Document:

Exhibit 4.2

Pogo Producing Company

 

$450,000,000 Principal Amount of

7.875% Senior Subordinated Notes due 2013

 

 

Exchange and Registration
Rights Agreement

 

June 6,
2006

 

Goldman,
Sachs & Co.,

As
representative of the several Purchasers

named
in Schedule I to the Purchase Agreement

85
Broad Street

New
York, New York 10004

 

Ladies
and Gentlemen:

 

Pogo
Producing Company, a Delaware corporation (the “Company”), proposes to issue
and sell to the Purchasers (as defined herein) upon the terms set forth in the
Purchase Agreement (as defined herein) $450,000,000 principal amount of its 7.875%
Senior Subordinated Notes due 2013.

 

As
an inducement to the Purchasers to enter into the Purchase Agreement and in
satisfaction of a condition to the obligations of the Purchasers thereunder,
the Company agrees with the Purchasers for the benefit of holders (as defined
herein) from time to time of the Registrable Securities (as defined herein) as
follows:

 

1.                                       Certain Definitions.  For
purposes of this Exchange and Registration Rights Agreement, the following
terms shall have the following respective meanings:

 

“Base Interest” shall mean the interest
that would otherwise accrue on the Securities under the terms thereof and the
Indenture, without giving effect to the provisions of this Agreement.

 

The
term “broker-dealer” shall mean
any broker or dealer registered with the Commission under the Exchange Act.

 

“Closing Date” shall mean the date on which
the Securities are initially issued.

 

“Commission” shall mean the United States
Securities and Exchange Commission, or any other federal agency at the time
administering the Exchange Act or the Securities Act, whichever is the relevant
statute for the particular purpose.

 

“DTC” shall mean The Depository Trust
Company.

 

“Effective Time,” in the case of (i) an
Exchange Registration, shall mean the time and date as of which the Commission
declares the Exchange Registration Statement effective or as of which the
Exchange Registration Statement otherwise becomes effective and (ii) a
Shelf

 

 

Registration,
shall mean the time and date as of which the Commission declares the Shelf
Registration Statement effective or as of which the Shelf Registration
Statement otherwise becomes effective.

 

“Electing Holder” shall mean any holder of
Registrable Securities that has returned a completed and signed Notice and
Questionnaire to the Company in accordance with Section 3(d)(ii) or
3(d)(iii) hereof.

 

“Exchange Act” shall mean the Securities
Exchange Act of 1934, or any successor thereto, as the same shall be amended
from time to time.

 

“Exchange Offer” shall have the meaning
assigned thereto in Section 2(a) hereof.

 

“Exchange Registration” shall have the
meaning assigned thereto in Section 3(c) hereof.

 

“Exchange Registration Statement” shall
have the meaning assigned thereto in Section 2(a) hereof.

 

“Exchange Securities” shall have the
meaning assigned thereto in Section 2(a) hereof.

 

The
term “holder” shall mean each of
the Purchasers and other persons who acquire Registrable Securities from time
to time (including any successors or assigns), in each case for so long as such
person owns any Registrable Securities.

 

“Indenture” shall mean the Indenture, dated
as of June 6, 2006, between the Company and The Bank of New York Trust
Company, N.A., as Trustee, as the same shall be amended from time to time.

 

“Notice and Questionnaire” means a Notice
of Registration Statement and Selling Securityholder Questionnaire
substantially in the form of Exhibit A hereto.

 

The
term “person” shall mean a
corporation, association, partnership, organization, business, individual,
government or political subdivision thereof or governmental agency.

 

“Purchase Agreement” shall mean the Purchase
Agreement, dated June 1, 2006, between the Purchasers and the Company
relating to the Securities.

 

“Purchasers” shall mean the Purchasers
named in Schedule I to the Purchase Agreement.

 

“Registrable Securities” shall mean the
Securities; provided, however, that a Security shall cease to be a Registrable
Security when (i) in the circumstances contemplated by Section 2(a) hereof,
the Security has been exchanged for an Exchange Security in an Exchange Offer
as contemplated in Section 2(a) hereof (provided that any Exchange Security that, pursuant
to the last two sentences of Section 2(a), is included in a prospectus for
use in connection with resales by broker-dealers shall be deemed to be a
Registrable Security with respect to Sections 5, 6 and 9 until termination
of the Resale Period; (ii) in the circumstances contemplated by Section 2(b) hereof,
a Shelf Registration Statement registering such Security under the Securities
Act has been declared or becomes effective and such Security has been sold or
otherwise transferred by the holder thereof pursuant to and in a manner
contemplated by such effective Shelf Registration Statement; (iii) such
Security is sold pursuant to Rule 144

 

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under
circumstances in which any legend borne by such Security relating to
restrictions on transferability thereof, under the Securities Act or otherwise,
is removed by the Company or pursuant to the Indenture; (iv) such Security
is eligible to be sold pursuant to paragraph (k) of Rule 144; or (v) such
Security shall cease to be outstanding.

 

“Registration Default” shall have the
meaning assigned thereto in Section 2(c) hereof.

 

“Registration Expenses” shall have the
meaning assigned thereto in Section 4 hereof.

 

“Resale Period” shall have the meaning
assigned thereto in Section 2(a) hereof.

 

“Restricted Holder” shall mean (i) a
holder that is an affiliate of the Company within the meaning of Rule 405,
(ii) a holder who acquires Exchange Securities outside the ordinary course
of such holder’s business, (iii) a holder who has arrangements or
understandings with any person to participate in the Exchange Offer for the
purpose of distributing Exchange Securities and (iv) a holder that is a
broker-dealer, but only with respect to Exchange Securities received by such
broker-dealer pursuant to an Exchange Offer in exchange for Registrable
Securities acquired by the broker-dealer directly from the Company.

 

“Rule 144,” “Rule 405” and “Rule 415” shall mean, in each case,
such rule promulgated under the Securities Act (or any successor
provision), as the same shall be amended from time to time.

 

“Securities” shall mean the Company’s 7.875%
Senior Subordinated Notes due 2013 to be issued and sold to the Purchasers and
securities issued in exchange therefor or in lieu thereof pursuant to the
Indenture.

 

“Securities Act” shall mean the Securities
Act of 1933, or any successor thereto, as the same shall be amended from time
to time.

 

“Shelf Registration” shall have the meaning
assigned thereto in Section 2(b) hereof.

 

“Shelf Registration Statement” shall have
the meaning assigned thereto in Section 2(b) hereof.

 

“Special Interest” shall have the meaning
assigned thereto in Section 2(c) hereof.

 

“Suspension Period” shall have the meaning
assigned thereto in Section 3(h) hereof.

 

“Trust Indenture Act” shall mean the Trust
Indenture Act of 1939, or any successor thereto, and the rules, regulations and
forms promulgated thereunder, all as the same shall be amended from time to
time.

 

“Trustee” shall mean The Bank of New York
Trust Company, N.A.

 

Unless
the context otherwise requires, any reference herein to a “Section” or “clause”
refers to a Section or clause, as the case may be, of this Exchange
and Registration Rights Agreement, and the words “herein,” “hereof” and “hereunder”
and other words of similar import refer to this Exchange and Registration
Rights Agreement as a whole and not to any particular Section or other
subdivision.

 

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All
references to “$” shall refer to the lawful currency of the United States of
America.

 

2.                                      Registration
Under the Securities Act.

 

(a)                                  Except as set forth in Section 2(b) below,
the Company agrees to file under the Securities Act, no later than 90 days
after the Closing Date, a registration statement relating to an offer to
exchange (such registration statement, the “Exchange Registration Statement”,
and such offer, the “Exchange Offer”) any and all of the Securities for a like
aggregate principal amount of debt securities issued by the Company, which debt
securities are substantially identical to the Securities (and are entitled to
the benefits of a trust indenture which is substantially identical to the
Indenture or is the Indenture and which has been qualified under the Trust
Indenture Act), except that they have been registered pursuant to an effective
registration statement under the Securities Act and do not contain provisions
for the additional interest contemplated in Section 2(c) below (such
new debt securities hereinafter called “Exchange Securities”). The Company
agrees to use its reasonable best efforts to cause the Exchange Registration
Statement to become effective under the Securities Act no later than 180 days
after the Closing Date. The Exchange Offer will be registered under the
Securities Act on the appropriate form and will comply with all applicable
tender offer rules and regulations under the Exchange Act. The Company
further agrees to use its reasonable best efforts to commence and complete the
Exchange Offer no later than 45 days after such registration statement has
become effective, hold the Exchange Offer open for at least 30 days and
exchange the Exchange Securities for all Registrable Securities that may legally
be exchanged in the Exchange Offer and that have been properly tendered and not
withdrawn on or prior to the expiration of the Exchange Offer. The Exchange
Offer will be deemed to have been “completed” only if the debt securities
received by holders other than Restricted Holders in the Exchange Offer for
Registrable Securities are, upon receipt, transferable by each such holder without
restriction under the Securities Act (except for the requirement to deliver a
prospectus included in the Exchange Offer Registration Statement applicable to
resales by certain broker-dealers of Exchange Securities received by them
pursuant to the Exchange Offer) and the Exchange Act. The Exchange Offer shall
be deemed to have been completed upon the earlier to occur of (i) the
Company having exchanged the Exchange Securities for all outstanding
Registrable Securities pursuant to the Exchange Offer and (ii) the Company
having exchanged, pursuant to the Exchange Offer, Exchange Securities for all
Registrable Securities that may legally be exchanged in the Exchange Offer
and that have been properly tendered and not withdrawn before the expiration of
the Exchange Offer, which shall be on a date that is at least 30 days following
the commencement of the Exchange Offer. The Company agrees (x) to include in
the Exchange Registration Statement a prospectus for use in any resales by any
holder of Exchange Securities that is a broker-dealer eligible under Commission
interpretations as of the date hereof to use such a prospectus for such resales
and (y) to keep such Exchange Registration Statement effective for a period
(the “Resale Period”) beginning when Exchange Securities are first issued in
the Exchange Offer and ending upon the earlier of the expiration of the 180th
day after the Exchange Offer has been completed or such time as such
broker-dealers no longer own any Registrable Securities. With respect to such Exchange
Registration Statement, such holders shall have the benefit of the rights of
indemnification and contribution set forth in Sections 6(a), (c), (d) and
(e) hereof.

 

(b)                                 If (i) on or prior to the time the
Exchange Offer is completed existing Commission interpretations are changed
such that the debt securities received by holders other than Restricted Holders
in the Exchange Offer for Registrable Securities are not or would not be, upon
receipt, transferable by each such holder without restriction under the
Securities Act ; (ii)

 

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the Exchange Offer has
not been completed within 255 days following the Closing Date or (iii) the
Exchange Offer is not available to any holder of the Securities because of applicable
law or Commission interpretations and, unless it is a Purchaser, such holder
notifies the Company of such unavailability prior to the 60th day following
consummation of the Exchange Offer, the Company shall, in lieu of (or, in the
case of clause (iii), in addition to) conducting the Exchange Offer
contemplated by Section 2(a), use its reasonable best efforts to file
under the Securities Act no later than the later of 90 days following the
Closing Date and 45 days after the time such obligation to file arises, a “shelf”
registration statement providing for the registration of, and the sale on a
continuous or delayed basis by the holders of, all of the Registrable
Securities, pursuant to Rule 415 or any similar rule that may be
adopted by the Commission (such filing, the “Shelf Registration” and such
registration statement, the “Shelf Registration Statement”). The Company agrees
to use its reasonable best efforts (x) to cause the Shelf Registration
Statement to become or be declared effective no later than 120 days after such
Shelf Registration Statement is filed and to keep such Shelf Registration
Statement continuously effective for a period ending on the earlier of the
second anniversary of the Effective Time or such time as there are no longer
any Registrable Securities outstanding, provided, however, that no holder shall
be entitled to be named as a selling securityholder in the Shelf Registration
Statement or to use the prospectus forming a part thereof for resales of
Registrable Securities unless such holder is an Electing Holder, and (y) after
the Effective Time of the Shelf Registration Statement, promptly upon the
request of any holder of Registrable Securities that is not then an Electing
Holder, to take any action reasonably necessary to enable such holder to use
the prospectus forming a part thereof for resales of Registrable
Securities, including, without limitation, any action necessary to identify
such holder as a selling securityholder in the Shelf Registration Statement;
provided, however, that nothing in this Clause (y) shall (a) relieve any
such holder of the obligation to return a completed and signed Notice and
Questionnaire to the Company in accordance with Section 3(d)(iii) hereof
or (b) in the case of a Shelf Registration under clause (iii) above,
require the Company to enable any holder not covered by such clause to use such
prospectus. The Company further agrees to supplement or make amendments to the
Shelf Registration Statement, as and when required by the rules, regulations or
instructions applicable to the registration form used by the Company for
such Shelf Registration Statement or by the Securities Act or rules and
regulations thereunder for shelf registration, and the Company agrees to
furnish to each Electing Holder copies of any such supplement or amendment
prior to its being used or promptly following its filing with the Commission.

 

(c)                                  In the event that (i) the Company
has not filed the Exchange Registration Statement or Shelf Registration
Statement on or before the date on which such registration statement is
required to be filed pursuant to Section 2(a) or 2(b), respectively,
or (ii) such Exchange Registration Statement or Shelf Registration
Statement has not become effective or been declared effective by the Commission
on or before the date on which such registration statement is required to
become or be declared effective pursuant to Section 2(a) or 2(b),
respectively, or (iii) the Exchange Offer has not been completed within 45
days after the initial effective date of the Exchange Registration Statement
relating to the Exchange Offer (if the Exchange Offer is then required to be
made) or (iv) any Exchange Registration Statement or Shelf Registration
Statement required by Section 2(a) or 2(b) hereof is filed and
declared effective but shall thereafter either be withdrawn by the Company or
shall become subject to an effective stop order issued pursuant to Section 8(d) of
the Securities Act suspending the effectiveness of such registration statement
(except as specifically permitted herein) without being succeeded as promptly
as practicable by an additional registration statement filed and declared
effective (each such event referred to in clauses (i) through (iv), a “Registration

 

5

 

Default” and each
period during which a Registration Default has occurred and is continuing, a “Registration
Default Period”), then, as liquidated damages for such Registration Default,
subject to the provisions of Section 8(b), special interest (“Special
Interest”), in addition to the Base Interest, shall accrue at a per annum rate
of 0.25% for the first 90 days of the Registration Default Period, at a per
annum rate of 0.50% for the second 90 days of the Registration Default Period,
at a per annum rate of 0.75% for the third 90 days of the Registration Default
Period and at a per annum rate of 1.0% thereafter for the remaining portion of
the Registration Default Period. Following the cure of all Registration
Defaults, the accrual of Special Interest shall cease.

 

(d)                                 The Company shall take all actions
reasonably necessary or advisable to be taken by it to ensure that the
transactions contemplated herein are effected as so contemplated.

 

(e)                                  Any reference herein to a registration
statement as of any time shall be deemed to include any document incorporated,
or deemed to be incorporated, therein by reference as of such time and any
reference herein to any post-effective amendment to a registration statement as
of any time shall be deemed to include any document incorporated, or deemed to
be incorporated, therein by reference as of such time.

 

3.                                      Registration
Procedures. If the Company files a registration statement pursuant to Section 2(a) or
Section 2(b), the following provisions shall apply:

 

(a)                                  At or before the Effective Time of the
Exchange Offer or the Shelf Registration, as the case may be, the Company
shall qualify the Indenture under the Trust Indenture Act.

 

(b)                                 In the event that such qualification
would require the appointment of a new trustee under the Indenture, the Company
shall appoint a new trustee thereunder pursuant to the applicable provisions of
the Indenture.

 

(c)                                  In connection with the Company’s
obligations with respect to the registration of Exchange Securities as
contemplated by Section 2(a) (the “Exchange Registration”), if
applicable, the Company shall:

 

(i)                                     prepare and file with the Commission no
later than 90 days after the Closing Date, an Exchange Registration Statement
on any form which may be utilized by the Company and which shall
permit the Exchange Offer and resales of Exchange Securities by broker-dealers
during the Resale Period to be effected as contemplated by Section 2(a),
and use its reasonable best efforts to cause such Exchange Registration
Statement to become effective no later than 180 days after the Closing Date;

 

(ii)                                  as soon as practicable prepare and file
with the Commission such amendments and supplements to such Exchange
Registration Statement and the prospectus included therein as may be
necessary to effect and maintain the effectiveness of such Exchange
Registration Statement for the periods and purposes contemplated in Section 2(a) hereof
and as may be required by the applicable rules and regulations of the
Commission and the instructions applicable to the form of such Exchange
Registration Statement, and promptly provide each broker-dealer holding
Exchange Securities with such number of copies of the prospectus included
therein (as then amended or supplemented), in conformity in all material
respects with the requirements of the Securities Act and the Trust Indenture
Act and the rules and

 

6

 

regulations of the Commission thereunder,
as such broker-dealer reasonably may request prior to the expiration of
the Resale Period, for use in connection with resales of Exchange Securities
with respect to which it may use such prospectus;

 

(iii)                               promptly notify each broker-dealer that
has notified the Company in writing that it is a broker-dealer eligible to
participate in the Exchange Offer and that has requested or received copies of
the prospectus included in such registration statement, and confirm such advice
in writing, (A) when such Exchange Registration Statement or the
prospectus included therein or any prospectus amendment or supplement or
post-effective amendment has been filed, and, with respect to such Exchange
Registration Statement or any post-effective amendment, when the same has
become effective, (B) of any comments by the Commission and by the blue
sky or securities commissioner or regulator of any state with respect thereto
or any request by the Commission for amendments or supplements to such Exchange
Registration Statement or prospectus or for additional information, (C) of
the issuance by the Commission of any stop order suspending the effectiveness
of such Exchange Registration Statement or the initiation or threatening of any
proceedings for that purpose, (D) if at any time during the Resale Period
when a prospectus is required to be delivered under the Securities Act, the
Company becomes aware that the representations and warranties of the Company
contemplated by Section 5 cease to be true and correct in all material
respects, (E) of the receipt by the Company of any notification with
respect to the suspension of the qualification of the Exchange Securities for
sale in any jurisdiction or the initiation or threatening of any proceeding for
such purpose, or (F) at any time during the Resale Period when a
prospectus is required to be delivered under the Securities Act, that such
Exchange Registration Statement, prospectus, prospectus amendment or supplement
or post-effective amendment does not conform in all material respects to
the applicable requirements of the Securities Act and the Trust Indenture Act
and the rules and regulations of the Commission thereunder or contains an
untrue statement of a material fact or omits to state any material fact
required to be stated therein or necessary to make the statements therein not
misleading in light of the circumstances then existing;

 

(iv)                              in the event that the Company would be
required, pursuant to Section 3(c)(iii)(F) above, to notify any
broker-dealers holding Exchange Securities, without unreasonable delay prepare
and furnish to each such holder a reasonable number of copies of a prospectus
supplemented or amended so that, as thereafter delivered to purchasers of such
Exchange Securities during the Resale Period, such prospectus shall conform in
all material respects to the applicable requirements of the Securities Act and
the Trust Indenture Act and the rules and regulations of the Commission
thereunder and shall not contain an untrue statement of a material fact or omit
to state a material fact required to be stated therein or necessary to make the
statements therein not misleading in light of the circumstances then existing;
and each such broker-dealer agrees that upon receipt of any notice from the
Company pursuant to Section 3(c)(iii)(F) it shall forthwith
discontinue the disposition of Exchange Securities pursuant to the Exchange
Offer Registration Statement applicable to such Exchange Securities until such
broker-dealer shall have received copies of such amended or supplemented
prospectus, and if so directed by the Company, such broker-dealer shall deliver
to the Company (at the Company’s expense) all copies, other than permanent file
copies, then in such broker-dealer’s possession of the prospectus covering such
Exchange Securities at the time of receipt of such notice;

 

7

 

(v)                                 use its reasonable best efforts to obtain
the withdrawal of any order suspending the effectiveness of such Exchange
Registration Statement or any post-effective amendment thereto at the earliest
practicable date;

 

(vi)                              if required, use its reasonable best
efforts to (A) register or qualify the Exchange Securities under the
securities laws or blue sky laws of such jurisdictions as are contemplated by Section 2(a) no
later than the commencement of the Exchange Offer, (B) keep such registrations
or qualifications in effect and comply with such laws so as to permit the
continuance of offers, sales and dealings therein in such jurisdictions until
the expiration of the Resale Period and (C) take any and all other actions
as may be reasonably necessary or advisable to enable each broker-dealer
holding Exchange Securities that is eligible to use the prospectus included in
the Exchange Registration Statement in connection with resales thereof to
consummate the disposition thereof in such jurisdictions; provided, however,
that the Company shall not be required for any such purpose to (1) qualify
as a foreign corporation in any jurisdiction wherein it would not otherwise be
required to qualify but for the requirements of this Section 3(c)(vi), (2) consent
to general service of process in any such jurisdiction, qualify as a dealer in
securities in an jurisdiction in which it is not so qualified or subject itself
to taxation in respect of doing business in any jurisdiction in which it is not
otherwise so subject or (3) make any changes to its certificate of
incorporation or bylaws or any agreement between it and its stockholders;

 

(vii)                           use its reasonable best efforts to obtain
the consent or approval of each governmental agency or authority, whether federal,
state or local, which may be required to effect the Exchange Registration,
the Exchange Offer and the offering and sale of Exchange Securities by
broker-dealers that are eligible to use the prospectus included in the Exchange
Registration Statement in connection with resales thereof during the Resale
Period;

 

(viii)                        provide a CUSIP number for all Exchange
Securities, not later than the applicable Effective Time;

 

(ix)                                comply with all applicable rules and
regulations of the Commission, and make generally available to the Company’s
securityholders as soon as practicable but no later than 18 months after the
effective date of such Exchange Registration Statement, an earning statement of
the Company and its subsidiaries complying with Section 11(a) of the
Securities Act (including, at the option of the Company, Rule 158
thereunder).

 

(d)                                 In connection with the Company’s
obligations with respect to the Shelf Registration, if applicable, the Company
shall:

 

(i)                                     prepare and file with the Commission
within the time periods specified in and subject to the terms of Section 2(b),
a Shelf Registration Statement on any form which may be utilized by
the Company and which shall register all of the Registrable Securities for
resale by the holders thereof, in accordance with such method or methods of
disposition as may be specified by such of the holders as, from time to
time, may be Electing Holders, and use its reasonable best efforts to
cause such Shelf Registration Statement to become effective within the time
periods specified in Section 2(b);

 

8

 

(ii)                                  not less than 30 calendar days prior to
the Effective Time of the Shelf Registration Statement, mail the Notice and
Questionnaire to the holders of record of Registrable Securities (or, if the
Securities are then in book-entry form, to all of the direct participants of
DTC that DTC identifies to the Company on a security position listing as
holders of the Securities); no holder shall be entitled to be named as a selling
securityholder in the Shelf Registration Statement as of the Effective Time,
and no holder shall be entitled to use the prospectus forming a part thereof
for resales of Registrable Securities at any time, unless such holder has
returned a completed and signed Notice and Questionnaire to the Company by the
deadline for response set forth therein; provided, however, holders of
Registrable Securities shall have at least 28 calendar days from the date on
which the Notice and Questionnaire is first mailed to such holders to return a
completed and signed Notice and Questionnaire to the Company;

 

(iii)                               after the Effective Time of the Shelf
Registration Statement, upon the request of any holder of Registrable
Securities that is not then an Electing Holder, promptly send a Notice and
Questionnaire to such holder; provided, however, that the Company shall not be
required to take any action to name such holder as a selling securityholder in
the Shelf Registration Statement or to enable such holder to use the prospectus
forming a part thereof for resales of Registrable Securities until such
holder has returned a completed and signed Notice and Questionnaire to the
Company and then only if such holder is eligible to be so named or to use such
prospectus pursuant to Section 2(b);

 

(iv)                              as soon as practicable prepare and file
with the Commission such amendments and supplements to such Shelf Registration
Statement and the prospectus included therein as may be necessary to
effect and maintain the effectiveness of such Shelf Registration Statement for
the period specified in Section 2(b) hereof and as may be
required by the applicable rules and regulations of the Commission and the
instructions applicable to the form of such Shelf Registration Statement,
and furnish to the Electing Holders copies of any such supplement or amendment
simultaneously with or prior to its being used or filed with the Commission;

 

(v)                                 comply with the provisions of the
Securities Act with respect to the disposition of all of the Registrable
Securities covered by such Shelf Registration Statement in accordance with the
intended methods of disposition by the Electing Holders provided for in such
Shelf Registration Statement;

 

(vi)                              provide (A) the Electing Holders, (B) the
underwriters (which term, for purposes of this Exchange and Registration Rights
Agreement, shall include a person deemed to be an underwriter within the
meaning of Section 2(a)(11) of the Securities Act), if any, thereof, (C) any
sales or placement agent therefor, (D) not more than one counsel for any
such underwriter or agent and (E) not more than one counsel for all the
Electing Holders the opportunity to participate in the preparation of such
Shelf Registration Statement, each prospectus included therein or filed with
the Commission and each amendment or supplement thereto;

 

(vii)                           for a reasonable period prior to the
filing of such Shelf Registration Statement, and throughout the period
specified in Section 2(b), make available at reasonable times at the
Company’s principal place of business or such other reasonable

 

9

 

place for inspection by the persons
referred to in Section 3(d)(vi) who shall certify to the Company that
they have a current intention to sell the Registrable Securities pursuant to
the Shelf Registration such financial and other information and books and
records of the Company, and cause the officers, employees, counsel and
independent certified public accountants of the Company to respond to such
inquiries, as shall be reasonably necessary, in the judgment of the respective
counsel referred to in such Section, to conduct a reasonable investigation
within the meaning of Section 11 of the Securities Act; provided, however,
that each such party shall be required to maintain in confidence and not to
disclose to any other person any information or records reasonably designated
by the Company as being confidential, until such time as (A) such
information becomes a matter of public record (whether by virtue of its
inclusion in such registration statement or otherwise, but not because of
disclosure, unauthorized by the Company or its representatives, by such person
or its representatives), or (B) such person shall be required so to
disclose such information pursuant to a subpoena or order of any court or other
governmental agency or body having jurisdiction over the matter (subject to the
requirements of such order, and only after such person shall have given the
Company prompt prior written notice of such requirement), or (C) such
information is required to be set forth in such Shelf Registration Statement or
the prospectus included therein or in an amendment to such Shelf Registration
Statement or an amendment or supplement to such prospectus in order that such
Shelf Registration Statement, prospectus, amendment or supplement, as the case may be,
complies with applicable requirements of the federal securities laws and the rules and
regulations of the Commission and does not contain an untrue statement of a
material fact or omit to state therein a material fact required to be stated
therein or necessary to make the statements therein not misleading in light of
the circumstances then existing;

 

(viii)                        promptly notify each of the Electing
Holders, any sales or placement agent therefor and any underwriter thereof
(which notification may be made through any managing underwriter that is a
representative of such underwriter for such purpose) and confirm such advice in
writing, (A) when such Shelf Registration Statement or the prospectus
included therein or any prospectus amendment or supplement or post-effective
amendment has been filed, and, with respect to such Shelf Registration
Statement or any post-effective amendment, when the same has become effective, (B) of
any comments by the Commission and by the blue sky or securities commissioner
or regulator of any state with respect thereto or any request by the Commission
for amendments or supplements to such Shelf Registration Statement or
prospectus or for additional information, (C) of the issuance by the
Commission of any stop order suspending the effectiveness of such Shelf
Registration Statement or the initiation or threatening of any proceedings for
that purpose, (D) if at any time when a prospectus is required to be
delivered under the Securities Act, the Company becomes aware that the
representations and warranties of the Company contemplated by Section 3(d)(xvii)
or Section 5 cease to be true and correct in all material respects, (E) of
the receipt by the Company of any notification with respect to the suspension
of the qualification of the Registrable Securities for sale in any jurisdiction
or the initiation or threatening of any proceeding for such purpose, or (F) if
at any time when a prospectus is required to be delivered under the Securities
Act, that such Shelf Registration Statement, prospectus, prospectus amendment
or supplement or post-effective amendment does not conform in all material
respects to the applicable requirements of the Securities Act and the Trust
Indenture Act and the rules and regulations of the Commission thereunder
or contains an untrue statement of a material fact or omits to state any
material fact required to be

 

10

 

stated therein
or necessary to make the statements therein not misleading in light of the
circumstances then existing;

 

(ix)                                use its reasonable best efforts to obtain
the withdrawal of any order suspending the effectiveness of such registration
statement or any post-effective amendment thereto at the earliest practicable
date;

 

(x)                                   if requested by any managing underwriter
or underwriters, any placement or sales agent or any Electing Holder, promptly
incorporate in a prospectus supplement or post-effective amendment such
information as is required by the applicable rules and regulations of the
Commission and as such managing underwriter or underwriters, such agent or such
Electing Holder reasonably specifies should be included therein relating to the
terms of the sale of such Registrable Securities, including information with
respect to the principal amount of Registrable Securities being sold by such
Electing Holder or agent or to any underwriters, the name and description of
such Electing Holder, agent or underwriter, the offering price of such
Registrable Securities and any discount, commission or other compensation
payable in respect thereof, the purchase price being paid therefor by such
underwriters and with respect to any other terms of the offering of the
Registrable Securities to be sold by such Electing Holder or agent or to such
underwriters; and make all required filings of such prospectus supplement or
post-effective amendment promptly after notification of the matters to be
incorporated in such prospectus supplement or post-effective amendment;

 

(xi)                                furnish to each Electing Holder, each
placement or sales agent, if any, therefor, each underwriter, if any, thereof
and the respective counsel referred to in Section 3(d)(vi) an
executed copy (or, in the case of an Electing Holder, a conformed copy) of such
Shelf Registration Statement, each such amendment and supplement thereto (in
each case excluding all exhibits thereto and documents incorporated by
reference therein unless specifically requested) and such number of copies of
such Shelf Registration Statement (excluding exhibits thereto and documents
incorporated by reference therein unless specifically so requested by such
Electing Holder, agent or underwriter, as the case may be) and of the
prospectus included in such Shelf Registration Statement (including each
preliminary prospectus and any summary prospectus), in conformity in all
material respects with the applicable requirements of the Securities Act and
the Trust Indenture Act and the rules and regulations of the Commission
thereunder, and such other documents, as such Electing Holder, agent, if any,
and underwriter, if any, may reasonably request in order to facilitate the
offering and disposition of the Registrable Securities owned by such Electing
Holder, offered or sold by such agent or underwritten by such underwriter and
to permit such Electing Holder, agent and underwriter to satisfy the prospectus
delivery requirements of the Securities Act; and the Company hereby consents to
the use of such prospectus (including such preliminary and summary prospectus)
and any amendment or supplement thereto by each such Electing Holder and by any
such agent and underwriter, in each case in the form most recently
provided to such person by the Company, in connection with the offering and
sale of the Registrable Securities covered by the prospectus (including such
preliminary and summary prospectus) or any supplement or amendment thereto;

 

(xii)                             use its reasonable best efforts to (A) register
or qualify the Registrable Securities to be included in such Shelf Registration
Statement under such securities

 

11

 

laws or blue sky laws of such
jurisdictions as any Electing Holder and each placement or sales agent, if any,
therefor and underwriter, if any, thereof shall reasonably request, (B) keep
such registrations or qualifications in effect and comply with such laws so as
to permit the continuance of offers, sales and dealings therein in such
jurisdictions during the period the Shelf Registration is required to remain
effective under Section 2(b) above and for so long as may be
necessary to enable any such Electing Holder, agent or underwriter to complete
its distribution of Securities pursuant to such Shelf Registration Statement
(so long as such distribution is commenced during the period during which the
Shelf Registration Statement is required to remain effective pursuant to Section 2(b))
and (C) take any and all other actions as may be reasonably necessary
or advisable to enable each such Electing Holder, agent, if any, and
underwriter, if any, to consummate the disposition in such jurisdictions of
such Registrable Securities; provided, however, that the Company shall not be
required for any such purpose to (1) qualify as a foreign corporation in
any jurisdiction wherein it would not otherwise be required to qualify but for
the requirements of this Section 3(d)(xii), (2) consent to general
service of process in any such jurisdiction, qualify as a dealer in securities
in an jurisdiction in which it is not so qualified or subject itself to
taxation in respect of doing business in any jurisdiction in which it is not
otherwise so subject or (3) make any changes to its certificate of
incorporation or bylaws or any agreement between it and its stockholders;

 

(xiii)                          use its reasonable best efforts to obtain
the consent or approval of each governmental agency or authority, whether
federal, state or local, which may be required to effect the Shelf
Registration or the offering or sale in connection therewith or to enable the selling
holder or holders to offer, or to consummate the disposition of, their
Registrable Securities;

 

(xiv)                         unless any Registrable Securities shall
be in book-entry only form, cooperate with the Electing Holders and the
managing underwriters, if any, to facilitate the timely preparation and
delivery of certificates representing Registrable Securities to be sold, which
certificates, if so required by any securities exchange upon which any
Registrable Securities are listed, shall be printed, lithographed or engraved,
or produced by any combination of such methods, on steel engraved borders, and
which certificates shall not bear any restrictive legends; and, in the case of
an underwritten offering, enable such Registrable Securities to be in such
denominations and registered in such names as the managing underwriters may request
at least two business days prior to any sale of the Registrable Securities;

 

(xv)                            provide a CUSIP number for all
Registrable Securities, not later than the applicable Effective Time;

 

(xvi)                         enter into one or more underwriting
agreements, engagement letters, agency agreements, “best efforts” underwriting
agreements or similar agreements, as appropriate, including customary
provisions relating to indemnification and contribution, and take such other
actions in connection therewith as any Electing Holders aggregating at least
20% in aggregate principal amount of the Registrable Securities at the time
outstanding shall request and as are customarily taken in order to expedite or
facilitate the disposition of such Registrable Securities;

 

12

 

(xvii)                      whether or
not an agreement of the type referred to in Section 3(d)(xvi) hereof is
entered into and whether or not any portion of the offering contemplated by the
Shelf Registration is an underwritten offering or is made through a placement
or sales agent or any other entity, (A) make such representations and
warranties to the Electing Holders and the placement or sales agent, if any,
therefor and the underwriters, if any, thereof in form, substance and scope as
are customarily made in connection with an offering of debt securities pursuant
to any appropriate agreement or to a registration statement filed on the form applicable
to the Shelf Registration; (B) obtain an opinion or opinions of counsel of
or to the Company in customary form and covering such matters, of the type
customarily covered by such an opinion, as the managing underwriters, if any,
or as any Electing Holders of at least 20% in aggregate principal amount of the
Registrable Securities at the time outstanding may reasonably request,
addressed to such Electing Holder or Electing Holders and the placement or
sales agent, if any, therefor and the underwriters, if any, thereof and dated
the effective date of such Shelf Registration Statement (and if such Shelf
Registration Statement contemplates an underwritten offering of a part or
all of the Registrable Securities, dated the date of the closing under the
underwriting agreement relating thereto) (it being agreed that the matters to
be covered by such opinions shall include the due formation and good standing
of the Company and certain of its subsidiaries; the due authorization,
execution and delivery of the relevant agreement of the type referred to in Section 3(d)(xvi)
hereof; the due authorization, execution, authentication and issuance, and the
validity and enforceability, of the Securities; the absence of material legal
or governmental proceedings involving the Company; the absence of a breach by
the Company or any of its subsidiaries of, or a default under, material
agreements binding upon the Company or any subsidiary of the Company as a
result of the contemplated transaction; the absence of certain governmental
approvals required to be obtained in connection with the Shelf Registration,
the offering and sale of the Registrable Securities, this Exchange and
Registration Rights Agreement or any agreement of the type referred to in Section 3(d)(xvi)
hereof, except such approvals as may be required under state securities or
blue sky laws; the material compliance as to form of such Shelf
Registration Statement and any documents incorporated by reference therein and
of the Indenture with the requirements of the Securities Act and the Trust
Indenture Act and the rules and regulations of the Commission thereunder,
respectively; and, a statement that as of the date of the opinion and of the
Shelf Registration Statement or most recent post-effective amendment thereto,
as the case may be, no facts have come to the attention to such counsel
that would lead such counsel to believe that such Shelf Registration Statement
and the prospectus included therein, as then amended or supplemented, and from
the documents incorporated by reference therein (in each case other than the
financial statements and other financial or reserve information contained
therein) of an untrue statement of a material fact or the omission to state
therein a material fact necessary to make the statements therein not misleading
(in the case of such documents, in the light of the circumstances existing at
the time that such documents were filed with the Commission under the Exchange
Act); provided, however, that such opinions may include customary
qualifications and limitations and shall not be materially more extensive in
scope and content than the opinions of counsel to or of the Company under the
Purchase Agreement); (C) obtain a “cold comfort” letter or letters from
the independent registered public accountants of the Company addressed to the
selling Electing Holders, the placement or sales agent, if any, therefor or the
underwriters, if any, thereof, dated (i) the effective date of such Shelf
Registration Statement and (ii) the effective date of any prospectus
supplement to the prospectus

 

13

 

included in such Shelf Registration Statement
or post-effective amendment to such Shelf Registration Statement which includes
unaudited or audited financial statements as of a date or for a period subsequent
to that of the latest such statements included in such prospectus (and, if such
Shelf Registration Statement contemplates an underwritten offering pursuant to
any prospectus supplement to the prospectus included in such Shelf Registration
Statement or post-effective amendment to such Shelf Registration Statement
which includes unaudited or audited financial statements as of a date or for a
period subsequent to that of the latest such statements included in such
prospectus, dated the date of the closing under the underwriting agreement
relating thereto), such letter or letters to be in customary form and
covering such matters of the type customarily covered by letters of such type; (D) deliver
such documents and certificates, including officers’ certificates, as may be
reasonably requested by any Electing Holders of at least 20% in aggregate
principal amount of the Registrable Securities at the time outstanding or the
placement or sales agent, if any, therefor and the managing underwriters, if
any, thereof to evidence the accuracy of the representations and warranties
made pursuant to clause (A) above or those contained in Section 5(a) hereof
and the compliance with or satisfaction of any agreements or conditions
contained in the underwriting agreement or other agreement entered into by the
Company; and (E) undertake such obligations relating to expense
reimbursement, indemnification and contribution as are provided in Section 6
hereof;

 

(xviii)                   notify in writing each holder of
Registrable Securities affected thereby of any proposal by the Company to amend
or waive any provision of this Exchange and Registration Rights Agreement
pursuant to Section 9(h) hereof and of any amendment or waiver
effected pursuant thereto, each of which notices shall contain the text of the
amendment or waiver proposed or effected, as the case may be;

 

(xix)                           in the event that any broker-dealer
registered under the Exchange Act shall underwrite any Registrable Securities
or participate as a member of an underwriting syndicate or selling group or “assist
in the distribution” (within the meaning of the Conduct Rules (the “Conduct
Rules”) of the National Association of Securities Dealers, Inc. (“NASD”)
or any successor thereto, as amended from time to time) thereof, whether as a
holder of such Registrable Securities or as an underwriter, a placement or
sales agent or a broker or dealer in respect thereof, or otherwise, assist such
broker-dealer in complying with the requirements of such Conduct Rules,
including by (A) if such Conduct Rules shall so require, engaging a “qualified
independent underwriter” (as defined in such Conduct Rules) to participate in
the preparation of the Shelf Registration Statement relating to such
Registrable Securities, to exercise usual standards of due diligence in respect
thereto and, if any portion of the offering contemplated by such Shelf
Registration Statement is an underwritten offering or is made through a
placement or sales agent, to recommend the yield of such Registrable
Securities, (B) indemnifying any such qualified independent underwriter to
the extent of the indemnification of underwriters provided in Section 6
hereof (or to such other customary extent as may be requested by such
underwriter) and (C) providing such information to such broker-dealer as may be
required in order for such broker-dealer to comply with the requirements of the
Conduct Rules; and

 

(xx)                              comply with all applicable rules and
regulations of the Commission, and make generally available to its
securityholders as soon as practicable but in any event not later than eighteen
months after the effective date of such Shelf Registration

 

14

 

Statement, an earning statement of the
Company and its subsidiaries complying with Section 11(a) of the
Securities Act (including, at the option of the Company, Rule 158
thereunder).

 

(e)                                  In the event that the Company would be
required, pursuant to Section 3(d)(viii)(F) above, to notify the
Electing Holders, the placement or sales agent, if any, therefor and the
managing underwriters, if any, thereof, the Company shall without unreasonable
delay prepare and furnish to each of the Electing Holders, to each placement or
sales agent, if any, and to each such underwriter, if any, a reasonable number
of copies of a prospectus supplemented or amended so that, as thereafter
delivered to purchasers of Registrable Securities, such prospectus shall conform in
all material respects to the applicable requirements of the Securities Act and
the Trust Indenture Act and the rules and regulations of the Commission
thereunder and shall not contain an untrue statement of a material fact or omit
to state a material fact required to be stated therein or necessary to make the
statements therein not misleading in light of the circumstances then existing. Each
Electing Holder agrees that upon receipt of any notice from the Company
pursuant to Section 3(d)(viii)(F) hereof, such Electing Holder shall
forthwith discontinue the disposition of Registrable Securities pursuant to the
Shelf Registration Statement applicable to such Registrable Securities until
such Electing Holder shall have received copies of such amended or supplemented
prospectus, and if so directed by the Company, such Electing Holder shall
deliver to the Company (at the Company’s expense) all copies, other than
permanent file copies, then in such Electing Holder’s possession of the
prospectus covering such Registrable Securities at the time of receipt of such
notice.

 

(f)                                    In the event of a Shelf Registration, in
addition to the information required to be provided by each Electing Holder in
its Notice Questionnaire, the Company may require such Electing Holder to
furnish to the Company such additional information regarding such Electing
Holder and such Electing Holder’s intended method of distribution of
Registrable Securities as may be required in order to comply with the
Securities Act. Each such Electing Holder agrees to notify the Company as
promptly as practicable of any inaccuracy or change in information previously
furnished by such Electing Holder to the Company or of the occurrence of any
event in either case as a result of which any prospectus relating to such Shelf
Registration contains or would contain an untrue statement of a material fact
regarding such Electing Holder or such Electing Holder’s intended method of
disposition of such Registrable Securities or omits to state any material fact
regarding such Electing Holder or such Electing Holder’s intended method of
disposition of such Registrable Securities required to be stated therein or
necessary to make the statements therein not misleading in light of the
circumstances then existing, and promptly to furnish to the Company any
additional information required to correct and update any previously furnished information
or required so that such prospectus shall not contain, with respect to such
Electing Holder or the disposition of such Registrable Securities, an untrue
statement of a material fact or omit to state a material fact required to be
stated therein or necessary to make the statements therein not misleading in
light of the circumstances then existing.

 

(g)                                 Until the expiration of two years after
the Closing Date or such earlier time as no Registrable Securities are
outstanding, the Company will not, and will not permit any of its “affiliates”
(as defined in Rule 144) to, resell any of the Securities which constitute
“restricted securities” under Rule 144 that have been reacquired by any of
them except pursuant to an effective registration statement under the
Securities Act.

 

15

 

(h)                                 Notwithstanding any provision of this
Exchange and Registration Rights Agreement to the contrary, in the event of a
potential acquisition or business combination or other transaction, business
development or event involving the Company that may require disclosure in
an Exchange Registration Statement or a Shelf Registration Statement, if the
Company shall determine in the exercise of its reasonable judgment that
disclosure of such potential acquisition or business combination or other
transaction, business development or event is not in the best interests of the
Company or that obtaining any financial statements relating to an acquisition
or business combination required to be included in such registration statement
would be impracticable, the Company shall have the right to suspend the
effectiveness of such registration statement for no more than two periods, each
of up to 60 consecutive days (each, a “Suspension Period”), during any 365-day
period, provided that no such registration statement may be suspended for
more than an aggregate of 75 days in any 12-month period. In any such event,
the Company shall promptly notify each broker-dealer eligible to use the
prospectus in the Exchange Offer Registration Statement in connection with
resales of Exchange Securities held by it and, if applicable, each Electing
Holder eligible to resell Securities under a Shelf Registration Statement, of
the suspension of the effectiveness of such registration statement, provided
that the Company shall not be required to disclose in such notice the possible
acquisition or business combination or other transaction, business development
or event if it determines in good faith that such disclosure would not be in
the best interests of the Company. Any Suspension Period shall terminate upon
the later of (i) the abandonment, consummation or termination of such
acquisition or business combination or other transaction, business development
or event or the availability of the required financial statements with respect
to a possible acquisition or business combination and (ii) any required
amendment or supplement to such registration statement, and the Company shall
promptly notify broker-dealers eligible to use the prospectus in the Exchange
Offer Registration Statement in connection with resales of Exchange Securities
held by them and, if applicable, Electing Holders eligible to resell Securities
under a Shelf Registration Statement, that the use of the prospectus contained
in such registration statement, as amended or supplemented, may resume.
The Company shall provide sufficient copies of the most recent version of such
prospectus to broker-dealers holding Exchange Securities eligible to use the
prospectus in the Exchange Offer Registration Statement in connection with
resales of Exchange Securities held by them and, if applicable, Electing
Holders eligible to resell Securities under a Shelf Registration Statement,
promptly upon written request, and in no event later than three business days
after such request.

 

4.                                      Registration Expenses. The
Company agrees to bear and to pay or cause to be paid promptly all expenses
incident to the Company’s performance of or compliance with this Exchange and
Registration Rights Agreement, including (a) all Commission and any NASD
registration, filing and review fees and expenses including reasonable fees and
disbursements of not more than one counsel for the placement or sales agent or
underwriters in connection with such registration, filing and review, (b) all
fees and expenses in connection with the qualification of the Securities for
offering and sale under the State securities and blue sky laws referred to in Section 3(d)(xii)
hereof and determination of their eligibility for investment under the laws of
such jurisdictions as any managing underwriters or the Electing Holders may designate,
including any reasonable fees and disbursements of not more than one counsel
for the Electing Holders or underwriters in connection with such qualification
and determination, (c) all expenses relating to the preparation, printing,
production, distribution and reproduction of each registration statement
required to be filed hereunder, each prospectus included therein or prepared
for distribution pursuant hereto, each amendment or supplement to the
foregoing, the expenses of preparing the Securities for delivery and the
expenses of printing or producing any

 

16

 

underwriting agreements, agreements among underwriters, selling
agreements and blue sky or legal investment memoranda and all other documents
in connection with the offering, sale or delivery of Securities to be disposed
of (including certificates representing the Securities), (d) messenger,
telephone and delivery expenses relating to the offering, sale or delivery of
Securities and the preparation of documents referred in clause (c) above, (e) fees
and expenses of the Trustee under the Indenture, any agent of the Trustee and
any counsel for the Trustee and of any collateral agent or custodian, (f) internal
expenses of the Company (including all salaries and expenses of the Company’s
officers and employees performing legal or accounting duties), (g) fees,
disbursements and expenses of counsel, reservoir engineers and independent
certified public accountants of the Company (including the expenses of any
opinions or “cold comfort” letters required by or incident to such performance
and compliance), (h) reasonable fees, disbursements and expenses of any “qualified
independent underwriter” engaged pursuant to Section 3(d)(xix) hereof and
of one counsel for the Electing Holders retained in connection with a Shelf
Registration, as selected by the Electing Holders of at least a majority in
aggregate principal amount of the Registrable Securities held by Electing
Holders (which counsel shall be reasonably satisfactory to the Company), (i) any
fees charged by securities rating services for rating the Securities, and (j)
fees, expenses and disbursements of any other persons, including special
experts, retained by the Company in connection with such registration
(collectively, the “Registration Expenses”). To the extent that any
Registration Expenses are reasonably incurred, assumed or paid by any holder of
Registrable Securities or any placement or sales agent therefor or underwriter
thereof, the Company shall reimburse such person for the full amount of the
Registration Expenses so incurred, assumed or paid promptly after receipt of a
request therefor. Notwithstanding the foregoing, the holders of the Registrable
Securities being registered shall pay all agency fees and commissions and
underwriting discounts and commissions attributable to the sale of such
Registrable Securities and the fees and disbursements of any counsel or other
advisors or experts retained by such holders (severally or jointly), other than
the counsel and experts specifically referred to above.

 

5.                                      Representations
and Warranties. The Company represents and warrants to, and agrees with,
each Purchaser and each of the holders from time to time of Registrable
Securities that:

 

(a)                                  Each registration statement covering
Registrable Securities and each prospectus (including any preliminary or
summary prospectus) contained therein or furnished pursuant to Section 3(d) or
Section 3(c) hereof and any further amendments or supplements to any
such registration statement or prospectus, when it becomes effective or is
filed with the Commission, as the case may be, and, in the case of an
underwritten offering of Registrable Securities, at the time of the closing
under the underwriting agreement relating thereto, will conform in all
material respects to the requirements of the Securities Act and the Trust
Indenture Act and the rules and regulations of the Commission thereunder
and will not contain an untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to make the statements
therein not misleading; and at all times subsequent to the Effective Time when
a prospectus would be required to be delivered under the Securities Act, other
than from (i) such time as a notice has been given to holders of
Registrable Securities pursuant to Section 3(d)(viii)(F) or Section 3(c)(iii)(F) hereof
until (ii) such time as the Company furnishes an amended or supplemented
prospectus pursuant to Section 3(e) or Section 3(c)(iv) hereof,
each such registration statement, and each prospectus (including any summary
prospectus) contained therein or furnished pursuant to Section 3(d) or
Section 3(c) hereof, as then amended or supplemented, will conform in
all material respects to the requirements of the Securities Act and the Trust
Indenture Act and the rules and regulations of the Commission

 

17

 

thereunder and will
not contain an untrue statement of a material fact or omit to state a material
fact required to be stated therein or necessary to make the statements therein
not misleading in the light of the circumstances then existing; provided,
however, that this representation and warranty shall not apply to any
statements or omissions made in reliance upon and in conformity with
information furnished in writing to the Company by a holder of Registrable
Securities expressly for use therein.

 

(b)                                 Any documents incorporated by reference
in any prospectus referred to in Section 5(a) hereof, when they
become or became effective or are or were filed with the Commission, as the
case may be, will conform or conformed in all material respects to
the requirements of the Securities Act or the Exchange Act, as applicable, and
none of such documents will contain or contained an untrue statement of a
material fact or will omit or omitted to state a material fact required to be
stated therein or necessary to make the statements therein not misleading;
provided, however, that this representation and warranty shall not apply to any
statements or omissions made in reliance upon and in conformity with
information furnished in writing to the Company by a holder of Registrable
Securities expressly for use therein.

 

(c)                                  The compliance by the Company with all of
the provisions of this Exchange and Registration Rights Agreement and the
consummation of the transactions herein contemplated will not conflict with or
result in a breach of any of the terms or provisions of, or constitute a
default under, any indenture, mortgage, deed of trust, loan agreement or other
agreement or instrument to which the Company or any subsidiary of the Company
is a party or by which the Company or any subsidiary of the Company is bound or
to which any of the property or assets of the Company or any subsidiary of the
Company is subject, nor will such action result in any violation of the
provisions of the certificate of incorporation or the bylaws of the Company or
any statute or any order, rule or regulation of any court or governmental
agency or body having jurisdiction over the Company or any subsidiary of the
Company or any of its properties; and no consent, approval, authorization,
order, registration or qualification of or with any such court or governmental
agency or body is required for the consummation by the Company of the
transactions contemplated by this Exchange and Registration Rights Agreement,
except the registration under the Securities Act of the Securities,
qualification of the Indenture under the Trust Indenture Act and such consents,
approvals, authorizations, registrations or qualifications as may be
required under State securities or blue sky laws in connection with the
offering and distribution of the Securities.

 

(d)                                 This Exchange and Registration Rights
Agreement has been duly authorized, executed and delivered by the Company.

 

6.                                      Indemnification.

 

(a)                                  Indemnification by the
Company.
The Company will indemnify and hold harmless each of the holders of Registrable
Securities included in an Exchange Registration Statement, each of the Electing
Holders of Registrable Securities included in a Shelf Registration Statement
and each person who participates as a placement or sales agent or as an
underwriter in any offering or sale of such Registrable Securities against any
losses, claims, damages or liabilities, joint or several, to which such holder,
agent or underwriter may become subject under the Securities Act or otherwise,
insofar as such losses, claims, damages or liabilities (or actions in respect
thereof) arise out of or are based upon an untrue statement or alleged untrue
statement of a material fact contained in any Exchange Registration Statement

 

18

 

or Shelf Registration
Statement, as the case may be, under which such Registrable Securities
were registered under the Securities Act, or any preliminary, final or summary
prospectus contained therein or furnished by the Company to any such holder,
Electing Holder, agent or underwriter, or any amendment or supplement thereto,
or arise out of or are based upon the omission or alleged omission to state
therein a material fact required to be stated therein or necessary to make the
statements therein not misleading, and will reimburse such holder, such
Electing Holder, such agent and such underwriter for any legal or other
expenses reasonably incurred by them in connection with investigating or
defending any such action or claim as such expenses are incurred; provided,
however, that the Company shall not be liable to any such person in any such
case to the extent that any such loss, claim, damage or liability arises out of
or is based upon an untrue statement or alleged untrue statement or omission or
alleged omission made in such registration statement, or preliminary, final or
summary prospectus, or amendment or supplement thereto, in reliance upon and in
conformity with written information furnished to the Company by such person
expressly for use therein; provided, further, that the Company shall not be
liable for any losses, claims, damages or liabilities arising out of any offer
or sale during any Suspension Period with respect to which the Company provided
notice in accordance with Section 3(h).

 

(b)                                 Indemnification by the
Holders and any Agents and Underwriters. The Company may require, as a condition
to including any Registrable Securities in any registration statement filed
pursuant to Section 2(b) hereof and to entering into any underwriting
agreement with respect thereto, that the Company shall have received an
undertaking reasonably satisfactory to it from the Electing Holder of such
Registrable Securities and from each underwriter named in any such underwriting
agreement, severally and not jointly, to (i) indemnify and hold harmless
the Company and all other holders of Registrable Securities, against any
losses, claims, damages or liabilities to which the Company or such other
holders of Registrable Securities may become subject, jointly or severally
under the Securities Act or otherwise, insofar as such losses, claims, damages
or liabilities (or actions in respect thereof) arise out of or are based upon
an untrue statement or alleged untrue statement of a material fact contained in
such registration statement, or any preliminary, final or summary prospectus
contained therein or furnished by the Company to any such Electing Holder,
agent or underwriter, or any amendment or supplement thereto, or arise out of
or are based upon the omission or alleged omission to state therein a material
fact required to be stated therein or necessary to make the statements therein
not misleading, in each case to the extent, but only to the extent, that such
untrue statement or alleged untrue statement or omission or alleged omission
was made in reliance upon and in conformity with written information furnished
to the Company by such Electing Holder or underwriter expressly for use
therein, and (ii) reimburse the Company for any legal or other expenses
reasonably incurred by the Company in connection with investigating or
defending any such action or claim as such expenses are incurred; provided,
however, that no such Electing Holder shall be required to undertake liability
to any person under this Section 6(b) for any amounts in excess of
the dollar amount of the proceeds to be received by such Electing Holder from
the sale of such Electing Holder’s Registrable Securities pursuant to such
registration.

 

(c)                                  Notices of Claims, Etc. Promptly after receipt by an indemnified
party under subsection (a) or (b) above of written notice of the
commencement of any action, such indemnified party shall, if a claim in respect
thereof is to be made against an indemnifying party pursuant to the indemnification
provisions of or contemplated by this Section 6, notify such indemnifying
party in writing of the commencement of such action; but the omission so to
notify the indemnifying party shall not relieve it from any liability which it may have
to any indemnified

 

19

 

party (to the extent
it is not materially prejudiced as a result thereof) otherwise than under the
indemnification provisions of or contemplated by Section 6(a) or 6(b) hereof.
In case any such action shall be brought against any indemnified party and it
shall notify an indemnifying party of the commencement thereof, such
indemnifying party shall be entitled to participate therein and, to the extent
that it shall wish, jointly with any other indemnifying party similarly
notified, to assume the defense thereof, with counsel reasonably satisfactory
to such indemnified party (who shall not, except with the consent of the
indemnified party, be counsel to the indemnifying party), and, after notice
from the indemnifying party to such indemnified party of its election so to
assume the defense thereof, such indemnifying party shall not be liable to such
indemnified party for any legal expenses of other counsel or any other
expenses, in each case subsequently incurred by such indemnified party, in
connection with the defense thereof other than reasonable costs of
investigation. No indemnifying party shall, without the written consent of the
indemnified party, effect the settlement or compromise of, or consent to the
entry of any judgment with respect to, any pending or threatened action or
claim in respect of which indemnification or contribution may be sought
hereunder (whether or not the indemnified party is an actual or potential party
to such action or claim) unless such settlement, compromise or judgment (i) includes
an unconditional release of the indemnified party from all liability arising
out of such action or claim and (ii) does not include a statement as to or
an admission of fault, culpability or a failure to act by or on behalf of any
indemnified party.

 

(d)                                 Contribution. If for any reason the indemnification
provisions contemplated by Section 6(a) or Section 6(b) are
unavailable to or insufficient to hold harmless an indemnified party in respect
of any losses, claims, damages or liabilities (or actions in respect thereof)
referred to therein, then each indemnifying party shall contribute to the
amount paid or payable by such indemnified party as a result of such losses,
claims, damages or liabilities (or actions in respect thereof) in such
proportion as is appropriate to reflect the relative fault of the indemnifying
party and the indemnified party in connection with the statements or omissions
which resulted in such losses, claims, damages or liabilities (or actions in
respect thereof), as well as any other relevant equitable considerations. The
relative fault of such indemnifying party and indemnified party shall be
determined by reference to, among other things, whether the untrue or alleged
untrue statement of a material fact or omission or alleged omission to state a
material fact relates to information supplied by such indemnifying party or by
such indemnified party, and the parties’ relative intent, knowledge, access to
information and opportunity to correct or prevent such statement or omission.
The parties hereto agree that it would not be just and equitable if
contributions pursuant to this Section 6(d) were determined by pro
rata allocation (even if the holders or any agents or underwriters or all of
them were treated as one entity for such purpose) or by any other method of
allocation which does not take account of the equitable considerations referred
to in this Section 6(d). The amount paid or payable by an indemnified
party as a result of the losses, claims, damages, or liabilities (or actions in
respect thereof) referred to above shall be deemed to include any legal or
other fees or expenses reasonably incurred by such indemnified party in
connection with investigating or defending any such action or claim.
Notwithstanding the provisions of this Section 6(d), no holder shall be
required to contribute any amount in excess of the amount by which the dollar
amount of the proceeds received by such holder from the sale of any Registrable
Securities (after deducting any fees, discounts and commissions applicable
thereto) exceeds the amount of any damages which such holder has otherwise been
required to pay by reason of such untrue or alleged untrue statement or
omission or alleged omission, and no underwriter shall be required to
contribute any amount in excess of the amount by which the total price at which
the Registrable Securities underwritten by it and distributed to the public
were offered to the public exceeds the amount of any damages which such
underwriter has otherwise been required to pay by reason

 

20

 

of such untrue or
alleged untrue statement or omission or alleged omission. No person guilty of
fraudulent misrepresentation (within the meaning of Section 11(f) of
the Securities Act) shall be entitled to contribution from any person who was
not guilty of such fraudulent misrepresentation. The holders’ and any
underwriters’ obligations in this Section 6(d) to contribute shall be
several in proportion to the principal amount of Registrable Securities
registered or underwritten, as the case may be, by them and not joint.

 

(e)                                  The obligations of the Company under this
Section 6 shall be in addition to any liability which the Company may otherwise
have and shall extend, upon the same terms and conditions, to each officer,
director and partner of each holder, agent and underwriter and each person, if
any, who controls any holder, agent or underwriter within the meaning of the
Securities Act; and the obligations of the holders and any agents or
underwriters contemplated by this Section 6 shall be in addition to any
liability which the respective holder, agent or underwriter may otherwise
have and shall extend, upon the same terms and conditions, to each officer and
director of the Company (including any person who, with his consent, is named
in any registration statement as about to become a director of the Company) and
to each person, if any, who controls the Company within the meaning of the
Securities Act.

 

7.                                      Underwritten
Offerings.

 

(a)                                  Selection of
Underwriters.
If any of the Registrable Securities covered by the Shelf Registration are to
be sold pursuant to an underwritten offering, the managing underwriter or
underwriters thereof shall be designated by Electing Holders holding at least a
majority in aggregate principal amount of the Registrable Securities to be
included in such offering, provided that such designated managing underwriter
or underwriters is or are reasonably acceptable to the Company.

 

(b)                                 Participation by
Holders.
Each holder of Registrable Securities hereby agrees with each other such holder
that no such holder may participate in any underwritten offering hereunder
unless such holder (i) agrees to sell such holder’s Registrable Securities
on the basis provided in any underwriting arrangements approved by the persons
entitled hereunder to approve such arrangements and (ii) completes and
executes all questionnaires, powers of attorney, indemnities, underwriting
agreements and other documents reasonably required under the terms of such
underwriting arrangements.

 

8.                                      Rule 144.
The Company covenants to take such action as any holder of Registrable
Securities may reasonably request, all to the extent required from time to
time to enable such holder to sell Registrable Securities without registration
under the Securities Act within the limitations of the exemption provided by Rule 144
under the Securities Act, as such Rule may be amended from time to
time, or any similar or successor rule or regulation hereafter adopted by
the Commission. Upon the request of any holder of Registrable Securities in
connection with that holder’s sale pursuant to Rule 144, the Company shall
deliver to such holder a written statement as to whether it has complied with
such requirements.

 

9.                                       Miscellaneous.

 

(a)                                  No Inconsistent
Agreements.
The Company represents, warrants, covenants and agrees that it has not granted,
and shall not grant, registration rights with respect to Registrable Securities
or any other securities which would be inconsistent with the terms contained in
this Exchange and Registration Rights Agreement.

 

21

 

(b)                                 Specific Performance. The parties hereto acknowledge that
there would be no adequate remedy at law if the Company fails to perform any
of its obligations hereunder and that the Purchasers and the holders from time
to time of the Registrable Securities may be irreparably harmed by any
such failure, and accordingly agree that the Purchasers and such holders, in
addition to any other remedy to which they may be entitled at law or in
equity, shall be entitled to compel specific performance of the obligations of
the Company under this Exchange and Registration Rights Agreement in accordance
with the terms and conditions of this Exchange and Registration Rights
Agreement, in any court of the United States or any State thereof having
jurisdiction.

 

(c)                                  Notices. All notices, requests, claims, demands,
waivers and other communications hereunder shall be in writing and shall be
deemed to have been duly given when delivered by hand, if delivered personally
or by courier, or three days after being deposited in the mail (registered or
certified mail, postage prepaid, return receipt requested) as follows:

 

(1)                                  if to a holder, to the address of such
holder set forth in the security register or other records of the Company, or
to such other address as the Company or any such holder may have furnished
to the other in writing in accordance herewith, except that notices of change
of address shall be effective only upon receipt.

 

(2)                                  if to the Company:

 

Pogo Producing Company

5 Greenway Plaza, Suite 2700

Houston, Texas 77046

Attention: General Counsel

 

with a copy to:

 

Baker Botts L.L.P.

One Shell Plaza

Houston, Texas 
77002

Attention: Stephen Massad

 

(3)                                  if to the Purchasers:

 

Goldman, Sachs & Co.

85 Broad Street

New York, New York 10004

Attention: Ray Strong

 

with a copy to:

 

Vinson & Elkins L.L.P.

First City Tower

1001 Fannin, Suite 2300

Houston, Texas 
77002

Attention: T. Mark Kelly

 

22

 

(d)                                 Parties in Interest. All the terms and provisions of this
Exchange and Registration Rights Agreement shall be binding upon, shall inure
to the benefit of and shall be enforceable by the parties hereto and the
holders from time to time of the Registrable Securities and the respective
successors and assigns of the parties hereto and such holders. In the event
that any transferee of any holder of Registrable Securities shall acquire Registrable
Securities, in any manner, whether by gift, bequest, purchase, operation of law
or otherwise, such transferee shall, without any further writing or action of
any kind, be deemed a beneficiary hereof for all purposes and such Registrable
Securities shall be held subject to all of the terms of this Exchange and
Registration Rights Agreement, and by taking and holding such Registrable
Securities such transferee shall be entitled to receive the benefits of, and be
conclusively deemed to have agreed to be bound by all of the applicable terms
and provisions of this Exchange and Registration Rights Agreement. If the
Company shall so request, any such successor, assign or transferee shall agree
in writing to acquire and hold the Registrable Securities subject to all of the
applicable terms hereof.

 

(e)                                  Survival. The respective indemnities, agreements,
representations, warranties and each other provision set forth in this Exchange
and Registration Rights Agreement or made pursuant hereto shall remain in full
force and effect regardless of any investigation (or statement as to the
results thereof) made by or on behalf of any holder of Registrable Securities,
any director, officer or partner of such holder, any agent or underwriter or
any director, officer or partner thereof, or any controlling person of any of
the foregoing, and shall survive delivery of and payment for the Registrable
Securities pursuant to the Purchase Agreement and the transfer and registration
of Registrable Securities by such holder and the consummation of an Exchange
Offer.

 

(f)                                    Governing
Law. This Exchange and Registration Rights Agreement shall be
governed by and construed in accordance with the laws of the State of New York.

 

(g)                                 Headings. The descriptive headings of the several
Sections and paragraphs of this Exchange and Registration Rights Agreement are
inserted for convenience only, do not constitute a part of this Exchange
and Registration Rights Agreement and shall not affect in any way the meaning
or interpretation of this Exchange and Registration Rights Agreement.

 

(h)                                 Entire Agreement;
Amendments.
This Exchange and Registration Rights Agreement and the other writings referred
to herein (including the Indenture and the form of Securities) or
delivered pursuant hereto which form a part hereof contain the entire
understanding of the parties with respect to its subject matter. This Exchange
and Registration Rights Agreement supersedes all prior agreements and
understandings between the parties with respect to their subject matter. This
Exchange and Registration Rights Agreement may be amended and the
observance of any term of this Exchange and Registration Rights Agreement may be
waived (either generally or in a particular instance and either retroactively
or prospectively) only by a written instrument duly executed by the Company and
the holders of at least a majority in aggregate principal amount of the
Registrable Securities at the time outstanding. Each holder of any Registrable
Securities at the time or thereafter outstanding shall be bound by any
amendment or waiver effected pursuant to this Section 9(h), whether or not
any notice, writing or marking indicating such amendment or waiver appears on
such Registrable Securities or is delivered to such holder.

 

(i)                                     Inspection. For so long as this Exchange and
Registration Rights Agreement shall be in effect, this Exchange and
Registration Rights Agreement and a complete list of the

 

23

 

names and addresses of
all the holders of Registrable Securities shall be made available for
inspection and copying on any business day by any holder of Registrable
Securities for proper purposes only (which shall include any purpose related to
the rights of the holders of Registrable Securities under the Securities, the
Indenture and this Agreement) at the offices of the Company at the address
thereof set forth in Section 9(c) above and at the office of the
Trustee under the Indenture.

 

(j)                                     Counterparts. This agreement may be executed by
the parties in counterparts, each of which shall be deemed to be an original,
but all such respective counterparts shall together constitute one and the same
instrument.

 

24

 

If
the foregoing is in accordance with your understanding, please sign and return
to us five counterparts hereof, and upon the acceptance hereof by you, on
behalf of each of the Purchasers, this letter and such acceptance hereof shall
constitute a binding agreement between each of the Purchasers and the Company. It
is understood that your acceptance of this letter on behalf of each of the
Purchasers is pursuant to the authority set forth in a form of Agreement
among Purchasers, the form of which shall be submitted to the Company for
examination upon request, but without warranty on your part as to the
authority of the signers thereof.

 

	
   

  	
  Very
  truly yours,

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Pogo
  Producing Company

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ James P. Ulm, II

  	
   

  
	
   

  	
   

  	
  James P. Ulm, II

  	
   

  
	
   

  	
   

  	
  Senior Vice President and Chief

  	
   

  
	
   

  	
   

  	
  Financial Officer

  	
   

  
	
   

  	
   

  	
   

  
	
  Accepted
  as of the date hereof:

  	
   

  	
   

  
	
  Goldman,
  Sachs & Co.

  	
   

  	
   

  
	
    As
  representative of the several Purchasers

  	
   

  	
   

  

 

 

 

	
  By:

  	
  /s/ Goldman, Sachs & Co.

  	
   

  
	
   

  	
  (Goldman, Sachs & Co.)

  	
   

  

 

25

 

Exhibit A

 

Pogo
Producing Company

 

INSTRUCTION
TO DTC PARTICIPANTS

 

[                        ],
2006

 

URGENT - IMMEDIATE ATTENTION REQUESTED

 

DEADLINE FOR
RESPONSE:  [DATE]*

 

The Depository Trust Company (“DTC”) has
identified you as a DTC Participant through which beneficial interests in Pogo
Producing Company (the “Company”) $450,000,000 principal amount of 7.875% Senior
Subordinated Notes due 2013 (the “Securities”) are held.

 

The Company is in the process of registering the
Securities under the Securities Act of 1933 for resale by the beneficial owners
thereof. In order to have their Securities included in the registration
statement, beneficial owners must complete and return the enclosed Notice of
Registration Statement and Selling Securityholder Questionnaire.

 

It is important that beneficial owners of the
Securities receive a copy of the enclosed materials as soon as possible as their rights to have the Securities
included in the registration statement depend upon their returning the Notice
and Questionnaire by [Deadline For Response].
Please forward a copy of the enclosed documents to each beneficial owner that
holds interests in the Securities through you. If you require more copies of
the enclosed materials or have any questions pertaining to this matter, please
contact Investor Relations, Pogo Producing Company, 5 Greenway Plaza, Suite 2700,
Houston, Texas  77046 (telephone:
713.297.5000).

 

*  Not less than 28 calendar days from date of
mailing.

 

A-1

 

Pogo Producing Company

 

Notice
of Registration Statement

and

Selling Securityholder Questionnaire

 

[                        ],
2006

 

Reference is hereby made to the Exchange and
Registration Rights Agreement (the “Exchange and Registration Rights Agreement”)
between Pogo Producing Company (the “Company”) and each of the Purchasers named
therein. Pursuant to the Exchange and Registration Rights Agreement, the
Company has filed with the United States Securities and Exchange Commission
(the “Commission”) a registration statement on Form S-3 (the “Shelf
Registration Statement”) for the registration and resale under Rule 415 of
the Securities Act of 1933, as amended (the “Securities Act”), of $450,000,000
principal amount of the Company’s 7.875% Senior Subordinated Notes due 2013
(the “Securities”). A copy of the Exchange and Registration Rights Agreement is
attached hereto. All capitalized terms not otherwise defined herein shall have
the meanings ascribed thereto in the Exchange and Registration Rights
Agreement.

 

Each beneficial owner of Registrable Securities
(as defined below) is entitled to have the Registrable Securities beneficially
owned by it included in the Shelf Registration Statement. In order to have
Registrable Securities included in the Shelf Registration Statement, this
Notice of Registration Statement and Selling Securityholder Questionnaire (“Notice
and Questionnaire”) must be completed, executed and delivered to the Company’s
counsel at the address set forth herein for receipt ON OR BEFORE [Deadline for Response]. Beneficial owners
of Registrable Securities who do not complete, execute and return this Notice
and Questionnaire by such date (i) will not be named as selling
securityholders in the Shelf Registration Statement and (ii) may not
use the Prospectus forming a part thereof for resales of Registrable
Securities.

 

Certain legal consequences arise from being
named as a selling securityholder in the Shelf Registration Statement and
related Prospectus. Accordingly, holders and beneficial owners of Registrable
Securities are advised to consult their own securities law counsel regarding
the consequences of being named or not being named as a selling securityholder
in the Shelf Registration Statement and related Prospectus.

 

The term “Registrable Securities” is
defined in the Exchange and Registration Rights Agreement.

 

A-2

 

ELECTION

 

The undersigned holder (the “Selling
Securityholder”) of Registrable Securities hereby elects to include in the
Shelf Registration Statement the Registrable Securities beneficially owned by
it and listed below in Item (3). The undersigned, by signing and returning this
Notice and Questionnaire, agrees to be bound with respect to such Registrable
Securities by the terms and conditions of this Notice and Questionnaire and the
Exchange and Registration Rights Agreement, including, without limitation, Section 6
of the Exchange and Registration Rights Agreement, as if the undersigned
Selling Securityholder were an original party thereto.

 

Upon any sale of Registrable Securities pursuant
to the Shelf Registration Statement, the Selling Securityholder will be
required to deliver to the Company and Trustee the Notice of Transfer set forth
in Appendix A to the Prospectus and as Exhibit B to the Exchange and
Registration Rights Agreement.

 

The Selling Securityholder hereby provides the
following information to the Company and represents and warrants that such
information is accurate and complete:

 

A-3

 

QUESTIONNAIRE

 

(1)                                  (a)                                  Full Legal Name of Selling
Securityholder:

 

 

(b)                                 Full
Legal Name of Registered Holder (if not the same as in (a) above) of
Registrable Securities Listed in Item (3) below:

 

 

(c)                                  Full
Legal Name of DTC Participant (if applicable and if not the same as (b) above)
Through Which Registrable Securities Listed in Item (3) below are Held:

 

(2)                                  Address for Notices to Selling
Securityholder:

 

 

 

Telephone:                                                                                          

Fax:                                                                                

Contact Person:                                                                 

 

(3)                                  Beneficial Ownership of Securities:

 

Except as set forth below in this Item (3), the undersigned
does not beneficially own any Securities.

 

(a)                                  Principal
amount of Registrable Securities beneficially owned:                                      

 

CUSIP No(s). of such
Registrable Securities:                                                                                          

 

(b)                                 Principal
amount of Securities other than Registrable Securities beneficially owned:
                                                                                                    

 

CUSIP No(s). of such
other Securities:                                                                                      

 

(c)                                  Principal
amount of Registrable Securities which the undersigned wishes to be included in
the Shelf Registration Statement:                                                                                                 

 

CUSIP
No(s). of such Registrable Securities to be included in the Shelf Registration
Statement:                                             

 

(4)                                  Beneficial
Ownership of Other Securities of the Company:

 

Except as set forth below in this Item (4), the undersigned
Selling Securityholder is not the beneficial or registered owner of any other
securities of the Company, other than the Securities listed above in Item (3).

 

A-4

 

State any exceptions
here:

 

(5)                                  Relationships
with the Company:

 

Except as set forth below, neither the Selling
Securityholder nor any of its affiliates, officers, directors or principal
equity holders (5% or more) has held any position or office or has had any
other material relationship with the Company (or its predecessors or
affiliates) during the past three years.

 

State any exceptions
here:

 

(6)                                  Plan
of Distribution:

 

Except as set forth below, the undersigned Selling
Securityholder intends to distribute the Registrable Securities listed above in
Item (3) only as follows (if at all): 
Such Registrable Securities may be sold from time to time directly
by the undersigned Selling Securityholder or, alternatively, through
underwriters, broker-dealers or agents. Such Registrable Securities may be
sold in one or more transactions at fixed prices, at prevailing market prices
at the time of sale, at varying prices determined at the time of sale, or at
negotiated prices. Such sales may be effected in transactions (which may involve
crosses or block transactions) (i) on any national securities exchange or
quotation service on which the Registered Securities may be listed or
quoted at the time of sale, (ii) in the over-the-counter market, (iii) in
transactions otherwise than on such exchanges or services or in the over-the-counter
market, or (iv) through the writing of options. In connection with sales
of the Registrable Securities or otherwise, the Selling Securityholder may enter
into hedging transactions with broker-dealers, which may in turn engage in
short sales of the Registrable Securities in the course of hedging the
positions they assume. The Selling Securityholder may also sell
Registrable Securities short and deliver Registrable Securities to close out
such short positions, or loan or pledge Registrable Securities to
broker-dealers that in turn may sell such securities.

 

State any exceptions
here:

 

By signing below, the Selling Securityholder
acknowledges that it understands its obligation to comply, and agrees that it
will comply, with the provisions of the Exchange Act and the rules and
regulations thereunder, particularly Regulation M.

 

In the event that the Selling Securityholder
transfers all or any portion of the Registrable Securities listed in Item (3) above
after the date on which such information is provided to the Company, the
Selling Securityholder agrees to notify the transferee(s) at the time of the
transfer of its rights and obligations under this Notice and Questionnaire and
the Exchange and Registration Rights Agreement.

 

By signing below, the Selling Securityholder
consents to the disclosure of the information contained herein in its answers
to Items (1) through (6) above and the inclusion of such

 

A-5

 

information in the Shelf Registration Statement
and related Prospectus. The Selling Securityholder understands that such
information will be relied upon by the Company in connection with the
preparation of the Shelf Registration Statement and related Prospectus.

 

In accordance with the Selling Securityholder’s
obligation under Section 3(d) of the Exchange and Registration Rights
Agreement to provide such information as may be required by law for
inclusion in the Shelf Registration Statement, the Selling Securityholder
agrees to promptly notify the Company of any inaccuracies or changes in the
information provided herein which may occur subsequent to the date hereof
at any time while the Shelf Registration Statement remains in effect. All
notices hereunder and pursuant to the Exchange and Registration Rights Agreement
shall be made in writing, by hand-delivery, first-class mail, or air
courier guaranteeing overnight delivery as follows:

 

(i)                                     To
the Company:

 

Pogo Producing Company

5 Greenway Plaza, Suite 2700

Houston, Texas 77046

Attention: General Counsel

 

(ii)                                  with
a copy to:

 

Baker Botts L.L.P.

One Shell Plaza

Houston, Texas 
77002

Attention: Stephen Massad

 

Once this Notice and Questionnaire is executed
by the Selling Securityholder and received by the Company’s counsel, the terms
of this Notice and Questionnaire, and the representations and warranties
contained herein, shall be binding on, shall inure to the benefit of and shall
be enforceable by the respective successors, heirs, personal representatives,
and assigns of the Company and the Selling Securityholder (with respect to the
Registrable Securities beneficially owned by such Selling Securityholder and
listed in Item (3) above). This Agreement shall be governed in all
respects by the laws of the State of New York.

 

A-6

 

IN WITNESS WHEREOF, the undersigned, by
authority duly given, has caused this Notice and Questionnaire to be executed
and delivered either in person or by its duly authorized agent.

 

	
  Dated:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  
	
  Selling Securityholder

  
	
  (Print/type full legal name of beneficial
  owner

  
	
   of
  Registrable Securities)

  
				

 

 

	
  By:

  	
   

  	
   

  
	
  Name:

  	
   

  	
   

  
	
  Title:

  	
   

  	
   

  
					

 

PLEASE RETURN THE COMPLETED AND EXECUTED NOTICE
AND QUESTIONNAIRE FOR RECEIPT ON OR BEFORE [DEADLINE
FOR RESPONSE] TO THE COMPANY’S COUNSEL AT:

 

 

 

A-7

 

Exhibit B

 

NOTICE
OF TRANSFER PURSUANT TO REGISTRATION STATEMENT

 

The
Bank of New York Trust Company, N.A.

Pogo
Producing Company

c/o
The Bank of New York Trust Company, N.A.

600
Pearl Street, Suite 420

Dallas,
Texas  75201

 

Attention:  Trust Officer

 

Re:                               Pogo Producing Company (the “Company”) $450,000,000
Principal Amount of 7.875% Senior Subordinated Notes due 2013

 

Dear Sirs:

 

Please be advised that
                                          has
transferred $                              aggregate
principal amount of the above-referenced Notes pursuant to an effective
Registration Statement on Form [    ] (File No. 333           )
filed by the Company.

 

We hereby certify that the prospectus delivery
requirements, if any, of the Securities Act of 1933, as amended, have been
satisfied and that the above-named beneficial owner of the Notes is named as a “Selling
Holder” in the Prospectus dated [date]
or in supplements thereto, and that the aggregate principal amount of the Notes
transferred are the Notes listed in such Prospectus opposite such owner’s name.

 

Dated:

 

	
   

  	
  Very
  truly yours,

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  (Name)

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
   (Authorized
  Signature)

  	
   

  
					

 

B-1Exhibit 10.1

 

LOAN AGREEMENT

Dated as of June 2, 2006

Between

BEHRINGER HARVARD SOUTH RIVERSIDE, LLC

as Borrower

And

GREENWICH CAPITAL FINANCIAL PRODUCTS, INC.

as Lender

 

 

 

TABLE OF CONTENTS

	
  1.

  	
  DEFINITIONS; PRINCIPLES OF CONSTRUCTION

  	
   

  	
  1

  
	
   

  	
  1.1

  	
  Specific Definitions

  	
   

  	
  1

  
	
   

  	
  1.2

  	
  Index of Other Definitions

  	
   

  	
  13

  
	
   

  	
  1.3

  	
  Principles of Construction

  	
   

  	
  15

  
	
   

  	
   

  	
   

  	
   

  
	
  2.

  	
  GENERAL LOAN TERMS

  	
   

  	
  15

  
	
   

  	
  2.1

  	
  The Loan

  	
   

  	
  15

  
	
   

  	
  2.2

  	
  Interest; Monthly Payments

  	
   

  	
  16

  
	
   

  	
   

  	
  2.2.1

  	
  Generally

  	
   

  	
  16

  
	
   

  	
   

  	
  2.2.2

  	
  Default Rate

  	
   

  	
  16

  
	
   

  	
   

  	
  2.2.3

  	
  Taxes

  	
   

  	
  16

  
	
   

  	
   

  	
  2.2.4

  	
  New Payment Date

  	
   

  	
  17

  
	
   

  	
  2.3

  	
  Loan Repayment.

  	
   

  	
  17

  
	
   

  	
   

  	
  2.3.1

  	
  Repayment

  	
   

  	
  17

  
	
   

  	
   

  	
  2.3.2

  	
  Mandatory Prepayments

  	
   

  	
  18

  
	
   

  	
   

  	
  2.3.3

  	
  Defeasance

  	
   

  	
  18

  
	
   

  	
   

  	
  2.3.4

  	
  Optional Prepayments

  	
   

  	
  20

  
	
   

  	
  2.4

  	
  Release of Property

  	
   

  	
  20

  
	
   

  	
   

  	
  2.4.1

  	
  Release on Defeasance

  	
   

  	
  20

  
	
   

  	
   

  	
  2.4.2

  	
  Release on Payment in Full

  	
   

  	
  21

  
	
   

  	
  2.5

  	
  Payments and Computations

  	
   

  	
  21

  
	
   

  	
   

  	
  2.5.1

  	
  Making of Payments

  	
   

  	
  21

  
	
   

  	
   

  	
  2.5.2

  	
  Computations

  	
   

  	
  21

  
	
   

  	
   

  	
  2.5.3

  	
  Late Payment Charge

  	
   

  	
  21

  
	
   

  	
   

  	
   

  	
   

  
	
  3.

  	
  CASH MANAGEMENT AND RESERVES

  	
   

  	
  21

  
	
   

  	
  3.1

  	
  Cash Management Arrangements

  	
   

  	
  21

  
	
   

  	
  3.2

  	
  Required Repairs

  	
   

  	
  21

  
	
   

  	
   

  	
  3.2.1

  	
  Completion of Required Repairs

  	
   

  	
  21

  
	
   

  	
   

  	
  3.2.2

  	
  Guaranty in Lieu of Required Repairs Reserve

  	
   

  	
  22

  
	
   

  	
  3.3

  	
  Tax and Insurance Reserve

  	
   

  	
  22

  
	
   

  	
   

  	
  3.3.1

  	
  Reserve Deposits. If and to the extent required
  under the provisions of Section 3.3.2 below, Borrower shall, from and after
  the date (and if) Borrower is required to do so under the provisions of
  Section 3.3.2 below, pay to Lender on each Payment Date the Monthly Tax and
  Insurance Deposit (as determined by Lender pursuant to the provisions of
  Section 3.3.2 below). Such amounts will be transferred by Lender to a
  Subaccount (the “Tax and Insurance Subaccount”). Provided that no monetary
  Event of Default or material non-monetary Event of Default has occurred and
  is continuing, Lender will (a) apply funds in the Tax and Insurance
  Subaccount to payments of Taxes and Insurance Premiums required to be made by
  Borrower pursuant to Section 5.2 hereof and Section 7.1 hereof, provided that
  Borrower has 

  	
   

  	
   

  

 

 i
 

 

 

	
  

  	
   

  	
   

  	
  promptly supplied Lender with notices of all Taxes
  and Insurance Premiums due and paid any deficiency between the amounts held
  in the Tax and Insurance Subaccount and the amounts due with respect to such
  Taxes and Insurance Premiums, or (b) reimburse Borrower for such amounts upon
  presentation of evidence of payment; subject, however, to Borrower’s right to
  contest Taxes in accordance with Section 5.2 hereof. In making any payment
  relating to Taxes and Insurance Premiums, Lender may do so according to any
  bill, statement or estimate procured from the appropriate public office (with
  respect to Taxes) or insurer or agent (with respect to Insurance Premiums),
  without inquiry into the accuracy of such bill, statement or estimate or into
  the validity of any tax, assessment, sale, forfeiture, tax lien or title or
  claim thereof.

  	
   

  	
  22

  
	
   

  	
   

  	
  3.3.2

  	
  Guaranty in Lieu of Tax and Insurance Deposits. In
  lieu of a requirement for monthly deposits by Borrower into the Tax and
  Insurance Subaccount, Guarantor, pursuant to the Guaranty, has (among other
  obligations thereunder) guaranteed payment in full of all Taxes and Insurance
  Premiums and agreed to pay to Lender, upon Lender’s demand following the
  occurrence and during the continuance of an Event of Default, an amount equal
  to the Guaranty Limit Amount, determined as the sum of various amounts,
  including an amount (initially equal to $6,230,661) equal to the sum of the
  estimated annual Taxes and Insurance Premiums (as such estimate may increase
  from time to time, as reasonably determined by Lender, the “Tax and Insurance
  Reserve Offset Amount”). Upon the occurrence of an Event of Default (and
  without limiting any rights or remedies available to Lender in connection
  therewith), Borrower shall make monthly deposits into the Tax and Insurance
  Subaccount on each Payment Date in an amount equal to the sum of (i)
  one-twelfth (1/12th) of the Taxes that Lender estimates will be payable
  during the next twelve (12) months in order to accumulate with Lender
  sufficient funds to pay all such Taxes at least thirty (30) days prior to
  their respective due dates and (ii) one-twelfth (1/12th) of the Insurance
  Premiums that Lender estimates will be payable for the renewal of the
  coverage afforded by the Policies upon the expiration thereof in order to
  accumulate with Lender sufficient funds to pay all such Insurance Premiums at
  least thirty (30) days prior to the expiration of the Policies (such monthly
  required deposit amount, as adjusted by Lender from time to time in the event
  of increases or decreases in annual estimated Taxes and Insurance Premiums,
  the “Monthly Tax and Insurance Deposit”). If Lender receives the Tax and
  Insurance Reserve Offset Amount from Guarantor under the Guaranty, Lender
  shall transfer the same to the Tax and Insurance Subaccount to be applied as
  provided in Section 3.1.1 above, 

  	
   

  	
   

  

 

 ii
 

 

 

	
  

  	
   

  	
   

  	
  subject to Lender’s right to apply the same
  otherwise as set forth in Section 3.10 below.

  	
   

  	
  23

  
	
   

  	
  3.4

  	
  Capital Expense Reserves

  	
   

  	
  23

  
	
   

  	
   

  	
  3.4.1

  	
  Reserve Deposits. If and to the extent required
  under the provisions of Section 3.4.2 below, Borrower shall, from and after
  the date (and if) Borrower is required to do so under the provisions of
  Section 3.4.2 below, pay to Lender $19,741 (the “Monthly Capital Reserve
  Deposit Amount”) on each Payment Date (such deposits, the “Monthly Capital
  Reserve Deposits”). Lender will transfer such amounts into a Subaccount (the
  “Capital Reserve Subaccount”). Additionally, upon thirty (30) days’ prior
  notice to Borrower, Lender may reassess the amount of the monthly payment required
  under this Section 3.4 from time to time in its reasonable discretion (based
  upon its then current underwriting standards). Provided that no Event of
  Default has occurred and is continuing, Lender shall disburse funds held in
  the Capital Reserve Subaccount to Borrower, within fifteen (15) days after
  the delivery by Borrower to Lender of a request therefor (but not more often
  than once per month), in minimum amounts of at least $5,000 provided that (i)
  such disbursement is for an Approved Capital Expense; (ii) Lender shall have
  (if it desires) verified (by an inspection conducted at Borrower’s expense
  (with respect to any disbursement in excess of $50,000)) performance of the
  work associated with such Approved Capital Expense; and (iii) the request for
  disbursement is accompanied by (A) an Officer’s Certificate certifying (1)
  that such funds will be used to pay or reimburse Borrower for Approved
  Capital Expenses and a description thereof, (2) that all outstanding trade
  payables (other than those not yet due and payable or those to be paid from
  the requested disbursement or those constituting Permitted Indebtedness) have
  been paid in full, (3) that the same has not been the subject of a previous
  disbursement, and (4) that all previous disbursements have been used to pay
  the previously identified Approved Capital Expenses, and (B) lien waivers or
  other evidence of payment satisfactory to Lender, (C) with respect to any
  disbursement that exceeds $50,000, at Lender’s option, a title search for the
  Property indicating that the Property is free from all Liens, claims and
  other encumbrances not previously approved by Lender and (D) such other
  evidence as Lender shall reasonably request that the Approved Capital
  Expenses at the Property to be funded by the requested disbursement have been
  completed and are paid for or will be paid upon such disbursement to
  Borrower. Any such disbursement of more than $10,000 to pay (rather than
  reimburse) Approved Capital Expenses may, at Lender’s option, be made by
  joint check payable to Borrower and the payee on such Approved Capital
  Expenses.

  	
   

  	
  23

  

 

 iii
 

 

 

	
  

  	
   

  	
  3.4.2

  	
  Guaranty in Lieu of Reserve.

  	
   

  	
  24

  
	
   

  	
  3.5

  	
  Rollover Reserves

  	
   

  	
  25

  
	
   

  	
  3.6

  	
  Operating Expense Subaccount

  	
   

  	
  26

  
	
   

  	
  3.7

  	
  Casualty/Condemnation Subaccount

  	
   

  	
  27

  
	
   

  	
  3.8

  	
  Security Deposits

  	
   

  	
  27

  
	
   

  	
  3.9

  	
  Cash Collateral Subaccount

  	
   

  	
  27

  
	
   

  	
  3.10

  	
  Grant of Security Interest; Application of Funds

  	
   

  	
  28

  
	
   

  	
  3.11

  	
  Property Cash Flow Allocation

  	
   

  	
  28

  
	
   

  	
  3.12

  	
  Intentionally Omitted.

  	
   

  	
  29

  
	
   

  	
  3.13

  	
  TI/LC Holdback Reserve. Attached hereto as Schedule
  8 is a schedule of certain tenant improvement costs and expenses required to
  be incurred by Borrower in completing or reimbursing the tenants specified in
  Schedule 8 (the “TI/LC Holdback Tenants”)
  for tenant improvements and/or paying leasing commissions specified in
  Schedule 8 as the same are incurred or become due under the related Leases
  specified on Schedule 8 (the “TI/LC Holdback Leases”),
  in each case allocated among such leases as set forth on Schedule 8, in a
  total amount aggregating to $5,947,407.07. On the date hereof, Borrower shall
  pay to Lender $5,947,407.07. Lender will transfer such amount into a
  Subaccount (the “TI/LC Holdback Reserve
  Subaccount”). Provided that no Event of Default has occurred and
  is continuing, Lender shall disburse funds held in the TI/LC Holdback Reserve
  Subaccount to Borrower, within 15 days after the delivery by Borrower to
  Lender of a request therefor (but not more often than once per month), in
  minimum amounts of at least $5,000, provided (i) such request includes an estoppel
  from the related TI/LC Holdback Tenant certifying that all construction to be
  performed and all improvements to be installed under the related TI/LC
  Holdback Lease have been completed and fully accepted by the related TI/LC
  Holdback Tenant, and that there are no defaults under such lease (nor does
  there exist any event or condition, which with the passage of time or the
  giving of notice, or both, could result in such a default); (ii) Lender shall
  have (if it desires) verified (by an inspection conducted at Borrowers’
  expense) performance of any construction work associated with such tenant
  improvements; (iii) the request for disbursement is accompanied by (A) an
  Officer’s Certificate certifying (1) that such funds will be used only to pay
  (or reimburse Borrower for) tenant improvements and/or leasing commissions
  under the related TI/LC Holdback Lease, (2) that all outstanding trade
  payables (other than those not yet due and payable or those to be paid from
  the requested disbursement or those constituting Permitted Indebtedness) have
  been paid in full, and (3) that the same has not been the subject of a
  previous disbursement, and (B) reasonably detailed supporting documentation
  as to the amount, necessity and purpose therefor; and (iv) the total amount of
  disbursements from the TI/LC Holdback Reserve Subaccount on account of a
  given TI/LC Holdback Lease shall not aggregate in excess of the amount for
  such TI/LC Holdback Lease indicated on Schedule 8. Any such disbursement of
  more than $10,000 to 

  	
   

  	
   

  

 

 iv
 

 

 

	
  

  	
   

  	
  pay (rather than reimburse) tenant improvements
  under this Section may, at Lender’s option, be made by joint check payable to
  Borrowers and the payee of such tenant improvements or leasing commissions,
  as applicable.

  	
   

  	
  29

  
	
   

  	
  3.14

  	
  Initial Deposits into Reserves. The initial deposits
  required to be made on the date hereof into the reserve accounts established
  under this Article 3 are funded from the proceeds of the Loan disbursed at
  closing.

  	
   

  	
  30

  
	
   

  	
  3.15

  	
  Letters of Credit in Lieu of Reserves.

  	
   

  	
  30

  
	
   

  	
  (C)  if Borrower shall have provided any Reserve
  Letter of Credit in accordance with this Section 3.15 and provided that no
  Event of Default has occurred and is continuing, the amount of the Reserve
  Letter of Credit shall be reduced from time to time, upon Borrower’s written
  request to Lender, by an amount equal to not more than the amount that
  Borrower would have been entitled to have disbursed to it from the applicable
  Reserve Subaccount(s) if cash reserves had continued to be held therein rather
  than such Reserve Letter of Credit substituted therefor, and provided
  further, that: (1) such requests may be made not more frequently than once
  per month; (2) without limiting any other requirement hereunder, the amount
  of any reduction shall be in increments of $100,000 or any whole multiple of
  $50,000 in excess thereof; (3) all requirements of Section 3.5 and/or 3.13,
  as applicable, shall have been satisfied as if cash reserves were then held
  in the applicable Reserve Subaccount(s) rather than such Reserve Letter of
  Credit substituted therefor and Borrower were requesting a disbursement of
  funds from the applicable Reserve Subaccount(s) in an amount equal to the
  requested reduction in the amount of such Reserve Letter of Credit. If the
  amount of the Reserve Letter of Credit is reduced, Lender will cooperate with
  Borrower in amending or replacing the Reserve Letter of Credit to reflect
  such reduced amount of the Reserve Letter of Credit. Borrower shall pay any
  fees or other amounts charged by any issuing bank with respect to any such
  request and shall promptly pay to Lender all costs and expenses of Lender
  incurred in connection with any such request, including Lender’s reasonable
  attorneys’ fees.

  	
   

  	
  31

  
	
   

  	
   

  	
   

  	
   

  
	
  (D)

  	
  Lender shall have the right to draw upon each
  Reserve Letter of Credit in the full amount thereof upon the occurrence of
  any of the following: (1) any Event of Default; or (2) Lender receives a
  notice stating that the Reserve Letter of Credit will not be renewed (as
  provided for in such Reserve Letter of Credit) and a replacement for such
  Reserve Letter of Credit conforming with the requirements of an Acceptable
  Letter of Credit shall not have been provided at least thirty (30) days prior
  to the date on which the applicable Reserve Letter of Credit is scheduled to
  expire or such Reserve Letter of Credit is to expire within thirty (30) days
  and an extension or renewal of such Reserve Letter of Credit conforming with
  the requirements of an Acceptable Letter of Credit shall not have been
  provided. The proceeds of any draw under the Reserve Letter of Credit
  pursuant to this Section 3.15(D)(1) above shall be allocated to the Debt, in
  such order and in such manner as Lender shall elect in its sole and absolute
  discretion, including (if the Loan has been accelerated) to make a prepayment
  of Principal (together with the applicable Yield Maintenance Premium
  applicable thereto). The 

  	
   

  	
   

  

 

 v
 

 

 

	
  

  	
  proceeds of any draw under the Reserve Letter of
  Credit pursuant to this Section 3.15(D)(2) above shall be deposited by Lender
  into the applicable Reserve Subaccount(s) and shall be governed by the
  provisions of Section 3.5 and/or 3.13, as applicable, as well as the other
  terms and conditions of this Agreement and the other Loan Documents.  Borrower shall pay any fees or other
  amounts charged by any issuing bank with respect to any such draw and shall
  promptly pay to Lender all costs and expenses of Lender incurred in
  connection with any such draw, including Lender’s reasonable attorneys’ fees.

  	
   

  	
  31

  
	
   

  	
  3.16

  	
  DSCR Earnout Reserve

  	
   

  	
  32

  
	
   

  	
   

  	
   

  	
   

  
	
  4.

  	
  REPRESENTATIONS AND WARRANTIES

  	
   

  	
  32

  
	
   

  	
  4.1

  	
  Organization; Special Purpose

  	
   

  	
  32

  
	
   

  	
  4.2

  	
  Proceedings; Enforceability

  	
   

  	
  32

  
	
   

  	
  4.3

  	
  No Conflicts

  	
   

  	
  33

  
	
   

  	
  4.4

  	
  Litigation

  	
   

  	
  33

  
	
   

  	
  4.5

  	
  Agreements

  	
   

  	
  33

  
	
   

  	
  4.6

  	
  Title

  	
   

  	
  33

  
	
   

  	
  4.7

  	
  No Bankruptcy Filing

  	
   

  	
  34

  
	
   

  	
  4.8

  	
  Full and Accurate Disclosure

  	
   

  	
  34

  
	
   

  	
  4.9

  	
  Tax Filings

  	
   

  	
  35

  
	
   

  	
  4.10

  	
  ERISA; No Plan Assets

  	
   

  	
  35

  
	
   

  	
  4.11

  	
  Compliance

  	
   

  	
  35

  
	
   

  	
  4.12

  	
  Contracts

  	
   

  	
  35

  
	
   

  	
  4.13

  	
  Federal Reserve Regulations; Investment Company Act

  	
   

  	
  36

  
	
   

  	
  4.14

  	
  Easements; Utilities and Public Access

  	
   

  	
  36

  
	
   

  	
  4.15

  	
  Physical Condition

  	
   

  	
  36

  
	
   

  	
  4.16

  	
  Leases

  	
   

  	
  36

  
	
   

  	
  4.17

  	
  Fraudulent Transfer

  	
   

  	
  37

  
	
   

  	
  4.18

  	
  Ownership of Borrower

  	
   

  	
  37

  
	
   

  	
  4.19

  	
  Purchase Options

  	
   

  	
  38

  
	
   

  	
  4.20

  	
  Management Agreement

  	
   

  	
  38

  
	
   

  	
  4.21

  	
  Hazardous Substances

  	
   

  	
  38

  
	
   

  	
  4.22

  	
  Name; Principal Place of Business

  	
   

  	
  39

  
	
   

  	
  4.23

  	
  Other Debt

  	
   

  	
  39

  
	
   

  	
  4.24

  	
  Reciprocal Operating Agreements

  	
   

  	
  39

  
	
   

  	
   

  	
   

  	
   

  
	
  5.

  	
  COVENANTS

  	
   

  	
  40

  
	
   

  	
  5.1

  	
  Existence

  	
   

  	
  40

  
	
   

  	
  5.2

  	
  Taxes and Other Charges

  	
   

  	
  40

  
	
   

  	
  5.3

  	
  Access to Property

  	
   

  	
  40

  
	
   

  	
  5.4

  	
  Repairs; Maintenance and Compliance; Alterations

  	
   

  	
  41

  
	
   

  	
   

  	
  5.4.1

  	
  Repairs; Maintenance and Compliance

  	
   

  	
  41

  
	
   

  	
   

  	
  5.4.2

  	
  Alterations

  	
   

  	
  41

  
	
   

  	
  5.5

  	
  Performance of Other Agreements

  	
   

  	
  41

  
	
   

  	
  5.6

  	
  Cooperate in Legal Proceedings

  	
   

  	
  41

  
	
   

  	
  5.7

  	
  Further Assurances

  	
   

  	
  42

  
	
   

  	
  5.8

  	
  Environmental Matters

  	
   

  	
  42

  

 

 vi
 

 

 

	
  

  	
   

  	
  5.8.1

  	
  Hazardous Substances

  	
   

  	
  42

  
	
   

  	
   

  	
  5.8.2

  	
  Environmental Monitoring

  	
   

  	
  42

  
	
   

  	
  5.9

  	
  Title to the Property

  	
   

  	
  44

  
	
   

  	
  5.10

  	
  Leases

  	
   

  	
  44

  
	
   

  	
   

  	
  5.10.1

  	
  Generally

  	
   

  	
  44

  
	
   

  	
   

  	
  5.10.2

  	
  Material Leases

  	
   

  	
  44

  
	
   

  	
   

  	
  5.10.3

  	
  Minor Leases

  	
   

  	
  45

  
	
   

  	
   

  	
  5.10.4

  	
  Additional Covenants with respect to Leases

  	
   

  	
  45

  
	
   

  	
  5.11

  	
  Estoppel Statement

  	
   

  	
  46

  
	
   

  	
  5.12

  	
  Property Management

  	
   

  	
  46

  
	
   

  	
   

  	
  5.12.1

  	
  Management Agreement

  	
   

  	
  46

  
	
   

  	
   

  	
  5.12.2

  	
  Termination of Manager

  	
   

  	
  48

  
	
   

  	
  5.13

  	
  Special Purpose Bankruptcy Remote Entity

  	
   

  	
  48

  
	
   

  	
  5.14

  	
  Assumption in Non-Consolidation Opinion

  	
   

  	
  48

  
	
   

  	
  5.15

  	
  Change in Business or Operation of Property

  	
   

  	
  48

  
	
   

  	
  5.16

  	
  Debt Cancellation

  	
   

  	
  48

  
	
   

  	
  5.17

  	
  Affiliate Transactions

  	
   

  	
  49

  
	
   

  	
  5.18

  	
  Zoning

  	
   

  	
  49

  
	
   

  	
  5.19

  	
  No Joint Assessment

  	
   

  	
  49

  
	
   

  	
  5.20

  	
  Principal Place of Business

  	
   

  	
  49

  
	
   

  	
  5.21

  	
  Change of Name, Identity or Structure

  	
   

  	
  49

  
	
   

  	
  5.22

  	
  Indebtedness

  	
   

  	
  49

  
	
   

  	
  5.23

  	
  Licenses

  	
   

  	
  50

  
	
   

  	
  5.24

  	
  Compliance with Restrictive Covenants, Etc.

  	
   

  	
  50

  
	
   

  	
  5.25

  	
  ERISA

  	
   

  	
   

  	
  50

  
	
   

  	
   

  	
  5.25.1

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

  	
   

  	
  50

  
	
   

  	
   

  	
  5.25.2

  	
  Borrower shall not maintain, sponsor, contribute to
  or become obligated to contribute to, or suffer or permit any ERISA Affiliate
  of Borrower to, maintain, sponsor, contribute to or become obligated to
  contribute to, any Plan or any Welfare Plan or permit the assets of Borrower
  to become “plan assets,” whether by operation of law or under regulations
  promulgated under ERISA.

  	
   

  	
  50

  
	
   

  	
   

  	
  5.25.3

  	
  Borrower shall deliver to Lender such certifications
  or other evidence from time to time throughout the Term, as requested by
  Lender in its sole discretion, that (A) Borrower is not and does not maintain
  an “employee benefit plan” as defined in Section 3(3) of ERISA, which is
  subject to Title I of ERISA, or a “governmental plan” within the meaning of
  Section 3(3) of ERISA; (B) Borrower is not subject to state statutes
  regulating investments and fiduciary obligations with respect to governmental
  plans; and (C) one or more of the following circumstances is true:

  	
   

  	
  50

  

 

 vii
 

 

 

	
  

  	
  5.26

  	
  Transfers

  	
   

  	
  51

  
	
   

  	
   

  	
  5.26.1

  	
  Generally

  	
   

  	
  51

  
	
   

  	
   

  	
  5.26.2

  	
  Transfer and Assumption

  	
   

  	
  51

  
	
   

  	
  5.27

  	
  Liens

  	
   

  	
  53

  
	
   

  	
  5.28

  	
  Dissolution

  	
   

  	
  53

  
	
   

  	
  5.29

  	
  Expenses

  	
   

  	
  53

  
	
   

  	
  5.30

  	
  Indemnity

  	
   

  	
  54

  
	
   

  	
  5.31

  	
  Patriot Act Compliance

  	
   

  	
  55

  
	
   

  	
  5.32

  	
  Reciprocal Operating Agreements

  	
   

  	
  56

  
	
   

  	
   

  	
   

  	
   

  
	
  6.

  	
  NOTICES AND REPORTING

  	
   

  	
  57

  
	
   

  	
  6.1

  	
  Notices

  	
   

  	
   

  	
  57

  
	
   

  	
  6.2

  	
  Borrower Notices and Deliveries

  	
   

  	
  57

  
	
   

  	
  6.3

  	
  Financial Reporting

  	
   

  	
  57

  
	
   

  	
   

  	
  6.3.1

  	
  Bookkeeping

  	
   

  	
  57

  
	
   

  	
   

  	
  6.3.2

  	
  Annual Reports

  	
   

  	
  58

  
	
   

  	
   

  	
  6.3.3

  	
  Monthly/Quarterly Reports

  	
   

  	
  58

  
	
   

  	
   

  	
  6.3.4

  	
  Other Reports

  	
   

  	
  59

  
	
   

  	
   

  	
  6.3.5

  	
  Annual Budget

  	
   

  	
  59

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  7.

  	
  INSURANCE; CASUALTY; AND CONDEMNATION

  	
   

  	
  59

  
	
   

  	
  7.1

  	
  Insurance

  	
   

  	
  59

  
	
   

  	
   

  	
  7.1.1

  	
  Coverage

  	
   

  	
  59

  
	
   

  	
   

  	
  7.1.2

  	
  Policies

  	
   

  	
  62

  
	
   

  	
  7.2

  	
  Casualty

  	
   

  	
  63

  
	
   

  	
   

  	
  7.2.1

  	
  Notice; Restoration

  	
   

  	
  63

  
	
   

  	
   

  	
  7.2.2

  	
  Settlement of Proceeds

  	
   

  	
  63

  
	
   

  	
  7.3

  	
  Condemnation

  	
   

  	
  64

  
	
   

  	
   

  	
  7.3.1

  	
  Notice; Restoration

  	
   

  	
  64

  
	
   

  	
   

  	
  7.3.2

  	
  Collection of Award

  	
   

  	
  64

  
	
   

  	
  7.4

  	
  Application of Proceeds or Award.

  	
   

  	
  65

  
	
   

  	
   

  	
  7.4.1

  	
  Application to Restoration

  	
   

  	
  65

  
	
   

  	
   

  	
  7.4.2

  	
  Application to Debt

  	
   

  	
  65

  
	
   

  	
   

  	
  7.4.3

  	
  Procedure for Application to Restoration

  	
   

  	
  66

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  8.

  	
  DEFAULTS

  	
   

  	
  67

  
	
   

  	
  8.1

  	
  Events of Default

  	
   

  	
  67

  
	
   

  	
  8.2

  	
  Remedies

  	
   

  	
  69

  
	
   

  	
   

  	
  8.2.1

  	
  Acceleration

  	
   

  	
  69

  
	
   

  	
   

  	
  8.2.2

  	
  Remedies Cumulative

  	
   

  	
  69

  
	
   

  	
   

  	
  8.2.3

  	
  Severance

  	
   

  	
  70

  
	
   

  	
   

  	
  8.2.4

  	
  Delay

  	
   

  	
  70

  
	
   

  	
   

  	
  8.2.5

  	
  Lender’s Right to Perform

  	
   

  	
  70

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  9.

  	
  SPECIAL PROVISIONS

  	
   

  	
  71

  
	
   

  	
  9.1

  	
  Sale of Note and Secondary Market Transaction

  	
   

  	
  71

  
	
   

  	
   

  	
  9.1.1

  	
  General; Borrower Cooperation

  	
   

  	
  71

  

 

 viii
 

 

 

	
  

  	
   

  	
  9.1.2

  	
  Use of Information

  	
   

  	
  72

  
	
   

  	
   

  	
  9.1.3

  	
  Borrower Obligations Regarding Disclosure Documents

  	
   

  	
  72

  
	
   

  	
   

  	
  9.1.4

  	
  Borrower Indemnity Regarding Filings

  	
   

  	
  73

  
	
   

  	
   

  	
  9.1.5

  	
  Indemnification Procedure

  	
   

  	
  73

  
	
   

  	
   

  	
  9.1.6

  	
  Contribution

  	
   

  	
  74

  
	
   

  	
   

  	
  9.1.7

  	
  Severance of Loan

  	
   

  	
  74

  
	
   

  	
  9.2

  	
  Costs and Expenses

  	
   

  	
  74

  
	
   

  	
  9.3

  	
  Mezzanine Loan. Lender agrees to permit owner(s) of
  direct or indirect equity interests in Borrower (the “Mezzanine
  Borrower”, provided however that in no event shall any entity
  required hereunder to be a Special Purpose Bankruptcy Remote Entity be a
  Mezzanine Borrower) to obtain a mezzanine loan (the “Mezzanine
  Loan”) the proceeds of which may be used solely to make a capital
  contribution to Borrower and in turn used by Borrower to pay Approved Leasing
  Expenses incurred with respect to Leases entered into after the date hereof,
  subject to satisfaction of the following conditions (provided that no more
  than one Mezzanine Loan shall be permitted during the term of the Loan):

  	
   

  	
  74

  
	
   

  	
  Borrower shall
  pay or reimburse to Lender all Rating Agency fees and all reasonable costs
  and expenses incurred by Lender, including fees and expenses of Lender’s
  counsel, in connection with the review and documentation concerning the
  Mezzanine Loan regardless of whether such Mezzanine Loan is closed.

  	
   

  	
  76

  
	
   

  	
  9.4

  	
  Letters of Credit

  	
   

  	
  76

  
	
   

  	
  9.5

  	
  . Each of the letters of credit delivered by
  Borrower under this Agreement (each, a “Letter of Credit”;
  collectively, the “Letters of Credit”)
  shall be additional security for the payment of the Debt. In the event Lender
  transfers any Letter of Credit to any successor or assignee of Lender, and
  the issuer of the Letter of Credit charges a fee in connection with such
  transfer, Borrower shall pay or reimburse Lender for such transfer fee.

  	
   

  	
  76

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  10.

  	
  MISCELLANEOUS

  	
   

  	
  76

  
	
   

  	
  10.1

  	
  Exculpation

  	
   

  	
  76

  
	
   

  	
  10.2

  	
  Brokers and Financial Advisors

  	
   

  	
  78

  
	
   

  	
  10.3

  	
  Retention of Servicer

  	
   

  	
  78

  
	
   

  	
  10.4

  	
  Survival

  	
   

  	
  79

  
	
   

  	
  10.5

  	
  Lender’s Discretion

  	
   

  	
  79

  
	
   

  	
  10.6

  	
  Governing Law

  	
   

  	
  79

  
	
   

  	
  10.7

  	
  Modification, Waiver in Writing

  	
   

  	
  80

  
	
   

  	
  10.8

  	
  Trial by Jury

  	
   

  	
  80

  
	
   

  	
  10.9

  	
  Headings/Exhibits

  	
   

  	
  81

  
	
   

  	
  10.10

  	
  Severability

  	
   

  	
  81

  
	
   

  	
  10.11

  	
  Preferences

  	
   

  	
  81

  
	
   

  	
  10.12

  	
  Waiver of Notice

  	
   

  	
  81

  
	
   

  	
  10.13

  	
  Remedies of Borrower

  	
   

  	
  81

  
	
   

  	
  10.14

  	
  Prior Agreements

  	
   

  	
  82

  
	
   

  	
  10.15

  	
  Offsets, Counterclaims and Defenses

  	
   

  	
  82

  
	
   

  	
  10.16

  	
  Publicity

  	
   

  	
  82

  

 

 ix
 

 

 

	
  

  	
  10.17

  	
  No Usury

  	
   

  	
  82

  
	
   

  	
  10.18

  	
  Conflict; Construction of Documents

  	
   

  	
  83

  
	
   

  	
  10.19

  	
  No Third Party Beneficiaries

  	
   

  	
  83

  
	
   

  	
  10.20

  	
  Assignment

  	
   

  	
  83

  
	
   

  	
  10.21

  	
  Set-Off

  	
   

  	
  83

  
	
   

  	
  10.22

  	
  Certain Additional Rights of Lender

  	
   

  	
  83

  
	
   

  	
  10.23

  	
  Counterparts

  	
   

  	
  84

  
	
   

  	
  10.24

  	
  Yield Maintenance Premium

  	
   

  	
  84

  

 

 

 

Schedule 1             Required Repairs

Schedule 2             Exceptions to Representations
and Warranties

Schedule 3             Rent Roll

Schedule 4             Organization of
Borrower

Schedule 5             Definition of
Special Purpose Bankruptcy Remote Entity

Schedule 6             Intentionally
Omitted

Schedule 7             Scheduled Rent
Abatement Periods and Scheduled Rent Abatements

Schedule 8             TI/LC Holdback
Reserve Information

 

 x

 

LOAN AGREEMENT

LOAN AGREEMENT  dated as of June 2,
2006 (as the same may be modified, supplemented, amended or otherwise changed,
this “Agreement”) between BEHRINGER
HARVARD SOUTH RIVERSIDE, LLC, a Delaware limited liability company, having an
office at 15601 Dallas Parkway, Suite 600, Addison, Texas 75001 (together
with its permitted successors and assigns, “Borrower”), and GREENWICH CAPITAL FINANCIAL PRODUCTS, INC., a Delaware corporation
(together with its successors and assigns, “Lender”).

1.     DEFINITIONS; PRINCIPLES OF CONSTRUCTION

1.1          Specific Definitions.
The following terms have the meanings set forth below:

Acceptable Letter of Credit:   an irrevocable, unconditional,
transferable, clean sight draft letter of credit (either an evergreen letter of
credit or one with a stated expiration date at least thirty (30) Business Days
after the Stated Maturity Date, or having a stated expiration date not less
than one year after its date of issuance, provided that such initially issued
Acceptable Letter of Credit, or any renewal thereof, is renewed or substituted
by an Acceptable Letter of Credit satisfying all of the conditions of this
definition at least thirty (30) days prior to the date on which the Acceptable
Letter of Credit, or any renewal thereof, is scheduled to expire) in favor of
Lender and entitling Lender to draw thereon in New York, New York, or Chicago,
Illinois, issued by a domestic Approved Bank or the U.S. agency or branch of a
foreign Approved Bank, and otherwise in form and substance reasonably
acceptable to Lender. If at any time the bank issuing any such Acceptable
Letter of Credit shall cease to be an Approved Bank, Lender shall have the
right after twenty (20) Business Days notice thereof to draw down the same in
full and hold the proceeds of such draw in accordance with the applicable
provisions hereof unless the Borrower shall have delivered to Lender a
replacement Acceptable Letter of Credit prior to such draw down.

Acceptable Mezzanine Lender:  (i) any Person satisfying the definition
of “Qualified Transferee” (or any successor term) under clause (ii) (or
such corresponding subsection of any successor term) of the definition of “Qualified
Transferee” set forth in the form Intercreditor Agreement attached as Appendix
VI to the Standard & Poor’s U.S. CMBS Legal and Structural Finance
Criteria published May 1, 2003, as the same may have been amended or
modified prior to the date of the Mezzanine Loan, based on the default values
for minimum total assets and capital/statutory surplus or shareholders’ equity
included in the definition of “Eligibility Requirements” in such publication
(or any successor term) or (ii) any other Person that has been approved by
Lender acting reasonably, and provided, however, in the case of each of the
foregoing clauses (i) and (ii), that if the Mezzanine Loan is made after
the occurrence of a Secondary Market Transaction, such Person (1) was
identified to the applicable Rating Agencies as the proposed lender in
connection with the request for a Rating Comfort Letter referred to in Section 9.3(c),
or (2) has otherwise been approved in writing by the applicable Rating
Agencies.

 

Affiliate: 
as to any Person, any other Person that, directly or indirectly, is in
Control of, is Controlled by or is under common Control with such Person or is
a director or officer of such Person or of an Affiliate of such Person.

Amortization
Commencement Date: 
July 6, 2011, as such date may be changed in accordance with Section 2.2.4.

Approved Capital Expenses:  Capital Expenses incurred by Borrower,
provided that during a Cash Trap Period, such Capital Expenses shall either be (i) included
in the total Approved Capital Budget or (ii) approved by Lender.

Approved Bank: a bank, the long term unsecured
debt obligations of which are rated at least “AA” by S&P and its
successors, and the equivalent by Fitch, Inc. and its successors and Moody’s
Investors Services, Inc. and its successors (unless Lender approves in
writing a financial institution other than a bank or a lower rating, in each
case in Lender’s sole and absolute discretion).

Approved Leasing Expenses:  actual out-of-pocket expenses incurred by
Borrower in leasing space at the Property pursuant to Leases entered into in
accordance with the Loan Documents, including brokerage commissions (including
those paid pursuant to the Management Agreement) and tenant improvements, which
expenses (i) are (A) specifically approved by Lender in connection
with approving the applicable Lease, (B) incurred in the ordinary course
of business and on market terms and conditions in connection with Leases which
do not require Lender’s approval under the Loan Documents, or (C) otherwise
approved by Lender, which approval shall not be unreasonably withheld or
delayed, and (ii) are substantiated by executed Lease documents and
brokerage agreements.

Approved Operating Expenses:  during a Cash Trap Period, operating expenses
incurred by Borrower which (i) are within one hundred five percent (105%)
of the total amounts included in the Approved Operating Budget for the current
calendar month (or for unpaid operating expenses included in the Approved
Operating Budget for prior calendar months); provided that, for purposes
hereof, operating expenses in such Approved Operating Budget shall be deemed to
be increased from the amounts in the applicable Approved Operating Budget to
the extent that such increased amounts are at least equal to an increase in
operating revenues from the amounts in such Approved Operating Budget or
directly relate to variances in occupancy levels or emergencies or unforeseen
circumstances, (ii) are for real estate taxes, insurance premiums,
electric, gas, oil, water, sewer or other utility service to the Property, (iii) are
for property management fees payable to Manager under the Management Agreement,
such amounts not to exceed three percent (3%) of the monthly Rents (excluding
however any asset management fees payable by Borrower to Manager pursuant to
the Management Agreement; provided, however, the foregoing three percent (3%)
limitation shall not be deemed to preclude Borrower from paying any such asset
management fees pursuant to the terms of the Management Agreement from its own
funds) or (iv) have been approved by Lender, acting in a commercially
reasonably manner. Notwithstanding the foregoing, nothing herein shall be
deemed to preclude Borrower from paying any asset management fee (over and
above the amount set forth above) pursuant to the terms of the Management
Agreement from its own funds.

 2
 

 

Available Cash:  as of each Payment Date during the
continuance of a Cash Trap Period, the amount of Rents, if any, remaining in
the Deposit Account after the application of all of the payments required under
clauses (i) through (v) of Section 3.11(a) hereof.

Behringer: 
Behringer Harvard Holdings, LLC, a Delaware limited liability company.

Business Day:  any day other than a Saturday, Sunday or
any day on which commercial banks in New York, New York are authorized or
required to close.

Calculation Date:  the last day of each calendar quarter during
the Term.

Capital Expenses: 
expenses that are capital in nature or required under GAAP to be
capitalized.

Cash Trap Period:  shall commence, if, (i) an Event of
Default has occurred and is continuing, and shall end if such Event of Default
has been cured and no other Event of Default has occurred and is continuing or (ii) as
of any Calculation Date, the Debt Service Coverage Ratio is less than 1.10:1,
and shall end upon Lender’s determination that the Property has achieved a Debt
Service Coverage Ratio of at least 1.10:1 for two (2) consecutive
Calculation Dates.

Code:  the
Internal Revenue Code of 1986, as amended and as it may be further amended from
time to time, any successor statutes thereto, and applicable U.S. Department of
Treasury regulations issued pursuant thereto in temporary or final form.

Control: 
with respect to any Person, either (i) ownership directly or
indirectly of forty nine percent (49%) or more of all equity interests in such
Person or (ii) the possession, directly or indirectly, of the power to
direct or cause the direction of the management and policies of such Person,
through the ownership of voting securities, by contract or otherwise.

Debt:  the
unpaid Principal, all interest accrued and unpaid thereon, any Yield
Maintenance Premium and all other sums due to Lender in respect of the Loan or
under any Loan Document.

Debt Service: 
with respect to any particular period, the scheduled Principal and
interest payments due under the Note in such period.

Debt Service Coverage Ratio:  as of any date, the ratio calculated by
Lender of (i) the Net Operating Income for the twelve (12)-month
period ending with the most recently completed calendar month to (ii) the
Debt Service with respect to such period (but assuming, only for the purpose of
calculating the Debt Service Coverage Ratio, that the Amortization Commencement
Date has already occurred).

Default: 
the occurrence of any event under any Loan Document which, with the
giving of notice or passage of time, or both, would be an Event of Default.

 3
 

 

Default Rate:  a rate per annum equal to the lesser of (i) the
maximum rate permitted by applicable law, or (ii) five percent (5%) above
the Interest Rate (as applicable prior to the occurrence of an Event of
Default), compounded monthly.

Defeasance Collateral:  U.S. Obligations, which provide payments (i) on
or prior to, but as close as possible to, all Payment Dates and other scheduled
payment dates, if any, under the Note after the Defeasance Date and up to and
including the Defeasance Maturity Date, and (ii) in amounts equal to or
greater than the Scheduled Defeasance Payments.

Defeasance Maturity Date:  means the Permitted Prepayment Date.

Deposit Bank:  Wachovia Bank, National Association, or such
other bank or depository selected by Lender in its discretion.

Eligible Account:  a separate and identifiable account from all
other funds held by the holding institution that is either (i) an account
or accounts (A) maintained with a federal or state-chartered depository
institution or trust company which complies with the definition of Eligible
Institution or (B) as to which Lender has received a Rating Comfort Letter
from each of the applicable Rating Agencies with respect to holding funds in
such account, or (ii) a segregated trust account or accounts maintained
with the corporate trust department of a federal depository institution or
state chartered depository institution subject to regulations regarding
fiduciary funds on deposit similar to Title 12 of the Code of Federal
Regulations §9.10(b), having in either case corporate trust powers, acting in
its fiduciary capacity, and a combined capital and surplus of at least
$50,000,000 and subject to supervision or examination by federal and state
authorities. An Eligible Account will not be evidenced by a certificate of
deposit, passbook or other instrument.

Eligible Institution: a depository institution insured by
the Federal Deposit Insurance Corporation the short term unsecured debt
obligations or commercial paper of which are rated at least A-1 by
S&P, P-1 by Moody’s and F-1+ by Fitch, in the case of accounts
in which funds are held for thirty (30) days or less or, in the case of Letters
of Credit or accounts in which funds are held for more than thirty (30) days,
the long term unsecured debt obligations of which are rated at least “AA” by
Fitch and S&P and “Aa2” by Moody’s.

ERISA:  the
Employment Retirement Income Security Act of 1974, as amended from time to
time, and the rules and regulations promulgated thereunder.

ERISA Affiliate: 
all members of a controlled group of corporations and all trades and
business (whether or not incorporated) under common control and all other
entities which, together with Borrower, are treated as a single employer under
any or all of Section 414(b), (c), (m) or (o) of the Code.

GAAP: 
generally accepted accounting principles in the United States of America
as of the date of the applicable financial report.

Governmental Authority:  any court, board, agency, commission, office
or authority of any nature whatsoever for any governmental unit (federal,
state, county, district, municipal, city or otherwise) now or hereafter in
existence.

 4
 

 

Guarantor: 
Behringer Harvard REIT I, Inc., a Maryland corporation.

Guaranty Limit Amount: as of any date of
determination thereof, the sum, as of such date after giving effect to any
adjustments thereto pursuant to this Agreement and the Guaranty, of (i) the
Rollover Reserve Offset Amount plus (ii) the Required Repairs Reserve
Offset Amount, plus (iii) the Tax and Insurance Reserve Offset Amount, plus
(iv) the Capital Reserve Offset Amount. The Guaranty Limit Amount as of
the date hereof is $16,767,547.

Harvard Fund I:  individually or collectively, Behringer
Harvard Short-Term Opportunity Funds I, L.P., a Texas limited partnership
and/or Behringer Harvard Mid-Term Value Enhancement Fund I, L.P. a Texas
limited partnership and/or Behringer Harvard Strategic Opportunity Fund LLP, a
Texas limited partnership and/or any other fund for which Behringer Harvard
Holdings, LLC, or an Affiliate of it under its Control, serves as general
partner, manager or advisor.

Harvard REIT:  individually or collectively, the Behringer
Harvard Operating Partnership I LP, a Texas limited partnership (the “Harvard REIT Operating Partnership”)
and/or Behringer Harvard REIT I, Inc., a Maryland corporation (“Behringer Harvard REIT”)
and/or Behringer Harvard Opportunity REIT I, Inc., a Maryland corporation
(“Behringer Harvard
Opportunity REIT”) and/or any other fund for which Behringer
Harvard Holdings, LLC, or an Affiliate of it under its Control, serves as
general partner, manager or advisor.

Interest Period:  (i) the period from the date hereof
through the first (1st) day
thereafter that is the fifth (5th)
day of a calendar month and (ii) each period thereafter from the sixth (6th) day of each calendar month
through the 5th day of the following calendar month; except
that the Interest Period, if any, that would otherwise commence before and end
after the Maturity Date shall end on the Maturity Date. Notwithstanding the
foregoing, if Lender exercises its right to change the Payment Date to a New
Payment Date in accordance with Section 2.2.4 hereof, then from and
after such election, each Interest Period shall be the period from the New
Payment Date in each calendar month through the day in the next succeeding
calendar month immediately preceding the New Payment Date in such calendar
month.

Interest Rate:  a rate of interest equal to (i) for the
period from and including the date hereof through and including the last day of
the Interest Period ending in the calendar month of June, 2008, 5.75% per
annum, and (ii) for all periods thereafter, 6.191% per annum (or, in
either such case, when applicable pursuant to this Agreement or any other Loan
Document, the Default Rate).

Leases: 
all leases and other agreements or arrangements heretofore or hereafter
entered into providing for the use, enjoyment or occupancy of, or the conduct
of any activity upon or in, the Property or the Improvements, including any
guarantees, extensions, renewals, modifications or amendments thereof and all
additional remainders, reversions and other rights and estates appurtenant
thereunder.

Lease Termination
Payments:  (i) all
fees, penalties, commissions or other payments made to Borrower in connection
with or relating to the rejection, buy-out, termination, surrender or
cancellation of any Lease (including in connection with any Bankruptcy 

 5
 

 

Proceeding), (ii) any security deposits, or
proceeds of letters of credit held by Borrower in lieu of cash security deposits,
which Borrower is permitted to retain pursuant to the applicable provisions of
any Lease and (iii) any payments made to Borrower relating to unamortized
tenant improvements and leasing commissions under any Lease.

Legal Requirements: statutes, laws, rules,
orders, regulations, ordinances, judgments, decrees and injunctions of
Governmental Authorities affecting Borrower, any Loan Document or all or part
of the Property or the construction, ownership, use, alteration or operation
thereof, whether now or hereafter enacted and in force, and all permits,
licenses and authorizations and regulations relating thereto, and all
covenants, agreements, restrictions and encumbrances contained in any
instrument, either of record or known to Borrower, at any time in force
affecting all or part of the Property.

Lien: any mortgage, deed of trust, lien
(statutory or otherwise), pledge, hypothecation, easement, restrictive
covenant, preference, assignment (intended as security), security interest or
any other encumbrance, charge or transfer (intended as security) of, or any
agreement to enter into or create any of the foregoing, on or affecting all or
any part of the Property or any interest therein, or any direct or indirect
interest in Borrower, including any conditional sale or other title retention
agreement, any financing lease having substantially the same economic effect as
any of the foregoing, the filing of any financing statement, and mechanic’s,
materialmen’s and other similar liens and encumbrances.

Loan Documents: 
this Agreement and all other documents, agreements and instruments now
or hereafter evidencing or securing the Loan, or pursuant to which any Person
incurs, has incurred or assumes any obligation to or for the benefit of Lender,
or makes any certification, representation or warranty to Lender in connection
with the Loan, including, without limitation, the following, each of which is
dated as of the date hereof:  (i) the
Promissory Note or Promissory Notes made by Borrower to Lender in the aggregate
principal amount equal to the Loan (the “Note”), (ii) the
Mortgage, Assignment of Leases and Rents, Security Agreement and Fixture Filing
made by Borrower in favor of Lender which covers the Property (the “Mortgage”), (iii) Assignment of Leases and
Rents from Borrower to Lender (the “Assignment of Leases”), (iv) Assignment
of Agreements, Licenses, Permits and Contracts from Borrower to Lender, (v) the
Clearing Account Agreement (the “Clearing Account Agreement”) among
Borrower, Lender, Manager and Clearing Bank, (vi) the Deposit Account
Agreement (the “Deposit Account Agreement”) among
Borrower, Lender, Manager and the Deposit Bank (vii) the Guaranty made by
Guarantor (the “Guaranty”), and (viii) the
LC Security Deposit Cooperation Agreement among Borrower Member, Borrower and
Lender (the “LC Security Deposit Cooperation Agreement”);
as each of the foregoing may be (and each of the foregoing defined terms shall
refer to such documents as they may be) amended, restated, replaced, severed,
split, supplemented or otherwise modified from time to time (including pursuant
to Section 9.1.7 hereof).

Management Agreement:  the management agreement between Borrower and
Manager, pursuant to which Manager is to manage the Property, as same may be
amended, restated, replaced, supplemented or otherwise modified from time to
time in accordance with Section 5.12 hereof.

 6
 

 

Manager: 
HPT Management Services LP, a Texas limited partnership, or any
successor, assignee or replacement manager appointed by Borrower in accordance
with Section 5.12 hereof.

Material Alteration: any alteration affecting
structural elements of the Property the cost of which exceeds $250,000;
provided, however, that in no event shall (i) any Required Repairs, (ii) any
tenant improvement work performed pursuant to any Lease existing on the date
hereof or entered into hereafter in accordance with the provisions of this
Agreement, or (iii) alterations performed as part of a Restoration,
constitute a Material Alteration.

Material Lease: 
all Leases which individually or in the aggregate with respect to the
same tenant and its Affiliates (i) cover more than 35,000 square feet of
the Improvements or (ii)  have a gross annual rent of more than five
percent (5%) of the total annual Rents or (iii) demise at least one (1) full
floor of the Improvements.

Maturity Date: 
the date on which the final payment of principal of the Note (or any
replacement promissory note issued in connection with a Defeasance Event, if
applicable) becomes due and payable as therein provided, whether at the Stated
Maturity Date, the Defeasance Maturity Date, by declaration of acceleration, or
otherwise.

Minor Lease: any Lease that is not a Material
Lease.

Net Operating
Income:  for any
period, the underwritten net cash flow of the Property determined by Lender in
its sole discretion exercised in good faith (uniformly and consistently applied
in the same manner as Lender exercises similar discretion in other loans of
this type and nature for comparable properties) in accordance with Lender’s
then current underwriting standards for loans of this type and the then current
underwriting standards of the Rating Agencies (including adjustments for a
management fee equal to the greater of the combined management fees and asset
management fees paid under the Management Agreement during such period or three percent (3%) of gross
revenues, market vacancy, bankrupt tenants which are not in full occupancy of
their respective leased premises or which have rejected their respective leases
or which are not paying rent on a current basis, leasing costs and capital
items).

Officer’s Certificate:  a certificate delivered to Lender by
Borrower, which is signed by the manager or a senior executive officer of
Borrower.

Other Charges:  all ground rents, maintenance charges, impositions
other than Taxes, and any other charges, including vault charges and license
fees for the use of vaults, chutes and similar areas adjoining the Property,
now or hereafter levied or assessed or imposed against the Property or any part
thereof.

Payment Date:  the sixth (6th) day of each calendar month or, upon
Lender’s exercise of its right to change the Payment Date in accordance with Section 2.2.4
hereof, the New Payment Date (in either case, if such day is not a Business
Day, the Payment Date shall be the first Business Day thereafter). The first
Payment Date hereunder shall be July 6, 2006.

Permitted Encumbrances: (i) the Liens
created by the Loan Documents, (ii) all Liens and other matters disclosed
in the Title Insurance Policy, (iii) Liens, if any, for Taxes or 

 7
 

 

Other Charges not yet due and payable and not
delinquent, (iv) any workers’, mechanics’ or other similar Liens on the
Property provided that any such Lien is bonded or discharged within thirty (30)
days after Borrower first receives notice of such Lien, (v) such other
title and survey exceptions as Lender approves in writing in Lender’s
discretion, and (vi) Liens securing a Mezzanine Loan in accordance with Section 9.3.

Permitted Transfers:

(i) a Lease entered into in accordance with the Loan Documents;

(ii) a Permitted Encumbrance;

(iii) a Transfer and Assumption pursuant to Section 5.26.2;

(iv) provided that no Event of Default shall then exist, a
Transfer of a direct or indirect interest in Borrower to any Person (including
the Transfer or issuance of publicly traded shares or of operating partnership
units in the Behringer Harvard REIT, Behringer Harvard Opportunity REIT,
Harvard Fund I or the Harvard REIT Operating Partnership, which shall be
permitted whether or not an Event of Default shall exist) provided that (A) the
Harvard REIT Operating Partnership shall at all times continue to own, directly
or indirectly, not less than fifty-one percent (51%) of Borrower, (B) such
Transfer shall not (x) cause the transferee (other than Behringer Harvard
REIT), together with its Affiliates, to acquire Control of Borrower or to
increase its direct or indirect interest in Borrower to an amount which equals
or exceeds forty nine percent (49%) or (y) result in Borrower no longer
being Controlled by Behringer Harvard REIT, (C) Borrower shall give Lender
notice of such Transfer together with copies of all instruments effecting such
Transfer not less than 10 days prior to the date of such Transfer (other than
with respect to Transfers or issuances of shares or “unit interests” in Harvard
Fund I or the Harvard REIT), and (D) the legal and financial structure of
Borrower and its members and the single purpose nature and bankruptcy
remoteness of Borrower and its members after such Transfer, shall satisfy Lender’s
then current applicable underwriting criteria and requirements;

(v) provided that no Event of Default shall then exist, a Transfer
of a direct or indirect interest in Borrower related to or in connection with
the estate planning of such transferor to (1) the spouse, children or
grandchildren of such transferor (and/or any spouse of a child or grandchild),
or any other immediate family member of such transferor, or (2) a trust
established for the benefit of any such parties, provided that (A) such
Transfer shall not cause a change in the Control of Borrower, (B) such
Transfer shall not result in a change of the day to day management and
operations of the Property, (C) Borrower shall give Lender notice of such
Transfer together with copies of all instruments effecting such Transfer not
less than 10 days after the date of such Transfer and (D) the legal and
financial structure of Borrower, and the single purpose nature and bankruptcy
remoteness of Borrower after such Transfer, shall satisfy Lender’s then current
applicable underwriting criteria and requirements; or

(vi)  a Transfer of a direct or indirect interest in Borrower that
occurs by devise or bequest or by operation of law upon the death of a natural
person that was the holder of such interest to a member of the immediate family
of such interest holder or a trust established for the benefit of such
immediate family member, provided that (A) no such Transfer shall result
in a 

 8
 

 

change of the day to day operations of the Property, (B) Borrower
shall give Lender notice of such Transfer together with copies of all
instruments effecting such Transfer not less than 30 days after the date of
such Transfer, (C) Borrower shall continue to be a Special Purpose
Bankruptcy Remote Entity, (D) if any such Transfer would result in a
change of Control of Borrower and occurs prior to the occurrence of a Secondary
Market Transaction, such Transfer is approved by Lender in writing within 30
days after any such Transfer, and (E) if any such Transfer would result in
a change of Control of Borrower and occurs after the occurrence of a Secondary
Market Transaction, Borrower, at Borrower’s sole cost and expense, shall,
within 30 days after any such Transfer, (a) deliver (or cause to be
delivered) (x) a Rating Comfort Letter to Lender, and (y) a
substantive non-consolidation opinion to Lender and the Rating Agencies with
respect to Borrower and such transferee in form and substance satisfactory to
Lender and the Rating Agencies, (b) obtain the prior written consent of
Lender which shall not be unreasonably withheld and (c) reimburse Lender
for all reasonable expenses incurred by Lender in connection with such
Transfer.

Person: 
any individual, corporation, partnership, limited liability company,
joint venture, estate, trust, unincorporated association, any other person or
entity, and any federal, state, county or municipal government or any bureau,
department or agency thereof and any fiduciary acting in such capacity on
behalf of any of the foregoing.

Plan:  (i) an
employee benefit or other plan established or maintained by Borrower or any
ERISA Affiliate or to which Borrower or any ERISA Affiliate makes or is
obligated to make contributions and (ii) which is covered by Title IV of
ERISA or Section 302 of ERISA or Section 412 of the Code.

Property: the parcel of real property and
Improvements thereon owned by Borrower and encumbered by the Mortgage; together
with all rights pertaining to such real property and Improvements, and all
other collateral for the Loan as more particularly described in the granting
clauses of the Mortgage and referred to therein as the Property. The Property
is located at 222 South Riverside Plaza and 444 West Jackson Boulevard,
Chicago, Illinois.

Rating Agency: 
each of Standard & Poor’s Rating Services, a division of The
McGraw-Hill Companies, Inc. (“S&P”), Moody’s
Investors Service, Inc. (“Moody’s”), and
Fitch, Inc., a division of Fitch Ratings Ltd. (“Fitch”) or any other
nationally-recognized statistical rating organization to the extent any of the
foregoing have been engaged by Lender or its designee in connection with or in
anticipation of any Secondary Market Transaction.

Rating Comfort Letter:  a letter issued by each of the applicable
Rating Agencies which confirms that the taking of the action referenced to
therein will not result in any qualification, withdrawal or downgrading of any
existing ratings of Securities created in a Secondary Market Transaction.

Reciprocal Operating Agreements: means, collectively, (i) that certain Easement and Operating Agreement
between LaSalle National Bank, not personally but solely as Trustee under Trust
Agreement dated December 1, 1983 and known as Trust No. 107363 and
Chicago Union Station Company, an Illinois corporation (“CUSCO”), as modified by that certain Lease
Consolidation, Assignment and Amendment and Easement and Operating Agreement
dated 

 9
 

 

September 1, 1998
among CUSCO and National Passenger Railroad Corporation and 222 Riverside Plaza
Corp., as further modified by that certain Supplement to Easement and Operating
Agreement between CUSCO and 222 Riverside Plaza Corp. dated October 10,
2001, and (ii) that certain Easement and Operating Agreement between CUSCO
and 222 South Riverside Fee, LLC, a Delaware limited liability company dated October 10,
2001.

Release Date:
the earlier to occur of (i) the thirty-sixth (36th) Payment Date of the Term and (ii) the
date that is two (2) years from the “startup day” (within the meaning of Section 860G(a)(9) of
the Code) of the REMIC Trust established in connection with the final Secondary
Market Transaction involving this Loan.

REMIC Trust:
a “real estate mortgage investment conduit” within the meaning of Section 860D
of the Code that holds the Note.

Rents:  all
rents, rent equivalents, moneys payable as damages (including payments by
reason of the rejection of a Lease in a Bankruptcy Proceeding) or in lieu of
rent or rent equivalents, royalties (including all oil and gas or other mineral
royalties and bonuses), income, fees, receivables, receipts, revenues, deposits
(including security, utility and other deposits), accounts, cash, issues,
profits, charges for services rendered, and other payment and consideration of
whatever form or nature received by or paid to or for the account of or benefit
of Borrower, Manager or any of their agents or employees (other than fees paid
under the Management Agreements and salaries paid to employees) from any and
all sources arising from or attributable to the Property and the Improvements,
including all receivables, customer obligations, installment payment
obligations and other obligations now existing or hereafter arising or created
out of the sale, lease, sublease, license, concession or other grant of the
right of the use and occupancy of the Property or rendering of services by
Borrower, Manager or any of their agents or employees and proceeds, if any,
from business interruption or other loss of income insurance.

Rollover Rent Abatement Periods:  The rent abatement periods (i.e. months, if
rent under the applicable Lease is paid monthly, or quarters, if rent under the
applicable Lease is paid quarterly) after the date hereof for which the
applicable tenants are entitled to Rollover Rent Abatements under the
applicable Leases.

Rollover Rent Abatements:  Rent abatements that tenants are entitled to
from time to time after the date hereof pursuant to Leases entered into in
accordance with the Loan Documents, which rent abatements (i) are (A) specifically
approved by Lender in connection with approving the applicable Lease, (B) incurred
in the ordinary course of business and on market terms and conditions in
connection with Leases which do not require Lender’s approval under the Loan
Documents, or (C) otherwise approved by Lender, which approval shall not
be unreasonably withheld or delayed, and (ii) are substantiated by
executed Lease documents; provided, however, that Rollover Rent Abatements
shall specifically exclude the Scheduled Rent Abatements.

Scheduled Defeasance Payments:  the Monthly Debt Service Payment Amount
and/or Monthly Interest Payment Amount (as applicable) required under the Note
for all Payment Dates occurring after the Defeasance Date but prior to the
Defeasance Maturity Date 

 10
 

 

and the outstanding Principal balance on the Note as
of the Defeasance Maturity Date and all accrued and unpaid interest as of such
date.

Scheduled Rent Abatement Periods:  The rent abatement periods for which certain
tenants under existing Leases are entitled to Scheduled Rent Abatements and
which are listed on Schedule 7 attached hereto.

Scheduled Rent Abatements: The rent abatement
amounts that certain tenants are entitled to pursuant to the terms of existing
Leases and which are listed on Schedule 7 attached hereto.

Security Agreement: a security agreement in form and
substance that would be satisfactory to Lender (in Lender’s sole but good faith
discretion) pursuant to which Borrower grants Lender a perfected, first
priority security interest in the Defeasance Collateral Account and the
Defeasance Collateral.

Servicer:  a servicer selected by Lender to service the
Loan, including any “master servicer” or “special servicer” appointed under the
terms of any pooling and servicing agreement or similar agreement entered into
as a result of a Secondary Market Transaction.

State:  the
state in which the Property is located.

Stated Maturity Date: June 6, 2016, as such
date may be changed in accordance with Section 2.2.4 hereof.

Taxes:  all
real estate and personal property taxes, assessments, water rates or sewer
rents, maintenance charges, impositions, vault charges and license fees, now or
hereafter levied or assessed or imposed against all or part of the Property.

Term:  the
entire term of this Agreement, which shall expire upon repayment in full of the
Debt and full performance of each and every obligation to be performed by
Borrower pursuant to the Loan Documents (other than surviving indemnity
obligations with respect to matters as to which no claim for indemnification is
then pending).

Title Insurance
Policy:  the ALTA
mortgagee title insurance policy in the form acceptable to Lender issued with
respect to the Property and insuring the Lien of the Mortgage.

Transfer: 
any sale, conveyance, transfer, lease or assignment, or the entry into
any agreement to sell, convey, transfer, lease or assign, whether by law or
otherwise, of, on, in or affecting (i) all or part of the Property
(including any legal or beneficial direct or indirect interest therein), or (ii) any
direct or indirect interest in Borrower (including any profit interest).

UCC or Uniform Commercial Code:  the
Uniform Commercial Code as in effect in the State or the state in which any of
the Cash Management Accounts are located, as the case may be.

U.S. Obligations:  obligations that are “government securities”
within the meaning of Section 2(a)(16) of the Investment Company Act of
1940, as amended, and, to the 

 11
 

 

extent acceptable to the applicable Rating Agencies,
other non-callable government securities satisfying the REMIC Provisions
(hereinafter defined), in each case to the extent such obligations are not
subject to prepayment, call or early redemption. As used herein, “REMIC Provisions”
mean provisions of the federal income tax law relating to real estate mortgage
investment conduits, which appear at Sections 860A through 860G of Subchapter M
of Chapter 1 of Subtitle A of the Code, and related provisions, and temporary
and final regulations and, to the extent not inconsistent with such temporary
and final regulations, proposed regulations, and published rulings, notices and
announcements promulgated thereunder, as the foregoing may be in effect from
time to time.

Welfare Plan: 
an employee welfare benefit plan, as defined in Section 3(1) of
ERISA.

Yield Maintenance
Premium: an amount which, when added to the outstanding
Principal, would be sufficient to purchase U.S. Obligations which provide
payments (a) on or prior to, but as close as possible to, all successive
scheduled payment dates under this Agreement through the Stated Maturity Date
and (b) in amounts equal to the Monthly Debt Service Payment Amount and/or
Monthly Interest Payment Amount, as the case may be, required under this
Agreement through the Stated Maturity Date together with the outstanding
principal balance of the Note as of the Stated Maturity Date assuming all
payments of the Monthly Debt Service Payment Amount and/or Monthly Interest
Payment Amount, as the case may be, are made (including any servicing costs
associated therewith). In no event shall the Yield Maintenance Premium be less
than zero.

 12
 

 

 

1.2  Index
of Other Definitions.        The following terms are defined in the sections or Loan
Documents indicated below:

“Aggregate Approved Capital Costs” –
3.4.2

“Approved Annual Budget ”
– 6.3.5

“Annual Budget ” – 6.3.5

“Approved Capital Budget” – 6.3.5

“Approved Operating Budget” – 6.3.5

“Applicable Taxes” – 2.2.3

“Assignment of Leases” – 1.1
(Definition of Loan Documents)

“Award” – 7.3.2

“Bankruptcy Proceeding” –
4.7

“Borrower Member” – 4.18

“Borrower’s Recourse Liabilities” – 10.1

“Base Capital Amount” – 3.4.2

“Calendar Quarter” – 3.4.2

“Capital Reserve Offset Amount” – 3.4.2

“Capital Reserve Subaccount”
– 3.4

“Cash Collateral Subaccount” – 3.9

“Cash Management Accounts” – 3.10

“Casualty” – 7.2.1

“Casualty/Condemnation Prepayment” – 2.3.2

“Casualty/Condemnation Subaccount” – 3.7

“Clearing Account” – 3.1

“Clearing Account Agreement” – 1.1
(Definition of Loan Documents)

“Clearing Bank” – 3.1

“Condemnation” – 7.3.1

“CUSCO” – 1.1 (Definition of
Reciprocal Operating Agreements)

“Defeasance Collateral Account”
– 2.3.3

“Defeasance Event” –
2.3.3

“Defeasance Date” – 2.3.3

“Deposit Account” – 3.1

“Deposit Account Agreement” – 1.1
(Definition of Loan Documents)

“Disclosure Document” – 9.1.2

“DSCR Earnout Reserve Subaccount” – 3.16

“Easements”
– 4.14

“Endorsement” – 5.26

“Environmental Laws” – 4.21

“Equipment” – Mortgage

“Event
of Default” – 8.1

“Exchange Act” – 9.1.2

“Fitch” – 1.1 (Definition
of Rating Agency)

“GCM Group”  – 9.1.3

“Government Lists” – 5.31

“Guaranty”
– 1.1 (Definition of Loan Documents)

“Harvard REIT Operating Partnership”
– 1.1 (Definition of Harvard REIT)

“Hazardous Substances” –  4.21

 13
 

 

“Improvements” – Mortgage

“Incumbent
Board” – 5.26.1

“Indemnified Liabilities” – 5.30

“Indemnified Party(ies)” – 5.30

“Independent Director” – Schedule 5

“Insurance Premiums” – 7.1.2

“Insured Casualty” – 7.2.2

“Issuer” – 9.1.3

“Intercreditor Agreement” – 9.3

“Late Payment Charge” – 2.5.3

“LC Security Deposit Cooperation
Agreement” – 1.1 (Definition of Loan Documents)

“Lender’s Consultant” – 5.8.1

“Lender’s Losses” – 10.1

“Letter(s) of Credit” – 9.4

“Liabilities”  – 9.1.3

“Licenses” – 4.11

“Loan” – 2.1

“Mezzanine
Borrower” – 9.3

“Mezzanine
Lender” – 9.3

“Mezzanine
Loan” – 9.3

“Monthly Capital Reserve Deposit Amount” –
3.4.1

“Monthly Debt Service Payment Amount”
– 2.2.1

“Monthly Interest Payment Amount”
– 2.2.1

“Monthly Tax and Insurance Deposit” –
3.3.2

“Moody’s” – 1.1
(Definition of Rating Agency)

“Mortgage” – 1.1
(Definition of Loan Documents)

“New Payment Date” –
2.2.4

“Note” – 1.1 (Definition of Loan Documents)

“Notice” – 6.1

“OFAC” – 5.31

“Operating Expense Subaccount”
– 3.6

“Patriot Act” – 5.31

“Patriot Act Offense” – 5.31

“Permitted Indebtedness” – 5.22

“Permitted Investments” – Deposit Account
Agreement

“Permitted
Prepayment Date” – 2.3.4

“Policies” – 7.1.2

“Principal” – 2.1

“Proceeds” – 7.2.2

“Proposed Material Lease” – 5.10.2

“Protective Advance” – 8.2.5

“Provided Information” – 9.1.1

“Qualified Carrier” – 7.1.1

“Registration Statement” – 9.1.3

“Remedial Work” – 5.8.2

“REMIC
Provisions” – 1.1 (Definition of U.S. Obligations)

 14
 

 

“Rent Roll” – 4.16

“Required Repairs” – 3.2.1

“Required Repairs Reserve Offset Amount” –
3.2.2

“Reserve
Letter of Credit” – 3.15

“Restoration” – 7.4.1

“Riverside Holding” – 4.18

“Rollover Reserve Offset Amount” – 3.5

“Rollover Reserve Subaccount”
– 3.5

“S&P” – 1.1 (Definition of Rating
Agency)

“Secondary Market Transaction” – 9.1.1

“Securities” – 9.1.1

“Securities Act” – 9.1.2

“Security Deposit Subaccount”
– 3.8

“Significant Casualty” – 7.2.2

“Special Purpose Bankruptcy Remote Entity” –
5.13

“Springing Recourse Event” – 10.1

“Subaccounts” – 3.1

“Successor Borrower” – 2.3.3

“Tax and Insurance Reserve Offset Amount”
– 3.3.2

“Tax and Insurance Subaccount”
– 3.3

“Third Party Report” –
9.1.3

“TI/LC Holdback Reserve Subaccount” –
3.13

“TI/LC Holdback Leases” – 3.13

“TI/LC Holdback Tenants” – 3.13

“Toxic Mold” –
4.21

“Transfer and Assumption”
– 5.26

“Transferee Borrower” – 5.26

“Underwriter Group”  – 9.1.3

“Underwriters” - 9.1.3

                1.3
Principles of Construction. Unless
otherwise specified, (i) all references to sections and schedules are to
those in this Agreement, (ii) the words “hereof,” “herein” and “hereunder”
and words of similar import refer to this Agreement as a whole and not to any
particular provision, (iii) all definitions are equally applicable to the
singular and plural forms of the terms defined, (iv) the words “include”
and “including” mean “including but not limited to,” and (v) accounting
terms not specifically defined herein shall be construed in accordance with
GAAP.

2.     GENERAL LOAN TERMS

                                2.1  The Loan.  Lender is making a loan (the “Loan”) to Borrower on the date hereof, in the original principal
amount (the “Principal”) of $202,000,000, which shall
mature on the Stated Maturity Date or, if a Defeasance Event has occurred in
accordance with Section 2.3.3 hereof, on the Defeasance Maturity
Date. Borrower acknowledges receipt of the Loan, the proceeds of which are
being and shall be used to (i) acquire the Property, (ii) fund
certain of the Subaccounts, and (iii) pay transaction costs. Any excess
proceeds may be used for any lawful purpose. No amount repaid in respect of the
Loan may be reborrowed.

 15
 

 

                2.2  Interest; Monthly Payments.

                                2.2.1  Generally.
 From and after the date hereof, interest
on the unpaid Principal shall accrue at the Interest Rate and be payable as
hereinafter provided. On the date hereof, Borrower shall pay interest on the
unpaid Principal from the date hereof through and including June 5, 2006. On
July 6, 2006 and each Payment Date thereafter through and including the
Payment Date immediately preceding the Amortization Commencement Date, Borrower
shall pay interest only on the unpaid Principal accrued at the Interest Rate
during the Interest Period immediately preceding such Payment Date (the “Monthly Interest Payment Amount”).
On the Amortization Commencement Date and each Payment Date thereafter through
and including May 6, 2016 (as such date may be changed in accordance with Section 2.2.4),
the Principal and interest thereon at the Interest Rate shall be payable in
equal monthly installments of $1,236,007.87 (the “Monthly Debt Service Payment Amount”);
which is based on the Interest Rate and a 360-month amortization schedule.
The Monthly Debt Service Payment Amount due on any Payment Date shall first be
applied to the payment of interest accrued during the preceding Interest Period
and the remainder of such Monthly Debt Service Payment Amount shall be applied
to the reduction of the unpaid Principal. All accrued and unpaid interest shall
be due and payable on the Maturity Date. If the Loan is repaid on any date
other than on a Payment Date (whether prior to or after the Stated Maturity
Date), Borrower shall also pay interest that would have accrued on such repaid
Principal to but not including the next Payment Date.

                                2.2.2 
Default Rate.  After
the occurrence and during the continuance of an Event of Default, the entire
unpaid Debt shall bear interest at the Default Rate, and shall be payable upon
demand from time to time, to the extent permitted by applicable law.

                                2.2.3  Taxes.  Any and all payments by Borrower
hereunder and under the other Loan Documents shall be made free and clear of
and without deduction for any and all present or future taxes, levies, imposts,
deductions, charges or withholdings, and all liabilities with respect thereto,
excluding taxes imposed on Lender’s income, and franchise taxes imposed on
Lender by the law or regulation of any Governmental Authority (all such
non-excluded taxes, levies, imposts, deductions, charges, withholdings and
liabilities being hereinafter referred to in this Section 2.2.3 as “Applicable Taxes”). If Borrower shall be required by
law to deduct any Applicable Taxes from or in respect of any sum payable
hereunder to Lender, the following shall apply: 
(i) the sum payable shall be increased as may be necessary so that
after making all required deductions (including deductions applicable to
additional sums payable under this Section 2.2.3), Lender receives
an amount equal to the sum it would have received had no such deductions been
made, (ii) Borrower shall make such deductions and (iii) Borrower
shall pay the full amount deducted to the relevant taxation authority or other
authority in accordance with applicable law. Payments pursuant to this Section 2.2.3
shall be made within ten (10) days after the date Lender makes written
demand therefor. If the amounts payable
hereunder relate to Applicable Taxes which are not of general application to
lending institutions making secured mortgage loans at such time, Borrower shall
have the option to prepay the Loan in full without any Yield Maintenance
Premium unless Lender, at its option, elects not to require Borrower to pay
such Applicable Taxes pursuant to this Section 2.2.3. Notwithstanding
the foregoing, if the Loan is transferred to a transferee which is organized
under the laws of any jurisdiction other than the United States of America or
any state thereof, the transferor shall cause such transferee, 

 16
 

 

concurrently
with the effectiveness of such transfer, to furnish to the transferor and
Borrower either a United States Internal Revenue Service Form 4224 or
United States Internal Revenue Service Form 1001 (wherein such transferee
claims entitlement to complete exemption from United States federal withholding
tax on all interest payments hereunder); provided, however, that in the event
that the transferor fails to cause the transferee to furnish either such Form,
Borrower shall deduct any Applicable Taxes to the extent required by law and
payments shall be made net of any Applicable Taxes without regard to the
provisions of clause (i) of the second sentence of this Section 2.2.3.

                                2.2.4  New Payment Date.  Lender shall have the right, to be
exercised not more than once during the term of the Loan, to change the Payment
Date to a date other than the sixth day of each month (a “New Payment Date”),
on thirty (30) days’ written notice to Borrower; provided, however, that any
such change in the Payment Date: (i) shall not modify the amount of
regularly scheduled monthly principal and interest payments, except that the
first payment of principal and interest payable on the New Payment Date shall
be accompanied by interest at the interest rate herein provided for the period
from the Payment Date in the month in which the New Payment Date first occurs
to the New Payment Date, (ii) shall extend the Amortization Commencement
Date to the New Payment Date occurring in the month set forth in the definition
of Amortization Commencement Date, and (iii) shall extend the Stated
Maturity Date to the New Payment Date occurring in the month set forth in the
definition of Stated Maturity Date.

2.3  Loan
Repayment.

                                2.3.1 
Repayment.  Borrower
shall repay the entire outstanding principal balance of the Note in full on the
Maturity Date, together with interest thereon to (but excluding) the date of
repayment and any other amounts due and owing under the Loan Documents. Borrower
shall have no right to prepay or defease all or any portion of the Principal
except in accordance with Section 2.2.3 above, Section 2.3.2
below, Section 2.3.3 below, Section 2.3.4 below, Section 2.4
below and Section 7.4.2 below. Except during the continuance of an
Event of Default, all proceeds of any repayment, including any prepayments of
the Loan, shall be applied by Lender as follows in the following order of
priority:  First,
accrued and unpaid interest at the Interest Rate; Second,
to Principal; and Third, to and any other amounts
then due and owing under the Loan Documents. If prior to the Stated Maturity
Date the Debt is accelerated by reason of an Event of Default, then Lender
shall be entitled to receive, in addition to the unpaid Principal and accrued
interest and other sums due under the Loan Documents, an amount equal to the
Yield Maintenance Premium applicable to such Principal so accelerated. During
the continuance of an Event of Default, all proceeds of repayment, including
any payment or recovery on the Property (whether through foreclosure,
deed-in-lieu of foreclosure, or otherwise) shall, unless otherwise provided in
the Loan Documents, be applied in such order and in such manner as Lender shall
elect in Lender’s discretion.

                                2.3.2       Mandatory Prepayments. The Loan is subject to mandatory
prepayment in certain instances of Insured Casualty or Condemnation (each a “Casualty/Condemnation Prepayment”), in the manner and to the extent
set forth in Section 7.4.2 hereof. Each Casualty/Condemnation
Prepayment, after deducting Lender’s costs and expenses (including reasonable
attorneys’ fees and expenses) in connection with the settlement or collection
of the Proceeds or Award, shall be applied in the same manner as repayments
under Section 2.3.1 

 17
 

 

above,
and if such Casualty/Condemnation Payment is made on any date other than a
Payment Date, then such Casualty/Condemnation Payment shall include interest
that would have accrued on the Principal prepaid to but not including the next
Payment Date. Provided that no Event of Default is continuing, any such
mandatory prepayment under this Section 2.3.2 shall be without the
payment of the Yield Maintenance Premium. Notwithstanding anything to the
contrary contained herein, each Casualty/Condemnation Prepayment shall be
applied in inverse order of maturity and shall not extend or postpone the due
dates of the monthly installments due under the Note or this Agreement, or
change the amounts of such installments. In addition, and notwithstanding
anything to the contrary contained herein or in any other Loan Document,
provided no Event of Default is continuing, no Yield Maintenance Premium shall
be payable in connection with any prepayment of the Debt required by Lender
under Sections 5 and 6 of the Mortgage.

2.3.3       Defeasance

(a)  Conditions to Defeasance.  Provided no Event of Default shall be
continuing, Borrower shall have the right on any Payment Date after the Release
Date and prior to the Permitted
Prepayment Date to voluntarily defease the entire amount of the
Principal and obtain a release of the Lien of the Mortgage by providing Lender
with the Defeasance Collateral (a “Defeasance Event”),
subject to the satisfaction of the following conditions precedent:

(i)    Borrower
shall give Lender not less than thirty (30) days prior written notice
specifying a Payment Date (the “Defeasance Date”) on which the Defeasance
Event is to occur.

(ii)   Borrower shall pay to Lender (A) all payments
of Principal and interest due on the Loan to and including the Defeasance Date
and (B) all other sums, then due under the Note, this Agreement and the
other Loan Documents;

(iii)  Borrower
shall deposit the Defeasance Collateral into the Defeasance Collateral Account
and otherwise comply with the provisions of subsections (b) and (c) of
this Section 2.3.3;

(iv)  Borrower shall execute and deliver to Lender a
Security Agreement in respect of the Defeasance Collateral Account and the
Defeasance Collateral;

(v)   Borrower
shall deliver to Lender an opinion of counsel for Borrower that is standard in
commercial lending transactions and subject only to customary qualifications,
assumptions and exceptions opining, among other things, that (i) Lender
has a legal and valid perfected first priority security interest in the
Defeasance Collateral Account and the Defeasance Collateral, (ii) if a
securitization has occurred, the REMIC Trust formed pursuant to such
securitization will not fail to maintain its status as a “real estate mortgage
investment conduit” within the meaning of Section 860D of the Code as a
result of a Defeasance Event pursuant to this Section 2.3.3, (iii) the
Defeasance Event will not result in a significant modification and will not be
an exchange of the Note for purposes of Section 1001 of the Code and the
Treasury Regulations thereunder, (iv) delivery of the Defeasance
Collateral and the grant of a security interest therein to Lender will not
constitute an avoidable preference under Section 547 of the 

 18
 

 

Bankruptcy Code or applicable state law and (v) a
non-consolidation opinion with respect to the Successor Borrower;

(vi)  Borrower shall deliver to Lender a Rating Comfort
Letter as to the Defeasance Event;

(vii) Borrower
shall deliver an Officer’s Certificate certifying that the requirements set
forth in this Section 2.3.3 have been satisfied;

(viii)        Borrower shall deliver a certificate of a “big
four” or other nationally recognized public accounting firm acceptable to
Lender certifying that (i) the Defeasance Collateral will generate monthly
amounts equal to or greater than the Scheduled Defeasance Payments, and (ii) the
securities that comprise the Defeasance Collateral are not subject to
prepayment, call or early redemption;

(ix)   Borrower shall deliver such other certificates,
opinions, documents and instruments as Lender may reasonably request; and

(x)    Borrower
shall pay all costs and expenses of Lender incurred in connection with the
Defeasance Event, including Lender’s reasonable attorneys’ fees and expenses
and Rating Agency fees and expenses.

(b)   Defeasance Collateral Account. On
or before the date on which Borrower delivers the Defeasance Collateral,
Borrower shall open at any Eligible Institution the defeasance collateral
account (the “Defeasance Collateral Account”)
which shall at all times be an Eligible Account. The Defeasance Collateral
Account shall contain only (i) Defeasance Collateral, and (ii) cash
from interest and principal paid on the Defeasance Collateral. All cash from
interest and principal payments paid on the Defeasance Collateral shall be paid
over to Lender on each Payment Date and applied first to accrued and unpaid
interest and then to Principal. Any cash from interest and principal paid on
the Defeasance Collateral not needed to pay accrued and unpaid interest or
Principal shall be retained in the Defeasance Collateral Account as additional
collateral for the Loan. Borrower shall cause the Eligible Institution at which
the Defeasance Collateral is deposited to enter an agreement with Borrower and
Lender, satisfactory to Lender in its sole discretion, pursuant to which such
Eligible Institution shall agree to hold and distribute the Defeasance
Collateral in accordance with this Agreement. The Successor Borrower shall be
the owner of the Defeasance Collateral Account and shall report all income
accrued on Defeasance Collateral for federal, state and local income tax
purposes in its income tax return. Borrower shall prepay all cost and expenses
associated with opening and maintaining the Defeasance Collateral Account. Lender
shall not in any way be liable by reason of any insufficiency in the Defeasance
Collateral Account.

(c)   Successor Borrower. In connection
with a Defeasance Event under this Section 2.3.3, Borrower shall,
if required by the Rating Agencies or if Borrower elects to do so, establish or
designate a successor entity (the “Successor Borrower”)
which shall be a Single Purpose Bankruptcy Remote Entity and which shall be
approved by the Rating Agencies. Any such Successor Borrower may, at Borrower’s
option, be an Affiliate of Borrower unless the Rating Agencies shall require
otherwise. Borrower shall transfer and assign all obligations, 

 19
 

 

rights and duties under and to the Defeased Note, together with the
Defeasance Collateral to such Successor Borrower. Such Successor Borrower shall
assume the obligations under the Note and the Security Agreement and Borrower
shall be relieved of its obligations under such documents. Borrower shall pay a
minimum of $1,000 to any such Successor Borrower as consideration for assuming
the obligations under the Note and the Security Agreement. Borrower shall pay
all costs and expenses incurred by Lender, including Lender’s attorney’s fees
and expenses, incurred in connection therewith.

                                2.3.4 
Optional Prepayments.
 On and after the third Payment Date
prior to the Stated Maturity Date (the “Permitted Prepayment Date”), Borrower shall
have the right to prepay the Loan in whole (but not in part), provided that
Borrower gives Lender at least fifteen (15) days’ prior written notice thereof.
If any such prepayment is not made on a Payment Date, Borrower shall also pay
interest that would have accrued on such prepaid Principal to, but not
including, the next Payment Date. Any such prepayment shall be made without
payment of the Yield Maintenance Premium.

                2.4  Release of Property.

2.4.1  Release
on Defeasance.  If Borrower has elected to defease the Note
and the requirements of Section 2.3.3 above and this Section 2.4
have been satisfied, the Property shall be released from the Lien of the
Mortgage and the Defeasance Collateral pledged pursuant to the Security
Agreement shall be the sole source of collateral securing the Note. In
connection with the release of the Lien, Borrower shall submit to Lender, not
less than thirty (30) days prior to the Defeasance Date (or such shorter time
as is acceptable to Lender in its sole discretion), a release of Lien (and
related Loan Documents) for execution by Lender. Such release shall be in a
form appropriate in the jurisdiction in which the Property is located and
contain standard provisions protecting the rights of the releasing lender. In
addition, Borrower shall provide all other documentation Lender reasonably
requires to be delivered by Borrower in connection with such release, together
with an Officer’s Certificate certifying that such documentation (i) is in
compliance with all Legal Requirements, and (ii) will effect such release
in accordance with the terms of this Agreement. Borrower shall pay all costs,
taxes and expenses associated with the release of the Lien of the Mortgage,
including Lender’s reasonable attorneys’ fees.

                                2.4.2 
Release on Payment in Full.
 Lender shall, upon the written request
and at the expense of Borrower, upon payment in full of the Debt in accordance
herewith, release or, if requested by Borrower, assign to Borrower’s designee
(without any representation or warranty by and without any recourse against
Lender whatsoever), the Lien of the Loan Documents if not theretofore released.

                2.5  Payments and Computations.

                                2.5.1 
Making of Payments.  Each
payment by Borrower shall be made in funds settled through the New York
Clearing House Interbank Payments System or other funds immediately available
to Lender by 11:00 a.m., New York City time, on the date such payment is
due, to Lender by deposit to such account as Lender may designate by written
notice to Borrower. Whenever any such payment shall be stated to be due on a
day that is not a Business Day, such payment shall be made on the first
Business Day thereafter. All such payments shall

 20

 

 

be
made irrespective of, and without any deduction, set-off or counterclaim
whatsoever and are payable without relief from valuation and appraisement laws
and with all costs and charges incurred in the collection or enforcement
thereof, including attorneys’ fees and court costs.

                                2.5.2  Computations.  Interest payable under the Loan
Documents shall be computed on the basis of the actual number of days elapsed
over a 360-day year.

                                2.5.3  Late Payment Charge.  If
any regularly scheduled payment of Principal, interest or other monthly payment
or reserve or escrow deposit due under any Loan Document is not paid by
Borrower on the date on which it is due, and, subject to the last sentence of
this Section 2.5.3, such failure continues for five (5) days, Borrower
shall pay to Lender upon demand an amount equal to the lesser of five percent
(5%) of such unpaid sum or the maximum amount permitted by applicable law (the “Late Payment Charge”), in order to defray the expense
incurred by Lender in handling and processing such delinquent payment and to
compensate Lender for the loss of the use of such delinquent payment.  Such amount shall be secured by the Loan
Documents.  With respect to the foregoing
5 day grace period, the parties agree that such 5 day grace period shall only
be applicable no more than twice during the Term, and in all other instances,
the Late Payment Charge shall be payable in accordance with this Section 2.5.3
with respect to any Principal, interest or other sum due under any Loan
Document which is not paid by Borrower on the date on which the same is due
(other than the balloon payment of Principal due on the Maturity Date or
acceleration of the Loan).

3.  CASH MANAGEMENT AND RESERVES

                3.1  Cash Management
Arrangements.  Borrower shall cause all Rents to be
transmitted directly by tenants of the Property into an Eligible Account (the “Clearing Account”) maintained by Borrower at a local
bank selected by Borrower, which shall at all times be an Eligible Institution
(the “Clearing Bank”) as more fully described in the
Clearing Account Agreement.  Without in
any way limiting the foregoing, all Rents received by Borrower or Manager shall
be deposited into the Clearing Account within two Business Days of receipt.  Funds deposited into the Clearing Account
shall be swept by the Clearing Bank on a daily basis into an Eligible Account
at the Deposit Bank controlled by Lender (the “Deposit Account”) and applied and disbursed in accordance with this Agreement.  Funds in the Deposit Account shall be
invested at Lender’s discretion only in Permitted Investments.  Lender will also establish subaccounts of the
Deposit Account which shall at all times be Eligible Accounts (and may be
ledger or book entry accounts and not actual accounts) (such subaccounts are
collectively referred to herein as “Subaccounts”).  The Deposit Account
and any Subaccount will be under the sole control and dominion of Lender, and
Borrower shall not have any right of withdrawal therefrom.  Borrower shall pay for all expenses of
opening and maintaining all of the above accounts.

                3.2  Required Repairs.

                                3.2.1  Completion of Required
Repairs.  Borrower shall perform and complete
each item of the repairs and environmental remedial work at the Property
described on Schedule 1 hereto (the “Required Repairs”)
within six (6) months of the date hereof; provided, however, that if such
Required Repairs cannot reasonably be completed within such six (6) month
period, upon Borrower’s request, such period shall be extended in Lender’s
reasonable discretion for 

 21
 

 

such
additional period of time as is reasonably necessary for Borrower in the
exercise of due diligence to complete such Required Repairs, so long as (a) Borrower
in good faith commences its efforts to perform such Required Repairs promptly
after the date hereof and thereafter diligently and expeditiously proceeds to
perform and complete the same, and (b) Borrower’s failure to have
completed such Required Repairs does not materially adversely affect the value,
operation or use of the Property, Lender’s rights under the Loan Documents or
Borrower’s ability to repay the Loan.

                                3.2.2  Guaranty in Lieu of
Required Repairs Reserve.  In lieu of a requirement hereunder for a
reserve to be established with Lender on the date hereof for the Required
Repairs, Guarantor, pursuant to the Guaranty, has (among other obligations
thereunder) guaranteed payment and performance in full of the Required Repairs
and agreed to pay to Lender, upon Lender’s demand following the occurrence and
during the continuance of an Event of Default, an amount equal to the Guaranty
Limit Amount, determined as the sum of various amounts, including an amount
equal to $300,000, being 125% of the estimated cost of the Required Repairs
(subject to reduction as provided below, the “Required Repairs Reserve Offset Amount”).  So long as no Event of Default exists, upon
Borrower’s completion of the Required Repairs in accordance with applicable
Legal Requirements and payment in full of the cost thereof, demonstrated to
Lender’s reasonable satisfaction with such evidence of payment and completion
as Lender may reasonably require (including paid invoices and a certificate of
Borrower, and, if required by Lender, an inspection of the work at Borrower’s
expense), the Required Repairs Reserve Offset Amount shall be reduced to zero,
with a corresponding dollar for dollar reduction of the Guaranty Limit Amount.  If Lender receives the Required Repairs
Reserve Offset Amount from Guarantor under the Guaranty, Lender shall transfer
the same to a Subaccount to be applied to the payment of the costs of the
Required Repairs, subject to Lender’s right to apply the same otherwise as set
forth in Section 3.10 below.

                3.3  Tax and Insurance Reserve.

3.3.1  Reserve
Deposits.  If and to the extent
required under the provisions of Section 3.3.2 below, Borrower shall,
from and after the date (and if) Borrower is required to do so under the
provisions of Section 3.3.2 below, pay to Lender on each Payment
Date the Monthly Tax and Insurance Deposit (as determined by Lender pursuant to
the provisions of Section 3.3.2 below).  Such amounts will be transferred by Lender to
a Subaccount (the “Tax and Insurance Subaccount”).  Provided that no monetary Event of Default or
material non-monetary Event of Default has occurred and is continuing, Lender
will (a) apply funds in the Tax and Insurance Subaccount to payments of
Taxes and Insurance Premiums required to be made by Borrower pursuant to Section 5.2
hereof and Section 7.1 hereof, provided that Borrower has promptly
supplied Lender with notices of all Taxes and Insurance Premiums due and paid
any deficiency between the amounts held in the Tax and Insurance Subaccount and
the amounts due with respect to such Taxes and Insurance Premiums, or (b) reimburse
Borrower for such amounts upon presentation of evidence of payment; subject,
however, to Borrower’s right to contest Taxes in accordance with Section 5.2
hereof.  In making any payment relating
to Taxes and Insurance Premiums, Lender may do so according to any bill,
statement or estimate procured from the appropriate public office (with respect
to Taxes) or insurer or agent (with respect to Insurance Premiums), without
inquiry into the accuracy of such bill, statement or estimate or into the
validity of any tax, assessment, sale, forfeiture, tax lien or title or claim
thereof.

 22
 

 

3.3.2  Guaranty
in Lieu of Tax and Insurance Deposits.  In
lieu of a requirement for monthly deposits by Borrower into the Tax and
Insurance Subaccount, Guarantor, pursuant to the Guaranty, has (among other obligations
thereunder) guaranteed payment in full of all Taxes and Insurance Premiums and
agreed to pay to Lender, upon Lender’s demand following the occurrence and
during the continuance of an Event of Default, an amount equal to the Guaranty
Limit Amount, determined as the sum of various amounts, including an amount
(initially equal to $6,230,661) equal to the sum of the estimated annual Taxes
and Insurance Premiums (as such estimate may increase from time to time, as
reasonably determined by Lender, the “Tax and
Insurance Reserve Offset Amount”).  Upon the occurrence of an Event of Default
(and without limiting any rights or remedies available to Lender in connection
therewith), Borrower shall make monthly deposits into the Tax and Insurance
Subaccount on each Payment Date in an amount equal to the sum of (i) one-twelfth
(1/12th) of the Taxes that Lender estimates will be payable during the next
twelve (12) months in order to accumulate with Lender sufficient funds to pay
all such Taxes at least thirty (30) days prior to their respective due dates
and (ii) one-twelfth (1/12th) of the Insurance Premiums that Lender
estimates will be payable for the renewal of the coverage afforded by the
Policies upon the expiration thereof in order to accumulate with Lender sufficient
funds to pay all such Insurance Premiums at least thirty (30) days prior to the
expiration of the Policies (such monthly required deposit amount, as adjusted
by Lender from time to time in the event of increases or decreases in annual
estimated Taxes and Insurance Premiums, the “Monthly Tax and Insurance Deposit”).  If Lender receives the Tax and Insurance
Reserve Offset Amount from Guarantor under the Guaranty, Lender shall transfer
the same to the Tax and Insurance Subaccount to be applied as provided in Section 3.1.1
above, subject to Lender’s right to apply the same otherwise as set forth in Section 3.10
below.

                3.4  Capital Expense Reserves.

3.4.1  Reserve
Deposits.  If and to the extent
required under the provisions of Section 3.4.2 below, Borrower shall,
from and after the date (and if) Borrower is required to do so under the
provisions of Section 3.4.2 below, pay to Lender $19,741 (the “Monthly Capital Reserve
Deposit Amount”) on each Payment Date (such deposits, the
“Monthly Capital Reserve
Deposits”).  Lender
will transfer such amounts into a Subaccount (the “Capital Reserve Subaccount”).  Additionally, upon thirty (30) days’ prior
notice to Borrower, Lender may reassess the amount of the monthly payment
required under this Section 3.4 from time to time in its reasonable
discretion (based upon its then current underwriting standards).  Provided that no Event of Default has
occurred and is continuing, Lender shall disburse funds held in the Capital
Reserve Subaccount to Borrower, within fifteen (15) days after the delivery by
Borrower to Lender of a request therefor (but not more often than once per
month), in minimum amounts of at least $5,000 provided that (i) such
disbursement is for an Approved Capital Expense; (ii) Lender shall have
(if it desires) verified (by an inspection conducted at Borrower’s expense
(with respect to any disbursement in excess of $50,000)) performance of the
work associated with such Approved Capital Expense; and (iii) the request
for disbursement is accompanied by (A) an Officer’s Certificate certifying
(1) that such funds will be used to pay or reimburse Borrower for Approved
Capital Expenses and a description thereof, (2) that all outstanding trade
payables (other than those not yet due and payable or those to be paid from the
requested disbursement or those constituting Permitted Indebtedness) have
been paid in full, (3) that the same has not been the subject of a
previous disbursement, and (4) that all previous disbursements have been
used to pay the previously identified Approved Capital Expenses, and (B) lien
waivers 

 23
 

 

or other evidence of payment satisfactory to Lender, (C) with
respect to any disbursement that exceeds $50,000, at Lender’s option, a title
search for the Property indicating that the Property is free from all Liens,
claims and other encumbrances not previously approved by Lender and (D) such
other evidence as Lender shall reasonably request that the Approved Capital
Expenses at the Property to be funded by the requested disbursement have been
completed and are paid for or will be paid upon such disbursement to Borrower.  Any such disbursement of more than $10,000 to
pay (rather than reimburse) Approved Capital Expenses may, at Lender’s option,
be made by joint check payable to Borrower and the payee on such Approved
Capital Expenses.

3.4.2  Guaranty
in Lieu of Reserve.

(A)  In lieu of a requirement for monthly deposits
by Borrower into the Capital Reserve Subaccount, Guarantor, pursuant to the
Guaranty, has (among other obligations thereunder) guaranteed payment and
performance in full of all Capital Expenses and work relating thereto and
agreed to pay to Lender, upon Lender’s demand following the occurrence and
during the continuance of an Event of Default, an amount equal to the Guaranty
Limit Amount, determined as the sum of various amounts, including an amount
equal to the Capital Reserve Offset Amount (as hereafter defined).  As used herein, “Capital
Reserve Offset Amount” shall mean, initially, an amount equal to
$236,886 (such initial $236,886 amount is herein referred to as the “Base Capital Amount”), and
thereafter on any date of determination, an amount equal to the greater of (I) the
Base Capital Amount, and (II) the following:

(1) the product of the Base Capital Amount
multiplied by a fraction, the numerator of which is the number of Calendar
Quarters which have ended (and for which the reports required under Section 6.3.3
hereof have been delivered or were required to have been delivered) as of the
date of determination (a “Calendar Quarter”
shall be the three calendar month period ending on June 30, 2006 and each
three calendar month period ending on each September 30, December 31,
March 31 and June 30 thereafter), and the denominator of which is
four (4); for example, a calculation made August 10, 2007 would be for the
5 Calendar Quarters ending June 30, 2006, September 30, 2006, December 31,
2006, March 31, 2007 and June 30, 2007, and thus $236,886 X [5/4] =
$296,107.50); minus

(2) the Aggregate Approved Capital Costs (as
hereafter defined) for such Calendar Quarters;

As used herein, the term  “Aggregate Approved Capital Costs”
shall mean amounts hereafter paid by Borrower for reasonable Approved Capital
Expenses (other than those for which a credit has been provided against the
purchase price under the purchase agreement pursuant to which the constituent
owners of Borrower acquired the indirect interests in Borrower as of the date
hereof), as demonstrated by Borrower to Lender reasonable satisfaction.

(B) Upon the occurrence of an Event of Default (and without limiting
any rights or remedies available to Lender in connection therewith), Borrower
shall on each Payment Date thereafter deposit with Lender the Monthly
Capital Reserve Deposit Amount.  If
Lender receives the Capital Reserve Offset Amount from Guarantor under the
Guaranty, Lender shall transfer the same to the 

 24
 

 

Capital Reserve
Subaccount to be applied as provided in Section 3.4.1 above,
subject to Lender’s right to apply the same otherwise as set forth in Section 3.10
below.

                3.5  Rollover Reserves.  (a) 
Borrower shall pay to Lender $10,000,000 on the date hereof.  Lender will transfer such amount into a
Subaccount (the “Rollover
Reserve Subaccount”).  In
lieu of a requirement hereunder for an additional $10,000,000 to be deposited
into the Rollover Reserve Subaccount, Guarantor, pursuant to the Guaranty, has
(among other obligations thereunder) guaranteed payment and performance in full
of all Approved Leasing Expenses with respect to Leases hereafter
executed and all work relating thereto
and agreed to pay to Lender, upon Lender’s demand following the occurrence and
during the continuance of an Event of Default, an amount equal to the Guaranty
Limit Amount, determined as the sum of various amounts, including an amount
equal to $10,000,000 (subject to reduction as provided below, the “Rollover Reserve Offset Amount”).  Borrower shall also pay to Lender for
transfer into the Rollover Reserve Subaccount all Lease Termination Payments
received by Borrower.  Provided that no
Event of Default has occurred and is continuing, Lender shall disburse funds
held in the Rollover Reserve Subaccount to Borrower, within ten (10) days
after the delivery by Borrower to Lender of a request therefor (but not more
often than once per month), in minimum amounts of at least $5,000, provided (i) such
disbursement is for Approved Leasing Expenses with respect to Leases hereafter
executed (it being acknowledged that leasing costs with respect to Leases
existing as of the date hereof shall not qualify for disbursements from the
Rollover Reserve Subaccount); (ii) Lender shall have (if it desires)
verified (by an inspection conducted at Borrower’s expense) performance of any
construction work associated with such Approved Leasing Expenses; (iii) the
request for disbursement is accompanied by (A) an Officer’s Certificate
certifying (1) that such funds will be used only to pay (or reimburse
Borrower for) Approved Leasing Expenses and a description thereof, (2) that
all outstanding trade payables (other than those not yet due and payable or
those to be paid from the requested disbursement or those constituting
Permitted Indebtedness) have been paid in full, (3) that the same has not
been the subject of a previous disbursement, and (4) that all previous
disbursements have been used only to pay (or reimburse Borrower for) the
previously identified Approved Leasing Expenses, and with respect to the first
$10,000,000 in disbursements from the Rollover Reserve Subaccount (each
disbursement thereof in an amount equal to 50% of the related Approved Leasing
Expenses), the remaining 50% portion of such Approved Leasing Expenses not paid
from such previous disbursements has also been paid, and (B) reasonably
detailed supporting documentation as to the amount, necessity and purpose
therefor; and (iv) the first $10,000,000 in aggregate disbursements from
the Rollover Reserve Subaccount for (x) Approved Leasing Expenses pursuant
to this Section 3.5(a) or (y) on account of Rollover Rent
Abatements pursuant to Section 3.5(b) below shall be made in
an amount equal to 50% of such Approved Leasing Expenses for which the
provisions of the foregoing clauses (i)-(iii) are satisfied, and upon each
such 50% disbursement and payment of 100% of the related Approved Leasing
Expenses or expiration of the related Rollover Rent Abatement Periods to which
such disbursement relates (as evidenced to Lender’s reasonable satisfaction),
the Rollover Reserve Offset Amount shall reduce dollar for dollar in the amount
of such disbursements from the Rollover Reserve Subaccount until the Rollover
Reserve Offset Amount reduces to zero, with
a corresponding dollar for dollar reduction of the Guaranty Limit Amount.  For example, if disbursements from the
Rollover Reserve Subaccount on account of Approved Leasing Expenses are
$5,000,000 (on account of $10,000,000 in Approved Leasing Expenses qualifying
under clause (i)-(iii) of the 

 25
 

 

foregoing provision), and disbursements from the
Rollover Reserve Subaccount on account of Rollover Rent Abatements are $500,000
(on account of Rollover Rent Abatement Periods expiring with respect to
$1,000,000 in Rollover Rent Abatements), the Rollover Reserve Offset Amount
shall, upon payment of 100% of the related Approved Leasing Expenses or
expiration of the related Rollover Rent Abatement Periods to which such
disbursements relate (as evidenced to Lender’s reasonable satisfaction), decrease by $5,500,000, with a resulting
Rollover Reserve Offset Amount of $4,500,000. 
Any such disbursement of more than $10,000 to pay (rather than
reimburse) Approved Leasing Expenses may, at Lender’s option, be made by joint
check payable to Borrower and the payee of such Approved Leasing Expenses.  If Lender receives the Rollover Reserve
Offset Amount from Guarantor under the Guaranty, Lender shall transfer the same
to the Rollover Reserve Subaccount to be applied as provided in this Section 3.5,
subject to Lender’s right to apply the same otherwise as set forth in Section 3.10
below.

(b)          Provided
no Event of Default exists, funds shall be disbursed from the Rollover Reserve
Subaccount to the Deposit Account (for application in the same manner as rents
transferred from the Clearing Account to the Deposit Account) as Rollover Rent
Abatement Periods expire with respect to any applicable Leases, within ten (10) days
after the delivery by Borrower to Lender of a request therefor (but not more
often than once per month), in minimum amounts of at least $5,000, provided: (i) the
request for disbursement is accompanied by (A) an Officer’s Certificate
certifying (1) that such funds are for a Rollover Rent Abatement for a
Rollover Rent Abatement Period that has expired pursuant to the applicable
Lease to which it relates, and (2) that the same has not been the subject
of a previous disbursement, and (B) reasonably detailed supporting
documentation as to the amount thereof; (ii) the amount disbursed in any
instance shall (subject to clause (iii) below) be an amount equal to 50%
of the applicable Rollover Rent Abatement with respect to the applicable Lease
for the Rollover Rent Abatement Period that has expired under such Lease; and (iii) the
total amount that shall be disbursed from the Rollover Reserve Subaccount
pursuant to this Section 3.5(b) shall in no event exceed an
aggregate total of $1,500,000 (on account of Rollover Rent Abatement Periods
expiring with respect to $3,000,000 in Rollover Rent Abatements).  For example, if a Lease has a Rollover Rent
Abatement of $50,000 per month for 20 months after the date hereof, the amount
to be disbursed from the Rollover Reserve Subaccount to the Deposit Account on
account of such Lease would be $25,000 per month for 20 months, resulting in a
corresponding $25,000 per month dollar for dollar decrease in the Rollover
Reserve Offset Amount.

                3.6  Operating Expense
Subaccount.  On each Payment Date during the
continuance of a Cash Trap Period, a portion of the Rents that have been
deposited into the Deposit Account during the immediately preceding Interest
Period in an amount equal to the monthly amount set forth in the Approved
Operating Budget for the following month (plus any other amounts requested by
Borrower for such month for payment of items constituting Approved Operating
Expenses, which are not included in the Approved Operating Budget), shall be
transferred into a Subaccount for the purpose of payment of Approved Operating
Expenses for the month in which such Payment Date occurs (the “Operating Expense Subaccount”). 
Provided no Event of Default has occurred and is continuing, Lender
shall disburse funds held in the Operating Expense Subaccount to Borrower (or
at Borrower’s direction, to the Manager), within five (5) Business Days
after delivery by Borrower to Lender of a request therefor (but not more often
than weekly), in minimum amounts of at least $1,000, provided (i) such
disbursement is for an Approved Operating Expense; and (ii) such
disbursement is accompanied by (A) an Officer’s 

 26
 

 

Certificate
certifying (1) that such funds will be used to pay Approved Operating
Expenses and a description thereof, (2) that all outstanding trade
payables (other than those not yet due and payable or those to be paid from the
requested disbursement or those constituting Permitted Indebtedness) have been
paid in full, (3) that the same has not been the subject of a previous
disbursement, and (4) that all previous disbursements have been or will be
used to pay the previously identified Approved Operating Expenses, and (B) reasonably
detailed documentation satisfactory to Lender as to the amount, necessity and
purpose therefor.  Notwithstanding
anything to the contrary contained herein, to the extent that (i) Borrower
has requested a disbursement of funds from the Operating Expense Subaccount in
accordance with the foregoing provisions and (ii) at the time of such
request, the funds that have been collected in the Operating Expense Subaccount
are insufficient to cover the same, then Lender shall nonetheless disburse
additional funds that are thereafter deposited into the Operating Expense
Subaccount to Borrower (without any requirement for Borrower to submit an
additional request therefor); provided that sufficient funds have been
collected in the Deposit Account to make the payments required under clauses (i) -
(v) of Section 3.11(a) on the next succeeding Payment Date.

                3.7  Casualty/Condemnation
Subaccount.  Borrower shall pay, or cause to be
paid, to Lender all Proceeds or Awards due to any Casualty or Condemnation to
be transferred to a Subaccount (the “Casualty/Condemnation
Subaccount”) in
accordance with the provisions of Article 7 hereof.  All amounts in the Casualty/Condemnation
Subaccount shall disbursed in accordance with the provisions of Article 7
hereof.

                3.8  Security Deposits.  Borrower
shall keep all security deposits under Leases in accordance with applicable
Legal Requirements.  After the occurrence
and during the continuance of an Event of Default, Borrower shall, upon Lender’s
request, if permitted by applicable Legal Requirements, turn over to Lender the
security deposits (and any interest theretofore earned thereon) under Leases,
to be held by Lender in a Subaccount (the “Security Deposit Subaccount”) subject to the
terms of the Leases.  Security deposits
held in the Security Deposit Subaccount will be released by Lender upon notice
from Borrower together with such evidence as Lender may reasonably request that
such security deposit is required to be returned to a tenant pursuant to the
terms of a Lease or may be applied as Rent pursuant to the rights of Borrower
under the applicable Lease.  Any letter
of credit or other instrument that Borrower receives in lieu of a cash security
deposit under any Lease shall (i) be maintained in full force and effect
in the full amount unless replaced by a cash deposit as hereinabove described
and (ii) if permitted pursuant to any Legal Requirements, name Lender as
payee or mortgagee thereunder (or at Lender’s option, be fully assignable to
Lender).

                3.9  Cash Collateral Subaccount.  If
a Cash Trap Period shall have commenced then on the immediately succeeding
Payment Date and on each Payment Date thereafter during the continuance of such
Cash Trap Period, all Available Cash shall be paid to Lender, which amounts
shall be transferred by Lender into a Subaccount (the “Cash Collateral Subaccount”)
as cash collateral for the Debt.  Any
funds in the Cash Collateral Subaccount and not previously disbursed or applied
shall be disbursed to Borrower upon the termination of such Cash Trap Period.  Lender shall have the right, but not the
obligation, at any time during the continuance of a monetary Event of Default
or material non-monetary Event of Default, in its sole and absolute discretion
to apply all sums then on deposit in the Cash Collateral Subaccount to the
Debt, in such order and in such manner as Lender shall elect in its sole and
absolute discretion, including 

 27
 

 

(if
the Loan has been accelerated) to make a prepayment of Principal (together with
the applicable Yield Maintenance Premium applicable thereto).  Notwithstanding anything to the contrary
contained above, Lender shall have the right, but not the obligation, in its
sole and absolute discretion from time to time, to disburse funds deposited
into the Cash Collateral Subaccount to Borrower for application to Approved
Leasing Expenses or capital expenditures approved by Lender, subject to such
terms and conditions as Lender may require.

                3.10  Grant of Security
Interest; Application of Funds.  As security for payment
of the Debt and the performance by Borrower of all other terms, conditions and
provisions of the Loan Documents, Borrower hereby pledges and assigns to
Lender, and grants to Lender a security interest in, all Borrower’s right,
title and interest in and to all Rents and in and to all payments to or monies
held in the Clearing Account, the Deposit Account, all Subaccounts created
pursuant to this Agreement (collectively, the “Cash Management Accounts”).  Borrower hereby
grants to Lender a continuing security interest in, and agrees to hold in trust
for the benefit of Lender, all Rents in its possession prior to the (i) payment
of such Rents to Lender or (ii) deposit of such Rents into the Deposit
Account.  Borrower shall not, without
obtaining the prior written consent of Lender, further pledge, assign or grant
any security interest in any Cash Management Account, or permit any Lien to
attach thereto, or any levy to be made thereon, or any UCC Financing
Statements, except those naming Lender as the secured party, to be filed with
respect thereto.  This Agreement is,
among other things, intended by the parties to be a security agreement for
purposes of the UCC.  Upon the occurrence
and during the continuance of an Event of Default, Lender may apply any sums in
any Cash Management Account in any order and in any manner as Lender shall
elect in Lender’s discretion without seeking the appointment of a receiver and
without adversely affecting the rights of Lender to foreclose the Lien of the
Mortgage or exercise its other rights under the Loan Documents, provided that
Lender will not apply any such sums to prepayment of Principal unless it has
accelerated the Loan.  Cash Management
Accounts shall not constitute trust funds and may be commingled with other
monies held by Lender.  All interest
which accrues on the funds in any Cash Management Account (other than the Tax
and Insurance Subaccount) shall accrue for the benefit of Borrower and shall be
taxable to Borrower and shall be added to and disbursed in the same manner and
under the same conditions as the principal sum on which said interest accrued.  Upon repayment in full of the Debt, all
remaining funds in the Subaccounts, if any, shall be promptly disbursed to
Borrower.

                3.11  Property Cash Flow Allocation.

(a)  All
Rents deposited into the Deposit Account during the immediately preceding
Interest Period shall be applied on each Payment Date as follows in the
following order of priority:

(i)  First, to make payments into the Tax and
Insurance Subaccount if and as required (and only if and as required) under Section 3.3
hereof;

(ii)  Second, to pay the monthly portion of the
fees charged by the Deposit Bank in accordance with the Deposit Account
Agreement;

 28
 

 

(iii)  Third, to Lender to pay the Monthly Debt
Service Payment Amount or the Monthly Interest Payment Amount, as the case may
be, due on such Payment Date (plus, if applicable, interest at the Default Rate
and all other amounts, other than those described under other clauses of this Section 3.11(a),
then due to Lender under the Loan Documents);

(iv)  Fourth, to make payments into the Capital
Reserve Subaccount if and as required (and only if and as required) under Section 3.4
hereof;

(v)  Fifth, during the continuance of a Cash Trap
Period, to make payments for Approved Operating Expenses as required under Section 3.6
hereof;

(vi)  Sixth, during the continuance of a Cash Trap
Period, to make payments in an amount equal to all remaining Available Cash on
such Payment Date into the Cash Collateral Subaccount in accordance with Section 3.9
hereof; and

(vii)  Lastly, provided that no Cash Trap Period is
then continuing, payments to Borrower of any remaining amounts.

Notwithstanding the
foregoing, except during the continuance of a Cash Trap Period, provided that
in any given Interest Period, all amounts referred to in the foregoing clauses (i) -
(iv) have been paid, then at Borrower’s request, the payments to Borrower
under the foregoing clause (vii) shall be made on a weekly basis.

(b)  The
failure of Borrower to make all of the payments required under clauses (i) through
(vi) of Section 3.11(a) above in full on each Payment
Date shall constitute an Event of Default under this Agreement; provided,
however, if adequate funds are available in the Deposit Account for such
payments, the failure by the Deposit Bank to allocate such funds into the
appropriate Subaccounts shall not constitute an Event of Default.

(c)  Notwithstanding
anything to the contrary contained in this Section 3.11, after the
occurrence of an Event of Default, Lender may apply all Rents deposited into
the Deposit Account and other proceeds of repayment in such order and in such manner
as Lender shall elect.

3.12  Intentionally
Omitted.

3.13  TI/LC
Holdback Reserve. 
Attached hereto as Schedule 8 is a schedule of certain tenant
improvement costs and expenses required to be
incurred by Borrower in completing or reimbursing the tenants specified in Schedule
8 (the “TI/LC
Holdback Tenants”) for tenant improvements and/or paying leasing
commissions specified in Schedule 8 as the same are incurred or become
due under the related Leases specified on Schedule 8 (the “TI/LC Holdback Leases”),
in each case allocated among such leases as set forth on Schedule 8, in
a total amount aggregating to $5,947,407.07. 
On the date hereof, Borrower shall pay to Lender $5,947,407.07. 
Lender will transfer such amount into a Subaccount (the “TI/LC  Holdback Reserve Subaccount”). 
Provided that no Event of Default has occurred and is continuing, Lender
shall disburse funds held in the TI/LC Holdback Reserve Subaccount to Borrower,
within 15 days after the delivery by Borrower to Lender of a request therefor
(but not more often than once per month), in minimum amounts of at least
$5,000, provided (i) such request includes an 

 29
 

 

estoppel from the related TI/LC Holdback Tenant certifying that all
construction to be performed and all improvements to be installed under the
related TI/LC Holdback Lease have been completed and fully accepted by the
related TI/LC Holdback Tenant, and that there are no defaults under such lease
(nor does there exist any event or condition, which with the passage of time or
the giving of notice, or both, could result in such a default); (ii) Lender
shall have (if it desires) verified (by an inspection conducted at
Borrowers’ expense) performance of any construction work associated with
such tenant improvements; (iii) the request for disbursement is
accompanied by (A) an Officer’s Certificate certifying (1) that such
funds will be used only to pay (or reimburse Borrower for) tenant improvements
and/or leasing commissions under the related TI/LC Holdback Lease, (2) that
all outstanding trade payables (other than those not yet due and payable or
those to be paid from the requested disbursement or those constituting
Permitted Indebtedness) have been paid in full, and (3) that the same
has not been the subject of a previous disbursement, and (B) reasonably
detailed supporting documentation as to the amount, necessity and purpose
therefor; and (iv) the total amount of disbursements from the TI/LC
Holdback Reserve Subaccount on account of a given TI/LC Holdback Lease shall
not aggregate in excess of the amount for such TI/LC Holdback Lease indicated
on Schedule 8.  Any such
disbursement of more than $10,000 to pay (rather than reimburse) tenant
improvements under this Section may, at Lender’s option, be made by joint
check payable to Borrowers and the payee of such tenant improvements or leasing
commissions, as applicable.

3.14  Initial Deposits into Reserves.  The initial deposits required to be made on the date hereof into the
reserve accounts established under this Article 3 are funded from
the proceeds of the Loan disbursed at closing.

3.15  Letters of Credit in
Lieu of Reserves.

(A)  Notwithstanding the foregoing provisions
of Sections 3.5 and 3.13 pertaining to the requirement for the
undisbursed balance of cash reserves provided hereunder to be held in the TI/LC
Holdback Reserve Subaccount and/or the Rollover Reserve Subaccount
(collectively, the “Reserve Subaccounts”),
provided no Event of Default has occurred and is continuing, Borrower
shall have the right to deliver to Lender, in substitution of any then undisbursed balance in
such Reserve Subaccounts, an Acceptable Letter of Credit in favor
of Lender in an aggregate principal amount equal to all or a designated portion
(of not less than $2,000,000, with the Reserve Subaccount(s) to which such
portion pertains to be designated by the Borrower at the time such letter of
credit is provided) of the undisbursed balance of such Reserve Subaccounts
providing that the Lender or its successors and assigns may draw the full
amount thereof at any time upon demand (and subject to no other drawing
requirements or conditions) and otherwise in form and content satisfactory to
Lender (each any every such letter of credit collectively the “Reserve Letter of Credit”; the term “Reserve
Letter of Credit”, as used herein, shall mean each
initial Reserve Letter of Credit and any replacement or renewal letters of
credit, and collectively all Reserve Letters of Credit).  Upon provision of such Reserve Letter of
Credit, the funds held in the Reserve Subaccount(s) for which such Reserve
Letter of Credit is provided as a substitute shall be disbursed to Borrower in
the amount of such Reserve Letter of Credit. 
Subject to the provisions of this Section, Lender shall retain custody
of each Reserve Letter of Credit until such time as the Loan is repaid in full.

 30
 

 

(B)  If
Borrower shall have provided a Reserve Letter of Credit in lieu of a cash
reserve required hereunder, then provided no Event of Default exists Borrower
may obtain a return of such Reserve Letter of Credit by depositing with Lender
substitute cash reserves in the amount of such Reserve Letter of Credit, which
cash reserve amounts shall be deposited and held in the applicable Subaccount(s) for
the reserve(s) for which such Reserve Letter of Credit was provided, and
applied in accordance with this Agreement and the other Loan Documents
pertaining to such reserve(s).

(C)  if Borrower shall have provided any Reserve Letter of Credit
in accordance with this Section 3.15 and provided that no Event of
Default has occurred and is continuing, the amount of the Reserve Letter of
Credit shall be reduced from time to time, upon Borrower’s written request to
Lender, by an amount equal to not more than the amount that Borrower would have
been entitled to have disbursed to it from the applicable Reserve Subaccount(s) if
cash reserves had continued to be held therein rather than such Reserve Letter
of Credit substituted therefor, and provided further, that: (1) such
requests may be made not more frequently than once per month; (2) without
limiting any other requirement hereunder, the amount of any reduction shall be
in increments of $100,000 or any whole multiple of $50,000 in excess thereof; (3) all
requirements of Section 3.5 and/or 3.13, as applicable, shall have been satisfied as if cash reserves were
then held in the applicable Reserve Subaccount(s) rather than such Reserve
Letter of Credit substituted therefor and Borrower were requesting a
disbursement of funds from the applicable Reserve Subaccount(s) in an
amount equal to the requested reduction in the amount of such Reserve Letter of
Credit.  If the amount of the Reserve
Letter of Credit is reduced, Lender
will cooperate with Borrower in amending or replacing the Reserve Letter of
Credit to reflect such reduced amount of the
Reserve Letter of Credit.  Borrower
shall pay any fees or other amounts charged by any issuing bank with respect to
any such request and shall promptly pay to Lender all costs and expenses of
Lender incurred in connection with any such request, including Lender’s
reasonable attorneys’ fees.

(D)  Lender shall have the right to draw upon each
Reserve Letter of Credit in the full amount thereof upon the occurrence of any
of the following: (1) any Event of Default; or (2) Lender receives a
notice stating that the Reserve Letter of Credit will not be renewed (as
provided for in such Reserve Letter of Credit) and a replacement for such
Reserve Letter of Credit conforming with the requirements of an Acceptable
Letter of Credit shall not have been provided at least thirty (30) days prior
to the date on which the applicable Reserve Letter of Credit is scheduled to
expire or such Reserve Letter of Credit is to expire within thirty (30) days
and an extension or renewal of such Reserve Letter of Credit conforming with
the requirements of an Acceptable Letter of Credit shall not have been provided.  The proceeds of any draw under the Reserve
Letter of Credit pursuant to this Section 3.15(D)(1) above
shall be allocated
to the Debt, in such order and in such manner as Lender shall elect in its sole
and absolute discretion, including (if the Loan has been accelerated) to make a
prepayment of Principal (together with the applicable Yield Maintenance Premium
applicable thereto).  The
proceeds of any draw under the Reserve Letter of Credit pursuant to this Section 3.15(D)(2) above
shall be deposited by Lender into the applicable Reserve Subaccount(s) and
shall be governed by the provisions of Section 3.5 and/or 3.13,
as applicable, as well as the other terms and conditions of this Agreement and
the other Loan Documents.  Borrower shall
pay any fees or other amounts charged by any issuing bank with respect to any
such draw and shall promptly pay to Lender all costs and expenses of 

 31
 

 

Lender incurred in connection with any such draw,
including Lender’s reasonable attorneys’ fees.

3.16  DSCR Earnout Reserve.

Borrower shall pay to Lender $10,000,000 on the date
hereof.  Lender will transfer such amount
into a Subaccount (the “DSCR Earnout Reserve
Subaccount”).  Provided
that no Event of Default has occurred and is continuing, Lender shall disburse
all funds held in the DSCR Earnout Reserve Subaccount to Borrower, within ten (10) days
after the delivery by Borrower to Lender of a written request therefor,
provided that Lender shall have received evidence reasonably acceptable to
Lender that sufficient new Leases shall have been entered into with tenants
having taken occupancy and commenced paying rent under their respective Leases
with all associated tenant improvement costs and allowances and leasing
commissions paid, to result in a Debt Service Coverage Ratio equal to 1.20:1.00
or greater; provided, however, that in calculating the Debt Service Coverage
Ratio for purposes of this Section only, the calculation as otherwise
reflected in the definition of Debt Service Coverage Ratio shall be adjusted by
(a) taking into account in the measurement of Net Operating Income (i) base
rents and recoveries on such additional Leases and other Leases then in place,
on an annualized basis, rather than rental revenues for the past twelve month
period, (ii) an adjustment for a leasing costs and capital items in an
aggregate amount equal to one dollar ($1.00) per square foot, (iii) a
market vacancy adjustment not to exceed ten percent (10%), and (iv) an adjustment
to expenses to reflect any increases in annualized expenses resulting from such
new Leases, and (b) using an assumed annual Debt
Service for the applicable period of calculation equal to $12,324,020.

4.  REPRESENTATIONS AND WARRANTIES

Borrower
represents and warrants to Lender as of the date hereof that, except to the
extent (if any) disclosed on Schedule 2 hereto with reference to a
specific Section of this Article 4:

                4.1  Organization; Special
Purpose.  Borrower has been duly organized and
is validly existing and in good standing under the laws of the state of its
formation, with requisite power and authority, and all rights, licenses,
permits and authorizations, governmental or otherwise, necessary to own its
properties and to transact the business in which it is now engaged.  Borrower is duly qualified to do business and
is in good standing in each jurisdiction where it is required to be so
qualified in connection with its properties, business and operations.  Borrower is a Special Purpose Bankruptcy
Remote Entity.

                4.2  Proceedings;
Enforceability.  Borrower has taken all necessary
action to authorize the execution, delivery and performance of the Loan
Documents.  The Loan Documents to which
Borrower is a party have been duly executed and delivered by Borrower and
constitute legal, valid and binding obligations of Borrower enforceable against
Borrower in accordance with their respective terms, subject to applicable
bankruptcy, insolvency and similar laws affecting rights of creditors generally,
and general principles of equity.  The
Loan Documents to which Borrower’s Guarantor and/or Affiliates are a party have
been duly executed and delivered by such Guarantor and/or Affiliates that are
parties thereto, and constitute legal, valid and binding obligations of such
Guarantor and/or Affiliates that are parties thereto, enforceable against such 

 32
 

 

Guarantor
and/or Affiliates that are parties thereto in accordance with their respective
terms, subject to applicable bankruptcy, insolvency and similar laws affecting
rights of creditors generally, and general principles of equity.  The Loan Documents are not subject to, and
Borrower has not asserted, any right of rescission, set-off, counterclaim or
defense, including the defense of usury. 
No exercise of any of the terms of the Loan Documents, or any right
thereunder, will render any Loan Document unenforceable.

                4.3  No Conflicts.  The
execution, delivery and performance of the Loan Documents by Borrower and the
transactions contemplated hereby will not conflict with or result in a breach
of any of the terms or provisions of, or constitute a default under, or result
in the creation or imposition of any Lien (other than pursuant to the Loan
Documents) upon any of the property of Borrower pursuant to the terms of, any
agreement or instrument to which Borrower is a party or by which its property
is subject, nor will such action result in any violation of the provisions of
any statute or any order, rule or regulation of any Governmental Authority
having jurisdiction over Borrower or the Property.  Borrower’s rights under the Licenses and the
Management Agreement will not be adversely affected by the execution and
delivery of the Loan Documents, Borrower’s performance thereunder, or the
recordation of the Mortgage.  Any
consent, approval, authorization, order, registration or qualification of or
with any Governmental Authority required for the execution, delivery and
performance by Borrower of the Loan Documents has been obtained and is in full
force and effect.

                4.4  Litigation.  There
are no actions, suits or other proceedings at law or in equity by or before any
Governmental Authority now pending or threatened against or affecting Borrower,
the Manager or the Property, which, if adversely determined, might materially
adversely affect the condition (financial or otherwise) or business of
Borrower, Manager or the condition or ownership of the Property.

                4.5  Agreements.  Borrower
is not a party to any agreement or instrument or subject to any restriction
which might adversely affect Borrower or the Property, or Borrower’s business,
properties, operations or condition, financial or otherwise.  Borrower is not in default in any material
respect in the performance, observance or fulfillment of any of the
obligations, covenants or conditions contained in any Permitted Encumbrance or
any other agreement or instrument to which Borrower is a party or by which
Borrower or the Property is bound.

                4.6  Title.  Borrower has good, marketable and
indefeasible title in fee to the real property and good title to the balance of
the Property, free and clear of all Liens except the Permitted Encumbrances.  All transfer taxes, deed stamps, intangible
taxes or other amounts in the nature of transfer taxes required to be paid by
any Person under applicable Legal Requirements in connection with the transfer
of the Property to Borrower have been paid. 
The Mortgage when properly recorded in the appropriate records, together
with any UCC financing statements required to be filed in connection therewith
and the other Loan Documents, will create (i) a valid, perfected first
priority lien on Borrower’s interest in that portion of the Property, the
Leases (to the extent not subject to the Uniform Commercial Code) and the Rents
constituting interests in real estate or real property interests (including
fixtures) and (ii) to the extent that a security interest therein may be
created under the Uniform Commercial Code, a valid security interest in that
portion of the Property, the Leases  (to
the extent subject to the Uniform Commercial Code) and Rents and other
collateral for the Loan constituting personal property, which security interest

 33
 

 

constitutes
a perfected first priority security interest (a) to the extent that a
security interest therein may be perfected by the filing of a UCC financing
statement and (b) with respect to the Cash Management Accounts, by virtue
of Lender’s control of such Cash Management Accounts, all in accordance with
the terms of such Loan Documents, in each case subject only to any applicable
Permitted Encumbrances.  All mortgage,
recording, stamp, intangible or other similar taxes required to be paid by any
Person under applicable Legal Requirements in connection with the execution,
delivery, recordation, filing, registration, perfection or enforcement of any
of the Loan Documents have been (or will, contemporaneously with such
recordation or filing, be) paid by Borrower. 
The Permitted Encumbrances do not materially adversely affect the value,
operation or use of the Property, or Borrower’s ability to repay the Loan.  No Condemnation or other proceeding has been
commenced or, to Borrower’s best knowledge, is contemplated with respect to all
or part of the Property or for the relocation of roadways providing access to
the Property.  There are no claims for
payment for work, labor or materials affecting the Property which are or may
become a Lien prior to, or of equal priority with, the Liens created by the
Loan Documents.  There are no outstanding
options to purchase or rights of first refusal affecting all or any portion of
the Property.  The survey for the
Property delivered to Lender does not fail to reflect any material matter
affecting the Property or the title thereto. 
Except as shown on the survey, all of the Improvements included in
determining the appraised value of the Property lie wholly within the
boundaries and building restriction lines of the Property, and no improvement
on an adjoining property encroaches upon the Property, and no easement or other
encumbrance upon the Property encroaches upon any of the Improvements, except
those insured against by the Title Insurance Policy.  Each parcel comprising the Property is a
separate tax lot and is not a portion of any other tax lot that is not a part
of the Property.  To the best of Borrower’s
knowledge, there are no pending or proposed special or other assessments for
public improvements or otherwise affecting the Property, or any contemplated
improvements to the Property that may result in such special or other assessments.

                4.7  No Bankruptcy Filing.  Borrower is not contemplating either the
filing of a petition by it under any state or federal bankruptcy or insolvency
law or the liquidation of all or a major portion of its property (a “Bankruptcy Proceeding”), and
Borrower has no knowledge of any Person contemplating the filing of any such
petition against Borrower.  In addition,
neither Borrower nor any principal or Affiliate of Borrower has been a party
to, or the subject of a Bankruptcy Proceeding for the past ten (10) years.

                4.8  Full and Accurate
Disclosure.  No statement
of fact made by Borrower in any of the Loan Documents contains any untrue
statement of a material fact or omits to state any material fact necessary to
make statements contained therein not misleading.  There is no material fact presently known to
Borrower that has not been disclosed to Lender which adversely affects, or, as
far as Borrower can foresee, might adversely affect, the Property or the
business, operations or condition (financial or otherwise) of Borrower.  All financial data, including the statements
of cash flow and income and operating expense, that have been delivered to
Lender in respect of Borrower and, to Borrower’s knowledge, the Property (i) are
true, complete and correct in all material respects, (ii) accurately
represent the financial condition of 
Borrower and the Property as of the date of such reports, and (iii) to
the extent prepared by an independent certified public accounting firm, have
been prepared in accordance with GAAP consistently applied throughout the
periods covered, except as disclosed therein. 
Borrower does not have any contingent liabilities, liabilities for
taxes, unusual forward or long-term commitments, unrealized or 

 34
 

 

anticipated
losses from any unfavorable commitments or any liabilities or obligations not
expressly permitted by this Agreement.  Since
the date of such financial statements, there has been no materially adverse
change in the financial condition, operations or business of Borrower or the
Property from that set forth in said financial statements.

                4.9  Tax Filings.  To the extent
required, Borrower has filed (or has obtained effective extensions for filing)
all federal, state and local tax returns required to be filed and have paid or
made adequate provision for the payment of all federal, state and local taxes,
charges and assessments payable by Borrower. 
Borrower believes that its tax returns (if any) properly reflect the
income and taxes of Borrower for the periods covered thereby, subject only to
reasonable adjustments required by the Internal Revenue Service or other
applicable tax authority upon audit.

                4.10  ERISA; No Plan Assets.  As
of the date hereof and throughout the Term (i) Borrower is not and will
not be an “employee benefit plan,” as defined in Section 3(3) of
ERISA, subject to Title I of ERISA, (ii) none of the assets of Borrower
constitutes or will constitute “plan assets” of one or more such plans within
the meaning of 29 C.F.R.  Section 2510.3-101,
(iii) Borrower is not and will not be a “governmental plan” within the
meaning of Section 3(32) of ERISA, and (iv) transactions by or with
Borrower are not and will not be subject to state statutes regulating
investment of, and fiduciary obligations with respect to, governmental plans.  As of the date hereof, neither Borrower, nor
any member of a “controlled group of corporations” (within the meaning of Section 414
of the Code) maintains, sponsors or contributes to a “defined benefit plan”
(within the meaning of Section 3(35) of ERISA) or a “multiemployer pension
plan” (within the meaning of Section 3(37)(A) of ERISA).

                4.11  Compliance.  Borrower and, to Borrower’s best knowledge,
the Property and the use thereof comply in all material respects with all
applicable Legal Requirements (including with respect to parking and applicable
zoning and land use laws, regulations and ordinances).  Borrower is not in default or violation of
any order, writ, injunction, decree or demand of any Governmental Authority,
the violation of which might materially adversely affect the condition
(financial or otherwise) or business of Borrower.  The Property is used exclusively as an office
building property and other appurtenant and related uses.  In the event that all or any part of the
Improvements are destroyed or damaged, said Improvements can be legally
reconstructed to their condition prior to such damage or destruction, and
thereafter exist for the same use without violating any zoning or other
ordinances applicable thereto and without the necessity of obtaining any
variances or special permits.  No legal
proceedings are pending or, to the knowledge of Borrower, threatened with
respect to the zoning of the Property.  Neither
the zoning nor any other right to construct, use or operate the Property is in
any way dependent upon or related to any property other than the Property.  All certifications, permits, licenses and
approvals, including certificates of completion and occupancy permits required
for the legal use, occupancy and operation of the Property (collectively, the “Licenses”), have been obtained and are in full
force and effect.  The use being made of
the Property is in conformity with the certificate of occupancy issued for the
Property and all other restrictions, covenants and conditions affecting the
Property.

                4.12  Contracts.  There are no service, maintenance or repair
contracts affecting the Property that are not terminable on one (1) month’s
notice or less without cause and without penalty or premium.  All service, maintenance or repair contracts
affecting the Property have 

 35
 

 

been
entered into at arms-length in the ordinary course of Borrower’s business (or
that of its predecessor in interest) and provide for the payment of fees in
amounts and upon terms comparable to existing market rates.

                4.13  Federal Reserve
Regulations; Investment Company Act.  No part of the proceeds of the Loan will be
used for the purpose of purchasing or acquiring any “margin stock” within the
meaning of Regulation U of the Board of Governors of the Federal Reserve System
or for any other purpose that would be inconsistent with such Regulation U or
any other regulation of such Board of Governors, or for any purpose prohibited
by Legal Requirements or any Loan Document. 
Borrower is not (i) an “investment company” or a company “controlled”
by an “investment company,” within the meaning of the Investment Company Act of
1940, as amended; (ii) a “holding company” or a “subsidiary company” of a “holding
company” or an “affiliate” of either a “holding company” or a “subsidiary
company” within the meaning of the Public Utility Holding Company Act of 1935,
as amended; or (iii) subject to any other federal or state law or
regulation which purports to restrict or regulate its ability to borrow money.

                4.14  Easements; Utilities and
Public Access.  All easements, cross easements, licenses, air
rights and rights-of-way or other similar property interests (collectively, “Easements”), if any,
necessary for the full utilization of the Improvements for their intended
purposes have been obtained, are described in the Title Insurance Policy and
are in full force and effect without default thereunder.  The Property has rights of access to
public ways and is served by water, sewer, sanitary sewer and storm drain
facilities adequate to service it for its intended uses.  All public utilities necessary or convenient
to the full use and enjoyment of the Property are located in the public
right-of-way abutting the Property, and all such utilities are connected so as
to serve the Property without passing over other property absent a valid
easement.  All roads necessary for the
use of the Property for its current purpose have been completed and dedicated
to public use and accepted by all Governmental Authorities.

                4.15  Physical Condition.  Other than the Required Repairs, to Borrower’s
knowledge, the Property, including all Improvements, parking facilities,
systems, Equipment and landscaping, are in good condition, order and repair in
all material respects; to Borrower’s knowledge, there exists no structural or
other material defect or damages to the Property, whether latent or otherwise.  Borrower has not received notice from any
insurance company or bonding company of any defect or inadequacy in the
Property, or any part thereof, which would adversely affect its insurability or
cause the imposition of extraordinary premiums or charges thereon or any
termination of any policy of insurance or bond. 
No portion of the Property is located in an area as identified by the
Federal Emergency Management Agency as an area having special flood hazards.  The Improvements have suffered no material
casualty or damage which has not been fully repaired and the cost thereof fully
paid.

                4.16  Leases.  The rent roll attached hereto as Schedule
3 (the “Rent Roll”)
is true, complete and correct and the Property is not subject to any Leases
other than the Leases described in the Rent Roll.  Except as set forth on the Rent Roll or
tenant estoppel certificates delivered to Lender prior to the date hereof: (i) each
Lease is in full force and effect; (ii) the tenants under the Leases have
accepted possession of and are in occupancy of all of their respective demised
premises, have commenced the payment of rent under the Leases, and there are no
offsets, claims or defenses to the enforcement thereof; (iii) all rents
due and payable under 

 36
 

 

the
Leases have been paid and no portion thereof has been paid for any period more
than thirty (30) days in advance; (iv) the rent payable under each Lease
is the amount of fixed rent set forth in the Rent Roll, and there is no claim
or basis for a claim by the tenant thereunder for an adjustment to the rent; (v) to
Borrower’s best knowledge, no tenant has made any claim against the landlord
under any Lease which remains outstanding, there are no defaults on the part of
the landlord under any Lease, and no event has occurred which, with the giving
of notice or passage of time, or both, would constitute such a default; (vi) to
Borrower’s best knowledge, there is no present material default by the tenant
under any Lease; (vii) all security deposits under Leases are as set forth
on the Rent Roll and are held consistent with Section 3.8 hereof; (viii) Borrower
is the sole owner of the entire lessor’s interest in each Lease; (ix) each
Lease is the valid, binding and enforceable obligation of the Borrower and the
applicable tenant thereunder; (x) to Borrower’s best knowledge, no Person
has any possessory interest in, or right to occupy, the Property except under
the terms of the Lease; and (xi) each Lease is subordinate to the Loan
Documents, either pursuant to its terms or pursuant to a subordination and
attornment agreement.  None of the Leases
contains any option to purchase or right of first refusal to purchase the
Property or any part thereof.  Neither
the Leases nor the Rents have been assigned or pledged except to Lender, and no
other Person has any interest therein except the tenants thereunder.

                4.17  Fraudulent Transfer.  Borrower has not entered into the Loan or any
Loan Document with the actual intent to hinder, delay, or defraud any creditor,
and Borrower has received reasonably equivalent value in exchange for its
obligations under the Loan Documents.  Giving
effect to the transactions contemplated by the Loan Documents, the fair
saleable value of Borrower’s assets exceeds and will, immediately following the
execution and delivery of the Loan Documents, exceed Borrower’s total probable
liabilities, including subordinated, unliquidated, disputed or contingent
liabilities, including the maximum amount of its contingent liabilities or its
debts as such debts become absolute and matured.  Borrower’s assets do not and, immediately
following the execution and delivery of the Loan Documents will not, constitute
unreasonably small capital to carry out its business as conducted or as
proposed to be conducted.  Borrower does
not intend to, and does not believe that it will, incur debts and liabilities
(including contingent liabilities and other commitments) beyond its ability to
pay such debts as they mature (taking into account the timing and amounts to be
payable on or in respect of obligations of Borrower).

                4.18  Ownership of Borrower.  The sole member of Borrower is 222 South
Riverside Property LLC, a Delaware limited liability company (“Borrower Member”).  The sole member of Borrower Member is
Behringer Harvard Riverside Holding Business Trust, a Maryland business trust (“Riverside Holding”).  The sole owner of 100% of the equity
interests in Riverside Holding is the Harvard REIT Operating Partnership.  The only partners of the Harvard REIT
Operating Partnership are (i) the Behringer Harvard REIT (0.1% general
partner), (ii) BHR Partners, LLC, a Delaware limited liability company (in
excess of 99% limited partner), which is 100% owned by the Behringer Harvard
REIT, and (iii) certain other individual holders of equity interests (less
than 1% limited partners in the aggregate). 
The foregoing membership interests in Borrower and Borrower Member, the
equity interests in Riverside Holding, the general partnership interests in
Harvard REIT Operating Partnership, and the limited partnership interests of
BHR Partners, LLC in Harvard REIT Operating Partnership, are all owned free and
clear of all Liens, warrants, options and rights to purchase.  Borrower has no obligation to any Person to
purchase, repurchase or issue any ownership interest in it.  The organizational chart attached 

 37
 

 

hereto
as Schedule 4 is complete and accurate and illustrates all Persons who
have a direct or indirect ownership interest in Borrower.

                4.19 
Purchase Options.  Neither
the Property nor any part thereof is subject to any purchase options or other
similar rights in favor of third parties.

                4.20  Management Agreement.  The Management Agreement is in full force and
effect.  There is no default, breach or
violation existing thereunder, and no event has occurred (other than payments
due but not yet delinquent) that, with the passage of time or the giving of
notice, or both, would constitute a default, breach or violation thereunder, by
either party thereto.  Pursuant to the
Management Agreement, Borrower has appointed the Manager as its agent for (i) hiring,
terminating (subject to the provisions thereof), overseeing and otherwise
dealing with any sub-property manager for the Property, (ii) otherwise
overseeing the operation and management of the Property, and (iii) making
decisions and otherwise interacting and dealing with Lender with respect to the
Loan, this Agreement, the other Loan Documents and the Property.  Additionally, subject to the provisions of Section 3.1
hereof, the Clearing Account Agreement and the Deposit Account Agreement, the
Manager has control of all operating and other bank accounts with respect to
the Property.

                4.21  Hazardous Substances.  Except as disclosed in the environmental
assessment report delivered to Lender in connection with the Loan, (i) to
the best of Borrower’s knowledge, after due inquiry, the Property is not in
violation of any Legal Requirement pertaining to or imposing liability or
standards of conduct concerning environmental regulation, contamination or
clean-up, including the Comprehensive Environmental Response, Compensation and
Liability Act, the Resource Conservation and Recovery Act, the Emergency
Planning and Community Right-to-Know Act of 1986, the Hazardous Substances
Transportation Act, the Solid Waste Disposal Act, the Clean Water Act, the
Clean Air Act, the Toxic Substance Control Act, the Safe Drinking Water Act,
the Occupational Safety and Health Act, any state super-lien and environmental
clean-up statutes (including with respect to Toxic Mold), any local law
requiring related permits and licenses and all amendments to and regulations in
respect of the foregoing laws (collectively, “Environmental
Laws”); (ii) to the best of Borrower’s knowledge, after due
inquiry, the Property is not subject to any private or governmental Lien or
judicial or administrative notice or action or inquiry, investigation or claim
relating to hazardous, toxic and/or dangerous substances, toxic mold or fungus
of a type that may pose a risk to human health or the environment or would
negatively impact the value of the Property (“Toxic Mold”) or any other substances or
materials which are included under or regulated by Environmental Laws
(collectively, “Hazardous Substances”); (iii) to
the best of Borrower’s knowledge, after due inquiry, no Hazardous Substances
are or have been (including the period prior to Borrower’s acquisition of the
Property), discharged, generated, treated, disposed of or stored on,
incorporated in, or removed or transported from the Property other than in
compliance with all Environmental Laws; (iv) to the best of Borrower’s
knowledge, after due inquiry, no Hazardous Substances are present in, on or
under any nearby real property which could migrate to or otherwise affect the
Property; (v) to the best of Borrower’s knowledge, after due inquiry, no
Toxic Mold is on or about the Property which requires remediation; and (vi) to
the best of Borrower’s knowledge, after due inquiry, no underground storage
tanks exist on the Property and the Property has never been used as a landfill.  To the best of Borrower’s knowledge, after
due 

 38
 

 

inquiry,
there have been no environmental investigations, studies, audits, reviews or
other analyses conducted by or on behalf of Borrower which have not been
provided to Lender.

                4.22  Name; Principal Place of
Business.  Borrower has
not used, does not use and will not use any trade name, nor has Borrower done,
or will in the future do, business under any name, other than its actual name
set forth herein and the trade name of the Property.  The principal place of business of Borrower
is its primary address for notices as set forth in Section 6.1
hereof, and Borrower has no other place of business.

                4.23  Other Debt.  There is no indebtedness with respect to the
Property or any excess cash flow or any residual interest therein, whether
secured or unsecured, other than Permitted Encumbrances and Permitted
Indebtedness.

4.24  Reciprocal
Operating Agreements.

(1)  Borrower
is a party to the Reciprocal Operating Agreements and the Reciprocal Operating
Agreements are in full force and effect and have not been amended or modified
and Borrower’s interest therein has not been assigned pursuant to any
assignment which survives the Closing Date except the assignment to Lender
pursuant to the Loan Documents;

(2)  Borrower
is not in default under the Reciprocal Operating Agreements and, to Borrower’s
knowledge, no other party to the Reciprocal Operating Agreements is in default
thereunder and there are no grounds for default thereunder after the giving of
the requisite notice thereunder;

(3)  Borrower
has no knowledge of any notice of termination or default given with respect to
the Reciprocal Operating Agreements;

(4)  There
are no set-offs, claims, counterclaims or defenses being asserted or, to
Borrower’s knowledge, capable of being asserted (after giving the requisite
notice, if any, required under the Reciprocal Operating Agreements or
otherwise) by Borrower or any other party to the Reciprocal Operating
Agreements for the enforcement of the obligations under the Reciprocal
Operating Agreements;

(5)  There
are no Liens capable of being asserted for amounts due under the provisions of
the Reciprocal Operating Agreements which, if unpaid, may be asserted as a Lien
prior to the Lien of the Mortgage;

(6)  Neither
Borrower nor to Borrower’s knowledge, any other party to the Reciprocal
Operating Agreements has requested that a matter be submitted to arbitration
under the Reciprocal Operating Agreements;

(7)  All
common charges and other sums due from Borrower under the Reciprocal Operating
Agreements have been paid to the extent they are payable to the date hereof;
and

(8)  Borrower
enjoys the quiet and peaceful possession of all easements relating to or
appurtenant to the Property granted by the Reciprocal Operating Agreements.

 39
 

 

All
of the representations and warranties in this Article 4 and
elsewhere in the Loan Documents (i) shall survive for so long as any
portion of the Debt remains owing to Lender and (ii) shall be deemed to
have been relied upon by Lender notwithstanding any investigation heretofore or
hereafter made by Lender or on its behalf, provided, however, that the
representations and warranties set forth in Section 4.21 above
shall survive in perpetuity.

5.  COVENANTS

Until
the end of the Term, Borrower hereby covenants and agrees with Lender that:

                5.1  Existence.  Borrower
shall (i) do or cause to be done all things necessary to preserve, renew
and keep in full force and effect its existence, rights, and franchises, (ii) continue
to engage in the business presently conducted by it, (iii) obtain and
maintain all Licenses, and (iv) qualify to do business and remain in good
standing under the laws of each jurisdiction, in each case as and to the extent
required for the ownership, maintenance, management and operation of the
Property.

                5.2  Taxes and Other Charges.  Borrower
shall pay all Taxes and Other Charges prior to delinquency, and deliver to
Lender receipts for payment or other evidence satisfactory to Lender that the
Taxes and Other Charges have been so paid prior to delinquency (provided,
however, that Borrower need not pay such Taxes nor furnish such receipts for
payment of Taxes paid by Lender pursuant to Section 3.3 hereof).  Borrower shall not suffer and shall promptly
cause to be paid and discharged any Lien against the Property, and shall
promptly pay for all utility services provided to the Property.  After prior notice to Lender, Borrower, at
its own expense, may contest by appropriate legal proceeding, promptly
initiated and conducted in good faith and with due diligence, the amount or
validity or application of any Taxes or Other Charges, provided that (i) no
Event of Default has occurred and is continuing, (ii) such proceeding
shall suspend the collection of the Taxes or such Other Charges, (iii) such
proceeding shall be permitted under and be conducted in accordance with the
provisions of any other instrument to which Borrower is subject and shall not
constitute a default thereunder, (iv) no part of or interest in the
Property will be in imminent danger of being sold, forfeited, terminated,
canceled or lost, (v) Borrower shall have furnished such security as may
be required in the proceeding, or as may be requested by Lender, to insure the
payment of any such Taxes or Other Charges, together with all interest and
penalties thereon, which shall not be less than one hundred twenty five percent
(125%) of the Taxes and Other Charges being contested (less amounts then being
retained in the Taxes and Insurance Subaccount to pay such Taxes so contested),
and (vi) Borrower shall promptly upon final determination thereof pay the
amount of such Taxes or Other Charges, together with all costs, interest and
penalties.  Lender may, with the prior
approval of Borrower (not to be unreasonably withheld), pay over any such
security or part thereof held by Lender to the claimant entitled thereto at any
time when, in the judgment of Lender, the entitlement of such claimant is
established.

5.3  Access
to Property.  Borrower
shall permit agents, representatives, consultants and employees of Lender to
inspect the Property or any part thereof at reasonable hours upon reasonable
advance notice, subject to the rights of tenants of the Property under their
respective Leases.

 

 40

 

5.4          Repairs; Maintenance and
Compliance; Alterations.

5.4.1       Repairs; Maintenance and
Compliance. Borrower
shall at all times maintain, preserve and protect all franchises and trade
names, and Borrower shall cause the Property to be maintained in a good and
safe condition and repair and shall not remove, demolish or alter the
Improvements or Equipment (except for alterations performed in accordance with Section 5.4.2
below and normal replacement of Equipment with Equipment of equivalent value
and functionality or removal of Equipment that is not material to the operation
or value of the Property as an office building). Borrower shall promptly comply
with all Legal Requirements and immediately cure properly any violation of a
Legal Requirement. Borrower shall notify Lender in writing within three (3) Business
Days after Borrower first receives notice of any such non-compliance. Borrower
shall promptly repair, replace or rebuild any part of the Property that becomes
damaged, worn or dilapidated and shall complete and pay for any Improvements at
any time in the process of construction or repair.

5.4.2       Alterations. Borrower may, without Lender’s
consent, perform alterations to the Improvements and Equipment which (i) do
not constitute a Material Alteration, (ii) do not adversely affect
Borrower’s financial condition or the value or Net Operating Income of the
Property and (iii) are in the ordinary course of Borrower’s business. Borrower
shall not perform any Material Alteration without Lender’s prior written
consent, which consent shall not be unreasonably withheld or delayed. Lender
may, as a condition to giving its consent to a Material Alteration, require
that Borrower deliver to Lender security for payment of the cost of such
Material Alteration in an amount equal to one hundred twenty five percent
(125%) of the cost of the Material Alteration as estimated by Lender. Upon
substantial completion of the Material Alteration, Borrower shall provide
evidence satisfactory to Lender that (i) the Material Alteration was constructed
in accordance with applicable Legal Requirements and substantially in
accordance with plans and specifications approved by Lender (which approval
shall not be unreasonably withheld or delayed), (ii) all contractors,
subcontractors, materialmen and professionals who provided work, materials or
services in connection with the Material Alteration have been paid in full and
have delivered unconditional releases of lien and (iii) all material
Licenses necessary for the use, operation and occupancy of the Material
Alteration (other than those which depend on the performance of tenant
improvement work) have been issued. Borrower shall reimburse Lender upon demand
for all out-of-pocket costs and expenses (including the reasonable fees of any
architect, engineer or other professional engaged by Lender) incurred by Lender
in reviewing plans and specifications or in making any determinations necessary
to implement the provisions of this Section 5.4.2.

5.5          Performance of Other
Agreements. Borrower
shall observe and perform each and every term to be observed or performed by
Borrower pursuant to the terms of any agreement or instrument affecting or
pertaining to the Property, including the Loan Documents.

5.6          Cooperate in Legal
Proceedings. Borrower
shall cooperate fully with Lender with respect to, and permit Lender, at its
option, to participate in, any proceedings before any Governmental Authority
which may in any way affect the rights of Lender under any Loan Document.

 41
 

 

5.7          Further Assurances. Borrower shall, at Borrower’s sole
cost and expense, (i) execute and deliver to Lender such documents,
instruments, certificates, assignments and other writings, and do such other
acts necessary or desirable, to evidence, preserve and/or protect the
collateral at any time securing or intended to secure the Debt and/or for the
better and more effective carrying out of the intents and purposes of the Loan
Documents, as Lender may reasonably require from time to time; and (ii) upon
Lender’s request therefor given from time to time after the occurrence of any
Default or Event of Default pay for (a) reports of UCC, federal tax lien,
state tax lien, judgment and pending litigation searches with respect to
Borrower and Guarantor and (b) searches of title to the Property, each
such search to be conducted by search firms reasonably designated by Lender in
each of the locations reasonably designated by Lender.

5.8          Environmental Matters.

5.8.1       Hazardous Substances. So long as Borrower owns or is in
possession of the Property, Borrower shall (i) keep the Property free from
Hazardous Substances and in compliance with all Environmental Laws, (ii) promptly
notify Lender if Borrower shall become aware that (A) any Hazardous
Substance is on or near the Property, (B) the Property is in violation of
any Environmental Laws or (C) any condition on or near the Property shall
pose a threat to the health, safety or welfare of humans and (iii) remove
such Hazardous Substances and/or cure such violations and/or remove such
threats, as applicable, as required by law (or as shall be required by Lender
in the case of removal which is not required by law, but in response to the
opinion of a licensed hydrogeologist, licensed environmental engineer or other
qualified environmental consulting firm engaged by Lender (“Lender’s Consultant”)), promptly after Borrower becomes
aware of same, at Borrower’s sole expense. Nothing herein shall prevent
Borrower from recovering such expenses from any other party that may be liable
for such removal or cure.

5.8.2       Environmental Monitoring.

(a)   Borrower shall give prompt written notice to
Lender of (i) any proceeding or inquiry by any party (including any
Governmental Authority) with respect to the presence of any Hazardous Substance
on, under, from or about the Property, (ii) all claims made or threatened
by any third party (including any Governmental Authority) against Borrower or
the Property or any party occupying the Property relating to any loss or injury
resulting from any Hazardous Substance, and (iii) Borrower’s discovery of
any occurrence or condition on any real property adjoining or in the vicinity
of the Property that could cause the Property to be subject to any
investigation or cleanup pursuant to any Environmental Law. Upon becoming aware
of the presence of mold or fungus at the Property, Borrower shall (i) undertake
an investigation to identify the source(s) of such mold or fungus and
shall develop and implement an appropriate remediation plan to eliminate the
presence of any Toxic Mold, (ii) perform or cause to be performed all acts
reasonably necessary for the remediation of any Toxic Mold (including taking
any action necessary to clean and disinfect any portions of the Property
affected by Toxic Mold, including providing any necessary moisture control
systems at the Property), and (iii) provide evidence reasonably
satisfactory to Lender of the foregoing. Borrower shall permit Lender to join
and participate in, as a party if it so elects, any legal or administrative
proceedings or other actions initiated with respect to the Property in
connection with any Environmental Law or 

 42
 

 

Hazardous Substance, and
Borrower shall pay all reasonable attorneys’ fees and disbursements incurred by
Lender in connection therewith.

(b)   Upon Lender’s request, at any time and from
time to time, Borrower shall provide an inspection or audit of the Property
prepared by a licensed hydrogeologist, licensed environmental engineer or
qualified environmental consulting firm approved by Lender assessing the
presence or absence of Hazardous Substances on, in or near the Property, and if
Lender in its good faith judgment determines that reasonable cause exists for
the performance of such environmental inspection or audit, then the cost and
expense of such audit or inspection shall be paid by Borrower. Such inspections
and audit may include soil borings and ground water monitoring. If Borrower
fails to provide any such inspection or audit within thirty (30) days after
such request, Lender may order same, and Borrower hereby grants to Lender and
its employees and agents access to the Property and a license to undertake such
inspection or audit.

(c)   If any environmental site assessment report
prepared in connection with such inspection or audit recommends that an
operations and maintenance plan be implemented for any Hazardous Substance,
whether such Hazardous Substance existed prior to the ownership of the Property
by Borrower, or presently exists or is reasonably suspected of existing,
Borrower shall cause such operations and maintenance plan to be prepared and
implemented at its expense upon request of Lender, and with respect to any
Toxic Mold, Borrower shall take all action necessary to clean and disinfect any
portions of the Improvements affected by Toxic Mold in or about the
Improvements, including providing any necessary moisture control systems at the
Property. If any investigation, site monitoring, containment, cleanup, removal,
restoration or other work of any kind is reasonably necessary under an
applicable Environmental Law (“Remedial Work”),
Borrower shall commence all such Remedial Work within thirty (30) days after
written demand by Lender and thereafter diligently prosecute to completion all
such Remedial Work within such period of time as may be required under
applicable law. All Remedial Work shall be performed by licensed contractors
approved in advance by Lender and under the supervision of a consulting
engineer approved by Lender. All costs of such Remedial Work shall be paid by
Borrower, including Lender’s reasonable attorneys’ fees and disbursements
incurred in connection with the monitoring or review of such Remedial Work. If
Borrower does not timely commence and diligently prosecute to completion the
Remedial Work, Lender may (but shall not be obligated to) cause such Remedial
Work to be performed at Borrower’s expense. Notwithstanding the foregoing,
Borrower shall not be required to commence such Remedial Work within the above
specified time period: (x) if prevented from doing so by any Governmental
Authority, (y) if commencing such Remedial Work within such time period
would result in Borrower or such Remedial Work violating any Environmental Law,
or (z) if Borrower, at its expense and after prior written notice to
Lender, is contesting by appropriate legal, administrative or other
proceedings, conducted in good faith and with due diligence, the need to
perform Remedial Work. Borrower shall have the right to contest the need to
perform such Remedial Work, provided that, (1) Borrower is permitted by
the applicable Environmental Laws to delay performance of the Remedial Work
pending such proceedings, (2) neither the Property nor any part thereof or
interest therein will be sold, forfeited or lost if Borrower fails to promptly
perform the Remedial Work being contested, and if Borrower fails to prevail in
contest, Borrower would thereafter have the opportunity to perform such
Remedial Work, (3) Lender would not, by virtue of such permitted contest,
be exposed to any risk of any civil liability for which Borrower has not
furnished additional security as provided in clause (4) below, or to any
risk of criminal liability, 

 43
 

 

and neither the Property nor any interest
therein would be subject to the imposition of any Lien for which Borrower has
not furnished additional security as provided in clause (4) below, as a
result of the failure to perform such Remedial Work and (4) Borrower shall
have furnished to Lender additional security in respect of the Remedial Work
being contested and the loss or damage that may result from Borrower’s failure
to prevail in such contest in such amount as may be reasonably requested by
Lender but in no event less than one hundred twenty five percent (125%) of the
cost of such Remedial Work as estimated by Lender or Lender’s Consultant and
any loss or damage that may result from Borrower’s failure to prevail in such
contest, which amount shall periodically be disbursed to Borrower during the
course of such Remedial Work in accordance with those procedures and
requirements that Lender may determine are reasonably necessary in connection
therewith. Upon completion of the Remedial Work, any unused portion of any
security deposited with Lender pursuant to this Section 5.8.2 shall
promptly be released to Borrower.

(d)   Borrower shall not install or permit to be
installed on the Property any underground storage tank.

5.9          Title to the Property. Borrower will warrant and defend the
title to the Property, and the validity and priority of all Liens granted or
otherwise given to Lender under the Loan Documents, subject only to Permitted
Encumbrances, against the claims of all Persons.

5.10        Leases.

5.10.1     Generally. Upon request, Borrower shall furnish
Lender with executed copies of all Leases then in effect (other than Leases
that have previously been furnished to Lender). All renewals of Leases and all
proposed leases shall provide for rental rates and terms comparable to existing
local market rates and shall be arm’s length transactions with bona fide,
independent third-party tenants.

5.10.2     Material Leases. Borrower shall not enter into a
proposed Material Lease or a proposed renewal, extension (other than a renewal
or extension that is being unilaterally exercised by a tenant pursuant to the
terms of an existing Lease, with respect to which Lender shall not have any
consent rights) or modification of an existing Material Lease without the prior
written consent of Lender, which consent shall not, so long as no Event of
Default is continuing, be  unreasonably
withheld or delayed. Prior to seeking Lender’s consent to any Material Lease,
Borrower shall deliver to Lender a copy of such proposed lease (a “Proposed Material Lease”) and, if such Proposed Material
Lease is based on the standard form of Lease approved by Lender, blacklined to
show changes from the standard form of Lease approved by Lender and then being
used by Borrower. Lender shall approve or disapprove each Proposed Material
Lease or proposed renewal, extension or modification of an existing Material
Lease for which Lender’s approval is required under this Agreement within ten (10) Business
Days of the submission by Borrower to Lender of a written request for such
approval, accompanied by a final copy of the Proposed Material Lease or
proposed renewal, extension or modification of an existing Material Lease. If
requested by Borrower, Lender will grant conditional approvals of Proposed
Material Leases or proposed renewals, extensions or modifications of existing
Material Leases at any stage of the leasing process, from initial “term sheet”
through negotiated lease drafts, provided that Lender shall retain the right to
disapprove any such Proposed Material Lease or proposed 

 44
 

 

renewal,
extension or modification of an existing Material Lease, if subsequent to any
preliminary approval material changes are made to the terms previously approved
by Lender, or additional material terms are added that had not previously been
considered and approved by Lender in connection with such Proposed Material
Lease or proposed renewal, extension or modification of an existing Material
Lease. Provided that no Event of Default is continuing, if Borrower provides
Lender with a written request for approval (which written request shall
specifically refer to this Section 5.10.2 and shall explicitly
state that failure by Lender to approve or disapprove within ten (10) Business
Days will constitute a deemed approval) and Lender fails to reject the request
in writing delivered to Borrower within ten (10) Business Days after
receipt by Lender of the request, the Proposed Material Lease or proposed
renewal, extension or modification of an existing Material Lease shall be
deemed approved by Lender, and Borrower shall be entitled to enter into such
Proposed Material Lease or proposed renewal, extension or modification of an
existing Material Lease. Notwithstanding anything to the contrary in this Section 5.10,
unless expressly agreed to in writing by Lender, any approval or deemed
approval by Lender of a proposed Lease or proposed renewal, extension or
modification of an existing Lease pursuant to this Section 5.10 shall not
be deemed to constitute (in and of itself) an approval or deemed approval by
Lender of any Approved Leasing Expenses in connection therewith.

5.10.3     Minor Leases. Notwithstanding the provisions of Section 5.10.2
above, provided that no Event of Default is continuing, renewals, amendments
and modifications of existing Leases and proposed Leases, shall not be subject
to the prior approval of Lender provided (i) the proposed Lease would be a
Minor Lease or the existing Lease as amended or modified or the renewal Lease
is a Minor Lease, (ii) the proposed Lease shall be written substantially
in accordance with the standard form of Lease which shall have been approved by
Lender, (iii) the Lease as amended or modified or the renewal Lease or
series of Leases or proposed Lease or series of Leases: (a) shall provide
for net effective rental rates comparable to existing local market rates for
similarly situated properties, (b) with respect to any new Lease with a
new tenant (other than kiosks and vending machines), shall have an initial term
(together with all renewal options) of not less than three (3) years or
greater than ten (10) years, (c) shall provide for automatic
self-operative subordination to the Mortgage and, at Lender’s option, (x) attornment
to Lender and (y) the unilateral right by Lender, at the option of Lender,
to subordinate the Lien of the Mortgage to the Lease, and (d) shall not
contain any option to purchase, any right of first refusal to purchase, any
right to terminate (except in the event of the destruction or condemnation of
substantially all of the Property), any requirement for a non-disturbance or
recognition agreement, or any other provision which might adversely affect the
rights of Lender under the Loan Documents in any material respect. Borrower
shall deliver to Lender copies of all Leases which are entered into pursuant to
the preceding sentence together with Borrower’s certification that it has
satisfied all of the conditions of the preceding sentence within ten (10) days
after the execution of the Lease. Notwithstanding anything in this Section 5.10
to the contrary, at Borrower’s request and at Borrower’s sole cost and expense,
Lender shall enter into a subordination, non-disturbance and attornment
agreement on Lender’s then current form with any tenant under a Lease of at
least 2,500 rentable square feet.

5.10.4     Additional Covenants with
respect to Leases. Borrower
(i) shall observe and perform the material obligations imposed upon the
lessor under the Leases and shall not do or permit anything to impair the value
of the Leases as security for the Debt;  (ii) shall

 45
 

 

promptly
send copies to Lender of all notices of default that Borrower shall send or
receive under any Lease; (iii) shall enforce, in accordance with
commercially reasonable practices for properties similar to the Property, the
terms, covenants and conditions in the Leases to be observed or performed by
the lessees, short of termination thereof; (iv)  shall not collect
any of the Rents more than one (1) month in advance (other than security
deposits); (v) shall not execute any other assignment of lessor’s interest
in the Leases or the Rents (except as contemplated by the Loan Documents); (vi) shall
not modify any Lease in a manner inconsistent with the Loan Documents; (vii) shall
not convey or transfer or suffer or permit a conveyance or transfer of the
Property so as to effect a merger of the estates and rights of, or a
termination or diminution of the obligations of, lessees under Leases; (viii) shall
not consent to any assignment of or subletting under any Material Lease unless
required in accordance with its terms without the prior written consent of
Lender, which, with respect to a subletting, may not, so long as no Event of
Default is continuing,  be unreasonably withheld
or delayed; and  (ix) shall not
cancel or terminate any Lease or accept a surrender thereof (except in the
exercise of Borrower’s commercially reasonable judgment in connection with a
tenant default under a Minor Lease or as expressly permitted under the terms of
such Lease in accordance with Section 5.10.3(d)) without the prior written
consent of Lender, which consent shall not, so long as no Event of Default is
continuing, be unreasonably withheld or delayed.

5.11        Estoppel Statement. After request by Lender, Borrower
shall within ten (10) days furnish Lender with a statement addressed to
Lender, its successors and assigns, duly acknowledged and certified, setting
forth (i) the unpaid Principal, (ii) the Interest Rate, (iii) the
date installments of interest and/or Principal were last paid, (iv) any
offsets or defenses to the payment of the Debt, and (v) that the Loan
Documents are valid, legal and binding obligations and have not been modified
or if modified, giving particulars of such modification.

5.12        Property Management.

5.12.1     Management Agreement. Borrower shall (i) cause the
Property to be managed pursuant to the Management Agreement; (ii) promptly
perform and observe all of the covenants required to be performed and observed
by it under the Management Agreement and do all things necessary to preserve
and to keep unimpaired its rights thereunder; (iii) promptly notify Lender
of any default under the Management Agreement of which it is aware; (iv) promptly
deliver to Lender a copy of each financial statement, business plan, capital
expenditure plan, and property improvement plan and any other notice, report
and estimate received by Borrower under the Management Agreement; and (v) promptly
enforce the performance and observance of all of the covenants required to be
performed and observed by Manager under the Management Agreement. Without
Lender’s prior written consent, Borrower shall not (a) surrender,
terminate, cancel, extend or renew the Management Agreement (other than
extensions or renewals pursuant to the express renewal/extension provisions set
forth in the Management Agreement on the same terms and conditions set forth
therein (as in effect on the date hereof, or as hereafter amended or modified
in accordance with the terms and conditions set forth in this Agreement)) or
otherwise replace the Manager or enter into any other management agreement
(except pursuant to Section 5.12.2 below); (b) reduce or
consent to the reduction of the term of the Management Agreement; (c) increase
or consent to the increase of the amount of any charges under the Management
Agreement; (d) otherwise modify, change, supplement, alter or amend in any
material respect, or waive or release any of its rights and remedies under, the
Management 

 46
 

 

Agreement;
(e) suffer or permit the occurrence and continuance of a default beyond
any applicable cure period under the Management Agreement (or any successor
Management Agreement) if such default permits the Manager to terminate the
Management Agreement (or such successor Management Agreement); (f) suffer
or permit the ownership, management or control of the Manager to be transferred
to a Person other than an Affiliate of Behringer; or (g) engage (or permit
any Manager to engage) any submanaging agent or enter into (or permit any
Manager to enter into) any submanagement agreement (other than the Subcontract
for Management Services dated May 29, 2003 between the current Manager and
Trammell Crow Services, Inc., or as otherwise permitted under Section 5.12.2
below), it being acknowledged that any new submanaging agent must be acceptable
to Lender (in Lender’s reasonable discretion) and the terms and conditions of
any new submanagement agreement must be reasonably satisfactory to Lender and
may, if required by Lender, be conditioned on Borrower delivering a Rating
Comfort Letter as to such new submanaging agent and new submanagement agreement
and a subordination and consent executed by the submanaging agent in the form
of that delivered by the current submanaging agent on or about the date hereof
or such other form as shall be reasonably acceptable to Lender.

5.12.2     Termination of Manager. If (i) an Event of Default
shall be continuing, or (ii) Manager is in default under the Management
Agreement, or (iii) upon the gross negligence, malfeasance or willful
misconduct of the Manager, Borrower shall, at the request of Lender, terminate
the Management Agreement and replace Manager with a replacement Manager
acceptable to Lender (in Lender’s discretion), on terms and conditions
satisfactory to Lender, which acceptance may, if required by Lender, be
conditioned upon Borrower delivering a Rating Comfort Letter as to such
successor Manager and the successor Management Agreement. Additionally, and
without limitation of any of the foregoing, if, as of any two (2) consecutive
Calculation Dates, Borrower fails to maintain a Debt Service Coverage Ratio of
at least 1.01:1.00, then Borrower shall, if requested by Lender, terminate (or
cause the termination of) any submanagement agreement and, in such event, shall
either (A) cause the Property to be managed directly by the then-existing
prime Manager under the then-existing prime Management Agreement then in place
between such Manager and Borrower in accordance with this Agreement (without
any replacement submanaging agent being utilized to manage the Property), or (B) replace
(or cause the replacement of) the submanaging agent thereunder with a
replacement submanaging agent acceptable to Lender (in Lender’s reasonable
discretion), on terms and conditions satisfactory to Lender, which acceptance
may, if required by Lender, be conditioned upon Borrower delivering a Rating
Comfort Letter as to such successor submanaging agent and the successor
submanagement agreement (it being acknowledged that in such event Borrower
shall be required to take one of the actions described in the foregoing clauses
(A) or (B) but that it shall be Borrower’s option which of such
actions Borrower shall take). If, at any time, Borrower elects, pursuant to
clause (A) of the immediately preceding sentence, to cause the Property to
be managed directly by the then-existing prime Manager without any replacement
submanaging agent, then, if Borrower continues to fail to maintain a Debt
Service Coverage Ratio of at least 1.01:1.00 as of the next Calculation Date
(or if Borrower does achieve a Debt Service Coverage Ratio of at least
1.01:1.00 as of the next Calculation Date but thereafter, as of any two (2) consecutive
Calculation Dates, Borrower fails to maintain a Debt Service Coverage Ratio of
at least 1.01:1.00), then Borrower shall, if requested by Lender, take one of
the following two actions: (I) terminate the Management Agreement and
replace Manager with a replacement Manager acceptable to Lender (in Lender’s
discretion), on terms and 

 47
 

 

conditions
satisfactory to Lender, which acceptance may, if required by Lender, be
conditioned upon Borrower delivering a Rating Comfort Letter as to such
successor Manager and the successor Management Agreement, or (II) engage
(or cause the engagement of) a new submanaging agent acceptable to Lender (in
Lender’s reasonable discretion), on terms and conditions satisfactory to
Lender, which acceptance may, if required by Lender, be conditioned upon
Borrower delivering a Rating Comfort Letter as to such new submanaging agent
and the new submanagement agreement (it being acknowledged that in such event
Borrower shall be required to take one of the actions described in the
foregoing clauses (I) or (II) but that it shall be Borrower’s option
which of such actions Borrower shall take). All calculations of the Debt
Service Coverage Ratio for purposes of this Section 5.12.2 shall (a) be
subject to verification by Lender, and (b) use, as the adjustment for
management fees made in calculating Net Operating Income in connection
therewith, the greater of actual combined management fees and asset management
fees paid under the Management Agreement (including any submanagement
agreement) or two percent (2%) of gross revenues (instead of three percent (3%)
as otherwise provided in the definition of Net Operating Income hereunder). In
any such event described in this Section 5.12.2, Borrower’s failure
to appoint an acceptable replacement Manager (or, as the case may be,
submanaging agent) within thirty (30) days after Lender’s request of
Borrower to terminate the Management Agreement (or, as the case may be,
submanagement agreement) shall constitute an immediate Event of Default. Borrower
may from time to time appoint a successor Manager to manage the Property,
provided that such successor Manager and corresponding replacement Management
Agreement shall be approved in writing by Lender (in Lender’s discretion),
which approval may, if required by Lender, be conditioned upon Borrower
delivering a Rating Comfort Letter as to such successor manager and Management
Agreement.

5.13        Special Purpose Bankruptcy
Remote Entity. Borrower shall at all times be a Special Purpose
Bankruptcy Remote Entity. Borrower shall not directly or indirectly make any
change, amendment or modification to its organizational documents, or otherwise
take any action which could result in Borrower not being a Special Purpose
Bankruptcy Remote Entity. A “Special Purpose Bankruptcy
Remote Entity” shall have the meaning set forth on Schedule 5 hereto.

5.14        Assumption in
Non-Consolidation Opinion. Borrower shall conduct its business
so that the assumptions (with respect to each Person) made in that certain
substantive non-consolidation opinion letter dated the date hereof delivered by
Borrower’s counsel in connection with the Loan, shall be true and correct in
all respects.

5.15        Change in Business or
Operation of Property. Borrower shall not purchase or own any
real property other than the Property and shall not enter into any line of
business other than the ownership and operation of the Property, or make any
material change in the scope or nature of its business objectives, purposes or
operations, or undertake or participate in activities other than the
continuance of its present business or otherwise cease to operate the Property
as an office building property or terminate such business for any reason
whatsoever (other than temporary cessation in connection with renovations to
the Property).

5.16        Debt Cancellation.
Borrower shall not cancel or otherwise forgive or release any claim or debt
(other than termination of Leases in accordance herewith) owed to Borrower by
any Person, except for adequate consideration and in the ordinary course of
Borrower’s business.

 48
 

 

5.17        Affiliate Transactions. Other than the Management Agreement, Borrower shall not
enter into, or be a party to, any transaction with an Affiliate of Borrower or
any of the members of Borrower except in the ordinary course of business and on
terms which are fully disclosed to Lender in advance and are no less favorable
to Borrower or such Affiliate than would be obtained in a comparable arm’s-length
transaction with an unrelated third party. With respect to the foregoing,
Lender hereby acknowledges that it has approved the Management Agreement in the
form delivered to Lender by Borrower on or before the date hereof.

5.18        Zoning. Borrower
shall not initiate or consent to any zoning reclassification of any portion of
the Property or seek any variance under any existing zoning ordinance or use or
permit the use of any portion of the Property in any manner that could result
in such use becoming a non-conforming use under any zoning ordinance or
any other applicable land use law, rule or regulation, without the prior
consent of Lender.

5.19        No Joint Assessment.
Borrower shall not suffer, permit or initiate the joint assessment of the
Property (i) with any other real property constituting a tax lot separate
from the Property, and (ii) with any portion of the Property which may be
deemed to constitute personal property, or any other procedure whereby the lien
of any taxes which may be levied against such personal property shall be
assessed or levied or charged to the Property.

5.20        Principal Place of
Business. Borrower shall not change its principal place of
business or chief executive office without first giving Lender thirty (30) days’
prior notice.

5.21        Change of Name, Identity
or Structure. Borrower shall not change its name, identity
(including its trade name or names) or Borrower’s corporate, partnership or
other structure without notifying Lender of such change in writing at least
thirty (30) days prior to the effective date of such change and, in the case of
a change in Borrower’s structure, without first obtaining the prior written
consent of Lender. Borrower shall execute and deliver to Lender, prior to or
contemporaneously with the effective date of any such change, any financing
statement or financing statement change required by Lender to establish or
maintain the validity, perfection and priority of the security interest granted
herein. At the request of Lender, Borrower shall execute a certificate in form
satisfactory to Lender listing the trade names under which Borrower intends to
operate the Property, and representing and warranting that Borrower does business
under no other trade name with respect to the Property.

5.22        Indebtedness. Borrower shall not directly or indirectly create, incur or
assume any indebtedness other than the Debt and unsecured trade payables
incurred in the ordinary course of business relating to the ownership and
operation of the Property which do not exceed, at any time, a maximum amount of
two percent (2%) of the original amount of the Principal and are paid within
sixty (60) days of the date incurred or invoiced (collectively, “Permitted Indebtedness”);
provided, however, such two percent (2%) limitation shall not apply to (i) any
asset management or property management fee payable pursuant to the terms of
the Management Agreement or (ii) any amounts that are payable out of the
Capital Reserve Subaccount, the Rollover Reserve Subaccount or any other
reserves established under this Agreement. Notwithstanding the foregoing, with respect to the 60-day period
set forth above, Borrower may, after prior notice to Lender, at its own
expense, contest by appropriate legal proceeding, promptly initiated and
conducted in good faith and with due diligence, the amount or validity of 

 49
 

 

any such Permitted Indebtedness (during which time
such 60-day period shall be tolled), provided that if Borrower desires to
withhold payment of such Permitted Indebtedness during the pendency of the
contest, (i) no Event of Default has occurred and is continuing, (ii) no
part of or interest in the Property will be in danger of being sold, forfeited,
terminated, canceled or lost, (iii) Borrower shall have furnished such
security as may be required in the proceeding, or as may be reasonably
requested by Lender, to insure the payment of any such Permitted Indebtedness,
together with all interest and penalties thereon, which security shall not be
less than one hundred twenty five percent (125%) of the Permitted Indebtedness
being contested, and (iv) Borrower shall promptly upon final determination
thereof pay the amount of such Permitted Indebtedness, together with all costs,
interest and penalties and Borrower shall be permitted to use such security to
make such payment.

5.23        Licenses. Borrower shall not Transfer any License required for the
operation of the Property (other than in connection with a Lender-approved
Transfer and Assumption pursuant to Section 5.26.2 below).

5.24        Compliance with Restrictive Covenants, Etc. Borrower will not enter into, modify,
waive in any material respect or release any Easements, restrictive covenants
or other Permitted Encumbrances, or suffer, consent to or permit the foregoing,
without Lender’s prior written consent, which consent may be granted or denied
in Lender’s sole discretion.

5.25        ERISA.

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

5.25.2     Borrower shall not maintain, sponsor,
contribute to or become obligated to contribute to, or suffer or permit any
ERISA Affiliate of Borrower to, maintain, sponsor, contribute to or become
obligated to contribute to, any Plan or any Welfare Plan or permit the assets
of Borrower to become “plan assets,” whether by operation of law or under
regulations promulgated under ERISA.

5.25.3     Borrower shall deliver to Lender such
certifications or other evidence from time to time throughout the Term, as
requested by Lender in its sole discretion, that (A) Borrower is not and
does not maintain an “employee benefit plan” as defined in Section 3(3) of
ERISA, which is subject to Title I of ERISA, or a “governmental plan” within
the meaning of Section 3(3) of ERISA; (B) Borrower is not
subject to state statutes regulating investments and fiduciary obligations with
respect to governmental plans; and (C) one or more of the following
circumstances is true:

(1)   Equity interests in Borrower are publicly
offered securities, within the meaning of 29 C.F.R. §2510.3-101(b)(2);

(2)   Less than twenty five percent (25%) of each
outstanding class of equity interests in Borrower are held by “benefit plan
investors” within the meaning of 29 C.F.R. §2510.3-101(f)(2); or

 50
 

 

(3)   Borrower qualifies as an “operating company”
or a “real estate operating company” within the meaning of 29 C.F.R. §2510.3-101(c) or
(e).

5.26        Transfers.

5.26.1     Generally. Borrower shall not directly or
indirectly make, suffer or permit the occurrence of (a) any Transfer other
than a Permitted Transfer, or (b) any event, or series of events, that
results in the individuals who, as of the date of this Agreement, are members
of the Board of Directors of the Behringer Harvard REIT (the “Incumbent Board”) ceasing
for any reason to constitute at least a majority of such Board of Directors,
provided, however, that if the election, or nomination for election by the
Behringer Harvard REIT’s shareholders, of any new director was approved by a
vote of at least a majority of the Incumbent Board, such new director shall,
for purposes of this Agreement, be considered as a member of the Incumbent
Board.

5.26.2     Transfer and Assumption.

(a)           Subject to obtaining Lender’s prior
written consent, which may be withheld in Lender’s reasonable and absolute
discretion, and subject to the terms and satisfaction of all of the conditions
precedent set forth in this Section 5.26.2, Borrower shall have the
right to Transfer the Property to another party (the “Transferee Borrower”)
and have the Transferee Borrower assume all of Borrower’s obligations under the
Loan Documents, and have replacement guarantors and indemnitors assume all of
the obligations of the indemnitors and guarantors of the Loan Documents
(collectively, a “Transfer
and Assumption”). Borrower may make a written application to
Lender for Lender’s consent to the Transfer and Assumption, subject to the
conditions set forth in paragraphs (b) and (c) of this Section 5.26.2.
Together with such written application, Borrower will pay to Lender the reasonable
review fee then required by Lender. Borrower also shall pay on demand all of
the reasonable costs and expenses incurred by Lender, including reasonable
attorneys’ fees and expenses, and including the fees and expenses of Rating
Agencies and other outside entities, in connection with considering any
proposed Transfer and Assumption, whether or not the same is permitted or
occurs.

(b)   Lender’s consent, which may be withheld in
Lender’s reasonable discretion, to a Transfer and Assumption shall be subject
to the following conditions:

(1)   No Event of Default has occurred and is
continuing;

(2)   Borrower has submitted to Lender true,
correct and complete copies of any and all information and documents of any
kind requested by Lender concerning the Property, Transferee Borrower,
replacement guarantors and indemnitors and Borrower;

(3)   Evidence satisfactory to Lender has been
provided showing that the Transferee Borrower and such of its Affiliates as
shall be designated by Lender comply and will comply with Section 5.13
hereof, as those provisions may be modified by Lender taking into account the
ownership structure of Transferee Borrower and its Affiliates;

 51
 

 

(4)   If the Loan, by itself or together with other
loans, has been the subject of a Secondary Market Transaction, then Lender
shall have received a Rating Comfort Letter from the applicable Rating
Agencies;

(5)   If the Loan has not been the subject of a
Secondary Market Transaction, then Lender shall have determined that no rating
for any securities that would be issued in connection with such securitization
will be diminished, qualified, or withheld by reason of the Transfer and
Assumption;

(6)   Borrower shall have paid all of Lender’s
reasonable costs and expenses in connection with considering the Transfer and
Assumption, and shall have paid the amount requested by Lender as a deposit
against Lender’s costs and expenses in connection with the effecting the
Transfer and Assumption;

(7)   Borrower, the Transferee Borrower, and the
replacement guarantors and indemnitors shall have indicated in writing in form
and substance reasonably satisfactory to Lender their readiness and ability to
satisfy the conditions set forth in subsection (c) below;

(8)   The identity, experience, and financial
condition of the Transferee Borrower and the replacement guarantors and
indemnitors shall be satisfactory to Lender; and

(9)   The proposed property manager and proposed
Management Agreement shall be satisfactory to Lender and the applicable Rating
Agencies.

(c)   If Lender consents to the Transfer and
Assumption, the Transferee Borrower and/or Borrower as the case may be, shall
immediately deliver the following to Lender:

(1)   Borrower shall deliver to Lender an
assumption fee in the amount of either (i) in the case of the first such
Transfer and Assumption, one quarter of one percent (0.25%) of the then unpaid
Principal, or (ii) in the case of any subsequent Transfer and Assumption,
one half of one percent (0.50%) of the then unpaid Principal;

(2)   Borrower, Transferee Borrower and the original
and replacement guarantors and indemnitors shall execute and deliver to Lender
any and all documents required by Lender, in form and substance required by
Lender, in Lender’s sole discretion;

(3)   Counsel to the Transferee Borrower and
replacement guarantors and indemnitors shall deliver to Lender opinions in form
and substance satisfactory to Lender as to such matters as Lender shall
require, which may include opinions as to substantially the same matters and
were required in connection with the origination of the Loan (including a new
substantive non-consolidation opinion with respect to the Transferee Borrower);

(4)   Borrower shall cause to be delivered to
Lender, an endorsement (relating to the change in the identity of the vestee
and execution and delivery of the Transfer and Assumption documents) to the
Title Insurance Policy in form and substance acceptable to Lender, in Lender’s
reasonable discretion (the “Endorsement”); and

 52
 

 

(5)   Borrower shall deliver to Lender a payment in
the amount of all remaining unpaid costs incurred by Lender in connection with
the Transfer and Assumption, including but not limited to, Lender’s reasonable
attorneys fees and expenses, all recording fees, and all fees payable to the
title company for the delivery to Lender of the Endorsement.

(d)   Upon the closing of a Transfer and
Assumption, Lender shall release Borrower and Guarantor from all obligations
under the Loan Documents arising prior to and after the date of the Transfer
and Assumption (but only to the extent that such obligations of Borrower and
Guarantor are expressly assumed by the Transferee Borrower or replacement
guarantor, as the case may be, in connection with the Transfer and Assumption).

5.27        Liens.
Without Lender’s prior written consent, Borrower shall not create, incur,
assume, permit or suffer to exist any Lien on all or any portion of the
Property or any direct or indirect legal or beneficial ownership interest in
Borrower, except Liens in favor of Lender and Permitted Encumbrances, unless
such Lien is bonded or discharged within thirty (30) days after Borrower first
receives notice of such Lien (or such longer period as is permitted under this
Agreement in the event and to the extent the Lien is of a nature which may be
contested by Borrower under the provisions of this Agreement and Borrower is in
fact contesting such Lien in accordance with the express provisions and
conditions set forth in this Agreement). Notwithstanding the foregoing, pledges
of any non-controlling direct or indirect legal or beneficial ownership
interest in Harvard REIT Operating Partnership shall not constitute Liens
prohibited hereunder if the foreclosure thereon would constitute a “Permitted
Transfer” (subject to any applicable notice and other requirements set forth in
the defined term “Permitted Transfer” (if applicable)).

5.28        Dissolution.
Borrower shall not (i) engage in any dissolution, liquidation or
consolidation or merger with or into any other business entity, (ii) engage
in any business activity not related to the ownership and operation of the
Property or (iii) transfer, lease or sell, in one transaction or any
combination of transactions, all or substantially all of the property or assets
of Borrower except to the extent expressly permitted by the Loan Documents.

5.29        Expenses.
Borrower shall reimburse Lender upon receipt of notice for all reasonable
out-of-pocket costs and expenses (including reasonable attorneys’ fees and
disbursements) incurred by Lender or Servicer in connection with the Loan,
including (i) the preparation, negotiation, execution and delivery of the
Loan Documents and the consummation of the transactions contemplated thereby
and all the costs of furnishing all opinions by counsel for Borrower; (ii) Borrower’s
and Lender’s ongoing performance under and compliance with the Loan Documents,
including confirming compliance with environmental and insurance requirements; (iii) the
negotiation, preparation, execution, delivery and administration of any
consents, amendments, waivers or other modifications of or under any Loan
Document and any other documents or matters requested by Lender; (iv) filing
and recording of any Loan Documents; (v) title insurance, surveys,
inspections and appraisals; (vi) the creation, perfection or protection of
Lender’s Liens in the Property and the Cash Management Accounts (including fees
and expenses for title and lien searches, intangibles taxes, personal property
taxes, mortgage recording taxes, due diligence expenses, travel expenses,
accounting firm fees, costs of appraisals, environmental reports and Lender’s
Consultant, surveys and engineering reports); (vii) enforcing or
preserving any rights in response to third party claims or the prosecuting or 

 53
 

 

defending
of any action or proceeding or other litigation, in each case against, under or
affecting Borrower, the Loan Documents, the Property, or any other security
given for the Loan; (viii) fees charged by Rating Agencies in connection
with any modification of the Loan requested by Borrower and (ix) enforcing
any obligations of or collecting any payments due from Borrower under any Loan
Document or with respect to the Property or in connection with any refinancing
or restructuring of the Loan in the nature of a “work-out”, or any insolvency
or bankruptcy proceedings. Any costs and expenses due and payable by Borrower
hereunder which are not paid by Borrower within ten (10) days after demand
may be paid from any amounts in the Deposit Account, with notice thereof to
Borrower. The obligations and liabilities of Borrower under this Section 5.29
shall survive the Term and the exercise by Lender of any of its rights or
remedies under the Loan Documents, including the acquisition of the Property by
foreclosure or a conveyance in lieu of foreclosure.

5.30        Indemnity.
Borrower shall defend, indemnify and hold harmless Lender and each of its
Affiliates and their respective successors and assigns, including the
directors, officers, partners, members, shareholders, participants, employees,
professionals and agents of any of the foregoing (including any Servicer) and
each other Person, if any, who Controls Lender, its Affiliates or any of the
foregoing (each, an “Indemnified Party”), from
and against any and all liabilities, obligations, losses, damages, penalties,
actions, judgments, suits, claims, costs, expenses and disbursements of any
kind or nature whatsoever (including the reasonable fees and disbursements of
counsel for an Indemnified Party in connection with any investigative,
administrative or judicial proceeding commenced or threatened, whether or not
Lender shall be designated a party thereto, court costs and costs of appeal at
all appellate levels, investigation and laboratory fees, consultant fees and
litigation expenses), that may be imposed on, incurred by, or asserted against
any Indemnified Party (collectively, the “Indemnified Liabilities”) in any
manner, relating to or arising out of or by reason of the Loan, including: (i) any
breach by Borrower of its obligations under, or any misrepresentation by
Borrower contained in, any Loan Document; (ii) the use or intended use of
the proceeds of the Loan; (iii) any information provided by Borrower; (iv) ownership
of the Mortgage, the Property or any interest therein, or receipt of any Rents;
(v) any accident, injury to or death of persons or loss of or damage to
property occurring in, on or about the Property or on the adjoining sidewalks,
curbs, adjacent property or adjacent parking areas, streets or ways; (vi) any
use, nonuse or condition in, on or about the Property or on adjoining sidewalks,
curbs, adjacent property or adjacent parking areas, streets or ways; (vii) performance
of any labor or services or the furnishing of any materials or other property
in respect of the Property; (viii) the presence, disposal, escape,
seepage, leakage, spillage, discharge, emission, release, or threatened release
of any Hazardous Substance on, from or affecting the Property; (ix) any
personal injury (including wrongful death) or property damage (real or
personal) arising out of or related to such Hazardous Substance; (x) any
lawsuit brought or threatened, settlement reached, or government order relating
to such Hazardous Substance; (xi) any violation of the Environmental Laws
which is based upon or in any way related to such Hazardous Substance,
including the costs and expenses of any Remedial Work; (xii) any failure
of the Property to comply with any Legal Requirement; (xiii) any claim by
brokers, finders or similar persons claiming to be entitled to a commission in
connection with any Lease or other transaction involving the Property or any
part thereof, or any liability asserted against Lender with respect thereto;
and (xiv) the claims of any lessee of any portion of the Property or any
Person acting through or under any lessee or otherwise arising under or as a
consequence of any Lease; provided, however, that Borrower shall not have any
obligation to any Indemnified Party 

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hereunder
to the extent that it is finally judicially determined that such Indemnified
Liabilities arise from the gross negligence, illegal acts, fraud or willful
misconduct of such Indemnified Party. Any amounts payable to any Indemnified
Party by reason of the application of this paragraph shall be payable within 10
days after demand and shall bear interest at the Default Rate from the date due
until paid. The obligations and liabilities of Borrower under this Section 5.30
shall survive the Term (with respect to any matter occurring or in existence
prior to the end of the Term, and thereafter with respect to third party
claims, suits and actions) and the exercise by Lender of any of its rights or
remedies under the Loan Documents, including the acquisition of the Property by
foreclosure or a conveyance in lieu of foreclosure.

5.31        Patriot
Act Compliance.

(a)   Borrower will use its good faith and
commercially reasonable efforts to comply with the Patriot Act (as defined
below) and all applicable requirements of governmental authorities having
jurisdiction over Borrower and the Property, including those relating to money
laundering and terrorism. Lender shall have the right to audit Borrower’s
compliance with the Patriot Act and all applicable requirements of governmental
authorities having jurisdiction over Borrower and the Property, including those
relating to money laundering and terrorism. In the event that Borrower fails to
comply with the Patriot Act or any such requirements of governmental
authorities, then Lender may, at its option, cause Borrower to comply therewith
and any and all reasonable costs and expenses incurred by Lender in connection
therewith shall be secured by the Mortgage and the other Loan Documents and
shall be immediately due and payable. For purposes hereof, the term “Patriot Act” means
the Uniting and Strengthening America by Providing Appropriate Tools Required to
Intercept and Obstruct Terrorism (USA PATRIOT ACT) Act of 2001, as the same may
be amended from time to time, and corresponding provisions of future laws.

(b)   Neither Borrower nor any member of Borrower
nor any partner of any such member nor any owner of a direct or indirect
interest in Borrower (i) is listed on any Government Lists (as defined
below), (ii) is a person who has been determined by competent authority to
be subject to the prohibitions contained in Presidential Executive Order No. 13224
(Sept. 23, 2001) or any other similar prohibitions contained in the rules and
regulations of OFAC (as defined below) or in any enabling legislation or other
Presidential Executive Orders in respect thereof, (iii) has been
previously indicted for or convicted of any felony involving a crime or crimes
of moral turpitude or for any Patriot Act Offense (as defined below), or (iv) is
currently under investigation by any governmental authority for alleged
criminal activity. For purposes hereof, the term “Patriot Act Offense” means any
violation of the criminal laws of the United States of America or of any of the
several states, or that would be a criminal violation if committed within the
jurisdiction of the United States of America or any of the several states,
relating to terrorism or the laundering of monetary instruments, including any
offense under (1) the criminal laws against terrorism; (2) the
criminal laws against money laundering, (3) the Bank Secrecy Act, as
amended, (4) the Money Laundering Control Act of 1986, as amended, or the (5) Patriot
Act. “Patriot Act Offense” also includes the crimes of conspiracy to commit, or
aiding and abetting another to commit, a Patriot Act Offense. For purposes
hereof, the term “Government Lists” means (I) the
Specially Designated Nationals and Blocked Persons Lists maintained by Office
of Foreign Assets Control (“OFAC”), (II) any
other list of terrorists, 

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terrorist organizations or
narcotics traffickers maintained pursuant to any of the Rules and
Regulations of OFAC that Lender notified Borrower in writing is now included in
“Governmental Lists”, or (III) any similar lists maintained by the United
States Department of State, the United States Department of Commerce or any
other government authority or pursuant to any Executive Order of the President
of the United States of America that Lender notified Borrower in writing is now
included in “Governmental Lists”.

5.32        Reciprocal Operating Agreements.

With respect to
the Reciprocal Operating Agreements, Borrower covenants and agrees that, until
payment in full of the Debt, it will not do, directly or indirectly, any of the
following unless Lender consents thereto in writing:

(1)   without Lender’s prior written consent,
materially amend, modify or supplement, or consent to or suffer the material
amendment, modification or supplementation of the Reciprocal Operating
Agreements;

(2)   fail to pay all charges and other sums to be
paid by Borrower pursuant to the terms of the Reciprocal Operating Agreements
as the same shall become due and payable and prior to the expiration of any
applicable grace period therein provided;

(3)   fail to comply, in all material respects,
with all of the terms, covenants and conditions on the Borrower’s part to be
complied with pursuant to terms of the Reciprocal Operating Agreements;

(4)   fail to take all actions as may be necessary
from time to time to preserve and maintain the Reciprocal Operating Agreements
in accordance with applicable laws, rules and regulations;

(5)   without the prior written consent of Lender,
as determined in its reasonable discretion, take (and Borrower hereby assigns
to Lender any right it may have to take) any action to terminate, surrender, or
accept any termination or surrender of, the Reciprocal Operating Agreements;

(6)   fail to enforce, in a commercially reasonably
manner, the obligations to be performed by the parties to the Reciprocal
Operating Agreements (other than Borrower);

(7)   fail to promptly furnish to Lender any notice
of default or other communication delivered in connection with the Reciprocal
Operating Agreements by any party to the Reciprocal Operating Agreements other
than routine correspondence and invoices;

(8)   assign (other than to Lender) or encumber its
rights under the Reciprocal Operating Agreements other than in connection with
a Transfer and Assumption permitted under the Loan Documents; and

(9)   make any election regarding material matters
under the Reciprocal Operating Agreements without the prior written consent of
Lender, which consent shall not be 

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unreasonably withheld, or grant
any material consent under the Reciprocal Operating Agreements, which consent
shall not be unreasonably withheld.

6.             NOTICES AND REPORTING

6.1          Notices. All notices, consents, approvals and
requests required or permitted hereunder or under any other Loan Document (a “Notice”) shall
be given in writing and shall be effective for all purposes if either hand
delivered with receipt acknowledged, or by a nationally recognized overnight
delivery service (such as Federal Express), or by certified or registered
United States mail, return receipt requested, postage prepaid, or by facsimile
and confirmed by facsimile answer back, in each case addressed as follows (or
to such other address or Person as a party shall designate from time to time by
notice to the other party):  If to
Lender: Greenwich Capital Financial
Products, Inc., 600
Steamboat Road, Greenwich,
Connecticut 06830, Attention: Mortgage Loan Department, Telecopier (203)
618-2052, with a copy to: Sidley Austin LLP, One South Dearborn
Street, Chicago, Illinois 60603, Attention: Charles E. Schrank, Esq.,
Telecopier: (312) 853-7036; if to Borrower: c/o HPT Management Services
LP, 15601 Dallas Parkway, Suite 600, Addison, Texas 75001, Attention:
Chief Financial Officer, Telecopier: (214) 655-1610. A notice shall be
deemed to have been given:  in the case
of hand delivery, at the time of delivery; or in the case of registered or
certified mail, when delivered or the first attempted delivery on a Business
Day; or in the case of overnight delivery, upon the first attempted delivery on
a Business Day; or in the case of facsimile, upon the confirmation of such
facsimile transmission.

6.2          Borrower Notices and
Deliveries. Borrower
shall (a) give prompt written notice to Lender of: (i) any litigation,
governmental proceedings or claims or investigations pending or threatened
against Borrower or the Property which might materially adversely affect
Borrower’s or the Property’s condition (financial or otherwise) or business; (ii) any
material adverse change in Borrower’s or the Property’s condition, financial or
otherwise, or of the occurrence of any Default or Event of Default of which
Borrower has knowledge; and (b) furnish and provide to Lender all
instruments, documents, boundary surveys, footing or foundation surveys,
certificates, plans and specifications, appraisals, title and other insurance
reports and agreements, reasonably requested, from time to time, by Lender
within the possession or reasonable control of Borrower. In addition, after
request by Lender (but no more frequently than twice in any year), (x) Borrower
shall furnish to Lender within ten days, a certificate addressed to Lender, its
successors and assigns reaffirming (to the best of its knowledge) all
representations and warranties of Borrower set forth in the Loan Documents as
of the date requested by Lender or, to the extent of any changes to any such
representations and warranties, so stating such changes, and (y) Borrower
shall use commercially reasonable efforts to furnish to Lender within 30 days,
tenant estoppel certificates addressed to Lender, its successors and assigns
from each tenant at each Property in form and substance reasonably satisfactory
to Lender.

6.3          Financial
Reporting.

6.3.1       Bookkeeping. Borrower shall keep on a calendar
year basis, in accordance with GAAP (or federal income tax basis of accounting,
consistently applied), proper and accurate books, records and accounts
reflecting all of the financial affairs of Borrower and all items of income and
expense and any services, Equipment or furnishings provided in 

 57
 

 

connection
with the operation of the Property, whether such income or expense is realized
by Borrower, Manager or any Affiliate of Borrower. Lender shall have the right
from time to time during normal business hours upon reasonable notice to
examine such books, records and accounts relating to the Property at the office
of Manager or other Person maintaining them, and to make such copies or
extracts thereof as Lender shall desire. After an Event of Default, Borrower
shall pay any costs incurred by Lender to examine such books, records and
accounts, as Lender shall determine to be necessary or appropriate in the
protection of Lender’s interest.

6.3.2       Annual Reports. Borrower shall furnish to Lender
annually, within 120 days after each calendar year, a complete copy of Borrower’s
annual financial statements audited by a “big four” accounting firm or another
reputable independent certified public accountant (accompanied by an
unqualified opinion from such accounting firm or other reputable independent
certified public accountant) reasonably acceptable to Lender, each in
accordance with GAAP (or federal income tax basis of accounting, consistently
applied) and containing balance sheets and statements of profit and loss for
Borrower and the Property in such detail as Lender may request. Each of such
financial statements (x) shall be in form and substance satisfactory to
Lender, (y) shall set forth the financial condition and the income and
expenses for the Property for the immediately preceding calendar year,
including statements of annual Net Operating Income as well as (1) a list
of tenants, if any, occupying more than ten percent (10%) of the rentable space
of the Property, (2) a breakdown showing (a) the year in which each
Lease then in effect expires, (b) the percentage of rentable space covered
by such Lease, (c) the percentage of base rent with respect to which
Leases shall expire in each such year, expressed both on a per year and a
cumulative basis and (z) shall be accompanied by an Officer’s Certificate
certifying (1) that such statement is true, correct, complete and accurate
and presents fairly the financial condition of the Property and has been
prepared in accordance with GAAP (or federal income tax basis of accounting,
consistently applied) and (2) whether there exists a Default or Event of
Default, and if so, the nature thereof, the period of time it has existed and
the action then being taken to remedy it.

6.3.3       Monthly/Quarterly Reports. Borrower shall furnish to Lender,
within thirty (30) days after the end of each calendar month during the period
prior to a securitization of the Loan and thereafter within thirty (30) days
after the end of each calendar quarter, the following items: (i) monthly
or quarterly (as applicable) and year-to-date operating statements, noting Net
Operating Income and other information necessary and sufficient under GAAP (or
federal income tax basis of accounting, consistently applied) to fairly
represent the financial position and results of operation of the Property
during such calendar month or calendar quarter (as applicable), all in form
satisfactory to Lender; (ii) a balance sheet for such calendar month or
calendar quarter (as applicable); (iii) a comparison of the budgeted
income and expenses and the actual income and expenses for each month or
quarter (as applicable) and year-to-date for the Property, together with a
detailed explanation of any variances of ten percent (10%) or more between
budgeted and actual amounts for such period and year-to-date; (iv) a
statement of the actual Capital Expenses made by Borrower during each calendar
quarter as of the last day of such calendar quarter; (v) intentionally
omitted; (vi) an aged receivables report and (vii) rent rolls identifying
the leased premises, names of all tenants, units leased, monthly rental and all
other charges payable under each Lease, date to which paid, term of Lease, date
of occupancy, date of expiration, material special provisions, concessions or
inducements granted to tenants, and a year-by-year schedule showing by
percentage the rentable area of the Improvements and 

 58
 

 

the
total base rent attributable to Leases expiring each year) and a delinquency
report for the Property. Each such statement shall be accompanied by an Officer’s
Certificate certifying that to the best of such officer’s knowledge, (1) that
such items are true, correct, accurate, and complete and fairly present the
financial condition and results of the operations of Borrower and the Property
in accordance with GAAP (or federal income tax basis of accounting,
consistently applied) (subject to normal year-end adjustments) and (2) whether
there exists a Default or Event of Default, and if so, the nature thereof, the
period of time it has existed and the action then being taken to remedy it.

6.3.4       Other Reports. Borrower shall furnish to Lender,
within ten (10) Business Days after request, such further detailed
information with respect to the operation of the Property and the financial
affairs of Borrower or Manager as may be reasonably requested by Lender or any
applicable Rating Agency.

6.3.5       Annual Budget. Borrower shall prepare and submit
(or shall cause Manager to prepare and submit) to Lender within thirty (30)
days after a Cash Trap Period commences and by December 15th of
each year thereafter during the Term until such Cash Trap Period has ended, for
approval by Lender, which approval shall not be unreasonably withheld or
delayed, a proposed pro forma budget for the Property for the succeeding calendar
year (the “Annual Budget”, and each Annual Budget approved by Lender is referred to herein as
the “Approved Annual
Budget”)), and, promptly after preparation thereof, any
revisions to such Annual Budget. The Annual Budget shall consist of (i) an
operating expense budget showing, on a month-by-month basis, in reasonable
detail, each line item of the Borrower’s anticipated operating income and
operating expenses (on a cash and accrual basis), including amounts required to
establish, maintain and/or increase any monthly payments required hereunder (and once such Annual Budget has been
approved by Lender, such operating expense budget shall be referred to herein
as the “Approved
Operating Budget”), and (ii) a Capital Expense
budget showing, on a month-by-month basis, in reasonable detail, each line item
of anticipated Capital Expenses (and
once such Annual Budget has been approved by Lender, such Capital Expense
budget shall be referred to herein as the “Approved Capital Budget”). Until such
time that any Annual Budget has been approved by Lender, the prior Approved
Annual Budget shall apply for all purposes hereunder (with such adjustments as
reasonably determined by Lender (including increases for any non-discretionary
expenses)).

7.             INSURANCE; CASUALTY; AND
CONDEMNATION

7.1          Insurance.

7.1.1       Coverage. Borrower, at its sole cost, for the
mutual benefit of Borrower and Lender, shall obtain and maintain during the
Term the following policies of insurance:

(a)   Property insurance insuring against loss or
damage customarily included under so called “all risk” or “special form”
policies including fire, lightning, vandalism, and malicious mischief, boiler
and machinery and, if required by Lender in accordance with subsections (b) or
(i) below, flood and/or earthquake coverage, and subject to
subsection (j) below, coverage for damage or destruction caused by
the acts of “Terrorists” (or such policies shall have no exclusion from
coverage with respect thereto) and such other insurable hazards as, 

 59
 

 

under good insurance practices,
from time to time are insured against for other property and buildings similar
to the premises in nature, use, location, height, and type of construction. Such
insurance policy shall also insure for ordinance of law coverage, costs of
demolition and increased cost of construction in amounts satisfactory to Lender.
Each such insurance policy shall (i) be in an amount equal to one hundred
percent (100%) of the then replacement cost of the Improvements without
deduction for physical depreciation and in any event not less than such
amount as is necessary so that the insurer would not deem Borrower a co-insurer
under such policies, (ii) have deductibles no greater than $200,000 per
occurrence, (iii) be paid annually in advance and (iv) be on a replacement
cost basis and contain either no coinsurance or, if coinsurance, an agreed
amount endorsement, and shall cover, without limitation, all tenant
improvements and betterments that Borrower is required to insure on a
replacement cost basis. If the insurance required under this subparagraph is
not obtained by blanket insurance policies, the insurance policy shall be
endorsed to also provide guaranteed building replacement cost to the
Improvements and such tenant improvements in an amount to be subject to the
consent of Lender, which consent shall not be unreasonably withheld. Lender
shall be named Mortgagee and Loss Payee on a Standard Mortgagee Endorsement.

(b)   Flood insurance if any part of the Property
is located in an area now or hereafter designated by the Federal Emergency
Management Agency as a Zone “A” & “V” Special Hazard Area, or such
other Special Hazard Area if Lender so requires in its sole discretion. Such
policy shall (i) be in an amount equal to (A) one hundred percent
(100%) of the full replacement cost of the Improvements on the Property
(without any deduction for depreciation) or (B) such other amount as is
agreed to by Lender in writing, and (ii) have a maximum permissible
deductible of $3,000.

(c)   Public liability insurance, including (i) ”Commercial
General Liability Insurance”, (ii) ”Owned”, “Hired” and “Non Owned Auto
Liability”; and (iii) umbrella liability coverage for personal injury,
bodily injury, death, accident and property damage, such insurance providing in
combination no less than containing minimum limits per occurrence of $1,000,000
and $2,000,000 in the aggregate for any policy year with no deductible or self
insured retention; together with at least $25,000,000 excess and/or umbrella
liability insurance for any and all claims with no deductible. The policies
described in this subsection shall also include coverage for elevators,
escalators, independent contractors, “Contractual Liability” (covering, to the
maximum extent permitted by law, Borrower’s obligation to indemnify Lender as
required under this Agreement and the other Loan Documents), “Products” and “Completed
Operations Liability” coverage.

(d)   Rental loss and/or business interruption
insurance (i) with Lender being named as “Lender Loss Payee”, (ii) in
an amount equal to 100% of the projected Rents from the Property during the
period of restoration; and (iii) containing an extended period of
indemnity endorsement which provides that after the physical loss to the
Property has been repaired, the continued loss of income will be insured until
such income either returns to the same level it was at prior to the loss, or
the expiration of eighteen (18) months from the date that the Property is
repaired or replaced and operations are resumed, whichever first occurs, and notwithstanding
that the policy may expire prior to the end of such period. The amount of such
insurance shall be increased from time to time during the Term as and when the
estimated or actual Rents increase.

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(e)   Comprehensive
boiler and machinery insurance covering all mechanical and electrical equipment
against physical damage, rent loss and improvements loss and covering, without
limitation, all tenant improvements and betterments that Borrower is required to
insure pursuant to the Leases on a replacement cost basis and in an amount
equal to the greater of (i) $2,000,000 and (ii) one hundred percent
(100%) of the full replacement cost of the Improvements on the Property
(without any deduction for depreciation).

(f)    Worker’s
compensation and disability insurance with respect to any employees of
Borrower, as required by any Legal Requirement.

(g)   During
any period of repair or restoration, builder’s “all-risk” insurance on the so
called completed value basis in an amount equal to not less than the full
insurable value of the Property, against such risks (including fire and
extended coverage and collapse of the Improvements to agreed limits) as Lender
may request, in form and substance acceptable to Lender.

(h)   Coverage
to compensate for ordinance of law, the cost of demolition and the increased
cost of construction in an amount satisfactory to Lender.

(i)    Such
other insurance (including environmental liability insurance, earthquake (but
only if a future seismic study indicates a PML in excess of twenty percent
(20%)) insurance, mine subsidence insurance and windstorm insurance) as may
from time to time be reasonably required by Lender in order to protect its
interests.

(j)    Notwithstanding
anything in subsection (a) above to the contrary, Borrower shall be
required to obtain and maintain coverage in its property insurance Policy (or
by a separate Policy) against loss or damage by terrorist acts in an amount
equal to one hundred percent (100%) of the “Full Replacement Cost” of the
Property; provided that such coverage is available. In the event that such
coverage with respect to terrorist acts is not included as part of the “all
risk” property policy required by subsection (a) above, Borrower shall,
nevertheless be required to obtain coverage for terrorism (as stand alone
coverage) in an amount equal to one hundred percent (100%) of the “Full
Replacement Cost” of the Property; provided that such coverage is available. Notwithstanding
the foregoing, with respect to any such stand-alone policy covering terrorist
acts, Borrower shall not be required to pay any Insurance Premiums solely with
respect to such terrorism coverage in excess of the Terrorism Premium Cap
(hereinafter defined); provided that if the Insurance Premiums payable with
respect to such terrorism coverage exceeds the Terrorism Premium Cap, Lender
may, at its option (1) purchase such stand-alone terrorism Policy, with
Borrower paying such portion of the Insurance Premiums with respect thereto
equal to the Terrorism Premium Cap and the Lender paying such portion of the
Insurance Premiums in excess of the Terrorism Premium Cap or (2) modify
the deductible amounts, policy limits and other required policy terms to reduce
the Insurance Premiums payable with respect to such stand-alone terrorism
Policy to the Terrorism Premium Cap. As used herein, (i) “Terrorism Premium Cap” means an
amount equal to one hundred percent (100%) of the aggregate Insurance Premiums
payable with respect to all the insurance coverage under Section 7.1.1(a) above
for the last policy year in which coverage for terrorism was included as part
of the “all risk” property policy required by subsection (a) above,
adjusted annually by a percentage equal to the increase in the Consumer Price
Index (hereinafter defined) and (ii)

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“Consumer Price Index”
means the Consumer Price Index for All Urban Consumers published by the Bureau
of Labor Statistics of the United States Department of Labor, New York
Metropolitan Statistical Area, All Items (1982-84 = 100), or any
successor index thereto, approximately adjusted, and in the event that the
Consumer Price Index is converted to a different standard reference base or
otherwise revised, the determination of adjustments provided for herein shall
be made with the use of such conversion factor, formula or table for converting
the Consumer Price Index as may be published by the Bureau of Labor Statistics
or, if said Bureau shall not publish the same, then with the use of such
conversion factor, formula or table as may be published by Prentice-Hall, Inc.,
or any other nationally recognized publisher of similar statistical
information; and if the Consumer Price Index ceases to be published, and there
is no successor thereto (i) such other index as Lender and Borrower shall
agree upon in writing or (ii)if Lender and Borrower cannot agree on a
substitute index, such other index, as reasonably selected by Lender. Borrower
shall obtain the coverage required under this subsection (j) from a
carrier which otherwise satisfies the rating criteria specified in Section 7.1.2
below (a “Qualified Carrier”) or in
the event that such coverage is not available from a Qualified Carrier,
Borrower shall obtain such coverage from the highest rated insurance company
providing such coverage.

                       7.1.2   Policies.   All policies of insurance (the “Policies”) required pursuant to Section 7.1.1 above shall: (i) be issued by
companies approved by Lender and licensed to do business in the State, with a
claims paying ability rating of “A” or better by S&P (and the equivalent by
any other Rating Agency), and a
rating of “A:VIII” or better in the current Best’s Insurance Reports, provided,
however, that for multi-layered Policies, (A) if there are 4 or fewer
insurers providing such Policies, then at least 75% of the entire amount of the
applicable insurance coverage provided under such Policies shall be issued by
insurers having minimum claims paying ability ratings of “A” or better by
S&P (and the equivalent by any other Rating Agency) and no insurer providing
any portion of such coverage shall have a minimum claims paying ability rating
lower than “BBB” by S&P (or lower than the equivalent by any other Rating
Agency), and (B) if there are 5 or more insurers providing such Policies,
then at least 60% of the entire amount of the applicable insurance coverage
provided under such Policies shall be issued by insurers having minimum claims
paying ability ratings of “A” or better by S&P (and the equivalent by any
other Rating Agency) and no insurer providing any portion of such coverage
shall have a minimum claims paying ability rating lower than “BBB” by S&P
(or lower than the equivalent by any other Rating Agency); (ii) name
Lender and its successors and/or assigns as their interest may appear as the
mortgagee (in the case of property insurance), loss payee (in the case of
business interruption/loss of rents coverage) and an additional insured (in the
case of liability insurance); (iii) contain (in the case of property
insurance) a Non-Contributory Standard Mortgagee Clause and a Lender’s Loss
Payable Endorsement, or their equivalents, naming Lender as the person to which
all payments made by such insurance company shall be paid; (iv) contain a
waiver of subrogation against Lender; (v) be assigned and the originals
thereof delivered to Lender; or, in lieu of delivering originals of the
Policies, Borrower may, on an annual basis, deliver Acord evidences of
coverages, or the equivalent, as adequate proof of coverage; provided,
however, if at, any time, Lender requests carrier certification of
Policies, Borrower shall deliver such certification within ten (10) days
of Lender’s request therefor; (vi) contain such provisions as Lender deems
reasonably necessary or desirable to protect its interest, including (A) endorsements
providing that neither Borrower, Lender nor any other party shall be a
co-insurer under the Policies, (B) that Lender shall receive at least
thirty (30) days’ prior written notice of any modification, reduction or
cancellation of any

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of the Policies, (C) an
agreement whereby the insurer waives any right to claim any premiums and
commissions against Lender, provided that the policy need not waive the
requirement that the premium be paid in order for a claim to be paid to the
insured and (D) providing that Lender is permitted to make payments to
effect the continuation of such policy upon notice of cancellation due to
non-payment of premiums; (vii) in the event any insurance policy (except
for general public and other liability and workers compensation insurance)
shall contain breach of warranty provisions, such policy shall provide that
with respect to the interest of Lender, such insurance policy shall not be
invalidated by and shall insure Lender regardless of (A) any act, failure
to act or negligence of or violation of warranties, declarations or conditions
contained in such policy by any named insured, (B) the occupancy or use of
the premises for purposes more hazardous than permitted by the terms thereof,
or (C) any foreclosure or other action or proceeding taken by Lender
pursuant to any provision of the Loan Documents; and (viii) be
satisfactory in form and substance to Lender and approved by Lender as to
amounts, form, risk coverage, deductibles, loss payees and insureds. Borrower
shall pay the premiums for such Policies (the “Insurance Premiums”)
as the same become due and payable and furnish to Lender evidence of the
renewal of each of the Policies together with (unless such Insurance Premiums
have been paid by Lender pursuant to Section 3.3
hereof) receipts for or other evidence of the payment of the Insurance Premiums
reasonably satisfactory to Lender. If Borrower does not furnish such evidence
and receipts at least thirty (30) days prior to the expiration of any expiring
Policy, then Lender may, but shall not be obligated to, procure such insurance
and pay the Insurance Premiums therefor, and Borrower shall reimburse Lender
for the cost of such Insurance Premiums promptly on demand, with interest
accruing at the Default Rate. Borrower shall deliver to Lender a certified copy
of each Policy within thirty (30) days after its effective date. Within thirty
(30) days after request by Lender, Borrower shall obtain such increases in the
amounts of coverage required hereunder as may be reasonably requested by
Lender, taking into consideration changes in the value of money over time,
changes in liability laws, changes in prudent customs and practices, and the
like.

       7.2   Casualty.

                       7.2.1   Notice;
Restoration.   If the Property is damaged or destroyed, in whole or in
part, by fire or other casualty (a “Casualty”), Borrower shall give prompt notice
thereof to Lender. Following the occurrence of a Casualty, Borrower, regardless
of whether insurance proceeds are available (unless Lender has breached its
obligation (if any) to make such insurance proceeds available pursuant to Section 7.4.1),
shall promptly proceed to restore, repair, replace or rebuild the Property in
accordance with Legal Requirements to be of at least equal value and of
substantially the same character as prior to such damage or destruction.

                       7.2.2   Settlement
of Proceeds.   If a Casualty covered by any of the Policies (an “Insured Casualty”) occurs where the loss does not
exceed $2,000,000, provided no Event of Default has occurred and is continuing,
Borrower may settle and adjust any claim without the prior consent of Lender;
provided such adjustment is carried out in a competent and timely manner, and
Borrower is hereby authorized to collect and receipt for the insurance proceeds
(the “Proceeds”). In the event of an Insured
Casualty where the loss exceeds $2,000,000 (a “Significant Casualty”), Borrower may settle and adjust any claim with the prior
written consent of Lender (which consent shall not be unreasonably withheld or
delayed) unless either (i) an Event of Default has occurred and is
continuing or (ii) the loss equals or exceeds $5,000,000, in

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which either such case
Lender may, in its sole discretion, settle and adjust any claim without the
consent of Borrower and agree with the insurer(s) on the amount to be paid
on the loss, and the Proceeds shall be due and payable solely to Lender and
held by Lender in the Casualty/Condemnation Subaccount and disbursed in
accordance herewith. If Borrower or any party other than Lender is a payee on
any check representing Proceeds with respect to a Significant Casualty,
Borrower shall immediately endorse, and cause all such third parties to
endorse, such check payable to the order of Lender. Borrower hereby irrevocably
appoints Lender as its attorney-in-fact, coupled with an interest, to endorse
such check payable to the order of Lender.  The expenses incurred by Lender in the
settlement, adjustment and collection of the Proceeds shall become part of the
Debt and shall be reimbursed by Borrower to Lender upon demand. Notwithstanding
anything to the contrary contained herein, if in connection with a Casualty any
insurance carrier makes a payment under a property insurance Policy that
Borrower proposes be treated as business or rental interruption insurance,
then, notwithstanding any designation (or lack of designation) by the insurance
carrier as to the purpose of such payment, as between Lender and Borrower, such
payment shall not be treated as business or rental interruption insurance
proceeds unless Borrower has demonstrated to Lender’s satisfaction that the remaining
net Proceeds that will be received from the property insurance carriers are
sufficient to pay one hundred percent (100%) of the cost of fully restoring the
Improvements or, if such net Proceeds are to be applied to repay the Debt in
accordance with the terms hereof, that such remaining net Proceeds will be
sufficient to pay the Debt in full.

       7.3   Condemnation.

                       7.3.1   Notice;
Restoration.   Borrower shall promptly give Lender notice of the actual or
threatened commencement of any condemnation or eminent domain proceeding
affecting the Property (a “Condemnation”) and shall deliver to Lender copies
of any and all papers served in connection with such Condemnation. Following
the occurrence of a Condemnation, Borrower, regardless of whether an Award is
available (unless Lender has breached its obligation (if any) to make such
Award available pursuant to Section 7.4.1), shall promptly proceed to
restore, repair, replace or rebuild the Property in accordance with Legal
Requirements to the extent practicable to be of at least equal value and of
substantially the same character (and to have the same utility) as prior to
such Condemnation.

                       7.3.2   Collection
of Award.   If a Condemnation occurs where the award or payment in
respect thereof (an “Award”)
does not exceed $2,000,000 or which results in the taking of five percent (5%)
or less of the Property, provided no Event of Default has occurred and is
continuing, Borrower may make any compromise, adjustment or settlement in
connection with such Condemnation with the prior written consent of Lender, not
to be unreasonably withheld, provided such adjustment is carried out in a
competent and timely manner, and Borrower is hereby authorized to collect and
receipt for the Award. In the event of a Condemnation where the Award is in
excess of $2,000,000 or which results in the taking of more than five percent
(5%) of the Property, Lender is hereby irrevocably appointed as Borrower’s
attorney-in-fact, coupled with an interest, with exclusive power to collect,
receive and retain such Award
and to make any compromise, adjustment or settlement in connection with such
Condemnation with the prior consent of Borrower (unless an Event of Default is
continuing, in which case, Borrower’s prior consent shall not be required), not
to be unreasonably withheld (which shall be deemed consented to if Borrower
fails to respond to any request for consent

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therefor within 10 days’
of request). Notwithstanding any Condemnation (or any transfer made in lieu of
or in anticipation of such Condemnation), Borrower shall continue to pay the
Debt at the time and in the manner provided for in the Loan Documents, and the
Debt shall not be reduced unless and until any Award shall have been actually
received and applied by Lender to expenses of collecting the Award and to
discharge of the Debt. Lender shall not be limited to the interest paid on the
Award by the condemning authority but shall be entitled to receive out of the
Award interest at the rate or rates provided in the Note. If the Property is
sold, through foreclosure or otherwise, prior to the receipt by Lender of such
Award, Lender shall have the right, whether or not a deficiency judgment on the
Note shall be recoverable or shall have been sought, recovered or denied, to
receive all or a portion of the Award sufficient to pay the Debt. Borrower
shall cause any Award that is payable to Borrower to be paid directly to Lender.
Lender shall hold such Award in the Casualty/Condemnation Subaccount and
disburse such Award in accordance with the terms hereof.

       7.4   Application of
Proceeds or Award.

                       7.4.1   Application
to Restoration.   If an Insured Casualty or Condemnation occurs where (i) the
loss is in an aggregate amount less than twenty five percent (25%) of the
unpaid Principal; (ii) in the reasonable judgment of Lender, the Property
can be restored within twelve (12) months after all applicable restoration
permits have been obtained, and prior to six (6) months before the Stated
Maturity Date and prior to the expiration of the rental or business
interruption insurance with respect thereto, to the Property’s pre-existing
condition and utility as existed immediately prior to such Insured Casualty or
Condemnation and to an economic unit not less valuable and not less useful than
the same was immediately prior to the Insured Casualty or Condemnation, and
after such restoration will adequately secure the Debt; (iii) less than (x) thirty
percent (30%), in the case of an Insured Casualty or (y) fifteen percent
(15%), in the case of a Condemnation, of the rentable area of the Improvements
has been damaged, destroyed or rendered unusable as a result of such Insured
Casualty or Condemnation; (iv) Leases
demising in the aggregate at least sixty-five percent (65%) of the total
rentable space in the Property and in effect as of the date of the occurrence
of such Insured Casualty or Condemnation remain in full force and effect during
and after the completion of the Restoration (hereinafter defined); and (v) no
Event of Default shall have occurred and be then continuing, then the Proceeds
or the Award, as the case may be (after reimbursement of any expenses incurred
by Lender), shall be applied to pay for or reimburse Borrower for the cost of
restoring, repairing, replacing or rebuilding the Property (the “Restoration”), in the manner set forth herein. Borrower
shall commence and diligently prosecute such Restoration. Notwithstanding the
foregoing, in no event shall Lender be obligated to apply the Proceeds or Award
to reimburse Borrower for the cost of Restoration unless, in addition to
satisfaction of the foregoing conditions, both (x) Borrower shall pay (and
if required by Lender, Borrower shall deposit with Lender in advance) all costs
of such Restoration in excess of the net amount of the Proceeds or the Award
made available pursuant to the terms hereof; and (y) Lender shall have
received evidence reasonably satisfactory to it that during the period of the
Restoration, the Rents will be at least equal to the sum of the operating
expenses and Debt Service, as reasonably determined by Lender.

                       7.4.2   Application
to Debt.   Except as provided in Section 7.4.1
above, any Proceeds and/or Award may, at the option of Lender in its discretion,
be applied to the payment

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of (i) accrued but
unpaid interest on the Note, (ii) the unpaid Principal and (iii) other
charges due under the Note and/or any of the other Loan Documents, or applied
to reimburse Borrower for the cost of any Restoration, in the manner set forth
in Section 7.4.3 below. Any such
prepayment of the Loan shall be without any Yield Maintenance Premium, unless
an Event of Default has occurred and is continuing at the time the Proceeds are
received from the insurance company or the Award is received from the
condemning authority, as the case may be, in which event Borrower shall pay to
Lender an additional amount equal to the Yield Maintenance Premium, if any,
that may be required with respect to the amount of the Proceeds or Award
applied to the unpaid Principal. Notwithstanding anything to the contrary
contained herein, if any Proceeds or Award are not required to be made
available for a Restoration and are retained and applied by Lender toward the
payment of the Debt, Borrower may prepay the entire outstanding Principal
without payment of any Yield Maintenance Premium provided that (x) such
prepayment is made within 90 days after Lender applies such Proceeds or Award
to the Debt and (y) together with such prepayment, Borrower pays to Lender
all accrued and unpaid interest and all other sums payable under the Loan
Documents.

                       7.4.3   Procedure
for Application to Restoration.   If Borrower is entitled to
reimbursement out of the Proceeds or an Award held by Lender, such Proceeds or
Award shall be disbursed from time to time from the Casualty/Condemnation
Subaccount upon Lender being furnished with (i) evidence satisfactory to
Lender of the estimated cost of completion of the Restoration, (ii) a
fixed price or guaranteed maximum cost construction contract for Restoration
satisfactory to Lender, (iii) prior to the commencement of Restoration,
all immediately available funds in addition to the Proceeds or Award that in
Lender’s judgment are required to complete the proposed Restoration (or such
additional funds are irrevocably committed to the satisfaction of Lender by or
on behalf of Borrower for that purpose), (iv) such architect’s
certificates, waivers of lien, contractor’s sworn statements, title insurance
endorsements, bonds, plats of survey, permits, approvals, licenses and such
other documents and items as Lender may reasonably require and approve in Lender’s
discretion, and (v) all plans and specifications for such Restoration,
such plans and specifications to be approved by Lender in writing prior to
commencement of any work. Lender may, at Borrower’s expense, retain a
consultant to review and approve all requests for disbursements, which approval
shall also be a condition precedent to any disbursement. No payment made prior
to the final completion of the Restoration shall exceed ninety percent (90%) of
the value of the work performed from time to time; funds other than the
Proceeds or Award shall be disbursed prior to disbursement of such Proceeds or
Award; and at all times, the undisbursed balance of such Proceeds or Award
remaining in the hands of Lender, together with funds deposited for that
purpose or irrevocably committed to the satisfaction of Lender by or on behalf
of Borrower for that purpose, shall be at least sufficient in the reasonable
judgment of Lender to pay for the cost of completion of the Restoration, free
and clear of all Liens or claims for Lien. Provided no Default or Event of
Default then exists, any surplus that remains out of the Proceeds held by
Lender after payment of such costs of Restoration shall be paid to Borrower. Any
surplus that remains out of the Award received by Lender after payment of such
costs of Restoration shall, in the discretion of Lender, be retained by Lender
and applied to payment of the Debt or returned to Borrower.

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8.             DEFAULTS

       8.1   Events
of Default.   An “Event of Default” shall exist with respect to the Loan if
any of the following shall occur:

(a)   any
portion of the Debt is not paid when due or any other amount under Section 3.11(a)(i) through
(viii) hereof is not paid in full on each Payment Date (provided,
however, if adequate funds are available in the Deposit Account for such
payments, the failure by the Deposit Bank to allocate such funds into the
appropriate Subaccounts shall not constitute an Event of Default);

(b)   any
of the Taxes are not paid when due (unless Lender is paying such Taxes pursuant
to Section 3.3 hereof), subject to Borrower’s right to contest
Taxes in accordance with Section 5.2 hereof;

(c)   the
Policies are not kept in full force and effect, or are not delivered to Lender
pursuant to Section 7.1.2(v) within ten (10) days after request;

(d)   (i) a
Transfer other than a Permitted Transfer occurs, or (ii) any event, or
series of events, occurs that results in the individuals who, as of the date of
this Agreement, are members of the Incumbent Board of the Behringer Harvard
REIT ceasing for any reason to constitute at least a majority of such Board of
Directors, provided, however, that if the election, or nomination for election
by the Behringer Harvard REIT’s shareholders, of any new director was approved
by a vote of at least a majority of the Incumbent Board, such new director
shall, for purposes of this Agreement, be considered as a member of the
Incumbent Board;

(e)   any
representation or warranty made by Borrower or Guarantor or in any Loan
Document, or in any report, certificate, financial statement or other
instrument, agreement or document furnished by Borrower or Guarantor in
connection with any Loan Document, shall be false or misleading in any material
respect as of the date the representation or warranty was made;

(f)    Borrower
or Guarantor shall (i) make an assignment for the benefit of creditors, or
(ii) generally not be paying its debts as they become due;

(g)   a
receiver, liquidator or trustee shall be appointed for Borrower or Guarantor;
or Borrower or Guarantor shall be adjudicated a bankrupt or insolvent; or any
petition for bankruptcy, reorganization or arrangement pursuant to federal
bankruptcy law, or any similar federal or state law, shall be filed by or
against, consented to, or acquiesced in by, Borrower or Guarantor, as the case
may be; or any proceeding for the dissolution or liquidation of Borrower or
Guarantor shall be instituted; provided, however, if such appointment,
adjudication, petition or proceeding was involuntary and not consented to by
Borrower or Guarantor, as the case may be, only upon the same not being
discharged, stayed or dismissed within sixty (60) days;

(h)   Borrower
breaches any covenant contained in Sections  5.12.1 (a) - (f),
5.13, 5.15, 5.25, 5.27 or 5.28 hereof;

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(i)    except
as expressly permitted hereunder, the alteration, improvement, demolition or
removal of all or any portion of the Improvements without the prior written
consent of Lender (if such consent is required pursuant to the terms of this
Agreement);

(j)    an
Event of Default as defined or described elsewhere in this Agreement or in any
other Loan Document occurs;

(k)   a
default occurs under any term, covenant or provision set forth herein or in any
other Loan Document which specifically contains a notice requirement or grace
period and such notice has been given and such grace period has expired;

(l)    any
of the assumptions contained in any substantive non-consolidation opinion,
delivered to Lender by Borrower’s counsel in connection with the Loan or
otherwise hereunder, were not true and correct as of the date of such opinion
or thereafter became untrue or incorrect;

(m) 
Borrower directly or indirectly creates, incurs or assumes any indebtedness
other than (i) the Debt and (ii) unsecured trade payables incurred in
the ordinary course of business relating to the ownership and operation of the
Property which do not exceed, at any time, a maximum amount of two percent (2%)
of the original amount of the Principal; provided, however, such two percent
(2%) limitation shall not apply to (i) any asset management or property
management fee payable pursuant to the terms of the Management Agreement or (ii) any
amounts that are payable out of the Capital Reserve Subaccount, the Rollover
Reserve Subaccount or any other reserves established under this Agreement; or

(n)   a
default shall be continuing under any of the other terms, covenants or
conditions of this Agreement or any other Loan Document not otherwise specified
in this Section 8.1, for ten (10) days after notice to
Borrower (and Guarantor, if applicable) from Lender, in the case of any default
which can be cured by the payment of a sum of money, or for thirty (30) days
after notice from Lender in the case of any other default; provided, however,
that if such non-monetary default is susceptible of cure but cannot reasonably
be cured within such thirty (30)-day period, and Borrower (or Guarantor, if
applicable) shall have commenced to cure such default within such thirty
(30)-day period and thereafter diligently and expeditiously proceeds to cure
the same, such thirty (30)-day period shall be extended for an additional
period of time as is reasonably necessary for Borrower (or Guarantor, if
applicable) in the exercise of due diligence to cure such default, such
additional period not to exceed sixty (60) days; it being further acknowledged
that: (A) a default under Section 6(c) of the Guaranty
may be cured by delivery to Lender of cash or an Acceptable Letter of Credit,
in either case in an amount equal to the Guaranty Limit Amount, (B) if an
Acceptable Letter of Credit is delivered pursuant to the foregoing clause (A),
Lender shall have the right to draw upon such Acceptable Letter of Credit in
the full amount thereof upon either (1) the occurrence of any Event of
Default, or (2) if Lender receives a notice stating that the Acceptable
Letter of Credit will not be renewed (as provided for in such Acceptable Letter
of Credit) and a replacement for such Acceptable Letter of Credit conforming
with the requirements of an

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Acceptable Letter of Credit shall not have been provided at least
thirty (30) days prior to the date on which the applicable Acceptable Letter of
Credit is scheduled to expire or such Acceptable Letter of Credit is to expire
within thirty (30) days and an extension or renewal of such Acceptable Letter of
Credit conforming with the requirements of an Acceptable Letter of Credit shall
not have been provided; (C) any cash delivered pursuant to the foregoing
clause (A) (if an Event of Default has occurred) and the proceeds of any
draw under an Acceptable Letter of Credit pursuant to the foregoing clause (B)(1) shall
be allocated to the Debt, in such order and in such manner as Lender shall
elect in its sole and absolute discretion, including (if the Loan has been
accelerated) to make a prepayment of Principal (together with the applicable
Yield Maintenance Premium applicable thereto); (D) any cash delivered
pursuant to the foregoing clause (A) (if no Event of Default has occurred)
and the proceeds of any draw under an Acceptable Letter of Credit pursuant to
the foregoing clause (B)(2) shall be deposited by Lender into the
Subaccount contemplated under Section 3.2.2, the Tax and Insurance
Subaccount, the Capital Reserve Subaccount and the Rollover Reserve Subaccount,
in the respective amounts contemplated under Section 3, and shall
be governed by the provisions of Sections 3.3.2, 3.3, 3.4
and 3.5, as applicable, as well as the other terms and conditions of
this Agreement and the other Loan Documents; and (E) Borrower shall pay
any fees or other amounts charged by any issuing bank with respect to any such
draw and shall promptly pay to Lender all costs and expenses of Lender incurred
in connection with any such draw, including Lender’s reasonable attorneys’
fees.

8.2          Remedies.

                       8.2.1   Acceleration.   Upon the occurrence and during
the continuance of an Event of Default (other than an Event of Default
described in paragraph (f) or (g) of Section 8.1
above) and at any time and from time to time thereafter during the continuance
of such Event of Default, in addition to any other rights or remedies available
to it pursuant to the Loan Documents or at law or in equity, Lender may take
such action, without notice or demand, that Lender deems advisable to protect
and enforce its rights against Borrower and in and to the Property; including
declaring the Debt to be immediately due and payable (including unpaid
interest), Default Rate interest, Late Payment Charges, Yield Maintenance
Premium and any other amounts owing by Borrower), without notice or demand; and
upon any Event of Default described in paragraph (f) or (g) of Section 8.1 above, the Debt (including unpaid interest,
Default Rate interest, Late Payment Charges, Yield Maintenance Premium and any
other amounts owing by Borrower) shall immediately and automatically become due
and payable, without notice or demand, and Borrower hereby expressly waives any
such notice or demand, anything contained in any Loan Document to the contrary
notwithstanding.

                       8.2.2   Remedies
Cumulative.   Upon the occurrence and during the continuance of an Event
of Default, all or any one or more of the rights, powers, privileges and other
remedies available to Lender against Borrower under the Loan Documents or at
law or in equity may be exercised by Lender at any time and from time to time,
whether or not all or any of the Debt shall be declared, or be automatically,
due and payable, and whether or not Lender shall have commenced any foreclosure
proceeding or other action for the enforcement of its rights and remedies under
any of the Loan Documents. Any such actions taken by Lender shall be cumulative
and concurrent and may be pursued independently, singly, successively, together
or otherwise, at such time and in such order as Lender may determine in its
discretion, to the fullest extent permitted by law, without impairing or
otherwise affecting the other rights and remedies of Lender permitted by law,
equity or contract or as set forth in the Loan Documents. Without limiting the
generality of the foregoing, Borrower agrees that if an Event of Default is
continuing, (i) to the extent permitted by applicable law, Lender is not
subject to any “one

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action” or “election of
remedies” law or rule, and (ii) all Liens and other rights, remedies or
privileges provided to Lender shall remain in full force and effect until
Lender has exhausted all of its remedies against the Property, the Mortgage has
been foreclosed, the Property has been sold and/or otherwise realized upon in
satisfaction of the Debt or the Debt has been paid in full. To the extent
permitted by applicable law, nothing contained in any Loan Document shall be
construed as requiring Lender to resort to any particular Property or any
portion of the Property for the satisfaction of any of the Debt in preference
or priority to any other portion, and Lender may seek satisfaction out of the
entire Property or any part thereof, in its discretion.

                       8.2.3   Severance.   During the continuance of an
Event of Default, Lender shall have the right from time to time to sever the
Note and the other Loan Documents into one or more separate notes, mortgages
and other security documents in such denominations and priorities of payment
and liens as Lender shall determine in its discretion for purposes of
evidencing and enforcing its rights and remedies. Borrower shall execute and
deliver to Lender from time to time, promptly after the request of Lender, a
severance agreement and such other documents as Lender shall request in order
to effect the severance described in the preceding sentence, all in form and
substance reasonably satisfactory to Lender. Borrower hereby absolutely and
irrevocably appoints Lender as its true and lawful attorney, coupled with an
interest, in its name and stead to make and execute all documents necessary or
desirable to effect such severance, Borrower ratifying all that such attorney
shall do by virtue thereof.

                       8.2.4   Delay.   No delay or omission to
exercise any remedy, right or power accruing upon an Event of Default, or the
granting of any indulgence or compromise by Lender shall impair any such
remedy, right or power hereunder or be construed as a waiver thereof, but any
such remedy, right or power may be exercised from time to time and as often as
may be deemed expedient. A waiver of one Default or Event of Default shall not
be construed to be a waiver of any subsequent Default or Event of Default or to
impair any remedy, right or power consequent thereon. Notwithstanding any other
provision of this Agreement, Lender reserves the right to seek a deficiency
judgment or preserve a deficiency claim in connection with the foreclosure of
the Mortgage to the extent necessary to foreclose on all or any portion of the
Property, the Rents, the Cash Management Accounts or any other collateral.

                       8.2.5   Lender’s
Right to Perform.   If Borrower fails to perform any covenant or obligation
contained herein and such failure shall continue for a period of five (5) Business
Days after Borrower’s receipt of written notice thereof from Lender, without in
any way limiting Lender’s right to exercise any of its rights, powers or
remedies as provided hereunder, or under any of the other Loan Documents,
Lender may, but shall have no obligation to, perform, or cause performance of,
such covenant or obligation, and all costs, expenses, liabilities, penalties
and fines of Lender incurred or paid in connection therewith shall be payable
by Borrower to Lender upon demand and if not paid shall be added to the Debt
(and to the extent permitted under applicable laws, secured by

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the Mortgage and other
Loan Documents) and shall bear interest thereafter at the Default Rate. Notwithstanding
the foregoing, Lender shall have no obligation to send notice to Borrower of
any such failure. Additionally, during the continuance of an Event of Default,
Lender shall have the right, but not the obligation, to make any Protective
Advance (hereinafter defined) (provided, however, that Lender will only make
such Protective Advance from its own funds if there are insufficient funds in
the Cash Management Accounts), and the same shall be added to the Debt (and to
the extent permitted under applicable laws, secured by the Mortgage and other
Loan Documents) and shall bear interest thereafter at the Default Rate. As
used herein, “Protective Advance” means
all sums advanced for the purpose of payment of real estate taxes (including
special payments in lieu of real estate taxes), maintenance costs, insurance
premiums, operating expenses, trade payables or other items with respect to the
Property (including capital items) reasonably necessary to protect the Property
or any other security given for the Loan or to preserve any of Lender’s rights
or remedies under the Loan Documents.

9.     SPECIAL PROVISIONS

       9.1   Sale
of Note and Secondary Market Transaction.

                       9.1.1   General;
Borrower Cooperation.   Lender shall have the right at any time and from time to
time (i) to sell or otherwise transfer the Loan or any portion thereof or
the Loan Documents or any interest therein to one or more investors, (ii) to
sell participation interests in the Loan to one or more investors or (iii) to
securitize the Loan or any portion thereof in a single asset securitization or
a pooled loan securitization of rated single or multi-class securities (the “Securities”) secured by or evidencing ownership
interests in the Note and the Mortgage (each such sale, assignment,
participation and/or securitization is referred to herein as a “Secondary Market Transaction”). In connection with any Secondary
Market Transaction, Borrower shall use all reasonable efforts and cooperate
fully and in good faith with Lender and otherwise assist Lender in satisfying
the market standards to which Lender customarily adheres or which may be
reasonably required in the marketplace or by the Rating Agencies in connection
with any such Secondary Market Transactions, including: (a) to (i) to
provide such financial and other information with respect to the Property,
Borrower and its Affiliates, Manager and any tenants of the Property, (ii) 
provide business plans and budgets relating to the Property and (iii) 
perform or permit or cause to be performed or permitted such site inspection,
appraisals, surveys, market studies, environmental reviews and reports,
engineering reports and other due diligence investigations of the Property, as
may be reasonably requested from time to time by Lender or the Rating Agencies
or as may be necessary or appropriate in connection with a Secondary Market
Transaction or Exchange Act requirements (the items provided to Lender pursuant
to clauses (i) and (ii) of this paragraph (a) being called the “Provided Information”),
together, if customary, with appropriate verification of and/or consents to the
Provided Information through letters of auditors or opinions of counsel of
independent attorneys acceptable to Lender and the Rating Agencies; (b) at
Borrower’s expense, cause counsel to render opinions as to non-consolidation
(which may be an update of an existing non-consolidation opinion) and any other
opinion customary in securitization transactions with respect to the Property,
Borrower and its Affiliates, which counsel and opinions shall be reasonably
satisfactory to Lender and the Rating Agencies; (c) make such
representations and warranties as of the closing date of any Secondary Market
Transaction with respect to the Property, Borrower and the Loan Documents as
are customarily provided in such transactions and as may be reasonably
requested by Lender or the Rating Agencies and consistent with the facts
covered by such representations and warranties as they exist on the date
thereof, including the representations and warranties made in the Loan
Documents; (d) provide current certificates of good standing and
qualification with respect to Borrower and Guarantor from appropriate
Governmental Authorities; and (e) execute such amendments to the Loan
Documents and Borrower’s organizational documents, as may be requested by
Lender or the Rating Agencies or otherwise to effect a Secondary Market

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Transaction, provided
that nothing contained in this subsection (e) shall result in changes
to Loan terms adverse to Borrower or require Borrower to incur any additional
liabilities. Borrower’s cooperation obligations set forth herein shall continue
until the Loan has been paid in full.

                       9.1.2   Use of Information.   Borrower understands that all
or any portion of the Provided Information and any other information and/or
materials delivered by or on behalf of Borrower, Guarantor or any of their
respective Affiliates may be included in disclosure documents in connection
with a Secondary Market Transaction, including a prospectus or private
placement memorandum (each, a “Disclosure Document”)
and may also be included in filings with the Securities and Exchange Commission
pursuant to the Securities Act of 1933, as amended (the “Securities
Act”), or the Securities and Exchange Act of 1934, as amended
(the “Exchange Act”), or provided
or made available to investors or prospective investors in the Securities, the
Rating Agencies, and service providers or other parties relating to the
Secondary Market Transaction. If the Disclosure Document is required to be
revised, Borrower shall cooperate with Lender in updating the Provided
Information or such other information and/or materials for inclusion or summary
in the Disclosure Document or for other use reasonably required in connection
with a Secondary Market Transaction by providing all current information
pertaining to Borrower, Manager and the Property necessary to keep the
Disclosure Document accurate and complete in all material respects with respect
to such matters.

9.1.3   Borrower Obligations Regarding
Disclosure Documents.   In connection with
a Disclosure Document, Borrower shall: (a) if requested by Lender, certify
in writing that Borrower has carefully examined those portions of such
Disclosure Document, pertaining to Borrower, the Property, Manager and the
Loan, and that such portions do not contain any untrue statement of a material
fact or omit to state a material fact necessary in order to make the statements
made, in the light of the circumstances under which they were made, not
misleading; and (b) indemnify (in a separate instrument of indemnity, if
so requested by Lender) (i) any underwriter, syndicate member or placement
agent (collectively, the “Underwriters”) retained
by Lender or its issuing company affiliate (the “Issuer”) in
connection with a Secondary Market Transaction, (ii) Lender and (iii) the
Issuer that is named in the Disclosure Document or registration statement
relating to a Secondary Market Transaction (the “Registration
Statement”), and each of the Issuer’s directors, each of its officers who
have signed the Registration Statement and each person or entity who controls
the Issuer or the Lender within the meaning of Section 15 of the
Securities Act or Section 30 of the Exchange Act (collectively within
(iii), the “GCM Group”), and each of its directors and each
person who controls each of the Underwriters, within the meaning of Section 15
of the Securities Act and Section 20 of the Exchange Act (collectively,
the “Underwriter Group”) for any
losses, claims, damages or liabilities (the “Liabilities”) to which
Lender, the GCM Group or the Underwriter Group may become subject (including
reimbursing all of them for any legal or other expenses actually incurred in
connection with investigating or defending the Liabilities) insofar as the
Liabilities arise out of or are based upon any untrue statement of any material
fact contained in any of the Provided Information or in any of the applicable
portions of such sections of the Disclosure Document applicable to Borrower,
Manager, the Property or the Loan, or arise out of or are based upon the
omission to state therein a material fact required to be stated in the
applicable portions of such sections or necessary in order to make the
statements in the applicable portions of such sections in light of the
circumstances under which they were made, not misleading; provided, however,
that Borrower shall not be required to indemnify Lender for any Liabilities

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relating to untrue
statements or omissions which Borrower identified to Lender in writing at the
time of Borrower’s examination of such Disclosure Document or which Borrower
identified to Lender in writing at least three (3) Business Days prior to
Lender’s delivery of such Disclosure Document to any third party in connection
with any Secondary Market Transaction, or (ii) any information or document
not provided to or certified by Borrower. Notwithstanding anything to the contrary contained in this Section 9.1.3,
nothing contained herein shall impose liability upon Borrower for any losses,
claims, damages or liability arising out of or based upon an untrue statement
of any material fact contained in any statement, report or document provided to
Lender on behalf of Borrower by a party who is not an Affiliate of Borrower (a “Third Party Report”),
unless Borrower had actual knowledge at the time Borrower provided such
statement, report or document to Lender that such Third Party Report contains
such untrue statement.

                       9.1.4   Borrower
Indemnity Regarding Filings.   In
connection with filings under the Exchange Act, Borrower shall (i) indemnify
Lender, the GCM Group and the Underwriter Group for any Liabilities to which
Lender, the GCM Group or the Underwriter Group may become subject insofar as
the Liabilities arise out of or are based upon the omission to state in the
Provided Information a material fact required to be stated in the Provided
Information in order to make the statements in the Provided Information, in
light of the circumstances under which they were made not misleading and (ii) reimburse
Lender, the GCM Group or the Underwriter Group for any legal or other expenses
actually incurred by Lender, GCM Group or the Underwriter Group in connection
with defending or investigating the Liabilities. Notwithstanding anything to
the contrary contained in this Section 9.1.4, nothing contained herein
shall impose liability upon Borrower for any Liabilities arising out of or
based upon an untrue statement of any material fact contained in any Third
Party Report, unless Borrower had actual knowledge at the time Borrower
provided such statement, report or document to Lender that such Third Party
Report contains such untrue statement.

                       9.1.5   Indemnification
Procedure.   Promptly after receipt by an
indemnified party under Section 9.1.3
above or Section 9.1.4 above of notice of
the commencement of any action for which a claim for indemnification is to be
made against Borrower, such indemnified party shall notify Borrower in writing
of such commencement, but the omission to so notify Borrower will not relieve
Borrower from any liability that it may have to any indemnified party hereunder
except to the extent that failure to notify causes prejudice to Borrower. If
any action is brought against any indemnified party, and it notifies Borrower
of the commencement thereof, Borrower will be entitled, jointly with any other
indemnifying party, to participate therein and, to the extent that it (or they)
may elect by written notice delivered to the indemnified party promptly after
receiving the aforesaid notice of commencement, to assume the defense thereof
with counsel satisfactory to such indemnified party in its discretion. After
notice from Borrower to such indemnified party under this Section 9.1.5,
Borrower shall not be responsible for any legal or other expenses subsequently
incurred by such indemnified party in connection with the defense thereof other
than reasonable costs of investigation; provided, however, if the defendants in
any such action include both Borrower and an indemnified party, and any
indemnified party shall have reasonably concluded that there are any legal
defenses available to it and/or other indemnified parties that are different from
or additional to those available to Borrower, then the indemnified party or
parties shall have the right to select separate counsel to assert such legal
defenses and to otherwise participate in the defense of such action on behalf
of such indemnified party or parties. Borrower shall not be liable for the
expenses of more than one separate counsel

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unless there are legal
defenses available to it that are different from or additional to those
available to another indemnified party.

                       9.1.6   Contribution.   In
order to provide for just and equitable contribution in circumstances in which
the indemnity agreement provided for in Section 9.1.3
above or Section 9.1.4 above is for any
reason held to be unenforceable by an indemnified party in respect of any
Liabilities (or action in respect thereof) referred to therein which would
otherwise be indemnifiable under Section 9.1.3
above or Section 9.1.4 above, Borrower shall
contribute to the amount paid or payable by the indemnified party as a result
of such Liabilities (or action in respect thereof); provided, however, that no
Person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of
the Securities Act) shall be entitled to contribution from any Person not
guilty of such fraudulent misrepresentation.  In determining the amount of contribution to
which the respective parties are entitled, the following factors shall be
considered:  (i) the GCM Group’s and
Borrower’s relative knowledge and access to information concerning the matter
with respect to which the claim was asserted; (ii) the opportunity to
correct and prevent any statement or omission; and (iii) any other
equitable considerations appropriate in the circumstances. Lender and Borrower
hereby agree that it may not be equitable if the amount of such contribution
were determined by pro rata or per capita allocation.

                       9.1.7   Severance
of Loan.   Lender shall have the right, at
any time (whether prior to, in connection with, or after any Secondary Market
Transaction), with respect to all or any portion of the Loan, to modify, split
and/or sever all or any portion of the Loan as hereinafter provided. Without
limiting the foregoing, Lender may (i) cause the Note and the Mortgage to
be split into a first and second mortgage loan, (ii) create one more
senior and subordinate notes (i.e.,
an A/B or A/B/C structure), (iii) create multiple components of the Note
or Notes (and allocate or reallocate the principal balance of the Loan among
such components) or (iv) otherwise sever the Loan into two (2) or
more loans secured by mortgages and by a pledge of partnership or membership
interests (directly or indirectly) in Borrower (i.e., a senior loan/mezzanine loan structure), in each such
case, in whatever proportion and whatever priority Lender determines; provided,
however, in each such instance the outstanding principal balance of all the Notes
evidencing the Loan (or components of such Notes) immediately after the
effective date of such modification equals the outstanding principal balance of
the Loan immediately prior to such modification and the weighted average of the
interest rates for all such Notes (or components of such Notes) immediately
after the effective date of such modification equals the interest rate of the
original Note immediately prior to such modification and no such modification
shall have a significant adverse economic effect on Borrower. If requested by
Lender, Borrower (and Borrower’s constituent members, if applicable, and
Guarantor) shall execute within seven (7) Business Days after such
request, such documentation as Lender may reasonably request to evidence and/or
effectuate any such modification or severance.

       9.2   Costs
and Expenses.   Notwithstanding anything
to the contrary contained in this Article 9, Borrower shall not be
required to incur out-of-pocket expenses in the performance of its obligations
under Sections 9.1.1 (other than with respect
to the delivery or update of non-consolidation opinions), 9.1.2
and 9.1.7.]

       9.3   Mezzanine
Loan.   Lender
agrees to permit owner(s) of direct or indirect equity interests in
Borrower (the “Mezzanine Borrower”,
provided however that in no event shall any

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entity required hereunder
to be a Special Purpose Bankruptcy Remote Entity be a Mezzanine Borrower) to
obtain a mezzanine loan (the “Mezzanine Loan”) the proceeds of
which may be used solely to make a capital contribution to Borrower and in turn
used by Borrower to pay Approved Leasing Expenses incurred with respect to
Leases entered into after the date hereof, subject to satisfaction of the
following conditions (provided that no more than one Mezzanine Loan shall be
permitted during the term of the Loan):

(a)   no
Event of Default shall exist;

(b)   the
Mezzanine Loan may be secured by a pledge by Mezzanine Borrower of such
Mezzanine Borrower’s direct or indirect equity interest in Borrower, but not by
the Property or any assets of Borrower or of any other entity required
hereunder to be a Single Purpose Bankruptcy Remote Entity, and neither Borrower
nor any other entity required hereunder to be a Special Purpose Bankruptcy
Remote Entity shall in any way be obligated in connection with the Mezzanine
Loan (except for non-monetary obligations reasonably acceptable to Lender that
are customary in connection with mezzanine loans involving securitized senior
loans);

(c)   if
a Secondary Market Transaction has occurred, Borrower shall have obtained (and
delivered to Lender) a Rating Comfort Letter with respect to the proposed
Mezzanine Loan;

(d)   the
Mezzanine Loan lender (the “Mezzanine Lender”) shall be an Acceptable Mezzanine
Lender;

(e)   the  Mezzanine Lender shall, upon Lender’s
request, execute a subordination and standstill intercreditor agreement (the “Intercreditor Agreement”)
in form approved by Lender, which approval shall not be unreasonably withheld,
conditioned or delayed so long as the Intercreditor Agreement is otherwise in
conformance with Rating Agency approved forms for intercreditor agreements;

(f)    the
Net Operating Income of the Property, as reasonably determined by Lender for
the 12 month period then most recently ended, is sufficient to satisfy an
aggregate projected Debt Service Coverage Ratio (based on the aggregate of the
Debt Service on the Loan and the Mezzanine Loan) of at least 1.00:1.00;

(g)   Lender
shall have approved (such approval not to be unreasonably withheld, conditioned
or delayed) the loan documents evidencing and securing the Mezzanine Loan;

(h)   the
maturity of the Mezzanine Loan shall be no earlier than the Maturity Date;

(i)    the
Property value, as determined by Lender based on a FIRREA appraisal dated not
more than six (6) months prior to the date of the Mezzanine Loan and
otherwise reasonably acceptable to Lender, prepared, at Borrower’s expense, on
behalf of Lender by an appraiser reasonably approved by Lender which is a
member of the Appraisal Institute with substantial experience in appraising
properties similar to the Property, is sufficient to satisfy an aggregate
loan-to-value ratio (based on the aggregate balances of the Loan and the
Mezzanine Loan) not in excess of 80%;

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(j)    Mezzanine
Loan payments shall be made solely from excess Property cash flow distributed
by the Borrower to its owners after payment of all debt service and reserve
payments under the Loan and operating expenses for the Property or from other
funds of Mezzanine Borrower; and

(k)   Borrower
shall enter into such amendments or supplements to the Loan Documents as Lender
may require in order to establish a hard lock box and cash management
arrangement whereby (or modify the existing arrangement so that) Property cash
flow is deposited and applied, through Lender-controlled accounts, first to
debt service and reserves required under the Loan, then to fund operating
expenses, prior to any distributions of excess Property cash flow to the
Borrower’s owners for payments upon the Mezzanine Loan.

Borrower shall pay or reimburse to Lender all Rating Agency fees and
all reasonable costs and expenses incurred by Lender, including fees and
expenses of Lender’s counsel, in connection with the review and documentation
concerning the Mezzanine Loan regardless of whether such Mezzanine Loan is
closed.

       9.4   Letters
of Credit.   Each of the letters of credit
delivered by Borrower under this Agreement (each, a “Letter of Credit”; collectively, the “Letters of
Credit”) shall be
additional security for the payment of the Debt. In the event Lender transfers
any Letter of Credit to any successor or assignee of Lender, and the issuer of
the Letter of Credit charges a fee in connection with such transfer, Borrower
shall pay or reimburse Lender for such transfer fee.

10.  MISCELLANEOUS

10.1   Exculpation.   (a) Subject to the
qualifications below, Lender shall not enforce the liability and obligation of
Borrower to perform and observe the obligations contained in the Loan Documents
by any action or proceeding wherein a money judgment shall be sought against
Borrower, except that Lender may bring a foreclosure action, an action for
specific performance or any other appropriate action or proceeding to enable
Lender to enforce and realize upon its interest and rights under the Loan
Documents, or in the Property, the Rents or any other collateral given to
Lender pursuant to the Loan Documents; provided, however, that, except as
specifically provided herein, any judgment in any such action or proceeding
shall be enforceable against Borrower only to the extent of Borrower’s interest
in the Property, in the Rents and in any other collateral given to Lender, and
Lender shall not sue for, seek or demand any deficiency judgment against
Borrower in any such action or proceeding under or by reason of or under or in
connection with any Loan Document. The provisions of this Section 10.1
shall not, however, (i) constitute a waiver, release or impairment of any
obligation evidenced or secured by any Loan Document; (ii) impair the
right of Lender to name Borrower as a party defendant in any action or suit for
foreclosure and sale under the Mortgage; (iii) affect the validity or
enforceability of any of the Loan Documents or any guaranty made in connection
with the Loan or any of the rights and remedies of Lender thereunder; (iv) impair
the right of Lender to obtain the appointment of a receiver; (v) impair
the enforcement of the Assignment of Leases; (vi) constitute a prohibition
against Lender to commence any other appropriate action or proceeding in order
for Lender to fully realize the security granted by the Mortgage or to exercise
its remedies

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against the Property; or (vii) constitute
a waiver of the right of Lender to enforce the liability and obligation of
Borrower, by money judgment or otherwise, to the extent of any loss, damage,
cost, expense, liability, claim or other obligation incurred by Lender
(including attorneys’ fees and costs reasonably incurred) (collectively, “Lender’s Losses”) arising out of or
in connection with the following (all such liability and obligation of Borrower
for any or all of the following being referred to herein as “Borrower’s Recourse Liabilities”): (1) fraud or intentional
misrepresentation by Borrower, or Guarantor in connection with obtaining the
Loan; (2) physical waste of the Property or any portion thereof (other
than acts committed by a third party non-affiliated property manager), or after
an Event of Default the removal or disposal of any portion of the Property
(other than acts committed by a third party non-affiliated property manager); (3) any
Proceeds paid by reason of any Insured Casualty or any Award received in
connection with a Condemnation or other sums or payments attributable to the
Property not applied in accordance with the provisions of the Loan Documents
(other than acts committed by a third party non-affiliated property manager)
(except to the extent that Borrower did not have the legal right, because of a
bankruptcy, receivership or similar judicial proceeding, to direct disbursement
of such sums or payments); (4) all Rents of the Property received or
collected by or on behalf of Borrower after an Event of Default and not applied
to payment of Principal and interest due under the Note, and to the payment of
actual and reasonable operating expenses of the Property, as they become due or
payable (other than acts committed by a third party non-affiliated property
manager) (except to the extent that such application of such funds is prevented
by bankruptcy,  receivership, or similar
judicial proceeding in which Borrower is legally prevented from directing the
disbursement of such sums); (5) misappropriation (including failure to
turn over to Lender on demand following an Event of Default) of tenant security
deposits and Rents collected in advance, or of funds held by Borrower for the
benefit of another party (other than acts committed by a third party
non-affiliated property manager); (6) the failure to pay Taxes, provided
that Borrower shall not be liable (A) to the extent funds to pay such
amounts are available in the Tax and Insurance Subaccount and Lender failed to
pay same or has elected not to pay the same pursuant to Section 3.3
or (B) Rents are insufficient to yield sufficient funds to pay such
amounts; (7) the breach of any representation, warranty, covenant or
indemnification in any Loan Document concerning Environmental Laws or Hazardous
Substances, including, without limitation, Sections 4.21
and 5.8, and clauses (viii) through
(xi) of Section 5.30; (8) the
breach of the covenants set forth in Section 5.13
(other than a breach of any of the covenants described in clauses (x) and
(xxi) (with respect to unsecured trade payables) set forth in the definition of
“Special Purpose Bankruptcy Remote Entity” on Schedule 5,
if the same occurs as a result of the economic performance of the Property); (9) the
breach of any representation, warranty, covenant or indemnification by Borrower
or Borrower Member under the LC Security Deposit Cooperation Agreement; and/or (10) Borrower
or Guarantor or any of their direct or indirect Affiliates taking any action or
making any omission intended or reasonably likely to hinder, delay, impair or
prevent Lender in or from enforcing any and all of its rights and remedies
under or pursuant to the Loan Documents or at law or in equity (unless the same
is brought in good faith and is determined in favor of Borrower or Guarantor
pursuant to a final, non-appealable judgment of a court of competent
jurisdiction).

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(b) Notwithstanding anything to the
contrary in this Agreement or any of the Loan Documents, (A) Lender shall
not be deemed to have waived any right which Lender may have under Section 506(a),
506(b), 1111(b) or any other provisions of the U.S. Bankruptcy Code to
file a claim for the full amount of the Debt or to require that all collateral
shall continue to secure all of the Debt in accordance with the Loan Documents,
and (B) Lender’s agreement not to pursue personal liability of Borrower as
set forth above SHALL BECOME NULL AND VOID and shall be of no further force and
effect, and the Debt shall be fully recourse to the Borrower in an amount equal
to the greater of (x) Lender’s Losses arising out of or in connection with
the following matters or (y) an amount equal to the unpaid balance of the
Debt, in the event that one or more of the following occurs (each, a “Springing Recourse Event”):
(i) an Event of Default described in Section 8.1(d) shall have
occurred; (ii) the occurrence of any condition or event described in
either Section 8.1(f)(i) (with respect to Borrower only) or Section 8.1(g) (with
respect to Borrower only) (each, an “Insolvency Action”) and, with respect to
such Insolvency Action described in Section 8.1(g), either Borrower,
Guarantor or any Person owning an interest (directly or indirectly) in
Borrower or Guarantor consents to, aids, solicits, supports, or otherwise
cooperates or colludes to cause such Insolvency Action or fails to contest such
Insolvency Action, except in the event that any such party has a fiduciary or
legal duty to take such action; (iii) any involuntary bankruptcy
proceeding is brought by Borrower or Guarantor or any of their respective
Affiliates against any of them; or (iv) if subsequent to the commencement
of any voluntary bankruptcy proceeding with respect to Borrower, any
involuntary bankruptcy proceeding is brought by Lender against Borrower and
Borrower or Guarantor files any motion contesting the same.

       10.2   Brokers
and Financial Advisors.   Borrower hereby represents that it has dealt with no
financial advisors, brokers, underwriters, placement agents, agents or finders in
connection with the Loan other than NorthMarq Capital, Inc. (“Broker”), whose fee
shall be paid by Borrower. Borrower shall indemnify and hold Lender harmless
from and against any and all claims, liabilities, costs and expenses (including
attorneys’ fees, whether incurred in connection with enforcing this indemnity
or defending claims of third parties) of any kind in any way relating to or
arising from a claim by any Person (including Broker) that such Person acted on
behalf of Borrower in connection with the transactions contemplated herein. The
provisions of this Section 10.2
shall survive the expiration and termination of this Agreement and the
repayment of the Debt.

       10.3   Retention
of Servicer.   Lender reserves the right to retain the Servicer to act as
its agent hereunder with such powers as are specifically delegated to the
Servicer by Lender, whether pursuant to the terms of this Agreement, any
pooling and servicing agreement or similar agreement entered into as a result
of a Secondary Market Transaction, the Deposit Account Agreement or otherwise,
together with such other powers as are reasonably incidental thereto. Borrower
shall pay any reasonable fees and expenses of the Servicer in connection with a
release of the Property, assumption or modification of the Loan, enforcement of
the Loan Documents or any other action taken by Servicer hereunder on behalf of
Lender, to the extent such actions are permitted to be taken pursuant to the
terms of the Loan Documents, but only to the extent that Borrower is expressly
required to pay such expenses pursuant to the terms of this Agreement. Notwithstanding
anything to the contrary contained herein, to the extent any matter described
in this Agreement requires the consent or approval of the special servicer under
the pooling and servicing agreement (or other similar agreement) entered into
in connection with a

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Securitization, such
special servicer shall be afforded a consent period for such matter equal to
the greater of (i) the period of time given to Lender hereunder within
which to consent or approve such matter, or (ii) 15 Business Days (to the
extent such 15 Business Day period is required under the terms of such pooling
and servicing agreement).

       10.4   Survival.   This Agreement and all
covenants, agreements, representations and warranties made herein and in the
certificates delivered pursuant hereto shall survive the making by Lender of
the Loan and the execution and delivery to Lender of the Note, and shall
continue in full force and effect so long as any of the Debt is unpaid or such
longer period if expressly set forth in this Agreement. All Borrower’s
covenants and agreements in this Agreement shall inure to the benefit of the
respective legal representatives, successors and assigns of Lender.

       10.5   Lender’s
Discretion.   Whenever pursuant to this Agreement or any other Loan
Document, Lender exercises any right given to it to approve or disapprove, or
consent or withhold consent, or any arrangement or term is to be satisfactory
to Lender or is to be in Lender’s discretion, the decision of Lender to approve
or disapprove, to consent or withhold consent, or to decide whether
arrangements or terms are satisfactory or not satisfactory, or acceptable or
unacceptable or in Lender’s discretion shall (except as is otherwise
specifically herein provided) be in the sole discretion of Lender and shall be
final and conclusive.

       10.6   Governing
Law.

(a)   THIS
AGREEMENT WAS NEGOTIATED IN THE STATE OF NEW YORK AND THE PROCEEDS OF THE NOTE
DELIVERED PURSUANT HERETO WERE DISBURSED FROM THE STATE OF NEW YORK, WHICH
STATE THE PARTIES AGREE HAS A SUBSTANTIAL RELATIONSHIP TO THE PARTIES AND TO THE
UNDERLYING TRANSACTION EMBODIED HEREBY, AND IN ALL RESPECTS, INCLUDING MATTERS
OF CONSTRUCTION, VALIDITY AND PERFORMANCE, THIS AGREEMENT AND THE OBLIGATIONS
ARISING HEREUNDER SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE
LAWS OF THE STATE OF NEW YORK APPLICABLE TO CONTRACTS MADE AND PERFORMED IN
SUCH STATE AND ANY APPLICABLE LAW OF THE UNITED STATES OF AMERICA, EXCEPT THAT
AT ALL TIMES THE PROVISIONS FOR THE CREATION, PERFECTION, AND ENFORCEMENT OF
THE LIENS CREATED PURSUANT TO THE LOAN DOCUMENTS SHALL BE GOVERNED BY AND
CONSTRUED ACCORDING TO THE LAW OF THE STATE IN WHICH THE PROPERTY IS LOCATED,
IT BEING UNDERSTOOD THAT, TO THE FULLEST EXTENT PERMITTED BY THE LAW OF SUCH
STATE, THE LAW OF THE STATE OF NEW YORK SHALL GOVERN THE VALIDITY AND THE
ENFORCEABILITY OF ALL LOAN DOCUMENTS AND THE DEBT. TO THE FULLEST EXTENT
PERMITTED BY LAW, BORROWER HEREBY UNCONDITIONALLY AND IRREVOCABLY WAIVES ANY
CLAIM TO ASSERT THAT THE LAW OF ANY OTHER JURISDICTION GOVERNS THIS AGREEMENT
AND THE NOTE, AND THIS AGREEMENT AND THE NOTE SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK PURSUANT TO § 5-1401
OF THE NEW YORK GENERAL OBLIGATIONS LAW.

 79
 

 

(b)   ANY
LEGAL SUIT, ACTION OR PROCEEDING AGAINST LENDER OR BORROWER ARISING OUT OF OR
RELATING TO THIS AGREEMENT SHALL BE INSTITUTED IN ANY FEDERAL OR STATE COURT IN
NEW YORK COUNTY, NEW YORK  AND BORROWER
WAIVES ANY OBJECTION WHICH IT MAY NOW OR HEREAFTER HAVE TO THE LAYING OF
VENUE OF ANY SUCH SUIT, ACTION OR PROCEEDING, AND BORROWER HEREBY IRREVOCABLY
SUBMITS TO THE JURISDICTION OF ANY SUCH COURT IN ANY SUIT, ACTION OR PROCEEDING.
BORROWER DOES HEREBY DESIGNATE AND APPOINT CT CORPORATION SYSTEM, 111 EIGHTH
AVENUE, NEW YORK, NEW YORK 10011 AS ITS AUTHORIZED AGENT TO ACCEPT AND ACKNOWLEDGE
ON ITS BEHALF SERVICE OF ANY AND ALL PROCESS WHICH MAY BE SERVED IN ANY
SUCH SUIT, ACTION OR PROCEEDING IN ANY FEDERAL OR STATE COURT IN NEW YORK, NEW
YORK, AND AGREES THAT SERVICE OF PROCESS UPON SAID AGENT AT SAID ADDRESS AND
WRITTEN NOTICE OF SAID SERVICE OF BORROWER MAILED OR DELIVERED TO BORROWER IN
THE MANNER PROVIDED HEREIN SHALL BE DEEMED IN EVERY RESPECT EFFECTIVE SERVICE
OF PROCESS UPON BORROWER (UNLESS LOCAL LAW REQUIRES ANOTHER METHOD OF SERVICE),
IN ANY SUCH SUIT, ACTION OR PROCEEDING IN THE STATE OF NEW YORK. BORROWER (i) SHALL
GIVE PROMPT NOTICE TO LENDER OF ANY CHANGED ADDRESS OF ITS AUTHORIZED AGENT
HEREUNDER, (ii) MAY AT ANY TIME AND FROM TIME TO TIME DESIGNATE A
SUBSTITUTE AUTHORIZED AGENT WITH AN OFFICE IN NEW YORK, NEW YORK (WHICH OFFICE
SHALL BE DESIGNATED AS THE ADDRESS FOR SERVICE OF PROCESS), AND (iii) SHALL
PROMPTLY DESIGNATE SUCH A SUBSTITUTE IF ITS AUTHORIZED AGENT CEASES TO HAVE AN
OFFICE IN NEW YORK, NEW YORK OR IS DISSOLVED WITHOUT LEAVING A SUCCESSOR.

       10.7   Modification,
Waiver in Writing.   No modification, amendment, extension, discharge,
termination or waiver of any provision of this Agreement or of any other Loan
Document, nor consent to any departure by Borrower therefrom, shall in any
event be effective unless the same shall be in a writing signed by the party
against whom enforcement is sought, and then such waiver or consent shall be
effective only in the specific instance, and for the purpose, for which given. Except
as otherwise expressly provided herein, no notice to or demand on Borrower
shall entitle Borrower to any other or future notice or demand in the same,
similar or other circumstances. Neither any failure nor any delay on the part
of Lender in insisting upon strict performance of any term, condition, covenant
or agreement, or exercising any right, power, remedy or privilege hereunder, or
under any other Loan Document, shall operate as or constitute a waiver thereof,
nor shall a single or partial exercise thereof preclude any other future
exercise, or the exercise of any other right, power, remedy or privilege. In
particular, and not by way of limitation, by accepting payment after the due
date of any amount payable under any Loan Document, Lender shall not be deemed
to have waived any right either to require prompt payment when due of all other
amounts due under the Loan Documents, or to declare an Event of Default for
failure to effect prompt payment of any such other amount.

       10.8   Trial
by Jury.   BORROWER AND LENDER HEREBY AGREE NOT TO ELECT A TRIAL BY
JURY OF ANY ISSUE TRIABLE OF RIGHT BY JURY, AND WAIVE ANY RIGHT TO TRIAL BY
JURY FULLY TO THE EXTENT THAT ANY SUCH RIGHT SHALL NOW OR HEREAFTER EXIST WITH
REGARD TO THE LOAN DOCUMENTS, OR

 80

 

ANY
CLAIM, COUNTERCLAIM OR OTHER ACTION ARISING IN CONNECTION THEREWITH. THIS
WAIVER OF RIGHT TO TRIAL BY JURY IS GIVEN KNOWINGLY AND VOLUNTARILY BY BORROWER
AND LENDER, AND IS INTENDED TO ENCOMPASS INDIVIDUALLY EACH INSTANCE AND EACH
ISSUE AS TO WHICH THE RIGHT TO A TRIAL BY JURY WOULD OTHERWISE ACCRUE. EITHER
PARTY IS HEREBY AUTHORIZED TO FILE A COPY OF THIS PARAGRAPH IN ANY PROCEEDING
AS CONCLUSIVE EVIDENCE OF THIS WAIVER BY THE OTHER.

10.9        Headings/Exhibits. The Section headings in this
Agreement are included herein for convenience of reference only and shall not
constitute a part of this Agreement for any other purpose. The Exhibits
attached hereto, are hereby incorporated by reference as a part of the
Agreement with the same force and effect as if set forth in the body hereof.

10.10      Severability. Wherever possible, each provision of
this Agreement shall be interpreted in such manner as to be effective and valid
under applicable law, but if any provision of this Agreement shall be
prohibited by or invalid under applicable law, such provision shall be
ineffective to the extent of such prohibition or invalidity, without
invalidating the remainder of such provision or the remaining provisions of
this Agreement.

10.11      Preferences. Upon the occurrence and continuance
of an Event of Default, Lender shall have the continuing and exclusive right to
apply any and all payments by Borrower to any portion of the Debt. To the
extent Borrower makes a payment to Lender, or Lender receives proceeds of any
collateral, which is in whole or part subsequently invalidated, declared to be
fraudulent or preferential, set aside or required to be repaid to a trustee,
receiver or any other party under any bankruptcy law, state or federal law,
common law or equitable cause, then, to the extent of such payment or proceeds
received, the Debt or part thereof intended to be satisfied shall be revived
and continue in full force and effect, as if such payment or proceeds had not
been received by Lender. This provision shall survive the expiration or
termination of this Agreement and the repayment of the Debt.

10.12      Waiver of Notice. Borrower shall not be entitled to
any notices of any nature whatsoever from Lender except with respect to matters
for which this Agreement or any other Loan Document specifically and expressly
requires the giving of notice by Lender to Borrower and except with respect to
matters for which Borrower is not, pursuant to applicable Legal Requirements,
permitted to waive the giving of notice. Borrower hereby expressly waives the
right to receive any notice from Lender with respect to any matter for which no
Loan Document specifically and expressly requires the giving of notice by
Lender to Borrower.

10.13      Remedies of Borrower. If a claim or adjudication is made
that Lender or any of its agents, including Servicer, has acted unreasonably or
unreasonably delayed acting in any case where by law or under any Loan
Document, Lender or any such agent, as the case may be, has an obligation to
act reasonably or promptly, Borrower agrees that neither Lender nor its agents,
including Servicer, shall be liable for any monetary damages, and Borrower’s
sole remedy shall be to commence an action seeking injunctive relief or
declaratory judgment. Any action or proceeding to determine whether Lender has
acted reasonably shall be determined by an action seeking declaratory judgment.
Borrower specifically waives any claim against Lender and its 

 81
 

 

agents,
including Servicer, with respect to actions taken by Lender or its agents on
Borrower’s behalf.

10.14      Prior Agreements.
This Agreement and the other Loan Documents contain the entire agreement of the
parties hereto and thereto in respect of the transactions contemplated hereby
and thereby, and all prior agreements, understandings and negotiations among or
between such parties, whether oral or written, are superseded by the terms of
this Agreement and the other Loan Documents.

10.15      Offsets, Counterclaims and
Defenses. Borrower
hereby waives the right to assert a counterclaim, other than a compulsory
counterclaim, in any action or proceeding brought against Borrower by Lender or
its agents, including Servicer, or otherwise offset any obligations to make
payments required under the Loan Documents. Any assignee of Lender’s interest
in and to the Loan Documents shall take the same free and clear of all offsets,
counterclaims or defenses which Borrower may otherwise have against any
assignor of such documents, and no such offset, counterclaim or defense shall
be interposed or asserted by Borrower in any action or proceeding brought by
any such assignee upon such documents, and any such right to interpose or
assert any such offset, counterclaim or defense in any such action or
proceeding is hereby expressly waived by Borrower.

10.16      Publicity. All news releases, publicity or
advertising by Borrower or its Affiliates through any media intended to reach
the general public, which refers to the Loan Documents, the Loan, Lender or any
member of the GCM Group, a Loan purchaser, the Servicer or the trustee in a
Secondary Market Transaction, shall be subject to the prior written approval of
Lender; provided however, that Lender’s consent shall not be required by
Borrower, Borrower’s Affiliates, or any broker dealer or investor
representative related to the marketing or sale of any investment fund or
investment trust managed by Borrower’s Affiliates which disclosure is required
under the Securities Act of 1933 or 1934 or to any potential purchaser of an
interest in the Property. Lender shall have the right to issue any of the
foregoing without Borrower’s approval.

10.17      No Usury. Borrower and Lender intend at all
times to comply with applicable state law or applicable United States federal
law (to the extent that it permits Lender to contract for, charge, take, reserve
or receive a greater amount of interest than under state law) and that this Section 10.17
shall control every other agreement in the Loan Documents. If the applicable
law (state or federal) is ever judicially interpreted so as to render usurious
any amount called for under the Note or any other Loan Document, or contracted
for, charged, taken, reserved or received with respect to the Debt, or if
Lender’s exercise of the option to accelerate the maturity of the Loan or any
prepayment by Borrower results in Borrower having paid any interest in excess
of that permitted by applicable law, then it is Borrower’s and Lender’s express
intent that all excess amounts theretofore collected by Lender shall be
credited against the unpaid Principal and all other Debt (or, if the Debt has
been or would thereby be paid in full, refunded to Borrower), and the
provisions of the Loan Documents immediately be deemed reformed and the amounts
thereafter collectible thereunder reduced, without the necessity of the
execution of any new document, so as to comply with applicable law, but so as
to permit the recovery of the fullest amount otherwise called for thereunder. All
sums paid or agreed to be paid to Lender for the use, forbearance or detention
of the Loan shall, to the extent permitted by applicable law, be 

 82
 

 

amortized,
prorated, allocated, and spread throughout the full stated term of the Loan
until payment in full so that the rate or amount of interest on account of the
Debt does not exceed the maximum lawful rate from time to time in effect and
applicable to the Debt for so long as the Debt is outstanding. Notwithstanding
anything to the contrary contained in any Loan Document, it is not the
intention of Lender to accelerate the maturity of any interest that has not
accrued at the time of such acceleration or to collect unearned interest at the
time of such acceleration.

10.18      Conflict; Construction of
Documents. In the
event of any conflict between the provisions of this Agreement and any of the
other Loan Documents, the provisions of this Agreement shall control. The
parties hereto acknowledge that each is represented by separate counsel in
connection with the negotiation and drafting of the Loan Documents and that the
Loan Documents shall not be subject to the principle of construing their
meaning against the party that drafted them.

10.19      No Third Party
Beneficiaries. The Loan Documents are solely for the benefit of
Lender and Borrower and nothing contained in any Loan Document shall be deemed
to confer upon anyone other than the Lender and Borrower any right to insist
upon or to enforce the performance or observance of any of the obligations
contained therein.

10.20      Assignment. The Loan, the Note, the Loan
Documents and/or Lender’s rights, title, obligations and interests therein may
be assigned by Lender and any of its successors and assigns to any Person at
any time in its discretion, in whole or in part, whether by operation of law
(pursuant to a merger or other successor in interest) or otherwise. Upon such
assignment, all references to Lender in this Loan Agreement and in any Loan
Document shall be deemed to refer to such assignee or successor in interest and
such assignee or successor in interest shall thereafter stand in the place of
Lender. Borrower may not assign its rights, title, interests or obligations
under this Loan Agreement or under any of the Loan Documents.

10.21      Set-Off. In addition to any rights and remedies of Lender provided by
this Loan Agreement and by law, Lender shall have the right, without prior
notice to Borrower, any such notice being expressly waived by Borrower to the
extent permitted by applicable law, upon any amount becoming due and payable by
Borrower hereunder (whether at the stated maturity, by acceleration or
otherwise) to set-off and appropriate and apply against such amount any and all
deposits (general or special, time or demand, provisional or final), in any
currency, and any other credits, indebtedness or claims, in any currency, in
each case whether direct or indirect, absolute or contingent, matured or
unmatured, at any time held or owing by Lender or any Affiliate thereof to or
for the credit or the account of Borrower. Lender agrees promptly to notify
Borrower after any such set-off and application made by Lender; provided
that the failure to give such notice shall not affect the validity of such
set-off and application.

10.22      Certain Additional Rights of Lender. Notwithstanding
anything to the contrary which may be contained in this Agreement, Lender shall
have:

(i)            the
right to routinely consult with Borrower’s management regarding the significant
business activities and business and financial developments of Borrower,
provided, however, that such consultations shall not include discussions of
environmental 

 83
 

 

compliance programs or disposal of hazardous
substances. Consultation meetings (which may be held by teleconference) should
occur on a regular basis (no less frequently than quarterly) with Lender having
the right to call special meetings at any reasonable times upon reasonable
notice;

(ii)           the
right, in accordance with the terms of this Agreement, to examine the books and
records of Borrower at any time upon reasonable notice;

(iii)          the
right, in accordance with the terms of this Agreement, to receive monthly,
quarterly and year-end financial reports, including balance sheets, statements
of income, shareholder’s equity and cash flow, a management report and
schedules of outstanding indebtedness;

(iv)          the
right, without restricting any other rights of Lender under this Agreement
(including any similar right), to restrict financing to be obtained with
respect to the Property so long as any portion of the Debt remains outstanding;

(v)           the
right, without restricting any other right of Lender under this Agreement or
the other Loan Documents (including any similar right), to restrict, upon the
occurrence of an Event of Default, Borrower’s payments of management,
consulting, director or similar fees to Affiliates of Borrower from the Rents;

(vi)          the
right, without restricting any other rights of Lender under this Agreement
(including any similar right), to approve any operating budget and/or capital
budget of Borrower;

(vii)         the
right, without restricting any other rights of Lender under this Agreement
(including any similar right), to approve any acquisition by Borrower of any
other significant property (other than personal property required for the day
to day operation of the Property); and

(viii)        the
right, without restricting any other rights of Lender under this Agreement
(including any similar right), to restrict the transfer of interests in
Borrower held by its members, and the right to restrict the transfer of
interests in such member, except for any transfer that is a Permitted Transfer.

The
rights described above may be exercised directly or indirectly by any Person
that owns substantially all of the ownership interests in Lender.

10.23      Counterparts.
This Agreement may be executed in any number of counterparts, each of which
when so executed and delivered shall be an original, but all of which shall
together constitute one and the same instrument.

10.24      Yield Maintenance Premium. Borrower acknowledges that (a) Lender
is making the Loan in consideration of the receipt by Lender of all interest
and other benefits intended to be conferred by the Loan Documents and (b) if
payments of Principal are made to 

 84
 

 

Lender prior to
the Stated Maturity Date, for any reason whatsoever, whether voluntary, as a
result of Lender’s acceleration of the Loan after an Event of Default, by
operation of law or otherwise, Lender will not receive all such interest and
other benefits and may, in addition, incur costs. For these reasons, and to
induce Lender to make the Loan, Borrower agrees that, except as expressly
provided in Section 2.2.3, Section 2.3.2, Section 2.3.4
and Section 7.4.2 hereof, all prepayments, if any, whether
voluntary or involuntary, will be accompanied by the Yield Maintenance Premium.
Such Yield Maintenance Premium shall be required whether payment is made by
Borrower, by a Person on behalf of Borrower, or by the purchaser at any
foreclosure sale, and may be included in any bid by Lender at such sale. Borrower
further acknowledges that (A) it is a knowledgeable real estate developer
and/or investor; (B) it fully understands the effect of the provisions of
this Section 10.24, as well as the other provisions of the Loan
Documents; (C) the making of the Loan by Lender at the Interest Rate and
other terms set forth in the Loan Documents are sufficient consideration for
Borrower’s obligation to pay a Yield Maintenance Premium (if required); and (D) Lender
would not make the Loan on the terms set forth herein without the inclusion of
such provisions. Borrower also acknowledges that the provisions of this
Agreement limiting the right of prepayment and providing for the payment of the
Yield Maintenance Premium and other charges specified herein were independently
negotiated and bargained for, and constitute a specific material part of the
consideration given by Borrower to Lender for the making of the Loan except as
expressly permitted hereunder. BY EXECUTING THIS AGREEMENT, BORROWER HEREBY
EXPRESSLY ACKNOWLEDGES AND UNDERSTANDS THAT, PURSUANT TO THE TERMS OF THIS
AGREEMENT, BORROWER HAS AGREED THAT IT DOES NOT HAVE THE RIGHT TO PREPAY THE
LOAN IN WHOLE OR IN PART WITHOUT PREMIUM EXCEPT AS OTHERWISE PROVIDED
HEREIN, AND THAT BORROWER SHALL BE LIABLE FOR THE PAYMENT OF THE YIELD
MAINTENANCE PREMIUM TO THE EXTENT PROVIDED HEREIN IF BORROWER PREPAYS THE LOAN FOLLOWING THE OCCURRENCE OF AN ACCELERATION OF
THE LOAN. BORROWER HEREBY FURTHER EXPRESSLY ACKNOWLEDGES AND UNDERSTANDS THAT
LENDER HAS MADE THE LOAN EVIDENCED HEREBY IN RELIANCE ON THE FOREGOING
AGREEMENTS AND WAIVERS OF BORROWER, THAT LENDER WOULD NOT HAVE MADE THIS LOAN
WITHOUT SUCH AGREEMENTS AND WAIVERS OF BORROWER, AND THAT THE MAKING OF THE
LOAN AT THE INTEREST RATE AND FOR THE TERMS SET FORTH HEREIN CONSTITUTES
ADEQUATE CONSIDERATION, GIVEN WEIGHT BY THE UNDERSIGNED, FOR SUCH AGREEMENTS
AND WAIVER.

[Remainder of page intentionally
left blank. Signature

counterparts follow on next page(s).]

 85

 

IN WITNESS WHEREOF, the parties
hereto have caused this Loan Agreement to be duly executed by their duly
authorized representatives, all as of the day and year first above written.

	
  

  	
  BEHRINGER HARVARD SOUTH RIVERSIDE, LLC,

  
	
   

  	
  a Delaware limited liability company

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Gerald J. Reihsen, III, Secretary

  
	
   

  	
  GREENWICH CAPITAL FINANCIAL
  PRODUCTS, INC., a Delaware corporation

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  

 

Schedule 1

Required
Repairs

Work required to remedy the following violations at
the Property reflected in the Zoning and Site Requirements Summary prepared by
The Planning & Zoning Resource Corporation (PZR Site Number: 51041)
and delivered to Lender in connection with the Loan:

1.                                       Violation
# 031023: Recharge, Date, and Tag Fire Extinguishers (17th & 18th
Floor Fire Extinguishers Tags Expired).

2.                                       Violation
# 101015: Repair Interior Walls or Ceilings (Minor Damage to Lobby of Building
next to Bank).

3.                                       Violation
# 001040: Warning: Check Zoning Compliance.

4.                                       Violation
# 002011: Submit Plans prepared by Architect for Alterations to 23rd Floor for
construction field offices.

5.                                       Violation
# 002051: Stop Work until Permit is obtained.

6.                                       Violation
# 002052: Fine for work without a Permit.

7.                                       Violation
# 252010: Submit Plans and obtain Permits for Ventilation.

8.                                       Violation
# 101015: Repair Interior Wall or Ceilings (Hole in Interior Wall Stairway at
31st Floor).

Work required to remedy the following matters at the
Property reflected on the estoppel letter dated May 16, 2006 from Chicago
Union Station Company and delivered to Lender in connection with the Loan:

1.                                       Installation
of surface drain to handle water that collects at the Adams Street and Chicago
River entrance.

2.                                       Leaks
in the plaza located above the common area between McDonalds and the Corner
Bakery.

3.                                       Leaks
along the length of the Canal Street sidewalk from Adams Street to Jackson
Street.

4.                                       Leaks
onto the North concourse and platform areas in the planters and plaza area on
the Adams Street side.

5.                                       Leaks
into the stairwell serving the Food Court and the 444 corridor from the loading
dock drive under the 444 building.

Schedule
2

Exceptions
to Representations and Warranties

Exceptions to Section 4.12
(Contracts):

The following
contracts are not terminable on one (1) month’s notice or less but are
instead terminable as follows:

	
  1.

  	
   

  	
  Type of Service: Building Automation (EMS)

  
	
   

  	
   

  	
  Term: 1/04 - 12/06

  
	
   

  	
   

  	
  Monthly Cost: $2,801

  
	
   

  	
   

  	
  Cancellation Provision: None — if cancelled, balance
  of annual amount is due

  
	
  2.

  	
   

  	
  Type of Service: DSL
  Service

  
	
   

  	
   

  	
  Term: Month to month

  
	
   

  	
   

  	
  Monthly Cost: $470

  
	
   

  	
   

  	
  Cancellation Provision: May be cancelled on 60
  days notice

  
	
  3.

  	
   

  	
  Type of Service:
  Bottled Water Service

  
	
   

  	
   

  	
  Term: 6/05 - 6/06

  
	
   

  	
   

  	
  Monthly Cost: $228

  
	
   

  	
   

  	
  Cancellation Provision: May be cancelled on 60
  days notice

  

 

Schedule
3

Rent
Roll

(see attached)

 

Schedule
4

Organization
of Borrower

(see attached)

 

Schedule
5

Definition of Special
Purpose Bankruptcy Remote Entity

A
“Special Purpose Bankruptcy Remote Entity”
means (x) a limited liability company that is a Single Member Bankruptcy
Remote LLC or (y) a corporation, limited partnership or limited liability
company which at all times since its formation and at all times thereafter (i) was
and will be organized solely for the purpose of (A) owning the Property or
(B) acting as a general partner of the limited partnership that owns the
Property or member of the limited liability company that owns the Property; (ii) has
not engaged and will not engage in any business unrelated to (A) the
ownership of the Property, (B) acting as general partner of the limited
partnership that owns the Property or (C) acting as a member of the
limited liability company that owns the Property, as applicable; (iii) has
not had and will not have any assets other than those related to the Property
or its partnership or member interest in the limited partnership or limited
liability company that owns the Property, as applicable; (iv) has not
engaged, sought or consented to and will not engage in, seek or consent to any
dissolution, winding up, liquidation, consolidation, merger, asset sale (except
as expressly permitted by this Agreement), transfer of partnership or
membership interests or the like, or amendment of its limited partnership
agreement, articles of incorporation, articles of organization, certificate of
formation or operating agreement (as applicable); (v) if such entity is a
limited partnership, has and will have, as its only general partners, Special
Purpose Bankruptcy Remote Entities that are corporations or that are Single
Member Bankruptcy Remote LLCs; (vi) if such entity is a corporation or a
Single Member Bankruptcy Remote LLC, has and will have at least two (2) Independent
Directors, and has not caused or allowed and will not cause or allow the board
of directors or board of managers, as applicable, of such entity to take any
action requiring the unanimous affirmative vote of one hundred percent (100%)
of the members of its board of directors or board of managers, as applicable,
unless all of the directors or managers, as applicable, and all Independent
Directors shall have participated in such vote; (vii) if such entity is a
limited liability company, has and will have at least one member that has been
and will be a Special Purpose Bankruptcy Remote Entity that has been and will
be a corporation or a Single Member Bankruptcy Remote LLC and such corporation
or such Single Member Bankruptcy Remote LLC is the managing member of such
limited liability company; (viii) if such entity is a limited liability
company, has and will have articles of organization, a certificate of formation
and/or an operating agreement, as applicable, providing that (A) such
entity will dissolve only upon the bankruptcy of the managing member, (B) the
vote of a majority-in-interest of the remaining members is sufficient to
continue the life of the limited liability company in the event of such bankruptcy
of the managing member and (C) if the vote of a majority-in-interest of
the remaining members to continue the life of the limited liability company
following the bankruptcy of the managing member is not obtained, the limited
liability company may not liquidate the Property without the consent of the
applicable Rating Agencies for as long as the Loan is outstanding; (ix) has
not, and without the unanimous consent of all of its partners, directors or
members (including all Independent Directors), as applicable, will not, with
respect to itself or to any other entity in which it has a direct or indirect
legal or beneficial ownership interest (A) file a bankruptcy, insolvency
or reorganization petition or otherwise institute insolvency proceedings or
otherwise seek any relief under any laws relating to the relief from debts or
the protection of debtors generally, (B) seek or consent to the
appointment of a receiver, liquidator, assignee, trustee, sequestrator,
custodian or any similar official for such entity or for all or any portion of
such 

 

entity’s
properties, (C) make any assignment for the benefit of such entity’s
creditors or (D) take any action that might cause such entity to become
insolvent; (x) has remained and will remain solvent and has maintained and
will maintain adequate capital in light of its contemplated business
operations; (xi) has not failed and will not fail to correct any known
misunderstanding regarding the separate identity of such entity; (xii) has
maintained and will maintain its accounts, books and records separate from any
other Person, provided, however, that the financial statements of such Person
may be included in the consolidated financial statements of another Person in
accordance with GAAP, provided that in each case, such financial statements
identify such Person as a separate member of such consolidated group and
include an express statement to the effect that the assets of such Person are
not available to satisfy the claims of creditors of such other Person, and will
file its own tax returns, and provided further, however, that if such entity is
a so-called “disregarded entity” under applicable law for tax purposes, and
such entity is required or permitted to be included in a consolidated return of
another entity, then such entity may be included in the consolidated return of
such other entity; (xiii) has maintained and will maintain its books,
records, resolutions and agreements as official records; (xiv) has not
commingled and will not commingle its funds or assets with those of any other
Person; (xv) has held and will hold its assets in its own name;
(xvi) has conducted and will conduct its business in its name or under the
trade name of the Property, (xvii) subject to the proviso in clause (xii)
above, has maintained and will maintain its financial statements, accounting
records and other entity documents separate from any other Person;
(xviii) has paid and will pay its own liabilities, including the salaries
of its own employees, out of its own funds and assets; (xix) has observed
and will observe all partnership, corporate or limited liability company
formalities, as applicable; (xx) subject to sub clause (xxx) below, has
maintained and will maintain an arm’s-length relationship with its Affiliates;
(xxi) (a) if such entity owns the Property, has and will have no
indebtedness other than the Loan and Permitted Indebtedness (subject to the
provisions of Section 5.22 of this Loan Agreement), or (b) if such
entity acts as the general partner of a limited partnership which owns the
Property, has and will have no indebtedness (in addition to such liability as
it has by virtue of its status as general partner) other than unsecured trade
payables in the ordinary course of business relating to acting as general
partner of the limited partnership which owns the Property which (1) do
not exceed, at any time, $10,000 and (2) are paid within thirty
(30) days of the date incurred, or (c) if such entity acts as a
managing member of a limited liability company which owns the Property, has and
will have no indebtedness other than unsecured trade payables in the ordinary
course of business relating to acting as a member of the limited liability
company which owns the Property which (1) do not exceed, at any time,
$10,000 and (2) are paid within thirty (30) days of the date incurred;
(xxii) except, if applicable, by virtue of its status as a general partner
of another Person, has not and will not assume or guarantee or become obligated
for the debts of any other Person or hold out its credit as being available to
satisfy the obligations of any other Person except for the Loan;
(xxiii) has not and will not acquire obligations or securities of its
partners, members or shareholders; (xxiv) has allocated and will allocate
fairly and reasonably shared expenses, including shared office space, and uses
separate stationery, invoices and checks; (xxv) except in connection with
the Loan, has not pledged and will not pledge its assets for the benefit of any
other Person; (xxvi) has held itself out and identified itself and will
hold itself out and identify itself as a separate and distinct entity under its
own name and not as a division or part of any other Person; (xxvii) has
maintained and will maintain its assets in such a manner that it will not be
costly or difficult to segregate, ascertain or identify its individual assets
from those of any other Person; (xxviii) has not made 

 2
 

 

and
will not make loans to any Person; (xxix) has not identified and will not
identify its partners, members or shareholders, or any Affiliate of any of
them, as a division or part of it; (xxx) except for the Management
Agreement, has not entered into or been a party to, and will not enter into or
be a party to, any transaction with its partners, members, shareholders or Affiliates
except in the ordinary course of its business and on terms which are
intrinsically fair and are no less favorable to it than would be obtained in a
comparable arm’s-length transaction with an unrelated third party;
(xxxi) has and will have no obligation to indemnify its partners,
officers, directors, members or Special Members, as the case may be, or has
such an obligation that is fully subordinated to the Debt and will not
constitute a claim against it if cash flow in excess of the amount required to pay
the Debt is insufficient to pay such obligation; and (xxxii) to the
fullest extent permitted under applicable law will consider the interests of
its creditors in connection with all corporate, partnership or limited
liability actions, as applicable.

“Independent Director” means (x) in
the case of a Single Member Bankruptcy Remote LLC: a natural person selected by
Borrower and reasonably satisfactory to Lender who shall not have been at the
time of such individual’s appointment as an Independent Director of the Single
Member Bankruptcy Remote LLC, does not thereafter become while serving as an
Independent Director (except pursuant to an express provision in the Single
Member Bankruptcy Remote LLC’s limited liability company agreement providing
for the Independent Director to become a Special Member (defined below) upon
the sole member of such Single Member Bankruptcy Remote LLC ceasing to be a
member in such Single Member Bankruptcy Remote LLC) and shall not have been at
any time during the preceding five years (i) a shareholder/partner/member
of, or an officer or employee of, Borrower or any of its shareholders,
subsidiaries or Affiliates, (ii) a director of any shareholder, subsidiary
or Affiliate of Borrower, (iii) a customer of, or supplier to, Borrower or
any of its shareholders, subsidiaries or Affiliates, (iv) a Person who
Controls any such shareholder, supplier or customer, or (v) a member of
the immediate family of any such shareholder/ director/partner/member, officer,
employee, supplier or customer or of any director of Borrower (other than as an
Independent Director); and (y) in the case of a corporation, an individual
selected by Borrower and reasonably satisfactory to Lender who shall not have
been at the time of such individual’s appointment as a director, does not
thereafter become while serving as an Independent Director and shall not have
been at any time during the preceding five years (i) a
shareholder/partner/member of, or an officer, employee, consultant, agent or
advisor of, Borrower or any of its shareholders, subsidiaries, members or
Affiliates, (ii) a director of any shareholder, subsidiary, member, or
Affiliate of Borrower other than Borrower’s general partner or managing member,
(iii) a customer of, or supplier to, Borrower or any of its shareholders,
subsidiaries or Affiliates that derives more than ten percent (10%) of its
purchases or income from its activities with Borrower or any Affiliate of
Borrower, (iv) a Person who Controls any such shareholder, supplier or
customer, or (v) a member of the immediate family (including a grandchild
or sibling) of any such shareholder/director/partner/member, officer, employee,
supplier or customer or of any other director of Borrower’s general partner or
managing member. A natural person who otherwise satisfies the foregoing
definition of Independent Director except for being the independent director,
manager or special member of a “special purpose entity” affiliated with the
Borrower that does not own a direct or indirect equity interest in the Borrower
shall not be disqualified from serving as an Independent Director if such
individual is at the time of initial appointment, or at any time while serving
as an Independent Director, an Independent Director of a “special purpose
entity” affiliated with the Borrower (other than any entity that owns a direct
or indirect equity interest in the Borrower).

 3
 

 

“Single Member Bankruptcy Remote LLC”
means a limited liability company organized under the laws of the State of
Delaware which at all times since its formation and at all times thereafter (i) complies
with the following clauses of the definition of Special Purpose Bankruptcy
Remote Entity above: (i), (ii), (iii), (iv), (ix), (x), (xi) and (xiii) through
(xxxii); (ii) has maintained and will maintain its accounts, books and
records separate from any other person; (iii) has and will have an
operating agreement which provides that the business and affairs of such Single
Member Bankruptcy Remote LLC shall be managed by its sole member (the “Sole Member”), and at all times
there shall be at least two duly appointed Independent Directors, and the Sole
Member will not, without the written consent of both of its Independent
Directors (1) take any action affecting its status as a “Special Purpose
Bankruptcy Remote Entity” (as set forth in this Schedule 5) or (2) take
any other “Material Action” (which for purposes
hereof means any action to consolidate or merge such Single Member Bankruptcy
Remote LLC with or into any Person, or sell all or substantially all of the
assets of such Single Member Bankruptcy Remote LLC other than in connection
with a permitted defeasance, a Transfer and Assumption effected in accordance
with Section 5.26.2 of this Loan Agreement or payment in full of
the Loan in accordance with the terms of the Loan Documents, or to institute
proceedings to have such Single Member Bankruptcy Remote LLC be adjudicated
bankrupt or insolvent, or consent to the institution of bankruptcy or
insolvency proceedings against such Single Member Bankruptcy Remote LLC or file
a petition seeking, or consent to, reorganization or relief with respect to
such Single Member Bankruptcy Remote LLC under any applicable federal or state
law relating to bankruptcy, or consent to the appointment of a receiver,
liquidator, assignee, trustee, sequestrator (or other similar official) of such
Single Member Bankruptcy Remote LLC or a substantial part of its property, or
make any assignment for the benefit of creditors of such Single Member
Bankruptcy Remote LLC, or admit in writing such Single Member Bankruptcy Remote
LLC’s inability to pay its debts generally as they become due, or take action
in furtherance of any such action, or, to the fullest extent permitted by law,
dissolve or liquidate such Single Member Bankruptcy Remote LLC); (iv) has
and will have an operating agreement which provides that, as long as any
portion of the Debt remains outstanding, (A) upon the occurrence of any
event that causes Sole Member to cease to be a member of such Single Member
Bankruptcy Remote LLC (other than (x) upon an assignment by Sole Member of
all of its limited liability company interest in such Single Member Bankruptcy
Remote LLC and the admission of the transferee, if permitted pursuant to the
organizational documents of such Single Member Bankruptcy Remote LLC and the
Loan Documents, or (y) the resignation of Sole Member and the admission of
an additional member of such Single Member Bankruptcy Remote LLC, if permitted
pursuant to the organizational documents of such Single Member Bankruptcy Remote
LLC and the Loan Documents), the person acting as an Independent Director of
such Single Member Bankruptcy Remote LLC shall, without any action of any
Person and simultaneously with Sole Member ceasing to be a member of such
Single Member Bankruptcy Remote LLC, automatically be admitted as the sole
member of such Single Member Bankruptcy Remote LLC (the “Special
Member”) and shall preserve and continue the existence of such
Single Member Bankruptcy Remote LLC without dissolution, (B) no Special
Member may resign or transfer its rights as Special Member unless (x) a
successor Special Member has been admitted to such Single Member Bankruptcy
Remote LLC as a Special Member, and (y) such successor Special Member has
also accepted its appointment as an Independent Director and (C) except as
expressly permitted pursuant to the terms of this Agreement, Sole Member may
not resign and no additional member shall be admitted to such Single Member
Bankruptcy Remote LLC; (v) has 

 4
 

 

and
will have an operating agreement which provides that, as long as any portion of
the Debt remains outstanding, (A) such Single Member Bankruptcy Remote LLC
shall be dissolved, and its affairs shall be would up only upon the first to
occur of the following: (x) the termination of the legal existence of the
last remaining member of such Single Member Bankruptcy Remote LLC or the
occurrence of any other event which terminates the continued membership of the
last remaining member of such Single Member Bankruptcy Remote LLC in such
Single Member Bankruptcy Remote LLC unless the business of such Single Member
Bankruptcy Remote LLC is continued in a manner permitted by its operating
agreement or the Delaware Limited Liability Company Act (the “Act”) or (y) the entry of a
decree of judicial dissolution under Section 18-802 of the Act; (B) upon
the occurrence of any event that causes the last remaining member of such
Single Member Bankruptcy Remote LLC to cease to be a member of such Single
Member Bankruptcy Remote LLC or that causes Sole Member to cease to be a member
of such Single Member Bankruptcy Remote LLC (other than (x) upon an
assignment by Sole Member of all of its limited liability company interest in
such Single Member Bankruptcy Remote LLC and the admission of the transferee,
if permitted pursuant to the organizational documents of such Single Member
Bankruptcy Remote LLC and the Loan Documents, or (y) the resignation of
Sole Member and the admission of an additional member of such Single Member
Bankruptcy Remote LLC, if permitted pursuant to the organizational documents of
such Single Member Bankruptcy Remote LLC and the Loan Documents), to the
fullest extent permitted by law, the personal representative of such member
shall be authorized to, and shall, within 90 days after the occurrence of the
event that terminated the continued membership of such member in such Single
Member Bankruptcy Remote LLC, agree in writing to continue the existence of
such Single Member Bankruptcy Remote LLC and to the admission of the personal
representative or its nominee or designee, as the case may be, as a substitute
member of such Single Member Bankruptcy Remote LLC, effective as of the
occurrence of the event that terminated the continued membership of such member
in such Single Member Bankruptcy Remote LLC; (C) the bankruptcy of Sole
Member or a Special Member shall not cause such member or Special Member,
respectively, to cease to be a member of such Single Member Bankruptcy Remote
LLC and upon the occurrence of such an event, the business of such Single
Member Bankruptcy Remote LLC shall continue without dissolution; (D) in
the event of dissolution of such Single Member Bankruptcy Remote LLC, such
Single Member Bankruptcy Remote LLC shall conduct only such activities as are
necessary to wind up its affairs (including the sale of the assets of such
Single Member Bankruptcy Remote LLC in an orderly manner), and the assets of
such Single Member Bankruptcy Remote LLC shall be applied in the manner, and in
the order of priority, set forth in Section 18-804 of the Act; and (E) to
the fullest extent permitted by law, each of Sole Member and the Special Member
shall irrevocably waive any right or power that they might have to cause such
Single Member Bankruptcy Remote LLC or any of its assets to be partitioned, to
cause the appointment of a receiver for all or any portion of the assets of
such Single Member Bankruptcy Remote LLC, to compel any sale of all or any
portion of the assets of such Single Member Bankruptcy Remote LLC pursuant to
any applicable law or to file a complaint or to institute any proceeding at law
or in equity to cause the dissolution, liquidation, winding up or termination
of such Single Member Bankruptcy Remote LLC.

 

 5

Schedule
6

Intentionally
Omitted

(see attached)

 

Schedule
7

Scheduled
Rent Abatement Periods and Scheduled Rent Abatements

(see attached)

 

Schedule
8

TI/LC
Holdback Reserve Information

(see attached)

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