protection
of the handicapped, and environmental matters and shall also include all orders and directives of
any court, governmental agency or authority having or claiming jurisdiction with respect thereto.




     Lenders as defined in the Preamble.



     LIBOR Rate Loan or LIBOR Loan means any principal outstanding under this
Agreement which bears interest at a rate determined by the LIBOR Rate.



     LIBOR Rate means, as applicable to any LIBOR Loan, the rate per annum (rounded upward,
if necessary, to the nearest one hundred-thousandth of a percentage point) as determined on the
basis of the offered rates for deposits in U.S. dollars, for a period of time comparable to such
LIBOR Loan which appears on the Telerate page 3750 as of 11:00 a.m. London time on the day that is
two London Banking Days preceding the first day of such LIBOR Loan; provided, however, if the rate
described above does not appear on the Telerate System on any applicable interest determination
date, the LIBOR Rate shall be the rate (rounded upwards as described above, if necessary)
determined on the basis of the offered rates for deposits in U.S. dollars for a period of time
comparable to such LIBOR Loan which are offered by four major banks in the London interbank market
at approximately 11:00 a.m. London time, on the day that is two (2) London Banking Days preceding
the first day of such LIBOR Loan as selected by Lender. The principal London office of each of the
four major London banks will be required to provide a quotation of its U.S. dollars deposit offered
rate. If at least two such quotations are provided, the rate for that date will be the arithmetic
mean of the quotations. If fewer than two quotations are provided as requested, the rate for that
date will be determined on the basis of the rates quoted for loans in U.S. dollars to leading
European banks for a period of time comparable to such LIBOR Loan offered by major banks in New
York City at approximately 11:00 a.m. New York City time, on the day that is two London Banking
Days preceding the first day of such LIBOR Loan. In the event that Lender is unable to obtain any
such quotation as provided above, it will be deemed that the LIBOR Rate for a LIBOR Loan cannot be
determined. In the event that the Board of Governors of the Federal Reserve System shall impose a
Reserve Percentage with respect to LIBOR Rate deposits of Lender, then for any period during which
such Reserve Percentage shall apply, the LIBOR Rate shall be equal to the amount determined above
divided by an amount equal to 1 minus the Reserve Percentage. “Reserve Percentage” shall mean the
maximum aggregate reserve requirement (including all basic, supplemental, marginal and other
reserves) which is imposed on member banks of the Federal Reserve System against “Euro-Currency
Liabilities” as defined in Regulation D.



     Lien means any mortgage, pledge, hypothecation, assignment, deposit arrangement,
security interest, encumbrance, lien (statutory or otherwise), preference, priority or charge of
any kind (including any agreement to give any of the foregoing), any conditional sale or other
title retention agreement, any financing or similar statement or notice perfecting a security
interest under the Uniform Commercial Code as adopted and in effect in the relevant jurisdiction,
or other similar recording or notice statute, and any lease in the nature thereof. Provided,
however, liens for the payment of real estate taxes and for other state, municipal or utility
charges shall not be considered “Liens” for purposes of the Facility to the extent that such liens
relate to taxes and other charges that are not then due and payable.



-11-









 





     Liquidation Proceeds means, without duplication, the proceeds and cash recovered by or
paid to Administrative Agent and the Lenders during an Event of Default.



     Loan or Loans as defined in Section 2.1(a).



     London Banking Day means any day on which dealings in deposits in Dollars are
transacted in the London interbank market.



     MAI Appraisal means real property appraisal(s) of the value of any Portfolio Asset,
determined on a market value basis, performed and prepared, impartially by an independent MAI
qualified appraiser(s) that is reasonably acceptable to the Administrative Agent, (provided,
however, CB Richard Ellis and Cushman & Wakefield shall be deemed acceptable for the purposes
hereof). Each such MAI Appraisal shall have been prepared in accordance with the Uniform Standards
of Professional Appraisal Practice and the Financial Institutions Reform, Recovery, and Enforcement
Act of 1989.



     Mandatory Prepayments as defined in Section 2.3.10(b)(i).



     Make Whole Provision as set forth in Section 2.3.16.



     Material Adverse Effect means a material adverse effect on (i) the condition
(financial or otherwise), operations, business, assets, liabilities or prospects of the Borrower,
(ii) the ability of the Borrower to perform any material obligation under the Credit Documents to
which it is a party, or (iii) the material rights and remedies of the Administrative Agent or any
Lender under the Credit Documents.



     Maturity shall mean the Maturity Date, or in any instance, upon acceleration of the
indebtedness under the Facility, if such indebtedness has been accelerated by Administrative Agent.



     Maturity Date as defined in Section 2.2.



     Maximum Loan Amount means Sixty Million Dollars ($60,000,000.00) as the same may be
reduced pursuant to the terms of this Agreement.



     Net Cash Flow means, for any period and without duplication, the sum of (a) dividends
in connection with marketable securities owned by Borrower and interest income earned by Borrower
on its cash and Investments plus (b) the portion of the following amount (without duplication) that
is Available for Distribution to Borrower from its Investments: (i) Borrower’s Pro Rata Share of
all cash received from all of Borrower’s Investments, including without limitation, all rents,
common area maintenance charges, insurance premiums and tax reimbursements and proceeds from rental
interruption insurance, but specifically excluding any proceeds from any casualty or condemnation
related to, or from the refinancing of or the sale or other disposition of, any of Borrower’s
Investments (unless approved by Administrative Agent and other than where the primary business of a
Portfolio Investment Entity is the sale of individual residential condominiums or units; with
respect to the sale of individual residential condominiums or units actually closed during the
applicable quarter, Net Cash Flow shall be calculated based on the actual sale proceeds of such
units closed in the applicable quarter less the



-12-









 




actual costs of such units), minus (ii) Borrower’s Pro Rata Share of the sum of the following
costs and expenses paid in cash in connection with Borrower’s Investments during such period: (A)
all Capital Expenditures other than Capital Expenditures made with either the proceeds of Funded
Debt or the proceeds of additional equity contributions made by Borrower, plus (B) any and all
costs and expenses of a non-capital nature, including but not limited to, operating, maintenance,
administrative, legal and accounting expenses (unless already deducted when reserved pursuant to
the following subclause C) plus (C) without duplication of any cost or expense in the preceding
subclause (B), amounts reserved for taxes, insurance and replacement reserves in accordance with
the past practices of the entity that owns such Investment, plus (D) all interest and principal
payments made in respect of Funded Debt.




     Net Operating Income means, for any period and without duplication, Borrower’s Pro
Rata Share of the following amount: (i) all operating revenues from all Portfolio Assets,
including without limitation, all rents, common area maintenance charges, insurance premium and tax
reimbursements and proceeds from rental interruption insurance, but specifically excluding revenues
from extraordinary events, any proceeds from any casualty or condemnation related to, or from the
refinancing of or the sale or other disposition of, any Portfolio Assets minus (ii) the sum of the
following costs and expenses incurred in connection with Portfolio Assets during such period: (A)
any and all costs and expenses of a non-capital nature, including but not limited to, operating,
maintenance, administrative, legal and accounting expenses (unless already deducted when reserved
pursuant to the following subclause (B)) but excluding payments on Funded Debt plus (B) without
duplication of any cost or expense in the preceding subclause (A) amounts reserved for taxes,
insurance and replacement reserves, plus (C) a capital expense reserve equal to $.50 per square
foot of the Portfolio Assets per annum calculated on a pro rata basis for any period less than one
(1) year.



     Net Sales Proceeds means, with respect to the Borrower, the aggregate cash proceeds
received by the Borrower in respect of any Portfolio Disposition by the Borrower, or cash
distributions to Borrower from the aggregate cash proceeds of Portfolio Distributions by another
Person, net of (a) all reasonable and customary direct costs (including, without limitation, legal,
accounting and investment banking fees, and sales commissions), (b) taxes paid or payable as a
result thereof and (c) existing Indebtedness (other than the Facility) repaid with the proceeds
received from such Portfolio Disposition; it being understood that “Net Sales Proceeds” shall
include, without limitation, Borrower’s Pro Rata Share of any cash received upon the financing,
sale or other disposition of any non-cash consideration received in any Portfolio Disposition to
the extent Borrower receives such cash.



     Notes means the promissory notes payable to each of the Lenders in the aggregate
principal amount of Sixty Million and 00/100 Dollars ($60,000,000.00), substantially in the form of
Exhibit F attached hereto, with the term “Note” meaning any one of the Notes.



     Other Taxes as defined in Section 2.3.4.2(b).



     Partnership Agreement  means that certain Second Amended and Restated Agreement of
Limited Partnership of Hines REIT Properties, L.P., dated as of May 25, 2004, as may be amended or
modified from time to time hereafter in accordance with the terms hereof.



-13-









 





     Perfected LP Interest shall mean an assignment of ownership or economic interest in
favor of Administrative Agent on behalf of Lenders in effect with respect to a Portfolio
Investment.



     Permitted Investment means all Investments reflected on the financial statements of
Borrower heretofore delivered to Administrative Agent and all Investments of a substantially
similar type, the Portfolio Investment Entities in which Borrower has an interest as of the date
hereof and which have been identified to Administrative Agent, all Investments held by Borrower
through such Portfolio Investment Entities as of the date hereof, including the California
Property, and all other Investments hereafter made by Borrower which Administrative Agent consents
to being Permitted Investments, such consent not to be unreasonably withheld.



     Permitted Liens means (a) Liens created by, under or in connection with this Agreement
or the other Credit Documents in favor of the Administrative Agent for the benefit of the Lenders
or evidenced by the Funded Debt Documents listed on Exhibit B, (b) Liens for taxes not yet
due or Liens for taxes being contested in good faith by appropriate proceedings for which adequate
reserves have been established (and as to which the property subject to such Lien is not yet
subject to foreclosure, sale or loss on account thereof); (c) Liens in respect of property imposed
by law arising in the ordinary course of business such as materialmen’s, mechanics’, warehousemen’s
and other like Liens; provided that such Liens secure only amounts not yet due and payable or
amounts being contested in good faith by appropriate proceedings for which adequate reserves have
been established (and as to which the property subject to such Lien is not yet subject to
foreclosure, sale or loss on account thereof); (d) pledges or deposits made to secure payment under
worker’s compensation insurance, unemployment insurance, pensions, social security programs, public
liability laws or similar legislation; (e) any attachment or judgment Lien, unless the judgment it
secures is not, within 30 days after entry thereof, discharged or the execution thereof stayed
pending appeal, or is not discharged within 30 days after the expiration of such stay; (f) Liens
securing Indebtedness permitted under Section 7.4; or (g) Liens on any Portfolio Investment,
including any transfer restrictions thereon, pursuant to the terms of any organizational documents
to which such Portfolio Investment is subject to or (ii) the terms of any instrument representing
or governing such Portfolio Investment.



     Permitted Portfolio Disposition as defined in Section 3.2(d).



     Person means any individual, partnership, joint venture, firm, corporation, limited
liability company, association, trust or other entity or enterprise (whether or not incorporated),
or any Governmental Authority.



     Plan means any “multiemployer plan” or “single-employer plan” as defined in Section
4001 of ERISA which the Borrower sponsors, maintains or contributes to or has any liability.



     Plan Assets means such term within the meaning and as defined in the Department of
Labor Regulation 29 CFR §2510.3-101, as amended, modified, succeeded or replaced from time to time
and the advisory opinions and rulings issued thereunder.



     Pledge Agreement means that certain Ownership Interests Pledge and Security Agreement
dated as of even date herewith executed by Borrower for the benefit of



-14-









 




Administrative Agent and Lenders, as may be amended from time to time in accordance with this
Agreement.




     Portfolio Asset means any real property asset directly or indirectly held by a
Portfolio Investment Entity.



     Portfolio Disposition means any disposition of all or any portion of any or all of the
Portfolio Investments of Borrower or Portfolio Assets by a Subsidiary of Borrower, whether by sale,
transfer or otherwise, other than (i) leasing of space in a Portfolio Asset in the normal course of
business, or (ii) where the primary business of such Subsidiary is the sale of multiple condominium
or housing units, the disposition of any such units in the ordinary course of business.



     Portfolio Investment Entity means a Person in which Borrower has a direct ownership
interest and which directly or indirectly holds interests in real property.



     Portfolio Investment means all of Borrower’s interest as a general partner, limited
partner, member or shareholder (including, without limitation, Borrower’s voting rights) in any
Portfolio Investment Entity.



     Prime Rate means the per annum rate of interest so designated from time to time by
KeyBank National Association as its prime rate. The Prime Rate is a reference rate and does not
necessarily represent the lowest or best rate being charged to any customer.



     Register as defined in Section 11.15.3.



     Regulation D, G, T, U or X means, respectively, Regulation D, G, T, U and X of the
Board of Governors of the Federal Reserve System as from time to time in effect and any successor
to all or a portion thereof.



     REIT means a “real estate investment trust”, as such term is defined in Section 856
of the Code.



     Reportable Event as defined in Section 6.8.



     Required Lenders means, at any time, Lenders which are then in compliance with their
obligations hereunder (as determined by the Administrative Agent) and holding in the aggregate at
least sixty-six and two thirds percent (66 2/3%) of (i) the Commitments (and participation
interests therein) or (ii) if the Commitments have been terminated, the outstanding Loans and
participation interests therein.



     Required Reduction shall have the meaning set forth in Section 3.2(g).



     Reserve Percentage shall have the meaning set forth within the definition of LIBOR
Rate.



     Security Documents shall mean, collectively, the Pledge Agreement and the related
UCC-1 Financing Statements.



-15-









 





     Solvent means, with respect to any Person as of a particular date, that on such date
(a) such Person is able to pay its debts and other liabilities, contingent obligations and other
commitments as they mature in the normal course of business, (b) such Person does not intend to,
and does not believe that it will, incur debts or liabilities beyond such Person’s ability to pay
as such debts and liabilities mature in their ordinary course, (c) such Person is not engaged in a
business or a transaction, and is not about to engage in a business or a transaction, for which
such Person’s assets would constitute unreasonably small capital after giving due consideration to
the prevailing practice in the industry in which such Person is engaged or is to engage, (d) the
fair value of the assets of such Person is greater than the total amount of liabilities, including,
without limitation, contingent liabilities, of such Person and (e) the present fair salable value
of the assets of such Person is not less than the amount that will be required to pay the probable
liability of such Person on its debts as they become absolute and matured. In computing the amount
of contingent liabilities at any time, it is intended that such liabilities will be computed at the
amount which, in light of all the facts and circumstances existing at such time, represents the
amount that would be expected to become an actual or matured liability.



     Subsidiary means as to any Person (a) any corporation more than 50% of whose stock of
any class or classes having by the terms thereof ordinary voting power to elect a majority of the
directors of such corporation (irrespective of whether or not at the time, any class or classes of
stock of such corporation shall have or might have voting power by reason of the happening of any
contingency) is at the time owned by such Person directly or indirectly through Subsidiaries, and
(b) any partnership, association, joint venture or other entity in which such Person directly or
indirectly through Subsidiaries has more than 50% equity interest at any time.



     Tangible Net Worth means the excess of Total Asset Value over Funded Debt.



     Taxes shall having the meaning set forth in Section 2.3.4.2(a).



     Term as defined in Section 2.2.



     Total Asset Value means the sum of (a) Borrower’s Pro Rata Share of the Appraised
Asset Value of the Portfolio Assets, (b) unrestricted cash then held by Borrower and Borrower’s Pro
Rata Share of any unrestricted cash held by any Portfolio Investment Entity or any Person in which
a Portfolio Investment Entity has a direct or indirect interest, plus (c) the value of unencumbered
marketable securities then owned by Borrower and Borrower’s Pro Rata Share of the value of
unencumbered marketable securities then owned by any Portfolio Investment Entity or any Person in
which a Portfolio Investment Entity has a direct or indirect interest, in each case as determined
by the closing price thereof on a major exchange on the last Business Day of the relevant calendar
quarter or, if applicable, on such other Business Day as to which Total Asset Value is being
determined.



     UCC means the Uniform Commercial Code in effect in the Commonwealth of Massachusetts
and in each jurisdiction in which the Portfolio Assets are situated, as the same may be amended
from time to time.



-16-









 





     Variable Rate means a per annum rate equal at all times to the greater of (a) Prime
Rate and (b) Adjusted Federal Funds Rate. Changes in the Variable Rate shall be effective
simultaneously with any change in the Prime Rate or Federal Funds Rate, as applicable.



     Variable Rate Loan means any Loan bearing interest at a rate determined by reference
to the Variable Rate.



-17-









 





Exhibit B




ASSETS; FUNDED DEBT; SUBSIDIARIES




Subsidiary




     Hines REIT 1900/2000 Alameda de Las Pulgas LLC, a Delaware limited liability company (“SPE
Subsidiary”). SPE Subsidiary is a direct wholly owned Subsidiary of Borrower.



Portfolio Investments




	 	 	 
	Name of Portfolio Investment Entity
	 	Ownership Interest 
	 
	 	 
	Hines-Sumisei U.S. Core Office Fund, L.P.
	 	90,186.529 Partnership
	 
	 	Units
	 
	 	(representing 22.0921% of
	 
	 	outstanding Partnership Units)
	(Following the closing of the acquisition of the	 	 
	California Property) SPE Subsidiary
	 	100.000%






Portfolio Assets




	 	 	 
	 	 	Indirect
	Portfolio Asset	 	Ownership Interest
	425 Lexington Avenue, New York, New York

	 	8.969%
	499 Park Avenue, New York, New York

	 	8.969%
	1200 Nineteenth Street, N.W., Washington, D.C.

	 	8.969%
	Manhattan Tower, 600 Lexington Avenue (101 East 52nd Street),

New York, New York

	 	8.969%
	One Shell Plaza, 910 Louisiana Street, Houston, Texas

	 	10.050%
	Two Shell Plaza, 777 Walker Street, Houston, Texas

	 	10.050%
	The KPMG Building, 55 Second Street, San Francisco, California

	 	20.100%
	101 Second Street, San Francisco, California

	 	20.100%
	Three First National Plaza, 70 West Madison Street, Chicago,

Illinois

	 	16.080%






-18-









 






	 	 	 
	 	 	Indirect
	Portfolio Asset	 	Ownership Interest
	1900 Alameda de Las Pulgas and 2000 Alameda de Las Pulgas in
San Mateo, California, commonly known as California Casualty
Plaza 1

	 	100.000%








 




			
	1.	 	California Casualty Plaza will not constitute a Portfolio
Asset until the acquisition of the California Property is consummated on or
after the Closing Date with the proceeds of the Facility.




-19-









 










Existing Funded Debt and Funded Debt Documents 2





			
	A.	 	Mortgage Loan for 425 Lexington Avenue, New York, NY, 499 Park Avenue,
New York, NY and 1200 Nineteenth Street, N.W., Washington, D.C.                         






     Loan Agreement, dated August 19, 2003, executed by and among Hines 425, Hines 499, Hines 1200
and Bank of America, N.A., a national banking association (“BofA”) and Connecticut General Life
Insurance Company, a Connecticut corporation (“CIGNA”; BofA and Cigna, collectively, “Portfolio
Lender”), as acknowledged and agreed to by HSNY and various other parties. The aggregate principal
balance outstanding under such Loan Agreement and the Notes described below is $316,405,000.00.



     Note Severance and Modification Agreement, dated August 19, 2003, executed by and among Hines
425, Hines 499, Hines 1200 and Portfolio Lender.



     $316,405,000.00 Consolidated, Amended, and Restated Promissory Note, dated August 19, 2003,
executed by and among Hines 425, Hines 499, Hines 1200 and Portfolio Lender.



     $160,000,000.00 Replacement Note A-1, dated August 19, 2003, executed by Hines 425, Hines 499
and Hines 1200 for the benefit of BofA.



     $104,600,000.00 Replacement Note A-2, dated August 19, 2003, executed by Hines 425, Hines 499
and Hines 1200 for the benefit of BofA.



     $51,805,000.00 Replacement Note B, dated August 19, 2003, executed by Hines 425, Hines 499 and
Hines 1200 for the benefit of CIGNA.



     Guaranty of Payment, dated August 19, 2003, executed by Hines Real Estate Holdings Limited
Partnership, a Texas limited partnership (“HREH”), for the benefit of Portfolio Lender.



     Agreement of Consolidation and Modification of Mortgage, Assignment of Leases and Rents, and
Security Agreement, dated August 19, 2003, executed by and among Hines 425, Hines 499 and Portfolio
Lender.



     Deed of Trust and Security Agreement, dated August 19, 2003, executed by Hines 1200, for the
benefit of Portfolio Lender.



     UCC-1 Financing Statements of each of the following:




     Hines 425, as Debtor, filed in the UCC Records of the Delaware Secretary of State




     Hines 499, as Debtor, filed in the UCC Records of the Delaware Secretary of State





 




			
	2.	 	This list of Funded Debt and Funded Debt Documents is in
addition to the Funded Debt under the Facility and the Credit Documents (in
each case as defined in the Agreement to which this Exhibit B is
attached).




-20-









 











     Hines 499 and Hines 425, as Debtor, filed in the Real Property Records of New York
County, New York




     Hines 1200, as Debtor, filed in the UCC Records of the Delaware Secretary of State




     Hines 1200, as Debtor, filed in the Real Property Records of the District of Columbia




     Assignments and Subordinations of Management Agreements, each dated August 19, 2003,
executed by and among:




     Hines 425, Portfolio Lender and Hines Interests Limited Partnership, a Delaware limited
partnership (“Manager”), as acknowledged and agreed to by HSNY




     Hines 499, Portfolio Lender and Manager, as acknowledged and agreed to by HSNY




     Hines 1200, Portfolio Lender and Manager, as acknowledged and agreed to by HSNY



     Five Party Agreements Relating to Lockbox Services, each dated August 19, 2003, executed by
and among the following, together with Portfolio Lender’s Initial Instructions to Bank, dated of
even date therewith:




     Hines 425, Hines NYOP and Portfolio Lender




     Hines 499, Hines NYOP and Portfolio Lender




     Hines 1200, Hines NYOP and Portfolio Lender




			
	B.	 	Mortgage Loan for Manhattan Tower, 600 Lexington Avenue, New York, NY






     Consolidation, Modification and Restatement of Notes, dated February 2, 2004, executed by and
among Hines 600 and CIGNA. The principle balance outstanding under such Note is $49,850,000.



     Consolidation, Modification and Restatement of Mortgages and Security Agreement, dated
February 2, 2004, by and between Hines 600 and CIGNA.



     Assignment of Rent and Leases, dated February 2, 2004, executed by and among Hines 600 and
CIGNA.



     Collateral Assignment of Contracts, Licenses, Permits and Warranties and Security Agreement,
dated February 2, 2004, executed by and among Hines 600 and CIGNA



     Prepaid Rent Escrow and Security Agreement, dated February 2, 2004, executed by and among
Hines 600, CIGNA and GMAC Commercial Mortgage Corporation (“GMAC”), a California corporation.



     Real Estate Tax Escrow and Security Agreement, dated February 2, 2004, executed by and among
Hines 600, CIGNA, and GMAC.



     Real Estate Tax Payment Guaranty, dated February 2, 2004, executed by and among Hines Real
Estate Holdings Limited for the benefit of CIGNA.



-21-









 





     Recourse Exceptions Guaranty, dated February 2, 2004, executed by Hines 600 for the benefit of
CIGNA.



     Environmental Indemnification Agreement, dated February 2, 2004, executed by Hines 600 for the
benefit of CIGNA.



     Subordination of Property Management and Leasing Agreement, dated February 2, 2004, executed
by Hines 600, Hines Interests Limited Partnership in favor of CIGNA.



     Assignment of Consolidation, Modification and Restatement of Mortgage, Assignment of Leases
and Rents and Security Agreement, dated February 2, 2004, executed by and among Fleet National Bank
and CIGNA.



     Assignment of Note, dated February 2, 2004, executed by and among Fleet National Bank and
CIGNA.



     Letter re Agreement & Conditions, dated February 2, 2004, executed by and among Hines 600 and
CIGNA.



     Mortgage Spreader Agreement, dated February 2, 2004, executed by and among No. 1 Times Square
Development LLC, Hines 600 and Fleet National Bank.



     Partial Release of Lien of Mortgaged Premises, dated February 2, 2004, executed by and among
Fleet National Bank and No. 1 Times Square Development LLC.



     UCC-1 Financing Statement of Hines 600, as Debtor, filed in the UCC Records of the Delaware
Secretary of State.



     UCC-1 Financing Statement of Hines 600, as Debtor, filed in the UCC Records of New York City.



     Letter Agreement, dated February 2, 2004, by Hines 600 issued to CIGNA regarding certain
post-closing matters.



     C. Mortgage Loan for One Shell Plaza & Two Shell Plaza, Houston, TX



     Loan Agreement, dated May 10, 2004, executed by and among Hines Louisiana Walker One, LP
(“Hines I Borrower”), Hines Louisiana Walker Two, LP (“Hines II Borrower”), Hines Louisiana Walker
Three, LP (“Hines III Borrower”) (jointly and severally, “Borrower”), and Prudential Mortgage
Capital Company, LLC (“PMCC”). The aggregate principle balance outstanding under such Loan
Agreement and Notes described below is $195,500,000.



     $131,962,500 Promissory Note (A), dated May 10, 2004, executed by and among Borrower and PMCC.



     $63,537,500 Promissory Note (B), dated May 10, 2004, executed by and among Borrower and PMCC.



-22-









 





     Assignment of Assignment of Leases and Rents, dated May 10, 2004, executed by and among
Borrower and PMCC.



     Assignment of Fee and Leasehold Deed of Trust and Security Agreement (with Fixture Filing),
dated May 10, 2004, executed by and among Borrower, PMCC, and Prudential Mortgage Capital Funding,
LLC.



     Assignment of Leases and Rents, dated May 10, 2004, executed by and among Borrower and PMCC.



     Assignment of Parking Management Agreement and Subordination of Parking Management Fees, dated
May 10, 2004, executed by and among Borrower, PMCC, and Hines US Services, Inc.



     Assignment of Permits, dated May 10, 2004, executed by and among Borrower and PMCC.



     Assignment of Property Management Agreement and Subordination of Property Management Fees,
dated May 10, 2004, executed by and among Borrower, PMCC, and Hines Interests Limited Partnership.



     Cash Management Agreement, dated May 10, 2004, executed by and among Borrower, PMCC and Hines
Interests Limited Partnership.



     Closing Certification, dated May 10, 2004, executed by and among Borrower and PMCC.



     Confirmatory Agreement, dated January 19, 2005, executed by and among Hines I Borrower,
LaSalle Bank National Association and the Prudential Insurance Company of America.



     Environmental Indemnity Agreement, dated May 10, 2004, executed by Borrower for the benefit of
PMCC.



     Fee and Leasehold Deed of Trust and Security Agreement (with Fixture Filing), dated May 10,
2004, executed by and among Borrower and PMCC.



     Restricted Account Agreement, dated May 10, 2004, executed by and among executed by and among
Borrower and PMCC.



     UCC-1 Financing Statement of Borrower, as Debtor, filed in the UCC Records of the Delaware
Secretary of State.



     D. Mortgage Loan for The KPMG Building, 55 Second Street, San Francisco, CA



     Deed of Trust, Security Agreement with Assignment of Rents and Leases and Fixture Filing,
dated September 20, 2004, executed by and among Hines 55, NLI Properties West, Inc



-23-









 




(“NLI”) and Hines Interests Limited Partnership (“HILP”). The principle balance outstanding
under such agreement is $80,000,000.




     $80,000,000 Promissory Note, dated September 20, 2004, executed by and among Hines 55 and NLI.



     Cash Management Agreement, dated September 20, 2004, executed by and among Hines 55, NLI and
HILP.



     Collateral Assignment of Contracts, Licenses and Permits, dated September 20, 2004, executed
by and among Hines 55, NLI and HILP.



     Environmental Indemnification Agreement, dated September 20, 2004, executed by Hines 55 for
the benefit of NLI.



     Letter re Loan from NLI, dated September 20, 2004, executed by and among Hines 55 and NLI.



     Restricted Account Agreement, dated September 20, 2004, executed by and among NLI, Hines 55
and Wells Fargo Bank, N.A.



     Subordination of Property Management and Leasing Agreement, dated September 20, 2004, executed
by Hines 55 in favor of NLI.



     Tax and Insurance Escrow Account, dated September 20, 2004, executed by and among Hines 55,
NLI and L.J. Melody and Company of Texas, LP.



     UCC-1 Financing Statement of Hines 55, as Debtor, filed in the UCC Records of the Delaware
Secretary of State.



     E. Mortgage Loan for 101 Second Street, San Francisco, CA



     Amended and Restated Deed of Trust, Security Agreement with Assignment of Rents and Leases and
Fixture Filing, dated September 20, 2004, executed by and among Hines 101 Second Street LP (“Hines
101”), First American Title Insurance Company (“Trustee”) and NLI Properties West, Inc. (“NLI”).
The principle balance outstanding under such agreement is $75,000,000.



     $75,000,000 Loan Modification Agreement dated September 20, 2004, executed by and among Hines
101 and NLI.



     $90,000,000 Loan Assumption and Release Agreement dated September 20, 2004, executed by and
among Cousin/Myers Second Street Partners, L.L.C., Cousins Properties Incorporated, Hines 101 and
NLI.



     $90,000,000 Promissory Note dated April 19, 2000, executed by and among Cousins/Meyers Second
Street Partners, L.L.C. and NLI.



-24-









 





     Cash Management Agreement, dated September 20, 2004, executed by and among Hines 101, NLI and
Hines Interests Limited Partnership.



     Collateral Assignment of Contracts, Licenses and Permits dated April 19, 2000, executed by and
among Cousins/Myers Second Street Partners, L.L.C. and NLI.



     Environmental Indemnification Agreement dated September 20, 2004, executed by Hines 101 for
the benefit of NLI.



     Letter re Loan from NLI Properties West dated September 20, 2004, executed by and among Hines
101 and NLI.



     Restricted Account Agreement dated September 20, 2004, executed by and among NLI, Hines 101
and Wells Fargo Bank, N.A.



     Subordination of Property Management and Leasing Agreement dated September 20, 2004, executed
by Hines and HILP for the benefit of NLI.



     Tax and Insurance Escrow Agreement dated September 20, 2004, executed by and among Hines 101,
NLI and L.J. Melody and Company of Texas, LP.



     UCC-1 Financing Statement of Hines 101, as Debtor, filed in the UCC Records of the Delaware
Secretary of State.



     F. Mortgage Loan for Three First National Plaza



     Absolute Assignment of Leases and Rents, dated March 22, 2005, executed by and among Hines 70
West Madison LP (“Hines 70”) and The Northwestern Mutual Life Insurance Company (“NWM”). The
principal balance outstanding under such agreement is $141,000,000.



     $126,900,000 Promissory Note, dated March 22, 2005, executed by and among Hines 70 and NWM.



     $14,100,000 Promissory Note, dated March 22, 2005, executed by and among Hines 70 and NWM.



     Environmental Indemnity Agreement, dated March 22, 2005, executed by Hines 70 for the benefit
of NWM.



     Fee and Leasehold Mortgage and Security Agreement, dated March 22, 2005, executed by and among
Hines 70 West Madison LP and The Northwestern Mutual Life Insurance Company.



     Non-Disturbance and Attornment Agreement, executed by and among Bear Sterns & Co., Inc., Hines
70 and NWM.



     Non-Disturbance and Attornment Agreement, dated March 9 2005, executed by and among Bell, Boyd
& Lloyd LLC, Hines 70 and NWM.



-25-









 





     Non-Disturbance and Attornment Agreement, executed by and among Foley & Lardner LLP, Hines 70
and NWM.



     Non-Disturbance and Attornment Agreement, dated March 3, 2005, executed by and among The
Privatebank and Trust Company, Hines 70 and NWM.



     Non-Disturbance and Attornment Agreement, dated February 17, 2005, executed by and among
Ungaretti & Harris, Limited, Hines 70 and NWM.



     UCC-1 Financing Statement of Hines 70, as Debtor filed in the UCC Records of the Delaware
Secretary of State.




			
	G.	 	Credit Facility for Hines-Sumisei NY Core Office Trust and Hines-Sumisei NY Core
Office Trust II                         






     Credit Agreement, dated January 28, 2005, executed by and among Hines-Sumisei NY Core Office
Trust (“HSNY”), Hines-Sumisei NY Core Office Trust II (“HSNYII”) and KeyBank National Association
(“KeyBank”). The principal balance outstanding under such Credit Agreement is $15,000,000.



     $15,000,000 Promissory Note, dated January 28, 2005, executed by HSNY and HSNYII.



     Indemnity Agreement Regarding Hazardous Materials, dated January 28, 2005, executed by HSNY
and HSNYII for the benefit of KeyBank.



     Letter (re: Loan from KeyBank (Fee Letter)), dated January 27, 2005, executed by and among
HSNY, HSNYII and KeyBank.




	H.	 	Hines-Sumisei US Core Office Properties LP Demand Promissory Note





     $4,000,000 Demand Promissory Note, dated June 28, 2005, issued by Hines-Sumisei US Core Office
Properties LP (“US Core Properties”) to KeyBank National Association (“KeyBank”). The principal
balance outstanding under such Demand Promissory Note is $4,000,000.



     Letter (Re: $4,000,000 Demand Promissory Note made by Borrower in favor of KeyBank National
Association), dated June 28, 2005, by and between KeyBank and US Core Properties.



-26-









 





EXHIBIT C TO AGREEMENT




AUTHORIZED REPRESENTATIVES




Frank Apollo



Charles N. Hazen



Sherri W. Schugart



Ryan Sims



-27-









 





EXHIBIT D TO AGREEMENT




 




FORM OF ASSIGNMENT AND ACCEPTANCE




-28-









 








ASSIGNMENT AND ACCEPTANCE




Dated: _________, 200_




     Reference is made to the Term Loan Agreement dated as of June ___, 2005 (as amended and in
effect from time to time, the “Agreement”), among Hines REIT Properties, L.P., a Delaware limited
partnership, having an address at c/o Hines Interests Limited Partnership, 2800 Post Oak Boulevard,
Suite 5000, Houston, Texas 77056-6118 (the “Borrower”), the banking institutions referred to
therein as Lenders (the “Lenders”), and KeyBank National Association as administrative agent (the
“Administrative Agent”) for the Lenders. Capitalized terms used herein and not otherwise defined
shall have the meanings assigned to such terms in the Agreement.



                                                                 (the “Assignor”) and                                                              (the “Assignee”) agree as
follows:



     1. The Assignor hereby sells and assigns to the Assignee, and the Assignee hereby purchases
and assumes from the Assignor, a ___% interest in and to all of the Assignor’s rights and
obligations under the Credit Documents as of the Effective Date (as hereinafter defined). The
amount of the Assignor’s Commitment being purchased by and assigned to the Assignee as of the
Effective Date is $                                         .



     2. The Assignor (i) represents that as of the date hereof, its Commitment Percentage (without
giving effect to assignments thereof which have not yet become effective) is ___%, and the
outstanding balance of the Loans owing to the Assignor under the Note held by the Assignor
(unreduced by any assignments thereof which have not yet become effective) is $___; (ii)
makes no representation or warranty and assumes no responsibility with respect to any statements,
warranties or representations made in or in connection with the Credit Documents or the execution,
legality, validity, enforceability, genuineness, sufficiency or value of the Credit Documents or
any other instrument or document furnished pursuant thereto, other than that the Assignor is the
legal and beneficial owner of the interest being assigned by it hereunder and that such interest is
free and clear of any adverse claim; (iii) makes no representation or warranty and assumes no
responsibility with respect to the financial condition of the Borrower, or any other Person which
may be primarily or secondarily liable in respect of any of the Borrower Obligations or any of
their obligations, or the performance or observance by the Borrower, or any other Person primarily
or secondarily liable in respect of any of the obligations under any of the Credit Documents or any
other instrument or document delivered or executed pursuant thereto; and (iv) attaches the Note
delivered to it under the Agreement and requests that the Borrower exchange such Note for new Notes
payable to each of the Assignor and the Assignee as follows:



	 	 	 
	Note Payable to the Order of:
	 	Amount of Note
	 	 	 
	                                        
	 	($                    )
	 	 	 
	                                        
	 	($                    )






-29-









 





     3. The Assignee (i) represents and warrants that it is legally authorized to enter into this
Assignment and Acceptance; (ii) confirms that it has received a copy of the Credit Documents,
together with copies of the most recent financial statements delivered pursuant to Section 7.2 of
the Agreement and such other documents and information as the Assignee has deemed appropriate to
make its own credit analysis and decision to enter into this Assignment and Acceptance; (iii)
agrees that it will, independently and without reliance upon the Assignor, any other Lender or the
Administrative Agent and based on such documents and information as it shall deem appropriate at
the time, continue to make its own credit decisions in taking or not taking action under the Credit
Documents; (iv) confirms that it is an Eligible Assignee; (v) appoints and authorizes the
Administrative Agent to take such action as agent on its behalf and to exercise such powers as are
reasonably incidental thereto pursuant to the terms of the Credit Documents; (vi) agrees that it
will perform all the obligations which by the terms of the Credit Documents are required to be
performed by the Assignee as a Lender in accordance with the terms of the Credit Documents; and
(vi) specifies as to its address for notices the office set forth beneath its name on the signature
page hereof.



     4. The effective date for this Assignment and Acceptance shall be ___, 200___(the
“Effective Date”). Following the execution of this Assignment and Acceptance, it will be delivered
to the Administrative Agent for acceptance by the Administrative Agent. Prior to such assignment
being effective the Assignee shall pay the Administrative Agent (for the Administrative Agent’s own
account) a registration fee in the sum of $3,500.00.



     5. Upon such acceptance, from and after the Effective Date, (i) the Assignee shall be a party
to the Agreement and, to the extent provided in this Assignment and Acceptance, have the rights and
obligations of a Lender thereunder, and (ii) the Assignor shall, with respect to that portion of
its interest under the Credit Documents assigned hereunder relinquish its future rights and be
released from its future obligations under the Credit Documents but shall remain liable for all
obligations which arose prior to such assignment.



     6. Upon such acceptance, from and after the Effective Date, the Administrative Agent shall
make all payments in respect of the rights and obligations assigned hereby (including payments of
principal, interest, fees and other amounts) to the Assignee. The Assignor and Assignee shall make
all appropriate adjustments in payments for periods prior to the Effective Date or with respect to
the making of this assignment directly between themselves.



     7. THIS ASSIGNMENT AND ACCEPTANCE IS INTENDED TO TAKE EFFECT AS A SEALED INSTRUMENT TO BE
GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE COMMONWEALTH OF MASSACHUSETTS.



     IN WITNESS WHEREOF, intending to be legally bound, each of the undersigned has caused this
Assignment and Acceptance to be executed on its behalf by its officer thereunto duly authorized, as
of the date first above written.



	 	 	 
	 

	 	ASSIGNOR:
	 
	 	 
	 

	 	By:                                                            ___
	 
	 	 
	 

	 	Title:                                                            






-30-









 





	 	 	 	 	 
	 

	 	ASSIGNEE:	 	 
	 
	 	 	 	 
	 

	 	By:                                                            	 	 
	 

	 	Title:                                                            	 	 
	Notice Address:

	 	                                                                                	 	 
	 

	 	                                                                                	 	 
	 

	 	                                                                                	 	 
	 
	 	 	 	 
	 

	 	Attn:	 	 
	 

	 	Telephone No. :	 	 
	 

	 	Telecopier No.:	 	 






-31-









 





EXHIBIT E




LENDER’S COMMITMENT PERCENTAGES




	 	 	 	 	 
	Bank:

	 	Commitment Percentage:

	KeyBank National Association

	 	 	100	%






-32-









 






EXHIBIT F TO AGREEMENT




FORM OF NOTE




-33-









 








PROMISSORY NOTE




			
	     $                                        
	 	                                         ___, 200_






     1. Promise To Pay.



     FOR VALUE RECEIVED, HINES REIT PROPERTIES, L.P., a Delaware limited partnership, having an
address at c/o Hines Interests Limited Partnership, 2800 Post Oak Boulevard, Suite 5000, Houston,
Texas 77056-6118 (the “Borrower”) promises to pay to the order of                     , a                      having an
address at                                          (“Lender”), the principal sum of                      DOLLARS ($                    ) or so
much thereof as may be advanced from time to time, with interest thereon, or on the amount thereof
from time to time outstanding, to be computed, as hereinafter provided, on each advance from the
date of its disbursement until such principal sum shall be fully paid. Interest shall be payable
at such rates and amounts and in installments as provided in the Agreement (as defined below). The
total principal sum, or the amount thereof outstanding, together with any accrued but unpaid
interest, shall be due and payable in full on September 28, 2005 subject however to acceleration,
in accordance with the Agreement (as defined below) pursuant to which this Note has been issued (as
so accelerated, the “Maturity Date”).



     2. Term Loan Agreement.



     This Note is issued pursuant to the terms, provisions and conditions of an agreement captioned
“Term Loan Agreement” (as the same may be amended the “Agreement”) dated as of even date by and
among Borrower, Lender, and KeyBank National Association as Administrative Agent for itself and for
such other financial institutions as may become parties to the Agreement (the Lender and such other
institutions are collectively referred to herein as the “Lenders”), and the Agreement evidences the
Facility (as defined in the Agreement) and the Loans (as defined in the Agreement) made pursuant
thereto. Capitalized terms used herein which are not otherwise specifically defined herein shall
have the same meaning herein as in the Agreement.



     3. Acceleration; Event of Default.



     To the extent permitted in the Agreement, this Note and the indebtedness evidenced hereby
shall become immediately due and payable without further notice or demand, and notwithstanding any
prior waiver of any breach or default, or other indulgence, during the existence at any time of any
one or more of the events defined in the Agreement as an “Event of Default”.



     4. Certain Waivers, Consents and Agreements.



     Each and every party liable hereon or for the indebtedness evidenced hereby whether as maker,
endorser, guarantor, surety or otherwise hereby: (a) waives presentment, demand, protest,
suretyship defenses and defenses in the nature thereof; (b) waives any defenses based upon and
specifically assents to any and all extensions and postponements of the time for payment,



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changes in terms and conditions and all other indulgences and forbearances which may be
granted by the holder to any party now or hereafter liable hereunder or for the indebtedness
evidenced hereby; (c) agrees to any substitution, exchange, release, surrender or other delivery of
any security or collateral now or hereafter held hereunder or in connection with the Agreement, or
any of the other Credit Documents, and to the addition or release of any other party or person
primarily or secondarily liable; (d) agrees that if any security or collateral given to secure this
Note or the indebtedness evidenced hereby or to secure any of the obligations set forth or referred
to in the Agreement, or any of the other Credit Documents, shall be found to be unenforceable in
full or to any extent, or if Administrative Agent or any other party shall fail to duly perfect or
protect such collateral, the same shall not relieve or release any party liable hereon or thereon
nor vitiate any other security or collateral given for any obligations evidenced hereby or thereby;
(e) to the extent required by the terms of the Agreement, agrees to pay all costs and expenses
incurred by Administrative Agent and Lenders or any other holder of this Note in connection with
the collection of the indebtedness evidenced hereby and the enforcement of rights and remedies
hereunder or under the other Credit Documents, whether or not suit is instituted and certain other
costs or expenses incurred by Administrative Agent and/or the Lender as provided in the Agreement;
and (f) consents to all of the terms and conditions contained in this Note, the Agreement, and all
other instruments now or hereafter executed evidencing or governing all or any portion of the
Borrower Obligations or the security or collateral for this Note and for such Agreement, or any one
or more of the other Credit Documents to which such Person is a party.




     5. Delay Not A Bar.



     No delay or omission on the part of the holder in exercising any right hereunder or any right
under any instrument or agreement now or hereafter executed in connection herewith, or any
agreement or instrument which is given or may be given to secure the indebtedness evidenced hereby
or by the Agreement, or any other agreement now or hereafter executed in connection herewith or
therewith shall operate as a waiver of any such right or of any other right of such holder, nor
shall any delay, omission or waiver on any one occasion be deemed to be a bar to or waiver of the
same or of any other right on any future occasion.



     6. Partial Invalidity.



     The invalidity or unenforceability of any provision hereof, of the Agreement, of the other
Credit Documents, or of any other instrument, agreement or document now or hereafter executed in
connection with the Facility made pursuant hereto and thereto shall not impair or vitiate any other
provision of any of such instruments, agreements and documents, all of which provisions shall be
enforceable to the fullest extent now or hereafter permitted by law.



     7. Compliance With Usury Laws.



     All agreements between Borrower, Administrative Agent, and Lenders are hereby expressly
limited so that in no contingency or event whatsoever, whether by reason of acceleration of
maturity of the indebtedness evidenced hereby or otherwise, shall the amount paid or agreed to be
paid to Administrative Agent or Lenders for the use or the forbearance of the indebtedness
evidenced hereby exceed the maximum permissible under applicable law. As used



-35-









 




herein, the term “applicable law” shall mean the law in effect as of the date hereof,
provided, however, that in the event there is a change in the law which results in a higher
permissible rate of interest, then this Note shall be governed by such new law as of its effective
date. In this regard, it is expressly agreed that it is the intent of Borrower, Administrative
Agent and Lenders in the execution, delivery and acceptance of this Note to contract in strict
compliance with the laws of the Commonwealth of Massachusetts from time to time in effect. If,
under or from any circumstances whatsoever, fulfillment of any provision hereof or of any of the
other Credit Documents at the time performance of such provision shall be due, shall involve
transcending the limit of validity prescribed by applicable law, then the obligation to be
fulfilled shall automatically be reduced to the limit of such validity, and if under or from any
circumstances whatsoever Administrative Agent or Lenders should ever receive as interest an amount
which would exceed the highest lawful rate, such amount which would be excessive interest shall be
applied to the reduction of the principal balance evidenced hereby and not to the payment of
interest. This provision shall control every other provision of all agreements among Borrower,
Administrative Agent, and Lenders.




     8. Use of Proceeds.



     All proceeds of the Facility shall be used solely for the purposes more particularly provided
for and limited by the Agreement.



     9. Security.



     This Note is secured by certain Security Documents as are more particularly described in the
Agreement and is further secured by other Collateral as set forth in the Agreement.



     10. Notices.



     Any notices given with respect to this Note shall be given in the manner provided for in the
Agreement.



     11. Governing Law and Consent to Jurisdiction.



     11.1. Substantial Relationship. It is understood and agreed that all of the Credit
Documents were negotiated, executed and delivered in the Commonwealth of Massachusetts, which State
the parties agree has a substantial relationship to the parties and to the underlying transactions
embodied by the Credit Documents.



     11.2. Place of Delivery. Borrower agrees to furnish to Administrative Agent at
Administrative Agent’s office in Boston, Massachusetts all further instruments, certifications and
documents to be furnished hereunder.



     11.3. Governing Law. This Note and each of the other Credit Documents, shall in all
respects be governed, construed, applied and enforced in accordance with the internal laws of the
Commonwealth of Massachusetts without regard to principles of conflicts of law.



     11.4. Consent to Jurisdiction. The Borrower hereby consents to personal jurisdiction
in any state or Federal court located within the Commonwealth of Massachusetts.



-36-









 





     12. Waiver of Jury Trial.



     BORROWER, ADMINISTRATIVE AGENT AND LENDERS MUTUALLY HEREBY KNOWINGLY, VOLUNTARILY AND
INTENTIONALLY WAIVE THE RIGHT TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION BASED HEREON, ARISING
OUT OF, UNDER OR IN CONNECTION WITH THIS NOTE OR ANY OTHER CREDIT DOCUMENTS CONTEMPLATED TO BE
EXECUTED IN CONNECTION HEREWITH, OR ANY COURSE OF CONDUCT, COURSE OF DEALINGS, STATEMENTS (WHETHER
VERBAL OR WRITTEN) OR ACTIONS OF ANY PARTY. THIS WAIVER CONSTITUTES A MATERIAL INDUCEMENT FOR
LENDER TO ACCEPT THIS NOTE AND MAKE THE FACILITY.



     13. No Oral Change.



     This Note and the other Credit Documents may only be amended, terminated, extended or
otherwise modified by a writing signed by the party against which enforcement is sought. In no
event shall any oral agreements, promises, actions, inactions, knowledge, course of conduct, course
of dealing, or the like be effective to amend, terminate, extend or otherwise modify this Note or
any of the other Credit Documents.



     14. Rights of the Holder.



     This Note and the rights and remedies provided for herein may be enforced by Administrative
Agent or any holder hereof. Wherever the context permits each reference to the term “holder”
herein shall mean and refer to Administrative Agent or the then holder of this Note.



     15. Survival.



     This Note shall survive and continue in full force and effect beyond and after the payment and
satisfaction of the Borrower Obligations in the event that Administrative Agent or any Lender is
required to disgorge or return any payment or property received as a result of any laws pertaining
to preferences, fraudulent transfers or fraudulent conveyances but such survival and continuation
shall be limited to the amount of such disgorgement or return.



(signatures on following page)




-37-









 








     IN WITNESS WHEREOF, Borrower has caused this Note to be duly executed as of the date set forth
above as a sealed instrument at Boston, Massachusetts.



	 	 	 
	 

	 	BORROWER:
	 
	 	 
	 

	 	HINES REIT PROPERTIES, L.P., a Delaware limited
partnership
	 
	 	 
	 

	 	By: Hines Real Estate Investment Trust, Inc., a
      Maryland corporation, its general partner
	 
	 	 
	 

	 	By:                                                             
	 

	 	Name:                                                             
	 

	 	Title:                                                             






-38-









 





EXHIBIT G TO AGREEMENT




FORM OF BORROWER’S CERTIFICATE




-39-









 








CERTIFICATE OF

HINES REIT PROPERTIES, L.P.




     HINES REIT PROPERTIES, L.P., a Delaware limited partnership (the “Borrower”) do hereby
certifies as follows as required pursuant to Section 7.2.6 of that certain Term Loan Agreement (as
the same may be amended, the “Term Loan Agreement”), dated as of June ___, 2005 and being by and
among the Borrower, KeyBank National Association as Administrative Agent, and the Lenders party
thereto (capitalized terms not herein defined shall have the meanings ascribed to such terms in the
Term Loan Agreement), that:



     1. Attached hereto is a schedule which contains detailed calculations of each of the financial
covenants set forth in Section 7.3 of the Term Loan Agreement [for the period ending] [as of]
[___, 200___] [after giving effect to the [Portfolio Disposition] [repayment] [borrowing]
scheduled to be made on such date] demonstrating that Borrower is in compliance with such covenants
as of the end of such date and stating the Applicable Margin as of the end of such fiscal quarter
(together with the calculation thereof); and


2. (A) No Default or Event of Default exists, and (B) all representations and warranties of the
Borrower that are contained in the Term Loan Agreement and in the other Credit Documents are true
and correct in all material respects as of the date therein made and as of the date hereof (other
than such warranties and representations as are made as of another date, which shall be true and
correct in all material respects of such other date).




     DATED as of the ___day of                                         ,                     



	 	 	 
	 

	 	HINES REIT PROPERTIES, L.P., a Delaware limited
partnership
	 
	 	 
	 

	 	By: Hines Real Estate Investment Trust, Inc., a
	 

	 	     Maryland corporation, its general partner
	 
	 	 
	 

	 	By:                                                             
	 

	 	Name:                                                             
	 

	 	Title:                                                             






-40-









 





EXHIBIT H TO AGREEMENT




INTENTIONALLY OMITTED




-41-









 








EXHIBIT I TO AGREEMENT




FORM OF NOTICE OF BORROWING




-42-









 








NOTICE OF BORROWING




	 	 	 	 	 
	 

	 	TO:
	 	KEYBANK NATIONAL ASSOCIATION, as agent (“Administrative Agent”)
for itself and such other financial institutions as may become parties to the
Term Loan Agreement (as hereinafter defined). Administrative Agent and such
other financial institutions are collectively referred to herein as “Lender”.
	 
	 	 	 	 
	 

	 	RE:
	 	Term Loan Agreement dated as of June ___, 2005 (as the same may
be amended, the “Term Loan Agreement”), between Lender and HINES REIT
PROPERTIES, L.P. (the “Borrower”)






     LOAN REQUEST NO:                     



     AMOUNT OF LOAN REQUESTED: $                                        



     DATE:                                          200_



     1. This Notice of Borrowing (this “Notice of Borrowing”) is submitted by Borrower to Lender
pursuant to the provisions of the Term Loan Agreement in order to induce Lender to make the Loan
requested. Capitalized terms used herein which are not otherwise specifically defined herein shall
have the same meaning herein as in the Term Loan Agreement.



     2. Borrower hereby requests Lender to make a Loan for the following purposes and in the
following amounts and on the following date:



	 	 	 	 	 	 	 
	 

	 	(i)
	 	                                        
	 	$                    
	 
	 	 	 	 	 	 
	 

	 	(ii)
	 	                                        
	 	$                    
	 
	 	 	 	 	 	 
	 

	 	(iii)
	 	                                        
	 	$                    
	 
	 	 	 	 	 	 
	 	 	 	 	Total Loan requested $                    






     Date on which Loan is requested to be made:                                          ___, 200_



     3. Borrower hereby certifies, warrants and represents to Lender that (except for Lender’s
approval of this Loan Request) each condition precedent to Lender’s obligation to make the
requested Loan has been satisfied, and further that:



          3.1. Borrower is not in Default under any Credit Document as of the date hereof, nor does
there exist any condition or circumstance which, with the lapse of time, or the giving of notice,
or both, would constitute such a Default; and there exists no Event of Default under the Term Loan
Agreement or any of the other Credit Documents.




-43-









 








          3.2 Borrower is in full compliance with all of the terms, covenants and conditions of the Term
Loan Agreement and each other Credit Document.




          3.3 No change that would have a material adverse effect on the ability of the Borrower to
perform its obligations under the Credit Documents has occurred in the condition (financial or
otherwise), operations, business, management or prospects of the Borrower or any other member of
the Combined Group since the date of the most recent financial statements furnished to
Administrative Agent pursuant to Section 7.2 of the Term Loan Agreement, and no change that would
have a material adverse effect on the ability of the Borrower to perform its obligations under the
Credit Documents has occurred with respect to any of the Assets.




          3.4 Immediately after the Loan requested hereby is made: (i) the sum of the aggregate
principal amount of outstanding Loans shall not exceed the Committed Amount, and (ii) Borrower
shall be in compliance with Section 7.3 of the Term Loan Agreement.




          3.5 Borrower has no knowledge that Lender has failed to perform any of Lender’s obligations
under the Credit Documents.




     4. This Loan Request: (i) constitutes an affirmation by Borrower that each of the warranties
and representations made in the Credit Documents remain true and correct in all material respects
(except as stated below) as of the date of this Loan Request and, unless Lender is notified to the
contrary prior to the disbursement of the Loan, will be so on the date of such Loan; and (ii)
constitutes the representation and warranty of Borrower that the information set forth in this
request and the accompanying documentation is true and correct and omits no material fact necessary
to make the same not misleading. The following are exceptions to the foregoing affirmation of
warranties and representations [if none are stated, there are no
exceptions]:  


 



      




      




     5. This request and the accompanying documentation (including a Notice of Rate Selection) are
submitted to Lender for the purpose of inducing Lender to make a Loan and Borrower intends that
Lender shall rely upon each of the same being true, accurate and complete.



     6. Each Person comprising Borrower shall be jointly and severally liable for the obligations
of Borrower hereunder.



-44-









 





     EXECUTED and delivered under seal as of the                                          day of                                          , 200___at Boston,
Massachusetts.



	 	 	 	 	 	 	 
	 	 	BORROWER:	 	 
	 
	 	 	 	 	 	 
	 	 	HINES REIT PROPERTIES, L.P., a Delaware limited
partnership	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	Hines Real Estate Investment Trust, Inc., a
Maryland corporation, its general partner	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	 	 	 
	 

	 	 	 	 	 	 
	 

	 	Name:	 	 	 	 
	 

	 	 	 	 	 	 
	 

	 	Title:	 	 	 	 
	 

	 	 	 	 	 	 





-45-









 





EXHIBIT J TO AGREEMENT




ENVIRONMENTAL NOTICES




NONE




-46-









 








EXHIBIT K TO AGREEMENT




Portfolio Investment Entities





	1.	 	Hines-Sumisei U.S. Core Office Fund, L.P., a Delaware limited partnership (the “Core Fund”).






	2.	 	(Following the closing of the acquisition of the California Property) Hines REIT 1900/2000
Alameda de Las Pulgas LLC, a Delaware limited liability company (“SPE Subsidiary”).





Portfolio Investments/Pledged Interests





	1.	 	90,186.529 units of partnership interest in the Core Fund, representing approximately
22.0921% of the interests in the Core Fund. Interest is a non-managing general partner
interest but would convert to a limited partner interest upon transfer to any Person other
than Borrower.






	2.	 	(Following the closing of the acquisition of the California Property) 100% of the member
interests in SPE Subsidiary.




-47-









 











EXHIBIT L TO AGREEMENT




PRO FORMA REDUCTION CALCULATION

Hines REIT Properties, L.P. — Pro Forma Reduction Calculation




Pro Forma Reduction

      Calculation



****Complete for non-residential sales only




	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	Net Sales	 	 	 	 
	Date	 	Investment	 	 	Sale Date	 	 	Trans. Type	 	 	Proceeds	 	 	Net Asset Value	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	Total	 	$	0	 
	 	 	Borrower’s Tangible Net Worth as of xx/xx/xxxx	 	 	 	 	 	 	 	 
	 	 	Less: Reduction in Net Worth from Current Sale	 	 	 	 	 	 	 	 
	 	 	     Adjusted Tangible Net Worth	 	 	 	 	 	 	 	 	 	$	—	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	Tangible Net Worth <= $80,000,000?	 	 	 	 	 	 	Y	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	A	 	Reduction Required based on Tangible Net Worth	 	 	 	 	 	$	—	 
	 	 	Fund Share of Project Level Debt, after effect of portfolio dispositions above	 	 	 	 
	 
	 	Outstanding	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	Facility 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	             Total Debt Outstanding	 	 	 	 	 	 	 	 	 	$	—	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	Fund Share of Asset FMV, after effect of portfolio dispositions above	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	Fund Leverage	 	 	 	 	 	 	 	 	 	 	 	 	#DIV/0!
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	Leverage > 70%?	 	 	 	 	 	 	 	 	 	 	 	#DIV/0!
	B
	 	Required Reduction based on Leverage Ratio	 	 	 	 	 	#DIV/0!
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	Minimum Required Reduction — Greater of A or B	 	#DIV/0!
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	Actual Reduction (enter as a negative)	 	 	 	 	 	 	 	 
	 	 	Total Outstanding after paydown	 	 	 	 	 	 	 	 	 	$	—	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	Availability	 	 	 	 	 	 	 	 	 	 	 	 	 	#DIV/0!







-48-