Document:

Exhibit 10.47

 

 

 

LOAN AGREEMENT

 

dated as of

 

August 25, 2005

 

among

 

DOUGLAS EMMETT 2000, LLC,

A DELAWARE LIMITED LIABILITY COMPANY

 

 

the LENDERS Party Hereto,

 

and

 

EUROHYPO AG, NEW YORK BRANCH,

as Administrative Agent

 

 

$425,000,000

 

 

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

  
	
  13.07

  	
  Failure to Act

  	
  120

  

 

iv

 

	
  13.08

  	
  Resignation of
  Administrative Agent

  	
  120

  
	
  13.09

  	
  Consents under
  Loan Documents

  	
  121

  
	
  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

  
	
  14.25

  	
  Usury Savings
  Clause

  	
  137

  

 

v

 

	
  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 2000, 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 eight (8) improved office buildings, containing
approximately 2,484,102 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 $425,000,000 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 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 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 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 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
Realty Fund 2000, a California Limited 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 Realty Fund 2000, the Borrower’s Member as of the date hereof,
if it 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, 2010.

 

“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.

 

“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

 

16

 

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 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

 

17

 

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.

 

“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,

 

18

 

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.

 

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

 

19

 

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

 

20

 

“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 $242,165,242.16, 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 $158,618,233.62, as the same may be Modified from
time to time.  Each Note B shall
constitute a “Note” for all purposes under this Agreement and the other Loan
Documents.

 

21

 

“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 $24,216,524.22, 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
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

 

22

 

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 limited), the
certificate of limited partnership or other certificate pertaining to such
partnership

 

23

 

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 imposed by any Governmental
Authority not yet due or delinquent, (c) rights of existing and

 

24

 

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 their 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:

 

(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:

 

	
  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

 

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 $106,250,000.

 

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.

 

(b)           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.

 

(c)           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 $212,500,000.

 

(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

  	
   

  	
  3 Business Days

  
	
  as, borrowings
  in, or changes in

  	
   

  	
  (prior to first
  day of next

  
	
  duration of
  Interest Periods for,

  	
   

  	
  applicable
  Interest Period

  
	
  Eurodollar Loans

  	
   

  	
  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,
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 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, the Borrower’s Member 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, 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 Parties 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.  All such
financial statements are complete and correct in all material respects and
fairly present the financial condition of Borrower’s Member, 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 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 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 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 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 20-2983832 under the Code and that the Borrower’s
Member’s tax identification number is 91-2105538 under the Code.

 

7.37         Borrower’s
Member.  The Borrower’s Member is
permitted under the limited partnership agreement of the Borrower’s Member, as
amended, or pursuant to consents obtained from the limited partners of the
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 agreement of the Borrower’s Member, as amended) that is not
permitted under the limited partnership agreement of the Borrower’s Member, as
amended, or pursuant to consents obtained from the limited partners of the
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 since inception
(which may be consolidated provided that such report

 

65

 

contains notes clearly
identifying each item on such report which is attributable to the Borrower and the
Borrower’s Member), 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 (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 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 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 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), 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
(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 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 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
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

 

66

 

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 Line of Credit, all compliance certificates, financial
statements and all other financial and

 

67

 

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); (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 change (other than
an increase) in,

 

73

 

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

 

76

 

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;

 

77

 

(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.

 

78

 

(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

 

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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
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 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 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 or any of the
Borrower Parties 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 Borrower’s Member’s
general partner) 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 $30,000,000 (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 $30,000,000 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 in 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

 

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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

 

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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

 

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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 1993, LLC, Douglas Emmett 1995, LLC, Douglas Emmett 1996, LLC, Douglas
Emmett 1997, LLC, Douglas Emmett 1998, 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”

 

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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

 

131

 

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.

 

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(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 into the OP Merger Sub with either the Borrower’s
Member or the OP Merger Sub as the surviving entity;

 

(ii)           The contribution to the Operating Partnership of
the Permitted Public REIT of all of the Equity Interests in the Borrower’s
Member 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
or the OP Merger Sub;

 

(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

 

142

 

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 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

 

143

 

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 2000,
  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 2000,
  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 2000,
  LLC

  
	
   

  	
  c/o Douglas
  Emmett Realty Advisors

  
	
   

  	
  808 Wilshire
  Boulevard, Suite 200

  
	
   

  	
  Santa Monica,
  California 90401

  
	
   

  	
  Attention:
  William Kamer, Esq.

  
	
   

  	
  Telecopier No.:
  (310) 255-7702

  
						

 

 

	
   

  	
  LENDERS

  
	
   

  	
   

  	
   

  
	
   

  	
  EUROHYPO AG, NEW
  YORK BRANCH

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By: 

  	
   /s/ David Sarner

  	
   

  
	
   

  	
   

  	
  Name:  David Sarner

  
	
   

  	
   

  	
  Title:   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.             Warner
Center Towers, 21530-21800 Oxnard Street, Woodland Hills, California

 

2.             1901
Avenue of the Stars, Los Angeles, California

 

3.             Columbus
Center, 15165 Ventura Boulevard, Sherman Oaks, CaliforniaExhibit
10.48

 

 

LOAN AGREEMENT

 

dated as of

 

August 25, 2005

 

among

 

DOUGLAS EMMETT 2002, LLC,

A DELAWARE LIMITED LIABILITY COMPANY,

as the Borrower

 

DEG, LLC,

A DELAWARE LIMITED LIABILITY
COMPANY,

as the Co-Borrower

 

 

the LENDERS Party Hereto,

 

and

 

EUROHYPO AG, NEW YORK BRANCH,

as Administrative Agent

 

 

$110,000,000

 

 

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 1

  	
   

  	
  DEFINITIONS AND ACCOUNTING
  MATTERS

  	
   

  	
  2

  
	
  1.01

  	
   

  	
  Certain Defined Terms

  	
   

  	
  2

  
	
  1.02

  	
   

  	
  Accounting Terms and Determinations

  	
   

  	
  35

  
	
  1.03

  	
   

  	
  Types of Loans

  	
   

  	
  35

  
	
  1.04

  	
   

  	
  Terms Generally

  	
   

  	
  35

  
	
  ARTICLE 2

  	
   

  	
  COMMITMENTS, LOANS, NOTES AND
  PREPAYMENTS

  	
   

  	
  36

  
	
  2.01

  	
   

  	
  Loans

  	
   

  	
  36

  
	
  2.02

  	
   

  	
  Funding of Loans

  	
   

  	
  36

  
	
  2.03

  	
   

  	
  Several Obligations

  	
   

  	
  36

  
	
  2.04

  	
   

  	
  Notes

  	
   

  	
  37

  
	
  2.05

  	
   

  	
  Conversions or Continuations of Loans

  	
   

  	
  37

  
	
  2.06

  	
   

  	
  Prepayment

  	
   

  	
  38

  
	
  2.07

  	
   

  	
  Mandatory Prepayments

  	
   

  	
  39

  
	
  2.08

  	
   

  	
  Interest and Other Charges on Prepayment

  	
   

  	
  40

  
	
  2.09

  	
   

  	
  Release of Projects

  	
   

  	
  40

  
	
  2.10

  	
   

  	
  Call Date

  	
   

  	
  43

  
	
  2.11

  	
   

  	
  Financing of Trillium Project

  	
   

  	
  43

  
	
  ARTICLE 3

  	
   

  	
  PAYMENTS OF PRINCIPAL AND
  INTEREST

  	
   

  	
  47

  
	
  3.01

  	
   

  	
  Repayment of Loans

  	
   

  	
  47

  
	
  3.02

  	
   

  	
  Interest

  	
   

  	
  47

  
	
  3.03

  	
   

  	
  Project-Level Account

  	
   

  	
  48

  
	
  ARTICLE 4

  	
   

  	
  PAYMENTS; PRO RATA TREATMENT;
  COMPUTATIONS; ETC

  	
   

  	
  49

  
	
  4.01

  	
   

  	
  Payments

  	
   

  	
  49

  
	
  4.02

  	
   

  	
  Pro Rata Treatment

  	
   

  	
  50

  
	
  4.03

  	
   

  	
  Computations

  	
   

  	
  50

  
	
  4.04

  	
   

  	
  Minimum Amounts

  	
   

  	
  51

  
	
  4.05

  	
   

  	
  Certain Notices

  	
   

  	
  51

  
	
  4.06

  	
   

  	
  Non-Receipt of Funds by the Administrative Agent

  	
   

  	
  52

  
	
  4.07

  	
   

  	
  Sharing of Payments, Etc.

  	
   

  	
  53

  
	
  ARTICLE 5

  	
   

  	
  YIELD PROTECTION, ETC

  	
   

  	
  54

  
	
  5.01

  	
   

  	
  Additional Costs

  	
   

  	
  54

  
	
  5.02

  	
   

  	
  Limitation on Eurodollar Loans

  	
   

  	
  56

  

 

i

 

	
  5.03

  	
   

  	
  Illegality

  	
   

  	
  56

  
	
  5.04

  	
   

  	
  Treatment of Affected Loans

  	
   

  	
  57

  
	
  5.05

  	
   

  	
  Compensation

  	
   

  	
  57

  
	
  5.06

  	
   

  	
  Taxes

  	
   

  	
  59

  
	
  5.07

  	
   

  	
  Replacement of Lenders

  	
   

  	
  60

  
	
  ARTICLE 6

  	
   

  	
  CONDITIONS PRECEDENT

  	
   

  	
  61

  
	
  6.01

  	
   

  	
  Conditions Precedent to Effectiveness of Loan
  Commitments

  	
   

  	
  61

  
	
  ARTICLE 7

  	
   

  	
  REPRESENTATIONS AND WARRANTIES

  	
   

  	
  65

  
	
  7.01

  	
   

  	
  Organization; Powers

  	
   

  	
  65

  
	
  7.02

  	
   

  	
  Authorization; Enforceability

  	
   

  	
  65

  
	
  7.03

  	
   

  	
  Government Approvals; No Conflicts

  	
   

  	
  65

  
	
  7.04

  	
   

  	
  Financial Condition

  	
   

  	
  66

  
	
  7.05

  	
   

  	
  Litigation

  	
   

  	
  66

  
	
  7.06

  	
   

  	
  ERISA

  	
   

  	
  66

  
	
  7.07

  	
   

  	
  Taxes

  	
   

  	
  66

  
	
  7.08

  	
   

  	
  Investment and Holding Company Status

  	
   

  	
  67

  
	
  7.09

  	
   

  	
  Environmental Matters

  	
   

  	
  67

  
	
  7.10

  	
   

  	
  Organizational Structure

  	
   

  	
  68

  
	
  7.11

  	
   

  	
  Subsidiaries

  	
   

  	
  68

  
	
  7.12

  	
   

  	
  Title

  	
   

  	
  68

  
	
  7.13

  	
   

  	
  No Bankruptcy Filing

  	
   

  	
  68

  
	
  7.14

  	
   

  	
  Executive Offices; Places of Organization

  	
   

  	
  68

  
	
  7.15

  	
   

  	
  Compliance; Government Approvals

  	
   

  	
  69

  
	
  7.16

  	
   

  	
  Condemnation; Casualty

  	
   

  	
  69

  
	
  7.17

  	
   

  	
  Utilities and Public Access; No Shared Facilities

  	
   

  	
  69

  
	
  7.18

  	
   

  	
  Solvency

  	
   

  	
  69

  
	
  7.19

  	
   

  	
  Foreign Person

  	
   

  	
  69

  
	
  7.20

  	
   

  	
  No Joint Assessment; Separate Lots

  	
   

  	
  69

  
	
  7.21

  	
   

  	
  Security Interests and Liens

  	
   

  	
  69

  
	
  7.22

  	
   

  	
  Leases

  	
   

  	
  70

  
	
  7.23

  	
   

  	
  Insurance

  	
   

  	
  71

  
	
  7.24

  	
   

  	
  Physical Condition

  	
   

  	
  71

  

 

ii

 

	
  7.25

  	
   

  	
  Flood Zone

  	
   

  	
  71

  
	
  7.26

  	
   

  	
  Management Agreement

  	
   

  	
  71

  
	
  7.27

  	
   

  	
  Boundaries

  	
   

  	
  72

  
	
  7.28

  	
   

  	
  Illegal Activity

  	
   

  	
  72

  
	
  7.29

  	
   

  	
  Permitted Liens

  	
   

  	
  72

  
	
  7.30

  	
   

  	
  Foreign Assets Control Regulations, Etc.

  	
   

  	
  72

  
	
  7.31

  	
   

  	
  Defaults

  	
   

  	
  72

  
	
  7.32

  	
   

  	
  Other Representations

  	
   

  	
  72

  
	
  7.33

  	
   

  	
  True and Complete Disclosure

  	
   

  	
  72

  
	
  7.34

  	
   

  	
  Reserved

  	
   

  	
  73

  
	
  7.35

  	
   

  	
  Limited Partners

  	
   

  	
  73

  
	
  7.36

  	
   

  	
  Non-Foreign Status

  	
   

  	
  73

  
	
  7.37

  	
   

  	
  Borrower’s Member

  	
   

  	
  73

  
	
  7.38

  	
   

  	
  Co-Borrower’s Representations

  	
   

  	
  73

  
	
  ARTICLE 8

  	
   

  	
  AFFIRMATIVE COVENANTS OF THE
  BORROWER

  	
   

  	
  73

  
	
  8.01

  	
   

  	
  Information

  	
   

  	
  73

  
	
  8.02

  	
   

  	
  Notices of Material Events

  	
   

  	
  76

  
	
  8.03

  	
   

  	
  Existence, Etc.

  	
   

  	
  77

  
	
  8.04

  	
   

  	
  Compliance with Laws; Adverse Regulatory Changes

  	
   

  	
  77

  
	
  8.05

  	
   

  	
  Insurance

  	
   

  	
  78

  
	
  8.06

  	
   

  	
  Real Estate Taxes and Other Charges

  	
   

  	
  83

  
	
  8.07

  	
   

  	
  Maintenance of the Projects; Alterations

  	
   

  	
  84

  
	
  8.08

  	
   

  	
  Further Assurances

  	
   

  	
  85

  
	
  8.09

  	
   

  	
  Performance of the Loan Documents

  	
   

  	
  85

  
	
  8.10

  	
   

  	
  Books and Records; Inspection Rights

  	
   

  	
  85

  
	
  8.11

  	
   

  	
  Environmental Compliance

  	
   

  	
  86

  
	
  8.12

  	
   

  	
  Management of the Projects

  	
   

  	
  87

  
	
  8.13

  	
   

  	
  Leases

  	
   

  	
  88

  
	
  8.14

  	
   

  	
  Tenant Estoppels

  	
   

  	
  88

  
	
  8.15

  	
   

  	
  Subordination, Non-Disturbance and Attornment
  Agreements

  	
   

  	
  88

  
	
  8.16

  	
   

  	
  Operating Plan and Budget

  	
   

  	
  89

  
	
  8.17

  	
   

  	
  Operating Expenses

  	
   

  	
  90

  

 

iii

 

	
  8.18

  	
   

  	
  Margin Regulations

  	
   

  	
  90

  
	
  8.19

  	
   

  	
  Hedge Agreements

  	
   

  	
  90

  
	
  8.20

  	
   

  	
  Reserved

  	
   

  	
  94

  
	
  8.21

  	
   

  	
  Required Work

  	
   

  	
  94

  
	
  ARTICLE 9

  	
   

  	
  NEGATIVE COVENANTS OF THE BORROWER

  	
   

  	
  94

  
	
  9.01

  	
   

  	
  Fundamental Change

  	
   

  	
  94

  
	
  9.02

  	
   

  	
  Limitation on Liens

  	
   

  	
  95

  
	
  9.03

  	
   

  	
  Due on Sale; Transfer; Pledge

  	
   

  	
  97

  
	
  9.04

  	
   

  	
  Indebtedness

  	
   

  	
  102

  
	
  9.05

  	
   

  	
  Investments

  	
   

  	
  105

  
	
  9.06

  	
   

  	
  Restricted Payments

  	
   

  	
  106

  
	
  9.07

  	
   

  	
  Change of Organization Structure; Location of
  Principal Office

  	
   

  	
  106

  
	
  9.08

  	
   

  	
  Transactions with Affiliates

  	
   

  	
  106

  
	
  9.09

  	
   

  	
  Leases

  	
   

  	
  106

  
	
  9.10

  	
   

  	
  Reserved

  	
   

  	
  108

  
	
  9.11

  	
   

  	
  No Joint Assessment; Separate Lots

  	
   

  	
  108

  
	
  9.12

  	
   

  	
  Zoning

  	
   

  	
  108

  
	
  9.13

  	
   

  	
  ERISA

  	
   

  	
  109

  
	
  9.14

  	
   

  	
  Reserved

  	
   

  	
  109

  
	
  9.15

  	
   

  	
  Property Management

  	
   

  	
  109

  
	
  9.16

  	
   

  	
  Foreign Assets Control Regulations

  	
   

  	
  110

  
	
  ARTICLE 10

  	
   

  	
  INSURANCE AND CONDEMNATION
  PROCEEDS

  	
   

  	
  110

  
	
  10.01

  	
   

  	
  Casualty Events

  	
   

  	
  110

  
	
  10.02

  	
   

  	
  Condemnation Awards

  	
   

  	
  111

  
	
  10.03

  	
   

  	
  Restoration

  	
   

  	
  112

  
	
  ARTICLE 11

  	
   

  	
  CASH TRAP ACCOUNT

  	
   

  	
  117

  
	
  11.01

  	
   

  	
  Low DSCR Trigger Event

  	
   

  	
  117

  
	
  ARTICLE 12

  	
   

  	
  EVENTS OF DEFAULT

  	
   

  	
  120

  
	
  12.01

  	
   

  	
  Events of Default

  	
   

  	
  120

  
	
  12.02

  	
   

  	
  Remedies

  	
   

  	
  123

  
	
  ARTICLE 13

  	
   

  	
  THE ADMINISTRATIVE AGENT

  	
   

  	
  124

  
	
  13.01

  	
   

  	
  Appointment, Powers and Immunities

  	
   

  	
  124

  

 

iv

 

	
  13.02

  	
   

  	
  Reliance by Administrative Agent

  	
   

  	
  125

  
	
  13.03

  	
   

  	
  Defaults

  	
   

  	
  126

  
	
  13.04

  	
   

  	
  Rights as a Lender

  	
   

  	
  128

  
	
  13.05

  	
   

  	
  Indemnification

  	
   

  	
  128

  
	
  13.06

  	
   

  	
  Non-Reliance on Administrative Agent and Other
  Lenders

  	
   

  	
  129

  
	
  13.07

  	
   

  	
  Failure to Act

  	
   

  	
  129

  
	
  13.08

  	
   

  	
  Resignation of Administrative Agent

  	
   

  	
  129

  
	
  13.09

  	
   

  	
  Consents under Loan Documents

  	
   

  	
  131

  
	
  13.10

  	
   

  	
  Authorization

  	
   

  	
  131

  
	
  13.11

  	
   

  	
  Amendments Concerning Agency Function

  	
   

  	
  131

  
	
  13.12

  	
   

  	
  Liability of the Administrative Agent

  	
   

  	
  132

  
	
  13.13

  	
   

  	
  Transfer of Agency Function

  	
   

  	
  132

  
	
  13.14

  	
   

  	
  Co-Lead Arranger and Joint Bookrunner

  	
   

  	
  132

  
	
  ARTICLE 14

  	
   

  	
  MISCELLANEOUS

  	
   

  	
  132

  
	
  14.01

  	
   

  	
  Non-Waiver; Remedies Cumulative

  	
   

  	
  132

  
	
  14.02

  	
   

  	
  Notices

  	
   

  	
  132

  
	
  14.03

  	
   

  	
  Expenses, Etc.

  	
   

  	
  133

  
	
  14.04

  	
   

  	
  Indemnification

  	
   

  	
  134

  
	
  14.05

  	
   

  	
  Amendments, Etc.

  	
   

  	
  135

  
	
  14.06

  	
   

  	
  Successors and Assigns

  	
   

  	
  136

  
	
  14.07

  	
   

  	
  Assignments and Participations

  	
   

  	
  136

  
	
  14.08

  	
   

  	
  Survival

  	
   

  	
  140

  
	
  14.09

  	
   

  	
  Reserved

  	
   

  	
  140

  
	
  14.10

  	
   

  	
  Right of Set-off

  	
   

  	
  140

  
	
  14.11

  	
   

  	
  Remedies of Borrower

  	
   

  	
  141

  
	
  14.12

  	
   

  	
  Brokers

  	
   

  	
  141

  
	
  14.13

  	
   

  	
  Estoppel Certificates

  	
   

  	
  141

  
	
  14.14

  	
   

  	
  Preferences

  	
   

  	
  142

  
	
  14.15

  	
   

  	
  Certain Waivers

  	
   

  	
  142

  
	
  14.16

  	
   

  	
  Entire Agreement

  	
   

  	
  143

  
	
  14.17

  	
   

  	
  Severability

  	
   

  	
  143

  
	
  14.18

  	
   

  	
  Captions

  	
   

  	
  143

  

 

v

 

	
  14.19

  	
   

  	
  Counterparts

  	
   

  	
  143

  
	
  14.20

  	
   

  	
  GOVERNING LAW

  	
   

  	
  143

  
	
  14.21

  	
   

  	
  SUBMISSION TO JURISDICTION

  	
   

  	
  143

  
	
  14.22

  	
   

  	
  WAIVER OF JURY TRIAL; COUNTERCLAIM

  	
   

  	
  144

  
	
  14.23

  	
   

  	
  Limitation of Liability

  	
   

  	
  144

  
	
  14.24

  	
   

  	
  Confidentiality

  	
   

  	
  145

  
	
  14.25

  	
   

  	
  Usury Savings Clause

  	
   

  	
  146

  
	
  14.26

  	
   

  	
  Cooperation with Syndication

  	
   

  	
  147

  
	
  14.27

  	
   

  	
  Reserved

  	
   

  	
  147

  
	
  14.28

  	
   

  	
  Controlled Account

  	
   

  	
  148

  
	
  14.29

  	
   

  	
  Financing Statements

  	
   

  	
  150

  
	
  14.30

  	
   

  	
  Severance of Loan

  	
   

  	
  150

  
	
  14.31

  	
   

  	
  Additional Permitted Public REIT Provisions

  	
   

  	
  152

  

 

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

  
	
  Schedule1.01(10) A

  	
   

  	
  -

  	
   

  	
  Additional Collateral Projects

  
	
  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-1

  	
   

  	
  -

  	
   

  	
  Form of Deed of Trust (California)

  
	
  Exhibit D-2

  	
   

  	
  -

  	
   

  	
  Form of Mortgage (Hawaii)

  
	
  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

  
	
  Exhibit P

  	
   

  	
  -

  	
   

  	
  Joinder Agreement

  

 

ATTACHMENTS:

 

Joinder and Supplement Agreement, together with the Supplement to
Joinder Agreement attached thereto

 

vii

 

LOAN
AGREEMENT

 

LOAN AGREEMENT dated as of August 25, 2005 by Douglas Emmett 2002, LLC,
a limited liability company organized under the laws of the State of Delaware
(the “Borrower”); DEG, LLC, a limited liability company organized under
the laws of the State of Delaware, as the Co-Borrower pursuant to the Joinder
and Supplement Agreement (the “Joinder and Supplement”) attached hereto
(the “Co-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
2.11 or 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 and the Co-Borrower is the owner of certain interests in office
buildings described in the Joinder and Supplement (each such office building
(or the interests of Co-Borrower therein) and the rights of the Borrower or Co-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 (or the interests of Co-Borrower therein), together with all fixtures
and equipment required for the operation thereof, all personal property related
to the foregoing and the rights of the Borrower or Co-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 three (3) improved office buildings, containing
approximately 782,695 square feet (each such Project and all other improvements
constructed on each Project being, individually and collectively, the “Improvements”).  

 

C.                                     The
Borrower and the Co-Borrower have requested and applied to the Lenders for a
loan in the aggregate principal amount of $110,000,000 in connection with the
Projects for the purposes provided herein, and may seek additional financing in
the amount of up to $125,000,000 pursuant to Section 2.11.  

 

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

 

E.                                      The
Borrower and Co-Borrower acknowledge that they will each receive substantial
benefits from the Lenders’ extension of credit hereunder to the Borrower and
the Co-Borrower on the joint and several, cross-collateralized basis provided
for herein, which benefits

 

 

are reasonably equivalent consideration for their respective incurrence
of liability on account of the Obligations hereunder, and which benefits
include, without limitation, the refinancing of certain existing indebtedness
of the Borrower and the Co-Borrower and the ability to refinance that
indebtedness at a lower interest rate and otherwise on more favorable terms
than would be available if the Projects owned by the Borrower and the
Co-Borrower were being financed on a stand-alone basis and not as part of a
pool of assets comprising the security for the Obligations; and that each is
joining in this Agreement, the Joinder and Supplement and the other Loan
Documents in consideration of those benefits. 

 

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

 

ARTICLE 1

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

 

2

 

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.  

 

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

 

“Agreement” shall mean this Loan Agreement as
supplemented by the Joinder and Supplement, and 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

 

3

 

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).

 

“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.  

 

4

 

“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 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, the Co-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 Co-Borrower or the sole
general partner 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 or Co-Borrower and/or as the
sole general partner of Borrower’s Member, and

 

5

 

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 and/or Co-Borrower and/or as the sole general partner
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. 

 

“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 Co-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 or the
Co-Borrower Projects, but not of direct or indirect Equity Interests in the
Borrower or Co-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, Co-Borrower,

 

6

 

 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 Co-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 or the
Co-Borrower Projects, but not of direct or indirect Equity Interests in the
Borrower or Co-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 or Co-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 or Co-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
Co-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 or Co-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.  

 

“Borrower’s Manager” shall mean DERA, in the
capacity of the manager of the Borrower or Co-Borrower or in the capacity of
the sole general partner 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 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 or the Co-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
Realty Fund 2002, a California limited 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

 

7

 

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 Realty Fund 2002, the Borrower’s Member as of the
date hereof, if it 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.

 

“Cash Trap Account Security Agreement” shall
mean a Cash Trap Account Security Agreement, among the Borrower or Co-Borrower,
as applicable, 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)

 

8

 

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.

 

“Co-Borrower” shall mean the Co-Borrower named
in the preamble to this Agreement, subject to the Joinder and Supplement, until
such time (if any) as a Qualified Successor Entity shall acquire all of the
Co-Borrower Projects and assume the obligations of Co-Borrower under the Loan
Documents and the originally named Co-Borrower shall be released from its
obligations under the Loan Documents, in accordance with Section
9.03(a)(iii), as set forth in Section 1(d)(xviii)(m) of the Joinder and
Supplement, at which time the “Co-Borrower” shall be such Qualified Successor
Entity.

 

“Co-Borrower Projects” shall have the meaning
assigned to such term in the Joinder and Supplement.

 

“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) or pursuant to a Joinder under Section 2.11(g), as
specified in the respective Assignment and Assumption pursuant to which such
assignment is effected, or as specified in the respective Joinder, in either
case, as such percentage may be modified by any Assignment and Assumption or
any Joinder.

 

“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

 

9

 

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-1 attached hereto (for Projects in California) or
each Mortgage, Assignment of Leases and Rents and Security Agreement
substantially in the form of Exhibit D-2 attached hereto (for Projects
in Hawaii), to be executed, dated and delivered by the Borrower or the
Co-Borrower, as applicable, to the Administrative Agent (on behalf of the
Lenders) on the Closing Date, securing the obligations identified therein, as
each such deed of trust or mortgage may be Modified and in effect from time to
time.  

 

10

 

“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.

 

11

 

“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 and Co-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

 

12

 

otherwise realized all such amounts upon or prior to
foreclosure of the collateral for the Loans; 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 or Co-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

 

13

 

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 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, the Co-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, the Co-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

 

14

 

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.

 

“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
(it being understood that the Property identified on Schedule 1.01(10)(A)
shall be an Excluded Project until such future time (if at all) as it may be
encumbered pursuant to the Loan Documents upon an additional loan advance in
accordance with Section 2.11), (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 or Co-Borrower
is located and (c) in the case of a Foreign Lender (other than an assignee
pursuant to a request by the Borrower or Co-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).

 

“Facility Amount” shall mean the amount of the
Commitments, which initially is $110,000,000, as the same may be increased in
accordance with Section 2.11 hereof.  

 

“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 

 

15

 

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, the
Co-Borrower and the Administrative Agent with respect to certain fees payable
by the Borrower and the Co-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.

 

“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 or Co-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 or Co-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 or
Co-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

 

16

 

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.  

 

“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, the Co-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, the Co-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 or Co-Borrower elects or is required to
enter into, or cause to be delivered, a Hedge Agreement, covering the
Borrower’s, the Co-Borrower’s or the 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, 2010.

 

17

 

“Immaterial Subsidiary” shall mean any
Subsidiary of the Borrower or Co-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, the Co-Borrower and their respective Subsidiaries.  

 

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

 

“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).

 

18

 

“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 or Co-Borrower may select as provided in Section 4.05; provided that, (i) except for the Stub Interest Period and the initial interest
period for Loans made pursuant to Section 2.11, 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 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 and the initial interest period for any Loans made pursuant to Section 2.11,
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 or the initial interest period for Loans made pursuant to Section 2.11),
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.  Notwithstanding the foregoing, the Borrower
may elect to have the initial Interest Period with respect to Loans made
pursuant to Section 2.11 commence upon the date such Loan is funded
and expire upon (but not include) the first Business Day of the next calendar
month thereafter.  

 

“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

 

19

 

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).

 

“Joinder” shall have the meaning assigned to such
term in Section 2.11(g).  

 

“Joinder and Supplement” shall have the meaning
assigned to such term in the preamble.

 

“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 or the Co-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 or the Co-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.

 

“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

 

20

 

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.  The LIBO Rate for the initial
Interest Period with respect to Loans made pursuant to Section 2.11
shall be a rate as quoted by the Administrative Agent to the Borrower two (2)
Business Days prior to the commencement of such initial Interest Period, which
quoted rate shall be determined in accordance with the foregoing definition of
the term “LIBO Rate” but for a period equal to the initial Interest Period for
such Loans (or, if rate quotations are not available for such period in
accordance with such definition, then based on an interpolation of the rate quotations
which are available for any lesser or greater periods, as determined by the
Administrative Agent in its reasonable discretion).  

 

“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 and Co-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.

 

“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.

 

21

 

“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 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.

 

22

 

“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).  

 

“New Lender” shall have the meaning ascribed to
such term in Section 2.11(e). 

 

“Note A” shall mean those certain notes or
note denominated “Note A” dated concurrently with the Loan Agreement,
executed by Borrower and Co-Borrower to the order of the Lender named therein,
in the aggregate original principal amount of $62,678,062.68, 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 and Co-Borrower to the order of the Lender named therein,
in the aggregate original principal amount of $41,054,131.06, as the same may
be 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.  

 

23

 

“Note C” shall mean those certain notes or
note denominated “Note C” dated concurrently with the Loan Agreement,
executed by Borrower and Co-Borrower to the order of the Lender named therein,
in the aggregate original principal amount of $6,267,806.26, 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 and Co-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 or Co-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 otherwise
constitute Operating Expenses without duplication), (iv) any payment or expense
for which the Borrower or the Co-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, the Co-Borrower or any Other

 

24

 

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 or the Co-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 or the Co-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 or the
Co-Borrower, or their representative or its Affiliate (except, in each case, to
the extent the Borrower or the Co-Borrower receives monetary credit for such
payment from the recipient thereof or such item is treated as an income item to
the Borrower or the Co-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 or the Co-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, the Co-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 limited), the certificate of limited partnership or other certificate
pertaining to such partnership

 

25

 

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) Co-Borrower, (iii) any Qualified
Successor Entity to whom the Projects are transferred pursuant to Section 9.03(a)(iii),
(iv) any entity that qualifies under clause (I) of the definition of
Qualified Successor Entity, (v) a Permitted Public REIT, its Operating
Partnership or any Permitted Public REIT Subsidiary and/or (vi) 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

 

26

 

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 or the Co-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 or Co-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 or Co-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
the Co-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 the Co-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).  Nothing
in this definition or in Section 9.03(a)(iii) shall prohibit the
transfer by the Co-Borrower of the Co-Borrower Projects to a separate Qualified
Successor Entity provided that (i) the Borrower shall transfer the Projects
owned by the Borrower to the same Qualified Successor Entity or to another
Qualified Successor Entity that qualifies as such pursuant to the same clause
(i.e., clause (I), (II) or (III) of the definition of Qualified Successor
Entity set forth in Section 9.03(a)(iii)), or (ii) direct or indirect
Equity Interests in the Borrower are transferred to a Person that controls, is
controlled by or is under common control with the Qualified Successor Entity to
which the Co-Borrower Projects are transferred and such transfer of Equity
Interests is otherwise permitted by this Agreement.

 

27

 

“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 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
Co-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.

 

28

 

“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 or Co-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.

 

“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 or
Co-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 or in the Joinder (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 or which may be Modified by a Joinder pursuant to Section 2.11(g).  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.

 

29

 

“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 the
Co-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 or the Co-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, all charges for utilities
and all other public charges whether of a like kind or different nature,
imposed upon or assessed against the Borrower or the Co-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

 

30

 

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

 

(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 or the Co-Borrower, any award made hereafter to the
Borrower or the Co-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 or the Co-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.

 

31

 

“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 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

 

32

 

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 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,

 

33

 

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
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 and
Co-Borrower of this Agreement and the other Loan Documents to which it is a
party, the borrowing of their 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.  

 

34

 

“Trillium Commitment Amount” shall have the
meaning set forth in Section 2.11(a).  

 

“Trillium Commitment Notice” shall have the
meaning ascribed to such term in Section 2.11(e).  

 

“Trillium Commitment Request” shall have the
meaning ascribed to such term in Section 2.11(a).  

 

“Trillium Project” shall mean the office
property commonly known as the “Trillium”, located at 6300-6320 Canoga Avenue,
Woodland Hills, California, consisting of approximately 661,062 rentable square
feet.  

 

“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.

 

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

 

35

 

“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 2

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
and the Co-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 or Co-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”.  

 

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 or Co-Borrower, as applicable. 
The amount so received by the Administrative Agent shall, subject to the
terms and conditions of this Agreement, be made available to the Borrower or Co-Borrower,
as applicable, in immediately available funds, for the uses and purposes
identified on a sources and uses statement approved by the Administrative
Agent, the Borrower and the Co-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.  

 

36

 

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) (ii) as provided in Section 2.11 if
the provisions of Section 2.11 are exercised by the Borrower or
(iii) 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 and Co-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 and
Co-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 and Co-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 or Co-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 or Co-Borrower complies with the terms of Section 5.05 and
(iii) subject to 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 and Co-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

 

37

 

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 or Co-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:

 

(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:

 

	
  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%

  

 

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),

 

38

 

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 $27,500,000 plus twenty-five percent (25%) of the amount
theretofore advanced pursuant to Section 2.11.  

 

(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, 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

 

39

 

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 or Co-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 or
Co-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 or Co-Borrower has not elected to Convert such Eurodollar Loan into a
Base Rate Loan pursuant to 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

 

40

 

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 or Co-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 and Co-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 or Co-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 or Co-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 or Co-Borrower,
as applicable, 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 or Co-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 or Co-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 or Co-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 or Co-Borrower shall remit to the Administrative Agent an amount equal
to one hundred ten percent (110%) of the Allocated Loan Amount for the
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

 

41

 

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 or Co-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 $55,000,000 plus
fifty percent (50%) of the amount theretofore advanced pursuant to Section 2.11.  

 

(vii)                           No
Default or Event of Default exists at the time of the Borrower’s or Co-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 or Co-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

 

42

 

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 or Co-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 or Co-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.  

 

2.11                           Financing of Trillium Project.  

 

(a)                                  The
Borrower has advised the Administrative Agent and the Lenders that the Borrower
may have an interest in refinancing the Trillium Project.  If the Borrower decides to obtain financing
to refinance the Trillium Project, the Borrower shall give the Administrative
Agent written notice thereof (the “Trillium Commitment Request”), no
later than November 30, 2006, together with the items identified below in
this Section 2.11(a), identifying the amount of the financing
sought by the Borrower in connection with such refinancing, not to exceed
$125,000,000 (such amount requested by Borrower being the “Trillium
Commitment Amount”), and the required funding deadline for such financing
(which deadline shall be no earlier than the earliest date on which the
Accepting Lenders and New Lenders are obligated to fund any additional advance
they elect to make for the Trillium Commitment Amount, as specified
below).  The Borrower shall also provide,
with the Trillium Commitment Request, (i) true and correct copies of any
leases affecting the Trillium Project and of the Borrower’s internally prepared
lease summaries relating thereto, (ii) copies of the most recent budget
and financial statements related to the Trillium Project, (iii) a Leasing
Affidavit relating to the Trillium Project in the form of Leasing Affidavit delivered
by the Borrower relating to the Projects pursuant to Section 7.22
hereto, and (iv) a certificate whereby the Borrower certifies, as of the
date of its notice, that the representations and warranties made by the
Borrower in this Agreement with respect to the Projects are true and correct as
to the Trillium Project (or, if applicable, identifying with reasonable
specificity any respects in which such representations and warranties are not
so true and correct as to the Trillium Project).  

 

(b)                                 Reserved.  

 

(c)                                  Following
its receipt of the Trillium Commitment Request, the Administrative Agent shall
promptly notify the Lenders of such request, and shall request each Lender to
promptly provide information as to whether it would be prepared to provide as
an

 

43

 

additional Commitment its pro rata share of the Trillium Commitment
Amount (it being understood that, as between the Administrative Agent and the
Lenders, any such increase in a Lender’s Commitment shall be on the same terms
and pricing and shall be evidenced as applicable by a Note A, Note B
or Note C as is consistent with the terms, pricing and form of Note that
such Lender received in connection with its respective original Commitments).  

 

(d)                                 Upon
its receipt of the Trillium Commitment Request, the Administrative Agent shall
have the right to request and obtain (at the Borrower’s expense) an
Environmental Report for the Trillium Project, a Property Condition Report for
the Trillium Project, a seismic report and a survey for the Trillium Project,
and the Borrower shall deliver to the Administrative Agent a title report for
the Trillium Project together with all underlying title documents, and such
other information and documentation with respect to the Trillium Project as is
described in Sections 6.01(m), (n), (q), (r), (u) and (v) as if it were one of the “Projects”)
(all such reports and materials are collectively referred to herein as the “Trillium
Due Diligence Materials”), it being understood that the items described in Sections
6.01(q) and (r) shall be provided on a commercially reasonable
efforts basis pursuant to the terms of such Sections.  The Administrative Agent shall make the
reports, information and materials received by it pursuant to this Section 2.11(d)
available for review by the Accepting Lenders and New Lenders.  

 

(e)                                  Within
thirty (30) days following receipt of the Trillium Commitment Request, the
Administrative Agent on behalf of the Lenders may, but shall not be obligated
to, provide to the Borrower notice (the “Trillium Commitment Notice”) as
to whether the Lenders or any one of them would be prepared to make an
additional advance under this Agreement in the amount of the Trillium
Commitment Amount and in accordance with the funding deadline set forth in the
Borrower’s notice (each such Lender, an “Accepting Lender”) or any other
lender meeting the qualifications of an Eligible Assignee (each a “New
Lender”).  The date on which the
Accepting Lenders and New Lenders shall be required to fund such additional
advance shall be not earlier than three (3) Business Days after the fifteenth
(15th) day following the later of the date the Trillium Commitment
Notice is delivered to the Borrower or the thirtieth (30th) day
following the receipt of the Trillium Commitment Request, and such Lenders’
obligation to fund such additional advance shall be subject to no conditions
other than the execution and delivery by the Borrower of the documentation, and
the issuance to the Administrative Agent upon the funding of such additional
advance of the title policy and endorsements, referred to in Section 2.11(f),
the receipt, review and approval by such Lenders in their discretion (prior to
the fifteenth (15th) day following the later of the date the
Trillium Commitment Notice is delivered to the Borrower or the thirtieth (30th)
day following the receipt of the Trillium Commitment Request) of the Trillium
Due Diligence Materials, and that no Default or Event of Default shall exist
upon such funding or shall result therefrom. 
The obligations of the Accepting Lenders and New Lenders to fund such
additional advance in accordance with the terms of the Trillium Commitment
Notice shall lapse and be of no further force or effect on 5:00 P.M.,
California time, on the date which is the ninetieth (90th) day after
the required funding deadline indicated in the Borrower’s Trillium Commitment
Request.  Notwithstanding anything to the
contrary contained herein or in the other Loan Documents, as an additional
condition precedent with respect to any additional advance to be funded
pursuant to this Section 2.11, the Borrower shall obtain interest rate
protection until the Hedging Termination Date pursuant to Section 8.19
with respect to any additional advances made pursuant to this Section 2.11.

 

44

 

(f)                                    If,
during the thirty (30) day period described in Section 2.11(e)
above, the Administrative Agent provides to the Borrower a Trillium Commitment
Notice indicating the Accepting Lenders’ or New Lenders’ conditional commitment
to provide financing for the Trillium Project as described in Section
2.11(a) in the full amount of the Trillium Commitment Amount which is
structured as an additional advance under this Agreement in an amount not to exceed
sixty percent (60%) of the appraised value of the Trillium Project (as
determined by the Appraisal obtained by the Administrative Agent for the
Trillium Project); is at the same rate (on a weighted average yield basis) and
proportionate fees (including those provided for in the Fee Letter) and has the
same maturity date and other payment terms as the Loans made pursuant hereto;
is secured by a Deed of Trust encumbering such Trillium Project insured by a
title insurance policy consistent with the requirements set forth in Section 6.01(m)
and by all other Deeds of Trust executed by the Borrower and other Loan
Documents to which the Borrower is a party; and is subject to no conditions
other than those provided for in Section 2.11(e), then the Borrower shall
be obligated to accept such financing, and shall, within three (3) Business
Days after its receipt of the Trillium Commitment Notice, deliver to the
Administrative Agent the Borrower’s unqualified written acceptance of such
conditional commitment, and, at the time of the funding of the Trillium
Commitment Amount, shall pay a commitment fee in the amount set forth in the
Fee Letter (the “Trillium Commitment Fee”) (which commitment fee shall
be non-refundable in all events).  The
Borrower shall, in connection with the consummation of such additional advance,
(i) execute and deliver a Deed of Trust and such other Loan Documents and
instruments (including, without limitation, recordable amendments to the Deeds
of Trust and the other Loan Documents, and such documents as may be required
under Section 2.11(g) below) as shall be reasonably acceptable to the
Administrative Agent and the Borrower and shall perform such other acts with
respect to the Trillium Project as may be consistent with the documentation and
actions delivered and performed in connection with the Closing, or as may be
deemed by the Administrative Agent to be necessary or reasonably desirable to
reflect such understandings and to confirm the Allocated Loan Amount and
Appraised Value for the Trillium Project, (ii) obtain for the benefit of
the Administrative Agent and the Lenders such title insurance endorsements as
may be reasonably required to confirm that the Deeds of Trust encumbering all
Projects have been amended to secure such additional advance with no loss of
priority, and (iii) the Borrower shall deliver opinion letters of Borrower’s
counsel with respect to all Loan Documents delivered in connection with the
additional advance, in form and substance satisfactory to the Administrative
Agent and in substantially the same form as the opinion letters delivered in
connection with the initial advance hereunder. 
Upon the consummation of such additional advance, such additional
advance shall be one of the “Loans” hereunder and secured by the collateral for
the Loans.  If, during the thirty (30)
day period described above, the Administrative Agent does not provide to the
Borrower a Trillium Commitment Notice or provides a notice which proposes terms
and conditions other than as described above in Section 2.11(e) and this
Section 2.11(f), or if the Lenders shall have timely provided a Trillium
Commitment Notice in compliance with this Section 2.11, but shall
thereafter fail to fund the full amount of the Trillium Commitment Amount
within the time limits for funding specified in Section 2.11(e) for any
reason other than the failure of a condition precedent to such funding set
forth in Section 2.11(e) (other than a condition precedent that involves
the discretionary review by the Administrative Agent or any Lender of any due
diligence items related to the Trillium Project), a default by the Borrower or
a requested postponement by the Borrower, then in each such case, the Lenders

 

45

 

shall be deemed to have elected not to provide financing for the
Trillium Project pursuant to this Section 2.11, and the rights of
the Lenders to provide the financing for the Trillium Project under this Section
2.11 shall automatically thereupon expire and, if such failure to fund
results from a breach or default by the Accepting Lenders and/or New Lenders,
then subject to all other applicable limitations set forth herein (including,
without limitation, those set forth in Section 14.11), the Borrower
shall have such rights and remedies against the Accepting Lenders and/or New
Lenders as shall be available at law or in equity for breaching their
respective obligations (such obligations are several and not joint and several
in nature) hereunder and under the conditional commitment.

 

(g)                                 If,
in connection with any proposal to finance the Trillium Project in an amount
equal to the Trillium Commitment Amount, any Lender (each such Lender, a “Non-Accepting
Lender”) has not provided sufficient increases in its respective
Commitments to equal the Trillium Commitment Amount, then the Administrative
Agent shall notify all Accepting Lenders of the unfunded balance of the
Trillium Commitment Amount and of the terms and pricing applicable thereto and
each Accepting Lender shall be entitled to increase its respective Commitment
(which, as between the Administrative Agent and the Accepting Lenders, shall be
on the same terms and pricing arrangements as would have been applicable to the
applicable Non-Accepting Lender had such Non-Accepting Lender elected to
increase its respective Commitments on a pro rata basis as provided in Section
2.11(c)).  If, within three (3)
Business Days after delivery of such notice there remains unsubscribed-for a
portion of the Trillium Commitment Amount, the Administrative Agent may
designate one or more New Lenders to fund such balance of the Trillium
Commitment Amount (which, as between the Administrative Agent and the New
Lenders, shall be on terms and pricing arrangements that represent, on a
weighted average yield basis, the same terms and pricing as would have been
available to the Non-Accepting Lenders, in the aggregate).  The foregoing shall not act to extend the
thirty (30) day period described in Sections 2.11(e).  The Administrative Agent may allocate the
Trillium Commitment Amount to the Accepting Lenders and any New Lenders in its
sole discretion, up to the amount of the increase each Accepting Lender or New
Lender has agreed to accept.  The
Commitments of the Accepting Lenders shall, upon the funding of their
respective portions of the Trillium Commitment Amount, be increased by such
portions without the consent of any other Lender.  Upon funding of the Trillium Commitment
Amount, the Borrower shall (i) issue substitute Notes (in exchange for the
original Notes so substituted) or additional Notes to the Accepting Lenders and
issue Notes to any New Lenders evidencing their shares of the Loans and such
Trillium Commitment Amount, (ii) together with the Accepting Lenders and the
Administrative Agent, execute such other documents evidencing such adjustments
in the Commitments and the Loans as shall be reasonably acceptable to the
Borrower, the Accepting Lenders, and the Administrative Agent, (iii) together
with any New Lenders and the Administrative Agent, execute such other documents
evidencing the addition of such New Lenders as Lenders hereunder and the
adjustment of the Commitments and the Loans as shall be reasonably acceptable
to the Borrower, the Administrative Agent and such New Lenders, including a
joinder agreement (a “Joinder”), substantially in the form of Exhibit
P attached hereto, and other documentation with respect to each New Lender
which is in compliance with the provisions of clauses (ii), (iii)
and (v) of Section 14.07(b) and (iv) pay all of the Administrative
Agent’s reasonable out-of-pocket expenses in connection with the foregoing

 

46

 

incurred prior to the funding date.  Upon such funding, the Lenders acknowledge
that their shares of outstanding Loans shall be adjusted to be in proportion to
the revised Commitments of all Lenders after giving effect to the increase in
Commitments resulting from the Accepting Lenders’ and each New Lender’s shares
of the Trillium Commitment Amount.

 

(h)                                 In
no event shall the additional Commitments to be added under the terms of this Section
2.11 with respect to the Trillium Project exceed the One Hundred
Twenty-Five Million Dollars ($125,000,000) without the consent of all Lenders.

 

(i)                                     Notwithstanding
anything to the contrary contained in this Agreement or the other Loan
Documents, each Lender hereby authorizes the Administrative Agent (on behalf of
the Lenders) to enter into amendments and modifications of this Agreement and
the other Loan Documents to the extent necessary to reflect the adjustment of
the Commitments and the Loans, the addition of new Lenders and the other
matters contemplated by this Section 2.11.

 

(j)                                     The
Administrative Agent’s and Lenders’ right to provide financing under this Section
2.11 shall automatically expire upon the earlier to occur of (i) the date
the Lenders shall have elected not to (or are deemed to have elected not to)
provide the financing for the Trillium Project pursuant to Sections 2.11(f),
(ii) the date the Outstanding Principal Amount (together with any accrued and
unpaid interest thereon) has been repaid or (iii) the Maturity Date.

 

ARTICLE 3

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

 

47

 

(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 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

 

48

 

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 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 4

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 or Co-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 or
Co-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 or Co-Borrower has the right pursuant to
this Section 4.01(b) to designate the obligations to which a payment
made by the Borrower or Co-Borrower under the Loan Documents is to be applied,
the Borrower or Co-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 or Co-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.

 

49

 

(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 (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 or Co-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 or Co-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.

 

50

 

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
$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 and Co-Borrower fail 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

 

51

 

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 and
Co-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 or
Co-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 or Co-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
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 or Co-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 or Co-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 or Co-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

 

52

 

(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 or
Co-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 or Co-Borrower and no advance by the
Administrative Agent to the Borrower or Co-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 or Co-Borrower, as
applicable, and shall be advanced by the Administrative Agent to the Borrower
or Co-Borrower, as applicable, to the extent the Borrower or Co-Borrower, as
applicable, 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

 

53

 

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.

 

ARTICLE 5

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.

 

54

 

If any Lender requests
compensation from the Borrower or Co-Borrower under this Section 5.01(a)
or Section 5.01(b), the Borrower or Co-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 or Co-Borrower
notifies such Lender that the Borrower or Co-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
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 and Co-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

 

55

 

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 and Co-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:

 

(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
or Co-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

 

56

 

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 or
Co-Borrower, in the case of Section 5.01, ends any suspension by the
Borrower or Co-Borrower:

 

(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 or Co-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:

 

57

 

(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; or

 

(d)                                 following timely notification from the
Administrative Agent that the Accepting Lenders and New Lenders will fund the
Trillium Commitment Amount in connection with the refinancing of the Trillium
Project pursuant to Section 2.11, any failure by the Borrower for
any reason (including the failure of any of the conditions precedent specified
in Section 2.11 to be satisfied except conditions that are based
upon the discretionary approval of the Administrative Agent or any Lender of
any due diligence items related to the Trillium Project) to borrow a Eurodollar
Loan from such Lender (other than the default of such Lender) on the funding
deadline as provided in the Borrower’s notice delivered pursuant to Section 2.11(a)
(as such deadline may be modified (subject to the outside expiration date of
the Trillium Commitment Notice, as specified in Section 2.11(e)) by at
least three (3) Business Days prior notice to the Administrative Agent).

 

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 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.

 

58

 

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 or Co-Borrower to a Governmental
Authority, the Borrower or Co-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.

 

(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 or Co-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 or Co-Borrower as will permit such payments to be made without
withholding or at a reduced rate. Until such documentation is provided, the
Borrower or Co-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 and Co-Borrower by any Foreign Lender

 

59

 

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,
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.

 

60

 

ARTICLE 6

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), (v) no
Default or Event of Default shall exist or shall result therefrom, and
(vi) all conditions incorporated into the Joinder and Supplement shall
have been satisfied.

 

(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.

 

(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

 

61

 

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, 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 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, the Borrower’s Member 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.

 

(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 

 

62

 

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 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.

 

63

 

(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,
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.

 

(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.

 

64

 

(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 7

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
Parties are each qualified to do business and in good standing in the State of
California except for the Co-Borrower which is qualified to do business and in
good standing in the State of Hawaii.

 

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).

 

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

 

65

 

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.
All such financial statements are complete and correct in all material respects
and fairly present the financial condition of Borrower’s Member, 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.

 

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

 

66

 

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.

 

(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

 

67

 

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

 

68

 

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 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

 

69

 

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

 

70

 

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.

 

71

 

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,

 

72

 

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 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 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 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 20-2983861 under the Code and
that the Borrower’s Member’s tax identification number is 46-0506810 under the
Code.

 

7.37                           Borrower’s Member. The Borrower’s Member is permitted under
the limited partnership agreement of the Borrower’s Member, as amended, or
pursuant to consents obtained from the limited partners of the 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 agreement of the
Borrower’s Member, as amended) that is not permitted under the limited
partnership agreement of the Borrower’s Member, as amended, or pursuant to
consents obtained from the limited partners of the Borrower’s Member.

 

7.38                           Co-Borrower’s Representations. All of the Co-Borrower’s representations
made pursuant to the Joinder and Supplement are true and correct.

 

ARTICLE 8

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:

 

73

 

(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 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), 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 (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 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 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 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), 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 (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 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

 

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(as of the date hereof)
quarterly report of the Borrower’s Member 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 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

 

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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 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;

 

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(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 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:

 

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(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 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

 

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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);

 

(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

 

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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, (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

 

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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 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

 

81

 

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); (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 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.

 

82

 

(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 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,

 

83

 

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;

 

(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

 

84

 

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
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,

 

85

 

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;

 

(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

 

86

 

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.

 

(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

 

87

 

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
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

 

88

 

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 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

 

89

 

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, 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 

 

90

 

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 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.

 

91

 

(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.

 

(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

 

92

 

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 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

 

93

 

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.

 

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 9

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

 

94

 

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 (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;

 

95

 

(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 or Co-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 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 Co-Borrower or any of its respective 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 Co-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 Co-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

 

96

 

and/or Excluded Projects and Liens on Swap Agreements entered into in
connection therewith); and

 

(k)                                  Liens securing the obligations of Borrower or
Co-Borrower or its respective 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
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 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
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
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;

 

97

 

(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 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

 

98

 

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 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

 

99

 

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 or any of the Borrower Parties 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 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.

 

100

 

(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 Borrower’s Member’s general partner) 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 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

 

101

 

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.

 

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;

 

102

 

(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
$20,000,000 (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 $20,000,000 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:

 

(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,

 

103

 

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, 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;

 

104

 

(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, the Co-Borrower or its respective 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”),
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

 

105

 

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 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,

 

106

 

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 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.

 

107

 

(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 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.

 

108

 

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 in
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 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.

 

109

 

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 10

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.

 

(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”),

 

110

 

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, 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,

 

111

 

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 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;

 

112

 

(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;

 

(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

 

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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 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

 

114

 

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 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

 

115

 

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 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

 

116

 

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 11

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.

 

(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

 

117

 

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 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 

 

118

 

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

 

(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

 

119

 

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 12

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 of the Bankruptcy Parties or for a
substantial part of its assets, and, in any such case, such

 

120

 

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

 

121

 

(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

 

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of cure but the Administrative Agent reasonably determines that such
non-monetary default 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;

 

(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; or

 

(t)                                    The occurrence of any Event of Default under
the Joinder and Supplement.

 

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

 

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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 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 13

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;

 

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(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 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.

 

125

 

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
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

 

126

 

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 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 

 

127

 

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 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

 

128

 

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.

 

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

 

129

 

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
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
1993, LLC, Douglas Emmett 1995, LLC, Douglas Emmett 1996, LLC, Douglas Emmett
1997, LLC, Douglas Emmett 1998, LLC, and Douglas Emmett 2000, 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 (it being
understood for purposes of clauses (i), (ii) and (iii) that the Loans and
Commitments against which such two and one-half percent (21⁄2%) and (where
applicable) five percent (5%) requirements shall be measured shall not include
any portion thereof resulting from any increase in the Outstanding Principal
Amount pursuant to Section 2.11), 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

 

130

 

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 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

 

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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”
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 14

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

 

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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 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

 

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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 financing of the Trillium Project or
funding of an additional advance or satisfaction of conditions precedent
thereto pursuant to Section 2.11 (to the extent such costs are
incurred prior to the funding of such additional advance), (iii) 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),
(iv) the protection and maintenance of the perfection and priority of the
Liens created pursuant to the Security Documents, (v) the negotiation with
any tenant, execution, delivery or recordation of any SNDA Agreement,
(vi) 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,
(vii) any review of documents or requests, consideration for approval or
disapproval or exercise of rights outside of the ordinary day-to-day
administration of the Loans and the Loan Documents, and (viii) 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

 

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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 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, the Co-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

 

135

 

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 and/or the Co-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, except as provided in Section 2.11, 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, Joinders 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.

 

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

 

136

 

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;

 

(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

 

137

 

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.

 

(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

 

138

 

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 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.

 

139

 

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 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.

 

140

 

(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 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

 

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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 Co-Borrower or any
prospective permitted lender to the Borrower or Co-Borrower or any lender
providing any Guaranteed Line of Credit, as to which the Borrower or
Co-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 or
Co-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 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

 

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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 (together with the Joinder
and Supplement attached hereto), 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. The Joinder and Supplement attached hereto is incorporated
into and forms a part of this Agreement.

 

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) 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

 

143

 

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 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

 

144

 

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.

 

(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).

 

(d)                                 All references to the “Borrower” in this Section 14.23
shall mean the Borrower and the Co-Borrower, individually or collectively, as
the context requires.

 

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

 

145

 

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.

 

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

 

146

 

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.

 

14.27                     Reserved.

 

147

 

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 if no further
documentation is requested by the Administrative Agent or the Lenders or
executed by the Borrower).

 

148

 

(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):

 

149

 

(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 or Co-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

 

150

 

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 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
or Co-Borrower with respect to all Loans outstanding hereunder following such
splitting, modification, componentization or other severance as compared to the
obligations of the Borrower or Co-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, the Co-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.

 

151

 

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 and Co-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 and Co-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 or Co-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 into the OP Merger Sub with either the Borrower’s Member or the OP
Merger Sub as the surviving entity;

 

(ii)                                  The contribution to the Operating Partnership
of the Permitted Public REIT of all of the Equity Interests in the Borrower’s
Member 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 and Co-Borrower, the
withdrawal of the Borrower’s Member as the sole

 

152

 

member of the Borrower and
as a Member of Co-Borrower and the dissolution of the Borrower’s Member or the
OP Merger Sub;

 

(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 and Co-Borrower 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.

 

153

 

(d)                                 In connection with the Permitted
Reorganization or at any time thereafter, the Borrower and Co-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 and Co-Borrower may
dispense with the requirement of 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 or Co-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

 

154

 

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]

 

155

 

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 2002, 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 2002, 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 2002, LLC

  
	
   

  	
  c/o Douglas Emmett Realty
  Advisors

  
	
   

  	
  808 Wilshire
  Boulevard, Suite 200

  
	
   

  	
  Santa Monica, California
  90401

  
	
   

  	
  Attention: William Kamer

  
	
   

  	
  Telecopier No.: (310)
  255-7702

  
	
   

  	
   

  
	
   

  	
  and:

  
	
   

  	
   

  
	
   

  	
  DEG, LLC

  
	
   

  	
  c/o Douglas Emmett Realty
  Advisor

  
	
   

  	
  808 Wilshire Boulevard,
  Suite 200

  
	
   

  	
  Santa Monica, California
  90401

  
	
   

  	
  Attention: Jordan L.
  Kaplan and 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 OWNED BY BORROWER

 

 

Beverly Hills Medical Center

8920 Wilshire Blvd.

Beverly Hills, CA

 

1

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