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Exhibit 10.10    
    

DOUGLAS EMMETT, INC.

2006 OMNIBUS STOCK INCENTIVE PLAN  

NON-QUALIFIED STOCK OPTION AGREEMENT  

Name
of Optionee:                          (the "Optionee")

No. of shares of Common Stock of the Company                          (the "Stock")

Exercise price pre share:                          (the "Exercise Price")

Grant Effective Date:
                                         
        (the "Grant Date") 

Pursuant
to the Douglas Emmett, Inc. 2006 Omnibus Stock Incentive Plan (as amended and supplemented from time to time, the "Plan"), Douglas
Emmett, Inc. (the "Company") hereby grants to the Optionee a non-qualified stock option (the "Stock
Option") to purchase the Stock at the Exercise Price subject to the terms of this Non-Qualified Stock Option Agreement (this
"Agreement") and the Plan. The Stock Option shall expire on the tenth anniversary of the Grant Date (the "Expiration
Date"). All terms used herein that are defined in the Plan shall have the same meaning given them in the Plan; certain capitalized terms used herein are defined in
Section 4. 

	1.
	Vesting.

	(a)
	Subject
to Section 2 below and the discretion of the Committee to accelerate the vesting schedule hereunder, the Stock Option shall become vested and exercisable with respect
to the following whole number of shares according to the timetable set forth below: 

	Date
	 	Number of Shares

Becoming Vested
	 	Cumulative

Percentage Available

	Before December 31, 2007	 	0	 	0%
	January 1, 2008	 	    (25%)	 	25%
	January 1, 2009	 	    (25%)	 	50%
	January 1, 2010	 	    (25%)	 	75%
	After January 1, 2011	 	    (25%)	 	100%

	(b)
	Notwithstanding
any other term or provision of this Agreement, if the Optionee's Continuous Service is terminated without Cause by the Company or for Good Reason by the Optionee, or
if the principal class of securities for which the Stock Option is exercisable are no longer publicly traded following a Change of Control, then any unvested shares subject to this Agreement that have
not been previously vested shall immediately vest as of the date of such termination. The vesting of the Stock Option shall not otherwise accelerate on a Sale Event except as provided in this
Agreement or with the consent of the Committee. 

[Alternative
language] The Stock Option is immediately vested and fully exercisable. 

	2.
	Termination of Continuous Service.    If the Continuous Service of the Optionee ceases for any reason, the Stock Option may
only be exercised thereafter to the extent exercisable (including as a result of the acceleration under Section 1(b)) at the time of the termination by the Optionee or the Optionee's legal
representative until the earlier of (i) the date three (3) months (except in the case of termination as a result of death, where the period shall be twelve (12) months) from the
date of termination. Any non-vested portion of the Stock Option on the date of termination of Continuous Service shall immediately terminate and be of no further force and effect.

	3.
	Manner of Exercise.    Subject to Section 5 below, the Stock Option may be exercised in whole or in part by giving
written notice of exercise to the Company specifying the number of shares of Stock to be purchased. Payment of the exercise price may be made by one or more of the following methods:

	(a)
	In
cash, by certified or bank check or other instrument acceptable to the Committee; 

 

	(b)
	In
the form of shares of Stock that the Optionee has beneficially owned for more than six months and that are not then subject to restrictions under any Company plan. Such surrendered
shares shall be valued at Fair Market Value on the exercise date; or

	(c)
	By
the Optionee delivering to the Company a properly executed exercise notice together with irrevocable instructions to a broker to promptly deliver to the Company cash or a check
payable and acceptable to the Company to pay the purchase price; provided that in the event the Optionee chooses to pay the purchase price as so provided, the Optionee and the broker shall comply with
such procedures and enter into such agreements of indemnity and other agreements as the Committee shall prescribe as a condition of such payment procedure. 

Payment
instruments will be received subject to collection. The delivery of certificates representing the shares of Stock to be purchased pursuant to the exercise of a Stock Option will be contingent
upon receipt from the Optionee (or a purchaser acting in the Optionee's stead in accordance with the
provisions contained in the Plan or this Agreement) by the Company of the full purchase price for such shares and any required withholding taxes, and the fulfillment of any other requirements
contained in the Plan, this Agreement or applicable provisions of law. 

	4.
	Definitions.    For purposes of this Agreement: 

"Cause" for termination of the Optionee's Continuous Service shall mean (A) if the Optionee is a party to an employment or other similar service
agreement with the Company (a "Service Agreement"), and "cause" is defined therein, such definition, or (B) if the Optionee is not party to a
Service Agreement or the Optionee's Service Agreement does not define "cause", then Cause means any of the following: (a) any act or omission by the Optionee which constitutes intentional
misconduct or a willful violation of law or a material written Company policy previously provided to the Optionee; (b) the Optionee receiving a benefit, money, property or services from the
Company or any Subsidiary or another person dealing with the Company or any Subsidiary in violation of applicable law or written policy of the Company or any Subsidiary; (c) an act of fraud,
conversion, misappropriation or embezzlement by the Optionee or conviction of, indictment for (or its procedural equivalent) or entering a guilty plea or plea of no contest with respect to a felony,
the equivalent thereof or any crime with respect to which imprisonment is a possible punishment or which involves moral turpitude; or (d) any other failure by the Optionee to perform his
material and reasonable duties and responsibilities as an employee, director or consultant of the Company or any Subsidiary which continues for ten (10) days following written notice from the
Company or any Subsidiary (except in the case of a willful failure to perform his duties or a willful breach, which shall require no notice). For purposes of the foregoing sentence, no act, or failure
to act, on the Optionee's part shall be considered "willful" unless the Optionee acted, or failed to act, in bad faith and without reasonable belief that his act or failure to act was in the best
interest of the Company or any Subsidiary. 

"Change of Control" shall be deemed to have occurred if 

(i)    there
shall be consummated (a) any consolidation or merger of the Company, other than a merger or consolidation of the Company in which (1) the holders of the Company's
common stock immediately prior to the merger or consolidation have at least fifty one percent (51%) ownership of the total voting power of the surviving entity immediately after the merger or
consolidation, and (2) no person (other than an Exempted Holder as defined below) beneficially owns (as such term is defined in Rule 13d-3 under the Securities Exchange Act
of 1934, as amended (the "Exchange Act")), directly or indirectly, twenty percent (20%) or more of the total voting power of the surviving entity or
(b) any sale, lease, exchange or other 

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transfer
(in one transaction or a series of related transactions) of all, or substantially all, of the assets of the Company, 

(ii)    the
shareholders of the Company approve any plan or proposal for the liquidation or dissolution of the Company, 

(iii)    any
person (as such term is used in Sections 13(d) and 14(d)(2) of the Exchange Act) other than an Exempted Holder (as defined below) shall become the beneficial owner (within the
meaning of Rule 13d-3 under the Exchange Act) of twenty percent (20%) or more of the outstanding Stock. "Exempted Holder" means
(a) the Company or any majority-owned Subsidiary (provided that this exclusion applies solely to the ownership levels of the Company or the
majority-owned Subsidiary); (b) any trustee, fiduciary or other person or entity holding securities under any employee benefit plan or trust sponsored or maintained by the Company or any
Subsidiary; (c) any underwriter or placement agent temporarily holding securities pursuant to an offering of such securities; or (d) Dan Emmett, Jordan Kaplan or Ken Panzer, their
immediate family members and family trusts or family-only partnerships and any charitable foundations, any entities in which they and their families beneficially own a majority of the
voting interests, and any "group" (as described in Rule 13d-5(b)(i) under the Exchange Act) including them. However, a Change in Control shall not be deemed to have occurred
if a person's percentage interest increases over twenty percent (20%) solely as a result of a decrease in the outstanding stock because of an acquisition of securities by the Company;  provided, however,
that a "Change in Control" shall be deemed to have occurred on any subsequent acquisitions of Stock by that person (other than
pursuant to a stock split, stock dividend, or similar transaction) at a time when that person beneficially owns twenty percent (20%) or more of the outstanding Stock, or 

(iv)    The
Board shall cease for any reason to have a majority of Uncontested Directors. "Uncontested Directors" means directors who were
initially elected or initially nominated (i) by a vote of at least two-thirds of the then Uncontested Directors and (ii) not as a result of an actual or threatened election
contest with respect to directors or as a result of any other actual or threatened solicitation of proxies or consents by or on behalf of any person other than the Board, including by reason of
agreement intended to avoid or settle any such actual or threatened contest or solicitation. 

"Continuous Service" means the continuous service to the Company and any Subsidiary, without interruption or termination, in any capacity of employee,
member of the Board, or, with the written permission of the Company, consultant. Continuous Service shall not be considered interrupted in the case of (A) any approved leave of absence,
(B) transfers among the Company and any Subsidiary, or any successor, in any capacity of employee, member of the Board or consultant, or (C) any change in status as long as the
individual remains in the service of the Company and any Subsidiary in any capacity of employee, member of the Board or (if the Company specifically agrees in writing that the Continuous Service is
not uninterrupted) a consultant. An approved leave of absence shall include sick leave, military leave, or any other authorized personal leave. 

"Good Reason" shall be present where the Optionee gives notice to the Board of his voluntary resignation within ninety (90) days after the
occurrence of any of the following, without the Optionee's written consent: (A) the failure of the Company to pay or cause to be paid any salary, bonus or other payment owed to the Optionee,
when due under any Optionee Service Agreement or otherwise, subject to a ten (10) day cure period by the Company (except in the case of a willful failure, which shall require no notice); or
(B) within four months after a Change of Control, a substantial diminution in the Optionee's duties, authority or 

3

 

responsibility
(but not title or position), subject to a thirty (30) day cure period by the Company (except in the case of a willful breach, which shall require no notice). 

	5.
	Trading Policy Restrictions.    Stock Option exercises shall be subject to such Company trading-policy-related restrictions,
terms and conditions as may be established by the Committee, or in accordance with policies set by the Committee, from time to time.

	6.
	Stock Option Transferable in Limited Circumstances.    Except as specifically permitted by the Committee, the Stock Option is
not transferable otherwise than by will or by the laws of descent and distribution, and shall be exercisable during the Optionee's lifetime only by the Optionee.

	7.
	Stock Option Shares.    The shares to be issued under the Plan are shares of Stock of the Company as constituted as of the
date of this Agreement, subject to adjustments pursuant to Section 3 of the Plan.

	8.
	Rights as a Stockholder.    The Optionee shall have the rights of a stockholder only as to shares of Stock acquired upon
exercise of the Stock Option and not as to any shares of Stock covered by unexercised Stock Options. No adjustment shall be made for dividends or other rights for which the record date is prior to the
date such shares are acquired.

	9.
	Tax Withholding.    No later than the date on which part or all of the value of any shares of Stock received under the Plan
first becomes includible in the Optionee's gross income for federal income tax purposes, the Optionee shall make arrangements with the Committee in accordance with Section 13 of the Plan
regarding the payment of any federal, state or local taxes required to be withheld with respect to such income. Such payment may be either in cash or in Stock, subject to approval by the Committee.

	10.
	Tax Status.    The Stock Option is not intended to qualify as an incentive stock option under Section 422 of the
Internal Revenue Code of 1986, as amended.

	11.
	The Plan.    The Stock Option is subject in all respects to the terms, conditions, limitations and definitions contained in
the Plan. In the event of any discrepancy or inconsistency between this Agreement and the Plan, the terms and conditions of the Plan shall control.

	12.
	No Obligation to Exercise Stock Option.    The grant and acceptance of the Stock Option imposes no obligation on the Optionee
to exercise it.

	13.
	No Obligation to Continue Employment.    Neither the Company nor any Subsidiary is obligated by or as a result of the Plan or
this Agreement to continue the Optionee in employment and neither the Plan nor this Agreement shall interfere in any way with the right of the Company or any Subsidiary to terminate the employment of
the Optionee at any time.

	14.
	Notices.    Notices hereunder shall be mailed or delivered to the Company at its principal place of business and shall be
mailed or delivered to the Optionee at the address on file with the Company or, in either case, at such other address as one party may subsequently furnish to the other party in writing.

	15.
	Purchase Only for Investment.    To insure the Company's compliance with the Securities Act of 1933, as amended, the Optionee
agrees for himself, the Optionee's legal representatives and estate, or other persons who acquire the right to exercise the Stock Option upon his death, that shares will be purchased in the exercise
of the Stock Option for investment purposes only and not with a view to their distribution, as that term is used in the Securities Act of 1933, as amended, unless in the opinion of counsel to the
Company such distribution is in compliance with or exempt from the registration and prospectus requirements of that Act. 

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	16.
	Governing Law.    This Agreement and the Stock Option shall be governed by, and construed in accordance with, the laws of the
State of Maryland, applied without regard to conflict of law principles. 

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PRIMARY BENEFICIARY(IES)
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	 	Relationship
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	 	Address

	    	 	 	 	 	 	 	 
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	(c)	    
	 	    
	 	    
	 	    

	    	 	 	 	 	 	 	 

CONTINGENT BENEFICIARY(IES)
  (Please Print) 

	Name
	 	Relationship
	 	    %    
	 	Address

	    	 	 	 	 	 	 	 
	(a)	    
	 	    
	 	    
	 	    

	    	 	 	 	 	 	 	 
	(b)	    
	 	    
	 	    
	 	    

	    	 	 	 	 	 	 	 
	(c)	    
	 	    
	 	    
	 	    

	    	 	 	 	 	 	 	 

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        IN
WITNESS WHEREOF, the undersigned has caused this Agreement to be executed on the     day
of                        , 2006. 

	 	 	DOUGLAS EMMETT, INC.
	

 	
 	

By:	

    

	 	 	 	Name:

Title:
	

 	
 	

 The Optionee
	

 	
 	

 Print Name

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QuickLinks

Exhibit 10.10Exhibit
10.42

 

 

 

LOAN AGREEMENT

 

dated as of

 

August 25, 2005

 

among

 

DOUGLAS EMMETT
1993, LLC,

A DELAWARE LIMITED LIABILITY COMPANY

 

the LENDERS Party
Hereto,

 

and

 

EUROHYPO AG, NEW
YORK BRANCH,

as Administrative
Agent

 

 

$170,000,000

 

 

EUROHYPO AG, NEW
YORK BRANCH,

as Lead Arranger
and Joint Bookrunner

 

and

 

BARCLAYS CAPITAL
REAL ESTATE INC.

as Co-Lead
Arranger and Joint Bookrunner

 

 

 

 

	
  ARTICLE
  I

  	
  DEFINITIONS
  AND ACCOUNTING MATTERS

  	
  2

  
	
  1.01

  	
  Certain Defined Terms

  	
  2

  
	
  1.02

  	
  Accounting Terms and
  Determinations

  	
  33

  
	
  1.03

  	
  Types of Loans

  	
  33

  
	
  1.04

  	
  Terms Generally

  	
  33

  
	
   

  	
   

  	
   

  
	
  ARTICLE
  II

  	
  COMMITMENTS,
  LOANS, NOTES AND PREPAYMENTS

  	
  33

  
	
  2.01

  	
  Loans

  	
  33

  
	
  2.02

  	
  Funding of Loans

  	
  34

  
	
  2.03

  	
  Several Obligations

  	
  34

  
	
  2.04

  	
  Notes

  	
  34

  
	
  2.05

  	
  Conversions or
  Continuations of Loans

  	
  34

  
	
  2.06

  	
  Prepayment

  	
  35

  
	
  2.07

  	
  Mandatory Prepayments

  	
  37

  
	
  2.08

  	
  Interest and Other
  Charges on Prepayment

  	
  37

  
	
  2.09

  	
  Release of Projects

  	
  38

  
	
  2.10

  	
  Call Date

  	
  40

  
	
   

  	
   

  	
   

  
	
  ARTICLE
  III

  	
  PAYMENTS
  OF PRINCIPAL AND INTEREST

  	
  40

  
	
  3.01

  	
  Repayment of Loans

  	
  40

  
	
  3.02

  	
  Interest

  	
  40

  
	
  3.03

  	
  Project-Level Account

  	
  41

  
	
   

  	
   

  	
   

  
	
  ARTICLE
  IV

  	
  PAYMENTS;
  PRO RATA TREATMENT; COMPUTATIONS; ETC.

  	
  42

  
	
  4.01

  	
  Payments

  	
  42

  
	
  4.02

  	
  Pro Rata Treatment

  	
  43

  
	
  4.03

  	
  Computations

  	
  43

  
	
  4.04

  	
  Minimum Amounts

  	
  43

  
	
  4.05

  	
  Certain Notices

  	
  44

  
	
  4.06

  	
  Non-Receipt of Funds by
  the Administrative Agent

  	
  44

  
	
  4.07

  	
  Sharing of Payments,
  Etc.

  	
  46

  
	
   

  	
   

  	
   

  
	
  ARTICLE
  V

  	
  YIELD
  PROTECTION, ETC.

  	
  47

  
	
  5.01

  	
  Additional Costs

  	
  47

  
	
  5.02

  	
  Limitation on
  Eurodollar Loans

  	
  48

  
	
  5.03

  	
  Illegality

  	
  49

  
	
  5.04

  	
  Treatment of Affected
  Loans

  	
  49

  

 

i

 

	
  5.05

  	
  Compensation

  	
  50

  
	
  5.06

  	
  Taxes

  	
  51

  
	
  5.07

  	
  Replacement of Lenders

  	
  52

  
	
   

  	
   

  	
   

  
	
  ARTICLE
  VI

  	
  CONDITIONS
  PRECEDENT

  	
  53

  
	
  6.01

  	
  Conditions Precedent to
  Effectiveness of Loan Commitments

  	
  53

  
	
   

  	
   

  	
   

  
	
  ARTICLE
  VII

  	
  REPRESENTATIONS
  AND WARRANTIES

  	
  57

  
	
  7.01

  	
  Organization; Powers

  	
  57

  
	
  7.02

  	
  Authorization;
  Enforceability

  	
  57

  
	
  7.03

  	
  Government Approvals;
  No Conflicts

  	
  58

  
	
  7.04

  	
  Financial Condition

  	
  58

  
	
  7.05

  	
  Litigation

  	
  58

  
	
  7.06

  	
  ERISA

  	
  58

  
	
  7.07

  	
  Taxes

  	
  59

  
	
  7.08

  	
  Investment and Holding
  Company Status

  	
  59

  
	
  7.09

  	
  Environmental Matters

  	
  59

  
	
  7.10

  	
  Organizational
  Structure

  	
  60

  
	
  7.11

  	
  Subsidiaries

  	
  60

  
	
  7.12

  	
  Title

  	
  60

  
	
  7.13

  	
  No Bankruptcy Filing

  	
  60

  
	
  7.14

  	
  Executive Offices;
  Places of Organization

  	
  60

  
	
  7.15

  	
  Compliance; Government
  Approvals

  	
  61

  
	
  7.16

  	
  Condemnation; Casualty

  	
  61

  
	
  7.17

  	
  Utilities and Public
  Access; No Shared Facilities

  	
  61

  
	
  7.18

  	
  Solvency

  	
  61

  
	
  7.19

  	
  Foreign Person

  	
  61

  
	
  7.20

  	
  No Joint Assessment;
  Separate Lots

  	
  61

  
	
  7.21

  	
  Security Interests and
  Liens

  	
  61

  
	
  7.22

  	
  Leases

  	
  62

  
	
  7.23

  	
  Insurance

  	
  63

  
	
  7.24

  	
  Physical Condition

  	
  63

  
	
  7.25

  	
  Flood Zone

  	
  63

  
	
  7.26

  	
  Management Agreement

  	
  63

  
	
  7.27

  	
  Boundaries

  	
  64

  

 

ii

 

	
  7.28

  	
  Illegal Activity

  	
  64

  
	
  7.29

  	
  Permitted Liens

  	
  64

  
	
  7.30

  	
  Foreign Assets Control
  Regulations, Etc.

  	
  64

  
	
  7.31

  	
  Defaults

  	
  64

  
	
  7.32

  	
  Other Representations

  	
  64

  
	
  7.33

  	
  True and Complete
  Disclosure

  	
  64

  
	
  7.34

  	
  Reserved

  	
  65

  
	
  7.35

  	
  Limited Partners

  	
  65

  
	
  7.36

  	
  Non-Foreign Status

  	
  65

  
	
  7.37

  	
  Borrower’s Member

  	
  65

  
	
   

  	
   

  	
   

  
	
  ARTICLE
  VIII

  	
  AFFIRMATIVE
  COVENANTS OF THE BORROWER

  	
  65

  
	
  8.01

  	
  Information

  	
  65

  
	
  8.02

  	
  Notices of Material
  Events

  	
  68

  
	
  8.03

  	
  Existence, Etc.

  	
  69

  
	
  8.04

  	
  Compliance with Laws;
  Adverse Regulatory Changes

  	
  69

  
	
  8.05

  	
  Insurance

  	
  70

  
	
  8.06

  	
  Real Estate Taxes and
  Other Charges

  	
  75

  
	
  8.07

  	
  Maintenance of the
  Projects; Alterations

  	
  76

  
	
  8.08

  	
  Further Assurances

  	
  77

  
	
  8.09

  	
  Performance of the Loan
  Documents

  	
  77

  
	
  8.10

  	
  Books and Records;
  Inspection Rights

  	
  77

  
	
  8.11

  	
  Environmental
  Compliance

  	
  77

  
	
  8.12

  	
  Management of the
  Projects

  	
  79

  
	
  8.13

  	
  Leases

  	
  79

  
	
  8.14

  	
  Tenant Estoppels

  	
  80

  
	
  8.15

  	
  Subordination,
  Non-Disturbance and Attornment Agreements

  	
  80

  
	
  8.16

  	
  Operating Plan and
  Budget

  	
  80

  
	
  8.17

  	
  Operating Expenses

  	
  81

  
	
  8.18

  	
  Margin Regulations

  	
  82

  
	
  8.19

  	
  Hedge Agreements

  	
  82

  
	
  8.20

  	
  Reserved

  	
  86

  
	
  8.21

  	
  Required Work

  	
  86

  

 

iii

 

	
  ARTICLE
  IX

  	
  NEGATIVE
  COVENANTS OF THE BORROWER

  	
  86

  
	
  9.01

  	
  Fundamental Change

  	
  86

  
	
  9.02

  	
  Limitation on Liens

  	
  86

  
	
  9.03

  	
  Due on Sale; Transfer;
  Pledge

  	
  88

  
	
  9.04

  	
  Indebtedness

  	
  94

  
	
  9.05

  	
  Investments

  	
  97

  
	
  9.06

  	
  Restricted Payments

  	
  97

  
	
  9.07

  	
  Change of Organization
  Structure; Location of Principal Office

  	
  97

  
	
  9.08

  	
  Transactions with
  Affiliates

  	
  97

  
	
  9.09

  	
  Leases

  	
  97

  
	
  9.10

  	
  Reserved

  	
  99

  
	
  9.11

  	
  No Joint Assessment;
  Separate Lots

  	
  99

  
	
  9.12

  	
  Zoning

  	
  99

  
	
  9.13

  	
  ERISA

  	
  100

  
	
  9.14

  	
  Reserved

  	
  100

  
	
  9.15

  	
  Property Management

  	
  100

  
	
  9.16

  	
  Foreign Assets Control
  Regulations

  	
  101

  
	
   

  	
   

  	
   

  
	
  ARTICLE
  X

  	
  INSURANCE
  AND CONDEMNATION PROCEEDS

  	
  101

  
	
  10.01

  	
  Casualty Events

  	
  101

  
	
  10.02

  	
  Condemnation Awards

  	
  102

  
	
  10.03

  	
  Restoration

  	
  103

  
	
   

  	
   

  	
   

  
	
  ARTICLE
  XI

  	
  CASH
  TRAP ACCOUNT

  	
  108

  
	
  11.01

  	
  Low DSCR Trigger Event

  	
  108

  
	
   

  	
   

  	
   

  
	
  ARTICLE
  XII

  	
  EVENTS
  OF DEFAULT

  	
  111

  
	
  12.01

  	
  Events of Default

  	
  111

  
	
  12.02

  	
  Remedies

  	
  114

  
	
   

  	
   

  	
   

  
	
  ARTICLE
  XIII

  	
  THE
  ADMINISTRATIVE AGENT

  	
  115

  
	
  13.01

  	
  Appointment, Powers and
  Immunities

  	
  115

  
	
  13.02

  	
  Reliance by
  Administrative Agent

  	
  116

  
	
  13.03

  	
  Defaults

  	
  116

  
	
  13.04

  	
  Rights as a Lender

  	
  119

  
	
  13.05

  	
  Indemnification

  	
  119

  
	
  13.06

  	
  Non-Reliance on
  Administrative Agent and Other Lenders

  	
  120

  

 

iv

 

	
  13.07

  	
  Failure to Act

  	
  120

  
	
  13.08

  	
  Resignation of
  Administrative Agent

  	
  120

  
	
  13.09

  	
  Consents under Loan
  Documents

  	
  122

  
	
  13.10

  	
  Authorization

  	
  122

  
	
  13.11

  	
  Amendments Concerning
  Agency Function

  	
  122

  
	
  13.12

  	
  Liability of the
  Administrative Agent

  	
  122

  
	
  13.13

  	
  Transfer of Agency
  Function

  	
  122

  
	
  13.14

  	
  Co-Lead Arranger and
  Joint Bookrunner

  	
  122

  
	
   

  	
   

  	
   

  
	
  ARTICLE
  XIV

  	
  MISCELLANEOUS

  	
  123

  
	
  14.01

  	
  Non-Waiver; Remedies
  Cumulative

  	
  123

  
	
  14.02

  	
  Notices

  	
  123

  
	
  14.03

  	
  Expenses, Etc.

  	
  124

  
	
  14.04

  	
  Indemnification

  	
  125

  
	
  14.05

  	
  Amendments, Etc.

  	
  126

  
	
  14.06

  	
  Successors and Assigns

  	
  126

  
	
  14.07

  	
  Assignments and
  Participations

  	
  127

  
	
  14.08

  	
  Survival

  	
  130

  
	
  14.09

  	
  Reserved

  	
  130

  
	
  14.10

  	
  Right of Set-off

  	
  130

  
	
  14.11

  	
  Remedies of Borrower

  	
  131

  
	
  14.12

  	
  Brokers

  	
  131

  
	
  14.13

  	
  Estoppel Certificates

  	
  132

  
	
  14.14

  	
  Preferences

  	
  132

  
	
  14.15

  	
  Certain Waivers

  	
  132

  
	
  14.16

  	
  Entire Agreement

  	
  133

  
	
  14.17

  	
  Severability

  	
  133

  
	
  14.18

  	
  Captions

  	
  133

  
	
  14.19

  	
  Counterparts

  	
  133

  
	
  14.20

  	
  GOVERNING
  LAW

  	
  133

  
	
  14.21

  	
  SUBMISSION
  TO JURISDICTION

  	
  133

  
	
  14.22

  	
  WAIVER OF JURY TRIAL;
  COUNTERCLAIM

  	
  134

  
	
  14.23

  	
  Limitation of Liability

  	
  135

  
	
  14.24

  	
  Confidentiality

  	
  136

  

 

v

 

	
  14.25

  	
  Usury Savings Clause

  	
  137

  
	
  14.26

  	
  Cooperation with
  Syndication

  	
  137

  
	
  14.27

  	
  Reserved

  	
  138

  
	
  14.29

  	
  Financing Statements

  	
  140

  
	
  14.30

  	
  Severance of Loan

  	
  140

  
	
  14.31
  

  	
  Additional Permitted
  Public REIT Provisions

  	
  142

  

 

SCHEDULES:

 

	
  Schedule 1A

  	
   

  	
  -

  	
   

  	
  List of Projects

  
	
  Schedule 1B

  	
   

  	
  -

  	
   

  	
  Legal Descriptions of
  Projects

  
	
  Schedule 1.01(1)

  	
   

  	
  -

  	
   

  	
  Allocated Loan Amounts

  
	
  Schedule 1.01(2)

  	
   

  	
  -

  	
   

  	
  List of Applicable
  Lending Offices

  
	
  Schedule 1.01(3)

  	
   

  	
  -

  	
   

  	
  Appraised Values

  
	
  Schedule 1.01(4)

  	
   

  	
  -

  	
   

  	
  List of Commitments and
  Proportionate Shares

  
	
  Schedule 1.01(5)

  	
   

  	
  -

  	
   

  	
  Certain Eligible
  Assignees

  
	
  Schedule 1.01(6)

  	
   

  	
  -

  	
   

  	
  List of Environmental
  Reports

  
	
  Schedule 1.01(7)

  	
   

  	
  -

  	
   

  	
  List of Property
  Condition Reports

  
	
  Schedule 1.01(8)

  	
   

  	
  -

  	
   

  	
  List of Property
  Management Agreements

  
	
  Schedule 1.01(9)

  	
   

  	
  -

  	
   

  	
  Title Companies

  
	
  Schedule 7.04

  	
   

  	
  -

  	
   

  	
  Financial Condition
  Events

  
	
  Schedule 7.05

  	
   

  	
  -

  	
   

  	
  Pending Litigation

  
	
  Schedule 7.09

  	
   

  	
  -

  	
   

  	
  Environmental Matters

  
	
  Schedule 7.11

  	
   

  	
  -

  	
   

  	
  Subsidiaries

  
	
  Schedule 7.22

  	
   

  	
  -

  	
   

  	
  Rent Roll

  
	
  Schedule 8.11

  	
   

  	
  -

  	
   

  	
  List of Underground
  Storage Tanks

  
	
  Schedule 8.21

  	
   

  	
  -

  	
   

  	
  Required Work

  
	
  Schedule 9.12

  	
   

  	
  -

  	
   

  	
  Existing Non-conforming
  Uses

  

 

vi

 

EXHIBITS:

 

	
  Exhibit A

  	
   

  	
  -

  	
   

  	
  Form of Assignment and
  Assumption

  
	
  Exhibit B

  	
   

  	
  -

  	
   

  	
  Borrower’s Manager’s
  Limited Indemnity and Guarantee

  
	
  Exhibit C

  	
   

  	
  -

  	
   

  	
  Form of Cash Trap
  Account Security Agreement

  
	
  Exhibit D

  	
   

  	
  -

  	
   

  	
  Form of Deed of Trust

  
	
  Exhibit E

  	
   

  	
  -

  	
   

  	
  Form of Environmental
  Indemnity

  
	
  Exhibit F

  	
   

  	
  -

  	
   

  	
  Form of General
  Assignment

  
	
  Exhibit G-1

  	
   

  	
  -

  	
   

  	
  Form of Hedge Agreement
  Pledge (Required)

  
	
  Exhibit G-2

  	
   

  	
  -

  	
   

  	
  Form of Hedge Agreement
  Pledge (Optional)

  
	
  Exhibit H

  	
   

  	
  -

  	
   

  	
  Form of Notes

  
	
  Exhibit I

  	
   

  	
  -

  	
   

  	
  Form of Project-Level
  Account Security Agreement

  
	
  Exhibit J

  	
   

  	
  -

  	
   

  	
  Form of Property
  Manager’s Consent

  
	
  Exhibit K

  	
   

  	
  -

  	
   

  	
  Form of Subordination,
  Non-Disturbance and Attornment Agreement

  
	
  Exhibit L

  	
   

  	
  -

  	
   

  	
  Notice of Conversion or
  Continuation

  
	
  Exhibit M

  	
   

  	
  -

  	
   

  	
  Form of Survey
  Certification

  
	
  Exhibit N

  	
   

  	
  -

  	
   

  	
  Form of Lease
  Information Summary

  
	
  Exhibit O

  	
   

  	
  -

  	
   

  	
  Form of Controlled
  Account Agreement

  

 

vii

 

LOAN
AGREEMENT

 

LOAN AGREEMENT dated as
of August 25, 2005 by Douglas Emmett 1993, LLC, a limited liability company
organized under the laws of the State of Delaware (the “Borrower”); each
of the lenders (including Eurohypo (as hereinafter defined) in its capacity as
a lender) that is a signatory hereto identified under the caption “LENDERS” on
the signature pages hereto and each lender that becomes a “Lender” after the
date hereof pursuant to Section 14.07(b) (individually, a “Lender”
and, collectively, the “Lenders”); and EUROHYPO AG, NEW YORK BRANCH, as
agent for the Lenders (in such capacity, together with its successors in such
capacity, the “Administrative Agent”).

 

RECITALS:

 

A.            The Borrower is the fee owner of those certain office
buildings listed in Schedule 1A attached hereto located in the County of
Los Angeles, State of California on certain land more fully described in Schedule
1B attached hereto (each such office building and the rights of the
Borrower with respect to the land on which such office building is located,
together with any air rights and other rights, privileges, easements,
hereditaments and appurtenances thereunto relating or appertaining thereto, all
Improvements thereon, together with all fixtures and equipment required for the
operation thereof, all personal property related to the foregoing and the
rights of the Borrower with respect to all other items described in the
granting clause of the Deed of Trust relating to such office building and
interest in land is referred to as a “Project” and, collectively, the “Projects”).

 

B.            The Projects consist of four (4) improved office
buildings, containing approximately 769,223 square feet (each such Project and
all other improvements constructed on each Project being, individually and
collectively, the “Improvements”).

 

C.            The Borrower has requested and applied to the Lenders for
a loan in the aggregate principal amount of $170,000,000 in connection with the
Projects for the purposes provided herein.

 

D.            The Lenders are willing to make such loans on and subject
to the terms and conditions hereinafter set forth.

 

NOW, THEREFORE, for good
and valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, the parties hereto agree as follows:

 

ARTICLE I

DEFINITIONS AND ACCOUNTING MATTERS

1.01         Certain Defined Terms. As used
herein, the following terms shall have the following meanings:

 “Additional Costs” shall have the meaning
assigned to such term in Section 5.01.

 

“Adjusted LIBO Rate”
shall mean, for any Eurodollar Loan for any Interest Period therefor, a rate
per annum (expressed as a percentage and rounded upwards, if necessary, to the
nearest 1/10000 of 1%) determined by the Administrative Agent to be equal to a
fraction, the numerator of which is equal to the LIBO Rate for such Eurodollar
Loan for such Interest Period and the denominator of which is equal to (x) 1 minus (y) the Reserve Requirement (if any)
for such Eurodollar Loan for such Interest Period.

 

“Adjusted Net
Operating Income” shall mean Net Operating Income, exclusive of any income
from tenants subject to any proceeding or case under the Bankruptcy Code
(except to the extent such income has been actually received).

 

“Administrative Agent”
shall have the meaning assigned to such term in the preamble.

 

“Administrative
Agent’s Account” shall mean the account maintained by the Administrative
Agent and of which the Borrower shall have been notified, with such bank as may
from time to time be specified by the Administrative Agent.

 

“Administrative
Questionnaire” shall mean an administrative questionnaire in a form
supplied by the Administrative Agent.

 

“Advance Date”
shall have the meaning assigned to such term in Section 4.06.

 

“Affiliate” shall
mean, with respect to any Person, another Person that directly or indirectly
controls, or is under common control with, or is controlled by, such Person
and, if such Person is an individual, any member of the immediate family
(including parents, spouse, children and siblings) of such individual and any
trust whose principal beneficiary is such individual or one or more members of
such immediate family and any Person who is controlled by any such member or
trust. As used in this definition, “control” (including, with its
correlative meanings, “controlled by” and “under common control with”)
shall mean possession, directly or indirectly, of power to direct or cause the
direction of management or policies (whether through ownership of securities or
partnership or other ownership interests, by contract or otherwise), provided
that, in any event, any Person that owns directly or indirectly securities
having 10% or more of the voting power for the election of directors or other
governing body of a publicly traded corporation or 10% or more of the
partnership, membership or other ownership interests of any other publicly
traded Person (other than as a limited partner of such other Person) shall be
deemed to control such corporation or other Person.

 

2

 

“Aggregate Notional
Amount” shall have the meaning assigned to such term in Section 8.19(a).

 

“Agreement” shall
mean this Loan Agreement, as the same may from time to time hereafter be Modified
and in effect from time to time.

 

“All-in-Rate”
shall mean, for any period, an annual interest rate equal to the weighted
average of the following rates: (i) as to any portions of the Outstanding
Principal Amount which are covered by one or more Hedge Agreements (including
any Excess Hedge Agreement for which a Hedge Agreement Pledge has been executed
and delivered to the Administrative Agent and remains in effect) which are in
effect during such period (collectively, the “Hedged Principal Amount”),
an imputed rate equal to the sum of all interest payments due with respect to
such period on the Hedged Principal Amount, plus all payments due by the
Borrower or Other Swap Pledgor with respect to such period under all Hedge
Agreements maintained pursuant to Section 8.19 (including any Excess
Hedge Agreement for which a Hedge Agreement Pledge has been executed and
delivered to the Administrative Agent and remains in effect), minus all
payments due to the Borrower or Other Swap Pledgor with respect to such
period under all Hedge Agreements maintained pursuant to Section 8.19
(including any Excess Hedge Agreement for which a Hedge Agreement Pledge has
been executed and delivered to the Administrative Agent and remains in effect)
(with all such interest and other payments to be annualized), divided by the
Hedged Principal Amount and (ii) as to any portion of the Outstanding Principal
Amount which is not covered by any Hedge Agreement (or Excess Hedge Agreement
for which a Hedge Agreement Pledge has been executed and delivered to the
Administrative Agent and remains in effect) during such period, the weighted
average annual interest rate actually payable hereunder on such Loans during
such period.  For purposes of this calculation, the notional amount provided
for in any Hedge Agreement (or Excess Hedge Agreement) in effect during any
period shall be deemed to “cover” a portion of the Outstanding Principal Amount
outstanding during such period in proportion to the amount which the notional
amount provided for in such Hedge Agreement (or Excess Hedge Agreement) bears
to the entire Outstanding Principal Amount outstanding during such
period.  If this Agreement requires the calculation of  the
“All-in-Rate” based upon any monthly or quarterly periods, and the period during
which any Hedge Agreement (or Excess Hedge Agreement) covering any portion of
the Outstanding Principal Amount is in effect is less than the entirety of the
relevant month or quarter, the calculation required under this definition shall
be made separately with respect to the different periods during such month or
quarter during which such portion of the Outstanding Principal Amount is
covered by such Hedge Agreement (or Excess Hedge Agreement), and such
calculations shall be aggregated, on a weighted average basis, for the relevant
period of one month or quarter.

 

“Allocated Loan Amount”
shall mean, solely for the purposes of performing certain calculations
hereunder: for any Project, the portion of the Loans allocated to such Project
in Schedule 1.01(1) attached hereto. The Allocated Loan Amount of a
Project suffering a Casualty Event or a Taking shall be reduced by the amount
of any Net Proceeds attributable to such Project applied by the Administrative
Agent in prepayment of the Outstanding Principal Amount pursuant to Section 2.07.

 

“Annual Budget”
shall have the meaning assigned to such term in Section 8.16(a).

 

3

 

“Anti-Terrorism Order”
shall mean 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 Law”
shall mean any statute, law (including Environmental Laws), regulation,
ordinance, rule, judgment, rule of common law, order, decree, Government
Approval, approval, concession, grant, franchise, license, agreement,
directive, guideline, policy, requirement, or other governmental restriction or
any similar form of decision of, or determination by, or any interpretation or
administration of any of the foregoing by, any Governmental Authority, whether
now or hereinafter in effect and, in each case, as amended (including any
thereof pertaining to land use, zoning and building ordinances and codes).

 

“Applicable Lending
Office” shall mean, for each Lender and for each Type of Loan, the “Lending
Office” of such Lender (or of an Affiliate of such Lender) designated for such
Type of Loan on Schedule 1.01(2) or such other office of such Lender (or
of an Affiliate of such Lender) as such Lender may from time to time specify to
the Administrative Agent and the Borrower as the office by which its Loans of
such Type are to be made and maintained.

 

“Applicable Margin”
shall mean (a) with respect to that portion of the Loan evidenced by
Note A, the Note A Applicable Margin, (b) with respect to that
portion of the Loan evidenced by Note B, the Note B Applicable Margin
and (c) with respect to that portion of the Loan evidenced by Note C, the
Note C Applicable Margin.

 

“Appraisal” shall
mean an appraisal of each Project prepared by an Appraiser, each such Appraisal
must comply in all respects with the standards for real estate appraisal
established pursuant to Title XI of the Financial Institutions Reform,
Recovery, and Enforcement Act of 1989, as amended, and otherwise in form and
substance satisfactory to the Administrative Agent.

 

“Appraised Value”
shall mean, for any Project, the appraised value indicated as such for that Project
in Schedule 1.01(3) attached hereto, as determined by the Appraisal.

 

“Appraiser” shall
mean CB Richard Ellis and/or KTR Newmark, or any other “state certified general
appraiser” as such term is defined and construed under applicable regulations
and guidelines issued pursuant to Title XI of the Financial Institutions
Reform, Recovery, and Enforcement Act of 1989, as amended, which appraiser must
have been licensed and certified by the applicable Governmental Authority
having jurisdiction in the State of California, and which appraiser shall have
been selected by the Administrative Agent.

 

“Approved Annual
Budget” shall have the meaning assigned to such term in Section 8.16(a).

 

“Approved Capital
Expenditures” shall have the meaning assigned to such term in Section
11.01(b).

 

“Approved Fund”
shall mean any Person (other than a natural person) that is engaged in making,
purchasing, holding or investing in bank loans and similar extensions of

 

4

 

credit in the ordinary
course of its business (and which is not engaged in the business of acquiring
direct or indirect ownership interests in commercial real estate projects) and
that is administered or managed by (a) a Lender, or (b) a Person that
meets the requirements in clauses (i), (ii), (iii) or (iv)
of the definition of “Eligible Assignee.”

 

“Approved Lease”
shall mean (a) each existing Lease as of the Closing Date as set forth in
the Leasing Affidavit and (b) each Lease entered into after the Closing
Date in accordance with the terms and conditions contained in Section 9.09
as such leases and related documents shall be Modified as permitted pursuant to
the terms of this Agreement.

 

“Approved Leasing
Expenditures” shall have the meaning assigned to such term in Section
11.01(b).

 

“Arranger” shall
mean EUROHYPO AG, NEW YORK BRANCH as lead arranger and joint bookrunner of the
lending syndicate.

 

“Assignment and
Assumption” shall mean an Assignment and Assumption, duly executed by the
parties thereto, in substantially the form of Exhibit A attached hereto
and, if required pursuant to Section 14.07(b) consented to by the
Borrower and the Administrative Agent.

 

“Authorized Officer”
shall mean, with respect to the Borrower or the Borrower’s Member, any of the
individual officers serving as the President, Vice President, Chief Financial
Officer, Secretary, Treasurer or Assistant Treasurer of Borrower’s Manager, in
its respective capacity as the manager of Borrower or the sole general partner
of the partners of Borrower’s Member, and whose name appears on a certificate
of incumbency executed by the Secretary of Borrower’s Manager, in its
respective capacity as the manager of Borrower and/or the sole general partner
of the partners of Borrower’s Member, and delivered concurrently with the
execution of this Agreement, as such certificate of incumbency may be amended
from time to time to identify the names of the individuals then holding such
offices and certified by the Secretary of Borrower’s Manager, in its respective
capacity as the manager of Borrower or the sole general partner of the partners
of Borrower’s Member.

 

“Bankruptcy Code”
shall mean the Federal Bankruptcy Code of 1978, as amended from time to time.

 

“Bankruptcy Party”
shall mean any of the Borrower Parties (including, in the case of a Borrower
Party which is a Qualified Successor Entity consisting of a Permitted Private
REIT Subsidiary of a Permitted Private REIT, such Permitted Private REIT, its
Operating Partnership and any Permitted Private REIT Subsidiary that holds
direct or indirect interests in the Borrower). Following a Permitted Public
REIT Transfer, “Bankruptcy Party” shall mean any of the Borrower Parties while
such Person qualifies as a “Borrower Party” under the definition of such term,
the Permitted Public REIT, its Operating Partnership, and any Permitted Public
REIT Subsidiary that holds direct or indirect interests in and controls the
Borrower. “Bankruptcy Party” shall also mean any Subsidiary of the Borrower
while such Person remains a Subsidiary of the Borrower, other than an
Immaterial Subsidiary.

 

5

 

“Base Rate” shall
mean, for any day, a rate per annum equal to the Federal Funds Rate for such
day. Each change in any interest rate provided for herein based upon the Base
Rate resulting from a change in the Base Rate shall take effect at the time of
such change in the Base Rate.

 

“Base Rate Loans”
shall mean the portions of the Outstanding Principal Amount that bear interest
at rates based upon the Base Rate.

 

“Basel Accord”
shall mean the proposals for risk-based capital framework described by the
Basel Committee on Banking Regulations and Supervisory Practices in its paper
entitled “International Convergence of Capital Measurement and Capital Standards”
dated July 1988, as Modified and in effect from time to time.

 

“Borrower” shall
mean the Borrower named in the preamble to this Agreement until such time (if
any) as a Qualified Successor Entity shall acquire all of the Projects and
assume the obligations of Borrower under the Loan Documents and the originally
named Borrower shall be released from its obligations under the Loan Documents,
in accordance with Section 9.03(a)(iii), at which time the “Borrower”
shall be such Qualified Successor Entity.

 

“Borrower Party”
shall mean each of the Borrower, the Borrower’s Member and the Borrower’s
Manager (and in any event shall not include any such Person that is not the
general partner or manager of the Qualified Successor Entity). Upon the
acquisition of the Projects, but not of direct or indirect Equity Interests in
the Borrower by a Qualified Successor Entity, “Borrower Party” shall also mean
and include such Qualified Successor Entity and the general partner or manager
thereof (except as expressly provided in this definition) and, unless the
Borrower, the Borrower’s Member or the Borrower’s Manager constitutes the
general partner or manager of the Qualified Successor Entity, shall no longer
include the original Borrower, the original Borrower’s Member or the original
Borrower’s Manager (and in any event shall not include any such Person that is
not the general partner or manager of the Qualified Successor Entity). Upon the
acquisition of the Projects, but not of direct or indirect Equity Interests in
the Borrower, by a Qualified Successor Entity that is a Permitted Public REIT
Subsidiary in connection with a Permitted Public REIT Transfer, “Borrower
Party” shall include such Permitted REIT Subsidiary and its general partner or
manager; provided, however, if the general partner or manager of such Permitted
Public REIT Subsidiary is the Permitted Public REIT or such REIT’s Operating
Partnership, “Borrower Party” shall not include the Permitted Public REIT or
such Operating Partnership. Upon the acquisition of direct or indirect Equity
Interests in the Borrower by a Permitted Public REIT Subsidiary, or by the
Operating Partnership of the Permitted Public REIT, or by the Permitted Public
REIT, “Borrower Party” shall include the Borrower and its general partner or manager,
but shall not include such Permitted Public REIT Subsidiary (unless it is the
general partner or manager of the Borrower) or such Operating Partnership or
the Permitted Public REIT (regardless of whether such Operating Partnership or
the Permitted Public REIT is the general partner or manager of the Borrower).

 

“Borrower’s Account”
shall mean an account maintained by the Borrower with such bank as may from
time to time be specified by or approved by the Administrative Agent to accept
the deposit of funds in accordance with this Agreement.

 

6

 

“Borrower’s Manager”
shall mean DERA, in the capacity of the manager of the Borrower or in the
capacity of the sole general partner of the partners of Borrower’s Member,
under their respective Organizational Documents, and its successors thereunder
in one or more of such capacities as permitted under the Loan Documents. Except
as may otherwise be expressly provided herein or as the context may require,
each reference herein to Borrower’s Manager shall mean Borrower’s Manager in
both such capacities. It is understood that, notwithstanding anything to the
contrary contained in this Agreement, any covenants, representations or
warranties that are required to be observed under this Agreement by the
“Borrower’s Manager” shall not be required to be observed by any manager of the
Borrower consisting of the Permitted Public REIT or its Operating Partnership.

 

“Borrower’s Manager’s
Limited Indemnity and Guarantee” shall mean that certain Limited Indemnity
and Guarantee in the form of Exhibit B attached hereto, to be
executed, dated and delivered by Borrower’s Manager to the Administrative Agent
(on behalf of the Lenders) on the Closing Date as the same may be Modified and
in effect from time to time.

 

“Borrower’s Member”
shall mean Douglas Emmett Joint Venture, a California general partnership, as
sole member under the Organizational Documents of Borrower, and its successors
thereunder as sole member of the Borrower as permitted under the Loan
Documents. It is understood that, notwithstanding anything to the contrary
contained in this Agreement, any covenants, representations or warranties that
are required to be observed under this Agreement by the “Borrower’s Member”
shall not be required to be observed by any member of the Borrower consisting
of the Permitted Public REIT, its Operating Partnership or any Permitted Public
REIT Subsidiary that is not the general partner or manager of the Borrower
including, without limitation Douglas Emmett Joint Venture, the Borrower’s
Member as of the date hereof, or its partners if such Person is not the general
partner or manager of the Borrower.

 

“Business Day”
shall mean any day that is not a Saturday, Sunday or other day on which
commercial banks in New York City (or, with respect only to payments to be made
by the Borrower, in California) are authorized or required by law to remain
closed; provided that, when used in connection with a borrowing, or
Continuation of, a Conversion into, a payment or prepayment of principal of or
interest on, or an Interest Period for, a Eurodollar Loan, or a notice by the
Borrower with respect to any such borrowing, Continuation, Conversion, payment,
prepayment or Interest Period, the term “Business Day” shall also exclude any
day on which banks are not open for dealings in dollar deposits in the London
interbank market.

 

“Business Interruption
Insurance” shall mean rental and/or business income insurance required
pursuant to Section 8.05(a)(iii) or otherwise maintained in accordance
with this Agreement.

 

“Capital Lease
Obligations” shall mean, for any Person, all obligations of such Person to
pay rent or other amounts under a lease of (or other agreement conveying the
right to use) property to the extent such obligations would generally be
classified and accounted for as a capital lease on a balance sheet of such
Person under GAAP, and, for purposes of this Agreement, the amount of such
obligations shall be the capitalized amount thereof, determined in accordance
with GAAP.

 

7

 

“Cash Trap Account
Security Agreement” shall mean a Cash Trap Account Security Agreement,
among the Borrower, the Administrative Agent (on behalf of the Lenders) and the
Depository Bank, substantially in the form of Exhibit C attached
hereto, and which is established and maintained in accordance with Section
11.01.

 

“Cash Trap Account”
shall have the meaning assigned to such term in the Cash Trap Account Security
Agreement.

 

“Casualty Event”
shall mean any loss of or damage to, any portion of any Project by fire or
other casualty.

 

“Change of Control”
shall mean, with respect to any Permitted Public REIT, any event or series of
events by which any “person” or “group” (as such terms are used in Sections
13(d) and 14(d) of the Securities Exchange Act of 1934, but excluding (i) any
person or group consisting of Named Principals or Related Parties, (ii) any
“person” or “group” which is controlled by one or more Named Principals or
Related Parties, (iii) the Depository Trust Company or its nominees,
(iv) any “dealer” (as defined in the Securities Act of 1933) who acquires
securities of the Permitted Public REIT with a view to, or in connection with,
(A) the distribution of such securities, (B) the resale of such
securities in accordance with the provisions of Rule 144A(d) promulgated
under the Securities Act of 1933 or (C) the resale of such securities in
accordance with the provisions of Rule 904 (promulgated under the Securities
Act) applicable to “Distributors” as defined in Rule 902 (promulgated under the
Securities Act), (v) any employee benefit plan of such person or its
subsidiaries, and any person or entity acting in its capacity as trustee, agent
or other fiduciary or administrator of any such plan) becomes the “beneficial
owner” (as defined in Rules 13d-3 and 13d-5 under the Securities Exchange Act
of 1934, except that a person or group shall be deemed to have “beneficial
ownership” of all securities that such person or group has the right to acquire
(such right, an “option right”), whether such right is exercisable immediately
or only after the passage of time), directly or indirectly, of forty percent
(40%) or more of the equity securities of the Permitted Public REIT entitled to
vote for members of the board of directors or equivalent governing body of the
Permitted Public REIT on a fully-diluted basis (and taking into account all
such securities that such person or group has the right to acquire pursuant to
any option right).

 

“Closing Date” shall
mean the date of this Agreement, which date shall be the initial funding date
of the Loans pursuant to Section 2.02.

 

“Code” shall mean
the Internal Revenue Code of 1986, as amended from time to time.

 

“Commitment” shall
mean, as to each Lender, the obligation of such Lender to make a Loan in a
principal amount up to but not exceeding the amount set opposite the name of
such Lender on Schedule 1.01(4) attached hereto under the caption
“Commitment” or, in the case of a Person that becomes a Lender pursuant to an
assignment permitted under Section 14.07(b), as specified in the
respective Assignment and Assumption pursuant to which such assignment is
effected, as such percentage may be modified by any Assignment and Assumption.

 

8

 

“Condemnation Awards”
shall mean all compensation, awards, damages, rights of action and proceeds
awarded to the Borrower by reason of a Taking.

 

“Consumer Price Index”
shall mean the “Consumer Price Index — For all Items” for the Los
Angeles-Riverside-Orange County Consolidated Metropolitan Statistical Area,
published monthly in the “Monthly Labor Review” of the Bureau of Labor
Statistics of the United States Department of Labor. If at any time the
Consumer Price Index is no longer available, then the term “Consumer Price
Index” shall be an index selected by the Administrative Agent which, in the
opinion of the Administrative Agent, is comparable to the Consumer Price Index.

 

“Continue”, “Continuation”
and “Continued” shall refer to the continuation pursuant to Section 2.05
of (a) a Eurodollar Loan from one Interest Period to the next Interest
Period or (b) Base Rate Loan at the Base Rate.

 

“Controlled Account”
shall mean one or more deposit accounts established by the Administrative Agent
(for the benefit of the Lenders) at a depository bank or financial institution
that is acceptable to the Administrative Agent, and which is established and
maintained in accordance with Section 14.28 hereof.

 

“Controlled Account
Agreement” shall have the meaning assigned to such term in Section
14.28(a)(i).

 

“Controlled Account
Collateral” shall have the meaning assigned to such term in Section
14.28(c)(i).

 

“Convert”, “Conversion”
and “Converted” shall refer to a conversion pursuant to Section 2.05
of one Type of Loan into another Type of Loan, which may be accompanied by the
transfer by a Lender (at its sole discretion) of a Loan from one Applicable
Lending Office to another.

 

“Debt Service Coverage
Ratio” shall mean, with respect to any period being measured, the ratio of
(a) Adjusted Net Operating Income for such period to (b) DSCR Debt Service for
such period. For purposes of calculating Debt Service Coverage Ratio pursuant
to Section 2.09(a), Adjusted Net Operating Income and DSCR Debt Service
shall be calculated on an annualized basis, and the Debt Service Coverage Ratio
for such purposes shall be as determined by the Administrative Agent, based
upon the quarterly results reflected in the most recent reports submitted by
Borrower pursuant to Section 8.01 (or, if the most recent report
has not been submitted pursuant to such section, based on such other
information as the Administrative Agent shall determine in its reasonable
discretion), which determination shall be conclusive in the absence of manifest
error. For purposes of calculating Debt Service Coverage Ratio pursuant to Section
10.03(c), Adjusted Net Operating Income and DSCR Debt Service shall be
projected for a period of one year in accordance with Section 10.03(c)(iv).

 

“Deed of Trust”
shall mean each Deed of Trust, Assignment of Leases and Rents and Security
Agreement and substantially in the form of Exhibit D attached
hereto, to be executed, dated and delivered by the Borrower to the
Administrative Agent (on behalf of the

 

9

 

Lenders) on the Closing
Date, securing the obligations identified therein, as each such deed of trust
may be Modified and in effect from time to time.

 

“Default” shall
mean an Event of Default or an event that with notice or lapse of time or both
would become an Event of Default.

 

“Depository Bank”
shall mean, at any time, the depository bank which is party to the Cash Trap
Account Security Agreement, the Project-Level Account Security Agreement or a
Controlled Account Agreement.

 

“DERA” shall mean
Douglas Emmett Realty Advisors, a California corporation.

 

“Disbursement Request”
shall have the meaning assigned to such term in Section 11.01(c)(iii).

 

“Dollars” and “$”
shall mean lawful money of the United States of America.

 

“Douglas Emmett Realty
Funds” shall mean Douglas Emmett Joint Venture, Douglas Emmett Realty Fund
1995, Douglas Emmett Realty Fund 1996, Douglas Emmett Realty Fund 1997, Douglas
Emmett Realty Fund 1998, Douglas Emmett Realty Fund 2000, Douglas Emmett Realty
Fund 2002 and Douglas Emmett Realty Fund 2005 and their respective
Subsidiaries.

 

“DSCR Debt Service”
shall mean, for any period, an amount equal to the payment of interest which
would be required under the Notes delivered by the Borrower based on the Outstanding
Principal Amounts of such Notes as of the end of such period and the
All-in-Rate at such time. All such calculations shall be subject to the
approval of the Administrative Agent. For purposes of Section 10.03, the
calculation of DSCR Debt Service shall be projected for a one year period in
accordance with Section 10.03(c)(iv).

 

“Eligible Assignee”
means any of (i) a commercial bank organized under the Laws of the United
States, or any state thereof, and having (x) total assets in excess of
$25,000,000,000 and (y) a combined capital and surplus of at least
$1,000,000,000; (ii) a commercial bank organized under the laws of any
other country which is a member of the Organization of Economic Cooperation and
Development (“OECD”), or a political subdivision of any such country,
and having (x) total assets in excess of $25,000,000,000 and (y) a
combined capital and surplus of at least $1,000,000,000, provided that
such bank is acting through a branch or agency located in the United States or
in the country in which it is organized or another country which is also a
member of OECD; (iii) a life insurance company organized under the Laws of
any state of the United States, or organized under the Laws of any country
which is a member of OECD and licensed as a life insurer by any state within
the United States and having (x) admitted assets of at least
$25,000,000,000 and (y) a combined capital and surplus of at least
$1,000,000,000; (iv) any Person described in Schedule 1.01(5);
or (v) an Approved Fund having (1) total assets of at least
$25,000,000,000 and (2) a net worth of at least $1,000,000,000; provided
that any such Person meeting the requirements of (i) through (v) (or its
holding company) shall also have a long-term senior unsecured indebtedness
rating of BBB- or better by S&P (if rated by S&P) and Baa3 or better by
Moody’s (if rated by Moody’s) at the time an interest in the Loans is assigned
to it.

 

10

 

“Environmental Claim”
shall mean, with respect to any Person, any written request for information by
a Governmental Authority, or any written notice, notification, claim,
administrative, regulatory or judicial action, suit, judgment, demand or other
written communication by any Person or Governmental Authority alleging or
asserting liability with respect to the Borrower or the Projects, whether for
damages, contribution, indemnification, cost recovery, compensation, injunctive
relief, investigatory, response, Remediation, damages to natural resources, personal
injuries, fines or penalties arising out of, based on or resulting from (i) the
presence, Use or Release into the environment of any Hazardous Substance
originating at or from, or otherwise affecting, the Projects, (ii) any fact,
circumstance, condition or occurrence forming the basis of any violation, or
alleged violation, of any Environmental Law by the Borrower or otherwise
affecting the health, safety or environmental condition of the Projects or
(iii) any alleged injury or threat of injury to the environment by the Borrower
or otherwise affecting the Projects.

 

“Environmental
Indemnity” means that certain Environmental Indemnity Agreement by the
Borrower in favor of the Administrative Agent and each of the Lenders
substantially in the form of Exhibit E attached hereto, to be executed,
dated and delivered to the Administrative Agent (on behalf of the Lenders) on
the Closing Date, as the same may be Modified and in effect from time to time.

 

“Environmental Laws”
shall mean any and all Applicable Laws relating to the regulation or protection
of the environment or the Release or threatened Release of Hazardous Substances
into the indoor or outdoor environment, including ambient air, soil, surface
water, ground water, wetlands, land or subsurface strata, or otherwise relating
to the Use of Hazardous Substances; provided, however, that
solely for purposes of the Environmental Indemnity, “Environmental Laws” shall
not include the California Environmental Quality Act or statutes, laws,
regulations or orders which relate to zoning or otherwise regulating the
permissible uses of land or permissible structures to be developed thereon.

 

“Environmental Liens”
shall have the meaning assigned thereto in Section 8.11(a).

 

“Environmental Losses”
shall mean any losses, damages, costs, fees, expenses, claims, suits,
judgments, awards, liabilities (including, but not limited to, strict
liabilities), obligations, debts, diminutions in value, fines, penalties,
charges, costs of Remediation (whether or not performed voluntarily), amounts
paid in settlement, foreseeable and unforeseeable consequential damages,
litigation costs, reasonable attorneys’ fees and expenses, engineers’ fees,
environmental consultants’ fees, and investigation costs (including, but not
limited to, costs for sampling, testing and analysis of soil, water, air,
building materials, and other materials and substances whether solid, liquid or
gas), of whatever kind or nature, and whether or not incurred in connection
with any judicial or administrative proceedings, actions, claims, suits,
judgments or awards relating to Hazardous Substances, Environmental Claims,
Environmental Liens and violation of Environmental Laws. Notwithstanding the
foregoing, “Environmental Losses” shall not include any loss resulting from
diminution in value of any Project suffered by any Lender if the Lenders shall
have been paid in full all amounts payable by the Borrower under this Agreement
and the other Loan Documents to which the Borrower is a party or shall have
otherwise realized all such amounts upon or prior to foreclosure of the
collateral for the Loans;

 

11

 

provided,
that, subject to the provisions of Section 8 of the Environmental
Indemnity, nothing contained in this sentence shall limit any claim for a loss
(otherwise included within the term “Environmental Losses” as defined herein)
suffered by the Administrative Agent, any Lender or any Affiliate as a result
of a claim for the diminution in value of the interest of any Person (other
than the interest of the Administrative Agent, any Lender or any Affiliate of
the Administrative Agent or any Lender) in any Project (including the interest
of any ground lessor, tenant, easement holder or other third party, but
excluding any Person who has purchased or acquired the Borrower’s interest in
such Project by foreclosure or deed-in-lieu of foreclosure or any time
thereafter) or the diminution in value of any other property made against the
Administrative Agent, any such Lender or any Affiliate by any other Person as a
result of the Administrative Agent, any Lender or any Affiliate succeeding to
the ownership of any Project through foreclosure or other exercise of remedies
(but not as a result of any contractual obligation incurred by the Administrative
Agent, any Lender or any Affiliate subsequent to or in connection with its
acquisition of the ownership of a Project).

 

“Environmental Reports”
shall mean, collectively, each environmental survey and assessment report
prepared for the Administrative Agent relating to each Project listed on Schedule 1.01(6)
attached hereto; each such environmental report shall include a certification
by the engineer (i) that such engineer has obtained and examined the list
of prior owners, (ii) has made an on-site physical examination of the
applicable Project and (iii) has made a visual observation of the
surrounding areas and has found no evidence of the presence of toxic or
Hazardous Substances, or of past or present Hazardous Substances activities that
have not been remediated or are not subject to an operation and maintenance
program. The Administrative Agent acknowledges receipt of copies of the
Environmental Reports.

 

“Equity Interests”
means shares of capital stock, partnership interests, membership interests in a
limited liability company, beneficial interests in a trust or other equity
ownership interests in a Person, and any warrants, options or other rights
entitling the holder thereof to purchase or acquire any such equity interest.

 

“ERISA” shall mean
the Employee Retirement Income Security Act of 1974, as amended from time to
time.

 

“ERISA Affiliate”
shall mean any trade or business (whether or not incorporated) that, together
with any Borrower Party, is treated as a single employer under Section 414(b)
or (c) of the Code, or, solely for purposes of Section 302 of ERISA and Section
412 of the Code, is treated as a single employer under Section 414 (b), (c),
(m) or (o) of the Code.

 

“ERISA Event”
means (a) any “reportable event”, as defined in Section 4043 of ERISA or the
regulations issued thereunder with respect to a Plan which is subject to Title
IV of ERISA (other than an event for which the thirty (30) day notice period is
waived); (b) the existence with respect to any Plan subject to Section 412 of
the Code or Section 302 of ERISA of an “accumulated funding deficiency” (as
defined in Section 412 of the Code or Section 302 of ERISA), whether or not
waived; (c) the filing pursuant to Section 412(d) of the Code or Section 303(d)
of ERISA of an application for a waiver of the minimum funding standard with
respect to any Plan subject to Section 412 of the Code or Section 302 of ERISA;
(d) the incurrence by a Borrower Party or any of its ERISA Affiliates of any
liability under Title IV of ERISA with

 

12

 

respect to the
termination of any Plan which is subject to Title IV of ERISA; (e) the receipt
by any Borrower Party or any ERISA Affiliate from the PBGC or a plan
administrator of any notice relating to an intention to terminate any Plan or
Plans which are subject to Title IV of ERISA or to appoint a trustee to
administer any such Plan; (f) the incurrence by a Borrower Party or any of its
ERISA Affiliates of any liability with respect to the withdrawal or partial
withdrawal from any Plan which is subject to Title IV of ERISA or Multiemployer
Plan; or (g) the receipt by a Borrower Party or any ERISA Affiliate of any
notice, or the receipt by any Multiemployer Plan from a Borrower Party or any
ERISA Affiliate of any notice, concerning the imposition of Withdrawal
Liability or a determination that a Multiemployer Plan is, or is expected to
be, insolvent or in reorganization, within the meaning of Title IV of ERISA.

 

“Eurodollar Loans”
shall mean the portions of the Outstanding Principal Amount that bear interest
based on a “LIBO Rate”.

 

“Eurohypo” shall
mean Eurohypo AG, New York Branch.

 

“Event of Default”
shall have the meaning assigned to such term in Article XII.

 

“Excess Cash”
shall mean with respect to any calendar month, the amount by which the sum of
Operating Income actually received during such calendar month plus amounts
actually paid during such month to or for the account of the Borrower or Other
Swap Pledgor by the counterparty under and pursuant to the Hedge Agreement (but
only on account of any “regular” payments due thereunder (and not on account of
any default or termination thereunder or any obligation to deliver collateral
pursuant thereto)) exceeds the sum of (i) Operating Expenses actually paid during
such month plus (ii) the sum of interest payments on the Loans and other
amounts due and payable under the Loan Documents plus amounts actually paid
during such month by the Borrower or Other Swap Pledgor to the counterparty
under and pursuant to the Hedge Agreement (but only on account of any “regular”
payments due thereunder (and not on account of any default or termination
thereunder or any obligation to deliver collateral pursuant thereto)) in each
case, to the extent actually paid during such month; provided, however,
that for purposes of determining Excess Cash, Operating Expenses shall exclude
any amounts due or accrued for Insurance Premiums, Real Estate Taxes, Approved
Capital Expenditures or Approved Leasing Expenditures, except for amounts actually
paid in cash during the relevant month for Insurance Premiums, Real Estate
Taxes and, if approved in accordance with the provisions of Article XI,
Approved Capital Expenditures or Approved Leasing Expenditures (and the
Borrower may utilize its Operating Income in such month to pay for Insurance
Premiums, Real Estate Taxes and, if approved in accordance with the provisions
of Article XI, Approved Capital Expenditures or Approved Leasing
Expenditures). For the avoidance of doubt, it is understood that the
calculation of Excess Cash for any month shall be based upon the cash method of
accounting notwithstanding references to GAAP or the imputation of any income
or expense item that is not actually received or paid in such month in the
definitions of “Operating Income” and “Operating Expenses.”  Notwithstanding the provisions set forth in
the definition of “Operating Expenses” relating to the treatment of reserves
specifically required under this Agreement and amounts paid from such reserves
for purposes of that definition, for purposes of the calculation of Excess
Cash, the deposit of sums into any such specifically-required reserve (but not
the expenditure and release of sums from any such reserve) shall be treated as
an expense.

 

13

 

“Excess Hedge
Agreement” shall have the meaning assigned to such term in Section
8.19(a).

 

“Excluded Project”
shall mean (a) any of the Residential Properties, (b) any of the Properties
owned by the Borrower on the Closing Date other than the Projects which are
identified on Schedule 1A, (c) any Qualified Real Estate Interest that
is acquired after the Closing Date by the Borrower or by a wholly-owned
Subsidiary or Qualified Sub-Tier Entity, and (d) any Project which has been released
from the Liens of the Loan Documents in accordance with Section 2.09.

 

“Excluded Taxes”
shall mean, with respect to the Administrative Agent and any Lender, or any
other recipient of any payment to be made by or on account of any obligation of
the Borrower hereunder, (a) income or franchise taxes imposed on (or
measured by) its net income by the United States of America, or by the
jurisdiction under the laws of which such recipient is organized or in which
its principal office is located or, in the case of any Lender, in which its
Applicable Lending Office is located, (b) any branch profits taxes imposed
by the United States of America or any similar tax imposed by any other
jurisdiction in which the Borrower is located and (c) in the case of a
Foreign Lender (other than an assignee pursuant to a request by the Borrower
under Section 5.07), any withholding tax that is imposed on amounts
payable to such Foreign Lender at the time such Foreign Lender becomes a party
to this Agreement (or designates a new lending office) or is attributable to
such Foreign Lender’s failure to comply with Section 5.06(e),
except to the extent that such Foreign Lender (or its assignor, if any) was
entitled, at the time of designation, to receive additional amounts from the Borrower
with respect to such withholding tax pursuant to Section 5.06(a).

 

“Extraordinary Capital
or Leasing Expenditures” shall have the meaning assigned to such term in Section
11.01(b).

 

“Federal Funds Rate”
shall mean, for any day, the weighted average (rounded upwards, if necessary,
to the next 1/1000 of 1%) 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
immediately preceding Business Day) on the next succeeding 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 (rounded upwards, if necessary, to the
next 1/1000 of 1%) of the quotations for such day for such transactions
received by the Administrative Agent from three Federal funds brokers of
recognized standing selected by it.

 

“Fee Letter” means
that certain letter agreement, dated as of the date of this Agreement, between
the Borrower and the Administrative Agent with respect to certain fees payable
by the Borrower in connection with the Commitments, as the same may be Modified
from time to time.

 

“Foreign Lender”
shall mean any Lender that is organized under the laws of a jurisdiction other
than that in which the Borrower is located. For purposes of this definition,
the United States of America, each state thereof and the District of Columbia
shall be deemed to constitute a single jurisdiction.

 

14

 

“GAAP” shall mean
generally accepted accounting principles applied on a basis consistent with
those that, in accordance with Section 1.02(a) and, except as
otherwise provided in this Agreement, are to be used in making the calculations
for purposes of determining compliance with this Agreement, it being understood
that the annual and quarterly financial statements to be delivered by the
Borrower shall be deemed prepared in accordance with “GAAP” for purposes of
this Agreement notwithstanding that such financial statements contain
adjustments for the market value of the Properties of the Borrower (as
reflected in the auditor’s statement that is contained in the most recent such
annual financial statement provided to the Administrative Agent on or before
the Closing Date) and that the treatment of depreciation charges in such
quarterly financial statements is consistent with the treatment of depreciation
charges in the most recent such quarterly financial statements provided to the
Administrative Agent on or before the Closing Date.

 

“General Assignment”
shall mean that certain Assignment of Contracts and Government Approvals
substantially in the form of Exhibit F attached hereto, to be executed,
dated and delivered by the Borrower to the Administrative Agent (on behalf of
the Lenders) on the Closing Date, as the same may be Modified and in effect
from time to time.

 

“Government Approval”
shall mean any action, authorization, consent, approval, license, ruling,
permit, tariff, rate, certification, exemption, filing or registration by or
with any Governmental Authority, including all licenses, permits, allocations,
authorizations, approvals and certificates obtained by or in the name of, or
assigned to, the Borrower and used in connection with the ownership,
construction, operation, use or occupancy of the Projects, including building
permits, certificates of occupancy, zoning and planning approvals, business
licenses, licenses to conduct business, and all such other permits, licenses
and rights.

 

“Governmental
Authority” shall mean any governmental department, commission, board,
bureau, agency, regulatory authority, instrumentality, judicial or
administrative body, federal, state or local, foreign or domestic, having
jurisdiction over the matter or matters in question.

 

“Guarantee” shall
mean a guarantee, an endorsement, a contingent agreement to purchase or to
furnish funds for the payment or maintenance of, or otherwise to be or become
contingently liable under or with respect to, the Indebtedness, other
obligations, net worth, working capital or earnings of any Person, or a
guarantee of the payment of dividends or other distributions upon the stock or
equity interests of any Person, or an agreement to purchase, sell or lease (as
lessee or lessor) Property, products, materials, supplies or services primarily
for the purpose of enabling a debtor to make payment of such debtor’s
obligations or an agreement to assure a creditor against loss, and including
causing a bank or other financial institution to issue a letter of credit or
other similar instrument for the benefit of another Person, but excluding
endorsements for collection or deposit in the ordinary course of business. The
terms “Guarantee” and “Guaranteed” used as a verb shall have a
correlative meaning.

 

“Guaranteed Line of
Credit” shall have the meaning set forth in Section 9.04(h).

 

“Guarantor” shall
mean the Borrower’s Manager, in its capacity as the guarantor under the
Borrower’s Manager’s Limited Indemnity and Guarantee.

 

15

 

“Guarantor Documents”
shall mean the Borrower’s Manager’s Limited Indemnity and Guarantee.

 

“Hazardous Substance”
shall mean, collectively, (a) any petroleum or petroleum products, flammable
materials, explosives, radioactive materials, asbestos, urea formaldehyde foam
insulation, Mold, and transformers or other equipment that contain
polychlorinated biphenyls (“PCB’s”), (b) any chemicals or other
materials or substances that are now or hereafter become defined as or included
in the definition of “hazardous substances”, “hazardous wastes”, “hazardous
materials”, “extremely hazardous wastes”, “restricted hazardous wastes”, “toxic
substances”, “toxic pollutants”, “contaminants”, “pollutants” or words of similar
import under any Environmental Law and (c) any other chemical or other material
or substance, exposure to which is now or hereafter prohibited, limited or
regulated under any Environmental Law.

 

“Hedge Agreement”
shall mean any Swap Agreement or Swap Agreements between the Borrower or Other
Swap Pledgor and one or more financial institutions providing for the transfer
or mitigation of interest risks with respect to the Loans, either generally or
under specific contingencies, as the same may be Modified and in effect from
time to time in accordance with Section 8.19.

 

“Hedge Agreement
Pledge” shall mean that certain Assignment, Pledge and Security Agreement
substantially in the form of Exhibit G-1 or G-2, as
applicable, attached hereto, to be executed, dated and delivered by the
Borrower or Other Swap Pledgor to the Administrative Agent (on behalf of the
Lenders) in accordance with Section 8.19 and at any other time the
Borrower elects or is required to enter into, or cause to be delivered, a Hedge
Agreement, covering the Borrower’s or Other Swap Pledgor’s right, title and
interest in and to any such Hedge Agreement, as the same may be Modified and in
effect from time to time.

 

“Hedging Termination
Date” shall mean the date which is three (3) months prior to August 1, 2011
as to fifty percent (50%) of the Aggregate Notional Amount and three (3) months
prior to August 1, 2012 as to the remainder of the Aggregate Notional Amount.

 

“Immaterial Subsidiary”
shall mean any Subsidiary of the Borrower which has incurred no Indebtedness
other than (i) Indebtedness which is non-recourse to such Subsidiary, the
Bankruptcy Parties and the Named Principals (except for “carve-outs” (or
Guarantees guarantying the debtor’s liability with respect to “carve-outs”) for
fraud, misrepresentation, misappropriation and other
exceptions-from-non-recourse customary in the real estate finance industry and
not materially more favorable to such lender than the
exceptions-from-non-recourse set forth in the second sentence of Sections 14.23(a)
(and which shall in no event include any recourse obligation of the
Borrower on account of the occurrence with respect to such Subsidiary or any
other Person of any event of the type described in Sections 12.01(d), (e)
or (f) hereof)) and (ii) Indebtedness which, in the aggregate for all
such Immaterial Subsidiaries, does not exceed ten percent (10%) of the
aggregate Indebtedness of the Borrower and all Subsidiaries of the Borrower.

 

“Improvements”
shall have the meaning assigned to such term in the Recitals.

 

16

 

“Indebtedness” of
any Person means, without duplication, (a) all obligations of such Person
for borrowed money or with respect to deposits or advances of any kind,
(b) all obligations of such Person evidenced by bonds, debentures, notes
or similar instruments, (c) all obligations of such Person upon which
interest charges are customarily paid, (d) all obligations of such Person
under conditional sale or other title retention agreements relating to property
acquired by such Person, (e) all obligations of such Person in respect of
the deferred purchase price of property or services (excluding current accounts
payable incurred in the ordinary course of business), (f) all Indebtedness
of others secured by (or for which the holder of such Indebtedness has an
existing right, contingent or otherwise, to be secured by) any Lien on property
owned or acquired by such Person, whether or not the Indebtedness secured
thereby has been assumed, (g) all Guarantees by such Person of
Indebtedness of others or performance of obligations, (h) all Capital
Lease Obligations of such Person, (i) all obligations, contingent or
otherwise, of such Person as an account party in respect of letters of credit
and letters of guaranty, (j) all obligations under or in respect of Swap
Agreements and (k) all obligations, contingent or otherwise, of such
Person in respect of bankers’ acceptances. The Indebtedness of any Person shall
include the Indebtedness of any other entity (including any partnership in
which such Person is a general partner) to the extent such Person is liable
therefor as a result of such Person’s ownership interest in or other
relationship with such entity, except to the extent the terms of such
Indebtedness provide that such Person is not liable therefor.

 

“Indemnified Parties”
shall mean the Administrative Agent, the Arranger, the Affiliates of the
Administrative Agent, the Arranger, and each Lender and each of the foregoing
parties’ respective directors, officers, employees, attorneys, agents,
successors and assigns.

 

“Indemnified Taxes”
shall mean Taxes other than Excluded Taxes.

 

“Information” has
the meaning assigned to such term in Section 14.24.

 

“Insurance Premiums”
shall have the meaning assigned to such term in Section 8.05(b).

 

“Insurance Proceeds”
shall mean all insurance proceeds, damages, claims and rights of action and the
right thereto under any insurance policies relating to the Projects.

 

“Insurance Threshold
Amount” shall have the meaning assigned to such term in Section 10.01(b).

 

“Interest Period”
shall mean, at all times following the Stub Interest Period, with respect to
any Eurodollar Loan, each period commencing on the date such Eurodollar Loan is
made or Converted from a Base Rate Loan or (in the event of a Continuation) the
last day of the immediately preceding Interest Period for such Loan and ending
on the numerically corresponding day in the first, second, third, sixth or (but
only if available from all Lenders) twelfth calendar month thereafter, as the
Borrower may select as provided in Section 4.05; provided
that, (i) except for the Stub Interest Period, each Interest Period that
commences on the last Business Day of a calendar month (or on any day for which
there is no numerically corresponding day in the appropriate subsequent
calendar month) shall end on the last Business Day of the appropriate
subsequent calendar month; (ii) each Interest Period that would otherwise

 

17

 

end on a day that is not a Business Day shall end on the next
succeeding Business Day (or, if such next succeeding Business Day falls in the
next succeeding calendar month, on the immediately preceding Business Day);
(iii) except for the Stub Interest Period, no Interest Period shall have a
duration of less than one month and, if the Interest Period for any Eurodollar
Loan would otherwise be a shorter period (other than for the Stub Interest
Period), such Loan shall bear interest at the Base Rate plus the Applicable
Margin for Base Rate Loans; (iv) in no event shall any Interest Period extend
beyond the Maturity Date; and (v) there may be no more than seven (7) separate
Interest Periods in respect of Eurodollar Loans outstanding from each Lender at
any one time. The first Interest Period shall be the Stub Interest Period.

 

“Interest Rate Hedge
Period” shall have the meaning assigned to such term in Section 8.19(a).

 

“Investment” shall
mean, for any Person:  (a) the
acquisition (whether for cash, Property, services or securities or otherwise)
of capital stock, bonds, notes, debentures, partnership or other ownership
interests or other securities of any other Person or any agreement to make any
such acquisition (including any “short sale” or any sale of any securities at a
time when such securities are not owned by the Person entering into such sale);
(b) the making of any deposit with, or advance, loan or other extension of
credit to, any other Person (including the purchase of Property from another
Person subject to an understanding or agreement, contingent or otherwise, to
resell such Property to such Person), but excluding any such advance, loan or
extension of credit having a term not exceeding ninety (90) days arising in
connection with the sale of inventory or supplies by such Person in the
ordinary course of business; (c) the entering into of any Guarantee of, or
other contingent obligation with respect to, Indebtedness or other liability of
any other Person and (without duplication) any amount committed to be advanced,
lent or extended to such Person; or (d) the entering into of any Swap
Agreement (other than the Hedge Agreement or any Excess Hedge Agreement).

 

“Lease Approval
Package” shall have the meaning assigned to such term in Section
9.09(b)(iii).

 

“Lease Information Summary”
shall have the meaning assigned to such term in Section 9.09(b)(iii).

 

“Leases” shall
mean all leases and other agreements or arrangements with or assumed by the
Borrower as landlord for the use or occupancy of all or any portion of the
Projects, including any signage thereat, now in effect or hereafter entered
into (including lettings, subleases, licenses, concessions, tenancies and other
occupancy agreements with or assumed by the Borrower as landlord covering or
encumbering all or any portion of the Projects), together with any Guarantees,
Modifications of the same, and all additional remainders, reversions and other
rights and estates appurtenant thereto.

 

“Leasing Affidavit”
shall have the meaning assigned to such term in Section 6.01(p).

 

“Lender” shall
have the meaning assigned to such term in the preamble.

 

18

 

“LIBO Rate” shall
mean, for any Interest Period for any Eurodollar Loan, the rate per annum
appearing on Page 3750 of the Dow Jones Markets Service (Telerate) (or on
any successor or substitute page of such service, or any successor to or
substitute for such service, providing rate quotations comparable to those
currently provided on such page of such service, as determined by the Administrative
Agent from time to time for purposes of providing quotations of interest rates
applicable to Dollar deposits in the London interbank market) at approximately
11:00 a.m. London time on the date two (2) Business Days prior to the
first day of such Interest Period as the rate for Dollar deposits having a term
comparable to such Interest Period and in an amount comparable to the amount of
the applicable Eurodollar Loan, provided that if such rate does not
appear on such page as of the date of determination, or if such page shall
cease to be publicly available at such time, or if the information contained on
such page, in the sole judgment of the Administrative Agent shall cease
accurately to reflect the rate offered by leading banks in the London interbank
market, the LIBO Rate shall be based on the rate that appears as of 11:00 a.m.
London time on such date of determination on the LIBO Page of Reuters Screen
for Dollar deposits having a term comparable to such Interest Period and in an
amount comparable to the amount of the applicable Eurodollar Loan. If both of
such pages shall cease to be publicly available as of the time of
determination, or if the information contained on such page, in the sole but
reasonable judgment of the Administrative Agent shall cease accurately to
reflect the rate offered by leading banks in the London interbank market, the
LIBO Rate shall be based on the rate reported by any publicly available source
of similar market data selected by the Administrative Agent that, in its sole but
reasonable judgment, accurately reflects such rate offered by leading banks in
the London interbank market. The LIBO Rate for the Stub Interest Period shall
be 4.4120% per annum.

 

“Lien” shall mean,
with respect to any Property (including the Projects), any mortgage, deed of
trust, lien, pledge, charge, security interest or encumbrance of any kind in
respect of such Property. For purposes of this Agreement and the other Loan
Documents, a Person shall be deemed to own subject to a Lien any Property that
it has acquired or holds subject to the interest of a vendor or lessor under
any conditional sale agreement, capital lease or other title retention
agreement (other than an operating lease) relating to such Property.

 

“Limiting Regulation”
shall mean any law or regulation of any Governmental Authority, or any
interpretation, directive or request under any such law or regulation (whether
or not having the force of law and whether or not failure to comply therewith
would be unlawful) by any court or Governmental Authority or monetary authority
charged with the interpretation or administration thereof, or any internal bank
policy resulting therefrom (applicable to loans made in the United States of
America) which would or could in any way require a Lender to have the approval
right contained in the last paragraph of Section 9.03.

 

“Loan” and “Loans”
shall have the respective meanings assigned to such terms in Section 2.01
with reference to the extensions of credit provided to the Borrower hereunder.

 

“Loan Documents”
shall mean, collectively, this Agreement, the Notes, the Security Documents,
the Environmental Indemnity, the Guarantor Documents and each other agreement,
instrument or document (excluding any Hedge Agreement or Excess Hedge
Agreement) required to be executed and delivered in connection with the Loans,
together with any Modifications thereof.

 

19

 

“Loan Transactions”
shall have the meaning assigned to such term in Section 4.04.

 

“Losses” shall
have the meaning assigned to such term in Section 14.04.

 

“Low DSCR Release
Event” shall mean, at any time after the occurrence of a Low DSCR Trigger
Event, that the Debt Service Coverage Ratio shall be at or above 1:20:1.00 for
a period of at least two (2) consecutive calendar quarters.

 

“Low DSCR Trigger
Event” shall mean, at any time prior to the Maturity Date,
that the Debt Service Coverage Ratio measured as of the end of any calendar
quarter is less than 1:15:1.00.

 

“Low DSCR Trigger
Period” shall mean the period of time after a Low DSCR Trigger Event until
the occurrence of a Low DSCR Release Event.

 

“LP Claim” shall
have the meaning set forth in Section 7.35.

 

“Major Default”
shall mean (i) any Event of Default; (ii) any Default arising from the failure
to make any payment on account of interest to any Lender required under the
Loan Documents or any fees payable to the Administrative Agent under the Fee
Letter, in each case on or before the due date therefor; and (iii) any other
Default written notice of which has been delivered by the Administrative Agent
to the Borrower unless, in the case of this clause (iii), the Borrower has
provided written notice to the Administrative Agent, within seven (7) days
after notice of such Default has been delivered to the Borrower, stating that
the Borrower shall undertake to cure such Default on or prior to the expiration
of the applicable cure period therefor, if any, set forth in the definition of
the term “Event of Default” (and setting forth the steps that the Borrower intends
to take in order to effectuate such cure), and the Administrative Agent shall
not have provided notice to the Borrower within five (5) Business Days after
receipt of such notice from the Borrower, setting forth the Administrative
Agent’s determination, in its reasonable discretion, that the steps set forth
in the notice from the Borrower are not likely to result in the timely cure of
such default. Notwithstanding the foregoing, for purposes of Sections 13.08
and 14.07(b)(i)(A), a Major Default of the type described in clause (ii)
above shall not be deemed to “exist” unless the Borrower has received notice of
such Major Default and has failed to cure such Major Default within five (5)
Business Days.

 

“Major Lease”
shall mean one or more Leases to the same tenant or its Affiliates covering an
aggregate of either (i) 20% of the rentable square footage of any Project
or (ii) 30,000 rentable square feet or more.

 

“Material Adverse
Effect” shall mean a material adverse effect, as determined by the
Administrative Agent, in its reasonable judgment and discretion, on
(a) any Project or the business, operations, financial condition,
liabilities or capitalization of the Borrower, (b) the ability of the
Borrower or any other Borrower Party to pay or perform (or cause to be
performed) its respective material obligations under any of the Loan Documents
to which it is a party, including the timely payment of the principal of
or interest on the Loans or other amounts payable in connection therewith,
(c) the Administrative Agent’s Liens in any of the collateral securing the
Loans or the priority of any such Liens, (d) the validity or
enforceability of any of

 

20

 

the Loan Documents or
(e) the rights and remedies of the Lenders and the Administrative Agent
under any of the Loan Documents.

 

“Maturity Date”
shall mean the earliest of (a) the Stated Maturity Date or (b) the date as to
any Loans on which the Outstanding Principal Amounts under the Notes evidencing
such Loans are accelerated or automatically become due and payable pursuant to
the terms of the Notes or any other Loan Document.

 

“Maximum Rate”
shall have the meaning assigned to such term in Section 14.25.

 

“Modifications”
shall mean any amendments, supplements, modifications, renewals, replacements,
consolidations, severances, substitutions and extensions thereof from time to
time; “Modify”, “Modified”, or related words shall have meanings correlative
thereto.

 

“Mold” shall mean
any microbial or fungus contamination or infestation in any Project of a type
which could reasonably be anticipated (after due inquiry and investigation) to
pose a risk to human health or the environment or could reasonably be
anticipated (after due inquiry and investigation) to negatively impact the
value of such Project in any material respect.

 

“Moody’s” shall
mean Moody’s Investors Service, Inc., or any successor thereto.

 

“Multiemployer Plan”
shall mean a multiemployer plan as defined in Section 4001(a)(3) of ERISA.

 

“Named Principals”
shall mean Dan A. Emmett, Christopher H. Anderson, Kenneth M.
Panzer and Jordan L. Kaplan.

 

“Net Operating Income”
shall mean, for any period, the excess, if any, of Operating Income for such
period over Operating Expenses for such period.

 

“Net Proceeds”
shall have the meaning assigned to such term in Section 10.03(b).

 

“Net Proceeds
Deficiency” shall have the meaning assigned to such term in Section
10.03(h).

 

“Note A”
shall mean those certain notes or note denominated “Note A” dated
concurrently with the Loan Agreement, executed by Borrower to the order of the
Lender named therein, in the aggregate original principal amount of
$96,866,096.86, as the same may be Modified from time to time. Each Note A
shall constitute a “Note” for all purposes under this Agreement and the other
Loan Documents.

 

“Note A
Applicable Margin” shall mean (a) for Base Rate Loans, 80 basis
points per annum; and (b) for Eurodollar Loans, 65 basis points per
annum.

 

“Note B”
shall mean those certain notes or note denominated  “Note B” dated concurrently with the
Loan Agreement, executed by Borrower to the order of the Lender named therein,
in the aggregate original principal amount of $63,447,293.45, as the same may
be

 

21

 

Modified from time to time. Each Note B shall constitute a “Note”
for all purposes under this Agreement and the other Loan Documents.

 

“Note B
Applicable Margin” shall mean (a) for Base Rate Loans, 110 basis
points per annum; and (b) for Eurodollar Loans, 85 basis points per
annum.

 

“Note C”
shall mean those certain notes or note denominated “Note C” dated
concurrently with the Loan Agreement, executed by Borrower to the order of the
Lender named therein, in the aggregate original principal amount of
$9,686,609.69, as the same may be Modified from time to time. Each Note C
shall constitute a “Note” for all purposes under this Agreement and the other
Loan Documents.

 

“Note C
Applicable Margin” shall mean (a) for Base Rate Loans, 410 basis
points per annum; and (b) for Eurodollar Loans, 285 basis points per
annum.

 

“Notes” shall
mean, collectively, each Note A, Note B, Note C and each other
promissory note hereafter executed by the Borrower to the order of any of the
Lenders evidencing such Lender’s respective Commitment and Loans, as such notes
may be Modified or substituted and in effect from time to time. Subject to such
modifications thereto as may be deemed necessary by the Administrative Agent to
reflect the Applicable Margin applicable to such Notes or to denominate any
such Note as a Note A, Note B, Note C or similar reference, and
subject to the provisions of Section 14.30, each of the Notes shall
be substantially in the form of Exhibit H attached hereto.

 

“Obligations”
means all obligations, liabilities and indebtedness of every nature of the
Borrower from time to time owing to the Administrative Agent or any Lender
under or in connection with this Agreement, the Notes or any other Loan
Document to which it is a party, including principal, interest, fees (including
fees of counsel), and expenses whether now or hereafter existing under the Loan
Documents to which it is a party.

 

“OECD” has the
meaning assigned to such term in the definition of “Eligible Assignee”.

 

“OP Merger Sub”
shall have the meaning set forth in Section 14.31.

 

“Operating Expenses”
shall mean, for any period, all expenditures, computed in accordance with GAAP,
of whatever kind or nature relating to the ownership, operation, maintenance,
repair or leasing of the Projects that are incurred on a regular monthly or
other periodic basis, including (a) allocated amounts on account of
Insurance Premiums and Real Estate Taxes, prorated on an annual basis,
(b) management fees in an amount which is the greater of
(i) management fees actually paid and (ii) management fees at an
imputed rate of 2.0% of Operating Income for such period and (c) imputed
capital expenditure in an amount equal to a prorated portion of an annual
amount equal to $0.20 per square foot; provided, however, that
Operating Expenses shall not include (i) depreciation, amortization and
other non-cash charges or capital expenditures (except as provided above), (ii)
leasing commissions, tenant improvement allowances or other expenditures
incurred for tenant improvements, (iii) any deposits to cash reserves (if any)
required to be maintained under the Loan Documents (except if and to the extent
any sums are withdrawn therefrom to pay (and are actually used to pay) expenses
which

 

22

 

otherwise constitute Operating Expenses without duplication), (iv) any
payment or expense for which the Borrower was or is to be reimbursed by any
third party if the receipt of the related reimbursement payment is required to
be excluded in the calculation of Operating Income, (v) any payment payable by
the Borrower or any Other Swap Pledgor under the Hedge Agreement, (vi) any
changes in value of derivative contracts or of the Projects, and (vii) any
principal, interest or other debt service payable with respect to the Loans. Operating
Expenses shall be determined on an annualized basis based on the relevant
quarterly results for purposes of Section 2.09(a), and on a projected
annual basis for purposes of Section 10.03(c)(iv).

 

“Operating Income”
shall mean, for any period, all regular ongoing income, computed in accordance
with GAAP (but without taking into account any treatment of Rent on a
straight-line amortization basis over the term of a lease that would otherwise
be required by GAAP), during such period from the ownership or operation, or
otherwise arising in respect, of the Projects, including (a) all amounts
payable to the Borrower by any Person as Rents under Approved Leases,
(b) business interruption proceeds and rent loss insurance proceeds
(except with respect to any Leases that have been terminated as of the date of
computation as a result of any Casualty Event or Taking) and (c) all other
amounts which are included in the Borrower’s financial statements as operating
income of the Projects, including, receipts from leases and parking agreements,
concession fees and charges, other miscellaneous operating revenues, but
excluding any extraordinary income, including (i) any Condemnation Awards
or Insurance Proceeds (other than business interruption and rent loss proceeds as
aforementioned), (ii) any item of income otherwise includable in Operating
Income but paid directly to a Person other than the Borrower, its
representative or its Affiliate (except, in each case, to the extent the
Borrower receives monetary credit for such payment from the recipient thereof
or such item is treated as an income item to the Borrower, in accordance with
GAAP), (iii) security deposits and earnest money deposits received from
tenants until forfeited or applied in accordance with their Leases, (iv) lease
buyout payments made by tenants in connection with any surrender, cancellation
or termination of their Leases, (v) any disbursements to the Borrower from
the Cash Trap Account (it being understood that nothing set forth in this
clause (v) shall prevent the receipt of funds that have been deposited into the
Cash Trap Account from being treated as Operating Income when received to the
extent such receipt otherwise constitutes Operating Income as provided in the
definition thereof), (vi) any changes in value of derivative contracts or of
the Projects, and (vii) any payment payable to the Borrower or any Other Swap
Pledgor under the Hedge Agreement. Operating Income shall be determined on an
annualized basis based on the relevant quarterly results for purposes of Section 2.09(a),
and on a projected annual basis for purposes of Section 10.03(c).

 

“Operating Partnership”
shall mean, with respect to a Permitted REIT, its affiliated operating
partnership majority-owned and controlled, directly or indirectly, by such
Permitted REIT through which such REIT holds substantially all of its assets.

 

“Organizational
Documents” shall mean (a) for any corporation, the certificate or
articles of incorporation, the bylaws, any certificate of determination or
instrument relating to the rights of preferred shareholders of such
corporation, any shareholder rights agreement, and any amendments thereto,
(b) for any limited liability company, the articles of organization and
any certificate relating thereto and the limited liability company (or
operating) agreement of such limited liability company, and any amendments
thereto, and (c) for any partnership (general or

 

23

 

limited), the certificate of limited partnership or other certificate
pertaining to such partnership, if any, and the partnership agreement of such
partnership (which must be a written agreement), and any amendments thereto.

 

“Other Charges”
shall mean all ground rents, maintenance charges, impositions other than Real Estate
Taxes, and any other charges, including vault charges and license fees for the
use of vaults, chutes and similar areas adjoining the Projects, now or
hereafter levied or assessed or imposed against the Projects or any part
thereof, other than Excluded Taxes.

 

“Other Swap Pledgor”
shall mean (i) Borrower’s Member, (ii) any Qualified Successor Entity
to whom the Projects are transferred pursuant to Section 9.03(a)(iii),
(iii) any entity that qualifies under clause (I) of the definition of
Qualified Successor Entity, (iv) a Permitted Public REIT, its Operating
Partnership or any Permitted Public REIT Subsidiary and/or (v) a Permitted
Private REIT or any Permitted Private REIT Subsidiary.

 

“Other Taxes”
means any and all present or future stamp or documentary taxes or any other
excise or property taxes, charges or similar levies arising from any payment
made under any Loan Document or from the execution, delivery, ownership or
enforcement of, or otherwise with respect to, any Loan Document.

 

“Outstanding Principal
Amount” shall mean the outstanding principal amount of the Loans at any
point in time after giving effect to any repayment thereof pursuant to Sections
2.06, 2.07, 2.09 and 3.01 or other applicable
provisions of this Agreement.

 

“Participant” shall
have the meaning assigned to such term in Section 14.07(c)(i).

 

“Payment Date”
shall mean the first Business Day of each calendar month. The first Payment
Date shall be October 1, 2005.

 

“Payor” shall have
the meaning assigned to such term in Section 4.06.

 

“PBGC” shall mean
the Pension Benefit Guaranty Corporation referred to and defined in ERISA and
any successor entity performing similar functions.

 

“Permitted Investments”
shall mean:  (a) direct obligations
of the United States of America, or of any agency thereof, or obligations
guaranteed as to principal and interest by the United States of America, or by
any agency thereof, in either case maturing not more than ninety (90) days from
the date of acquisition thereof; (b) certificates of deposit issued by any
bank or trust company organized under the laws of the United States of America
or any state thereof and having capital, surplus and undivided profits of at
least $500,000,000, maturing not more than ninety (90) days from the date of
acquisition thereof; and (c) commercial paper rated A-1 or P-1 or better
by S&P or Moody’s, respectively, maturing not more than ninety (90) days
from the date of acquisition thereof; in each case so long as the same (i)
provide for the payment of principal and interest (and not principal alone or
interest alone) and (ii) are not subject to any contingency regarding the
payment of principal or interest.

 

“Permitted Liens”
shall mean for each Project: (a) any Lien created by the Loan Documents,
(b) Liens for Real Estate Taxes not yet delinquent and Liens for Other
Charges

 

24

 

imposed by any Governmental Authority not yet due or delinquent,
(c) rights of existing and future tenants under Approved Leases as tenants
only, (d) Permitted Title Exceptions that constitute Liens, (e) utility
and other easements entered into by the Borrower in the ordinary course of
business having no adverse impact on the occupation, use, enjoyment, operation,
value or marketability of any Project and approved in advance in writing by the
Administrative Agent in its reasonable discretion, (f) any Lien for the
performance of work or the supply of materials affecting any Project unless the
Borrower fails to discharge such Lien by payment or bonding (in accordance with
statutory bonding requirements the effect of which is to release such Lien from
the affected Project and to limit the Lien claimant’s rights to a recovery on
the bond) on or prior to the date that is the earlier of (i) thirty (30)
days after the date of filing of such Lien and (ii) the date on which the
Project or the Borrower’s interest therein is subject to risk of sale,
forfeiture, termination, cancellation or loss, (g) any Lien consisting of
the rights of a lessor under equipment leases which are entered into in
compliance with Sections 9.02(h) and 9.04(d), and (h) any other
title and survey exceptions (not referred to in clauses (a) through (g) above)
affecting the Projects as the Administrative Agent may approve in advance in
writing and in its sole discretion.

 

“Permitted Private
REIT” shall have the meaning set forth in Section 9.03(a)(iii).

 

“Permitted Private
REIT Subsidiary” shall mean any wholly-owned Subsidiary of a Permitted
Private REIT or its Operating Partnership.

 

“Permitted Public REIT”
shall mean a REIT, in which, at the time of the initial public offering of
shares therein, at least two (2) of the Named Principals are senior officers of
such REIT.

 

“Permitted Public REIT
Subsidiary” shall mean any wholly-owned Subsidiary of the Permitted Public
REIT or its Operating Partnership.

 

“Permitted Public REIT
Transfer” shall mean (a) a transfer, through one or a series of related
transactions, of one hundred percent (100%) of the direct or indirect Equity
Interests in the Borrower or any Qualified Successor Entity to the Permitted
Public REIT, its Operating Partnership or a Permitted Public REIT Subsidiary in
accordance with this Agreement; provided that the Projects continue to
be directly owned by the Borrower or such Qualified Successor Entity, as the
case may be, or (b) a transfer, in compliance with Section 9.03(a)(iii),
of all but not less than all of the Projects to a Qualified Successor Entity
that is a Permitted Public REIT Subsidiary of the Permitted Public REIT (other
than its Operating Partnership).

 

“Permitted REIT”
shall mean a Permitted Private REIT or the Permitted Public REIT.

 

“Permitted REIT
Subsidiary” shall mean a Permitted Public REIT Subsidiary or a Permitted
Private REIT Subsidiary.

 

“Permitted
Reorganization” shall have the meaning set forth in Section 14.31.

 

“Permitted Title
Exceptions” shall mean as to any Project, the outstanding liens, easements,
restrictions, security interests and other exceptions to title set forth in the
policy of

 

25

 

title insurance insuring
the lien of the Deed of Trust encumbering such Project approved by the
Administrative Agent.

 

“Person” shall
mean any individual, corporation, company, voluntary association, partnership,
limited liability company, joint venture, trust, unincorporated organization or
government (or any agency, instrumentality or political subdivision thereof).

 

“Plan” shall mean
any employee pension benefit plan (other than a Multiemployer Plan) as defined
in Section 3(2) of ERISA, and in respect of which any Borrower Party or its
ERISA Affiliates is (or, if such plan were terminated, would, if the Plan were
subject to Title IV of ERISA, under Section 4069 of ERISA be deemed to be) an
“employer” as defined in Section 3(5) of ERISA.

 

“Policy” and “Policies”
shall have the respective meanings assigned to such terms in Section 8.05(b).

 

“Post-Default Rate”
shall mean a rate per annum equal to 5% plus the Base Rate as in effect
from time to time plus the Applicable Margin for Base Rate Loans, provided
that, with respect to principal of a Eurodollar Loan, the “Post-Default Rate”
shall be the greater of (a) 5% plus the interest rate for such Loan as
provided in Section 3.02(a)(ii) and (b) the rate provided for above
in this definition; provided, however, that in no event shall the
Post-Default Rate exceed the Maximum Rate.

 

“Primary Credit
Facility” means, with respect to any Permitted REIT, the primary credit
facility under which such Permitted REIT obtains financing for its general
purposes.

 

“Principal Office”
shall mean the office of Eurohypo, located on the date hereof at
1114 Avenue of the Americas, 29th Floor, New York, New York, or
such other office as the Administrative Agent shall designate upon ten (10)
days’ prior notice to the Borrower and the Lenders.

 

“Principals” shall
mean the Named Principals and any other Person holding ten percent (10%) or
more of the shares, partnership interests, membership interests, or other
voting or beneficial interests in Borrower’s Manager. As of the date hereof,
the Named Principals own all of the shares in Borrower’s Manager.

 

“Project” shall
have the meaning assigned to such term in the Recitals.

 

“Project-Level Account”
shall have the meaning assigned to such term in the Project-Level Account
Security Agreement.

 

“Project-Level Account
Security Agreement” shall mean the Project-Level Account Security
Agreement, among the Borrower, the Administrative Agent (on behalf of the
Lenders) and the Depository Bank, substantially in the form of Exhibit I
attached hereto, delivered on the Closing Date, as the same may be Modified and
in effect from time to time.

 

“Property” shall
mean any right or interest in or to property of any kind whatsoever, whether
real, personal or mixed and whether tangible or intangible.

 

26

 

“Property Condition
Report” shall mean, collectively, those certain property condition reports
for each Project prepared for the Administrative Agent and listed on Schedule 1.01(7)
attached hereto. The Administrative Agent acknowledges receipt of copies of the
foregoing Property Condition Reports.

 

“Property Management
Agreement” shall mean, collectively, (a) each Property Management Agreement
between the Borrower and the Property Manager listed on Schedule 1.01(8)
attached hereto and (b) any other property management and/or leasing agreement
entered into with a Property Manager appointed in accordance with the
definition of Property Manager contained in this Section 1.01, as the
same shall be Modified in accordance with the provisions of this Agreement.

 

“Property Manager”
shall mean Douglas, Emmett and Company or such successor manager and/or leasing
agent as shall be reasonably approved by the Administrative Agent or otherwise
permitted without such approval pursuant to Section 9.15 or Section 14.31.

 

“Property Manager’s
Consent” shall mean a Property Manager’s Consent and Subordination of
Property Management Agreement substantially in the form of Exhibit J
attached hereto, to be executed, dated and delivered by (a) the Property
Manager and the Borrower to the Administrative Agent (on behalf of the Lenders)
on the Closing Date and (b) any other Property Manager to the Administrative
Agent (on behalf of the Lenders) prior to its appointment as Property Manager,
as such agreements may be Modified and in effect from time to time.

 

“Proportionate Share”
shall mean, with respect to each Lender, the percentage set forth opposite such
Lender’s name on Schedule 1.01(4) attached hereto under the caption
“Proportionate Share” or in the Assignment and Assumption (in accordance with
the terms of this Agreement) pursuant to which such Lender became a party
hereto, in any case, as such percentage may be Modified in the most recent
Assignment and Assumption (in accordance with the terms of this Agreement) to
which such Lender is a party. The aggregate Proportionate Shares of all Lenders
shall equal one hundred percent (100%).

 

“Proposed Lender”
shall have the meaning assigned to such term in Section 5.07.

 

“Qualified Real Estate
Interest” shall mean any real estate asset of a type and quality, located
in markets, consistent with the Projects or any Residential Property as of the
date this Agreement is entered into or which is otherwise consistent with the investment
practices prior to the date hereof of the Douglas Emmett Realty Funds taken as
a whole and which is acquired after the Closing Date directly by the Borrower
or by a Qualified Sub-Tier Entity.

 

“Qualified Successor
Entity” shall have the meaning set forth in Section 9.03(a)(iii).

 

“Qualified Sub-Tier
Entity” means an entity wholly- or majority-owned and controlled by the
Borrower.

 

“Real Estate Taxes”
shall mean all real estate taxes and all general and special assessments,
levies, permits, inspection and license fees, all water and sewer rents and
charges,

 

27

 

all charges for utilities
and all other public charges whether of a like kind or different nature,
imposed upon or assessed against the Borrower, the Projects or any part thereof
or upon the revenues, rents, issues, income and profits of the Projects or
arising in respect of the occupancy, use or possession thereof.

 

“Register” shall
have the meaning assigned to such term in Section 14.07(b)(iv).

 

“Regulations A, D, T,
U and X” shall mean, respectively, Regulations A, D, T, U and X of the
Board of Governors of the Federal Reserve System (or any successor), as the
same may be Modified and in effect from time to time.

 

“Regulatory Change”
shall mean, with respect to any Lender, any change after the Closing Date in
federal, state or foreign law or regulations (including Regulation D) or the
adoption or making after such date of any interpretation, directive or request
applying to a class of banks including such Lender of or under any federal,
state or foreign law or regulations (whether or not having the force of law and
whether or not failure to comply therewith would be unlawful) by any
Governmental Authority or monetary authority charged with the interpretation or
administration thereof.

 

“REIT” shall mean
a real estate investment trust as defined in Sections 856-860 of the Code.

 

“REIT Merger Sub 1”
shall have the meaning set forth in Section 14.31.

 

“REIT Merger Sub 2”
shall have the meaning set forth in Section 14.31.

 

“Rejecting Lender”
shall have the meaning set forth in Section 9.03(c).

 

“Related Entity”
shall mean, as to any Person, (a) any other Person which directly or
indirectly owns 51% or more of the partnership, membership or other ownership
interests of such Person and directly or indirectly controls such Person;
(b) any other Person into which, or with which, such Person is merged,
consolidated or reorganized, or which is otherwise a successor to such Person
by operation of law, or which acquires all or substantially all of the assets
of such Person; (c) any other Person which is a successor to the business
operations of such Person and engages in substantially the same activities; or
(d) any other Person in which a Person described in clauses (b) and (c)
of this definition directly or indirectly owns 51% or more of the partnership,
membership or other ownership interests of such Person and directly or
indirectly controls such Person. As used in this definition, “control”
(including, with its correlative meanings, “controlled by” and “under
common control with”) shall mean possession, directly or indirectly, of
power to direct or cause the direction of management or policies (whether
through ownership of securities or partnership or other ownership interests, by
contract or otherwise).

 

“Related Party”
shall mean:

 

(i)            any family member of any Named
Principal; or

 

28

 

(ii)           any trust, corporation, partnership,
limited liability company or other entity, in which any Named Principal and/or
such other persons referred to in the immediately preceding clause (i) have a
controlling interest.

 

“Release” shall
mean any release, spill, emission, leaking, pumping, injection, pouring,
dumping, deposit, disposal, discharge, dispersal, leaching, seeping or
migration into the indoor or outdoor environment, including the movement of
Hazardous Substances through ambient air, soil, surface water, ground water,
wetlands, land or subsurface strata.

 

“Remediation” shall
mean, without limitation, any investigation, site monitoring, response,
remedial, removal, or corrective action, any activity to cleanup, detoxify,
decontaminate, contain or otherwise remediate any Hazardous Substance, any
actions to prevent, cure or mitigate any Release of any Hazardous Substance,
any action to comply with any Environmental Laws or with any permits issued
pursuant thereto, any inspection, investigation, study, monitoring, assessment,
audit, sampling and testing, laboratory or other analysis, or evaluation
relating to any Hazardous Substances. “Remediate” shall have a correlative
meaning.

 

“Rents” means all
rents (whether denoted as base rent, advance rent, minimum rent, percentage
rent, additional rent or otherwise), issues, income, royalties, profits,
revenues, proceeds, bonuses, deposits (whether denoted as security deposits or
otherwise), termination fees, rejection damages, buy-out fees and any other
fees made or to be made in lieu of rent to the Borrower, any award made
hereafter to the Borrower in any court proceeding involving any tenant, lessee,
licensee or concessionaire under any of the Leases in any bankruptcy,
insolvency or reorganization proceedings in any state or federal court, and all
other payments, rights and benefits of whatever nature from time to time due to
the Borrower under the Leases (including any Leases with respect to signage),
including (i) rights to payment earned under the Leases, (ii) any
payments or rights to payment with respect to parking facilities or other
facilities in any way contained within or associated with the Projects, and
(iii) all other income, consideration, issues, accounts, profits or
benefits of any nature arising from the possession, use and operation of the
Projects.

 

“Requesting Lender”
shall have the meaning assigned to such term in Section 5.07.

 

“Required Lenders”
shall mean Lenders holding at least 66.67% of the Outstanding Principal Amount.

 

“Required Payment”
shall have the meaning assigned to such term in Section 4.06.

 

“Reserve Requirement”
shall mean, for any Interest Period for any Eurodollar Loan, the average
maximum rate at which reserves (including any marginal, supplemental or
emergency reserves) are required to be maintained during such Interest Period
under Regulation D by member banks of the Federal Reserve System in New York
City with deposits exceeding one billion Dollars against “Eurocurrency
liabilities” (as such term is used in Regulation D). Without limiting the
effect of the foregoing, the Reserve Requirement shall include any other
reserves required to be maintained by such member banks by reason of any
Regulatory Change

 

29

 

with respect to
(i) any category of liabilities that includes deposits by reference to
which the LIBO Rate is to be determined as provided in the definition of “LIBO
Rate” in this Section 1.01 or (ii) any category of extensions
of credit or other assets that includes Eurodollar Loans.

 

“Residential
Properties” shall have no meaning for purposes of this Agreement.

 

“Restoration”
shall have the meaning assigned to such term in Section 10.01(a).

 

“Restoration
Consultant” shall have the meaning assigned to such term in Section
10.03(e).

 

“Restoration Retainage”
shall have the meaning assigned to such term in Section 10.03(f).

 

“Restricted Payment”
shall mean all distributions of the Borrower or the Borrower’s Member (in cash,
Property or other obligations) on, or other payments or distributions on
account of (or the setting apart of money for a sinking or other analogous fund
for) the purchase, redemption, retirement or other acquisition of, any portion
of any Equity Interest in the Borrower or the Borrower’s Member or of any
warrants, options or other rights to acquire any such Equity Interest.

 

“Rollover Breakage
Costs” shall have the meaning assigned to such term in Section 2.08.

 

“Security Accounts”
shall mean, collectively, the Cash Trap Account, the Project-Level Account and
any Controlled Account.

 

“Security Documents”
shall mean, collectively, the Deed of Trust, the Hedge Agreement Pledge, the
Cash Trap Account Security Agreement, the Project-Level Account Security
Agreement, the Controlled Account Agreement, the General Assignment and such
other security documents as the Administrative Agent may reasonably request and
all Uniform Commercial Code financing statements required by this Agreement,
the Deed of Trust, the Hedge Agreement Pledge, the Cash Trap Account Security
Agreement, the Project-Level Account Security Agreement, the Controlled Account
Agreement, the General Assignment or any other security document the
Administrative Agent may reasonably request to be filed with respect to the
applicable security interests.

 

“Significant Casualty
Event” shall have the meaning assigned to such term in Section 10.01(b).

 

“SNDA Agreement”
shall mean (i) the form of Subordination, Non-Disturbance, and Attornment
Agreement attached hereto as Exhibit K, (ii) any form attached to a
Major Lease currently in effect or which has been approved by the Administrative
Agent pursuant to the terms of this Agreement or (iii) such other form as is
reasonably satisfactory to the Administrative Agent.

 

“Solvent” shall
mean, when used with respect to any Person, that at the time of determination:
(i) the fair saleable value of its assets is in excess of the total amount of
its

 

30

 

liabilities (including
contingent liabilities); (ii) the present fair saleable value of its assets is
greater than its probable liability on its existing debts as such debts become
absolute and matured; (iii) it is then able and expects to be able to pay its
debts (including contingent debts and other 
commitments) as they mature; and (iv) it has capital sufficient to carry
on its business  as conducted and as
proposed to be conducted.

 

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

 

“Stated Maturity Date”
shall mean the date that is seven (7) years from the expiration of the Stub
Interest Period, subject to Section 2.10.

 

“Stub Interest Period”
shall mean the period commencing on the Closing Date and ending on (but not
including) the first calendar day of the first month following the Closing Date
(or if such day is not a Business Day, the next Business Day thereafter).

 

“Subsidiary” shall
mean, with respect to any Person, any corporation, limited liability company,
partnership or other entity of which at least a majority of the securities or
other ownership interests having by the terms thereof ordinary voting power to
elect a majority of the board of directors or other persons performing similar
functions of such corporation, limited liability company, partnership or other
entity (irrespective of whether or not at the time securities or other
ownership interests of any other class or classes of such corporation, limited
liability company, partnership or other entity shall have or might have voting
power by reason of the happening of any contingency) is at the time directly or
indirectly owned or controlled by such Person or one or more Subsidiaries of
such Person or by such Person and one or more Subsidiaries of such Person.

 

“Swap Agreement”
means any agreement (whether one or more) with respect to any swap, forward,
future or derivative transaction or option or similar agreement (including,
without limitation, any cap or collar) involving, or settled by reference to,
one or more rates, currencies, commodities, equity or debt instruments or
securities, or economic, financial or pricing indices or measures of economic,
financial or pricing risk or value or any similar transaction or any
combination of these transactions. For purposes hereof, the credit exposure at
any time of any Person under a Swap Agreement to which such Person is a party
shall be determined at such time in accordance with the standard methods of
calculating credit exposure under similar arrangements as reasonably prescribed
from time to time by the Administrative Agent, taking into account (a)
potential interest rate movements, (b) the respective termination provisions,
(c) the notional principal amount and term of such Swap Agreement and (d) any
provisions providing for the netting of amounts 
payable by and to a Person thereunder (or simultaneous payments of amounts
by and to such Person).

 

“Syndication”
shall have the meaning assigned to such term in Section 14.26.

 

“Taking” means a
taking or voluntary conveyance during the term hereof of all or part of any
Project or any interest therein or right accruing thereto or use thereof, as
the result of, or in settlement of, any condemnation or other eminent domain
proceeding by any Governmental

 

31

 

Authority affecting such project or any portion thereof whether or not the
same shall have actually been commenced.

 

“Taxes” shall mean
any and all present or future taxes, levies, imposts, duties, deductions,
charges or withholdings imposed by any Governmental Authority.

 

“Third Party
Counterparty” shall have the meaning assigned to such term in Section
8.19(a).

 

“Third Party Hedge
Agreement” shall have the meaning assigned to such term in Section
8.19(c).

 

“Title Company”
shall mean Chicago Title Insurance Company and any one or more reinsurers
identified on Schedule 1.01(9) attached hereto; provided, however,
that (i) in no event shall the amount insured by any such title insurer exceed
the limits shown on Schedule 1.01(9) and (ii) any reinsurance shall be
subject to direct access agreements from such reinsurers.

 

“Title Policy”
shall have the meaning assigned to such term in Section 6.01(k).

 

“Trading with the
Enemy Act” shall mean 50 U.S.C. App. 1 et seq.

 

“Transactions”
shall mean, collectively, (a) the execution, delivery and performance by
the Borrower of this Agreement and the other Loan Documents to which it is a
party, the borrowing of the Loans and the use of the proceeds thereof and
(b) the execution, delivery and performance by the other Borrower Parties
of the other Loan Documents to which they are a party and the performance of
their obligations thereunder.

 

“Transfer” shall
mean any transfer, sale, assignment, mortgage, encumbrance, pledge or
conveyance, whether voluntary or involuntary.

 

“Type” shall have
the meaning assigned to such term in Section 1.03.

 

“Uniform Commercial
Code” shall mean the Uniform Commercial Code of the State of California,
except with respect to those circumstances in which the Uniform Commercial Code
of the State of California shall require the application of the Uniform
Commercial Code of another state, in which case, for purposes of such
circumstances, the “Uniform Commercial Code” shall mean the Uniform Commercial
Code of such other state.

 

“Use” shall mean,
with respect to any Hazardous Substance, the generation, manufacture, processing,
distribution, handling, use, treatment, recycling or storage of such Hazardous
Substance or transportation to or from the property of such Person of such
Hazardous Substance.

 

“Withdrawal Liability”
means liability to a Multiemployer Plan as a result of a complete or partial
withdrawal from such Multiemployer Plan.

 

32

 

1.02                           Accounting Terms and Determinations.

 

(a)                                  Except as otherwise expressly provided
herein, all terms of an accounting or financial nature shall be construed in
accordance with GAAP, as in effect from time to time.

 

(b)                                 Without first obtaining the Administrative
Agent’s consent, the Borrower will not change the last day of its fiscal year
from December 31, or the last days of the first three fiscal quarters in
each of its fiscal years.

 

1.03                           Types of Loans. Loans hereunder are distinguished by “Type”.
The “Type” of a Loan refers to whether such Loan is a Base Rate Loan or a
Eurodollar Loan, each of which constitutes a Type.

 

1.04                           Terms Generally. The definitions of terms herein shall
apply equally to the singular and plural forms of the terms defined. Whenever
the context may require, any pronoun shall include the corresponding
masculine, feminine and neuter forms. The words “include”, “includes” and “including”
shall be deemed to be followed by the phrase “without limitation”. The word “will”
shall be construed to have the same meaning and effect as the word “shall”.
Unless the context requires otherwise (a) any definition of or reference
to any agreement, instrument or other document herein shall be construed as
referring to such agreement, instrument or other document as from time to time
Modified (subject to any restrictions on such Modifications set forth herein), (b) any
reference herein to any Person shall be construed to include such Person’s
successors and assigns, (c) the words “herein”, “hereof” and “hereunder,”
and words of similar import, shall be construed to refer to this Agreement in
its entirety and not to any particular provision hereof, (d) all
references herein to Articles, Sections, Exhibits and Schedules shall be
construed to refer to Articles and Sections of, and Exhibits and Schedules to,
this Agreement, (e) the words “asset” and “property” shall be construed to
have the same meaning and effect and to refer to any and all tangible and
intangible assets and properties, including cash, securities, accounts and
contract rights and (f) whenever this Agreement provides that any consent
or approval will not be “unreasonably withheld” or words of like import, the
same shall be deemed to include within its meaning that such consent or
approval will not be unreasonably delayed or conditioned.

 

ARTICLE II

 

COMMITMENTS,
LOANS, NOTES AND PREPAYMENTS

 

2.01                           Loans. Each Lender severally agrees, on the terms and
conditions of this Agreement, to make a loan (each such loan being a “Loan”
and collectively, the “Loans”) on a non-revolving basis to the Borrower
in Dollars on the Closing Date in a principal amount up to but not exceeding
the amount of the Commitment of such Lender. Thereafter the Borrower may Convert
all or a portion of the Outstanding Principal Amount of one Type of Loan into
another Type of Loan (as provided in Section 2.05) or Continue one
Type of Loan as the same Type of Loan (as provided in Section 2.05),
subject in all cases to the limit on the number of Interest Periods that may be
outstanding at any one time as set forth in the definition of “Interest Period”.

 

33

 

2.02                           Funding of Loans. On the Closing Date, each Lender shall
make available from its Applicable Lending Office the amount of the Loan to be
made by it on such date to the Administrative Agent as specified by the
Administrative Agent, in immediately available funds, for account of the
Borrower. The amount so received by the Administrative Agent shall, subject to
the terms and conditions of this Agreement, be made available to the Borrower
in immediately available funds, for the uses and purposes identified on a
sources and uses statement approved by the Administrative Agent and the
Borrower.

 

2.03                           Several Obligations. The failure of any Lender to make any
Loan to be made by it on the date specified therefor shall not relieve any
other Lender of its obligation to make its Loan on such date, but neither any
Lender nor the Administrative Agent shall be responsible for the failure of any
other Lender to make a Loan to be made by such other Lender. The amounts
payable by the Borrower at any time hereunder and under the Note to each Lender
shall be a separate and independent debt. It is understood and agreed that the
Closing hereunder shall not occur unless each of the Lenders shall have funded
the amount of the Loan to be made by it.

 

2.04                           Notes.

 

(a)                                  Notes. The Loan made by each Lender shall be evidenced by
its Note.

 

(b)                                 Substitution, Exchange and Subdivision of
Notes. No Lender
shall be entitled to have its Note substituted or exchanged for any reason, or
subdivided for promissory notes of lesser denominations, except (i) in
connection with a permitted assignment of all or any portion of such Lender’s
Commitment, Loan and Note pursuant, and subject to the terms and conditions of,
Section 14.07(b) (and, if requested by any Lender in
connection with such permitted assignment, the Borrower agrees to so exchange
any such Note provided the original Note subject to such exchange has been delivered
to the Borrower) or (ii) as provided in Section 14.30 with
respect to severance of Notes if elected by Eurohypo, provided the original
Note severed, split, divided or otherwise replaced pursuant to Section 14.30
has been delivered to the Borrower.

 

(c)                                  Loss, Theft, Destruction or Mutilation of
Notes. In the
event of the loss, theft or destruction of any Note, upon the Borrower’s
receipt of a reasonably satisfactory indemnification agreement executed in
favor of the Borrower by the holder of such Note, or in the event of the
mutilation of any Note, upon the surrender of such mutilated Note by the holder
thereof to the Borrower, the Borrower shall execute and deliver to such holder
a replacement Note in lieu of the lost, stolen, destroyed or mutilated Note.

 

2.05                           Conversions or Continuations of Loans.

 

(a)                                  Subject to Section 4.04, the
Borrower shall have the right to Convert Loans of one Type into Loans of
another Type or Continue Loans of one Type as Loans of the same Type, at any
time or from time to time; provided that:  (i) the Borrower shall give the
Administrative Agent notice of each such Conversion or Continuation as provided
in Section 4.05; (ii) Eurodollar Loans may be Converted
only on the last day of an Interest Period for such Loans unless the Borrower
complies with the terms of Section 5.05 and (iii) subject to

 

34

 

Sections 5.01(a) and 5.03, any Conversion or Continuation of Loans shall be pro
rata among the Lenders. Notwithstanding the foregoing, and without limiting the
rights and remedies of the Administrative Agent and the Lenders under Article XII,
in the event that any Event of Default exists, the Administrative Agent may (and
at the request of the Required Lenders shall) suspend the right of the Borrower
to Convert any Loan into a Eurodollar Loan, or to Continue any Loan as a
Eurodollar Loan for so long as such Event of Default exists, in which event all
Loans shall be Converted (on the last day(s) of the respective Interest Periods
therefor) into, or Continued as, as the case may be, Base Rate Loans. In
connection with any such Conversion, a Lender may (at its sole discretion)
transfer a Loan from one Applicable Lending Office to another.

 

(b)                                 Notwithstanding anything to the contrary
contained in this Agreement, at any time that a Hedge Agreement is in effect,
the Borrower shall have the right to choose only an Interest Period which is
the same as the Interest Rate Hedge Period, provided that the foregoing shall
only apply to a Hedge Agreement that is required by Section 8.19(a) of
this Agreement.

 

2.06                           Prepayment.

 

(a)                                  Prepayment of the Loans. Upon not less than ten (10) days’
prior written notice to the Administrative Agent, the Borrower may prepay
the Loans, in whole or in part, in minimum increments of One Million Dollars
($1,000,000) except as otherwise provided by Section 2.06(c),
subject to the following:

 

	
  If the prepayment occurs during the

  following period:

  	
   

  	
  The percentage is as follows:

  
	
   

  	
   

  	
   

  
	
  During the period from the Closing Date to and including the date
  which occurs six (6) months after the Closing Date

  	
   

  	
  1.00%

  
	
   

  	
   

  	
   

  
	
  During the period from the day immediately following the date which
  occurs six (6) months after the Closing Date to and including the date
  which occurs twelve (12) months after the Closing Date

  	
   

  	
  0.50%

  
	
   

  	
   

  	
   

  
	
  Thereafter

  	
   

  	
  0.00%

  

 

 

35

 

(i)                                     any such prepayment shall be accompanied by
the amount of interest theretofore accrued but unpaid in respect of the
principal amount so prepaid, in accordance with Section 2.08;

 

(ii)                                  except as provided below, any such prepayment
(except as a result of a Casualty Event or Taking or any prepayment made
pursuant to Section 10.03(j) or Section 14.25)) shall
be accompanied by a prepayment premium equal to the following percentage of the
principal amount so prepaid:

 

and

 

(iii)                               such prepayment shall be accompanied by
any amounts payable to a Lender pursuant to Section 5.05 as a
result of such prepayment while a Eurodollar Loan is in effect, in accordance
with Section 2.08.

 

If the Loans are
paid or prepaid in whole or in part for any reason (including acceleration
of the Loans or because the Loans automatically become due and payable in
accordance with Section 12.02(a)), other than by a Casualty Event
or Taking or any prepayment made pursuant to Section 10.03(j) or Section 14.25)
at any time, the Borrower shall pay to the Administrative Agent (on behalf of
the Lenders) the amount(s) described in clauses (i), (ii), as
applicable, and (iii), of the immediately preceding sentence.
Notwithstanding the foregoing, no prepayment premium pursuant to clause (ii) of
Section 2.06(a) shall be payable in connection with any
prepayment of principal made other than pursuant to Section 2.09(a),
if such prepayment, when aggregated with all past prepayments made other than
pursuant to Section 2.09(a), would not exceed $42,500,000.

 

(b)                                 Treatment of Prepayments. Except for any mandatory prepayment
made pursuant to Section 2.07 and any prepayment made under Sections
2.06(c) and 2.09, and notwithstanding when such prepayment is
made, each partial prepayment of the Loans shall be deemed to reduce the
Allocated Loan Amounts pro-rata in accordance with the Allocated Loan Amount
for each Project.

 

(c)                                  Prepayment Upon Release of Projects. Notwithstanding anything to the
contrary contained in this Section 2.06, any prepayment made in
connection with the release in accordance with the terms contained in Section 2.09
of any one or more of the Projects may be made at any time upon not less
than ten (10) days’ prior written notice to the Administrative Agent, and
without reference to the minimum One Million Dollars ($1,000,000) increment
requirements of Section 2.06(a), but subject to payment of any
applicable prepayment premium under clause (ii) of Section 2.06(a) and
compliance with the provisions set forth in clause (iii) of Section 2.06(a) above,
and the applicable provisions set forth in Section 2.09.

 

(d)                                 Acknowledgments Regarding Prepayment
Premium. The
prepayment premiums required by this Section 2.06 are acknowledged
by the Borrower to be partial compensation to the Lenders for the costs of
reinvesting the proceeds of the Loans and for the loss of the contracted rate
of return on the Loans and shall be due in accordance with the terms of this Section 2.06
upon any prepayment of the Loans, including any prepayment occurring after an
acceleration resulting from a violation of the provisions restricting Transfers
set forth in this Agreement. Furthermore, the Borrower acknowledges that the
loss that may be sustained by the Lenders as a result of such a prepayment
by the Borrower is not susceptible of precise calculation, and the prepayment
premium represents the good faith effort of the Borrower and the Lenders to
compensate the Lenders for such loss and the parties’ reasonable estimate of
such loss, and is not a penalty. By initialing this provision where indicated
below, the Borrower waives any rights it may have under California Civil
Code Section 2954.10, or any successor statute, and the Borrower confirms
that the Lenders’ agreement to make the Loans at the interest rate and on the
other terms set forth herein constitutes adequate and valuable consideration,

 

36

 

given individual weight
by the Borrower, for the prepayment provisions set forth in this Section 2.06.

 

	
   

  	
   

  	
   

  
	
  Borrower’s Initials

  

 

2.07                           Mandatory Prepayments. If a Casualty Event or Taking shall
occur with respect to any Project, the Borrower, upon the Borrower’s or the
Administrative Agent’s receipt of the applicable Insurance Proceeds or
Condemnation Awards, shall prepay the Loan, if required by the provisions of Article X,
on the dates and in the amounts specified therein without premium (but subject
to the provisions of Sections 2.08 and 5.05) or, at the
instruction of the Borrower (provided no Event of Default is then continuing),
shall be held in a Controlled Account by the Administrative Agent and applied
to prepayment of the Loan on the next Payment Date (in which case the amount so
held shall continue to bear interest at the rate(s) provided in this Agreement
until so applied to prepay the Loan). Nothing in this Section 2.07
shall be deemed to limit any obligation of the Borrower under the Deeds of
Trust or any other Security Document, including any obligation to remit to the
Cash Trap Account, Project-Level Account, or a Controlled Account pursuant to
the Deeds of Trust or any of the other Security Documents the Insurance
Proceeds, Condemnation Awards or other compensation received in respect of any
Casualty Event or Taking.

 

2.08                           Interest and Other Charges on Prepayment. If the Loans are prepaid, in whole or
in part, pursuant to Section 2.06 or 2.07, each such
prepayment shall be made together with (a) the accrued and unpaid interest
on the principal amount prepaid, and (b) any amounts payable to a Lender
pursuant to Section 5.05 as a result of such prepayment while an
Adjusted LIBO Rate is in effect (provided the Borrower is notified of such
amount or an estimate thereof), including, without limitation, any such amounts
that may result from a prepayment other than on the last day of an
Interest Period for a Eurodollar Loan the Interest Period of which has been
automatically Continued pursuant to Section 4.05 during any period
on which a prepayment date has been postponed in accordance with the provisions
set forth below in this Section 2.08; provided, however,
that any such prepayment shall be applied first, to the prepayment of
any portions of the Outstanding Principal Amount that are Base Rate Loans and, second,
to the prepayment of any portions of the Outstanding Principal Amount that are
Eurodollar Loans applying such sums first to Eurodollar Loans of the shortest
maturity so as to minimize Rollover Breakage Costs (as defined below); provided
further, however, that if an Event of Default exists, the
Administrative Agent may distribute such payment to the Lenders for
application in such manner as it or the Required Lenders, subject to Section 4.02,
may determine to be appropriate. Each prepayment pursuant to Section 2.06
shall be made on the prepayment date specified in the notice of prepayment
delivered pursuant to Section 4.05, unless such notice is revoked
(or the date of prepayment is postponed) by a further written notice (which may be
delivered by the Borrower by facsimile to the Administrative Agent). Any notice
revoking a notice of prepayment (or postponing a previously-specified
prepayment date) shall be delivered not less than one (1) Business Day
prior to the date of prepayment specified in the notice of prepayment; provided,
however, in the event that the Borrower revokes or postpones such notice
during the last three (3) Business Days of any Interest Period for a
Eurodollar Loan, and provided that the Borrower has not elected to Convert such
Eurodollar Loan into a Base Rate Loan pursuant to

 

37

 

Section 2.05, the Borrower acknowledges that losses,
costs and expenses for which the Borrower is responsible pursuant to Section 5.05(b) shall
include, without limitation, losses, costs and expenses that may subsequently
result from the early repayment, termination, cancellation or failure of the
Borrower to borrow any Eurodollar Loan that was to have been automatically
continued pursuant to Section 4.05 (“Rollover Breakage Costs”).

 

2.09                           Release of Projects. Except as set forth in this Section 2.09,
or unless the Obligations have been paid in full, the Borrower shall have no
right to obtain the release of any Project from the Lien of the Loan Documents,
and no repayment or prepayment of any portion of the Loans shall cause, give
rise to a right to require, or otherwise result in, the release of the Lien of
the Deed of Trust on any Project or any other collateral securing the Loans.
Any release upon payment of the Obligations in full shall be in accordance with
the provisions of the Deeds of Trust governing releases.

 

(a)                                  Release of Projects. At any time following the Closing Date,
the Borrower on one or more occasions may obtain, and the Administrative
Agent shall take such actions as are necessary to effectuate pursuant to this Section 2.09(a),
the release of the entirety of any Project from the Lien of the Deeds of Trust
(and related Loan Documents) thereon and the release of the Borrower’s
obligations under the Loan Documents with respect to such Project (other than
those which expressly survive repayment, including, but not limited to, those
set forth in the Environmental Indemnity), upon satisfaction of each of the
following conditions:

 

(i)                                     The Borrower shall submit to the
Administrative Agent (on behalf of the Lenders), by 3:00 P.M., New York
City time, at least ten (10) days prior to the date of the proposed
release, written notice of its election to obtain such release (which notice
shall include a certification by an Authorized Officer of the Borrower that the
proposed release complies with all of the conditions set forth in this Section 2.09(a)),
together with the form or forms for a release of Lien and related Loan
Documents (or, in the case of a Deed of Trust, a request for reconveyance) for
such Project for execution by the Administrative Agent, which the
Administrative Agent shall execute and deliver to the Borrower for recordation
upon satisfaction of all conditions set forth in this Section 2.09(a).
Such release shall be in a form appropriate in each jurisdiction in which
the applicable Project is located and reasonably satisfactory to the
Administrative Agent and its counsel. Any notice of a proposed release of a Project
pursuant to this Section 2.09(a) may be revoked (or the
date proposed for such release may be postponed) by a further written
notice (which may be delivered by the Borrower by facsimile to the
Administrative Agent). Any notice revoking a proposed release (or postponing
the date for a proposed release) shall be delivered not less than one (1) Business
Day prior to the date of such release specified in the notice of release; provided,
however, in the event that the Borrower revokes or postpones such notice
during the last three (3) Business Days of the Interest Period for any
Eurodollar Loan, and provided that the Borrower has not elected to Convert such
Eurodollar Loan into a Base Rate Loan pursuant to Section 2.05, the
Borrower acknowledges that the losses, costs and expenses for which the
Borrower shall be responsible under Section 5.05(b) shall
include Rollover Breakage Costs;

 

(ii)                                  The Borrower shall remit to the
Administrative Agent an amount equal to one hundred ten percent (110%) of the
Allocated Loan Amount for the

 

38

 

applicable Project (for
application to the principal balance of the Loans), plus any prepayment premium
payable in connection with such prepayment pursuant to clause (ii) of
Section 2.06(a). The minimum One Million Dollar ($1,000,000)
increment requirements of Section 2.06(a) shall not apply to a
prepayment of the Loans made in accordance with this Section 2.09(a);

 

(iii)                               The Borrower shall pay to the
Administrative Agent all sums, including, but not limited to, interest payments
and principal payments, if any, that are then due and payable under the Notes,
this Agreement, the Deeds of Trust and the other Loan Documents, and all costs
due pursuant to Section 5.05 and clause (viii) of this Section 2.09(a) (it
being agreed that accrued interest on the principal amount to be paid pursuant
to clause (ii) of this Section 2.09(a) shall not be due
and payable in connection with such release (unless such accrued interest is
otherwise due and payable), but shall be due and payable on the next Payment
Date);

 

(iv)                              [Reserved];

 

(v)                                 Immediately prior to such release, the
Debt Service Coverage Ratio as calculated for all of the Projects then securing
the Loans other than the Project proposed to be released (and assuming for
purposes of the calculation of the DSCR Debt Service that the principal of the
Loans shall have been reduced by the principal amount payable with respect to
the Project to be released in accordance with clause (ii) of this Section 2.09(a))
shall be equal to or greater than 1.50-to-1.00;

 

(vi)                              After giving effect to such release and
the payment of principal required to be made in connection therewith, the
Outstanding Principal Amount of the Loans (unless the Loans shall be repaid in
full) shall not be less than $85,000,000.

 

(vii)                           No Default or Event of Default exists at
the time of the Borrower’s request or on the date of the proposed release or
after giving effect thereto (other than a Default or Event of Default that
would be cured by effectuating such release); and

 

(viii)                        The Borrower shall pay all costs and
expenses (including, but not limited to, reasonable legal fees and
disbursements, escrow and trustee fees, costs for title insurance endorsements
required by the Administrative Agent to confirm the continued priority of the
Liens in favor of the Lenders on the Projects not being released and other
out-of-pocket costs and expenses) incurred by the Administrative Agent in
connection with such release.

 

It
is understood and agreed that no such release shall impair or otherwise
adversely affect the Liens, security interests and other rights of the
Administrative Agent or the Lenders under the Loan Documents not being released
(or as to the parties to the Loan Documents and Projects subject to the Loan
Documents not being released).

 

(b)                                 Any Project released from the Lien of the
Deed of Trust and other Loan Documents pursuant to this Section 2.09
shall, effective upon such release, no longer be considered a “Project” for
purposes of this Agreement or the other Loan Documents, except for

 

39

 

purposes of those
indemnification obligations and other covenants which, by their terms,
expressly survive any such release.

 

2.10                           Call Date. Notwithstanding anything to the contrary contained
in this Agreement, (i) the Outstanding Principal Amount under all Notes
shall become automatically due and payable on the fifth (5th) anniversary of
the expiration of the Stub Interest Period if on or prior to such date the
Borrower has not paid to the Administrative Agent in accordance with the Fee
Letter for the benefit of the Lenders an extension fee equal to five (5) basis
points (0.05%) times the Outstanding Principal Amount under all Notes as of the
fifth (5th) anniversary of the expiration of the Stub Interest Period or if on
such date an Event of Default exists and (ii) the Outstanding Principal
Amount under all Notes shall become automatically become due and payable on the
sixth (6th) anniversary of the expiration of the Stub Interest Period if on
such date the Borrower has not paid to the Administrative Agent in accordance
with the Fee Letter for the benefit of the Lenders an extension fee equal to
five (5) basis points (0.05%) times the Outstanding Principal Amount under
all Notes as of the sixth (6th) anniversary of the expiration of the Stub
Interest Period or if on such date an Event of Default exists.

 

ARTICLE III

 

PAYMENTS
OF PRINCIPAL AND INTEREST

 

3.01                           Repayment of Loans. The Borrower hereby promises to pay to
the Administrative Agent for the account of each Lender the principal amount of
such Lender’s outstanding Loans to the Borrower, together with accrued and
unpaid interest, any applicable fees and all other amounts due under the Loan
Documents with respect to such Loans, which amounts, to the extent not
previously paid, shall, without notice, demand or other action, be due and
payable on the Maturity Date.

 

3.02                           Interest.

 

(a)                                  The Borrower hereby promises to pay to
the Administrative Agent for the account of each Lender interest on the unpaid
principal amount of each Loan (which may be Base Rate Loans and/or
Eurodollar Loans) made by such Lender for the period from and including the
date of such Loan to but excluding the date such Loan shall be paid in full if
paid in the time and manner provided for in Section 4.01, at the
following rates per annum:

 

(i)                                     during such periods as such Loan is a
Base Rate Loan, the Base Rate plus the Applicable Margin; and

 

(ii)                                  during such periods as such Loan is a Eurodollar
Loan, for each Interest Period relating thereto, the Adjusted LIBO Rate for
such Loan for such Interest Period plus the Applicable Margin.

 

(b)                                 Accrued interest on each Loan shall be
payable (i) monthly in arrears on each Payment Date for all interest
accrued through but not including the relevant Payment Date and (ii) in
the case of any Loan, upon the payment or prepayment thereof (except as
expressly provided in Section 2.09(a)(iii)) or the Conversion of
such Loan to a Loan of another Type (but

 

40

 

only on the principal
amount so paid, prepaid or Converted), except that interest payable hereunder
at the Post-Default Rate shall be payable from time to time on demand.

 

(c)                                  Notwithstanding anything to the contrary
contained herein, after the Maturity Date and during any period when an Event
of Default exists, the Borrower shall pay to the Administrative Agent for the
account of each Lender interest at the applicable Post-Default Rate on the
outstanding principal amount of any Loan made by such Lender, any interest
payments thereon not paid when due and on any other amount due and payable by
the Borrower hereunder, under the Notes and any other Loan Documents.

 

(d)                                 Promptly after the determination of any interest
rate provided for herein or any change therein, the Administrative Agent shall
give notice thereof to the Lenders to which such interest is payable and to the
Borrower, but the failure of the Administrative Agent to provide such notice
shall not affect the Borrower’s obligation for the payment of interest on the
Loans.

 

(e)                                  In addition to any sums due under this Section 3.02,
the Borrower shall pay to the Administrative Agent for the account of the
Lenders a late payment premium in the amount of four percent (4%) of (i) any
payments of principal under the Loans not made when due, and (ii) any
payments of interest or other sums under the Loans not made when due, provided,
in each case, that such payments are not made within the earlier of (i) two
(2) Business Days after the Borrower receives written notice from the
Administrative Agent of Borrower’s failure to make such payment when due and (ii) five
(5) days after the date the same became due, which late payment premium
shall be due with any such late payment or upon demand by the Administrative
Agent. Such late payment charge represents the reasonable estimate of the
Borrower, the Administrative Agent and the Lenders of a fair average
compensation for the loss that may be sustained by the Lenders due to the
failure of the Borrower to make timely payments. Such late charge shall be paid
without prejudice to the right of the Administrative Agent and the Lenders to
collect any other amounts provided herein or in the other Loan Documents to be
paid or to exercise any other rights or remedies under the Loan Documents.

 

(f)                                    Reserved.

 

3.03                           Project-Level Account. The Borrower shall, and shall cause the
Property Manager to (a) deposit all Rents from the Projects, and all
amounts received by the Borrower or the Property Manager constituting Rent or
other revenue or sums of any kind from the Projects, into the applicable
Project-Level Account for such Project in accordance with the Project-Level
Account Security Agreement and (b) upon an Event of Default, and upon
written request of the Administrative Agent, deliver irrevocable written
instructions to all tenants under Leases to deliver all Rents payable
thereunder directly to the applicable Project-Level Account for such Project.
The Borrower shall not maintain any checking, money market or other deposit
accounts for the deposit and holding of any revenues or sums derived from the
ownership or operation of the Projects other than the Project-Level Account
(except for such replacement or additional deposit accounts in which the
Administrative Agent shall have been granted, pursuant to a written instrument
in form and substance satisfactory to the Administrative Agent, a first
priority security interest on the terms provided herein, in which case the “Project-Level
Account” referred to herein shall include such replacement or additional
account), other than (i) accounts

 

41

 

into which funds
initially deposited in a Project-Level Account have been, or may be,
transferred in compliance with the Project-Level Account Security Agreement and
(ii) any Cash Trap Account or Controlled Account required hereunder.

 

ARTICLE IV

 

PAYMENTS;
PRO RATA TREATMENT; COMPUTATIONS; ETC.

 

4.01                           Payments.

 

(a)                                  Payments by the Borrower. Except to the extent otherwise provided
herein, all payments of principal, interest and other amounts to be made by the
Borrower under this Agreement, the Notes and any other Loan Document, shall be
made in Dollars, in immediately available funds, without deduction, set-off or
counterclaim, to the Administrative Agent at the Administrative Agent’s
Account, not later than 3:00 p.m., New York City time, on the date on
which such payment shall become due (each such payment made after such time on
such due date to be deemed to have been made on the next succeeding Business
Day).

 

(b)                                 Application of Payments. The Borrower may, at the time of making
each payment under this Agreement, any Note or any other Loan Document for the
account of any Lender (if such payment is not comprised solely of interest),
specify to the Administrative Agent (which shall so notify the intended
recipient(s) thereof) the Loans or other amounts to which such payment is to be
applied (and in the event that the Borrower fails to so specify, or if an Event
of Default exists, the Administrative Agent may apply such payment to
amounts then due to the Lenders, subject to Section 4.02, pro rata
in accordance with their Proportionate Share and, thereafter, may apply
any remaining portion of such payment in such manner as it or the Required
Lenders, subject to Section 4.02, may determine to be
appropriate). To the extent that the Borrower has the right pursuant to this Section 4.01(b) to
designate the obligations to which a payment made by the Borrower under the
Loan Documents is to be applied, the Borrower shall exercise such rights in
such a manner as shall result in the application of such payment to the
designated obligation in a manner that will result in each Lender receiving its
pro rata share of the amount so
paid by the Borrower on account of the designated obligation in proportion to
the respective amounts then due and payable on account of the designated
obligation to all Lenders entitled to payment of the designated obligation.
Notwithstanding the foregoing and to avoid any potential ambiguity between this
provision and Section 2.06, nothing in the foregoing sentence is
intended to modify or supersede Section 2.06.

 

(c)                                  Payments Received by the Administrative
Agent. Each
payment received by the Administrative Agent under this Agreement, any Note or
any other Loan Document for account of any Lender shall be paid by the
Administrative Agent promptly to such Lender (and in any event, the
Administrative Agent shall use commercially reasonable efforts to pay such sums
to such Lender on the same Business Day such sums are received by the
Administrative Agent provided the Administrative Agent has actually received
such sums prior to 3:00 p.m. on such Business Day), in immediately
available funds, for account of such Lender’s Applicable Lending Office for the
Loan or other obligation in respect of which such payment is made. In the event
that the Administrative Agent fails to make such payment to such Lender within
two

 

42

 

(2) Business Days of
receipt, subject to any delays resulting from force majeure, then such Lender
shall be entitled to interest from the Administrative Agent at the Federal
Funds Rate from the date that such payment should have been paid by the
Administrative Agent to such Lender until the Administrative Agent makes such
payment.

 

(d)                                 Extension to Next Business Day. If the due date of any payment under
this Agreement or any Note would otherwise fall on a day that is not a Business
Day, such date shall be extended to the next succeeding Business Day, and
interest shall be payable for any principal so extended for the period of such
extension.

 

4.02                           Pro Rata Treatment. Except to the extent otherwise provided
herein:  (a) each borrowing from the
Lenders under Section 2.01 shall be made from the Lenders on a pro
rata basis according to the amounts of their respective Commitments; (b) except
as otherwise provided in Section 5.04, Eurodollar Loans having the
same Interest Period shall be allocated pro rata among the Lenders according to
the amounts of their respective Commitments (in the case of the making of
Loans) or their respective Loans (in the case of Conversions and Continuations
of Loans); (c) each payment or prepayment of principal of Loans by the
Borrower shall be made for account of the Lenders on a pro rata basis in
accordance with the respective unpaid principal amounts of the Loans held by
them; and (d) each payment of interest on Loans by the Borrower shall be
made for the account of the Lenders on a pro rata basis in accordance with the
amounts of interest on such Loans then due and payable to the respective
Lenders. Notwithstanding anything to the contrary contained in this Agreement
or in any of the other Loan Documents, (a) all payments received by the
Administrative Agent on account of interest, principal (including, without
limitation, prepayments), fees or other amounts which are required under this
Agreement to be paid to the Lenders pro rata, or in accordance with their
respective Proportionate Shares, shall be paid to the Lenders pro rata in
proportion to the respective amounts of interest, principal, fees or other
amounts, as applicable, then due and payable to all Lenders pursuant to the
Loan Documents, and (b) during the existence of an Event of Default, all
payments received by the Administrative Agent with respect to the Loan shall be
applied as provided in that certain Co-Lender Agreement to be entered into by
and among the Lenders and the Administrative Agent, as the same may be
Modified from time to time.

 

4.03                           Computations. Interest on all Loans shall be computed
on the basis of a year of 360 days and actual days elapsed (including the first
day but excluding the last day) occurring in the period for which payable.

 

4.04                           Minimum Amounts. Except for (a) mandatory
prepayments made pursuant to Section 2.07, 8.19(g), 10.03(j)
or 14.25 of this Agreement or Section 7.08 of the Deed of
Trust, (b) Conversions or prepayments made pursuant to Section 5.04,
and (c) prepayments made pursuant to Section 2.06 or Section 2.09
(which shall be governed by such Sections) each borrowing, Conversion,
Continuation and partial prepayment of principal other than made pursuant to Section 2.09
(collectively, “Loan Transactions”) of Loans shall be in an aggregate
amount at least equal to $1,000,000 (Loan Transactions of or into Loans of
different Types or Interest Periods at the same time hereunder shall be deemed
separate Loan Transactions for purposes of the foregoing, one for each Type or
Interest Period); provided that if any Loans or borrowings would
otherwise be in a lesser principal amount for any period, such Loans shall be
Base Rate Loans during such period. Notwithstanding the foregoing, the minimum
amount of

 

43

 

$1,000,000 shall not
apply to Conversions of lesser amounts into a tranche of Loans that has (or
will have upon such Conversion) an aggregate principal amount exceeding such
minimum amount and one Interest Period.

 

4.05                           Certain Notices. Notices by the Borrower to the
Administrative Agent regarding Loan Transactions and the selection of Types of
Loans and/or of the duration of Interest Periods shall be effective only if
received by the Administrative Agent not later than 3:00 PM, New York City
time, on the date which is the number of calendar days or Business Days, as
applicable, prior to the date of the proposed Loan Transaction specified
immediately below:

 

	
  Notice

  	
   

  	
  Number
  of Days Prior

  
	
   

  	
   

  	
   

  
	
  Optional Prepayment

  	
   

  	
  10 calendar days

  
	
   

  	
   

  	
   

  
	
  Conversions into, Continuations as, or borrowings in Base Rate Loans

  	
   

  	
  3 Business Days

  
	
   

  	
   

  	
   

  
	
  Conversions into, Continuations as, borrowings in, or changes in
  duration of Interest Periods for, Eurodollar Loans

  	
   

  	
  3 Business Days (prior to first day of next applicable Interest
  Period for such Conversion Continuation or change)

  

 

Notices
of the selection of Types of Loans and/or of the duration of Interest Periods
shall be irrevocable. Each notice of a Loan Transaction shall specify the
amount (subject to Section 4.04), Type, and Interest Period of such
proposed Loan Transaction, and the date (which shall be a Business Day) of such
proposed Loan Transaction. Notices for Conversions and Continuations shall be
in the form of Exhibit L attached hereto. Each such notice
specifying the duration of an Interest Period shall specify the portion of the
Loans to which such Interest Period is to relate. The Administrative Agent
shall promptly notify the Lenders of the contents of each such notice. If the
Borrower fails to select (i) the Type of Loan or (ii) the duration of
any Interest Period for any Eurodollar Loan within the time period (i.e., three
(3) Business Days prior to the first day of the next applicable Interest
Period) and otherwise as provided in this Section 4.05, such Loan
(if outstanding as a Eurodollar Loan) will automatically be continued as a
Eurodollar Loan as of the last day of the then current Interest Period for such
Loan, with such Eurodollar Loan having an Interest Period of one month, and the
Borrower shall be deemed to have provided to the Administrative Agent three (3) Business
Days prior to the first day of such Interest Period a duly completed and
unqualified notice requesting such Continuation in the form of Exhibit L.

 

4.06                           Non-Receipt of Funds by the Administrative Agent. Unless the Administrative Agent shall have
been notified by a Lender or the Borrower (each, for purposes of this Section 4.06,
a “Payor”) prior to the date on which such Payor is to make payment to
the Administrative Agent of (in the case of a Lender) the proceeds of a Loan to
be made by such Payor hereunder or (in the case of the Borrower) a payment to
the Administrative Agent for the account of one or more of the Lenders
hereunder (such payment being herein called a “Required Payment”), which
notice shall be effective upon receipt, that such Payor does not intend to make

 

44

 

such Required Payment to
the Administrative Agent, the Administrative Agent may assume that such
Required Payment has been made and may, in reliance upon such assumption (but
shall not be required to), make the amount thereof available to the intended
recipient(s) on such date; and, if such Payor has not in fact made the Required
Payment to the Administrative Agent, the recipient(s) of such payment from the
Administrative Agent shall, on demand, repay to the Administrative Agent the
amount so made available together with interest thereon in respect of each day
during the period commencing on the date (the “Advance Date”) such
amount was so made available by the Administrative Agent until the date the
Administrative Agent recovers such amount at a rate per annum equal to (a) the
Federal Funds Rate for such day in the case of payments returned to the
Administrative Agent by any of the Lenders or (b) the applicable interest
rate due hereunder with respect to payments returned by the Borrower to the
Administrative Agent and, if such recipient(s) shall fail to promptly make such
payment, the Administrative Agent shall be entitled to recover such amount, on
demand, from such Payor, together with interest at the same rates as aforesaid;
provided that if neither the recipient(s) nor such Payor shall return
the Required Payment to the Administrative Agent within three (3) Business
Days (five (5) days in the case the Borrower is the Payor) of the Advance
Date, then, retroactively to the Advance Date, such Payor and the recipient(s)
shall each be obligated to pay interest on the Required Payment as follows:

 

(i)                                     if the Required Payment shall represent a
payment to be made by the Borrower to the Administrative Agent for the benefit
of the Lenders, the Borrower and the recipient(s) shall each be obligated to
pay interest retroactively to the Advance Date in respect of the Required
Payment at the Post-Default Rate (without duplication of the obligation of the
Borrower under Section 3.02 to pay interest on the Required Payment
at the Post-Default Rate), it being understood that the return by the
recipient(s) of the Required Payment to the Administrative Agent shall not
limit such obligation of the Borrower under Section 3.02 to pay
interest at the Post-Default Rate in respect of the Required Payment, and it
being further understood that to the extent the Administrative Agent actually
receives from the Borrower any such interest at the Post-Default Rate on such
Required Payment, such amount so received shall be credited against the amount
of interest (if any) payable by the applicable recipient(s), and

 

(ii)                                  if the Required Payment shall represent
proceeds of a Loan to be made by the Lenders to the Borrower, such Payor and
the Borrower shall each be obligated retroactively to the Advance Date to pay
interest in respect of the Required Payment pursuant to whichever of the rates
specified in Section 3.02 is applicable to the Type of such Loan,
it being understood that the return by the Borrower of the Required Payment to
the Administrative Agent shall not limit any claim that the Borrower may have
against such Payor in respect of such Required Payment and shall not relieve
such Payor of any obligation it may have hereunder or under any other Loan
Documents to the Borrower and no advance by the Administrative Agent to the
Borrower under this Section 4.06 shall release any Lender of its
obligation to fund such Loan except as set forth in the following sentence. If
any such Lender shall thereafter advance any such Required Payment to the
Administrative Agent, together with interest on such Required Payment as
provided herein, such Required Payment shall be deemed such Lender’s applicable
Loan to the Borrower and shall be advanced by the Administrative Agent to 

 

45

 

the Borrower to
the extent the Borrower has remitted the Required Payment and such interest to
the Administrative Agent.

 

4.07         Sharing of Payments, Etc.

 

(a)           Sharing. If any Lender shall
obtain payment of any principal of or interest on any Loan owing to it or
payment of any other amount under this Agreement or any other Loan Document
through the exercise (subject to the provisions of Section 14.10)
of any right of set-off, banker’s lien or counterclaim or similar right or
otherwise (other than from the Administrative Agent as provided herein), and,
as a result of such payment, such Lender shall have received a greater
percentage of the principal of or interest on the Loans or such other amounts
then due hereunder or thereunder by the Borrower to such Lender than the
percentage received by any other Lender, it shall promptly purchase from such
other Lenders participations in (or, if and to the extent specified by such
Lender, direct interests in) the Loans or such other amounts, respectively,
owing to such other Lenders (or in interest due thereon, as the case may be)
in such amounts, and make such other adjustments from time to time as shall be
equitable, to the end that all the Lenders shall share the benefit of such
excess payment (net of any expenses that may be incurred by such Lender in
obtaining or preserving such excess payment) pro rata in accordance with the
unpaid principal of and/or interest on the Loans or such other amounts,
respectively, owing to each of the Lenders. To such end all the Lenders shall
make appropriate adjustments among themselves (by the resale of participations
sold or otherwise) if such payment is rescinded or must otherwise be restored.
Each Lender agrees that it shall turn over to the Administrative Agent (for
distribution by the Administrative Agent to the other Lenders in accordance
with the terms of this Agreement) any payment (whether voluntary or
involuntary, through the exercise of any right of setoff or otherwise) on
account of the Loans held by it in excess of its ratable portion of payments on
account of the Loans obtained by all the Lenders.

 

(b)           Consent by the Borrower. The
Borrower agrees that any Lender so purchasing such a participation (or direct
interest) may exercise (subject, as among the Lenders, to Section 14.10)
all rights of set-off, banker’s lien, counterclaim or similar rights with
respect to such participation as fully as if such Lender were a direct holder
of Loans or other amounts (as the case may be) owing to such Lender in the
amount of such participation.

 

(c)           Rights of Lenders; Bankruptcy.
Nothing contained herein shall require any Lender to exercise any right of
set-off, banker’s lien or counterclaim or similar right or otherwise or shall
affect the right of any Lender to exercise, and retain the benefits of
exercising, any such right with respect to any other indebtedness or obligation
of the Borrower. If, under any applicable bankruptcy, insolvency or other
similar law, any Lender receives a secured claim in lieu of a set-off to which
this Section 4.07 applies, then such Lender shall, to the extent
practicable, exercise its rights in respect of such secured claim in a manner
consistent with the rights of the Lenders entitled under this Section 4.07
to share in the benefits of any recovery on such secured claim.

 

46

 

ARTICLE V

 

YIELD
PROTECTION, ETC.

 

5.01         Additional Costs.

 

(a)           Costs of Making or Maintaining
Eurodollar Loans. The Borrower shall pay directly to each Lender from time
to time such amounts as such Lender may determine to be necessary to
compensate such Lender for any costs that such Lender determines are
attributable to its making or maintaining of any Eurodollar Loans, or its
obligation to make any Eurodollar Loans, hereunder, or, subject to the
following provisions of this Article V, any reduction in any amount
receivable by such Lender hereunder in respect of any of such Eurodollar Loans
or such obligation (such increases in costs and reductions in amounts
receivable being herein called “Additional Costs”), provided such
Additional Costs result from any Regulatory Change that:

 

(i)                                     shall subject any Lender (or its
Applicable Lending Office for any of such Eurodollar Loans) to any tax, duty or
other charge in respect of such Eurodollar Loans or its Note or changes the
basis of taxation of any amounts payable to such Lender under this Agreement or
its Note in respect of any of such Eurodollar Loans (other than Excluded
Taxes); or

 

(ii)                                  imposes or Modifies any reserve, special
deposit or similar requirements (other than the Reserve Requirement utilized in
the determination of the Adjusted LIBO Rate for such Eurodollar Loan) relating
to any extensions of credit or other assets of, or any deposits with or other
liabilities of, any Lender (including any of such Eurodollar Loans or any
deposits referred to in the definition of “LIBO Rate” in Section 1.01),
or any commitment of such Lender (including the Commitment of such Lender
hereunder); or

 

(iii)                               imposes any other condition affecting
this Agreement or the Note of any Lender (or any of such extensions of credit
or liabilities) or its Commitment.

 

If
any Lender requests compensation from the Borrower under this Section 5.01(a) or
Section 5.01(b), the Borrower may, by notice to such Lender (with a
copy to the Administrative Agent), suspend the obligation of such Lender
thereafter to make or Continue Eurodollar Loans, or to Convert Base Rate Loans
into Eurodollar Loans, until the Regulatory Change giving rise to such request
ceases to be in effect or until the Borrower notifies such Lender that the
Borrower is lifting such suspension (in which case the provisions of Section 5.04
shall be applicable), provided that such suspension shall not affect the
right of such Lender to receive the compensation so requested for so long as
any Eurodollar Loan remains in effect.

 

(b)                                 Costs Attributable to Regulatory Change or
Risk-Based Capital Guidelines.
Without limiting the effect of the provisions of this Section 5.01
(but without duplication), the Borrower shall pay to each Lender from time to
time on request such amounts as such Lender may determine to be necessary
to compensate such Lender (or, without duplication, the bank holding company or
other legal entity of which such Lender is a subsidiary) for any costs that it
determines are attributable to the maintenance of its Eurodollar Loans

 

47

 

hereunder by such Lender
(or any Applicable Lending Office or such bank holding company or other legal
entity), pursuant to any law or regulation or any interpretation, directive or
request (whether or not having the force of law and whether or not failure to
comply therewith would be unlawful) of any Governmental Authority (i) following
any Regulatory Change with respect to such law, regulation, interpretation,
directive or request resulting in such costs or (ii) implementing any
risk-based capital guideline or other requirement of capital (whether or not
having the force of law and whether or not the failure to comply therewith
would be unlawful) hereafter issued by any Governmental Authority implementing
at the national level the Basel Accord, in respect of its Commitment or its
Eurodollar Loans (such compensation to include an amount equal to any reduction
of the rate of return on assets or equity of such Lender (or any Applicable
Lending Office or such bank holding company or other legal entity) to a level
below that which such Lender (or any Applicable Lending Office or such bank
holding company or other legal entity) could have achieved but for such law,
regulation, interpretation, directive or request).

 

(c)           Notification and Certification.
Each Lender shall notify the Borrower of any event occurring after the date
hereof entitling such Lender to compensation under subsections (a) or
(b) of this Section 5.01 (setting forth in reasonable
detail the basis of such determination) as promptly as practicable, but in any
event within sixty (60) days, after such Lender obtains actual knowledge
thereof; provided that (i) if any Lender fails to give such notice
within sixty (60) days after it obtains actual knowledge of such an event, such
Lender shall, with respect to compensation payable pursuant to this Section 5.01
in respect of any costs resulting from such event, be entitled to payment under
this Section 5.01 only for costs incurred from and after the date
sixty (60) days prior to the date that such Lender does give such notice and (ii) each
Lender shall designate a different Applicable Lending Office (if applicable)
for the Eurodollar Loans of such Lender affected by such event if such
designation will avoid the need for, or reduce the amount of, such compensation
and will not, in the sole opinion of such Lender, be disadvantageous to such
Lender. Each Lender shall furnish to the Borrower a certificate setting forth
the basis and amount of each request by such Lender for compensation under subsection (a) or (b) of
this Section 5.01. Determinations and allocations by any Lender for
purposes of this Section 5.01 of the effect of any Regulatory
Change pursuant to subsection (a) or (b) of this Section 5.01,
or of the effect of capital maintained pursuant to subsection (b) of
this Section 5.01, on its costs or rate of return of maintaining
Eurodollar Loans or its obligation to make Eurodollar Loans, or on amounts
receivable by it in respect of Eurodollar Loans, and of the amounts required to
compensate such Lender under this Section 5.01, as set forth in the
certificate of the Lender, shall be prima facie evidence of the accuracy of the
determinations and calculations contained or asserted therein. Notwithstanding
anything to the contrary contained herein, it shall be a condition to the
Borrower’s obligation to pay compensation under subsections (a) or (b) of
this Section 5.01 that such compensation requirements are also
being imposed on substantially all other similar classes or categories of
commercial loans or commitments of such Lender similarly affected by the
Regulatory Change and the other guidelines and requirements referred to in this
Section 5.01.

 

5.02         Limitation on Eurodollar Loans.
Anything herein to the contrary notwithstanding, if, on or prior to the
determination of any LIBO Rate for any Interest Period for any Eurodollar Loan:

 

48

 

(a)           after making reasonable efforts, the
Administrative Agent determines, which determination shall be conclusive absent
manifest error, that quotations of interest rates for the relevant deposits
referred to in the definition of “LIBO Rate” in Section 1.01 are
not being provided in the relevant amounts or for the relevant maturities for
purposes of determining rates of interest for Eurodollar Loans as provided
herein; or

 

(b)           the Administrative Agent determines,
which determination shall be conclusive absent manifest error, that, as a
result of circumstances arising after the Closing Date, the relevant rates of
interest referred to in the definition of “LIBO Rate” in Section 1.01
upon the basis of which the rate of interest for Eurodollar Loans for such
Interest Period is to be determined are not likely adequately to cover the cost
to such Lenders of making or maintaining Eurodollar Loans for such Interest
Period;

 

then
the Administrative Agent shall give the Borrower and each Lender prompt notice
thereof and, so long as such condition remains in effect, the Lenders shall be
under no obligation to make additional Eurodollar Loans, to Continue Eurodollar
Loans or to Convert Base Rate Loans into Eurodollar Loans, and the Borrower
shall, on the last day(s) of the then current Interest Period(s) for the
outstanding Eurodollar Loans, either prepay such Eurodollar Loans in accordance
with Sections 2.06 and 2.07 or, in accordance with Section 2.05,
Convert such Eurodollar Loans into Base Rate Loans or other Eurodollar Loans in
amounts and maturities which are still being provided. Notwithstanding the foregoing,
(i) if the applicable conditions under clauses (a) or (b) of
this Section 5.02 affect only a portion of the Eurodollar Loans,
the balance of the Eurodollar Loans may continue as Eurodollar Loans and (ii) if
the applicable conditions under clauses (a) and (b) of
this Section 5.02 only affect certain Interest Periods, the
Borrower, subject to the terms and conditions of this Agreement, may elect
to have Eurodollar Loans with such other Interest Periods.

 

5.03         Illegality. Notwithstanding any
other provision of this Agreement, if it becomes unlawful for any Lender or its
Applicable Lending Office to honor its obligation to make or maintain
Eurodollar Loans hereunder (and, in the sole opinion of such Lender, the
designation of a different Applicable Lending Office would either not avoid
such unlawfulness or would be disadvantageous to such Lender), then such Lender
shall promptly notify the Borrower thereof (with a copy to the Administrative
Agent) and such Lender’s obligation to make or Continue, or to Convert portions
of its Loan of any other Type into, Eurodollar Loans shall be suspended until
such time as such Lender may again make and maintain Eurodollar Loans (in
which case the provisions of Section 5.04 shall be applicable).

 

5.04         Treatment of Affected Loans. If
the obligation of any Lender to make Eurodollar Loans or to Continue, or to
Convert Base Rate Loans into, Eurodollar Loans shall be suspended pursuant to Sections 5.01
or 5.03, then such Lender’s Eurodollar Loans shall be automatically
Converted into Base Rate Loans on the last day(s) of the then current Interest
Period(s) for Eurodollar Loans (or, in the case of a Conversion resulting from
a circumstance described in Section 5.03, on such earlier date as
such Lender may specify to the Borrower with a copy to the Administrative
Agent) and, unless and until either (a) such Lender gives notice as
provided below that the circumstances specified in Sections 5.01
or 5.03 that gave rise to such Conversion no longer exist or (b) the
Borrower, in the case of Section 5.01, ends any suspension by the
Borrower:

 

49

 

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

 

(b)           all portions of its Loan that would
otherwise be made or Continued by such Lender as Eurodollar Loans shall be made
or Continued instead as Base Rate Loans, and all Base Rate Loans of such Lender
that would otherwise be Converted into Eurodollar Loans shall remain as Base
Rate Loans.

 

If
such Lender gives notice to the Borrower with a copy to the Administrative
Agent that the circumstances specified in Section 5.01 or 5.03
that gave rise to the Conversion of such Lender’s Eurodollar Loans pursuant to
this Section 5.04 no longer exist (which notice such Lender agrees
to give promptly upon such circumstances ceasing to exist) or the Borrower
terminates its applicable suspension at a time when Eurodollar Loans made by
other Lenders are outstanding, such Lender’s Base Rate Loans shall be
automatically Converted, on the first day(s) of the next succeeding Interest
Period(s) for such outstanding Eurodollar Loans, to the extent necessary so
that, after giving effect thereto, all Base Rate and Eurodollar Loans are
allocated among the Lenders ratably (as to principal amounts, Types and
Interest Periods) in accordance with their respective Commitments.

 

5.05         Compensation. The Borrower shall
pay to the Administrative Agent for account of each Lender, upon the request of
such Lender through the Administrative Agent, such amount as shall be
sufficient to compensate it for any loss, cost or expense that such Lender
reasonably determines is attributable to:

 

(a)           any payment, mandatory or optional
prepayment or Conversion of a Eurodollar Loan made by such Lender for any
reason (including the acceleration of the Loans pursuant to Article XII)
on a date other than the last day of the Interest Period for such Loan;

 

(b)           any failure by the Borrower for any
reason to prepay a Eurodollar Loan pursuant to a notice of prepayment given in
accordance with Section 2.06 (or any notice timely given postponing
the date for prepayment given in accordance with Section 2.08),
unless such notice is timely revoked pursuant to a notice of revocation given
in accordance with Section 2.08; or

 

(c)           the assignment of any Eurodollar Loan
other than on the last day of the applicable Interest Period as a result of a
request by the Borrower pursuant to Section 5.07.

 

Without
limiting the effect of the preceding provisions, such compensation shall
include an amount equal to the excess, if any, of (i) the amount of
interest that otherwise would have accrued on the principal amount so paid,
prepaid, Converted or not borrowed for the period from the date of such
payment, prepayment, Conversion or failure to borrow to the last day of the
then current Interest Period for such Loan (or, in the case of a failure to
borrow, the Interest Period for such Loan that would have commenced on the date
specified for such borrowing) at the applicable Adjusted LIBO Rate for such
Loan provided for herein over (ii) the amount of interest that such
Lender would earn on such principal amount for such period if such Lender would
have bid in the London interbank market for Dollar deposits of leading banks in
amounts comparable

 

50

 

to
such principal amount and with maturities comparable to such period (as
reasonably determined by such Lender), or if such Lender shall not, or shall
cease to, make such bids, the equivalent rate, as reasonably determined by such
Lender, derived from Page 3750 of the Dow Jones Markets Service (Telerate)
or other publicly available source as described in the definition of “LIBO Rate”
in Section 1.01, plus, in the case of Section 5.05(c),
the amount of interest for such period paid to such Lender pursuant to Section 5.07.
A certificate of any Lender setting forth any amount or amounts that such
Lender is entitled to receive pursuant to this Section 5.05 shall
be delivered to the Borrower and shall be prima facie evidence of the accuracy
of the determinations and calculations contained or asserted therein. The
Borrower shall pay such Lender the amount shown as due on any such certificate
within ten (10) days after receipt thereof. Any payment due to any of the
Lenders pursuant to this Section 5.05 shall be deemed additional
interest under such Lender’s Note.

 

5.06         Taxes.

 

(a)           Payments Free of Taxes. Any
and all payments by or on account of any obligation of the Borrower hereunder
or under any other Loan Document shall be made free and clear of and without
deduction for any Indemnified Taxes or Other Taxes; provided that if the
Borrower shall be required to deduct any Indemnified Taxes or Other Taxes from
such payments, then (i) the sum payable shall be increased as necessary so
that after making all required deductions (including deductions applicable to
additional sums payable under this Section 5.06) the Administrative
Agent and each Lender (as the case may be) receives an amount equal to the
sum it would have received had no such deductions been made, (ii) the
Borrower shall make such deductions and (iii) the Borrower shall pay the
full amount deducted to the relevant Governmental Authority in accordance with
applicable law.

 

(b)           Payment of Other Taxes by the
Borrower. In addition, the Borrower shall pay any Other Taxes to the
relevant Governmental Authority in accordance with applicable law.

 

(c)           Indemnification by the Borrower.
The Borrower shall indemnify the Administrative Agent and each Lender, within
ten (10) days after written demand therefor, for the full amount of any
Indemnified Taxes or Other Taxes paid by the Administrative Agent or such
Lender, as the case may be, on or with respect to any payment by or on
account of any obligation of the Borrower hereunder (including Indemnified
Taxes or Other Taxes imposed or asserted on or attributable to amounts payable
under this Section 5.06) and any penalties, interest and reasonable
expenses arising therefrom or with respect thereto, whether or not such
Indemnified Taxes or Other Taxes were correctly or legally imposed or asserted
by the relevant Governmental Authority. A certificate as to the amount of such
payment or liability delivered to the Borrower by a Lender or by the
Administrative Agent on its own behalf or on behalf of a Lender, shall be prima
facie evidence of the accuracy of the determinations and calculations contained
or asserted therein.

 

(d)           Evidence of Payments. As soon
as practicable after any payment of Indemnified Taxes or Other Taxes by the
Borrower to a Governmental Authority, the Borrower shall deliver to the
Administrative Agent the original or a certified copy of a receipt issued by
such Governmental Authority evidencing such payment, a copy of the return
reporting such payment or other evidence of such payment reasonably
satisfactory to the Administrative Agent.

 

51

 

(e)           Foreign Lenders. Any Foreign
Lender that is entitled to an exemption from or reduction of withholding tax
under the law of the jurisdiction in which the Borrower is located, or any
treaty to which such jurisdiction is a party, with respect to payments under
this Agreement shall deliver to the Borrower (with a copy to the Administrative
Agent), at the time or times prescribed by applicable law, such properly
completed and executed documentation prescribed by applicable law or reasonably
requested by the Borrower as will permit such payments to be made without
withholding or at a reduced rate. Until such documentation is provided, the
Borrower shall be entitled to take all actions that are required to comply with
Applicable Laws with respect to payments payable hereunder on account of Loans
made to the Borrower by any Foreign Lender who has not complied with the
requirements of this Section 5.06(e), and such actions shall not
constitute a Default or an Event of Default.

 

(f)            Refunds. If the
Administrative Agent or a Lender determines, in its sole discretion, that it
has received a refund of any Taxes or Other Taxes as to which it has been
indemnified by the Borrower or with respect to which the Borrower has paid
additional amounts pursuant to this Section 5.06, provided no Major
Default or Event of Default exists, it shall pay over such refund to the
Borrower (but only to the extent of indemnity payments made, or additional
amounts paid, by the Borrower under this Section 5.06 with respect
to the Taxes or Other Taxes giving rise to such refund), net of all
out-of-pocket expenses of the Administrative Agent or such Lender and without
interest (other than any interest paid by the relevant Governmental Authority
with respect to such refund); provided, that the Borrower, upon the
request of the Administrative Agent or such Lender, agrees to repay the amount
paid over to the Borrower (plus any penalties, interest or other charges
imposed by the relevant Governmental Authority) to the Administrative Agent or
such Lender in the event the Administrative Agent or such Lender is required to
repay such refund to such Governmental Authority. This Section 5.06(f) shall
not be construed to require the Administrative Agent or any Lender to make
available its tax returns (or any other information relating to its taxes which
it deems confidential) to the Borrower or any other Person.

 

5.07         Replacement of Lenders. If any
Lender requests compensation pursuant to Section 5.01 or 5.06,
or any Lender’s obligation to Continue Loans of any Type, or to Convert Loans
of any Type into the other Type of Loan, shall be suspended pursuant to Section 5.01
or 5.03 (any such Lender requesting such compensation, or whose
obligations are so suspended, being herein called a “Requesting Lender”),
the Borrower, upon five (5) Business Days notice to such Requesting Lender
and the Administrative Agent, may require that such Requesting Lender
transfer all of its right, title and interest under this Agreement and such
Requesting Lender’s Note and its interest in the other Loan Documents to an
Eligible Assignee (a “Proposed Lender”) identified by the Borrower that
is satisfactory to the Administrative Agent in its sole discretion (i) if
such Proposed Lender agrees to assume all of the obligations of such Requesting
Lender hereunder, and to purchase all of such Requesting Lender’s Loan
hereunder for consideration equal to the aggregate outstanding principal amount
of such Requesting Lender’s Loan, together with interest thereon to the date of
such purchase (to the extent not paid by the Borrower), and satisfactory
arrangements are made for payment to such Requesting Lender of all other
amounts accrued and payable hereunder to such Requesting Lender as of the date
of such transfer (including any fees accrued hereunder and any amounts that
would be payable under Section 5.05 as if all of such Requesting
Lender’s Loan were being prepaid in full on such date) and (ii) if such
Requesting Lender has requested compensation pursuant to Section 5.01
or 5.06,

 

52

 

such Proposed Lender’s
aggregate requested compensation, if any, pursuant to Section 5.01
or 5.06 with respect to such Requesting Lender’s Loan is lower than that
of the Requesting Lender. Subject to the provisions of Section 14.07(b),
such Proposed Lender shall be a “Lender” for all purposes hereunder. Without
prejudice to the survival of any other agreement of the Borrower hereunder the
agreements of the Borrower contained in Sections 5.01, 5.06,
14.03 and 14.04 (without duplication of any payments made to such
Requesting Lender by the Borrower or the Proposed Lender) shall survive for the
benefit of such Requesting Lender under this Section 5.07 with
respect to the time prior to such replacement.

 

ARTICLE VI

 

CONDITIONS
PRECEDENT

 

6.01         Conditions Precedent to
Effectiveness of Loan Commitments. The effectiveness of the Commitments and
the obligation of the Lenders to make the Loans are subject to the conditions
precedent that, on or prior to the Closing Date, (i) the Administrative
Agent shall have received each of the documents (duly executed and completed by
the part(y)(ies) thereto and acknowledged when applicable) referred to below in
this Section 6.01, (ii) each of the other conditions listed below
in this Section 6.01 is satisfied, the satisfaction of each of such
conditions to be satisfactory to the Administrative Agent (and to the extent
specified below, to each Lender) in form and substance (or any such
condition shall have been waived in accordance with Section 14.05),
(iii) all of the representations and warranties of the Borrower (without
giving effect to any qualification therein which limits any such
representations and warranties to the “knowledge” or “best knowledge” of the
Borrower or any other Borrower Party) shall be true and correct on the Closing
Date, (iv) the Liens granted by the Security Documents shall have attached
and been perfected, with the priority as required pursuant to the terms hereof
or thereof (or, in the case of the Liens encumbering the Projects the Title
Policies insuring the effectiveness and priority of such Liens shall have been
unconditionally delivered to the Administrative Agent in accordance with the
closing instructions delivered on its behalf), and (v) no Default or Event
of Default shall exist or shall result therefrom.

 

(a)           Agreement. From each party
hereto either (i) a counterpart of this Agreement signed on behalf of
such party or (ii) written evidence satisfactory to the Administrative
Agent (which may include telecopy transmission of a signed signature page of
this Agreement) that such party has signed a counterpart of this
Agreement.

 

(b)           Notes. The Notes for each
Lender.

 

(c)           Deed of Trust. Each Deed of
Trust, in form for recording.

 

(d)           Environmental Indemnity. The
Environmental Indemnity.

 

(e)           Project-Level Account Security
Agreement. The Project-Level Account Security Agreement.

 

(f)            General Assignment. The
General Assignment.

 

53

 

(g)           Property Manager’s Consent.
The Property Manager’s Consent.

 

(h)           Other Loan Documents. The
Guarantor Documents and all other Loan Documents.

 

(i)            Opinion of Counsel to the
Borrower Parties. A favorable written opinion, dated the Closing Date, of
Cox, Castle & Nicholson LLP, counsel to the Borrower and furnishing
such opinions at the Borrower’s request on behalf of the other Borrower
Parties, and covering such matters relating to the Borrower Parties, this
Agreement, the other Loan Documents, and the Transactions as the Administrative
Agent shall reasonably request. The Borrower hereby requests such counsel to
deliver such opinion to the Lenders and the Administrative Agent.

 

(j)            Organizational Documents.
Copies of (i) the Certificate of Incorporation, Certificate of Formation,
Certificate of Limited Partnership or similar formation document of each of the
Borrower Parties (other than Borrower’s Member), certified by the Secretary of
State of the state of formation of such Person as of a recent date, (ii) the
other Organizational Documents of each of the Borrower Parties certified by any
Authorized Officer on behalf of such Borrower Party, (iii) the applicable
resolutions of each of the Borrower Parties authorizing the execution and
delivery of the Loan Documents to which they are a party, in each case
certified by an Authorized Officer on behalf of such Borrower Party as of the
date of this Agreement as being accurate and complete, all in form and
substance satisfactory to the Administrative Agent and its counsel, (iv) certificates
signed by an Authorized Officer on behalf of the applicable Person certifying
the name, incumbency and signature of each individual authorized to execute the
Loan Documents to which such Person is a party and the other documents or
certificates to be delivered pursuant hereto or thereto, on which the
Administrative Agent and the Lenders may conclusively rely unless a
revised certificate is similarly so delivered in the future, and (v) good
standing certificates with respect to each Borrower Party (other than Borrower’s
Member) that is organized under the laws of any state of the United States of
America from such state and good standing certificates and authority to conduct
business with respect to the Borrower and the Borrower’s Manager from the State
of California.

 

(k)           Title Insurance; Priority. An
ALTA policy or policies (or pro forma policy or policies) of title insurance
for each Project satisfactory to the Administrative Agent (collectively, the “Title
Policy”), together with evidence of the payment of all premiums due
thereon, issued by the Title Company (i) each insuring the Administrative
Agent for the benefit of the Lenders in an amount equal to the aggregate amount
of the Commitments (to the extent advanced) in effect on the Closing Date (with
a tie-in endorsement satisfactory to the Administrative Agent) that the
Borrower is lawfully seized and possessed of a valid and subsisting fee simple
(or other applicable) interest in the Projects subject to no Liens other than
Permitted Title Exceptions and (ii) providing such other affirmative
insurance and endorsements as the Administrative Agent may require in each
case as approved by the Administrative Agent. In addition, the Borrower shall
have paid to the Title Company all expenses and premiums of the Title Company
in connection with the issuance of such policies and all recording and filing
fees payable in connection with recording the Deeds of Trust and the filing of
the Uniform Commercial Code financing statements related thereto in the
appropriate offices.

 

54

 

(l)            Survey. An “as-built” survey
of each Project, each satisfactory to the Administrative Agent in form and
content and made by a registered land surveyor satisfactory to the
Administrative Agent, each survey showing, among other things through the use
of course bearings and distances, (i) all easements and roads or rights of
way (including all access to public roads) and setback lines, if any, affecting
the Improvements and that the same are unobstructed or any such obstructions
are acceptable to the Administrative Agent; (ii) the dimensions of all
existing buildings and distance of all material Improvements from the lot
lines; (iii) no encroachments by improvements located on adjoining property
that are not acceptable to the Administrative Agent; and (iv) such
additional information which may be reasonably required by the
Administrative Agent. Each said survey shall be dated a date reasonably
satisfactory to the Administrative Agent, bear a proper certificate
substantially in the form of Exhibit M attached hereto by the
surveyor in favor of the Administrative Agent (on behalf of the Lenders) and
the Title Company and include the legal description of the Project.

 

(m)          Certificates of Occupancy.
Copies of permanent and unconditional certificates of occupancy permitting the
fully functioning operation and occupancy of the Projects and of such other
permits necessary for the use and operation of the Projects issued by the
respective Governmental Authorities having jurisdiction over the Projects,
together with such other evidence as may be requested by the
Administrative Agent with respect to the compliance of the Projects with zoning
requirements.

 

(n)           Insurance. A copy of the
insurance policies required by Section 8.05 or certificates of
insurance with respect thereto, such policies or certificates, as the case may be,
to be in form and substance, and issued by companies, acceptable to the
Administrative Agent and otherwise in compliance with the terms of Section 8.05,
together with evidence of the payment of all premiums therefor.

 

(o)           Environmental Report. The
Environmental Reports.

 

(p)           Leases. (i) An affidavit
(the “Leasing Affidavit”) of an Authorized Officer of the Borrower
certifying that except as disclosed in the estoppel certificates delivered to
the Administrative Agent prior to the Closing Date, that certain Douglas,
Emmett & Company Delinquency/Aging Report (Summarized) dated 7/20/2005
provided to the Administrative Agent, or the rent rolls delivered to the
Administrative Agent pursuant to Section 7.22, (A) each tenant
lease listed in the Leasing Affidavit is in full force and effect; (B) the
tenant lease summaries provided by the Borrower to the Administrative Agent are
true and correct and, as to all matters contained therein relating to rent,
term, termination rights, options to renew, extend or expand, rights of first
refusal or offer, tenant improvement allowances, security deposits and other
credit enhancements, insurance, tax and operating expense recovery, and
obligations with respect to subordination, non-disturbance and attornment,
complete in all material respects, and such summaries do not fail to disclose
any material term of any Lease which would adversely affect the obligation of
the tenant thereunder to pay rent or perform any of its other material
obligations for the entire term thereof consistent with the terms disclosed in
such summary and the rent rolls delivered to the Administrative Agent pursuant
to Section 7.22; (C) no defaults exist under any of the Leases
(other than the Major Leases) by any party (including any guarantor) thereto
that, individually or in the aggregate with respect to all such defaults, would
result in a Material Adverse Effect and, to the knowledge of the Borrower, no
material default

 

55

 

exists under any of the
Major Leases; and (D) to the Borrower’s knowledge, no event which would
result in a material adverse change in the financial condition, operations or
business of one or more tenants under Major Leases has occurred which the
Borrower has determined would adversely affect the ability of such tenant to
pay its rent and perform its other material obligations under such Major
Lease and (ii) the standard office lease form and the standard retail
lease form (both as approved by the Administrative Agent) to be used for
the Projects.

 

(q)           Estoppels. Estoppel
certificates in form and substance satisfactory to the Administrative
Agent from tenants covering at least seventy-five percent (75%) of all the
leased space in the Projects, except to the extent that the Administrative
Agent agrees in writing to defer the receipt of any estoppel certificate to a
date subsequent to the Closing Date, in which case the Borrower shall use
commercially reasonable efforts to obtain such deferred estoppel certificates
as promptly as possible following the Closing Date. For purposes of this
requirement, it is agreed that the form tenant estoppels required by any
applicable Approved Lease shall be acceptable to the Administrative Agent.

 

(r)            SNDA Agreements. The Borrower
will distribute and use commercially reasonable efforts to obtain the SNDA
Agreements duly executed by each tenant under a Major Lease.

 

(s)           Non-Foreign Status. A
certificate by an Authorized Officer certifying the Borrower’s tax
identification number and the fact that the Borrower is not a foreign person
under the Code.

 

(t)            UCC Searches. Uniform Commercial
Code searches with respect to the Borrower, the Borrower’s Member and the
Borrower’s Manager as required by the Administrative Agent.

 

(u)           Appraisal. The Appraisals
indicating an “as-is” value for each of the Projects, such that the Allocated
Loan Amount for each Project shall not exceed sixty percent (60%) of the
Appraised Value of such Project.

 

(v)           Property Management and Leasing
Agreements. The Property Management Agreement and all brokerage and/or
leasing agreements affecting the Projects and certified by an Authorized
Officer to be true, correct and complete in all respects.

 

(w)          Financial Statements. Copies of
the most recent audited and unaudited annual and quarterly financial statements
of the Borrower’s Member or its partners, and a certificate dated the Closing
Date and signed by an Authorized Officer on behalf of the Borrower’s Member
stating that (i) such financial statements are true, complete and correct
in all material respects and (ii) no event that could reasonably be
expected to have a Material Adverse Effect has occurred since the date of such financial
statements, all of the foregoing to be satisfactory to the Administrative Agent
and each Lender in their reasonable discretion.

 

(x)            Approved Annual Budget. A
copy of the Annual Budget for each Project for the current calendar year.

 

56

 

(y)           Property Condition Report. A
survey of the physical condition of the Projects prepared by a licensed
engineer selected by the Administrative Agent and in accordance with the
Administrative Agent’s scope.

 

(z)            Project-Level Accounts. The
Project-Level Accounts shall have been established pursuant to the terms of
this Agreement and any other Loan Document.

 

(aa)         Seismic Report. A seismic report
for each Project prepared by a firm of licensed engineers selected by the
Administrative Agent and prepared in accordance with the Administrative Agent’s
scope for such reports and otherwise acceptable to the Administrative Agent in
all respects.

 

(bb)         Fees and Expenses. The Borrower
shall have paid (i) all fees then due and payable to the Administrative
Agent pursuant to the Fee Letter, (ii) any other fees then due to the
Administrative Agent, Eurohypo or the Arranger and (iii) any fees and
expenses due to the Administrative Agent or the Arranger pursuant to Section 14.03,
including the reasonable fees and expenses of Morrison & Foerster LLP,
counsel to the Administrative Agent and Eurohypo.

 

(cc)         Other Documents. Such other
documents as the Administrative Agent may reasonably request.

 

ARTICLE VII

 

REPRESENTATIONS
AND WARRANTIES

 

The Borrower represents and warrants to the
Administrative Agent and the Lenders as of the date hereof that:

 

7.01         Organization; Powers. Each of
the Borrower Parties is duly organized, validly existing and in good standing
under the laws of the jurisdiction of its organization, has all requisite power
and authority to carry on its business as now conducted and, except where the
failure to do so, individually or in the aggregate, could not reasonably be
expected to result in a Material Adverse Effect, is qualified to do business
in, and is in good standing in, every jurisdiction where such qualification is
required. The Borrower and Borrower’s Manager are each qualified to do business
and in good standing in the State of California.

 

7.02         Authorization; Enforceability.
The Transactions applicable to each Borrower Party are within such Borrower
Party’s organizational powers and have been duly authorized by all necessary
organizational action under their respective Organizational Documents. This
Agreement and the other Loan Documents have been duly executed and delivered by
the Borrower Parties party thereto and each of the Loan Documents to which a
Borrower Party is a party when delivered will constitute, a legal, valid and
binding obligation of the applicable Borrower Party, enforceable in accordance
with its terms, subject to applicable bankruptcy, insolvency, reorganization,
moratorium or other laws affecting creditors’ rights generally and subject to
general principles of equity (regardless of whether such enforceability is
considered in a proceeding in equity or at law).

 

57

 

7.03         Government Approvals; No Conflicts.
The Transactions (a) do not require any Government Approvals of,
registration or filing with, or any other action by, any Governmental
Authority, except for (i) such as have been obtained or made and are in
full force and effect and (ii) filings and recordings in respect of the
Liens created pursuant to the Security Documents, (b) will not violate any
Applicable Law applicable to the Borrower Parties or the Organizational
Documents of any of the Borrower Parties, (c) will not violate or result
in a default under any material indenture, agreement or other instrument
binding upon any of the Borrower Parties, or give rise to a right thereunder to
require any payment to be made by any of the Borrower Parties, and (d) except
for the Liens created pursuant to the Security Documents, will not result in
the creation or imposition of any Lien on any asset of any of the Borrower
Parties.

 

7.04         Financial Condition. The
Borrower has heretofore furnished to the Administrative Agent certain financial
statements of the Borrower’s Member or its partners. All such financial
statements are complete and correct in all material respects and fairly present
the financial condition of Borrower’s Member or its partners, as of the dates
of such financial statements, all in accordance with GAAP. Each of the Borrower
and Borrower’s Member, on the date hereof, does not have any Indebtedness
(other than security deposits and tenant improvement allowances under the
Leases that are described in the tenant lease summaries provided by the
Borrower to the Administrative Agent and that are in amounts and on terms
consistent with market terms and in the ordinary course of business), material
contingent liabilities, liabilities for taxes, unusual forward or long-term
commitments or unrealized or anticipated losses from any unfavorable
commitments, except as referred to or reflected or provided for in said
financial statements as of said dates and except for Real Estate Taxes and
Other Charges that are not yet delinquent. Since the applicable dates of such
financial statements, except as disclosed in Schedule 7.04 attached
hereto, there has been no event that could reasonably be expected to have a
Material Adverse Effect.

 

7.05         Litigation. Except as disclosed
in Schedule 7.05 hereto, there are no legal or arbitral
proceedings, or any proceedings by or before any Governmental Authority or agency
of which the Borrower, Borrower’s Member or Borrower’s Manager has received
written notice, now pending or (to the knowledge of the Borrower) threatened in
writing against the Borrower, the Projects, the Borrower’s Member or Borrower’s
Manager except for those which (a) (subject to applicable deductibles or
self-insurance) are fully covered by insurance maintained by or for the
Borrower, the Borrower’s Member or the Borrower’s Manager or (b) involve
uninsured claims that do not exceed $75,000 individually, or in the aggregate
for all such claims.

 

7.06         ERISA. Neither the Borrower nor
Borrower’s Member has established any Plan which would cause the Borrower or
the Borrower’s Member to be subject to ERISA and none of the Borrower’s or the
Borrower’s Member’s assets constitutes or will constitute “plan assets” of one
or more Plans. No ERISA Event has occurred or is reasonably expected to occur
that, when taken together with all other such ERISA Events for which liability
is reasonably expected to occur, could reasonably be expected to result in a
Material Adverse Effect. Each Plan established by a Borrower Party and, to the
knowledge of the Borrower Parties, each of its ERISA Affiliates and each
Multiemployer Plan, is in compliance with, the applicable provisions of ERISA,
the Code and any other Applicable Law.

 

58

 

7.07         Taxes. Each of the Borrower
Parties has timely filed or timely caused to be filed (or obtained effective
extensions for filing) all tax returns and reports required to have been filed
and has paid or caused to be paid all Taxes required to have been paid by it,
except Taxes that are being contested in good faith by appropriate proceedings
and (a) for which such Borrower Party has set aside on its books adequate
reserves in accordance with GAAP or (b) to the extent that the failure to
do so could not reasonably be expected to result in a Material Adverse Effect.

 

7.08         Investment and Holding Company
Status. None of the Borrower Parties is (a) an “investment company” as
defined in, or subject to regulation under, the Investment Company Act of 1940
or (b) a “holding company”, or an “affiliate” of a “holding company” or a “subsidiary
company” of a “holding company”, as defined in, or subject to regulation under,
the Public Utility Holding Company Act of 1935.

 

7.09         Environmental Matters. Except
for matters expressly and specifically set forth in the Environmental Reports
or the Property Condition Reports or matters disclosed in Schedule 7.09
or Schedule 8.11 attached hereto, to the Borrower’s knowledge:

 

(a)           The Borrower and each Project is in
compliance with all applicable Environmental Laws, except where the failure to
comply with such laws is not reasonably likely to result in a Material Adverse
Effect.

 

(b)           There is no Environmental Claim of
which the Borrower has received written notice pending, or to the Borrower’s
knowledge, threatened in writing, and no penalties arising under Environmental
Laws have been assessed, against the Borrower, any Project or, to the Borrower’s
knowledge, against any Person whose liability for any Environmental Claim the
Borrower or the Borrower’s Member has or may have retained or assumed
either contractually or by operation of law, and the Borrower has received no
written notice of any investigation or review which is pending or, to the
knowledge of the Borrower, threatened in writing by any Governmental Authority,
citizens group, employee or other Person with respect to any alleged failure by
the Borrower, the Borrower’s Member or any Project to have any environmental,
health or safety permit, license or other authorization required under, or to
otherwise comply with, any Environmental Law or with respect to any alleged
liability of the Borrower or the Borrower’s Member for any Use or Release of
any Hazardous Substances.

 

(c)           There have been no past, and there
are no present, Releases of any Hazardous Substance that could reasonably be
anticipated to form the basis of any Environmental Claim against the
Borrower, the Borrower’s Member, any Project or, to the knowledge of the
Borrower, against any Person whose liability for any Environmental Claim the
Borrower or the Borrower’s Member has or may have retained or assumed
either contractually or by operation of law.

 

(d)           To the Borrower’s knowledge, there is
no Release of Hazardous Substances migrating to any Project which could require
Remediation or require the Borrower to provide notice to any Governmental
Authority.

 

59

 

(e)           There is not present at, on, in or
under any Project, PCB-containing equipment, asbestos or asbestos containing
materials, underground storage tanks or surface impoundments for Hazardous
Substances, lead in drinking water (except in concentrations that comply with
all Environmental Laws), or lead-based paint (except in compliance with all
applicable Environmental Laws).

 

(f)            No Liens are presently recorded with
the appropriate land records under or pursuant to any Environmental Law with
respect to any Project and, to the Borrower’s knowledge no Governmental
Authority has been taking or is in the process of taking any action that could
subject any Project to Liens under any Environmental Law.

 

(g)           The Borrower has provided to the
Administrative Agent’s environmental consultant prior to the Closing Date true
and correct copies of all materials, environmental reports and other documents
pertaining to the Projects requested by the consultant and in the Borrower’s
possession or control.

 

7.10         Organizational Structure. The
Borrower has heretofore delivered to the Administrative Agent a true and
complete copy of the Organizational Documents of each Borrower Party. The sole
member of the Borrower on the date hereof is the Borrower’s Member. The sole
manager of Borrower and general partner of the partners of Borrower’s Member on
the date hereof is Borrower’s Manager.

 

7.11         Subsidiaries. The Borrower’s
Member has no Subsidiaries except for Borrower and those specifically disclosed
on Schedule 7.11. No other Borrower Party has any Subsidiaries
except for those specifically disclosed on Schedule 7.11.

 

7.12         Title. On the Closing Date, the
Borrower will own and on such date will have good, indefeasible and insurable
fee simple title to the portion of the Projects consisting of real property
free and clear of all Liens, other than Permitted Title Exceptions. On the
Closing Date, the Borrower will own or (in compliance with Section 9.04(d))
lease and will have good title to all other portions of the Project free and
clear of all Liens, other than Permitted Title Exceptions and rights of
equipment lessors under equipment leases currently in effect which comply with
the requirements set forth in Sections 9.02(h) and 9.04(d).
There are no outstanding options to purchase or rights of first refusal to
purchase affecting the Projects.

 

7.13         No Bankruptcy Filing. Neither
the Borrower nor the Borrower’s Member is contemplating either the filing of a
petition by it under any state or federal bankruptcy or insolvency laws or the
liquidation of all or a major portion of its assets or property, and neither
the Borrower nor Borrower’s Member has knowledge of any Person contemplating
the filing of any such petition against the Borrower, the Borrower’s Member or
the Borrower’s Manager.

 

7.14         Executive Offices; Places of
Organization. The location of the Borrower’s, the Borrower’s Member’s and
the Borrower’s Manager’s principal place of business and chief executive office
is the address identified in the “Address for Notices” area beneath the
Borrower’s name on the Borrower’s signature page to this Agreement, except
to the extent changed in accordance with Section 9.07. The Borrower
was organized in the State of Delaware,

 

60

 

and the Borrower’s Member
and the Borrower’s Manager were organized in the State of California.

 

7.15         Compliance; Government Approvals.
Except as expressly set forth in the Property Condition Report for each
Project, the Environmental Reports, or the seismic reports delivered for the
Projects pursuant to Section 6.01(aa), the Borrower, each Project
and the Borrower’s use thereof and operations thereat comply in all material
respects with all Applicable Laws. All material Government Approvals necessary
under Applicable Law in connection with the operation of the Projects as
contemplated by the Loan Documents have been duly obtained, are in full force
and effect, are not subject to appeal, are held in the name of the Borrower (or
Borrower’s Member for the benefit of the Borrower) and are free from conditions
or requirements compliance with which could reasonably be expected to have a
Material Adverse Effect or which the Borrower does not reasonably expect to be
able to satisfy. To the best knowledge of the Borrower, there is no proceeding
pending or threatened in writing that seeks, or may reasonably be
expected, to rescind, terminate, Modify or suspend any such Government
Approval. Except for business licenses and other licenses or permits that are
not specifically applicable to the Projects, the Borrower has no reason to
believe that the Administrative Agent, acting for the benefit of the Lenders,
will not be entitled, without undue expense or delay, to the benefit of each
such Government Approval upon the exercise of remedies under the Security
Documents.

 

7.16         Condemnation; Casualty. To the
Borrower’s knowledge, no Taking has been commenced or is presently contemplated
with respect to all or any portion of any Project or for the relocation of
roadways providing access to any Project. No Casualty Event of any material
nature that has not been substantially repaired has occurred with respect to
any Project.

 

7.17         Utilities and Public Access; No
Shared Facilities. Each Project has adequate rights of access to public
ways and is served by adequate electric, gas, water, sewer, sanitary sewer and
storm drain facilities. All public utilities necessary to the use and enjoyment
of each Project as intended to be used and enjoyed are located in the public
right-of-way abutting each Project except as otherwise shown on the survey of
such Project provided to the Administrative Agent.

 

7.18         Solvency. On the Closing Date
and after and giving effect to the Loans occurring on the Closing Date, and the
disbursement of the proceeds of such Loans pursuant to the Borrower’s
instructions, each Borrower Party is and will be Solvent.

 

7.19         Foreign Person. Neither the
Borrower nor Borrower’s Member is a “foreign person” within the meaning of Section 1445(f)(3) of
the Code.

 

7.20         No Joint Assessment; Separate Lots.
The Borrower has not suffered, permitted or initiated the joint assessment of
any Project with any other real property constituting a separate tax lot.

 

7.21         Security Interests and Liens.
The Security Documents create (and upon recordation of the Deeds of Trust,
filing of the applicable financing statements in the appropriate filing offices
and the execution and delivery by the Depository Bank of control agreements
with

 

61

 

respect to any pledged
deposit accounts there will be perfected as to any portion of such collateral
consisting of the deposit account itself and the securities entitlements
thereto), as security for the Obligations, valid, enforceable, perfected and
first priority security interests in and Liens on all of the respective
collateral intended to be covered thereunder, in favor of the Administrative
Agent as administrative agent for the ratable benefit of the Lenders, subject
to no Liens other than the Permitted Title Exceptions and rights of equipment
lessors under equipment leases currently in effect which comply with the
requirements set forth in Sections 9.02(h) and 9.04(d),
except as enforceability may be limited by applicable insolvency,
bankruptcy, reorganization, moratorium or other laws affecting creditors’
rights generally, or general principles of equity, whether such enforceability
is considered in a proceeding in equity or at law. Other than in connection
with any future change in the Borrower’s name or the location in which the
Borrower is organized or registered, no further recordings or filings are or
will be required in connection with the creation, perfection or enforcement of
such security interests and Liens, other than the filing of continuation
statements and Notices of Intent to Preserve Security Interests in accordance
with the Uniform Commercial Code and the California Civil Code. A
financing statement covering all property covered by any Security Document that
is subject to a Uniform Commercial Code financing statement has been filed
and/or recorded, as appropriate, (or irrevocably delivered to the
Administrative Agent or a title agent for such recordation or filing) in all
places necessary to perfect a valid first priority security interest with
respect to the rights and property that are the subject of such Security
Document to the extent governed by the Uniform Commercial Code and to the
extent such security can be perfected by such filing.

 

7.22         Leases. Except as disclosed in
the estoppel certificates delivered to the Administrative Agent prior to the
Closing Date, in that certain Douglas, Emmett & Company
Delinquency/Aging Report (Summarized) dated 7/20/2005 provided to the
Administrative Agent prior to the Closing Date, or (as to items (2) through
(10) below) the rent rolls for each Project attached hereto as Schedule 7.22,
with respect to the Leases (which term, for the purposes of this Section 7.22
is limited to tenant leases): (1) the rent rolls attached hereto as Schedule 7.22
are true, correct and complete and the Leases referred to thereon are all valid
and in full force and effect; (2) the Leases (including Modifications
thereto) are in writing, and there are no oral agreements with respect thereto;
(3) the copies of each of the Leases (if any) delivered to the Administrative
Agent are true, correct and complete in all material respects and have not been
Modified (or further Modified); (4) the lease summaries delivered to the
Administrative Agent are true and correct in all material respects and, as to
all matters contained therein relating to rent, term, termination rights,
options to renew, extend or expand, rights of first refusal or offer, tenant
improvement allowances, security deposits and other credit enhancements,
insurance, tax and operating expense recovery, and obligations with respect to
subordination, non-disturbance and attornment, complete in all material
respects, and such summaries do not fail to disclose any material term of any
Lease which would materially impact the obligation of the tenant thereunder to
pay rent or perform any of its other material obligations for the entire
term thereof as disclosed in such summary and the rent rolls attached hereto as
Schedule 7.22; (5) to the Borrower’s knowledge, no defaults
exist under any of the Leases (other than the Major Leases) by any party
(including any guarantor) thereto that, individually or in the aggregate with
respect to all such defaults would result in a Material Adverse Effect and, to
the knowledge of the Borrower, no material default exists under any of the
Major Leases; (6) the Borrower has no knowledge of any presently effective
notice of termination or notice of default given by any tenant with respect to
any Major Lease or under any other Leases that individually or in the aggregate
could be

 

62

 

reasonably expected to
result in a Material Adverse Effect; (7) the Borrower has not made any
presently effective assignment or pledge of any of the Leases, the rents or any
interests therein except to the Administrative Agent; (8) no tenant or
other party has an option or right of first refusal to purchase all or any
portion of any Project; (9) except as disclosed in the lease summaries
delivered by the Borrower to the Administrative Agent, no tenant has the right
to terminate its lease prior to expiration of the stated term of such Lease
(except as a result of a casualty or condemnation); and (10) no tenant has
prepaid more than one month’s rent in advance (except for bona fide security
deposits and estimated payments of operating expenses, taxes and other
pass-throughs paid by tenants pursuant to their Leases not prepaid more than
one month prior to the date such estimated payments are due).

 

7.23         Insurance. The Borrower has in
force, and has paid (in each case to the extent now due and payable) the
Insurance Premiums in respect of all of the insurance required by Section 8.05.

 

7.24         Physical Condition. Except as
expressly and specifically described and disclosed in the Property Condition
Reports for the Projects, the seismic reports delivered for the Projects
pursuant to Section 6.01(aa), the Environmental Reports for the
Projects and the capital improvement schedules contained in the 2005 budgets
for the Projects previously delivered to the Administrative Agent, and except
for the work described in Schedule 8.21, to the Borrower’s
knowledge, each Project, including all buildings, improvements, parking
facilities, sidewalks, storm drainage systems, roofs, plumbing systems, HVAC
systems, fire protection systems, electrical systems, equipment, elevators,
exterior sidings and doors, landscaping, irrigation systems and all structural
components, is in good condition, order and repair in all material respects; to
the Borrower’s knowledge, there exists no structural or other material defects
or damages in any Project, whether latent or otherwise, and the Borrower has
not received written notice from any insurance company or bonding company of
any defects or inadequacies in any Project, or any part thereof, which would
adversely affect the insurability of the same or cause the imposition of
extraordinary premiums or charges thereon or of any termination or threatened
termination of any policy of insurance or bond. Notwithstanding the provisions
of Section 12.01(c), if any representation or warranty contained in
this Section 7.24 is untrue at any time with respect to any
Project, such Default or Event of Default may be cured if the Borrower,
within the cure period set forth in Section 12.01(r), performs such
acts as are sufficient to cause this representation and warranty to be true by
the end of such cure period.

 

7.25         Flood Zone. Except as may be
disclosed on the survey of the Project, or any flood zone certification
delivered by the Borrower to the Administrative Agent prior to the Closing
Date, no portion of any Project is located in a flood hazard area as designated
by the Federal Emergency Management Agency or, if in a flood zone, flood
insurance is maintained therefor in full compliance with the provisions of Section 8.05(a)(i).

 

7.26         Management Agreement. The
Property Management Agreement is the only management and/or leasing agreement
related to each Project, and is in full force and effect with no default or
event of default existing thereunder, and the copy of the Property Management
Agreement delivered to the Administrative Agent is a true, correct and complete
copy.

 

63

 

7.27         Boundaries. Except as may be
disclosed on the surveys delivered pursuant to Section 6.01(l) and
in the Title Policy, to the Borrower’s knowledge: (i) none of the
Improvements is outside the boundaries of any Project (or building restriction
or setback lines applicable thereto); (ii) no improvements on adjoining
properties encroach upon any Project; and (iii) no Improvements encroach
upon or violate any easements or (in any respect which would have a Material
Adverse Effect) any other encumbrance upon any Project.

 

7.28         Illegal Activity. No portion of
any Project has been purchased with proceeds of any illegal activity and no part of
the proceeds of the Loans will be used in connection with any illegal activity.

 

7.29         Permitted Liens. None of the
Permitted Title Exceptions or Permitted Liens individually or in the aggregate
will have a Material Adverse Effect.

 

7.30         Foreign Assets Control Regulations,
Etc. Neither the execution and delivery of the Notes and the other Loan
Documents by the Borrower Parties nor the use of the proceeds of the Loan, will
violate 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 the
Anti-Terrorism Order or any enabling legislation or executive order relating to
any of the same. Without limiting the generality of the foregoing, no Borrower
Party or any of their respective Subsidiaries (a) is or will become a
blocked person described in Section 1 of the Anti-Terrorism Order or (b) knowingly
engages or will engage in any dealings or transactions or be otherwise
associated with any person who is known or who (after such inquiry as may be
required by Applicable Law) should be known to such Borrower Party or
Subsidiary to be such a blocked person.

 

7.31         Defaults. No Default exists
under any of the Loan Documents.

 

7.32         Other Representations. All of
the representations in this Agreement and the other Loan Documents by the
Borrower and its Affiliates are true, correct and complete in all material
respects as of the date hereof.

 

7.33         True and Complete Disclosure.
The information, reports, financial statements, exhibits and schedules
furnished in writing by or on behalf of the Borrower Parties to the
Administrative Agent or any Lender in connection with the negotiation,
preparation or delivery of this Agreement and the other Loan Documents or
included herein or therein or delivered pursuant hereto or thereto, do not
contain any untrue statement of material fact or omit to state any material
fact known to the Borrower necessary to make the statements herein or therein,
in light of the circumstances under which they were made, not misleading. All
written information furnished after the date hereof by any Borrower Party to
the Administrative Agent and the Lenders in connection with this Agreement and
the other Loan Documents and the Transactions will, to the Borrower’s
knowledge, be true, complete and accurate in every material respect, or (in the
case of projections) based on reasonable estimates, on the date as of which
such information is stated or certified. There is no fact presently known to
the Borrower or the Borrower’s Manager that could reasonably be anticipated to
have a Material Adverse Effect that has not been disclosed herein, in the other
Loan Documents or in a report, financial statement,

 

64

 

exhibit, schedule,
disclosure letter or other writing furnished to the Administrative Agent or the
Lenders for use in connection with the Transactions.

 

7.34         Reserved.

 

7.35         Limited Partners. The Borrower
represents and warrants to the Lenders as follows: (a) no limited partner
of the partners of Borrower’s Member is presently asserting, or has threatened
to assert, by action or otherwise, any claims or other liability of the
Borrower’s Manager in its capacity as the general partner of the partners of
Borrower’s Member or otherwise or any person related to such general partner
with respect to the business, operations or financing of the Borrower or the
Borrower’s Member or the past, present or future offering of any limited
partnership interests in the partners of Borrower’s Member or the making of the
Loans or the grant of the security therefor (an “LP Claim,” which term
shall also refer to any other claim that any such limited partner may make
against the Borrower’s Manager from time to time of a nature that would
indicate that any assurance contained in this Section may be
incorrect); and (b) to the extent required, the consent of such limited
partners to the Loans has been obtained and is fully effective.

 

7.36         Non-Foreign Status. The Borrower
represents and warrants to the Lenders that its tax identification number is
68-0587906 under the Code and that the Borrower’s Member’s tax identification
number is 95-4498223 under the Code.

 

7.37         Borrower’s Member. The Borrower’s
Member is permitted under the limited partnership agreements of the partners of
Borrower’s Member, as amended, or pursuant to consents obtained from the
limited partners of the partners of Borrower’s Member, to enter into or
authorize Borrower to enter into the Transactions including the borrowing of
the Loans by the Borrower. There is not, and after the Closing Date the
original Borrower’s Member will not incur, any ‘Portfolio Debt’ (as such term
is defined in the limited partnership agreements of the partners of Borrower’s
Member, as amended) that is not permitted under the limited partnership
agreements of the partners of Borrower’s Member, as amended, or pursuant to
consents obtained from the limited partners of the partners of Borrower’s Member.

 

ARTICLE VIII

 

AFFIRMATIVE
COVENANTS OF THE BORROWER

 

The Borrower covenants and agrees with the Lenders
and the Administrative Agent that, so long as any Commitment or Loan is
outstanding and until payment in full of all amounts payable by the Borrower
hereunder:

 

8.01         Information. The Borrower shall
deliver to the Administrative Agent:

 

(a)           Within one hundred (100) days after
the end of each fiscal year of the Borrower’s operation of the Project, the
Borrower shall furnish to the Administrative Agent (i) an annual report
containing a summary of operating results for such year, a history of operating
results broken down by quarter and twelve (12) month periods for the Borrower
and the Borrower’s Member (or its partners) since inception (which may be
consolidated provided that

 

65

 

such report contains
notes clearly identifying each item on such report which is attributable to the
Borrower and the Borrower’s Member (or its partners)), an investment summary broken
down for each of the Borrower’s properties, a comparison of actual results to
budget for all of the Borrower’s properties for such year, audited financial
statements for such year for the Borrower and the Borrower’s Member (or its
partners) (which may be consolidated provided that such financial
statements contain notes clearly identifying each item on such financial
statements which is attributable to the Borrower, the Borrower’s Member (or its
partners) and the Projects) (including a balance sheet, statement of income,
statement of aggregate partners’ capital or member’s equity, statement of cash
flows, and notes), and the operating budget for each of the Projects for the
fiscal year then under way, all in the same form as the Borrower’s Member’s
(or its partner’s respective) 2004 audited financial statements and related
materials, which form is acceptable to Administrative Agent, and (ii) an
updated rent roll for each of the Projects in the form delivered to the
Administrative Agent prior to the Closing Date; provided however, following a
Permitted Public REIT Transfer, in lieu of the items in clauses (i) and (ii) above,
the Borrower shall furnish to the Administrative Agent, within the later of the
time period for delivery of the annual report provided above or five (5) Business
Days after the annual Form 10-K of the Permitted Public REIT becomes
publicly available, the following: (i) the annual Form 10-K of the
Permitted Public REIT, (ii) an annual summary of operating results for
each of the Projects for such year, (iii) a comparison of actual results
to budget for each of the Projects for such year, (iv) the operating
budget for each of the Projects for the fiscal year then under way, (v) an
unaudited balance sheet and income statement for such year for the Borrower
(which may be consolidated provided that such financial statements contain
notes identifying each item on such financial statements that is attributable
to the Borrower or the Projects) and (vi) an updated rent roll for each of
the Projects;

 

(b)           Within fifty (50) days after the end
of each calendar quarter (or, in the case of the fourth calendar quarter for
each fiscal year, within one hundred (100) days after the end of such quarter),
the Borrower shall furnish to the Administrative Agent (i) a quarterly
report containing a summary of operating results for such quarter and for the
twelve (12) months ending with such quarter, a history of operating results
broken down by quarter and twelve (12) month periods for the Borrower and
Borrower’s Member (or its partners) since inception (which may be
consolidated provided that such report contains notes clearly identifying each
item on such report which is attributable to the Borrower and the Borrower’s
Member(or its partners)), an investment summary broken down for each of the
Borrower’s properties, a comparison of actual results to budget for all of the
Borrower’s properties for such quarter and for the twelve (12) months ending
with such quarter, unaudited financial statements for that quarter and for the
twelve (12) months ending with such quarter for the Borrower and the Borrower’s
Member (or its partners) (which may be consolidated provided that such
financial statements contain notes clearly identifying each item on such
financial statements which is attributable to the Borrower, the Borrower’s
Member (or its partners) and the Projects) (including a balance sheet,
statement of income, statement of partners’ capital or member’s equity,
statement of cash flows, and notes), and in the same form as the most
recent (as of the date hereof) quarterly report of the Borrower’s Member (or
its partners) provided to the Administrative Agent pursuant to Section 6.01(w),
which form is acceptable to Administrative Agent and (ii) an updated
rent roll for each of the Projects in the form delivered to the
Administrative Agent in connection with the Closing; provided however,
following a Permitted Public REIT Transfer, in lieu of the items in clauses (i) and
(ii) above, the Borrower shall furnish to the Administrative Agent, within
the later of the

 

66

 

time period provided
above for delivery of the quarterly report (which shall instead be based on the
Permitted Public REIT’s fiscal quarter) or five (5) Business Days after
the Form 10-Q of the Permitted Public REIT for such fiscal quarter becomes
publicly available, the following: (i) the most recent Form 10-Q of
the Permitted Public REIT, (ii) a summary of operating results for each of
the Projects as of the end of the current quarter for the year-to-date, (iii) a
comparison of actual results to budget for each of the Projects as of the end
of the current quarter for the year-to-date, (iv) an unaudited balance
sheet and income statement for the Borrower as of the end of the current
quarter for the year-to-date (which may be consolidated provided that such
financial statements contain notes identifying each item on such financial
statements that is attributable to the Borrower or the Projects) and (v) an
updated rent roll for each of the Projects;

 

(c)           at the time of the delivery of each
of the financial statements provided for in subsection (a) and
subsection (b) of this Section 8.01, a certificate
of an Authorized Officer on behalf of the Borrower, certifying (i) that such
respective financial statements and reports as being true, correct, and
complete in all material respects; (ii) that such officer has no
knowledge, except as specifically stated, of any Default or if a Default has
occurred, specifying the nature thereof in reasonable detail and the action
which the Borrower is taking or proposes to take with respect thereto; (iii) that
the Borrower is in compliance with the restrictions on Indebtedness set forth
in Section 9.04; and (iv) containing a calculation in such
reasonable detail as is acceptable to the Administrative Agent setting forth
the Operating Income, Operating Expenses, Net Operating Income, Adjusted Net
Operating Income, DSCR Debt Service, and Debt Service Coverage Ratio of the
Borrower for the most recent calendar quarter;

 

(d)           from time to time, within fifteen
(15) days after request therefor, such other information regarding the
financial condition, operations, business or prospects of the Borrower, the
Projects, the other Borrower Parties, the Bankruptcy Parties or status or terms
of the Permitted Reorganization as the Administrative Agent may reasonably
request, including, without limitation, if there is a material variation in the
application of accounting principles as further described herein (i) a
description in reasonable detail of any material variation between the
application of accounting principles employed in the preparation of any annual
or quarterly financial statement under Section 8.01 and the
application of accounting principles employed in the preparation of the
immediately preceding annual or quarterly financial statements and (ii) reasonable
estimates of the difference between such statements arising as a consequence
thereof; and

 

(e)           within ten (10) Business Days
after the end of each calendar month during a Low DSCR Trigger Period, (i) an
operating statement (showing monthly activity), with such detail and in a form reasonably
satisfactory to the Administrative Agent, showing Operating Income, Operating
Expenses, Net Operating Income, Adjusted Net Operating Income, DSCR Debt
Service, and the Borrower’s calculation of Excess Cash for such month; (ii) the
computations of Debt Service Coverage Ratio as calculated as of the end of the
most recent calendar month; and (iii) a reconciliation of the results for
such month and year-to-date as compared to the Approved Annual Budget for such
period.

 

(f)            In the event of a Transfer to a
Permitted REIT or its Permitted REIT Subsidiary in accordance with Section 9.03(a)(iii),
the Borrower shall furnish to the Administrative Agent (a) if the Borrower
shall have delivered a Guarantee of the Guaranteed

 

67

 

Line of Credit, all
compliance certificates, financial statements and all other financial and material
reports required pursuant to the terms of the Primary Credit Facility of the
Permitted REIT on or prior to the date(s) required for the delivery thereof by
such Permitted REIT pursuant to the terms of the Primary Credit Facility of
such Permitted REIT and (b) at all other times such compliance
certificates, financial statements and all other financial and material reports
delivered by the Permitted REIT pursuant to the terms of the Primary Credit
Facility of the Permitted REIT as may be requested by the Administrative
Agent from time to time, promptly following such request.

 

Any reports, statements
or other information required to be delivered under this Agreement (other than
the Form 10-K and Form 10-Q of the Permitted Public REIT, which may be
delivered in paper or electronic form) shall be delivered (1) in paper
form, (2) on a diskette, and (3) if requested by the Administrative
Agent and within the capabilities of the Borrower’s data systems without change
or modification thereto, in electronic form and prepared using a Microsoft
Word for Windows or WordPerfect for Windows files (which files may be
prepared using a spreadsheet program and saved as word processing files).

 

8.02         Notices of Material Events. The
Borrower shall give to the Administrative Agent prompt written notice after
becoming aware of any of the following:

 

(a)           the occurrence of any Default or
Event of Default, including a description of the same in reasonable detail;

 

(b)           the commencement (or threatened
commencement in writing) of all material legal or arbitral proceedings whether
or not covered by insurance policies maintained by or for the Borrower, the
Borrower’s Member or the Borrower’s Manager in accordance herewith (it being
understood that any monetary claims asserted in any proceeding which,
individually or in the aggregate, exceeds $3,000,000 shall be deemed material),
and of all proceedings by or before any Governmental Authority of a material
nature, and any material development in respect of such legal or other
proceedings, affecting any of the Borrower Parties or any Project;

 

(c)           the occurrence of any ERISA Event
that, alone or together with any other ERISA Events that have occurred, could
reasonably be expected to result in liability of the Borrower Parties in an
aggregate amount exceeding $250,000;

 

(d)           promptly after the Borrower knows or
has reason to believe any default has occurred by the Borrower or tenant under
any Major Lease or the Borrower has received a written notice of default from
the tenant under any Major Lease, a notice of such default;

 

(e)           copies of any material notices or
documents pertaining to or related to the Projects, the Borrower or the
Borrower’s Member received from any Governmental Authority; and, with respect
to Major Leases only, any notices received asserting a material default by the
landlord under such lease, or relating to an assignment of the lease by the
tenant, or a subletting of all or substantially all of the premises thereunder,
or the vacation of all or a material portion of the premises by the tenant, or
a change in control of the tenant, or an election by the tenant to terminate
the lease or any other event or condition which, as reasonably determined by
the Borrower, would impact the obligation of the tenant thereunder to pay rent or
perform any of its

 

68

 

other material
obligations for the entire term thereof as previously disclosed to the
Administrative Agent;

 

(f)            notice of any Taking threatened in
writing; or the occurrence of any Casualty Event resulting in damage or loss in
excess of $500,000; and

 

(g)           any other development that results
in, or could reasonably be expected to result in, a Material Adverse Effect.

 

Each
notice delivered under this Section 8.02 shall be accompanied by a
statement of an Authorized Officer of the Borrower setting forth, in reasonable
detail, the details of the event or development requiring such notice and any
action taken or proposed to be taken with respect thereto.

 

8.03         Existence, Etc. The Borrower will,
and will cause each other Borrower Party to, preserve and maintain its legal
existence and all material rights, privileges, licenses and franchises
necessary for the maintenance of its existence and the conduct of its affairs.

 

8.04         Compliance with Laws; Adverse
Regulatory Changes.

 

(a)           The Borrower shall comply in all
material respects (subject to such more stringent requirements as may be
set forth elsewhere herein) with all Applicable Laws. The Borrower shall
maintain in full force and effect all required Government Approvals and shall
from time to time obtain all Government Approvals as shall now or hereafter be
necessary under Applicable Law in connection with the operation or maintenance
of the Projects and shall comply, in all material respects, with all such
Government Approvals and keep them in full force and effect. Upon request from
time to time, the Borrower shall promptly furnish a true, correct and complete
copy of each such Government Approval to the Administrative Agent. The Borrower
shall, unless otherwise approved by the Administrative Agent in writing, use
its reasonable efforts to contest any proceedings before any Governmental
Authority and to resist any proposed adverse changes in Applicable Law to the
extent that such proceedings or changes are directed specifically toward any
Project or could reasonably be expected to have a Material Adverse Effect, but
only to the extent that Borrower deems such action to be in the best interests
of the affected Project in the exercise of its business judgment.

 

(b)           The Borrower, at its own expense, may contest
by appropriate legal proceedings promptly initiated and conducted in good faith
and with due diligence, the validity or application of any Applicable Law, and
shall provide the Administrative Agent with notice of any such contest of a
material nature, provided that:

 

(i)                                     Reserved;

 

(ii)                                  the Borrower shall pay any outstanding
fines, penalties or other payments under protest unless such proceeding shall
suspend the collection of such items;

 

(iii)                               such proceeding shall be permitted under
and be conducted in accordance with the applicable provisions of any other
instrument governing the contest

 

69

 

of such Applicable
Laws to which the Borrower or any such Project is subject and shall not
constitute a default thereunder;

 

(iv)                              no part of or interest in any
Project (or the Borrower’s interest therein) will be in danger of being sold,
forfeited, terminated, canceled or lost during the pendency of the proceeding;

 

(v)                                 such proceeding shall not subject the
Borrower, the Administrative Agent or any Lender to criminal or civil liability
(other than civil liability of the Borrower as to which adequate security has
been provided pursuant to clause (vi) below);

 

(vi)                              unless paid under protest, the Borrower
shall have furnished such security as may be required in the proceeding,
or as may be reasonably requested by the Administrative Agent, to insure
the payment of any such items, together with all interest and penalties
thereon, which shall not be less than 110% of the maximum liability of the
Borrower as reasonably determined by the Administrative Agent; and

 

(vii)                           the Borrower shall promptly upon final
determination thereof pay the amount of such items, together with all costs,
interest and penalties.

 

8.05         Insurance.

 

(a)           The Borrower shall obtain and
maintain, or cause to be maintained, for the benefit of the Borrower, the
Administrative Agent and the Lenders, insurance for each Project providing at
least the following coverages:

 

(i)                                     comprehensive all risk insurance (A) in
an amount equal to one hundred percent (100%) of the full replacement cost
(less deductible amounts provided for herein), which for purposes of this
Agreement shall mean actual replacement value (exclusive of costs of
excavations, foundations, underground utilities and footings) with a waiver of
depreciation; (B) containing an agreed amount endorsement with respect to
the Improvements and personal property at each Project waiving all co-insurance
provisions (if applicable); (C) providing for no deductible in excess of
Seventy-Five Thousand Dollars ($75,000) for all such insurance coverage; and (D) containing
an “Ordinance or Law Coverage” or “Enforcement” endorsement if any of the
Improvements or the use of each Project shall at any time constitute legal
non-conforming structures or uses. In addition, the Borrower shall obtain: (y)
if any portion of the Improvements is currently or at any time in the future
located in a federally designated “special flood hazard area”, flood hazard
insurance in an amount equal to the lesser of (1) the Outstanding
Principal Amount of the Notes or (2) the maximum amount of such insurance
available under the National Flood Insurance Act of 1968, the Flood Disaster Protection
Act of 1973 or the National Flood Insurance Reform Act of 1994, as each may be
amended or such greater amount as the Administrative Agent shall require; and
(z) subject to Sections 8.05(a)(xi) and (xii), coverage for
terrorism, terrorist acts and earthquake; provided that the insurance
pursuant to clauses (y) and (z) hereof shall be on terms (other than with
respect to deductibles and self-insurance) consistent with the comprehensive
all risk insurance policy required under this subsection (i);

 

70

 

(ii)           commercial general liability
insurance against claims for personal injury, bodily injury, death or property
damage occurring upon, in or about the Project, such insurance (A) to be on the
so-called “occurrence” form with an occurrence limit of not less than One
Million and No/100 Dollars ($1,000,000) and an aggregate limit of not less than
Two Million and No/100 Dollars ($2,000,000); (B) to continue at not less than
the aforesaid limit until required to be changed by the Administrative Agent by
reason of changed economic conditions making such protection inadequate; and
(C) to cover at least the following hazards: (1) premises and operations; (2)
products and completed operations on an “if any” basis; (3) independent
contractors; (4) blanket contractual liability for all legal contracts; and (5)
contractual liability covering the indemnities contained in the Loan Documents
to the extent the same is available;

 

(iii)          business income insurance (A) with
loss payable to the Administrative Agent (on behalf of the Lenders); (B)
covering all risks required to be covered by the insurance provided for in subsection (i)
above for a period commencing at the time of loss for such length of time as it
takes to repair or replace with the exercise of due diligence and dispatch; (C)
containing an extended period of indemnity endorsement which provides that
after the physical loss to the Improvements and personal property has been
repaired, the continued loss of income will be insured until such income either
returns to the same level it was at prior to the loss, or the expiration of twelve
(12) months from the date that the Project is repaired or replaced and
operations are resumed, whichever first occurs, and notwithstanding that the
policy may expire prior to the end of such period; and (D) if there is a
separate sublimit for business income insurance, such sublimit shall be not
less than one hundred percent (100%) of the projected gross income from the
Project for a period of eighteen (18) months. The amount of such business
income insurance shall be determined prior to the date hereof and at least once
each year thereafter based on the Borrower’s reasonable estimate of the gross
income from the Project for the succeeding eighteen (18) month period. All
proceeds payable to the Administrative Agent pursuant to this subsection (iii)
shall be held by the Administrative Agent and shall be applied to debt service
that is due and payable under the Notes with the amount in excess of such debt
service during the period of business interruption held in a Controlled Account
and available for release to the Borrower upon the completion of the
restoration of the Project provided no Major Default or Event of Default then
exists; provided, however, that nothing herein contained shall be
deemed to relieve the Borrower of its obligations to pay the obligations
secured by the Loan Documents on the respective dates of payment provided for
in the Notes and the other Loan Documents except to the extent such amounts are
actually paid out of the proceeds of such business income insurance;

 

(iv)          at all times during which structural
construction, repairs or alterations are being made with respect to the
Improvements, and only if or to the extent the coverage specified herein is not
provided through the other insurance maintained by or for the benefit of the
Borrower, (A) owner’s contingent or protective liability insurance covering
claims not covered by or under the terms or provisions of the above mentioned
commercial general liability insurance policy; and (B) the insurance provided
for in subsection (i) above written in a so-called builder’s risk
completed value form (1) on a non-reporting basis, (2) against all risks
insured against pursuant to subsection (i) above, 

 

71

 

(3) including permission to occupy the Project, and
(4) with an agreed amount endorsement waiving co-insurance provisions;

 

(v)           workers’ compensation, subject to the
statutory limits of the state in which the Project is located, and employer’s
liability insurance with a limit of at least One Million and No/100 Dollars
($1,000,000) per accident and per disease per employee, and One Million and
No/100 Dollars ($1,000,000) for disease aggregate in respect of any work or
operations on or about the Project, or in connection with the Project or its
operation (if applicable);

 

(vi)          comprehensive boiler and machinery
insurance, if applicable, in amounts as shall be reasonably required by the
Administrative Agent on terms consistent with the commercial property insurance
policy required under subsection (i) above;

 

(vii)         umbrella liability insurance in
addition to primary coverage in an amount not less than Fifty Million and
No/100 Dollars ($50,000,000) per occurrence on terms consistent with the
commercial general liability insurance policy required under subsection (ii)
above and subsections (viii) and (ix) below;

 

(viii)        motor vehicle liability coverage for all
owned and non-owned vehicles, including rented and leased vehicles containing minimum
limits per occurrence of One Million and No/100 Dollars ($1,000,000);

 

(ix)          if applicable to a particular Project,
so-called “dramshop” insurance or other liability insurance required in
connection with the sale by the Borrower of alcoholic beverages;

 

(x)           insurance against employee dishonesty
in an amount not less than one (1) month of Operating Income from the Project
and with a deductible not greater than Ten Thousand and No/100 Dollars
($10,000.00);

 

(xi)          such coverages with respect to
terrorism and terrorist acts as are then being maintained by prudent owners of
institutionally owned “Class A” office buildings in the market where the Projects
are located as reasonably determined by the Borrower and the Administrative
Agent; it being acknowledged and agreed that the Administrative Agent and the
Lenders have accepted the Borrower’s existing coverages, deductibles and
self-insurance limits in effect on the Closing Date with respect to terrorism
and terrorist acts;

 

(xii)         such coverages with respect to
earthquake as are then being maintained by prudent owners of institutionally
owned “Class A” office buildings in the market where the Projects are located
as reasonably determined by the Borrower and the Administrative Agent; it being
acknowledged and agreed that the Administrative Agent and the Lenders have
accepted the Borrower’s existing coverages, deductibles and self-insurance
limits in effect on the Closing Date with respect to earthquake; and

 

(xiii)        upon sixty (60) days’ notice, such other
reasonable insurance and in such reasonable amounts as the Administrative Agent
from time to time may 

 

72

 

reasonably request against such other insurable
hazards which at the time are commonly insured against for property similar to
the Project located in or around the region in which the Project is located.

 

(b)           All insurance provided for in Section 8.05(a)
shall be obtained under valid and enforceable policies (collectively, the “Policies”
or in the singular, the “Policy”) and, to the extent not specified
above, shall be subject to the approval of the Administrative Agent as to
deductibles, loss payees and insureds. Not less than fifteen (15) days prior to
the expiration dates of the Policies theretofore furnished to the
Administrative Agent, certificates of insurance evidencing the Policies
accompanied by evidence satisfactory to the Administrative Agent of payment of
the premiums then due thereunder (the “Insurance Premiums”), shall be
delivered by the Borrower to the Administrative Agent; provided, however,
that no Event of Default shall result from the Borrower’s failure to deliver or
cause to be delivered such certificates or other evidence unless (i) on or
prior to the expiration date of the applicable Policy, the Administrative Agent
shall not have obtained certificates or other evidence satisfactory to it confirming
that the Policies required hereunder shall have been extended for an additional
period or shall have been replaced for an additional period with replacement
Policies that comply with the requirements set forth in this Section 8.05
and (ii) on or prior to the fifth (5th) Business Day after the
expiration of such expiring Policy, the Administrative Agent shall not have
received certificates of insurance evidencing the extension of the existing
Policies or replacement Policies for an additional period accompanied by
evidence satisfactory to the Administrative Agent of payment of the Insurance
Premiums then due thereunder.

 

(c)           Each Policy shall (i) provide that
adjustment and settlement of any claim equal to or in excess of the Insurance
Threshold Amount shall be subject to the approval of the Administrative Agent
in accordance with Section 10.01(b); provided that so long as no
Event of Default exists, the Borrower may, upon notice to the Administrative
Agent, settle and adjust any claim with respect to a Casualty Event in excess
of the Insurance Threshold Amount without the prior consent of the
Administrative Agent and the Borrower is hereby authorized to collect the
Insurance Proceeds with respect to any such claim; provided that such
adjustment is carried out in a competent and timely manner; (ii) include
permission by the insurer for the parties to the transaction to waive all
rights of subrogation against each other; (iii) to the extent such provisions
are reasonably obtainable, provide that such insurance shall not be impaired or
invalidated by virtue of (1) any act, failure to act or negligence of, or
violation of declarations, warranties or conditions contained in such policy
by, the Borrower, the Administrative Agent, the Lenders or any other named
insured, additional insured, or loss payee, except for the willful misconduct
of the Administrative Agent or the Lenders knowingly in violation of the
conditions of such Policy or (2) any foreclosure or other proceeding or notice
of sale relating to the Projects; (iv) be subject to a deductible, if any, not
greater than $10,000 (except as otherwise specifically provided in or permitted
by Section 8.05(a)); (v) contain an endorsement providing that none of
the Administrative Agent, the Lenders or the Borrower shall be, or shall be
deemed to be, a co-insurer with respect to any risk insured by such Policy;
(vi) include effective waivers by the insurer of all claims for insurance
premiums against any loss payees, additional insureds and named insureds (other
than the Borrower Parties or partners of Borrower’s Member); (vii) provide that
if all or any part of such Policy shall be canceled or terminated, or shall
expire, the insurer will forthwith give notice thereof to each named insured,
additional insured and loss payee and that no cancellation, termination,
expiration, reduction in amount of, or material 

 

73

 

change (other than an increase) in, coverage thereof
shall be effective until at least thirty (30) days after receipt by each named
insured, additional insured and loss payee of written notice thereof; and
(viii) provide that the Administrative Agent shall not be liable for any
Insurance Premiums thereon or subject to any assessments thereunder.

 

(d)           If any such Insurance Proceeds required
to be paid to the Administrative Agent are instead made payable to the
Borrower, the Borrower hereby appoints the Administrative Agent as its
attorney-in-fact, irrevocably and coupled with an interest, to endorse and/or
transfer any such payment to the Administrative Agent (on behalf of the
Lenders).

 

(e)           Except as otherwise provided by the
terms of the blanket insurance policies maintained by the Borrower and/or its Affiliates
with respect to the Borrower and the Projects as of the Closing Date, or
comparable blanket policies that may be obtained by the Borrower and/or its Affiliates
after the Closing Date, any blanket insurance Policy shall specifically
allocate to the Projects the amount of coverage from time to time required
hereunder and shall otherwise provide the same protection as would a separate
Policy insuring only the Projects in compliance with the provisions of Section 8.05(a).

 

(f)            All Policies of insurance provided for
or contemplated by Section 8.05(a) shall be primary coverage and,
except for the Policy referenced in Section 8.05(a)(v), shall name
the Borrower as the insured and the Administrative Agent (on behalf of the
Lenders) and its successors and/or assigns as the additional insured (or in the
case of property insurance, as the “mortgagee”), as its interests may appear,
and in the case of property damage, boiler and machinery, flood, earthquake and
terrorism insurance, shall contain a standard non-contributing mortgagee
endorsement in favor of the Administrative Agent providing that the loss
thereunder shall be payable to the Administrative Agent. The Borrower shall not
procure or permit any of its constituent entities to procure any other
insurance coverage which would be on the same level of payment as the Policies
or would adversely impact in any way the ability of the Administrative Agent or
the Borrower to collect any proceeds under any of the Policies. All polices
must EXACTLY state the following: Eurohypo AG, New York Branch Its successors
and assigns 1114 Avenue of the Americas 29th Floor New York, NY
10036 Attn: Director of Portfolio Operations.

 

(g)           Without limiting the obligations of the
Borrower under the foregoing provisions of this Section 8.05, if at any
time the Administrative Agent is not in receipt of written evidence that all
insurance required hereunder is in full force and effect, the Administrative
Agent shall have the right, without notice to the Borrower, to take such action
as the Administrative Agent deems necessary to protect its interest in the
Projects, including, without limitation, the obtaining of such insurance
coverage as the Administrative Agent in its sole discretion deems appropriate
and all premiums incurred by the Administrative Agent in connection with such
action or in obtaining such insurance and keeping it in effect shall be paid by
the Borrower to the Administrative Agent upon demand and until paid shall be
secured by the Deed of Trust and shall bear interest at the Post-Default Rate.

 

(h)           In the event of foreclosure of the Deed
of Trust or other transfer of title to any Project in extinguishment in whole
or in part of the obligations thereunder, all right, title and interest of the
Borrower in and to the Policies that are not blanket Policies then in force 

 

74

 

concerning such Project and all proceeds payable
thereunder shall thereupon vest in the purchaser at such foreclosure or the
Administrative Agent or other transferee in the event of such other transfer of
title.

 

(i)            The Polices shall be issued by
financially sound and responsible insurance companies authorized to do business
in the state in which the Projects are located and be approved by the
Administrative Agent. The insurance companies shall have (i) a general policy
and claims paying ability rating of A or better and a financial class of IX or
better (and, as to the coverages for terrorism, terrorist acts and earthquake, a
general policy and claims paying ability rating of A minus or better and a
financial class of VII or better) by A.M. Best Company, Inc.; provided, however,
that the Borrower shall be permitted to maintain (at levels other than the
primary layer of insurance) up to twenty percent (20%) of the total required
all-risk insurance coverage required under subsection 8.05(a)(i) with
insurance companies having a general policy and claims paying ability rating of
less than A and a financial class of less than IX provided such companies have
at least a general policy and claims paying ability rating of A minus or better
and a financial class of VII or better, provided such insurance companies are
also issuing earthquake coverage to the Borrower or (ii) an investment grade
rating for claims paying ability of “AA” by S&P or the equivalent rating by
one or more credit rating agencies approved by the Administrative Agent.

 

8.06        Real
Estate Taxes and Other Charges.

 

(a)           Subject to the provisions of subsection
(b) of this Section 8.06, the Borrower shall pay all Real Estate
Taxes and Other Charges now or hereafter levied or assessed or imposed against
each Project or any part thereof before fine, penalty, interest or cost
attaches thereto. Subject to the provisions of subsection (b) of this Section
8.06, upon the request of the Administrative Agent, the Borrower shall
furnish to the Administrative Agent receipts for, or other evidence reasonably
satisfactory to the Administrative Agent of, the payment of Real Estate Taxes
and Other Charges in compliance with this Section 8.06.

 

(b)           After prior written notice to the
Administrative Agent, the Borrower, at its own expense, may contest by
appropriate legal proceedings or other appropriate actions, promptly initiated
and conducted in good faith and with due diligence, the amount or validity or
application in whole or in part of any Real Estate Taxes and Other Charges, provided
that:

 

(i)            Reserved;

 

(ii)           the Borrower shall pay the Real
Estate Taxes and Other Charges under protest unless such proceeding shall
suspend the collection of the Real Estate Taxes and Other Charges;

 

(iii)          such proceeding shall be permitted
under and be conducted in accordance with the applicable provisions of any
other instrument governing the contest of Real Estate Taxes or Other Charges to
which the Borrower or the Projects is subject and shall not constitute a
default thereunder;

 

(iv)          such proceeding shall be conducted in
accordance with all Applicable Laws;

 

75

 

(v)           neither the Projects nor any part
thereof or interest therein will, in the reasonable opinion of the
Administrative Agent, be in danger of being sold, forfeited, terminated,
cancelled or lost during the pendency of the proceeding;

 

(vi)          unless paid under protest, the
Borrower shall have furnished such security as may be required in the
proceeding, or as may be reasonably requested by the Administrative Agent (but
in no event less than 110% of the Real Estate Taxes or Other Charges being
contested), to insure the payment of any such Real Estate Taxes and Other
Charges, together with all interest and penalties thereon; and

 

(vii)         the Borrower shall promptly upon final
determination thereof or upon the failure of the existence of (ii), (iii),
(iv) or (v) above pay the amount of such Real Estate Taxes or Other
Charges, together with all costs, interest and penalties.

 

8.07        Maintenance
of the Projects; Alterations. The Borrower shall:

 

(i)            maintain or cause to be maintained
each Project in good condition and repair in a manner consistent with a Class-A
office building located in the relevant submarket in which such Project is
located in Los Angeles County, California, and make all reasonably necessary
repairs or replacements thereto;

 

(ii)           except for work that constitutes
required work under Section 8.21, not remove, demolish or structurally
alter, or permit or suffer the removal, demolition or structural alteration of,
any of the Improvements or make any alteration that may have a Material Adverse
Effect or involve a cost in the aggregate for such alteration and all other
alterations involving a single work of improvement (or related group of
improvements) which is anticipated to exceed the lesser of (A) $5,000,000 or (B)
ten percent (10%) of the Appraised Value of such Project, without the prior
consent of the Administrative Agent; provided, however, that the
Administrative Agent’s consent shall not be required for tenant improvement
work performed pursuant to the terms and provisions of an Approved Lease which
(upon completion of such work) does not adversely affect any structural
component of any Improvements, any utility or HVAC system contained in any Improvements
or the exterior of any building (excluding signage or other alterations that
would not otherwise require the consent of the Administrative Agent under this Section
8.07(ii) in the absence of this proviso) constituting a part of any
Improvements at any Project; and provided, further, that the
Administrative Agent’s consent shall not be unreasonably withheld for any
alterations that are required by Applicable Law and otherwise require the
consent of the Administrative Agent under this Section 8.07(ii);

 

(iii)          complete promptly and in a good and
workmanlike manner any Improvements which may be hereafter constructed and,
subject to the terms of the Loan Documents (including, without limitation, Section
10.03), promptly restore (in compliance with Section 10.03) in
like manner any portion of the Improvements which may be damaged or destroyed
thereon from any cause whatsoever, and pay when due all claims for labor
performed and material furnished therefor, subject to the Borrower’s right to
contest any such claims (as long as, with respect to any claim for which a 

 

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mechanic’s lien has been filed, such contested claims
have been bonded over to the satisfaction of the Administrative Agent within
thirty (30) days of the date of filing);

 

(iv)          not commit, or permit, any waste of
the Projects; and

 

(v)           not remove any item from the Projects
without replacing it with a comparable item of equal quality, value and
usefulness, except that the Borrower may sell or dispose of in the ordinary
course of the Borrower’s business any property which is obsolete.

 

8.08        Further
Assurances. The Borrower will, and will cause each of the other Borrower
Parties to, promptly upon request by the Administrative Agent, execute any and
all further documents, agreements and instruments, and take all such further
actions which may be required under any applicable law, or which the
Administrative Agent may reasonably request, to effectuate the Transactions,
all at the sole cost and expense of the Borrower. The Borrower, at its sole
cost and expense, shall take or cause to be taken all action required or
requested by the Administrative Agent to maintain and preserve the Liens of the
Security Documents and the priority thereof. The Borrower shall from time to
time execute or cause to be executed any and all further instruments, and
register and record such instruments in all public and other offices, and shall
take all such further actions, as may be necessary or requested by the
Administrative Agent for such purposes, including timely filing or refiling all
continuations and any assignments of any such financing statements, as
appropriate, in the appropriate recording offices.

 

8.09        Performance
of the Loan Documents. The Borrower shall observe, perform and satisfy all
the terms, provisions, covenants and conditions required to be observed,
performed or satisfied by it under the Loan Documents, and shall pay when due
all costs, fees and expenses required to be paid by it under the Loan
Documents.

 

8.10        Books
and Records; Inspection Rights. The Borrower will, and will cause each of
the other Borrower Parties to, keep proper books of record and account in which
full, true and correct entries are made of all dealings and transactions in
relation to its business and activities. The Borrower will, and will cause each
of the other Borrower Parties to, permit any representatives designated by the
Administrative Agent or any Lender, upon reasonable prior notice, to visit and
inspect its properties (subject to the proviso set forth in Section 8.11(a)),
to examine and make extracts from its books and records, and to discuss its
affairs, finances and condition with its officers and independent accountants,
all at such reasonable times (during normal business hours) and as often as
reasonably requested.

 

8.11        Environmental
Compliance.

 

(a)           Environmental Covenants. The
Borrower covenants and agrees that:

 

(i)            all uses and operations on or of
each Project, whether by the Borrower or any other Person, shall be in
compliance with all Environmental Laws and permits issued pursuant thereto;

 

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(ii)           except for Releases incidental to the
Use of Hazardous Substances permitted by clause (iii) below and in
compliance with all Applicable Laws, the Borrower shall not permit a Release of
Hazardous Substances in, on, under or from any Project;

 

(iii)          the Borrower shall not knowingly
permit Hazardous Substances in, on, or under any Project, except those that are
in compliance with all Environmental Laws and of types and in quantities
customarily used in the ownership, operation and maintenance of buildings
similar to the Projects (i.e., materials used in cleaning and other building
operations) and shall undertake to supervise and inspect activities occurring
on the Projects as may be reasonably prudent to comply with the foregoing
obligation;

 

(iv)          except as disclosed in Schedule
8.11 or as specifically described in the Environmental Reports, the
Borrower shall not permit any underground storage tanks to be in, on, or under
any Project, and shall operate, maintain, repair and replace any such
underground storage tank so disclosed in compliance with all Applicable Laws;

 

(v)           Reserved;

 

(vi)          the Borrower shall keep each Project
free and clear of all Liens and other encumbrances imposed pursuant to any
Environmental Law, whether due to any act or omission of the Borrower or any
other Person (collectively, “Environmental Liens”);

 

(vii)         notwithstanding clause (iii)
above, the Borrower shall not, or knowingly permit any other Person to, install
any asbestos or asbestos containing materials on any Project, and shall upon
and following the Closing Date implement, comply with and maintain in effect an
operations and maintenance program with respect to any existing asbestos or
asbestos containing materials located at any Project;

 

(viii)        the Borrower shall cause the Remediation
of such Hazardous Substances present on, under or emanating from any Project,
or migrating onto or into any Project, in accordance with this Agreement and
applicable Environmental Laws subject to the right to contest such Remediation
in accordance with Section 7(a) of the Environmental Indemnity; and

 

(ix)          the Borrower shall provide the
Administrative Agent, the Lenders and their representatives (A) with
access, upon prior reasonable notice, at reasonable times (during normal
business hours) to all or any portion of any Project for purposes of
inspection; provided that such inspections shall not unreasonably
interfere with the operation of such Project or the tenants or occupants
thereof, and shall be subject to the rights of tenants under their Leases, and
the Borrower shall cooperate with the Administrative Agent, the Lenders and
their representatives in connection with such inspections, including, but not
limited to, providing all relevant information and making knowledgeable persons
available for interviews and (B) promptly upon request, copies of all
environmental investigations, studies, audits, reviews or other analyses
conducted by or that are in the possession or control of the Borrower in
relation to any Project, whether heretofore or hereafter obtained.

 

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(b)           Environmental Notices. The
Borrower shall promptly provide notice to the Administrative Agent of:

 

(i)            all Environmental Claims asserted or
threatened against the Borrower or any other Person occupying any Project or
any portion thereof or against any Project which become known to the Borrower;

 

(ii)           the discovery by the Borrower of any
occurrence or condition on any Project or on any real property adjoining or in
the vicinity of any Project which could reasonably be expected to lead to an
Environmental Claim against the Borrower, any Project, the Administrative Agent
or any of the Lenders;

 

(iii)          the commencement or completion of any
Remediation at any Project; and

 

(iv)          any Environmental Lien filed against
any Project.

 

In
connection therewith, the Borrower shall transmit to the Administrative Agent
copies of any citations, orders, notices or other written communications
received from any Person and any notices, reports or other written
communications and copies of any future Environmental Reports whether or not submitted
to any Governmental Authority with respect to the matters described above.

 

8.12        Management
of the Projects.

 

(a)           The Borrower shall (i) cause each
Project to be managed by the Property Manager in accordance with the Property
Management Agreement, (ii) promptly perform and observe all of the material
covenants required to be performed and observed by the Borrower under the
Property Management Agreement and do all things necessary to preserve and to
keep unimpaired its material rights thereunder, (iii) promptly notify the
Administrative Agent of any material default under the Property Management
Agreement of which it is aware and (iv) promptly enforce the performance and
observance of all of the material covenants required to be performed and
observed by the Property Manager under the Property Management Agreement.

 

(b)           If (i) an Event of Default exists,
(ii) the Property Manager is insolvent, or (iii) the Property Manager is
in default of any material covenant or obligation under the Property Management
Agreement beyond the expiration of any applicable grace period set forth
therein, the Borrower shall, at the request of the Administrative Agent,
promptly terminate the Property Management Agreement and replace the Property
Manager with a property manager approved by the Administrative Agent pursuant
to a Property Management Agreement on terms and conditions reasonably
satisfactory to the Administrative Agent.

 

8.13        Leases.
The Borrower shall (a) upon the Closing Date, assign to the Administrative
Agent (on behalf of the Lenders) any and all Leases, and/or all Rents payable
thereunder, including, but not limited to, any Lease which is now in existence
or which may be executed after the Closing Date, (b) promptly perform and
fulfill, or cause to be performed and fulfilled, each and every material term
and provision of the Borrower’s obligations under the Leases, including the
performance of any tenant improvement work required with respect 

 

79

 

thereto, (c) give to the Administrative Agent a copy
of each notice of default given to any tenant under a Major Lease or sent by
any tenant thereunder to the Borrower, (d) consistent with good business
practices and in the best interests of the affected Project, enforce its rights
with regard to all Leases unless otherwise approved by the Administrative Agent,
(e) use its commercially reasonable efforts to lease the Projects, (f)
diligently enforce the terms of each Lease with respect to any construction
work to be performed by the tenant thereunder so that such work is performed in
a manner which will cause a minimum amount of disruption to the tenants then in
occupancy at any such Project and in a manner so as not to cause a default by
the Borrower under any other tenants’ Leases or provide the basis for any
abatement or set off by any other tenant of the rent payable under any such
Lease, or a claim by any other tenant for breach of warranty of habitability or
similar claim and (g) prior to entering into any new Lease with a retail tenant
provide a copy of the Borrower’s standard form of retail lease to the Administrative
Agent for review and approval, which approval shall not be unreasonably
withheld or delayed.

 

8.14        Tenant
Estoppels. At the Administrative Agent’s request, at any time while an
Event of Default exists and otherwise from time to time upon the joint
agreement of the Borrower and the Administrative Agent, with each acting
reasonably, the Borrower shall request and use commercially reasonable efforts
to obtain and furnish to the Administrative Agent written estoppels in form and
substance satisfactory to the Administrative Agent, executed by tenants under
Leases in any Project and confirming the term, rent, and other provisions and
matters relating to the Leases. Borrower further hereby agrees that, while an
Event of Default exists, the Administrative Agent may exercise all rights of
the Borrower under the Leases to request the delivery of estoppels from the
tenants thereunder.

 

8.15        Subordination,
Non-Disturbance and Attornment Agreements. The Borrower shall use
commercially reasonable efforts to provide to the Administrative Agent SNDA
Agreements executed by each tenant under a Major Lease prior to the Closing
Date; provided, however, that in addition to the obligations set
forth in Section 9.09(c), if the Borrower does not obtain all such SNDA
Agreements by the Closing Date, the Borrower shall continue to use commercially
reasonable efforts to obtain such SNDA Agreements after the Closing Date.

 

8.16        Operating
Plan and Budget.

 

(a)           Commencing with the budget for the
calendar year 2006 and then annually thereafter, the Borrower shall submit to
the Administrative Agent an annual budget for each Project (each an “Annual
Budget”), in form and substance reasonably satisfactory to the
Administrative Agent setting forth in detail budgeted monthly Operating Income
and monthly Operating Expenses for each such Project (which may be in the form
of the calendar year 2005 budget for each Project provided to the
Administrative Agent prior to the Closing Date). The Annual Budget for each
year shall be delivered together with the annual financial statement for the
preceding year pursuant to Section 8.01(a). During any Low DSCR Trigger
Period but not otherwise, the Administrative Agent shall have the right to
approve such Annual Budget (including, without limitation, the Annual Budget
for the portions of the calendar year in which such Low DSCR Trigger Period
occurs following after the commencement of such Low DSCR Trigger Period). Within
fifty (50) days following the end of any calendar quarter which comprises a Low
DSCR Trigger Period, the Borrower shall deliver to the Administrative Agent for
its approval the Annual Budget (in the format as described above) for the
calendar year in 

 

80

 

which such Low DSCR Trigger Period occurs (together
with a reconciliation to that Annual Budget of actual revenues and expenses
year-to-date), and shall thereafter deliver to Administrative Agent for its approval
the Annual Budget (in the format as described above) proposed by the Borrower
for the succeeding calendar year, by no later than the November 15 preceding
such calendar year. The Administrative Agent shall not unreasonably withhold
its approval of any Annual Budget as required hereunder; provided, however, that if
during any Low DSCR Trigger Period the actual monthly Operating Expenses exceed
budgeted Operating Expenses in any month during any period by more than ten
percent (10%), the Administrative Agent shall have the right to require the
Borrower to submit for its approval a revised Annual Budget for review and
approval by the Administrative Agent in its sole discretion. If the
Administrative Agent objects to any proposed Annual Budget for which approval
is required hereunder, the Administrative Agent shall advise the Borrower of
such objections within fifteen (15) Business Days after receipt thereof (and
deliver to the Borrower a reasonably detailed description of such objections),
and the Borrower shall within five (5) days after receipt of notice of any such
objections revise such Annual Budget and resubmit the same to the
Administrative Agent (such procedure to be repeated until such time as the
Administrative Agent shall approve such Annual Budget). Each such Annual Budget
submitted to and (to the extent that such approval is required hereunder) approved
by the Administrative Agent in accordance with terms hereof, as well as the
budget for the current calendar year approved by the Administrative Agent on
the Closing Date, shall hereinafter be referred to as an “Approved Annual
Budget”. Until such time that the Administrative Agent has approved a proposed
Annual Budget for which its approval is required hereunder, the most recently
Approved Annual Budget shall apply for purposes of this Section 8.16; provided
that such Approved Annual Budget shall be adjusted to reflect actual increases
in real estate taxes, insurance premiums, utilities expenses and other fixed
costs and shall otherwise be adjusted to reflect any change during the
preceding year in the Consumer Price Index. Notwithstanding the foregoing, the
Administrative Agent and the Lenders acknowledge that the Borrower is not
required to operate under the terms of an Approved Annual Budget during any
period other than a Low DSCR Trigger Period.

 

(b)           During any Low DSCR Trigger Period, the
Borrower may at any time propose an amendment to an Approved Annual Budget for
any Project for the remainder of the calendar year in which such Low DSCR
Trigger Period has occurred, and, when approved as provided below, such amended
Approved Annual Budget for such Project shall be deemed to be and shall be
effective as the Approved Annual Budget for such Project for such calendar year.
Prior to making any expenditures not reflected in any current Approved Annual
Budget in excess of ten percent (10%) of the budgeted amount therefor, the
Borrower shall propose an amendment to such Approved Annual Budget to the
Administrative Agent for its approval in accordance with the standards for the
granting or withholding of consent to Annual Budgets set forth in Section
8.16(a). The Administrative Agent shall have fifteen (15) Business Days
after receipt of any proposed amendment to such Approved Annual Budget to
approve or disapprove such proposed amendment.

 

8.17        Operating
Expenses. The Borrower shall pay all known costs and expenses of operating,
maintaining, leasing and otherwise owning the Projects on a current basis and
before same become delinquent (subject however to the other provisions of this
Agreement and the other Loan Documents), including all interest, principal
(when due) and other sums required to be paid under this Agreement, the other
Loan Documents and the Hedge Agreement, 

 

81

 

before utilizing any revenues derived or to be derived
from or in respect of the Projects for any other purpose, including
distributions or other payments to the Borrower’s Member.

 

8.18        Margin
Regulations. No part of the proceeds of the Loans will be used for the
purpose of purchasing or acquiring any “margin stock” within the meaning of
Regulation U of the Board of Governors of the Federal Reserve System or for any
other purpose which would be inconsistent with such Regulation T, U, X or any
other Regulations of such Board of Governors, or for any purposes prohibited by
Legal Requirements.

 

8.19        Hedge
Agreements.

 

(a)           The Borrower shall obtain, or cause to
be obtained by an Other Swap Pledgor, no later than thirty (30) days after the
Closing Date and will at all times thereafter maintain, or cause to be
maintained by an Other Swap Pledgor, in full force and effect one or more Hedge
Agreements in the aggregate notional amount equal to one hundred percent (100%)
of the Outstanding Principal Amount of the Loans from time to time (the “Aggregate
Notional Amount”) approved by the Administrative Agent in its reasonable
discretion with (i) Eurohypo or its Affiliates or (ii) one or more
other banks or insurance companies as counterparties (each a “Third-Party
Counterparty”), which is effective to cause the All-in-Rate as to the Aggregate
Notional Amount commencing no later than the date that is thirty (30) days
after the Closing Date (or, if such day is not a Business Day, the first
Business Day thereafter) to be not in excess of eight percent (8.0%) per annum through
the Hedging Termination Date. Upon the Closing Date, the Borrower shall deliver,
or cause to be delivered by an Other Swap Pledgor, a Hedge Agreement Pledge,
substantially in the form of Exhibit G-1 attached hereto, together with,
within thirty (30) days after the Closing Date, the applicable bid package,
confirmation and other documentation for such Hedge Agreement (including,
without limitation, a certificate from an Authorized Officer of the Borrower
certifying that a Hedge Agreement has been entered into on the terms set forth
in the confirmation) as may be reasonably acceptable to the Administrative
Agent evidencing compliance with the Borrower’s obligations under the
provisions of this Section 8.19, and within ten (10) days after the
delivery of each such Hedge Agreement (or within the thirty (30) day period
referred to above)  shall deliver the
applicable counterparty acknowledgment. Any Hedge Agreement shall require
monthly fixed rate and floating rate payments and be based on a LIBO Rate of
interest having, at the Borrower’s option, successive Interest Periods (an “Interest
Rate Hedge Period”) of one, two, three, six or twelve months or such other
Interest Periods satisfactory to the Administrative Agent in its reasonable
discretion. Notwithstanding anything to the contrary contained in this Section
8.19, the Borrower or any Other Swap Pledgor shall be entitled to enter
into one or more Hedge Agreements in excess of the Aggregate Notional Amount,
up to the total amount of the Commitments or providing interest rate protection
for periods that extend beyond the Hedging Termination Date (each such
agreement, but only to the extent that it, after giving effect to all other
Hedge Agreements maintained pursuant to this Section 8.19(a), relates to
a notional amount in excess of the Aggregate Notional Amount or provides
interest rate protection for periods that extend beyond the Hedging Termination
Date, is referred to herein as an “Excess Hedge Agreement”) on terms
acceptable to the Borrower or such Other Swap Pledgor; provided, however,
that Borrower shall deliver, or cause to be delivered by an Other Swap Pledgor,
upon the Administrative Agent’s request in accordance with the time
requirements set forth in this Section 8.19(a), a Hedge Agreement
Pledge with respect to each Excess Hedge Agreement, substantially in the form
of 

 

82

 

Exhibit G-2 attached hereto,
together with the counterparty’s acknowledgment and other instruments provided
to be delivered thereunder.

 

(b)           The Borrower’s obligations under any
Hedge Agreement shall not be secured by the Deeds of Trust and shall not be
secured by any Lien on or in all or any portion of the collateral under the
Security Documents, any direct or indirect interest in the Borrower or any
other Property (other than as permitted pursuant to Section 9.02(i)).

 

(c)           Any Hedge Agreement with a Third-Party
Counterparty is herein called a “Third-Party Hedge Agreement.”  With respect to each Third-Party Hedge
Agreement maintained with respect to the Aggregate Notional Amount and each
Excess Hedge Agreement pledged to the Administrative Agent pursuant to Section
8.19(a):  (i) the Third-Party
Counterparty providing such Third-Party Hedge Agreement must have a long term
credit rating no lower than “A” from S&P or “A2” from Moody’s at the time
of entry into such Third-Party Hedge Agreement; provided, however,
if there is a difference in the then current S&P rating and the Moody’s
rating, the lesser rating shall be applicable; (ii) the form and substance
thereof must be satisfactory to the Administrative Agent in its reasonable
discretion and in all respects and (iii) each counterparty thereunder shall
have delivered to the Administrative Agent a counterparty’s acknowledgment in
the form attached to the Hedge Agreement Pledge applicable thereto (or in such
other form as may be acceptable to the Administrative Agent in its reasonable
discretion).

 

(d)           Reserved.

 

(e)           If the Borrower fails for any reason or
cause whatsoever to secure and maintain, or cause to be secured and maintained
by an Other Swap Pledgor, a Hedge Agreement with respect to the Aggregate Notional
Amount as and when required to do so hereunder, such failure shall constitute
an Event of Default and the Administrative Agent shall be entitled to exercise
all rights and remedies available to it under this Agreement (for the benefit
of the Lenders) and the other Loan Documents or otherwise, including the right
(but not the obligation) of the Administrative Agent to secure or otherwise
enter into one or more Hedge Agreements with respect to the Aggregate Notional
Amount with a Lender for and on behalf of the Borrower without such action
constituting a cure of such Event of Default and without waiving the
Administrative Agent’s or the Lenders’ rights arising out of or in connection
with such Event of Default. If the Administrative Agent shall enter into a
Hedge Agreement with a Lender in accordance with its right to do so pursuant to
this subsection (e), then (i) the terms and provisions of any such Hedge
Agreement, including the term thereof, shall be determined by the
Administrative Agent in its sole discretion (except that the maximum notional
amount of all such Hedge Agreements shall not exceed the Aggregate Notional Amount)
and (ii) the Borrower shall pay all of the Administrative Agent’s costs and
expenses in connection therewith, including any fees charged by the applicable
counterparty, attorneys’ fees and disbursements, and the cost of additional
title insurance in an amount determined by the Administrative Agent to be
necessary to protect the Administrative Agent and the Lenders from potential
funding losses under any Hedge Agreement provided by a Lender.

 

(f)            Reserved.

 

83

 

(g)           If the Borrower or Other Swap Pledgor is
entitled to receive a payment upon the termination of any Hedge Agreement
required by this Section 8.19, or, while any Event of Default exists,
under any Excess Hedge Agreement pledged to the Administrative Agent pursuant
to Section 8.19(a) (it being understood that any termination payment
paid with respect to any Excess Hedge Agreement shall be delivered to the
Borrower or Other Swap Pledgor at any time while an Event of Default does not
exist) such payment shall be delivered to the Administrative Agent and applied
by the Administrative Agent to any amounts due to the Administrative Agent or
the Lenders under the Loan Documents evidencing the Loans (it being understood
that any such payment applied to the principal of the Loans shall be deemed a
prepayment of such principal, and shall be accompanied by any applicable
prepayment premium resulting from such prepayment, or such termination payment
shall be applied in part to pay such principal and in part to pay such
prepayment premium) in such order and priority as the Administrative Agent
shall determine in its sole discretion. Notwithstanding the foregoing, if
(i) at any time upon or following any principal prepayment made pursuant
to Section 2.06 the Outstanding Principal Amount is reduced and the
Borrower or Other Swap Pledgor elects at its option to terminate or partially
to terminate, or to reduce the notional amount of, any Hedge Agreement (or is
required under the terms of such Hedge Agreement to do so) in a notional amount
(in either such case) not exceeding, respectively, the amount by which the aggregate
notional amount in effect under the Hedge Agreements then maintained pursuant
hereto (other than Excess Hedge Agreements unless pledged pursuant to the Hedge
Agreement Pledge substantially in the form of Exhibit G-1 attached
hereto) exceeds the Aggregate Notional Amount then required to be hedged
pursuant hereto or (ii) the Borrower or Other Swap Pledgor elects, in full
compliance with the terms of each Hedge Agreement Pledge, to deliver to the
Administrative Agent, in substitution for a Hedge Agreement, a substitute Hedge
Agreement, then the Borrower or Other Swap Pledgor shall have the right to do
so, and if the Borrower or Other Swap Pledgor is entitled (in the case of
either (i) or (ii) above) to receive a termination payment from the
counterparty in connection therewith, then, provided that no Event of Default
then exists, the Borrower or Other Swap Pledgor shall have the right to receive
and retain such termination payment free and clear of the Lien of the Hedge
Agreement Pledge, provided, that, after giving effect to any such termination
or substitution, the Borrower remains in compliance with its obligations under Section
8.19(a) with respect to the maintenance of Hedge Agreements with respect to
the Aggregate Notional Amount then required to be hedged pursuant hereto and
has complied (or caused the Other Swap Pledgor to comply) with the applicable
conditions precedent set forth in Section 6(e) of the Hedge Agreement Pledge
and the certification obligations with respect thereto set forth in the
applicable Hedge Agreement Pledge and the Acknowledgment of Security Interest
delivered pursuant thereto. The Borrower or Other Swap Pledgor shall have the
right to terminate, reduce the notional amount of or modify any Excess Hedge
Agreement and to receive any payments from the counterparty thereunder
resulting therefrom, provided that if an Event of Default exists and such
Excess Hedge Agreement has been pledged to the Administrative Agent, then the
rights and obligations of the Borrower (or Other Swap Pledgor) and the
Administrative Agent with respect thereto shall be the same as their respective
rights and obligations with respect to Hedge Agreements maintained with respect
to the Aggregate Notional Amount.

 

(h)           Upon securing any Hedge Agreement
required under this Section 8.19, or any Excess Hedge Agreement pledged
to the Administrative Agent pursuant to Section 8.19(a) the Borrower
agrees that the economic and other benefits of such Hedge Agreement and all of 

 

84

 

the other rights of the Borrower or Other Swap Pledgor
thereunder shall be collaterally assigned to the Administrative Agent as
additional security for the Loans for the ratable benefit of the Lenders,
pursuant to a Hedge Agreement Pledge. All Hedge Agreement Pledges shall be
accompanied by (i) Uniform Commercial Code financing statements, in
duplicate, with respect to such pledges and (ii) within ten (10) days
after delivery of the applicable Hedge Agreement Pledge (or within such longer
period as provided in Section 8.19(a) above), a counterparty’s
acknowledgment in the form attached to the Hedge Agreement Pledge applicable
thereto (or in such other form as may be acceptable to the Administrative Agent
in its reasonable discretion) from each counterparty under each Hedge
Agreement.

 

(i)            Notwithstanding the provisions of Section
8.19(a), following the delivery of any notice of full or partial prepayment
delivered by the Borrower pursuant to Section 2.06(a) or any notice of a
proposed release of a Project pursuant to Section 2.06(c), Borrower’s
obligation to maintain, or cause to be maintained, any Hedge Agreement required
under Section 8.19(a) shall be suspended with respect to the full Aggregate Notional
Amount (in the case of a notice of full prepayment) or the portion of the
Aggregate Notional Amount equal to the amount to be prepaid in the case of a
partial prepayment or pursuant to Section 2.09(a)(ii) in connection with
the release of a Project (in the case of a notice of partial prepayment or
notice of the release of a Project), and Borrower or the Other Swap
Pledgor may terminate or reduce the notional amount of any Hedge Agreement
theretofore entered into with respect to such suspended portion of the Aggregate Notional Amount;
provided, however, that if such notice of prepayment or release is subsequently
revoked, or if such prepayment or release does not occur on or prior to the
date identified in such notice of prepayment or release (as such date may be
postponed in accordance with the provisions of this Agreement), then the
suspension of such obligation shall terminate, and Borrower shall be obligated
to enter into and thereafter maintain, or to cause an Other Swap Pledgor to
enter into and thereafter maintain, one or more Hedge Agreements in full
compliance with Section 8.19(a) by not later than the end of a
cumulative period during which the Hedge Agreements otherwise required under Section
8.19(a) are not being maintained (with respect to all such notices of
prepayment or release in the aggregate) which shall not exceed (60) days in the
aggregate.

 

(j)            If any Hedge Agreement delivered by
the Borrower or Other Swap Pledgor to the Administrative Agent shall, by its
terms, expire during any period in which Borrower remains obligated to maintain
a Hedge Agreement in effect pursuant to Section 8.19(a), and as a result
thereof the Borrower would not be in compliance with its obligations under Section
8.19(a) with respect to the maintenance of Hedge Agreements covering the
Aggregate Notional Amount, then, subject to the provisions of Section
8.19(i),  the Borrower shall deliver,
or cause an Other Swap Pledgor to deliver, to the Administrative Agent a
replacement Hedge Agreement at least ten (10) Business Days prior to the
expiration date of the then current Hedge Agreement (so as to remain in
compliance with its obligations under Section 8.19(a) with respect to
the maintenance of Hedge Agreements) which replacement Hedge Agreement shall be
acceptable to the Administrative Agent in its reasonable discretion and
otherwise satisfy the requirements of this Section 8.19.

 

85

 

8.20        Reserved.

 

8.21        Required
Work. The Borrower shall cause the work described on Schedule 8.21
attached hereto to be completed on or before the applicable dates set forth on
said schedule. Such work shall be completed in a good and workmanlike manner,
lien-free and in accordance with all Applicable Laws. The Administrative Agent
shall have the right to inspect such work and the reasonable costs of such
inspection shall be paid by the Borrower. In addition, the Borrower
acknowledges receipt of the Environmental Reports and the Property Condition
Reports and agrees to address in its prudent business judgment the
recommendations contained in such reports.

 

ARTICLE
IX

NEGATIVE COVENANTS OF THE BORROWER

 

The Borrower covenants and agrees that, until the
payment in full of the Obligations, it will not do or permit, directly or
indirectly, any of the following:

 

9.01        Fundamental
Change.

 

(a)           Mergers; Consolidations; Disposal of
Assets. Except as expressly provided for in Section 14.31, none of
the Borrower Parties will merge into or consolidate with any other Person, or
permit any other Person to merge into or consolidate with it, or sell,
transfer, lease (other than tenant leases pursuant to and in accordance with Sections
8.13 and 9.09 of this Agreement) or otherwise dispose of (in one
transaction or in a series of transactions) any substantial part of its
Properties and assets whether now owned or hereafter acquired (but excluding
any Transfer permitted by Section 9.03 (including, without limitation,
any sale or disposition of any Excluded Projects) or any sale or disposition of
Projects subject to and in accordance with Section 2.09 of this
Agreement or of obsolete or excess furniture, fixture and equipment in the
ordinary course of business if same is unnecessary or is replaced with
furniture, fixtures and equipment of equal or greater value and utility), or
wind up, liquidate or dissolve, or enter into any agreement to do any of the
foregoing.

 

(b)           Organizational Documents. Without
the prior written consent of the Administrative Agent, the Borrower will not,
and will not permit any of the other Borrower Parties to, make any Modification
of the terms or provisions of its Organizational Documents, except: (i)
Modifications necessary to clarify existing
provisions of such Organizational Documents, (ii) Modifications which would
have no adverse, substantive effect on the rights or interests of the Lenders
in conjunction with the Loans or under the Loan Documents,
(iii) Modifications necessary to effectuate Transfers to the extent expressly
permitted in this Agreement; or (iv) Modifications of the Organizational
Documents for Borrower Parties other than the Borrower which are necessary to
effectuate the Permitted Reorganization.

 

9.02        Limitation
on Liens. None of the Borrower, the Borrower’s Member nor any of their
respective Subsidiaries shall create, incur, assume or suffer to exist any Lien
upon or with respect to any of its Property, now owned or hereafter acquired; provided,
however, that the following shall be permitted Liens except (in the case
of any Lien described in clauses (d), (f) or 

 

86

 

(g) below) to the extent that they
would encumber any interest in any Project, any other asset which is collateral
for the Loans or any interest in Borrower:

 

(a)           the Liens created by the Loan
Documents; any Permitted Title Exceptions affecting the Projects; any Permitted
Liens; and any Lien for the performance of work or the supply of materials
affecting any Property (unless, in the case of any such Lien affecting any
Project, the Borrower or the Borrower’s Member fails to discharge such Lien by
payment or bonding (in accordance with statutory bonding requirements the
effect of which is to release such Lien from the affected Project and to limit
the Lien claimant’s rights to a recovery on the bond) on or prior to the date
that is the earlier of (i) thirty (30) days after the date of filing of such
lien against such Project and (ii) the date on which the Project (or the
Borrower’s interest therein) is in danger of being sold, forfeited, terminated,
canceled or lost);

 

(b)           Liens for taxes or assessments or other
government charges or levies if not yet delinquent or if they are being
contested in good faith by appropriate proceedings in accordance with Sections
8.04(b) and/or 8.06(b), if applicable;

 

(c)           Liens imposed by law, such as mechanic’s,
materialmen’s, landlord’s, warehousemen’s and carrier’s Liens, and other
similar Liens securing obligations incurred in the Borrower’s or the Borrower’s
Member’s or their respective Subsidiary’s ordinary course of business which, in
the case of the Projects, are not past due for more than thirty (30) days, or
which are being contested in good faith by appropriate proceedings and for
which appropriate reserves have been established;

 

(d)           Liens or pledges to secure the
performance of bids, tenders, contracts (other than contracts for the payment
of money), leases, public or statutory obligations, surety, stay, appeal,
indemnity, performance or other similar bonds, or other similar obligations
arising in the ordinary course of the Borrower’s or the Borrower’s Member’s or
their respective Subsidiary’s business;

 

(e)           Judgment and other similar Liens (which
shall be subordinate to the Liens of the Deeds of Trust, in the case of any
such Lien encumbering any Project or the Borrower’s interest therein) in an
aggregate amount not in excess of $1,000,000 arising in connection with court
proceedings, but only if the execution or other enforcement of such Liens is
effectively stayed (or bonded over through the posting of a bond in accordance
with a statutory bonding procedure the effect of which is to release such Lien
from any Property of the Borrower or the Borrower’s Member and to limit the
Lien claimant’s rights to recovery under the bond) and the claims secured
thereby are being actively contested in good faith by appropriate proceedings
and for which appropriate reserves have been established;

 

(f)            Easements, rights-of-way, restrictions
and other similar non-monetary encumbrances encumbering assets other than the
Projects or any other collateral for the Loans;

 

(g)           Liens on any of the Qualified Real
Estate Interests (it being understood that the Liens permitted under this Section 9.02(g)
shall also include Liens encumbering interests in accounts, rents, leases,
management and other contracts, personal property and other items related to
the applicable Qualified Real Estate Interest and Liens on Swap Agreements
entered 

 

87

 

into in connection therewith), but only to the extent
created to secure Indebtedness incurred in connection with the acquisition,
financing or refinancing thereof, in compliance with Section 9.04(e)
or (g);

 

(h)           Liens consisting of the rights of the
lessor to the property covered by any equipment lease entered into in
compliance with Section 9.04(d), provided that such lien consists solely
of such rights with respect to the leased property;

 

(i)            Liens encumbering cash and other
liquid assets (not constituting collateral for the Loans to the Borrower) in the aggregate amount not to exceed the sum
required to be pledged by the Borrower or any of its Subsidiaries in
order to secure its respective obligations with respect to the negative value
of any Hedge Agreement or Excess Hedge Agreement entered into by the Borrower or
Other Swap Pledgor in compliance with Section 8.19 hereof or the
negative value of any Hedge Agreement entered into by the Borrower or the
Borrower’s Member or their respective Subsidiaries in connection with the
Indebtedness permitted by Section 9.04(e), (f) or (g);

 

(j)            Liens securing the Indebtedness
permitted by Section 9.04(e) or (f), and encumbering the specific
Residential Properties or Excluded Projects financed pursuant to such section
or sections (it being understood that the Liens permitted under this Section
9.02(j) shall also include Liens encumbering interests in accounts, rents,
leases, management and other contracts, personal property and other items
related to the applicable Residential Properties and/or Excluded Projects and
Liens on Swap Agreements entered into in connection therewith); and

 

(k)           Liens securing the obligations of
Borrower or its Subsidiaries on account of Guarantees described in Section 9.04(h)
provided that such Liens encumber Excluded Projects (which may include Liens on
any interests in accounts, rents, leases, management and other contracts,
personal property and, other items related thereto) exclusively.

 

9.03        Due
on Sale; Transfer; Pledge. Without the prior written consent of the
Administrative Agent and (subject to the last paragraph of this Section 9.03)
the Required Lenders:

 

(a)           None of the Borrower, nor any Borrower
Party, nor any Principal shall (w) directly or indirectly Transfer any
interest in any Project or any part thereof (including any direct or indirect
interest in any partnership, membership or other ownership interest or other
Equity Interest in the Borrower, the Borrower’s Member or the Borrower’s
Manager); (x) directly or indirectly grant any Lien on any direct or,
prior to the Permitted Public REIT Transfer, indirect interest in any Project
or any part thereof (including any direct or, prior to the Permitted Public
REIT Transfer, indirect interest in any partnership, membership or other
ownership interest or other Equity Interest in the Borrower, the Borrower’s
Member or the Borrower’s Manager), whether voluntarily or involuntarily; (y) except
for arrangements which result from the Permitted Reorganization pursuant to
which the Permitted Public REIT or its Operating Partnership or another
Permitted Public REIT Subsidiary thereof shall acquire such rights or powers, enter
into any arrangement granting any direct or indirect right or power to direct
the operations, decisions and affairs of the Borrower, the Borrower’s Member or
the 

 

88

 

Borrower’s Manager, whether through the ability to
exercise voting power, by contract or otherwise; or (z) except as
described in clause (e) of the definition of “Permitted Liens,” enter into any
easement or other agreement granting rights in or restricting the use or
development of any Project except for easements and other agreements which, in
the reasonable opinion of the Administrative Agent, have no Material Adverse
Effect; provided, however, that, the foregoing restrictions shall
not apply with respect to:

 

(i)            any Transfer of direct or indirect
ownership interests in the Borrower’s Member or its partners, or a successor to
the Borrower’s Member (other than the ownership interests that are covered by Section
9.03(a)(ii)), unless (A) in the case of any such Transfer prior to the
Permitted Public REIT Transfer, the acquisition by any one investor of ownership
interests in any partner of the Borrower’s Member would result in the direct or
indirect ownership by that investor of more than forty-nine percent (49%) of
the ownership interests in any partner of the Borrower’s Member, or successor
to the Borrower’s Member, in which case the consent of the Administrative
Agent, which shall not be unreasonably withheld or delayed, shall be required
or (B) in the case of any such Transfer following the Permitted Public
REIT Transfer, the Permitted Public
REIT, following such Transfer, shall not directly or indirectly own fifty-one
percent (51%) or more of the ownership interests in the Borrower or shall not
directly or indirectly control the Borrower, or a Change in Control shall
result from such Transfer;

 

(ii)           the Transfer of direct or indirect
ownership interests in, or the admission or withdrawal of any partner, member
or shareholder to or from, the Borrower’s Manager (or any replacement manager referred
to in Section 9.03(b) or any general partner, manager or managing member
of any successor to the Borrower or the Borrower’s Member referred to in Section
9.03(a)(iii)), so long as, after such Transfer, admission or withdrawal,
the provisions of Section 9.03(c) are not violated;

 

(iii)          the conveyance of all of the Projects to
a Qualified Successor Entity which assumes all of the obligations of the
Borrower under the Loan Documents in form and substance satisfactory to the
Administrative Agent and in recordable form; provided, however,
that such Qualified Successor Entity and the general partner, manager or
managing member of such Qualified Successor Entity, after giving effect to such
Transfer, is in compliance with all of the covenants of the Borrower or
applicable to the Borrower’s Member, the Borrower’s Manager or any Borrower
Party (as applicable) contained in the Loan Documents except as otherwise
provided in the definition of “Borrower’s Member” or “Borrower’s Manager” (with
all references herein to “Borrower” to mean such Qualified Successor Entity, all
references herein to the “Borrower’s Member” to mean (except as otherwise
provided in the definition of “Borrower’s Member”) the controlling entity for
such Qualified Successor Entity, and all references herein to “Borrower’s
Manager” to mean (except as otherwise provided in the definition of “Borrower’s
Manager”) any general partner, manager or managing member of the Qualified
Successor Entity; no Default or Event of Default is then existing or would
result therefrom; and upon the transfer of the Projects to such Qualified
Successor Entity, such Qualified Successor Entity, its controlling entity and
the general partner, manager or managing member of such Qualified Successor
Entity are in compliance in all material respects with all of the
representations and warranties of the Borrower or 

 

89

 

applicable to the Borrower’s
Member or the Borrower’s Manager (whether directly or as a Borrower Party) (as
applicable) contained herein and in the other Loan Documents (after giving
effect to the modifications reflecting the identity of the transferee resulting
from such transfer) except as otherwise provided in the definition of “Borrower’s
Member” or “Borrower’s Manager” (with all references herein to “Borrower” to
mean such Qualified Successor Entity, all references herein to the “Borrower’s
Member” to mean (except as otherwise provided in the definition of “Borrower’s
Member”) the controlling entity for such Qualified Successor Entity, and all
references herein to “Borrower’s Manager” to mean (except as otherwise provided
in the definition of “Borrower’s Manager”) any general partner, manager or
managing member of the Qualified Successor Entity); and provided, further,
that from and after such Transfer, in the case of a Transfer to a Qualified
Successor Entity consisting of a Permitted Public REIT Subsidiary, the
Properties may be managed by the Permitted Public REIT or any property
management company owned or controlled directly or indirectly by the Permitted
Public REIT. Prior to such Transfer, the Administrative Agent shall have
received and approved (which approval shall not be unreasonably withheld) the
Organizational Documents of such Qualified Successor Entity and the general
partner, manager or managing member of such Qualified Successor Entity (except that, in the case of a Qualified
Successor Entity which is a Permitted Public REIT Subsidiary of the Permitted
Public REIT, there shall be no approval rights over the Organizational
Documents of such general partner, manager or managing member if it is the Permitted
Public REIT or the Operating Partnership of the Permitted Public REIT),
together with such financial information relating to such Qualified Successor
Entity as the Administrative Agent may reasonably request, and concurrently
with such Transfer, the Administrative Agent shall have received such
endorsements to the Title Policies insuring ownership of the Projects by such Qualified
Successor Entity and the continued priority of the Liens of the Deeds of Trust
after giving effect to the delivery by such entity of the assumption agreement
referred to above (subject only to Permitted Title Exceptions), in form and
substance satisfactory to the Administrative Agent, and such confirmation as
the Administrative Agent may require that the Hedge Agreements required under Section 8.19(a)
remain in full force and effect, in compliance with Section 8.19 hereof,
as to the Loans as assumed by such Qualified Successor Entity. In connection
with any such Transfer, the assumption agreement to be entered into by the Borrower
and the Qualified Successor Entity (and such other parties deemed appropriate
by the Administrative Agent) shall include such modifications to this Agreement
and the other Loan Documents as the Administrative Agent may reasonably
require, including, without limitation, such modifications to the covenants and
other provisions that are contained herein and that relate to the Borrower,
Borrower’s Member or Borrower’s Manager, as shall be deemed necessary by the
Administrative Agent to allocate to the Qualified Successor Entity, its
controlling entity, and its general partner or manager responsibility for the
performance of the covenants of, and satisfaction of the other provisions set
forth herein that relate to, the Borrower, Borrower’s Member or Borrower’s
Manager, and of such limited indemnity agreements and guaranties as shall be
deemed necessary by the Administrative Agent to obtain recourse liability from
the general partner or manager of the Qualified Successor Entity as shall be
consistent with the obligations of the Guarantor under the Guarantor Documents
immediately upon the 

 

90

 

Closing Date. Upon compliance with the foregoing
requirements in connection with such Transfer, the original Borrower and the
original Guarantor, in their capacities as such, shall be released from their
respective obligations under the Loan Documents arising from and after such
Transfer, but such release shall not limit the obligations of such parties to
comply with any requirements applicable to them (if any) in other capacities
(including, without limitation, in capacities such as the general partner,
managing member, manager or controlling entity for such Qualified Successor
Entity). As used herein, “Qualified Successor Entity” shall mean either
(I) so long as the provisions of Section 9.03(c) are not violated,
an entity (other than a REIT, its Operating Partnership or any Subsidiary of
such REIT), majority-owned, directly or indirectly, by (A) the Borrower and/or
(B) the Borrower’s Member and/or (C) at least two (2) of the Named Principals,
so long as at least one of the Named Principals is either Dan A. Emmett or
Jordan L. Kaplan, and provided that in the case of this clause (I)(C)
the general partner, managing member or manager of such Qualified Successor
Entity must be controlled, directly or indirectly, by such Named Principals, (II)
a Permitted Public REIT Subsidiary of the Permitted Public REIT (other than
such Permitted Public REIT’s Operating Partnership), or (III) a Permitted
Private REIT Subsidiary of a private REIT, provided that at least two (2) of
the Named Principals are senior officers of such private REIT and own, directly
or indirectly, not less than one percent (1%) of the beneficial interest in
such private REIT, and at least one of the Named Principals is either Dan A.
Emmett or Jordan L. Kaplan; such private REIT has an institutional character
substantially the same as the institutional character of the Borrower as of the
date hereof; and all of the investors in such private REIT are “accredited
investors” within the meaning of Regulation D promulgated under the Securities
Act of 1933 (such private REIT is referred to as a “Permitted Private REIT”);
and, provided further, however, that
in the case of clauses (I), (II) and (III) above, such Qualified Successor
Entity shall, from the date of its formation, have been in compliance with the
provisions of Sections 9.02, 9.04 and 9.05 hereof as if
each reference therein to “Borrower” were to mean and refer to such Qualified
Successor Entity;

 

(iv)          entering into Approved Leases or the
granting of Liens expressly permitted by the Loan Documents;

 

(v)           any Transfers of direct or indirect
Equity Interests in the Borrower, any of the Borrower Parties or any partners
of Borrower’s Member to the Permitted Public REIT, its Operating Partnership or
any Permitted Public REIT Subsidiary in connection with a Permitted Public REIT
Transfer;

 

(vi)          any Transfers constituting part of the
Permitted Reorganization which are permitted under Section 14.31;

 

(vii)         any Transfers expressly permitted by
the Loan Documents; and

 

(viii)        following the Permitted Public REIT
Transfer, any of the following so long as no Change of Control shall result
therefrom:  (A) any Transfer or issuance (whether through public offerings, private
placements or other means) of shares or Equity Interests in the Permitted
Public REIT or its Operating Partnership; (B) any 

 

91

 

conversion, into
securities of the Permitted Public REIT, of partnership units or other Equity
Interests of the Operating Partnership of the Permitted Public REIT; (C) any
issuance or Transfer of any Equity Interests in any Permitted Public REIT
Subsidiary owning any direct or indirect Equity Interests in any Borrower
Party, so long as following such issuance or Transfer the Permitted Public REIT
shall directly or indirectly own fifty-one percent (51%) or more of the
ownership interests in the Borrower and shall directly or indirectly control the
Borrower; and/or (C) any merger, consolidation, dissolution, liquidation,
reorganization, sale, lease or other transaction involving any Person other
than the Borrower so long as the Permitted Public REIT (or, as applicable, a
Permitted Public REIT Subsidiary) is the surviving entity and the Permitted
Public REIT thereafter directly or indirectly owns fifty-one percent (51%) or
more of the ownership interests in the Borrower and directly or indirectly
controls the Borrower. As used herein, “control” (including, with its
correlative meanings, “controlled by” and “under common control with”) shall
mean possession, directly or indirectly, of the power to direct or cause the
direction of the management or policies (whether through ownership of
securities or partnership or other ownership interests, by contract or
otherwise) of such Person.

 

(b)           Prior to a Permitted Public REIT
Transfer, except for Transfers constituting part of the Permitted
Reorganization which are permitted under Section 14.31, no new general
partner, manager or managing member that is not owned and controlled, directly
or indirectly, by at least two (2) of the Named Principals shall be admitted to
or created in the Borrower or the Borrower’s Member (nor shall the Borrower’s
Manager withdraw or be replaced as the Borrower’s sole manager or the Borrower’s
Manager withdraw or be replaced as the general partner of the partners of
Borrower’s Member) unless the new or replacement general partner, manager or
managing member is owned and controlled, directly or indirectly, by at least
two (2) Named Principals and the general partners or managers owned and
controlled, directly or indirectly, by at least two (2) of the Named Principals
own, directly or indirectly, not less than one percent (1%) of the beneficial
interest in the Borrower’s Member following such admission or replacement and,
without the prior written consent of the Administrative Agent, no other change
in the Borrower’s or the Borrower’s Member’s Organizational Documents (except
as permitted in Section 9.01(b)) shall be effected in connection with
such replacement;

 

(c)           Except for Transfers constituting part
of the Permitted Reorganization which are permitted under Section 14.31,
prior to a Permitted Public REIT Transfer, no Transfer shall be permitted which
would cause the Borrower’s Manager or any replacement general partner, manager
or managing member referred to in Section 9.03(b) (or any general
partner, manager or managing member of any Qualified Successor Entity unless
the Borrower is, itself, such manager or managing member) (i) to own, directly
or indirectly, less than one percent (1%) of the beneficial interest in the
Borrower, the Borrower’s Member or such successor to the Borrower or the
Borrower’s Member or (ii) to cease to be “controlled” directly or indirectly by
at least two (2) of the Named Principals (at least one of which shall be Dan A.
Emmett or Jordan L. Kaplan in the case of a Qualified Successor Entity referred
to in clause (I)(A) of the definition of the term “Qualified Successor
Entity”); and

 

(d)           As used in Sections 9.03(a)(iii),
(b) and (c) above, “control” (including, with its correlative
meanings, “controlled by” and “under common control with”) shall mean
possession, directly or indirectly, of the power to direct or cause the
direction of the management 

 

92

 

or policies (whether through ownership of securities
or partnership or other ownership interests, by contract or otherwise) of such
Person.

 

Notwithstanding the
foregoing provisions of this Section 9.03, any Transfer of a direct
or indirect ownership interest in the Borrower, the Borrower’s Member, the Borrower’s
Manager or any Qualified Successor Entity or any general partner, manager or
managing member of any Qualified Successor Entity shall be further subject to
the requirement that, after giving effect to such Transfer, the Borrower, the
Borrower’s Member, the Borrower’s Manager, any Qualified Successor Entity and
its controlling entity and general partner or manager shall be in compliance
with all applicable laws applicable to such Persons and relating to such
Transfer, including the USA Patriot Act and regulations issued pursuant thereto
and “know your customer” laws, rules, regulations and orders. In addition, any
such Transfer (except for the Permitted Public REIT Transfer, any Transfer of
publicly-traded stocks in the Permitted Public REIT or any Transfers following
a Permitted Public REIT Transfer that are permitted by Section 9.03(a)(viii))
shall be further subject to (w) the Borrower providing prior written notice to
Administrative Agent of any such Transfer, (x) no Default or Event of Default
then existing, (y) the proposed transferee being a corporation, partnership, limited
liability company, joint venture, joint-stock company, trust or individual
approved in writing by each Lender subject to a Limiting Regulation in its
discretion, and (z) payment to the Administrative Agent on behalf of the
Lenders of all reasonable costs and expenses incurred by the Administrative
Agent or any Lenders in connection with such Transfer. Each Lender at the time
subject to a Limiting Regulation shall, within ten (10) Business Days after
receiving the Borrower’s notice of a proposed Transfer subject to this Section 9.03,
furnish to the Borrower a certificate (which shall be conclusive absent
manifest error) stating that it is subject to a Limiting Regulation, whereupon
such Lender shall have the approval right contained in clause (y) above. Each
Lender which fails to furnish such a certificate to the Borrower during such
ten (10) Business Day period shall be automatically and conclusively deemed not
to be subject to a Limiting Regulation with respect to such Transfer. If any
Lender subject to a Limiting Regulation fails to approve a proposed transferee
under clause (y) above (any such Lender being herein called a “Rejecting
Lender”), the Borrower, upon three (3)
Business Days’ notice, may (A) notwithstanding the terms of Sections 2.06,
prepay such Rejecting Lender’s outstanding Loans or (B) require that such
Rejecting Lender transfer all of its right, title and interest under this
Agreement and such Rejecting Lender’s Note to any Eligible Assignee or Proposed
Lender selected by the Borrower that is reasonably satisfactory to the
Administrative Agent if such Eligible Lender or Proposed Lender (x) agrees to
assume all of the obligations of such Rejecting Lender hereunder, and to
purchase all of such Rejecting Lender’s Loans hereunder for consideration equal
to the aggregate outstanding principal amount of such Rejecting Lender’s Loans,
together with interest thereon to the date of such purchase (to the extent not
paid by the Borrower), and satisfactory arrangements are made for payment to
such Rejecting Lender of all other amounts accrued and payable hereunder to
such Rejecting Lender as of the date of such transfer (including any fees
accrued hereunder and any amounts that would be payable under Section 2.06
as if all such Rejecting Lender’s Loans were prepaid in full on such date) and
(y) approves the proposed transferee. Subject to the provisions of Section 14.07
such Eligible Assignee or Proposed Lender shall be a “Lender” for all purposes
hereunder. Without prejudice to the survival of any other agreement of the
Borrower hereunder, the agreements of the Borrower contained in Section 5.05
shall survive for the benefit of such Rejecting Lender with respect to the time
period prior to such replacement.

 

93

 

9.04        Indebtedness.
None of the Borrower, the Borrower’s Member nor any of their respective Subsidiaries
shall create, incur, assume, suffer to exist, or otherwise become or remain
directly or indirectly liable with respect to, any Indebtedness or enter into
any equipment leases (whether or not constituting Indebtedness), except for the
following:

 

(a)           Indebtedness Under the Loan
Documents. Indebtedness of such Borrower Party and its Subsidiaries in
favor of the Administrative Agent and the Lenders pursuant to this Agreement and
the other Loan Documents;

 

(b)           Accounts Payable. Accounts
payable to trade creditors for goods and services and current operating
liabilities (not the result of the borrowing of money) incurred in the ordinary
course of such Borrower Party’s or Subsidiary’s business in accordance with
customary terms and paid within the specified time, unless contested in good
faith by appropriate actions or proceedings and reserved for in accordance with
GAAP, and provided such trade payables and accrued expenses are not outstanding
for more than sixty (60) days;

 

(c)           Contingent Obligations. Indebtedness
consisting of (i) endorsements by such Borrower Party or such Subsidiary for
collection or deposit in the ordinary course of business or (ii) unsecured Swap
Agreements entered into by the Borrower, the Borrower’s Member or their
respective Subsidiaries with respect to Indebtedness permitted under Section 9.04
(a), (e), (f) or (g);

 

(d)           Indebtedness for Capital
Improvements. Unsecured Indebtedness of the such Borrower Party and its
Subsidiaries (including obligations under equipment leases or other personal
property used in the ownership or operation of their respective Properties), in
the aggregate amount during the term of the Loans not to exceed $25,000,000
(inclusive of the portion of the value of the equipment covered by equipment
leases entered into pursuant to this Section 9.04(d) amortized through
the rental payments under such leases) incurred in connection with capital or
tenant improvements to (or other tenant concessions made in connection with)
such Borrower Party’s and such Subsidiaries’ Properties (including, without
limitation, the Projects and the Residential Properties) or the acquisition of
equipment or other assets for the benefit of such Borrower Party’s and such
Subsidiaries’ Properties (including, without limitation, the Projects and the
Residential Properties), and that is not used for the purposes of making
Restricted Payments. Not more than Two Million Dollars ($2,000,000) of the
foregoing $25,000,000 maximum may be incurred in the form of equipment leases
(as measured by the value of the equipment covered by such equipment leases
amortized through the rental payments under such leases); provided that
such equipment leases relate to equipment constituting neither fixtures nor
personal property material to the operation, maintenance or management of any
of the Projects; and

 

(e)           Additional Indebtedness of Borrower Parties
and Wholly-Owned Subsidiaries. Indebtedness of the Borrower, the Borrower’s
Member or their wholly-owned Subsidiaries for borrowed money incurred in
connection with the acquisition, financing or  refinancing of one or more of the Excluded
Projects, but only if such Indebtedness satisfies the following requirements:

 

94

 

(i)            the obligation to repay such
Indebtedness is non-recourse to the Borrower, the Borrower’s Member, the Bankruptcy
Parties and the Named Principals (except for “carve-outs” (or Guarantees
guarantying the debtor’s liability with respect to “carve-outs”) for fraud,
misrepresentation, misappropriation and other exceptions-from-non-recourse
customary in the real estate finance industry and not materially more favorable
to such lender than the exceptions-from-non-recourse set forth in the second
sentence of Sections 14.23(a));

 

(ii)           such Indebtedness is secured solely
by Liens on the Excluded Projects owned by the Borrower or one or more of its
wholly-owned Subsidiaries (if the Borrower or any such Subsidiary is the borrower
of the Indebtedness secured thereby), or by Liens on the Excluded Projects
owned by the Borrower’s Member or one or more of its wholly-owned Subsidiaries
(other than the Borrower or its wholly-owned Subsidiaries) (if the Borrower’s
Member or any such wholly-owned Subsidiary of the Borrower’s Member is the
borrower of the Indebtedness secured thereby), together with Liens on any
interests in accounts, rents, leases, management and other contracts, personal
property and other items (including, without limitation, Swap Agreements) related
thereto;

 

(iii)          the amount of such Indebtedness, when
incurred, does not exceed sixty percent (60%) of the fair market value of the Excluded
Projects, as determined by the lender’s appraisal (or, in the case of financing
for the acquisition of Excluded Projects, sixty percent (60%) of the
acquisition cost of the Excluded Projects so acquired) encumbered as collateral for such Indebtedness, and, so long as the original
Borrower’s Member remains a member of the Borrower, such Indebtedness
complies with the limitations on indebtedness contained in the limited
partnership agreement of the original Borrower’s Member, as amended, or has
otherwise received the requisite approval of the limited partners of the original
Borrower’s Member, if required; provided that, in the case of any Excluded
Project consisting of a Residential Property, the “sixty percent (60%)”
limitation set forth above in this clause (iii) shall mean “seventy-five
percent (75%)”; and

 

(iv)          no Major Default or Event of Default
shall have occurred or be continuing immediately prior to the incurrence of
such Indebtedness or would occur after giving effect thereto.

 

(f)            Additional Indebtedness of
Residential Properties. Indebtedness for borrowed money incurred in connection
with the financing or refinancing of any residential property that is a
Qualified Real Estate Interest by the Borrower or one or more of its
wholly-owned Subsidiaries (if the Borrower or any such Subsidiary is the borrower
of the Indebtedness secured thereby), or by the Borrower’s Member or one or
more of its wholly-owned Subsidiaries (other than the Borrower or its
wholly-owned Subsidiaries) (if the Borrower’s Member or any such wholly-owned
Subsidiary of the Borrower’s Member is the borrower of the Indebtedness secured
thereby), but only if such Indebtedness satisfies the following requirements:

 

(i)            the obligation to repay such
Indebtedness is non-recourse to the Bankruptcy Parties and the Named Principals
(except for “carve-outs” (or Guarantees guarantying the debtor’s liability with
respect to “carve-outs”) for fraud, 

 

95

 

misrepresentation,
misappropriation and other exceptions-from-non-recourse customary in the real
estate finance industry);

 

(ii)           such Indebtedness is secured solely
by Liens on the residential properties so financed and, if applicable, Liens on
other Excluded Projects owned by the Borrower or one or more of its
wholly-owned Subsidiaries (if the Borrower or any such Subsidiary is the
borrower of the Indebtedness secured thereby), or by Liens on Excluded Projects
owned by the Borrower’s Member or one or more of its wholly-owned Subsidiaries
(other than the Borrower or its wholly-owned Subsidiaries) (if the Borrower’s
Member or any such wholly-owned Subsidiary of the Borrower’s Member is the
borrower of the Indebtedness secured thereby), together with Liens on any
interests in accounts, rents, leases, management and other contracts, personal
property and other items (including, without limitation, Swap Agreements) related
thereto;

 

(iii)          the amount of such Indebtedness, when
incurred, does not exceed seventy-five percent (75%) of the fair market value
of such residential properties, as determined by the lender’s appraisal, plus
sixty percent (60%) of the fair market value, as determined by the lender’s
appraisal, of any Excluded Projects encumbered as security therefore that are
non-residential and seventy-five percent (75%) of the fair market value, as
determined by the lender’s appraisal, of any Excluded Projects encumbered as
security therefore that are residential and, so long as the original Borrower’s Member remains a member of the
Borrower, such Indebtedness complies with the limitations on
indebtedness contained in the limited partnership agreement of the original Borrower’s
Member, as amended, or has otherwise received the requisite approval of the
limited partners of the original Borrower’s Member, if required; and

 

(iv)          no Major Default or Event of Default
shall have occurred or be continuing immediately prior to the incurrence of
such Indebtedness or would occur after giving effect thereto.

 

(g)           Additional Indebtedness of Qualified
Sub-Tier Entities. Indebtedness of any Qualified Sub-Tier Entity for
borrowed money incurred in connection with the acquisition, financing or
refinancing by such Qualified Sub-Tier Entity of Qualified Real Estate
Interests, but only if the obligation to repay such Indebtedness is
non-recourse to such Qualified Sub-Tier Entity, Bankruptcy Parties, and the
Named Principals (except for “carve-outs” (or Guarantees guarantying the debtor’s
liability with respect to “carve-outs”) for fraud, misrepresentation,
misappropriation and other exceptions-from-nonrecourse customary in the real
estate finance industry and not materially more favorable to the holder of such
Indebtedness than the exceptions from non-recourse set forth in the second
sentence of Sections 14.23(a)) and such Indebtedness otherwise is
in compliance with the requirements set forth in Sections 9.04(e)
above (unless such Qualified Real
Estate Interests consist of residential projects, in which case the applicable
requirements shall be as set forth in Section 9.04(f)).

 

(h)           Guarantees of Permitted Public REIT or Operating Partnership Line of Credit. Following the Permitted Public REIT
Transfer, Guarantees by the Borrower or its Subsidiaries of one or more credit facilities
provided to the Permitted Public REIT, its Operating Partnership or another
Permitted Public REIT Subsidiary (each, a “Guaranteed Line of Credit”), 

 

96

 

which Guarantees, if
secured, shall be secured only in compliance with Section 9.02(k) and
shall in no event be secured by any of the Projects or other Collateral
encumbered by the Security Documents; provided that no Major Default or
Event of Default shall exist or be continuing immediately prior to the
incurrence of such Guarantees or would occur after giving effect thereto.

 

9.05        Investments.
Neither the Borrower nor the Borrower’s Member nor any of their respective Subsidiaries
will make or permit to remain outstanding any Investments except
(a) operating deposit accounts or money market accounts with banks,
(b) Permitted Investments, (c) Borrower’s Member’s 100% membership in
Borrower, (d) the Projects, (e) the Excluded Projects (including,
without limitation, any of the Residential Properties (or Borrower’s Member’s
Equity Interest in the owner of any of the Residential Properties) which may
hereafter be acquired by the Borrower or any Subsidiary thereof), (f) Borrower’s
or Borrower’s Member’s Equity Interests in any Subsidiary of Borrower or
Borrower’s Member existing on the Closing Date, (g) Borrower’s Equity
Interests in any Qualified Sub-Tier Entity or any Subsidiary permitted or
contemplated by this Agreement, (h) other investments which are permitted
by the respective Organizational Documents of the Borrower or the Borrower’s
Member as in effect on the Closing Date, (i) other investments required or
permitted by the Loan Documents, and (j) other investments (including,
without limitation, investments owned by Subsidiaries) which are consistent
with the investment practices prior to the date hereof of the Douglas Emmett
Realty Funds taken as a whole.

 

9.06        Restricted
Payments. Neither the Borrower nor the Borrower’s Member will make any
Restricted Payment at any time during the existence of a Major Default or Event
of Default.

 

9.07        Change
of Organization Structure; Location of Principal Office. The Borrower or
any Qualified Successor Entity that may hereafter acquire title to any of the
Projects shall not change its name or change the location of its chief
executive office, state of formation or organizational structure unless, in
each instance, Borrower shall have (a) given the Administrative Agent at least
thirty (30) days’ prior written notice thereof, and (b) made all filings
or recordings, and taken all other action, reasonably requested by the
Administrative Agent that is reasonably necessary under Applicable Law to
protect and continue the priority of the Liens created by the Security
Documents.

 

9.08        Transactions
with Affiliates. Except as expressly permitted by this Agreement, prior to
the Permitted Public REIT Transfer, neither the Borrower nor the Borrower’s Member
shall enter into, or be a party to, any transaction with an Affiliate of the
Borrower or Borrower’s Member, except in full compliance with the
Organizational Documents of the Borrower’s Member as in effect on the Closing
Date. This Section shall not prohibit any transfer of the Excluded Projects to
Affiliates of the Borrower or Borrower’s Member.

 

9.09        Leases.

 

(a)           Negative Covenants. The Borrower
shall not (i) accept from any tenant, nor permit any tenant to pay, Rent for
more than one month in advance except for payment in the nature of security for
performance of a tenant’s obligations, escalations, percentage rents and 

 

97

 

estimated payments (not prepaid more than one month
prior to the date such estimated payments are due) of operating expenses, taxes
and other pass-throughs paid by tenants pursuant to their Leases, (ii) Modify
(other than ministerial changes), terminate, or accept surrender of, any Major
Lease now existing or hereafter made, without the prior written consent of the
Administrative Agent; notwithstanding the foregoing, the Borrower shall retain
the right to Modify, terminate, or accept surrender of any Approved Lease that
is not a Major Lease; provided that (A) any such Modification, is
(1) consistent with fair market terms and (2) is entered into
pursuant to arm’s-length negotiations with a tenant not affiliated with the
Borrower, and (B) any such termination is (1) in the ordinary course
of business, (2) consistent with good business practice and (3) in the
best interests of the affected Project, (iii) except for the Deed of Trust,
assign, transfer (except for a Transfer thereof together with the transfer of
the Projects to the entity described in Section 9.03(a)(iii) in full compliance
with the provisions of such Section), pledge, subordinate or mortgage any Lease
or any Rent without the prior written consent of the Administrative Agent and
the Required Lenders, (iv) waive or release any nonperformance of any material
covenant of any Major Lease by any tenant without the Administrative Agent’s
prior written consent, (v) release any guarantor from its obligations under any
guaranty of any Major Lease or any letter of credit or other credit support for
a tenant’s performance under any Major Lease, except as expressly permitted
pursuant to the terms of such Lease or (vi) enter into any master lease for any
space at the Projects. Notwithstanding the foregoing or anything to the
contrary contained herein, the Borrower shall have the right, at its option, to
terminate or accept the surrender of any Lease (including any Major Lease), and
to pursue any other rights and remedies the Borrower may have against any
tenant, following an uncured material default by a tenant under its Lease.

 

(b)           Approvals. The Borrower shall
not enter into any Lease for any space at any Project (unless such proposed
Lease is held in escrow pending the receipt of any approval required below)
except as follows:

 

(i)            Non-Major Leases. The
Borrower may enter into Leases that do not constitute Major Leases, and
extensions, Modifications and renewals thereof without the approval of the
Administrative Agent or any Lender; provided that such Lease, extension,
renewal or Modification (A) in the case of a Lease, is substantially in
the form of the Borrower’s standard form office lease or standard form retail
lease, as applicable, previously approved by the Administrative Agent, (B) is
consistent with fair market terms and (C) is entered into pursuant to arm-length
negotiations with a tenant not affiliated with the Borrower. Any proposed Lease
that is not a Major Lease, or any extension, renewal or modification of any
such Lease, that does not comply with the preceding sentence shall require the
prior approval of the Administrative Agent.

 

(ii)           Major Leases. The Borrower
shall not enter into any Major Lease or any extension, renewal or Modification
of any Major Lease without the prior written approval of the Administrative
Agent.

 

(iii)          Information. With respect to
any Lease or Modification of Lease that requires approval of the Administrative
Agent, the Borrower shall provide the Administrative Agent with the following
information (collectively, the “Lease Approval Package”):  (A) all material information available
to the Borrower concerning the lessee 

 

98

 

and its business and financial condition; (B) a
draft of the lease (or lease modification); and (C) a summary (the “Lease
Information Summary”) substantially in the form attached hereto as Exhibit
N, of the material terms of such lease or lease modification. Within ten
(10) Business Days after the Administrative Agent shall have received a Lease
Approval Package, the Administrative Agent shall either consent or refuse to
consent to such Lease Approval Package. If the Administrative Agent shall fail
to respond within such ten (10) Business Day period, the Administrative Agent
shall be deemed to have approved such lease or lease modification; provided
that such lease or lease modification is documented pursuant to a lease or
lease modification which is consistent with the draft and lease summary and
Lease Approval Package previously delivered to the Administrative Agent in all
material respects.

 

(c)           Additional Requirements as to all
Leases. Notwithstanding anything to the contrary set forth in this Section
9.09, the following requirements shall apply with respect to all Leases and
all Modifications of Leases entered into after the date hereof:

 

(i)            The Borrower shall within ten (10)
days after the Administrative Agent’s request, provide the Administrative Agent
with a true, correct and complete copy thereof as signed by all such parties,
including any Modifications and Guarantees thereof.

 

(ii)           All Leases must be subordinate to the
Deed of Trust, and all existing and future advances thereunder, and to any
Modification thereof.

 

(iii)          Notwithstanding anything to the
contrary set forth above, the Administrative Agent may require that the
Borrower and the tenant under any Major Lease execute and deliver an SNDA
Agreement (with such commercially reasonable changes thereto as may be
requested by such tenant). The Administrative Agent (on behalf of the Lenders)
shall, if requested by the Borrower, and as a condition to a tenant’s obligation
to subordinate its lease (if necessary or if requested by the Borrower) or
attorn, enter into an SNDA Agreement with such tenant (with such commercially
reasonable changes thereto as may be requested by such tenant). The
Administrative Agent’s execution thereof shall be conditioned upon the prior
execution thereof by both the tenant and the Borrower.

 

(iv)          All Leases shall be substantially in
the form of the Borrower’s standard form office lease or standard form retail
lease, as applicable, approved by the Administrative Agent and the Borrower on
the Closing Date, with such Modifications as the Administrative Agent shall
thereafter approve prior to the execution of such Leases.

 

9.10        Reserved.

 

9.11        No
Joint Assessment; Separate Lots. The Borrower shall not suffer, permit or
initiate the joint assessment of any Project with any other real property
constituting a separate tax lot.

 

9.12        Zoning.
The Borrower shall not, without the Administrative Agent’s prior written
consent, seek, make, suffer, consent to or acquiesce in any change or variance
in any zoning or land use laws or other conditions of any Project or any
portion thereof. Except as 

 

99

 

disclosed on the Appraisals delivered to the
Administrative Agent prior to the Closing Date or any other existing
non-conforming use disclosed on Schedule 9.12, the Borrower shall not
use or permit the use of any portion of any Project in any manner that could
result in such use becoming a non-conforming use under any zoning or land use
law or any other applicable law, or Modify any agreements relating to zoning or
land use matters or permit the joinder or merger of lots for zoning, land use
or other purposes, without the prior written consent of the Administrative
Agent. Without limiting the foregoing, in no event shall the Borrower take any
action that would reduce or impair either (a) the number of parking spaces
at any Project or (b) access to any Project from adjacent public roads.

 

Further, without the
Administrative Agent’s prior written consent, the Borrower shall not file or
subject any part of any Project to any declaration of condominium or
co-operative or convert any part of any Project to a condominium, co-operative
or other direct or indirect form of multiple ownership and governance.

 

9.13        ERISA.
The Borrower shall not shall not take any action, or omit to take any action,
which would (a) cause the Borrower’s assets to constitute “plan assets” for
purposes of ERISA or the Code or (b) cause the Transactions to be a nonexempt
prohibited transaction (as such term is defined in Section 4975 of the Code or
Section 406 of ERISA) that could subject the Administrative Agent and/or the
Lenders, on account of any Loan or execution of the Loan Documents hereunder,
to any tax or penalty on prohibited transactions imposed under Section 4975 of
the Code or Section 502(i) of ERISA.

 

9.14        Reserved.

 

9.15        Property
Management. The Borrower will not, without the prior written approval of
the Administrative Agent, (i) enter into any new Property Management Agreement;
(ii) terminate or make any material changes to the Property Management
Agreement, either orally or in writing, in any respect; or (iii) consent to,
approve or agree to any assignment or transfer by or with respect to the
Property Manager (including transfers of beneficial interests in the Property
Manager or assignments or transfers by the Property Manager of any or all of
its rights under any Property Management Agreement) except as otherwise
permitted by Section 9.03 or Section 14.31. Notwithstanding the
foregoing, the Borrower may, on prior written notice to the Administrative
Agent, subject to the limitations set forth herein with respect to the
Administrative Agent’s approval of any new manager for any Project, terminate a
Property Management Agreement in accordance with its terms as a result of a
material default by a Property Manager thereunder, and the limited partners of
the partners of the Borrower’s Member  may remove any Property Manager or terminate
any Property Management Agreement provided a replacement Property Manager
satisfactory to the Administrative Agent is immediately appointed pursuant to a
Property Management Agreement acceptable to the Administrative Agent which
permits termination by the Borrower on thirty (30) days’ notice so long as the
new property manager delivers a Property Manager’s Consent. Any change in
ownership or control of the Property Manager other than as specifically set
forth herein shall be cause for the Administrative Agent to re-approve such
Property Manager and Property Management Agreement. If at any time the
Administrative Agent consents to the appointment of a new Property Manager,
such new Property Manager and the Borrower shall, as a condition of the
Administrative Agent’s consent,
execute a Property Manager’s Consent in the form then used by 

 

100

 

the Administrative Agent. Each Property Manager shall
be required to hold and maintain all necessary licenses, certifications and
permits required by Applicable Law. The Borrower may, on prior written notice
to the Administrative Agent, transfer a Property Management Agreement to, or
terminate and enter into a new Property Management Agreement on substantially
the same terms with, another entity owned and controlled by, or under common
control with, Douglas, Emmett and Company or the Borrower’s Manager; provided
that such new management entity is majority-owned and controlled, directly or
indirectly, by at least two (2) of the four (4) Named Principals, and such
entity delivers a Property Manager’s Consent with respect to such Property
Management Agreement.

 

9.16        Foreign
Assets Control Regulations. Neither the Borrower nor any Borrower Party
shall use the proceeds of the Loan in any manner that will violate 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 the Anti-Terrorism Order or any enabling legislation
or executive order relating to any of the same. Without limiting the foregoing,
neither the Borrower nor any Borrower Party will permit itself nor any of its
Subsidiaries to (a) become a blocked person described in Section 1 of the
Anti-Terrorism Order or (b) knowingly engage in any dealings or transactions or
be otherwise associated with any person who is known by such Borrower Party or
who (after such inquiry as may be required by Applicable Law) should be known
by such Borrower Party to be a blocked person.

 

ARTICLE
X

INSURANCE AND CONDEMNATION PROCEEDS

 

10.01      Casualty
Events.

 

(a)           If a Casualty Event shall occur as to
any Project which results in damage in excess of $500,000, the Borrower shall
give prompt notice of such damage to the Administrative Agent and shall,
subject to the provisions of Section 10.03, promptly commence and
diligently prosecute in accordance with Section 8.07 and this Article
X the completion of the repair and restoration of such Project in
accordance with Applicable Law to, as nearly as reasonably possible, the
condition such Project was in immediately prior to such Casualty Event, with
such alterations as may be reasonably approved by the Administrative Agent (a “Restoration”)
for any Restoration for which such approval is otherwise required pursuant to Section
10.03(e) or alteration for which such approval is otherwise required
pursuant to Section 8.07. The Borrower shall pay all costs of such
Restoration whether or not such costs are covered by Insurance Proceeds. The
Administrative Agent may, but shall not be obligated to make proof of loss if
not made promptly by the Borrower. All Net Proceeds with respect to a
Significant Casualty Event, shall, at the Administrative Agent’s option, be
applied to the payment of the Obligations unless required to be made available
to the Borrower for Restoration hereunder, in which case such Net Proceeds
shall, subject to the provisions of this Agreement, be made available to the
Borrower to pay the costs incurred in connection with the Restoration. All Net
Proceeds with respect to a Casualty Event that is not a Significant Casualty
Event shall, subject to the provisions of this Agreement, be made available to
the Borrower to pay the costs incurred in connection with the Restoration of
the affected Project.

 

101

 

(b)           If Restoration of any Project following
a Casualty Event is reasonably expected to cost not more than the lesser of (i)
$5,000,000 and (ii) ten percent (10%) of the Appraised Value of such Project
(the “Insurance Threshold Amount”), provided no Event of Default exists,
the Borrower may, upon notice to the Administrative Agent, settle and adjust
any claim with respect to such Casualty Event without the prior consent of the
Administrative Agent and the Borrower is hereby authorized to collect the
Insurance Proceeds with respect to any such claim; provided such adjustment is
carried out in a manner consistent with good business practice. In the event
that Restoration of any Project is reasonably expected to cost an amount equal
to or in excess of the Insurance Threshold Amount (a “Significant Casualty
Event”), provided no Event of Default exists, the Borrower may, with the
prior written consent of the Administrative Agent (which consent shall not be
unreasonably withheld), settle and adjust any claim of the Borrower and agree
with the insurer(s) on the amount to be paid on the loss, and the Insurance
Proceeds shall be due and payable solely to the Administrative Agent (on behalf
of the Lenders); notwithstanding the foregoing, the Administrative Agent shall
retain the right to participate (not to the exclusion of the Borrower) in any
such insurance settlement at any time. If an Event of Default exists, with
respect to any Casualty Event, the Administrative Agent, in its sole
discretion, may settle and adjust any claim without the consent of the Borrower
and agree with the insurer(s) on the amount to be paid on the loss, and the
Insurance Proceeds shall be due and payable solely to the Administrative Agent
(on behalf of the Lenders) and deposited in a Controlled Account and disbursed
in accordance herewith. If the Borrower or any party other than the
Administrative Agent is a payee on any check representing Insurance Proceeds
with respect to a Significant Casualty Event, the Borrower shall immediately
endorse, and cause all such third parties to endorse, such check payable to the
order of the Administrative Agent. The Borrower hereby irrevocably appoints the
Administrative Agent as its attorney-in-fact, coupled with an interest, to
endorse such check payable to the order of the Administrative Agent. The
reasonable out-of-pocket expenses incurred by the Administrative Agent in the
settlement, adjustment and collection of the Insurance Proceeds shall become
part of the Obligations and shall be reimbursed by the Borrower to the
Administrative Agent upon demand to the extent not already deducted by the
Administrative Agent from such Insurance Proceeds in determining Net Proceeds.

 

10.02      Condemnation
Awards.

 

(a)           The Borrower shall promptly give the
Administrative Agent notice of any actual Taking or any Taking that has been
threatened in writing and shall deliver to the Administrative Agent copies of
any and all papers served in connection with such actual or threatened Taking. The
Administrative Agent may participate in any Taking proceedings (not to the
exclusion of the Borrower), and the Borrower shall from time to time deliver to
the Administrative Agent all instruments requested by it to permit such
participation. The Borrower shall, at its expense, diligently prosecute any
such proceedings, and shall consult with the Administrative Agent, its
attorneys and experts, and cooperate with them in the carrying on or defense of
any such proceedings. The Administrative Agent may participate in any such
proceedings (not to the exclusion of the Borrower) and may be represented
therein by counsel of the Administrative Agent’s selection at the Borrower’s
cost and expense. Without the Administrative Agent’s prior consent, the
Borrower (i) shall not agree to any Condemnation Award and (ii) shall not take
any action or fail to take any action which would cause the Condemnation Award
to be determined; provided, however, that if no Event of Default
exists, 

 

102

 

and upon prior written notice to the Administrative
Agent, the Borrower shall have the right to compromise and collect or receive
any Condemnation Award that does not exceed the lesser of (i) $5,000,000 and
(ii) ten percent (10%) of the Appraised Value of such Project, provided that
such condemnation does not result in any material adverse effect upon the
Project affected thereby. In the event of such Taking, the Condemnation Award
payable is hereby assigned to and (except as provided in the preceding
sentence) shall be paid to the Administrative Agent (on behalf of the Lenders)
and, except as expressly set forth in Section 10.03 hereof, shall be
applied to the repayment of the Obligations. If any Project or any portion
thereof is subject to a Taking, the Borrower shall promptly commence and
diligently prosecute the Restoration of such Project in accordance with this Article
X and otherwise comply with the provisions of Section 10.03. If
such Project is sold, through foreclosure or otherwise, prior to the receipt by
the Administrative Agent of the Condemnation Award, the Administrative Agent
and the Lenders shall have the right, whether or not a deficiency judgment on
the Notes shall have been sought, recovered or denied, to receive the
Condemnation Award, or a portion thereof sufficient to pay the Obligations.

 

10.03      Restoration.

 

(a)           If each of the Net Proceeds and the
cost of completing the Restoration shall be not more than the Insurance Threshold
Amount, the Net Proceeds will be disbursed by the Administrative Agent to the
Borrower upon receipt; provided that no Major Default or Event of
Default then exists and, except where the Restoration has already been
completed by the Borrower and the Borrower seeks reimbursement for costs of the
Restoration, the Borrower delivers to the Administrative Agent a written
undertaking to expeditiously commence and to satisfactorily complete with due
diligence the Restoration in accordance with the terms of this Agreement; and
the Borrower thereafter commences and diligently proceeds with the Restoration
thereof in compliance with Section 8.07 and this Article X.

 

(b)           If either the Net Proceeds or the costs
of completing the Restoration is equal to or greater than the Insurance
Threshold Amount, the Administrative Agent shall make the Net Proceeds
available for the Restoration in accordance with the provisions of this Section
10.03. The term “Net Proceeds” for purposes of this Article X
shall mean:  (i) the net amount of all
Insurance Proceeds received by the Administrative Agent pursuant to the
Policies as a result of such damage or destruction, after deduction of the
Administrative Agent’s reasonable out-of-pocket costs and expenses (including,
but not limited to, reasonable counsel fees), if any, in collecting same, or
(ii) the net amount of the Condemnation Award, after deduction of the
Administrative Agent’s reasonable out-of-pocket costs and expenses (including,
but not limited to, reasonable counsel fees), if any, in collecting same,
whichever the case may be.

 

(c)           The Net Proceeds shall be made
available to the Borrower for Restoration; provided that each of the
following conditions is met:

 

(i)            no Major Default or Event of Default
exists;

 

(ii)           (A) in the event the Net Proceeds are
Insurance Proceeds, less than twenty-five percent (25%) of the total (gross)
floor area of the Improvements on such Project has been damaged, destroyed or
rendered unusable as a result of such Casualty 

 

103

 

Event or (B) in the event the Net Proceeds are
Condemnation Awards, less than ten percent (10%) of the land constituting such
Project is taken, and such land is located along the perimeter or periphery of
such Project, and no portion of the Improvements (other than sidewalks, paved
areas and decorative non-structural elements of the Improvements) is located on
such land;

 

(iii)          Reserved;

 

(iv)          the Debt Service Coverage Ratio
projected (with Operating Income and Operating Expenses also being projected
rather than being based on the previous calendar quarter) by the Administrative
Agent for a period of one year after the Administrative Agent’s estimated date
for the stabilization of the affected Project following completion of the
Restoration will be equal to or greater than 1:50:1.00 based on Leases with
respect to which the tenants do not have the right to or have waived any right
to terminate their respective Leases;

 

(v)           subject to the applicable provisions
of Section 10.03(l), the Borrower shall commence the Restoration as soon
as reasonably practicable (but in no event later than ninety (90) days after
such Casualty Event or Taking, as the case may be, occurs) and shall diligently
pursue the same to completion to the reasonable satisfaction of the
Administrative Agent;

 

(vi)          the Administrative Agent shall be
satisfied that any operating deficits, including all scheduled payments of
principal and interest under the Notes, which will be incurred with respect to
the subject Project as a result of the occurrence of any such Casualty Event or
Taking, as the case may be, will be covered out of (A) the Net Proceeds, (B)
the proceeds of Business Interruption Insurance, if applicable, or (C) other
funds of the Borrower;

 

(vii)         the Administrative Agent shall be
satisfied that the Restoration will be completed on or before the earliest to
occur of (A) six (6) months prior to the Stated Maturity Date, (B) such time as
may be required under Applicable Law in order to repair and restore the subject
Project to the condition it was in immediately prior to such Casualty Event or
to as nearly as possible the condition it was in immediately prior to such
Taking, as the case may be, and (C) six (6) months prior to the expiration of
the Business Interruption Insurance unless the Borrower delivers to the
Administrative Agent such additional security to the Administrative Agent in an
amount reasonably determined by the Administrative Agent which additional
security shall consist of cash or a letter of credit reasonably satisfactory to
the Administrative Agent;

 

(viii)        the subject Project and the use thereof
after the Restoration will be in substantial compliance with and permitted
under all Applicable Laws;

 

(ix)          the Borrower shall deliver, or cause to
be delivered, to the Administrative Agent satisfactory evidence that after
Restoration, the subject Project would be at least as valuable as immediately
before the Casualty Event or Taking occurred;

 

104

 

(x)           such Casualty Event or Taking, as the
case may be, does not result in the permanent loss of any current access to the
subject Project;

 

(xi)          the Borrower shall deliver, or cause
to be delivered, to the Administrative Agent a signed detailed budget approved
in writing by the Borrower’s architect or engineer stating the entire cost of
completing the Restoration, which budget shall be reasonably acceptable to the
Administrative Agent and any architect or engineer the Administrative Agent may
engage (at the Borrower’s expense); and

 

(xii)         the Net Proceeds together with any cash
or cash equivalent deposited by the Borrower with the Administrative Agent are
sufficient in the Administrative Agent’s judgment to cover the cost of the
Restoration.

 

(d)           Except for proceeds of a Casualty Event
or Taking received and retained by the Borrower in compliance with the
provisions of this Article X, the Net Proceeds shall be held by the
Administrative Agent in a Controlled Account, until disbursed in accordance
with the provisions of this Section 10.03, and shall constitute
additional security for the Obligations. Upon receipt of evidence reasonably
satisfactory to the Administrative Agent that all the conditions precedent to
such advance, including those set forth in subsection (c) above, have
been satisfied, the Net Proceeds shall be disbursed by the Administrative Agent
to, or as directed by, the Borrower from time to time during the course of the
Restoration in substantially the same manner and subject to similar conditions
as if such advances were being made in connection with a construction loan,
such manner of disbursement and conditions to be determined by the
Administrative Agent, including the Administrative Agent’s receipt of (i)
advice from the Restoration Consultant (who shall be employed by the
Administrative Agent at the Borrower’s sole expense) that the work completed or
materials installed conform to said budget and plans, as approved by the
Administrative Agent, (ii) evidence that all materials installed and work and
labor performed to the date of the applicable advance (except to the extent
that they are to be paid for out of the requested disbursement) in connection
with the Restoration have been paid for in full, including the receipt of
waivers of lien, contractor’s certificates, surveys, receipted bills, releases,
title policy endorsements and such other evidences of cost, payment and
performance satisfactory to the Administrative Agent, and (iii) evidence that
there exist no notices of pendency, stop orders, mechanic’s or materialman’s
liens or notices of intention to file same, or any other Liens of any nature
whatsoever on the subject Project which have not either been fully bonded to
the reasonable satisfaction of the Administrative Agent and discharged of
record or in the alternative fully insured to the reasonable satisfaction of
the Administrative Agent under the Title Policy.

 

(e)           All plans and specifications required
in connection with any Restoration resulting in Net Proceeds in excess of the
Insurance Threshold Amount shall be subject to prior review and approval (such
approval not to be unreasonably withheld) in all respects by the Administrative
Agent and by an independent consulting engineer selected by the Administrative
Agent (the “Restoration Consultant”). All plans and specifications
required in connection with any Restoration resulting in Net Proceeds not in
excess of the Insurance Threshold Amount shall be provided to the
Administrative Agent in the ordinary course of business. The Administrative
Agent shall have the use of the plans and specifications and all permits,
licenses and approvals required or obtained in connection with any Restoration.
With respect to any Restoration 

 

105

 

resulting in Net Proceeds in excess of the Insurance
Threshold Amount (whether resulting from a Casualty Event or a Taking), the
identity of the contractors, subcontractors and materialmen engaged in the
Restoration, as well as all contracts having a cost in excess of $100,000,
shall be subject to the prior review and approval (such approval not to be
unreasonably withheld) of the Administrative Agent and the Restoration
Consultant. All costs and expenses incurred by the Administrative Agent in
connection with making the Net Proceeds available for the Restoration including
reasonable counsel fees and disbursements and the Restoration Consultant’s
fees, shall be paid by the Borrower. The Borrower shall also obtain, at its
sole cost and expense, all necessary Government Approvals as and when required
in connection with such Restoration and provide copies thereof to the
Administrative Agent and the Restoration Consultant.

 

(f)            In no event shall the Administrative
Agent be obligated to make disbursements of the Net Proceeds in excess of an
amount equal to the costs actually incurred from time to time for work in place
as part of the Restoration, as certified by the Restoration Consultant, minus
the Restoration Retainage. The term “Restoration Retainage” shall mean
the greater of (i) an amount equal to ten percent (10%) of the hard costs
actually incurred for work in place as part of the Restoration, as certified by
the Restoration Consultant and (ii) the amount actually held back by the
Borrower from contractors, subcontractors and materialmen engaged in the
Restoration. The Restoration Retainage shall not be released until the
Restoration Consultant certifies to the Administrative Agent that the
Restoration has been substantially completed in accordance with the provisions
of this Section 10.03, subject to punch-list items and other
non-material items of work and that all approvals necessary for the
re-occupancy and use of the subject Project have been obtained from all
appropriate Governmental Authorities, and the Administrative Agent receives
evidence reasonably satisfactory to the Administrative Agent that the costs of
the Restoration have been paid in full or will be paid in full out of the
Restoration Retainage; provided, however, that the Administrative
Agent will release the portion of the Restoration Retainage being held with
respect to any contractor, subcontractor or materialman engaged in the
Restoration as of the date upon which the Restoration Consultant certifies to
the Administrative Agent that such contractor, subcontractor or materialman has
satisfactorily completed all work and has supplied all materials in accordance
with its contract, and the Administrative Agent receives lien waivers and
evidence of payment in full of all sums due to such contractor, subcontractor
or materialman as may be reasonably requested by the Administrative Agent or by
the Title Company issuing the Title Policy, and the Administrative Agent
receives an endorsement to the Title Policy insuring the continued priority of
the lien of the Deed of Trust and evidence of payment of any premium payable
for such endorsement. If required by the Administrative Agent, the release of
any such portion of the Restoration Retainage shall be approved by the surety
company, if any, which has issued a payment or performance bond with respect to
such contractor, subcontractor or materialman.

 

(g)           The Administrative Agent shall not be
obligated to make disbursements of the Net Proceeds more frequently than once
per month.

 

(h)           If at any time the Net Proceeds or the
undisbursed balance thereof shall not, in the reasonable opinion of the
Administrative Agent in consultation with the Restoration Consultant, be
sufficient to pay in full the balance of the costs which are estimated by the
Restoration Consultant to be incurred in connection with the completion of the
Restoration, the Borrower shall deposit the deficiency (the “Net Proceeds
Deficiency”) with the Administrative 

 

106

 

Agent within ten (10) Business Days of the
Administrative Agent’s request and before any further disbursement of the Net
Proceeds shall be made. The Net Proceeds Deficiency shall be held in a
Controlled Account and shall be disbursed for costs actually incurred in
connection with the Restoration on the same conditions applicable to the
disbursement of the Net Proceeds, and, until so disbursed, shall constitute
additional security for the Obligations.

 

(i)            After the Restoration Consultant
certifies to the Administrative Agent that a Restoration has been substantially
completed in accordance with the provisions of this Section 10.03, and
the receipt by the Administrative Agent of evidence satisfactory to the
Administrative Agent that all costs incurred in connection with the Restoration
have been paid in full, the excess, if any, of the Net Proceeds and the
remaining balance, if any, of the Net Proceeds Deficiency deposited in a
Controlled Account shall be remitted to the Borrower, provided that no
Event of Default shall exist.

 

(j)            All Net Proceeds not required (i) to
be made available for the Restoration or (ii) to be returned to the Borrower as
excess Net Proceeds pursuant to subsection (i) above may (A) be retained
and applied by the Administrative Agent toward the payment of the Obligations,
whether or not then due and payable, in such order, priority and proportions as
the Administrative Agent in its sole discretion shall deem proper (but without
premium or penalty) or (B) at the sole discretion of the Administrative
Agent, be paid, either in whole or in part, to the Borrower for such purposes
and upon such conditions as the Administrative Agent shall designate. In the
event the Net Proceeds are applied to the Obligations and all of the
Obligations have been performed or are discharged by the application of less
than all of the Net Proceeds, then any remaining Net Proceeds will be paid over
to the Borrower or any other party legally entitled thereto.

 

(k)           Notwithstanding any Casualty or Taking,
the Borrower shall continue to pay the Obligations in the manner provided in
the Notes, this Agreement and the other Loan Documents and the Outstanding
Principal Amount shall not be reduced unless and until (i) any Insurance
Proceeds or Condemnation Award shall have been actually received by the
Administrative Agent, (ii) the Administrative Agent shall have deducted its
reasonable expenses of collecting such proceeds and (iii) the Administrative
Agent shall have applied any portion of the balance thereof to the repayment of
the Outstanding Principal Amount in accordance with Section 10.03(j). The
Lenders shall not be limited to the interest paid on any Condemnation Award but
shall continue to be entitled to receive interest at the rate or rates provided
in the Notes and this Agreement if such interest is then due hereunder.

 

(l)            Notwithstanding anything to the
contrary contained in this Article X or Section 8.07, if pursuant
to the provisions of this Article X the Net Proceeds are required to be
made available to the Borrower for Restoration of the damage caused by a
Casualty Event or any Taking, the Borrower’s obligation to commence or
thereafter to proceed with such Restoration shall be conditioned upon the
Borrower’s receipt of the Net Proceeds attributable to such Casualty Event or
Taking, respectively; provided, however, that nothing contained
in this sentence (or any other provision of this Article X) shall (i)
defer, limit or excuse in any respect the Borrower’s obligation to commence or
proceed with the Restoration of any Project: (A) if the Borrower does not
diligently pursue the collection of such Net Proceeds; (B) where the relevant
Casualty Event is not a Significant Casualty Event or the Taking involves a
claim of not more 

 

107

 

than the lesser of $5,000,000 or ten percent (10%) of
the Appraised Value of the affected Project; (C) in the case of a Casualty
Event, to the extent that the costs of such Restoration are included within any
applicable deductible or self-insurance retention, or exceed the applicable
limits of insurance, under any insurance policy maintained hereunder; (D) in
the case of a Casualty Event, if the Borrower is, at the time of such Casualty
Event, in default in its obligation to maintain the insurance policies required
under Section 8.05 in any respect which would reduce the amount of Net
Proceeds available to the Borrower on account of such Casualty Event below the
amount which would have been available had the Borrower not been in default of
such obligation, then to the extent of such reduction; or (E) to the extent
that the Net Proceeds available to the Borrower on account of such Casualty
Event or Taking are reasonably anticipated to be reduced as a result of any
defense to coverage or other defense available to the insurer or condemning
authority, whether as a result of any act or omission of the Borrower or
otherwise (provided that the undisputed portion of such Net Proceeds shall have
been paid by the insurer or condemning authority and made available to the Borrower);
(ii) defer, limit or excuse in any respect the Borrower’s obligation to
undertake such prudent measures (subject in all cases to any applicable
provisions in Section 8.07) as may be necessary to keep any Project,
following any Casualty Event or Taking, safe, secure and protected and as may
be appropriate to avoid further deterioration or damage; or (iii) defer, limit
or excuse any obligation of the Borrower under this Agreement or the other Loan
Documents (other than the obligation to commence and diligently prosecute the
Restoration of such damage).

 

ARTICLE
XI

CASH TRAP ACCOUNT

 

11.01      Low
DSCR Trigger Event. Upon the occurrence of a Low DSCR Trigger Event and on
each day that the required monthly report is due under Section 8.01(e)
and continuing for each month thereafter during any Low DSCR Trigger Period,
the Borrower shall cause all Excess Cash from the Projects to be paid each
month directly to the Administrative Agent for deposit into a Cash Trap Account
established for the Borrower as additional collateral for its Obligations.

 

(a)           Establishment and Maintenance of
the Cash Trap Account.

 

(i)            The Cash Trap Account (A) shall be a
separate and identifiable account from all other funds held by the Depository
Bank and (B) shall contain only funds required to be deposited pursuant to this
Section 11.01. Any interest which may accrue on the amounts on deposit
in a Cash Trap Account shall be added to and shall become part of the balance
of the Cash Trap Account. The Borrower shall enter into with the Administrative
Agent and the applicable Depository Bank a Cash Trap Account Security Agreement
(with such changes thereto as may be required by the Depository Bank and
satisfactory to the Administrative Agent) which shall govern the Cash Trap
Account established for it and the rights, duties and obligations of each party
to such Cash Trap Account Security Agreement.

 

108

 

(ii)           The Cash Trap Account Security
Agreement shall provide that (A) the Cash Trap Account shall be established in
the name of the Administrative Agent, (B) the Cash Trap Account shall be
subject to the sole dominion, control and discretion of the Administrative
Agent, and (C) neither the Borrower nor any other Person, including,
without limitation, any Person claiming on behalf of or through the Borrower,
shall have any right or authority, whether express or implied, to make use of
or withdraw, or cause the use or withdrawal of, any proceeds from the Cash Trap
Account or any of the other proceeds deposited in the Cash Trap Account, except
as expressly provided in this Agreement or in the Cash Trap Account Security
Agreement.

 

(b)           Deposits
to, Disbursements and Release from the Cash Trap Account. All deposits to
and disbursements of all or any portion of the deposits to the Cash Trap
Account shall be in accordance with this Agreement and the Cash Trap Account Security
Agreement. The Borrower hereby agrees to pay any and all fees charged by
Depository Bank in connection with the maintenance of the Cash Trap Account and
the performance of its duties. During any Low DSCR Trigger Period, provided
that no Event of Default exists at the time of any request by the Borrower for
a disbursement from the Cash Trap Account, the Administrative Agent will direct
the Depository Bank to transfer amounts credited to the Cash Trap Account to
the Borrower’s Account to pay or reimburse the Borrower for (i) Real Estate
Taxes or Insurance Premiums, (ii) capital expenditures incurred pursuant to an
Approved Annual Budget (such capital expenditures, “Approved Capital
Expenditures”), (iii) actual costs of tenant improvements and/or leasing
commissions pursuant to an Approved Lease and set forth in an Approved Annual
Budget (such expenditures, “Approved Leasing Expenditures”), or (iv)
capital expenditures which have been approved by the Administrative Agent in
accordance with subsection (c)(iv) below or leasing expenditures
incurred pursuant to an Approved Lease, in either case which are not set forth
in an Approved Annual Budget (such expenditures, “Extraordinary Capital or
Leasing Expenditures”), in accordance with the terms and conditions set
forth below in subsection (c). Provided no Default or Event of Default
then exists, any funds held in the Cash Trap Account shall be released to the
Borrower for the account of the Borrower upon the occurrence of a Low DSCR
Release Event and, in such event the Borrower shall no longer be required to
cause the deposit of the subsequent Excess Cash into the Cash Trap Account
unless a Low DSCR Trigger Event occurs with respect to any future calendar
quarter.

 

(c)           Conditions
to Disbursements from Cash Trap Account. Each disbursement from a Cash Trap
Account is subject to the satisfaction of each of the following conditions:

 

(i)            Disbursements shall be utilized
solely for Real Estate Taxes, Insurance Premiums, Approved Capital
Expenditures, Approved Leasing Expenditures or Extraordinary Capital or Leasing
Expenditures and shall be in an amount no greater than the actual cost of such
Real Estate Taxes or Insurance Premiums, Approved Capital Expenditures,
Approved Leasing Expenditures or Extraordinary Capital or Leasing Expenditures
to the extent not theretofore paid from Operating Income;

 

(ii)           Disbursements for Approved Capital
Expenditures, Approved Leasing Expenditures and Extraordinary Capital or
Leasing 

 

109

 

Expenditures shall not be
made more frequently than monthly, and each disbursement (if any) shall be in
an amount not less than $25,000.00 (unless the disbursement represents the
final disbursement for a particular Approved Capital Expenditure or Approved Leasing
Expenditure);

 

(iii)          Not less than ten (10) days prior to
the requested funding date for a disbursement, the Administrative Agent shall
have received a written request for such disbursement executed by an Authorized
Officer, which request shall specify the date on which the Borrower requests
the disbursement to be made and the Person(s) or account(s) to whom such
disbursement should be made (such duly completed request is referred to herein
as a “Disbursement Request”);

 

(iv)          Not less than ten (10) days prior to
each disbursement for Approved Capital Expenditures, Approved Leasing
Expenditures or Extraordinary Capital or Leasing Expenditures, the
Administrative Agent shall have received, reviewed and approved (A) a
certificate executed by the Borrower, or, if such Person was engaged for such
work, the Borrower’s architect or engineer, as applicable, certifying that, to
the knowledge of such Person, the work for which such disbursement is being
requested has been completed to the percentage of completion specified in the
Disbursement Request substantially in accordance with the applicable plans and
specifications therefor and in a good and workmanlike manner; (B) sworn
statements and conditional lien waivers from all contractors, subcontractors
and materialmen with respect to such work; (C) sworn statements and final lien
waivers from all contractors and subcontractors and materialmen with respect to
work theretofore completed and for which a disbursement was made to the
Borrower in a prior month; (D) copies of paid invoices for prior disbursements
and open invoices for requested disbursements, and an all bills paid affidavit
from the Borrower; (E) with respect to the final payment for a work of
improvement, certificates of occupancy (or similar documentation), as required
by Applicable Law, relating to the work for which such disbursement is being
made; and (F) such other supporting documentation as may be reasonably required
by the Administrative Agent, all in form and substance reasonably satisfactory
to the Administrative Agent. Notwithstanding the foregoing, in lieu of
complying with the requirements in clauses (A) through (F) above with respect
to any requested disbursement for Approved Capital Expenditures, Approved
Leasing Expenditures or Extraordinary Capital or Leasing Expenditures which
consists of leasing commissions or sums due pursuant to any contract or
subcontract providing for an aggregate contract sum of not more than $50,000,
the Borrower may, not less than ten (10) days prior to the requested funding
date for any disbursement on account thereof, deliver to the Administrative
Agent, together with (or as part of) its Disbursement Request, a certificate
executed by an Authorized Officer on behalf of the Borrower certifying that
such sums so requested are due and payable and are Approved Capital
Expenditures, Approved Leasing Expenditures or Extraordinary Capital or Leasing
Expenditures which have been incurred in compliance with this Agreement and
containing copies of the relevant invoices, contracts or other back-up
documentation to confirm that such sums are then owing; and

 

110

 

(v)           Based on the most recent
reconciliation report delivered by the Borrower pursuant to Section
8.01(e)(iii) prior to the delivery of such Disbursement Request (or, if the
most recent such report has not been delivered pursuant to such section or
article, based on such other information as the Administrative Agent shall
determine in its reasonable discretion), the results from the operations of the
Projects for the month and year-to-date covered by such reconciliation report
shall be equal to or better than the results contemplated by the Approved
Annual Budget for such month and year-to-date, except for Extraordinary Capital
or Leasing Expenditures or other expenses or items approved by the
Administrative Agent.

 

ARTICLE
XII

EVENTS OF DEFAULT

 

12.01       Events of Default. Any one or more
of the following events shall constitute an “Event of Default”:

 

(a)           The
Borrower shall: (i) fail to pay any principal of any Loan when due (whether at
stated maturity, mandatory prepayment or otherwise); or (ii) fail to pay
any interest on any Loan, any fee or any other amount (other than an amount
referred to in clause (i) above) payable by it under this Agreement or under
any other Loan Document, when and as the same shall become due and payable,
and, in the case of this clause (ii), such default shall continue for a
period of five (5) days; or

 

(b)           The
Borrower (or, if applicable, any Borrower Party) shall default in the performance
of any of its obligations under any of Sections 8.05, 8.06, 8.12,
8.17, 8.19 or Article IX (other than Section 9.06);
or any Change in Control shall occur; or the Borrower shall default in the
performance of any of its obligations under Section 8.16 which are
required to be performed during any Low DSCR Trigger Period; or the Borrower
shall make any Restricted Payment while any Event of Default exists; or the
Borrower shall make a Restricted Payment while any other Major Default exists
unless such Major Default is cured within the applicable cure or grace period
therefor; or

 

(c)           Any
representation, warranty or certification made or deemed made herein or in any
other Loan Document (or in any Modification hereto or thereto) by the Borrower
or any request, notice or certificate furnished by or on behalf of any Borrower
Party pursuant to the provisions hereof or thereof, shall prove to have been
false or misleading as of the time made or furnished in any material respect;
or

 

(d)           Any
of the Bankruptcy Parties shall admit in writing its inability to, or be
generally unable to, pay its debts as such debts become due; or

 

(e)           An
involuntary proceeding shall be commenced or an involuntary petition shall be
filed, seeking (i) liquidation, reorganization or other relief in respect of
any of the Bankruptcy Parties or its debts, or of a substantial part of its
assets, under any Federal, state or foreign bankruptcy, insolvency,
receivership or similar law now or hereafter in effect or (ii) the appointment
of a receiver, trustee, custodian, sequestrator, conservator or similar
official for any 

 

111

 

of the Bankruptcy
Parties or for a substantial part of its assets, and, in any such case, such
proceeding or petition shall continue undismissed for a period of sixty (60)
days or an order or decree approving or ordering any of the foregoing shall be
entered; or

 

(f)            Any
Bankruptcy Party shall (i) voluntarily commence as to itself any proceeding or
file any petition seeking liquidation, reorganization or other relief under any
Federal, state or foreign bankruptcy, insolvency, receivership or similar law
now or hereafter in effect, (ii) consent to the institution of, or fail to
contest in a timely and appropriate manner, any proceeding or petition
described in clause (e) of this Section 12.01, (iii) apply for or
consent to the appointment of a receiver, trustee, custodian, sequestrator,
conservator or similar official for it or for a substantial part of any of its
assets, (iv) file an answer admitting the material allegations of a petition
filed against it in any such proceeding, (v) make a general assignment for the
benefit of creditors or (vi) take any action for the purpose of effecting any
of the foregoing; or

 

(g)           The
Borrower shall default in the payment when due of any principal of or interest
on any of its Indebtedness (other than the Obligations) in excess of Five
Million Dollars ($5,000,000) and such default shall not be cured within any
applicable notice or cure period provided with respect to such Indebtedness; or
any event specified in any note, agreement, indenture or other document
evidencing or relating to any such Indebtedness shall occur if the effect of
such event is to cause, or (with the giving of any notice or the lapse of time
or both) to permit the holder or holders of such Indebtedness to cause, such
Indebtedness to become due, or to be prepaid in full (whether by redemption,
purchase, offer to purchase or otherwise), prior to its stated maturity; or

 

(h)           Any
of the Bankruptcy Parties shall be terminated, dissolved or liquidated (as a
matter of law or otherwise) or proceedings shall be commenced by any Person
(including any Bankruptcy Party) seeking the termination, dissolution or
liquidation of any Bankruptcy Party, except, in each case, in connection with a
merger, termination, dissolution or liquidation permitted by Section 9.03(a)
or Section 14.31; or

 

(i)            One
or more (i) judgments for the payment of money (exclusive of judgment amounts
fully covered by insurance (other than permitted deductibles) where the insurer
has admitted liability in respect of the full amount of such judgment)
aggregating in excess of One Million Dollars ($1,000,000) shall be rendered
against one or more of the Borrower Parties or (ii) non-monetary judgments,
orders or decrees shall be entered against any of the Borrower Parties which
have or would reasonably be expected to have a Material Adverse Effect, and, in
either case, the same shall remain undischarged for a period of thirty (30)
consecutive days during which execution shall not be effectively stayed (or
bonded over through the posting of a bond in accordance with a statutory
bonding procedure the effect of which is to limit the judgment creditor’s claim
to recovery under the bond), or any action shall be legally taken by a judgment
creditor to attach or levy upon any assets of such Borrower Party to enforce
any such judgment; or

 

(j)            An
ERISA Event shall have occurred that, in the opinion of the Administrative
Agent, when taken together with all other such ERISA Events that have occurred,
could reasonably be expected to result in a Material Adverse Effect; or

 

112

 

(k)           The
Liens created by the Security Documents shall at any time not constitute a
valid and perfected first priority Lien (subject to the Permitted Title
Exceptions) on the collateral intended to be covered thereby in favor of the
Administrative Agent, free and clear of all other Liens (other than the
Permitted Title Exceptions and Liens which are described in clauses (b),
(c), (e) and (g) of the definition of “Permitted Liens” or which
are described in clauses (a), (b), (c), (e) and (h)
of Section 9.02 of this Agreement, and which are in the case of Liens
described in clause (e) of the definition of “Permitted Liens” and Section
9.02 (e) of this Agreement subordinate to the Lien of the Deed of Trust
encumbering the affected Project), or, except for expiration in accordance with
its terms or releases or terminations contemplated by this Agreement, any of
the Security Documents shall for whatever reason be terminated or cease to be
in full force and effect, or the enforceability thereof shall be contested by
any Borrower Party or any of their Affiliates (controlled by the Permitted
Public REIT, in the case of contest occurring after a Permitted Public REIT
Transfer); or

 

(l)            The
Guarantor shall (i) default under any of the Guarantor Documents beyond
any applicable notice and grace period; or (ii) revoke or attempt to
revoke, contest or commence any action against its obligations under any of the
Guarantor Documents; or

 

(m)          At
any time while a Guarantee furnished by the Borrower or any Subsidiary of the
Borrower is in effect with respect to any Guaranteed Line of Credit, any event
of default shall occur under any of the applicable documents evidencing or
securing such Guaranteed Line of Credit; or any event specified in any of the
applicable documents evidencing or securing such Guaranteed Line of Credit
shall occur and the effect of such event is to cause, or (with the giving of
any notice or the lapse of time or both) to permit the lenders providing such
Guaranteed Line of Credit to cause, all amounts outstanding under Guaranteed
Line of Credit to become immediately due and payable prior to the stated
maturity date; or

 

(n)           Reserved

 

(o)           The
Borrower uses, or permits the use of, funds from the Security Accounts for any purpose other than the purpose for which
such funds were disbursed from the Security Accounts; or

 

(p)           Except
as permitted by Section 8.19(i), the failure of Borrower to
maintain, or cause to be maintained, Hedge Agreements with respect to the
Aggregate Notional Amount in accordance with Section 8.19; or the
occurrence of any default by or termination event as to the Borrower or Other
Swap Pledgor under any Hedge Agreement maintained with respect to the Aggregate
Notional Amount which is not cured within the applicable notice and grace or cure
periods provided therein; or

 

(q)           Reserved;

 

(r)            Any
of the Borrower Parties shall default under any of the other terms, covenants
or conditions of this Agreement or any other Loan Document not set forth above
in this Section 12.01 and such default shall continue for thirty (30)
days after notice from the Administrative Agent to the Borrower; provided,
however, that if (i) such default is susceptible of cure but the
Administrative Agent reasonably determines that such non-monetary default 

 

113

 

cannot be
reasonably cured within such thirty (30) day period, (ii) the Administrative
Agent determines, in its sole discretion, that such default does not create a
material risk of sale or forfeiture of, or substantial impairment in value to,
any material portion of the Projects, and (iii) the Borrower has provided
the Administrative Agent with security reasonably satisfactory to the
Administrative Agent against any interruption of payment or impairment of
collateral that is reasonably likely to result from such continuing failure,
then, so long as the relevant Borrower Party shall have commenced to cure such
default within such thirty (30) day period and thereafter diligently and
expeditiously proceeds to cure the same, such thirty (30) day period shall be
extended for such time as is reasonably necessary for the relevant Borrower
Party in the exercise of due diligence to cure such default, but in no event
shall such period exceed ninety (90) days after the original notice from the
Administrative Agent or extend beyond the Maturity Date; or

 

(s)           At
any time following a Transfer to a Qualified Successor Entity consisting of a
Permitted Private REIT or its Permitted Private REIT Subsidiary pursuant to Section
9.03(a)(iii), the senior officers of and members of the Board of Directors
of the Permitted Private REIT shall include less than two (2) of the Named
Principals; or at the time of a Permitted Public REIT Transfer, the senior
officers of and members of the Board of Directors of the Permitted Public REIT
shall include less than two (2) of the Named Principals.

 

12.02       Remedies. Upon the occurrence of
an Event of Default and at any time thereafter during the existence of such
event, the Administrative Agent may (subject to, and in accordance with, the
provisions of Section 13.03) and, upon request of the Required Lenders
shall, by written notice to the Borrower, pursue any one or more of the
following remedies, concurrently or successively, it being the intent hereof
that none of such remedies shall be to the exclusion of any other:

 

(a)           In
the case of an Event of Default other than one referred to in clause (e)
or (f) of Section 12.01 with respect to any Borrower Party,
terminate the Commitments and/or declare the Outstanding Principal Amount of
the Loans, and the accrued interest on the Loans and all other amounts payable
by the Borrower hereunder (including any amounts payable under Section 5.05)
and under the Notes and the Obligations of the Borrower under the other Loan
Documents to be forthwith due and payable and, if the Administrative Agent or
an Affiliate is a counterparty to a Hedge Agreement, then the Administrative
Agent may designate a default or similar event under such Hedge Agreement
whereupon such amounts shall be immediately due and payable without
presentment, demand, protest or other formalities of any kind, all of which are
hereby expressly waived by the Borrower. In the case of the occurrence of an
Event of Default referred to in clause (e) or (f) of Section
12.01 with respect to a Borrower Party, the Commitments shall automatically
be terminated and the Outstanding Principal Amount of the Loans, and the
accrued interest on, the Loans and all other amounts payable by the Borrower
hereunder (including any amounts payable under Section 5.05) and
under the Notes and the Obligations of the Borrower under the other Loan
Documents shall automatically become immediately due and payable without
presentment, demand, protest or other formalities of any kind, all of which are
hereby expressly waived by the Borrower;

 

(b)           If
the Borrower shall fail, refuse or neglect to make any payment or perform any
Obligations under the Loan Documents, then, while any Event of Default exists
and 

 

114

 

without notice to
or demand upon the Borrower and without waiving or releasing any other right,
remedy or recourse the Administrative Agent may have because of such Event of
Default, the Administrative Agent may (but shall not be obligated to) make such
payment or perform such Obligation for the account of and at the expense of the
Borrower, and shall have the right to enter upon the Projects for such purpose
and to take all such action thereon and with respect to the Projects as it may
deem necessary or appropriate. If the Administrative Agent shall elect to pay any
sum due with respect to the Projects, the Administrative Agent may do so in
reliance on any bill, statement or assessment procured from the appropriate
Governmental Authority or other issuer thereof without inquiring into the
accuracy or validity thereof. Similarly, in making any payments to protect the
security intended to be created by the Loan Documents, the Administrative Agent
shall not be bound to inquire into the validity of any apparent or threatened
adverse title, Lien, encumbrance, claim or charge before making an advance for
the purpose of preventing or removing the same. Additionally, if any Hazardous
Substance affects or threatens to affect any of the Projects, the
Administrative Agent may (but shall not be obligated to) give such notices and
take such actions as it deems necessary or advisable in order to abate the
discharge of or remove any Hazardous Substance; and/or

 

(c)           Exercise
or pursue any other remedy or cause of action permitted under this Agreement,
any or all of the Security Documents or any other Loan Document, or conferred
upon the Administrative Agent and the Lenders by operation of law.

 

ARTICLE
XIII

THE ADMINISTRATIVE AGENT

 

13.01       Appointment, Powers and Immunities.
Each Lender hereby irrevocably appoints and authorizes the Administrative Agent
to act as its agent hereunder and under the other Loan Documents with such
powers as are specifically delegated to the Administrative Agent by the terms
of this Agreement and of the other Loan Documents, together with such other
powers as are reasonably incidental thereto. The Administrative Agent (which
term as used in this sentence and in Section 13.05 and the first
sentence of Section 13.06 shall include reference to its Affiliates
and its own and its Affiliates’ officers, directors, employees and agents):

 

(a)           shall
have no duties or responsibilities except those expressly set forth in this
Agreement and in the other Loan Documents, and shall not by reason of this
Agreement or any other Loan Document be a fiduciary or trustee for any Lender
except to the extent that the Administrative Agent acts as an agent with
respect to the receipt or payment of funds, nor shall the Administrative Agent
have any fiduciary duty to the Borrower nor shall any Lender have any fiduciary
duty to the Borrower or any other Lender;

 

(b)           shall
not be responsible to the Lenders for any recitals, statements, representations
or warranties contained in this Agreement or in any other Loan Document, or in
any certificate or other document referred to or provided for in, or received
by any of them under, this Agreement or any other Loan Document, or for the
value, validity, effectiveness, genuineness, enforceability or sufficiency of
this Agreement, any Note or any other Loan 

 

115

 

Document or any
other document referred to or provided for herein or therein or for any failure
by the Borrower or any other Person to perform any of its obligations hereunder
or thereunder;

 

(c)           shall
not be responsible for any action taken or omitted to be taken by it hereunder
or under any other Loan Document or under any other document or instrument
referred to or provided for herein or therein or in connection herewith or
therewith, except for its own gross negligence, bad faith or willful misconduct;

 

(d)           shall
not, except to the extent expressly instructed by the Required Lenders with
respect to collateral security under the Security Documents, be required to
initiate or conduct any litigation or collection proceedings hereunder or under
any other Loan Document; and

 

(e)           shall
not be required to take any action which is contrary to this Agreement or any
other Loan Document or Applicable Law.

 

The
relationship between the Administrative Agent and each Lender is a contractual
relationship only, and nothing herein shall be deemed to impose on the
Administrative Agent any obligations other than those for which express
provision is made herein or in the other Loan Documents. The Administrative
Agent may employ agents and attorneys-in-fact and shall not be responsible for
the negligence or misconduct of any such agents or attorneys-in-fact selected
by it in good faith. The Administrative Agent may deem and treat the payee of a
Note as the holder thereof for all purposes hereof unless and until a notice of
the assignment or transfer thereof shall have been filed with the
Administrative Agent, any such assignment or transfer to be subject to the
provisions of Section 14.07. Except to the extent expressly provided in Sections
13.08 and 13.10, the provisions of this Article XIII are
solely for the benefit of the Administrative Agent and the Lenders, and the
Borrower shall not have any rights as a third-party beneficiary of any of the
provisions hereof and the Lenders may Modify or waive such provisions of this Article
XIII in their sole and absolute discretion.

 

13.02       Reliance by Administrative Agent. The
Administrative Agent shall be entitled to rely upon any certification, notice,
document or other communication (including any thereof by telephone, telecopy,
telegram or cable) reasonably believed by it to be genuine and correct and to
have been signed or sent by or on behalf of the proper Person or Persons, and
upon advice and statements of legal counsel, independent accountants and other
experts selected by the Administrative Agent in good faith. As to any matters
not expressly provided for by this Agreement or any other Loan Document, the
Administrative Agent shall in all cases be fully protected in acting, or in
refraining from acting, hereunder or thereunder in accordance with instructions
given by the Required Lenders, and such instructions of the Required Lenders
and any action taken or failure to act pursuant thereto shall be binding on all
of the Lenders.

 

13.03       Defaults.

 

(a)           The
Administrative Agent shall give the Lenders notice of any material Default of
which the Administrative Agent has knowledge or notice. Except with respect to
(i) the nonpayment of principal, interest or any fees that are due and payable
under any of the Loan Documents, (ii) Defaults with respect to which the
Administrative Agent has actually sent 

 

116

 

written notice of
to the Borrower and (iii) material Defaults with respect to which the
Administrative Agent is given written notice (or copied on such written notice)
from a third party specifying such Default, the Administrative Agent shall not
be deemed to have knowledge or notice of the occurrence of a Default unless the
Administrative Agent has received notice from a Lender or the Borrower
specifying such Default and stating that such notice is a “Notice of Default”. If
the Administrative Agent has such knowledge or receives such a notice from the
Borrower or a Lender in accordance with the immediately preceding sentence with
respect to the occurrence of a material Default, the Administrative Agent shall
give prompt notice thereof to the Lenders. Within ten (10) days of delivery of
such notice of Default from the Administrative Agent to the Lenders (or such
shorter period of time as the Administrative Agent determines is necessary),
the Administrative Agent and the Lenders shall consult with each other to
determine a proposed course of action. The Lenders agree that the
Administrative Agent shall (subject to Section 13.07) take such
action with respect to such Default as shall be directed by the Required
Lenders, provided that, (A) unless and until the Administrative Agent
shall have received such directions, the Administrative Agent may while a
Default exists (but shall not be obligated to) take such action, or refrain
from taking such action, including decisions (1) to make protective advances
that the Administrative Agent determines are necessary to protect or maintain
the Projects and (2) to foreclose on any of the Projects or exercise any other
remedy, with respect to such Default as it shall deem advisable in the interest
of the Lenders and (B) no actions approved by the Required Lenders shall
violate the Loan Documents or Applicable Law. 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 the Notes) other than
through the Administrative Agent. The Administrative Agent shall advise the
Lenders of all material actions which the Administrative Agent takes in
accordance with the provisions of this Section 13.03(a) and shall
continue to consult with the Lenders with respect to all of such actions. Notwithstanding
the foregoing, if the Required Lenders shall at any time direct that a
different or additional remedial action be taken from that already undertaken
by the Administrative Agent, including the commencement of foreclosure
proceedings, such different or additional remedial action shall be taken in
lieu of or in addition to, the prosecution of such action taken by the
Administrative Agent; provided that all actions already taken by the
Administrative Agent pursuant to this Section 13.03(a) shall be valid
and binding on each Lender. All money (other than money subject to the
provisions of Section 13.03(f)) received from any enforcement actions,
including the proceeds of a foreclosure sale of the Projects, shall be applied,
first, to the payment or reimbursement of the Administrative Agent for expenses
and advances incurred in accordance with the provisions of Sections 13.03(a)
and (d) and 13.05 and to the payment of any fees owing to the
Administrative Agent pursuant to the Loan Documents, second, to the
payment or reimbursement of the Lenders for expenses incurred in accordance
with the provisions of Sections 13.03(b), (c) and (d) and 13.05;
third, to the payment or reimbursement of the Lenders for any advances
made pursuant to Section 13.03(b); fourth, pari passu to the Lenders in
accordance with their respective Proportionate Shares until the Obligations
have been fully paid and discharged in full; and fifth to the person(s)
legally entitled thereto.

 

(b)           All
losses with respect to interest (including interest at the Post-Default Rate)
and other sums payable pursuant to the Notes or incurred in connection with the
Loans, the enforcement thereof or the realization of the security therefor,
shall be borne by the Lenders in accordance with their respective Proportionate
Shares of the Loan, and the Lenders shall promptly, upon request, remit to the
Administrative Agent their respective Proportionate Shares 

 

117

 

of (i) any
expenses incurred by the Administrative Agent in connection with any Default to
the extent any expenses have not been paid by the Borrower, (ii) any advances
made to pay taxes or insurance or otherwise to preserve the Lien of the
Security Documents or to preserve and protect the Projects, whether or not the
amount necessary to be advanced for such purposes exceeds the amount of the
Obligations,  (iii) any other expenses
incurred in connection with the enforcement of the Deeds of Trust or other Loan
Documents, and (iv) any expenses incurred in connection with the consummation
of the Loans not paid or provided for by the Borrower. To the extent any such
advances are recovered in connection with the enforcement of the Deeds of Trust
or the other Loan Documents, each Lender shall be paid its Proportionate Share
of such recovery after deduction of the expenses of the Administrative Agent
and the Lenders.

 

(c)           If,
at the direction of the Required Lenders or otherwise as provided in Section
13.03(a), any action(s) is brought to collect on the Notes or enforce the
Security Documents or any other Loan Document, such action shall (to the extent
permitted under applicable law and the decisions of the court in which such
action is brought) be an action brought by the Administrative Agent and the
Lenders, collectively, to collect on all or a portion of the Notes or enforce the
Security Documents or any other Loan Document and counsel selected by the
Administrative Agent shall prosecute any such action at the direction of the
Administrative Agent on behalf of the Administrative Agent and the Lenders, and
the Administrative Agent and the Lenders shall consult and cooperate with each
other in the prosecution thereof. All decisions concerning the appointment of a
receiver while such action is pending, the conduct of such receivership, the
conduct of such action, the collection of any judgment entered in such action
and the settlement of such action shall be made by the Administrative Agent. The
costs and expenses of any such action shall be borne by the Lenders in
accordance with each of their respective Proportionate Shares (without
diminishing or releasing any obligation of the Borrower to pay for such costs).

 

(d)           If,
at the direction of the Required Lenders or otherwise as provided in Section
13.03(a), any action(s) is brought to foreclose any Deed of Trust, such
action shall (to the extent permitted under applicable law and the decisions of
the court in which such action is brought) be an action brought by the
Administrative Agent and the Lenders, collectively, to foreclose all or a
portion of the Deed of Trust and collect on the Notes. Counsel selected by the
Administrative Agent shall prosecute any such foreclosure at the direction of
the Administrative Agent on behalf of the Administrative Agent and the Lenders
and the Administrative Agent and the Lenders shall consult and cooperate with
each other in the prosecution thereof. All decisions concerning the appointment
of a receiver, the conduct of such foreclosure, the manner of taking and
holding title to any such Project (other than as set forth in subsection (e)
below), and the commencement and conduct of any deficiency judgment proceeding
shall be made by the Administrative Agent (subject to the rights of the
Required Lenders under Section 13.03(a)), and all decisions concerning
the acceptance of a deed in lieu of foreclosure and the bid on behalf of the
Administrative Agent and the Lenders at the foreclosure sale of any Project
shall be made by the Administrative Agent with the approval of the Required
Lenders. The costs and expenses of foreclosure will be borne by the Lenders in
accordance with their respective Proportionate Shares.

 

(e)           If
title is acquired to any Project after a foreclosure sale, nonjudicial
foreclosure or by a deed in lieu of foreclosure, title shall be held by the
Administrative Agent in 

 

118

 

its own name in
trust for the Lenders or, at the Administrative Agent’s election, in the name
of a wholly owned subsidiary of the Administrative Agent on behalf of the
Lenders.

 

(f)            If
the Administrative Agent (or its subsidiary) acquires title to any Project or is
entitled to possession of any Project during or after the foreclosure, all
material decisions with respect to the possession, ownership, development,
construction, control, operation, leasing, management and sale of such Project
shall be made by the Administrative Agent. All income or other money received
after so acquiring title to or taking possession of such Project with respect
to the Project, including income from the operation and management of such Project
and the proceeds of a sale of such Project, shall be applied, first, to
the payment or reimbursement of the Administrative Agent and the expenses
incurred in accordance with the provisions of this Article XIII and to
the payment of any fees owed to the Administrative Agent, second, to the
payment of operating expenses with respect to such Project; third, to
the establishment of reasonable reserves for the operation of such Project; fourth,
to the payment or reimbursement of the Lenders for any advances made pursuant
to Section 13.03(b); fifth to fund any capital improvement,
leasing and other reserves; and sixth, to the Lenders in accordance with
their respective Proportionate Shares.

 

13.04       Rights as a Lender. With respect
to its Commitment and the Loans made by it, Eurohypo (and any successor acting
as Administrative Agent) in its capacity as a Lender hereunder shall have the
same rights and powers hereunder as any other Lender and may exercise the same
as though it were not acting as the Administrative Agent, and the term “Lender”
or “Lenders” shall, unless the context otherwise indicates, include the
Administrative Agent in its individual capacity. Subject to the provisions of Sections
4.07 and 14.10, Eurohypo (and any successor acting as Administrative
Agent) and any of its Affiliates may (without having to account therefor to any
other Lender) accept deposits from, lend money to, make investments in and
generally engage in any kind of banking, investment banking, trust or other
business with the Borrower (and any of its Affiliates) as if it were not acting
as the Administrative Agent and Eurohypo (and any such successor) and any of
its Affiliates may accept fees and other consideration from the Borrower for
services in connection with this Agreement or otherwise without having to
account for the same to the Lenders.

 

13.05       Indemnification. Each Lender
agrees to indemnify the Administrative Agent (to the extent not reimbursed by
the Borrower, but without limiting the obligations of the Borrower under Section 14.03)
in accordance with their Proportionate Shares, for any and all liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs,
expenses or disbursements of any kind and nature whatsoever that may be imposed
on, incurred by or asserted against the Administrative Agent in its capacity as
Administrative Agent (including by any Lender) arising out of or by reason of
any investigation in or in any way relating to or arising out of this Agreement
or any other Loan Document or any other documents contemplated by or referred
to herein or therein or the Transactions (including the costs and expenses that
the Borrower is obligated to pay under Section 14.03, but excluding,
unless a Default has occurred and is continuing, normal administrative costs
and expenses incident to the performance of its agency duties hereunder) or the
enforcement of any of the terms hereof or thereof, provided that no
Lender shall be liable for any of the foregoing to the extent they arise from
the gross negligence, bad faith or willful misconduct of the Administrative
Agent.

 

119

 

13.06       Non-Reliance on Administrative Agent
and Other Lenders. Each Lender agrees that it has, independently and
without reliance on the Administrative Agent or any other Lender, and based on
such documents and information as it has deemed appropriate, made its own
credit analysis of the Borrower and its decision to enter into this Agreement
and that it will, independently and without reliance upon the Administrative
Agent or any other Lender, and based on such documents and information as it
shall deem appropriate at the time, continue to make its own analysis and
decisions in taking or not taking action under this Agreement or under any
other Loan Document. The Administrative Agent shall not be required to keep
itself informed as to the performance or observance by the Borrower of this
Agreement or any of the other Loan Documents or any other document referred to
or provided for herein or therein or to inspect the Properties or books of the
Borrower. Except for notices, reports and other documents and information
expressly required to be furnished to the Lenders by the Administrative Agent
hereunder or under the other Loan Documents, the Administrative Agent shall not
have any duty or responsibility to provide any Lender with any credit or other
information concerning the affairs, financial condition or business of the
Borrower (or any of its Affiliates) that may come into the possession of the
Administrative Agent or any of its Affiliates.

 

13.07       Failure to Act. Except for action
expressly required of the Administrative Agent hereunder and under the other
Loan Documents, the Administrative Agent shall in all cases be fully justified
in failing or refusing to act hereunder and thereunder unless it shall receive
further assurances to its satisfaction from the Lenders of their
indemnification obligations under Section 13.05 against any and all
liability and expense that may be incurred by it by reason of taking or
continuing to take any such action, subject to the limitations on such
obligations contained in such Section 13.05.

 

13.08       Resignation of Administrative Agent.
It is agreed by the Lenders that subject to the terms of this Loan Agreement,
the Administrative Agent will remain the Administrative Agent under this
Agreement and the other Loan Documents throughout the term of the Loans; provided,
however, that (a) the Administrative Agent may assign all its
rights as the Administrative Agent to any Related Entity of Eurohypo, and such
Related Entity shall assume the obligations of Administrative Agent hereunder arising
after the date of such assignment, (b) subject to the appointment and
acceptance of a successor Administrative Agent as provided below, the
Administrative Agent may resign at any time by giving at least thirty (30) days’
prior written notice thereof to the Lenders and the Borrower and (c) the
Administrative Agent may be removed upon the unanimous consent of the Lenders
(excepting therefrom the Administrative Agent in its capacity as a Lender) on
account of the gross negligence, bad faith or willful misconduct of the
Administrative Agent. Upon any such resignation or removal, the Required
Lenders shall have the right to appoint a successor Administrative Agent that
shall be a Person that, provided that no Event of Default then exists, meets
the qualifications of an Eligible Assignee with an office in the United States
through which it will act as the servicer of the Loans; who is knowledgeable
and experienced in servicing real estate secured syndicated commercial loans in
the United States; who (together with its Affiliates and Related Entities and any
Approved Funds managed by it or by any of its Affiliates or Related Entities) then
holds (and agrees in writing for the benefit of the Borrower to maintain, for
so long as it shall remain the Administrative Agent and provided that no Event
of Default has occurred), minimum Loans and Commitments either (i) in an
aggregate principal amount not less than ten percent (10%) of the aggregate
Outstanding Principal Amount of the Loans, (ii) comprising Loans and 

 

120

 

Commitments evidenced by
a Note C, which comprise at least two and one-half percent (21⁄2%) of the
aggregate Loans and Commitments of all Lenders and which, determined
collectively with the Loans and Commitments evidenced by a Note C of Eurohypo
and Barclays Capital Real Estate Inc. and their respective Affiliates, Related
Entities and Approved Funds managed by either of them or their respective
Affiliates or Related Entities, comprise at least five percent (5%) of the
aggregate Loans and Commitments of all Lenders, but only (in the case of this
clause (ii)) if such replacement Administrative Agent also qualifies and is
named as the replacement Administrative Agent pursuant to the loan agreements
entered into by Eurohypo as administrative agent with Douglas Emmett 1995, LLC,
Douglas Emmett 1996, LLC, Douglas Emmett 1997, LLC, Douglas Emmett 1998, LLC,
Douglas Emmett 2000, LLC, and Douglas Emmett 2002, LLC and certain co-borrowers
named therein to the extent then outstanding or (iii) only if the replacement
Administrative Agent is Barclays Capital Real Estate Inc. or one of its
Affiliates, Related Entities or Approved Funds managed by Barclays Capital Real
Estate Inc or one of its Affiliates or Related Entities, comprising Loans and
Commitments evidenced by a Note C, which comprise at least two and one-half
percent (21⁄2%) of the aggregate Loans and Commitments of all Lenders, and who
agrees in writing for the benefit of the Borrower not to resign except in
accordance with the provisions of this Loan Agreement. If such successor
Administrative Agent is not a Lender (or is a Lender, but such Lender does not
comply with the requirements of the second sentence of this Section 13.08),
as long as no Major Default exists, the Borrower shall have the right to
approve such successor Administrative Agent, such approval not to be
unreasonably withheld or delayed and which consent shall be deemed to have been
given unless written notice of disapproval is delivered by the Borrower to the
resigning Administrative Agent within five (5) Business Days after notice of
such proposed successor Administrative Agent has been delivered to the Borrower.
If, in the case of a resignation by the Administrative Agent, no successor
Administrative Agent shall have been so appointed by the Required Lenders and
shall have accepted such appointment within thirty (30) days after the retiring
Administrative Agent’s giving of notice of resignation, then the retiring
Administrative Agent may, on behalf of the Lenders, appoint a successor
Administrative Agent, that shall be a Person that meets the requirements of the
second sentence of this Section 13.08. If any successor Administrative
Agent is not a Lender (or is a Lender, but such Lender does not comply with the
requirements of the second sentence of this Section 13.08), the
Borrower, as long as no Major Default exists, shall have the right to approve
such successor Administrative Agent, such approval not to be unreasonably
withheld or delayed and which consent shall be deemed to have been given unless,
in the case of a resignation, written notice of disapproval is delivered by the
Borrower to the resigning Administrative Agent within five (5) Business Days
after notice of such proposed successor Administrative Agent has been delivered
to the Borrower. Upon the acceptance of any appointment as the Administrative
Agent hereunder by a successor Administrative Agent, such successor
Administrative Agent shall thereupon succeed to and become vested with all the
rights, powers, privileges and duties of the retiring Administrative Agent, and
such successor Administrative Agent shall assume all obligations of the
Administrative Agent hereunder arising after the date of such acceptance, and
the retiring or removed Administrative Agent shall be discharged from its
duties and obligations hereunder; provided, however, that the
retiring or removed Administrative Agent shall not be discharged from any
liabilities which existed prior to the effective date of such resignation. The
fees payable by the Borrower to a successor Administrative Agent shall be the
same as those payable to its predecessor unless otherwise agreed between the
Borrower and such successor. After any 

 

121

 

retiring Administrative
Agent’s resignation hereunder as the Administrative Agent, the provisions of
this Article XIII shall continue in effect for its benefit in respect of
any actions taken or omitted to be taken by it while it was acting as the
Administrative Agent.

 

13.09       Consents under Loan Documents. Subject
to the provisions of Section 14.05, the Administrative Agent may (a) grant
any consent or approval required of it or (b) consent to any Modification or
waiver under any of the Loan Documents. If the Administrative Agent solicits
any consents or approvals from the Lenders under any of the Loan Documents,
each Lender shall within ten (10) Business Days of receiving such request, give
the Administrative Agent written notice of its consent or approval or denial
thereof; provided that, if any Lender does not respond within such ten
(10) Business Days or within any such shorter period as required in this
Agreement or any other Loan Document, such Lender shall be deemed to have
authorized the Administrative Agent to vote such Lender’s interest with respect
to the matter which was the subject of the Administrative Agent’s solicitation
as the Administrative Agent elects. Any such solicitation by the Administrative
Agent for a consent or approval shall be in writing and shall include a
description of the matter or thing as to which such consent or approval is
requested and shall include the Administrative Agent’s recommended course of
action or determination in respect thereof.

 

13.10       Authorization. The Administrative
Agent is hereby authorized by the Lenders to execute, deliver and perform in
accordance with the terms of each of the Loan Documents to which the
Administrative Agent is or is intended to be a party and each Lender agrees to
be bound by all of the agreements of the Administrative Agent contained in such
Loan Documents. The Borrower shall be entitled to rely on all written agreements,
approvals and consents received from the Administrative Agent as being that
also of the Lenders, without obtaining separate acknowledgment or proof of
authorization of same.

 

13.11       Amendments Concerning Agency Function.
Notwithstanding anything to the contrary contained in this Agreement, the
Administrative Agent shall not be bound by any waiver, amendment, supplement or
Modification of this Agreement or any other Loan Document which affects its
duties, rights and/or functions hereunder or thereunder unless it shall have
given its prior written consent thereto.

 

13.12       Liability of the Administrative Agent.
The Administrative Agent shall not have any liabilities or responsibilities to
the Borrower on account of the failure of any Lender (other than the
Administrative Agent in its capacity as a Lender) to perform its obligations
hereunder or to any Lender on account of the failure of the Borrower to perform
its obligations hereunder or under any other Loan Document.

 

13.13       Transfer of Agency Function. Without
the consent of the Borrower or any Lender, the Administrative Agent may at any
time or from time to time transfer its functions as the Administrative Agent
hereunder to any of its offices wherever located in the United States; provided
that the Administrative Agent shall promptly notify the Borrower and the
Lenders thereof.

 

13.14       Co-Lead Arranger and Joint Bookrunner.
No Lender identified on the cover page of or elsewhere in this Agreement as a “Co-Lead
Arranger” or “Joint Bookrunner” 

 

122

 

shall have any right,
power, obligation, liability, responsibility or duty under this Agreement other
than those applicable to all Lenders under this Agreement and the other Loan
Documents as a Lender.

 

ARTICLE
XIV

 

MISCELLANEOUS

 

14.01       Non-Waiver; Remedies Cumulative. No
failure on the part of the Administrative Agent or any Lender to exercise and
no delay in exercising, and no course of dealing with respect to, any right,
power or privilege under this Agreement or any other Loan Documents shall
operate as a waiver thereof, nor shall any single or partial exercise of any
right, power or privilege under this Agreement or any other Loan Documents
preclude any other or further exercise thereof or the exercise of any other
right, power or privilege. The remedies provided herein and in the other Loan
Documents are cumulative and not exclusive of any remedies provided by law.

 

14.02       Notices.

 

(a)           All
notices, requests, demands, statements, authorizations, approvals, directions,
consents and other communications provided for herein and under the Loan
Documents shall be given or made in writing and shall be deemed sufficiently
given or served for all purposes as of the date (a) when hand delivered,
(b) three (3) days after being sent by postage pre-paid registered or
certified mail, return receipt requested, (c) one (1) Business Day after being
sent by reputable overnight courier service, or (d) with a simultaneous
delivery by one of the means in clause (a), (b) or (c)
above, by facsimile, when sent, with confirmation and a copy sent by first
class mail, in each case addressed to the intended recipient at the “Address
for Notices” specified below its name on the signature pages hereof; or, as to
any party, at such other address as shall be designated by such party in a
notice to each other party hereto. Unless otherwise expressly provided in the
Loan Documents, the Borrower shall only be required to send notices, requests,
demands, statements, authorizations, approvals, directions, consents and other
communications to the Administrative Agent on behalf of all of the Lenders.

 

(b)           Notices
and other communications to the Lenders hereunder may be delivered or furnished
by electronic communications pursuant to procedures approved by the
Administrative Agent; provided that the foregoing shall not apply to
notices pursuant to Article II or notices pursuant to Section 13.03
unless otherwise agreed by the Administrative Agent and the applicable Lender. The
Administrative Agent or the Borrower may, in its discretion, agree (in writing)
to accept notices and other communications to it hereunder by electronic
communications pursuant to procedures approved by it; provided that
approval of such procedures by such party may be limited to particular notices
or communications.

 

(c)           Any
person shall have the right to specify, from time to time, as its address or
addresses for purposes of this Agreement, any other address or addresses upon
giving notice thereof to each other person then entitled to receive notices or
other instruments hereunder at 

 

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least five (5)
days before such change of address shall become effective for purposes of this
Agreement.

 

14.03       Expenses, Etc. Subject to the
limitation set forth in Section 14.26:

 

(a)           The
Borrower agrees to pay on demand or reimburse on demand to the applicable party
all reasonable out-of-pocket costs and expenses of the Administrative Agent and
the Arranger incurred prior to the Closing Date or otherwise in connection with
the closing of the Loans (including customary post-closing follow-through) and
in connection with the satisfaction of the requirements of Section 8.19
following the Closing Date, including, but not limited to, (i) the
reasonable fees and expenses for Morrison & Foerster LLP, counsel to the
Administrative Agent and Eurohypo; such legal fees to be paid on the Closing
Date; provided, however, that payment of
ten percent (10%) of such legal fees shall be deferred and payable promptly
upon the Borrower’s receipt of a closing binder and legal invoices prepared by
Morrison & Foerster LLP and payment of any such legal fees relating to
the satisfaction of the requirements of Section 8.19 following the
Closing Date shall be payable promptly following the Borrower’s receipt of any
legal invoice therefor (if delivered subsequent to the invoices covering the
10% retention referred to above), (ii) due diligence expenses, including title
insurance reports and policies, surveys, title and lien searches and appraisals
(including the Appraisal and the Environmental Reports) and (iii) fees and
expenses for the services of an insurance consultant, in connection with:  the negotiation, preparation, execution and
delivery of this Agreement and the other Loan Documents and initial funding of
the Loans hereunder and the creation and perfection of the Liens to be created
by the Security Documents.

 

(b)           The
Borrower also agrees to pay on demand or reimburse on demand to the applicable
party all reasonable out-of-pocket costs and expenses of the Administrative
Agent incurred after the Closing Date (including, but not limited to, the
reasonable fees and expenses of legal counsel, but excluding any travel
expenses incurred for travel by the personnel of the Administrative Agent (but
not any of its consultants when engaged in services for which the Borrower is
required to reimburse the Administrative Agent hereunder, with the
understanding that the Administrative Agent shall use good faith efforts to
attempt to engage qualified local consultants to provide such services) and
also excluding the Administrative Agent’s internal overhead) in connection with
(i) any release of a Project under Section 2.09, (ii) the negotiation or
preparation of any Modification or waiver of any of the terms of this Agreement
or any of the other Loan Documents (whether or not consummated), (iii) the
protection and maintenance of the perfection and priority of the Liens created
pursuant to the Security Documents, (iv) the negotiation with any tenant,
execution, delivery or recordation of any SNDA Agreement, (v) any review
or inspection of the work undertaken pursuant to Section 8.21
(including, without limitation, any seismic review undertaken to measure the
probable maximum loss with respect to the affected Projects following the
completion of such work); any monitoring or evaluation of environmental
conditions occurring at any Project following the occurrence of (A) any
event for which notice is required under Section 8.11(b), (B) any
violation by the Borrower of any of its covenants contained in Section
8.11(a) or (C) any act or occurrence for which the Borrower is
obligated to indemnify the Administrative Agent or any Lender pursuant to the
terms set forth in the Environmental Indemnity Agreement; any review,
inspection or evaluation undertaken by the Restoration Consultant; and the
preparation of any reports or studies in connection with any of the foregoing, (vi) any
review of documents or requests, consideration for approval or 

 

124

 

disapproval or
exercise of rights outside of the ordinary day-to-day administration of the
Loans and the Loan Documents, and (vii) any other act, condition, request,
delivery or other item, if any other applicable provision of this Agreement or
the other Loan Documents provides for the costs and expenses of the
Administrative Agent in connection therewith to be paid by the Borrower and are
not in violation of the limitations contained herein.

 

(c)           The
Borrower also agrees to pay on demand or reimburse on demand to the applicable
party all reasonable out-of-pocket costs and expenses of the Lenders and the
Administrative Agent (including, but not limited to, the reasonable fees and
expenses of legal counsel) in connection with (i) any Default and any
enforcement or collection proceedings resulting therefrom, including all manner
of participation in or other involvement with (A) bankruptcy, insolvency,
receivership, foreclosure, winding up or liquidation proceedings, (B) judicial
or regulatory proceedings and (C) workout, restructuring or other negotiations
or proceedings (whether or not the workout, restructuring or transaction
contemplated thereby is consummated) and (ii) the enforcement of this Section
14.03.

 

(d)           The
Borrower also agrees to pay on demand or reimburse on demand to the applicable
party all transfer, stamp, documentary or other similar taxes, assessments or
charges levied by any Governmental Authority in respect of this Agreement or
any of the other Loan Documents or any other document referred to herein or
therein and all costs, expenses, taxes, assessments and other charges incurred
in connection with any filing, registration, recording or perfection of any
security interest contemplated by any Security Document or any other document
referred to therein.

 

14.04       Indemnification. (a) The
Borrower hereby agrees to (i) protect and indemnify the Indemnified Parties
from, and hold each of them harmless, from and against all damages, losses,
claims, actions, liabilities (or actions, investigations or other proceedings
commenced or threatened in respect thereof) penalties, fines, costs and
expenses including reasonable attorneys’ fees and expenses (collectively and
severally, “Losses”) which may be imposed upon, asserted against or
incurred or paid by any of them resulting from the claims of any third party
relating to or arising out of (A) the Projects, (B) any of the Loan Documents
or the Transactions, (C) any ERISA Events, (D) any Environmental Losses and (E)
any act performed or permitted to be performed by any Indemnified Party under
any of the Loan Documents, except for Losses to the extent determined by a
court of competent jurisdiction to be caused by the gross negligence, bad faith
or willful misconduct of an Indemnified Party (but the effect of this exception
only eliminates the liability of the Borrower with respect to the Indemnified
Party (and if such Indemnified Party is not a Lender, the Lender on whose
behalf such Indemnified Party was acting) to the extent such Indemnified Party
has been adjudged to have so acted and not with respect to any other
Indemnified Party), and (ii) reimburse each Indemnified Party on demand for any
expenses (including the reasonable attorneys’ fees and disbursements) reasonably
incurred in connection with the investigation of, preparation for or defense of
any actual or threatened claim, action or proceeding arising therefrom
(excluding any action or proceeding where the Indemnified Party is not a party
to such action or proceeding out of which any such expenses arise unless such
Indemnified Party is required to participate or respond in connection with such
action or proceeding (e.g., by way of deposition, discovery requests,
testimony, subpoena or similar reason)). The Obligations shall not be
considered to have been paid in full unless all obligations of the Borrower
under this Section 14.04(a) shall 

 

125

 

have been fully performed
(except for contingent indemnification obligations for which no claim has
actually been made pursuant to this Agreement). This Section 14.04(a)
shall survive repayment in full of the Obligations and, as to any Project, the
release of that Project as collateral for the Loans in accordance with Section
2.09 of this Agreement, and in addition, shall survive the assignment, sale
or other transfer of the Administrative Agent’s or any Lender’s interest
hereunder.

 

(b)           Reserved.

 

14.05       Amendments, Etc. Except as
otherwise expressly provided in this Agreement or the other Loan Documents,
this Agreement and the other Loan Documents may be Modified only by an
instrument in writing signed by the Borrower and the Administrative Agent
acting with the consent of the Required Lenders; provided that:  (a) no Modification or waiver shall,
unless by an instrument signed by all of the Lenders or by the Administrative
Agent acting with the written consent of all of the Lenders:  (i) extend the date fixed for the
payment of principal of or interest on any Loan or any fee hereunder or under
the Loan Documents, including, without limitation, any extension of the
Maturity Date, (ii) reduce the amount of any such payment of principal,
(iii) reduce the rate at which interest is payable thereon or any fee is
payable hereunder, (iv) alter the rights or obligations of the Borrower to
prepay Loans, (v) alter the manner in which payments or prepayments of
principal, interest or other amounts hereunder shall be applied as between the
Lenders or Types of Loans, (vi) alter the terms of this Section 14.05,
(vii) Modify the definition of the term “Required Lenders” or Modify in
any other manner the number or percentage of the Lenders required to make any
determinations or waive any rights hereunder or to Modify any provision hereof,
(viii) alter the several nature of the Lenders’ obligations hereunder,
(ix) release the Borrower, any collateral or the Guarantor or otherwise
terminate any Lien under any Security Document providing for collateral
security (except that no such consent shall be required, and the Administrative
Agent is hereby authorized, to release any Lien covering the collateral under
the Security Documents, and to release (or terminate the liability of) the
Borrower under the Loan Documents, and to release the Guarantor under the Guarantor
Documents:  (A) as expressly
provided in the Loan Documents and (B) upon payment of the Obligations in full
in accordance with the terms of the Loan Documents), (x) agree to additional
obligations being secured by such collateral security, or (xi) alter the
relative priorities of the obligations entitled to the benefits of the Liens
created under the Security Documents; (b) any Modification of Article XIII,
or of any of the rights or duties of the Administrative Agent hereunder, shall
require the consent of the Administrative Agent and the Required Lenders; and
(c) no Modification shall increase the Commitment of any Lender without the
consent of such Lender. Notwithstanding anything to the contrary contained in
this Agreement or the other Loan Documents, the Administrative Agent is hereby
authorized by the Lenders to enter into Modifications to the Loan Documents
which are ministerial in nature, including the preparation and execution of
Uniform Commercial Code forms, Assignments and Assumptions and SNDA Agreements
and any amendment to the definition of “Change of Control” that would eliminate
the exclusions set forth in clause (i) or (ii) of such definition.

 

14.06       Successors and Assigns. This
Agreement shall be binding upon and inure to the benefit of the parties hereto
and their respective successors and permitted assigns.

 

126

 

14.07       Assignments and Participations.

 

(a)           Consent
Required for Assignments by the Borrower. Except as otherwise expressly permitted
by this Agreement, the Borrower may not assign any of its rights or obligations
hereunder or under the Loan Documents without the prior consent of all of the
Lenders and the Administrative Agent.

 

(b)           Assignments
by Lenders.

 

(i)            Subject to the conditions set forth
in subsection (b)(ii) below, any Lender may assign to one or more
assignees all or a portion of its rights and obligations under this Agreement
(including all or a portion of its Commitment and the Loans at the time owing
to it) with the prior written consent of:

 

(A)          the Borrower, whose consent shall not
be unreasonably withheld, conditioned or delayed; provided that (1) such
consent shall be deemed granted should the Borrower fail to respond within five
(5) Business Days upon receipt of a notice of such assignment and (2) should
the Borrower not give such consent, the Borrower shall provide to the
Administrative Agent and the Lender requesting such assignment its specific
reasons for such disapproval; provided that no consent of the Borrower
shall be required for an assignment to a Lender, an Affiliate of a Lender that
is engaged in making, purchasing, holding or investing in bank loans and
similar extensions of credit in the ordinary course of its business (and which
is not engaged in the business of acquiring direct or indirect ownership
interests in commercial real estate projects), an Eligible Assignee or, if a
Major Default exists, any other assignee; and

 

(B)           the Administrative Agent, whose
consent shall not be unreasonably withheld, conditioned or delayed; provided
that no consent of the Administrative Agent shall be required for an assignment
of all or a portion of any Commitment or Loans to an assignee that is a Lender
with a Commitment immediately prior to giving effect to such assignment or an
Affiliate of the assigning Lender if also an Eligible Assignee.

 

(ii)           Assignments shall be subject to the
following additional conditions:

 

(A)          except in the case of an assignment to
a Lender or an Affiliate of a Lender or an assignment of the entire remaining
amount of the assigning Lender’s Commitment or Loan, the amount of the
Commitment or Loan of the assigning Lender subject to each such assignment
(determined as of the date the Assignment and Assumption with respect to such
assignment is delivered to the Administrative Agent) shall not be less than
$5,000,000 unless each of the Borrower and the Administrative Agent otherwise
consent; provided that no such consent of the Borrower shall be required
if an Event of Default exists;

 

(B)           each partial assignment shall be made
as an assignment of a proportionate part of all the assigning Lender’s rights
and obligations under this Agreement;

 

127

 

(C)           the parties to each assignment shall
execute and deliver to the Administrative Agent an Assignment and Assumption,
together with a processing and recordation fee of $4,500; and

 

(D)          the assignee, if it shall not be a
Lender, shall deliver to the Administrative Agent an Administrative
Questionnaire.

 

(iii)          Subject to acceptance and recording
thereof pursuant to subsection (b)(iv) of this Section 14.07,
from and after the effective date specified in each Assignment and Assumption
the assignee thereunder shall be a party hereto and, to the extent of the interest
assigned by such Assignment and Assumption, have the rights and obligations of
a Lender under this Agreement, and the assigning Lender thereunder shall, to
the extent of the interest assigned by such Assignment and Assumption, be
released from its obligations under this Agreement (and, in the case of an
Assignment and Assumption covering all of the assigning Lender’s rights and
obligations under this Agreement, such Lender shall cease to be a party hereto
but shall continue to be entitled to the benefits of Sections 5.01,
5.05, 5.06 and 14.04); provided, however,
that in no event shall such assigning Lender be released with respect to any
defaults by or liabilities of such Lender under the Loan Documents which
accrued prior to such assignment. Any assignment or transfer by a Lender of
rights or obligations under this Agreement that does not comply with this Section
14.07 shall be treated for purposes of this Agreement as a sale by such
Lender of a participation in such rights and obligations in accordance with subsection
(c) of this Section 14.07.

 

(iv)          The Administrative Agent shall
maintain at its Principal Office a copy of each Assignment and Assumption
delivered to it and a register for the recordation of the names and addresses
of the Lenders, and the Commitment of, and principal amount of the Loan owing
to, each Lender pursuant to the terms hereof from time to time (the “Register”).
The entries in the Register shall be conclusive absent manifest error, and the
Borrower, the Administrative Agent, and the Lenders may treat each Person whose
name is recorded in the Register pursuant to the terms hereof as a Lender
hereunder for all purposes of this Agreement, notwithstanding notice to the
contrary. The Administrative Agent shall record all entries in the Register promptly
upon their being effected. The Register shall be available for inspection by
the Borrower and any Lender, at any reasonable time and from time to time upon
reasonable prior notice.

 

(v)           Upon its receipt of a duly completed
Assignment and Assumption executed by an assigning Lender and an assignee, the
assignee’s completed Administrative Questionnaire, the processing and
recordation fee referred to in subsection (b) of this Section 14.07
and any written consent to such assignment required by subsection (b) of
this Section 14.07, the Administrative Agent shall accept such
Assignment and Assumption and record the information contained therein in the
Register. No assignment shall be effective for purposes of this Agreement
unless it has been recorded in the Register as provided in this subsection.

 

128

 

(c)           Participations.

 

(i)            Any Lender may, without the consent
of the Borrower or the Administrative Agent, sell participations to one or more
banks or other financial institutions (including, without limitation, life
insurance companies), or an Affiliate of the Lender that is engaged in making,
purchasing, holding or investing in bank loans and similar extensions of credit
in the ordinary course of its business (and which is not engaged in the
business of acquiring direct or indirect ownership interests in commercial real
estate projects) (a “Participant”) in all or a portion of such Lender’s
rights and obligations under this Agreement and the other Loan Documents
(including all or a portion of its Commitment and the Loans owing to it); provided
that (A) such Lender’s obligations under this Agreement and the other Loan
Documents shall remain unchanged, (B) such Lender shall remain solely
responsible to the other parties hereto for the performance of such obligations
and (C) the Borrower, the Administrative Agent and the other Lenders shall
continue to deal solely and directly with such Lender in connection with such
Lender’s rights and obligations under this Agreement and the other Loan
Documents. Any agreement or instrument pursuant to which a Lender sells such a
participation shall provide that such Lender shall retain the sole right to
enforce this Agreement and the other Loan Documents and to approve any
Modification or waiver of any provision of this Agreement or any other Loan
Document; provided that such agreement or instrument may provide that
such Lender will not, without the consent of such Participant, agree to (1)
increase or extend the term of such Lender’s Commitment to the extent that it
affects such Participant, (2) extend the date fixed for the payment of
principal of or interest on the related Loan or Loans, (3) reduce the amount of
any such payment of principal or (4) reduce the rate at which interest is
payable thereon to a level below the rate at which the Participant is entitled
to receive such interest. Subject to subsection (c)(ii) of this Section
14.07, the Borrower agrees that each Participant shall be entitled to the
benefits of Sections 5.01, 5.05 and 5.06 to the same
extent, but subject to the same limitations, conditions and duties set forth in
such sections, as if it were a Lender and had acquired its interest by
assignment pursuant to subsection (b) of this Section 14.07.
To the extent permitted by law, each Participant also shall be entitled to the
benefits of Section 14.10 as though it were a Lender; provided
that such Participant agrees to be subject to Section 14.10 as though it
were a Lender.

 

(ii)           A Participant shall not be entitled
to receive any greater payment under Section 5.01 or 5.06
than the applicable Lender would have been entitled to receive with respect to
the participation sold to such Participant, unless the sale of the
participation to such Participant is made with the Borrower’s prior written
consent. A Participant that would be a Foreign Lender if it were a Lender shall
not be entitled to the benefits of Section 5.06 unless the Borrower
is notified of the participation sold to such Participant and such Participant
agrees in writing, for the benefit of the Borrower, to comply with Section 5.06
as though it were a Lender.

 

(d)           Pledges.
In addition to the assignments and participations permitted under the foregoing
provisions of this Section 14.07: 
(a) any Lender may (without notice to the Borrower, the Administrative
Agent or any other Lender and without payment of any fee) assign and pledge all
or any portion of its Loans and its Note to any Federal Reserve Bank as
collateral 

 

129

 

security pursuant
to Regulation A and any Operating Circular issued by such Federal Reserve Bank,
and such Loans and Note shall be transferable as provided therein; and (b) any
Lender may (upon notice to the Administrative Agent and without payment of any
fee) assign and pledge all or any portion of its Loans and its Note as
collateral for financing, and such Loans and Note shall be fully transferable
as provided therein. No such assignment shall release the assigning Lender from
its obligations hereunder.

 

(e)           Provision
of Information to Assignees and Participants. A Lender may furnish any
information concerning the Borrower, the Projects, the Loans, the Borrower’s
Member or any Borrower Party in the possession of such Lender from time to time
to assignees, pledgees and participants (including prospective assignees,
pledgees and participants), subject, however, to the party receiving such
information confirming in writing that such party and such information is
subject to the provisions of Section 14.24.

 

(f)            No
Assignments to the Borrower or Affiliates. Anything in this Section
14.07 or Section 14.27 to the contrary notwithstanding, each Lender
agrees for itself that it shall not assign or participate any interest in any
Loan held by it hereunder to the Borrower or any of its Affiliates without the
prior consent of each Lender.

 

14.08       Survival. The obligations of the
Borrower under Sections 3.02(e), 5.01, 5.05, 5.06, 14.03,
14.04 and 14.12, and the obligations of the Lenders under Sections 13.05,
shall survive the repayment of the Obligations, the termination of the
Commitments and, as to any Project, the release of that Project as collateral
for the Loans in accordance with Section 2.09 of this Agreement, and in
addition, in the case of any Lender that may assign any interest under the Loan
Documents in accordance with the terms thereof including any Lender’s interest
in its Commitment or Loan hereunder, shall survive the making of such
assignment, notwithstanding that such assigning Lender may cease to be a “Lender”
hereunder. In addition, each representation and warranty made herein or
pursuant hereto by the Borrower shall survive the making of such representation
and warranty, and no Lender shall be deemed to have waived, by reason of making
any Loan, any Default that may arise by reason of such representation or
warranty proving to have been false or misleading, notwithstanding that such
Lender or the Administrative Agent may have had notice or knowledge or reason
to believe that such representation or warranty was false or misleading at the
time such Loan was made.

 

14.09       Reserved.

 

14.10       Right of Set-off.

 

(a)           Upon
the occurrence and during the continuance of any Event of Default, each of the
Lenders is, subject (as between the Lenders) to the provisions of subsection
(c) of this Section 14.10, hereby authorized at any time and from
time to time, without notice to the Borrower (any such notice being expressly
waived by the Borrower) and to the fullest extent permitted by law, to set-off and
apply any and all deposits (general or special, time or demand, provisional or
final) at any time held, and other indebtedness at any time owing, by such
Lender in any of its offices, in Dollars or in any other currency, to or for
the credit or the account of the Borrower against any and all of the respective
obligations of the Borrower now or hereafter existing under the Loan Documents,
irrespective of whether or not such Lender or any other 

 

130

 

Lender shall have
made any demand hereunder and although such obligations may be contingent or
unmatured and such deposits or indebtedness may be unmatured. Each Lender and
the Administrative Agent acknowledges that it is aware of the implications of
the anti-deficiency laws and “one form of action” laws of various jurisdictions
in which the Collateral may be located. These laws, in general, restrict or
prohibit the exercise of remedies under loans secured by real property, and the
violation of those laws can result in severe consequences to a lender,
including a loss of the real property security. These laws include, for
example, Section 726 of the California Code of Civil Procedure. Therefore,
anything obtained in this Section 14.10 to the contrary notwithstanding,
no Lender shall exercise any right of set-off against any Borrower Party with
respect to the Obligations under the Loan Documents without the prior written
consent of all of the Lenders. In the event that any Lender exercises any right
of set-off without all of the Lenders’ prior consent, such Lender shall
protect, indemnify, defend and hold harmless the Administrative Agent and each
of the other Lenders from and against any liability, loss, cost, damage, or
injury that may result from such Person’s exercise of its right of set-off. This
Section 14.10 shall inure only for the benefit of the Lenders and the
Administrative Agent, and may not be relied upon by any third party, including
but not limited to the Borrower and its Subsidiaries.

 

(b)           Each
Lender shall promptly notify the Borrower and the Administrative Agent after
any such set-off and application, provided that the failure to give such
notice shall not affect the validity of such set-off and application. The
rights of the Lenders under this Section 14.10 are in addition to other
rights and remedies (including other rights of set-off) which the Lenders may
have.

 

(c)           If
an Event of Default has resulted in the Loans becoming due and payable prior to
the stated maturity thereof, each Lender agrees that it shall turn over to the
Administrative Agent any payment (whether voluntary or involuntary, through the
exercise of any right of setoff or otherwise) on account of the Loans held by
it in excess of its ratable portion of payments on account of the Loans
obtained by all the Lenders.

 

14.11       Remedies of Borrower. It is
expressly understood and agreed that, notwithstanding any Applicable Law or any
provision of this Agreement or the other Loan Documents to the contrary, the
liability of the Administrative Agent and each Lender (including their
respective successors and assigns) and any recourse of the Borrower against the
Administrative Agent and each Lender shall be limited solely and exclusively to
their respective interests in the Loans and/or Commitments or the Projects. Without
limiting the foregoing, in the event that a claim or adjudication is made that
the Administrative Agent, any of the Lenders, or their agents, acted
unreasonably or unreasonably delayed acting in any case where by Applicable Law
or under this Agreement or the other Loan Documents, the Administrative Agent,
any Lender or any such agent, as the case may be, has an obligation to act
reasonably or promptly, or otherwise violated this Agreement or the Loan
Documents, the Borrower agrees that none of the Administrative Agent, the
Lenders or their agents shall be liable for any incidental, indirect, special,
punitive, consequential or speculative damages or losses resulting from such
failure to act reasonably or promptly in accordance with this Agreement or the
other Loan Documents.

 

14.12       Brokers. The Borrower hereby
represents to the Administrative Agent and each Lender that it has not dealt
with any broker, underwriter, placement agent, or finder in 

 

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connection with the
Transactions, except for Secured Capital. The Borrower hereby agrees that it
shall pay any and all brokerage commissions or finders fees owing to Secured
Capital in connection with the Transactions and agrees and acknowledges that
payment of all such brokerage commissions or finders fees shall be the Borrower’s
sole responsibility. The Borrower hereby agrees to protect and indemnify and
hold the Administrative Agent and each Lender harmless from and against any and
all claims, liabilities, costs and expenses of any kind in any way relating to
or arising from a claim by Secured Capital and any Person that such Person
acted on behalf of the Borrower in connection with the Transactions.

 

14.13       Estoppel Certificates.

 

(a)           The
Borrower, within ten (10) days after the Administrative Agent’s request, shall
furnish to the Administrative Agent a written statement, duly acknowledged,
certifying to the Administrative Agent and each Lender and/or, subject to the
terms of Section 14.07, any proposed assignee of any portion of the
interests hereunder:  (i) the amount of
the Outstanding Principal Amount then owing under this Agreement and each of
the Notes, (ii) the terms of payment and Stated Maturity Date of the Loans (or
if earlier, the Maturity Date), (iii) the date to which interest has been paid
under each of the Notes, (iv) whether, to the Borrower’s knowledge, any offsets
or defenses exist against the repayment of the Loans and, if any are alleged to
exist, a reasonably detailed description thereof, (v) the extent to which the
Loan Documents have been Modified by the Borrower and (vi) such other
information as the Administrative Agent shall reasonably request.

 

(b)           The
Administrative Agent, within ten (10) days after the Borrower’s reasonable
request therefor, shall furnish to the Borrower a written statement, duly
acknowledged, certifying to any prospective permitted purchaser of an interest
in the Borrower or any prospective permitted lender to the Borrower or any
lender providing any Guaranteed Line of Credit, as to which the Borrower or any
Subsidiary thereof remains or will be obligated under a Guarantee: (i) the
amount of the Outstanding Principal Amount, (ii) the terms of payment and
Stated Maturity Date of the Loans (or if earlier, the Maturity Date), (iii) the
date to which interest has been paid under each of the Notes, (iv) whether, to
the actual knowledge of the Person signing on behalf of the Administrative
Agent, there are any Defaults on the part of the Borrower under this Agreement or
under any of the other Loan Documents, and, if any are alleged to exist, a
detailed description thereof and (v) the extent to which the Loan Documents
have been Modified.

 

14.14       Preferences. To the extent that
the Borrower makes a payment or payments to the Administrative Agent and/or any
Lender, which payment or proceeds or any part thereof are subsequently
invalidated, declared to be fraudulent or preferential, set aside or required
to be repaid to a trustee, receiver or any other party under any bankruptcy
law, state or federal law, common law or equitable cause, then, to the extent
of such payment or proceeds received, the obligations hereunder or part thereof
intended to be satisfied shall be revived and continue in full force and effect,
as if such payment or proceeds had not been received by the Administrative
Agent or a Lender, as the case may be.

 

14.15       Certain Waivers. The Borrower
hereby irrevocably and unconditionally waives (a) promptness and diligence,
(b) notice of any actions taken by the Administrative Agent 

 

132

 

or any Lender hereunder
or under any other Loan Document or any other agreement or instrument relating
thereto except to the extent (i) otherwise expressly provided herein or therein
or (ii) the Borrower is not, pursuant to Applicable Law, permitted to waive the
giving of such notice, (c) all other notices, demands and protests, and
all other formalities of every kind in connection with the enforcement of the
Borrower’s obligations hereunder and under the other Loan Documents, the
omission of or delay in which, but for the provisions of this Section 14.15,
might constitute grounds for relieving the Borrower of any of its obligations
hereunder or under the other Loan Documents, except to the extent otherwise
expressly provided herein or to the extent that the Borrower is not, pursuant
to Applicable Law, permitted to waive the giving of such notice, (d) any
requirement that the Administrative Agent or any Lender protect, secure,
perfect or insure any lien on any collateral for the Loans or exhaust any right
or take any action against the Borrower or any other Person or against any
collateral for the Loans, (e) any right or claim of right to cause a
marshalling of the Borrower’s assets and (f) until the Obligations are
paid in full and discharged, all rights of subrogation or contribution, whether
arising by contract or operation of law or otherwise by reason of payment by
the Borrower pursuant hereto or to the other Loan Documents.

 

14.16       Entire Agreement. This Agreement,
the Notes and the other Loan Documents constitute the entire agreement between
the Borrower, the Administrative Agent and the Lenders with respect to the
subject matter hereof and all understandings, oral representations and
agreements heretofore or simultaneously had among the parties are merged in,
and are contained in, such documents and instruments.

 

14.17       Severability. If any provision of
this Agreement shall be held by any court of competent jurisdiction to be
unlawful, void or unenforceable for any reason as to any Person or
circumstance, such provision or provisions shall be deemed severable from and
shall in no way affect the enforceability and validity of the remaining
provisions of this Agreement.

 

14.18       Captions. The table of contents
and captions and section headings appearing herein are included solely for
convenience of reference and are not intended to affect the interpretation of
any provision of this Agreement.

 

14.19       Counterparts. This Agreement may
be executed in any number of counterparts, all of which taken together shall
constitute one and the same instrument and any of the parties hereto may
execute this Agreement by signing any such counterpart.

 

14.20       GOVERNING LAW. THIS AGREEMENT, THE
NOTES AND THE OTHER LOAN DOCUMENTS ARE TO BE CONSTRUED IN ACCORDANCE WITH AND
GOVERNED BY THE INTERNAL LAWS OF THE STATE OF CALIFORNIA (AS PERMITTED BY
SECTION 1646.5 OF THE CALIFORNIA CIVIL CODE OR ANY SIMILAR SUCCESSOR
PROVISION), WITHOUT GIVING EFFECT TO ANY CHOICE OF LAW RULE THAT WOULD CAUSE
THE APPLICATION OF THE LAWS OF ANY JURISDICTION OTHER THAN THE INTERNAL LAWS OF
THE STATE OF CALIFORNIA TO GOVERN THE RIGHTS AND DUTIES OF THE PARTIES.

 

14.21       SUBMISSION TO JURISDICTION. THE
BORROWER, THE ADMINISTRATIVE AGENT AND EACH OF THE LENDERS HEREBY IRREVOCABLY
(I) 

 

133

 

AGREE THAT ANY SUIT,
ACTION OR OTHER LEGAL PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT,
THE NOTES, ANY SECURITY DOCUMENT, OR ANY OTHER LOAN DOCUMENT MAY BE BROUGHT IN
A COURT OF RECORD IN THE STATE OF CALIFORNIA, COUNTY OF LOS ANGELES OR IN THE
COURTS OF THE UNITED STATES OF AMERICA LOCATED IN SUCH STATE AND COUNTY, (II)
CONSENT TO THE JURISDICTION OF EACH SUCH COURT IN ANY SUCH SUIT, ACTION OR
PROCEEDING, (III) WAIVE ANY OBJECTION WHICH IT MAY HAVE TO THE LAYING OF VENUE
OF ANY SUCH SUIT, ACTION OR PROCEEDING IN ANY OF SUCH COURTS AND ANY CLAIM THAT
ANY SUCH SUIT, ACTION OR PROCEEDING HAS BEEN BROUGHT IN AN INCONVENIENT FORUM
AND (IV) AGREE AND CONSENT THAT ALL SERVICE OF PROCESS UPON THE BORROWER IN ANY
SUCH SUIT, ACTION OR PROCEEDING IN ANY SUCH STATE OR FEDERAL COURT MAY BE MADE
BY CERTIFIED OR REGISTERED MAIL, RETURN RECEIPT REQUESTED, DIRECTED TO THE
BORROWER, AT THE ADDRESS FOR NOTICES PURSUANT TO SECTION 14.02
HEREOF, AND SERVICE SO MADE SHALL BE COMPLETE FIVE (5) DAYS AFTER THE SAME
SHALL HAVE BEEN SO MAILED. NOTHING IN THIS SECTION 14.21 SHALL AFFECT
THE RIGHT OF THE ADMINISTRATIVE AGENT OR ANY LENDER TO SERVE LEGAL PROCESS IN
ANY OTHER MANNER PERMITTED BY LAW OR AFFECT THE RIGHT OF THE ADMINISTRATIVE
AGENT OR ANY LENDER TO BRING ANY SUIT, ACTION OR PROCEEDING AGAINST THE
BORROWER OR THE PROPERTY OF THE BORROWER IN THE COURTS OF ANY OTHER
JURISDICTIONS.

 

14.22       WAIVER OF JURY TRIAL; COUNTERCLAIM.
EACH OF THE BORROWER, THE ADMINISTRATIVE AGENT AND THE LENDERS HEREBY
IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY AND
ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATING
TO THIS AGREEMENT, THE NOTES, THE OTHER LOAN DOCUMENTS OR THE TRANSACTIONS. THE
BORROWER FURTHER HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVES, IN CONNECTION
WITH ANY LEGAL PROCEEDING BROUGHT BY OR ON BEHALF OF THE ADMINISTRATIVE AGENT
OR THE LENDERS WITH RESPECT TO THIS AGREEMENT, THE NOTES , THE OTHER LOAN
DOCUMENTS OR OTHERWISE IN RESPECT OF THE LOANS, ANY AND EVERY RIGHT THE
BORROWER MAY HAVE TO (A) INTERPOSE ANY COUNTERCLAIM THEREIN, OTHER THAN A
MANDATORY OR COMPULSORY COUNTERCLAIM, AND (B) HAVE THE SAME CONSOLIDATED
WITH ANY OTHER OR SEPARATE SUIT, ACTION OR PROCEEDING. NOTHING CONTAINED IN THE
IMMEDIATELY PRECEDING SENTENCE SHALL PREVENT OR PROHIBIT THE BORROWER FROM
INSTITUTING OR MAINTAINING A SEPARATE ACTION AGAINST THE ADMINISTRATIVE AGENT
OR THE LENDERS WITH RESPECT TO ANY ASSERTED CLAIM. THE ADMINISTRATIVE AGENT AND
THE LENDERS HEREBY WAIVE ANY DEFENSE OR OBJECTION TO THE BORROWER INSTITUTING
OR MAINTAINING SUCH A SEPARATE ACTION AGAINST THE ADMINISTRATIVE AGENT OR THE
LENDERS FOR ANY CLAIM WHICH THE BORROWER IS PRECLUDED FROM INTERPOSING AS A
COUNTERCLAIM IN OR CONSOLIDATING WITH ANY PROCEEDING COMMENCED BY THE
ADMINISTRATIVE AGENT OR THE LENDERS DESCRIBED IN THIS SECTION 14.22, BUT
THE DEFENSES AND OBJECTIONS SO WAIVED ARE LIMITED SOLELY TO DEFENSES AND OBJECTIONS

 

134

 

BASED ON THE ASSERTION OF
SUCH CLAIM IN A SEPARATE ACTION AND DO NOT INCLUDE ANY OTHER DEFENSES OR
OBJECTIONS, WHETHER PROCEDURAL OR SUBSTANTIVE.

 

14.23       Limitation of Liability.

 

(a)           Neither
the Borrower, nor any past, present or future member in or manager of Borrower,
nor any owner of any direct or indirect Equity Interests in the Borrower, shall
be personally liable for payments due hereunder or under any other Loan
Document or for the performance of any obligation of the Borrower hereunder or
thereunder, or breach of any representation or warranty made by the Borrower
hereunder or thereunder. Notwithstanding the foregoing provisions of this Section
14.23(a), the Borrower shall be personally (and on a full recourse basis)
liable for and shall protect, indemnify and defend the Administrative Agent and
the Lenders from and against, and shall hold the Administrative Agent and the
Lenders harmless of, from and against any deficiency, liability, loss, damage,
costs, and expenses (including legal fees and disbursements) suffered by the
Administrative Agent and/or the Lenders and caused by, or related to or as a
result of any of the following:  (i) the
commission of a criminal act by or on behalf of the Borrower, (ii) fraud,
intentional misrepresentation or intentionally inaccurate certification made at
any time in connection with the Loan Documents or the Loans by or on behalf of
the Borrower; (iii) misapplication or misappropriation of cash flow or other
revenue derived from or in respect of the Projects, including security
deposits, Insurance Proceeds, Condemnation Awards, or any rental, sales or
other income derived directly or indirectly from the Projects in violation of
the Loan Documents by or on behalf of the Borrower; and/or (iv) intentional
or bad faith commission of waste to or of the Projects or any portion thereof
by or on behalf of the Borrower. In addition, the Borrower (but not any past,
present or future member in or manager of Borrower, nor any owner of any direct
or indirect Equity Interests in the Borrower) shall be personally (and on a
full recourse basis) liable for and shall protect, indemnify and defend the
Administrative Agent and the Lenders from and against, and shall hold the Administrative
Agent and the Lenders harmless of, from and against any deficiency, liability,
loss, damage, costs, and expenses (including legal fees and disbursements)
suffered by the Administrative Agent and/or the Lenders and caused by, or
related to or as a result of any of the following: (A) voluntary
bankruptcy or collusion in an involuntary bankruptcy of the Borrower by or on
behalf of the Borrower, (B) any violation of Section 8.11(a) or
resulting from a failure to perform under the Environmental Indemnity, and/or
(C) interference with foreclosure following an Event of Default by or on
behalf of the Borrower.

 

(b)           Nothing
contained in this Section shall impair the validity of the indebtedness,
obligations or Liens arising under the Loan Documents. Notwithstanding anything
to the contrary contained herein, the Administrative Agent may pursue any power
of sale, bring any foreclosure action, any action for specific performance, or
any other appropriate action or proceedings against Borrower or any other Person
for the purpose of enabling the Administrative Agent and the Lenders to realize
upon the collateral for the Loans (including, without limitation, any Rents and
Net Proceeds to the extent provided for in the Loan Documents) or to obtain the
appointment of a receiver.

 

135

 

(c)           Notwithstanding
anything to the contrary contained herein, the Guarantor shall have personal
liability on the terms contained in the Guarantor Documents (to the extent
provided therein).

 

14.24       Confidentiality. Each of the
Administrative Agent and the Lenders agrees to maintain the confidentiality of
the Information (as defined below), except that Information that may be
disclosed (a) to it and its Subsidiaries’ and Affiliates’ directors,
officers, employees and agents, including accountants, legal counsel and other
advisors (it being understood that the Persons to whom such disclosure is made
will be informed of the confidential nature of such Information and instructed
to keep such Information confidential), (b) to the extent requested by any
regulatory authority, (c) to the extent required by Applicable Laws or by
any subpoena or similar legal process, (d) to any other party to this
Agreement, (e) in connection with the exercise of any remedies hereunder
or under any other Loan Document or any suit, action or proceeding relating to
this Agreement or any other Loan Document or the enforcement of rights
hereunder or thereunder, (f) subject to an agreement containing provisions
substantially the same as those of this Section 14.24, to (i) any
assignee or pledgee of or Participant in, or any prospective assignee or
pledgee of or Participant in, any of its rights or obligations under this
Agreement or (ii) any actual or prospective counterparty (or its advisors) to
any swap or derivative transaction relating to the Borrower and its
obligations, (g) with the consent of the Borrower or (h) to the
extent such Information (i) becomes publicly available other than as a
result of a breach of this Section 14.24 or of arrangements entered into
pursuant hereto or (ii) becomes available to the Administrative Agent or
any Lender on a non-confidential basis from a source other than the Borrower; provided,
however, the obligation to maintain the confidentiality of the
Information provided hereunder shall expire twelve (12) months after the date
upon which the Obligations hereunder are indefeasibly paid in full. For the
purposes of this Section 14.24, “Information” means all written
information received from or on behalf of the Borrower relating to the
Borrower, its Subsidiaries or Affiliates or their respective businesses, other
than any such information that is available to the Administrative Agent or any
Lender on a nonconfidential basis (and obtained from a Person not known by the
Administrative Agent or such Lender to have disclosed such information in
violation of a contractual confidentiality obligation of such Person owed to
the Borrower) prior to disclosure by the Borrower. The Administrative Agent and
each Lender, to the extent required to maintain the confidentiality of
Information as provided in this Section 14.24, shall be considered to
have complied with its obligation to do so if such Person has exercised the
same degree of care to maintain the confidentiality of such Information as a
commercial banker exercising reasonable and customary business practices would
accord to its own confidential information. Notwithstanding anything herein to
the contrary, the information subject to this Section 14.24 shall not
include, and the Administrative Agent and each Lender may disclose without
limitation of any kind, any information with respect to the “tax treatment” and
“tax structure” (in each case, within the meaning of Treasury Regulation
Section 1.6011-4) of the transactions contemplated hereby and all materials of
any kind (including opinions or other tax analyses) that are provided to the
Administrative Agent or such Lender relating to such tax treatment and tax
structure; provided that with respect to any document or similar item
that in either case contains information concerning the tax treatment or tax
structure of the transactions as well as other information, this sentence shall
only apply to such portions of the document or similar item that relate to the
tax treatment or tax structure of the Loans and transactions contemplated
hereby.

 

136

 

14.25       Usury Savings Clause. It is the
intention of the Borrower, the Administrative Agent and the Lenders to conform
strictly to the usury and similar laws relating to interest from time to time
in force, and all Loan Documents between the Borrower, the Administrative Agent
and the Lenders, whether now existing or hereafter arising and whether oral or
written, are hereby expressly limited so that in no contingency or event
whatsoever, whether by acceleration of maturity hereof or otherwise, shall the
amount paid or agreed to be paid in the aggregate to the Lenders as interest
(whether or not designated as interest, and including any amount otherwise
designated by or deemed to constitute interest by a court of competent
jurisdiction) hereunder or under the other Loan Documents or in any other
agreement given to secure the Loans, or in any other document evidencing, securing
or pertaining to the Loans, exceed the maximum amount (the “Maximum Rate”)
permissible under Applicable Laws. If under any circumstances whatsoever
fulfillment of any provision hereof, of this Agreement or of the other Loan
Documents, at the time performance of such provisions shall be due, shall
involve exceeding the Maximum Rate, then, ipso facto, the obligation to be
fulfilled shall be reduced to the Maximum Rate. For purposes of calculating the
actual amount of interest paid and/or payable hereunder in respect of laws
pertaining to usury or such other laws, all sums paid or agreed to be paid to
the Lenders for the use, forbearance or detention of the Loans evidenced
hereby, outstanding from time to time shall, to the extent permitted by Applicable
Law, be amortized, pro-rated, allocated and spread from the date of
disbursement of the proceeds of the Notes until payment in full of all of such
indebtedness, so that the actual rate of interest on account of such Loans is
uniform through the term hereof. If under any circumstances any Lender shall
ever receive an amount which would exceed the Maximum Rate, such amount shall
be deemed a payment in reduction of the principal amount of the applicable
Loans and shall be treated as a voluntary prepayment under this Agreement
(without prepayment penalty or premium) and shall be so applied in accordance
with the provisions of this Agreement, or if such excessive interest exceeds
the outstanding amount of the applicable Loans and any other Obligations, the
excess shall be deemed to have been a payment made by mistake and shall be
refunded to the Borrower.

 

14.26       Cooperation with Syndication. The
Borrower acknowledges that Arranger intends to syndicate a portion of the
Commitments to one or more Lenders (the “Syndication”) and in connection
therewith, the Borrower will take all actions as Arranger may reasonably
request to assist Arranger in its Syndication effort. Without limiting the
generality of the foregoing, the Borrower shall, at the request of Arranger (i)
facilitate the review of the Loan and the Projects by any prospective Lender;
(ii) assist Arranger and otherwise cooperate with Arranger in the preparation
of information offering materials (which assistance may include reviewing and
commenting on drafts of such information materials and drafting portions
thereof); (iii) deliver updated information on the Borrower and the Projects;
(iv) make representatives of the Borrower available to meet with prospective
Lenders at tours of the Projects and bank meetings; (v) facilitate direct
contact between the senior management and advisors of the Borrower and any
prospective Lender; and (vi) provide Arranger with all information reasonably
deemed necessary by it to complete the Syndication successfully. The Borrower agrees
to take such further action, in connection with documents and amendments to the
Loan Documents, as may reasonably be required to effect such Syndication. The
Borrower shall not be responsible for any costs or expenses incurred by the
Administrative Agent, the Arranger, any Lender or any other Person in
connection with such Syndication, other than Arranger’s attorneys’ fees
incurred through the closing of the Loan.

 

137

 

14.27       Reserved.

 

14.28       Controlled Account. The Borrower
hereby agrees with the Administrative Agent, as to any Controlled Account into
which this Agreement requires the Borrower to deposit funds, as follows:

 

(a)           Establishment and Maintenance of
the Controlled Account.

 

(i)            Each Controlled Account (A) shall be
a separate and identifiable account from all other funds held by the Depository
Bank and (B) shall contain only funds required to be deposited pursuant to this
Agreement or any other Loan Document. Any interest which may accrue on the
amounts on deposit in a Controlled Account shall be added to and shall become
part of the balance of such Controlled Account. The Borrower, the
Administrative Agent and the applicable Depository Bank shall enter into an
agreement (the “Controlled Account Agreement”), substantially in the
form of Exhibit O attached hereto (with such changes thereto as may be
required by the Depository Bank and satisfactory to the Administrative Agent)
which shall govern the Controlled Account and the rights, duties and obligations
of each party to the Controlled Account Agreement.

 

(ii)           The Controlled Account Agreement
shall provide that (A) the Controlled Account shall be established in the name
of the Administrative Agent, as agent for the Lenders, (B) the Controlled Account
shall be subject to the sole dominion, control and discretion of the
Administrative Agent, and (C) neither the Borrower nor any other Person,
including, without limitation, any Person claiming on behalf of or through the Borrower,
shall have any right or authority, whether express or implied, to make use of
or withdraw, or cause the use or withdrawal of, any proceeds from the
Controlled Account or any of the other proceeds deposited in the Controlled
Account, except as expressly provided in this Agreement or in the Controlled
Account Agreement.

 

(b)           Deposits to and Disbursements from
the Controlled Account. All deposits to and disbursements of all or any
portion of the deposits to the Controlled Account shall be in accordance with
this Agreement and the Controlled Account Agreement. The Borrower shall pay any
and all fees charged by Depository Bank in connection with the maintenance of
the Controlled Account required to be established by or for it hereunder, and
the performance of the Depository Bank’s duties.

 

(c)           Security Interest.

 

(i)            The Borrower hereby grants a
perfected first priority security interest in favor of the Administrative Agent
for the ratable benefit of the Lenders in each Controlled Account established
by or for it hereunder and all financial assets and other property and sums at
any time held, deposited or invested therein, and all security entitlements and
investment property relating thereto, together with any interest or other
earnings thereon, and all proceeds thereof, whether accounts, general
intangibles, chattel paper, deposit accounts, instruments, documents or
securities (collectively, “Controlled Account Collateral”), together
with all rights of a secured party with respect thereto (even 

 

138

 

if no further
documentation is requested by the Administrative Agent or the Lenders or
executed by the Borrower).

 

(ii)           The Borrower covenants and agrees:

 

(A)          to do all acts that may be reasonably
necessary to maintain, preserve and protect the Controlled Account Collateral;

 

(B)           to pay promptly when due all material
taxes, assessments, charges, encumbrances and liens now or hereafter imposed
upon or affecting any Controlled Account Collateral;

 

(C)           to appear in and defend any action or
proceeding which may materially and adversely affect the Borrower’s title to or
the Administrative Agent’s interest in the Controlled Account Collateral;

 

(D)          following the creation of each
Controlled Account established by or for the Borrower and the initial funding
thereof, other than to the Administrative Agent pursuant to this Agreement or a
Controlled Account Agreement, not to transfer, assign, sell, surrender,
encumber, mortgage, hypothecate, or otherwise dispose of any of the Controlled
Account Collateral or rights or interests therein, and to keep the Controlled
Account Collateral free of all levies and security interests or other liens or
charges except the security interest in favor of the Administrative Agent
granted hereunder;

 

(E)           to account fully for and promptly
deliver to the Administrative Agent, in the form received, all documents,
chattel paper, instruments and agreements constituting the Controlled Account
Collateral hereunder, endorsed to the Administrative Agent or in blank, as
requested by the Administrative Agent, and accompanied by such powers as
appropriate and until so delivered all such documents, instruments, agreements
and proceeds shall be held by the Borrower in trust for the Administrative
Agent, separate from all other property of the Borrower; and

 

(F)           from time to time upon request by the
Administrative Agent, to furnish such further assurances of the Borrower’s
title with respect to the Controlled Account Collateral, execute such written
agreements, or do such other acts, all as may be reasonably necessary to
effectuate the purposes of this agreement or as may be required by law, or in
order to perfect or continue the first-priority lien and security interest of
the Administrative Agent in the Controlled Account Collateral.

 

(iii)          All interest earned on the Controlled
Account shall be retained in such Controlled Account subject to the Borrower’s
withdrawal rights set forth herein. The Borrower shall treat all interest
earned on the Controlled Account as its income for federal income tax purposes.

 

(iv)          Upon the occurrence and during the
continuation of an Event of Default, the Administrative Agent may (and, upon
the instruction of the Required Lenders, shall):

 

139

 

(A)          without any advertisement or notice to
or authorization from the Borrower (all of which advertisements, notices and/or
authorizations are hereby expressly waived), withdraw, sell or otherwise
liquidate the funds deposited into any Controlled Account, and apply the proceeds
thereof to the unpaid Obligations in such order as the Administrative Agent may
elect in its sole discretion, without liability for any loss, and the Borrower
hereby consents to any such withdrawal and application as a commercially
reasonable disposition of such funds and agrees that such withdrawal shall not
result in satisfaction of the Obligations except to the extent the proceeds are
applied to such sums;

 

(B)           without any advertisement or notice
to or authorization from the Borrower (all of which advertisements, notices
and/or authorizations are hereby expressly waived), notify any account debtor
on any Controlled Account Collateral pledged by the Borrower pursuant hereto to
make payment directly to the Administrative Agent;

 

(C)           foreclose upon all or any portion of
the Controlled Account Collateral pledged by the Borrower or otherwise enforce
the Administrative Agent’s security interest in any manner permitted by law or
provided for in this Agreement;

 

(D)          sell or otherwise dispose of all or
any portion of the Controlled Account Collateral pledged by the Borrower at one
or more public or private sales, whether or not such Controlled Account
Collateral is present at the place of sale, for cash or credit or future
delivery, on such terms and in such manner as the Administrative Agent may
determine;

 

(E)           recover from the Borrower all costs
and expenses, including, without limitation, reasonable attorneys’ fees,
incurred or paid by the Administrative Agent in exercising any right, power or
remedy provided by this subsection (iv); and

 

(F)           exercise any other right or remedy
available to the Administrative Agent or the Lenders under Applicable Law or in
equity.

 

(v)           Reserved.

 

14.29       Financing
Statements. The Borrower authorizes the Administrative Agent to file such
financing statements (and any continuation statements with respect thereto) as
the Administrative Agent may deem necessary in order to perfect or maintain the
perfection of any security interest granted or to be granted to the
Administrative Agent pursuant to any of the Loan Documents, in such
jurisdictions as the Administrative Agent may elect.

 

14.30       Severance
of Loan. Eurohypo
shall have the right, at any time, but at no additional cost to the Borrower,
to direct the Administrative Agent, with respect to all or any portion of the
Loan, to (a) cause the Notes, the Deeds of Trust and the other Security
Documents to be severed and/or split into two or more separate notes, deeds of
trust and other security agreements, so as to evidence and secure one or more
senior and subordinate mortgage loans, (b) create one more senior and
subordinate notes (i.e., an A/B or A/B/C structure) secured by the 

 

140

 

Deeds
of Trust and the other Security Documents, (c) create multiple components of
the Notes (and allocate or reallocate the Outstanding Principal Amount of the
Loan among such components or among the components of the Notes delivered upon
the Closing Date) or (d) otherwise sever the Loan into two or more loans secured
by the Deeds of Trust and the other Security Documents; in each such case, in
whatever proportions and priorities as Eurohypo may so direct in its discretion
to the Administrative Agent; provided, however, that in each such
instance (i) the Outstanding Principal Amount of all the Notes evidencing the
Loan (or (in any case involving the  splitting, modification, componentization or other severance of any
previously-split, componentized or severed Note) components of such Notes)
immediately after the effective date of such splitting, modification,
componentization or other severance, equals the Outstanding Principal Amount of
the Loan (or (in any case involving the splitting, modification, componentization or other severance of any
previously-split, componentized or severed Note) the applicable component
thereof) immediately prior to such splitting, modification, componentization or
other severance, (ii) the weighted average of the interest rates for all such
Notes (or, if applicable, components of such Notes) immediately after the
effective date of such splitting, modification, componentization or other
severance equals the interest rate of the original Note (or the applicable
component thereof) immediately prior to such splitting, modification, componentization
or other severance thereof, (iii) there shall be no modification of the
Maturity Date, the Types of Loans available to be selected by the Borrower
(provided that the Applicable Margins on the relevant Types may be modified,
and may differ for each of such split, modified, componentized or otherwise
severed Notes or components, so long as the restrictions set forth in clause
(ii) above are not violated), the due dates for mandatory principal payments,
prepayment terms, Events of Default (other than cross defaulting of any severed
Notes or Security Documents) or any other modifications which would result, in
the aggregate, in an increase in the economic obligations of the Borrower with
respect to all Loans outstanding hereunder following such splitting, modification, componentization or
other severance as compared to the obligations of the Borrower immediately
prior thereto (other than changes in the interest rate or Applicable
Margins which do not violate the restrictions in clause (ii) above), including,
without limitation, any recourse provisions, and (iv) except for modifications
which do not violate the restrictions set forth in clauses (ii) and (iii) above,
such modification shall not result, in the aggregate, in an increase in any
liability or obligation, or any change in any substantive rights, of the
Borrower, any Borrower Party or any Named Principal under the Loan Documents
following such splitting, modification,
componentization or other severance as compared to the respective liabilities, obligations
or rights of such parties immediately prior thereto. If requested by the
Administrative Agent in writing, subject to the provisions of Section
2.04(b), the Borrower shall execute within ten (10) Business Days after
such request, a severance agreement, amendments to or amendments and
restatements of any one or more Loan Documents, and such documentation as the
Administrative Agent may reasonably request to evidence and/or effectuate any
such splitting, modification, componentization or other severance, all in form
and substance reasonably satisfactory to Eurohypo, the Administrative Agent and
the Borrower.

 

141

 

14.31       Additional Permitted Public REIT Provisions. In connection with the Permitted Reorganization
and following a Permitted Public REIT Transfer, the following provisions shall
apply:

 

(a)           The
Borrower shall have the right from time to time upon notice to, but without the
consent of, the Administrative Agent to change the Borrower’s Manager to the
Permitted Public REIT or any other Permitted Public REIT Subsidiary determined
by the Permitted Public REIT. Upon the occurrence of such change, the Borrower
shall notify the Administrative Agent of the name and principal place of
business or chief executive office of the new Borrower’s Manager within ten
(10) Business Days after any change in the same.

 

(b)           Notwithstanding
the provisions of Section 1.02(b), the Borrower shall have the right
from time to time upon notice to, but without the consent of, the
Administrative Agent, to change its fiscal year, including the last days of its
fiscal year and fiscal quarters, to correspond with those of the Permitted
Public REIT. The Borrower shall provide written notice thereof to the
Administrative Agent within ten (10) Business Days after the occurrence of such
change.

 

(c)           Nothing
in Sections 8.03, 9.01 and 9.07 as to parties other than
the Borrower shall prohibit or restrict the actions taken pursuant to the
Permitted Reorganization, or any other actions expressly permitted by this Section
14.31 (or any agreement to take any such actions). As used herein, the term
“Permitted Reorganization” shall mean a simultaneous transaction
consisting of one or more of the following elements, provided that, upon the
consummation of such transaction, the Borrower shall be in compliance with all
covenants set forth in this Agreement (after giving effect to the express terms
thereof which by their terms may be applicable or inapplicable upon the
occurrence of the Permitted Public REIT Transfer or Transfer of the Projects to
a Qualified Successor Entity), no Event of Default shall result therefrom, and
the Permitted Public REIT shall directly or indirectly own fifty-one percent
(51%) or more of the ownership interests in the Borrower and shall directly or
indirectly control the Borrower:

 

(i)            The
formation of a limited liability company that is a wholly owned Subsidiary of
the Operating Partnership of the Permitted Public REIT (the “OP Merger Sub”)
and the merger of the Borrower’s Member (or its partners) into one or more OP
Merger Subs with either the Borrower’s Member (or its partners) or the OP
Merger Sub(s) as the surviving entity or entities;

 

(ii)           The
contribution to the Operating Partnership of the Permitted Public REIT of all
of the Equity Interests in the Borrower’s Member (or its partners) that are not
redeemed;

 

(iii)          At the option of the
Permitted Public REIT, the contribution to the Operating Partnership of the
Permitted Public REIT or another Permitted Public REIT Subsidiary as part of a
Permitted Public REIT Transfer of all of the Equity Interests in the Borrower,
the withdrawal of the Borrower’s Member as the sole member of the Borrower and
the dissolution of the Borrower’s Member, its partners and/or the OP Merger Sub;

 

142

 

(iv)          The formation of a limited liability
company that is a wholly owned Subsidiary of the Permitted Public REIT (“REIT
Merger Sub 1”) and the merger of the Borrower’s Manager into REIT Merger
Sub 1 with either the Borrower’s Manager or REIT Merger Sub 1 as the surviving
entity;

 

(v)           The formation of a limited liability
company that is a wholly owned Subsidiary of the Permitted Public REIT (“REIT
Merger Sub 2”) and the merger of the Property Manager into REIT Merger Sub
2 with either the Property Manager or REIT Merger Sub 2 as the surviving
entity;

 

(vi)          The contribution to the Operating
Partnership of the Permitted Public REIT of all or substantially all of the
assets of the Borrower’s Manager and all or substantially all of the assets of
the Property Manager and, at the option of the Permitted Public REIT, the
subsequent dissolution of the Borrower’s Manager and/or the Property Manager;

 

(vii)         The withdrawal of the Borrower’s
Manager as the manager of the Borrower and any applicable Subsidiaries of the
Borrower or the Borrower’s Member and the appointment of the Permitted Public
REIT or any wholly-owned Permitted Public REIT Subsidiary determined by the
Permitted Public REIT as the new manager of such Person;

 

(viii)        The termination of the Property
Management Agreement for each Project and the appointment, pursuant to Section
14.31(d), of a new Property Manager for the Projects consisting of the
Permitted Public REIT or any wholly-owned Permitted Public REIT Subsidiary
determined by the Permitted Public REIT; and

 

(ix)           Modifications to the Organizational
Documents of the Borrower Parties that do not violate Section 9.01(b);
and

 

(x)            The formation, dissolution or
termination of such other entities, the contribution or transfer of such other
assets, the execution of such contracts and agreements, and such other
deliveries and actions as the Borrower Parties shall determine to be necessary
or appropriate to accomplish the foregoing so long as, upon the consummation of
such transaction, the Borrower shall be in compliance with all covenants set
forth in this Agreement (after giving effect to the express terms thereof which
by their terms may be applicable or inapplicable upon the occurrence of the
Permitted Public REIT Transfer or Transfer of the Projects to a Qualified Successor Entity),
no Event of Default shall result therefrom, and the Permitted Public REIT shall
directly or indirectly own fifty-one percent (51%) or more of the ownership
interests in the Borrower and shall directly or indirectly control the
Borrower.

 

(d)           In connection with the Permitted Reorganization or at any
time thereafter, the Borrower shall have the right to terminate (or assign to
the new property manager) the existing Property Management Agreement for each
Project and to replace, pursuant to this Section 14.31(d), the Property
Manager by the Permitted Public REIT or by a management company controlled
directly or indirectly by the Permitted Public REIT (including, without
limitation, the Operating Partnership of the Permitted Public REIT or any other
wholly-owned Permitted Public REIT Subsidiary). If any Project is managed by
the Permitted Public REIT or a Permitted Public REIT Subsidiary, then the
Borrower may dispense with the requirement of 

 

143

 

entering into a property management agreement or may enter into a new
property management agreement for one or more of the Projects on such terms as
it deems satisfactory (which may include, without limitation, a separate cost
sharing agreement delegating responsibilities for property management to the
Permitted Public REIT or a Permitted Public REIT Subsidiary); provided
that, if a property management agreement is entered into, such agreement shall
in all events be subordinate to the Deeds of Trust and the other Loan
Documents, and, within thirty (30) days after entering into a new property
management agreement, the Borrower and the new property manager will execute
and deliver to the Administrative Agent a Property Manager’s Consent, with such
changes thereto as may be reasonably necessary for the Permitted Public REIT or
its Affiliates to comply with tax or other Applicable Laws pertaining to their
status.

 

(e)           The Borrower’s Manager’s Limited
Indemnity and Guaranty shall be replaced by replacement guaranties delivered by
an entity reasonably satisfactory to the Administrative Agent with a net worth
at least equivalent to that of Borrower’s Manager as of the date of this
Agreement and which controls the Borrower, which may, at Borrower’s option, be
the Permitted Public REIT’s Operating Partnership or another guarantor
reasonably satisfactory to the Administrative Agent. Without limiting the
discretion of the Administrative Agent in connection with the review of any
such replacement guarantor, it is understood and agreed that (i) such
replacement guarantor shall deliver to the Administrative Agent such certified
organizational documents and papers, authorizations, consents, resolutions,
incumbency certificates and legal opinions as the Administrative Agent may
reasonably require in its discretion in order to confirm the due formation,
valid existence and good standing of such replacement guarantor, due execution,
authorization, validity and enforceability of such replacement guaranties, the
enforceability with respect to such replacement guarantor of the obligations
incurred thereby and the adequacy of the consideration received by such
replacement guarantor for the incurrence of such obligations and such other
matters relating to such replacement guarantor as the Administrative Agent may
reasonably request; (ii) the Administrative Agent shall have received such
financial statements and obtained such background checks, searches of
governmental records and similar diligence items with respect to such
replacement guarantor as shall be in form and substance reasonably satisfactory
to the Administrative Agent; and (iii) the Borrower or replacement guarantor
shall pay upon demand all costs and expenses (including, without limitation,
reasonable attorneys’ fees and expenses) incurred by the Administrative Agent
in connection with the review, preparation, negotiation or execution of any of
the foregoing items. Upon the Administrative Agent’s approval of such
replacement guarantor and satisfaction of the conditions set forth above, such
replacement guarantor shall be deemed a “Guarantor” hereunder in substitution
for the named Guarantor and the replacement guaranties delivered by such
replacement guarantor shall be deemed the “Guarantor Documents” hereunder.

 

(f)            The Borrower shall ̧ within ten (10)
Business Days, following the consummation of the Permitted Reorganization,
deliver written notice thereof to the Administrative Agent which shall identify
in reasonable detail any changes in the identity of the Borrower Parties or the
Property Manager, any changes in the Property Management Agreement, any changes
in the Organizational Documents of the Borrower Parties, or any change in the
fiscal year of the Borrower which were consummated in connection therewith.

 

[Signature Pages Follow]

 

144

 

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

 

	
   

  	
  BORROWER

  
	
   

  	
   

  
	
   

  	
  DOUGLAS EMMETT
  1993, LLC,

  
	
   

  	
  a Delaware
  limited liability company

  
	
   

  	
   

  
	
   

  	
  By:

  	
  DOUGLAS EMMETT
  REALTY ADVISORS,

  
	
   

  	
   

  	
  a California
  corporation, its Manager

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  /s/ William
  Kamer

  	
   

  
	
   

  	
   

  	
  William Kamer

  
	
   

  	
   

  	
  Senior Vice
  President

  
	
   

  	
   

  
	
   

  	
  Address for
  Notices:

  
	
   

  	
   

  
	
   

  	
  Douglas Emmett
  1993, LLC

  
	
   

  	
  c/o Douglas
  Emmett Realty Advisors

  
	
   

  	
  808 Wilshire
  Boulevard, Suite 200

  
	
   

  	
  Santa Monica,
  California 90401

  
	
   

  	
  Attention:  Jordan L. Kaplan

  
	
   

  	
  Telecopier
  No.:  (310) 255-7702

  
	
   

  	
   

  
	
   

  	
  With copies to:

  
	
   

  	
   

  
	
   

  	
  Douglas Emmett
  1993, LLC

  
	
   

  	
  c/o Douglas
  Emmett Realty Advisors

  
	
   

  	
  808 Wilshire
  Boulevard, Suite 200

  
	
   

  	
  Santa Monica,
  California 90401

  
	
   

  	
  Attention:
  William Kamer

  
	
   

  	
  Telecopier No.:
  (310) 255-7702

  

 

 

	
   

  	
  LENDERS

  
	
   

  	
   

  
	
   

  	
  EUROHYPO AG, NEW YORK BRANCH

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Alfred Koch

  	
   

  
	
   

  	
   

  	
  Name:  Alfred
  Koch

  
	
   

  	
   

  	
  Title:  
  Managing Director

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Stephen Cox

  	
   

  
	
   

  	
   

  	
  Name:  Stephen
  Cox

  
	
   

  	
   

  	
  Title:   Vice
  President

  
	
   

  	
   

  
	
   

  	
  Address for Notices to Eurohypo AG,

  
	
   

  	
  New York Branch:

  
	
   

  	
   

  
	
   

  	
  Eurohypo AG, New York Branch

  
	
   

  	
  1114 Avenue of the Americas, 29th Floor

  
	
   

  	
  New York, New York 10036

  
	
   

  	
  Attention: Legal Director

  
	
   

  	
  Telecopier No.: (866) 267-7680

  
	
   

  	
   

  
	
   

  	
  With copies to:

  
	
   

  	
   

  
	
   

  	
  Eurohypo AG, New York Branch

  
	
   

  	
  1114 Avenue of the Americas, 29th Floor

  
	
   

  	
  New York, New York 10036

  
	
   

  	
  Attention: Head of Portfolio Operations

  
	
   

  	
  Telecopier No.: (866) 267-7680

  
	
   

  	
   

  
	
   

  	
  - and -

  
	
   

  	
   

  
	
   

  	
  Morrison
  & Foerster LLP

  
	
   

  	
  555 West Fifth Street, Suite 3500

  
	
   

  	
  Los Angeles, California 90013

  
	
   

  	
  Attention: Thomas R. Fileti, Esq.

  
	
   

  	
  Telecopier No.: (213) 892-5454

  

 

 

	
   

  	
  BARCLAYS CAPITAL
  REAL ESTATE INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ LoriAnn Rung

  	
   

  
	
   

  	
   

  	
  Name: LoriAnn
  Rung

  
	
   

  	
   

  	
  Title:  Authorized Signatory

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Address for
  Notices:

  
	
   

  	
   

  
	
   

  	
  Barclays Capital Real Estate Inc.

  
	
   

  	
  200 Park Avenue

  
	
   

  	
  New York, NY 10166

  
	
   

  	
  Attention: 
  Larry Miller, Director

  
	
   

  	
  Telecopier No.: (212) 412-1613

  
	
   

  	
   

  
	
   

  	
  With copies to:

  
	
   

  	
   

  
	
   

  	
  Barclays Capital Real Estate Inc.

  
	
   

  	
  200 Park Avenue

  
	
   

  	
  New York, NY 10166

  
	
   

  	
  Attention: 
  Lori Rung

  
	
   

  	
  Telecopier No.: (212) 412-1664

  

 

 

	
   

  	
  ADMINISTRATIVE AGENT

  
	
   

  	
   

  
	
   

  	
  EUROHYPO AG, NEW YORK BRANCH,

  
	
   

  	
  as Administrative Agent

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Alfred Koch

  	
   

  
	
   

  	
   

  	
  Name: Alfred Koch

  
	
   

  	
   

  	
  Title: 
  Managing Director

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Stephen Cox

  	
   

  
	
   

  	
   

  	
  Name:  Stephen
  Cox

  
	
   

  	
   

  	
  Title:   Vice
  President

  
	
   

  	
   

  
	
   

  	
  Address for Notices to

  
	
   

  	
  Eurohypo as Administrative Agent:

  
	
   

  	
   

  
	
   

  	
  Eurohypo AG, New York Branch

  
	
   

  	
  1114 Avenue of the Americas, 29th Floor

  
	
   

  	
  New York, New York 10036

  
	
   

  	
  Attention: Legal Director

  
	
   

  	
  Telecopier No.: (866) 267-7680

  
	
   

  	
   

  
	
   

  	
  With copies to:

  
	
   

  	
   

  
	
   

  	
  Eurohypo
  AG, New York Branch

  
	
   

  	
  1114 Avenue of the Americas, 29th Floor

  
	
   

  	
  New York, New York 10036

  
	
   

  	
  Attention: Head of Portfolio Operations

  
	
   

  	
  Telecopier No.: (866) 267-7680

  
	
   

  	
   

  
	
   

  	
  - and -

  
	
   

  	
   

  
	
   

  	
  Morrison
  & Foerster LLP

  
	
   

  	
  555 West Fifth Street, Suite 3500

  
	
   

  	
  Los Angeles, California 90013

  
	
   

  	
  Attention: Thomas R. Fileti, Esq.

  
	
   

  	
  Telecopier No.: (213) 892-5454

  

 

 

SCHEDULE 1A

 

LIST OF PROJECTS

 

1.             Studio
Plaza, 3400 Riverside Dr., Burbank, California

 

2.             Gateway Building, 12424 Wilshire Blvd., Los Angeles,
California

 

3.             Bundy/Olympic, 11900 Olympic Blvd., Los Angeles,
California

 

4.             Brentwood Exec. Plaza, 11726 San Vicente Blvd., Los
Angeles, California

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00110-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00110-of-00352.parquet"}]]