Document:

EXHIBIT 10.28

 

AMENDMENT NO. 6 TO REVOLVING CREDIT AGREEMENT

 

This Amendment No. 6 to Revolving Credit Agreement (this “Amendment No. 6”) is made and entered into and has an effective date as of the 11th day of March, 2008, by and among WHITESTONE REIT OPERATING PARTNERSHIP, LP f/k/a HARTMAN REIT OPERATING PARTNERSHIP, LP (“Whitestone OP”), WHITESTONE REIT OPERATING PARTNERSHIP III, L.P. f/k/a HARTMAN REIT OPERATING PARTNERSHIP III, L.P. (“Whitestone III”) and the Subsidiaries of Whitestone OP and/or Whitestone III which are listed on Schedule 1 (as such Schedule 1 may be amended from time to time) (Whitestone OP, Whitestone III and any such Subsidiary being hereinafter referred to collectively as the “Borrower” unless referred to in their individual capacities) to a certain Revolving Credit Agreement, dated as of March 11, 2005 (as amended, the “Credit Agreement”), each having its
principal place of business at 2600 South Gessner, Suite 500, Houston, Texas 77063, KEYBANK NATIONAL ASSOCIATION (“KeyBank”), having a principal place of business at 127 Public Square, Cleveland, Ohio 44114, and certain other lenders individually and in certain agent capacities (collectively with KeyBank, the “Lenders”) and KeyBank, as administrative agent for itself and each other Lender (the “Agent”).

 

WHEREAS, the Borrower has requested certain amendments to the Credit Agreement, including an extension of the maturity date, as set forth herein.

 

NOW, THEREFORE, in consideration of One Dollar ($1.00) and other good and valuable consideration by each of the parties hereto, the receipt and sufficiency of which are hereby acknowledged, it is agreed as follows:

 

	
             
 	
            1.
 	
            Capitalized terms used but not defined herein shall have the respective meanings assigned to such terms in the Credit Agreement.
 

	
             
 	
            2.
 	
            References to the Borrower and Guarantor in the Loan Documents.
 

	
             
 	
            (a)
 	
            All references in the Loan Documents to Hartman REIT Operating Partnership, LP shall be deemed to refer to Whitestone REIT Operating Partnership, LP.
 

	
             
 	
            (b)
 	
            All references in the Loan Documents to Hartman REIT Operating Partnership III, L.P. shall be deemed to refer to Whitestone REIT Operating Partnership III, L.P.
 

	
             
 	
            (c)
 	
            All references in the Loan Documents to Hartman REIT Operating Partnership III GP LLC shall be deemed to refer to Whitestone REIT Operating Partnership III GP LLC.
 

 

-1-

 

 

	
             
 	
            (d)
 	
            All references in the Loan Documents to Hartman Commercial Properties REIT shall be deemed to refer to Whitestone REIT.
 

	
             
 	
            3.
 	
            Amendments to Credit Agreement.  Effective from and after March 11, 2008:
 

	
             
 	
            (a)
 	
            The term Loan Documents shall include this Amendment No. 6 to Revolving Credit Agreement, dated as of March 11, 2008, among the Borrower, the Lenders and the Agent.
 

	
             
 	
            (b)
 	
            The definition of “Applicable Base Rate Margin” is amended to read in its entirety as follows: 
 

“Applicable Base Rate Margin.  The Applicable Base Rate Margin is 1.625%.”

	
             
 	
            (c)
 	
            The definition of “Applicable Libor Margin” is amended to read in its entirety as follows: 
 

“Applicable Libor Margin.  The Applicable Libor Margin is 2.625%.”

	
             
 	
            (d)
 	
            Clause (iv) contained in the definition of “Eligible Unencumbered Property(ies)” is amended to read in its entirety as follows: 
 

“(iv) is wholly-owned in fee simple by Whitestone III”.

	
             
 	
            (e)
 	
            Clause (vi) contained in the definition of “Eligible Unencumbered Property(ies)” is amended to read in its entirety as follows: 
 

“(vi) does not comprise more than 15% of total Borrowing Base Asset Value (except that one, but not more than one, Eligible Unencumbered Property may comprise up to 20% of total Borrowing Base Asset Value)”.

	
             
 	
            (f)
 	
            The definition of “Financial Statement Date” is amended to read in its entirety as follows: 
 

“Financial Statement Date.  September 30, 2007.”

	
             
 	
            (g)
 	
            The definition of “Maturity Date” is amended to read in its entirety as follows: 
 

“Maturity Date.  October 1, 2008, or such earlier date on which the Revolving Credit Loans shall become due and payable pursuant to the terms hereof.”

 

-2-

 

 

	
             
 	
            (h)
 	
            The definition of “Mortgage Constant” is amended to read in its entirety as follows:
 

“Mortgage Constant.  As at any date of determination, a ratio that represents the payment of principal and interest on an amortizing mortgage loan based on (i) an interest rate equal to the greater of (a) the actual weighted average interest rate on the Loans, (b) the then 10-year treasury rate plus 2.25% and based on a 25-year mortgage-style amortization schedule and (c) 7.25%.”

	
             
 	
            (i)
 	
            The definition of “Revolving Credit Notes” is amended by deleting the reference to “$50,000,000” contained therein and by replacing it with the following:  “$75,000,000”.
 

	
             
 	
            (j)
 	
            The second sentence of the definition of “Total Commitment” is amended to read in its entirety as follows:
 

“As of the Sixth Amendment Date, the Total Commitment is $75,000,000.”

	
             
 	
            (k)
 	
            Section 1.1 of the Credit Agreement is amended by inserting, in the appropriate alphabetical order, the following new definitions:
 

“Sixth Amendment.  Amendment No. 6 to Revolving Credit Agreement, dated as of March 11, 2008, among the Borrower, the Lenders and the Agent.”

“Sixth Amendment Date.  March 11, 2008.”

	
             
 	
            (l)
 	
            Section 2.3(c) of the Credit Agreement is deleted in its entirety.
 

	
             
 	
            (m)
 	
            Section 2.3(e) of the Credit Agreement is amended to read in its entirety as follows:
 

“The Borrower agrees to pay to the Agent, for the accounts of the Lenders in accordance with their respective Commitment Percentages, from the Closing Date through the Maturity Date, a facility fee (the “Facility Fee”) calculated at the rate of (i) for any day when the outstanding principal balance of the Loans is less than or equal to 50% of the Total Commitment, 0.30% per annum, and (ii) for any day when the outstanding principal balance of the Loans is greater than 50% of the Total Commitment, 0.15% per annum, in each case calculated on the average daily amount, during each fiscal quarter or portion thereof, of the unborrowed portion of the Total Commitment.  The Facility Fee shall be payable quarterly in arrears on the first Business Day of each calendar quarter for the immediately preceding calendar quarter commencing on the first 

 

-3-

 

 

 

such date following the Closing Date through the Maturity Date, with a final payment on the Maturity Date.”

	
             
 	
            (n)
 	
            Clause (a) of Section 7.3 of the Credit Agreement is amended by deleting the reference to “The Borrower” contained therein and be replacing it with the following: “Whitestone III”.
 

	
             
 	
            (o)
 	
            Section 7.4 of the Credit Agreement is amended by deleting the reference to “December 31, 2003” and by replacing it with “December 31, 2006” and by deleting the reference to “September 30, 2004 and by replacing it with the “September 30, 2007”.
 

	
             
 	
            (p)
 	
            Section 7.21 of the Credit Agreement is amended by inserting, immediately following the reference to “December 31, 2004” contained therein, the following: “or December 31, 2005, December 31, 2006 or December 31, 2007”.
 

	
             
 	
            (q)
 	
            Section 9.1(i) of the Credit Agreement is amended by deleting the first parenthetical contained therein and replacing it with the following parenthetical:  “(but not any other Borrower)”.
 

	
             
 	
            (r)
 	
            Section 9.4(b) of the Credit Agreement is amended to insert the following new sentence at the end thereof:
 

“Notwithstanding the foregoing or any other provision of this Agreement, in the event that the Borrower sells, transfers otherwise disposes of any Eligible Unencumbered Property, or obtains financing for any Eligible Unencumbered Property, and as a result of any thereof, removes such Eligible Unencumbered Property from the Borrowing Base Pool, the Borrower shall retain and/or reinvest in Whitestone III, [within 120 days after receipt thereof], the proceeds of such sale, transfer, disposition or refinancing (net of customary fees and expenses).” 

	
             
 	
            (s)
 	
            Sections 9.6(a) and 9.6(b) of the Credit Agreement are amended to read in its entirety as follows:
 

“(a) The Borrower will not declare (nor will the Borrower at a subsequent date make) (i) quarterly Distributions in an amount in excess of the amount of quarterly Distributions declared and made with respect to the fiscal quarter ended December 31, 2007, provided that in the event that the number of shares of the Trust issued and outstanding as of the Sixth Amendment Date is reduced, the amount of permitted Distributions shall be reduced by the amount of such Distributions that would be attributable to the shares that are no longer outstanding; or (ii) any Distributions 

 

-4-

 

 

 

during any period after any Event of Default has occurred; provided, however, that (a) unless an Event of Default under Section 14.1(g) or (h) has occurred or the Lenders have not been paid in full in cash on the Maturity Date (or otherwise refinanced in a manner acceptable to the Agent and the Lenders in their sole discretion), the Borrower may at all times (including while any other Event of Default not described above is continuing) make Distributions to the minimum extent (after taking into account all available funds of the Trust from all other sources) required in order to enable the Trust to continue to qualify as a REIT.”

“(b) The Trust will not, during any period when any Event of Default has occurred and is continuing, make any Distributions in excess of the minimum Distributions (after taking into account all available funds of the Trust from all other sources) required to be made by the Trust in order to maintain its status as a REIT, provided that in the event of an Event of Default under Section 14.1(g) or (h) or the Lenders have not been paid in full in cash on the Maturity Date (or otherwise refinanced in a manner acceptable to the Agent and the Lenders in their sole discretion), the Trust will not declare or make any Distributions.”

	
             
 	
            (t)
 	
            Section 10.2 of the Credit Agreement is amended by deleting the reference to “2.00 to 1.0” contained therein and by replacing it with the following: “1.55 to 1.0”.
 

	
             
 	
            (u)
 	
            Section 10.3 of the Credit Agreement is amended by deleting the reference to “1.50 to 1.0” contained therein and by replacing it with the following: “1.40 to 1.0”.
 

	
             
 	
            (v)
 	
            Section 10.7 of the Credit Agreement is amended by deleting the reference to “ten (10)” contained therein and by replacing it with the following: “fifteen (15)”.
 

	
             
 	
            (w)
 	
            Section 10.8 of the Credit Agreement is amended to read in its entirety as follows:
 

“Consolidated Tangible Net Worth.  As at the end of any fiscal quarter or any other date of measurement, the Consolidated Tangible Net Worth of the Borrower shall not be less than the sum of (i) 75% of the Consolidated Tangible Net Worth of the Borrower reflected in the audited financial statements of the Borrower for the fiscal year ending December 31, 2007, plus (ii) 75% of the aggregate proceeds received by the Trust (net of fees and expenses customarily incurred in transactions of such type) in connection with any offering of stock in the Trust, plus (iii) 75% of 

 

-5-

 

the aggregate value of operating units issued by the Borrower in connection with asset or stock acquisitions (valued at the time of issuance by reference to the terms of the agreement pursuant to which such units are issued), provided that issuances of operating units to the Trust in connection with additional capital contributions made by the Trust in the Borrower shall be excluded from this clause (iii), in each case after May 18, 2006 and on or prior to the date such determination of Consolidated Tangible Net Worth is made, plus (iv) 50% of the net income of the Borrower for such period.”

	
             
 	
            4.
 	
            The Borrower hereby represents and warrants as follows:
 

	
             
 	
            (a)
 	
            Representations in Credit Agreement.  Both before and after giving effect to this Amendment No. 6, each of the representations and warranties made by or on behalf of the Borrower, the Trust or any of their respective Subsidiaries contained in the Credit Agreement or any of the other Loan Documents, was true when made and is true on and as of the date hereof with the same full force and effect as if each of such representations and warranties had been made on the date hereof and in this Amendment No. 6, except to the extent that such representations and warranties relate expressly to an earlier date.
 

	
             
 	
            (b)  
 	
            No Events of Default.  No Default or Event of Default exists on the date hereof (both before and after giving effect to this Amendment No. 6).
 

	
             
 	
            (c)  
 	
            Binding Effect of Documents.  This Amendment No. 6 has been duly executed and delivered by the Borrower and the Trust and is in full force and effect as of the date hereof, and the agreements and obligations of the Borrower contained herein constitute legal, valid and binding obligations of the Borrower enforceable against the Borrower in accordance with their respective terms.
 

	
             
 	
            5.
 	
            Conditions Precedent to Effectiveness.  This Amendment No. 6 shall become effective when each of the following conditions is met to the satisfaction of the Agent:
 

	
             
 	
            (a)
 	
            receipt by the Agent of this Amendment No. 6 duly and properly authorized, executed and delivered by each of the Borrowers and the Lenders; 
 

	
             
 	
            (b)
 	
            receipt by the Agent of a Compliance Certificate demonstrating compliance with the financial covenants contained in Section 10 of the Credit Agreement as of December 31, 2007; 
 

 

-6-

 

 

	
             
 	
            (c)
 	
            receipt by the Agent of an officers’ or manager’s certificate dated as of the date hereof signed by an officer or manager, as applicable, of each Borrower certifying as to such matters as the Agent shall require and attaching authorizing resolutions with respect to this Amendment No. 6; 
 

	
             
 	
            (d)
 	
            receipt by the Agent of title reports as of a recent date on each of the Eligible Unencumbered Properties evidencing no Liens thereon and evidencing a recorded Negative Pledge Agreement in favor of the Agent with respect to each such Eligible Unencumbered Property;
 

	
             
 	
            (e)
 	
            receipt by the Agent of each of the items set forth on the Closing Agenda attached hereto as Annex 1; 
 

	
             
 	
            (f)
 	
            receipt by the Agent of payment of the extension fees payable for the benefit of the Lenders signatory hereto, which fee shall be fully-earned upon the effectiveness hereof and shall be non-refundable for any reason; 
 

	
             
 	
            (g)
 	
            receipt by the Agent of payment of any other fees due to the Agent, including all of the Agent’s reasonable legal fees and expenses incurred in the connection with the preparation and negotiation of this Amendment No. 6 or otherwise outstanding; and 
 

	
             
 	
            (h)
 	
            receipt by the Agent of any other documents, agreements, certificates or other items requested by the Agent in connection with this Amendment No. 6.
 

	
             
 	
            6.
 	
            Provisions of General Application.
 

	
             
 	
            (a)
 	
            No Other Changes.  Except as otherwise expressly provided by this Amendment No. 6, all of the terms, conditions and provisions of the Credit Agreement and each of the other Loan Documents remain unaltered.  The Credit Agreement and this Amendment No. 6 shall be read and construed as one agreement.
 

	
             
 	
            (b)
 	
            Governing Law.  This Amendment No. 6 is intended to take effect as a sealed instrument and shall be deemed to be a contract under the laws of the State of New York.  This Amendment No. 6 and the rights and obligations of each of the parties hereto shall be governed by and interpreted and determined in accordance with the laws of the State of New York (excluding the laws applicable to conflicts or choice of law).
 

 

-7-

 

 

	
             
 	
            (c)
 	
            Binding Effect; Assignment.  This Amendment No. 6 shall be binding upon and inure to the benefit of each of the parties hereto and their respective successors in title and assigns.
 

	
             
 	
            (d)
 	
            Counterparts.  This Amendment No. 6 may be executed in any number of counterparts, but all such counterparts shall together constitute but one and the same agreement.  In making proof of this Amendment No. 5, it shall not be necessary to produce or account for more than one counterpart thereof signed by each of the parties hereto. 
 

	
             
 	
            (e)
 	
            Conflict with Other Agreements.  If any of the terms of this Amendment No. 6 shall conflict in any respect with any of the terms of any of the Credit Agreement or any other Loan Document, the terms of this Amendment No. 6 shall be controlling.
 

 

-8-

 

 

WITNESS the execution hereof, under seal, as of the day and year first written above

 

KEYBANK NATIONAL ASSOCIATION,

as Agent and as a Lender

 

 

	
             
 	
            By:
 	
            ____________________________
 

	
             
 	
            Name:
Title:
 

 

RBS CITIZENS, NATIONAL ASSOCIATION,

as a Lender

 

 

	
             
 	
            By:
 	
            ____________________________
 

	
             
 	
            Name:
Title:
 

 

TRUSTMARK NATIONAL BANK,

as a Lender

 

 

	
             
 	
            By:
 	
            ____________________________
 

	
             
 	
            Name:
Title:
 

 

MERCANTIL COMMERCE BANK, N.A.,

as a Lender

 

 

	
             
 	
            By:
 	
            ____________________________
 

	
             
 	
            Name:
Title:
 

 

(Signatures continued on next page)

 

-9-

 

 

 

WHITESTONE REIT OPERATING PARTNERSHIP, LP

 

	
             
 	
            By:
 	
            Whitestone REIT, a Maryland real estate investment trust, its sole general partner
 

 

 

	
             
 	
            By:
 	
            ____________________________
 

James C. Mastandrea, CEO

 

WHITESTONE REIT OPERATING PARTNERSHIP III, L.P.

 

	
             
 	
            By:
 	
            Whitestone REIT Operating Partnership III GP LLC, a Texas limited liability company, its sole general partner
 

 

	
             
 	
            By:
 	
            Whitestone REIT Operating Partnership, LP, a Delaware limited partnership, its sole member
 

 

	
             
 	
            By:
 	
            Whitestone REIT, a Maryland real estate investment trust, its sole member
 

 

 

	
             
 	
            By:
 	
            _________________________
 

	
             
 	
            James C. Mastandrea, CEO
 

 

 

WHITESTONE REIT OPERATING PARTNERSHIP III GP LLC, a Texas limited liability company

 

	
             
 	
            By:
 	
            Whitestone REIT Operating Partnership, LP, a Delaware limited partnership, its sole member
 

 

	
             
 	
            By:
 	
            Whitestone REIT, a Maryland real estate investment trust, its sole member
 

 

 

	
             
 	
            By:
 	
            ____________________________
 

James C. Mastandrea, CEO

 

 

-10-

 

 

 

HARTMAN REIT OPERATING PARTNERSHIP III LP LTD, a Texas limited partnership

 

	
             
 	
            By:
 	
            Whitestone REIT Operating Partnership III GP LLC, a Texas limited liability company, its sole general partner
 

 

	
             
 	
            By:
 	
            Whitestone REIT Operating Partnership, LP, a Delaware limited partnership, its sole member
 

 

	
             
 	
            By:
 	
            Whitestone REIT, a Maryland real estate investment trust, its sole general partner
 

 

	
             
 	
            By:
 	
            _________________________
 

	
             
 	
            James C. Mastandrea, CEO
 

 

 

-11-

 

 

 

Each Guarantor hereby acknowledges receipt of this Amendment No. 6, affirms its obligations under the Guaranty, dated as of March 11, 2005, and agrees that all “Obligations”, as defined in the Credit Agreement and after giving effect to this Amendment No. 6, are Obligations under the Guaranty.

 

WHITESTONE REIT, a Maryland real estate investment trust, Guarantor

 

 

	
             
 	
            By:
 	
            _________________________________
 

James C. Mastandrea, CEO

 

WHITESTONE REIT OPERATING PARTNERSHIP III GP LLC, a Texas limited liability company, Guarantor

 

	
             
 	
            By:
 	
            Whitestone REIT Operating Partnership, LP, a Delaware limited partnership, its sole member
 

 

	
             
 	
            By:
 	
            Whitestone REIT, a Maryland real estate investment trust, its sole member
 

 

 

	
             
 	
            By:
 	
            ____________________________
 

James C. Mastandrea, CEO

 

HARTMAN REIT OPERATING PARTNERSHIP III LP LTD, a Texas limited partnership, Guarantor

 

	
             
 	
            By:
 	
            Whitestone REIT Operating Partnership III GP LLC, a Texas limited liability company, its sole general partner
 

 

	
             
 	
            By:
 	
            Whitestone REIT Operating Partnership, LP, a Delaware limited partnership, its sole member
 

 

	
             
 	
            By:
 	
            Whitestone REIT, a Maryland real estate investment trust, its sole general partner
 

 

	
             
 	
            By:
 	
            _________________________
 

	
             
 	
            James C. Mastandrea, CEO
 

 

-12-Exhibit 10.29

TERM LOAN AGREEMENT

among

WHITESTONE REIT OPERATING PARTNERSHIP, L.P.,
WHITESTONE PIMA

NORTE LLC, WHITESTONE REIT OPERATING PARTNERSHIP III LP,

WHITESTONE REIT OPERATING PARTNERSHIP III GP LLC and HARTMAN REIT

OPERATING PARTNERSHIP III LP LTD

and

KEYBANK NATIONAL ASSOCIATION

and

OTHER LENDERS WHICH MAY BECOME PARTIES TO
THIS AGREEMENT

and

KEYBANK NATIONAL ASSOCIATION,

AS ADMINISTRATIVE AGENT

Dated as of January __, 2008

TABLE OF
CONTENTS

	
 

	
 

	
 

	
 

	
 

	
 

	
§1.

	
 

	
DEFINITIONS
 AND RULES OF INTERPRETATION

	
 

	
2

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
§1.1.

	
Definitions

	
 

	
2

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
§1.2.

	
Rules of
 Interpretation

	
 

	
18

	
 

	
 

	
 

	
 

	
 

	
 

	
§2.

	
 

	
THE TERM
 LOAN

	
 

	
19

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
§2.1.

	
Commitment
 to Lend

	
 

	
19

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
§2.2.

	
The Term
 Notes

	
 

	
19

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
§2.3.

	
Interest on
 Term Loan; Fees

	
 

	
19

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
§2.4.

	
Request for
 the Term Loan

	
 

	
20

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
§2.5.

	
Conversion
 Options

	
 

	
20

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
§2.6.

	
Funds for
 the Term Loan

	
 

	
21

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
§2.7.

	
Extension of
 Maturity Date

	
 

	
22

	
 

	
 

	
 

	
 

	
 

	
 

	
§3.

	
 

	
REPAYMENT OF
 THE TERM LOAN

	
 

	
22

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
§3.1.

	
Maturity

	
 

	
22

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
§3.2.

	
Optional
 Repayments of the Term Loan

	
 

	
23

	
 

	
 

	
 

	
 

	
 

	
 

	
§4.

	
 

	
CERTAIN
 GENERAL PROVISIONS

	
 

	
23

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
§4.1.

	
Funds for
 Payments

	
 

	
23

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
§4.2.

	
Computations

	
 

	
24

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
§4.3.

	
Inability to
 Determine Libor Rate

	
 

	
24

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
§4.4.

	
Illegality

	
 

	
24

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
§4.5.

	
Additional
 Costs, Etc.

	
 

	
25

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
§4.6.

	
Capital
 Adequacy

	
 

	
26

-i-

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
§4.7.

	
Certificate;
 Limitations

	
 

	
26

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
§4.8.

	
Indemnity

	
 

	
26

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
§4.9.

	
Interest on
 Overdue Amounts; Late Charge

	
 

	
27

	
 

	
 

	
 

	
 

	
 

	
 

	
§5.

	
 

	
RESERVED

	
 

	
27

	
 

	
 

	
 

	
 

	
 

	
§6.

	
 

	
RECOURSE
 OBLIGATIONS

	
 

	
27

	
 

	
 

	
 

	
 

	
 

	
§7.

	
 

	
REPRESENTATIONS
 AND WARRANTIES

	
 

	
27

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
§7.1.

	
Authority,
 Etc.

	
 

	
27

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
§7.2.

	
Governmental
 Approvals

	
 

	
29

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
§7.3.

	
Title to
 Properties; Leases

	
 

	
30

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
§7.4.

	
Financial
 Statements

	
 

	
30

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
§7.5.

	
No Material
 Changes, Etc.

	
 

	
30

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
§7.6.

	
Franchises,
 Patents, Copyrights, Etc.

	
 

	
30

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
§7.7.

	
Litigation

	
 

	
31

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
§7.8.

	
No
 Materially Adverse Contracts, Etc.

	
 

	
31

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
§7.9.

	
Compliance
 With Other Instruments, Laws, Etc.

	
 

	
31

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
§7.10.

	
Tax Status

	
 

	
32

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
§7.11

	
No Event of
 Default

	
 

	
32

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
§7.12.

	
Investment
 Company Acts

	
 

	
32

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
§7.13.

	
Name;
 Jurisdiction of Organization; Absence of UCC Financing Statements, Etc.

	
 

	
32

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
§7.14.

	
Absence of
 Liens

	
 

	
32

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
§7.15.

	
Certain
 Transactions

	
 

	
32

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
§7.16.

	
Employee
 Benefit Plans; Multiemployer Plans; Guaranteed Pension Plans

	
 

	
33

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
§7.17.

	
Regulations
 U and X

	
 

	
33

-ii-

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
§7.18.

	
Environmental
 Compliance

	
 

	
33

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
§7.19.

	
Subsidiaries

	
 

	
34

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
§7.20.

	
Loan
 Documents

	
 

	
35

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
§7.21.

	
REIT Status

	
 

	
35

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
§7.22.

	
No
 Condemnation

	
 

	
35

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
§7.23.

	
Utilities

	
 

	
35

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
§7.24.

	
Brokerage
 Fees

	
 

	
35

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
§7.25.

	
Independent
 Parcel

	
 

	
35

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
§7.26.

	
Major Lease

	
 

	
35

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
§7.27.

	
No
 Encroachment

	
 

	
36

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
§7.28.

	
Federal Tax
 Identification Numbers

	
 

	
36

	
 

	
 

	
 

	
 

	
 

	
 

	
§8.

	
 

	
AFFIRMATIVE
 COVENANTS OF THE BORROWER AND THE TRUST

	
 

	
36

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
§8.1.

	
Punctual
 Payment

	
 

	
36

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
§8.2.

	
Maintenance
 of Office; Jurisdiction of Organization, Etc.

	
 

	
36

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
§8.3.

	
Records and
 Accounts

	
 

	
36

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
§8.4.

	
Financial
 Statements, Certificates and Information

	
 

	
36

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
§8.5.

	
Notices

	
 

	
39

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
§8.6.

	
Existence of
 Borrower; Maintenance of the Project

	
 

	
41

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
§8.7.

	
Existence of
 the Trust; Maintenance of REIT Status of the Trust; Maintenance of
 Properties; Etc.

	
 

	
41

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
§8.8.

	
Insurance

	
 

	
42

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
§8.9.

	
Taxes

	
 

	
42

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
§8.10.

	
Inspection
 of Properties and Books

	
 

	
42

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
§8.11.

	
Compliance
 with Laws, Contracts, Licenses, and Permits

	
 

	
43

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
§8.12.

	
Use of
 Proceeds

	
 

	
44

-iii-

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
§8.13.

	
Solvency of
 Borrower and Trust

	
 

	
44

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
§8.14.

	
Further
 Assurances

	
 

	
44

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
§8.15.

	
Reserved.

	
 

	
44

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
§8.16.

	
Environmental
 Indemnification

	
 

	
44

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
§8.17.

	
Response
 Actions

	
 

	
44

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
§8.18.

	
Environmental
 Assessments

	
 

	
45

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
§8.19.

	
Employee
 Benefit Plans

	
 

	
45

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
§8.20.

	
No
 Amendments to Certain Documents

	
 

	
46

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
§8.21.

	
Personal
 Property

	
 

	
46

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
§8.22.

	
Leases

	
 

	
46

	
 

	
 

	
 

	
 

	
 

	
 

	
§9.

	
 

	
CERTAIN
 NEGATIVE COVENANTS OF THE BORROWER AND THE TRUST

	
 

	
46

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
§9.1.

	
Restrictions
 on Indebtedness

	
 

	
46

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
§9.2.

	
Restrictions
 on Liens, Etc.

	
 

	
48

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
§9.3.

	
Restrictions
 on Investments

	
 

	
49

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
§9.4.

	
Merger,
 Consolidation and Disposition of Assets; Assets of the Trust

	
 

	
51

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
§9.5.

	
Compliance
 with Environmental Laws

	
 

	
52

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
§9.6.

	
Distributions

	
 

	
52

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
§9.7.

	
Reserved

	
 

	
52

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
§9.8.

	
Default
 Under Leases

	
 

	
53

	
 

	
 

	
 

	
 

	
 

	
 

	
§10.

	
 

	
FINANCIAL
 COVENANTS

	
 

	
53

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
§10.1.

	
Consolidated
 Total Leverage Ratio

	
 

	
53

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
§10.2.

	
Interest
 Coverage Ratio

	
 

	
53

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
§10.3.

	
Fixed Charge
 Coverage Ratio

	
 

	
53

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
§10.4.

	
Secured Debt
 Leverage

	
 

	
53

-iv-

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
§10.5.

	
Reserved

	
 

	
53

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
§10.6.

	
Reserved

	
 

	
53

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
§10.7.

	
Reserved

	
 

	
53

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
§10.8.

	
Consolidated
 Tangible Net Worth

	
 

	
53

	
 

	
 

	
 

	
 

	
 

	
 

	
§11.

	
 

	
RESERVED

	
 

	
54

	
 

	
 

	
 

	
 

	
 

	
§12.

	
 

	
CONDITIONS
 TO THE TERM LOAN

	
 

	
54

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
§12.1.

	
Loan
 Documents

	
 

	
54

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
§12.2.

	
Certified
 Copies of Organization Documents

	
 

	
54

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
§12.3.

	
Resolutions

	
 

	
55

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
§12.4.

	
Incumbency
 Certificate: Authorized Signers

	
 

	
55

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
§12.5.

	
Title Policy

	
 

	
55

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
§12.6.

	
Certificates
 of Insurance

	
 

	
55

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
§12.7.

	
Environmental
 Reports

	
 

	
55

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
§12.8.

	
Opinion of
 Counsel Concerning Organization and Loan Documents

	
 

	
56

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
§12.9.

	
Structural
 Inspection Reports

	
 

	
56

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
§12.10.

	
Inspection
 of the Project

	
 

	
56

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
§12.11.

	
Certifications
 from Government Officials; UCC-11 Reports

	
 

	
56

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
§12.13.

	
Proceedings
 and Documents; Adverse Changes

	
 

	
56

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
§12.14.

	
Fees

	
 

	
56

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
§12.15.

	
Closing
 Certificate

	
 

	
57

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
§12.16.

	
Patriot Act,
 Etc.

	
 

	
57

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
§12.17.

	
Governmental
 Regulation

	
 

	
57

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
§12.18.

	
Property
 Financial Analysis

	
 

	
57

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
§12.19.

	
Appraisal

	
 

	
57

-v-

	
 

	
 

	
 

	
 

	
 

	
 

	
§13.

	
 

	
CONDITIONS
 TO ALL BORROWINGS

	
 

	
57

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
§13.1.

	
Representations
 True; No Event of Default; Compliance Certificate

	
 

	
57

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
§13.2.

	
No Legal
 Impediment

	
 

	
57

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
§13.3.

	
Governmental
 Regulation

	
 

	
57

	
 

	
 

	
 

	
 

	
 

	
 

	
§14.

	
 

	
EVENTS OF
 DEFAULT; ACCELERATION; ETC.

	
 

	
58

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
§14.1.

	
Events of
 Default and Acceleration

	
 

	
58

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
§14.2.

	
Reserved

	
 

	
61

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
§14.3.

	
Remedies

	
 

	
61

	
 

	
 

	
 

	
 

	
 

	
 

	
15.

	
 

	
SECURITY
 INTEREST AND SET-OFF

	
 

	
61

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
15.1

	
Security
 Interest

	
 

	
61

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
15.2

	
Set-Off and
 Debit

	
 

	
62

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
15.3

	
Right to
 Freeze

	
 

	
63

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
15.4

	
Additional
 Rights

	
 

	
63

	
 

	
 

	
 

	
 

	
 

	
 

	
§16.

	
 

	
THE AGENT

	
63

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
§16.1.

	
Authorization

	
 

	
63

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
§16.2.

	
Employees
 and Agents

	
 

	
63

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
§16.3.

	
No Liability

	
 

	
63

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
§16.4.

	
No
 Representations

	
 

	
64

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
§16.5.

	
Payments

	
 

	
64

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
§16.6.

	
Holders of
 Notes

	
 

	
65

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
§16.7.

	
Indemnity

	
 

	
65

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
§16.8.

	
Agent as
 Lender

	
 

	
65

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
§16.9.

	
Notification
 of Defaults and Events of Default

	
 

	
65

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
§16.10.

	
Duties in
 Case of Enforcement

	
 

	
66

-vi-

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
§16.11.

	
Successor
 Agent

	
 

	
66

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
§16.12.

	
Notices

	
 

	
67

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
§16.13.

	
Reserved

	
 

	
67

	
 

	
 

	
 

	
 

	
 

	
 

	
§17.

	
 

	
EXPENSES

	
 

	
67

	
 

	
 

	
 

	
 

	
 

	
§18.

	
 

	
INDEMNIFICATION

	
 

	
68

	
 

	
 

	
 

	
 

	
 

	
§19.

	
 

	
SURVIVAL OF
 COVENANTS, ETC.

	
 

	
68

	
 

	
 

	
 

	
 

	
 

	
§20.

	
 

	
ASSIGNMENT;
 PARTICIPATIONS; ETC.

	
 

	
69

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
§20.1.

	
Conditions
 to Assignment by Lenders.

	
 

	
69

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
§20.2.

	
Certain
 Representations and Warranties; Limitations; Covenants

	
 

	
69

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
§20.3.

	
Register

	
 

	
70

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
§20.4.

	
New Notes

	
 

	
70

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
§20.5.

	
Participations

	
 

	
71

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
§20.6.

	
Pledge by
 Lender

	
 

	
71

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
§20.7.

	
No
 Assignment by Borrower

	
 

	
71

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
§20.8.

	
Disclosure

	
 

	
71

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
§20.9.

	
Syndication

	
 

	
72

	
 

	
 

	
 

	
 

	
 

	
 

	
§21.

	
 

	
NOTICES,
 ETC.

	
 

	
72

	
 

	
 

	
 

	
 

	
 

	
§22.

	
 

	
WHITESTONE
 OP AS AGENT FOR THE BORROWER

	
 

	
73

	
 

	
 

	
 

	
 

	
 

	
§23.

	
 

	
GOVERNING
 LAW; CONSENT TO JURISDICTION AND SERVICE

	
 

	
73

	
 

	
 

	
 

	
 

	
 

	
§24.

	
 

	
HEADINGS

	
 

	
74

	
 

	
 

	
 

	
 

	
 

	
§25.

	
 

	
COUNTERPARTS

	
 

	
74

	
 

	
 

	
 

	
 

	
 

	
§26.

	
 

	
ENTIRE
 AGREEMENT, ETC.

	
 

	
74

-vii-

	
 

	
 

	
 

	
 

	
 

	
§27.

	
 

	
WAIVER OF
 JURY TRIAL AND CERTAIN DAMAGE CLAIMS

	
 

	
74

	
 

	
 

	
 

	
 

	
 

	
§28.

	
 

	
CONSENTS,
 AMENDMENTS, WAIVERS, ETC.

	
 

	
74

	
 

	
 

	
 

	
 

	
 

	
§29.

	
 

	
SEVERABILITY

	
 

	
76

	
 

	
 

	
 

	
 

	
 

	
§30.

	
 

	
INTEREST
 RATE LIMITATION

	
 

	
76

-viii-

Exhibits to Term Loan Agreement

Exhibit A –
Form of Term Note

Exhibit B –
Form of Completed Loan Request

Exhibit C –
Form of Compliance Certificate

Exhibit D – Form of Assignment
and Assumption

-ix-

	
  

 	
  

 
	
             Schedules to Term Agreement

 
	
  

 	
  

 
	
 Schedule 1

 	
 Lender’s
 Commitments

 
	
  

 	
  

 
	
 Schedule
 7.1(b)

 	
 Capitalization

 
	
  

 	
  

 
	
 Schedule 7.7

 	
 Litigation

 
	
  

 	
  

 
	
 Schedule
 7.15

 	
 Affiliate
 Transactions

 
	
  

 	
  

 
	
 Schedule
 7.16

 	
 Employee
 Benefit Plans

 
	
  

 	
  

 
	
 Schedule
 7.18

 	
 Environmental
 Matters

 
	
  

 	
  

 
	
 Schedule
 7.19

 	
 Subsidiaries

 
	
  

 	
  

 
	
 Schedule
 7.26

 	
 Major Leases

 
	
  

 	
  

 
	
 Schedule
 8.19

 	
 Employee
 Benefit Plans

 
	
  

 	
  

 
	
 Schedule
 9.1(g)

 	
 Contingent
 Liabilities

 
	
  

 	
  

 
	
 Schedule
 9.1(f)

 	
 Secured Term
 Loan Indebtedness

 

-x-

TERM LOAN AGREEMENT 

          This
TERM LOAN AGREEMENT is made as of the ____ day of January, 2008, by and among
WHITESTONE REIT OPERATING PARTNERSHIP, L.P., a Delaware limited a partnership
(“Whitestone OP”), WHITESTONE PIMA NORTE LLC, a Texas limited liability company
(“Pima Norte”), WHITESTONE REIT OPERATING PARTNERSHIP III LP, a Texas limited
partnership (“Whitestone III”), HARTMAN REIT OPERATING PARTNERSHIP III LP LTD,
a Texas limited partnership (“Whitestone III LP LTD”) and WHITESTONE REIT
OPERATING PARTNERSHIP III GP LLC, a Texas limited liability company
(“Whitestone III GP LLC” and, collectively with Whitestone OP, Pima Norte,
Whitestone III and Whitestone III LP LTD, the “Borrower”), each having its
principal place of business at 2600 South Gessner, Suite 500, Houston, Texas
77063; KEYBANK NATIONAL ASSOCIATION (“KeyBank”), having a principal place of
business at 127 Public Square, Cleveland, Ohio 44114, and the other lending
institutions which may become parties hereto pursuant to §20 (individually, a
“Lender” and collectively, the “Lenders”); and KEYBANK NATIONAL ASSOCIATION, as
administrative agent for itself and each other Lender (the “Agent”). 

RECITALS

          A.
The Borrower is primarily engaged in the business of owning, acquiring,
developing, renovating and operating retail, office or mixed office/warehouse
properties. 

          B.
Pima Norte owns approximately 33,405 square feet in the Pima Norte Office
Condominium Project located at 36600 North Pima Road in the town of Carefree,
County of Maricopa, State of Arizona. 

          C.
Whitestone REIT, a Maryland real estate investment trust (the “Trust”), is the
sole general partner of Whitestone OP, holds in excess of 62% of the
partnership interests in Whitestone OP as of the date of this Agreement, is
qualified to elect REIT status for income tax purposes and has agreed to
guaranty the obligations of the Borrower hereunder and under the other Loan
Documents (as defined below). 

          D.
Whitestone OP is the 100% owner and sole member of Pima Norte. 

          E.
Whitestone OP is the 100% owner and sole member of Whitestone III GP LLC, which
limited liability company is the sole general partner of Whitestone III and of
Whitestone III LP LTD, the sole limited partner of Whitestone III. 

          F.
The Borrower and the Trust have requested, and the Lenders have agreed to
provide, a secured term loan to the Borrower pursuant to the terms and
conditions hereof. 

1

          NOW,
THEREFORE, in consideration of the mutual covenants and agreements herein
contained, the parties hereto agree as follows: 

          §1.
DEFINITIONS AND RULES OF INTERPRETATION. 

          §1.1.
Definitions. The following terms shall have the meanings set forth in this §1
or elsewhere in the provisions of this Agreement referred to below: 

          Accountants.
In each case, independent certified public accountants reasonably acceptable to
the Majority Lenders. The Lenders hereby acknowledge that the Accountants may
include Pannell Kerr Forster of Texas PC and any so-called “big-four”
accounting firm. 

          Accounts
Payable. Accounts payable of the Borrower, the Trust and their respective
Subsidiaries, as determined in accordance with GAAP. 

          Affiliate.
With reference to any Person, (i) any director, officer, general partner,
trustee or managing member (or the equivalent thereof) of that Person, (ii) any
other Person controlling, controlled by or under direct or indirect common
control of that Person, (iii) any other Person directly or indirectly holding
five percent (5%) or more of any class of the capital stock or other equity
interests (including options, warrants, convertible securities and similar
rights) of that Person, (iv) any other Person five percent (5%) or more of any
class of whose capital stock or other equity interests (including options,
warrants, convertible securities and similar rights) is held directly or
indirectly by that Person, and (v) any Person directly or indirectly
controlling that Person, whether through a management agreement, voting
agreement, other contract or otherwise. 

          Agent.
See the preamble to this Agreement. The Agent shall include any successor
agent, as permitted by §16. 

          Agent’s
Head Office. The Agent’s office located at 127 Public Square, Cleveland,
Ohio 44114, or at such other location as the Agent may designate from time to
time, or the office of any successor agent permitted under §16. 

          Agreement.
This Term Loan Agreement, including the Schedules and Exhibits hereto, as the
same may be from time to time amended, restated, modified and/or supplemented
and in effect.  

          Agreement
of Limited Partnership of the Borrower. Collectively, (i) the Amended and
Restated Agreement of Limited Partnership of Whitestone OP, dated December 31,
1998, among the Trust and the limited partners named therein, (ii) the
Agreement of Limited Partnership of Whitestone III, dated March 4, 2005, (iii)
the Agreement of Limited Partnership of Whitestone III LP LTD, dated March 2,
2005, and (iv) the Operating Agreement of Whitestone III GP LLC, dated March 1,
2005, and (v) the 

2

Operating
Agreement of Pima Norte, dated December 11, 2007, in each case as amended
through the date hereof and as the same may be further amended from time to
time as permitted by §8.20. 

          Anti-Terrorism
Order. Executive Order No. 13,224 66 Fed Reg. 49,079 (2001) issued by the
President of the United States of America (Executive Order Blocking Property
and Prohibiting Transactions with Persons Who Commit, Threaten to Commit, or
Support Terrorism). 

          Applicable
Libor Margin. Two percent (2%). 

          Assignment
and Assumption. See §20.1. 

          Base
Rate. The higher of (i) the variable per annum rate of interest announced
from time to time by KeyBank as its “base rate” and (ii) one half of one
percent (1/2%) plus the Federal Funds Rate. The Base Rate is a reference
rate and does not necessarily represent the lowest or best rate being charged
to any customer. Any change in the Base Rate during an Interest Period shall be
effective and result in a corresponding change on the same day in the rate of
interest accruing from and after such day on the unpaid balance of principal of
the Base Rate Loans, if any, effective on the day of such change in the Base
Rate, without notice or demand of any kind. 

          Base
Rate Loan(s). Those portions of the Term Loan bearing interest calculated
by reference to the Base Rate. 

          Borrower.
See the preamble hereto. 

          Building(s).
Individually and collectively, the buildings, structures and improvements now
or hereafter located on the Real Estate Assets. 

          Business
Day. For all purposes other than as covered by clause (ii) below, any day
other than a Saturday, Sunday or legal holiday on which banks in Cleveland,
Ohio are open for the conduct of a substantial part of their commercial banking
business; and (ii) with respect to all notices and determinations in connection
with, and payments of principal and interest on, Libor Rate Loans, any day that
is a Business Day described in clause (i) and that is also a Libor Business
Day. 

          Capital
Expenditures. Any expenditure for any item that would be treated or defined
as a capital expenditure under GAAP. 

          Capital
Reserve. For any period, a capital reserve equal to the weighted average
square feet of the Real Estate Assets during the applicable period, multiplied
by $0.15 per annum. 

          Capitalization
Rate. The Capitalization Rate shall be 9.25%.

3

          Capitalized
Leases. Leases under which the Borrower or any of its Subsidiaries or any Partially-Owned
Entity is the lessee or obligor, the discounted future rental obligations under
which are required to be capitalized on the balance sheet of the lessee or
obligor in accordance with GAAP. 

          Cash
and Cash Equivalents. As of any date of determination, the sum of (a) the
aggregate amount of unrestricted cash then actually held by the Borrower or any
of its Subsidiaries (excluding without limitation, until forfeited or otherwise
entitled to be retained by the Borrower or any of its Subsidiaries, tenant
security and other restricted deposits), and (b) the aggregate amount of
unrestricted cash equivalents (valued at fair market value) then held by the
Borrower or any of its Subsidiaries. As used in this definition, (i)
“unrestricted” means the specified asset is not subject to any Liens in favor
of any Person, and (ii) “cash equivalents” means that such asset has a liquid,
par value in cash and is convertible to cash on demand. Notwithstanding
anything contained herein to the contrary, the term Cash and Cash Equivalents
shall not include the commitments of the lenders to make revolving loans or any
other extension of credit under the Revolving Credit Agreement. 

          CERCLA.
See §7.18. 

          Closing
Date. January __, 2008. 

          Code.
The Internal Revenue Code of 1986, as amended and in effect from time to time. 

          Commitment.
With respect to each Lender, the amount set forth from time to time on Schedule 1 hereto as the amount of such Lender’s Commitment to make the Term Loan, as
such Schedule 1 may be updated by the Agent from time to time.  

          Commitment
Percentage. With respect to each Lender, the percentage set forth on
Schedule 1 hereto as such Lender’s percentage of the Term Loan Commitment, as
such Schedule 1 may be updated by the Agent from time to time.  

          Completed
Loan Request. A loan request accompanied by all information required to be
supplied under the applicable provisions of §2.4. 

          Consolidated
or consolidated. With reference to any term defined herein, shall mean that
term as applied to the accounts of the Borrower, the Trust and their respective
Subsidiaries, consolidated in accordance with GAAP in accordance with the terms
of this Agreement. 

          Consolidated
EBITDA. In relation to the Borrower, the Trust and their respective
Subsidiaries for any applicable period, an amount equal to, without
double-counting, the net income or loss of the Borrower, the Trust and their
respective Subsidiaries determined

4

in accordance
with GAAP (before minority interests and excluding losses attributable to the
sale or other disposition of assets and adjusted to eliminate the
straight-lining of rents) for such period, plus (x) the following to the
extent deducted in computing such Consolidated net income for such period: (i)
Consolidated Total Interest Expense for such period, (ii) real estate
depreciation and amortization for such period, and (iii) other non-cash charges
for such period; and minus (y) all gains attributable to the sale or
other disposition of assets or debt restructurings in such period, in each case
adjusted to include the Borrower’s, the Trust’s or any Subsidiary’s pro rata
share of EBITDA (and the items comprising EBITDA) from any Partially-Owned
Entity in such period, based on its percentage ownership interest in such
Partially-Owned Entity (or such other amount to which the Borrower, the Trust
or such Subsidiary is entitled or for which the Borrower, the Trust or such Subsidiary
is obligated based on an arm’s length agreement), provided that for
purposes of calculating the Interest Coverage Ratio (§10.2) and the Fixed
Charge Coverage Ratio (§10.3), Consolidated EBITDA shall only include EBITDA
from a Partially-Owned Entity to the extent cash income is actually received in
the applicable period by the Borrower, the Trust or such Subsidiary in the form
of dividends or similar distributions. 

          Consolidated
Fixed Charges. For any applicable period, an amount equal to (i) Consolidated
Total Interest Expense (including, in any event, capitalized interest) for such
period plus (ii) the aggregate amount of scheduled principal payments of
Indebtedness (excluding balloon payments at maturity) required to be made
during such period by the Borrower, the Trust and their respective Subsidiaries
on a Consolidated basis plus (iii) the Capital Reserve applicable to
such period plus (iv) the dividends and distributions, if any, paid or
required to be paid during such period on the Preferred Equity, if any, of the
Borrower, the Trust and their respective Subsidiaries (other than dividends
paid in the form of capital stock). 

          Consolidated
Tangible Net Worth. As of any date of determination, an amount equal to the
total shareholders’ equity of the Borrower and its Subsidiaries, as determined
in accordance with GAAP, as reported on the Borrower’s Consolidated balance
sheet, less all assets that are considered to be intangible assets under GAAP,
including, without limitation, customer lists, goodwill, computer software,
copyrights, trade names trademarks, patents, franchises, licenses, unamortized
deferred charges, unamortized debt discount and capitalized research and
development costs. 

          Consolidated
Total Indebtedness. As of any date of determination, Consolidated Total
Indebtedness means for the Borrower, the Trust and their respective
Subsidiaries, all obligations, contingent or otherwise, which should be
classified on the obligor’s balance sheet as liabilities, or to which reference
should be made by footnotes thereto, all in accordance with GAAP, including, in
any event, the sum of (without double-counting), all Indebtedness outstanding
on such date, in each case whether Recourse, Without Recourse or contingent, provided,
however, that amounts not drawn under the Revolving Credit Agreement on
such date shall not be included in calculating Consolidated Total Indebtedness,
and provided, further, that (without double-counting), each of
the following 

5

shall be
included in Consolidated Total Indebtedness: (a) all amounts of guarantees,
indemnities for borrowed money, stop-loss agreements and the like provided by
the Borrower, the Trust and their respective Subsidiaries, in each case in
connection with and guarantying repayment of amounts outstanding under any
other Indebtedness; (b) all amounts for which a letter of credit has been
issued for the account of the Borrower, the Trust or any of their respective
Subsidiaries; (c) all amounts of bonds posted by the Borrower, the Trust or any
of their respective Subsidiaries guaranteeing performance or payment
obligations; (d) all lease obligations (including under Capital Leases) and (e)
all liabilities of the Borrower, the Trust or any of their respective
Subsidiaries as partners, members or the like for liabilities (whether such
liabilities are Recourse, Without Recourse or contingent obligations of the
applicable partnership or other Person) of partnerships or other Persons in
which any of them have an equity interest, which liabilities are for borrowed
money or any of the matters listed in clauses (a), (b), (c) or (d) above. Without
limitation of the foregoing (without double counting), with respect to any
Partially-Owned Entity, (x) to the extent that the Borrower, the Trust or any
of their respective Subsidiaries or such Partially-Owned Entity is providing a
completion guaranty in connection with a construction loan entered into by a
Partially-Owned Entity, Consolidated Total Indebtedness shall include the
Borrower’s, the Trust’s or such Subsidiary’s pro rata liability
under the Indebtedness relating to such completion guaranty (or, if greater,
the Borrower’s, the Trust’s or such Subsidiary’s potential liability under such
completion guaranty) and (y) in connection with the liabilities described in
clauses (a) and (d) above (other than completion guarantees, which are referred
to in clause (x)), the Consolidated Total Indebtedness shall include the
portion of the liabilities of such Partially-Owned Entity which are
attributable to the Borrower’s, the Trust’s or such Subsidiary’s percentage
equity interest in such Partially-Owned Entity or such greater amount of such
liabilities for which the Borrower, the Trust or their respective Subsidiaries
are, or have agreed to be, liable by way of guaranty, indemnity for borrowed
money, stop-loss agreement or the like, it being agreed that, in any case,
Indebtedness of a Partially-Owned Entity shall not be excluded from
Consolidated Total Indebtedness by virtue of the liability of such
Partially-Owned Entity being Without Recourse. For purposes hereof, the amount
of borrowed money shall equal the sum of (1) the amount of borrowed money as
determined in accordance with GAAP plus (2) the amount of those
contingent liabilities for borrowed money set forth in subsections (a) through
(e) above, but shall exclude any adjustment for so-called “straight-line
interest accounting”. 

          Consolidated
Total Interest Expense. For any applicable period, the aggregate amount of
interest required in accordance with GAAP to be paid, accrued, expensed or, to
the extent it could be a cash expense in the applicable period, capitalized,
without double-counting, by the Borrower, the Trust and their respective
Subsidiaries during such period on: (i) all Indebtedness of the Borrower, the
Trust and their respective Subsidiaries (including the Loans, obligations under
Capital Leases (to the extent Consolidated EBITDA has not been reduced by such
Capital Lease obligations in the applicable period) and any Subordinated
Indebtedness and including original issue discount and amortization of prepaid
interest, if any, but excluding any Distribution on Preferred Equity), (ii) all
amounts available for borrowing, or for drawing under letters of credit, if 

6

any, issued
for the account of the Borrower, the Trust or any of their respective
Subsidiaries, but only if such interest was or is required to be reflected as
an item of expense, and (iii) all commitment fees, agency fees, facility fees,
balance deficiency fees and similar fees and expenses in connection with the
borrowing of money. 

          Conversion
Request. A notice given by the Borrower to the Agent of its election to
convert or continue a Loan in accordance with §2.5. 

          Deed
of Trust. The Deed of Trust, Assignment of Leases and Rents, Security
Agreement and Fixture Filing, dated as of the date hereof, made by Pima Norte
in favor of the Agent. 

          Default.
When used with reference to this Agreement or any other Loan Document, an event
or condition specified in §14.1 that, but for the requirement that time elapse
or notice be given, or both, would constitute an Event of Default. 

          Delinquent
Lender. See §16.5(c). 

          Disqualifying
Environmental Event. Any Release or threatened Release of Hazardous
Substances, any violation of Environmental Laws or any other similar
environmental event with respect to the Project that will, in the Agent’s
reasonable opinion, cost in excess of $50,000 to remediate. 

          Disqualifying
Structural Event. Any structural issue with respect to the Project that
will, in the Agent’s reasonable opinion, cost in excess of $50,000 to
remediate. 

          Distribution.
With respect to: 

	
 

	
 

	
 

	
          (i)
  the Borrower, any distribution of cash or other cash equivalent, directly or
  indirectly, to the partners of the Borrower; or any other distribution on or
  in respect of any partnership interests of the Borrower; and 

	
 

	
 

	
 

	
          (ii)
  the Trust, the declaration or payment of any dividend on or in respect of any
  shares of any class of capital stock or other equity of the Trust, other than
  dividends payable solely in shares of common stock by the Trust; the
  purchase, redemption, or other retirement of any shares of any class of
  capital stock or other equity of the Trust, directly or indirectly through a
  Subsidiary of the Trust or otherwise; the return of capital by the Trust to
  its shareholders as such; or any other distribution on or in respect of any
  shares of any class of capital stock or other equity of the Trust. 

          Dollars
or $. Lawful currency of the United States of America. 

7

          Drawdown
Date. The date on which any portion of the Term Loan is converted or
continued in accordance with §2.5. 

          Eligible
Assignee. Any of (a) a commercial bank (or similar financial institution)
organized under the laws of the United States, or any State thereof or the
District of Columbia, and having total assets in excess of $500,000,000; (b) a
savings and loan association or savings bank organized under the laws of the
United States, or any State thereof or the District of Columbia, and having a
net worth of at least $100,000,000, calculated in accordance with GAAP; and (c)
a commercial bank (or similar financial institution) organized under the laws
of any other country (including the central bank of such country) which is a
member of the Organization for Economic Cooperation and Development (the “OECD”),
or a political subdivision of any such country, and having total assets in
excess of $500,000,000, provided that such bank (or similar financial
institution) is acting through a branch or agency located in the United States
of America. In no event will the Borrower or any Affiliate of the Borrower be
an Eligible Assignee. 

          Employee
Benefit Plan. Any employee benefit plan within the meaning of §3(3) of
ERISA maintained or contributed to by the Borrower or any ERISA Affiliate,
other than a Multiemployer Plan. 

          Environmental
Indemnity Agreement. Environmental and Hazardous Substances Indemnity
Agreement, dated as of the date hereof, between Pima Norte and the Agent. 

          Environmental
Laws. See §7.18(a). 

          Environmental
Reports. See §7.18 

          ERISA.
The Employee Retirement Income Security Act of 1974, as amended and in effect
from time to time. 

          ERISA
Affiliate. Any Person which is treated as a single employer with the
Borrower under §414 of the Code. 

          ERISA
Reportable Event. A reportable event with respect to a Guaranteed Pension
Plan within the meaning of §4043 of ERISA and the regulations promulgated
thereunder. 

          Event
of Default. See §14.1. 

          Excluded
Litigation Fees. The legal fees and disbursements paid by the Borrower
during the applicable period in connection with litigation among Allen R.
Hartman, Hartman Management L.P. and the Trust, provided that “Excluded
Litigation Fees” shall not include any legal fees and disbursements incurred by
the Borrower in defending any litigation commenced by the Trust’s shareholders
(including, without limitation, Allen R. Hartman) in their capacity as such
(other than in connection with litigation commenced 

8

by and/or
involving solely Allen R. Hartman (and not by and/or involving any other
shareholder(s)) in his capacity as a shareholder). 

          Extension.
See §2.7. 

          Extension
Fee. See §2.7. 

          Facility
Fee. See §2.3(e). 

          Fair
Market Value of Real Estate Assets. As of any date of determination, an
amount equal to (i) Consolidated Net Operating Income for the most recent four
(4) consecutive complete fiscal quarters less (ii) the Capital Reserve
applicable to such period; with the product thereof being divided by
(iii) the Capitalization Rate. Notwithstanding the foregoing, (i) with respect
to any Real Estate Asset acquired during the applicable period, Fair Market
Value of Real Estate Assets shall be calculated as follows: (x) from
acquisition through the first two complete fiscal quarters after such
acquisition, the Net Operating Income from such Real Estate Asset shall be
excluded and it shall be included in Fair Market Value of Real Estate Assets at
its cost basis plus the cost of improvements made during the applicable period
(but in no event shall such aggregate cost value exceed the “as stabilized”
appraised value of such Real Estate Asset, as reasonably determined by the
Agent) ; (y) once the acquired Real Estate Asset has been owned by the Borrower
for three complete fiscal quarters, such Real Estate Asset shall no longer be
valued at its cost basis but shall be valued based upon its Net Operating
Income for such three fiscal quarters, annualized, less a capital
reserve equal to the total number of square feet of such Real Estate Asset multiplied
by $0.15, with the sum thereof being divided by the Capitalization Rate;
and (z) once the acquired Real Estate Asset has been owned by the Borrower for
four complete fiscal quarters, such Real Estate Asset shall no longer be valued
at its cost basis but shall be valued based upon its Net Operating Income for
such four fiscal quarters in the manner set forth in the first sentence above,
and (ii) Net Operating Income from Real Estate Assets removed sold or otherwise
disposed of during the applicable period shall be excluded. 

          Federal
Funds Rate. For any day, a fluctuating interest rate per annum equal to the
weighted average of the rates on overnight federal funds transactions with
members of the Federal Reserve System arranged by federal funds brokers, as
published for such day (or, if such day is not a Business Day, for the next
preceding Business Day) by the Federal Reserve Bank of New York, or, if such
rate is not so published for any day that is a Business Day, the average of the
quotations for such day on such transactions received by the Agent from three
(3) federal funds brokers of recognized standing selected by the Agent. 

          Financial
Statement Date. September 30, 2007. 

9

          “funds
from operations”.  As defined in
accordance with resolutions adopted by the Board of Governors of the National
Association of Real Estate Investment Trusts, as in effect at the applicable
date of determination.

          GAAP.  Generally accepted accounting principles,
consistently applied.

          G
and A Expenses.  All payroll and
other employment-related expenses incurred by the Trust in connection with
becoming a self-managed REIT.

          Governmental
Authority. Any federal, state, county or municipal government, or political
subdivision thereof, any governmental or quasi-governmental agency, authority,
board, bureau, commission, department, instrumentality, or public body, or any
court, administrative tribunal, or public utility.

          Guaranteed
Pension Plan. Any employee pension benefit plan within the meaning of §3(2)
of ERISA maintained or contributed to by the Borrower or the Trust, as the case
may be, or any ERISA Affiliate of any of them the benefits of which are
guaranteed on termination in full or in part by the PBGC pursuant to Title IV
of ERISA, other than a Multiemployer Plan.

          Guaranty.
The Unlimited Guaranty, dated as of the date hereof, made by the Trust and
certain other parties in favor of the Agent and the Lenders pursuant to which
the Trust and such other parties guarantee to the Agent and the Lenders the
unconditional payment and performance of the Obligations.

          Hazardous
Substances. See §7.18(b).

          Indebtedness.
All obligations, contingent and otherwise, that in accordance with GAAP should
be classified upon the obligor’s balance sheet as liabilities, or to which
reference should be made by footnotes thereto, including in any event and
whether or not so classified: (a) all debt and similar monetary obligations,
whether direct or indirect, including, without limitation, all Obligations and
all obligations under any hedge, swap or other interest rate protection
arrangement, any forward purchase contract or any put; (b) all liabilities
secured by any mortgage, pledge, security interest, lien, charge, or other
encumbrance existing on property owned or acquired subject thereto, whether or
not the liability secured thereby shall have been assumed; (c) all
reimbursement obligations under letters of credit; and (d) all guarantees for
borrowed money, endorsements and other contingent obligations, whether direct
or indirect, in respect of indebtedness or obligations of others, including any
obligation to supply funds (including partnership obligations and capital
requirements) to or in any manner to invest in, directly or indirectly, the
debtor, to purchase indebtedness, or to assure the owner of indebtedness
against loss, through an agreement to purchase goods, supplies, or services for
the purpose of enabling the debtor to make payment of the indebtedness held by
such owner or otherwise.

10

          Interest
Payment Date. As to any Base Rate Loan and any Libor Rate Loan, the tenth
day of any calendar month in which such Loan is outstanding, and with respect
to any Libor Rate Loan, also on the last day of the applicable Interest Period,
but no less frequently than quarterly. 

          Interest
Period. With respect to all or any portion of the Term Loan, as applicable,
but without duplication of any other Interest Period, (a) initially, the period
commencing on the Drawdown Date of such Loan and ending (as selected by the
Borrower in a Completed Loan Request): (i) for any Base Rate Loan, the first
occurring tenth day of a calendar month after such Base Rate Loan is made
(whether by borrowing or by conversion from a Libor Rate Loan), and (ii) for
any Libor Rate Loan, 30, 60, 90 or 180 days after the Drawdown Date of such
Loan; and (b) thereafter, each period commencing at the end of the last day of
the immediately preceding Interest Period applicable to such Loan and ending on
the last day of the applicable period set forth in (a)(i) and (ii) above (as
selected by the Borrower in a Conversion Request); provided that all of
the foregoing provisions relating to Interest Periods are subject to the
following:

	
  

 	
  

 
	
  

 	
           (A)
 if any Interest Period with respect to a LIBOR Rate Loan would otherwise end
 on a day that is not a LIBOR Business Day, such Interest Period shall end on
 the next succeeding LIBOR Business Day, unless such next succeeding LIBOR
 Business Day occurs in the next calendar month, in which case such Interest
 Period shall end on the next preceding LIBOR Business Day, as determined
 conclusively by the Agent in accordance with the then current bank practice
 in London; 

 
	
  

 	
  

 
	
  

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

 
	
  

 	
  

 
	
  

 	
           (C)
 if the Borrower shall fail to give notice of conversion or continuation as
 provided in §2.5, the Borrower shall be deemed to have requested a conversion
 of the affected Libor Rate Loan to a Base Rate Loan on the last day of the
 then current Interest Period with respect thereto;

 
	
  

 	
  

 
	
  

 	
           (D)
 any Interest Period relating to any Libor Rate Loan that begins on the last
 Business Day of a calendar month (or on a day for which there is no
 numerically corresponding day in the calendar month at the end of such
 Interest Period) shall, subject to subparagraph (E) below, end on the last
 Business Day of a calendar month; and

 
	
  

 	
  

 
	
  

 	
           (E)
 no Interest Period may extend beyond the Maturity Date.

 

11 

          Investments.
All expenditures made and all liabilities incurred (contingently or otherwise,
but without double-counting): (i) for the acquisition of stock, partnership or
other equity interests or for the acquisition of Indebtedness of, or for loans,
advances, capital contributions or transfers of property to, any Person; (ii)
in connection with Real Estate Assets Under Development; and (iii) for the
acquisition of any other obligations of any Person. In determining the
aggregate amount of Investments outstanding at any particular time: (a) there
shall be deducted in respect of each such Investment any amount received as a
return of capital (but only by repurchase, redemption, retirement, repayment,
liquidating dividend or liquidating distribution); (b) there shall not be
deducted in respect of any Investment any amounts received as earnings on such
Investment, whether as dividends, interest or otherwise; and (c) there shall
not be deducted from the aggregate amount of Investments any decrease in the
value thereof.

          Land.
An undeveloped Real Estate Asset owned in fee by the Borrower.

          Leases.
Leases, licenses and agreements whether written or oral, relating to the use or
occupation of space in or on the Buildings or on the Project by persons other
than the Borrower or any other member of the Whitestone Group.

          Lenders.
Collectively, KeyBank and each other lending institution which may become a
party to this Agreement, and any other Person who becomes an assignee of any
rights of a Lender pursuant to §20 or a Person who acquires all or
substantially all of the stock or assets of a Lender.

          Libor
Business Day. Any day on which commercial banks are open for international
business (including dealings in Dollar deposits) in London, England. 

          Libor
Breakage Costs. With respect to any Libor Rate Loan to be prepaid prior to
the end of the applicable Interest Period or not borrowed, converted or
continued (“drawn” and, with correlative meaning, “draw”) after elected, a
prepayment “breakage” fee in an amount required to compensate the Lenders for
any and all additional losses, costs or expenses that such Lenders incur as a
result of such prepayment or failure to borrow, convert or continue a Libor
Rate Loan, including, without limitation, any loss (including loss of
anticipated profits), cost or expense incurred by reason of the liquidation or
reemployment of deposits of other funds acquired by any Lender to fund or
maintain such Libor Rate Loan.

          Libor
Rate. For any LIBOR Rate Loan for any Interest Period, the average rate
(rounded upwards to the nearest 1/16th) as shown in Dow Jones Markets (formerly
Telerate) (Page 3750) at which deposits in U.S. dollars are offered by first
class banks in the London Interbank Market at approximately 11:00 a.m. (London
time) on the day that is one (1) LIBOR Business Day prior to the first day of
such Interest Period with a maturity approximately equal to such Interest
Period and in an amount approximately equal to the amount to which such
Interest Period relates, adjusted for reserves and taxes if required by future
regulations. If Dow Jones Markets no longer reports such rate or 

12

Agent determines in good faith that the rate so
reported no longer accurately reflects the rate available to Agent in the
London Interbank Market, Agent may select a replacement index. For any period
during which a Reserve Percentage shall apply, the LIBOR Rate with respect to
LIBOR Rate Loans shall be equal to the amount determined above divided by an
amount equal to 1 minus the Reserve Percentage.

          Libor
Rate Loan(s). Loans bearing interest calculated by reference to the Libor
Rate.

          Lien.
See §9.2.

          Loan.
All or any portion of the Term Loan, as the context may require.

          Loan
Documents. Collectively, this Agreement, the Guaranty, the Notes, the Deed
of Trust, the Environmental Indemnity Agreement and any and all other
agreements, instruments, documents or certificates now or hereafter evidencing
or otherwise relating to the Term Loan and executed and delivered by or on
behalf of the Borrower or the Trust or its Subsidiaries in connection with or
in any way relating to the Term Loan or the transactions contemplated by this
Agreement, and all schedules, exhibits and annexes hereto or thereto, as any of
the same may from time to time be amended and in effect.

          M&M
Liens. Mechanic’s and materialmen’s liens.

          Majority
Lenders. As of any date, any two or more Lenders whose aggregate
outstanding Term Loans constitute more than fifty percent (50%) of the total
aggregate outstanding principal amount of the Term Loan on such date. 

          Maturity
Date. July __, 2009, as such date may be extended pursuant to §2.7, or such
earlier date on which the Term Loan shall become due and payable pursuant to
the terms hereof.

          Mortgage
Note(s). A mortgage note, in which the Borrower holds a direct interest as
payee, for real estate that is developed, so long as at the relevant date of
determination, such Mortgage Note is not in default.

          Multiemployer
Plan. Any multiemployer plan within the meaning of §3(37) of ERISA
maintained or contributed to by the Borrower or the Trust, as the case may be,
or any ERISA Affiliate.

          Net
Operating Income. For any period, an amount equal to (i) the aggregate
rental and other income from the operation of the applicable Real Estate Assets
during such period; minus (ii) all expenses and other proper charges
incurred in connection with the operation of such Real Estate Assets
(including, without limitation, real estate taxes, management fees, payments
under ground leases and bad debt expenses) during such 

13

period; but, in any case, before payment of or
provision for debt service charges for such period, income taxes for such
period, capital expenses for such period, and depreciation, amortization, and
other non-cash expenses for such period, all as determined in accordance with
GAAP (provided that, except for purposes of calculating the covenants
set forth in §§10.1 and 10.4, any rent leveling adjustments shall be excluded
from rental income).

          Note
Record. A Record with respect to any Note.

          Notes.
The Term Notes.

          Obligations.
All indebtedness, obligations and liabilities of the Borrower to any of the
Lenders or the Agent, individually or collectively (but without
double-counting), under this Agreement and each of the other Loan Documents and
in respect of the Term Loan and the Notes and other instruments at any time
evidencing any thereof, whether existing on the date of this Agreement or
arising or incurred hereafter, direct or indirect, joint or several, absolute
or contingent, matured or unmatured, liquidated or unliquidated, secured or
unsecured, arising by contract, operation of law or otherwise, and including
any indebtedness, obligations and liabilities of the Borrower under any
Protected Interest Rate Agreement entered into with any Lender in connection
with the Term Loan.

          Organizational
Documents. Collectively, (i) the Agreement of Limited Partnership of the
Borrower, (ii) the Certificate of Limited Partnership of the Borrower, (iii)
the Amended and Restated Declaration of Trust of the Trust, (iv) the Amended
and Restated By-Laws of the Trust, (v) the Certificate of Formation of Pima
Norte, (vi) the Operating Agreement of Pima Norte and (vii) all of the other
agreements, certificates or other documents relating to the formation, organization
or governance of the Borrower or Trust, in each case as any of the foregoing
may be amended in accordance with §8.20. 

          Partially-Owned
Entity(ies). Any of the partnerships, associations, corporations, limited
liability companies, trusts, joint ventures or other business entities or
Persons in which the Borrower or the Trust, directly, or indirectly through its
full or partial ownership of another entity, own an equity interest, but which
is not required in accordance with GAAP to be consolidated with the Borrower or
the Trust for financial reporting purposes.

          Patriot
Act. Title III of Public Law 107-56 of the United States of America, United
and Strengthening America by Providing Appropriate Tools Required to Intercept
and Obstruct Terrorism (USA PATRIOT Act) Act of 2001. 

          PBGC.
The Pension Benefit Guaranty Corporation created by §4002 of ERISA and any
successor entity or entities having similar responsibilities.

          Permits.
All governmental permits, licenses, and approvals necessary for the lawful
operation and maintenance of the Real Estate Assets.

14

          Permitted
Exceptions. Those matters listed on Exhibit E-1 hereto to which
title to the Project may be subject on the Closing Date and thereafter such other
title exceptions as the Agent may reasonably approve in writing.

          Permitted
Liens. Liens permitted by §9.2.

          Permitted
Property. A property which is a retail, office or mixed office/warehouse
property.

          Person.
Any individual, corporation, general partnership, limited partnership, trust,
limited liability company, limited liability partnership, unincorporated
association, business, or other legal entity, and any government (or any
governmental agency or political subdivision thereof).

          Preferred
Equity. Any preferred stock, preferred partnership interests, preferred
member interests or other preferred equity interests issued by the Borrower,
the Trust or any of their respective Subsidiaries.

          Project.
The collective reference to (i) the Property, (ii) all rights,
privileges, easements and hereditaments relating or appertaining thereto, and
(iii) all personal property, fixtures and equipment required or beneficial
for the operation thereof.

          Property.
Approximately 33,405 square feet in the Pima Norte Office Condominium Project
located at 36600 North Pima Road in the town of Carefree, County of Maricopa,
State of Arizona.

          Protected
Interest Rate Agreement. An agreement which evidences any interest
protection arrangements entered into by the Borrower and any Lender in
connection with the Term Loan, and all extensions, renewals, modifications,
amendments, substitutions and replacements thereof.

          Rate
Period. The period beginning on the first day of any fiscal month following
delivery to the Agent of the annual or quarterly financial statements required
to be delivered pursuant to §8.4(a) or §8.4(b) and ending on the last day of
the fiscal month in which the next such annual or quarterly financial
statements are delivered to the Agent.

          RCRA.
See §7.18.

          Real
Estate Assets. The fixed and tangible properties consisting of Land and/or
Buildings owned in fee simple by the Borrower or any of its Subsidiaries at the
relevant time of reference thereto, including, without limitation, the Project.

          Real
Estate Assets Under Development. Any Real Estate Assets (including raw
land) for which the Borrower or any of its Subsidiaries is actively pursuing
(or intends to 

15

actively pursue) construction of one or more Buildings
or other improvements and for which construction, if commenced, is proceeding
to completion without undue delay from Permit denial, construction delays or
otherwise, all pursuant to such Person’s ordinary course of business, provided
that any such Real Estate Asset (or, if applicable, any Building comprising a
portion of any such Real Estate Asset) will no longer be considered a Real
Estate Asset Under Development when a certificate of occupancy has issued for
such Real Estate Asset (or Building) or such Real Estate Asset (or Building)
may otherwise be lawfully occupied for its intended use unless it becomes the
subject of a redevelopment of any significant portion thereof.

          Record.
The grid attached to any Note, or the continuation of such grid, or any other
similar record, including computer records, maintained by any Lender with
respect to its Term Loan.

          Recourse.
With reference to any obligation or liability, any liability or obligation that
is not Without Recourse to the obligor thereunder, directly or indirectly. For
purposes hereof, a Person shall not be deemed to be “indirectly” liable for the
liabilities or obligations of an obligor solely by reason of the fact that such
Person has an ownership interest in such obligor, provided that such
Person is not otherwise legally liable, directly or indirectly, for such
obligor’s liabilities or obligations (e.g., without limitation, by reason of a
guaranty or contribution obligation, by operation of law or by reason of such
Person being a general partner of such obligor).

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

          Release.
See §7.18(c)(iii).

          Revolving
Credit Agreement. That certain Revolving Credit Agreement, dated as of
March 11, 2005, by Whitestone OP and certain of its Subsidiaries, KeyBank
National Association, individually and as administrative agent, and certain
other parties, as amended, amended and restated, or supplemented from time to
time.

          Reserve
Percentage. The maximum aggregate reserve requirement (including all basic,
supplemental, marginal and other reserves) which is imposed on member banks of
the Federal Reserve System against “Euro-currency Liabilities” as defined in Regulation
D.

          SARA.
See §7.18.

          SEC.
The Securities and Exchange Commission, or any successor thereto.

          SEC
Filings. Collectively, (i) each Form 10-K, 10-Q and Form 8-K filed by the
Trust with the SEC from time to time and (ii) each of the other public forms
and reports filed by the Trust with the SEC from time to time.

16

          Subsidiary.
Any corporation, association, partnership, limited liability company, trust,
joint venture or other business entity or Person which is required to be
consolidated with the Borrower or the Trust in accordance with GAAP.

          Term
Loan. The term loan made by the Lenders to the Borrower pursuant to §2.

          Term
Notes. Collectively, the separate promissory notes of the Borrower in favor
of each Lender in substantially the form of Exhibit A hereto, in an
aggregate principal amount equal to $6,400,000, dated as of the date hereof or
as of such later date as any Person becomes a Lender under this Agreement, and
completed with appropriate insertions, as each of such notes may be amended,
replaced, substituted and/or restated from time to time.

          Title
Insurer: Chicago
Title Company, or such other title insurance company licensed in the
State of Arizona as may be approved in writing by the Agent.

          Title
Policy. See §12.5.

          Trust.
See preamble.

          Type.
As to any portion of the Term Loan, its nature as a Base Rate Loan or a Libor
Rate Loan.

          Unanimous
Lender Approval. The written consent of each Lender that is a party to this
Agreement at the time of reference.

          Unencumbered
Asset. Any Real Estate Asset that on any date of determination is not
subject to any Liens (except for Permitted Liens).

          Unsecured
Consolidated Total Indebtedness. As of any date of determination, the
aggregate principal amount of Consolidated Total Indebtedness outstanding at
such date (including all Obligations), that is not secured by a lien evidenced
by a mortgage, deed of trust, negative pledge, assignment of partnership
interests or other security interest.

          Whitestone
Group. Collectively, (i) Whitestone OP, (ii) Pima Norte, (iii) Whitestone
III, (iv) Whitestone III LP LTD, (v) Whitestone III GP LLC, (vi) the Trust, (vii)
the respective Subsidiaries of the Borrower, Whitestone III and the Trust and
(viii) the Partially-Owned Entities.

          Wholly-owned
Subsidiary. Any single purpose entity that is a Subsidiary of the Borrower
and of which the Borrower at all times owns directly or indirectly (through a
Subsidiary or Subsidiaries) 100% of the outstanding voting or controlling
interests and of the economic interests. 

17

          
“Without Recourse” or “without recourse”. With reference to any
obligation or liability, any obligation or liability for which the obligor
thereunder is not liable or obligated other than as to its interest in a
designated Real Estate Asset or other specifically identified asset only,
subject to such limited exceptions to the non-recourse nature of such
obligation or liability, such as fraud, misappropriation and misapplication
indemnities, as are usual and customary in like transactions involving
institutional lenders at the time of the incurrence of such obligation or
liability, and to usual and customary environmental indemnification obligations
in connection with such designated Real Estate Asset.

          §1.2.
Rules of Interpretation.

	
  

 	
  

 
	
  

 	
           
 (i) A reference to any document or agreement shall include such document or
 agreement as amended, modified or supplemented from time to time in
 accordance with its terms or the terms of this Agreement.

 
	
  

 	
  

 
	
  

 	
           
 (ii) The singular includes the plural and the plural includes the singular.

 
	
  

 	
  

 
	
  

 	
           
 (iii) A reference to any law includes any amendment or modification to such
 law.

 
	
  

 	
  

 
	
  

 	
           
 (iv) A reference to any Person includes its permitted successors and
 permitted assigns.

 
	
  

 	
  

 
	
  

 	
           
 (v) Accounting terms not otherwise defined herein have the meanings assigned
 to them by generally accepted accounting principles applied on a consistent
 basis by the accounting entity to which they refer.

 
	
  

 	
  

 
	
  

 	
           
 (vi) The words “include”, “includes” and “including” are not limiting.

 
	
  

 	
  

 
	
  

 	
           
 (vii) All terms not specifically defined herein or by generally accepted
 accounting principles, which terms are defined in the Uniform Commercial Code
 as in effect in Massachusetts, have the meanings assigned to them therein.

 
	
  

 	
  

 
	
  

 	
           
 (viii) Reference to a particular “§” refers to that section of this Agreement
 unless otherwise indicated.

 
	
  

 	
  

 
	
  

 	
           
 (ix) The words “herein”, “hereof”, “hereunder” and words of like import shall
 refer to this Agreement as a whole and not to any particular section or
 subdivision of this Agreement.

 

18

          
§2. THE TERM LOAN.

          §2.1
Commitment to Lend.
Subject to the provisions of §2.4 and the other terms and conditions set forth
in this Agreement, each of the Lenders severally agrees to lend to the Borrower
on the Closing Date, and the Borrower agrees to borrow on such date and repay
in accordance with §3, an amount equal to $6,400,000, provided, that at
the time the Borrower requests the Term Loan and after giving effect to the
making thereof, (i) all of the conditions in §12 and §13 have been met at the
time of such request, and (ii) there has not occurred and is not
continuing (or will not occur by reason thereof) any Default or Event of
Default.

          The
Term Loan shall be made pro rata in accordance with each Lender’s
Commitment Percentage. The request for the Term Loan made pursuant to §2.4
shall constitute a representation and warranty by the Borrower that the
conditions set forth in §12 and §13 have been satisfied as of the Closing Date,
provided that the making of such representation and warranty by the
Borrower shall not limit the right of any Lender not to lend if such conditions
have not been met. No portion of the Term Loan shall be required to be made by
any Lender unless all of the conditions contained in §12 and §13 have been
satisfied as of the Closing Date.

          §2.2.
The Term Notes. The Term Loan shall be evidenced by the Term Notes. A Term Note
shall be payable to the order of each Lender in an aggregate principal amount
equal to such Lender’s Commitment. The Borrower irrevocably authorizes each
Lender to make or cause to be made, on the Closing Date and at the time of
receipt of any payment of principal on such Lender’s Term Note, an appropriate
notation on such Lender’s applicable Note Record reflecting the making of such
Loan or (as the case may be) the receipt of such payment. The outstanding
amount of the Loan set forth on such applicable Note Record shall be prima
facie evidence of the principal amount of the Term Loan owing and unpaid
to such Lender, but the failure to record, or any error in so recording, any
such amount on such Note Record shall not limit or otherwise affect the rights
and obligations of the Borrower hereunder or under any Term Note to make
payments of principal of or interest on any Term Note when due.

          §2.3.
Interest on Term Loan; Fees.

                    (a)
Each Base Rate Loan shall bear interest for the period commencing with the
Drawdown Date thereof and ending on the last day of the Interest Period with
respect thereto (unless earlier paid in accordance with §3.2) at a rate equal
to the Base Rate. 

                    (b)
Each Libor Rate Loan shall bear interest for the period commencing with the
Drawdown Date thereof and ending on the last day of the Interest Period with
respect thereto (unless earlier paid in accordance with §3.2) at a rate equal
to the Libor Rate determined for such Interest Period plus the
Applicable Libor Margin.

19

                    (c)
Reserved.

                    (d)
The Borrower unconditionally promises to pay interest on the Term Loan in
arrears on each Interest Payment Date with respect thereto, and when the
principal of such Term Loan is due (whether at maturity, by reason of
acceleration or otherwise).

          §2.4.
Request for the Term Loan.

          The
following provisions shall apply to the request by the Borrower for the Term
Loan:

                    (a)
The Borrower shall submit a Completed Loan Request to the Agent, together with
a duplicate copy of such Completed Loan Request for each Lender which is then a
party to this Agreement at the time such loan request is made. The Completed
Loan Request shall be irrevocable and binding on the Borrower and shall
obligate the Borrower to accept the Term Loan requested from the Lenders on the
Closing Date.

                    (b)
The Completed Loan Request shall include a completed certificate in the form of
Exhibit B hereto specifying: (1) the principal amount of the Term Loan
requested, (2) the Interest Period applicable to the Term Loan, and (3) the
Type of Loan being requested, and certifying that, both before and after giving
effect to the making of the Term Loan, no Default or Event of Default exists or
will exist under this Agreement or any other Loan Document.

                    (c)
No Lender shall be obligated to fund the Term Loan unless:

	
 

	
 

	
 

	
                    (i)
 a Completed Loan Request has been received by the Agent as provided in clause
 (a) above; and

	
 

	
 

	
 

	
                    (ii)
 both before and after giving effect to the Term Loan to be made pursuant to
 the Completed Loan Request, all of the conditions contained in §12 and §13
 shall have been satisfied as of the Closing Date.

                    (d)
The Agent will promptly notify each Lender of the Completed Loan Request and
will cause a copy thereof to be delivered to each Lender on the Closing Date.

          §2.5.
Conversion Options.

                    (a)
The Borrower may elect from time to time to convert any portion of the
outstanding Term Loan to a Loan of another Type, provided that (i)
subject to the further proviso at the end of this §2.5(a) and subject to
§2.5(b) and §2.5(d), with respect to any conversion of a Base Rate Loan to a
Libor Rate Loan (or a continuation of a Libor Rate Loan, as provided in
§2.5(b)), the Borrower shall give the Agent (with copies to the 

20

Agent for each
Lender) at least three (3) Business Days’ prior written notice of such
election, which such notice must be received by the Agent by 10:00 a.m. on any
Business Day; and (ii) no Loan may be converted into a Libor Rate Loan when any
Default or Event of Default has occurred and is continuing. All or any part of
outstanding Term Loan of any Type may be converted as provided herein, provided
that each Conversion Request relating to the conversion of a Base Rate Loan to
a Libor Rate Loan shall be for an amount equal to $1,000,000 or an integral
multiple of $100,000 in excess thereof and shall be irrevocable by the
Borrower.

                    (b)
Any portion of the Term Loan of any Type may be continued as such upon the
expiration of the Interest Period with respect thereto (i) in the case of Base
Rate Loans, automatically and (ii) in the case of Libor Rate Loans by
compliance by the Borrower with the notice provisions contained in §2.5(a)(i); provided
that no Libor Rate Loan may be continued as such when any Default or Event of
Default has occurred and is continuing but shall be automatically converted to
a Base Rate Loan on the last day of the first Interest Period relating thereto
ending during the continuance of any Default or Event of Default. The Borrower
shall notify the Agent promptly when any such automatic conversion contemplated
by this §2.5(b) is scheduled to occur.

                    (c)
In the event that the Borrower does not notify the Agent of its election
hereunder with respect to any portion of the Term Loan in accordance with the
terms hereof, such Loan shall be automatically converted to a Base Rate Loan at
the end of the applicable Interest Period.

                    (d)
The Borrower may not request or elect a Libor Rate Loan pursuant to §2.4, elect
to convert a Base Rate Loan to a Libor Rate Loan pursuant to §2.5(a) or elect
to continue a Libor Rate Loan pursuant to §2.5(b) if, after giving effect
thereto, there would be greater than six (6) Libor Rate Loans then outstanding.
Any Conversion Request for a Libor Rate Loan that would create greater than six
(6) Libor Rate Loans outstanding shall be deemed to be a Conversion Request for
a Base Rate Loan. By way of explanation of the foregoing, in the event that the
Borrower wishes to convert or continue two or more Loans into one Libor Rate
Loan on the same day and for identical Interest Periods, such Libor Rate Loan
shall constitute one single Libor Rate Loan for purposes of this clause (d).

          §2.6.
Funds for the Term Loan.

                    (a)
Subject to the other provisions of this §2, on the Closing Date, each of the
Lenders will make available to the Agent, at the Agent’s Head Office, in
immediately available funds, the amount of such Lender’s Commitment Percentage
of the Term Loan. Upon receipt from each Lender of such amount, the Agent will
make available to the Borrower the aggregate amount of such Term Loan made
available to the Agent by the Lenders. The failure or refusal of any Lender to
make available to the Agent at the aforesaid time and place on the Closing Date
the amount of its Commitment Percentage of the Term Loan shall not relieve any
other Lender from its several obligation 

21

hereunder to
make available to the Agent the amount of its Commitment Percentage of any Term
Loan but in no event shall the Agent (in its capacity as Agent) have any
obligation to make any funding or shall any Lender be obligated to fund more
than its Commitment Percentage of the Term Loan or to increase its Commitment
Percentage on account of such failure or otherwise.

                    (b)
The Agent may, unless notified to the contrary by any Lender prior to the
Closing Date, assume that such Lender has made available to the Agent on the
Closing Date the amount of such Lender’s Commitment Percentage of the Term
Loan, and the Agent may (but it shall not be required to), in reliance upon
such assumption, make available to the Borrower a corresponding amount. If any
Lender makes available to the Agent such amount after the Closing Date, such
Lender shall pay to the Agent on demand an amount equal to the product of (i)
the average, computed for the period referred to in clause (iii) below, of the
weighted average interest rate paid by the Agent for federal funds acquired by
the Agent during each day included in such period, multiplied by (ii)
the amount of such Lender’s Commitment Percentage of the Term Loan, multiplied
by (iii) a fraction, the numerator of which is the number of days that
elapsed from and including the Closing Date to the date on which the amount of
such Lender’s Commitment Percentage of the Term Loan shall become immediately
available to the Agent, and the denominator of which is 365. A statement of the
Agent submitted to such Lender with respect to any amounts owing under this
paragraph shall be prima facie evidence of the amount due and
owing to the Agent by such Lender.

          §2.7.
Extension of Maturity Date.
At least forty-five (45) days but in no event more than ninety (90) days prior
to July __, 2009, the Borrower, by written notice to the Agent (with copies for
each Lender), may request an extension of the Maturity Date by a period of six
(6) months from the Maturity Date then in effect (the “Extension”). The
Extension shall become effective on July __, 2009 so long as (i) the Borrower
has paid to the Agent on such date, for the ratable accounts of the Lenders, an
extension fee in an amount equal to 12.5 basis points on the Term Loan in
effect on such date (“Extension Fee”), (ii) no Default or Event of Default has
occurred and is continuing on such date and all representations and warranties
contained in the Loan Documents shall be true and correct as of such date
(except to the extent that such representations and warranties relate expressly
to an earlier date), (iii) the Borrower shall be in compliance with all
Financial Covenants on such date and (iv) the Borrower shall have completed all
necessary build-out with respect to the Project in a manner satisfactory to the
Agent. The notice referred to in the first sentence of this §2.7 shall
constitute and shall be deemed to be a certification by the Borrower as to the
truth and accuracy of the statements contained in clauses (ii) and (iii) of the
preceding sentence.

          §3.
REPAYMENT OF THE TERM LOAN.

          §3.1.
Maturity. The Borrower promises to
pay on the Maturity Date, and there shall become absolutely due and payable on
the Maturity Date, all unpaid principal of the Term Loan outstanding on such
date, together with any and all accrued and unpaid

22

interest
thereon and any and all other unpaid amounts due under this Agreement, the Notes
or any other of the Loan Documents.

          §3.2.
Optional Repayments of the Term Loan. The Borrower shall have
the right, at its election, to prepay the outstanding amount of the Term Loan,
in whole or in part, at any time without penalty or premium; provided
that the outstanding amount of any Libor Rate Loans may not be prepaid on a
date other than the last day of an Interest Period unless the Borrower pays the
Libor Breakage Costs for each Libor Rate Loan so prepaid at the time of such
prepayment. The Borrower shall give the Agent (with copies to the Agent for
each Lender), no later than 10:00 a.m., Cleveland, Ohio time, at least two (2)
Business Days’ prior written notice of any prepayment pursuant to this §3.2 of
any Base Rate Loans, and at least four (4) Business Days’ notice of any
proposed prepayment pursuant to this §3.2 of Libor Rate Loans, specifying the
proposed date of prepayment and the principal amount to be prepaid. Each such partial
prepayment of the Term Loan shall be in an amount equal to $1,000,000 or an
integral multiple of $1,000,000 in excess thereof or, if less, the outstanding
balance of the Term Loan then being repaid, shall be accompanied by the payment
of all charges, if any, outstanding on the Term Loan so prepaid and of all
accrued interest on the principal prepaid to the date of payment, and shall be
applied, in the absence of instruction by the Borrower, first to the principal
of Base Rate Loans and then to the principal of Libor Rate Loans.

          §4.
CERTAIN GENERAL PROVISIONS.

          §4.1.
Funds for Payments.

                    (a)
All payments of principal, interest, fees, and any other amounts due hereunder
or under any of the other Loan Documents shall be made to the Agent, for the
respective accounts of the Lenders or (as the case may be) the Agent, at the
Agent’s Head Office, in each case in Dollars and in immediately available
funds. The Borrower shall make each payment of principal of and interest on the
Term Loan and of fees hereunder or thereunder not later than 12:00 p.m.
(Cleveland, Ohio time) on the due date thereof.

                    (b)
All payments by the Borrower hereunder and under any of the other Loan
Documents shall be made without setoff or counterclaim and free and clear of
and without deduction for any taxes, levies, imposts, duties, charges, fees,
deductions, withholdings, compulsory liens, restrictions or conditions of any
nature now or hereafter imposed or levied by any jurisdiction or any political
subdivision thereof or taxing or other authority therein unless the Borrower is
compelled by law to make such deduction or withholding. If the Borrower is
compelled by law to make any such deduction or withholding with respect to any
amount payable by it hereunder or under any of the other Loan Documents (except
with respect to taxes on the income or profits of the Agent or any Lender), the
Borrower shall pay to the Agent, for the account of the Lenders or (as the case
may be) the Agent, on the date on which such amount is due and payable
hereunder or under such other Loan Document, such additional amount in Dollars
as shall be necessary to enable the Lenders to receive the same net amount
which the Lenders would 

23

have received
on such due date had no such deduction or withholding obligation been imposed
upon the Borrower. The Borrower will deliver promptly to the Agent (with copies
to the Agent for each Lender) certificates or other valid vouchers for all
taxes or other charges deducted from or paid with respect to payments made by
the Borrower hereunder or under such other Loan Document.

          §4.2.
Computations.
All computations of interest on the Term Loan and of fees to the extent
applicable shall be based on a 360-day year, in each case paid for the actual
number of days elapsed. Except as otherwise provided in the definition of the
term “Interest Period” with respect to Libor Rate Loans, whenever a payment
hereunder or under any of the other Loan Documents becomes due on a day that is
not a Business Day, the due date for such payment shall be extended to the next
succeeding Business Day, and interest shall accrue during such extension. The
outstanding amount of the Loans as reflected on the Note Records or record
attached to any other Note from time to time shall constitute prima facie
evidence of the principal amount thereof.

          §4.3.
Inability to Determine Libor Rate. In the event, prior to the commencement of any
Interest Period relating to any Libor Rate Loan, the Agent shall determine that
adequate and reasonable methods do not exist for ascertaining the Libor Rate
that would otherwise determine the rate of interest to be applicable to any
Libor Rate Loan during any Interest Period, the Agent shall forthwith give
notice of such determination (which shall be conclusive and binding on the
Borrower) to the Borrower and the Lenders. In such event (a) each Libor Rate
Loan will automatically, on the last day of the then current Interest Period
applicable thereto, become a Base Rate Loan, and (b) the obligations of the
Lenders to make Libor Rate Loans shall be suspended, in each case unless and
until the Agent determines that the circumstances giving rise to such
suspension no longer exist, whereupon the Agent shall so notify the Borrower
and the Lenders.

          §4.4.
Illegality. Notwithstanding any
other provisions herein, if any present or future law, regulation, treaty or
directive or in the interpretation or application thereof shall make it
unlawful for any Lender to make or maintain Libor Rate Loans, such Lender shall
forthwith give notice of such circumstances to the Agent and the Borrower and
thereupon (a) the Commitment of such Lender to make Libor Rate Loans or
convert Base Rate Loans to Libor Rate Loans shall forthwith be suspended and (b)
such Lender’s Commitment Percentage of Libor Rate Loans then outstanding shall
be converted automatically to Base Rate Loans on the last day of each Interest
Period applicable to such Libor Rate Loans or within such earlier period as may
be required by law, all until such time as it is no longer unlawful for such
Lender to make or maintain Libor Rate Loans. The Borrower hereby agrees
promptly to pay the Agent for the account of such Lender, upon demand, any
additional amounts necessary to compensate such Lender for Libor Breakage Costs
incurred by such Lender in making any conversion required by this §4.4 prior to
the last day of an Interest Period.

24

          §4.5.
Additional Costs, Etc. If any present or future applicable law,
which expression, as used herein, includes statutes, rules and regulations
thereunder and interpretations thereof by any competent court or by any
governmental or other regulatory body or official charged with the administration
or the interpretation thereof and requests, directives, instructions and
notices at any time or from time to time hereafter made upon or otherwise
issued to any Lender or the Agent by any central bank or other fiscal, monetary
or other authority (whether or not having the force of law, but if not having
the force of law, then generally applied by the Lenders or the Agent with
respect to similar loans), shall:

                    (a)
subject any Lender or the Agent to any tax, levy, impost, duty, charge, fee,
deduction or withholding of any nature with respect to this Agreement, the
other Loan Documents, such Lender’s Commitment or the Term Loan (other than
taxes based upon or measured by the income or profits of such Lender or the
Agent), or

                    (b)
change the basis of taxation (except for changes in taxes on income or profits)
of payments to any Lender of the principal of or the interest on the Term Loan
or any other amounts payable to the Agent or any Lender under this Agreement or
the other Loan Documents, or

                    (c)
impose or increase or render applicable (other than to the extent specifically
provided for elsewhere in this Agreement) any special deposit, reserve,
assessment, liquidity, capital adequacy or other similar requirements (whether
or not having the force of law) against assets held by, or deposits in or for
the account of, or loans by, or letters of credit issued by, or commitments of
an office of any Lender, or

                    (d)
impose on any Lender or the Agent any other conditions or requirements with
respect to this Agreement, the other Loan Documents, the Term Loan, such
Lender’s Commitment, or any class of loans or commitments of which any portion
of the Term Loan or such Lender’s Commitment forms a part;

and the result
of any of the foregoing is

	
 

	
 

	
 

	
          (i)
 to increase the cost to any Lender of making, funding, issuing, renewing,
 extending or maintaining any of the Term Loan or such Lender’s Commitment, or

	
 

	
 

	
 

	
          (ii)
 to reduce the amount of principal, interest or other amount payable to such
 Lender or the Agent hereunder on account of such Lender’s Commitment or the
 Term Loan, or

	
 

	
 

	
 

	
          (iii)
 to require such Lender or the Agent to make any payment or to forego any
 interest or other sum payable hereunder, the amount of which payment or
 foregone interest or other sum is calculated by reference 

25

	
 

	
 

	
 

	
to the gross
 amount of any sum receivable or deemed received by such Lender or the Agent
 from the Borrower hereunder,

then, and in each
such case, the Borrower will, upon demand made by the Agent or such Lender
(such demand to be made promptly by the Agent or such Lender upon the making of
any such determination), at any time and from time to time and as often as the
occasion therefor may arise, pay to such Lender or the Agent such additional
amounts as such Lender or the Agent shall determine in good faith to be
sufficient to compensate such Lender or the Agent for such additional cost,
reduction, payment or foregone interest or other sum, provided that such
Lender or the Agent is generally imposing similar charges on its other
similarly situated borrowers. The Agent shall provide the Borrower with a
calculation, in reasonable detail, of such amounts in accordance with its
customary practices.

          
§4.6. Capital Adequacy.
If any future law, governmental rule, regulation, policy, guideline or
directive (whether or not having the force of law, but if not having the force
of law, then generally applied by the Lenders with respect to similar loans) or
the interpretation thereof by a court or governmental authority with
appropriate jurisdiction affects the amount of capital required or expected to
be maintained by banks or bank holding companies and any Lender or the Agent
determines that the amount of capital required to be maintained by it is
increased by or based upon the existence of the Term Loan made pursuant hereto,
then such Lender or the Agent may notify the Borrower of such fact, and the
Borrower shall pay to such Lender or the Agent from time to time, upon demand
made by the Agent or such Lender (such demand to be made promptly by the Agent
or such Lender upon the making of any such determination), as an additional fee
payable hereunder, such amount as such Lender or the Agent shall determine
reasonably and in good faith and certify in a notice to the Borrower to be an
amount that will adequately compensate such Lender in light of these
circumstances for its increased costs of maintaining such capital. Each Lender
and the Agent shall allocate such cost increases among its customers in good
faith and on an equitable basis, and will not charge the Borrower unless it is
generally imposing a similar charge on its other similarly situated borrowers.
The Agent shall provide the Borrower with a calculation, in reasonable detail,
of such amounts in accordance with its customary practices.

          §4.7.
Certificate; Limitations. A certificate setting forth any additional
amounts payable pursuant to §§4.5 or 4.6 and a brief explanation of such
amounts which are due, submitted by any Lender or the Agent to the Borrower,
shall be prima facie evidence that such amounts are due and
owing. Notwithstanding anything to the contrary contained in this Article 5, to
the extent reasonably possible, each Lender shall designate an alternate
lending office in the continental United States to make the Loans in order to
reduce any liability of Borrower to such Lender under §§4.4, 4.5 or 4.6 or to
avoid the unavailability of a Libor Rate Loan, so long as such designation is
not disadvantageous to such Lender. 

          §4.8.
Indemnity. In addition to the other
provisions of this Agreement regarding such matters, the Borrower agrees to
indemnify the Agent and each Lender and to hold

26

the Agent and
each Lender harmless from and against any loss, cost or expense (including loss
of anticipated profits) that the Agent or such Lender may sustain or incur as a
consequence of (a) a default by the Borrower in the payment of any principal
amount of or any interest on any Libor Rate Loans as and when due and payable,
including any such loss or expense arising from interest or fees payable by the
Agent or such Lender to lenders of funds obtained by it in order to maintain
its Libor Rate Loans, (b) the failure by the Borrower to make a borrowing or
conversion after the Borrower has given a Completed Loan Request for a Libor
Rate Loan or a Conversion Request for a Libor Rate Loan, and (c) the making of
any payment of a Libor Rate Loan or the making of any conversion of any such
Loan to a Base Rate Loan on a day that is not the last day of the applicable
Interest Period with respect thereto, including interest or fees payable by the
Agent or a Lender to lenders of funds obtained by it in order to maintain any
such Libor Rate Loans.

          §4.9.
Interest on Overdue Amounts; Late Charge. Notwithstanding anything to
the contrary stated herein, upon the occurrence and during the continuance of
an Event of Default, at the option of the Majority Lenders, to the extent
permitted by applicable law, the unpaid balance of all Obligations shall bear
interest at the rate otherwise applicable thereto plus 2%, compounded
daily until such Event of Default is cured or waived to the satisfaction of the
Agent and the required Lenders. In addition, the Borrower shall pay a late
charge equal to five percent (5%) of any amount of interest charges on the Term
Loan which is not paid within ten (10) days of the date when due.

          §5.
RESERVED. 

          §6.
RECOURSE OBLIGATIONS. The Obligations are full
recourse obligations of the Borrower, and all of the respective assets and
properties of the Borrower shall be available for the payment in full in cash
and performance of the Obligations. The obligations of the Trust under the
Guaranty are full recourse obligations of the Trust, and all of the respective
assets and properties of the Trust shall be available for the payment in full
in cash and performance thereof. 

          §7.
REPRESENTATIONS AND WARRANTIES. The Borrower and the
Trust, on their own behalf and on behalf of their respective Subsidiaries,
jointly and severally represent and warrant to the Agent and the Lenders all of
the statements contained in this §7.

          §7.1.
Authority, Etc.

                    (a)
Organization: Good Standing.

	
 

	
 

	
 

	
          (i)
 Each of Whitestone OP, Pima Norte, Whitestone III, Whitestone III GP LLC and
 Whitestone III LP LTD is a limited partnership or limited liability company,
 as applicable, duly organized, validly existing and in good standing under
 the laws of its state of 

	
 

	
 

27

	
 

	
 

	
 

	
organization;
 each of Whitestone OP, Pima Norte, Whitestone III, Whitestone III GP LLC and
 Whitestone III LP LTD has all requisite limited partnership or limited
 liability company power to own its properties and conduct its business as now
 conducted and as presently contemplated; and each of Whitestone OP, Pima
 Norte, Whitestone III, Whitestone III GP LLC and Whitestone III LP LTD is in
 good standing as a foreign entity and is duly authorized to do business in
 the jurisdiction where the Project is located and in each other jurisdiction
 where such qualification is necessary except where a failure to be so qualified
 would not have a materially adverse effect on its business, operations,
 assets, condition (financial or otherwise) or properties.

	
 

	
 

	
 

	
          (ii)
 the Trust is a real estate investment trust duly organized, validly existing
 and in good standing under the laws of the State of Maryland; each Subsidiary
 of the Trust is duly organized, validly existing and in good standing as a
 corporation, nominee trust, limited liability company, limited partnership or
 general partnership, as the case may be, under the laws of the state of its
 organization; the Trust and each of its Subsidiaries has all requisite
 corporate, trust, limited liability company, limited partnership or general
 partnership, as the case may be, power to own its respective properties and conduct
 its respective business as now conducted and as presently contemplated; and
 the Trust is in good standing as a foreign entity and is duly authorized to
 do business in the jurisdictions where such qualification is necessary,
 except where a failure to be so qualified in such other would not have a
 materially adverse effect on the business, operations, assets, condition
 (financial or otherwise) or properties of the Trust or any such Subsidiary.

                    (b)
Capitalization. The outstanding equity of Whitestone OP is comprised of
a general partner interest and limited partner interests, all of which have
been duly issued and are outstanding and fully paid and non-assessable. All of
the issued and outstanding general partner interests of Whitestone OP are owned
and held of record by the Trust. As of the Closing Date, all of the issued and
outstanding limited partner interests of Whitestone OP are owned and held of
record as set forth on Schedule 7.1(b). There are no outstanding
securities or agreements exchangeable for or convertible into or carrying any
rights to acquire a general partner interest in Whitestone OP. There are no
outstanding commitments, options, warrants, calls or other agreements (whether
written or oral) binding on Whitestone OP or the Trust which require or could
require Whitestone OP or the Trust to sell, grant, transfer, assign, mortgage,
pledge or otherwise dispose of any general partner interest in Whitestone OP.
No general partner interests of Whitestone OP is subject to any restrictions on
transfer or any partner agreements, voting agreements, trust deeds, irrevocable
proxies; or any other similar agreements or interests (whether written or
oral). Whitestone OP owns, directly or indirectly, 100% (by number of votes or
controlling interests) of the outstanding voting interests and of the economic
interests in Pima Norte, Whitestone III, Whitestone III GP LLC and Whitestone
III LP LTD and all 

28

of such equity
interests have been duly issued and are outstanding and fully paid and
non-assessable. There are no outstanding securities or agreements exchangeable
for or convertible into or carrying any rights to acquire any equity interests
in any Borrower (other than Whitestone OP). There are no outstanding
commitments, options, warrants, calls or other agreements (whether written or
oral) binding on any Borrower (other than Whitestone OP) which require or could
require any Borrower (other than Whitestone OP) to sell, grant, transfer,
assign, mortgage, pledge or otherwise dispose of any equity interest in such
Borrower. Except as set forth on Schedule 7.1(b), no equity interests of
the Borrower are subject to any restrictions on transfer or any partner
agreements, voting agreements, trust deeds, irrevocable proxies or any other
similar agreements or interests (whether written or oral). All of the Preferred
Equity which exists as of the date of this Agreement, and each of the
agreements or other documents entered into and/or setting forth the terms,
rights and restrictions applicable to any such Preferred Equity, are listed and
described on Schedule 7.1(b) attached hereto. All of the agreements and
other documents relating to the Preferred Equity in effect on the Closing Date
have been furnished to the Agent.

                    (c)
Due Authorization. The execution, delivery and performance of this
Agreement and the other Loan Documents to which the Borrower or the Trust is or
is to become a party and the transactions contemplated hereby and thereby (i)
are within the authority of the Borrower and the Trust, (ii) have been duly
authorized by all necessary proceedings on the part of the Borrower or the
Trust and any general partner or member thereof, (iii) do not conflict with or
result in any breach or contravention of any provision of law, statute, rule or
regulation to which the Borrower or the Trust is subject or any judgment,
order, writ, injunction, license or permit applicable to the Borrower or the
Trust, (iv) do not conflict with any provision of the Organizational Documents
of the Borrower or the Trust or any general partner thereof, and (v) do not
contravene any provisions of, or constitute Default or Event of Default
hereunder or a failure to comply with any term, condition or provision of any
other agreement, instrument, judgment, order, decree, permit, license or
undertaking binding upon or applicable to the Borrower or the Trust or any of
the Borrower’s or the Trust’s properties (except for any such failure to comply
under any such other agreement, instrument, judgment, order, decree, permit,
license, or undertaking as would not materially and adversely affect the
business, operations, assets, condition (financial or otherwise) or properties
of the Trust the Borrower) or result in the creation of any mortgage, pledge,
security interest, lien, encumbrance or charge upon any of the properties or
assets of the Borrower or the Trust.

                    (d)
Enforceability. Each of the Loan Documents to which the Borrower or the
Trust is a party has been duly executed and delivered and constitutes the
legal, valid and binding obligations of the Borrower and the Trust, as the case
may be, subject only to applicable bankruptcy, insolvency, reorganization,
moratorium or other laws relating to or affecting generally the enforcement of
creditors’ rights.

          §7.2.
Governmental Approvals. The execution, delivery and performance by
the Borrower and the Trust of this Agreement and the other Loan Documents to
which the

29

Borrower or
the Trust is or is to become a party and the transactions contemplated hereby
and thereby do not require (i) the approval or consent of any governmental
agency or authority other than those already obtained and delivered to the
Agent, or (ii) filing with any governmental agency or authority, other than
filings which will be made with the SEC when and as required by law or deemed
appropriate by the Trust.

          §7.3.
Title to Properties; Leases.

          The
Borrower and the Trust each has good fee title to all of its respective
properties, assets and rights of every name and nature purported to be owned by
it, including, without limitation, that:

                    (a)
Pima Norte holds good and clear record and marketable fee simple title to the
Project and all assets or properties relating thereto, subject to no Liens
other than Permitted Liens.

                    (b)
The Borrower and the Trust will, as of the Closing Date, own all of the assets
as reflected in the financial statements of the Borrower and the Trust
described in §7.4, or acquired since the date of such financial statements
(except property and assets sold or otherwise disposed of in the ordinary
course of business since that date).

          §7.4.
Financial Statements. The Borrower has furnished to each of the
Lenders the audited Consolidated balance sheet of the Trust and its
Subsidiaries as of December 31, 2006 (together with the unaudited Consolidated
balance sheet of the Trust and its Subsidiaries as of September 30, 2007 and
the related Consolidated Statements of Income, changes in shareholders’ equity
and cash flows for the fiscal year or other period then ended, as applicable
(collectively, the “Initial Financials”). Such Initial Financials have been
prepared in accordance with GAAP and, in the case of the December 31, 2006
financial statements, accompanied by an auditors’ report prepared without
qualification by the Accountants. The Initial Financials fairly present the
financial condition of the Trust and its Subsidiaries as at the close of
business on the date thereof and the results of operations for the fiscal year
then ended. There are no contingent liabilities of the Trust or any of its
Subsidiaries as of such date known to the officers of the Trust or any of its
Subsidiaries not disclosed in the Initial Financials.

          §7.5 No
Material Changes, Etc. Since the Financial Statement Date, there
has occurred no materially adverse change in the business, operations, assets,
condition (financial or otherwise) or properties of the Trust, the Borrower or
the Project. 

          §7.6.
Franchises, Patents, Copyrights, Etc. The Borrower, the Trust and
each of their respective Subsidiaries possess all franchises, patents,
copyrights, trademarks, trade names, licenses and permits, and rights in
respect of the foregoing, adequate for the conduct of their respective
businesses substantially as now conducted without known conflict with any
rights of others, except where the failure to so possess could not reasonably
be expected to have a material adverse effect on the business, operations,

30

assets,
condition (financial or otherwise) or properties of the Trust or the Borrower.
The Borrower possesses all Permits relating to the Project.

          §7.7
Litigation.
Except as disclosed on Schedule 7.7, there are no actions, suits,
proceedings or investigations of any kind pending or, to the Borrower’s or the
Trust’s knowledge, threatened against the Borrower, the Trust or any of their
respective Subsidiaries or the Project before any court, tribunal or
administrative agency or board that, if adversely determined, could reasonably
be expected to, either individually or in the aggregate, materially adversely
affect the business, operations, assets, condition (financial or otherwise) or
properties of the Trust or the Borrower, or materially impair the right of the
Trust or the Borrower to carry on its businesses substantially as now conducted
by it, or result in any substantial liability not fully covered by insurance,
or for which adequate reserves are not maintained, as reflected in the
applicable consolidated financial statements or SEC Filings of the Borrower and
the Trust, or which question the validity of this Agreement or any of the other
Loan Documents, or any action taken or to be taken pursuant hereto or thereto.

          §7.8.
No Materially Adverse Contracts, Etc. Neither the Borrower, the
Trust nor any of their respective Subsidiaries is subject to any charter, corporate,
partnership, limited liability company or other legal restriction, or any
judgment, decree, order, rule or regulation that has or could reasonably
expected in the future to have a materially adverse effect on the business,
operations, assets, condition (financial or otherwise) or properties of the
Trust, the Borrower or the Project. None of the Borrower, the Trust or any of
their respective Subsidiaries is a party to any contract or agreement that has
had, or could reasonably be expected to have, any materially adverse effect on
the business, operations, assets, condition (financial or otherwise) or
properties of the Trust, the Borrower or the Project.

          §7.9.
Compliance With Other Instruments, Laws, Etc. Neither the Borrower, the
Trust nor any of their respective Subsidiaries is in violation of any provision
of its partnership agreement, operating agreement, charter or other
Organizational Document, as the case may be, or any agreement or instrument to
which it may be subject or by which it or any of its properties may be bound or
any decree, order, judgment, statute, license, rule or regulation, in any of
the foregoing cases in a manner that could reasonably be expected to result,
individually or in the aggregate, in the imposition of substantial penalties or
materially and adversely affect the business, operations, assets, condition
(financial or otherwise) or properties of the Trust, the Borrower or the
Project. Without limitation of the foregoing, the Borrower is in compliance
with, and neither the entering into of the Loan Documents or the use of the
proceeds of the Loans will violate: any law, rule or regulation relating to
anti-terrorism or money laundering, including the Anti-Terrorism Order, the
Patriot Act, the Trading with the Enemy Act, as amended, or any of the foreign
assets control regulations of the United States Treasury Department (31 CFR,
Subtitle B, Chapter V, as amended) or any enabling legislation or executive
order relating thereto.

31

          §7.10.
Tax Status.
(i) Each of the Borrower, the Trust and their respective Subsidiaries (a) has
made or filed all federal, state and local income and all other tax returns, reports
and declarations required by any jurisdiction to which it is subject, (b) has
paid all taxes and other governmental assessments and charges shown or
determined to be due on such returns, reports and declarations, except those
being contested in good faith and by appropriate proceedings, and (c) has set
aside on its books provisions reasonably adequate for the payment of all taxes
for periods subsequent to the periods to which such returns, reports or
declarations apply, and (ii) there are no unpaid taxes claimed to be due by the
taxing authority of any jurisdiction, and the respective officers of the
Borrower and the Trust and their respective Subsidiaries know of no basis for
any such claim.

          §7.11
No Event of Default. No Default or Event of Default has occurred
and is continuing.

          §7.12.
Investment Company Acts. None of the Borrower, the Trust or any of
their respective Subsidiaries is an “investment company”, or an “affiliated
company” or a “principal underwriter” of an “investment company”, as such terms
are defined in the Investment Company Act of 1940.

          §7.13.
Name; Jurisdiction of Organization; Absence of UCC Financing Statements, Etc. The exact legal name of the
Borrower and the Trust, and their respective jurisdictions of organization and
tax identification numbers, are set forth on Schedule 7.13 attached
hereto. Except for Permitted Liens, there is no financing statement, security
agreement, chattel mortgage, real estate mortgage, equipment lease, financing
lease, option, encumbrance or other document filed or recorded with any filing
records, registry, or other public office, that purports to cover, affect or
give notice of any present or possible future lien or encumbrance on, or
security interest in, the Project or the member interests of Pima Norte. Except
in favor of the Agent, neither the Borrower nor the Trust has pledged or
granted any lien on or security interest in or otherwise encumbered or
transferred any of their respective interests in any Subsidiary (including in
the case of the Trust, its interests in Whitestone OP).

          §7.14.
Absence of Liens.
Pima Norte is the owner of the Project free from any Lien, except for Permitted
Liens.

          §7.15.
Certain Transactions. Except as set forth on Schedule 7.15,
none of the officers, partners, directors, or employees of the Trust, the
Borrower or any of their Subsidiaries is presently a party to any transaction
with the Borrower, the Trust or any of their respective Subsidiaries (other
than for services as employees, officers and directors), including any
contract, agreement or other arrangement providing for the furnishing of
services to or by, providing for rental of real or personal property to or
from, or otherwise requiring payments to or from any officer, partner, member,
director or such employee or, to the knowledge of the Borrower or the Trust,
any corporation, partnership, limited liability company, trust or other entity
in which any officer, partner, director, or any such employee or natural Person
related to such officer, partner, director or employee or other

32

Person in
which such officer, partner, member, director or employee has a direct or
indirect beneficial interest has a substantial interest or is an officer,
director, member, trustee or partner.

          §7.16.
Employee Benefit Plans; Multiemployer Plans; Guaranteed Pension Plans. Except as disclosed in
the SEC Filings or on Schedule 7.16, none of the Borrower, the Trust nor
any ERISA Affiliate maintains or contributes to any Employee Benefit Plan,
Multiemployer Plan or Guaranteed Pension Plan.

          §7.17.
Regulations U and X. No portion of the Term Loan is to be used
for the purpose of purchasing or carrying any “margin security” or “margin
stock” as such terms are used in Regulations U and X of the Board of Governors
of the Federal Reserve System, 12 C.F.R. Parts 221 and 224.

          §7.18. Environmental
Compliance.
The Borrower has caused Phase I and other environmental assessments or similar
assessments (collectively, the “Environmental Reports”) to be conducted to
investigate the past and present environmental condition and usage of the
Project, true and complete copies of which have been delivered to the Agent. To
the Borrower’s knowledge, except as otherwise expressly disclosed on Schedule
7.18, the Borrower makes the following representations and warranties:

                    (a)
None of the Borrower, its Subsidiaries, the Trust or any operator of the
Project or any portion thereof, or any operations thereon is in violation, or
alleged violation, of any judgment, decree, order, law, license, rule or
regulation pertaining to environmental matters, including without limitation,
those arising under the Resource Conservation and Recovery Act (“RCRA”), the
Comprehensive Environmental Response, Compensation and Liability Act of 1980 as
amended (“CERCLA”), the Superfund Amendments and Reauthorization Act of 1986
(“SARA”), the Federal Clean Water Act, the Federal Clean Air Act, the Toxic
Substances Control Act, or any state or local statute, regulation, ordinance,
order or decree relating to health, safety or the environment (hereinafter
“Environmental Laws”), which violation or alleged violation has, or its
remediation would have, by itself or when aggregated with all such other
violations or alleged violations, a material adverse effect on the business,
operations, assets, condition (financial or otherwise), properties or prospects
of the Trust or the Borrower, or constitutes a Disqualifying Environmental
Event.

                    (b)
None of the Borrower, the Trust or any of their respective Subsidiaries has
received written notice from any third party, including, without limitation,
any federal, state or local governmental authority, (i) that it has been
identified by the United States Environmental Protection Agency (“EPA”) as a
potentially responsible party under CERCLA with respect to a site listed on the
National Priorities List, 40 C.F.R. Part 300 Appendix B (1986), (ii) that any
hazardous waste, as defined by 42 U.S.C. § 9601(5), any hazardous substances as
defined by 42 U.S.C. § 9601(14), any pollutant or contaminant as defined by 42
U.S.C. §9601(33) or any toxic substances, oil or hazardous materials or other
chemicals or substances regulated by any Environmental

33

Laws
(“Hazardous Substances”) which it has generated, transported or disposed of
have been found at any site at which a federal, state or local agency or other
third party has conducted or has ordered that the Borrower, the Trust or any of
their respective Subsidiaries conduct a remedial investigation, removal or
other response action pursuant to any Environmental Law, or (iii) that it is or
shall be a named party to any claim, action, cause of action, complaint, or
legal or administrative proceeding (in each case, contingent or otherwise) arising
out of any third party’s incurrence of costs, expenses, losses or damages of
any kind whatsoever in connection with the release of Hazardous Substances,
which event described in any such notice would have a material adverse effect
on the business, operations, assets, condition (financial or otherwise),
properties or prospects of the Trust or the Borrower, or constitutes a
Disqualifying Environmental Event.

                    (c)
(i) No portion of the Project has been used for the handling, processing, storage
or disposal of Hazardous Substances except in accordance with applicable
Environmental Laws; and no underground tank or other underground storage
receptacle for Hazardous Substances is located on any portion of the Project
except in accordance with applicable Environmental Laws, (ii) in the course of
any activities conducted by the Borrower, the Trust, their respective
Subsidiaries or the operators of the Project or any ground or space tenants on
the Project, no Hazardous Substances have been generated or are being used on
the Project except in accordance with applicable Environmental Laws, (iii)
there has been no present or past releasing, spilling, leaking, pumping,
pouring, emitting, emptying, discharging, injecting, escaping, disposing or
dumping (a “Release”) or threatened Release of Hazardous Substances on, upon,
into or from the Project in violation of applicable Environmental Laws, (iv)
there have been no Releases in violation of applicable Environmental Laws upon,
from or into any real property in the vicinity of the Project which, through
soil or groundwater contamination, may have come to be located on the Project,
and (v) to the best of Borrower’s Knowledge, any Hazardous Substances that have
been generated on the Project during ownership thereof by the Borrower, the
Trust, their respective Subsidiaries or the operations of the Project have been
transported off-site only in compliance with all applicable Environmental Laws;
any of which events described in clauses (i) through (v) above would have a
material adverse effect on the business, operations, assets, condition
(financial or otherwise), properties or prospects of the Trust or the Borrower,
or constitutes a Disqualifying Environmental Event.

                    (d)
None of the Borrower, the Trust or the Project is subject to any applicable
Environmental Law requiring the performance of Hazardous Substances site
assessments, or the removal or remediation of Hazardous Substances, or the
giving of notice to any governmental agency or the recording or delivery to
other Persons of an environmental disclosure document or statement, by virtue
of the transactions set forth herein and contemplated hereby, or as a condition
to the effectiveness of any other transactions contemplated hereby.

          §7.19.
Subsidiaries.
Schedule 7.19 sets forth, as of the Closing Date, all of the respective
Subsidiaries of the Trust and the Borrower.

34

          §7.20.
Loan Documents.
All of the representations and warranties by or on behalf of the Borrower and
the Trust and their respective Subsidiaries made in this Agreement and in the
other Loan Documents or any document or instrument delivered to the Agent or
the Lenders pursuant to or in connection with any of such Loan Documents are
true and correct in all material respects and do not include any untrue
statement of a material fact or omit to state a material fact required to be
stated or necessary to make such representations and warranties not materially
misleading.

          §7.21.
REIT Status The Trust is qualified as a REIT and has not taken any action that
would prevent it from maintaining its qualification as a REIT for its tax years
ending December 31, 2005 or December 31, 2006, or from maintaining such
qualification at all times during the term of this Agreement.

          §7.22.
No Condemnation.
(i) No condemnation of any material portion of the Project, (ii) no
condemnation or relocation of any roadways abutting the Project which are
material to the Project, and (iii) no proceeding to deny access to the
Project from any point or planned point of access to the Project which is material
to the Project, has commenced or, to the best of Borrower’s knowledge, is
contemplated by any Governmental Authority.

          §7.23.
Utilities. The Project will have
adequate water, gas and electrical supply, storm and sanitary sewerage
facilities, other required public utilities, fire and police protection, and
means of access between the Project and public highways; none of the foregoing
will be foreseeably delayed or impeded by virtue of any requirements under any
applicable Laws.

          §7.24.
Brokerage Fees.
No brokerage fees or commissions are payable by or to any person in connection
with this Agreement or the Loan to be disbursed hereunder.

          §7.25.
Independent Parcel.
The Project is taxed separately without regard to any other property and for
all purposes the Project may be mortgaged, conveyed and otherwise dealt with as
an independent parcel.

          §7.26.
Major Lease.
The Borrower and its agents have not entered into any Major Lease, subleases
under a Major Lease or other arrangements for occupancy of more than 10,000
square feet of net leasable space within the Project other than as listed on Schedule
7.26. True, correct and complete copies of all Major Leases, as amended,
have been delivered to Lender and, at Lender’s request, Borrower will deliver
true, correct and complete copies of any or all other Leases, as amended, to Lender.
All Major Leases are in full force and effect. Borrower is not in default under
any Major Lease and Borrower has disclosed to Lender in writing any material
default by the tenant under any Major Lease.

35

          §7.27.
No Encroachment.
No building or other improvement related to the Project encroached in any
material respect upon any property line, building line, setback line, side yard
line or any recorded or visible easement (or other easement of which the
Borrower is aware or has reason to believe may exist) with respect to the
Project unless permitted by easement or other agreement for purposes of
granting an easement.

          §7.28.
Federal Tax Identification Numbers. Each Borrower has obtained a Federal Tax
Identification Number as set forth in Schedule 7.19.

          §8.
AFFIRMATIVE COVENANTS OF THE BORROWER AND THE TRUST. The Borrower and the
Trust, on their own behalf and on behalf of their respective Subsidiaries,
jointly and severally covenant and agree that:

          §8.1.
Punctual Payment.
The Borrower will duly and punctually pay or cause to be paid the principal and
interest on the Term Loan and all interest, fees, charges and other amounts and
Obligations provided for in this Agreement and the other Loan Documents, all in
accordance with the terms of this Agreement, the Notes and the other Loan
Documents.

          §8.2.
Maintenance of Office; Jurisdiction of Organization, Etc.. Each of the Borrower and
the Trust will maintain its chief executive office in Houston, Texas, or at
such other place in the United States of America as each of them shall
designate by written notice to the Agent to be delivered at least thirty (30)
days prior to any change of chief executive office, where, subject to §21,
notices, presentations and demands to or upon the Borrower and the Trust in
respect of the Loan Documents may be given or made. Neither the Trust nor the
Borrower will change its jurisdiction of organization, name or corporate
structure without giving the Agent at least thirty (30) days prior written
notice of such change, and, in the case of a change in corporate structure,
without the prior written consent of the Agent, which consent may not be
unreasonably withheld.

          §8.3.
Records and Accounts. Each of the Borrower and the Trust will (a)
keep, and cause each of its Subsidiaries to keep, true and accurate records and
books of account in which full, true and correct entries will be made in
accordance with GAAP and (b) maintain adequate accounts and reserves for all
taxes (including income taxes), contingencies, depreciation and amortization of
its properties and the properties of its Subsidiaries.

          §8.4.
Financial Statements, Certificates and Information. The Borrower and the
Trust will deliver to the Agent (with copies to the Agent for each Lender):

                    (a)
as soon as practicable, but in any event not later than ninety (90) days after
the end of each fiscal year of the Trust, the audited consolidated balance
sheet of the Trust and its Subsidiaries at the end of such year, and the
related audited consolidated statements of income, changes in shareholder’s
equity (or the equivalent thereof) and cash flows for the year then ended, in
each case, setting forth in comparative

36

form the
figures as of the end of and for the previous fiscal year and all such
statements to be in reasonable detail, prepared in accordance with GAAP, and,
in each case, accompanied by an auditor’s report prepared without qualification
by the Accountants; together with, at the Agent’s request, a written statement
from such Accountants to the effect that they have read a copy of this
Agreement, and that, in making the examination necessary to said certification,
they have obtained no knowledge of any Default or Event of Default under §10 or
otherwise under the provisions of this Agreement relating to the financial condition
of the Trust or any of its Subsidiaries, or of any facts or circumstances that
would cause the Trust not to continue to qualify as a REIT for federal income
tax purposes, or, if such Accountants shall have obtained knowledge of any then
existing Default, Event of Default or such facts or circumstances, they shall
make disclosure thereof in such statement;

                    (b)
as soon as practicable, but in any event not later than forty-five (45) days
after the end of each of its March 31, June 30 and September 30 fiscal
quarters, copies of the unaudited consolidated balance sheet of the Trust and
its Subsidiaries, as at the end of such quarter, and the related unaudited
consolidated statements of income, changes in shareholders’ equity and cash flows
for the portion of the Trust’s fiscal year then elapsed, all in reasonable
detail and prepared in accordance with GAAP (which may be provided by inclusion
in the Form 10-Q of the Trust filed with the SEC for such period provided
pursuant to clause (i) below), together with a certification by the principal
financial or accounting officer of the Borrower and the Trust that the
information contained in such financial statements fairly presents the
financial position of the Trust and its Subsidiaries on the date thereof
(subject to year-end adjustments none of which shall be materially adverse and
the absence of footnotes);

                    (c)
as soon as practicable, but in any event not later than ninety (90) days after
the end of each of its fiscal years, statements of Net Operating Income and
outstanding Indebtedness as at the end of such fiscal year and for the fiscal
year then ended in respect of the Project, each prepared in accordance with
GAAP consistent with the definitions of Net Operating Income and outstanding
Indebtedness used in this Agreement and a rent roll and operating statement in
respect of the Project, in each case certified by the chief financial or
accounting officer of the Borrower as true and correct;

                    (d)
as soon as practicable, but in any event not later than forty-five (45) days
after the end of each of the fiscal quarters of the Borrower, (i) copies of the
unaudited statements of Net Operating Income and outstanding Indebtedness as at
the end of such quarter and for the portion of the fiscal year then elapsed in
respect of the Project, prepared in accordance with GAAP consistent with the
definitions of Net Operating Income and outstanding Indebtedness used in this
Agreement, and a rent roll and operating statement in respect of the Project,
certified by the chief financial or accounting officer of the Borrower to
present fairly the Net Operating Income and outstanding Indebtedness and rent
roll in respect of the Project, (ii) an occupancy analysis in respect of the
Project certified by the chief financial officer of the Borrower to be true and
complete, (iii) a schedule of revenues and expenses for the Project, and (iv)
an updated

37

build-out
budget for the Project and an update on the status of the intended tenant
improvements on the Property and conformity of expenditures to budget for such
tenant improvements;

                    (e)
simultaneously with the delivery of the financial statements referred to in
subsections (a) and (b) above, a statement in the form of Exhibit C
hereto signed by the chief financial or accounting officer of the Borrower, and
setting forth in reasonable detail computations evidencing compliance with the
covenants contained in §10;

                    (f)
promptly as they become available, a copy of each report submitted to the
Borrower, the Trust or any of their respective subsidiaries by the Accountants
in connection with each annual audit of the books of the Borrower, the Trust or
such Subsidiary by such Accountants or in connection with any interim audit
thereof pertaining to any phase of the business of the Borrower, the Trust or
any such Subsidiary;

                    (g)
contemporaneously with (or promptly after) the filing or mailing thereof,
copies of all material of a financial nature sent to the holders of any
Indebtedness of the Trust or any of its Subsidiaries (other than the Term Loan)
for borrowed money, to the extent that the information or disclosure contained
in such material refers to or could reasonably be expected to have a material
adverse effect on the business, operations, assets, condition (financial or
otherwise) or properties of the Trust, the Borrower or any other member of the
Whitestone Group;

                    (h)
contemporaneously with the filing or mailing thereof, copies of all material of
a financial nature filed with the SEC or sent to the equityholders of the
Trust;

                    (i)
as soon as practicable, but in any event not later than ninety (90) days after
the end of each fiscal year of the Trust, copies of the Form 10-K statement
filed by the Trust with the SEC for such fiscal year, and as soon as
practicable, but in any event not later than fifty (50) days after the end of
each fiscal quarter of the Trust copies of the Form 10-Q statement filed by the
Trust with the SEC for such fiscal quarter;

                    (j)
in the case of the Borrower and the Trust, as soon as practicable, but in any
event not later than thirty (30) days prior to the end of each of their
respective fiscal years, a business plan for the next fiscal year (including pro
forma projections for such period);

                    (k)
together with the financial statements delivered pursuant to §8.4(a), a
certification by the chief financial or accounting officer of the Borrower of
the state and federal taxable income of the Trust and its Subsidiaries as of
the end of the applicable fiscal year;

                    (l)
in the event that the definition of “funds from operations” is revised by the
Board of Governors of the National Association of Real Estate Investment

38

Trusts, a
report, certified by the chief financial or accounting officer of the Borrower,
of the “funds from operations” of the Borrower based on the definition as in
effect on the date of this Agreement and based on the definition as so revised
from time to time, which such report shall be delivered to the Agent (with
copies to the Agent for each Lender) with the financial statements required to
be delivered pursuant to §8.4(a) or §8.4(b) above, as applicable;

                    (m)
simultaneously with the delivery of the financial statements referred to in
clauses (a) and (b) above, updated title searches with respect to the Project
and evidence of the Agent’s continued first priority lien on the Property, or
such other evidence of its priority lien as the Agent may require; and

                    (m)
from time to time such other financial data and other information about the
Borrower, the Trust, their respective Subsidiaries and the Project as the Agent
or any Lender (through the Agent) may reasonably request, including, without
limitation, evidence of adequate funds held by the Borrower to complete all
build-out contemplated in connection with the Project.

          Notwithstanding
the foregoing, the Borrower shall be deemed to have complied with this covenant
(other than with respect to items relating to the Project or the Property, or
otherwise requested pursuant to clause (m) above) so long as Whitestone OP
delivers the financial statements required to be delivered under §8.4 of the
Revolving Credit Agreement in accordance with the terms thereof, so long as
such Revolving Credit Agreement remains in effect.

          §8.5.
Notices.

                    (a)
Defaults. The Borrower and the Trust will, promptly after obtaining
knowledge of the same, notify the Agent in writing (with copies to the Agent
for each Lender) of the occurrence of any Default or Event of Default. If any
Person shall give any notice or take any other action in respect of (x) a
claimed Default (whether or not constituting an Event of Default) under this
Agreement or (y) a claimed failure by the Borrower, the Trust or any of their
respective Subsidiaries, as applicable, to comply with any term, condition or
provision of or under any note, evidence of Indebtedness, indenture or other
obligation (i) in excess of $5,000,000, individually or in the aggregate, in
respect of Indebtedness that is Without Recourse and (ii) in excess of
$1,000,000, individually or in the aggregate, in respect of Indebtedness that
is Recourse, to which or with respect to which any of them is a party or
obligor, whether as principal obligor, guarantor or surety, and such failure to
comply would permit the holder of such note or obligation or other evidence of
Indebtedness to accelerate the maturity thereof, the Borrower shall forthwith
give written notice thereof to the Agent and each of the Lenders, describing
the notice or action and the nature of the claimed failure to comply.

                    (b)
Environmental Events. The Borrower and the Trust will promptly give
notice in writing to the Agent (with copies to the Agent for each Lender) (i)
upon 

39

Borrower’s or
the Trust’s obtaining knowledge of any material violation (as determined by the
Borrower or the Trust in the exercise of its reasonable discretion) of any
Environmental Law regarding the Project or Borrower’s or the Trust’s
operations, (ii) upon Borrower’s or the Trust’s obtaining knowledge of any
known Release of any Hazardous Substance at, from, or into the Project which it
reports in writing or is reportable by it in writing to any governmental
authority and which is material in amount or nature or which could materially
affect the value of the Project, (iii) upon Borrower’s or the Trust’s receipt
of any notice of material violation of any Environmental Laws or of any
material Release of Hazardous Substances in violation of any Environmental Laws
or any matter that may be a Disqualifying Environmental Event with respect to
the Project, including a notice or claim of liability or potential
responsibility from any third party (including without limitation any federal,
state or local governmental officials) and including notice of any formal
inquiry, proceeding, demand, investigation or other action with regard to (A)
Borrower’s or the Trust’s or any other Person’s operation of the Project, (B)
contamination on, from or into the Project, or (C) investigation or
remediation of off-site locations at which Borrower or the Trust or any of its
predecessors are alleged to have directly or indirectly disposed of Hazardous
Substances, or (iv) upon Borrower’s or the Trust’s obtaining knowledge that any
expense or loss has been incurred by such governmental authority in connection
with the assessment, containment, removal or remediation of any Hazardous
Substances with respect to which Borrower or the Trust may be liable or for
which a lien may be imposed on the Project.

                    (c)
Notification of Claims against the Project. The Borrower will, and will
cause each Subsidiary to, promptly upon becoming aware thereof, notify the
Agent in writing (with copies to the Agent for each Lender) of any setoff,
claims, withholdings or other defenses to which the Project is subject, which
(i) could reasonably be expected to have a material adverse effect on (x) the
business, operations, assets, condition (financial or otherwise), properties or
prospects of the Trust or the Borrower, or (y) the value of the Project, or
(ii) with respect to the Project, constitute a Disqualifying Environmental
Event, a Disqualifying Structural Event or a Lien.

                    (d)
Notice of Litigation and Judgments. The Borrower and the Trust will give
notice to the Agent in writing (with copies to the Agent for each Lender)
within three (3) days of becoming aware of any litigation or proceedings
threatened in writing or any pending litigation and proceedings an adverse
determination in which could materially adversely affect the Borrower, the
Trust, or the Project, or to which the Borrower, the Trust or any of their
respective Subsidiaries is or is to become a party involving a claim against
the Borrower, the Trust or any of their respective Subsidiaries that could
reasonably be expected to have a materially adverse effect on the respective
business, operations, assets, condition (financial or otherwise) or properties
of the Trust, the Borrower or on the value or operation of the Project and
stating the nature and status of such litigation or proceedings. The Borrower
and the Trust will give notice to the Agent and each of the Lenders, in
writing, in form and detail reasonably satisfactory to the Agent, within three
(3) days of any judgment not covered by insurance, final or 

40

otherwise,
against the Borrower, the Trust or any of such Subsidiaries in an amount in
excess of $1,000,000.

          §8.6.
Existence of Borrower; Maintenance of the Project. The Borrower and the
Trust will do or cause to be done all things necessary to, and shall, preserve
and keep in full force and effect its respective existence in its jurisdiction
of organization and will do or cause to be done all things necessary to
preserve and keep in full force all of its respective rights and franchises and
those of its respective Subsidiaries which may be necessary to properly and
advantageously conduct the businesses conducted by it. The Borrower (a) will
cause all necessary repairs, renewals, replacements, betterments and
improvements to be made to the Project, all as in the judgment of the Borrower
may be necessary so that the business carried on in connection therewith may be
properly and advantageously conducted at all times, and in any event, will keep
all of the Project in a condition consistent with the Real Estate Assets
currently owned or controlled by the Borrower or its Subsidiaries, (b) will
cause all of its other properties and those of its Subsidiaries used or useful
in the conduct of its business or the business of its Subsidiaries to be
maintained and kept in good condition, repair and working order and supplied
with all necessary equipment, (c) will not permit the Trust to directly own or
lease the Project, and (d) will, and will cause each of its Subsidiaries to
continue to engage primarily in the businesses now conducted by it.

          §8.7.              Existence of the Trust;
Maintenance of REIT Status of the Trust; Maintenance of Properties; Etc. 

          (a)
The Trust will do or cause to be done all things necessary to preserve and keep
in full force and effect the Trust’s existence as a Maryland real estate
investment trust. The Trust will at all times (i) maintain its status as a REIT
and not take any action which could lead to its disqualification as a REIT and
(ii) continue to operate as a self-directed and self-administered REIT and make
public reports and filings as though it were listed on a nationally-recognized
stock exchange. The Trust will not engage in any business other than the
business of acting as a REIT and serving as the general partner and limited
partner of the Borrower and matters directly relating thereto, and shall (x)
conduct all or substantially all of its business operations through the
Borrower or through subsidiary partnerships or other entities in which the
Borrower owns 100% of the legal and economic interests and (y) own no real
property or material personal property other than through its ownership
interests in the Borrower. The Trust will (a) cause all of its properties and
those of its Subsidiaries used or useful in the conduct of its business or the
business of its Subsidiaries to be maintained and kept in good condition,
repair and working order, and supplied with all necessary equipment, (b) cause
to be made all necessary repairs, renewals, replacements, betterments and
improvements thereof, all as in the judgment of the Trust may be necessary so
that the business carried on in connection therewith may be properly and
advantageously conducted at all times and (c) cause each of its Subsidiaries to
continue to engage primarily in the businesses now conducted by it.

41

          (b)
No Borrower will enter into any transactions after the Closing Date that, if in
effect on the Closing Date, would have required disclosure on Schedule 7.15
without the consent of the Agent.

          (c)
Neither of Whitestone III LP LTD and Whitestone III GP LLC will engage in any
business other than the business of serving as the general partner or limited
partner, as the case may be, of Whitestone III and matters directly relating
thereto and shall not own any real property or material personal property other
than through its ownership interests in Whitestone III.

          §8.8.
Insurance. The Borrower and the Trust will maintain with respect to the
Project and their other properties, and will cause each of its Subsidiaries to
maintain, with financially sound and reputable insurers, insurance with respect
to such properties and its business against such casualties and contingencies
as shall be in accordance with the general practices of businesses engaged in
similar activities in similar geographic areas and in amounts, containing such
terms, in such forms and for such periods as may be reasonable and prudent and
as otherwise required pursuant to Section 1.4 of the Deed of Trust.

          §8.9.
Taxes. The Borrower will, and will cause the Trust and each of their
respective Subsidiaries to, pay or cause to be paid real estate taxes, other
taxes, assessments and other governmental charges against the Project before
the same become delinquent and will duly pay and discharge, or cause to be paid
and discharged, before the same shall become overdue, all taxes, assessments
and other governmental charges imposed upon its sales and activities, or any
part thereof, or upon the income or profits therefrom, as well as all claims
for labor, materials, or supplies that if unpaid might by law become a lien or
charge upon the Project; provided that any such tax, assessment, charge,
levy or claim need not be paid if the validity or amount thereof shall
currently be contested in good faith by appropriate proceedings and if the
Borrower or the Trust shall have set aside on its books adequate reserves with
respect thereto; and provided, further, that the Borrower or the
Trust will pay all such taxes, assessments, charges, levies or claims forthwith
prior to the attachment of any lien as security therefor. Promptly upon request
by the Agent if required for bank regulatory compliance purposes or similar
bank purposes, the Borrower will provide evidence of the payment of real estate
taxes, other taxes, assessments and other governmental charges against the
Project in the form of receipted tax bills or other form reasonably acceptable
to the Agent, or evidence of the existence of applicable contests as
contemplated herein.

          §8.10.
Inspection of Properties and Books. (a) The Borrower and the Trust will permit the
Agent or any of its designated representatives upon reasonable notice (which
notice may be given orally or in writing and provided that no notice
shall be required if a Default or Event of Default has occurred and is
continuing), to visit and inspect any of the properties of the Borrower, the
Trust or any of their respective Subsidiaries to examine the books of account
of the Borrower, the Trust and their respective Subsidiaries and Whitestone
Management (and to make copies thereof and extracts therefrom) and to 

42

discuss the
affairs, finances and accounts of the Borrower, the Trust and their respective
Subsidiaries and the Project with, and to be advised as to the same by, its
officers, all at such reasonable times and intervals as the Agent may
reasonably request. 

          (b)
The Borrower hereby agrees that each of the Lenders and the Agent (and each of
their respective, and their respective affiliates’, employees, officers,
directors, agents and advisors (collectively, “Representatives”) is, and has
been from the commencement of discussions with respect to the facility established by the
Agreement (the “Facility”), permitted to disclose to any and all Persons,
without limitation of any kind, the structure and tax aspects (as such terms
are used in Code sections 6011 and 6111) of the Facility, and all materials of
any kind (including opinions or other tax analyses) that are or have been provided
to such Lender or the Agent related to such structure and tax aspects. In this
regard, the Lenders and the Agent intend that this transaction will not be a
“confidential transaction” under Code sections 6011, 6111 or 6112, and the
regulations promulgated thereunder. Neither the Borrower, the Trust, nor any
Subsidiary of any of the foregoing intends to treat the Term Loan or the
transactions contemplated by this Agreement and the other Loan Documents as
being a “reportable transaction” (within the meaning of Treasury Regulation
Section 1.6011-4). If the Borrower or the Trust determines to take any action
inconsistent with such intention, the Borrower will promptly notify the Agent
thereof. If the Borrower so notifies the Agent, the Borrower acknowledges that
the Agent may treat the Term Loan as part of a transaction that is subject to
Treasury Regulation Section 301.6112-1, and the Agent will maintain the lists
and other records, including the identity of the applicable party to the Term
Loan as required by such Treasury Regulation.

          §8.11. Compliance
with Laws, Contracts, Licenses, and Permits. The Borrower and the Trust
will comply with, and will cause each of their respective Subsidiaries to
comply with (a) all applicable laws and regulations now or hereafter in effect
wherever its business is conducted that are material in any respect to the
operation of their respective businesses in the ordinary course and consistent
with past practices, including, without limitation, all such Environmental Laws
and all such applicable federal and state securities laws, (b) the provisions
of its partnership agreement, trust agreement, operating agreement or corporate
charter and other Organizational Documents, as applicable, (c) all material
agreements and instruments to which it is a party or by which it or any of its
properties may be bound (including the Project and the Leases) and (d) all
applicable decrees, orders, and judgments. If at any time while the Term Loan
or Note or other Obligations is outstanding, any Permit shall become necessary
or required in order that the Borrower may fulfill any of its obligations
hereunder, the Borrower and the Trust and their respective Subsidiaries will
immediately take or cause to be taken all reasonable steps within the power of
the Borrower or the Trust, as applicable, to obtain such Permit and furnish the
Agent with evidence thereof. Without limitation of the foregoing, the Borrower
will continue to comply with all laws, rules and regulations relating to
anti-terrorism or money laundering, including the Anti-Terrorism Order, the
Patriot Act, the Trading with the Enemy Act, as amended, and the foreign assets
control regulations of the 

43

United States
Treasury Department (31 CFR, Subtitle B, Chapter V, as amended) and the
enabling legislation or executive orders relating thereto.

          §8.12.
Use of Proceeds.
Subject at all times to the other provisions of this Agreement, including
without limitation §7.17, the Borrower will use the proceeds of the Term Loan
solely to repay certain of its obligations under the Revolving Credit
Agreement.

          §8.13.
Solvency of Borrower and Trust. The Borrower and the Trust shall remain solvent
at all times.

          §8.14.
Further Assurances.
The Borrower and the Trust will cooperate with the Agent and the Lenders and
execute such further instruments and documents as the Lenders or the Agent
shall reasonably request to carry out to their satisfaction the transactions
contemplated by this Agreement and the other Loan Documents.

          §8.15.
Reserved.

          §8.16.
Environmental Indemnification. The Borrower and the Trust
each covenants and agrees that it will indemnify and hold the Agent and each
Lender, and each of their respective Affiliates, harmless from and against any
and all claims, expense, damage, loss or liability incurred by the Agent or any
Lender (including all reasonable costs of legal representation incurred by the
Agent or any Lender, but excluding, as applicable, for the Agent or a Lender
any claim, expense, damage, loss or liability as a result of the gross
negligence or willful misconduct of the Agent or such Lender or any of their
respective Affiliates) relating to (a) any Release or threatened Release of
Hazardous Substances on the Project; (b) any violation of any Environmental
Laws with respect to conditions at the Project or the operations conducted
thereon; (c) the investigation or remediation of off-site locations at which
the Borrower, the Trust or any of their respective Subsidiaries or their
predecessors are alleged to have directly or indirectly disposed of Hazardous
Substances; or (d) any action, suit, proceeding or investigation brought or
threatened with respect to any Hazardous Substances relating to the Project
(including, but not limited to, claims with respect to wrongful death, personal
injury or damage to property). It is expressly acknowledged by the Borrower
that, notwithstanding the introductory paragraph of this §8, this covenant of
indemnification shall survive the repayment of the amounts owing under the
Notes and this Agreement and the termination of this Agreement and the
obligations of the Lenders hereunder and shall inure to the benefit of the
Agent and the Lenders and their respective Affiliates, their respective
successors, and their respective assigns under the Loan Documents permitted
under this Agreement. The environmental indemnity provided herein shall be in
addition to that provided in the Environmental Indemnity Agreement.

          §8.17.
Response Actions.
The Borrower covenants and agrees that if any Release or disposal of Hazardous
Substances shall occur or shall have occurred on the Project, in violation of
applicable Environmental Laws, the Borrower will cause the prompt 

44

containment
and removal of such Hazardous Substances and remediation of the Project as
necessary to comply with all Environmental Laws and to preserve the value of
the Project.

          §8.18.
Environmental Assessments. Without limitation of any
other provision herein or in any other Loan Document, if the Agent reasonably
believes, after discussion with the Borrower and review of any environmental
reports provided by the Borrower, that a Disqualifying Environmental Event has
occurred with respect to the Property, whether or not a Default or an Event of
Default shall have occurred, the Agent may, from time to time, for the purpose
of assessing and determining whether a Disqualifying Environmental Event has in
fact occurred, cause the Borrower to obtain one or more environmental
assessments or audits of the Property prepared by a hydrogeologist, an
independent engineer or other qualified consultant or expert approved by the
Agent to evaluate or confirm (i) whether any Hazardous Substances are present
in the soil or water at the Property and (ii) whether the use and operation of
the Property complies with all Environmental Laws. Environmental assessments
may include without limitation detailed visual inspections of the Property
including, without limitation, any and all storage areas, storage tanks,
drains, dry wells and leaching areas, and, if and to the extent reasonable,
appropriate and required pursuant to applicable Environmental Laws, the taking
of soil samples, surface water samples and ground water samples, as well as
such other investigations or analyses as the Agent deems appropriate. All such
environmental assessments shall be at the sole cost and expense of the
Borrower.

          §8.19.
Employee Benefit Plans.

                    (a)
Notice. The Borrower and the Trust will notify the Agent (with copies to
the Agent for each Lender) at least thirty (30) days prior to the establishment
of any Employee Benefit Plan, Multiemployer Plan or Guaranteed Pension Plan by
any of them or any of their respective ERISA Affiliates other than those
disclosed on Schedule 7.16 or disclosed in the SEC Filings, and neither
the Borrower nor the Trust will establish any Employee Benefit Plan,
Multiemployer Plan or Guaranteed Pension Plan which could reasonably be
expected to have a material adverse effect on the Borrower or the Trust.

                    (b)
In General. Each Employee Benefit Plan maintained by the Borrower, the
Trust or any of their respective ERISA Affiliates will be operated in
compliance with the provisions of ERISA and, to the extent applicable, the
Code, including but not limited to the provisions thereunder respecting
prohibited transactions.

                    (c)
Terminability of Welfare Plans. With respect to each Employee Benefit
Plan maintained by the Borrower, the Trust or any of their respective ERISA
Affiliates which is an employee welfare benefit plan within the meaning of
§3(l) or §3(2)(B) of ERISA, the Borrower, the Trust, or any of their respective
ERISA Affiliates, as the case may be, shall have the right to terminate each
such plan at any time (or at any time subsequent to the expiration of any
applicable bargaining agreement) without liability other than liability to pay
claims incurred prior to the date of termination.

45

                    (d)
Unfunded or Underfunded Liabilities. The Borrower and the Trust will not
at any time have accruing or accrued unfunded or underfunded liabilities with
respect to any Employee Benefit Plan, Guaranteed Pension Plan or Multiemployer
Plan, or permit any condition to exist under any Multiemployer Plan that would
create a withdrawal liability.

          §8.20.
No Amendments to Certain Documents. The Borrower and the Trust
will not at any time cause or permit its certificate of limited partnership,
agreement of limited partnership (including without limitation the Agreement of
Limited Partnership of the Borrower), articles of incorporation, by-laws,
operating agreement, trust agreement or other Organizational Documents, as the
case may be, to be modified, amended or supplemented in any respect whatever,
without (in each case) the express prior written consent or approval of the
Agent, if such changes could affect the Trust’s REIT status or otherwise
adversely affect the rights of the Agent and the Lenders hereunder or under any
other Loan Document. Any such modification, amendment or supplement shall, in
any event, be subject to the other terms and provisions of this Agreement and
the other Loan Documents.

          §8.21.
Personal Property.
All of the Borrower’s personal property, fixtures, attachments and equipment
delivered upon, attached to or used in connection with the operation of the
Project shall always be located at the Project and shall be kept free and clear
of all Liens, encumbrances and security interests, except those in favor of the
Agent and except for Permitted Liens.

          §8.22.
Leases. Borrower shall provide the
Agent and the Lenders with a copy of the fully executed original of all Leases
promptly following their execution. 

          §9.
CERTAIN NEGATIVE COVENANTS OF THE BORROWER AND THE TRUST. The Borrower and the
Trust, on their own behalf and on behalf of their respective Subsidiaries,
jointly and severally covenant and agree that neither the Borrower nor the
Trust will:

          §9.1.
Restrictions on Indebtedness. Create, incur, assume, guarantee or be or remain liable,
contingently or otherwise, with respect to any Indebtedness other than:

                    (a)
Indebtedness to the Agent and the Lenders (and their respective Affiliates)
arising under any of the Loan Documents;

                    (b)
Indebtedness arising under the Revolving Credit Agreement;

                    (c)
current liabilities of the Borrower incurred in the ordinary course of business
other than through (i) the borrowing of money, or (ii) the obtaining of credit
except for credit on an open account basis customarily extended and in fact
extended in connection with normal purchases of goods and services;

46

                    (d)
Indebtedness of Whitestone OP (other than relating to the Project) in an
aggregate amount not in excess of $500,000 in respect of taxes, assessments,
governmental charges or levies and claims for labor, materials and supplies to
the extent that payment therefor shall not at the time be required to be made
in accordance with the provisions of §8.9 (but including, in any event, any
Indebtedness secured by an M&M Lien);

                    (e)
Indebtedness of Whitestone OP (other than relating to the Project) in an
aggregate amount not in excess of $1,000,000 in respect of judgments or awards
that have been in force for less than the applicable period for taking an
appeal so long as execution is not levied thereunder or in respect of which, at
the time, a good faith appeal or proceeding for review is being prosecuted, and
in respect of which a stay of execution shall have been obtained pending such
appeal or review;

                    (f)
endorsements for collection, deposit or negotiation incurred in the ordinary
course of business;

                    (g)
Secured term loan Indebtedness of Whitestone OP and its Subsidiaries (but not
Pima Norte) disclosed on Schedule 9.1(f) or incurred after the Closing Date, provided
that: (i) such Indebtedness is Without Recourse to the Borrower or the Trust
and is Without Recourse to any of the respective assets of any of the Borrower
or the Trust other than to the specific Real Estate Asset or Assets acquired,
refinanced or rehabilitated with the proceeds of such Indebtedness, and (ii) at
the time any such Indebtedness is incurred and after giving effect thereto,
there exists no Default or Event of Default hereunder; 

                    (h)
contingent liabilities of Whitestone OP disclosed in the financial statements
referred to in §7.4 or on Schedule 9.1(g) hereto, and such other
contingent liabilities of the Borrower having a combined aggregate potential
liability of not more than $1,000,000 at any time; 

                    (i)
Indebtedness of Whitestone OP for the purchase price of capital assets (other
than Real Estate Assets but including Indebtedness in respect of Capitalized
Leases) incurred in the ordinary course of business, provided that the
aggregate principal amount of Indebtedness permitted by this clause (i) shall
not exceed $500,000 at any time outstanding; and

                    (j)
Recourse Indebtedness of Whitestone OP incurred after the Closing Date (other
than Indebtedness relating to or affecting the Project) in connection with the
purchase of or the construction of or renovation of improvements on any Real
Estate Asset, provided that (i) the aggregate principal amount of
Indebtedness permitted by this clause (i) shall not exceed $40,000,000 at any
time outstanding, and (ii) at the time any such Indebtedness is incurred and
after giving effect thereto, there exists no Default or Event of Default
hereunder.

47

          Notwithstanding
the foregoing, in no event shall the Borrower, the Trust or any of their
respective Subsidiaries incur or have outstanding (i) unhedged variable rate
Indebtedness in excess of fifty percent (50%) of Consolidated Total
Indebtedness, or (ii) any other revolving credit facility, whether secured or
unsecured, or any unsecured Indebtedness for borrowed money.

          It
is understood and agreed that the provisions of this §9.1 shall not apply to
Indebtedness of any Partially-Owned Entity that is Without Recourse to the
Borrower or the Trust, or any of their respective assets. The terms and
provisions of this §9.1 are in addition to, and not in limitation of, the
covenants set forth in §10.

          §9.2. Restrictions
on Liens, Etc. (a) Create or incur or suffer to be created
or incurred or to exist any lien, mortgage, pledge, attachment, security
interest or other rights of third parties of any kind upon the Project or on
the member interests of Pima Norte, whether now owned or hereafter acquired, or
upon the income or profits therefrom; (b) acquire, or agree or have an option
to acquire, any property or assets upon conditional sale or other title
retention or purchase money security agreement, device or arrangement in
connection with the operation of the Project; (c) suffer to exist with respect
to the Project, any taxes, assessments, governmental charges and claims for
labor, materials and supplies for which payment thereof is not being contested
or for which payment notwithstanding a contest is required to be made in
accordance with the provisions of §8.9 and has not been timely made; or (d)
sell, assign, pledge or otherwise transfer for security any accounts, contract
rights, general intangibles, chattel paper or instruments, with or without
recourse, relating to the Project (the foregoing types of liens and
encumbrances described in clauses (a) through (d) being sometimes referred to
herein collectively as “Liens”), provided that the Borrower may create
or incur or suffer to be created or incurred or to exist the following
(“Permitted Liens”):

                    (i)
Liens securing taxes, assessments, governmental charges or levies which are not
yet due and payable or which are not yet required to be paid under §8.9;

                    (ii)
Liens arising out of deposits or pledges made in connection with, or to secure
payment of, worker’s compensation, unemployment insurance, old age pensions or
other social security obligations; and deposits with utility companies and
other similar deposits made in the ordinary course of business;

                    (iii)
Liens (other than affecting the Project or the equity interests of any Borrower
or the Trust) in respect of judgments or award, the Indebtedness with respect
to which is not prohibited by §9.1(e);

                    (iv)
Encumbrances on properties (other than the Project) consisting of easements,
rights of way, covenants, zoning and other land-use restrictions, building
restrictions, restrictions on the use of real property and defects and
irregularities in the title thereto; landlord’s or lessor’s Liens under Leases
to which the Borrower is a party or 

48

bound;
purchase options granted at a price not less than the market value of such
property; and other minor Liens or encumbrances on properties, none of which
interferes materially with the use of the property affected in the ordinary
conduct of the business of the Borrower, and which matters (x) do not
individually or in the aggregate have a material adverse effect on the business
of the Borrower or the Trust and (y) do not make title to such property
unmarketable by the conveyancing standards in effect where such property is
located;

                    (v)
any Leases entered into in the ordinary course of business;

                    (vii)
Liens affecting the Project (but not the equity interests of the Borrower or
the Trust) in respect of judgments or awards not in excess of $50,000 that are
under appeal or have been in force for less than the applicable period for
taking an appeal, so long as execution is not levied thereunder or in respect
of which, at the time, a good faith appeal or proceeding for review is being
diligently prosecuted, and in respect of which a stay of execution shall have
been obtained pending such appeal or review; provided that the Borrower
shall have obtained a bond or insurance or made other arrangements with respect
thereto, in each case reasonably satisfactory to the Agent;

                    (viii)
Liens securing Indebtedness for the purchase price of capital assets (other
than Real Estate Assets but including Indebtedness in respect of Capitalized
Leases for equipment and other equipment leases) to the extent not otherwise
prohibited by §9.1;

                    (ix) M&M Liens securing an aggregate amount not in excess of $500,000 at any
time, so long as each such M&M Lien is bonded within thirty (30) days of
attachment; and

                    (x)
other Liens (other than Liens affecting the Project or the equity interests of
the Borrower or the Trust) in connection with any Indebtedness permitted under
§9.1.

                    Nothing
contained in this §9.2 shall restrict or limit the Borrower or any of their
respective Wholly-owned Subsidiaries from creating a Lien in connection with
any Real Estate Asset which is not an Eligible Unencumbered Property (as
defined in the Revolving Credit Agreement) and otherwise in compliance with the
other terms of this Agreement, provided that in no event will the Borrower,
the Trust or any of their respective Subsidiaries create, incur or suffer to be
created or incurred or to exist any Lien, other than in favor of the Agent, on
the equity interests of the Borrower or the Trust. Without limitation of the
foregoing, the Trust shall not create or incur or suffer to be created or
incurred any Lien on any of its directly-owned properties or assets, including,
in any event, its general partner interests and limited partner interests in
the Borrower.

          §9.3.
Restrictions on Investments. Make or permit to exist
or to remain outstanding any Investment except, with respect to the Borrower
and its Subsidiaries only, Investments in:

49

                    (a)
(i) marketable direct or guaranteed obligations of the United States of America
that mature within one (1) year from the date of purchase (including
investments in securities guaranteed by the United States of America such as
securities in so-called “overseas private investment corporations”) and (ii)
demand deposits, certificates of deposit, bankers acceptances and time deposits
of United States banks having total assets in excess of $1,000,000,000;

                    (b)
(i) preferred stock or public bonds issued by companies listed on a nationally
recognized exchange and having a rating of at least AAA, and (ii) shares in
public REITs so long as such REIT is listed on a nationally recognized exchange
and has a rating of at least AAA, provided that the aggregate
investments in all such items described in clauses (i) and (ii) above will not
at any time exceed five percent (5%) of the Fair Market Value of Real Estate
Assets, and provided, further, that no such investment shall be
outstanding for longer than ninety (90) days;

                    (c)
securities commonly known as “commercial paper” issued by a corporation
organized and existing under the laws of the United States of America or any
state thereof that at the time of purchase have been rated and the ratings for
which are not less than “P 1” if rated by Moody’s, and not less than “A 1” if
rated by S&P; 

                    (d)
Investments existing on the Closing Date and listed in the financial statements
referred to in §7.4;

                    (e)
other Investments hereafter in connection with the acquisition and development
of Permitted Properties by the Borrower or any Wholly-owned Subsidiary of the
Borrower, provided that the aggregate amounts actually invested by
Borrower (or if not invested directly by the Borrower, actually invested by an
Affiliate of the Borrower for which the Borrower has any funding obligation)
and such Wholly-owned Subsidiary at any time in Real Estate Assets under
Development (including all development costs) will not exceed twenty percent
(20%) of the Fair Market Value of Real Estate Assets at the time of any such
Investment, and provided, further, that Investments in unimproved
Land may at no time exceed fifteen percent (15%) of the Fair Market Value of
Real Estate Assets;

                    (f)
(i) any Investments now or hereafter made in any Wholly-owned Subsidiary; and
(ii) Investments now or hereafter made in any Partially-Owned Entity (or other
Person for which the Borrower has any funding obligation) so long as such
Investment is made in connection with Permitted Properties and provided
that the aggregate amounts actually invested by Borrower (or if not invested
directly by Borrower, actually invested by an Affiliate of the Borrower for
which the Borrower has any funding obligation) and such Wholly-owned Subsidiary
at any time in any Partially-Owned Entity (or other such Person) will not
exceed thirty percent (30%) of the Fair Market Value of Real Estate Assets at
the time of any such Investment; and

50

                    (g)
Investments in respect of (1) equipment, inventory and other tangible personal
property acquired in the ordinary course of business, (2) current trade and
customer accounts receivable for services rendered in the ordinary course of
business and payable in accordance with customary trade terms, (3) advances in
the ordinary course of business to employees for travel expenses, drawing
accounts and similar expenditures, (4) prepaid expenses made in the ordinary
course of business.

                    (h)
Investments by the Borrower in Mortgage Notes, provided that the
aggregate investment in such Mortgage Notes will not exceed twenty percent
(20%) of the Fair Market Value of Real Estate Assets at the time of any such
Investment.

          In
no event shall the aggregate of Investments (1) made pursuant to subclauses
(a), (b) or (c) above (or otherwise in marketable securities to the extent
permitted under this §9.3) exceed ten percent (10%) of the Fair Market Value of
Real Estate Assets, and (2) made pursuant to subclauses (a), (b), (c), (d) to
the extent relating to any of the types of Investments otherwise described in
this clause (2), (e) to the extent relating to Real Estate Assets Under
Development, (f)(ii), or (h) exceed thirty percent (30%) of the Fair Market
Value of Real Estate Assets at any time.

          Notwithstanding
the foregoing, the Trust shall be permitted to make and maintain Investments in
the Borrower and the Trust shall contribute to the Borrower, promptly upon, and
in any event within three (3) Business Days of, the Trust’s receipt thereof,
100% of the aggregate proceeds received by the Trust in connection with any
offering of stock or debt in the Trust (net of fees and expenses customarily
incurred in such offerings).

          §9.4.
Merger and Consolidation.   

                    (a)
Become a party to any merger, consolidation, spin-off or other material
business change without the prior written approval of the Majority Lenders
(other than the merger or consolidation of a Borrower with and into Whitestone
OP (with Whitestone OP being the surviving entity) so long as no Default or
Event of Default has occurred and is continuing, or would occur and be continuing
after giving effect to such merger or consolidation); or

                    (b)
sell, transfer or otherwise dispose of any Real Estate Assets or other
property, including any equity interest in any Person, except for (i) the sale,
transfer or other disposition of obsolete or worn out property in the ordinary
course of business, (ii) the sale or issuance of equity interests of the Trust
and Whitestone OP in the ordinary course of business, (iii) the sale of
Permitted Investments in the ordinary course of business and (iv) the sale,
transfer or other disposition of property (other than the Project), provided
that (A) such sale, transfer or disposition is at fair market value, (B) such
sale, transfer or disposition will not result in a Material Adverse Effect and
(C) in connection with the sale of any material Real Estate Asset, the Borrower
shall have provided to the Agent a compliance certificate in the form of Exhibit
C-2, hereto signed 

51

by the chief
financial officer or chief accounting officer of the Borrower, setting forth in
reasonable detail computations evidencing compliance with the covenants
contained in §10 hereof and certifying that no Default or Event of Default
would exist or occur and be continuing after giving effect to all such proposed
such sale, transfer or disposition.

          §9.5.
Compliance with Environmental Laws. (a) Use the Project or any portion thereof as a
facility for the handling, processing, storage or disposal of Hazardous
Substances except for quantities of Hazardous Substances used in the ordinary
course of business and in compliance with all applicable Environmental Laws,
(b) cause or permit to be located on the Project any underground tank or other
underground storage receptacle for Hazardous Substances except in compliance
with Environmental Laws, (c) generate any Hazardous Substances on the Project
except in compliance with Environmental Laws, or (d) conduct any activity at
the Project or use the Project in any manner so as to cause a Release in
violation of applicable Environmental Laws.

          §9.6.
Distributions.

                    (a)
The Borrower will not declare or make (i) annual Distributions in excess of (x)
105% of “funds from operations” for the fiscal quarters ended March 31, 2007,
June 30, 2007, September 30, 2007, December 31, 2007 and March 31, 2008 or (y)
95% of “funds from operations” for any fiscal quarter thereafter; or (ii) any
Distributions during any period after any Event of Default has occurred; provided,
however, (a) that the Borrower may at all times (including while an
Event of Default is continuing) make Distributions to the extent (after taking
into account all available funds of the Trust from all other sources) required
in order to enable the Trust to continue to qualify as a REIT and (b) in the
event that the Borrower cures any such Event of Default in clause (ii) above
and the Agent has accepted such cure prior to accelerating the Loan, the
limitation of clause (ii) above shall cease to apply with respect to such Event
of Default.

                    (b)
The Trust will not, during any period when any Event of Default has occurred
and is continuing, make any Distributions in excess of the minimum
Distributions required to be made by the Trust in order to maintain its status
as a REIT.

                    (c)
Notwithstanding the definition of “funds from operations” by the Board of
Governors of the National Association of Real Estate Investment Trusts, for
purposes of determining the Distributions permitted to be declared under
Section 9.6(a)(i), (i) for any fiscal period ending on or after December 31,
2006 through December 31, 2007, Excluded Litigation Fees shall not reduce
“funds from operations” and (ii) for all fiscal periods ending prior to March
11, 2008, “funds from operations” shall be calculated in a manner consistent
with its calculation prior to the Trust becoming a self-managed fund and shall
not be reduced by G and A Expenses.

          §9.7.
Reserved.

52

          §9.8.
Default Under Leases.
The Borrower will not suffer or permit any breach or default to occur in any of
the Borrower’s material obligations under any of the Major Leases nor suffer or
permit the same to terminate by reason of any failure of the Borrower to meet
any requirement of any Major Lease including those with respect to any time
limitation within which any of the Borrower’s work is to be done or the space
is to be available for occupancy by the lessee to the extent any of the
foregoing could reasonably be expected to result in a no material adverse
change to the Net Operating Income of the Project. The Borrower shall notify
Lender promptly in writing of any termination by any party of a Major Lease.

          §10.
FINANCIAL COVENANTS.
The Borrower and the Trust, on their own behalf and on behalf of their
respective Subsidiaries, jointly and severally covenant and agree that:

          §10.1.
Consolidated Total Leverage Ratio. At any time, (i)
Consolidated Total Indebtedness as at the last day of any fiscal quarter shall
not exceed sixty percent (60%) of (ii) the Fair Market Value of Real Estate
Assets.

          §10.2.
Interest Coverage Ratio.
As at the end of any fiscal quarter, the ratio of (i) Consolidated EBITDA for
the four consecutive fiscal quarters ending on the last day of such fiscal
quarter to (ii) Consolidated Total Interest Expense for the four consecutive
fiscal quarters ending on the last day of such fiscal quarter must exceed 2.00
to 1.00.

          §10.3.
Fixed Charge Coverage Ratio. As at the end of any fiscal quarter, the ratio
of (i) Consolidated EBITDA for the four consecutive fiscal quarters ending on
the last day of such fiscal quarter to (ii) Consolidated Fixed Charges for the
four consecutive fiscal quarters ending on the last day of such fiscal quarter
must exceed 1.50 to 1.00.

          §10.4.
Secured Debt Leverage. At any time, (i) Consolidated
Total Indebtedness (less any Unsecured Consolidated Total Indebtedness) as at
the last day of any fiscal quarter shall not exceed forty percent (40%) of (ii)
the Fair Market Value of Real Estate Assets.

          §10.5.
Reserved.

          §10.6.
Reserved.

          §10.7.
Reserved.

          §10.8.
Consolidated Tangible Net Worth. As at the end of any
fiscal quarter or any other date of measurement, the Consolidated Tangible Net
Worth of the Borrower and its Subsidiaries shall not be less than the sum of
(i) $30,000,000 plus (ii) 75% of the aggregate proceeds received by the
Trust (net of fees and expenses customarily incurred in transactions of such
type) in connection with any offering of stock in the Trust, plus (iii)
75% of the aggregate value of operating units issued by the Borrower in
connection 

53

with asset or
stock acquisitions (valued at the time of issuance by reference to the terms of
the agreement pursuant to which such units are issued), provided that
issuances of operating units to the Trust in connection with additional capital
contributions made by the Trust in the Borrower shall be excluded from this
clause (iii) on or prior to the date such determination of Consolidated
Tangible Net Worth is made.

          §11.
Reserved.

          §12.
CONDITIONS TO THE TERM LOAN. The obligations of any Lender to make and
maintain the Term Loan shall be subject to the satisfaction of the following
conditions precedent on or prior to the Closing Date with, in each instance,
the Agent having approved in its sole discretion each matter submitted to it in
compliance with such conditions:

          §12.1.
Loan Documents.
Each of the Loan Documents shall have been duly executed and delivered by the
respective parties thereto and shall be in full force and effect.

          §12.2.
Certified Copies of Organization Documents. The Agent shall have received (i) from the Whitestone OP a copy,
certified as of a recent date by a duly authorized officer of the Trust, in its
capacity as general partner of the Borrower, to be true and complete, of the
Agreement of Limited Partnership of Whitestone OP and any other Organizational
Document or other agreement governing the rights of the partners or other
equity owners of Whitestone OP, (ii) from Pima Norte a copy, certified as of a
recent date by a duly authorized officer of Whitestone OP, in its capacity as
sole member of Pima Norte, to be true and complete, of the Agreement of Limited
Partnership of Pima Norte and any other Organizational Document or other
agreement governing the rights of the members or other equity owners of Pima
Norte, (iii) from Whitestone III a copy, certified as of a recent date by a duly
authorized officer of Whitestone OP, in its capacity as sole member of
Whitestone III GP LLC, general partner of Whitestone III, to be true and
complete, of the Agreement of Limited Partnership of Whitestone III and any
other Organizational Document or other agreement governing the rights of the
partners or other equity owners of Whitestone III, (iv) from Whitestone III GP
LLC, a copy, certified as of a recent date by a duly authorized officer of
Whitestone OP, in its capacity as sole member of Whitestone III GP LLC, to be
true and complete, of the Agreement of Limited Partnership of Whitestone III GP
LLC and any other Organizational Document or other agreement governing the
rights of the members of Whitestone III GP LLC, (v) from Whitestone III LP LTD a
copy, certified as of a recent date by a duly authorized officer of Whitestone
OP, in its capacity as general partner of Whitestone III GP LLC, sole general
partner of Whitestone III LP LTD, to be true and complete, of the Agreement of
Limited Partnership of Whitestone III LP LTD and any other Organizational
Document or other agreement governing the rights of the partners or other
equity owners of Whitestone III LP LTD, and (vi) from the Trust a copy,
certified as of a recent date by the appropriate officer of the State of
Maryland to be true and correct, of the trust agreement of the Trust, in each
case along with any other organization documents of the Borrower or the Trust 

54

and their
respective general partners, as the case may be, and each as in effect on the
date of such certification.

          §12.3.
Resolutions.
All action on the part of the Borrower and the Trust necessary for the valid
execution, delivery and performance by the Borrower and the Trust of this
Agreement and the other Loan Documents to which any of them is or is to become
a party shall have been duly and effectively taken, and evidence thereof
satisfactory to the Agent shall have been provided to the Agent. The Agent
shall have received from the Trust and the Borrower true copies of the
resolutions adopted by its board of directors or trustees authorizing the
transactions described herein and evidencing the due authorization, execution
and delivery of the Loan Documents to which the Trust and/or the Borrower is a
party, each certified by the secretary as of a recent date to be true and
complete.

          §12.4.
Incumbency Certificate: Authorized Signers. The Agent shall have
received from the Trust and the Borrower an incumbency certificate, dated as of
the Closing Date, signed by a duly authorized officer of the Trust and the
Borrower, as applicable, and giving the name of each individual who shall be
authorized: (a) to sign, in the name and on behalf of the Borrower and the
Trust, as the case may be, each of the Loan Documents to which the Borrower or
the Trust is or is to become a party; (b) to make Loan and Conversion Requests
on behalf of the Borrower and (c) to give notices and to take other action on
behalf of the Borrower or the Trust, as applicable, under the Loan Documents.

          §12.5.
Title Policy.
The Agent shall have received from the Borrower an ALTA Loan Title Insurance
Policy acceptable to Lender in its sole discretion, insuring the Loan, issued
by the Title Insurer, insuring the lien of the Deed of Trust as a valid first,
prior and paramount lien upon the Project and all appurtenant easements, and
subject to no exceptions other than the Permitted Exceptions (the “Title
Policy”). The Title Policy shall satisfy the requirements of Exhibit E-2,
including, without limitation, a zoning endorsement;

          §12.6.
Certificates of Insurance. The Agent shall have received (a)
certificates of insurance as to all of the insurance maintained by Borrower on
the Project (including flood insurance if necessary) from the insurer or an
independent insurance broker identifying insurers, types of insurance,
insurance limits, and policy terms in each case naming the Agent as loss payee,
additional insured and mortgagee and in form and substance satisfactory to the
Agent and the Lenders; and (b) such further information and certificates from
Borrower, its insurers and insurance brokers as the Agent may reasonably
request.

          §12.7.
Environmental Reports. The Agent shall have received satisfactory
Environmental Reports with respect to the Project, prepared at the Borrower’s
expense by environmental engineers acceptable to the Agent. Such Environmental
Reports shall be in form and substance satisfactory to the Agent and shall
indicate that the Project is free 

55

of all
Hazardous Substances. The Agent shall have the right to obtain third-party
review of the Environmental Reports at the Borrower’s expense.

          §12.8.
Opinion of Counsel Concerning Organization and Loan Documents. The Agent shall have
received favorable opinions addressed to the Lenders and the Agent in form and
substance reasonably satisfactory to the Agent from counsel to the Borrower and
the Trust and, if any, state specific local counsel who are reasonably
satisfactory to Agent, each as counsel to the Borrower, the Trust and their
respective Subsidiaries, with respect to applicable law.

          §12.9.
Structural Inspection Reports. At the
Agent’s request, the Borrower shall deliver to the Agent a structural
inspection report with respect to the Project prepared at the Borrower’s
expense by structural engineers acceptable to the Agent. Such report shall be
in form and substance satisfactory to the Agent. The Agent shall have the right
to obtain third-party review of such report at the Borrower’s expense.

          §12.10.
Inspection of the Project. The Agent
shall have completed to its satisfaction an inspection of the Project at the
Borrower’s expense.

          §12.11.
Certifications from Government Officials; UCC-11 Reports.

          The
Agent shall have received (i) long-form certifications from government
officials evidencing the legal existence, good standing and foreign
qualification of the Borrower and the Trust, along with a certified copy of the
certificate of limited partnership, formation or trust, as applicable, of the
Borrower, all as of the most recent practicable date; (ii) UCC-11 search
results from the appropriate jurisdictions for the Borrower and the Trust; and
(iii) full coverage title search results with respect to the Project.

          §12.13.
Proceedings and Documents; Adverse Changes. All proceedings in connection with the transactions contemplated
by this Agreement, the other Loan Documents and all other documents incident
thereto shall be satisfactory in form and substance to the Agent’s counsel, and
the Agent and such counsel shall have received all information and such
counterpart originals or certified or other copies of such documents as the Agent
may reasonably request. There shall have occurred no material adverse change in
government regulations or policies affecting the Borrower, the Agent or any
Lender. No disruption or material adverse change in the financial or capital
markets in general that could reasonably be expected to have a material adverse
effect on the market for loan syndications. 

          §12.14.
Fees. The Borrower shall have paid to the Agent, for the accounts of the
Lenders or for its own account, as applicable, all of the fees and expenses
that are due and payable as of the Closing Date in accordance with this
Agreement or any separate fee letter entered into by the Borrower and the Trust
and the Agent.

56

          §12.15.
Closing Certificate. The Borrower and the Trust shall have delivered a Closing
Certificate to the Agent, in form and substance satisfactory to the Agent.

          §12.16.
Patriot Act, Etc. The Borrower and the Trust shall have delivered to the Agent,
sufficiently in advance of the Closing Date, all documentation and other
information required by bank regulatory authorities under applicable “know your
customer” and anti-money laundering rules and regulations, including without
limitation, the Patriot Act.

          §12.17.
Governmental Regulation. Each Lender shall be satisfied that the making of the Term Loan is
in compliance with any applicable regulations of the Comptroller of the
Currency or the Board of Governors of the Federal Reserve System.

          §12.18.
Property Financial Analysis. Each Lender shall have received such financial information
regarding the Project as set forth in §8.4(d) and as further required by the
Lenders calculated on a pro forma basis and dated as of the
Closing Date.

          §12.19.
Appraisal. The Agent shall, at the Borrower’s expense, order, receive and
review an appraisal of the Project prepared by a member of the Appraisal
Institute. The appraisal and the determination of the Project’s value is subject
to the Agent’s appraisal department’s review, approval, and revision or
adjustment in the Agent’s discretion.

          §13.
CONDITIONS TO ALL BORROWINGS. The obligations of any
Lender to make its Term Loan on the Closing Date shall also be subject to the
satisfaction of the following conditions precedent:

          §13.1.
Representations True; No Event of Default; Compliance Certificate. Each of the
representations and warranties made by or on behalf of the Borrower, the Trust
or any of their respective Subsidiaries contained in this Agreement, the other
Loan Documents or in any document or instrument delivered pursuant to or in
connection with this Agreement shall be true and correct in all respects; and
no Default or Event of Default under this Agreement shall have occurred and be
continuing on such date. 

          §13.2.
No Legal Impediment.
No change shall have occurred any law or regulations thereunder or
interpretations thereof that in the reasonable opinion of the Agent or any
Lender would make it illegal for any Lender to make the Term Loan on the
Closing Date. No disruption or material adverse change in the financial or
capital markets in general that could reasonably be expected to have a material
adverse effect on the market for loan syndications.

          §13.3.
Governmental Regulation. Each
Lender shall be satisfied that the making of the Term Loan is in compliance
with any applicable regulations of the Comptroller of the Currency or the Board
of Governors of the Federal Reserve System. 

57

          §14.
EVENTS OF DEFAULT; ACCELERATION; ETC.

          §14.1.
Events of Default and Acceleration. If any of the following
events (“Events of Default”) shall occur:

                    (a)
the Borrower shall fail to pay any principal of any portion of the Term Loan
when the same shall become due and payable, whether at the stated date of
maturity or any accelerated date of maturity or at any other date fixed for
payment); 

                    (b)
the Borrower shall fail to pay any interest on any portion of the Term Loan or
any other sums due hereunder or under any of the other Loan Documents or any
fee letter (including, without limitation, amounts due under §8.16) when the
same shall become due and payable, and such failure continues for three (3)
days; 

                    (c)
the Borrower, the Trust or any of their respective Subsidiaries shall fail to
comply, or to cause the Trust to comply, as the case may be, with any of the
respective covenants contained in the following: §8.1 (except with respect to
principal, interest and other sums covered by clauses (a) or (b) above); §8.2;
§§8.4 through §8.10, inclusive; §8.12; §8.13; §8.19; §8.20; §9 and §11;

                    (d)
the Borrower, the Trust or any of their respective Subsidiaries shall fail to
perform any other term, covenant or agreement contained herein or in any of the
other Loan Documents (other than those specified elsewhere in this §14) and
such failure continues for thirty (30) days;

                    (e)
any representation or warranty made by or on behalf of the Borrower, the Trust
or any of their respective Subsidiaries in this Agreement or any of the other
Loan Documents shall prove to have been false in any material respect upon the
date when made or deemed to have been made or repeated;

                    (f)
the Borrower, the Trust or any of its Subsidiaries or, to the extent of
Recourse to the Borrower, the Trust or such Subsidiaries thereunder, any
Partially-Owned Entity or other of their respective Affiliates, shall fail to
pay when due, or within any applicable period of grace, any Consolidated Total
Indebtedness which is in excess of (i) $5,000,000, either individually or in the
aggregate, if such Indebtedness is without Recourse and (ii) $1,000,000, either
individually or in the aggregate, if such Indebtedness is Recourse, or fail to
observe or perform any material term, covenant, condition or agreement
contained in any agreement, document or instrument by which it is bound
evidencing, securing or otherwise relating to such Consolidated Total
Indebtedness for such period of time (after the giving of appropriate notice if
required) as would permit the holder or holders thereof or of any obligations
issued thereunder in excess of (i) $5,000,000, either individually or in the
aggregate, if such Indebtedness is without Recourse and (ii) $1,000,000, either
individually or in the aggregate, if such Indebtedness is Recourse, to accelerate
the maturity thereof;

58

                    (g)
any of the Borrower, the Trust or any of their respective Subsidiaries shall
make an assignment for the benefit of creditors, or admit in writing its
inability to pay or generally fail to pay its debts as they mature or become
due, or shall petition or apply for the appointment of a trustee or other
custodian, liquidator or receiver of any of the Borrower, the Trust or any of
their respective Subsidiaries or of any substantial part of the properties or assets
of any of such parties or shall commence any case or other proceeding relating
to any of the Borrower, the Trust or any of their respective Subsidiaries under
any bankruptcy, reorganization, arrangement, insolvency, readjustment of debt,
dissolution or liquidation or similar law of any jurisdiction, now or hereafter
in effect, or shall take any action to authorize or in furtherance of any of
the foregoing, or if any such petition or application shall be filed or any
such case or other proceeding shall be commenced against any of the Borrower,
the Trust or any of their respective Subsidiaries and (i) any of the Borrower,
the Trust or any of their respective Subsidiaries shall indicate its approval
thereof, consent thereto or acquiescence therein or (ii) any such petition,
application, case or other proceeding shall continue undismissed, or unstayed
and in effect, for a period of forty-five (45) days;

                    (h)
a decree or order is entered appointing any trustee, custodian, liquidator or
receiver or adjudicating any of the Borrower, the Trust or any of their
respective Subsidiaries bankrupt or insolvent, or approving a petition in any
such case or other proceeding, or a decree or order for relief is entered in
respect of any of the Borrower, the Trust or any of their respective
Subsidiaries in an involuntary case under federal bankruptcy laws as now or
hereafter constituted;

                    (i)
there shall remain in force, undischarged, unsatisfied and unstayed, for more
than thirty (30) days, whether or not consecutive, any final judgment that is
not fully insured against any of the Borrower, the Trust or any of their
respective Subsidiaries that, with other outstanding uninsured final judgments,
undischarged, unsatisfied and unstayed, against any of such parties exceeds in
the aggregate $1,000,000;

                    (j)
any of the Loan Documents or any provision of any Loan Document shall be
canceled, terminated, revoked or rescinded otherwise than in accordance with
the terms thereof (other than the Guaranty, which may not be terminated without
the prior consent of the Agent) or with the express prior written agreement,
consent or approval of the Agent, or any action at law, suit or in equity or
other legal proceeding to make unenforceable, cancel, revoke or rescind any of
the Loan Documents shall be commenced by or on behalf of the Borrower or any of
its Subsidiaries or the Trust or any of its Subsidiaries, or any court or any
other governmental or regulatory authority or agency of competent jurisdiction
shall make a determination that, or issue a judgment, order, decree or ruling
to the effect that, any one or more of the Loan Documents is illegal, invalid
or unenforceable as to any material terms thereof; the Guaranty shall be terminated,
revoked or rescinded; or the Agent shall at any time fail to have a perfected,
first-priority security interest in the Project;

59

                    (k)
any “Event of Default” or default (after notice and expiration of any period of
grace, to the extent provided), as defined or provided in any of the other Loan
Documents, shall occur and be continuing;

                    (l)
with respect to any Guaranteed Pension Plan, an ERISA Reportable Event shall
have occurred and the Agent shall have determined in their reasonable
discretion that such event reasonably could be expected to result in liability
of the Borrower or any of its Subsidiaries or the Trust or any of its
Subsidiaries to the PBGC or such Guaranteed Pension Plan in an aggregate amount
exceeding $1,000,000 and such event in the circumstances occurring reasonably
could constitute grounds for the termination of such Guaranteed Pension Plan by
the PBGC or for the appointment by the appropriate United States District Court
of a trustee to administer such Guaranteed Pension Plan; or a trustee shall
have been appointed by the United States District Court to administer such
Plan; or the PBGC shall have instituted proceedings to terminate such
Guaranteed Pension Plan;

                    (m)
Reserved;

                    (n) the
failure of James C. Mastandrea, for any
reason, to cease to retain the title of President of the Trust and to perform
the functions typically performed under such office and to be actively involved
in strategic planning and decision-making for the Trust, unless within six (6)
months after such failure, the board of directors or board of trustees has duly
elected or appointed a qualified substitute to replace such individual who is
acceptable to the Agent in its sole discretion (as notified to the Borrower by
the Agent in writing); or the occurrence of any transaction in which any
“person” or “group” (within the meaning of Section 13(d) and 14(d)(2) of the
Securities Exchange Act of 1934) becomes the “beneficial owner” (as defined in
Rule 13d-3 under the Securities Exchange Act of 1934), directly or indirectly,
of a sufficient number of voting rights applicable to the Trust ordinarily
entitled to vote in the election of directors or trustees, empowering such
“person” or “group” to elect a majority of the board of directors or board of
trustees of the Trust, who did not have such power before such transaction; or
during any twelve-month period on or after the Closing Date, individuals who at
the beginning of such period constituted the board of trustees of the Trust
(together with any new Trustees whose election by the board of trustees or
whose nomination for election by the shareholders of the Trust was approved by
a vote of at least a majority of the members of the board of trustees then in
office who either were members of the board of trustees at the beginning of
such period or whose election or nomination for election was previously so
approved) ceased for any reason to constitute a majority of the members of the
board of trustees of the Trust then in office;

                    (o)
without limitation of the other provisions of this §14.1, (i) the Trust shall
at any time fail to be the sole general partner of Whitestone OP or shall at
any time be in contravention of any of the requirements contained in the last
paragraph of §9.2, (ii) Whitestone OP shall fail at any time to be the sole
member of Pima Norte, or (iii) the Borrower or the Trust shall at any time fail
to be self-managed;

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                    (p)
any Event of Default under (and as defined in) the Revolving Credit Agreement;
or

                    (q)
any Disqualifying Environmental Event or Disqualifying Structural Event shall
have occurred;

                    then,
and in any such event, so long as the same may be continuing, the Agent may,
and upon the request of the Majority Lenders shall, declare all amounts owing
with respect to this Agreement, the Notes and the other Loan Documents to be,
and they shall thereupon forthwith become, immediately due and payable without
presentment, demand, protest or other notice of any kind, all of which are
hereby expressly waived by the Borrower, the Trust and each of their respective
Subsidiaries; provided that in the event of any Event of Default
specified in §14.1(g) or 14.1(h), all such amounts shall become immediately due
and payable automatically and without any requirement of notice from any of the
Lenders or the Agent or action by the Lenders or the Agent. Without limitation
of the foregoing, upon the occurrence of an Event of Default and/or the
acceleration of the Loans or other enforcement action under any Loan Document,
the Agent shall have the right to terminate the Management Agreement, effective
on the date of such termination (or such later date as the Agent may elect).

          §14.2.
Reserved.

          §14.3.
Remedies. In the event that one or
more Events of Default shall have occurred and be continuing, whether or not
the Lenders shall have accelerated the maturity of the Loans pursuant to §14.1,
the Majority Lenders may direct the Agent to proceed to protect and enforce the
rights and remedies of the Agent and the Lenders under this Agreement, the
Notes, any or all of the other Loan Documents or under applicable law by suit
in equity, action at law or other appropriate proceeding (including for the
specific performance of any covenant or agreement contained in this Agreement
or the other Loan Documents or any instrument pursuant to which the Obligations
are evidenced and, to the full extent permitted by applicable law, the
obtaining of the ex parte appointment of a receiver), and, if any amount
shall have become due, by declaration or otherwise, proceed to enforce the
payment thereof or any other legal or equitable right or remedy of the Agent
and the Lenders under the Loan Documents or applicable law. No remedy herein
conferred upon the Lenders or the Agent or the holder of any Note is intended
to be exclusive of any other remedy and each and every remedy shall be
cumulative and shall be in addition to every other remedy given hereunder or
under any of the other Loan Documents or now or hereafter existing at law or in
equity or by statute or any other provision of law.

          §15.
SECURITY INTEREST AND SET-OFF. 

          §15.1
Security Interest.
Borrower hereby grants to the Agent, on behalf of and for the benefit of the
Lenders, and to each Lender, a lien, security interest and right of

61

setoff as
security for all liabilities and obligations to the Lenders, whether now
existing or hereafter arising, upon and against all deposits, credits,
collateral and property, now or hereafter in the possession, custody,
safekeeping or control of the Agent or any Lender or any entity under the
control of KeyCorp. and its successors and assigns, or in transit to any of
them.

          §15.2
Set-Off and Debit.
(i) If any Event of Default or other event which would entitle the Agent to
accelerate the Loans occurs, or (ii) at any time, whether or not any Default or
Event of Default exists, in the event any attachment, trustee process,
garnishment, or other levy or lien is, or is sought to be, imposed on any
property of the Borrower; then, in any such event, any such deposits, balances
or other sums credited by or due from the Agent or any Lender, or from any such
affiliate of the Agent or any Lender, to the Borrower may to the fullest extent
not prohibited by applicable law at any time or from time to time, without
regard to the existence, sufficiency or adequacy of any other collateral, and
without notice or compliance with any other condition precedent now or hereafter
imposed by statute, rule of law or otherwise, all of which are hereby waived,
be set off, debited and appropriated, and applied by the Agent or any Lender,
as the case may be, against any or all of the Obligations irrespective of
whether demand shall have been made and although such Obligations may be
unmatured, in such manner as the Agent or the applicable Lender in its sole and
absolute discretion may determine. Within five (5) Business Days of making any
such set off, debit or appropriation and application, the Agent agrees to
endeavor to notify the Borrower thereof, provided that the failure to
give such notice shall not affect the validity of such set off, debit or
appropriation and application. ANY AND ALL RIGHTS TO REQUIRE THE AGENT OR ANY
LENDER TO EXERCISE ITS RIGHTS OR REMEDIES WITH RESPECT TO ANY OTHER COLLATERAL
WHICH SECURES THE LOANS, PRIOR TO EXERCISING ITS RIGHT OF SETOFF WITH RESPECT
TO SUCH DEPOSITS, CREDITS OR OTHER PROPERTY OF THE BORROWER, ARE HEREBY
KNOWINGLY, VOLUNTARILY AND IRREVOCABLY WAIVED. Each of the Lenders agrees with
each other Lender that (a) if an amount to be set off is to be applied to
indebtedness of the Borrower to such Lender, other than the obligations
evidenced by the Note held by such Lender, such amount shall be applied ratably
to such other indebtedness and to the obligations evidenced by the Note held by
such Lender, and (b) if such Lender shall receive from the Borrower, whether by
voluntary payment, exercise of the right of setoff, counterclaim, cross action,
enforcement of the claim evidenced by the Note held by such Lender by
proceedings against the Borrower at law or in equity or by proof thereof in
bankruptcy, reorganization liquidation, receivership or similar proceedings, or
otherwise, and shall retain and apply to the payment of the Note held by such
Lender any amount in excess of its ratable portion of the payments received by
all of the Lenders with respect to the Note held by all of the Lenders, such
Lender will make such disposition and arrangements with the other Lenders with
respect to such excess, either by way of distribution, pro tanto assignment of
claims, subrogation or otherwise as shall result in each Lender receiving in
respect of the Note held by it its proportionate payment as contemplated by this
Agreement; provided that if all or any part of such excess payment is
thereafter recovered

62

from such
Lender, such disposition and arrangements shall be rescinded and the amount
restored to the extent of such recovery, but without interest.

          §15.3
Right to Freeze.
The Agent and each of the Lenders shall also have the right, at its option,
upon the occurrence of any event which would entitle the Agent or any Lender to
set off or debit as set forth in §15.2, to freeze, block or segregate any such
deposits, balances and other sums so that the Borrower may not access, control
or draw upon the same.

          §15.4
Additional Rights.
The rights of the Agent, the Lenders and each affiliate of Administrative Agent
and each of the Lenders under this §15 are in addition to, and not in
limitation of, other rights and remedies, including other rights of set off,
which the Agent or any Lender may have.

          §16.
THE AGENT.

          §16.1.
Authorization.
(a) The Agent is authorized to take such action on behalf of each of the
Lenders and to exercise all such powers as are hereunder and under any of the
other Loan Documents and any related documents delegated to the Agent, together
with such powers as are reasonably incident thereto, provided that no
duties or responsibilities not expressly assumed herein or therein shall be
implied to have been assumed by the Agent. The relationship between the Agent
and the Lenders is and shall be that of agent and principal only, and nothing
contained in this Agreement or any of the other Loan Documents shall be
construed to constitute the Agent as a trustee or fiduciary for any Lender.

                    (b)
The Borrower, without further inquiry or investigation, shall, and is hereby
authorized by the Lenders to, assume that all actions taken by the Agent
hereunder and in connection with or under the Loan Documents are duly
authorized by the Lenders. The Lenders shall notify Borrower of any successor
to Agent by a writing signed by Majority Lenders, which successor shall be
reasonably acceptable to the Borrower so long as no Default or Event of Default
has occurred and is continuing. The Borrower acknowledges that any lender that
acquires KeyBank is acceptable as a successor to the Agent.

          §16.2.
Employees and Agents.
The Agent may exercise its powers and execute its duties by or through
employees or agents and shall be entitled to take, and to rely on, advice of
counsel concerning all matters pertaining to its rights and duties under this
Agreement and the other Loan Documents. The Agent may utilize the services of
such Persons as the Agent in its sole discretion may reasonably determine, and
all reasonable fees and expenses of any such Persons shall be paid by the
Borrower.

          §16.3.
No Liability.
Neither the Agent, nor any of its shareholders, directors, officers or
employees nor any other Person assisting them in their duties nor any agent or
employee thereof, shall be liable for any waiver, consent or approval given or
any action

63

taken, or
omitted to be taken, in good faith by it or them hereunder or under any of the
other Loan Documents, or in connection herewith or therewith, or be responsible
for the consequences of any oversight or error of judgment whatsoever, except
that the Agent may be liable for losses due to its willful misconduct or gross
negligence, as finally determined by a court of competent jurisdiction.

          §16.4.
No Representations.
The Agent shall not be responsible for the execution or validity or
enforceability of this Agreement, the Notes or any of the other Loan Documents
or for the validity, enforceability or collectibility of any such amounts owing
with respect to the Notes, or for any recitals or statements, warranties or
representations made herein or in any of the other Loan Documents or in any
certificate or instrument hereafter furnished to it by or on behalf of the
Trust or the Borrower or any of their respective Subsidiaries, or be bound to
ascertain or inquire as to the performance or observance of any of the terms,
conditions, covenants or agreements in this Agreement or the other Loan
Documents. The Agent shall not be bound to ascertain whether any notice,
consent, waiver or request delivered to it by the Borrower or the Trust or any
holder of any of the Notes shall have been duly authorized or is true, accurate
and complete. The Agent has not made nor does it now make any representations
or warranties, express or implied, nor does it assume any liability to the
Lenders, with respect to the credit worthiness or financial condition of the
Borrower or any of its Subsidiaries or the Trust or any of the Subsidiaries or
any tenant under a Lease or any other entity. Each Lender acknowledges that it
has, independently and without reliance upon the Agent or any other Lender, and
based upon such information and documents as it has deemed appropriate, made
its own credit analysis and decision to enter into this Agreement.

          §16.5.
Payments.

                    (a)
A payment by the Borrower to the Agent hereunder or any of the other Loan
Documents for the account of any Lender shall constitute a payment to such
Lender. The Agent agrees to distribute to each Lender such Lender’s pro rata
share of payments received by the Agent for the accounts of all the Lenders, as
provided herein or in any of the other Loan Documents. All such payments shall
be made on the date received, if before 1:00 p.m., and if after 1:00 p.m., on
the next Business Day. If payment is not made on the day received, the funds
shall be invested by the Agent in overnight obligations, and interest thereon
paid pro rata to the Lenders.

                    (b)
If in the reasonable opinion of the Agent the distribution of any amount
received by it in such capacity hereunder, under the Notes or under any of the
other Loan Documents might involve it in material liability, it may refrain
from making distribution until its right to make distribution shall have been
adjudicated by a court of competent jurisdiction, provided that the
Agent shall invest any such undistributed amounts in overnight obligations on
behalf of the Lenders and interest thereon shall be paid pro rata to the
Lenders. If a court of competent jurisdiction shall adjudge that any amount
received and distributed by the Agent is to be repaid, each Person to whom any

64

such distribution shall have
been made shall either repay to the Agent its proportionate share of the amount
so adjudged to be repaid or shall pay over the same in such manner and to such
Persons as shall be determined by such court.

                    (c)
Notwithstanding anything to the contrary contained in this Agreement or any of
the other Loan Documents, any Lender that fails to adjust promptly such
Lender’s outstanding principal and its pro rata Commitment Percentage as
provided in §2.1, shall be deemed delinquent (a “Delinquent Lender”) and shall
be deemed a Delinquent Lender until such time as such delinquency is satisfied.
A Delinquent Lender shall be deemed to have assigned any and all payments due
to it from the Borrower, whether on account of outstanding Loans, interest,
fees or otherwise, to the remaining nondelinquent Lenders for application to,
and reduction of, their respective pro rata shares of all outstanding
Loans. The Delinquent Lender hereby authorizes the Agent to distribute such
payments to the nondelinquent Lenders in proportion to their respective pro
rata shares of all outstanding Loans. If not previously satisfied
directly by the Delinquent Lender, a Delinquent Lender shall be deemed to have
satisfied in full a delinquency when and if, as a result of application of the
assigned payments to all outstanding Loans of the nondelinquent Lenders, the
Lenders’ respective pro rata shares of all outstanding Loans have
returned to those in effect immediately prior to such delinquency and without
giving effect to the nonpayment causing such delinquency.

          §16.6.
Holders of Notes.
The Agent may deem and treat the payee of any Notes as the absolute owner
thereof for all purposes hereof until it shall have been furnished in writing
with a different name by such payee or by a subsequent holder, assignee or
transferee.

          §16.7.
Indemnity. The Lenders ratably and
severally agree hereby to indemnify and hold harmless the Agent and its
Affiliates from and against any and all claims, actions and suits (whether
groundless or otherwise), losses, damages, costs, expenses (including any
expenses for which the Agent has not been reimbursed by the Borrower as
required by §17), and liabilities of every nature and character arising out of
or related to this Agreement, the Notes, or any of the other Loan Documents or
the transactions contemplated or evidenced hereby or thereby, or the Agent’s
actions taken hereunder or thereunder, except to the extent that any of the
same shall be directly caused by the Agent’s willful misconduct or gross
negligence, as finally determined by a court of competent jurisdiction.

          §16.8.
Agent as Lender.
In its individual capacity as a Lender, KeyBank shall have the same obligations
and the same rights, powers and privileges in respect to its Commitment and the
Term Loan made by it, and as the holder of any of the Notes, as it would have
were it not also the Agent. 

          §16.9.
Notification of Defaults and Events of Default. Each Lender hereby agrees
that, upon learning of the existence of a Default or an Event of Default, it
shall (to the extent notice has not previously been provided) promptly notify
the Agent thereof. 

65

The Agent hereby agrees that
upon receipt of any notice under this §16.9 it shall promptly notify the other
Lenders of the existence of such Default or Event of Default.

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

          §16.11.
Successor Agent. KeyBank, or any
successor Agent, may resign as Agent at any time by giving at least thirty (30)
days prior written notice thereof to the Lenders and to the Borrower. Any such
resignation shall be effective upon appointment and acceptance of a successor
Agent, as hereinafter provided. Upon any such resignation, the Majority Lenders
shall have the right to appoint a successor Agent, which is a Lender under this
Agreement, provided that so long as no Default or Event of Default has
occurred and is continuing the Borrower shall have the right to approve any
successor Agent, which approval shall not be unreasonably withheld. If, in the
case of a resignation by the Agent, no successor Agent shall have been so
appointed by the Majority Lenders and approved by the Borrower, and shall have
accepted such appointment, within thirty (30) days after the retiring Agent’s
giving of notice of resignation, then the retiring Agent may, on behalf of the
Lenders, appoint any one of the other Lenders as a successor Agent. The
Borrower acknowledges that any lender that acquires KeyBank is acceptable as a
successor Agent. Upon the acceptance of any appointment as Agent hereunder by a
successor Agent, such successor Agent shall thereupon succeed to and become
vested

66

with all the
rights, powers, privileges and duties of the retiring Agent, and the retiring
Agent shall be discharged from all further duties and obligations as Agent
under this Agreement. After any Agent’s resignation hereunder as Agent, the
provisions of this §16 shall inure to its benefit as to any actions taken or
omitted to be taken by it while it was Agent under this Agreement. The Agent
may be removed at the direction of the Majority Lenders in the event of a final
judicial determination (in which the Agent had an opportunity to be heard) by a
court of competent jurisdiction that the Agent had acted in a grossly negligent
manner or in willful misconduct.

          §16.12.
Notices. Any notices or other information required hereunder to be
provided to the Agent (with copies to the Agent for each Lender) shall be
forwarded by the Agent to each of the Lenders promptly.

          §16.13.
Reserved.

          §17.
EXPENSES. The Borrower agrees to pay (a) the reasonable costs of
producing and reproducing this Agreement, the other Loan Documents and the
other agreements and instruments mentioned herein, (b) the reasonable fees,
expenses and disbursements of the Agent’s outside counsel or any local counsel
to the Agent incurred in connection with the preparation, administration or
interpretation of the Loan Documents and other instruments mentioned herein,
each closing hereunder, and amendments, modifications, approvals, consents or
waivers hereto or hereunder, (c) the fees, expenses and disbursements of the
Agent incurred by the Agent in connection with the preparation, administration
or interpretation of the Loan Documents and other instruments mentioned herein,
including, without limitation, the costs incurred by the Agent in connection
with its inspection of the Project, and, without double-counting amounts under
clause (b) above, the fees and disbursements of the Agent’s counsel in
preparing the documentation, (d) all, if any, title insurance premiums,
appraisal fees, engineer’s, inspector’s and surveyor’s fees, (e) the fees,
costs, expenses and disbursements of the Agent and its Affiliates incurred in
connection with the syndication and/or participations of the Loans (whether
occurring before or after the closing hereunder), including, without
limitation, reasonable legal fees, travel costs, costs of preparing syndication
materials and photocopying costs, (f) all reasonable expenses (including
reasonable attorneys’ fees and costs, which attorneys may be employees of any
Lender or the Agent, and the fees and costs of engineers, appraisers,
surveyors, investment bankers, or other experts retained by any Lender or the
Agent in connection with any such enforcement proceedings) incurred by any
Lender or the Agent in connection with (i) the enforcement of or preservation
of rights under any of the Loan Documents against the Borrower or any of its
Subsidiaries or the Trust or the administration thereof after the occurrence
and during the continuance of a Default or Event of Default (including, without
limitation, expenses incurred in any restructuring and/or “workout” of the
Loans), and (ii) any litigation, proceeding or dispute whether arising
hereunder or otherwise, in any way related to any Lender’s or the Agent’s
relationship with the Borrower or any of its Subsidiaries or the Trust, (g) all
reasonable fees, expenses and disbursements of the Agent incurred in connection
with UCC searches and filings, UCC terminations or mortgage discharges, and the
like, and (h) all costs 

67

incurred by
the Agent in the future in connection with its inspection of the Project. The
covenants of this §17 shall survive the repayment of the amounts owing under
the Notes and this Agreement and the termination of this Agreement and the
obligations of the Lenders hereunder.

          §18.
INDEMNIFICATION. The Borrower agrees to indemnify and hold harmless the
Agent and each of the Lenders and the shareholders, directors, agents,
officers, subsidiaries and affiliates of the Agent and each of the Lenders from
and against any and all claims, actions and suits, whether groundless or
otherwise, and from and against any and all liabilities, losses (including
amounts, if any, owing to any Lender pursuant to §§4.4, 4.5, 4.6 and 4.8),
settlement payments, obligations, damages and expenses of every nature and
character in connection therewith, arising out of this Agreement or any of the
other Loan Documents or the transactions contemplated hereby or thereby or
which otherwise arise in connection with the financing, including, without
limitation, (a) any actual or proposed use by the Borrower or any of its
Subsidiaries of the proceeds of any of the Loans, (b) the Borrower or any of
its Subsidiaries entering into or performing this Agreement or any of the other
Loan Documents, or (c) pursuant to §8.16, in each case including, without
limitation, the reasonable fees and disbursements of counsel and allocated
costs of internal counsel incurred in connection with any such investigation,
litigation or other proceeding, provided, however, that the
Borrower shall not be obligated under this §18 to indemnify any Person for
liabilities arising from such Person’s own gross negligence or willful
misconduct, as finally determined by a court of competent jurisdiction. In
litigation, or the preparation therefor, the Borrower shall be entitled to
select counsel reasonably acceptable to the Majority Lenders, and the Agent (as
approved by the Majority Lenders) shall be entitled to select their own
supervisory counsel, and, in addition to the foregoing indemnity, the Borrower
agrees to pay promptly the reasonable fees and expenses of each such counsel.
If and to the extent that the obligations of the Borrower under this §18 are
unenforceable for any reason, the Borrower hereby agrees to make the maximum
contribution to the payment in satisfaction of such obligations which is
permissible under applicable law. The provisions of this §18 shall survive the
repayment of the amounts owing under the Notes and this Agreement and the
termination of this Agreement and the obligations of the Lenders hereunder and
shall continue in full force and effect as long as the possibility of any such
claim, action, cause of action or suit exists.

          §19.
SURVIVAL OF COVENANTS, ETC. All covenants, agreements, representations
and warranties made herein, in the Notes, in any of the other Loan Documents or
in any documents or other papers delivered by or on behalf of the Borrower or
any of its Subsidiaries or the Trust pursuant hereto shall be deemed to have
been relied upon by the Lenders and the Agent, notwithstanding any
investigation heretofore or hereafter made by any of them, and shall survive
the making by the Lenders of any of the Loans, as herein contemplated, and
shall continue in full force and effect so long as any amount due under this Agreement
or the Notes or any of the other Loan Documents remains outstanding. The
indemnification obligations of the Borrower provided herein and in the other
Loan Documents shall survive the full repayment of amounts due and the 

68

termination of
the obligations of the Lenders hereunder and thereunder to the extent provided
herein and therein. All statements contained in any certificate or other paper
delivered to any Lender or the Agent at any time by or on behalf of the
Borrower or any of its Subsidiaries or the Trust pursuant hereto or in
connection with the transactions contemplated hereby shall constitute
representations and warranties by the Borrower or such Subsidiary or the Trust
hereunder.

          §20.
ASSIGNMENT; PARTICIPATIONS; ETC.

          §20.1.
Conditions to Assignment by Lenders. Except as provided herein, each
Lender may assign to one or more Eligible Assignees (or to any other financial
institution approved by the Agent) all or a portion (in a minimum amount of
$1,000,000) of its interests, rights and obligations under this Agreement
(including all or a portion of its Commitment Percentage and Commitment and the
same portion of the Loans at the time owing to it, the Notes held by it); provided
that (a) the Agent and, other than during an Event of Default, the Borrower
each shall have the right to approve any Eligible Assignee (or such other
financial institution), which approval, in the case of an Eligible Assignee,
shall not be unreasonably withheld or delayed, (b) subject to the provisions of
§2.7, each Lender shall have at all times an amount of its Commitment of not
less than $1,000,000 unless otherwise consented to by the Agent and (c) the
parties to such assignment shall execute and deliver to the Agent, for
recording in the Register (as hereinafter defined), an assignment and
assumption, substantially in the form of Exhibit D hereto (an
“Assignment and Assumption”), together with any Notes subject to such
assignment. Upon such execution, delivery, acceptance and recording, from and
after the effective date specified in each Assignment and Assumption, which
effective date shall be at least two (2) Business Days after the execution
thereof unless otherwise agreed or accepted by the Agent (provided that
any assignee has assumed the obligation to fund any outstanding Libor Rate
Loans), (i) the assignee thereunder shall be a party hereto and, to the extent
provided in such Assignment and Assumption, have the rights and obligations of
a Lender hereunder and thereunder, and (ii) the assigning Lender shall, to the
extent provided in such assignment and upon payment to the Agent of the
registration fee referred to in §20.3, be released from its obligations under
this Agreement. Any such Assignment and Assumption shall run to the benefit of
the Borrower and a copy of any such Assignment and Assumption shall be
delivered by the Assignor to the Borrower. 

          Notwithstanding
the provisions of subclause (a) of the preceding paragraph, any Lender may,
without the consent of the Borrower, make an assignment otherwise permitted
hereunder to (x) another Lender, and (y) an Affiliate of such Lender, provided
that such Affiliate is an Eligible Assignee (unless otherwise approved by the
Agent). 

          §20.2.
Certain Representations and Warranties; Limitations; Covenants. By
executing and delivering an Assignment and Assumption, the parties to the
assignment thereunder confirm to and agree with each other and the other
parties hereto as follows: (a) other than the representation and warranty that
it is the legal and beneficial owner of the interest being assigned thereby
free and clear of any adverse claim, the assigning

69

Lender makes
no representation or warranty and assumes no responsibility with respect to any
statements, warranties or representations made in or in connection with this
Agreement or the execution, legality, validity, enforceability, genuineness,
sufficiency or value of this Agreement, the other Loan Documents or any other
instrument or document furnished pursuant hereto; (b) the assigning Lender
makes no representation or warranty and assumes no responsibility with respect
to the financial condition of the Borrower and its Subsidiaries or the Trust or
any other Person primarily or secondarily liable in respect of any of the
Obligations, or the performance or observance by the Borrower and its
Subsidiaries or the Trust or any other Person primarily or secondarily liable
in respect of any of the Obligations of any of their obligations under this
Agreement or any of the other Loan Documents or any other instrument or
document furnished pursuant hereto or thereto; (c) such assignee confirms that
it has received a copy of this Agreement, together with copies of the most
recent financial statements referred to in §7.4 and §8.4 and such other
documents and information as it has deemed appropriate to make its own credit
analysis and decision to enter into such Assignment and Assumption; (d) such
assignee will, independently and without reliance upon the assigning Lender,
the Agent or any other Lender and based on such documents and information as it
shall deem appropriate at the time, continue to make its own credit decisions
in taking or not taking action under this Agreement; (e) such assignee
represents and warrants that it is an Eligible Assignee (unless otherwise
approved by the Agent); (f) such assignee appoints and authorizes the Agent to
take such action as agent on its behalf and to exercise such powers under this
Agreement and the other Loan Documents as are delegated to the Agent by the
terms hereof or thereof, together with such powers as are reasonably incidental
thereto; (g) such assignee agrees that it will perform in accordance with their
terms all of the obligations that by the terms of this Agreement are required
to be performed by it as a Lender; and (h) such assignee represents and
warrants that it is legally authorized to enter into such Assignment and
Assumption.

          §20.3.
Register. The Agent shall maintain a copy of each Assignment and
Assumption delivered to it and a register or similar list (the “Register”) for
the recordation of the names and addresses of the Lenders and the Commitment
Percentages of, and principal amount of the Loans owing to, the Lenders from
time to time. The entries in the Register shall be conclusive, in the absence
of manifest error, and the Borrower, the Agent and the Lenders may treat each
Person whose name is recorded in the Register as a Lender hereunder for all
purposes of this Agreement. The Register shall be available for inspection by
the Borrower and the Lenders at any reasonable time and from time to time upon
reasonable prior notice. Upon each such recordation, the assigning Lender
agrees to pay to the Agent a registration fee in the sum of $3,500 and all
legal fees and expenses incurred by the Agent in connection with such
assignment.

          §20.4.
New Notes. Upon its receipt of an Assignment and Assumption executed by
the parties to such assignment, together with each Note subject to such
assignment, the Agent shall (a) record the information contained therein in the
Register, and (b) give prompt notice thereof to the Borrower and the Lenders
(other than the assigning Lender). Unless done simultaneously with the
Assignment and Assumption, within three (3)

70

Business Days
after receipt of such notice, the Borrower, at its own expense, shall execute
and deliver to the Agent, in exchange for each surrendered Note, a new Note to
the order of such Eligible Assignee in an amount equal to the amount assumed by
such Eligible Assignee pursuant to such Assignment and Assumption and, if the
assigning Lender has retained some portion of its obligations hereunder, a new
Note and other Note, if applicable, to the order of the assigning Lender in an
amount equal to the amount retained by it hereunder. Such new Notes shall
provide that they are replacements for the surrendered Notes, shall be in an
aggregate principal amount equal to the aggregate principal amount of the
surrendered Notes, shall be dated the effective date of such Assignment and
Assumption and shall otherwise be in substantially the form of the assigned
Notes. The surrendered Notes shall be canceled and returned to the Borrower.

          §20.5.
Participations. Each Lender may sell participations to one or more
lending institutions or other entities in all or a portion of such Lender’s
rights and obligations under this Agreement and the other Loan Documents; provided
that (a) each such participation shall be in an amount of not less than
$1,000,000, (b) any such sale or participation shall not affect the rights and
duties of the selling Lender hereunder to the Borrower and the Agent and the
Lender shall continue to exercise all approvals, disapprovals and other
functions of a Lender, (c) the only rights granted to the participant pursuant
to such participation arrangements with respect to waivers, amendments or
modifications of, or approvals under, the Loan Documents shall be the rights to
approve waivers, amendments or modifications that would reduce the principal of
or the interest rate on any Loans, extend the term or increase the amount of
the Commitment of such Lender as it relates to such participant, reduce the
amount of any fees to which such participant is entitled or extend any
regularly scheduled payment date for principal or interest, and (d) no
participant shall have the right to grant further participations or assign its
rights, obligations or interests under such participation to other Persons
without the prior written consent of the Agent, which consent shall not be
unreasonably withheld.

          §20.6.
Pledge by Lender. Notwithstanding any other provision of this Agreement,
any Lender at no cost to the Borrower may at any time pledge all or any portion
of its interest and rights under this Agreement (including all or any portion
of its Notes) to any of the twelve Federal Reserve Banks organized under §4 of
the Federal Reserve Act, 12 U.S.C. §341. No such pledge or the enforcement
thereof shall release the pledgor Lender from its obligations hereunder or
under any of the other Loan Documents.

          §20.7.
No Assignment by Borrower. The Borrower shall not assign or transfer any
of its rights or obligations under any of the Loan Documents without prior
Unanimous Lender Approval.

          §20.8.
Disclosure. The Borrower agrees that, in addition to disclosures made in
accordance with standard banking practices, any Lender may disclose information
obtained by such Lender pursuant to this Agreement to assignees or participants
and potential assignees or participants hereunder. 

71

           §20.9.
Syndication. The Borrower acknowledges that the Agent intends, and shall
have the right, by itself or through its Affiliates, to syndicate or enter into
co-lending arrangements with respect to the Term Loan and the Total Commitment.
The Agent, in cooperation with the Borrower, will manage all aspects of the
syndication, including the selection of co-lenders, the determination of when
the Agent will approach potential co-lenders and the final allocations among
co-lenders. Each of the Borrower and the Trust agrees to assist the Agent
actively in achieving a timely syndication that is reasonably satisfactory to
the Agent, such assistance to include, among other things, (a) direct contact
during the syndication between the Borrower’s and the Trust’s senior officers,
representatives and advisors, on the one hand, and prospective co-lenders, on
the other hand at such times and places as the Agent may reasonably request,
(b) providing to the Agent all financial and other information with respect to
the Borrower and the Trust and the transactions contemplated hereby that the
Agent may reasonably request, including but not limited to financial
projections relating to the foregoing, and (c) assistance in the preparation of
a confidential information memorandum and other marketing materials to be used
in connection with the syndication, and the Borrower and the Trust agree to
cooperate with the Agent’s and its Affiliate’s syndication and/or co-lending
efforts, such cooperation to include, without limitation, the provision of
information reasonably requested by potential syndicate members. The Agent
shall be entitled with the consent of the Borrower (which shall not be
unreasonably withheld or delayed), to change the structure or terms of the Term
Loan if the Agent determines that such changes are advisable in order to ensure
a successful syndication or an optimal credit structure for the Term Loan,
provided the Total Commitment will not be reduced. In addition, the Borrower
and the Trust agree that, prior to and during the syndication of the Total
Commitment (which for purposes hereof shall be deemed to be completed ninety
(90) days after the Closing Date), the Borrower nor the Trust will permit any
offering, placement or arrangement of any competing issues of debt securities
or commercial bank facilities of the Borrower, the Trust and any of their
Subsidiaries, unless approved by the Agent.  

           §21. NOTICES,
ETC. Except as otherwise expressly provided in this Agreement, all notices
and other communications made or required to be given pursuant to this
Agreement or the Notes shall be in writing and shall be delivered in hand,
mailed by United States registered or certified first class mail, postage
prepaid, sent by overnight courier, or sent by facsimile and confirmed by
delivery via courier or postal service, addressed as follows: 

                  (a)  if to
the Borrower or the Trust, at 2600
South Gessner, Suite 500, Houston TX 77063, attention James C. Mastandrea
(facsimile: (713) 465-8847), with a copy to General Counsel, or to such other
address for notice as the Borrower or the Trust shall have last furnished in
writing to the Agent; 

                  (b)  if to
the Agent, to KeyBank National
Association, 1200 Abernathy Road NE, Suite 1550, Atlanta, Georgia 30328,
attention Meredith Hall, Vice President 

72

(facsimile:
(770) 510-2195), with a copy to Douglas Novitch, KeyBank National Association,
127 Public Square, Cleveland, OH 44114, or such other address for notice as the
Agent shall have last furnished in writing to the Borrower, with a copy to
Pamela M. MacKenzie, Esq., Goulston & Storrs, 400 Atlantic Avenue, Boston,
Massachusetts 02110-3333 (facsimile: (617) 574-7615), or at such other address
for notice as the Agent shall last have furnished in writing to the Person
giving the notice; and 

                  (c) if to
any Lender, at such Lender’s address
set forth on Schedule 2 hereto, or such other address for notice as such Lender
shall have last furnished in writing to the Person giving the notice.  

Any such
notice or demand shall be deemed to have been duly given or made and to have
become effective (i) if delivered by hand, overnight courier, or facsimile to
the party to which it is directed, at the time of the receipt thereof by such
party or the sending of such facsimile and (ii) if sent by registered or
certified first-class mail, postage prepaid, on the third Business Day
following the mailing thereof. 

           §22. WHITESTONE
OP AS AGENT FOR THE BORROWER. The Borrower (other than Whitestone OP)
hereby appoints Whitestone OP as its agent with respect to the receiving and
giving of any notices, requests, instructions, reports, certificates
(including, without limitation, compliance certificates), schedules, revisions,
financial statements or any other written or oral communications hereunder. The
Agent and each Lender is hereby entitled to rely on any communications given or
transmitted by Whitestone OP as if such communication were given or transmitted
by each and every Borrower; provided however, that any
communication given or transmitted by any Borrower other than Whitestone OP
shall be binding with respect to such Borrower. Any communication given or
transmitted by the Agent or any Lender to Whitestone OP shall be deemed given
and transmitted to each and every Borrower. 

           §23. GOVERNING
LAW; CONSENT TO JURISDICTION AND SERVICE. THIS AGREEMENT AND EACH OF THE
OTHER LOAN DOCUMENTS, EXCEPT AS OTHERWISE SPECIFICALLY PROVIDED THEREIN, ARE
CONTRACTS UNDER THE LAWS OF THE STATE OF NEW YORK AND SHALL FOR ALL PURPOSES BE
CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAWS OF SUCH STATE (EXCLUDING
THE LAWS APPLICABLE TO CONFLICTS OR CHOICE OF LAW). EACH OF THE BORROWER AND
ITS SUBSIDIARIES AGREES THAT ANY SUIT FOR THE ENFORCEMENT OF THIS AGREEMENT OR
ANY OF THE OTHER LOAN DOCUMENTS MAY BE BROUGHT IN THE COURTS OF THE STATE OF
NEW YORK, THE STATE OF OHIO, THE STATE OF GEORGIA OR ANY OTHER COURT HAVING
JURISDICTION OVER THE BORROWER AND CONSENTS TO THE NON-EXCLUSIVE JURISDICTION
OF SUCH COURTS AND THE SERVICE OF PROCESS IN ANY SUCH SUIT BEING MADE UPON THE
BORROWER OR ITS SUBSIDIARIES BY MAIL AT THE ADDRESS SPECIFIED IN §21. THE
BORROWER AND ITS SUBSIDIARIES HEREBY WAIVE ANY OBJECTION THAT ANY OF THEM MAY
NOW OR 

73

HEREAFTER HAVE
TO THE VENUE OF ANY SUCH SUIT OR ANY SUCH COURT OR THAT SUCH SUIT IS BROUGHT IN
AN INCONVENIENT COURT. 

           §24. HEADINGS.
The captions in this Agreement are for convenience of reference only and shall
not define or limit the provisions hereof. 

           §25. COUNTERPARTS.
This Agreement and any amendment hereof may be executed in several counterparts
and by each party on a separate counterpart, each of which when so executed and
delivered shall be an original, and all of which together shall constitute one
instrument. In proving this Agreement it shall not be necessary to produce or
account for more than one such counterpart signed by the party against whom
enforcement is sought. 

           §26. ENTIRE
AGREEMENT, ETC. The Loan Documents and any other documents executed in
connection herewith or therewith express the entire understanding of the
parties with respect to the transactions contemplated hereby. Neither this
Agreement nor any term hereof may be changed, waived, discharged or terminated,
except as provided in §28. 

           §27. WAIVER
OF JURY TRIAL AND CERTAIN DAMAGE CLAIMS. EXCEPT TO THE EXTENT EXPRESSLY
PROHIBITED BY LAW, THE BORROWER AND ITS SUBSIDIARIES HEREBY WAIVE THEIR
RESPECTIVE RIGHTS TO A JURY TRIAL WITH RESPECT TO ANY ACTION OR CLAIM ARISING
OUT OF ANY DISPUTE IN CONNECTION WITH THIS AGREEMENT, THE NOTES OR ANY OF THE
OTHER LOAN DOCUMENTS, ANY RIGHTS OR OBLIGATIONS HEREUNDER OR THEREUNDER OR THE
PERFORMANCE OF SUCH RIGHTS AND OBLIGATIONS. EXCEPT TO THE EXTENT EXPRESSLY
PROHIBITED BY LAW, THE BORROWER AND ITS SUBSIDIARIES HEREBY WAIVE ANY RIGHT ANY
OF THEM MAY HAVE TO CLAIM OR RECOVER IN ANY LITIGATION REFERRED TO IN THE
PRECEDING SENTENCE ANY SPECIAL, EXEMPLARY, PUNITIVE OR CONSEQUENTIAL DAMAGES OR
ANY DAMAGES OTHER THAN, OR IN ADDITION TO, ACTUAL DAMAGES. EACH OF THE BORROWER
AND ITS SUBSIDIARIES (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF
ANY LENDER OR THE AGENT HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH
LENDER OR THE AGENT WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE
FOREGOING WAIVERS AND (B) ACKNOWLEDGES THAT THE AGENT AND THE LENDERS HAVE BEEN
INDUCED TO ENTER INTO THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS TO WHICH THEY
ARE PARTIES BY, AMONG OTHER THINGS, THE WAIVERS AND CERTIFICATIONS CONTAINED
HEREIN. 

           §28. CONSENTS,
AMENDMENTS, WAIVERS, ETC. Except as otherwise expressly provided in this
Agreement, any consent or approval required or permitted by this Agreement may
be given, and any term of this Agreement or of any of the other Loan

74

 Documents may be amended, and the performance
or observance by the Borrower or the Trust or any of their respective
Subsidiaries of any terms of this Agreement or the other Loan Documents or the
continuance of any Default or Event of Default may be waived (either generally
or in a particular instance and either retroactively or prospectively) with,
but only with, the written consent of the Majority Lenders. 

           Notwithstanding
the foregoing, Unanimous Lender Approval shall be required for any amendment,
modification or waiver of this Agreement that: 

                    (a)
reduces or forgives any principal of the
Term Loan or any interest thereon (including any general waiver of interest
“breakage” costs) or any fees due any Lender hereunder, or permits any
prepayment not otherwise permitted hereunder; or 

                    (b)
changes the unpaid principal amount of the
Term Loan, reduces the rate of interest applicable to the Term Loan, or reduces
any fee payable to the Lenders hereunder; or 

                    (c)
changes the date fixed for any payment of
principal of or interest on the Term Loan (including, without limitation, any
extension of the Maturity Date) or any fees payable hereunder (including,
without limitation, the waiver of any monetary Event of Default); or 

                    (d)
changes the amount of any Lender’s
Commitment (other than pursuant to an assignment permitted under §20.1) or
increases the amount of the Total Commitment except as permitted hereunder; or 

                    (e)
modifies any provision herein or in any
other Loan Document which by the terms thereof expressly requires Unanimous
Lender Approval; or 

                    (f)
changes the definitions of Majority Lenders
or Unanimous Lender Approval; or 

                    (g)
releases the Guaranty. 

          No
waiver shall extend to or affect any obligation not expressly waived or impair
any right consequent thereon. No course of dealing or delay or omission on the
part of the Agent or the Lenders or any Lender in exercising any right shall
operate as a waiver thereof or otherwise be prejudicial to such right or any
other rights of the Agent or the Lenders. No notice to or demand upon the
Borrower shall entitle the Borrower to other or further notice or demand in
similar or other circumstances. 

          Notwithstanding
the foregoing, in the event that the Borrower requests any consent, waiver or
approval under this Agreement or any other Loan Document, or an amendment or
modification hereof or thereof, and one or more Lenders determine not to
consent or agree to such consent, waiver, approval, amendment or modification,
then the 

75

Lender then acting as Agent hereunder shall have the right to purchase the Commitment of such non-consenting Lender(s) at a
purchase price equal to the then outstanding amount of principal, interest and
fees then owing to such Lender(s) by the Borrower hereunder, and such
non-consenting Lender(s) shall immediately upon request, sell and assign its
Commitment and all of its other right, title and interest in the Loans and
other Obligations to the Lender then acting as Agent pursuant to an Assignment
and Assumption (provided that the selling Lender(s) shall not be responsible to
pay any assignment fee in connection therewith). 

          
§29. SEVERABILITY. The provisions of this Agreement are severable, and
if any one clause or provision hereof shall be held invalid or unenforceable in
whole or in part in any jurisdiction, then such invalidity or unenforceability
shall affect only such clause or provision, or part thereof, in such
jurisdiction, and shall not in any manner affect such clause or provision in
any other jurisdiction, or any other clause or provision of this Agreement in
any jurisdiction. 

          
§30. INTEREST RATE LIMITATION. Notwithstanding anything herein to the
contrary, if at any time the interest rate applicable to any Loan, together
with all fees, charges and other amounts which are treated as interest on such
Loan under applicable law (collectively, the “Charges”), shall exceed the maximum
lawful rate (the “Maximum Rate”) which may be contracted for, charged, taken,
received or reserved by the Lender holding such Loan in accordance with
applicable law, the rate of interest payable in respect of such Loan hereunder,
together with all Charges payable in respect thereof, shall be limited to the
Maximum Rate and, to the extent lawful, the interest and Charges that would
have been payable in respect of such Loan but were not payable as a result of
the operation of this §30 shall be cumulated and the interest and Charges
payable to such Lender in respect of other Loans or periods shall be increased
(but not above the Maximum Rate therefor) until such cumulated amount, together
with interest thereon at the Federal Funds Rate to the date of repayment, shall
have been received by such Lender. 

(Remainder of page intentionally left blank)

76

          IN
WITNESS WHEREOF, the undersigned have duly executed this Agreement as a sealed
instrument as of the date first set forth above. 

	
 

	
 

	
 

	
 

	
 

	
KEYBANK NATIONAL ASSOCIATION,

	
 

	
Individually
  and as Administrative Agent

	
 

	
 

	
 

	
 

	
 

	
By:

	
 

	
 

	
 

	
 

	 

	
 

	
 

	
Name:

	
 

	
 

	
Title:

	
 

	
 

	
 

	
 

	
 

	
WHITESTONE REIT OPERATING PARTNERSHIP, L.P.

	
 

	
 

	
 

	
 

	
 

	
By:

	
Whitestone
  REIT, a Maryland real estate

	
 

	
 

	
investment
  trust, its sole general partner

	
 

	
 

	
 

	
 

	
 

	
By:

	
 

	
 

	
 

	
 

	 

	
 

	
 

	
James C.
  Mastandrea, President

	
 

	
 

	
 

	
 

	
 

	
WHITESTONE PIMA NORTE LLC

	
 

	
 

	
 

	
 

	
 

	
By:

	
Whitestone
  REIT Operating Partnership, L.P.,

	
 

	
 

	
a Delaware
  limited partnership, its sole member

	
 

	
 

	
 

	
 

	
 

	
 

	
By:

	
Whitestone
  REIT, a Maryland real estate

	
 

	
 

	
 

	
investment
  trust, its sole general partner

	
 

	
 

	
 

	
 

	
 

	
 

	
By:

	
 

	
 

	
 

	
 

	 

	
 

	
 

	
 

	
James C.
  Mastandrea, President

Signature Page to Term Loan Agreement

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
WHITESTONE REIT OPERATING
  PARTNERSHIP III LP

	
 

	
 

	
 

	
By: 

	
Whitestone REIT Operating Partnership III GP LLC,
a
  Texas limited liability company, its sole general partner

	
 

	
 

	
 

	
 

	
 

	
By:

	
Whitestone REIT Operating Partnership, L.P.,
a
  Delaware limited partnership, its sole member

	
 

	
 

	
 

	
 

	
 

	
 

	
By: 

	
Whitestone REIT, a Maryland real estate investment
  trust, its sole member

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
By: 

	
 

	
 

	
 

	
 

	
 

	
 

	 

	
 

	
 

	
 

	
James C. Mastandrea, President

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
WHITESTONE REIT OPERATING
  PARTNERSHIP III GP LLC

	
 

	
 

	
 

	
 

	
 

	
By:

	
Whitestone REIT Operating Partnership, L.P.,
a
  Delaware limited partnership, its sole member

	
 

	
 

	
 

	
 

	
 

	
 

	
By:

	
Whitestone REIT, a Maryland real estate investment   trust, its sole member

	
 

	
 

	
 

	
 

	
 

	
 

	
By:

	
 

	
 

	
 

	
 

	 

	
 

	
 

	
 

	
James C. Mastandrea, President

	
 

	
 

	
 

	
 

	
 

	
HARTMAN REIT OPERATING PARTNERSHIP III
  LP LTD

	
 

	
 

	
 

	
 

	
 

	
By:

	
Whitestone REIT Operating Partnership III GP LLC,
a
  Texas limited liability company, its sole general partner

	
 

	
 

	
 

	
 

	
 

	
By:

	
Whitestone REIT Operating Partnership, L.P.,
a
  Delaware limited partnership, its sole member

	
 

	
 

	
 

	
 

	
 

	
 

	
By:

	
Whitestone REIT, a Maryland real estate investment
  trust, its sole general partner

	
 

	
 

	
 

	
 

	
 

	
 

	
By:

	
 

	
 

	
 

	
 

	
 

	 

	
 

	
 

	
 

	
James C. Mastandrea, President

Signature Page to Term Loan
Agreement

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